All Forum Posts by: Chris Smith

I'm looking to develop flex space and I think 1500 sq ft is my target size. The smaller the space, usually the higher rent per sq footage. There are a large pool of buyers who might need a smaller space. 

 Normally what I'm seeing with this type of product is the city is asking for 1.5 to 3 parking spaces per thousand sq feet of building space. So you might be fine on building size. Regarding big trucks, if the units are only 1000 sq ft, these are probably going to be smaller businesses that don't really require a lot of heavy deliveries. And when they do, it will be drop off one or two pallets which will be done fairly quickly.

I'm looking to develop some flex space in FL. I would love to connect with anyone who is interested in developing flex space to compare notes! 

Did you have any personal net worth requirements to do the loan?

@Dee Diaz I think the site won't let you post phone numbers unless you have a certain amount of posts. This is to reduce spamming. I don't think anyone is trying to edit you specifically.

@Catherine German Can you tell me how much you charged for the corporate rental versus the fair market rent?

@Tim Touchette Can you tell me what the ideal floor plan/features of these condo's? If you were building from scratch, what would you be building?

@Joseph Gozlan @Russell Brazil

Thanks so much for providing your feedback. 

You mentioned that AIR BNB and short term rental type income would not be considered for an appraisal purpose, which makes sense. But what if you are using month-to-month leases with the minimum term being 1 month? So in theory you would have leases to verify income. 

But overall, I agree with your viewpoints, this is no longer a passive income and you will need a much more active manager and higher capex and expenses to cover the costs of turnover every 1-3 months. 

In this age of compressing cap rates and every increasing asking prices I'm trying to find a way to make deals work. Or even make a new build, small scale multi-family work. There are a few apartments in areas of town I've been looking at that might make sense if they can be rented out shorter term just like @Marc C. is considering doing. 

Just trying to think outside the box here guys :)

I've been looking into this as well. I'm in Florida where the construction costs are lower than the national average.  First off, there is a lot of land out there but not much that is zoned for the density needed for apartments. Most small multi family units I see that were built decades ago have much higher density than is currently allowed by today's zoning code. 

There is also no economy of scale on these 6/8/12 unit projects. I just built a house last year, acted as my own GC and there is no way you can build for 60$ a sq foot anywhere in this state on a small project unless you physically do a lot of the work yourself. Whether or not you're using builder grade materials or high end, the bones of the house cost the same. Maybe in the mega subdivisions can you get those prices, but not on a small project like that. Like you, most of what I see is mega big, mega expensive Class A projects with lots of amenities. 

I doubt you will find any similar properties, and even if there were, it's unlikely there would be recent sales data and unlikely that they would be of similar size/value.

It makes me wonder if you could buy a decent apartment deal off of loopnet, convert it to monthly rental and increase the value. In most areas 30 day rentals are legal.

I've been practicing running numbers on various deals in town and I found this 22 unit apartment listed in Tampa, FL. The apartments are located in a central location in Tampa and the owner has converted them to short term, furnished monthly rentals that he labels as "luxury apartments". 1 of the 22 units is used as an office. 

Craigslist Ad: http://tampa.craigslist.org/hil/off/5822629291.htm...

"Property and building is used as a Luxury short term corporate apartments/condos that consist of 22 units. 1 unit has been converted in to an onsite managers office and 21 unit 1 br/ 1 bath fully furnished luxury apartments. All homes come complete with elegant and comfortable furnishings, washer and dryer, full size kitchen with kitchenware, linens, wood floors, two flat screen televisions with cable and internet. Existing business has been successfully operated since 2006 boasting great revenue! This property is a must see! Possible owner financing up to 1 million.Apartment/Condos complex is minutes from downtown Tampa, Tampa General Hospital, Tampa International airport, I-275."

Previous Loopnet listing: http://www.loopnet.com/Listing/19737906/3418-W-North-A-St-Tampa-FL/

Here are some numbers:

Asking price: 2.7 million

NOI: 192,500

Cap rate: 7%

Monthly rents are $1600 a month for a 675 sq ft apartments.

Now this doesn't seem like a good deal to me and it's actually off the market but here's my question. He is seems to be getting 2x the normal rent by renting on a monthly rate and making his NOI much higher than you could get from a unit of this size.

Even though the overhead and management costs are higher, would this NOI still be usable /accepted in an appraisal?

Will the lender accept the NOI as the basis of establishing value, even if they come from monthly rentals instead of yearly?

This leads me to my next question - could you increase the NOI and thus the value of an apartment building by furnishing them and converting them to short term luxury rentals? (assuming there was a market for it). And I'm not talking about AIR BNB but more like corporate housing, 1-3 month leases, etc.