Buying & Managing Mid Level to Large Multifamily

[Jerry Lymburner]

Hello everyone! If you're wondering if there are still mid to large multi family deals happening with todays rates, they are! Currently have nearly 15 million in volume through 4 different transactions, from as small as 12 units up to 32. Financing for two of them is owner finance, while the other two, one a 24 unit NEW construction (Yes that's happening still) are both through conventional financing. The interesting part is they all cash flow really well, two of them need a lot of work and had to use creative wording in one of the owner finance deals during the transaction which then transferred onto the DOT for a recapture of monies in case of foreclosure.

While currently falling, you can beat the interest rates if the seller is willing to owner finance to you. If a seller is reluctant, get a short balloon on the deal and refinance the property. I have had good luck with the promise for the seller to only be on the hook as the lender for short term, while buyers are waiting out the rate hike. 

If you are a buyer that is getting traditional financing and you want to wait out the inspection period BEFORE ordering the appraisal due to high cost, make sure this is worded correctly in the contract. I have recently had a buyer decide to not order the appraisal until after the inspection period is over, which is getting close to the close date, while appraisals in our area are 30 days out and threaten to end the deal. Something that could've been avoided early on.

On the PM side, Large properties or an accumulation of properties can be a daunting task. The Landlord Tenant Act, at least in Alaska can leave very vague opportunities for tenants to find holes in your lease. Having the right structure to your lease, wording, follow up, inspections is crucial especially in our cold climate where freeze ups are an unfortunate normal. Cheaper is not always better! Having a good PM involves not just finding you a tenant! Follow up due to non payment by the tenant, proper maintenance, key monitoring (I hate keys! We strongly suggest all owners to switch to a keyless deadbolt with a blank handle), accounting (I've seen transfers from another PM and there is OVER $10K MISSING!), and leases that are all properly signed and dated are all big parts when you are looking for a PM! 

Lastly one of the biggest thing that gets over looked, especially on properties where utilities can not be separated. Get an average and do a utility charge back. This is never done on ANY property we have ever taken over management on. Sellers can be losing out on tens of thousands of dollars on previously uncollected return. 

Make 2024 the year of returns! - Jerry