Multifamily.AM.Guy

@AndrewKeel5 $350 or $600?!

The average U.S. apartment rents for $1,713/month. Average MHP lot rent: ~$600/month. Residents own their home. They lease the land. For 22M Americans, that gap is the difference between housing stability and chronic rent burden.

@leo_szac Why are you including capex with your operating expenses? I’d show it below the line and underwrite it below the line.

@MultifamAMGUY I UW on 55%, these are old buildings. But reality shows between 52/60%

Ohio Deal File #5 — Update on the South Toledo 14-unit. We looked at this one in March (the $580k ask with $75k gap). Agreed price: $498,000 Rents: avg $620/unit (market: $780) Occupancy: 12/14 CapEx budget: $65,000 Projected stabilized NOI: $72,000 Return on cost: 10.6% Six weeks from first offer to signed PSA. Seller was patient once he understood we were serious. The gap closed because we showed up on every call, hit every deadline, and didn't retrade after inspection. That reputation travels.

@leo_szac At market $900, that looks like a screaming deal to me. Is that post renovation or just normal turn cost?

Ohio Deal File #4 — Under contract now. 20-unit in Parma (Cleveland west side). 33 days on market. Ask: $920,000 Rents: avg $755/unit (market: $900) Occupancy: 19/20 NOI T12: $74,000 Roof replaced 2022 (verified). HVAC: mix of ages, budgeted 5 replacements over 3 years. Underwrote at $850k. Negotiated to $865k — seller wanted slightly above my open because of a competing interest. Under contract. Inspection scheduled. This is where most deals actually die. More soon.

@DallasAptGP Bravo! That is fantastic!

We've done a bunch of gut renovations on small 1960's apartment buildings We've now put skylights into the roofs on two of them

@TheKelseyMcR I have never heard of this. What a great idea! I’m surprised people opt in. Do you have a specific lockbox product you use the most?

One of my favorite amenities we offer during lease signing is installation of a back-up lockbox. We charge $55 compared to $250 for a locksmith. We get a nice profit margin from the tenants who purchase it and man oh man has it cut down on the fits people throw when we don't rescue them during a lockout. That's the real motivator for offering this option up front. It works beautifully.

@leo_szac You must be incredibly gifted with people! I am very impressed that you can get 10-40 unit owners to do the work to provide you estoppels for each tenant, actual bank deposits and 24 months utility bills. Do you provide this request with LOI or with the PSA?

My due diligence checklist before closing on an Ohio 10–40 unit: DOCUMENTS: — 24 months T12 (not just trailing 12) — Actual bank deposits matched against rent roll — All leases + estoppel certificates — 24 months utility bills — Tax bills (last 3 years) — Any pending litigation or code violations PHYSICAL: — Walk every unit — Independent inspector (my choice, not the seller's referral) — Separate specialist for roof, HVAC, plumbing if building is pre-1980 The list isn't short. That's the point.

For some context, we bought this property for $21 million and it was recently appraised for $38.25 million. $55k is a drop in the bucket. Building something like this to delight residents, improve the leasing path, add a small amenity, and build a stronger community is hard to quantify in dollars. But it's just another thing that sets you apart from other operators. And at a time where competition for residents is fierce, every little variable that goes your way is valuable.

Decided to build a little grilling area and pergola at our 180-unit property so the folks on this side of the property could have a grill + chill zone. It's the little things that create a community. Small expense, but residents get out there and grill all the time.

@robbiehendricks Looks great BTW. Really like the oversized concrete pad to what I normally see.

@robbiehendricks AI said $175 /mo in gas cost (high end) At 6 cap that’s $35k in value impact due to operating expense. Plus $20k to build. Total $55k for Marketing photos, added amenity, community enhancement, resident satisfaction and appreciation. How do you think about the ROI on this?

@robbiehendricks Amazing! Congrats. Do you think your purchase price was at the then current market or how much below market price do you think you purchased at?

Couple notes: • Are these deals easy to find? Of course not. But they exist. You only need one of them to get moving. • Regarding debt, we were comfortable levering up on this deal. 88% LTC. Smaller loans and deal sizes worry us measurably less, and transparently, we knew what we had with 100% confidence. You could have brought more capital and taken on less debt, of course. • Why not refi and hold? This sale was during the hot times of 2022. Folks were paying 6.5-caps for this stuff. We took the win and moved on to something bigger. That said, even if the deal sold at our underwritten 8-cap exit, it still would have been a great deal.

Young RE Investors: Yes, your entire life can change with one little deal. Here's the story of a 31-unit deal we bought in 2019. We invested $300k to buy this little property for $1.2 million, including about $150k into fixing it up. All-in for $1.35 million. It was in nice shape and only needed light renovations, but it was poorly managed (rather, very little management or maintenance support at all). Renovated it. Got the landscaping and curb appeal dialed in. New signage. Actually answered the phone. Moved rents to market (which are sub-25% household income in this market). Refinanced and pulled out all of our capital after 12 months. Sold it for $2.8 million after a 2.5 year hold, a profit of $1.45 million in 2.5 years (excl. cash flow, selling costs, etc.) Just like that. That win could be the foundation on which you build a real estate empire. Or some other empire. Whatever...it's a good start. Now, for newer real estate investors...what if you don't have the $300k needed? You probably don't. So how to get it? Could you borrow it? What if you borrowed that $300,000 at 12% fixed for 2.5 years? You'll pay $90,000 in interest...and make over $1.3 million on that one little deal. Honesty check: Yes, that's risk - not suggesting this is for everyone. If you don't know what you're doing or get cute, you could be behind the 8-ball. But it's a real example of what can be done without "going big" and buying institutional deals. You really wouldn't even need to syndicate this little one unless you didn't want the risk of hard money or other debt. And bonus: Most of the big guys aren't pounding the pavement for these smaller properties. But you can. Notes in the next post.

@leo_szac Yeah, well many of peoples rules are formed by getting burned. Pretty great when we have the fortune to learn from someone else getting burned, and add the lesson to our rules list.

@MultifamAMGUY I learned from my mistakes... I bought a mixed-use property without seeing it in person. I'm still crying for not following my own "rules"

Non-negotiable before I close on any deal: I walk every single unit. Not a sample. Not the ones the seller picks. Every unit. Three things happen when you do this: 1. You find what the inspection missed 2. You understand your actual tenant base 3. You almost always find something that changes your offer I've never walked every unit and regretted it. I've heard from people who skipped it. They all regret it.

Have an 18-unit in Toledo under contract right now. Agreed price: $680,000 Rents: avg $635/unit (market: $820) Occupancy: 14/18 CapEx budget: $85,000 Projected stabilized NOI: $96,000 In due diligence now. Three vacants we're walking this week. Thesis: below-market rents, undermanaged, real bones. This is the deal profile I look for every time.

@ThinkAppraiser So you and your guests have to slide under the countertop to enter? Creative.

Grok said this is a bulletproof floor plan Can you find a single error?

@GenZMultifamily @thmoneycircle What?! No, if someone renews you definitely should keep the existing set in there. You still haven’t explained your “savings”. What would it cost you to purchase, not rent. Purchase the exact set that you are renting from the appliance company?

Yes that’s correct. So my cost is is $525 and I charge the tenat $50 per month/ $600 annually. That is something I still need to workout with the appliance company. I’m not going to lie, I didn’t think about the best way to go about it if someone renews. Realistically, if they want it for a second year I will likely just get a few one from the appliance people for another year with a new warranty.

I'm here to share my experience, but also to learn from people ahead of me. I’ve learned an insane amount these past few months. And have already implements a decent amount of it. So here’s 5 things I’ve learned from 5 people much more experience than me: @thmoneycircle – Renting Washer/Dryers Already have this set up with the local appliance company. Still gives them the option, and saves me at least $1,200/year. @robbiehendricks – Cleaning kits at move in. Already set up for my next vacancy as well as 3 furnace filters. Also instructions on the water heater showing what to do in certain scenarios (Shut off water etc). @WarhorseDiv – Remote Showings App Haven’t had an issue with how I do it currently. But have it all set up just in case. @donniccolo - Better software and LLC Structure Moving towards Buildium after my next purchase. Also recommended for a holding LLC which will be my “property management”. Turn my 32 bank accounts to just 2. @ThinkAppraiser -Texting realtors instead of calling No idea how I never thought of this. But I didn't. But my response rate went from maybe 10% to 85%. I have learned way more than this. Just wanted to highlight a few I am thankful for and have already benefited from.🫡

@GenZMultifamily @thmoneycircle Just talking about cost not net. You said $775 installed, then you sell back for $250. $525. Is that for 12 months or if it goes 2 years they still give you $250 for the used set?

@MultifamAMGUY @thmoneycircle Negative, I profit around $100 or more depending on the set and they all have 1 year warranty. More importantly, no maintenance cost.

@GenZMultifamily @thmoneycircle You are paying $500 a year to a rent a set from a company?

@thmoneycircle @MultifamAMGUY I don't see how there is a down side? My tenant wants one. I buy it from my person for $775 delivered and installed. Over 12 months I collect at least $600 then they buy it back off me for $250.

@Stealx Landlord poetry might be your calling. It is admittedly a very very niche audience, and won’t ever be a best seller. But pretty that you would be one of one.

Roses are red, Violets are blue, You haven’t paid rent since October, But got a Hellcat, congrats to you.