All Forum Posts by: Henri Meli

@Jian G. . $240k per unit ... is some scary numbers, to be honest. Someone recently quoted me $150k/unit in a 20 unit Class A building in Raleigh, NC (rent were $1200/month) and I ran away. But I'm sure these are normal ... for the SD market. I know I live and invest in other markets. But I wouldn't touch anything like this, unless I was guaranteed that rents would be north of $2k per month with zero vacancy. 

Anyway ... congrats on finding the deal in your market. 

Did you get the most recent rent roll from the seller? That should be the basis of your calculations. But, being a resident of California, there are lots of external factors you need to add to your overall analysis. 

Are you buying for value-add or cashflow? 

Have you done an analysis to understand the current management inefficiencies? What's your marketing strategy to keep vacancies at the lowest level possible? What's you strategy to bring in the best tenants and get ride of problem tenants? What's the typical profile of your tenant base? Have you identified areas where you can grow income and reduce expenses? 

Owning a 12 units is like owning a real business. Meaning, you need to think of all aspects of the business. Especially, these low cap rates don't  give you any margin for errors, if you don't want to lose your money.

Also, what's your exit strategy? 

Good Luck.

@Jose Ortega . I know a lot of people usually like to "analyze" assets, but ... what exactly are you looking for from the analysis? Are you investing for value-add? Are you investing for cashflow? how important are CoC? IRR, ... will you be investing solo? With other investors? With partners? What's your exit strategy? Sale? Refinance? ... etc.

The reasons I'm asking those questions is because the word "Analyze" can really mean a lot of things and depending on what it means to you, some calculators (analysis tool) might be more suited than others.

I'm of the opinion that when you perform an analysis, you want to get a very complete picture, so that you can also run the "negative" scenarios to fail proof your investment as much as you can, before you pull the trigger.

Good Luck. 

@Oliver Davis . I would go through brokers and get a list. Then I would make sure I get at least 3-5 suggestions and interview them before hiring them. 

Do you own property in those markets already or are you planning to buy? If you haven't bought any, then I'm sure you will need to fly to those markets before closing on any deals. Would be a better idea to actually meet them in person. 

I would second @Lennon Lee . You should focus on listening more than talking.  And build genuine connections, where you can add value to people. The value doesn't necessarily need to be real estate related. If you haven't done so yet, start building your Thought Leadership Platform. Joe Fairless talks about it on his podcasts. Start with a website, blog/create content about what you do in real estate. Display your expertise through the content you create.

@Gary B.  Are you investing out of state (I know many people in CA do)? Do you have a team on the ground with strict criteria of what you are looking for? What are your criteria? I'm just curious.

I know this is tough sometimes, but one of my rules has always been to visit the place to invest at least once. I can't sleep at night, if I invest for example $500k in a place I have never seen.

Neighborhood classification is also sometimes subjective. I believe, what you are trying to find out is: What is the profile of the clients for the asset you are trying to purchase. What's their salary range, what's types of jobs do they do,  what are the top employers in the location, is the clientele mostly on fixed income or other types of income, ... etc. Another question you want to know the answer to would be, is the neighborhood up and coming (growing in population, ...etc) or is it losing population? Also, are you doing a repositioning on the asset or are you simply purchasing to extract cashflow and ride with it as-is?

Good Luck.

@Aditya Soma Congratulations. Sounds like something you are very excited about. Good luck.

@Caleb Heimsoth Caleb can give you more information on Rocky Mount. 

@Josh Oaten ,

@Dan Handford and @Danny Randazzo have the Multifamily Investor Nation Summit coming up January 17-19 (so, in a few  days). It is a virtual event, so you can listen to experts from the comfort of your laptop ... :-) Can't beat that !!! 

@Matt Faircloth Will you be stopping in Raleigh / Durham as well?

@Gaurav Bhasin . There are lots of people who invest (successfully) in places they have never seen. I'm a visual person and I like to see things with my own eyes for my own comforts. Here is what I would do. 

I would narrow down my choices based on specific set criteria, then take a trip (week end trip) to places I would like to invest, meet with brokers, agents, property managers ... etc. And start building a relationship with them.

Good Luck.