Table of Contents
In this podcast episode, Dave Debeau talks with his guest, Mark Baltazar, an expert in multi-unit investing who has leveraged the power of 12-20-unit apartments to generate sustainable wealth.
Much like you, Mark Baltazar found his way into the 12-20 unit apartment investing field by seeking an effective method. Initially, building wealth in single-family homes led him to explore the potential of multi-unit investments. His journey in real estate investing is marked by continuous learning and growth, and he shares this wealth of experience in the chat with Dave.
Mark’s expertise lies mainly in 12-20 unit apartments, a niche that offers an ideal balance between manageable scale and profitability. This segment presents unique opportunities not always available in single-family investment or larger multi-unit projects. It allows investors to build substantial portfolios without getting involved in institutional-grade properties.
Throughout their discussion, Dave and Mark touch on critical topics that will enlighten and inform budding investors. From understanding the benefits to analyzing the market, financing considerations, and strategies for tenant selection and retention, their conversation offers a comprehensive guide to investing in 12-20-unit apartments.
As you listen to Dave and Mark discuss the potential of 12-20-unit apartments, it’s essential to consider how their insights might apply to your investment journey. Please take note of their experiments, their successes, and their challenges. Use these insights as a roadmap for success in this unique real estate niche.
But first, if you want financing for your next investment and want to know what type of collateral may be involved, click the link below for a free strategy call with our mortgage team at LendCity to discuss your specific situation.
Understanding the Benefits of Investing in 12-20 Unit Apartments
When Dave Debeau sat down with Mark Baltazar to discuss the benefits of investing in 12-20 unit apartments, Mark shared several essential insights about this specific real estate market segment. Mark emphasized that one benefit is the profitability of economies of scale. Acquiring multiple units in one property allows investors to streamline management, maintenance, and other operational costs.
Economies of Scale
As Mark Baltazar explained to Dave Debeau, investing in a 12-20 unit apartment can offer higher return margins. This is because the operational expenses for such properties tend to decrease per unit as the size of the investment increases. It allows investors to negotiate better prices for property management, maintenance, insurance, and landscaping services. These combined cost savings can contribute to higher net income and return on investment.
Mark also pointed out another significant advantage of 12-20 unit apartments: less competition. Unlike the hotly contested single-family home marketplace, fewer investors are eyeing these mid-sized properties. Mark told Dave that this could mean fewer bidding wars and more opportunities for savvy investors.
Lastly, Mark highlighted the allure of steady cash flow that 12-20 unit apartments can yield. Unlike smaller properties where a single vacancy can lead to significant income loss, a couple of vacancies in a 12-20-unit apartment building will generally impact the overall revenue less. This can mean a more consistent return, providing more financial security for investors.
Investing in 12-20 unit apartments can provide economies of scale, less competition, and a steady cash flow.
Analyzing the Market for 12-20 Unit Apartments
In this episode, Mark Baltazar, an expert in real estate investing, talks with Dave Debeau about the factors to consider when analyzing the market for 12-20-unit apartments. It’s not just about spotting any apartment building for sale; it’s also about understanding the dynamics within that specific market.
Mark emphasizes the importance of collecting both macro and micro data. Macro data will give you a broad view of the real estate climate in a particular area. In contrast, microdata offers insights into the specifics of the property and its neighbourhood.
- Macro Data includes information on housing and job markets, population trends, and economic indicators such as GDP growth. This data will help you understand whether or not it is the right time to invest and where the opportunities may be.
- Micro Data: This level of data involves factors like neighbourhood rental rates, tenant demand, property conditions, and nearby amenities. It helps to assess the potential profitability of a particular property.
Understanding these numbers is crucial, but deciding what they imply can be challenging. Mark suggests engaging with real estate professionals – brokers, property managers and other investors. They have the expertise and experience to help interpret the data and make the right decisions.
“Leveraging your network is extremely important. You should never underestimate the power of a seasoned professional’s knowledge. Their insights could be the key differentiating factor between a good investment and a bad one.” – Mark Baltazar
A thorough market analysis can position you to make better investment decisions, ultimately leading to improved profitability and success.
Lastly, Mark shares that examining the market should not be a one-off task. It should be continuous because market conditions can change rapidly, and staying current empowers investors to adapt quickly to maximize returns.
Finding the Right Location for Your Investment
When investing in 12-20 unit apartments, one crucial factor to consider is the location of your investment, a point upon which Dave Debeau and his guest, Mark Baltazar, place significant emphasis.
As Mark stresses in the podcast, “Location is everything in real estate investment.” This resonates profoundly with Dave Debeau’s philosophy that choosing a suitable location gives your investment a stronger foundation for success and minimizes potential impediments.
Not all locations are created equal when it comes to real estate investment. Mark Baltazar breaks down several essential location factors when scouting potential investment properties. Some of these include:
- Economic trends: Regions with robust and growing economies tend to have higher demand for rental units.
- Population growth: Areas experiencing population growth often lead to increased rental demands.
- Public amenities: Proximity to schools, shops, and other amenities can make an apartment complex more appealing to potential tenants.
When exploring potential locations for your investment, remember that patience and due diligence go hand in hand. This is an aspect of the investment process that should not be rushed or taken lightly, as it can make or break the profitability of your venture.
As Dave reminds us in the podcast, “Finding the right location can mean the difference between making a good investment move and making a costly mistake.”
In conclusion, careful consideration of location when investing in 12-20-unit apartments should not be underestimated. The insights shared by Mark Baltazar reveal why an astute choice in terms of location is a significant step toward experiencing lucrative returns on your investment.
Key Considerations for Financing 12-20 Unit Apartments
Finding suitable financing options for investing in 12-20-unit apartments can be challenging. Not only do you need capital to purchase the property, but also funds for possible renovations and ongoing maintenance. Our guest, Mark Baltazar, provides expert insight on the matter.
The Different Loan Options
Mark explained during his talk with Dave Debeau that various loan options are available depending on your financial situation and the property you’re interested in. Some common ones include conventional bank loans, credit union loans, and private lending. Understanding the pros and cons of each can help set you on the right path.
Interest Rates and Terms
A crucial aspect Mark mentioned is the terms and interest rates. A lower interest rate might seem attractive, but you must consider the loan term. The long-term cost of the loan may be higher with a lower interest rate but extended term. So, make sure to calculate the total cost before making a decision.
Another point Mark highlighted was being aware of any hidden fees or charges that might come with a loan. These could include appraisal, origination, underwriting, and processing fees. Make sure you’re fully aware of all potential costs.
One concept that might be less familiar but intriguing is partner financing. Mark elaborated that partnering with someone who does can be a good option if you don’t have enough capital. This splits the financial burden and allows you to learn from someone more experienced.
In conclusion, financing 12-20 unit apartments need not be daunting if you take the time to study the different options and decide wisely based on your financial capabilities and investment goals. Mark’s insights have shed light on crucial considerations, a testament to his expertise in the field.
The Importance of Due Diligence
Due diligence is critical when investing in real estate, particularly 12-20-unit apartments. As Dave Debeau and his guest, Mark Baltazar, emphasized in the podcast, this step is fundamental to avoid any surprises down the line. Due diligence involves thoroughly investigating a property before finalizing the purchase.
Completing due diligence investigations demands a thorough review of all aspects of the property. This could include, but is not limited to, an inspection of the property’s physical condition, financial stability, legal standing, and local market circumstances.
- Physical condition: Investigating the property’s physical state includes looking into property wellness, required repairs, and overall quality. Being well-informed about these aspects is crucial to avoid unexpected expenses after purchase.
- Financial stability: Investigating the property’s financial standing includes reviewing previous income, costs, and net operating income to understand if the investment will be profitable.
- Legal Standing: Legal due diligence involves confirming the property’s legal status, existing or potential legal issues, and compliance with local real estate laws and regulations.
- Market conditions: Understanding the local market conditions can indicate whether the property will likely retain or increase in value over time. Consider the region’s employment rate, population growth, and future development plans.
Due diligence can seem like a complex, time-consuming activity. However, Mark Baltazar insists on its importance during the podcast show with Dave Debeau. Doing your homework could mean the difference between a successful investment and a financially draining project. You want to know precisely what you’re buying, and the only way to do that is through due diligence.
The two experts, Dave and Mark, provide specific tips for performing due diligence. They suggest hiring a professional, such as a property inspector or a real estate lawyer, to help you navigate the process. While this may incur additional costs, the benefits outweigh the expenses as it secures your investment and ensures a comprehensive understanding of what you are about to purchase.
“Don’t cut corners. Check everything you can check. This is your hard-earned money you’re investing, you want to make sure you’re making a wise move,” advises Mark Baltazar.
You can safeguard your investment through due diligence and improve your chances of a profitable return. Embrace it as part of the process rather than viewing it as an obstacle or hurdle to overcome.
Strategies for Tenant Selection and Retention
As an asset manager, selecting the right tenant for your 12-20-unit apartment can often be daunting.
Tenant selection is the process of choosing renters for your rental property. The process includes analyzing the tenant’s income, character, prior eviction cases, and credibility. It’s worth stating that choosing a tenant who pays on time and is responsible is critical to the successful management of your property, according to Dave Debeau.
How to Select the Right Tenant
- Background Check: Begin by thoroughly checking a potential tenant’s background. This may involve getting references from past landlords, verifying employment, and running credit checks.
- Income Validation: A tenant’s income should be able to afford the rental payment comfortably. Look for tenants who have steady income sources.
- No Prior Evictions: Mark Baltazar mentions that if a tenant has previously been evicted, this could be a red flag and may suggest the potential tenant would be problematic.
- Maintains Good Credit: A responsible tenant is likely to have good credit.
Tenant retention involves strategies to encourage tenants to continue living in your property and minimize turnover, thereby reducing vacancies. This is particularly important because a high churn rate means lost revenue and more expenses due to repainting, cleaning, and making necessary repairs each time a tenant moves out.
- Quality Maintenance: Maintain the quality of the building and units. A well-maintained rental property is a powerful tenant retention tool. Regular maintenance and prompt repairs make tenants feel valued and reduce their desire to move.
- Sound Communication: Always keep open lines of communication. Regularly check in with tenants and respond promptly to complaints or concerns.
- Rent Increase Strategy: Be careful with rent increases. While a rent increase is expected over time, ensure it’s reasonable and appropriately communicated to avoid jolting tenants.
Conclusion: Taking Action and Building Wealth with 12-20 Unit Apartments
In the conclusion of this insightful discussion, Dave Debeau and Mark Baltazar shed light on the importance of taking decisive action when building wealth with 12-20 20-unit apartments.
As Mark Baltazar points out, the purpose of attempting the 12-20 unit apartment model is significant as it offers low risk and high rewards. The more substantial number of units provides a cushion against any potential vacancy, thereby reducing risk. Moreover, it also provides increased cash flow compared to single-unit properties.
Mindset plays an undeniable role in the success enjoyed in this property segment. As reiterated by Mark, one must disregard the perception of large properties being intimidating. It is about surrounding oneself with a solid and knowledgeable team and pursuing diligently. Remember, these opportunities offer the potential for building wealth while providing housing for those in need.
“Hesitation can cost you an opportunity,” reminds Mark, underlying the relevance of swift action in a competitive market. Continuous learning, understanding market dynamics, due diligence, and proactive engagement are paramount to capitalize on these opportunities. The path to wealth creation is open, and it is up to you to make the journey.
Starting your investment journey in 12-20 unit apartments can seem daunting. But, as Dave’s discussion with Mark Baltazar demonstrates, with the right mindset and approach, these platforms offer a viable route to substantial financial growth.
If you are ready to start investing today and want more information about how your mortgage may be secured – or are looking to apply for a mortgage today – click the link below for a free strategy call with our mortgage team at LendCity today.