All Forum Posts by: Jeffrey Holst

@Dan Beaulieu it dies seem like there is a shift happening.

I'm not sure I disagree with the possibility of a market that creates both cashflow and appreciation but I think it would be hard to find with out a value add strategy. 2-3% annual appreciation over a long period is fairly normal in decent markets. Id challenge anyone to find me a market other than low income c class and below areas where appreciation of 2-3% didn't occur over the last three decades.

A quick Google search tells me the average home price in 1990 was around 120k vs 226k last year which by my math means on average houses rose by 2.1% annually over that 29 year period.

Which to me seems to mean that if you buy a place with 80% leverage and amortize it over 30 years your original 25k investment will now be worth around 215k (this combines the amortization gains and the appreciation gains and assumes a reminder of a few thousand since it hasn't been 30 years) obviously it seems more likely this would be amortized over 20 years or have been refied or sold at least once during this period.

But I digress the second part of the equation was to cash flow 12% cash on cash. There in lies the trick for me. As mentioned I think the appreciation is essentially automatic on average (although I'll admit I don't care about appreciation when analyzing a deal I want a market I don't think will decline and figure amortization and appreciation are the bonuses for long term buy and hold strategies) I think you need to buy assets that have rental upside and need some renovation to get there. It's fairly easy to get 12% cashflow if you are using a value add strategy particularly in b class areas. I guess what I am saying is buy in areas you are comfortable holding for decades and buy for cashflow. Get as good of terms as you can on the notes to increase cash on cash return and buy the properties on those areas that need some love and you have a real shot at a 12% cash on cash return.

This is a long winded way to say buy for cashflow and don't worry about appreciation cause that will just happen as long as you find stable markets and hold long term.

@Nicholas L. I would advise being very careful at this point in the market cycle about jumping into apartments without getting some experience first.

Further it's imperative if you're thinking about taking in other people's money that you get good legal advice it's much more important than even a CPA. The security and exchange commission has a very strict rules for people that are issuing offerings such as the type that you're talking about. I don't think it's something that just any attorney can handle either You need someone who specializes in SEC compliance or at least is familiar with the basics of it. By way of example, I'm an attorney licensed in two states and had no idea what the rules were or even that there were rules until I started digging further into an attending conferences on multifamily investing.

I can say that North Georgia and Chattanooga are attractive markets from a multi-family perspective. There's less competition cap rates are higher but continue to decline which means that values are increasing over time.

If you want more information about my thoughts on market cycle be sure to check out our real estate show on YouTube. I think the idea of partnering with someone who's already doing this and knows the pitfalls might be the best place for you to start. If not you should at least make sure you're getting good advice and maybe finding a mentor that's already doing these types of deals.

@Nick Gann I'd recommend first property management @Brian Levredge and his team do a great job. I agree with @Allan Smith there are some areas you might want to avoid. @Heidi Foster is spot on about East Ridge and Brainerd, but personally I'm not a fan of Highland Park and Orchard Knob I think the first is over valued and the second is over hyped with little growth potential this market cycle, I could be wrong of course. I'm a fan of Red Bank, Hixson and the Highway 58 corridor for duplexes and the like. There are tons of them out there and the rents are very strong.

Let me know if I can be of any help to you and if you get down here be sure to look me up

@Joseph Glisson speaking if getting together we need to schedule a lunch.

@Danny Matthews this can be achieved in Chattanooga and North Georgia. I'm a fan of Ringgold, Fort Oglethorpe in particular.

https://www.facebook.com/groups/REIMeetupChattanooga/

welcome to Chattanooga

Be sure to hook up with @Kelly Rastatter and attend our monthly investor happy hour. 

I'll try to be there

We are definitely fans of Old Fashioned discipline.  ;-)