Multi-Unit Rags to Riches

Month 1 – Agenda Identifying Markets & Marketing

Strategies Locating Multi-Unit OpportunitiesIdentifying Possible MarketsMarketing Strategies Acquisition – Analysis –

Negotiations

“In – Field”Physical Due DiligenceIdentifying Value PlaysTurn Key vs. Reposition

Private Money – Equity PartnersSyndicationWorking With Commercial Banks Property Management

“In - Field”Building Your TeamRehab Budget & Scope of WorkContractorsWorking With City, Town, County

Month 2 – AgendaFunding & Financing

Due DiligenceOperations – Management of Your

TeamForms & DocumentationSettlement Preparation

“In – Field”Property Take Over1-3-5 Year PlanResident RelationsInvestor Relations

Month 3 – AgendaDue Diligence

Identifying Your Target Markets Identifying Your Target Markets for Multi-Unit Investingfor Multi-Unit Investing

Local Markets

Emerging Markets

Stabilized Markets

Understand the Market Understand the Market CyclesCyclesResearch / Potential Markets of

Interest

Identify What Cycle Market is In

Learn the “Path of Progress”

What is/has been/will be the Trends

“Trust but Verify Resources”

Market Market CyclesCycles

Cautious Buying BuySM 1

BM1 = Buyer’s Market Phase 1BM2 = Buyer’s Market Phase 2SM1 = Seller’s Market Phase 1SM2 = Seller’s Market Phase 2

SM2

BM 1

“Vulture Buyers”BM 2

Don’t Buy

The Market The Market CyclesCycles

Market Cycle

Characteristics Strategy

Buyer’s Market Phase 1

• Price/Rents Falling• Demand falls• Unemployment highest• Excess supply• Time on market longest,

inventory on market idle• Foreclosures sharply increase• Oversupply of property so lots

of concessions

Cautious Acquisitions

Buy for Cash flow in Local Markets

Cash on Cash Returns to be a minimum of 15%

Buyer’s Market Phase 2

• Time on Market Decreases• Absorbing Oversupply• Job Growth increases• Prices and rents slowly increase• Existing properties being rehabbed• Foreclosures Begin to Decrease

Buy & Hold for Appreciation

The Market CyclesThe Market CyclesMarket Cycle

Characteristics Strategy

Seller’s Market Phase 1

• Supply Dwindles• Properties sell fast• Unemployment Low• Prices/Rent Rising• Lots of speculation• Construction Starts to

accelerate

•Buy & Hold

•Ride Appreciation

• Wholesale

Seller’s Market Phase 2

• Time on Market increases and number of properties on market increases

• Rents become stagnant• Potential for overbuilding• Property bought on speculation,

not cash flow• Business/jobs begin to slow

•Sell, Have Cash, Cash flow, Liquidity

•Do NOT Buy

Identifying Market Identifying Market OpportunitiesOpportunitiesResearch…Research…Research…

◦www.MilkenInstitute.org / www.MarcusMilichap.com

100 Best Performing Large Cities Report

100 Best Performing Small Cities Report

◦ Look at Statistics, Employment, Census Information, Data Trends, Verify Capital Infusion, Building Permits

◦ Demographics, Psychographics, Zip Codes

Identify Your Target Markets

1 - Local Market1-2 Different Target Markets Identify Property Specifics

www.DunHills.com

Gather Market Data◦Chamber of Commerce◦Military Bases◦Major Employers in Area◦New Businesses Coming to area◦Medical Facilities Hospital Expansion◦ University-School-Technology Growth◦Comprehensive Plan ( County – City)

Identifying Market Identifying Market OpportunitiesOpportunities

Understanding the Understanding the Market Market

Identify Maps of City/Town with Zip codes

Gather Demographics of Target Market (s)

◦Census Data and Projected Forecasts ◦Employment Statistics / Job Growth

◦www.ARA.com American Realty Advisors◦www.Loopnet.com (household information)◦www.RedCapitalGroup.com◦www.Realtor.com

Contact Local Chamber of Commerce◦www.ChamberofCommerce.com

◦Questions to ask: Employers Moving In/Out of Area? Types of Housing Needed and Areas Needed In? Status of Area Affordable Housing Programs? City/County/Town Plans for Next 5 Years? Areas of Most Growth? Path of Progress?

Understanding the Understanding the Market Market

Research Local Newspapers Online Gather Data on Current Rents in AreaContact Local Community Managers

Seller Concessions◦ 1 Month Free◦ No Security Deposit Required

Research Articles, Stories, Current Events

Understanding the Understanding the MarketMarket

Understanding the Understanding the MarketsMarkets

Research City/County/Town Comprehensive Growth or Development Plan Types of Employment – Companies Arriving /Leaving Timeframe of Expected Arrival, Length of Stay Percentage of New Jobs to be Created

◦Comprehensive City /County / Town Plan

Identify Major Employers in Area: Their Location ( Corporate, Industrial, Manufacturing) Research Current Unemployment Rate Increasing – Steady - Declining

Baltimore 2010 GROWTH Report

Understanding the Market

Contact Economic Development Office / Team

Questions to Ask? How many NEW multi-unit building permits? Have building permits increased or decreased?Perception on Housing Market Conditions?Types of Housing Most Needed?Potential Housing Programs / Organizations/

Understanding the Understanding the MarketMarket

Identify Empowerment / Enterprise Zones Tax Credits Rehab Incentiveswww.BaltimoreCountyMD.gov

Empowerment Zones and Enterprise Zones

Understanding the Understanding the MarketMarket

Research and Identify Commercial Realtors/Brokers in Area

Make Contact and Interview Share Your Investment Criteria

◦ Example..20-100 Multi-Family Apartment Units◦ 9-11 Capitalization Rate ( Cap rate)◦ Age of Building Criteria◦ Areas of Focus◦ Occupancy & Vacancy Preferences◦ Ask Questions about their Specific Knowledge of

Area ◦ Path of Progress in the Area◦ Preferred Zip Codes◦ Their Area of Expertise, Years in Business, Potential

Properties ◦ Request Information on Possible Properties

Your Homework Is To:Your Homework Is To:

1. Research Possible Markets of Interest to You

2. Identify Those Markets 3. Indentify the Market Cycle 4. Research and Understand the Market5. Contact and Communicate with

Commercial Brokers/Realtors6. Identify Property Types Your Interested

In Apartments, Mobile Home Communities, Self

Storage

7. Order a List from www.DunHills.com

Clean Out Party – Giving Back