My Apartment Quest

If you’ve been reading this space for any length of time, you know that I’m a huge fan of cash flow and cash flow properties. To the extent that I get a great deal of grief about it, and even earned the nickname “Cashflow Dennis”. (Instead of trying tp beat them I decided to join them and start two new websites – CashFlowDennis.com and CashFlowMercenary.com)

But alas, unless you’ve been living in a cave for the last year you’re familiar with the problems in the credit markets. While in reality all we are seeing is an extreme overreaction to what has already happened in the market, the credit markets with respect to single family homes have clamped down tighter than a two year old gripping a lollipop.

What that means is that everybody is playing by the book, and there are virtually no exceptions to be made. Anywhere. Which means that things like 20% down, 1 year of seasoning before refinancing, and strict limits on the number of mortgages are back with a vengeance. So while there are tons of spectacular deals and tons of renters out there, the credit markets with their 20-20 hindsight are conspiring to keep the housing market soft. What a shame. This leaves private investors as really the only funding source for rental properties after someone has hit their limits.

Now don’t get me wrong, private money is a great way to go and I’m still buying this way because there are still so many good deals out there. But it takes time to find the investors and time to do the deals.

So two months ago I decided to branch out and buy apartment buildings. How hard could it be, right? I have a bunch of single family homes, I’ve dealt with evictions and renter issues, and I’ve gotten pretty good at pulling the trigger. I’ve also gotten pretty good at not just doing the math but also accurately assessing investment properties so the math is correct.

So I figured that my processes should pretty much all be leveragable to bigger, multi-family properties.

I’ve learned quite a bit over the last couple of months. I attended an out-of-state seminar given by a nationally recognized apartment “guru” (who turned out to be a one-trick pony who’s one trick only works in his state), I have talked to several commercial real estate brokers (two of which blatantly lied to me to my face and one that’s spectacular), several commercial loan officers (one of which tried to pitch my on a 9% interest rate when everybody else was at 6%), and commercial appraisers (don’t get me started on commercial appraisers). And I have talked to apartment owners selling by owner.

I’ve learned so much already that I’m starting this series called My Apartment Quest to write about my experience, and take you through it step by step.

So check back periodically. The next installment will be titled “A Close Encounter with My First Commercial Real Estate Broker”.

 

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