All Forum Posts by: Taylor Witt

Hello BP,

A month ago I purchased my first apartment building (16 units), which now brings my total units up to 25.  During this past month my appetite to scale up and create systems for future growth has increased exponentially.  There is a lot I have learned from my past deals, my first apartment building, and with all the education and research I can get my hands on.

With that being said I know there is a tremendous amount of information and learning that comes from real world scenarios and experience that I am hoping to tap into.

I'm an eager student looking to help and learn from a willing mentor.  Any direction and thoughts are appreciated!

I've recently not been receiving rent from my tenant, we we've had conversation about him moving out but he is slow to respond and take action. Unfortunately at the time he moved in I never signed a lease as he was a good friend of my downstairs tenant who I grew up with and so it wasn't a priority at the time (this was my first mistake!). When I showed the place I notice drug paraphernalia. What are my next steps and options for this? I obviously want to get paid, but do I have any leverage? I contacted a friend who is a city police officer.

Planning on getting signed up with Buildium, anyone else interested in the referral?

Does anyone know what podcast(s) # I could listen to on tax liens?

It never hurts to put in an offer, just make sure it's an offer you would be with them agreeing with, obviously.  Also make sure to have contingencies.

With a ROI of only 3.29% I would keep looking as that is very low for an investment. Continue to look and analyze properties. Also, your interest rate seems to be very high at 6%, I would shop around and look for a lower rate.

Brent - those administrative items and book keeping were necessities for the government housing program I believe, so I factored them out. A few of the commercial multi family comps in the area sold for 500k, 300k, and 200k. And I figured the Cap Rate by using their NOI.

Russell - I've back out the depreciation of the property already. Looking into the expenses a little further you are right, they have $8,000 in administrative, bookkeeping, etc that shouldn't be in there. This would bring the NOI to 2015: $33,000 and 2014: $31,000.

I should also note that this apartment is transitioning away from a Rural Development Multi-Family housing unit where rent was capped at $450, and will now be able to rent for around $500-$550.  So there is some turnover in renters right now and some minor upgrades will be needed.

BP World -

I'm looking at a 16 unit apartment building and I need some advice on what the you see as market value and what would be a fair offer price.

The place is listed for $479,000, and the area Cap Rate is anywhere from 8-10%. I did my analysis on a purchase price of $400,000 and the place will cash flow pretty nicely at $1,500/month or so and 20% Cash on Cash. But after looking at the sellers numbers on the Schedule E taxes they showed a NOI of $25,000 for 2015 and $23,000 for 2014. Which would mean this place should be valued at $250,000 - $312,500 if I follow the equation: Property Value = NOI/Cap Rate.

I don't want to insult the seller with such a low offer, but seeing this makes me think I should offer less than $400,000. What do you see this property valued at? I'm torn on what I should offer, because even at $400,000 the place will cash flow nicely, but the sellers numbers aren't justifying the list price.

Can you help me figure out what I may be looking at incorrectly and what I could do to educated the listing agent/seller?

Neal - both of the rates come with a 5 year ARM. My 25 year is 4.5% and my 15 is 5%. Carter - you make a good point, I'm probably slightly optimistic. Amber - thank you for that, I have reached out to him.