All Forum Posts by: Edward Rogan

We recently opened escrow on 2 properties in Brazoria County, TX. They are less than 2mi apart and they each have a vacant, adjacent parcel, which was included in the deal price. The parcels are large enough to build on and one is up against a main thoroughfare in town. We are raising private equity through a Reg D offering as our capital source and placing agency debt. 

We underwrote the value assuming the existing income only and did not assume any improvement to the vacant parcels. Therefore, if we just focused our plan on the existing income producing properties, it won’t affect our projections. 

However, we would like to consider the possibilities of building storage, garage units, Re-zone and sell to retail developer etc.. 

Our question focuses on how to structure the deal with equity and debt, in order to gain the most flexibility with the vacant land. We are open to including it with the deal so our investors can benefit from the upside, but not sure if we should include the improvement costs with initial equity raise or explain the circumstance and ask if they’ll consider a capital call at a later date. 

If anyone has experience with similar deals, we thank you in advance for taking the time to provide your insight. 

Sincerely,

Ed Rogan

2- property, 284 unit multifamily deal just opened escrow. Located outside of Houston in Brazoria County. Great upside potential, with economic occupancy in place at 94%

Bought at great basis, with zero competition. Comp set within 2 mi radius shows upside from $85-$200 rent bumps with new management and amenities. Light value add interiors and exterior curb appeal is planned.   

We are looking for qualified partners to assist with balance sheet requirements and also equity. If interested, please reach out to us on our website or contact me directly for an executive summary. 

Sincerely,

Ed Rogan

Penn Capital

Here is the link pasted appropriately...

https://1drv.ms/f/s!AvA-3ZIz1uaorBaMa9CVnFyEa7k_

@Ryan Ohls If you're interested, I've pasted a link to a market study I performed recently. It's basically comprised of data pulled from the census and BLS. It lists MSA level data for most of the main factors that relate to housing demand, job growth, pop. growth, hh growth, in-migration (domestic and international), renter base %, etc.. The goal of the research was to model secondary and tertiary markets that were similar to areas like Raleigh, NC, Salt Lake City, UT and other secondary/tertiary markets that had seen major growth since the recession; then try to pinpoint where the institutional capital started to emerge. 

https://1drv.ms/f/s!AvA-3ZIz1uaorBaMa9CVnFyEa7k_

If a deal sponsor were to raise the necessary equity through a single, passive source, such as JV equity from an insurance company or family office, would that structure then be considered syndication?

Another key point that should play out to be a major economic boost is the current revitalization of Marcus Hook's Sunoco Refinery. The Marcellus Shale Natural Gas boom will make Philadelphia the primary source for exporting and importing natural gas, especially as natural gas continues to grow, surpassing coal, as a cleaner and cheaper energy source. As new gas fired, power generation plants continue to come online and new pipelines are put in place to increase demand for natural gas, Philadelphia is poised to become a major, global energy hub. It does seem like an exciting time for Philadelphia, hopefully the politicians have the same positive agenda as we would hope. 

Thank you for your insight Mary!

I'm curious to hear any thoughts on the planned development of Schuylkill Yards, with a projected investment of $3.5billion in U-City and West Philly to cover 14acres. Would it be a good idea to invest in properties in and around U City, given the plans for development? Or would the influx of new residential inventory reduce the demand for existing units?

Pauline, thank you kindly for sharing your experience. I appreciate the advice. Aside from the long distance issue, what other criteria would you consider to be important to qualify as a good property for sec 8 tenants?

I'm new to investing and currently analyzing 3-5 unit properties, in search of my first deal. My plan to this point has been to find a property in a B-class neighborhood in Philadelphia, PA. The other day I spoke with another investor, who has had very significant success operating rental units all throughout Philadelphia and has many years of experience. He gave me the idea to possibly get started in section 8 property rentals. Until then, I hadn't given the section 8 strategy much thought, as I wrote it off as too costly, with high potential for tenant vacancies and much higher difficulty with property management altogether. But I figured, if this person recommended the strategy, I would at least consider it and do some research on pros and cons.

The topic came up when I asked about various sub markets, as I'm currently creating a market profile, in order to choose the sub-market that is best aligned with my initial investment goals.

Please correct me if I'm wrong with any assumption, as I'm hoping to receive some feedback, verifying my assumptions, based on what I've learned so far. Also, If anyone has experience renting to section 8 tenants and would like to point out pros and cons, or general analysis, I'd appreciate your time and comments. Thank you in advance!

I'm not sure how the laws vary by state, but I am looking to invest in Philadelphia. From my understanding, the local housing authority will provide a voucher to the tenant for the cost or partial cost of the rent; otherwise known as, Housing Choice Voucher Program.

My understanding is that the housing authority will dictate the fair market rental price or price range, per the unit type in a general area and that price is represented by the voucher as the max amount allowed to pay the rent.

Lets say that within the general area, in which the fair market rate was considered, there are various submarkets. The sub-markets may vary from block to block, by the actual rental rates being paid for a specific type apt.

If I were to locate a property deal in a sub-market, where the actual rental rates for a specific unit type, were lower that the voucher rate, would it be possible to charge the max rate of the voucher?

What is the typical strategy to maximize cash flow when working with section 8 tenants? If you can't increase rent above the voucher rate, it seems that your only option to add cash flow potential would be to find a property in an area where the rent is lower than the fair market rent subsidized by the HA. Is this common practice? Would there ever be a situation where you would ask for less in rent, than what the voucher has the ability to pay? For example, if a unit recently becomes vacant and the previous rental rate was $500 to non section 8 tenant, would the rate be required to stay at $500 for the section 8 tenant, even if the voucher covers up to $650 for the given unit type?