All Forum Posts by: Brian Burke

Rob K, awesome questions! An apartment complex of this size requires an on-site staff, here is the breakdown (this is salaries & benefits for the entire 22-month ownership period):

Manager Salaries: $85,743.80
Maintenance Salaries: $56,572.45
Payroll Taxes: $19,418.62
Worker's Compensation: $7,281.98
Medical Insurance: $11,594.08
Total: $180,610.93

The income from rents was actually $723,191.65, but after subtracting out all operating expenses (property management, G&A, marketing, payroll, R&M, utilities, contract services, insurance, property taxes, and loan interest) the NET was $9,802 (but I guess it's really the net that matters, right?!). This is primarily because of the low occupancy in the beginning (which produced negative income for the first year) and the ultra-high interest expense on the hard money loan.

If we hadn't decided to sell it after month 14 or so, I would have refinanced out of the HML and into an agency loan (Fannie/Freddie), which would have dropped our interest from 12.5% down to less than 4.5%. Toward the end, the property was throwing off over $20K/ month net after expenses. Subtract interest on the new loan of $7K or so, the positive cash flow would have been around $13K/mo, maybe a little less or more. Another alternative would have been to refi all of the contributed cash out also, making the loan payment closer to $11K/mo, giving $9K/mo net cash without any money left in the deal.

Someone will ask...why didn't you get your cash out and take the $9K/mo? Because we'll take the equity along with the gain, perhaps add in a few more investors, and reinvest in the next deal that will be even larger, produce even more, and allow us to do the value-add component again. We can't value-add to this deal any more than we already did.

Thanks everyone for the awesome feedback! This makes me glad that I made the decision to share this story.

Joshua Dorkin, I would have been more than happy to have split this with you, all you had to do was supply the $540K raised in the offering! Maybe next time... :)

Aaron Junck, yes, CA has a 2 year experience requirement. They also have an exemption for equivelent experience, which among other things can include experience as an investor or developer. I qualified under that exemption thus I did not work as an agent for 2 years prior to obtaining my broker's license.

So I just posted my first article for the BiggerPockets blog. After hitting what I'd call a Grand Slam flip that produced a net profit of over $800,000, and at the risk of sounding boastful or as a braggart, I was conflicted whether or not to tell this story.

At the end of the day, I decided to write it because I read a lot of questions from people curious about how deals are found and financed, and what the numbers look like. I also read a lot of comments on this website from people who struggle to build their real estate businesses. In times of doubt, an occasional reminder of why the struggle is worth it can be enormously helpful, or so I'm told. :)

If you haven't seen it already, check it out here: http://www.biggerpockets.com/renewsblog/2013/01/29/anatomy-grand-slam-flip/

I hope you enjoy it! If you like it, let me know what you think. If you don't like it, my name is Joshua Dorkin.

Hi Andrew, check out these two threads:

http://www.biggerpockets.com/forums/48/topics/80880

http://www.biggerpockets.com/forums/41/topics/80928

Hope those help. You pose a tough question with no easy answer.

YES!
1. Broker
2. My own
3. All pros, no cons. Impossible to do my REI at the scale that I do without it.
4. Zero, but I don't buy/sell RE for clients myself
5. Nope
6. N/A

I got my license so I could facilitate my own transactions. Run my own comps. Mine for my own deals. And, most importantly, hire an army of agents to find property for me, and sell them (the properties, not the agents!) after rehab.

The automatic stay in the BK prohibits you from proceeding with the eviction until you file a motion for relief from stay with the BK court, and the BK judge grants your motion. Once that happens, there is a 10-day waiting period. After that, you can proceed with your eviction.

K. Marie Poe, you're right...I forgot about that. It's too bad because everyone likes a "fallen and got back up" story. Maybe I'll just have to make my own movie. :)

Pace Jordan, I'm not too handy, I leave that up to the pros. Went full time over 10 years ago.

I simply had no other options at the time. If I hadn't done that, I probably wouldn't be where I am today.