I have been researching the apartment complex market in the USA, and am finding deals that are going to be worth the effort. Does anyone have any suggestions about how I could locate people here in Australia and/or in the USA to take advantage of them? I have sent out feelers into my family group and contacts – I am looking at investing clubs and so on. Is there something else I could do?
Thanks in advance
MarthaTassieJHParticipant@tassiejhJoin Date: 2010Post Count: 41
I think you are in the "right place" but this is very much a start of a journey as yo have probably read in some other posts. (an interesting read here Miami (ad)VICE )
Suggest you put together some concepts as to the size and location of the intended "deal" that will enable others to scope the opportunity. You will then get some feedback on the basic research such as:
1/ your intended City / Suburb / Zip code demographics – "great deal" but bad crime rate / unemployment / vacancy rates with no upside on jobs. Versus overlooking Central Park REO for 50K
2/ Intended entity structure to purchase – assume LLC that can have multiple "managers" (owners that can be a mix of individuals or other entities such as another LLC or Trust etc
3/ Concept for the asset – Buy – renovate – hold ….. who will manage and ongoing asset control / rent distributions OR
Buy-renovate-sell ….. some partners may wish to hold onto the asset which can then be handled by the managers selling down their share of the LLC or the individual units/flats are able to be sold off / retained.
These comments are starting points only …..
I am sure there are a few of us interested in what you are contemplating
Thanks for your response. I went and read through the other thread you posted … bit of an interesting journey there
I have to be a bit careful what I post, because the US has very strict laws with regard to syndicates and so on buying property, and also with regard to specific offers or suggestions of returns, etc.
So, speaking just *personally* – I am looking for positive cashflow deals on apartment complexes with 100+ units in the complex, with at least 10% cash-on-cash return, in cities where net domestic migration is positive, job market is strong and diverse, city government is aggressively building the economy, fairly stable employment; and sub markets that are predominantly blue collar, low crime, good access to transport; complexes that are not too "distressed", but with scope for improvement to optimise the capital investment through building works/beautification and decreasing vacancies. In most cases it will probably be structured through an LLC; managed by professional property management company; probably around a 5 year investment, with exit strategies of hold, for cashflow, or refinance to buy out investors. My personal strategy is buy and hold for cashflow… I am not so interested in capital gains, I want a regular income. I am also very interested in the development of a sense of communities in the complexes … so it really feels like "home" for those who live there.
Those who invest from the USA will probably need to be "accredited investors" with investment amounts of $25k or something. I am not sure what the situation is with syndication in Australia.
Anyway, at this stage I am just trying to get a list of people who find this sort of thing interesting, so that I can forward the specifics of deals to those people. It is not legal to advertise these deals publically, so I am unable to get too specific in a public forum like this.
I hope that goes some way to answering your questions?balljoint10Participant@balljoint10Join Date: 2010Post Count: 1
I am looking to invest in in US property and would like to hear from you.
Hi Steve, Good to hear from you. I will send you a private message.
MarthaDick YorkMember@dick-yorkJoin Date: 2010Post Count: 8
Hi Dick – I will email you.
MarthamickjohnMember@mickjohnJoin Date: 2007Post Count: 78
Can i request more information please. i have been looking(previously) at similar markets and wondered how to get the venture off the ground.
I am interested to know the structure of any proposed LLC and the number of shares on offer, whether one person can invest in more than one share also.
If there arent answers to these questions yet, maybe those that are interested can help out with some leg work.
thanks in advance.
mickCheevesFinancialParticipant@cheevesfinancialJoin Date: 2010Post Count: 201
Apartment complexes are great to look into especially given that rental properties are very favorable right now due to the amount of homeowners that have went into foreclosure. Occupancy rates on rentals have improved dramatically. However, out of 50 complexes that are out there for sale, maybe 1 makes utmost economic sense. You need a FULL and EFFICIENT team in place. Realtor, Finance guy for future refinance, Asset Manager, Property Manager, Renovation crew.
In my opinion, the best opportunities are what are called "Value Add" assets. This involves buying a neglected / distressed asset and some could be ugly, but that is the hidden beauty in it. Buying – Stabilizing – Holding makes an enormous amount of sense in the right property. If you buy a stable asset, you are buying on the wrong side and being sold a wholesale product. If that is ok with you, then that is fine as well, but most equity is developed by adding value to a distressed/neglected asset in todays' current market conditions.
I am currently under contract for a C-Class 336 unit apartment complex in Orlando, FL. We have negotiated a deal from the bank at $8,900 per door. Market value from comparable sales is $25k to $30k. At $8,900 per door, this development needs $2.5 million in Capital Improvements. It is effectively going to make the complex nearly new. So an investment of $2.5 million into the complex will bring our total to $16,300 per door, still considerably under market value. Currently the complex is 15% occupied. That will cover most of the current operating expenses which is a positive. Rehabilitating the complex will take the $2.5 million, but if done according to plan, we will not have to lay out all of that money. We will phase out construction and use the gradual increase in occupancy to pay for most of it. So we will pay the $3 million for the asset and inject another $700k or so to get things moving. From that point forward, we are expecting rental income to pay for the remaining improvements.
The complex will take 18 months to stabilize in our projections. At 75% occupancy with the Net Operating Income that it will have, the complex will have a 9% Capitalization Rate, valued at $10 million. The area occupancy rate is 93% so we budget and project conservatively.
The acquisition process is tough if you want the best deals. In most cases, banks have no idea what is going on with the complex. You must deal with the lender, the Receivership, the Asset Manager, and the Special Servicer. It's time consuming, but worth it.
Anyway, that is a traditional acquisition that we find very lucrative for the right investor.
We are constantly working with our contacts in the Florida area for bank owned or Deed In Lieu opportunities. We do not have anything now, but if you send me a private message, I can send you a due diligence package that we provide once something comes up. They are bank direct. No middlemen. If we assist with the sale, our asset management firm simply collects a commission. We provide Receivership reports, Financials, Comparables, history, etc. In most cases, quick action is required. That is typical when dealing with the bank, otherwise we risk having them pool their non-performing notes together and selling to an investment bank. I've lost several deals because of that!!! If you would simply like any suggestions on investment in apartment complexes, I would be happy to assist in answering any.Dick YorkMember@dick-yorkJoin Date: 2010Post Count: 8
Thanks Martha. I look forward to email.
The structure of the LLCs will vary from opportunity to opportunity, and likewise the number of shares on offer, and purchasing more than one share will not be a problem. Investment per share will also vary according to opportunity. It is likely that the offer will be made to "Accredited Investors" as defined by the USA SEC.
I anticipate that in most cases the LLCs will be incorporated in either Nevada or Wyoming, and then qualify for business in whichever state the acquisition is made if it is outside the state of incorporation.
I know that these are very vague answers to your questions, and I apologise if you are wanting more detail. I am being very careful as I do not want to breach any SEC rulings about soliciting investments, and making comments that could be seen as guaranteeing or specifying returns, etc. At present I am concentrating on building a buyer list, so that when I have an opportunity, we are able to move quickly, as there are opportunities waiting, if I had the capital ready. If you want to ask more specific questions privately, please PM me and I will do what I can.
As for the type of investments and the idea of purchasing distressed properties as CheevesFinancial mentions, I am not as interested in the more distressed properties at the moment, as Cheeves seems to be. Obviously I am looking for great deals, and a certain amount of distress in a property often makes a good deal become a great one. However, I am not looking at extreme capital improvements that are necessary in order to achieve cashflow. I want cashflow from day one. If there are some non-essential improvements that can be done to improve cashflow, then great. If there are a few little essential improvements that are needed, then I will consider it. But I am not wanting (at this stage) to completely rehab a complex. I will leave those ones to Cheeves for now
Obviously, that means that the investments I am targeting may not achieve significant capital growth. Let me say it again. I am after cashflow, and at a rate better than what the bank gives me.mickjohnMember@mickjohnJoin Date: 2007Post Count: 78
Interested. Thank you for your honest answer.
I would like to hear more as it develops and, if required will assist in any way that I can.
Please add me to any list that you have or email circular.
No problems, Mick. I will add you onto my email list.
MarthaCoolButtersParticipant@coolbuttersJoin Date: 2004Post Count: 18matt5Member@matt5Join Date: 2010Post Count: 1
Hi Corey (like the "no the relation to" and Matt – I will PM and email respectively
MarthaLarry MyerMember@larry-myerJoin Date: 2010Post Count: 1
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If you would like to participate in online discussions, you are welcome to reference your business as part of your 3 line signature at the bottom of each post / reply you make,
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