All Forum Posts by: Jaden Ghylin

How do you guys think the geography of SLC sandwiched between lakes, mountains, and national forests will affect appreciation in that market over the long term? Is it a major factor in your strategy? It seems like land is pretty limited.

Jaden

Rich, what do you think will happen with interest rates and how do you think that will affect the market? Some investors seem to discount the effect of rising rates on real estate values. The book "Equity Happens" even makes a case that home prices will rise in a period of rising rates, backed up by data from the early 80s.

I am very concerned about the effect of rising rates, but just don't know how much effect it will have. So far the effect has been noticeable.

Jaden

@Jeff Greenberg

Thanks for the link. Very helpful.

-Jaden

@Chris Winterhalter

I think you nailed it on the head. Thanks for your very insightful post. You are correct that I've been getting good returns on SFH, but am now trying to figure out how to scale. I have been doing a mix of flipping and buy-hold. It is very time consuming to manage SFH projects and I'm at the limit of what I can do.

I've gotten very good at finding and evaluating deals on SFH, but really don't know how to start on multifamily since the information doesn't seem to be as readily available. It seems that I need to find a good broker that can help me find deals. I've rarely had luck using brokers to find SFH deals, so hopefully it's different in the commercial world. Any tips on finding a good commercial broker would be appreciated.

-Jaden

Thanks Jean, that makes sense. I guess I don't really know how to look for multi-family. The MLS has listings for 1-4 unit and almost all seem to be overpriced. Beyond 4 units, do I just need to get a broker to track down deals?

-Jaden

Rich, where are you at in your buy-hold-sell strategy? Are you still buying in UT and TX or are you in the hold phase? What will be the trigger for your exit?

How many years do you expect this to run?

Sorry for all the questions, just very curious about investing in growth markets.

Regards,

-Jaden

BTW, that one on Vincent looks great. I own an SFH very close to there that does quite well. Good neighborhood. I'll be going after this one, thanks for the tip.

-Jaden

@Aaron Montague

Thanks for breaking it down for me. That building doesn't meet the 2% rule, but seems to cash flow just fine. Should I throw out the 2% rule?

Also, it looks like your expenses are well below the 50% rule. Maybe I'm letting these rules get in my way.

How much do you budget per month for capital repairs/improvements? How do you get such low cost property management? I currently pay $100/mo per unit + first month's rent to fill a unit, which I believe is pretty normal in this market for a quality mgmt company.

Thanks again for your input.

Regards,

-Jaden

I'm not so sure about the roofs being cheaper. A flat, rubber membrane roof on top of an apartment building can run $30k+. Roofs on small houses run about $3k.

Using the 50% rule with 25-30% down, I think this property does cash flow, but doesn't seem to cash flow as well as SFH properties.

-Jaden

I've been buying SFHs for a few years now and as the market rises am looking at other alternatives. I've been buying my rentals close to the 2% rule. In most cases, I have $50k in for $1,000 rent or $60k for $1,200. All are in good neighborhoods in the Minneapolis metro. As prices have gone up, I've had a tougher time finding new properties to purchase. I've been looking at multi-family, but the economics don't make sense to me, so I hope someone can help explain.

There is an 11 unit (1 beds units) apartment building in a decent area of North Minneapolis for sale for $560k ($51k/unit). Rents in that area for 1 bedroom is $725/mo. So, I'm looking at $51k/unit for rent of $725/mo. This isn't really close to meeting the 2% rule, it's at 1.4%.

So, my question is, what is the motivation for buying multifamily, when SFHs are so cheap? SFHs are more liquid, tend to appreciate better, have more financing options, command higher rents, and can be sold to the retail market. Is now just a historically bad time to be buying multifamily due to low vacancies and increasing rents?

I'd appreciate any insights people have to offer. I seem to get asked frequently why I'm not in multi-family and I just haven't figured out the economics of it.

-Jaden