All Forum Posts by: Chase Louderback

@Evan Smeenge

The high leverage of the FHA and additonal PMI payments that @Tom Shallcross pointed out is definitely going to make a deal difficult in this market.  

Have you explored getting a conventional loan and wrapping in the construction costs? It looks like after all rehab, closing costs, etc you are in for 300k. That would be 60k down which isn't much more than the capital you have to bring now and you will shave off that PMI. Smaller local lenders may consider that.

If you can do that and maybe self manage (effectively) the property then how do you feel about the numbers?  They would still be a little tight but after your renovation could you bump the rents a bit?  All of those things combined may get you close to where you want to be. 

Hope that helps.

That's awesome @Danny Kao.  We are all learning together.  Feel free to DM me if you have any other questions or just want to connect.  Best of luck!

Second what @Jack Martin has said. Is it possibly for you to have a close friend or family member help with the capital? Could also JV with someone if it is a really great deal. 4 Park owned homes will make it difficult to sell for a JV though. It's small and the turnover will (generally) be very management intensive.

Best luck!

Going to echo everyone else in the thread that education is extremely important.  The market is competitive so you absolutely must know how to underwrite these deals.

Michael Blank's Ultimate Apartment Guide gave a great dive into the knowledge and underwriting skills needed for larger multifamily.  

I've heard great things about Joe Fairless's new book but haven't gotten to read it yet.  Dave Lindahl's books, Multifamily Millions and Emerging Markets, were a fun read and had a good overview on market selection and multifamily investing. 

Hi @Chris Lawrence

Since this is a commercial property (over 5 units) banks will generally underwrite them based on the current market cap rate and the NOI (Net Operating Income). NOI is the income the property produces after factoring in all expenses except for the mortgage payment.

The vale calculation would be: NOI/cap rate = Value. (I.E. 100k/10% = $1m Value).

@Luke Miller had great advice on the next steps and things to look out for.  Definitely lean on a professional property manager's experience about the per unit expenses and where you can realistically push rents too.

Feel free to PM me if you have any other questions.

@Skyler Mckinney

I know a couple of wholesalers in the VA beach area that are hustling hard and may be a good connection. @William Brown and his partner are sourcing a lot of deals in that area.

Otherwise, look for business and real estate related meetups and the ones that are consistently going are probably serious (or know someone who is) and would likely make good contacts.  Also, be sure to connect with the organizer since they are usually a good contact and know other active investors.

Hi @Christopher Morgan,

Have you considered calling commercial brokers in the area that sell similar properties to what your group is proposing to build for that information?  Could say that you are looking to buy a similar commercial property and want to know the market trends of the area or maybe offer to pay them for the information?

Good luck!

Hi @Danny Kao,

You can get this information directly from the broker for the property you are interested in.  Generally they will make you sign a CA (Confidentiality Agreement).  

If you don't want to be calling brokers, I would recommend looking at Loopnet, CRExi or some of the other commercial websites.  Also, as another bonus, a lot of brokers on Loopnet or CRExi may not directly include the information you want but will include a link to their website.  You can sign up and get the information there.

Finally, keep in mind that these brokers are trying to sell the property they have listed.  As long as you know the lingo and are knowledgeable in what you are looking for then that's the majority of the battle, in my opinion. Hope that helps!

Seeing properties adding these amenities which can help indirectly raise rents:

Dog Parks

Outdoor grilling/picnic areas

Can also add: Late fees, application fees, installing vending machines for income, short term lease fee, month to month fee, etc.

Also heard of people Leasing space on the properties for signage or something similar. That can have a pretty substantial boost to NOI. (I.E. operator installed a digital sign on their property by a main road and approached local business owners who used then leased sign for prime advertising.)

@Michael Fernandez  If all the other investors are passive then you will have to have a securities attorney draft up the needed syndication paperwork.  

If there are only a couple or few investors and everyone is "active" then you may be able to get back with just doing a JV. You should still at least consult an SEC attorney if you have only a small group and have agreed upon active roles, just to cover all your bases.