All Forum Posts by: Serge S.

@Ben Leybovich  the answers to all your boredom: CLM16 (Jun '16)

@Rob K.  gave you some great advice: The definition of happiness is Lima in your rearview mirror. I would pack up and move to (anywhere else).

You need to be in Arizona or Florida. Maybe in Houston/Dallas after 6 months of sub $60 oil. Maybe RE in Kiev, Moscow or St. Petersburg. Look to where the world is seemingly falling apart and position to be in front of the recovery. The Squirty Worm and your 10 plex tenants won't miss you.

@Ben Leybovich why not? Most investors are happy w the 1% rule and they all "hear" how great Ohio is. All I heard from you though when I considered buying in Ohio is "I'm not property managing that"! Unfortunately your tried and true methods are not so viable anymore. Time to think outside the box. 

@Ben Leybovich This is a relevant topic and one we talk about a lot. My overriding investing philosophy is to take what the market gives. The key here is to be ready to educate yourself quickly to take advantage. I became a RE investor in 2009 not for bragging rights but because the numbers made sense. I don't see owning RE as a privilege. I see myself as a distressed asset buyer and not a "RE investor". I got educated and made it happen. Today, unfortunately that opportunity is not so abundant. I can think of about 100 better ways to make under a 5% yield and none of them involve tenants, insurance or toilets.

I believe that today there is more money in servicing RE assets than buying them. Why buy a home at the top of a cycle to hope to make $100 a unit? Wouldn't it be better to just be a property manager and make the same without the risk? Especially for those that already self manage. You are already a PM by default. Why wholesale a deal for a $5k spread instead of being the agent on the deal? I'd rather get the commission on most of these deals than be on the buy side.

So what is the right play today? Nobody can tell you but its probably not 100+ unit multifamily. If you want to stay in RE then flips and perhaps servicing may be viable. Another option is to convert to notes. Outside of RE, oil and gold look viable. Perhaps shorting some sovereign debt. Are you willing to reeducate yourself on new asset classes as they become viable or are you just a RE investor? Or are you like many of the RE newbies that see a P&L and glaze over and go right back to their day job? I think that's the bigger question. If your not willing to reeducate yourself then stick to what you know. Write a book about pissing off BP readers ...

I am in the same market as @Steve Olafson and playing it the same way. Selling into the froth and not buying much. Looking towards the next batch of distressed assets whatever they may be and fully satisfied if it is not RE for the next 5-10 years. Thats why its so crucial to buy enough to hit critical mass when the opportunity does arise. The key skill set here is being able to recognize the opportunity and the fact that it will not last forever.

@Account Closed Hate to jump in late to the party but ... the use of GRM to value Multifamily property (particularly larger multifamily property) is useless at best, dangerous at worst. The "secret sauce" to this investment class is understanding expenses (and buying right). That is done by knowing all details of expenses and underwriting accordingly. I disagree that this is an unknown at time of purchase. No, the sellers expenses will not be reliable but with experience a savvy buyer can figure it out. Unfortunately this is exactly where most investors fail miserably. They use GRM and the 50% rule and think where can I go wrong. Its very easy to have 70%-200% expense ratios when it is impossible to maintain occupancy or you have D class tenants. No GRM or 50% rule will account for this. This is the primary reason so many large multifamily properties fail and guys like @Ben Leybovich buy them. The difference is the new buyer understands the expenses and buys it for the according value rather than a target GRM or a broker pro-forma.

There are so many factors that determine a building's value that gross rents tell literally nothing of the real story. The story is told in the occupancy, expenses, owner and location. Each of those will equate a value but you cannot assign a value until all four are figured out. 

The 50% rule is just as general of a metric although more useful to get a quick estimate of NOI. I see literally no value in GRM other than a cursory evaluation of homogenous SFR stock in one location. Unfortunately @Ben Leybovich is correct here.

Last week I had the privilege of scoping and underwriting a 200 unit apartment complex in AZ. Unfortunately, the deal was not one that we would pursue (another interesting story I will save for Ben) but while in town I was able to take Ben to my 56 unit complex. I was planning the new construction of an office as the complex was lacking a leasing space as it was originally built as individual condos. We had been using a 2 bedroom unit as the office. 

Well, after 5 minutes of criticizing my interior finishes and telling my resident manager that she is sorely underpaid, Ben came up with the suggestion that we wall off a room in the two bedroom and add an exterior door to make that the new office. This is a $500 remedy to my problem and achieves the goal of adding an office. We are now able to offer the wasted two bedroom as a furnished one bedroom corporate rental and the complex has an official office! 

Goes to show how sharing ideas with like minded investors can pay off big time. This was a seemingly simple solution that escaped me. A big thank you to @Ben Leybovich. Looking forward to the next Arizona visit.

@Ben Leybovich  surprising answer from the creative financing guru. If you can buy with no money down and produce infinite returns why is $10k not enough to start?

I do generally agree though. RE investment is an investment. An investment by definition is putting spare cash to work. If you don't have spare cash then you are not an investor, you are trading time for a chance of minimal profit. This by definition is a job. Doesn't make sense? Just ask Ben why.

So I wake up yesterday morning to a full voicemail with messages from my tenants and the local police. My text box is equally full and I get the message below: It was just crazy, my wife woke me up at about 1:30 this morning because of all the screaming and yelling I got up the girl was outside covered in blood and they wouldn't let the cops in so they left about 30 minutes later, we were going back to bed after they left and that's when Vaugn was trying to come in thru the bedroom window saying he was gonna shoot us so I warned him that if he came threw the window I was going to shoot him to stay out, the sons bailed and the police could not find them but the girl was there , I don't understand why Vaun is freaking out but his son came and talk to Steph and I around 9:00 and told us he hadn't slept in days and was freaking out,,, the cop that took the reports told us he was being airlifted to hospital because his eye was hanging out of the socket from getting beat by his sons and that his ribs had been broken... He is dying in intensive care. Thanks Serge please call me or the Sherrif ASAP

I am just about ready to implement water, sewer and trash submettering on a 56 unit complex. We completed a retrofit so that all units have a water main that is submettered. A separate company will do the meter reads, billing and shutoff as necessary. I am estimating that the tenant cost of water, sewer, trash and the meter read/rental fee will be $50-$70 per month for each tenant. This will be great for our NOI and we have implemented this system with great success in the past. This time around, we are in a market that is highly competitive. There are 4 other complexs around town and we all compete for the same tenants. They charge a flat $30 for water sewer and trash and I do not charge anything although my rents are a bit higher as my units are 1000 sq feet to their 700 sq feet. RUBS makes sense but I'm very concerned about springing it on the 50+ tenants and seeing a mass exodus and turnover. I'm considering compensating with the installation of wifi or cable. I know the liability issues of wifi but if it can be done right then all good.

The question is cost. I wonder the cost for unit of either wifi or cable. If I can do it for $10-$20 per unit then it would be a win win. I have not been able to find much information and will be calling the major providers shortly. Wondering if anyone has done such an install and the initial and ongoing costs involved.

Brandon Turner any eta on the bug fix?

There has been on ongoing issue for a long while now when scrolling the forums. On the app it just refreshes the same posts as before. On the web it doesn't refresh at all. Only able to scroll the first 20 or so posts.