Multi-Family Millions: How Anyone Can Reposition Apartments for Big Profits

Acknowledgments xiii

Chapter 1

A Different Approach that Creates Huge Real Estate Profits 1

How This Book is Different 2

Chapter 2

Why Invest in Apartments? 9

Apartments Set You Free 10

Let’s Explode the No-Money-Down Myth 13

More Myths about Apartment Investing 14

This is Not a Myth, This is Reality: They’ll Laugh First, and You’ll Laugh Last 18

Opportunity is Everywhere 20

A Brief Overview of the Different Kinds of Multi-Family Housing 21

Burned-Out Landlords are Great Sources for Deals 23

In the Next Chapter 24

Chapter 3

An Overview of How to Get Your First Deal 25

The 14 Steps to Acquiring a Property 26

1. Decide What Size Buildings You Want to Start Investing In 26

2. Decide Where You Want to Invest 27

3. Determine What Types of Multi-Family Properties You’ll Buy 29

4. Put Your Team in Place 30

5. Market to Get Your Deal 31

6. Analyze the Deals 31

7. Create the Offer or Letter of Intent 32

8. Negotiate the Deal 33

9. Create and Sign the Purchase-and-Sale Agreement 33

10. Do Your Due Diligence 35

11. Renegotiate the Deal 37

12. Start Your Financing 38

13. Choose a Management Company 40

14. Close the Deal 41

Option 1: Buy and Flip 42

Option 2: Buy and Hold 46

Option 3: Buy, Reposition, and Sell 47

In the Next Chapter 53

Chapter 4

Where to Find Enormous Profits from Repositioning 55

It’s All about Raising the NOI 57

Problems to Look For 58

Making a Change 60

Then there’s the Perception 61

Send the Message that Change is Happening 62

The Property Cycle 64

A Common Repositioning Mistake 67

The Two Main Reasons Why Repositions Fail 68

The City Cycle 69

Revitalization Zones 70

In the Next Chapter 73

Chapter 5

How to Attract Deals to You with a Minimum of Time and Money 75

Principle #1: Make It Easy to Do Business with You 75

Principle #2: Do What You Say You Will Do 77

Principle #3: Don’t Be a Pain in the Butt 78

Inexpensive Deal-Attraction Techniques 79

Go Directly to the Owners 84

Other Techniques that Cost Little but Bring Big Results 88

Go After the Don’t Wanters 90

Cruising for Dollars 91

Another Way to Cruise 92

Oh So Many Ways to Get Deals 93

Don’t Make These Three Mistakes 93

In the Next Chapter 95

Chapter 6

Separating the Gold Mines from the Land Mines 97

The Power of Negative Thinking 97

Profiting from Value Plays 98

How to Find—and Profit from—Burned-Out Landlords 99

Profiting from Management Nightmares 100

Properties that Need Repair: Where the Gold is 101

Avoid Certain Repairs 102

Solving High-Vacancy Problems—Once and for All 104

How I Filled 400 Units 105

How to Raise Rents at Takeover and Not Lose Your Tenants 106

How to Raise Rents Steadily While Keeping Your Tenants 107

When It Makes Sense to Clean House 109

In the Next Chapter 111

Chapter 7

How to Analyze a Property Using the Fewest Numbers for the Most Profit 113

Back to the Cap Rate 114

Analyzing Your First Deal 116

How Do We Know It Really is a Deal? 118

Current Management: When to Hold ’Em and When to Fold ’Em 119

What Matters the Very Most to Tenants 122

Is Someone Putting Lipstick on a Pig? 123

Let’s Look Inside 125

Market Area Inspection 126

The Sidewalk Tells the Story 128

But What If My Numbers are Off ? 129

Don’t Get Depressed on Me! 129

In the Next Chapter 130

Chapter 8

Where to Get the Money for All Your Deals 131

Why Banks Like Apartments 132

Three Flavors of Lenders 133

Conduits 136

When to Use a Mortgage Broker 136

Putting Your Package Together 137

How to Get Partners to Fund Your Deals 138

The Big, Profitable World of Private Money 139

Debt versus Equity Deals 143

In the Next Chapter 145

Chapter 9

Twelve Negotiating Secrets of the Pros 147

1. Be Prepared 147

2. Understand the Other Party’s Needs 149

3. Set Your Goals and Rank Them in Order of Priority 150

4. Decide What Your Strike Price is and Don’t Exceed It 152

5. Anticipate the Next Move and Don’t Avoid Haggling 153

6. Remain Calm and Unemotional 154

7. Build Rapport and Trust 155

8. Create a Win/Win Environment 155

9. Remain Flexible and Open to Options 156

10. When the Seller Speaks, Listen Closely and Delay Your Response 157

11. Demonstrate Empathy 158

12. Silence is Golden 158

In the Next Chapter 160

Chapter 10

The 80/20 Rule of Rehabbing 161

Exterior Improvements 162

Interior Improvements 166

How to Get the Most from Insurance Claims 170

Dealing with Contractors 171

In the Next Chapter 176

Chapter 11

How to Avoid Being a Landlord: Secrets to Hiring Great Property Managers 177

How to Find the Best Managers 179

What You Should Expect to Pay 182

Repositioning Managers: A Special Breed 187

How to Get Contractors to Beg You for Business 190

Managing the Manager: Reports You Should Get Regularly 191

You’re an Asset Manager 194

In the Next Chapter 194

Chapter 12

Reselling for Huge Profits 195

Return on Equity 196

Is Your Property Stabilized? 198

Get Your Financial House in Order 199

Get Your Physical House in Order 201

Time to Tell the World 202

Your Obligations as a Seller 205

In the Next Chapter 205

Chapter 13

The 10 Biggest Mistakes Repositioners Make, and How to Avoid Them 207

Mistake #1: Running Out of Money During a Repositioning 207

Mistake #2: Leasing Up Too Soon 210

Mistake #3: Not Using Licensed Contractors 211

Mistake #4: Not Getting Three Bids 212

Mistake #5: Assuming the Lowest Bid is the Best Bid 213

Mistake #6: Not Going after Private Money Sooner 214

Mistake #7: Not Marketing Consistently 215

Mistake #8: Discriminating 215

Mistake #9: Not Having Signing Authority on Bank Accounts 216

Mistake #10: Buying a Property with Environmental Issues 217

Mistake #11: Inspecting the Property Yourself 218

Mistake #12: Managing the Property Yourself 219

Mistake #13: Using Fill-in-the-Blank Legal Forms 219

Mistake #14: Dealing with Tenants 220

Mistake #15: Thinking You Know It All 221

In the Next Chapter 222

Chapter 14

Creating Your Success Team 223

Real Estate Brokers 224

The Property Manager 225

Attorneys 227

Property Inspector 229

Appraisers 229

Lender 230

Contractors 230

Insurance Agent 231

Demographer 232

1031 Specialists 233

Accountant 235

In the Next Chapter 236

Chapter 15

Next Steps on Your Road to Wealth 237

How Impatient are You? 239

The Absolute Shortest Shortcut to Real Estate Wealth 240

Free Bonus Materials for You 241

Index 243