All Forum Posts by: Matthew Fiebig

Besides the BP podcast obviously :)

@Eric Fernwood I'm back from reading your two posts. My first question is how you find these local property managers in the first place. I can think of a couple ideas, like phone book, contacting the local REIA, google search. Are there any other methods that you would suggest? Also what would be the best way to validate the information that they give you. "Trust but verify" right?

@Tiffany Plovie , bummer, I couldn't make it to this one. Does this meet up happen regularly?

@Eric Fernwood , thank you for the reply.

So basically what you're saying here, is that the initial offer is based off of whatever financials I can get our of the seller (P&L, rent roll, sched E) which represents the highest offer. Then I have an escape clause which is executed when when due diligence is completed and finds better leveraging material.

Instead of a linear flow like I was thinking it looks something more like:

Acquire Lead

Letter of Intent

Acquire Finacials (P&Ls)

  > Negotiate Offer
|    Under Contract
<   Due Dilligence (Rent Rolls, Structure, Title, etc)
  Escrow
Management Reorg

What sort of information besides Financials should I be requesting from the owner/broker during that first touch? What is left deffered to due diligence?

@Brian P. at what point should I be getting that info. Due dilligence?

Hello,

I am a new to the area of real estate and one of the biggest problems stopping me from investing is that I do not understand the general flow "the deal". I'm specifically interested in this from the perspective of acquiring apartment buildings in Washington state.


As I understand it, the flow occurs something like this:

Acquire Lead

Letter of Intent
Acquire Finacials (P&Ls)

Negotiate Offer
Under Contract
Due Dilligence (Rent Rolls, Structure, Title, etc)
Escrow
Management Reorg

The part I'm confused about is Due Diligence is likely where the treasure trove of info is going to be, but by the time I reveal that information, I'm already under contract. If I find something unfavorable to the seller how do I get out of the contract and negotiate a better price?

I feel very uncomfortable making an offer without that due dilligence info, but as I understand it, that comes after the contract is executed.

I'm coming in from Redmond. Looking forward to meeting you all. How will I recognize the group?

When analyzing a deal, what resources do you use to establish the market rent and comparable CAP rates in the area? Often I find data about the selling price of an apartement building, but no data on NOI, CAP or GI. Finding market rents has been a similarly frustrating problem.

Matthew Fiebig

Fair enough. I'll present all the information I know.

First a Physical Description:
Mobile Home Park 10 acres, subdivided 84 pads with 69 park owned Mobile Homes. For this property separately the owner wants $1,101,620. The value that I've gotten out of comps is
There are 26 disparate SFD, one duplex, one 6 unit apt complex, and one vacant lot. The owner wants 1,191,102
for those properties.

Incumbency summary.
Mobile home park + park owned homes are free and clear.
6 unit apartment - mtg balance $36,866 @ 6%
duplex - free and clear.
Vacant lot - free and clear.
26 SFD as follows
Price Mtge bal
219 N Wash 40,127 33,430
320 Oak 40,613 25,590
720 Picher 25,340 23,120
730 Picher 29,073 30,324
732 Moffet 27,347 28,929
901 Roose 112,920 36,866
909 Connor 20,927 22,253
920 Jackson 25,740 28,619
1501 Valley 22,867 23,489
1604 Minn 26,293 21,490
1718 Connor 43,927 clear
1810 Pearl 47,380 48,249
1820 Wall 28,080 25,963
1823 Redbud 127,790 128,046
312 E 19 12,000 32,466
318 E 19 9,000 clear
1902 Kentucky 17,000 clear <-2br burnout.
2115 Bird 48,040 42,905
2124 Adele 13,393 clear
2224 Murphy 29,693 22,253
2302 W 4 21,280 21,453
2540 E 12 128,790 102,550
2815 E 16 59,492 45,501
2903 Schiff 32,867 25,446
4309 W 27 106,810 98,793
5796 Harrison 62,700 clear

Total Incumberances - $867,735

Still working on comps data right now for SFD

Gross Financial Summary yearly
Overall CAP 15%
Gross/Net income from Mobile Home Park - $379,451 / 165,243
Gross/Net income from Homes - $178,113 / $133,840

Seller Summary
Seller is an older Gentleman looking to sell to purchase a Motel closer to where his Son lives. Seller hopes to get $700,000 net out of the deal and is willing to put up $550,000 seller finance in second position but wants the note sold immediately. The seller is also willing to put up 50% or $1,000,000 in first position. The seller seems pretty receptive to creative financing. The seller's major fear is to have to foreclose on the second lien position subject to the first mortgage. He has said ardently "We are just not in a position to do that." The SFDs may be taken subject to existing financing.

From what I've seen in comps so far is that the homes comp at or above asking price, and the MHP is CAPing higher than most other parks in the area.

There are two things I forgot to mention; there is also a 6 unit apartment complex as well, and the purchase price is $2m

The Mobile Home Park is free and clear, whereas the SFR are under ~$800k of mortgages by various banks. The seller said that all debt would be retired via the purchase price. There are some SFR that are in need of rehab as well.

Also I've never tried to purchase/fund multiple SFR in one transaction before. Does each need to be a separate transaction or what?

In regards to the Staggered Closing, he was specifically referring to the scenario of finding a Note Buyer either before or after escrow. But I would like to hear more about what your technique.

Hello BiggerPockets!

I come to you with a two fold question, but first I would like to present a little background. I'm attempting purchase a Mobile Home Park in MO which includes some SFR in the deal. The seller is willing to do 25% at second lien position, but fears default from me and having to take on the first position loan to preserve the property.

So BP, what are your negotiation tactics in this situation?

One thing that we had talked about is finding a note buyer during escrow who would be willing to write a letter of commitment to purchase the note at a later date, preferably after some seasoning so as to avoid SAFE laws. He referenced something called a staggered closing, and wondered if BP had any experience with such a thing.

I look forward to the responses!