All Forum Posts by: Benjimen Elliott Johnston

I'm partnering with my contractor on a multi-family apartment complex. Based on all my numbers the property breaks even with phase 1 (6 apartments)and phase 2 (8 additional apartments) improvements. We want to buy the property for cash and majorly renovate with cash. 120,000 to purchase with 250,000 in renovations for phase 1 which should appraise between 480-520,000. Phase II would cost about 400,000 for a total 770,000 and an appraised value of 980-1.2 million based on other work we have done together. I want to take cash back out and finance after phase 1 and phase 2. The property is such that we can add an additional 20-24 units over time. What is the best financial strategy if we end up financing this property 4-5 times over the next several years? I'd love to avoid all the reappraisal and separate closing costs at each phase where possible.

Michael Biggs could you elaboarate on what the greatest risks entail? I want all the negatives I can get. I'm not questioning the advice but it does not elaborate enough as to why. 

This project is a partnership with a builder in my area. He is a friend whom I've done commercial property Rehab and new construction with. He is always on budget and under time frame. he knows all the zoning and codes almost by memory. There are no restrictions on zoning. Declining population may be %5 in 25 years. My wife is a CPA and my best friend is a lawyer. Any other professional that I should seek advice from? I have an employee that has experience and is interested in on site management in exchange for a room which would not be in the six apartments remodeled. Any additional pearls of wisdom would be appreciated. 

I have the opportunity to purchase a bank owned vacant two story sixteen room hotel with lake view and access. It is located in a realitively small town with diversified industry and very gradual decrease in population. It will not be able to compete with existing hotels as a hotel. I'm told by multiple sources that rental property is hard to find in our area. Cheap two bedroom apartments rent for $500/month. Higher end rent for $800/month. The property is large enough to eventually develop into 30 two bedroom units. I want to get into the existing hotel and convert into three two bedroom and three one bedroom apartments and have rental income to cover banknote times two in case there is a slow ramp up to capacity or turnover issues, etc. Negatives: Cost to convert. Lower units have only 7' high ceilings. Near a highway (Great for marketing and exposure, but not great for noise). Positives: Lakeview. Lake access. Land to develop past first eight units. If I was independently wealthy, I would not hesitate to purchase and possibly even clear land and start over. Unfortunately I do not have this option. The property is $300,000 with no improvements. I own a commercial property (recently appraised) which leads me to believe that the hotel could appraise for about $600,000 once developed. What am I missing or do I need to research? I am new to this whole thing and would appreciate any advice.