All Forum Posts by: Benjamin Romski

@Jeffrey Donis and @Scott Wolf, I appreciate your commercial mortgage broker recommendation and will likely venture down that avenue.

@Jason Wray thank you for the recommendation of Sabal! Will reach out to them about this and likely a few other brokers to see what's out there.  

What is the best way to go about financing a smaller multifamily deal (10-50 units) where we're planning to bring investors in? 

Previously, my partner and I have acquired an 8 unit building where we brought in an investor as a general partner and that investor is personally liable for the loan in the event of default, like my partner and I both are. We're looking to scale by bringing in 2-6 investors in the next deal (targeting 10-50 units with a $2 million or less purchase price), but want them to be limited partners with limited liability. 

From discussions with a few banks, it seems that the banks will only let these people be limited partners with no recourse and not need their personal financials if they own less than a certain percentage of the property (anywhere from 20% or less). Does anyone have a recommendation on how to get around this using a bank? It's likely that one investor would make up a larger than 20% share of ownership. Obviously things may be different if we could find a private lender and we don't want to venture into hard money.

Thanks!

@Michael Perry I'm also based out of Atlanta and purchased two duplexes in Milwaukee during late 2020 in "C" areas. Granted, my partner in these endeavors is from there, so my reasoning for investing there is slightly different. Couple of points for you.

1) I leveraged @Marcus Auerbach and his team when purchasing these investments and I cannot recommend them highly enough if you need a realtor up there. They were more than happy to video walk throughs of each property and were excellent at communicating -- something that I highly value when investing out of state. They were also great at providing detail around each submarket we were looking at and what to expect. Additionally, their network allowed for us to find a high quality property manager and a bank that would close via mail.

2) I think we got in at the right time, but both our duplexes are in the West Allis area (which is likely a C area per my understanding). They currently cash flow at about $400 or so per month and we've seen about 10%-15% appreciation since the end of last year (I wouldn't expect this to keep climbing at this rate). We've put in a few more offers (one at $15k above ask!) on potential BRRRR's since then, but haven't been able to find a property where the numbers made sense based on our strategy (BRRRR's are nearly impossible to find on the MLS there). Essentially, the market up there is super competitive right now -- even if there seems on the surface to be a lot of supply. I'd look for homes that have been on the market more than two weeks, that's usually where you'll find some wiggle room to deal. Moreover, I'd consider areas like West Milwaukee, West Allis and any location in between Wauwatosa & West Allis or West Allis and Greenfield. In sum, I'm bullish on Milwaukee's potential, lower barrier to entry and believe it to be a strong rental market.

Hope this helps a bit!

I was hopeful to receive some guidance on the best way to underwrite a mid sized multi-unit building (11 Units) with a planned use of Air BnB. Would you underwrite it more in line with traditional multifamily apartment buildings while accounting for a higher vacancy rate? Or would you underwrite it more so like a hotel? 

Currently, I've broken out the revenue by unit type, utilizing an average price per night and accounting for vacancy rates. I've sourced the average pricing and occupancy based off of data from AirDNA.co. I understand that I need to include the Air BnB 3% fee in addition to the standard expenses and utilities. I've checked local laws and would be passing through the hospitality tax to the person booking the stay in addition to the cleaning service charge. Am I missing anything here? I'm just struggling to figure out the best way to calculate a revenue that is in-line with what is to be expected and want to make sure I'm not missing any expenses.

Thanks for your help!

-Ben