All Forum Posts by: Shannon Sadik

@James Wise

 I use https://cozy.co/  The only drawback is that they pull the rent from the tenant's bank account on the 1st (no earlier) and it takes a few business days to actually get into my bank account so you have to float the mortgage a few days. However, I have complained about this to Customer Service (why on earth they designed it this way I don't know) and they said they have several new updates planned to roll out this summer. It's brand new, so I'm hopeful about what's to come. I mean, it's free! :) 

I agree with @Kelly N.  I'll give you my internal thoughts about a PM. My husband and I manage all of our own properties while both working full-time jobs and I don't really see much for a property manager to do at this point. We don't have that many units, but thus far have intentionally bought rentals in areas that are desirable and have fixed up all of our units so they themselves are desirable; therefore they rent easily. I can post on Craigslist and have any unit rented within 1-2 group showings. Because our units are fixed up and we have good tenants who take care of their apartments, we don't get a lot of maintenance calls. When we do, my husband is very handy, so he will go over and can usually fix most anything on a weeknight or weekend. I also encourage all of my tenants to pay rent through a free software that automatically debits it from their bank account to ours so we don't have to worry about  that either. All in all, there's just not enough work to justify 10% for a PM. 

As we continue to grow, this may not be a reality anymore, but the type of rentals and tenants will stay the same.  Because of this, if one day we decide to be more hands off and decide to hire a PM, I can tell you that it would be very attractive to me if they came to me with a lower rate due to the types of properties I have since I know it's less work than another investor's properties might be, and a flat rate at that, to take care of everything. Just like tenants like to pay a little more for an apt that includes heat, I also don't want to worry about every little call that may result in a fee. A flat fee would be an easy thing to budget for and an easier thing for me to swallow. 

It seems to me the biggest factors prompting a desire for property management are: those that aren't handy, number of units, age (I imagine I will have a PM when I'm older and tired and can't crawl through the attic anymore :), out of state investors, and those who own properties in less nice areas.  

Hope that helps! 

Thanks everyone! That helps clarify things a bit for me! 

@Brian Burke, thank you for answering my question! It took me a few reads to wrap my mind around your post! I can't say I am familiar with IRR's so need to research that a bit more.

My market, Rochester, NY, has a very minimal and slow appreciation growth, so given what you are saying, does that mean I should buy at a higher cap rate? I know to look for an apartment that has room for growth to raise rents, lower expenses, etc to force the value, but I haven't yet seen one for sale (and my realtor said those are very hard to come by on the open market since most are sold to people an investor already knows), nor am I sure that I want to take on a large scale reno project, so am considering some smaller 6 units where the apartments are livable now, but could be renovated over time as tenants move out and I have the time/money and could then raise the rents over the life of the investment. 

I only question this deal because it has been listed every year for the last 3 years so it must be overpriced. Currently, the property is at a 7.5% cap rate. If I can get the price a little less and raise the rents, it would be around 10% cap, but then the cash on cash isn't great. I guess that's what you mean when you say "find the combination that works best for you"?

Exactly. My dilemma is that I can afford to put down 20-25% on an apt now but if I keep buying up other kinds of properties then that cash will dwindle and then I will have to find private money. I figure now would be the easiest time to make that jump into apartments if I'm going to do it. Not that it can't be done later, but now would be easier.  So... to my original question: what is a good cap rate to aim for? Should I aim for at least 10% since I can definitely get that elsewhere? If I can't find a good deal on an apt, should I hold off on other purchases until I do? 

I'm curious what other investors recommend if they could do it all over again knowing what they know now? @Brie Schmidt are you satisfied with just smaller multis? 

@Austin Youmans - I can certainly understand the benefit of time to acquisition and factoring in a property manager.  

However, I have found that commercial loans are actually easier to obtain than regular residential loans. From the discussions I've had with lenders around town, residential (1-4 units) requires a job, W2 statements, rental history of 1-2 yrs, less than 10 loans, and a slew of other things. Commercial lenders just care about whether you have the 25% down, or have worked out some other arrangement, and if the property performs. 

Perhaps it is best to tap out all resources on residential while I can and then move to commercial when residential loans aren't available to me anymore? I'm just trying to strategize my next move and how best to utilize the funds I have...

I am fairly new to investing, but want to grow aggressively and have been considering taking cash I have and investing in an apartment building (currently looking at 6-10 units). 

I've done a lot of digging on the site and listen to the podcasts. I keep seeing/hearing the number "10% cap rates" come up, but I've yet to find a definitive answer on what is considered "good" when it comes to apartment buildings and what I should aim for when buying. 

I have a few duplexes and single families and get great cash flow on them (which is what I personally want and care about) and they are all at 10-15% cap rates in A to B- neighborhoods (just selling on the regular ol' MLS) and don't really require a lot of upkeep, maintenance, etc and rent easily. I am familiar with the pros and cons of buying a small MF vs SF and large apartments, but even still, why would I pay a huge amount of money down to get a smaller cap rate of 10% when I can find much better cap rates elsewhere?

I ask because it seems to me that the average trajectory of an investor is to start off with smaller properties and eventually buy bigger ones, but these numbers don't really seem like growth to me. Again, I'm newer to investing, but is the economy of scale and ease of one building really worth it? In my case and market (Rochester, NY), should I be aiming for higher cap rate buildings? 

Let me know your thoughts. 

Are you wanting to learn how to wholesale in general or how to start pitching the houses you have found to buyers? Because I'm interested if you have some houses! :)

Brett, 

As a newer investor, I understand where you are coming from. I went through quite a few real estate agents in the beginning because they just didn't get it. It is a totally different ballgame to buy investment properties (based on dollars) vs a home (based more on emotion and what the bank will lend you). There are many great realtors out there who can help you buy a home (and even some not so great at that), but most are not great at investment buying. 

You have to find a realtor who is willing to learn and work with you, or else find a realtor who has lots of investments themselves. EVEN THEN, run all the numbers yourself. Don't trust the realtor, but figure out for yourself if the numbers will work. And don't trust Zillow with rents. Go on Craigslist or use rentometer.com to see exactly what you can get. I personally buy properties that cash flow NOW with as little down as I can get away with. I do not trust or wait for anything else (appreciation, etc), and it sounds like you do not want to either.  

Don't be afraid to try a new realtor and see what they have to offer. Once you are more experienced and confident, then you will be amazed at how quickly you can tell which realtors know their stuff and which don't. But also, don't be afraid to work by yourself if you want a deal and your realtor isn't available or returning your calls when a hot property comes up (which has also happened to me). Here in NY, I have plenty of very successful investor friends who don't use realtors at all. They either work with the seller's agent (giving them the commission, which can often times work in your favor) or the home owner directly. You can find everything you need MLS-wise on homesteadnet.com.

Good luck!

I'm excited as I can make this one! See you all there!