Ask Mike

Got a question you’d like me to answer ? Then fire away below! I’ll post a response and may also talk about it on a future podcast or blog article..

If you have something of more personal nature to ask me (not too personal I hope -;) then please use the Contact form instead.

  • Hi Stanci – signed up for what please? Also it might help to email support@themichaelblank.com so that we can help you better. Thanks!

  • Hi Lewis – expect to analyze/make informal offers on 100 deals before you close on one one. Target analyzing 5 deals per week. Target one investor meeting per week.

    Hope that helps!

    Michael

  • Sorry for the delay. I’ll look into this asap. I’m putting out a revision to the SDA next week, so if this is a bug, it’ll be fixed by then 🙂 Thanks!

  • Hi Leivi … man, I love your enthusiasm! The challenge with all of my free stuff is that it’s not in any particular order, so I can understand how it could be tough the exact steps.

    Are you in my list? I have a live webinar tomorrow (Thurs 8/3 at 2pm EST) that is going to try to break the process down more by using a real deal one of my students closed in April.

    If you aren’t on my list (and didn’t get the invite), please contact my team at support@themichaelblank.com and they’ll hook you up …

    Thanks!

  • Sterling … nearly impossible to say without spending more time understanding the situation … and I’m not a CPA!

  • Here is the link to register for the webinar tomorrow:
    https://app.webinarjam.net/register/1931/87eede8916

  • Hi Jarrod – have you read my free ebook “The Secret to Raising Money to Buy Your First Apartment Building”? (www.TheMichaelBlank.com/ebook). That might help to get you started. Also, registering for the live webinar tomorrow (https://app.webinarjam.net/register/1931/87eede8916).

    Thanks!

  • United Commercial

    That helps a great deal. Thanks!

    Lewis

  • Mitch Carson

    Hi Michael, on the SDA when you are modeling paying investors a too high preferred rate of return, is there a clear indication that the current income will not support it? Meaning you have to make up the difference in the following year. I thought I viewed one of your videos pointing this out.

    When this is the case, does the P&L tab show it? Or what is a direct method to know this?

    Thank you for your thoughts, Mitch

  • Yes, the P&L tab shows it, On the Preferred Member Deficiency. You may have to click the + sign to expand those rows. Hope that helps.

  • Mitch Carson

    Hi Michael,

    Thank you for answering my previous question, I re-watched an advanced topic video and noticed the + maneuver
    that controlled that function.

    Please tell me why some of the fields are are masked out with #### ? If I mouse over them I can see the result. How do I control this?

    Thank you in advance,

    Mitch
    P.s. Awesome job in creating the SDA for us! The best model I’ve come across.

  • Hi Vidal … I see the bug. It happens when you enter a 2nd mortgage but then you forget to set the interest rate and term. I fixed this (in the next release, coming in a week or so), so that when you enter an amount, it uses the % and term of the 1st loan, and then you can modify it. But it least it won’t behave funny if you forget. Thanks for this!

  • The #### indicate that you need to make the column wider to display the entire number. Thanks for the kind words!

  • Jake N Dani Reeder

    Hi Michael, I absolutely love your videos and podcasts… As of Aug 2017 where would be the top 5 emerging markets in the US to buy apartments? What are your recommendations. Thank you in advanced!

  • Everette Hill

    Hello Mr. Blank, I have some questions for you.
    1. How can you loose with Apartment Investing ?
    2. If the cash flow is coming why would you sell?
    3. Are you producing the majority of your income from Apartment rentals?

    I do the math using very conservative figures and it appears that you just cant loose. Im doing the 50% rule and cash flow is still coming. This is after 50% on expenses.

    Sir what am I missing? Im on the verge of feeling ignorant for not investing sooner.

  • Elena Demianenko

    Mike, I purchased the “How to Analyze Deals from A to Z ($7)” and was able to watch it right after the purchase. Where can I find it now? Can’t find it in my mailbox. Should I keep looking in it? thank you!

  • Patrick Wood

    I have heard all of your podcasts. Many more than once. Thank you for the work you do to help fledgling investors like myself. I know you are a fan of the Real Estate Guys Cruise. But is there another conference that focuses on syndication. Or any other ideas you may have to help educate myself and others on syndication. Thank you.

  • Tough to say “top 5”, but I like (in no particular order): Atlanta, Cincinatti, Columbus, Indianapolis, Jacksonville, Tampa, Orlando, OK City, TX (Dallas, Houston, San Antonio). Lots of cities are growing right now, the challenge is finding deals in those areas. I also like “non-cyclical” cities, i.e. ones that were not significantly impacted by the bubble and recession.

  • You can always lose in business. But it’s much tougher to do with multifamily. You’re not missing anything! You just need to buy right – don’t overpay, stick to your investing criteria.

  • Hi Elena – please contact our support team at support@themichaelblank.com, and they’ll be able to gain access to that course. Thanks!

  • I have my first in-person event coming up in October (www.TheMichaelBlank.com/event). The RE Guys have a syndication event. So does Dave Lindahl. Hope that helps.

  • Gustavo Valadao

    Thank you for your answer here Michael. The first one is close. Like really close. Thank you! https://uploads.disquscdn.com/images/4bad6772ef04451a8b20764e640b1938f745d85004a29e6af0f94f6ee050c3f8.png

  • Dino Pierce

    KaBOOM! Utilizing The Michael Blank’s techniques I had a broker send me an off-mkt, 98 unit, deal in Jacksonville today! Just underwrote it using the SDA and I’m in the game! Sincere Thx The Michael Blank!

  • Dino Pierce

    It’s penciling out!

  • That is fantastic … keep us posted!

  • Dino Pierce

    Will do – The seller is traveling until the end of the week so he will send rent roll & T12 then. Need to do more research on the area but it’s still penciling out thus far.

  • Christy Brock

    Hello. I am underwriting a property that is just under 300 units. It is a value-add deal. All units will be upgraded over a 3 year period. How do I slowly increase income to account for 100 units a year being upgraded since the income pop will come over time?
    Thanks in advance.

  • Anthony R

    Hi Michael. Thank you for all your support and education material. I just recently went on LoopNet and asked a broker for a marketing package. He replied back asking me to fill out and sign a confidentiality and registration agreement. Is that standard procedure when sorting deals with brokers?

    Thanks

    Anthony

  • Matt Engle

    Hi Michael,
    First of all, thank you for creating the SDA. I’m still in the early stages of analyzing deals and it is such a powerful model. I’m interested in holding the apartment buildings as long as possible and I noticed that the SDA exit strategies are limited to a sale in year 10 if you are able to refinance early and return the investors money. Is there a way to model a longer hold period and still meet the investors’ returns (i.e. If I refinance before year 5 and return all the investor capital, is there a way to model the deal if I again refinance in year 10 to cover the balloon payment on the loan and then keep the cashflow coming beyond the 10 year mark?) Thanks again for all your help.

    Matt Engle

  • Hi Christy,
    This is more art than science unfortunately. In the P&L tab you can adjust the average rent price that would occur over the 12 month period. It is Line 7. Or, adjust the total rent collected in Line 8.
    How to calculate that is the art. Essentially you want to figure out the total rent collected over the 12 month period. So you can adjust the total revenue (Line 8) for Y2 by the additional rent received for the 100 units improved. Repeat for the next 2 years.
    There is still a gap as you would be improving units throughout the year so you’d want to model that also. The best way to capture that is in Y1, Maybe take 40% of the difference in income and add to Line 8 (edit the formula and add in that value). That 40% income improvement would then be carried forward.
    If want to model based on average rents in the area you can overwrite the formula in Line 7. So if you wanted to raise rents $100 / month over 3 years you can apply maybe $20 in Y1, $25 Y2, $30 Y3, and then the final $25 at the start of Y4 so you’d recognize the full $100 average rent increase for all of Y4.
    Hope that helps, and sorry for the slightly complex answer.

  • Hi Anthony – use an NDA will be required. They should be pretty standard and most are online these days. This is business information and needs to be conducted in a business-like manner.

  • Hi Matt,
    The simplest way to model that currently is to use two SDAs. In SDA1, you could have a ‘Sale’ with $0 expenses in Y10. Then take those numbers as inputs into SDA2 as a starting point.
    If you have extensive Excel experience you can extend the tables in the P&L and Return tabs. That is a benefit to the Excel model instead of a software program. But that is to be used at your own risk also.

  • Sergio Fetter

    Would you consider a large property with 170 units, but several of the
    units are down, it will need some capital work? I have been offered
    couple of properties in Greensboro, NC. It is a big enough city, and it
    does have a very good upside.

  • Hi Sergio – this seems like a possible Value Add opportunity. And the market would be a good one. If you are a member of the Deal Maker’s Mastermind Group (http://www.ultimateapartmentinvestingguide.com/mastermind-lto) you can submit it to the team for review if you would like help in closing.

  • Jonathan

    Hi Michael, thanks for all you do to share your knowledge and experience with everyone! I’ve been a W-2 employee for over 10 years but am now working to build an investment portfolio which will allow me to leave my daily grind and live off of my cashflow. My company 401k plan offers a 100% match up to 9.3%, which is great. I have always been and continue to put 10% of my salary into a Roth IRA to take advantage of the full match. Given today’s economic market, do you think I’d be better off staying with my 10% allocation or forget the 401k and use the additional take-home pay and put it directly into my real estate investments? Thanks in advance!

  • Brandon Brown

    Hello Michael,

    My name is Brandon brown. My girl friend and I have been educating ourselves on real estate for sometime now, and we are ready to make our first purchase. I came across your website sometime ago, and we love your content. I’d like to say thank you for creating your website and helping others like us pursue their Real estate investing dreams. I have a question for you, we are still new to investing so we of course are digging and searching for a good deal. I have a deal i just came across, as of now I just have the proforma, I’m waiting for the financials. I don’t have the deal under contract yet. I’m still waiting to view the financials. Looking at the Proforma, it looks like a good deal, The obstacle I have in front of me is the down payment. We don’t have the money for the down payment and if we pull out a second Mortgage on it, we would be in debt every month.The property has great potential for upsides, The rents can be brought up to market rate, and we could increase the Rubs as well. The owner completed rehab on 47% of the property, we would have to finish the rest which would help our goal in bringing the rents to market rate. My question is how would someone creatively over come such an obstacle in regards to financing this property? Just to give you an idea of the financials here is what they look like. The property has 300 plus units, it’s property is unpriced, but the comps in the area that have recently sold were between 25-44 million dollars at an average price of $97,142 per unit. Doing the math i believe the owner would want $34,700,400.00. That price would be too much and would leave My Partner (Girlfriend) and I in debt every month. However if we could get the property for $29,500,000.00 we would be able to pay for the second mortgage or pay back an investor who would be willing to go in on this deal with us. That’s my take on it, but I know there are different creative ways to do financing, i thought about asking the owner to finance the downpayment? As i said before we are new and still learning any information you can provide would be greatly appreciated. Please forgive me if I left some details out.

    Thanks in advance!

  • Robert Walker

    Hi Mike,

    I would like to first thank you for helping me step out of my comfort zone to pursue my ultimate goal of acquiring an apartment building. I have been struggling with the the concept of flipping single family homes to build up my cash reserves to better position myself for a multiunit purchase. I have to admit you saved me. I was very close to moving forward with a homevestors franchise to help expedite my activity by leveraging their marketing. But, then I thought about how that would affect my future purchases and what my true goals were.

    I was listening to last week’s podcast and Tyler Sheff said flipping houses was practically stupid if you had aspirations to own multifamily, in so many words and it stopped me in my tracks. I’m fully committed to making this happen for myself. I have downloaded your ebook and reviewed and I have been using bigger pockets to poll great rental areas for multifamily and leveraging loopnet just to get an idea of what’s out there. I really would like to ensure I’m using my time wisely to educate myself as I work two full time jobs believe it or not so my free time is extremely valuable. If you were in my shoes today with the free and paid resources available to educate yourself, what resources do you believe would be the most effective in guiding me to purchasing my first multiunit property? Bigger pockets, books, resources on your site, etc. Any suggestions or feedback you can provide would be really helpful?

    Thank you for your time.

    V/R,
    Robert Walker

  • Hi Jonathan,
    I’m happy to share my experiences. Good to hear about your goals.
    Regarding specific financial advice, I cannot comment as I’m not a financial advisor. Finding a balanced plan, one that will help you sleep at night, is the best approach.
    I would also research ways in which you could use the money in your Roth IRA to possibly invest in real estate via a self-directed IRA or “checkbook” IRA as they are commonly called. There are lots of options. Educating yourself is always the best solution.

  • Hi Brandon – It appears you have laid a solid foundation and are well on your way. You should find a price that will work for you and not give on it. As you state, if you can’t afford it then it will just put a significant amount of stress in your life. Asking the owner to finance or other creative strategies would probably help you in this scenario.
    I have a couple options if you wanted to get deeper into this property analysis. The Deal Maker’s Mastermind group provides a lot of advice by real estate investors experienced to new: http://www.ultimateapartmentinvestingguide.com/mastermind-lto. Or you can schedule 1:1 coaching with somebody from my team to dig into this deal further: http://www.ultimateapartmentinvestingguide.com/coaching-by-the-hour/. Best of luck and let us know what happens!

  • Hi Robert – Your story will be fantastic when you buy your first apartment building. I would spend wisely on education based on what you can afford. The best place to start would probably be my course “The Ultimate Guide to Buying Apartment Buildings with Private Money” -> http://www.ultimateapartmentinvestingguide.com/. There are a lot of great resources available for free so do not discard those.
    If that course doesn’t fit within your budget, and even if it does, I would attend local REI meetings and network to find local mentors. There are a lot of ways to get started. There are a lot of different ways to be successful. As I’ve written about and discussed on podcasts the most important thing is to get started. We are here to help and have different programs to support real estate investors from new to seasoned as we can all learn something new. Best of luck!

  • Ed

    Hi Michael,

    I’ve been an avid listener of your podcast and want to start syndicating deals soon. I hope you can help me figure out how to invest $20k of my own money and another $20k from a Self Directed 401k account. My mother is also interested in partnering with me with her $50K when I find us a deal that makes sense for us. We are both looking for cash flowing buy and hold investments.

    My main question is if we are better off investing our money here in California to achieve that “First Deal” or should I reach out to other syndicators and partner with them instead. We don’t mind investing in multi family/small apartments out of state but we don’t know who to trust and where to start. BTW, we are not accredited investors.

    I’d be more than happy to partner with a syndicator but I don’t know anyone. Any feedback would be very much appreciated. Thank you.

  • Brandon Brown

    Thank you Michael! I really appreciate that advice. I agree with you, i’m going to find a price that works for me, as i want my first deal to be little to no stress on me. I’m interested in your mastermind group and i’m going to sign up, however, i do have one question in regards to proof of financing. I’m looking for properties in phoenix Arizona, and Las Vegas Nevada, Do you supply proof of funds to investors like myself in those areas? In the case, that the deal meets your criteria.

  • Yes we have a proof of funds process within the Deal Maker’s Mastermind group. And you could network with other members for one also. Look forward to you joining!

  • Hi Ed – Thank you for your dedicated listening. If you can leave a review in iTunes I would greatly appreciate it.
    Regarding your investment question – I think that is something that you are going to have to answer yourself. I would suggest an option where you can sleep well at night. And remember, you don’t need your own money necessarily. Through education and networking you can work with other investors to help you take down your first deal, anywhere. My Ultimate Guide course is a great educational tool, and goes through an entire section on how to find deals outside of your own market. You can review more details on that here -> https://www.ultimateapartmentinvestingguide.com/.
    In order to network, your local REI is a great place to start. Also, BiggerPockets is another great online networking resource. My Deal Maker’s Mastermind network has a lot of active investors who have submitted over 3,000 units to our Deal Desk since July. So you could partner with another team member in that regard. For more information on DMM you can view this web page -> http://www.ultimateapartmentinvestingguide.com/mastermind-lto.

    Best of luck and hope to work with you some capacity in the near future.

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