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.

  • Isaac Young

    Hello Mr. Blank,

    My name is Isaac Young, and I am a 20 year old
    graduating college this year. In May, when I graduate, I will be 21. I
    am graduating college debt free, which is a huge relief. My goal is to
    be able to make at least $10k income through rentals by the age of 35.
    This is to support not only myself, and my future wife, but my mother,
    who has spent her life-savings keeping my brothers and I alive.

    Currently I am looking at an 11 unit I really like, but it is $400k, and I don’t
    have that kind of money! By December of 2017 I will have close to $20k
    saved up. I know the sellers will do owner financing, up to 15% of the down payment. As I have been told by the owner, the future needs of the buildings (there are two of them), are paint on one building (estimated @ $13k, or siding at $27K), and one needs jacking (estimated @$9k). The owner says they are firm on the price, but after finding out these numbers, I will probably say they need to meet me halfway.

    Included are two screen shots, one at 10% vacancy, and under repairs 15% (including 5% CapExand 10% Repairs). The second is a more conservative view. I am new to the realm, and my goal is to invest in multifamilies 5+ units, with my end goal getting into the 50s+. I will be living in one of the units as well, hence “0” in the unit section. My down payment is estimated at $10k.

    A few months back, and recently, I read on your first deal that was a 12 unit. Compared to the average 1-4 unit mindset, the higher number units seem a little overwhelming. I am willing to take on the challenge, because as you have said, you will work 10x harder to find 10 small deals opposed to one large deal. Did
    you have any fears though going into it? Many “what ifs” are coming into play as my time to enter the real estate realm comes. Any advice for person willing to step into the larger apartment buildings first? Thanks
    a million and happy holidays!

    (Sorry for such a long post!)
    https://uploads.disquscdn.com/images/7f42915f4a19fe09242515e1c60d3ab3bd8c1ed77f112203e0bb90cc253787fb.png https://uploads.disquscdn.com/images/00bd5e4e64bba9eccd4095f29747efe39ee9d2ef1bdba2e4384e221289fafdc1.png

  • Hi Isaac – thanks for your story. I think it’s great that you’re so young and already thinking of how to create passive income. I wish I had been so insightful!

    > Did you have any fears though going into it? Many “what ifs” are coming into play as my time to enter the real estate realm comes. Any advice for person willing to step into the larger apartment buildings first?

    The more time you spend with this deal, the more your comfort zone will expand.

    This article might help also: https://www.biggerpockets.com/renewsblog/2015/03/09/3-practical-ways-expand-comfort-zone-so-deals/

    Keep moving forward!

    Michael

  • Yehonatan Izik Baran

    Hi Michael

    In a syndicated deal, how would you handle a bad deal that ends up not living up to the promised investors returns?

    What would be the right course of action apart of not paying yourself, how would you address this to them

    Thanks

  • Rey Magno

    Hi Michael,
    I love listening to your podcast. Been a listener for a year now. I saw this deal on MLS but not sure if it’s a good deal and worth pursuing. Please help me evaluate it.

    It’s a 26-unit apartment. 25 units with 1/1. And 1 unit with 2/1.

    Purchase Price = $1.5M

    ACTUAL:

    Total Rent = $17,785/mo
    10% vacancy = 1,778.50/mo
    Annnual Taxes = $13,002/yr
    WSG, common Electric and Maintenance expenses = $34,750/yr
    Annual Insurance = $5,000/yr

    25% down and 5.5% interest rate.

    How to determine what my offer should be?
    How to determine the market cap rate vs cap rate?
    According to LA, cap rate is 13% which I doubt it.

    Thanks in advance, Michael.

    Sincerely,
    –rey

  • Claudio Tepper

    Hi Michael
    Looking forward to starting with your SDA. Quick question…should I stay away from rent control areas like where I live in Santa Monica???

  • Hi Rey … a good question and one I get frequently. Which is why I created the Syndicated Deal Analyzer and a very affordable program in which I provide feedback on your analysis. Please learn more about the Deal Maker’s Mastermind program here: http://www.ultimateapartmentinvestingguide.com/mastermind-lto.

    All of my free resources re: analyzing deals are here: http://www.themichaelblank.com/analyzing/

    Hope that helps!

  • Not necessarily, you just need a property manager who specializes in managing the buildings there. If your business model relies on raising rents, make sure you know what you can and cannot do, and how long it will take.

    Having said that, I own a rent-controlled property and I’m not a huge fan 🙂

  • Rey Magno

    Ok, thanks so much Michael. I will check into it tonight.

  • Nate Woodard

    Michael, just went through your 5 day introduction video series and really enjoyed the material. Thank you for providing it. I am not an apartment complex investor but actually a mobile home park investor. There is a ton of overlap between the two and I’ve already gotten great value and ideas from the material you provided, tailoring it to my business.

    My question pertains to the Syndicated Deal Analyzer. Do you think it could be customized to the MHP model? For MHP’s we do not capitalize the rent from park owned homes to avoid paying $25k for a MH that may be worth, say, $5k on the market. So when I run analysis I separate the lot rent (aka “dirt rent”) from the home rent, and value the park based on dirt rent and expenses, then add in an assigned value for the Park Owned HOmes based on what I think they might be worth.

    Any ideas how I could make this work with your Syndicated Deal Analyzer?

    Appreciate your time.

  • Hi Nate … I know that some customers have modified the SDA for mobile home parks and even self-storage, you just need some familiarity with spreadsheets. However, since I’ve received the request a few times in the past, I’d be willing to do this for you if you provide some guidance WRT the requirements (since I’m not a MH park expert). If you’re open to this, please email me at michael at themichaelblank dot com and we’ll take it from there … thanks!

  • Jcfwing

    Hi Michael, would you let me know what type of expenses are indicated by “contract services” on the scenarios tab of the SDA? I cant figure this out but would be helpful for modeling purposes. Also, if I want to add an expense for marketing do you think the other row on the scenarios tab is the best section to include it?

  • Jcfwing

    Hi Nate, I am interested in mobile home parks too and self storage as well. Would be interesting to see if the SDA could be customized for these types of properties as well.

  • Contract services includes things like pest control, landscaping, janitorial, snow removal. Yes, you can add marketing to the Other or “General/Admin” line item. Thanks!

  • Tom Hickey

    Hi Michael,

    Thanks for reaching out. I currently own a 4 unit in Peabody MA that I bought FHA and house hacked. It is nearing completion and I’m looking for direction on my next deal. Wondering if my current route of house hacking vs going big with partners is the way to go? Your podcasts are very helpful.

    Thank You,

    Tom

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