All Forum Posts by: Dan Mundie

Hello all,

Duplex in Norcross for sale - 2/1 (938sq/ft) each side. One side is vacant, other is occupied month to month. Market rent in that area is $1600-1800. 

Property needs some TLC, which we are doing now, but wanted to post it out there to see if someone would rather purchase before repairs are done for value-add (and customization). 

* Roof is 4 years old (receipts/warranty)

* Structural repairs done recently (with lifetime property/transferrable warranty)

* Sits on a septic, which was recently emptied. Also repaired/upgraded in 2021 (receipts/warranty)

Please call for more information - 404-433-8281.

Thanks

Absolutely!!! We had a project on a 1930 building (smaller Apt complex) with a TON of value add. Don't discard those, just be extremely thorough. Typically those buildings can be gems in the rough - as the small apt complex we found - in an AMAZING area (A-, B+), but operating as a C- property. 

That said, and as mentioned above, be Thorough and most importantly - wise. Things we learned:

- Expect for basic foundation to be out of code. What I mean by this is: Electrical, plumbing, etc. done 100 years ago typically are completely out of date. Bake that into your numbers, regardless of how much the broker tells you the property has been renovated, there WILL BE ISSUES!!!

- Roof - is it a slate roof? That is common for the time, and brokers will tell you it lasts a lifetime, however, their time is very finite and expensive. Be sure to convert to shingles if possible.

- Accessibility - if they are out of code, you will have a very bad time pulling permits - including most value-add opportunities.

- Sub-metering. Typically buildings of this age do not have central HVAC. Be mindful.

- Parking: Way different 100 years ago when people rode horses (semi-joking).

This is an abbreviated version of everything I learned from buying a 100-year-old apartment complex, regardless of size. 

Most major piece of advice: BE SURE TO CONDUCT A THOROUGH PSA!!!!!! Ideally having property management onsite at time of inspection, as well as bidding contractors (tough to schedule an all-encompassing/all-unit inspection for multiple dates). Also, be sure to inspect EVERY UNIT! If there is an excuse for ONE unit not being able to be inspected - DO NOT CLOSE without inspecting.

I know you probably didn't ask for the above, but things to consider, as people tend to go for the shiny object and bypass thoroughness. 

Good luck! Cheers!
DM

 

 Funnily enough, I have done the opposite - turn a Tri into a 5-unit (then sold). Didn't do it properly though (re-zoning), which bit me in the A**, so be mindful, regardless.

Totally - however, SO many questions here!

Why, exactly? Is it going to change structure? Do you want to do this to change to a better/more favorable debt-service? Why? How big are the units? Can the 5th be turned into something else? What is it zoned for currently? Why?

Man, this is very intriguing!

 Guessing this is a residential refi (and not commercial). Is this a rental property, or your own residence? 

This can be very tricky to accomplish without a regular W2 gig and without proving historical income, especially via the regular bank route (as other replies mention). However, there might be ways around it, through credit unions, other non-bank lenders, and even commercial, depending on what type of deal it is and if you have other properties. 

That said, all of the above will cost you - typically in rates and points. You should very much weigh out your equity position, and how favorable it is to do so, including what your end goals are. 

You might have an easier time getting a HELOC, instead of REFI.

Again, tough to assess with info provided. 

In any event, good luck!

So, I'll tell you what happened to me when transitioning to commercial Mutli-Family. Was at 12 units (all duplexes and a few townhomes), and decided to transition to commercial MF apartments. Opened new LLC (typically a requirement from the bank, for a commercial deal - they do not want to see other deals in the same LLC for risk purposes), then sought a deal. Agreed upon terms, offer, etc., created PSA, then executed (with enough DD time and extensions to financing if needed - THIS IS IMPORTANT!).

Once I had the executed PSA, I started shopping around for commercial loans, though only really started getting traction once I built a proper, thorough business plan, and had all of my documents ready to send to loan officers. It is critical to have all historic P&L's before most lenders will talk to you. Also, be ready to have an up-to-date PFS for yourself and whomever else is controlling the deal - you must have a higher net worth than the loan amount, and a certain % of liquidity (varies by lender, but 10% is a good start). 

Now, it is important to bake into the PSA a few financing extensions, in case lenders take their time (which is frequently the case). I offered additional earnest monies for each extension, to prove I was serious, which was accepted (asked for 4 extensions, settled at 2). 

Hopefully this helps.

Good luck!

https://joefairless.com/ (controls over $600m in apartment complexes)

Similarly:

https://themichaelblank.com/

Just thoughts, aside from what everyone else mentioned. 

Good luck!

Greetings all,

Perhaps a long-shot, but figured I would give this a try. My partner and I are currently under contract on a small 15k SQF apartment building in Montgomery. Because we are based in GA, and most our properties are here, we are seeking local partnerships to help execute upon our business plan for this property.

Scope would include:

- Rehabbing units (Kitchens, predominantly)

- Sub-metering units for Gas/Water, adding central air.

- Build 1-2 additional units (will have drawn plans) within building

- Repairing outside driveway and re-arranging parking

- Storage units in basement (unfinished)

- Additional items (landscaping, common area/etc.)

We are ideally looking for a GC who can take on the project as a whole (with their own subs if necessary). The one kicker is that we need a quick turn-around here; not for the completion of the build, but for a proposal and executing a scope of work. We will be in Montgomery this Friday and Saturday, would love to meet with more GS's then.

If anyone knows of a thorough, reliable GC in that area, or you are one, please get in touch with me.

Thank you!

 Very good point - thank you! I agree completely, smaller complexes will have a higher likelihood of this happening, and having to rely on other sources to make sure the deal works is paramount. Luckily, this is a very interesting value-add deal in a great area, so I am finding ways to close, not the other way around. 

Thanks again for the advice, it is much appreciated. 

@Greg Dickerson, they are stating they have the records, just intertwined with their personal stuff, and would be laborious to provide (apparently). 

I tend to agree with your thoughts, it being small and everything else considered. 

Really appreciate your thoughts/insight!