All Forum Posts by: Todd Dexheimer

I would say a 20-20% IRR sounds very aggressive in this market, which would make me be very cautious on that deal. The best think you can do is actually get to know the sponsorship group. Use this deal as something to start the conversation with them and maybe even tour the property with them after they close. I would make sure you have looked at dozens of deals and talked with 3-5 sponsors before you invest passively.

I would do an engineering inspection if you're worried about the structure. When we walk the property for DD, we bring on contractors for all the major components (Roofing, siding, parking, plumbing, electrical, HVAC, Elevator, landscaping, pest control, overall GC). I, along with my property manager and contractors walk all areas of the buildings and exteriors, skipping nothing. 

We then do a full audit on the leases, contracts, billings, etc. If a recent survey and phase 1 hasn't been ordered, we will make sure that is done as well (usually required by the lender)

Absolute determination to growing and challenging myself, which at many times is completely uncomfortable, but through consistency and persistence becomes routine. When you challenge the status quo and block out the doubters, your paradigm shifts. The more you can shift your paradigm, the more success you will have. This has allowed me to start with $20,000 to buy a single family, to now owning nearly $100mm in real estate. 

For those looking to level up, be patient, but uncomfortable. If you become comfortable, you will become stuck. That's ok, if that means buying $100mm properties, but I got stuck by being comfortable flipping $150-$300k homes and buying duplexes. Not until a mentor kicked me in the butt, did I realize that I got "fat and happy."

Cooper Young, Midtown, some of downtown, SE memphis, east Memphis, Germantown, Cordova, Bartlett and most suburbs to the east and south. Basically, you can go from downtown and head east along Union/Walnut Grove you're for the most part in the path of progress. 

Now, if you are looking for a lot of value add potential and don't mind a C-class area, then you can expand that a lot

Ask a lot of questions on the mechanical systems, leaks in plumbing and roofs, age/condition of roofs, HVAC, windows, etc. I always ask what their biggest 3 maintenance items are and dig into that. Ask about the tenant profile (market rate or govt assistance, young, old, kids, single, common employers, etc). I also want to know why tenants are and aren't moving in. How much advertising are they doing vs drive in traffic. Crime, bad debt, evictions. Insurance claims, flooding, termites. 

9 units is not too big for a first deal. Make sure that you have the correct financing options in place and get the right team in place. 

On big item that I feel people aren't considering and should be is the rent affordability. If you are investing in a market with growing rents and they are forcing tenants to spend their entire check on rent, that will be a bursting bubble eventually. We look for markets that max out at 25% rent to income. 

We also want to see renting as a more affordable alternative than buying. 

Here is my full criteria: https://www.biggerpockets.com/...

If you own the entire building then you may be able to dissolve the HOA. You could also keep it and sell off individual units. Is the sale for the entire building or is it for a portion of the building?

This all comes down do what you actually want to achieve and what you have time for. If you want to create the best returns with the least hassle, then passively investing to get 15% IRR is a solid deal, especially if you have a job or business that you enjoy and that makes you good money.

If it is the thrill of the deal and the challenge that comes with it that gets you excited, then being active is a must. Getting a 7% cap in a good market and neighborhood is not going to happen, but you can still get a 4-6 cap and complete a value add to give yourself a 30%+IRR.

Of course, you can do both and then after a few deals, decide which you prefer. 

The best thing is not the low flow fixtures, but inspections and sensors. You can place leak detection sensors on your meters to alert you if a leak is happening, saving you thousands of dollars. Also, regular maintenance inspections can do the same. We install low flow Delta toilets and fixtures and that will save you money, but one leak can loose and entire years worth of savings in less than a month.