All Forum Posts by: Mark Mosch

I've had a 4-plex there for over a year now (I'm based in LA) managed by Jon Burroughs at Century 21. They have their own office that manages a bunch of SFR's and smaller multi-family properties - I'm very pleased with them to date. I own about 375 units overall now in 4 states, and even though this is a smaller place, they are very automated on their systems and manage things very effectively for me. here's the contact info:

Jon Burroughs

Broker/Property Manager

CENTURY 21 Burroughs

10900 Perrin Beitel

San Antonio, TX 78217

I pay 4% for some larger properties (over 50 units) and 8% for smaller ones at 24 units and under.  I think you should work with the property management company and get them to look at the property and give you a budget.  On my larger properties I walk them with the property manager and work with them to figure out what staffing would be required to do this.  It might be that they can reduce your payroll expense by having a shared manager who comes from other nearby properties part-time.  Or they might say they need someone there and will give a budget to you for what they think they need.  Either way, it's critical to evaluate it together so you have something concrete to work with.  

There's also legal implications based on your location.  For instance in the People's State of California, you have to have a live-in manager for any complex over 16 units - so you have no choice about it in those instances...

Last thing to beware of: the leasing fees on top of the property management fees.  I have one smaller 4-plex that is away from all my other buildings and I have property management firm there overseeing it for me.  Their policy was to charge $500 (Average rent there is like $675) for each new lease they get signed.    That totally sucks.  National retention rates are like only 50% or so, so that means half of the units turn over every year and the manager gets to charge me that new lease fee.  That makes the property management rate go from 8% to closer to 11% when you calculate those fees in.  With your size property, you shouldn't need to do that - but check the agreement and make sure!

Good luck...

Why don't you post your numbers and we can see where your math might be off.  I've got a bunch of 4-plexes and all are out of state with turnkey property management - I don't do a thing.  It costs me between 7% and 10%.  I make between 9% and 15% Cash on Cash on these properties - which are in smaller metros in Montana and Texas.  With a cap rate of 8%, you should be able to come out better.  Do you have huge numbers in there for reserves or something?

Hey Michelle - good to see you moving forward right away!  So those are the two metros you chose off the list - pretty good choices.  If i get anything going up there with my Property Manager I'm using now I'll let you know.  If we have a couple buildings up there then it would be efficient for him to add another even if it's smaller.  I'm looking for something in the 50-100 unit space - trying to find something in the next 60-90 days.

This is the increase in the average for a given sized apartment.   So the new average would include any new product coming on line.  Still - that's just a starting point, because there are a number of other parameters since all the units aren't equal.  Maybe the new A class stuff got good rent increases, but older buildings with similar sized units don't.  Also - maybe new units are bigger in sq ft vs smaller older units - so you also want to check that out.

Still, the rent increase is a decent overall barometer, but you need to make sure to dive down to the next level when you start actually looking at a purchase in a specific sub-market.

Pretty basic math.

"Building Value" - "Mortgage" = Equity.  Your 24% would be of the equity, not the value.  And, where does the value come from?  Was it recently appraised?  Did a broker give you comps?  You need to have a proper support for what you feel the value is.  Also realize that technically the Value would be the value after sales costs - which would probably be 5-7% for things like Sales Commission to a broker selling it etc...  As Jay mentioned, you have to see if your partners are even liquid enough to buy you out.  Real Estate is not a liquid investment, so you might have to take a discount from what your 24% would be worth in a perfect world.  If the building is cashflowing nicely, then they might just take you out at face value, but if things are sucking and it's losing money, why would they want to buy you out at all?  

Good luck!

Hi Jose,

Try Jon Burroughs - from Century 21.  He helped acquire and now manages a 4-plex for me down there.  Good guy and professional.  His info is:

Jon Burroughs

Broker/Property Manager

CENTURY 21 Burroughs

10900 Perrin Beitel

San Antonio, TX 78217

Office: (210) 654-8080 ext. 8003

Fax: (210) 654-9420

Hi Josh,

Used Bank of The Rockies for the refinance - Doug Boutillier.  They were very helpful and cooperative.  A little higher on the rates, but got my cash out and am using it productively.

Guys - just wanted to give a shout out to the BP community and recommend that people use these forums to help with lining up good lenders.  I had several properties for a number of years in a smaller metro area (Montana).  I felt they were up in value but my existing lender refused to do cash out refi's.  The bigger banks didn't like the smaller metro areas - under 150 people per square mile.  So I put it out on BP - asking if anyone had good lender contacts in this area.  Amazingly, i got several replies - a couple from mortgage brokers who had useful programs I can use now on bigger projects, and two recommendations of local banks not in the same town, but in the same region who were familiar with my area.  Lo and behold i reached out to them and one was really receptive.   They put my first building's deal to bed in 60 days, then we did another one 60 days later, and just finished up a third last month.  Overall, it allowed me to take out $375,000 to use to pay some bills and go out and get a couple more properties.  Once that starting happening, too, its amazing how the bank that wasn't as cooperative became much more so!

So just wanted to post this here - so people using this site realize that there's so many people in so many geographies that you can get really specific and useful help that meaningfully can impact your business - if you just put it out there on the forums!

Hi Adriel,

There are a lot of sub-markets in San Antonio - so your cap rate will depend on where it is, type of building (A,B,C...etc...), and even things like age of building.  Here's a link to a new report issued by Marcus and Millichamp on the San Antonio market today - they have great free research on the major metro areas.  This might help guide you as to what's going on and where.  It also gives you some overall average data for the area - which seems to be what you are asking about.  http://www.marcusmillichap.com/research/researchre...

Good luck!