All Forum Posts by: Serge S.

Joel is absolutely right. I had a complex where I was getting offers from Canadians sight unseen. My listing was never able to tell me much about the buyer even though she was representing him. We went through accepted offer to fall out 3 times and not bc of the property but bc the buyers were not being vetted I finally terminated the relationship w the broker.

@Joel Owens thx for the input. I do agree. They have the financing in place and are starting in the infrastructure within the next month but are already behind schedule. My building would go from being surrounded by farms to surrounded by hotels, restaurants and business literally within a few years if all goes according to plan.

I have a multifamily complex of 16 units that I am considering purchasing. The complex is miles from a new development beginning construction. It is located in a city of 50,000 and there is a large scale project scheduled for development:

http://phoenixmart.com/what-is-phoenixmart/

This project is estimated to create 9,000 jobs and sits on 500 acres. The city has a 9.8% unemployment rate so if even a fraction of these jobs stay local this will have a significant impact. The county has had very little residential or multifamily building in the past 4 years due to the downturn and cheap cost of foreclosure housing. I already own a good number of SFRs in the city so i am already vested.

Wondering what to expect from this size of project coming to a somewhat rural town. I'm paying more than I usually would for a complex this size and its a deal I usually would not do but I am counting on the stimulus from the new development and everything that comes with it. The numbers still should work but at a smaller return than I would normally take.

Would love to hear from others that bought or held through such a cycle.

Update on this one. I did purchase the home and am 3 months into the remodel. I did find a local contractor and its worked out well so far. I ended up changing out the floors, kitchen, bathroom and just about everything:) Nearly $30k all in about two weeks to completion. Had a local broker view the property and have comps at around $179k. I will be all in around $70k so this could be a home run. I'll post a full set of after pictures.

1. Do an MLS or loopnet search and note the biggest multifamily brokers. Call them and tell them your criteria and to call you when stuff comes up.

2. Same process but search multifamily PMs.

Offmarket will come from relationships so people need to know you and what you are looking for.

@Tom Lafferty I would advise posting the numbers to your deal to get some feedback from the BP community. There are many key factors that will help determine your answers such as age of complex, unit mix, vacancy, etc.

I own a 32 unit and have gone from using a PM, self managing and managing with onsite help. My complex is late 70s with consistent maintenance. I did not enjoy the experience of having a full time PM and I created a PM company to self manage this and all my other units. In fact I would say that I spent more time correcting mistakes, questioning bad decisions, marketing, etc. I was paying top dollar (10%) yet results were definitely lacking.

You need to understand that no matter what route you take, a 32 unit will not be very passive for the owner. An onsite maintenance guy and resident manager is a must. I now have both and manage them and have found this to be the ideal formula. Find a local person that has been in the town for some time and this will help with screening. Have a process and software in place so that they are in a position to succeed. They will look to you to set the tone and if your not confident or show indecisiveness they will not succeed on their own. Pay them appropriately so that they have the right incentives. I pay a small draw weekly in addition to a bonus structure in place to align incentives such as $100 lease up bonus, etc.

Finally a word of caution - there are some multifamily properties that simply have no chance of ever cash flowing no matter what you do to them. The typical profile of such a property is over 50 years old, owner pays for majority of utilities and low income tenants. These properties often seem like great deals and I have seen some that I literally would not take for free. These are liabilities any way you spin it and believe me, the seller will spin it. A complex of such size can certainly be rewarding but do not think it will be a passive cash cow without much effort and if your not experienced make sure you get serious second opinions on your deal. Best of luck.

thanks for the responses. Question - do the folks that steer clear of the South side consider the entire area untouchable or are certain neighborhoods good enough to consider? If so what are some of the better pockets?

better question- anyone have long term success and positive returns playing the south side shuffle??

Wow great insight. So.... To play it safe if possible you would have to buy at historical lows and hope to sell during an upswing:) the south side shuffle:) if you can buy at $15k w minimal $10k repair and rent each side at $1k those are preposterous returns but it sounds like it will all come back into eviction and turn. Anyone use a really good PM to manage this profile property on the south side??

yes it was in abandoned condition and appraised based on our market over a year ago. AZ appreciated a lot over that span prob 20% in this asset class. That being said I would be buying at a higher price than today's appraisal. This based on my ability to improve the valuation and the development of the area which has a lot going on. I've never purchased anything for more than 60% of appraisal so this isn't a habit.