Categories Property Management

This is How I Plan To Get From 83 Rental Units to 1,000 

I am still a long ways from my 1,000-door goal. Since I purchased a large multifamily complex, I have gained valuable experience operating an apartment building. The majority of components are required to build a multifamily enterprise.

Owners of properties with 75 to 100 units will eventually realize that economies of scale are in their favor. Profits can be maximized by leveraging operating costs. I am open to doing smaller deals as well as larger ones.

I am planning to buy right

Last week, I went out to dinner with an commercial programmer. I was struck by his statement: “You make money not the day that you sell but the day that you buy.” But to buy at the right price, you must acquire good debt with a favorable interest rate.

We’ve seen an increase in mortgage rates over the last 30 days as the 10-year Treasury has reached its highest level in three years. This implies that cap rate will be compressed, and perhaps even move up in order to match the rising cost of borrowing. It hasn’t yet happened, but I am anticipating a move in this direction.

Borrowing money from lenders has just become more expensive. If asset prices don’t rise at the same rate as interest rates, then net cash flow will be lower. I am preparing to add extra equity in order to secure favorable loan terms. A low-interest rate assumable can be a useful tool in a market where rates are rising.

It is important to have the ability to communicate with lenders, and to always be open to negotiating. It’s a great idea to reach out to lenders right now, and I am actively pursuing it. In this market, finding competitive loans can be critical to enhancing the value of deals.

I call my lenders every day to give them a simple wink and nod when a good deal comes up. If used correctly, leverage can be an extremely powerful tool. If misused, leverage can lead to financial ruin. Smart debt from a reputable loan provider can be a lifesaver if interest rates continue to rise. Now is the time to get your ducks in order.

The Right Property Management is Vital

Property management is what keeps the machine going. A bad property management can lead to nightmares. A solid property management program can be a valuable asset to grow with. After prospecting a particular area, I search for property management companies and ask brokers to recommend them.

After a few candidates have been selected, I call the property managers and pretend to be a potential tenant. This is a way to test the system and see what it involves. It’s important to see how a company manages the customer experience and shows tenants. I do as much research as possible before choosing a property management company.

Brokers can be your best source for finding deals

Brokers are an important part of the team. I believe in reaching out to your brokers regularly to let them know you are there. These are the people who will bring you listings, before the public.

My property search days are split between reaching out to agents and reminding them of my intentions. I also reiterate my criteria to ensure that the broker has a clear, concise product in mind. Money is not the issue for most multifamily players on this market. Deals are.

It is important to make offers consistently.

I have strict underwriting standards and could improve. I have a very risk-averse approach that excludes many doable deals. This ensures the success of executed deals. Deals aren’t as easy to come by in this market.

Investors need a strategy to find off-market deals, or have brokers do it for them. It is not a good strategy to hope deals will just fall into my lap. It is a good idea to reach out to brokers to remind them of your buying criteria. Every week, I try to do this more. The likelihood of a successful deal is proportional to how many deals you have analyzed. The number of offers is proportional to this.

This is a Marathon and Not a Sprint

Real estate markets can be volatile at any time. In the face of so much uncertainty, my old poker style as a grinder is returning. It is important to be patient and not make mistakes. Real estate is an attrition war, and mistakes could lead to a significant setback.

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