Condo speculators and converters beware... - Posted by ray@lcorn

Posted by Nancy on September 29, 2005 at 10:22:48:

Thanks a lot for your reply… " --“knowing” their personal skills and desire–" very insightful! I should be focused then to find that out first…
I’ll definetly get his material.


Condo speculators and converters beware… - Posted by ray@lcorn

Posted by ray@lcorn on September 26, 2005 at 09:44:40:

Hello all,

In case you’re wondering what the smart money is up to these days…

See this article:


So, Ray…? - Posted by wes

Posted by wes on September 26, 2005 at 10:19:15:

Due to (some) current fundamentals such as:

All these Conversions cutting into the apartments available as rentals.

Thousands of people along the Gulf Coast from FL to TX having lost homes due to the hurricanes (have heard at least 50% of those displaced out of New Orleans were renters).

And yet, long term financing for apartments is still very attractive.

Has this caused you to take a second look at the Multi-Unit market as holding future potential even with current low cap rates?

I know you have stated before you were more interested in other property types…

Re: So, Ray…? - Posted by ray@lcorn

Posted by ray@lcorn on September 26, 2005 at 11:03:09:


My move away from multi-family has much more to do with lifestyle factors than my outlook for the sector. My two brothers/partners and I have been at this all of our professional careers. We’re not done by a long shot, but we’re targeting less-management intensive properties as a way to reduce the demands of day-to-day business. Granted, our shift in emphasis was definitely accelerated by sky-high valuations in both multi-family and retail. We’ve learned over the years that sometimes you just have to take profits when they’re there, so we did.

But no, current conditions haven’t changed that for us. I’m updating our strategic plan now for our annual planning meeting, and multi-family isn’t in the mix. That isn’t a reflection on the sector, just our personal desires for how we want to spend our time.

The conditions you note certainly bode well for both apartments and mobile home parks. To those I would add that single-family housing is weakening daily, probably a stagnation or slow decrease of appreciation rates in most places. But while that helps multi-family, it assumes you can find and acquire deals that get past the high-price/low-return hurdles. That’s a tougher nut to crack.

Given that the weak fundamentals have been a demand-side phenomenon (as opposed to over-supply), and that shows signs of turning, this would seem to be a good time to explore selective development opportunities in areas showing above-trend job growth.

The recovery areas on the gulf coast are of course the focus of attention, but the effects will be felt across the south. I think a significant portion of the gulf coast population may well be permenantly displaced. The question is where those folks will settle. There’s a pretty good chance they will go where they can find work. Now is the time to get ahead of the crowd in those areas with expandable infrastructure and a diversified employment base… not necessarily metros. Second and third tier cities, now tracked by the census bureau as “micropolitans”, are showing the best fundamentals.


Re: So, Ray…? - Posted by Nancy

Posted by Nancy on September 27, 2005 at 23:10:17:

I’ve been reading a lot of your posts and they are very helpful!! I’m in Dallas, Texas, this is my first year doing real estate full time. We’ve had several rentals and is closing our first 9 units next week.
It’s great to hear your insights about apartment investing , and i think Dallas might be a good place to invest in multiunits right now, however good deals are drying up because of California buyers, many over paid and driving up the prices of apartments significantly.

I’m new to this and got a lot to learn, but I heard many “Apartment Mentors” staying “If you do a deal, might as well do it BIG” they are suggesting to start as big as 100 units, so that it can support an onsite manager and be able to support the expenses… I don’t know if you’d agree with that… They talk about Let the management company manage… but I think the owner needs to be very involved with apartment management and need to over see the managers regularly…
I want to hear what you suggest on how to get started with apartment investing. and how much money and experience you think one needs to have before jumping into say 50 unit complex… if I sell some of my properties I’ll be able to come up with 200K as down payments for apartment, but I want to know what I need to get myself prepared for the life of an real apartment owner… I’m getting myself educated in the area right now and I’d only go ahead when I’m get comfortable at it.

Your advice is greatly appreciated



Re: So, Ray…? - Posted by Mike Cheatwood

Posted by Mike Cheatwood on September 29, 2005 at 06:36:47:


While my name is not “Ray”, I have owned a number of “scatter” Apt Bldg’s over the past 8 years. Ray’s previous advice to questions on this subject point towards the individual investor first “knowing” their personal skills and desires and then using these strenghts to craft an investment plan that works with and compliments the desired deal structure as well as the financing for the deal(s) which means that these issues are ones that each of us can best answer for ourselves.

As a recent purchaser of Ray’s latest material, I also strongly recommend Ray’s recent masterpiece “Dealmakers Guide to Commercial Real Estate” as the detailed answer source to most of the questions in the area of commercial RE investing.


PS I too have always believed in being a hands on owner…

Re: So, Ray…? - Posted by Nancy

Posted by Nancy on September 29, 2005 at 10:23:37:

Thanks a lot for your reply… " --“knowing” their personal skills and desire–" very insightful! I should be focused then to find out my strenght and my goals first.
I’ll definetly get his material.