+ All Categories
Home > Documents > APARTMENT HOUSE RAGS TO RICHES

APARTMENT HOUSE RAGS TO RICHES

Date post: 14-Apr-2018
Category:
Upload: blvsr
View: 222 times
Download: 0 times
Share this document with a friend

of 22

Transcript
  • 7/27/2019 APARTMENT HOUSE RAGS TO RICHES

    1/22

    Rehabbing apartment buildings and reshaping their marketplace image cancreate huge investment returns fast. Heres how you avoid the pitfallsand grab the greatest profits.

    APARTMENT HOUSE RAGS TO RICHESHow to turn a troubled or tired property into a tremendous asset

    Ugly duckling becomes swan Cinderella story no matter what you call it, when realestate investors transform an apartment building thats an eye soar into eye candy, theycreate much more than a pretty picture. The impact on the bottom line can be equallybeautiful.

    Rehabbing a tired building and repositioning its image in the marketplace is a provenway for investors to create a windfall. It takes market analysis, negotiation skill,management savvy, construction know-how, and even a little undercover detectivework. But the financial rewards can be huge.

    Dear Real Estate Investor:

    Theres just one reason for any investor to refurbish and reposition an apartmentbuilding: to CREATE ADDED VALUE FAST. Rehab is a classic way to capture rapidprice appreciation.

    If you buy an apartment building that has been rehabbed, you do it primarily for thecash flow. You want its sea of rental checks filling your mailbox every month providingyou with steady income. The checks keep coming rain or shine, good economy or bad.Its a wonderful thing.

    But when you buy an older building and rehab it, your aim is to build rapid priceappreciation. Youre taking a dusty diamond and giving it a precision polish thatenhances its value significantly. Your gains can be fast and fantastic.

    The rehabbing does not need to be extensive to earn big returns. Upgrading a C-building into a C+ building can add $1 million or more to a propertys value. This ismoney that goes straight into your pocket when you sell and even before you sell ifyou choose to refinance.

    The Fast Lane to Big Profits

    For investors seeking sudden wealth, rehab can be their road to riches. Rehab canbe like squeezing 9 years of property appreciation into 9 months.

  • 7/27/2019 APARTMENT HOUSE RAGS TO RICHES

    2/22

    2

    This is particularly appealing to investors who dont want to wait for long-term gainsthat put them at the mercy of the economy and other uncontrollable outside forces.

    They want to make and take their profits NOW.

    You can even get back all your invested money before you sell the revitalizedbuilding... This can happen when you refinance the property based on its significantlyhigher value after it has been rehabbed and occupancy has been increased.

    You can then take your windfall and buy another building. Its how you become amillionaire within months. How millionaires become multi-multi millionaires.

    Cinderella Real Estate

    So how do you go about finding an apartment building that can be reshaped into a

    marketable asset particularly if youve never done this before? There can be a lot ofexpected curves on the rehab road to profits.

    Dont go it alone. If you hope to learn on the fly, youll likely crash. Rehabbing andremarketing apartment buildings is an involved and often complicated process.

    Not everyone is on your side. The seller, current property manager, contractorsand tenants have only one person in mind... themselves.

    You may be helping a seller exit a property he no longer wants... you may begiving contractors much needed work in slow economy... you are improving theproperty managers working conditions... and you are giving tenants a better place tolive. But they wont always see it that way. They wont always be truthful andcooperative.

    If you want straight talk, ask investors who have rehab experience. Take theirexperience and make it your own.

    So how do you get the insight of experienced investors?

    Turns out thats easy...

  • 7/27/2019 APARTMENT HOUSE RAGS TO RICHES

    3/22

    3

    Apartment House Rehab and

    Reposition Boot Camp

    Serious Moneymaking Process

    From duplexes to major apartment communities, I have rehabbed more than 700buildings in the last 15 years investing as little as $2,000 for a quick fix and as muchas $2 million for a major overhaul.

    I am currently rehabbing a 400 unit, 256 unit, 192 unit and a 144 unit complex.Thats just shy of 1,000 units total.

    I recently completed the rehab process on (but not yet sold) a 196 unit, 71 unit,

    200 unit, 344 unit and two 147 unit properties... Im holding these properties for theenormous cash flow they provide.

    I created the Apartment House Rehab and Reposition Boot Camp to give you myhard-won secrets for transforming tired properties into profitable assets.

    In 3 enriching days Ill mold you into an apartment turnaround guru. Youll get theknowledge to do this the right way. Youll be able troubleshoot the pitfalls and pinpointwhere the profits are. Plus youll gain the confidence to know you can do this.

    Youll get the wealth of information from my years of experience. From the crawl

    space to the roof, Ive covered every inch of apartment buildings.

    The key to successful rehabbing is NO SURPRISES. Ill make sure youre aware ofevery corner where a surprise could be lurking.

    Even if you have rehabbed houses, doing it on a major scale with an apartmentbuilding is different.

    For one thing, you dont usually rehab a house with someone still living in it. Butwith apartment buildings come tenants and a whole slew of new challenges.

    Knowing what the new challenges will be BEFORE you take on the project is howyou avoid surprises.

    Troubled Property to Avoid Like the PlagueOr Biggest Hidden Profit Opportunity Ever?

    Never Guess.

  • 7/27/2019 APARTMENT HOUSE RAGS TO RICHES

    4/22

    4

    Ill take you inside my approach to rehabbing buildings. It will be like doing a mindmeld.

    Youll see how I...

    Find and analyze potential rehab buildings

    Negotiate the sale and orchestrate the rehab process

    Remake the propertys image in the marketplace

    Plan the exit strategy that gives me the most profits in hand

    Would you like to know the secret to doing all this? Its really very simple...

    Every undertaking, no matter how enormous, is a series of steps. Break theprocess down into steps and the job gets done efficiently whether youre retooling an18-story aircraft carrier or rehabbing an 18-unit apartment building.

    At my Apartment House Rehab and Repositioning Boot Camp well break downeach stage of the rehab and remarketing process into its core steps. Youll get acomplete plan of action, step by step.

    Lets take a look at some of the key steps and the moneymaking secrets that makethem proven wealth-builders.

    14 Insider Secrets to Making a FortuneRehabbing and Repositioning Apartment Buildings

    Secret #1Identify the key forces that erode a propertys value,

    causing it to depreciate.

    Knowing why a potential rehab property has declined is vital to determiningwhether youll take on that property.

    Not every property can be turned around. You want to be certain from the out-startthat youre investing your time, money, and energy into a viable and profitable project.

  • 7/27/2019 APARTMENT HOUSE RAGS TO RICHES

    5/22

    5

    - If your potential rehab property is caught in grasp of a general neighborhood orcitywide decline, run the other way. Its not your job to turn a community around.Thats like repainting the staterooms on a sinking cruise ship no matter whatyou do, bigger forces beyond your control are at work.

    - If the property is affected by external economic depreciation, be wary. Are jobsleaving the area? Are the adjacent properties in neglect? Know what zoningchanges will impact the area negatively or positively.

    - If external forces are positive and the building has depreciation because ofphysical wear and tear then bingo! This can be fixed. Plus it gives you

    bargaining power when negotiating your purchase price. Youre buying theproperty to fix it up, yet because it needs TLC, you can negotiate a low price. Itsa win win.

    Secret #2Know the two main reasons why rehabbing and

    repositioning can fail.

    The main reason an apartment building fails is lack of money. When the income

    isnt where it needs to be, the owner defers maintenance and the building slides intoneglect.

    The primary reason tenants leave a building is not because of high rent. The No. 1reason is poor maintenance and poor response time to maintenance requests.

    Poor maintenance will ensure that your occupancy rate falls. The obviousconsequence from people moving out is even less rental income and more deferredmaintenance.

    There is little to no money to market the property. Bigger maintenance issues get

    ignored. The decline snowballs.

    Lack of money is also the main reason a rehab/reposition can fail. You needenough money to see the process through. Fortunately, its a predictable process withchecklists and safeguards. That means you can cover all your bases -- provided youfirst know what they are.

  • 7/27/2019 APARTMENT HOUSE RAGS TO RICHES

    6/22

    6

    The second main reason apartments fail is poor management. When you rehab,you need a management company onboard that has gone through the process. If theyhavent, they are no more experienced than the management team that rode theproperty into decline.

    Many managers are able to run a building thats stabilized. But they cant handleongoing construction and the many challenges of rehabbing buildings and overhaulingthe tenant base.

    Secret #3Perception is profits. Know the perception of your building

    in the marketplace.Theres a saying that perception is reality. Im sure youve heard it. It means that

    whatever people believe to be true, is true.

    If youre looking at an apartment house that has a reputation in the area for beinga party building, if thats what people say it is, then it doesnt matter if the last loudtenant vacated 10 years ago and the building is as quiet as a cemetery on Sunday.

    The marketplace reality is that the building is party city. The perception of themarketplace is the perception you have to deal with.

    The good news is that these perceptions can be changed.

    Even the perception of change itself is a good thing. Fact is, the belief that changeis happening can be more powerful than the actual change itself.

    So one of the first things you should do is create the perception of change. Hereare two quick ways to do that...

    - Change the signage. This does not have to be a major undertaking. You donthave to install a waterfall by the street. But you should do more than change the

    name from The Willows to The Oaks.

    - Put up a banner that says Under New Management. Its a temporary sign thatleaves a lasting impression.

    - The first sign of change that tells you that your repositioning is starting to changethe perception of the community is when someone who knows the propertys

    -

  • 7/27/2019 APARTMENT HOUSE RAGS TO RICHES

    7/22

    7

    - past reputation makes the commitment to live there. The second sign of change and this is the most important is when that person starts to tell other people

    to move in. Its a sure sign the turnaround is in full swing.

    Secret #4Timing is not everything. But its darn important.

    You may think that the sooner you begin remarketing the property, the better. Youremotivated to get the property occupancy up, and youre thinking that leasing units duringthe rehab is ideal. Wrong.

    You can actually begin to raise occupancy too soon because youre attracting thesame class of people that you just got rid of. You want to do more than rehab thebuilding. You want to upgrade the tenants as well. That process has to be timed.

    - It typically takes from one to two years for a building to decline from good to bad and another one to two years to reverse the process.

    Secret #5Ask a few questions where you already know the answer.

    When youre scouting for properties, there are key questions to ask upfront.Clearly, you want to know the price and number of units right off the bat.

    You should ask what the neighborhood is like and what is the condition of theproperty. This is somewhat subjective, but your goal is to get a ballpark handle on if theasking price aligns with the market. If it does, you move on to an initial inspection.

    You inspect more than the property. You also check out the neighborhood. Get afeel for the communitys perception of the property. Ask local merchants in the area ifthey know of the property. Is it quiet? Would they live there?

    If this is positive, your next step is to do full-blown due diligence. Learn the historyof the building. When you analyze a property, there is a mystery you need to solve: How

    did the building get this way?

    Once you have the answer, ask yourself what you can do differently. For example,the building may have declined because the owner was not setting money aside formaintenance. Anywhere from 10% to 12% of your gross rent should go into deferredmaintenance of a property.

  • 7/27/2019 APARTMENT HOUSE RAGS TO RICHES

    8/22

    8

    To get a ballpark idea of what needs to be repaired and what the cost will be. Havea property manager that you can trust, and who has experience doing repositioning,inspect the building.

    Your property manager may report back that repairs are going to cost you $7,000

    to $8,000 per unit. Yet the building seller, maintenance staff and broker may lowball therepairs at $5,000 per unit.

    One way to measure whether youre getting straight answers or a runaround is toask a few questions where you already know the answer.

    - The RS Means Book will give you a price per square foot on just about any typeof construction. Your library should have it. A lot of contractors bid off the RSMeans. You can use it to get a handle on how expensive repairs will be (as wellas a guide for whether contractors are trying to gouge you).

    I did a $1.3 million renovation that the RS Means estimated at $2 million. So I knewthe bids were on target. But that also gave me another advantage... Remember, wewant to change the perception of the property in the marketplace. So right out front onthe banner that says Under New Management, we also add $2 million renovation.

    Secret #6Management can make or break your success.

    A building and its onsite management are two sides of the same coin. When youevaluate a property you must also see how the management team measures up toevery challenge.

    Look at the dress and appearance of the current management staff. Do theyconvey the image you want for the property? T-shirts dont cut it.

    Neatness also spills over into their paperwork. If the files are well organized, thentypically you have a property that is being run properly.

    - Two clues to how a property is being run are the service requests and the

    maintenance logs. Check to see when the service was requested and when themaintenance log says the request was acted upon. If its longer than 48 hours,you have a problem to root out. Is it because of lack of money (the owner) or lackof organization (the manager). Sloppy paperwork points to the manager.

    - Take a look at the current policies. Are the policies clear and concise? Is there apolicy manual? If yes, is it being followed?

  • 7/27/2019 APARTMENT HOUSE RAGS TO RICHES

    9/22

    9

    Secret #7You want to rehab more than just the building... you want

    to upgrade the tenant profile as well.

    Youll want to audit as many leases as possible. You need to know the rents andthe terms, plus how many are behind on payments and how far behind. If someone istwo months behind, its likely they are not going to pay you, so consider that a unitwhich will be vacant.

    - For buildings with less than 100 units, complete a lease audit on every unit. Forbuildings with 100 units or more, audit at least one out of every three or four.Choose them randomly do not look just at the selected units that the ownerswant you to see. It must be your choice. You want to be a diligent as possible.

    - Expect your occupancy to fall when you start repositioning a property becauseyou plan to evict the non-payers, slow payers, and the unlawful. Only about 25percent will stay through the entire rehab process. Expect 75 to 90 percentturnover the first year. Youre going to lose two old tenants for every three newtenants that you get. But the new tenants will be better and this puts you ahead.

    You need to know how the tenants are getting along. Do they like each other? Arethere problems? If they are not getting along, you should find out why. Is it somethingmanageable or is it a cultural issue that is beyond your control and thus cannot beresolved?

    How you find all this out happens when you inspect the occupied units and talk off-the-cuff with tenants.

    Ask about the condition of other apartments they have been in. Ask where thedrugs are. Drugs are actually easy to get rid of. At my Boot Camp, I tell you how itsdone.

    Secret #8Banks dont like to see expenses exceed 50% of the gross

    income, and neither should you once you own thebuilding.

  • 7/27/2019 APARTMENT HOUSE RAGS TO RICHES

    10/22

    10

    If your expenses exceed 50% you have a problem and its usually for two reasons.Number one is the income is lower than it should be. No surprise there... after all, youreacquiring a building that needs to be repositioned. It has high vacancies, rents are pastdue, and the buildings reputation is not attracting business.

    Expenses could be exceeding 50% because staff wages are too high. You need toknow what the marketplace standard is for your area. Higher wages do not guaranteebetter quality staff.

    Unproductive staff also translates to higher wages. These are the time stealers>They rob a lot of business simply by doing less.

    - Certain neighborhoods can command higher rents. Major cities like Houston,Memphis, and Baltimore have distinct neighborhoods and neighborhoodboundaries. You need a firm understanding of neighborhoods to establish rents.This, in turn, affects your income-to-expense ratio.

    There could be less obvious reasons the expenses are high. You have to think likea detective. For example, if you see that the costs of maintenance supplies is going up,but nothing is getting fixed, what could that indicate?

    Whats probably happening is someone on the management staff or in themaintenance area is taking the supplies. They could be reselling them, running a sidebusiness with these supplies, or just fixing up their home.

    Sounds like a mess but the truth is... it can all be fixed efficiently. Its onlyconfusing if youre not prepared. My Apartment House Rehab and Repositioning BootCamp not only gives you a checklist for what to look for, but empowers you by showinghow to take decisive action.

    Key to diagnosing a buildings ills, is knowing the common causes for what youobserve. Like any good doctor making a diagnosis, it helps to consult with specialists.One specialist you should have in your Rolodex is a property inspector.

    Your property inspector has to walk through every building, do a physicalinspection, and figure out what needs to be done and in what order.

    - The property inspector will act as an engineer. He will check all the systems andmake sure everything is structurally sound because thats where a majority of thecosts will be in addition to the cosmetic repairs.

    Secret #9Inspect the finances as well as the physical property. Can

    you use existing financing to your advantage?

  • 7/27/2019 APARTMENT HOUSE RAGS TO RICHES

    11/22

    11

    At the same time you perform the physical inspection of the property, put amagnifying glass to the current financing.

    Find out if it is assumable and whether theres a prepayment penalty. If there is,how much is it and how many years before it burns off?

    Assumable financing comes into play not only when you buy, but when you sell.Im buying a property in Texas with an assumable loan at 4.9 percent. There are threeyears left on the prepayment penalty.

    I plan to hold this property for three to five years, so it doesnt matter much. Butlets say Im at the 2 year mark and I see another opportunity that I want to put mymoney into. So I decide to sell.

    Will I have a tough time? Absolutely not. I have an assumable loan at a low 4.9percent thats going to be very attractive to buyers. Lets not forget that the building hasbeen rehabbed and repositioned. The cash flow is solid. Youre a cash flow doctor andyou brought this building back to life!

    - Be sure to know how many more times the loan is assumable, plus when theright to assume expires. This could be a key factor in determining your exitstrategy for the property because selling your property with an assumable low-interest loan attached makes your property more attractive.

    - You want to know if the assumable loan is recourse or non-recourse. Recoursemeans youre NOT personally liable. Non-recourse means you are personallyliable.

    Secret #10Inspect the marketplace. External forces can and will

    impact your success.

    When you look at the marketplace, you want to determine three things. First, willthere be demand for this type of property in this particular market?

  • 7/27/2019 APARTMENT HOUSE RAGS TO RICHES

    12/22

  • 7/27/2019 APARTMENT HOUSE RAGS TO RICHES

    13/22

    13

    Look at the economic base of the area. What type of businesses are in your centralbusiness district? Are the surrounding businesses low end or high end? Knowing whattypes of businesses are leaving and what businesses that are replacing them will tellyou if the demographic profile of that area is starting to drop.

    You also want to look at infrastructure including fire and police departments, roadsand highways, recreational areas, and transportation.

    - Your property should be close to shopping, particularly food, entertainment andclothing. Those are the three amenities that people look for when scouting aparticular area to live.

    - The property should be on the bus line. If your demographic profile is for a dualadult household with one car, public transportation is essential.

    When analyzing demographics, look for a sharp increase or decrease between age

    groups. If you dont see any movement it means the population is static. This is anindication that the housing needs are already being met. Thus, you may not have themarket you need in order to be successful in the repositioning of the property.

    School districts are always a factor. Look for a neighborhood where thekindergarten through age six enrollment is growing faster than any other area. This is agood indication that your property is located in the path of progress.

    At my Apartment House Rehab and Repositioning Boot Camp youll see how tofind all this data and quickly interpret it. Youll see how easy it is to find trends that leadto profits. For example, the higher the average home prices in an area, the higher thedemand for apartments. Thats because people are priced out of the homebuyerssegment of the market.

    Home prices can determine rent levels. Pricey neighborhoods simply cost morewhether youre renting or buying. The advantage you have is that by doing yourhomework, you can identify turnaround markets on the upswing and get into areas thatare affordable today but are trending toward pricey.

    - Determine the markets breakeven point. This is when rents are equal to orgreater than the mortgage payment for the average home in the area. Whenrents are on a par with mortgage payments, a lot of people will be leavingapartments and buying homes. Rents for a two bedroom apartment must be 75%of the average mortgage payment.

    At any given time a neighborhood is growing, maturing, or declining. Your best chanceto reposition is during the growth and maturity phases. If the market is declining, dont

    move in.

  • 7/27/2019 APARTMENT HOUSE RAGS TO RICHES

    14/22

    14

    Secret #11Analyze the rental market at least one year out. Predictingfuture demand is key whether you should enter a market.

    For tenants, rent is a four-letter word. But for you, its the center of your rehaband repositioning universe because apartment investing is all about cash flow. Rents, ofcourse, are the source of your cash flow.

    When it comes time to sell your repositioned building, rental income is what buyerswill be looking at. When youre considering purchasing a building to rehab, youll alsoanalyze the rental market.

    You want to know:

    How many vacancies are at the property?

    Is there a dominant unit type (one bedroom, two bedroom) or rent level, and if so,what is it?

    What do competing properties charge and how does it compare to your building?

    How does your rent compare to the larger market as a whole?

    Can the property command higher rents and occupancy if rehabbed andrepositioned?

    If demand for apartments is greater than the supply, youre in a good market. Buthow do you know if this is the case? More importantly, how do you know it will still bethe case six months or a year from now?

    Knowing future demand is key to your decision to enter a market. You determinethis by figuring out the market absorption rate. It gives you a good idea of how quicklyyoull lease up your building.

    At Apartment House Rehab and Repositioning Boot Camp Ill give you myfoolproof formula for figuring the absorption rate of any market.

    Secret #12Smaller contractors are generally best because theyll be

    more responsive.

  • 7/27/2019 APARTMENT HOUSE RAGS TO RICHES

    15/22

    15

    When you rehab and reposition, you have a management team onsite. You knowexactly what is going on with the day-to-day reconstruction process. Of course, you

    know what is NOT happening as well. You can watch the contractor like a hawk.

    Youve done your due diligence on hiring a reputable contractor, so youre not

    expecting major problems. But on large projects of $2 million and above, youll want totake an extra protective measure and get a bond. The following bonds can costanywhere from $500 to $5,000 depending on the size of the job.

    BID BONDA bid bond, as its name suggests, is taken out during the bidding process for aproject. It ensures that the company with the winning bid fulfills the contract at theprice agreed to. It also ensures that the bidder meets any other terms agreed to inthe bidding process. This is often done to protect public interest such as projectsbid on at the state, local and federal levels, but private investors can benefit fromtheir protection as well.

    Contractors may bid several jobs at once. If two or three hit at the same time andthe contractor cannot handle them all, then the contractor will back out on someprojects. If your project happens to be the one that the contractor drops, that putsyou behind the eight ball. Protecting yourself from this is one reason why you takeout a Bid Bond.

    PAYMENT BONDInsures the contractor pays for all labor, materials, equipment, supplies, andsubcontractors. Protects you from any claims and leans. If you pay the contractorbut he does not in turn pay the subcontractors and suppliers, then the suppliersand subcontractors can demand payment from you. The Payment Bond protectsyou from this.

    PERFORMANCE BONDAssures that the contractor performs and completes the contract. My contract iseight pages with four addendums. The complete scope of the job is covered, fromrequiring that the contractor must pull the permits, to stipulating that the job sitemust be cleaned up at the end of the workday. Its based on my years ofexperience rehabbing small and large projects and its one of the most importantadvantages you can have as a real estate investor. Youll get this contract whenyou attend my Boot Camp.

    SUPPLY BONDThis assures the contractor will supply the quantity and quality of materialsaccording to the contract. It protects the contractor as well as you. Suppliers cantry to substitute materials and you dont want that happening. Inferior materials willlead to maintenance issues down the road.

  • 7/27/2019 APARTMENT HOUSE RAGS TO RICHES

    16/22

    16

    - Require your subcontractors to sign a lien waiver. This basically states that theycant put a lien on the property if the contractor doesnt pay them. If thesubcontractors wont sign a lien waver, this is signal that they dont trust thecontractor and thats a red flag.

    You have bonds to protect yourself from shoddy materials and workmanship, butthe best protection is to work with a reputable contractor who does quality work. So howdo you find one?

    Get referrals. If youve fixed and flipped houses, your network is in place. Manyresidential contractors have divisions that handle commercial work.

    Property managers and brokers are good sources of referrals.

    Check out an apartment building where the contractor has already worked. If the

    current onsite building manager went through the rehab, ask about the contractorsstrengths and weaknesses.

    Was the work done on time and on budget? Did the contractor stay on top of thejob and supervise the subcontractors? Did the contractor keep the lines ofcommunication open, or were you left guessing when things would get done.

    Ask if there is something theyd sub out to a difference contractor if they could do itover again. This leads you to even more referrals.

    - You may have two or more contractors on site: one for exterior and one forinterior. If one falls behind, they impact everybody elses schedule. Thus yourcontractor should have a reputation for getting the job done.

    - Your contract should have a penalty clause. For jobs less than $100,000 thepenalty may be $100 per day. For jobs above $100,000 it may start at $1,000 perday.

    Locally based contractors (including management companies) have advantagesover larger regional

    contractors. Number one is they usually run on a quicker timeframe. They can startfaster and answer callbacks quicker. They likely have other crews in the area and thisgives them more maneuverability in allocating their manpower.

    If you hire a large firm to do a small job, the large firm may push you to the backburner when another job comes along. Large firms typically take on small jobs whenthey are between major jobs. They may have a lot of other bids out, and if one hits, theycould lose focus on you.

  • 7/27/2019 APARTMENT HOUSE RAGS TO RICHES

    17/22

    17

    One way to know if your property management contractor is continuing to performup to expectation is to check your work orders. Has the turnaround time increased? Youwant a 24-hour turnaround.

    Remember, the primary reason tenants leave is maintenance. Your highest cost is

    tenant turnover. So maintenance is a deal breaker for both you and the tenants.

    Secret #13Learn before you leap. Seek the guidance of those whoare experienced in the process. Know how and why it is

    different than rehabbing houses.

    Even if you have rehabbed houses, tackling an apartment building is different.Know upfront what to expect and what to look for. This in turn ensures fewer surprises

    down the road. (Surprises really should begin with a big $ because thats what theycost you.)

    Theres an art and a science to successfully rehabbing and repositioning aproperty. The art comes into play when dealing with tenants. A newly rehabbed andupgraded B building with C tenants will quickly revert back to a C propertyregardless of how much money, time and effort you throw at it. You want to keep thegood tenants, get rid of the bad, and attract a new B level tenant that matches theupgrade in your building.

    The science is in the property evaluation and physical construction phases. Thereare certain questions to ask, all of which lead to specific answers. When you know whatto ask and have thorough checklists in hand for determining costs and timelines, yourprofits can be readily predictable.

    At the Apartment House Rehab and Repositioning Boot Camp, youll get thosechecklists, plus see how they can be efficiently managed with software. The processcan be automated with expenses and estimates tallied almost instantly.

    Youll get the guidelines that real estate investors use to evaluate properties anddetermine the strength of the cash flow.

    Youll quickly know if a property is overstaffed because youll have key staff-to-unitratios, including how many units a property should have to...

    support an onsite manager

    support an assistant manager

  • 7/27/2019 APARTMENT HOUSE RAGS TO RICHES

    18/22

    18

    support one maintenance person (This ratio will change depending on the age ofthe property, condition, tenant profile, and more.)

    support a porter (It is the porters responsibility to clean up the property, pick upthe litter, clean out units, care for the pool, etc.)

    Plus youll know how many leasing agents youll need. (This is also based on thenumber of units in the property.)

    There are dozens and dozens of factors to consider. The good news is that thesefactors are all known. They can all be identified and managed effectively. Ill show youhow.

    At my upcoming Apartment House Rehab and Repositioning Boot Camp youlllearn evaluate, monitor, and manage every aspect including expenses.

    Typically, operating expenses will be 45 percent of gross collected rent. But there

    are core exceptions that you need to know about.

    - Do not mix your rehab expenses with your operating costs. They are two differenttypes of expenses. Your capital expenses are written off; they are depreciated.

    Secret #14Know your exit strategy. You either want to sell or

    refinance.

    Even before you officially buy a property to rehab you need a plan for how youlltake your profits.

    There are two exit strategies that youre going to consider with a rehab. Either youare going to sell the newly repositioned property quickly or you are going to refinance itand keep it.

    When you sell, you take the profits and buy a bigger property. You can do itanywhere in the country because the process is the same coast to coast. You donthave to be close to home. You can cherry-pick the best emerging real estate markets inthe U.S. My Boot Camp will reveal where they are.

    Refinancing is also popular with investors. The property is worth considerably morenow that it has been rehabbed and repositioned. Thus, you get all your money backwhen you refinance... every dime you put down to purchase the property, every nickelspent to rehab... it all comes back to you.

  • 7/27/2019 APARTMENT HOUSE RAGS TO RICHES

    19/22

    19

    You now hold onto the property because you have a cash cow that provides youwith income month after month.

    Plus you have all your original money (and more) back... so now you can go out

    and buy another property. Repeat the process. Its how you can ultimately own multiplebuildings worth millions and millions of dollars without it costing you a penny.

    Apartment House Rehab and Repositioning Boot Camp.How to find, analyze, negotiate, buy, rehab, reposition, and sell apartment houses.

    Your complete A to Z training for turning around tired properties for top dollar.

    Register Today. Call the office at 781-878-7114

    If youve ever flipped a house in the right market at the right time, you already know howprofitable it can be to make repairs and cosmetic changes. Just a couple gallons of

    paint can give you a $5,000 or more boost in equity. Ive seen this over and over withthe houses Ive flipped.

    But now, I want you to imagine this ON STERIODS.

    Not just a $5,000 return but $50,000 even $500,000 and more.

    This explosion in gains is possible when you rehab APARTMENT BUILDINGS. Insteadof sprucing up one house, it is like turning an entire neighborhood around. Your returnon investment can be a windfall. Of course, the windfall goes straight into your wallet.

    At my Apartment House Rehab and Repositioning Boot Camp youll go step-by-stepthrough the rehab (fixing up) and repositioning (marketing) process. Youll get my time-tested and hard-won moneymaking strategies that built my $240 million real estateportfolio one apartment house at a time.

    4 key steps to identifying ideal properties to rehab and reposition.

    My ironclad formula for increasing property value.

    3 reasons why properties decline and how to turn each around.

    3 insider sources on zoning changes that will impact your property for better orworse.

    The fastest way to improve the marketplace perception of your property.

    2 major components of risk. (You dont have to fear them, but you got to knowthem.)

  • 7/27/2019 APARTMENT HOUSE RAGS TO RICHES

    20/22

    20

    3 reasons repositions fail (and how to avoid them).

    What repairs need to done and in what order.

    The bible that gives you honest construction costs.

    How to ensure contractors get your work done on time, on budget.

    3 simple words that attract new tenants and keep old ones from moving.

    The most important signal that your building has turned around.

    The biggest change you can make to improve your property from the street inone day.

    How to identify emerging real estate markets poised for sharp gains in propertyvalue.

    What banks and funding sources look for.

    All this is just the opening session of your 3 days of comprehensive training.

    Well drill down on what to ask the seller, property manager, maintenance crews,tenants, and others with inside knowledge of the property. Know why their answers canlead you to profits (and steer you clear of pitfalls).

    Youll know how to audit leases, inspect properties, and ferret out any hiddenminefields. Youll get secrets for managing the property during both the pre-sale and

    post-sale period.

    Well look at the 5 critical factors in repositioning a property. Use them together andyoull create wealth. (But skip just one and thats like making concrete without water.)

    Youll see how you can ferret out any hidden minefields. Youll know how to manage theproperty during both the pre-sale and post-sale period.

    Most importantly, youll know how and why this is one of the richest ways to makemoney with real estate.

    Fasten your seatbelts for 3 days of comprehensive training that leaves no moneymakingstone unturned. Everything I will show you is ultimately designed to do one thing: makeyou money. Thats why were investors. But its also terrific that youll be beautifyingbuildings, improving the lives of tenants, adding value to neighborhoods and helpingkeep the planet green by refurbishing existing resources.

  • 7/27/2019 APARTMENT HOUSE RAGS TO RICHES

    21/22

    21

    To register, Call the office today at 781-878-7114

    Who Should AttendREAL ESTATE INVESTORS

    Get proven formulas and secrets for optimum cash flow, occupancy, and more Find out what rehabbing changes will bring you the biggest returns. See how to finance properties.

    APARTMENT BUILDING OWNERS

    Thinking of selling your building? Know what potential buyers will be looking at. Want to get higher rents and increase your propertys market value? Find out

    what changes can make your property worth 20% more in 90 days.

    APARTMENT MANAGERS

    If the building you manage is for sale know what buyers will be asking you andhow theyll measure your performance.

    If youre taking over the management know what will make the most significantimprovements quickest.

    REAL ESTATE BROKERS

    If you represent sellers know how to anticipate questions from experiencedrehabber investors.

    If you represent buyers know how to quickly find properties that have workablenumbers.

    CONSTRUCTION PROFESSIONALS

    You bid the jobs. You do the work. Now find out how you can take an ownership rolein the properties and get maximum return for your efforts.

    This Is The Only Training of its Kind,Call the office today at 781-878-7114 to register for the next event.

  • 7/27/2019 APARTMENT HOUSE RAGS TO RICHES

    22/22

    About Dave Lindahl

    DAVE LINDAHL takes you step-by-step through the process of finding apartmentbuildings in need of TLC, rehabbing them, and giving them a rich new image in themarketplace. This can be one of the most profitable transformations in commercial realestate if done right. Now you can know the exact strategies and steps that Dave takesto turn properties around and turn in high returns.

    Dave is one of Americas most active private real estate investors. He currently hasmore than 7,200 rental units in his portfolio and has rehabbed more than 1,000 units inthe last decade. His Boot Camps attract wealthy investors, entrepreneurs, industryprofessionals, and newbie investors alike and are legendary for their inside informationand networking connections.

    Dave is the host of the Creative Success Alliance radio show on the Voice AmericaVariety Channel, and is the author of 3 top-selling books, Multi-Family Millions: How

    Anyone Can Reposition Apartments for Big Profits, Emerging Real Estate Markets: Howto Find and Profit from Up-and-Coming Areas, and Commercial Real Estate Investing101, written with Donald Trump for Trump University.


Recommended