All Forum Posts by: Todd Dexheimer

Numbers look off to me unless you are self managing and doing the maintenance, lawn, etc. For a 20 unit deal you should be closer to 50% or more on expenses to Gross income. Numbers shown are vague and I don't know that market. I think if it's in a good area it may be a good deal. Could you split the properties off and sell them? If you could do that and cash is tight you may be able to sell a 4-unit or the SF. Just make sure the lender will accept that. You may also want to shop around on lenders, those are spendy terms in my areas. 4-5% max interest rate and you should be able to find 25 year am. Try negotiating with the bank. Most are hungry to do deals right now. Lastly raise the rents if they are low. You won't loose too many people if they are truly low - where else will they go?

@Steven Stokes The properties I have purchased are all out of state. I first started researching markets in 2015 after I decided to change directions and follow my dream that I have had since 2008 (prior to that I flipped 100+ houses and owned 60ish rentals - all 1-4 family besides a 15 unit and a ski resort). After a year I finally got the courage to get on a plane and view apartments and the markets that I liked. I have been buying ever since.

The deals: I purchased a 20 unit mobile home park in South Carolina from a bank with cash- this deal I flipped immediately.

I purchased a 22 unit apartment in Ohio that was off market. I bought it on a contract for deed with 10% down and have stuck $60k into it. It's stable now and makes about $35k/year

I purchased a 21 unit apartment in Ohio that was on the mls. I bought it contract for deed with 10% down again and I am sticking $55k into that one. Once stable it will make $35k/year as well

I recently purchased a 20 unit in Ohio from a receiver. This was brought to me by a broker. This deal was a cash purchase and will require about $180k in renovation. The cap rate will be around 14% when its stable. Once it is stable I will seek financing

The 13 unit is a cash deal as well and will require $150k in renovation. This is a B/B+ class area and will be at a 9.5 cap once its completed. Once it is stable I will seek financing

The other deal is 12 units in Wisconsin that required renovation to stabilize. Cap is around 12.5 now that it's stable.

The deals all got brought to me by brokers. Most of them where off market deals. There is real value in building relationships with brokers. Anything they send you take serious and analyze. If the deal doesn't work you need to politely tell them that and explain why - be confident. They will respect you and want to find you a deal that works. Also, make offers on their deals if they are marginal. Even if you make an offer knowing that it will likely not be accepted, that is better than no action. The broker will in turn understand you are serious and will want to find you a deal (I caution that you should not blow smoke - if you want to be taken serious, be professional and serious. It's fine to make a low offer if it's justifiable, don't low ball just because).

The biggest challenge in out of state investing is that you are not close by to be sure that things are going right. That is a blessing and a curse. It's nice to have a hands off approach to investing, but it's also hard to trust everyone involved when you first start out. Interviewing your team and taking referrals is a great way to get people you can trust. Once you hear the same name over and over, you know there is a good chance they are dependable. Do your homework. Vetting your management and the rest of your team is more important that vetting your tenants!

@Kadi Ferrara how I got started is a long story, but to make it short I was a teacher and started reading books on business and RE investing. I got lucky and started buying in 2008 and never looked back. In 2008 I bought my own live in and flip house, 1 flip and 3 rental houses in my first 6 months. I refi'd my rentals and used that money to buy more. Then in 2009 I started doing more flips and used that money to buy rental houses. During that time I was meeting people to invest in my deals and building a rental portfolio. Once the flips got too expensive and small rentals didn't make sense to buy, I decided to actually follow my dream and buy apartments. I researched markets for over a year and then started buying with my investor network.

@Jon Q. What size buildings are you purchasing? How are you raising money for your deals?

@Jon Q. I don't think I mentioned the small deals not kicking out enough revenue. The small deals I am buying have much higher returns even after paying a manager than the big deals do. Every deal I have purchased so far is a 10 cap + using large replacement reserves and high maintenance expenses. The larger 100+ unit building won't cash flow as well, but they are about economies of scale.

I am buying in B/C areas with management issues - so far all mom and pop type owners.

My target return varies depending on the deal, area, etc. If I have a clean deal, with little in renovation expenses, I am able to purchase at a lower ROI. If it is high risk, I will expect 35% min. My goal is to make my investors a minimum of a 15% annualized ROI.

@Manvir G. Internet searches. Going to loopnet to find markets with desirable NOI and then researching them to find out if they have potential. The key is to find out if there is economic growth and reason for the market to increase. Looking at city web pages, researching Biz journals and looking at big brokers web pages can be good.

@Jon Q. I am using a management company that focuses on under 100 unit assets. There are a lot of companies in every market that are in the 15-50 unit field, but they are often less "professional" than the companies that are focusing on 100+ units. My goal is to get to the 100+ unit deals, but right now I am finding good value add in the mid space. My desire is good NOI and value add. That is hard to find right now in the 100+ unit apartments.

You don't need to have an LLC as an investor. It's not going to provide you much protection as long as the property is owned by an LLC and it is ran properly. If you want the extra layer of protection, that is fine. You should set up a bank account for the LLC and you can then take income from the account as the owner of the LLC. Just be sure to keep some money into the account in order to pay taxes, use it for expenses - gas, entertainment, etc.

Start an LLC for the house management business or quit claim the property to that LLC. That should help and it's a good liability management tool

@Johnquel Jones Go for it. I hesitated for years. I researched for 2 years before finally holding my breath and diving in. I wish I would have started years ago. When researching, look for jobs coming in and the types of jobs, look for building permits - you want apartments being built, but not at record highs, look for market rental affordability, cap rates, distressed opportunities if you like that. Also be sure you're getting into markets that have good property managers. All of this can be found online with research. Don't go with the hot trendy markets.