All Forum Posts by: Mike Dymski

Nice work and congratulations.  How did you fund the rehab and how do you plan to get the rehab and value add proceeds out of the property, if applicable.

I have a small complex, have an offsite PM and pay an 8% flat fee.  48 units in my market would not justify an onsite manager and would either be (1) a sign of high turnover or (2) an opportunity for cost savings.  Markets and properties are different though.

IMO, the primary challenges with smaller complexes are (1) finding and maintaining contractors and (2) working with 3rd party PM that may not have the same diligence as you.

I use wood-look rolled vinyl on rentals and it's hard to tell that it's not real wood.  LVT would be even better if it fits your budget.

Purchase value adds each step of the way, rehab, trade up to larger property, rehab, trade up and continue.  If your goal is to own an apartment complex free and clear, you can create equity faster though adding value.

IMO, REI is too much work to only earn the cap rate but owning properties free and clear is very attractive as well.

IMO, leverage and capacity are the best benefits of REI.

The remaining $800k would need to be invested (and leveraged) as well for proper comparison.

The best cap on borrowing in the commercial world is the requirement to have net worth greater than the next loan, which would not be limiting here, and nine months or so liquidity.  Once you reach those caps, invest the remaining funds with sponsors and you have a fully loaded set of numbers to compare to alternative investments.

@Ryland Taniguchi Are you concerned about the due on sale clause in the loan or piercing of the corporate veil with the loan in personal names? I have concerns with due on sale in a potential rising rate environment. I am all for getting creative, especially when getting started. Some of these items are just the cost of REI, especially with partnerships.

Same situation...work a ton. I found a real estate agent, who was also an investor, to find properties. Never took this route, but you may be able to find wholesalers to find you properties as well. They will take some profit out of the deal but that's the cost of part time REI.

@Eugene Kemp ah i see, that's too bad

Hey Brett, I just switched to USAA and cut my insurance cost on rental properties by 50%.  Not sure who you are with.

USAA also allows you to use a lower dwelling coverage than their cost estimator, which I have never seen before.  It's a replacement value policy with a cash value feature.

Another more basic option is to increase the deductible.  You can do the math on the premium savings versus the payback period should you happen to have a claim.

appreciation is part of the equation