Gain an insider’s perspective of our exclusive VIP program. The program offers the seasoned real estate investor valuable insights that can save time, money and assist them in making smarter investment decisions. Alex Hemani is one of those investors. Read his inspirational story to find out how he went from fixing and flipping one house to owning an investment firm that buys and sells thousands of properties.
Who is Alex Hemani? For over a decade, Alex Hemani of Alna Properties, has been a leading player in the SFR rental industry. He first entered the business during the financial and economic crisis and strongly believes that on the institutional level, SFR is going to be a very successful and stand alone asset class in the coming years. He has purchased over 100 properties through Auction.com in the past 4 years and has completed thousands of transactions and generated hundreds of millions of dollars with the help of the Auction.com platform.
How did you get into this industry? I got into the real estate industry in 2003 while living in Florida. I was working in a completely different industry at this time. The housing boom was going on and Orlando was ground zero. That’s where all the action was. Big appreciations were taking place. When I saw all this happening, I contacted a partner of mine as well as a very successful realtor. I approached the realtor and said, ‘You find the deals, you build the houses ground up and I will put up the money, and you will get a piece of the action.’ This is how I got started in the fix-and-flip business and I did very well. In 2005 I moved to Dallas-Fort Worth and I quickly realized that my action plan wouldn’t work here because properties are very cheap in Texas, compared to where I was coming from. So, in this case, I got into the buy-and-hold business, or the rental business, and I started buying single-family homes from builders. I would buy them and then rent them out. Then I began buying foreclosure properties and older homes, and we started fixing them up and turning them into rentals.
In 2007, I went to the banks in the Metroplex; medium-sized and small banks, and I told them I wanted to buy single-family homes and rent them out, but the banks laughed at me and wouldn’t give me the time of day. Fixing and flipping homes was not the ‘norm’ during this time. Finally, after knocking on so many bank doors, a few banks stepped up and that’s how I got my start to expand. Now, you have banks all over that want to throw money into fix-and-flip opportunities.
What do you look for in a real estate investment? Our model on the buy-and-hold side hasn’t changed much. The flip side is totally different. On the flip side, you are looking for either a percentage ROI, cash on cash, or after financing, or a dollar amount that you are comfortable with getting back after you fixed the property up. When it comes to fix and flip, that’s up to each individual investor. The sale of million-dollar-plus homes has slowed down. We can see that as something that is already taking place. We are seeing longer days on market, a little bit of slowdown and price reductions in my neck of the woods. Now, the half-a-million-plus homes are also starting to slow down on the fix-and-flip side, but the $200k-and-below properties are hot as ever. You can put it on the market and in three days, it will sell.
On the buy-and-hold side, we look for a certain cap rate. It’s nothing different than purchasing multi-family properties or buying a commercial property. It’s all based on cap rates. We look for a certain cap rate and we look for it to fit our portfolio. We look for year builds, number of rooms, types of structures and neighborhoods, because for buy-and-hold properties, you are in it for the long run. You have to buy the right property or you’re stuck with it for 30-50 years. You have to do your due diligence to make sure you’re making the right decision for you.
What about Auction.com made you think it would be a good place to find the kind of properties you want? Auction.com does a great job of producing inventory. Whoever has the inventory, that’s where all the investors are going to flock. You have competitors that are not as aggressive as Auction.com when it comes to the inventory. This is where Auction.com separates themselves from the competition. Plus, the other thing that Auction.com does so well is their organization and technology platform is by far more superior to anything else out there.
Before finding Auction.com, finding access to inventory and smoothness of transaction was hard to find? Correct. If you’re on another auction site, it’s a nightmare to buy from them. Auctions keep repeating themselves. The technology isn’t there yet. It’s night and day compared to Auction.com.
What was it you saw in Auction.com early on that made you think this might work? Their organization, the smoothness of being able to verify the asset, and the ease of putting in the offer as well as the ease of purchasing the asset.
How has being a VIP member make a difference in your business? As a VIP, Auction has helped my business accelerate and grow. We enjoy the ability to look at inventory quickly, put our offers in quickly, and it’s a fair way of doing business. We feel comfortable that there is no hanky-panky going on behind the scene. He who has the best offer will get the asset. Transparency is vital.
In your mind, is there anything Auction.com can do to make the VIP program better for you? Auction.com has worked hard on streamlining the process. However, one thing Auction.com can do is to make sure when they have new VIP buyers who come in, especially those who are bidding on a pre-auction property, that they understand the process. Oftentimes, new investors will place a bid and win, and then when it comes time to pay for the property, they do not show up. And then two weeks later, the buyer falls out and I am asked if I would like to purchase because I was the second-highest bidder. But this ruins it for the rest of us because it is not fair.
