Latest / Own More Doors / #79 Long Beach Apartments Are on the CLEARANCE Rack Right Now (Here's the Data)

Transcript

#79 Long Beach Apartments Are on the CLEARANCE Rack Right Now (Here's the Data) · Own More Doors

• 0:00
  SPEAKER_00: In one specific case, it's a million dollars off from the last sale.
• 0:04
  SPEAKER_00: There's never been a better time to buy five units or above like there is today.
• 0:08
  SPEAKER_00: Cap rates keep going up.
• 0:09
  SPEAKER_00: That means it's it's pulling the values down.
• 0:11
  SPEAKER_00: The gross rent multipliers on a lot of these units, eight units, 12 units, 16 units, is right around 10%.
• 0:18
  SPEAKER_00: And some of the less desirable areas were nine and a half, nine.
• 0:22
  SPEAKER_00: We've never seen numbers this good.
• 0:24
  SPEAKER_00: I just did a presentation a few days ago, full of investors there, and I asked every single one of them, why are you buying?
• 0:30
  SPEAKER_00: And they said because the properties are selling at a discount.
• 0:33
  SPEAKER_00: So it is a buyer's market.
• 0:36
  SPEAKER_00: Now I want to be very clear.
• 0:37
  SPEAKER_00: The properties on a discount are not single family homes.
• 0:40
  SPEAKER_00: They're not condominiums.
• 0:42
  SPEAKER_00: They're not fourplexes, they're not triplexes, they're not duplexes.
• 0:46
  SPEAKER_00: It's units that are five units and above.
• 0:48
  SPEAKER_00: Now I've done a lot of videos on why that is.
• 0:51
  SPEAKER_00: There's a little bit more fluctuation when it comes to five units and above because the financing on these types of properties is shorter term, typically five, seven, ten years.
• 1:00
  SPEAKER_00: A lot of the people, a lot of the investors who bought five years ago, their interest rates are adjusting and they're adjusting up.
• 1:07
  SPEAKER_00: Sometimes, in some cases, doubling, it's putting a lot of pressure on them.
• 1:11
  SPEAKER_00: The other thing that's putting pressure is that sales overall are down, okay?
• 1:15
  SPEAKER_00: And and cap rates are up.
• 1:16
  SPEAKER_00: So anytime that cap rate goes up, that value goes down.
• 1:19
  SPEAKER_00: So in order for an investor to get a better return on an asset, that means the the cap rate just went up.
• 1:25
  SPEAKER_00: Something has to give, the price has to give.
• 1:28
  SPEAKER_00: So today I'm gonna give you guys an idea on why you should be buying uh five units and above.
• 1:34
  SPEAKER_00: And just to give you an idea, I and I've done a few videos on this, I've already purchased an eight-unit building and a 10-unit building in the last eight months.
• 1:41
  SPEAKER_00: Why?
• 1:42
  SPEAKER_00: Because the writing's on the wall.
• 1:44
  SPEAKER_00: Right now, the best way to describe it is that you and I go to a department store, and instead of looking at uh everything else that's uh selling for retail, you know, we're gonna go back to the very back, the very back wall where things are on the clearance rack.
• 1:59
  SPEAKER_00: And I'll tell you right now, the eights, the tens, the 12s, even bigger if you're looking at bigger units, everything's at a discount.
• 2:05
  SPEAKER_00: Cap rates are up, gross rent multipliers down, price per square foot is down, people are anyone who bought five years ago is in a tough situation.
• 2:15
  SPEAKER_00: And let me give you another example, which is the most important thing that I want you to take away from today.
• 2:21
  SPEAKER_00: About 30%, 30% of the five plus properties on the market are selling for less than they sold five years ago.
• 2:31
  SPEAKER_00: There are numerous examples of things that I've already sold where someone bought something today where the asset is better because improvements were done and the income is better, and they in some cases they saved$500,000 off from the last sale.
• 2:47
  SPEAKER_00: In one specific case on a property at 601 Linden, it's a million dollars off from the last sale.
• 2:55
  SPEAKER_00: Folks, this is not always the case.
• 2:58
  SPEAKER_00: In fact, this is the first time where I've done this kind of video where like stop what you're doing, if you're an investor, and what's the catch?
• 3:05
  SPEAKER_00: The catch is in order to play in this game, we need more down.
• 3:08
  SPEAKER_00: And typically someone would say, Well, how much down?
• 3:10
  SPEAKER_00: Well, if we're looking at Long Beach, I'll be honest with you, we're gonna need at least 400,000 and above.
• 3:15
  SPEAKER_00: Because to buy just an average eight-unit building, you're gonna need about$570,000 down.
• 3:21
  SPEAKER_00: Just so you know, if you have a million, man, there are some beautiful properties on the market that you could go buy.
• 3:27
  SPEAKER_00: So let me give you guys some data.
• 3:29
  SPEAKER_00: In the last 12 months, uh, this is all co-star derived data.
• 3:32
  SPEAKER_00: In the last 12 months, uh, we had 169 sales in the city of Long Beach.
• 3:37
  SPEAKER_00: The average sales price, um, which doesn't say a lot, it's just the average sales price was 2,420,000.
• 3:43
  SPEAKER_00: The average price per unit, now this part's where it gets really exciting, was$225,000 a door.
• 3:48
  SPEAKER_00: The reason why this is important because 12 months ago, that was higher.
• 3:53
  SPEAKER_00: 12 months ago, the average price was like$232,000 a door.
• 3:58
  SPEAKER_00: So a year ago, I'll tell you this, a year ago, it was a great time to buy.
• 4:02
  SPEAKER_00: If you bought a year ago, congratulations, you're a genius.
• 4:04
  SPEAKER_00: You bought at the right time.
• 4:06
  SPEAKER_00: However, the deals got even better now.
• 4:09
  SPEAKER_00: Average cap rate, super important.
• 4:11
  SPEAKER_00: So if you have an average property in an average area, yeah, the cap rate's gonna be six and above.
• 4:17
  SPEAKER_00: If you have an inferior property, you're gonna be looking at 6.25, 6.5.
• 4:24
  SPEAKER_00: In some cases, if you're in rough, rough parts of Long Beach where rent collection is difficult, the tenants are difficult, it's just the way that it is.
• 4:32
  SPEAKER_00: I'm not uh putting blame, it's just the way that it is.
• 4:36
  SPEAKER_00: Some some units are getting up to seven caps and above.
• 4:40
  SPEAKER_00: I just listed a property and uh the seller needed to sell, and I said, we need to put an eight in front of it.
• 4:47
  SPEAKER_00: He said, An eight cap?
• 4:48
  SPEAKER_00: I said yes.
• 4:49
  SPEAKER_00: My phone blew up.
• 4:50
  SPEAKER_00: No one was used to seeing an actual eight cap.
• 4:54
  SPEAKER_00: But all in all, those are a few examples.
• 4:56
  SPEAKER_00: A lot of them are not trading in the sevens.
• 4:58
  SPEAKER_00: Some of them are.
• 4:59
  SPEAKER_00: The majority of them are gonna be at six.
• 5:01
  SPEAKER_00: If you're looking at a better area, say in the shore, that cap rate's gonna come down.
• 5:06
  SPEAKER_00: Properties are sitting on the market a very long time.
• 5:10
  SPEAKER_00: On average, six months, folks.
• 5:14
  SPEAKER_00: The at the average fourplex sits on the market 62 days, two months.
• 5:19
  SPEAKER_00: And we're looking at six months.
• 5:21
  SPEAKER_00: But the reason why is that in this market, what we'll call the commercial market, the five plus market, there's a lot of competition.
• 5:28
  SPEAKER_00: Investors are looking, but investors are smart.
• 5:31
  SPEAKER_00: They know that if they let the property sit on the market and it wasn't priced well to begin with, you're gonna have price reduction, price reduction, price reduction.
• 5:39
  SPEAKER_00: We're seeing this right now.
• 5:40
  SPEAKER_00: Every week, when I look, we see arrows down on the MLS.
• 5:45
  SPEAKER_00: Arrows.
• 5:45
  SPEAKER_00: That arrow down means someone just lowered the price.
• 5:47
  SPEAKER_00: They have to.
• 5:49
  SPEAKER_00: Sellers right now are in a tough spot.
• 5:52
  SPEAKER_00: And are buyers buying?
• 5:54
  SPEAKER_00: Yes, but they want to make sure that they get the very best deal possible.
• 5:58
  SPEAKER_00: My advice right now for anyone who's watching this: if you're a seller and your loan's coming due, call me.
• 6:04
  SPEAKER_00: You're gonna have to sell in most cases.
• 6:07
  SPEAKER_00: In some cases, maybe you've paid down the loan.
• 6:09
  SPEAKER_00: In some cases, maybe you are able to do a cash-in refi if you want to keep your property.
• 6:14
  SPEAKER_00: But in a lot of cases, people realize look, I'm gonna cut my losses, sell the property now.
• 6:20
  SPEAKER_00: And that doesn't mean that they get out of the game.
• 6:22
  SPEAKER_00: It just means that they're done with this one specific property.
• 6:24
  SPEAKER_00: Maybe it's a 20-unit building, cut your loss, but you see the other opportunities.
• 6:30
  SPEAKER_00: Because very rarely do we see an average gross rent multiplier in Long Beach at 10.
• 6:35
  SPEAKER_00: Typically, if anything is at 10, it's a good deal.
• 6:39
  SPEAKER_00: Now, most deals are somewhere hovering around 10, 10 and a half.
• 6:43
  SPEAKER_00: And again, it's not rare to see a gross rent multiplier in the nines.
• 6:48
  SPEAKER_00: So there you have it, folks.
• 6:49
  SPEAKER_00: Um, we're gonna continue tracking the market, bringing the data right to you, letting you know that if from a buyer perspective, if you have an investment condo, an investment house, an investment duplex, triplex, fourplex, there is not a better time to have me help you sell that property at the top so that we could buy an eight-unit building, a 12-unit building at the bottom.
• 7:12
  SPEAKER_00: That is the best advice that I could give you.
• 7:14
  SPEAKER_00: No one could come on my channel and say that is horrible advice.
• 7:17
  SPEAKER_00: No one could say you shouldn't do that.
• 7:19
  SPEAKER_00: This is the best time to do that because this is not always the case.
• 7:23
  SPEAKER_00: Because typically, when you sell at the top, you buy at the top.
• 7:26
  SPEAKER_00: That's just the way that it normally is.
• 7:29
  SPEAKER_00: But the uh dynamics behind our economy and and in our industry specifically change.
• 7:36
  SPEAKER_00: And given where we're at right now, there's tremendous opportunity.
• 7:38
  SPEAKER_00: And so my channel is to teach people how to build wealth through apartment ownership.
• 7:43
  SPEAKER_00: And there's no better way to do it right now than to be buying five units and above.
• 7:48
  SPEAKER_00: So if you have any questions, please comment below.
• 7:50
  SPEAKER_00: Please reach out to me.
• 7:51
  SPEAKER_00: We'd love to hear from you.
• 7:53
  SPEAKER_00: And folks, make sure I'm offering free monthly meetups.
• 7:57
  SPEAKER_00: Free monthly meetups.
• 7:59
  SPEAKER_00: So check out our website and just search meetups.
• 8:03
  SPEAKER_00: The meetups are a place for you to come learn, come network.
• 8:06
  SPEAKER_00: Ask me any questions you might have in person in real time.
• 8:10
  SPEAKER_00: Hope you enjoyed this video.
• 8:11
  SPEAKER_00: Make sure to like, comment, and subscribe.
• 8:13
  SPEAKER_00: Until next time.