Teaming Up And Co-Wholesaling Apartment Buildings

co-wholeslaingWholesaling apartment buildings is an amazing opportunity. You leverage multi million dollar transaction values, slice off five and six figure assignment fees, all without taking any risk or using any of your own money.

In the early stages though, there is a lot to get your head around. In the world of project management, it’s well established that if you have to learn more than one new skill during the course of executing a project, your chances of successful completion start to go down.

This is definitely the case with apartment wholesaling, and it illustrates quite neatly why the first deal is the hardest deal to do. You are learning how to find deals, how to negotiate with sellers, you are learning how to raise private money, you are learning how to qualify buyers, and shepherd them through the closing process, all the while dealing with your own fears and maintaining a “can-do” mindset.

When you look at this way, it’s not a surprise that, most people struggle getting their first apartment deal done. There are a lot of firsts you have to achieve, and an unforgiving time frame in which to achieve them.

One way to lower the bar though, and increase your overall chances of succeeding, is to break the doing of the deal down into separate parts, and assign the accountability for producing a result in each part to another person. This can be a partner, someone in your network, it can be another Apartment Entrepreneur.

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Posted by Ben - February 24, 2014 at 3:44 pm

Categories: Apartment Investing   Tags: , , , ,

What Makes A Healthy Economy?

capitalists dilemnaA healthy economy makes everybody happy; in society, in business, in government. In a healthy economy there are plenty of jobs, everyone has disposable income, business thrives, and there is plenty of tax revenue for both political parties to implement their pet agendas. One could also hope there would be less need to borrow so much money just to fund the government Budget each year as well.

But what’s wrong? Why after so long are their so many people still out of work, notwithstanding the faux Recovery and the “prosperity” that no-one can seem to identify, at least in their own lives, nor in the lives of most everyone they know.

The answer lies in a common mistake. Tragically for us, this mistake is being made by the Federal Reserve.

The mistake is, confusing correlation with causality.

For forty years now the Federal Reserve has attempted to stimulate the economy by loosening the money supply, which lowers interest rates. The economy has generally responded, though increasingly more slowly in successive downturns since the early 1970’s, to the point of where we are today, five years after the financial crisis crashing the economy. The Federal Reserve is still pumping $65 Billion into the economy every month, though it is failing to move the needle on job creation and unemployment.

We are finally learning now, at the end game of Federal Reserve economic intervention, that loose money supply is only correlated with job creation and economic prosperity, it doesn’t cause it.

The evidence is there for all to see. Three Trillion dollars of U.S. Currency put into circulation since 2009, and real wages have fallen, middle class America is shrinking, and government assistance is needed by most families just to get by.

But if the Federal Reserve trying to fill the ocean with money does not create jobs, what does?

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Posted by Ben - February 16, 2014 at 1:13 pm

Categories: Markets   Tags: , , , , ,

What Is The Best Market To Wholesale Apartment Buildings?

apartment marketsApartment buildings, being income producing and essentially businesses run by a property management staff, have always been able to be traded without you necessarily being local to the property.

This being the case, what is the best market to choose as the market you are going to focus on to do deals?

To be simplistic about it, the answer is the market where it will be easiest for you to get a property under contract at a price where you can add on your assignment fee and still have your resell price attractive enough that a new buyer (preferably multiple new buyers) will come in and eagerly take the property from you.

As usual with real estate, the easiest way to understand it is through the lens of supply and demand.

At the time of writing this (early 2014), money has been piling into commercial real estate in Tier 1 markets like New York City, Los Angeles, San Francisco, Chicago, and now Tier 2 cities like Houston, Las Vegas, Indianapolis, for 2-3 years now. When bond yields are so low, commercial real estate’s traditionally pedestrian return start looking pretty attractive.

First it was US hedge funds that figured this out, then it was international sovereign wealth and pension funds, and the buying began in earnest. That trend is probably hitting it’s peak right about now as the Federal Reserve tapers it’s bond buying each month and bond yields start rising again.

Nevertheless, so much money flowing into real estate markets around the US, buying up everything from the highest quality income property on down has created a lot of demand for property and pushed prices upwards.

If you are looking to wholesale apartment buildings then, what do you do? Which market do you choose?

If you are in a market where a lot of institutional capital has piled in you will see there are not many properties available on sites like Loopnet, what is available will have a high cost per unit, even with high vacancy and repairs needed. With a bit of investigation you’ll find market cap rates in the 5-6% range, maybe even lower. The brokers you talk to will be arrogant, and probably brush you off unless you are willing to pay 80-90% of their Pro Forma valuation (brokers are “Masters Of The Universe” when the money is flowing).

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Posted by Ben - February 7, 2014 at 1:56 pm

Categories: Markets   Tags: , , , , ,

Create A Network Of Commercial Brokers Feeding You Deals

apartment_buildingWhat is the leading indicator for your success in buying a profitable apartment building?


Rookie or veteran, without a steady stream of potential apartment deals coming across your desk every week, you won’t be doing many deals. With consistent dealflow, however, it becomes a numbers game, and doing the basic things right, deals are just a matter of time.

One very effective way of creating dealflow is using commercial brokers. Of course, sourcing deals through commercial brokers has the benefit of being “free”. They find the deal, the Seller pays the broker a commission when you buy.

When starting out, you can use brokers and their listings to practise on; to get over your initial nerves talking with real estate professionals, and do deal analysis on the listed properties in the process.

The main benefit of using commercial brokers though is you are able to leverage their network. Each broker has done a lot of work to go out and meet apartment owners, to network and meet people who know apartment owners, and to do all of the work associated with listing a property once finding an apartment owner wanting to sell. When you build a relationship with a broker and he/she knows what you are looking for, you get the benefit of all of that.

Even more powerful is when you build up a network of brokers, with all of their networks, individual and combined, reaching out into the local market and beyond working to pull in deals that fit your buying criteria. It’s pretty powerful, and not hard to get up and working for you.

Here is what to do:

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Posted by Ben - January 21, 2014 at 7:43 am

Categories: Finding Deals   Tags: , , , , ,

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