All Forum Posts by: Jordan Concepcion

In most cases, deals on Loopnet are either "stale" or not the greatest deal on the market.  The best deals are usually shopped by the Listing Broker to his preferred buyers who can close.  I agree with many of the people  here that you should reach out the a local multifamily broker personally.  Take them out to coffee, build a relationship, and show that you are serious in purchasing (don't you want to be that buyer that they call when they have a great deal?).  Most of all, be honest with them.  However, there are some good deals on Loopnet.  Many serious sellers require the Listing Brokers to expose it on Loopnet when signing the agreement.  This insures that these brokers don't keep it in-house and try to fit their own buyer into it.  Thus, if you identify a good deal on Loopnet, I would call that broker directly and see what the seller's motivation is.  Maybe there is something you can bring of value to them when sending in an offer (ie fast close, extending close of escrow to accommodate a 1031 exchange etc).  Don't fully give up on Loopnet deal, just make sure to call the Listing Broker directly to get more information.  

In most cases, deals on Loopnet are either "stale" or not the greatest deal on the market.  The best deals are usually shopped by the Listing Broker to his preferred buyers who can close.  I agree with many of the people  here that you should reach out the a local multifamily broker personally.  Take them out to coffee, build a relationship, and show that you are serious in purchasing.  Most of all, be honest with them.  However, there are some good deals on Loopnet.  Many serious sellers require the Listing Brokers to expose it on Loopnet when signing the agreement.  This insures that these brokers don't keep it in-house and try to fit their own buyer into it.  Thus, if you identify a good deal on Loopnet, I would call that broker directly and see what the seller's motivation is.  Maybe there is something you can bring of value to them when sending in an offer (ie fast close, extending close of escrow to accommodate a 1031 exchange etc).  Don't fully give up on Loopnet deal, just make sure to call the Listing Broker directly to get more information.  

It really does depend on your goals of an investor. Typically, a smaller 6 unit building in a good location (ie coastal, good neighborhood, high density downtown, etc) has a better bet on appreciating over the years since the land is so valuable. However, your ROI and cash flow will certainly be lower. If you are in a stage of being conservative and are looking for a safe place to place your money with steady returns, this is a great route.

As far as the 32 unit building, you have to assess the neighborhood and the volatility of values in that market.  If it is in C or D markets or an older building, make sure you do your homework on the demographics, household incomes, and historical values (especially when the market dropped).  It will certainly give you more cash flow but keep in mind that the area might have some challenges (raising rents, evictions, etc).  Larger buildings have larger expenses.  However, the upside is that equity and rent growth can be exponential.  Let's assume the following:

Scenario 1 (6 unit building in good area)

1. If you raise rents $150 per unit across the board a month, you are making $900 more dollars a month ($10,800 a year).

Scenario 2 (32 units in a challenging area)

1. If you raise rents at $150 per unit a month, you are netting $4,800 a month ($57,600 a year).

2. Even if you raise rents at a moderate rate of $50 per unit a month (assuming it is a lower income area), you are netting $1,600 per month ($19,200 per year).  

Both have their pro's and cons but it really does depend on where you are in your investment cycle and how much risk you are willing to take on.  Keep in mind that, since you will be hiring a property manager, many of the day-to-day "headaches" or duties will go to the property manager.  I've dealt with some clients who actually say that moving into more units is less of a headache since they are delegating the responsibilities to a Property Manager. This is just my take and I hope it helps.

Feel free to reach out if you have any questions

-Jordan

I know that it is always best to get a contractor to tour the units, but are there any "rule of thumbs" anyone uses for upgrading units?  Here are some examples.  I know I'm asking for ball park numbers but any info would help.  If it counts for anything, I'm located in San Diego just in case construction costs vary. Also some recommendations of some good and price friendly contractors in San Diego would always be good.  Thank you in advance!

1. Cost of laying new flooring per SF (vinyl wood plank or carpet)

2. New counter tops (granite or linoleum)

3. Paint

4. Price to turnover a unit

1. As a broker, it probably best to take out an active multifamily specialist in the market for coffee and develop that relationship.  Buyers definitely out number the sellers by 3:1 (my opinion) so it's important humanize this aspect.  Once they see you and "vet" you as a buyer, at least there is a relationship that's started by then.  Broker's still have quite an influence in bringing your offer to the top of the list on a prospective purchase.  

2. If you have buddies at a Title company, you can ask for mailing addresses of multifamily owners.  You can probably do a direct marketing letter or flyers to them you can star to research owner information to give them a call. 

Hope this helps and please contact me if you need more details