All Forum Posts by: Davide Formica

What are the terms on the owner's 20% note?

You should check with the bank if they would allow a second position, which is likely not the case.
Make sure you can pay the loan and the note with cash flow and unforeseen expenses.
The only way I see this working is by working out terms with the owner using another property as collateral with deferral payments of at least six months.

Know your market.  If you are in a strong market, I would feel good about this.   I would shop and compare your competition, all nearby small office spaces.  Are they fully leased and going at the rate?  Perhaps you can even increase rents.   I think small office space for CPAs, attorneys, counseling services, etc, will never go away, these can't operate out of a home.

The three types of real estate listing agreements are:

Open listing

Exclusive agency listing

Exclusive right-to-sell listing

A listing agreement is an employment contract between a broker and a seller for a definite amount of time.

The most common type of listing agreement is the exclusive right-to-sell. Where the realtor is guaranteed payment for representing the owner and finding buyers. The realtor will be paid a commission regardless of who brings a buyer.

In an exclusive agency listing, the owner agrees not to list the property with any other broker. However, the owner reserves the right to find a buyer and avoid paying a commission. The seller is only liable to pay the selling commission if the realtor is able to secure a buyer and close the sale.

In an open listing, the seller has the right to use as many brokers as they want. However, the seller isn't obligated to pay any of them if they sell the property without the broker's help.

@Noah Bacon, as I look at properties, the 1% is an automatic mental metric that I think about most times but never rely on, especially regarding multifamily. Most important these days is the DSCR and how to increase it during that first year to maintain a healthy CoC.

@Daniel Serrano I suggest asking a real estate attorney to assist you in filling a quitclaim deed transfer.

@MattE22

@Dave Foster thank you for confirming that. I appreciate it

@Wayne Brooks thank you

Is there a 1031 rule that limits the number of parcels (sold a single transaction) that one can roll over to one larger multifamily property?

@Lee Ripma thanks! I never heard about vestmap, I'll check it out.

Before getting into the details of a property, the first step is to analyze the market demographics and economy to ensure that it supports healthy rental growth and demonstrates demand with a growing population.

Below is an overview of the more critical factors that we analyze as they will directly impact housing demand and the performance of an investment property:

• Poverty Rate – The poverty rate in the asset’s local area must be at or below the MSA where you’re investing.
• Median Household Income – We like to see the household income at $35K or higher depending on the asset class and new resident qualification standards.
• Unemployment Rate: The Unemployment rate in the asset’s local area must at a similar level or better than the MSA where we’re investing.
• Population growth and jobs: Where there are jobs, there’s population growth. We look for deals in MSAs with an existing trend in population growth and economic developments that will fuel continued expansion, such as corporations moving into the city, developing transport and communication, etc.
• Schools – Depending on the asset class, we like to see the assigned school’s rating at an above-average level.

Investing in a sound submarket with a growing population is the basis of any real estate investment. It’ll provide the tailwinds necessary to propel the performance of the investment.

Helpful Resources:

• United States Census Bureau – QuickFacts – The most up-to-date and accurate data directly from the source.
• City-Data.com – You can search by city and zoom in to the local area level to see Median household income, unemployment, residents below the poverty level, and more.
• TownCharts.com – Powerfully illustrated and interactive data on Demographics, Housing, Economy, Education, Healthcare
• GreatSchools.org – Check the assigned schools and the rating based on an address.

What factors do you evaluate?
What tools do you use?