All Forum Posts by: Christian Austin

Thanks for the post @Rami W. I was going to update the post after getting the P+S back, but since you asked, here's where the project stands. 

I has a signed offer back at the end of March. Most of the details of the purchase were deferred to the P+S that was drawn up by an attorney recommended by @Ray HurteauThe P+S is structured so that the sale is contingent on the town approving rezoning for a 3 family building. Earnest money is structured as 3% upon signing the P+S and 2% upon rezoning approval by the town. If rezoning is not approved all earnest is returned.

As far as the approval process, I will be working with a couple of attorneys in the town that the condo conversion is in. They have done rezoning in the town before. I was not able to find a way to avoid putting up money before getting approval. Our first step in the approval process is to draw up plot plans and bring them to the town engineer to see if we even have a chance. My attorneys think there is a a good chance this will go through, or else we wouldn't have proceeded. After this, we will draw up a floor plan, current and proposed for the building inspector and ZBA. Currently, I am waiting on the P+S from the seller. He's been out of town, and we spoke last week. At that point he said the P+S looked fine and he was going to send it back signed. I haven't received it yet, but I haven't been following up this week because I have another deal in the works.

For the rehab process, I met some guys through the Boston BP meetup that I will be partnering on the deal. They have a lot of experience in flipping on the north shore of MA, and have done several condos.

I will post an update upon executed purchase and sale. Any feedback is always appreciated.

A quick update on the status of this deal. The buyer and I have been trying to agree on who holds the earnest money in escrow. The seller is not using an attorney and wanted to use his own account. Eventually, we agreed on holding escrow with my lawyer; I'll be sending over a revised offer tomorrow. Thanks @Ray Hurteau for all of the great advice in the post above and over the phone! 

Any suggestions on how to run the initial inspection to make sure my renovation costs are in line? There is a 14 day period in the offer. Ideally, I'd have plans drawn and go by when walking through. I was thinking of paying several contractors to walk through and having them give the costs under the assumption that one or two floors would be turned into additional units.

@Tom Meade  I  be setting up a purchase and sale to take the buyer through the process with me for his price, as both you and Ray suggested. Thanks for the advice on architects and civil engineers. I was actually thinking that an architect may want to partner up on a deal like this. Given your advice, it's probably a good idea to partner; anyone interested in potentially partnering, please PM me.

@Martin Scherer  Wow, that sounds like a nightmare timeframe, even worse than Ray's. Luckily this project doesn't involve new construction; so the timeframe is probably shorter than one involving changes in structure/subdivision. Preliminary due diligence with the town indicated 4-5 months for the ZBA process. Unfortunately, there are NIMBYs here too.

@Wayne Brooks  I can't comment on how well small condo developments are manged here, but I can say that there is high buyer demand for them in the Boston area.

Great feedback!

This is my first post in awhile. I've been around, but haven't been posting. Much has happened since my last post, but I won't bore anyone with the details. In short, I began wholesaling, and recently ran across a lead that has lead me to post here.

The lead is a multifamily in the northern Boston MA area with good potential as a condo conversion. The issue is that the numbers make sense for a 3+ condo conversion, and the house is zoned 2 family. From looking over the area, talking to the owner, and town, it looks like the town would approve 3+ units, but of course, no one can make guarantees until going through the zoning board of appeals process.

This is typical of several leads I get. The owner prices the property based on what they "think" can be built on the property. The deal is good if this is true, but nothing can be guaranteed until going through the rezoning processes, and the process costs money for plot plans and possibly architectural drawings.

Back to the lead above. I've decided that I want to attempt the rezoning process and condo conversion on this property; I have no personal experience in these areas. The reason for going through the process is twofold 1] Learn the rezoning process, and see if there is a low risk way to apply this to other leads. 2] Try a rehab, and see the process through form start to finish. 

My goal in this post is to update the status of this deal and have others give their opinions. So, here were go:

The plan is to first get the property under contract, with a 14 day inspection contingency, and then to draw up a purchase and sale contract with a lawyer; certain amounts of earnest money would be put down after milestones are met in the rezoning process (this was recommended in other posts). Finally, either follow through with the rehab, or sell the plans.

I'm in the processes of agreeing on a offer which should come back tomorrow.

Some of the gaps right now are:

1] Should I partner, hire a GC, or find my own subs? I'm leaning towards partnering. Feel free to PM me if you want to discuss.

2] How to proceed with the inspection period: I made, what I think is, a conservative estimate on rehab, but would like to get a professional opinion. Should I hire an inspector/contractor, have some GCs look (possibly pay them) look over the job, or immediately look for a partner?

3] How to get plot plans and drawings for the rezoning process? pay out of pocket to a professional, look for architecture students on craigslist, etc., or again partner with an architect.? Right now, it looks like I'll have to pay out of pocket.

Enough for today. I welcome any feedback. Thanks.

Timely post@Bryan Dracka. I've been looking for similar advice. Check out this thread.

wholesaling small multifamily

Looking forward reading any advice given here.

@Brian BurkeAll great tips. Thanks @Brian Burke.

@Brian Burke I appreciate your input. Do you have any recommendations for determining the cap rate for different regions? My thought would be to gather a list of recent sold prices in a region and then calculate the NOI for these properties by estimating the rent and non-finance expenses (using, say, the 50% rule). From these numbers we could find an average cap rate for the region.

Thanks @Ann Bellamy. Great advice and tool. The APOD generates an estimate of property cash flow; do you have any suggestions on how determine good cash flow in a region to compare to the APOD analysis? Perhaps regional analysis is not necessary if cash flow is above some threshold?

Great thread. Just wanted to give it a bump to see if there have been any updates. @James Swan I'm also trying to determine the best way to analyze multifamily wholesale deals in the Boston area. Any developments? @Account Closed have you settled on a process for analysis of multifamily wholesale deals?

For wholesaling, I've been looking at estimated cap rates of 2-4 unit multifamily properties. The problem with this is that maintenance is estimated, and cap rates differ greatly around the city and need to be determined for each region of interest. At @Justin Silverio's Boston BP meetup, buy and hold investors suggested that they look for either cash flow--again this would be region specific--or value-add multifamilies, such as ones that need rehab.

Has anyone else used and had success with other metrics? Does anyone know of tools/databases that would make regional analysis of Cap Rate, ROI, GRM, etc. easier to calculate than by manually calculating these values on a property by property basis for different regions?

Thanks.

Great event again @Justin Silverio ! Thanks for organizing.

@Shlomo Trachtenberg welcome to BP. You're in the right place to begin the real estate education process. I was in your position about this time last year, and was looking in areas similar to where you are interested in buying. This summer, I ended up purchasing in Medford. Feel free to message me if you have questions.