All Forum Posts by: Andy Crooks

@Senate Eskridge I hate the IRR for MFR. It's a marketing metric seemingly used primarily by syndicators trying to justify a deal to get other people's money. I haven't seen a good IRR on a buy and hold asset, it's always based on an exit, usually 7-10 years in the future assuming consistent appreciation. There are differences of opinion on where the market will be in the next 2-3 years so how can one base a deal on everything going right for the next decade?

Cap rates are fine. COC is king.

@Keeley Hubbard what type of lender did you source this deal through? Bank? Insurance company? Other?

You are right about the term sheets. If you want the money and haven’t signed yet it’s all fluid!

Congrats on the deal. Good luck!

@Kyle Kalish i don't own any rentals up in da Nort'woods but we have a family place in Three Lakes. I would talk to both Ken or TD Biegel as well as Adam Redman. They are some of the bigger RE players north of 8. Adam has a wider spread with his team and the Biegel's home turf is the Rhinelander "metro". There is a northwoods MLS for a couple counties up there that doesn't have reciprocity with the rest of the state so you need someone with the local diggs.

@Desiree Kumar DM me if you want to discuss further. I don’t think they can require a Phase 1 ESA in which case potential environmental defects would be listed as an exception on schedule B2 of your title insurance. There are all sorts of things title companies won’t insure for and those are the most important things to note on title commitment.

If the property has been developed (phase 1 likely done or required by developer’s bank as a requirement to lend, assuming loan on build/development) and there is no known or suspected contaminants, you might just be tossing money away.

But the main point is that if you are buying this should be your decision and not title co (or your lender if financing). If you are selling this should be buyers cost or decision, NOT the title

Co.

Why do you need Phase 1 for developed property? Is there suspected contaminant or red flags? Vierbircher is and engineering and planning firm who has done Phase 1 for me before. I have also used other folks and none have been significantly better or worse than others. There is a higher standard to do this work than most, so if someone has a license to do a Phase I ESA they are likely reputable. 

Hey Narik,

you can set up keywords and get alerts when people talk about Madison/Wisconsin or any other pertinent terms to you. Also they do some BP meetups (post Covid) but I think they are doing them remotely now. That’s a great way to network with investors. 

We are as good as our network

Andy

I’m going to follow this thread diligently. Madison AL or WI? Can’t wait to find out. 😬

@Mike B. where are you watching for SS? While I haven't seen dozens, I have definitely seen at least a handful come on the market in the greater and outlying Madison area. I helped with the analysis for one of my good buddies who ended up buying one on the E side. MLS is good for residential and some light commercial but you also have both costar/loopnet (National marketing sites) and cirex.com which is the local (commercial-industrial - real estate exchange). You are going to want eyes on all, or at least a broker who does on your behalf.

Andy

@Keith Schulz as it relates to condo conversion, sure you can get more per door on a conversion, but I still see more risk than reward especially in a larger building. For one over half of the units would need to be under contract or sold for buyers to get conventional financing which makes selling tough because entry price points probably need or at least want want. 

Money is also cheap and cap rates are getting compressed from big city money buying the larger existing projects that one could likely refi and pull out cash close to the profit difference on a conversion. 

Also Fannie and Freddie want majority owner occupied on these projects which all but eliminates investor buyers. 

I personally like a conversion on a smaller project to eliminate the absorption risk but then again you gotta get a bank on board and also get the units for the right price which is hard in the first place.

my turn to stop rambling. Happy turkey day

@Jack Medford the last recession was in large part created by crap mortgages setting people up to fail. Obviously there are many facets and layers to any economy and while RE is hyper local there are many macro forces at play. And yes it’s also historically cyclical every 18 years or so. 

I don’t have hard data on this (id love to see it) but it didn’t seem that Madison got hit as hard or stayed down as long as many other places in the last recession. The comment about supply not catching up to demand was as much about the restrictive and lengthy entitlement process as it was about the diverse and robust employers in the area in a variety of sectors. I also didn’t say it will never be a buyers market but it’s tough to predict what might cause it. But then again I haven’t spoken to too many people who had a pandemic contingency plan...

Dane Co has widely surpassed their own growth projections over the last decade. One local issue that may stifle growth in medium term is infrastructure inability to handle the transit (think Beltline). But maybe that just leads to more people wanting to live closer to work...