All Forum Posts by: Brad Hayden

@Allen L.

Deep Water - Big Sharks

@Brett Peters is right. Demand is very high. Warehouse/logistics is one of the hottest and most competitive asset types. The whole next-day delivery, work from home, instant gratification syndrome has dramatically changed the standard for this asset type. A big building with high ceiling and dock doors is no longer adequate. The demand now is for "smart warehouses." Example: Amazon recently built a facility not too far from my home. It's over 2 million square feet and 70-80% of the work is done by "robots".
NAIOP and industrial brokers will be valuable resources, but it will be difficult for you to jump into this by yourself. I recommend that you also start networking with developers and investors who are already in the business. Find people that you can work for, learn from, and leverage their knowledge and network of resources.

@Andrew Neal

Andrew, a couple of questions upfront:

What is the upside? If it's 95% occupied, how will you increase the value?

How will you manage? Doesn't seem that you are local and a 62 unit facility is unlikely to support 3rd party management.

As for valuation:
Current Value:
Gross Potential Rental income - Economic Vacancy = Effective Gross Income
Effective Gross Income + Additional/Ancillary Income = Gross Operating Income
Gross Operating Income - Operating Expenses = Net Operating Income
Net Operating Income / Market Cap Rate = Value 

Investment Value:
This goes back to my original question of increasing the future value:

Hope this helps. Let me know if you have questions and I will send a DM with contact info.

@Aidan Richard Connly

Thank you for your service. I'd love to connect and help in any way I can. Will send a DM with contact info.

@Henry Lewis

Henry, good instincts on not using your home address. Use a private mailbox found at UPS, Aim Mail Centers, PostNet, etc. 

@Matt Concannon

Matt - it depends on several factors.

As Aurelien Bonin mentioned above, if they are limited partners (passive investors) they typically are not included on the loan. However, if they are truly passive investors, are you structuring and documenting this as a syndication?

If they are not passive and are in fact active members of the general partner structure, then each lender will look at their specific criteria such as:

Do you have credit, net worth, and reserves to meet their underwriting criteria?

What is your experience / track record with this type and size of investment? 

Most lenders will require any partner with 20% or greater ownership to be on the loan docs, but I have seen occassions where lenders pushed that requirement down to 15% or even 10%. Depends on the lender and what risk factors they perceive.

You state that financing will be 75% ltv, 5-10 yr fixed, 25 yr am. Do you have a lender commitment for that or is it your target? If you don't have a firm commitment, how will you handle a less desirable loan? What will it do to your investment plan?

Hope this helps. Let me know if you have questions and I will send a DM with my contact info.

@Alex Hawk

Alex - here is one opinion.

https://www.globest.com/2020/0...

@Kyle Wakefield

Kyle - checking back to see if you got what you needed and found a lender to work with or do you still have questions & need additional help.

@David R.

David - I haven't used the BP BRRRR calculator so I'm not familiar with the details. At first glance, it seems to be geared toward residential property analysis.

My questions/comments are based on what I see in the report.

What type of property is this; # units; total sq ft; rentable sq ft?

What is current occupancy; physical & economic? Do you have a current rent roll?

Does the monthly income of $15,500 include any vacancy number? Even if the property is fully occupied, you should include vacancy allowance in your underwriting. Lenders and investors will require it.

What repairs are included in the $250,000 and what impact will they have on tenants, operations, and monthly cash-flow?

Expenses are low. This may be what the seller is showing, but they will need to be adjusted to reflect accepted industry expense types and ranges. Exact details will depend on type, size, age, and location of property, who the tenants are, how leases are structured, etc. Different property types have different % rules of thumb for preliminary estimating, but lenders and investors will require details.

Using the 50% rule as a starting point the 50% Rule Cash Flow Estimates Post-Refinance calculation shows negative cash-flow, but the analysis over time does not reflect that? 

Hope this helps! I'd be happy to answer any questions you have. Send me a DM if you want and we can set some time to talk.

Commercial real estate deals can be complex and managing all the moving parts requires significant time and attention to detail. Having ready access to the right tools, resources, and industry-specific knowledge may be the difference between a successful transaction and a lost opportunity.

Would you like to have a commercial real estate specialist on-call? A Certified Project Management Professional (PMP) with a 15 year proven track record of helping investors, developers, and owners successfully execute commercial real estate projects. I’ve worked with most asset types including stabilized, value-add, and development projects and I have the systems, tools, and resources in place to assist with analysis, scheduling, budgeting, financing, documentation, and other critical tasks.

Schedule a free project management consultation at carreraresources.as.me/

@Kyle Wakefield

I'm definitely not an expert on the BP estimator, but I don't think it's set up to produce per unit reports. 

The size of the project along with the scope and cost of rehab needed will likely determine what level of detail lenders want to see. If you're using a contractor, they should be able to produce such reports.