Ep. 39: Due Diligence Tips for Buying Apartments with Nathan Tabor

Nathan Tabor has operated more than two-dozen businesses since 1999, grossing over $150 million in sales. He was introduced to real estate when a man came to his used car lot with a building he needed to sell. Since then Nathan has successfully flipped 26 properties in 9 years, grossing over $52 million in sales and has consulted on deals worth over $200 million. He’s had amazing successes and epic failures, and is the author of “How to Find, Finance, Fix and Flip Apartments.” Today, he shares his take on the Winston-Salem market and his best due diligence tips when acquiring apartments.

Key Market Insights

• Ran a “buy here, pay here” car lot when a guy walked in and said he had an 18-unit complex to sell
• After having multiple issues securing financing was told to meet with someone who gentleman and received 100% financing
• Had $500k in debt, sold it for $850k and netted $253k in profits
• Second seller saw him doing the work and offered to sell his property and paid the same price per unit
• Second deal had a setback issue that ended up costing $150k more than planned
• Focus market is Winston-Salem and Greensboro
• 11th year investing in real estate and has seen 4 peaks and valleys
• Sees big city investors coming into Winston-Salem
• Gets almost sidelined in a timeframe like this when properties that should sell for $15k/door start selling for $30k-$35k/door
• If market is maxed out at $900/mo for rent, you’re not getting more than that no matter what you do to the unit.
• Focus on Class C or D+ properties with high issues, runs his number backwards, like a flip property
• Cap rate determines value for the area based on what has been sold
• In Winston-Salem properties have sold at 2%-3% cap rate, and others that have sold at a 24% cap rate
• Look at Loopnet, CoStar or brokerage firm to help determine cap rate
• Cap Rate = Net Operating Income / Sales Price
• Most properties are in 7.5-9% cap rate
• Found opportunities in rural areas, 15 minutes from downtown, off MLK,
• Seeking an owner in distress or ready to exit
• Pulls police records, city complaints, housing authority from last two years and looks for patterns
• 80% of people don’t have a business plan for their business

   Bull’s Eye Tips:

Winning Your Market: The answer is no until you ask

Tracking Market Changes: Educate – read, talk to building inspectors and leverage a team

Daily Habit: Reads Proverbs daily

Resources:

How to Find, Finance, Fix and Flip Apartments by Nathan Tabor   

Best Business Books:

21 Irrefutable Laws of Leadership by John Maxwell 

Digital Resources

Loan Calculator Pro 

Tweet This:

“Business is simply how much you can make versus how much you can lose” “You can not rely on someone else’s information – go direct and ask the source” “You make your money whether you hold it or flip it” “Rent rolls are worth nothing, get bank statements”

Places to Grab a Bite in Winston-Salem:

Prissy Polly’s

Clark’s BBQ 

Connect with Nathan:

Apartments.nathantabor.com

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Midwest Real Estate Networking Summit

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