All Forum Posts by: Joel Owens

Things take much longer to develop than people think.

Typically when you see big apartment buildings go up it is a 3 to 5 year process.It might only be a few years from the time the public hears about it but before that years of legwork went into getting to that point.

I couldn't say if right now was the right time to build.Everything is project specific.If the city will let you use a class C finish rather than a class A the numbers will save you money.

Just to give a for instance some cities will demand a traffic light be put in for some projects.The traffic light parts itself are not that expensive but with the fiber optic hookup and underground cabling you are talking hundreds of thousands just for that one item.

Typically on larger projects it's a fight for the developer to make profit.They propose a certain density and drawing.The county or city then wants to reduce the density and add in all these road improvements and lights at the cost of the developer.

All the costs have to work for both parties to get a deal done.I have seen some projects take 2 years to get approved from submitting after going back and forth with revisions and tabling until the next meeting.

So half the battle is the cost and financing available when you break ground and the other is the political junk.How much total land would you be getting??

Have you completed an environmental around the property?? If other businesses have contaminents that have leaked into your soil that could be a huge development problem.

You might want a developer consultant who knows that market to discuss further.

I know nothing of Washington.

Look up books by Roderick Johnston.I don't know if you want to get this detailed with it but you will learn a ton. He has multiple books from site development and building,to streets,to going vertical.

Would have to know more about it.The best leasing info in my area is from Costar.

You can find out what everyone else is paying,class of building and amenities,and when their leases are coming up for renewal.

When you buy this building are their any height restrictions for redevelopment??

Often the class of building and requirements expected by the city or the county can greatly ramp up building costs and delays.

How large would the new building you want to build be approximately??

When the developers I have worked with do a tear down a place with asbestos and other things costs much more to demolish.You would think you would just tear it down but they want all that remediated and removed first so it doesn't go airborne during the tear down.

Building cost 5 years from now is impossible to speculate.Labor and materials could be way up and LEED demands might be a requirement then.

Can an additional level be built on the existing structure if it is beefed up at the bottom?? Then you can just reface the outside and update the interior.

The city and county over time also change how they view development.In five years you have different people in office which might be pro-development or anti-development.

So there is a ton of factors that play into it.Right now you can land great contractor teams in commercial for cheap.Once the big jobs come back around it will be harder to find quality work for a small job such as you are proposing.

Hope it helps.

The sale of your property has nothing to do with your sister looking at other properties with an agent.

You can do whatever you want as a client relationship is not with you but your sister if they signed an agreement.

If your sister (buyer) signs a buyer broker agreement she can list your property and address as an exception to which the buyers broker will be owed no commission.

Now if your sister wants to bring in an agent to represent her typically the commission is paid by the seller but you can refuse and the buyer would be responsible in that situation.

It sounds like your sister might look at a few properties that are distressed and buy a deal for a great price.Sometimes it's hard to tell family you will only pay X for a property and no more.

no legal advice

Yes and the grass is not always greener on the other side.

I have seen some do this only to be disappointed in the final outcome.If the difference was marginal and I was already down the road so far in costs and time with bank A I would stay where I am at.

Exactly Mitch.

If you wait on a 1,100 1 year lease tenant you will be at 2 months to rent.

If you rent at 1,050 the 50 dollars less times 12 months is 600 compared to an extra month the property sits vacant and lost potential income is 1,100. So even with lower rent you come out ahead.

The other thing you wan to ask the property manager is are rents staying flat,going down,or going up? If they are declining you don't want to try for 1,100 and then end up renting for 1,000-950 and have 2 months vacant because you wanted top market rent.

The property is currently in need of a light rehab in 10 of the units with carpet and paint.

Lease up after rehab will be fast as I would drop down the rate to 99 a week.

Hoping for 500k.Buy at 450k with 50k of rehab ground improvements.Property was built in 1983.

My e-mail is in my signature line if you want to talk further and have a private discussion.

You can get a bunch of employment and job growth numbers from the Federal Government of Bureau of Labor and Statistics.

http://www.bls.gov/eag/eag.ga.htm

State searches are to the left. Towns that are heavily at risk are what I call ONE ECONOMY towns.

This is where one business is propping up most of the economy.If that business goes most of the other businesses will follow and the town will start dying off and people will migrate elsewhere.

Once vibrant towns 30 years ago are now all but vacant and many will eventually cycle and spring back.With one economy towns it's very important to know what that businesses plans are for staying and if they own or lease and when it's coming up for renewal.

Many investors stay only in big city cores for what they see as less risk. Suburban to rural can be great investments if you do your research and know what is going on and helps especially if the local economy has many types of trade propping it up.

This way if one leaves or fails the government can usually get something else in to cover the shortfall.There are many,many other things you can check as well that you do for planning on larger commercial projects.

For house rentals I don't think it's necessary to go real deep with it.

Try to find other areas for lower prices with better rent ratios.

Here in Atlanta you can get a property for about 15k with 550 to 600 a month in rent.

Where I live In Cherokee county that same property is about 60k.Tenant class would be about the same.

The LAST thing you want to do is saddle yourself with a high debt service and mortgage that cripples you from doing the better deals.

I see it a lot where an investor buys a house and pays to much for it.Any little problem goes wrong like eviction and tenant damage or unanticipated repairs and you are now in the red.

Many bought houses in your range when the market was hot in my area for appreciation.They didn't care if it cash flowed as the appreciation they could just refi out and make money that way.

Sometimes people will buy something just as a tax write off to show losses and other times if you break even but the old property is sitting on future commercial land or other potential develop you can make a great return that way.

If it's a house in a subdivision there is only so much you can do for an exit and return strategy.The numbers you have given I would not do the deal.

Jimmy your welcome.

Bpo agents come in many levels.If you have a newbie completing one they might look at your comps and your repair list.

Seasoned bpo brokers/agents complete sometimes 200 or more bpo's a month and barely have time to breathe.They have a mill telling them get the report back in 48 hours or we will start reducing your volume.

The last thing they want is to have to chase down an investor to gain access trying to influence them so they can make a measly 50 bucks and get on to the next orders.If they can't get access they often tell the mill to re-assign which causes the bpo to take weeks to get back.For the bpo broker/agent it's about how fast can I get out there and take pics and upload to the office.

I still do a few a month but stopped doing the volume years ago.

Used to in the hot sales market I would get 130 to do a rush 24hr exterior. Now sales for comps are few in between and the order pays 40 to 50 which is below my pay grade.