Underwriting major Rehab of 90 Units

[Ryan Terrell]

I currently have an opportunity to purchase 96 multifamily units, 16 of which are newly renovated leaving 80 that need MAJOR rehab. We are talking full gut to the studs rehab.  I am a General Contractor and I am comfortable with the construction side of things, but this deal is quite a bit larger than my other investments I've made in the past. So the problems or roadblocks that come with properties of this magnitude I am unaware of.

 I am looking to connect with someone, that either can affirm my thoughts and underwriting or poke holes in it, that has experience in deals of this size.  We are looking to scale into larger projects so though this is the current deal I am looking at we seek to have more opportunities of this size come across our desk. With that said I am also looking for financing partners that have experience in these types of deals as well as any other people that feel like they could offer guidance. I feel like I am at the point where "you don't know what you don't know". Looking forward to any input you guys may have on the matter. Thanks

[Scott Mac]

Quote from @Ryan Terrell:

I currently have an opportunity to purchase 96 multifamily units, 16 of which are newly renovated leaving 80 that need MAJOR rehab. We are talking full gut to the studs rehab.  I am a General Contractor and I am comfortable with the construction side of things, but this deal is quite a bit larger than my other investments I've made in the past. So the problems or roadblocks that come with properties of this magnitude I am unaware of.

 I am looking to connect with someone, that either can affirm my thoughts and underwriting or poke holes in it, that has experience in deals of this size.  We are looking to scale into larger projects so though this is the current deal I am looking at we seek to have more opportunities of this size come across our desk. With that said I am also looking for financing partners that have experience in these types of deals as well as any other people that feel like they could offer guidance. I feel like I am at the point where "you don't know what you don't know". Looking forward to any input you guys may have on the matter. Thanks

 Hi Ryan,

I like the units with the skylights, those should be very popular with astonomists.

Just some rhetorical questions that come to mind.

Are these A, B, C or D renters who will occupy the units when finished?

Do you know how to attract the different renter classes, unit mix, overall offering, etc.. to not overspend or underspend.

Can you get supplies and labor in time to finish as required by your lender.

You will most likely need to come up to current code for your area...

Will you need security onsite to keep materials from being stolen, will they need to be armed (for their own safety) (different price points here).

Have you talked to an Architect who does larger multi-family re floor plans, and etc...?

Have you talked to a leasing agent/broker about unit mix, and popular features for your intended renter class?

What will the taxes be when it's finished.

Have  you talked to an electrician to make sure enough electricity is available a the drop(s)/(service lateral(s)), for the new code requirements.

A Sewer Cam inspection is always a good idea on older real estate--being there during this inspection with your own site map to make notes might be helpful...ask them how long it will take, and ask the to check if backflow prevention devices are in the sewer lines--they can prevent one units sewer backup from coming up into another unit.

Good Luck!