Apartment Quest

Due to the tidal wave of chaos and uncertainty that’s building right now in commercial real estate, I believe that 2010 is the year to buy Apartment Buildings!

Because of this I’m teaching a half-day FREE seminar on How to Buy Your FIRST Apartment Building. Saturday, February 6, 2010. 8:30 am to 1:00pm.

There’s a catch though – in order to be admitted free I’m asking for your help with something that’s very important to me. Medical care for pregnant mothers.

I’m doing this seminar to raise money for a charity that I personally work with and have supported for years called Mother and Unborn Baby Care in Southfield, Michigan. I came to realize how critical medical care is to pregnant mothers when my 4th child developed a very serious and life threatening problem prior to her birth. One of my goals now is to make sure that every pregnant mother has access to proper medical care.

I’m asking that you donate $15 per person with the proceeds going to Mother and Unborn Baby Care. If you choose not to donate, then the cost to attend is only $97.

The updates for 2010 include:

And I’ll also be talking about:

And I’m offering a special bonus this time: round tables with some of the experts that I use every day in my business.

It’s going to be a jam-packed half day talking about everything you need to know to start looking for your first apartment building.

Who should attend?

Beginners!!! Or at least people brand new to apartment building investing. This is an entry level seminar about what you need to do when you’re just starting out looking for your first apartment building. I’ll walk through the purchase process and tell you what to expect, and what to look out for, during each phase of the purchase process. If you have already bought your first apartment property, this seminar is probably not for you.

Act fast if you want to attend. Due to hotel conference room availability, space is extremely limited.

Get the details:

How to Buy Your FIRST Apartment Building

As you may have noticed, something was glaringly missing from my Wednesday Post: My Million Dollar Day.

It was intentional.

What I didn’t include were the many, many thank-you’s that I owe to the various people that have played a part in my “Apartment Quest”. To think that I could have done this myself is ridiculous. It’s been a long road since I started this quest back in January, and the list of people that I want to thank is endless. So I wanted to make sure that I did this under a separate post.

I want to take the opportunity thank the following people for in some way making a truly material contribution to this achievement. Please forgive me if I have left you out:

Andrew Kuhn
Catherine Hartkop
Chris Burrell
Darin G
Dave Geraghty
Doug Shellig
Eric Stanton
John Mcalauf
John M
Linda Hagan
Mark Dundon
Mark Ijlal
Marty B
My father, Dennis Fassett Sr.
Nora Chenail
Pat Parke

And a couple of others that for various reasons, one nefarious, must remain anonymous. You know who you are.

Two people that I want specifically thank are:

Eric Brown of Urbane Apartments. Eric I very much appreciated your advice, guidance and feedback. I very much appreciate the time that you took explaining your organization and approach to purchasing and managing multi-family buildings.

Josh Otting, owner of Apartment Realty and Management. Josh I want to thank you for your patience and guidance through this process, and I particularly appreciate your deft and calm handling and disposition of every single issue that has come up since we started all this in April.

But most importantly – I want to thank my wife Marily. She’s my biggest fan and my greatest supporter. She never had a single doubt about this through the entire process, even though I wavered. As always she’s the reason behind my action.

Thank you.

Yesterday was a good day in my real estate business. 

A pretty good day in fact.

Because yesterday I bought a little over $1 million in real estate. One 20 unit apartment building and one single family home. (And didn’t use one penny of my own money. But that’s a topic for another post.) Not only that, but I had an offer accepted for what will be my 11th single family rental home, and a colleague that I’m helping to buy his first rental had HIS offer accepted as well.

But like most things all of this didn’t just happen. If you’ve been following my travails you know that I’ve been slogging through the process for months (since April 5th to be exact) on the apartment building, and at various times thought that it just wasn’t going to happen.

Now I’m not going to give myself tennis elbow patting myself on the back about this because it’s not my style, but I was fortunate that two of my strengths match up well with my two fundamental take-aways from this experience. And they are:

• Patience is key. The process required to buy an apartment building takes time. A lot of time. No matter what. On my single family homes my all-time record is 11 days between offer acceptance and closing. That’s not going to happen with an apartment buildings. Personally I scoffed at it when everyone told me that it would take six months to close. I’m not scoffing any more. There is no way to short-cut the process, and I don’t think that you’d want to when you’re spending a million dollars. This is a marathon not a sprint so plan accordingly.

• Persistence is critical. My first deal died through no fault of my own, and this deal died three times since April. But the location is spectacular, the numbers are spectacular and there was/is substantial upside so I was not going to be denied as long as the fundamentals remained the same. Out of all the skills or traits necessary to bring this to closing I’d say that without a doubt that dogged, focused persistence is the most important.

 
I can’t tell you how excited I am to get started harvesting the upside potential on this building. (The best part about it was that my kids invested in this building as well. They cashed in their savings bonds and all four are now earning 10% interest on their money.)

But lost in this discussion and dwarfed by the building in terms of dollars is the little single family home that I closed on in the afternoon. Now you wouldn’t BELIEVE the grief that I continue to get for my dogged pursuit of single family rental homes, especially since I’ve made the leap to apartment buildings.

But not only do the numbers make sense, they’re off the charts. It’s a three bedroom one and a half bath bungalow in the best school district in the state, Grosse Pointe. It’s all brick, has a full partially finished basement, central air, a two car garage, refinished hardwood floors, nice paint (actual colors) and all appliances. The roof and mechanicals are in great shape as well. It’s in better than move-in condiiton.

I bought it for $60,000 yesterday and had it rented for $1075 per month last week. A house across the street sold for $137,000 in 2005. So cash flow and upside. And oh yeah by the way – my private investor funded this 100%. And it STILL cash flows around $300 net per month. And it will cash flow on Day 1.

So my question back to my grief-giving friends and colleagues is – why not?

So yes I’d say that we had a good day yesterday in my real estate business. A million dollar day. A BSD day.

Are you curious about what it takes to buy your first apartment building? You’d be shocked by how simple it is, even the first time. I’m offering a free seminar next week to talk about it. For more information go on over to ApartmentSeminar.com. The session is almost full so act quickly if you’d like to attend.

It’s been a while since I posted something to this topic. July I think. Mostly because I’ve found that when dealing with adults in commercial real estate the deal process is about as exciting as watching paint dry. And I hate painting.

So let me bring you up to speed.

We last left this thread with my last deal dead and me starting the lawsuit process for the return of my earnest money deposit. Well if you can believe it, this hasn’t been resolved yet. The reason? Mr Seller, being the third grader that he is, is ducking the process server. So I’m still chasing him for his signature. But on the bright side, Mr Drama Queen is now in a world of hurt. Now I’m (generally) not someone that revels in the misfortune of others, but in this case I’m making an exception. You see, in anticipation of selling the building to me, he refinanced the building and took on a commercial mortgage with an interest rate that resets daily, and with all the volatility in the credit markets his interest rate is now so high that his building isn’t generating positive cash flow for him any more. I’m really broken up about this as you can tell. 

The good news is that I have made progress on another building that I first looked at back in April. This one is located near the GM Tech Center in Warren, and there’s a lot to like about it.

First is the location. The Tech Center is a good area to be near, because it’s probably the last GM facility that will close if they continue their collapse and walk away from the Ren Cen. Second, it had an assumable (for no fee) 15 year low-interest land contract with no underlying mortgage, and third it was being managed less than efficiently by an owner that had reached the point of wanting to retire, so there is some low hanging fruit to boost ROI performance.

Much to my surprise this process has moved along completely drama-free except for a couple of small mistakes and mis-communications.

We agreed on price. The inspection went well with no major issues arising. The Phase 1 environmental inspection was completely clean, and the financing is a breeze because of the assumable land contract. We’ve even filled a couple of vacancies as we have approached the close.

Now don’t get me wrong, there was a lot of tough back and forth negotiating along the way. Several disagreements, miscommunications, and mis-clarifications. But end the end it was a straightforward and unemotional process that was primarily focused, at least from my perspective, on the numbers.

As I mentioned before, I had always heard that commercial real estate was where the big boys and girls played. And this deal validated that belief pretty well.

I cross the finish line on October 29th at 10am.

Unbelievable. AGAIN.

I kept hearing how this commercial property stuff was different. But it seems like every time I turn around it’s gets more and more bizarre.

As you have read in some of my prior posts, I’ve been pursuing my first apartment building since the beginning of April. The seller has been a compete flake every step of the way.

He dragged his feet so much that I drew a line in the sand to either decide or I would cancel the deal. He couldn’t make up his mind so I canceled it two weeks ago. He came back a couple of days later and tried to renegotiate – for more money if you can believe it – even though he hasn’t had any other interest in the building since we started to dance.

I said no and have moved on to look at other buildings.

That was over a week ago. And guess what? The seller has decided that he’s not going to sign a release so that I can get my earnest money deposit back from the title company.

And here I thought that the commercial area was where the big boys played.

Instead I picked a third-grader to deal with on my first one. Brilliant.

So now I get to engage my attorney and go to court – just to get my EMD back.

So as Bugs Bunny says – of course you realize, this means war!

What a maroon.