All Forum Posts by: David Shikiar

Ryan, 

Yes, I've seen that.  Somehow first builds happen without an on-title track record.  Partner who is GC has been contractor of record but not on-title owner.  How do you bridge that gap.  We have assets, and other property experience.

LA based investor looking for financing/guidance on ground up construction loan for 6 unit 2/2 in Reno.  Acquired land in 2019.  Have complete plans and all engineering complete, first bid all from local Reno architect, engineers, and contractor.  Ready for permits.   Great location 1 mile from UNReno campus and mid-town.   My RE partner is a California GC; won't be performing but guiding build.   

Yosef was kind enough to share with me privately the basics of the deal he made with his partners.  This is as important as finding your first deal.  I have a couple of properties I have acquired since joining BP in 2017.  I learned alot.  I'm in the process of making an equity deal for my first ground up construction project now with an investor.  For all the newer investors who may have not made a deal yet, I encourage you to put your personal financial aspirations aside somewhat and just get the first deal done, even if it's not a great deal for you.  Getting the first one done has been the most important step for me.  Don't be afraid, ask questions, ask your investor what they are looking for in the deal, and just do it!  (btw- this is not to say Josef doesn't have a great deal!, but has been my experience)

Yosef, would you share the part of the deal you made with your investors, and what your personal ROI looks like?

Hi Yosef,

Are you willing to share the deal you made with the investment partners and what you maintain in the deal?

Investment Info:

Large multi-family (5+ units) other investment in Reno.

Cash invested: $175,000

This property is a ground up construction of a MFR in Reno. Land was acquired in May 2019. Construction start estimated June 2021.

What made you interested in investing in this type of deal?

My business partner and I attempted purchasing MFR's in Reno area, 8-14 units with 3 different buildings. We couldn't arrive at a deal that worked in any so we pursued building our own.

How did you find this deal and how did you negotiate it?

Land purchase was through a family trust. We met with a local lender that deals in loans this size. After underwriting us, they were acquired by another bank, and we lost our loan. Started over with another lender that is based out of state. We are through underwriting and in committee. I researched and met with a couple of architects and settled on the one I thought we could have a working friendship, and could see doing this over and over. He has been our best find.

How did you finance this deal?

Cash for land. Construction and permanent loan from one lender. Borrowing some cash from an investor after talking to several investors, for down to start construction

Lessons learned? Challenges?

Hahah..always! In early 2021 the city called and said squatters had trespassed through a fence, and into the lone remaining 100 sq ft block wall structure, and set up accounts with water and power. They were persistent but in the end the City and Law Enforcement helped us move them on.

@Leeron Regev, it's a process.  If you have ever hired a contractor for your own home, you follow the same line of questioning and checking references and seeing other projects.  My partner is a GC so he speaks the language and can call BS when necessary.   If you want to discuss any opportunities, feel free to reach out.

@Leeron Regev, I ended up focusing on Reno and have 3 assets there, 1 in South Carolina, and 1 in the So. Cal mountains of Big Bear.   2 ended up being land purchases with ground up construction.  And same as Travis and Sally, it took about 6-8 months to find my first property out of state.  I called alot of agents and found 1 I clicked with.   She got a flaky later and I found a great 2 person team--from there referrals for maintenance people and contractors.  Not that bad really.

Actually Dan is correct.  I live in a coastal city of Southern California about a half mile from the beach.   It's pristine.  It's also my primary residence.   What I didn't mention about finding deals in California is the price points start much higher.  So more cash is needed to get in the game, or you need to find an investor to partner with...

I live in Southern California, and couldn't find deals for about 18 months because larger "pool" investors are willing to take lower cash flowing properties and outbid me and my GC partner. After several losses, we studied other markets that were growing, had new tech employers, a revitalized downtown and began buying out of state. In 18 months we have acquired 3 assets, and making offer on a fourth. All are MFR's. Through my original broker I was able to get solid referrals for maintenance, handymen, electricians, plumbers, lenders, and so on. I made the trip out of state to meet these different contractors and so far it's worked out well.