All Forum Posts by: Adam Gerig

@Zoran M. think your dead on.  I think it's always good to have an independent third party go in and tell you what their thoughts are on the property.  The only thing that sometimes frustrates me is that their job is to pick out everything and anything that is wrong with the property and sometimes it scares would be buyers away.  For example, I had an inspection come back and the buyer had an issue with about 5 different items that they were scared about and I told them those aren't that big of a deal I can have my contractor go in and knock those out in half a day before we close, but to him (first time investor) that killed the deal because it wasn't in pristine condition.

Especially for those that have never dove into investing from afar and investing for the first time I think sometimes there's a misnomer about what a property is going to be like.  I feel like sometimes especially first time investors expect a property's condition to be like a new build construction.  In our area if you are buying something that's less than 15 years old your returns are dismal.  However, if you get a 50 year old home that may have just been rode hard and do a rehab on it we get very very good returns, but that being said it's an older home and there are going to be more upkeep on them.  All in all if the numbers work and both sides feel like they are getting a good shake and it passes the smell test I think it's just a matter of what that individual person is comfortable with in moving forward.  

@Joshua McGinnis  100% agree with ya.  I've got 2 different buyers out of Boston this month and my "pitch" to them if you can call it that was if I were an out of towner and coming in I'd spend more money and invest in a more conservative location then gave them zip codes to start doing some research on their own.  They then came out and we probably went through 20 properties in those neighborhoods so they got an understanding of what I meant.  

Me, personally, I can stand much more risk and invest in what some people would probably classify as the "hood" because I've got experience, the team in place, and obviously management skills that allow me to do this, but if I were someone just starting out, especially all the way across the county, I'd be looking for lower returns and a more conservative area to first start out.  

The thing that kills me about the whole "turn-key" operation is that there are a lot of shady companies doing it and ripping off investors.  I ran into two situations within 3 months of each other that a company out of Utah who shall remain nameless, (unless you directly inbox me for their name)that bought 2 properties for about $28k/piece that already had tenant in place.  I managed them for them and within 6 months of purchasing sold them for roughly $22k more per property to an investor out of Canada and Texas.

Nothing was upgraded and I don't know what the investors were basing their decision off purchasing the properties on, but needless to say I was like you've got to be kidding me.  Those properties are $30k at most properties all day and they paid $20k more than they are worth every single day of the week.  This stuff happens and I guess you live and you learn, but to me I couldn't sleep at night selling something to someone else for $20k more than they purchased it at and literally doing nothing to it.  So i guess that's my buyer's beware story.  Hope I didn't scare everyone off lol..

@Joshua McGinnis  sorry to hear about your experience.  I guess I can see it from both sides although the multiple delays should have been at least communicated and as the potential buyer you should always be kept in the loop.

I recently had a BP back out of a deal I had put together turn-key, but I think it was more because this was their first deal then the snag we ran into.  Hope you don't feel like I'm side tracking your post, but just thought sharing my story from the opposite side might also be helpful.

Had a 3 package deal of which 2 of the 3 were rented and I told him that I would highly suggest having inspections done just for his assurance. Got to the inspection on the one that wasn't rented and over the weekend someone had thrown a rock through a window and stole about 16 inches of copper. To someone who hasn't dealt with that before it can be scary and I had no problem in him backing out, but sometimes things do come up. If he would have based the decisions strictly off the numbers I think he or anyone else would have felt pretty comfortable moving forward, but in REI you've always gotta go with your gut.

He backed out I kept all 3 of them in my portfolio and they are bringing me in $1740/month for a package I was going to sell to him for less than $83k which would have been over a 13 cap rate based off 50% rule.  

All in all I'm sorry you had a bad experience, but I think you made the right choice in my opinion.  Gotta go with your gut!

$14k before debt service and management.  Again, this is all negotiable, but I know the seller would be willing to make the numbers work for any interested party and our management company is willing to manage the units for 8% commission.  

Owner is Amish so I'm working on getting him to get me something in written form so I can better understand as well, but I've done several deals with the guy and he's always made sure they are fair on both sides.  The owner is financing it.

Attention investors!!!  I have a 53 unit apartment complex in Fort Wayne, Indiana for sale for $1,850,000.  Contract terms are $300k down at 6.75% interest.

50 out of 53 units are occupied it has 18 1bd/1ba, 16 2bd/1ba, 16 2bd/1.5ba, and 2 3bd/2ba units.  

It's currently grossing $23,660/month and netting right around $14k after expenses.  If interested let me know our company could also handle management on these units making it truly turn-key.  Stop sitting on the sidelines and get in the game!

I concur with @Engelo Rumora pick conservative B class neighborhoods in the Midwest.  Here you can pick them up between $30-45k and you'll be looking at a projected cashflow between $4k-8k cashflow a year.  

Avoid majors for the start I would say. (foundations, roofs, properties with bad systems(electrical, furnance). Just my 2 cents. Those things will come to you further down the road, but if you find properties especially in the beginning with good roofs, foundations, and systems, the rest should be a whole lot easier!

Welcome fellow Hoosier!!

@Anne A. I'd love to help you do something here in Indiana! We had an equity group in Thursday from California and a couple other investors(one BP'er) from there as well.

If you have any questions feel free to PM or give me a call. Good luck either way!!

We had a group in today from Texas speaking to our owner of our property management company and I was just wondering if anyone in the property management field or even selling wise has any good ideas on how to get a hold of groups that would be looking for real estate.

There was a company that used to operate in our area, now defunct, that used to pool money and buy a bunch of investments with the enticements of 8-10% return on their monies. Their model was wrong as they sold them all on contract and ended up getting a majority of them back in worse condition then when they sold them, but I think with our company we could truly supply a turn-key solution as we are Realtors, property managers, and investors ourselves(at least myself and the other two property managers at our company).

We really only strictly deal with investors right now as far as the realty side of things, but we also are finding stuff that's off-market or never hits the market. I think we could provide some serious benefits to a group or people whom are having problems getting decent returns on large quantities of monies because of real estate pricing in their particular areas.

What are your thoughts?