All Forum Posts by: Ray Hayward

Thank you Milton!

I am the Developer for this project with the intent is to turn an old factory into a 20-25 unit apartment building. We need to make a decision on Rehab or New Construction. I will be hiring an Architect to draw a couple concepts and schematics then we intend use these plans to determine Construction Costs.

Thank you for your advice, here is my feedback to your questions:

Who found the deal? RH: I have found this deal.

Who is financing/putting the down payment & closing costs? RH: I will be paying upfront costs (Architect and Enviro Studies). Based on this information we will be able to determine if this the project is a “Go!”. We would then seek investors to finance Construction and exit to a bank long term. (We each have potential investors/lenders to pitch to if we find the deal is good) If he is able to help us find funding, there could be 2 other incentives (1. Finder 2. Signing the dotted line)

What is the extent of the renovation (how risky is it)? RH: High Risk.

What is the total estimated turnaround (from acquisition to selling), how long does will funds be tied up? RH: 15 Months

Who is on point to market and sell it? RH: The intent is to hold the property long term (Life of Mortgage which is anticipated to be 15-20 years for this deal) in a partnership with specific buy out clauses.

Enviro or Construction Costs First?

Enviro - To add to this, there is likely some environmental issues for this property and will be ordering a Phase 2 studies to be done. The results of the environmental study can be a deal breaker of its own.

Construction - We are in MA where current Construction costs avg $200 per sq ft. At this number, the investment would not work. The deal is a live because of this potential partnership.

For this deal to work, the Construction Costs and Environmental remediation variables need to be answered to determine if this is project is a “Go!”. That being said, would you invest environmental study or Construction Costs first? Each are “go or no go” decision points.

Hello, I am looking to partner with a General Contractor on a project. The conversation has been based on the exchange of “Sweat Equity” for Partnership Equity. I am looking for advice on how to make the Contractor a fair offer. Outside of GC services, he does not intent to put cash in the project. The GC believes his costs will average around 30-33% of market value as his reasoning for pricing is 33% Material, 33% Labor, 33% Taxes.

What is a reasonable % of equity you would offer a GC? Also, I would want to make it incentive based including hitting Timeline, Budget, Other? Do you agree?

I look forward to your general feedback and recommendations. 

Thank you.I know the neighborhood very well and have 2 properties nearby.The difference is this will be our first rehab at this scale and didn’t know how the rules change.

We want to rehab the building to contain 25 Two Bedroom units at approx. 1100 sq ft per unit and rent for $1500 each. (We are confident in these numbers for rentals these size). The building has approx. 35K sq ft living space and 1.5 arces gross.The Town Tax Rate is $13.34 per $1000 of assessed value.

Is there a formula, a way to calculate, a ballpark Tax Rate and/or FMV after rehab?

We absolutely want and need to know the end value.However, we are not yet at a place with confidence to invest $30K on an appraisal (this is the estimate provided by bank) yet.

We are interested in learning how to factor annual Tax Rate and End Value into our equation.Is there another way?

Many thanks! Short of getting an appraisal, is there a way to estimate what FMV would be for a 25 unit rehabbed mill? There really are not other rehabbed mills in the immediate area to accurately compare this building to (though many new developments with 100-500 units) recently.

Hello, a partner and I are looking to rehab an old mill and turn the building into an apartment building.  How  can we determine property tax for our balance sheet once rehab is done and renting 25 units?  Will the property change even if we do not increase the living sq ft to the building?

I am working with a General Contractor to determine if we can find a way to partner up in hopes to make project numbers work.  He is interested in equity in exchange for “Sweat Equity”.

My thought is to offer equity based on reaching Schedule and Milestone incentives.  I am curious to know if anyone here has successfully done the same.  If yes, what were your clauses and triggers?

What is a reasonable equity share to offer the GC?  What would you factor in creating a win-win situation for yourself and the GC?

Hello, A GC partner and I are working on a proforma to determine costs for a potential rehab project of a historic building and targeting 25 units in MA.

Can someone recommend a cost per unit for property management companies to use as a reasonable baseline as we obtain estimates? 

Hello,  A GC partner and I are working on a proforma to determine costs for a potential rehab project of a historic building and targeting 25 units in MA.

Can someone help me understand what kind of insurance we need to purchase, how much it will likely cost, and recommend potential insurance companies to work with for this type of project?

Hello, I have a great tenant who would like to have a roommate move in.While the apartment has the proper occupancy requirements to do this, he wants to keep his lease and prefers a tenancy-at-will for the new roommate.This would allow a grace period to make sure this works out for both parties.

The state is MA.Is there a way I can accommodate this kind of request should all the background checks workout?