How to set your buying criteria in apartments- 2023 investing

Hey, what's up, guys? It's Jonathan. Today I want to talk to you about how to set your buying criteria in apartments. Okay? So if you're buying apartments, maybe you're brand new, you've not bought one before, or maybe you're looking for your next one. We want to talk about where to buy, what locations nationally, where do you want to buy apartments, how do you set that criteria, and also how many units should you go buy or take to start with or for your next deal and what types of property, what type of assets, what's the strategy, all those kinds of things. We're going to talk about those things. If you don't know who I am, my name is Jonathan. Me and my partner both have businesses, real estate businesses that we've scaled significantly. Collectively, we have around 500 units or more. And we say all the time we wish we, if we knew what we know now, then when we first started, we would have stopped, started with commercial and been a lot further ahead. But today let's jump in. Number one, where should you buy apartments? And by the way, we will go deeper into each of these subjects and do videos later on. But if you want to be updated with that, I would just subscribe on the channel, just hit that subscribe button and hit the notification bell. Either way, let's jump in. So where to buy? Now, this is kind of controversial. There's a lot of different points of view. But I'm just going to try and make it simple for you because we've coached and advised a lot of investors, probably hundreds of investors at this point. And so I'm just going to give you what I'm going to recommend for most people. Now, some people want to look nationally, want to look all over, and that's fine. There's different advantages to both. Right. And I've done a separate video specifically on in state versus local. But you know, a lot of people talk about Florida, Texas, California, all these places that are doing really well and people are moving to. Right. And you know, there's stats to back it up, like, hey, you probably want to be in Florida, you probably want to be in California. You know, there's going to, you know, you know, a majority, I think there was 4.3 million apartments or new apartments are going to be needed in the next 10 to 15 years. Right. In the U.S. and most of those are in Florida and Texas. Right. And California. So just following that, I mean, you know that it's probably pretty safe to be in Florida and Texas, but I'm going To let you know that some of the best deals we find are in random towns, right. I would say as long as the town is not negatively trending in terms of population, as long as it's not going down in population, there are good deals in many areas and even the small towns, right. So generally I'm going to recommend that when looking for off market deals, we're not looking on market. The way we talk about it is you're kind of what you need to get through a lot of deals, a lot of leads to find that perfect best deal. Right? And so that means you need to be spending your time most efficiently, most wisely, and that's going to not be necessarily underwriting and spending a lot of time looking at on market deals. We need to be looking at off market deals. So for that we generally recommend going and pulling a list of, and you can use things like crop stream, Rhionomy, all these different things, but pulling a list of maybe a hundred mile radius of yourself, right. And that should give you a big enough list to where you can start dialing and hitting up properties. Okay. Now there's many ways to go about, you know, lead generation, right. And we teach probably 50 or more ways. But that's just an idea, right? To give you an idea of what I'll generally recommend. Okay. And we talked about this in another video. But you know, advantages to investing locally are just simply, you know, the ability to have home field advantage, know your market a little better than other outside investors. Okay. You'll be able to, you know, keep a little bit more money in your pocket because if you need to go visit the property, you can just go visit it, you can check on things, blah, blah, blah, versus going out of state, you may need to bring in an on site partner or boots on the ground or whatever you want to call it, and then give a little bit of equity away. But advantages investing out of state is going to be the fact that it's, you know, more passive. You've got to put systems in place to manage things from afar. You know, you have a bigger range of ideas or of possibilities. But I think that's pretty much where I'll land right there. With what location should you be investing in? Some people talk about Republican versus Democrat states, right? I think, yeah, you could argue it's probably not smart to invest where somebody could just pull the rug out from under you and not require anybody to pay rent. But that's happened before and we've still pushed through it. Right. And I think that in the End of the day, my personal philosophy is how good of a deal is it? Even if it's in a horrible area, you know, how good of a deal is it? Right. If they're going to pay me to take it over. Right. So anyway, that's how I look at it. Some of the best deals we find are in back towns that aren't even, you know, necessarily the most, you know, popular. People don't even really know about it. It's just about pulling the numbers. If you want to find out more about like you know, how to pull list and how to, you know, analyze on, right. Just reach out to us. We'll probably put a link in the description. Second thing, on setting your buying criteria because again, buying criteria is simply, you know, letting people know what you are looking for in, in, in your apartments. Right. So letting people know what you're looking to buy. So just kind of giving you a brief overview of ours, right? It's 30 plus units, you know, class A and B areas, but class B and C properties and not saying that, you know, it can't be a class C area, but that's just generally what we'd love to see. If we can take a C class property and move it to a B because it's in a B class area. But you can't take a C class property and put it in a C area and expect it to be a B. Right? It's going to be a C, but you can still make money if it's a C class property and you don't move it into a new class, you just increase the value through forced appreciation. Right. Like you can still make a lot of money there and we've done it. Right. So yeah, so generally 30 plus units, value add, opportunity, that's the biggest key there, right? We want something that we can fix up and create not just relying on natural appreciation. We want something we can create free forced appreciation. Okay, so that's big key right there. And how many units should you go with? Should you start with now I'm going to say it's up to you, right? Like it's, it's. But for us, when you're talking about 30 plus units, especially in the beat areas, you're talking about one of the most passive vehicles in real estate that you could possibly be in. And, and because it's passive, it's also extremely scalable. So even if you're wanting to create an apartment buying business and really invest into creating a massive commercial business, you still want to think about passivity, you still Want to think about scalability, right? So even if you're not just trying to do one deal or two deals and then retire and be free, it's still good to think about what's going to be worth your time the most. And we find raising money and allowing yourself to get into big deals has much more margins for you in your time, you know, so just like a property that our team just took down recently, you know, it's 200 bucks a month under market rents or somewhere around there just for round numbers. Let's talk about round numbers, right? 88 units, 200 bucks under market rent. Let's just suppose that we go in there in the first six 12 months, maybe 18 months, and raise the rents. 200 bucks a month. You're talking about an immediate 200 grand to the NOI. And then the way apartments are valued, 200 grand divided by your cap rate, which is 6%, you're talking about an immediate $3.5 million being added to, to the value of the property. Okay, so that's an example, right? It's not saying the deal is going to play out like that, but that's just giving you an example of what can be done in value add apartments. And, and then you also. On top of that, because you're at such a high unit and you have the ability to afford a nicer property management company, you are going to have a much more professional level of service. Now, you still need to make sure you're checking on your property management company. You still need to make sure you have that dialed in and that they're doing their job. But for the most part, it's one of the most passive vehicles you can be in. I hope this video added value for you. Select your buying criteria. That's the first thing you're going to need when buying apartments. So let us know if that helped. Otherwise, hit subscribe and let's be looking out for the next videos about even deeper things like that. Okay? All right. God bless. Have a great day.