All Forum Posts by: Danielle Bennett

@Evan Polaski

Over the past 10 years, LACDA avg annual increase for PBVs is closer to 3%

I am looking for recommendations on underwriting a deal.

100-units with 60% occupied by tenants with LA County housing choice vouchers (HCV) - many of which rents are below current HCV payment standards, 10% vacant, 25% occupied below market.

LACDA publishes HCV payment standards annually. 2021 PS are approximately 15% below market. LACDA PS was flat for 2010-2012, and again 2018-2020. The PS increased in 2021 by 5.45%. LACDA will also increase contract rent to the lesser of current PS or amount capped by CA rent control (5%+CPI).

Back to my underwriting question:

I am assuming rents for vacant units at leased at market, occupied non-HCV units at increased up to market (over 1-2 years), HCV units increased to max allowable (current PS or rent control increase). This may be conservative since it does not assume any turnover of HCV units (which do not turn regularly).

Am I missing something here?

For MF 5+ unit, and more specifically 20-100 units, what % are you offering/providing for earnest money deposit? How long for due diligence before EM is non-refundable?

I realize this may vary depending on the area and market but I’m curious what others are doing generally. Thanks!

@Lee Ripma

Thanks for your feedback and completely agree. These are broad goals that need to be broken down into short term action items. Short term: (1) determine investment goals (target ROI, markets, property size, capital stack); use this to dictate where and with whom we invest. (2) market research to evaluate where and what will meet investment goals (this is where my OP question about analyzing properties with rent control comes into play). (3) decide to sell or refi our 4-unit property in line with points (1) and (2). (4) analyze cost benefit of selling GP interest as capital source in line with points (1) and (2).

Hi BP community!

I am looking to get some perspectives and suggestions for some shifts on our RE journey.

I am not new to real estate generally, but new in some ways. I am a principal in a small family business that owns GP interest in 800+ affordable units (tax credit financed) in CA, AZ, NV operating for 15+ years. My company continues to acq/rehab tax credit properties to build portfolio (or maybe not). Tax credit/affordable MF has is pros/cons. Pros include cash developer fee, cash flow and asset value with no long term cash invested (pursuit costs at risk repaid at closing), minimized risk with rents below market. Cons are that tax credit financed properties are highly complex and take a TON OF TIME, with uncertainty of execution (waiting agency/local approvals, etc. As with many aspects of RE these days, it’s harder to find deals that work, patient sellers, and many agencies are more interested in new construction vs. acq/rehab. Multifamily value add assets for cash flow. Looking to develop acquisition strategy (not using tax credit equity) using with debt our equity and/or with partners), value add, HAP contract with MUTM potential a plus.

On the other side of the same coin...

My husband and I own a 4-unit in Chicago that we purchased with FHA and without a specific plan BRRR'd but have gotten stuck on repeat. That was 9 years ago...we now live in Los Angeles area. Currently self-managed, but prefer not to do this long term. We are trying to decide if we refinance, sell and 1031 exchange into a larger property. My goal is to develop an active investment strategy leveraging our equity in this property, possibly as investor along with my company.

I feel like I am working hard, but not smart (on both sides of the coin). I understand RE fundamentals, and yet not sure to begin - driving for dollars (what exactly does that mean one does?), calling brokers to look for off market deals? West Coast/Midwest? Is it better to focus on 1-4 unit properties, small commercial (5+ units) with our own equity, or mid-size commercial (50-100 units) with partners. I realize I’m all over the place at the moment and trying to hone in on a focused strategy to achieve my goals; the goals being to generate cash flow, wealth accumulation for financial freedom.

I appreciate any insight, and specific suggestions you can share!

Any advice on loan products for refinancing 4-unit OOS rental? Ideally cash out refi to buy another rental $300k equity

We started investing in 4-unit in Chicago. We acquired with 203K, rehabbed all units, lived in one unit, and rented out 3 units. Refi’d to conventional but no cash out. Change of plans and we’re back in LA, where we’ve been for 5+ years. Looking to refi 4-unit in Chicago. Fully rented and several years post acq-rehab. Goal to reduce interest rate, cash out for next acquisition, re-boot investing. Any suggestions on refi options? TIA