Quote:
Originally Posted by glassman
that is a great quote.
Greg, on the reit. This may not be a proper question but here goes. Did you know the number of units (at the apartment/condo/highrise etc etc) there were and the average sq ft of each unit? in other words, i'm curious to see what these boil down to on a cost per sq ft basis. I know in the custom and track home building business's this matters, was wondering if the same applies to a reit.
thanx
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Okay -- it's semantics -- but these are NOT REITS (Real Estate Investment Trusts) -- these are private LLC's....
Yes --- Price per square foot matters.... and the condition of the property relative to its neighbors/neighborhood.... and it matters what it's competition is getting in rental rates ------ if you plan to buy a beat up property and improve it.... can you then raise the current rate to market.
The guys I've invested with have several key investment strategies that I personally am drawn to:
HUGE down payments --- 40% ish or more
Large cash reserves
Cash to improve the property immediately (meaning part of the cash raise from investors includes the updates)
Improve the property to raise the rental rate.... even if it means no return to investors for a year or two. What happens here is a lack of rental income while you're remodeling several units at a time.
Buy properties that have been owned by someone that has not brought them up to current rates because they've not improved them. This includes interior and exterior and landscaping etc. While this is costly up front -- the return is a higher/above market rental rate. Rental rates control cap rates - cap rates control the selling price.