All Forum Posts by: Gaspare U.

I didn't think it was possible to buy a strip in a populated urban area, where the tenant is well established, Internet/recession proof, NNN, long leases, below market rates per sq' at 10 CAP.

I will say this. I have a 3 store strip in N Jersey, and when a place is vacant it’s empty for a year. So make sure you have staying power. 

It's in the center of town. Flanked by two train stations, flanked by two schools (private and public) adjacent from a Chase and a Wendy's. Parking lot, NN, 5 year leases. I jumped on it at a 6 CAP during an 1031.

You can do both, especially if you find an active investor who brings something to the table that you lack. Let's say you find someone that has experience as a contractor. That is a huge resource if you are looking at projects that need work done. 

I like to look at the T12 (the ongoing money that's going in and out for the last 12 months) but since this place is practically abandoned that's not going to help.

I would get more contractors in there. And get a price on the repairs to get this place rentable. While those estimates are getting worked on I would look at the area. 

Get a 5 year outlook on Employment, Population, Industry makeup, Age Group, various other factors. ((btw I'm reading this book: Best Ever Apartment Syndication Book and i actually just went over this chapter on my commute in to work!)) @TheoHicks nice work guys!!

@Scott Morongell is there an exact science to determine CAP or is it more of an art? I understand the function of reducing the income by expenses but why would your 20 unit warrant a 5% CAP and mine only hold a 9%?

Thanks!

@Jerry Kim

But since being a limited partner would involve a lot more time and effort than index funds, as you would have to find the syndicator, choose what city to invest in, the neighborhood, etc, how is this better than just sticking to index funds?

You wouldn't be choosing the city and area. Perhaps research what is proposed to you, yes. That's a LOT less work than finding the needle in a haystack. 

Regards to why do it?

1. it's a higher rate of return
2. there is an underlying asset
3. tax advantage
4. DIVERSIFICATION!

How comfortable would you feel at 65 with a $5mm portfolio in IBM, or the SP500 index, or a mix of 50% stocks, 25% cash and 25% bond? Me personally I wouldn't mind a good chunk of that 5mm in REAL real estate (not a REIT) earning me passive income. But that's just me.

I look there, and @Erik Hatch is most likely right. Good deals are purchased off market. But for that to happen you need a network. 

Here is one piece of advice, if there is a property for sale in an area you like, stay in contact with the agent. Call them every 3 months or so, and tell them "when the owner really wants to sell, call me"

You may get lucky and find an owner who suddenly has a change of heart.

I would get 3 or 4 MORE estimates. I paid 6k just to rip out a shower and install a vinyl slip in. $150 for a plumber to swap out a faucet or toilet. 1200 to re-varnish hardwood floors in 3 rooms. 1k-1300 to repaint 5 room apartments (3BR).  I would talk to the lawyer and see what precautions you can take to protect yourself on the contractor's estimate. Explain to him that you are buying this deal on the basis that he can convert these apartments into rentals!  

Area looks very rural, can this town support these new vacancies? Who's going to manage this property? If you fine; if not are there multiple PM in that area?

I personally would not do a vacant property as my first deal unless I was the contractor. I could research the hell out of apartment supply/demand in that area to feel confident if my vacancy rate is accurate. Rehab is my big fear, always was, always will be. 

I receive emails from them after they acquired some other company that did the same thing. I have NOT placed much research into it but from what I have read their fee structure is expensive. 

Their target audience are professionals with cash don't don't have the time or desire to become educated and are willing to pay/forgo some revenue for a experienced investment relations firm. 

Iintoo seems to be branding themselves well as someone who is knowledgeable and will only vet deals that are on point to succeed. 

Wonder what they charge developers to access their capital resources.   

I would assume the land needed to purchase is what keeps most people out of that game. But if you inherited a crap property in a high density area, a tear down and parking lot would be great.

This is a great question and will be following along. I think it has to do with BOTH condition and amenities of the building AND the area. I wouldn’t use age of property as a guideline. You have some pretty old buildings on Park Ave and categorizing them as a D would be foolish. You could also have a company who was subsidized by the government to build projects in a war zone and I wouldn’t call that an A.

Someone brought up the correlation of income. I think that may be a great starting point. Look at the area’s median income vs the building’s tenants income. If the area is in low crime, good schools and the town offers other desirable characteristics (transportation, lively downtown, proximity to beach/lake/ski) That area may be an A or B. Look at the medium salary per family and then compare those tenants. Then compare rents w/ other buildings, where would you rather live?