March - April 2013 . Personal Real Estate Investor www.PersonalRealEstateInvestorMag.com 10 2 IN THE HOUSE This is a textbook example of a couple who believe in real estate and are doing what many investors wish they had done. OKLAHOMA Danny and Amber Newberry recently closed on a 48-unit mul- tifamily property they describe as a C+ property in an improving C neighborhood in Okla homa City. The first phase of a new mall has outperfo rmed retail expectations, and the developers have accelerated Phases 2 & 3. A Super WalMart and other big boxes are moving into the area. The Newberrys bought this under-tenanted property from a delinquent, absentee San Francisco owner for $15 a square foot. With partners, they put $50,000 down on a $700,000 property, expecting to invest $350,000 in renovation. “The local management had been Band- Aiding everything,” says Danny. “We needed to re-clad the exterior, bring the nine out-of-ser- vice apartments to rental condition and resurface the parking lot. We moved from our Cedar City, Utah, home to oversee the renovation and property management until we get the property to where it needs to be.” OUT OF SERVICE & NO PLAN The former owner had accepted a 60% occupancy, so the property was only generating $55,000 in net income. “By renovating the prop- erty and bringing all of the un its to production, we have increased the net to $155,000 a year,” says Danny. “Accepting ‘down units’ would have meant accepting $60,000 in lost income. We are bringing one of these idle apartments on line every two weeks. Since we took over in October 2012, we have brought rents to market and will have this lost capacity back by March.” Renovating the property, he says, has doubled the after-repair value from $15 a foot to $30 a foot. “And then by increasing the net operating income with all 48 units available, we will have increased the appraised value to a conserva- tive $1.6 million or more.” Market rateS & Pet PreMiuM These are desirable 900-square- foot, 2 bed/one bath apartments now rented at around $550 a month – up from $450. A $15 pet premium helps because of a new a dog run the Newberrys have installed. Danny and Amber are from Cedar City in Southern Utah, about an hour north of Las Vegas. Danny has always liked the idea of buying homes. He bought his first foreclo- sure six years ago, cleaned it up and rented it. He then bought a nearly vacant six-plex for $25,000 a door. He renovated with contractors, spend- ing $6,000 per unit. The after-repair cost (ARC) of $31,000 became an after-repair value (ARV) of $50,000 a door, increasing the valuation to $300,000. “I favored four-plexs,” says Danny. “I also bought a triplex and duplex and a 10-unit property in Las Vegas . Starti ng out, family and friends helped with financing and CASE STUDY – “READ THIS TO THE END!” Can you guess the ages of these “old hands” at real estate investing? (The answer is on Page 104.) All Property Management is a leading provider of property management connections on the Web. In a move to improve investor and owner experiences with its network of property managers, the company has instituted an annual Visitors’ Choice Award. The 2012 charter awards are given to 200 property management com- panies that were selected the most often by the more than 2 million rental property own- ers who visited All Property Management’s website last year. “Connecting rental property owners with the right management solutions is the core of our business,” said Reggie Brown, CEO of All Property Management. “The companies receiv- ing this award are particularly skilled at handling high volumes of new business, and as such, tend to be some of the most experienced managers in our network. The reason we did this is to recog- nize companies that provide exemplary service. The best rise to the top because they have the greatest customer conversion rates because of best customer facing skills. We are doing this to recognize our best property managers, best practices as a property management distinction and raise industry standards generally.” Since APM began in 2004 the company has made more than 100,000 connections between rental property owners and property manage- ment companies. APM focuses on helping property owners maximize their rental potential through shared resources and introductions to local property management experts that fit their service needs and property types. In November 2010, the company was pur- chased by an investment group led by former Microsoft executive and founder of Walkscore and All Star Directories, Mike Mathieu. Under this new ownership, the company now has 15 employees and is aggressively building on its industry leadership by expanding its online net- work, products and resources designed to con- nect property owners and managers nationwide. All Property Management Reggie Brown, CEO 206-577-0029 www.allpropertymanagement.com APM’s ‘Visitors’ Choice Awards’ spotlight top property managers