All Forum Posts by: Account Closed

@Mark Hamblin

It's a valid question, especially with all of the tax increases that are coming to Chicago. It's unlikely you'll see taxes on a sub $2M escalate to $30K, but given that it's been rehabbed, it's going to generate more income and thus taxes are going to increase.

I'd disagree vehemently with a broker pro-forma of $5K a year. That's just irresponsible underwriting and completely misleading (which is subsequently going to inflate cap rates, NOI, etc.)

In there defense, it is a little more difficult to pro-forma taxes on a rehabbed building. I think you could conservatively pro-forma anywhere from 12%-15% of the NEW Scheduled Gross Income. Just my $.02.

@David Thompson thanks for sharing! I listen to Kevin's podcast on a weekly basis and look forward to hearing your thoughts on this subject.

Rock on!

- Troy

Hi @Nicholas Moffett,

I know it's been said, but I would research the top brokerage companies in your area and start reaching out to and meeting with brokers.

Simply sending them an email saying, "I'm looking for this this and this" isn't going to cut it. Have coffee or lunch with them and get to know them. 

We sell most of our deals without ever listing them on Loopnet or MLS.

@Holly Hollister I'm surprised at how little conversation there is about what types of property you are looking for...that's the real determining factor of whether or not an area like Price Hill is desirable to you or not.

If you're looking for B class property that can be readily managed by a third party, and you're happy with a 6%-7% cap rate, you may want to look elsewhere.

If you're looking for lower class property and Section 8 housing where the cash flow phenomenal then you may want to explore more.

There is plenty of opportunity, it just comes down to what you can get the property for and what type of investments you prefer.

That's my $.02.

Hi @Alexandra Preziosi,

College town rental property is an interesting niche. If you can solidfy a well-oil machine for getting units rented, and subsequently turned over in the summer time for next year, you can have a very profitable business.

College housing usually starts marketing their rentals in first weeks of the spring semester, with leases starting in the summer/fall! So it's definitely a marketing game for reaching college students. Also, turnover on a yearly basis can average 80%, so having a team each year that goes in and overhauls the rental is essential.

Bottom line, if you're a process/operations inclined individual who can create the system for a real estate portoflio of student rental housings, you make a TON of money!! They usually charge by the person, not just a flat rate, so there's a ton of money to be made.

However, like all things, it's a business, and I personally wouldn't rent any property that I was personally attached to in any way because, well, they're college students and will likely leave their mark.

Hope this helps,

- Troy

Hi @Lewis C.

Larger multifamily buildings are a far cry away from SFR, and as you might expect, the due diligence is much more involved.

For starters, all mechanicals in the building need to be evaluated intensely. Is this a boiler building where owner pays heat? When was it last replaced if so? What type of roof is currently installed and what is the condition? How much electrical service does each unit have? 60A? 100A? What is the condition of the parking area, if any? Do they currently charge for parking?

What is the unit mix? Is there room to add more bedrooms to any of the units to increase rents? What are the other buildings renting units for in the area? Is this a value add opportunity or a stabilized deal?

I'm sure the BP podcast has some great information on due diligence. Kevin Bupp also has a podcast episode dedicated solely to due diligence. 

Best of luck.

Hi @Benjamin Eccles, we do a lot of direct mailing on the brokerage side of things, but the underlying principles and tips should remain the same for the most part:

1. Invest in some sort of research tool to be able to accurate identify the proper mailing address of the OWNER, not the tenants. We use TLOxp and the county recorder of deeds sites to accurate database owner information.

2. Don't make your mailer seem too generic. Little subtle touches like a handwritten address or an actual physical stamp (as opposed to a bulk mailer label that's just printed) can increase your open/read rate and hopefully lead to more connections with owners.

3. Lastly, TRACK YOUR PROGRESS. Try sending different types of mailers to different segments of your mailing list, and track your responses. You may find that your personal letter yields a better response rate than you postcard, or whatever you're using.

There is a lot more to this art of mailing, but hopefully this is some good food for thought.

- Troy

@Daniel Wetherill My father owns quite a few SFRs on the west side of town. Most of which are operating at a 9%-12% Cap Rate with valuations between $60K-$80K. Pretty decent returns for that kind of money. Definitely some value add opps as well. 

He's made noise about selling, and regardless, would probably be willing to speak with you if you're interested in getting in to that game.

Let me know if you'd like me to make a connection.

CoStar is used extensively by us brokers to facilitate the transacting of property. It provides us with important information regarding the details of the past sale of properties (sale comps) and it does have a database of properties for research as well.

I my experience, CoStar's property database is not as complete as others. There are other tools out there (property database tools) that have a more comprehensive set of buildings for less than what CoStar charges.

In essence - for brokers, CoStar is a must. For a buyer or perspective buyer, maybe a little overkill.

That's my $.02.

@Josh Nicolson would love to learn more about the types of multifamilies (i.e. how many units, what areas of the city, price range) you're looking for. Would love to connect and talk about your goals for the trip.