All Forum Posts by: Cody Dover

Ed Matson Hey Ed, Yes I didn’t itemize in there sewer, water, etc. Due to me adding that within the 50%. The taxes and insurance came straight from the owner. I run 89% as a conservative number. Even though my above numbers are based on current. I leave room in there for people either getting behind, or moving out etc.. The market it is in is about a 95% average occupancy rate. Although with this being a mile down the road from a major university, will be more closer to 100% year over year. And just found out today the same seller is selling 20 more units (five 4-plexes) that’s all on this same street. With that, you could have more control as far as rent rates and completely controlling that whole street.

I'm underwriting a deal right now, trying to determine a generic rule of thumb people use for expenses. 

The deal includes: 

- Four 4-plex's totaling 16 units

- 100% occupied (although I like running my numbers at 89%)

- $600/door = $9,600 Gross Monthly rents || Yearly $115,200 Gross rental income

- Hard cost include: 

- $10k Taxes/insurance yearly

- $11k Property Management yearly 

Total Income [MINUS] hard cost = $94,200. 

I've been told to multiply your total Gross rental income by 50% to account for expenses so

($115,200 x .50) = $57,600 as a NOI. Then calculate your loan payments in from your NOI.

I just have a hard time believing expenses are going to turn out to be that high. Would I then subtract my hard cost of Taxes/Insurance from the $57,600 or is that factored into the 50% we cut back? 

This deal will be a value add deal where we can add about $2.5k per unit in upgrades and raise rents $50-100. The rent as it is, is hard to beat in this area. 

Located in a city with a University Population of 30,000+ enrolled. Excellent job growth and voted top 5 places to live 2 years in a row. 

I have factored in my loan amount to be $52,300 yearly (with renovation cost added in)

The payout to private money will amount to $11,400 a year. 

Please let me know your thoughts after seeing some of the skinny numbers on the property. Would love to hear your insight and if I could possibly get better terms than a 25 year 5.75% on a $733k loan balance.

The best loan terms I've found so far are a 5 year balloon 20 years amortization, 5.75%. 

Is their any other loan structure for 10-30 unit complexes that are better than the one above or is this typical for commercial loans? 

Unfortunately, our loan price doesn't meet the requirement for Fannie/Freddie. I'm told it needs to be above at least a $2M price in order to get them involved. 

Please verify if I'm wrong here. 

Thanks guys for the feedback. We planned on getting a lawyer, yes. And it is just a few investors involved on a small scale that “wants to be apart” of our deals. Not much soliciting going on here. But what was mentioned is right, we need an attorney first for them to line out these kind of things.

We are coming up on completing our first syndication with 102 storage units

With this being our first "syndication" deal  in terms of managing "a fund" , we aren't sure of what's to come with reaching out to the SEC to proper documentation. 

Anyone that has closed successfully, I'd love to hear some challenges or problems that we can avoid on the front end and be better equipped going through the process. 

Yeah it’s syndication. We have been running our numbers based on a 25% down payment plus an additional 5% of purchase price so 30% all in all invested. But this would be for just normal operating capital. Not sure if there was an generic industry number people used.

@Donovan Warren I have a few connects out in Los Angeles area, would you happen to know the Galen's or David Meltzer? Both in sports and R/E. If not I would love to get you connected. 

@Eric Hrlbock You referred to list, what type of list is it, and how can I get one for my state?

When raising money for apartments,

How much would you guys factor in when raising funds to set aside per door?

This isn't just for fixing the place up, more so setting it aside

That you perhaps won’t need to go back for a capital call..

Thoughts appreciated!

Rehabbing your units while tenant occupied..

What has worked best for you; 

-moving tenants out

-waiting until they leave to rehab

-do it while they are occupied?

Knowing this is only a 12 unit apartment with all places occupied, I'm seeing which strategy is best to do with your tenants while trying to add minor updating. Flooring, Painting, Appliances etc..