10 Reasons Arlington Apartment Buyers Are A Good Option For Multi-Family Real Estate Owners

This post describes the 10 Reasons Arlington apartment buyers are a good option for multi-family real estate owners who are considering the possibility of selling their texas apartment properties in the near future.

1. Increased competition as new apartments are being built in Arlington and the Dallas metropolitan area.

2. Arlington and certain area of Dallas continue to be strong, but the current credit crisis in the US could adversely impact growth and real estate values for the next several years.

3. Managing a mult-family real estate property can take time away from other things you may want to do, including golf, time with kids or grandchildren, travel or other activities.

4. Desire to work less and focus on the things that are most important to you.

5. Texas apartment properties have enjoyed robust growth over the past few years and should position most owners who have been in their investments for 2 or more years with ample profits available for the taking.

6. Tax advantages can permit trade-ups using 1031 transaction structuring to provide tax deferred capital to use for the down payment on a different or larger property.

7. Loans continue to be difficult for most to qualify for, but at the same time stock market volatility, the credit crunch and declining residential real estate have kept apartment values afloat through much of the crisis. Now can be a good time to lock in current profits and avoid future downside risk.

8. Capital gains are still available at the reduced rate of 15%, but the administration change to a new president and Democratic control of congress could mean substantially higher tax rates in the future if a sale is deferred.

9. Access the capital currently locked up in your Arlington or Dallas apartment property to use for other investments or more pleasurable pursuits.

10. A desire to escape tenant excuses and hassles and enjoy freedom from the ever present demands of managing and owning a multi-family property.

 

New Report Of Interest To Texas Apartment Buyers

I just read a great new report that should be of interest to Texas apartment buyers over on the real estate channel site.

Here’s an excerpt on the Dallas Fort Worth Market…

Dallas/Fort Worth

“The investment climate in Dallas/Fort Worth remains positive, underpinned by the strong local economy and vigorous population growth,” says Tim A. Speck, regional manager of Marcus & Millichap’s Dallas office. “The market is transitioning, with  local investors emerging as the major buyers, expanding their portfolios with residual capital from previous sales.”

Speck says employers in the Dallas/Fort Worth hub are expected to add 50,000 jobs by the end of this year, expanding payrolls by 1.7 percent.

 

Questions from Arlington Apartment Investors Answered

I have been getting some feedback and questions from Arlington apartment Investors and I want to take a moment to answer them now. Some of you who are interested in apartment properties have asked me if I accept private money investors for MY projects when I am a Dallas apartment buyer. 

As my projects are performing quite well and generating above average returns for me so far, a few of my readers have asked if I can save them the time and hassles of finding multi-family properties themselves and just let them in on some of my real estate deals.

 

Well, interestingly enough, from time to time I will accept other investors for certain deals. 

 

If you think you may qualify to participate or want to see if you qualify, you may contact me with your required ROI, and I will let you know 1) if you qualify, and 2) if so, when the next available opportunity comes about.

 

Investors in my projects do enjoy the benefit that we do all the work for them.  We select, negotiate, get the financing, purchase and close on the property, arranage for management the property and handle the details for them.

 

In most cases, they don’t even have to sign on the loan.   My apartment investors also get a preferred return – meaning the investors get paid first after the all expenses. 

 

 

Texas Apartment Buyers Still Buying Dallas Apartments

Despite the flagging economy and what are generally considered to be tough times for real estate, some texas apartment buyers are still buying apartments in Dallas, Arlington and Grand Prairie.

Dixon NG is one such Dallas apartment buyer. “There are many great investment opportunities in growing areas of Texas,” according to Dixon.

Most of the hot growth areas for Texas private money investors investing in apartment complexes and multi-family real estate can be found in South and East Texas, but of particular interest to many are the up and coming areas of Arlington and Ft. Worth.

Stronger economic growth and better than average job and employment prospects help keep businesses and people moving into these areas, supporting the demand for multi-family real estate to house them.

People can’t always afford or qualify for single family homes in these difficult and changing economic times. As more people move into growing areas following employment and business growth opportunities, demand for housing will continue to rise, thereby ensuring the continuing viability of multi-family and apartment real properties.

If you are a Texas private money investor looking to become a Texas apartment buyer, then you would do well to look into the possibilty of buying apartments in Arlington or Ft. Worth.

 

Arlington Apartment Investors Info (More About Cap Rates)

In a recent post I talked about how Arlington Private Money investors who want to invest in Dallas apartment realty need to understand GRM (Gross Rent Multipliers) and Cap Rates. In this post, I want to clarify what I said and provide prospective Arlington Apartment buyers with more info about how cap rates work when analyzing a potential multi-family real estate purchase.

How Cap Rates Work

Here’s how cap rates work. As I said in my recent post, the cap rate is the net operating income from the apartment investment divided by the market value or purchase price (depending on whether you are buying or selling).

Cap Rate Example for Arlington Apartment Investment

So for example, let’s say we have a $1 million asking price for an apartment project and it has net operating income (or NOI) of $100,000. The cap rate then would be $100,000 divided by $1 million which equals 10%.

Now, if we move the variables in the equation around just a bit, we can see that if we know the cap rate and we know the NOI, then we can calculate the value of the property using the following formula…

Net Operating Income divided by Cap Rate = Value

So, in our example we have NOI of $100,000 and a cap rate of 10%, so $100,000 divided by .1 = a property value of $1 million.

Lower Cap Rates Mean Higher Returns for Dallas Apartment Sellers

Now, what happens if the cap rate goes DOWN? Let’s see…

Say we have a cap rate of 5% with the same NOI as before ($100,000). Then we divide the NOI by the cap rate as follows: $100,000 divided by .05 = a property value of $2 million!

This may seem a littl counterintuitive at first, because the reality is that a lower cap rate yeilds a great property value.

Let’s look at one more example just to be sure we understand completely:

Private Money Investors and Apartment Buyers Should Look For Higher Cap Rates

Say that we have the same $100,000 NOI, but now the cap rate is 16%. Doing the math, we have the following: $100,000 divided by .16 = a property value of only $625,000.

Putting Cap Rates To Use In Multi-Family Real Estate Investment Decisions

So, how can Apartment Buyers use this information to their advantage?

The answer is simple. Buy at higher cap rates and sell at lower cap rates! If you are buying apartments in Arlington or anywhere in the greater Dallas metropolitan area, you are much better off buying at a high cap rate, because that means you will be paying less for the property.

However, when you go to sell your Texas multi-family property, you want to sell it at a lower cap rate, because the lower the cap rate you can sell the property at, the greater the total value you will receive for it will be.

Conclusion

I know cap rates can be a little daunting, but once you start playing with some numbers in the formulas, you will see that you can just use the general rule of Buy High and Sell Low when it comes to cap rates.

 

Welcome to the Arlington Multi Family and Dallas Apartment Investor Blog

Welcome to the Arlington Multi Family Real Estate & Dallas Apartment Investor Blog. I’m starting this blog today to provide valuable content and information to private money investors interested in investing in Dallas apartment real estate and for private money investors who are looking for above average returns on their investments.

I hope that you will find this information valuable and that you will leave comments here on the blog and let me know what other sorts of articles you would like to see posted here on the blog! Dixon NG

 

Arlington Private Money Investors Should Know Their Cap Rates and GRMs

Private Money Investors should know their cap rates and gross rent multipliers or GRMs. Arlington Apartment Investors have many things to think about with respect to today’s private money investment opportunities. This post provides some guidance as to things to consider when looking for places to invest if you hope to receive above average returns on your investments:

Cap Rate Valuation Model

The first model is the “cap rate” which is basically the annual pre-tax net rental income from the apartment complex divided by its current market value. Generally the lower the cap rate, the better the investment.

Gross Rent Multiplier or GRM Model

Another valuation model is the “gross rent multiplier” which is the purchase price or present market value divided by the gross operating income or total rents.

If you are a private money investor looking to invest in Dallas, Arlington or Grand Prarie real estate, you must understand these valuation models and what cap rates and GRMs are standard for the areas the apartments you are going to invest in are located.

Texas Multi Family Apartments Are Primarily Sold Through Real Estate Brokers

If you are a private money investor considering an investment in Arlington apartments or apartments in the Dallas metro area, consider asking for a referral for available properties through a commercial real estate broker.

I have a list of Arlington commercial real estate brokers that I would be happy to share with you. If you are interested, call me or e-mail at the contact info below and I will send what I have to you.

Know Your Numbers

Buyers should investigate local vacancy rates, rent control restrictions, the pace of new construction, employment levels and other marketplace factors.

Rents have a tendency to go up when construction of new multi-family housing is overly expensive and there are low vacancy rates. However, rents tend to decrease when new construction becomes available and vacancy rates are increasing.

Real Estate Finance Terms Have Little To Do With Investor Credit

Why? Because virtually all Texas apartment properties are judged credit worthy by banks based on their ability to service the debt they will incur during the financing process.

If the apartment property can service the debt it will carry, then financing is much more likely than if the only financial support will be a private money investors’ credit.

 

Arlington Texas Apartment Buyers Should Avoid These 5 Deadly Mistakes

I wrote this article on the 5 Deadly Mistakes Arlington Apartment Buyers might make, to help you learn from my experience and hopefully help you as an apartment owner avoid some of the costly missteps I’ve made and learned from.:

1. Failure to Properly Screen Tenants for Your Arlington Apartments.

Before you agree to lease an apartment unit to a new prospective tenant, be sure to check the following:

• Credit History
• References
• Background

2. Failure To Document Your Lease Arrangement In Writing.

Always have a written rental agreement setting out all the terms by which you are renting your  Dallas area apartment to your tenant.

3. Failure to Handle Texas Multi-Family Property Security Deposits Properly.

Establish a good system for handling tenant security deposits. Your security deposit policy should be in writing and mada a part of any rental agreement your tenant signs.

4. Failure to Properly Inspect and Document Pre-Move Property Condition of Your Property.

Hold a formal meeting to physically inspect the premises, document the condition and any issues requiring repair and have the tenant sign a form stating that the property is being received in new, like-new, good or whatever condition the unit being rented is actually in.

5. Failure to Timely Make Repairs To Your Arlington Multi Family Units.

You need a system by which tenants can request repairs to their premises when things go wrong, and you should have a person or team who can handle repair requests in a timely manner.