All Forum Posts by: Brian Cowan

I strongly recommend a Phase 1 Environmental Site Assessment (also called a Phase I ESA). This is a high-risk site from an environmental contamination perspective. I posted about this on another thread, so I won't rehash the whole thing here. 

Quick summary: A Phase I ESA gives you the "Innocent Landowner Defense" protection under federal Superfund regulations. It protects real estate owners (and investors like me) from liability for environmental contamination that they did not cause. I have clients at my W2 who didn't do this and are now paying environmental remediation companies (like the one I work at) hundreds of thousands to clean it up, by order of the EPA, even though the PREVIOUS owner caused the issue. That doesn't include legal fees and fines either. 

Hope this helps but don't let it freak you out. These things can be accounted for with proper due diligence!

Check out Invenergy; they are a client at my W2. They are aggressively developing all over the US. I don't have direct contact in the Acquisitions department as I work with their environmental due diligence team on Phase I Environmental Site Assessments.

That said, I echo @Chris Martin in warning that the environmental and engineering feasibility process can easily take a year or more.  

A little late to the party, but I hope this helps you and others. Your lender may already require it, but I cannot stress how important a Phase One Environmental Site Assessment (or "Phase I ESA") is for many commercial deals. I am a Geologist and have done hundreds of them, and I am a Subject Matter Expert for a large engineering company. Very long and complicated background, but a Phase I ESA screens the property for hazardous materials problems. Things like underground gas tank leaks, high metals in the soil due to previous use, underground tanks, previous landfills, etc. 

Most importantly, a Phase I ESA gives you the "Innocent Landowner Defense" protection under federal Superfund regulations. Basically, it protects real estate owners (and investors like me) from liability for environmental contamination that they did not cause. I have had clients who were litigated for contamination on their property that the PREVIOUS owner or an adjacent owner caused because they didn't get a Phase I ESA. The legal fees alone can be in the six-digit range, and cleanups can go into the millions. A Phase I ESA probably would have identified the issues BEFORE they bought the property and protected them from liability. 

Hopefully this helps. Don't let it scare the bejesus out of you. Just like a good surveyor can protect you from boundary disputes, a good environmental professional can walk you through this process.

Hi BP

Updating from my previous post. I am looking for a $60K private money loan to purchase a portfolio of rentals in Memphis TN. You would be protected by a 2nd position lien. Upon purchase the deal will have approximately $100K in equity. All but one of the properties are already rented out and the deal is projected to ROI of approximately 20-23% after all expenses (including a very conservative 20% of gross rents for vacancy and repair). There is room for rent increases over time as they are all a bit below market. I already have a track record of purchasing solid properties and have a portfolio of properties currently at 21 ROI%. The properties will be under professional property management. I am looking for a 3-5 year loan of $60K. I anticipate being able to pay back $40K within the first six months and the remainder over 18 months, but I would like the cushion of a 3 year term to ensure that I meet my responsibilities with the payback. Please contact me on BP or directly at 512-632-8409. Thank you for your consideration.

Hello BP. I am looking for a $50,000 private money loan to close a deal on a portfolio of 11 rental properties. Payback within 5 years, likely much sooner than that. Please contact me for more details about the deal and to discuss terms.  512-632-8409 Brain Cowan. Thanks!

Looking forward to it...

@Jason Smith I lived in west Georgia during college so I got to know the area well. Now I live in Austin Texas but mainly invest in west Georgia because I can get much better ROI there versus the overpriced Austin market. I currently have properties in Carrollton and Bremen. The key is to have a great property manager (I highly recommend Century 21 Novus in Carrollton). I have had a few that were not so great in the past and they took a good deal and turned it into a total pain in my ***. I look for deals with a projected 20%+ ROI, doing a conservative analysis. I also look for gross monthly rent that is at least 1.5% of the purchase price. These criteria are tough to meet, but it's well worth it to be selective (I learned this the hard way). I invest in B and C neighborhoods. Stay out of the "war zones" because the return will look good on paper but the turnover and damage will kill your ROI. Class A neighborhoods generally won't cashflow as well unless you get a great deal on a rehab. My property manager is great at pointing out the neighborhoods that are full of solid blue collar workers, good rent rates and low crime. I never have more than a week or two vacancy because of their guidance. Hope this helps.

@Jason Smith

I agree with Zachery. Leverage the skills you already have while focusing on the snowball method. Work in the RE industry in the market you want to invest in so that you build relationships and credibility. Most of the good deals never hit the MLS, so your network will likely be where you get most of your deals. The west Georgia area is great for cash flow. I started buying properties in the Carrollton and Bremen area a few years ago and have almost replaced my day job income in a very short amount of time. If I was working in the local RE industry I would likely be farther along in building my portfolio due to the connections. Good luck!

@Chris Soignier I have been a member for a year at the $500 level and have really benefited from the education and networking. I am considering the PIG membership, but the price tag is not insignificant. You mentioned that you have experience investing in MF outside of LU as well. How has that compared with your experience with LU? Was it a group where an non accredited investor can participate like they can in LU? Just wanting to see what else is out there. Any advice would be greatly appreciated. 

Definitely look up @Brian Adams  he is very responsive and helpful. He knows the area very well.