Time is money. Property managers spend a lot of money on their time and this is true whether they are managing residential, multifamily or commercial properties. Often times, property managers may get caught up in the timing of things, letting their financial records and organization fall by the wayside. Not only does this cause added stress on the property manager, but it can also hurt the value of a property. When it comes time to sell a property or to refinance, proper financial details mean everything in determining how much the property is valued at.
Dan Pepper knows the importance of organizing and recording all the financial details of a property. Through his company, Palm Companies, a combined investment and property management firm, Dan oversees 190 multifamily units with nearly 50 units managed by Palm. With so many factors to keep track of, paying attention to financial details has become imperative in streamlining property management efficiency. This episode, Dan shares what he has learned about managing properties effectively and increasing property value by organizing and tracking financial details.
Automated Property Management Systems
streamline record keeping, bill pay and rent collection
Appfolio – good mid-market, fully-integrated automated system; 80+ units
Import photos or scans of bills for services and expenses into an easily accessible database
Capitalizing Expenses vs. Annual Expenses
Clearly define and categorize expenses that are capital improvements and what are annual expenses
Buyers can reconcile their investment concerns with detailed records
Lenders can asses precise values on properties
If unfamiliar, google search “capitalizing expenses”
Dan and Palm Companies are focused on multifamily properties ranging between 30-150 units in Southwest Florida. They focused primarily on property management ventures currently, but are open to viable multifamily deals. Palm Companies also has an interest in retail investments. Check out their website for more information.
Listeners of the show will remember Jillian Bandes who, in episode 74, discussed what real estate investors should consider about building structure when looking at commercial multifamily investing. The project manager for Bandes Construction covered 6 hot topics on building structure and maintenance that investors should be aware of with commercial multifamily properties.
In this episode, we discuss Jillian’s first investment property….a single family home with an ajacent rental apartment. She discusses razing the property, dealing with the local code and building officials and her plans on whether to rent the units or live in one and rent the remainder. The property was purchased through a foreclosure and we cover the online methods now employed by Pinellas County. Not only is this project about a potential home and investment, but Jillian is passionate about blazing the trail for urban renewal and redevelopment in St Petersburg’s core and her unit is in the heart of a rapidly changing area.
Residential property permitting and zoning regulations differ from commercial properties
Choose property in an area you are familiar with
Walk surrounding neighborhood
If investment property, define target rental market
If foreclosure property, know state of title (liens)
What is the property zoned for? Is property up to code? Accessory buildings permitted?
Work with local and municipal officials
St. Petersburg, Florida
Undergoing immense urban growth period
Investors need accessibility to invest in properties with potential for redevelopment/renewal
South St. Pete offers development opportunity and reasonable prices w/ proximity to cultural amenities
Jillian extends a big thank you to Carlyn Neuman of Tampa’s 360 Realty for helping to navigate online foreclosure bidding as well as to Katrina Trump of Bank of Tampa, for assisting with securing financing.
Real estate investors in Florida know that the market has seen a steadily increasing return to normalcy since it bottomed out in 2010. Asset classes of all types have been undergoing a resurgence as the market continues to correct itself. With investing outpacing development though, investors are seeing access to viable properties tightening up. Investors need to become more creative when finding deals and stay ahead of new trends arising.
David Beshears, head appraiser and owner of Beshears & Associates, has been appraising properties in Florida for over 20 years and he is very knowledgeable about the self storage market. John Miller, senior appraiser and realtor for Beshears & Associates, specializes in multifamily asset classes, having completed over 200 multifamily appraisals since 2008. This episode, David and John discuss where Florida markets are at, particularly in the multifamily and self storage market.
4% vacancy in Tampa area markets
Uptick in rental rates across sub-markets
High occupancy rates causing higher appreciation in Class B and C properties
Class A properties new builds at $2/sqf (Central Tampa Sub-market: Hyde Park, Westshore, Downtown Tampa, Davis Islands)
3300 units entitled to construction; 2200 scheduled for 2016 completion
Class A super properties arising in suburban markets (Riverview)
Luxury trend in new developments (zero-entry pools, state-of-the-art amenities)
No new builds for Class B and C properties
Cap Rates (Tampa): Class A: 4.5-5.25%; Class B: 5.25-5.75%; Class C: 6.5-9%
Value-add opportunities still available with focus on interior of units
Traditionally lag behind multifamily cap rates by 150-200 basis points
Self storage market similar to multifamily market
Subject to overbuilding in 3rd tier markets
12% of market owned by institutional investors
Value-add opportunity for private investors
Upgrade security and lighting
Cap rates: Class A: 5-7%; Class B: 7-9%; Class C: 9% and up
Major markets in need of new development
Opportunity for developers if they can find land
2-3 acres at $5-8/sqf is ideal
Beshears & Associates offers a newsletter providing an overview on a variety of asset classes in Florida, including the multifamily and self storage market. To check out their newsletter and to find out about the other services they offer, visit their website at www.beshears.net
When it comes to multifamily investing, the size of the deals is often the most intimidating, but as we know, with bigger risks come bigger rewards.There is always a reason not to do something. The transition to becoming a multifamily investor may seem overwhelming but many investors make the move into multifamily markets and overcome the obstacles to become successful multifamily investors.
Karma Senge is a multifamily investor with quite an interesting story. Like most real estate investors, Karma cut his teeth in investing in the single-family markets. After entering the market in the early 2000s, Karma had soon acquired over 350 properties in his portfolio and was single-handedly managing them all. After a brief departure from real estate investing to recover from the stress of single-family investing, Karma reentered the market with a focus on multifamily investing. Despite his renewed vigor, Karma had to work his way back from the ground up in the multifamily market, eventually acquiring his first investment on a 6-property portfolio. Karma’s story is one of hard work and perseverance. Karma managed to overcome the obstacles ahead of him and establish himself as a successful multifamily investor in Florida and the Southeast U.S.
Seller-financing and creative debt options provide an appealing alternative to institutional debt options
Researching markets and properties is imperative before committting to any deal
Find a Mentor
Someone who is an experienced multifamily investor can serve as an invaluable source of information and guidance
Have a Team
A team of experienced staff or even a partner can help to manage responsibilities and stress
It is important to consider tenants when investing in multifamily. Invest in community-oriented projects and developments.
Wesley Burdette has always had a hand in real estate investing, however he began on the lending side in the Washington D.C./metro area. From lending he moved towards single-family residential flipping with his sights set on the Florida real estate markets. After finding success in the single-family markets, Wesley endeavored into real estate development and now has several projects in progress in the Seminole Heights neighborhood of Tampa, notably a 46 unit loft-living complex, The Warehouse as well as four new townhouses.
Wesley joins us to discuss his transition from flipper to developer and covers key tips for investing in the Florida real estate markets along with advice on how to diversify your investments and foray into larger investment markets.
Know Your Market
Research the areas you are considering investing in
Understand consumer psyche – what do people want in a home?
Know your contractors, work closely with them
Millennial Markets on the rise: Seminole Heights
Know what you can afford
House-flipping is all about initial buy
Adaptive reuse (commercial, multi-family)
Infrastructure (basic repairs)
Perseverance is key.
Entering into investment real estate can be intimidating, but with determination and the proper know-how you can find success.
Be careful with your investments. Don’t get locked into something uncertain
Chris Urso is a multifamily real estate investor and coach. His real estate company, URS Capital Partners, now controls over 50 million dollars of real estate throughout the Midwest and Southwest of America. Chris began investing in real estate at the young age of 21 years old when he bought a 2-family in 2001 with the money his parents were intending on using for his college loans. In this podcast, Chris covers a range of topics from how to get started, what has worked for him and hasn’t worked and how he structures his deals.
One of his proudest moments in his investing career was purchasing a 280 unit building in Charleston, SC for 7.2 million dollars. Urso then invested 2 million dollars into renovations for the property. All in all Urso plans on selling the property in the next two years for a 3 million dollar profit.
Chris Urso gave some great advice throughout the show. One piece of advice he gave is that it is important to focus your energy on one specific type of investing. Urso also stresses the need for every young investor to have a mentor or a coach in their life to help guide them.
Quote’s from the show
“Anyone who says they’ve never lost money in real estate is full of you know what. “- Chris Urso
“You can’t dance at every wedding.”- Steven
“Stay focused on the end game.”- Chris Urso
“Don’t do a deal just for the sake of doing a deal.”- Chris Urso
Favorite Places in Florida
Urso’s favorite spots to hang out in Florida are Del Ray Beach as well as the beaches on the West Coast.
Today our guest on the show is a multi-family real estate expert by the name of Michael Becker. Becker is the Senior Director of Lending for Old Capital Lending and Principal in
SPI Advisory, a real estate investment firm specializing in the Multifamily Apartment investments in the Dallas-Fort Worth area. What is surprising about Becker’s story is the breathtakingly short period of time he was grown his portfolio. In two years, he has acquired 9 complexes with more coming this fiscal year. Becker started out as a lender, when the light bulb came on one day and he made the decision to move from collecting a check to taking control. He originally started in the single family market and quickly came to the conclusion that he could not grow the single family business with the speed necessary to meet his goals.
Steven and Eric cover much more than just Becker’s investment history. Michael possesses the knowledge to talk frankly about how to acquire debt to purchase multifamily properties. He touches on many types of lending from small, community bank borrowing to Commercial Mortgage Backed Securities (CMBS), and his personal favorite, agency debt (Fannie Mae and Freddie Mac). Find out the pros and cons of each one of the debt options and learn why Michael likes the agency lenders so much!