All Forum Posts by: David Alvarado

Are you local to Baltimore? If so, you'll definitely want to drive the neighborhoods and blocks to get a feel of what is really going on. Trulia, crime reports, spot crime all have some decent info on high crime areas.

I own some property in Baltimore and can provide some additional guidance if you want to shoot me a PM. 

When the bank is doing their initial look and underwriting they will normalize the expenses to like properties in the area. I wouldn't rely on the 50% rule as the expense ratio can vary - I've seen anywhere from 30% - 60%+ all depends on the product type, class, age/quality/condition, market, who pays utilities, etc.

Generally speaking for B/C product built in the 60'-70's and 70+ units I've seen expenses range from $3,700-4,500/unit per year. When I worked as an analyst on the CMBS securitization side this was sort of a back stop to cross check when we did our underwriting.

@Matt Lyons

I've underwritten and valued quite a few hotels in the past when I was an analyst working for a sales platform and also within the CMBS world. Depending on the flag, location - drivers, occupancy, and age of the property value can vary widely. Cap rate and room revenue multiple are two ways to look at them to reach value.

Feel free to reach out to discuss if you’re interested.

Yes, definitely talk to a local retail broker. They should know what QSR's would want to fill a space in your center. OSR's will typically want to see a minimum traffic count and likely have demographic thresholds - the broker should be able to give you insight on that. 

Like others mentioned some additional information surrounding the expenses would be helpful. The 50% rule can be misleading in some instances depending on the location, age, class of property, etc. I've seen many smaller properties in the Ohio market operate in the 55% - 65% range so that can throw numbers off. Also, depending on if it is an all expense paid property can skew numbers. Lastly, as Arlan mentioned, knowing what deferred maintenance there is would be useful. 

Hi Doug - I am an owner in the city and have some initial thoughts to share on the expenses side. 

Initially looking over I think you are a little light on a few items:

Water/sewer - if you as the landlord are responsible to pay for water (most likely you will be) log in to the Baltimore City public works website and look at the most recent bill - http://cityservices.baltimorecity.gov/water/

One of my duplexes operates around $65/mo for water and the other has crept up to $150/mo - identical buildings, side-by-side, just different tenants, so always a good idea to double check actuals. 

Insurance - get a quote if you want to tweak a bit. You may be close there on a monthly basis, that looks close to what I pay on one of my duplexes. I believe mine are about $60/mo. 

Capex - looks light to me but this can all depend on the current condition and how conservative you want to be.

Repairs/Maintenance - looks light to me - I like to have 5% - 10% of gross income in there depending on the deal. 

Taxes - double check if you haven't already on the Baltimore City public works site to get the actual bill - plan to appeal if they are high, but run with the as-is number in your numbers for now. 

Hope this helps!

Best Used Appliances - https://www.bestusedappliancesmd.com/contact-us/

They do deliver and haul away as well. 

From my experience with underwriting we would typically budget for 1 in and 1 out as employees per 100 units - this would cover leasing and maintenance. There are definitely benefits to going larger with regard to operational efficiencies.

Where are you looking to invest?

Is anyone heading to the NMHC conference in Orlando next week? 

Looking to link with someone that is syndicating deals in the southeast and midwest - specifically: Ohio, Kentucky, Indiana, North and South Carolina, Georgia, Virginia, and Florida. I have a decent underwriting background working on the valuations and CMBS side - have looked at product all over the US and worked through securitizations.

I've been underwriting and going after deals but would love to shadow someone and do what ever I can to help - I sincerely enjoy underwriting (built my own template), so a second set of eyes on a deal or linking with potential debt resources that close Fannie/Freddie quality deals is how I can help. I have a couple deals that I have tee'd up that show strong IRR's as well and would love to share and go after. Additionally, I've also started putting together "teasers" for my deals to get in front of people and I could work on that as well if needed. Looking to make this mutually beneficial and want to get my feet wet on the deal side.

Have a goal for myself to be involved in one deal before the end of the year - made that early this year and went through negotiations on a deal in Savannah, but sellers' expectations were extreme from where I thought as-is value was. Reply or shoot me a PM. Happy deal hunting.