All Forum Posts by: Abraham Anderson

Hi Jed, thanks for the informative video. I'm up the road from you in Sevierville. I will definitely use this information if (God forbid) I have to evict a tenant. Thanks again!

In my city there aren't many multifamily properties for sale. The closest large market would be Knoxville (which is 30 minutes away), cap rates there are hovering around 7.5%. Besides contacting brokers and asking for this info (which you should definitely do), a quick check on LoopNet.com will show you multifamily properties listed in the area (along with their cap rates).

Also keep in mind, they can list any cap rate they want & it's usually based on pro-formas. Always get the actuals (rent rolls/tax returns) and do your own numbers!

@Brian G.:

Sorry for the delayed reply. I have a local bank who has agreed to finance 90% of the property (purchase price 1.3m), they are placing a lien on another property I own free & clear & and I am financing the other 10%. At this moment the bank is waiting on the appraisal so we haven't finalized any of the other terms, I will post them once they're available!

@Manvir G.:

Sure! I originally offered on this property in early January. The realtor they had it listed with at the time wasn't very experienced in Multifamily so it made negotiations difficult. The listing price was $1.9M. I started at $900K, the realtor accidentally countered at $1,900,000,000.00 (1.9 billion), I still have that paper saved, haha. She then submitted the "correct" counter of $1.9M. Before I could submit another offer, they had received (And accepted) an offer for $1.5M. I put in a backup offer at $1.1M.

Fast forward to late March, the $1.5M deal fell apart (I don't know the details). The realtors listing agreement expired. My realtor spoke with the owner who was about to re-list it. We finally agreed at $1.3M. This was my strike price. At this rate, even accounting for vacancy, cap-ex ($30/unit/month), and a 5% reserve for a property manager, it's still an 8.65% cap rate, and (depending on the financing terms I ultimately end up with) will cashflow between $3.5-$5K a month.

I got this under contract because of a combination of their realtor being inexperienced (She only listed it on one MLS service, not even in the correct county), the owners being burnt out (one of the owners tragically died in an airplane accident), and sticking to my strike price. I'd rather buy no deal at all than buy a bad one!

I realize getting it under contract is only the first step. There's still a ton of things that could 'go wrong', but I will remain patient & persistent until I finally get this deal closed!

@Brian Garrett sure! Asking price was originally $1.9m (very overpriced), I was able to negotiate down to $1.3m

Gross rental income is $153,600, rents range from $600-700. As I said above, the NOI is approx. $116K, that includes budgeting for capex ($30/month/unit), a 3% vacancy and a 5% property management fee. Renters pay their own utilities and it's barely inside the county, so there's no city taxes.

On the advice of many other multifamily investors, I plan on initially managing this myself in order to learn the business, but eventually outsourcing it, as I want to devote my time to my main career (insurance sales) and finding more deals. Any other info you'd like?

They accepted :) 8.65% cap rate, $116K NOI, 35% cash on cash return.

I had put an offer on this property back in December. Someone came in and out bid me by 300K, but I did my numbers and I was sticking to them. The first offer fell apart & I re-approached them last month, negotiated & I was able to get it under contract below my strike price. I'm so pumped! 

If you're interested in multifamily, check out Wheelbarrow Profits by fellow forum members Jake & Gino, they acquired 600+ units in 3 years using the strategy they outline in their book.

Thank you everyone for your input. I apologize for the late reply (I am currently in Rio, Brazil, on a business trip). I am submitting an offer on the property. 

@Jeff Kehl, it's my own money + traditional financing through a local bank

I've been searching for about 6 months for a value-add multifamily property, 20+ units and around an 8% cap. However at the moment I have the opportunity to purchase an already high performing property. It's 20 units and will cashflow about $200/door/month. Occupancy is 100%, rents are already about market rate, and tenants are already paying their utilities, so I can't add value there.

In my mind, the good side is there's low maintenance, but the bad side is, I won't be able to force appreciation/cash out refinance in a few years (my original strategy). What are some other pros/cons?

@Andrew, what are some of the features of RentManager you find valuable/use on a daily basis?

 I will call them tomorrow. Thank you!

@Brent Shryock

PCA report, got it. I will verify everything my bank will require & then begin gathering quotes.