All Forum Posts by: Kyle R.

Are you saying you recently bought an 80 unit apartment in Alexandria MN at that price? This would be a property in a similar condition not requiring rehab? The price per door will often vary per market.

The property required no rehab and was constructed in the 90's. The only issue that came up during inspection was two broken rafters, a couple disengaged shingles, a few holes in the vinyl siding, and cracks in the sidewalks. Total estimate to fix everything was about $5k. Property was 100% occupied at takeover and located near Charlotte, NC.

Interesting... for all we know, you may have overpaid for your property based on what the market rate is in NC. Some areas in MN price per door is between $70,000 to $75,000. That is within the state of MN. I included a map here just so maybe someone else can help count how many states exist between NC and MN :) Again, different markets have different prices and cap rates. In New York for instance, $400,000 to $500,000 per door or more is normal rate.

The property is currently performing at a 13.6 cap with rents 25% below market. Don't worry, I'm well aware of how many states exist between the two. I'm just not interested in paying 233% more per door when the rent rolls are the same. When I invest, I focus on cash flow. Paying under $15K per unit with rents averaging $400 a door is hard to beat. The per unit market price for this complex is $22K.

What kind of rent are you getting per door for $75K? By purchasing 80 units at $14.9K with an average rent of $400, I can purchase five units for $75k with a total rent of $2k. If you're paying $75k a door and bringing in more than $2k, my hat is off to you. I understand market prices vary, which is why certain markets are less financially advantageous. At the end of the day, you're buying a rent roll. This all comes down to math, right? I can't see why spending $2.8M for a productive asset in Alexandria that generates an equal return of a $1.19M productive asset in Charlotte is a better decision.

1 Vote

Originally posted by @Account Closed:

Originally posted by @Kyle R.:

Originally posted by @Pete Edmonson:

I have an opportunity to purchase a 50 unit apartment, along with 7 other SFR properties (14 doors total for those) from a retired old-school RE investor. He keeps telling me that he used to buy his properties using the 1% rule, and wants to sell them as such. His explanation of the rule is: If gross monthly rent on SFR is $1,000 ~ House should sell for $100k. If his 7- unit brings in $5,000, he wants to sell it for $500,000, and since the 50 unit apartment brings in $28k gross rent a month, he wants to sell for $2.8 million. I'm in the process of analyzing the apartment financials to make him an offer. But I don't know enough on how to analyze apartments to counter and negotiate. Like I said, he's very old school, has no debt on all his properties, and I know him well enough to know he's not out to swindle me. I can analyze SFR all day long, but very green in the apartment arena. It was a 5 year goal to move in that direction, but this opportunity presented itself 4 years and 3 months early. Any suggestions for analyzing?

I would not pay $2.8M for a $28K rent roll. I recently paid $1.19M for an 80 unit with a $30K rent roll. Feel free to PM me and I'll send you the spreadsheet I use to value larger multis.

1 Vote

Originally posted by @Pete Edmonson:

I would not pay $2.8M for a $28K rent roll. I recently paid $1.19M for an 80 unit with a $30K rent roll. Feel free to PM me and I'll send you the spreadsheet I use to value larger multis.

2 Votes

Originally posted by @Carmelo Lopez:

Fannie Mae is increasing the DTI to 50% starting July 29th. America's largest mortgage lender is making it easier to buy their first home.

In the last housing bubble, just about anyone with a pulse was approved for a mortgage. Sub-prime mortgages seem to be making a comeback! I smell opportunity!

Almost a decade after the crash, the largest lenders are loosening their standards, again, to make housing more accessible to first time buyers, how considerate of them! You'd think the 11 billion dollar hit they took last time would have taught them a lesson!

Not that big of a deal? This comes shortly after the recent credit reporting changes, by all three credit bureaus, related to bankruptcies, foreclosure's, lien's etc. The agencies will exclude the tax liens and civil debt'a if report's don't include a consumers name, address & social and or date of birth. Many lien's & judgments don't include all of the required data, in part because s/s number's are usually redacted for security reasons.

My personal opinion: Capitalism is one hell of a drug! We're currently in a bubble that's getting bigger by the day. When's it going to burst? I'm interested in reading how you feel, please share your opinion and/or comments below!

I wouldn't conflate the resurgence of subprime to a potential housing crisis. Subprime played a role in the last crisis, but it was exacerbated by asset liability mismatch programs and CDOs that contained a fair amount of dubious assets.

I'm surprised to see China hasn't been brought up. Over the last 10 years they've grown credit 1000% while GDP has trailed at 500%. Their politically determined growth targets have been met by issuing loans to individuals without regard for their ability to repay the loan or its ROI. The size of their asset liability mismatch programs is multiple what ours was going into the last crisis. As we've seen recently, some of the assets aren't performing, which means the liabilities will soon follow. The misallocation of capital that has taken place is greater than anything the world has ever seen.

You may be correct by forecasting a correction in US housing, but I think you'll be right for the wrong reasons.

1 Vote

Originally posted by @Lee G.:

Is factoring in property management into your investment spreadsheet overrated?

Cons of property management: I always care about my property more than property manager, lower ROI, and the probability you lose touch with what is going on in your properties.

I believe part of building the team is to have a great ppl you can call who will take care of tenant issues. Why have a middle man who you pay 10% of rents?? Further you have the risk of them screwing you.

I've been a landlord for over 7 years and find it easy. I am not handy, but I know how to pick up the phone and call someone to handle it. From a cost-benefit perspective, I don't think it makes sense. its really not difficult to handle tenant calls! With technology advances even in the last 10 years, being a landlord (if you utilize basic modern technology ) is even easier.

Am I completely off? With 10% of rents I'm saving, it gives me a margin for error to not have to penny pinch my plumbers and handymen.

Based on the fact that you've been a landlord for seven years and have one property, managing it yourself might make sense. However, if you ever decide to scale up, you'll realize the benefit of having a PM. I have 82 units and work 60-70 hours a week in the corporate world. This would not be possible without my PM.

From a cost/benefit perspective, I think you have it backwards. I've mentioned it before, but I believe self managing to save money is penny wise and pound foolish. I find it far easier to increase my income than it is to cut my expenses. Focus your time on strategy and sourcing new acquisitions, not day to day operations.

5 Votes

Originally posted by @Nathan Arceneaux:

You guys are great inspiration, impressive figures all around, wow! @Chris Masons , @Kyle R., @Joe Splitrock, @Jieh Larson you guys are killing it!

Chris, sounds like you would be done well before your 55-60, unless you are going for a larger amount of monthly cash flow. That commute must be a killer in and out of the city, unless this is where you get caught up on things for your day job and RE business.

Kyle, sounds like your just destroying it at 24, wow. You must have a larger multifamily in your portfolio??

Thanks, Nathan. I do, I recently sold the majority of my condos/SFH and bought an 80 unit complex.

3 Votes

As suggested by others, hiring a PM is a good place to start. I work around 60 hours a week in the corporate world and have 82 units. I don't have any issues balancing my time, however, I'm 24, single, and have no kids.

If you truly want to expand your portfolio, hire a quality PM and focus your time on acquisitions. I know many will disagree with me, but I find self managing to save money penny wise and pound foolish.

2 Votes

Originally posted by @Chris Eaker:

@Kyle R.

If the property is set up for it, sub-metering doesn't have to be very expensive. I'm glad you learned this now rather than later. I only learned it a few weeks ago. I am looking at a property in the Charlotte metro area, but it's right across the state line in South Carolina. A property manager I've been speaking to about it told me "Good thing this one's in South Carolina, because you can't do RUBS in North Carolina!" I never knew either!

Sub-metering is something I'll have to look into in the future.

On another note, I'm not sure if you're familiar with the property tax structure in SC, but non owner occupied seems to be hit with a property tax rate that's 2% higher than owner occupied. Just something to factor into your analysis if you haven't already.

0 Votes

Originally posted by @Ingrid J.:

@Kyle R. Congratulations!

I'm curious: is the property located far away from your hometown? If it's far away, how long does it take you to drive? And did you take that into consideration when you bought it?

It's about 45 minutes away from my home. I'm comfortable buying anything within 100 miles of my city.

In terms of what I took into consideration, my main focus was the per unit price, age of the property, P&L, and existing deferred maintenance (minimal found).

1 Vote

Originally posted by @Caleb Heimsoth:

Kyle R. Did you enjoy owning condos? I've thought about buying some condos myself but I'm concerned that the HOA would eat my cash flow.

In the past I did, but I don't plan on purchasing any more. The HOA does take up a bit of the cash flow.

0 Votes

All Forum Posts by: Kyle R.

Kyle R. has started 8 posts and replied 92 times.

Post: Analyzing a 50-unit apartment- "The 1% Rule" ?

Post: Analyzing a 50-unit apartment- "The 1% Rule" ?

Post: Analyzing a 50-unit apartment- "The 1% Rule" ?

Post: When's this bubble going to pop?

Post: Factoring in Property Management is Overrated

Post: How to build a RE portfolio while managing a full time job

Post: How to build a RE portfolio while managing a full time job

Post: 24 Years Old, 82 Units

Post: 24 Years Old, 82 Units

Post: 24 Years Old, 82 Units