All Forum Posts by: Luke Miller

@Stephen Brown were you pressed for time? Was that the main concern? 

Next time see if you can get an early access agreement. Also ensure that your "due diligence phase" doesn't begin until you receive all of the necessary paperwork/items. 

@Jon Schwartz what are you trying to accomplish with your data? Too much will fog your results. If you're looking for "good" multifamily markets i'd add the affordability index (I like places where it's still affordable to live) I would add landlord friendly states, barriers to new construction, housing starts, job diversification (by industry), and a bunch of others. All depends on what you're trying to accomplish. 

@Matthew Wright you touched on the problem without realizing it. Value-add multifamily assumes that you will be able to push the NOI somehow. Fixing old siding and other exterior renovations won't necessarily raise rents, it's just expected that you'll keep up with capital expenditures. Now, it could reduce operating expenses (which would boost NOI), but tenants expect that the roof won't leak and the siding to be in good repair. The true, deep, value-adds come from interior renovations.

@Mike A. syndication is just a fancy word for group investing. You can pool investor money together and purchase larger commercial sized buildings as a way to scale. Of course it gets much more complicated, but the foundation is simple. 

@Noah Stone i'm a bit confused. Do you want to purchase a property in every state you work or just in sacramento? Are you looking at commercial properties or sfhs? (this is the commercial mf section of BP)

In general, saving as much as you can and education yourself on as many different strategies as possible is a good idea. If you really enjoy your job and can save $50k a year investing as a limited partner in syndications might be a good route. Most deals that people are doing project a 2x multiplier over 5 to 7 years (doubling their money). That's a good way to supplement your income and begin investing right away. 

@Daniel Wolcott you need to widen your funnel and go directly to sellers. Find a unique way to get seller leads off market. You can try looking out of state for small multifamily, but in my experience it's going to take a lot more work and the results are going to be mediocre. Unless you're looking for large multifamily (over 100 units) it doesn't make much sense to look out of state. That is unless you are extremely familiar with the market you're looking in. 

@Davey Davanoski If you want to scale and become a professional I would recommend not managing yourself. 

Here's how I look for and vet PMs.

First is asking for recommendations, but i'd focus more on people actually operating the exact asset type that you're looking to purchase. Go to the broker that sold you the deal, go to other brokers (great way to network/break the ice). Get as many recommendations as you feel comfortable with.

Second, interview them all. It's an exhaustive process, but one that really needs attention. Here's my questions I ask. They are usually tweaked or added to, but it's a good start.

1. How long have you been in business?
2. Are you strictly third party or do you manage your own portfolio as well?
3. What size of properties do you manage the most?
4. What are your management fees for my size building? What is your leasing fee? How else are you compensated?
5. What is your process for handling repair requests? How do tenants make requests? How quickly do you typically respond? Who does the work? What do you charge for the work?
6. How do you collect rents? Who keeps the late fees?
7. What are your management policies, i.e. when and how do you handle lease violations and evictions?
8. How many evictions have you handled and what is the cost of a typical eviction?
9. What is the expected vacancy and delinquency rate for this area? What about turnover ratio?
10. What management software are you using?
11. How do you handle the funds? Will you get a separate bank account?
12. What areas will you not work in the city?
13. What’s your favorite area in the city to work?
14. How prevalent is RUBS? Is it an option for my property?
15. In your estimation, what is the most affordable amenity I can add? Covered parking, reserved parking, pool, dog-park, etc.
16. Can I have some references?

Third, verify this across a couple different platforms. Do that by verifying with other PMs (as you're interviewing multiple). You'll start to see some trends, it will give you a lot of credibility with the PM, and it will set the tone of your relationship with them - they'll know that you're business minded and these are the areas you'll be focusing on once your asset is in place.

Hope this helps. Let me know if you have questions. 

@Taylor Smith if you're focusing on apartments, the National Apartment Association has a cool website called weareapartments dot org and it is filled with useful data on MSAs. I generally use that in conjunction with what @Greg Dickerson said. 

@Mike A. that sounds frustrating. I think the biggest "scaling" moment for me wasn't focusing on purchasing as many units as possible, but instead focusing on the best value units. In my situation that was focusing on B and C class tenants in desirable areas. 

I think the answer to your question depends on where you want to be in real estate investing. If it were me, i'd sell the properties and roll that money into something like commercial syndication. That's a big way to scale, but you can afford the better tenant base and professional property management. 

@Juan Pablo Murillo You certainly don't have to start as an independent investor, you can jump right into syndication. I would add though that I would find it incredibly difficult to do this without a mentor or coach. If you're serious about it, it's going to cost some money, but I would say it's worth it.