I'm assuming with a proper loan, say 70% LTV = ~$500k property. Even here in California, I can find a 6-10 unit for $500k ($60k-$80k/unit). In other parts of the country, I'm sure it'd be even easier. My site of choice for commercial property: http://www.loopnet.com. Here are a few random links from the site... I haven't looked at any of them, except in terms of # units + price: http://www.loopnet.com/xNet/MainSit....aspx?LID=16812315&SRID=1114345694&StepID=101 http://www.loopnet.com/xNet/MainSit....aspx?LID=16821040&SRID=1114345694&StepID=101 http://www.loopnet.com/xNet/MainSit....aspx?LID=16804756&SRID=1114345694&StepID=101 http://www.loopnet.com/xNet/MainSit....aspx?LID=16787835&SRID=1114345694&StepID=101
I'm thinking it might be time to buy outright rather than take a loan on rental property. Look at your last one, the 6-plex for $250,000. It says 100% rented and takes in $34,455 per year in rent. That's over 13% gross. Subtract out your costs and it still beats most other investments these days. The advantage is if the economy drops more you can adjust your rents and still have an income, rather than negative cash flow if you have to make loan payments. Anyone know of any REITS that are doing this?
Loan = leverage... so the same risk/reward applies to leverage here, just as it does in trading. Higher reward but higher potential risk. Commercial real estate is typically done with 3 or 5 year fixed loans (amortized over 30 years). Rates are higher than residential, but not much. Keep in mind that your mortgage payments are fully a business expense. Also keep in mind, for that matter, that you get to claim 2-3% depreciation every year on your returns... boosting your returns further.
Well... keep in mind that you get what you pay for, just like shopping for a "cheap" stock or bond. Any property with a cap rate of 15% probably has serious vacancy issues, deferred maintenance, etc, etc, etc, etc. Considering the amount of time I would have available to put into an apartment complex, I wouldn't touch any property with a cap rate OVER 8%.
SPECIALTY FINANCIAL 6160 Plumas Street, Ste. 200 Reno, Nevada 89519 I know that street. Just off McCarran there are two huge apartment complexes. one is in default and the other is being foreclosed. The rest of the street is made up of mostly vacant office buildings. The website is a dearth of details. ETA: I guess the question is - how did they blow up?
I think residential real estate has further to come down, putting pressure on rents, so i expect the risk part of the leverage equation will come to bear (pun).
It all depends on location and the type of deals. 1) With the current historical rate(4.5% 30 yr fixed), get as much as the bank allows you. Standard 20% down gives you 4x leverage, name another investment that will let retail do 4x leverage AND NO margin calls if shit hit the fan. In certain situations even 10% down with monthly pmi is worth it. Most people dont realize how insane this is... 2) Flip side is right off the bat you are down 10% from various fees, so this is definitely long term investment, flipping days are gone. 3) Location is still everything, simple but most people are still retarded, they get blinded by low prices not realizing noone will rent in those ghettos or the high ownership cost of bad properties. 4) Once you have a good location where there are always renters. Pick something that has a 20 year or less net return. Meaning if it cost 400k, 1k a month on tax+fees. Then you need a monthly rent roll of $2667 (400k/(20*12) + 1000). Then your cashflow is pretty much balanced with 20% down. China was a real estate heaven in the last 10 years mostly because there is NO monthly cost/tax at all, i was getting 5 year net returns at the beginning, on top of major appreciation. But that time is ending, nowdays you get 2k rent on a 1000k property, way out of wack. Got into a few investment properties in the US now around nyc, it's a major pain in the ass. You gotta get everyone and their fucking mother to approve every little thing. On top of all this bullshit about cant kick out the renters if they dont pay. Dont think i will bother with more. A buddy of mine quit his mid 6 figure job and moved to florida to invest in those 50k bankrupt condos and supposely making a killing. Basically buys up a gated community with association in bankruptcy at <50k a pop, then you become the association and it became financially sound again, he then do some minor fixup and either rent or sell the units. Anyway real estate is just like trading, there are good guys and morons.
You can essentially ignore the first half of the book that is about Yale and Harvard. His technique is to divide $ into five equal sized bets: US stock, foreign stock, real estate, commodities, bonds. Using the 200 day (or the 40 week) moving average, at all times you would be either in cash or in the sector. For example, one could use DIA, EFA, IYR, DBC and AGG to do this. Right now, every one of these five ETFs is above its 200d MA, so you would have 20% in each. As soon as one falls below the 200, switch that 20% to cash. I have been trading a variant of this since the book came out. I check signals daily instead of once a month, and use both the 200 day and the slope of the 50 day for entry and exit signals. I also use more ETFs, and have similar rules for shorting. You can see his results here: http://www.theivyportfolio.com/timing-updates/ I think this is a pretty good way to allocate the conservative part of one's portfolio.