All Forum Posts by: Lee Ripma

I'm looking to buy major value-add properties in Kansas City. Small to large multifamily. Complete rehab required and totally vacant is fine. If you've got anything please PM me. I can close with our without an agent. Looking for decent areas with market rents above 800/mo. Not interested in zips 64124-64130. Thank you! 

@Mia Trasolini

It might be possible but it's not going to be the norm if you buy a retail property from the MLS. Those who do it are doing value-add or repositioning the property in some way. Here is the thing, appreciation beats cash flow any day, just do the math. The problem with appreciation is that you can't guarantee it and it's hard to time the market to maximize it. Many on BP say that you can bet on it in the desirable coastal cities and the long term data do bear that out. Do you think that San Diego is going to be a more desirable or a less desirable place to live in 5 years? 10 years? I see demand going up in SD. It's still cheap compared to SF and LA. I don't personally invest in SD but it's an appreciation market. So if you're in an appreciation market either embrace it and invest or go to the midwest and cash flow. I just think SD is a not a cash flow market at the time when you buy unless you do something very creative (which you could do).

If you can afford a 2-4 unit in SD I would do that. You’ll learn a ton that you can apply to buying an apartment in another market.

I think I’m life you’ve got to do things that challenge you and make you grow. You can get that from career, you can get it from personal life, from side gig, etc. Maybe you’re ready to step it up somewhere but not with the promotion. You were offered that promotion. But what would you choose if you could offer yourself anything?

I agree with others that you must look into codes: your livable area in relation to lot size, units allowed on lot per zoning, parking per unit, etc. You can go to the building department or look online. There is a decent chance you can’t do this for one reason or another. Assuming you can do it: no, a contractor won’t usually do the layout and they are just looking for you to say I want x, x, x, done so they can tell you the cost. Checkout the magicplan app for your iPad. You can digitize the room and add in anything you want, windows, doors, walls. It will generate plans for your contractor and maybe enough for the building department in some areas. Since the building is commercial and valued on NOI you can easily calculate the value of doing this. If you can get 700/mo per new unit added and you have 45% expenses (so keep 55% of the income) and an 8 cap (fill in with whatever values are in your market) then your value addition for doing this is 700*2*12=16,800*.55/.08=115,500. Can you do it for 80% of that cost? Probably! Talk with your commercial lender about your updates and your value add and see if they can change your note to account for this value add (prob will require commercial apprasil). They may want you to pay upfront for this and then they will cashout and to the note. If your goal is to trade up anyway you could skip this and just sell the building after a year or two to get something larger.

6k would be a bargin! My landlord in LA has a tenant he has offered 75k to leave, guy won't do it! 

I rent in LA and invest out of state. I would never be a landlord here! 

@Josh Wallace

You're in a good position since it's already vacant. I agree with @Bettina F. that you should be very aggressive in setting that market rent. You need to start high because once someone is in you can only raise the rent 3% per year. You also need to watch out for tenants rights in LA. It can be impossible get rid of people even when they are not paying. So do a ton of due diligence on the people you rent to. 

I think the most common thing is to use Quickbooks. It’s 50/mo so I have done it yet. For my day job I use Harvest for tracking staff time, sending invoices, and having receipts and expenses hit projects. I’m interested to hear what others use!

I agree with what others said, you should partner with them. They are your silent partner, you do the deals. If I had a silent partner with 800k I would buy a turnkey (TK) apartment complex in the Midwest. I personally invest in Kansas City so that’s a market I know but I’m sure there are many others. I’m suggesting the Midwest because it sounds like they want to turn that capital into cash-flow. Hire a PM company or hire an on-site manager. You’ll get leverage and you’ll get a ton of cash flow. Since it’s turnkey the rehabs and updates will be good for a while. I am usually very anti SFH TKs but if you have a ton of capital then I think TK large apartment complexes are awesome. You really do need to leverage that money and watch out for people who are just trying to sell you financial services or homes!

What neighborhood and what’s the price?