SUCCESS STORY: Steve O

Nice, have what is the best thin you've bought?

^lol!!!

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My Book About Creating Your Own Luck

Steve your one of the reasons I joined this forum! Excellent story!

I think I see where this is going...

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J Scott
http://www.reistartup.com

^rofl!

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My Book About Creating Your Own Luck

I did look at the sig link. The question is worth answering though. I don't recall it ever being asked.

The best purchase I made was the literature that taught me how to evaluate and purchase apartment buildings.

The best deal that I made to date was. 135 unit apartment building. Purchased for 4M, sold 2 years later for 5.5M. No money down. Borrowed money included funds for fixup and the initial negative cashflow. The hard money was costly... but worked out. I netted around 1.2M off this deal.

Thanks hatterasguy. I haven't had as much time to participate as I would like but... My days get so darned hectic sometimes. Just yesterday, I played 18 holes, came home and jumped in the pool, went to my bowling league, had to quickly bounce over to the gym for a workout, and managed a 5 mile run afterward. Still got some work done in the morning before golf.

Whew...

Schweet Jeebus... That is definitely a "big deal card" Nice haul... and the tax implications were just 15% long term cap gains on that?

- Hakrjak

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"Don't let good enough be good enough" -- Coach Bill Parcells to Tony Romo upon leaving the Dallas Cowboys.

Why pay 15% now when you can 1031 exchange?

Tough day man! lol!

I'd say let's go golfing but the high is 116 degrees today. Don't forget that you have to pitch two games today with a broken thumb.

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My blog - Live Learn Invest

SteveO's got a broken thumb? You been hitch hiking again?

Steve O,

I have a stupid question for you. I have the knowledge and concept of purchasing an apartment building but I have a serious fear factor. I know I can do it but for some reason I dont follow thru. Did you ever have fear of doing the deals or maybe doing the deals wrong. I think its fear of rejection for me even though I know it comes with the job. I guess I have to think of it as a woman because when you get rejected, move on. But seriously can you give me some advice and how do you find these deals. I drive around looking for older buildings and right down the address and I find the owners. I try to find owners with 10yrs or more ownership.

Then I start sending letters to see if the want to sell. Now should I call them instead of mailing a letter to them.

What is the real way of estimating the price. I was taught to multiply the NOI by 10 and that is your purchase price.

If you are still here in Arizona, I could be a great BIRD DOG for you. I just need some guidance and someone that won't try to rip me off all the time.


Please help if you can.

Tawn Smith

I am going to point you to a couple of other threads that address some of your concerns.


finding apartment deals

fear

Determining purchase price is much more complicated in my world. I don't tend to buy in stable markets so most of the typical rules don't apply. What I find very useful is the basic understanding of NOI as determined by my knowledge of a market. What can I get for income? What will my expenses be? These are not easy to find but are my best tools for analysis.

I also try to trace all of it back to comps and cost/unit. This makes it easier to weed out most of the deals that don't make sense.

It is not my intention to hurt feelings but, I have a pretty good grip on finding deals. This is the toughest part of my job. I am happy to look at what someone can bring me though. It is very rare that someone besides the sales agents will find something that I haven't seen.

There are a lot of dishonest people in this world. Especially in businesses where a lot of money is floating around. Everyone selling will be trying to get as much as they can. Agents will push deals on you that don't make sense because it will make them money. You need to protect yourself through education.

SteveO,

Just wanted to see I have been following your posts and what not since I joined FLTM.

My question is have you ever used loopnet do find apartment complexes?

Dan

Not really...

It is a great tool for locating the apartment agents that work a location though. There is also some use in approximating the prices for a location.

The biggest problem is that most listings on loopnet have been shopped quite a bit. I like to take most shots a purchase before it has made it to Loopnet.

There is value there in a slow market. You can follow some listings through time and make your move when the motivation gets high.

Hey Steve. So I just put my order in for "How to Buy and Sell Apartment Buildings" on Amazon. It didn't exactly get great reviews compared to other REI books but your story convinced me of it's value.

You said that you had to refinance your house and max out your credit card in order to make your first purchase. Would you recommend any other creative financing strategies for someone who has difficulty producing a large enough down payment for a commercial deal?

Also, I'm contemplating the ideas of getting into a deal similar to your fourplex next summer while I'm at college. I realize this is a very general question and could have many opinions, but what was your experience managing the tenants yourself as an REI newcomer while working your day job too?

Thank you!!

DJ

The book is a great overview of a process. The process should be refined to meet your needs and the current environment.

Any decision on risk levels needs to be backed up with a solid plan and execution. You always want to minimize your risk. Your plan should include reserves in case things don't go as planned.

The market environment should dictate whether you should buy in a given location. Reading that book should help you to make a determination.

Properties the size of a 4-plex are not usually traded with professional management in the numbers. It is also hard to find a good manager for a property like this. If you go this route, you should count on managing. It does not take a lot of time but situations can be uncomfortable for some people.