Apartment Investing Virtual Class
22. Oct, 2008 
7 Comments
Apartment Investing Virtual Class
Here’s the replay of the Apartment Investing class that happened live Tuesday, October 21st.
Listen to the mp3
Click here to download the mp3 recording of this class.
Click HERE to download the video to watch offline. Warning: File is large!
Susan, I’ve listened to several “Gurus” including Lance Edwards, David Lindahl, Peter Conti, et al, and I think your presentation was equal to if not better than any I’ve heard – that includes presentation and content, esp. content.” Thank you — Marshall Werry
“Susan, Good conference call the other night – I was expecting fluff and a hard sell of over priced courses and instead I received good sound financial information that I can use to evaluate real estate. I am a newbie and this was very helpful.” — Frank Starosciak
Resources
Here are links to the resources and offers I mentioned on the teleclass:
Red Capital Group’s 2008 Guide to the Multifamily Markets
Red Capital Group’s Research Report Index by State
Finance It Right Commercial Financing Module
Susan,
Great information, as always! Thanks for sharing with us.
I have a question that I hope you can take a few minutes to address. In your presentation you spoke about the differences between “value plays” and “long term holds” — and that you prefer holds. One of the things that I’ve always found difficult with buying properties without some value play element is the fact that the numbers don’t work out very well unless the cap rate is really high or a larger down payment is made (which also affects cash on cash returns). For example, assume that one can buy a property with a true 8% cap rate. The NOI will not be sufficient even at that cap rate to meet DCR requirements for a loan with just a 20% down payment. Plus, even if it did get funded, the cashflow is going to be poor. For example, a $1MM property at 8% cap will have $80k NOI. For an 80%, 6.5% 240mo loan, the annual PI will be $72k. That won’t meet DCR reqirements…and would only cashflow $8k per year anyway (4% cash on cash ROI).
Can you please take a few minutes to elaborate on this? How are you actually doing these deals without some sort of value play? Putting more down than 20%? And how are you able to retain your investor interest with such a low cash on cash ROI?
Susan, you’re the greatest! Thanks for all you do.
The key is to get properties below market value and I always use 30 year amortization financing. Obviously if you are paying full price, it’s tough to get the rate of return we want. But I don’t pay full price and neither should you.
…which results an a higher cap rate for the acquisition.
But you did note a third option that I failed to include…a longer amortization period. Incidentally, using the example I noted above, but with a 30 year amortization instead of 20 does work out…well within 1.2 DCR and cashflows at about 9.7% cash on cash ROI.
Thanks for your help, Susan!
How do you get started and do you have a course or telclass to get started with no money.
Romao – watch the Mastering the Master Lease Option class. That’s the best way to get involved in commercial with no $$.
Do you have a Apaertment Building Investing Course.
Hi Romao, I have one in the works. It’ll be released after the first of the year.