All Forum Posts by: Bryan Hartlen

Quote from @Stacy Santini:

Thank you, ill check out the link to try and find my next pm and the questions to ask are very helpful. I too researched the eviction timeline online because my property manager told me it's 6 months to a year and that didn't align with what I saw. 

We have several section 8 rentals and currently use two different property management companies.  First of all, I don't believe you'll ever be truly satisfied with a PM company but they are a necessary evil for out of state investors. 

As for eviction timelines in Birmingham:  the online timelines you are reading are the fastest possible given the various laws / rules required to evict.  We've been told by multiple PM companies that the actual timelines are much longer because of the sheriff dept short staffing.  It's taking weeks to months to get them to serve notice. 

We’ve sold 4 or 5 notes thru Paperstac. We’ve never sold partials. One was non-performing the rest were performing or re-performing. All sold within a month. We price our performing notes to provide 10 - 12% return to the buyer. 

Nothing but positive to say about the platform in general. Very smooth process.  Access to way more eyes on our notes than we would’ve been able to get ourselves.

@Aaron K. by all accounts they are still backed up. So far we haven’t had any of our 2023 re-inspections (not that we’re complaining). Our PM company now suggests where possible to find private payer tenants because of the delays in placement inspections. 

@Steve Priola, thx. This sounds like section 8 rentals or turning the property into a HUD contracted property?

@Steve Priola sorry that I can’t help with your question, but I’m wondering if you would mind sharing your description of workforce housing and how it’s business model differs from standard MF rentals?

It looks like you have an error in entering the insurance cost ($8). Otherwise, assuming that you verified the various expenses and market rents, it looks like you have all the bases covered.

I’m assuming that you have the ability to cover the assumed negative cashflow of 1300/mo.

Note that there may be other costs that should be considered that could increase your monthly costs. Have you budgeted for vacancy and turnover costs that will occur when you start to raise rents. Depending on the situation you may also want to budget legal expenses for evictions. What about repairs and maintenance costs?

If you can handle the monthly costs then it becomes a question of your willingness to pay today for appreciating tomorrow. As has been noted this is more speculation than investing.

One option to consider would be STR one or more of the triplex units? Generally allows you to 2-3x the standard LTR rents. I'm assuming ocean views would mean a strong tourism market?

@Kristi Miller, agency debt (loans secured by Fannie or Freddie) will generally be cheaper rates, won't cover any value-add, will loan based only on current income (not performa) at a DSCR of 1.25 or better, will require loan amounts greater than $1M, will offer non-recourse loans but still require proof of the sponsors cumulative net worth being at least equal to the principal amount (not in reserve) and liquid reserves to cover 9 months of P&I (also not in reserve). Local banks will have more flexibility but generally have higher rates and will require guarantors. Local banks and national lenders will also have bridge products if you need to borrow for purchase + value-add.

I'd suggest you talk to both to see which ones best meet your needs. 

Not a lot of details but LimaOne offers MF bridge loans nationally. 

Quote from @Evan Polaski:

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But YOUR investors may be wanting a 15+ yr hold.  In this instance, you would likely want to structure the deal differently.  Maybe it is a lower pref, but a GP split.  Maybe there are terms in there that let you start sharing upon refi.  

I know of many groups that are a 5-6% annualized distribution rate and don't market IRRs.  Why?  Because their investors don't want to sell.  They want near indefinite holds and just keep the cash flow coming forever.  They also don't front load the tax savings, like many syndicators.  Because this is a deferral strategy, and their investors don't want the huge tax bill at the end.  They want to keep offsetting their distributions year over year, not burn it off early and then have to pay taxes on their distributions into years 5-20...

Evan, that's something we'll have to consider.  Our current network of investors would be hesitant to make an indefinite commitment of capital. But we have discussed a plan that would allow investor's to optionally "roll" their initial investment into something different once the property has stabilized. The legal logistics to make that work assuming some investors would want to roll over and others would want to be cashed out, is not something we've tackled yet.