All Forum Posts by: Darrin Gross

Dawn if you have any questions about self storage insurance, let me know.  

I'm based in Portland and we have a couple of really good insurance programs and can provide a quote fairly easy.  

Darrin

From what I have gathered in talking with Retail professionals, I think it depends on the opportunity.  Like any investment, if you don't understand the marketplace, you should probably learn more before investing.  

I think traditional indoor suburban malls are struggling.

I interviewed a commercial broker who provided some keys to pay attention to:

- Population

- Tenant mix; grocery, service oriented are good

- Size of bays; too big is not good

Let me know if you want the link to the interview and I can send it to you.

Seems like a letter of intent would be a good place to start.  Then hustle and have some conversations with contractors, the city, etc to see what the feasibility of your plan is and some cost.  You will need to run some projections and talk with a bank.  I have a client that does this kind of project for creative space and they do well.   Is there demand for this type of space? 

Inspectors always frustrate me.  If you read their disclaimer, it states that they can only visually observe what is.  So if there is a drippy faucet, they note, "drippy faucet, have professional inspect".  REALLY?

How much would your plumber charge once you own the building to go unit to unit to inspect and repair any drips?

There is tremendous value in having a trained eye go through the property, but I think for my future purchases I will take my experienced property manager who is a pro at turning units with a good plumber, electrician, HVAC & roofing contractor to walk the property with me.  These are the professionals who can assess my cap x needs.  Cap x are the numbers that will ruin your cash flow.  Your buildings are fairly new, so plumbing & electrical should be in good shape.  

Good luck.

Russell,

Don't fall for the proforma.  Buy off Actual and account for all expenses.  

Small properties are horrible at tracking expenses especially when the owner manages.  

You might listen to the BP podcast episode with Chris Voss that is awesome for negotiating.  I think he was also a guest  on Wheelbarrow Profits.  

Good luck.

Darrin

@John Underwood is spot on.  Don't chase rent.  If you do not enforce your rental agreement and have to go to court, the judge will look at how long it took for things to go bad and allow the tenant the same amount of time to correct.  Lesson I learned first hand after hearing every chapter in my tenants book, "Why the Rent is Late".  

Aaron,

Have you considered doing an open house?  It's a great way to save on time, and you create the fear of missing out.  I've done two and they work.  I post on Craigslist 24 hours before announcing the open house for 2 hours on a Sunday morning.  Bring applications, and a piece of paper to collect names & phone numbers. 

Screening tenants- use a background checking service to screen for criminal & eviction activity.  I try to get income at least 3x's rent.

Get a lease signed, and collect full first month rent and deposit.  Then turn over the keys.

Good luck,

Darrin 

I believe you only have to be $1 greater in a 1031 exchange. Have you ever heard of a Delaware Statutory Trust? As I understand, you can invest in a DST to balance your trade, ie the overage from your sale that would not be required for the purchase of the replacement property. I will message you some contacts who can provide more answers.

My opinion, this will be tough for two basic reasons. 

1- Selling 8 properties at full retail at the same time will be tough and unlikely.  If you are able it will not be for full retail.

2- You are spending a lot of money and energy to make a lateral move.  

Some questions I would answer

Q: Is the $1.2m estimated sale price retail?

Q: What is the upside for the buyer of your portfolio?

Q: How much are you getting for rent?

Q: How much equity do you have in your portfolio?  Is there room to borrow against the current portfolio?

Q: Do you have other funds for your down payment on the apartment building? 25% down on $1.1 = $275,000.

Q: Will you be selling these yourself, or will you have to pay commissions? 

Bethany, 

You might check with your CPA before doing a HELOC. If I understand the new Tax law, you can no longer deduct the interest from the HELOC. But, sometimes, you have to do what you have to do to get started.

What do small apartment buildings go for in your area on a per unit basis?

If you are able, I would encourage you to look at 5+ units.  The financing on 5+ unit buildings look at the income from the property rather than the income of the buyer.  If you buy 4 or less units, traditional financing will be subject to your debt to income ratio. 

Josh,

We have a very similar plan.  We looked from Tampa to Ft Myers, and did not have a lot of luck finding an apartment building that fit our investment strategy.  Our agent found a 4 unit on Ft Myers Beach that we put under contract.  It was beautiful.  However, it did not have actual 12 months rents, the proforma was very optimistic, and it required Flood Insurance.  I finally backed out of the deal, and as far as I know, the property has not sold.  

I think seasonal properties in FL are tough unless you buy right, and know you will have little to no income from Easter to Thanksgiving.  

We ended up finding a 12 unit property on the Space Coast, Cape Canaveral area.  So far, so good.  The rents were way below market, with lots of expenses we were able to cut.  We have increased rents over $200/ month & were able to cut the cable bill & bill residents for water.  Unfortunately, we have had some plumbing issues that we are working through, but this will resolve itself.  

Good luck.  

Darrin