All Forum Posts by: Kris Benson

Hey sorry guys...the website got put back online last week....

Take a look!  www.thedeltaapartments.com

The marketing plan conversation is on my top of mind right now.  I have had conversations with apartmentguide.com ($249 per month) 3 month commitment.  Local newspapers, etc.

I also have posted on Postlets and gotten a few hits.  I have also reached out to the local real estate agents and offered a commission ($500) for placing tenants at the community.  Any other tools you would suggest?

Thanks

Kris

Thanks for the heads up on the website error.  I have a call into our webmaster, will let you know when its resolved....

BP Team,

Well our new project, The Delta Luxury Apartments is off the ground and running.  First tenant moved in on Friday!  Check out our website at www.thedeltaapartments.com and click on the project updates page for some pics.... Posted a couple below too!

We have built 16 units to start and are looking for some marketing plans or consultants to work with to target the appropriate renter demographic.  We have 6 out of the first 16 leased and are looking to fill the rest so we can begin building the 2nd 16 units!

Does anyone have any suggestions on where to start?

Thanks

Kris

@Chris Vacek and @Michael Sherwood 

Upstate NY in this case is Rome, NY right outside Utica.  We are working to create a luxury apartment market in that space with all of the new jobs at Griffis tech park and impending Marcy Nanotech.

Do either of you have any experience in developing a marketing plan for a new community?

Thanks

Kris

BP Team,

Our ownership group got final planning board approval this past Tuesday for our new 64 unit apartment complex in Upstate NY!  Ground breaking should be in the next two weeks!

That being said we would like to begin a comprehensive marketing plan to maximize the pre leasing during the construction phase.  Does anyone have a marketing plan template or timeline that I can use?

I am thinking a website, direct mailers, community sponsorship events etc.

Any information on what other people have done in the past would be a great help!

Thanks

Kris

@Brian Burke thats a great point. Any suggestions on finding a good one? I have never dealt with a broker on commercial lending before. I will reach out to my current broker today for some suggestions as well.

Ben,

I would be happy to share my proforma on the deal. We can make it work because my partner is the builder and is willing to build the units for basically no margin. We will be into each unit for just over 100K per unit.

We are building in a market that has no real class A housing. We are basically creating a luxury apartment offering in a community that has had trouble historically keeping young professionals with good income in town.

Here is the link to our proforma. I am not sure if I can attach files to a post....

http://www.biggerpockets.com/files/user/FivePines/file/merrick-rd-proforma

Thanks for the feedback!

Kris

BP Team,

Our new multifamily development project was approved via the Common Council of our municipality last week. We are good to go to begin our engineering study and submission of architechtural plans. In the mean time I wanted some feedback on our term sheets provided by two lenders in the area who are interested in the project. This is my first new construction loan so I am interested in what else may be out there.....

Here is one set of terms for our new construction loan:

Lender # 1

AMOUNT: $1,935,000

PURPOSE: Construction of new apartment buildings

TERM: 12 months interest only, followed by 20 years amortized repayment.

INTEREST RATE: Prime +2% during interest only period. Permanent rate is set at time of commitment for 5 years to the 5 Year US Treasury Rate plus 3.00% (as of today would be 4.76%) or for 10 years to the 10 Year US Treasury plus 3.00% (as of today would be 5.73%). With either selection, the rate would adjust for each additional five year term to the 5 Year US Treasury plus 3.00%.

FEES: There are no commitment fees or prepayment penalties. Appraisal fee would be payable at time of commitment.

PAYMENT: Monthly principal and interest payments sufficient to amortize debt over the term of the loan.

COLLATERAL: A first mortgage and assignment of rents and leases on property . Loan to value will not exceed 80% of the after-improved appraised value of the property.

As assignment of life insurance on each of the three guarantors in the amount of $750,000 each.

Lender # 2

Proposed Terms:

Amount: Up to $1,850,000 Construction LOC

Rate: P+1%, interest only

Term: Up to 18 months

Fee: 1%

Purpose: Construction of up to 16 apartment units (2 buildings, 8 units each)

Permanent:

Amount: Up to $1,850,000

Rate 5% fixed for 5 years, with 5 year rate adjustment at 4 Yr. FHLB+300bp

Term: 10 years

Amortization: 25 years

1. 3% prepayment penalty years 1-3, 2% years 4-6, 1% years 7-10; does not apply with NBT refinance or within 90 days of maturity.
2. Minimum DSC of 1.20X measured annually beginning after first full year of operation.

Our goal for the project is passive income so we are trying to maximize the amortization and minimize our interest rates. Are our terms from these two lenders in line what what you are seeing in your areas?

Any help would be greatly appreciated....

Kris

Andrew,

Understood thank you. I guess I am looking for some developers who have built new apt buildings in the past and have some data to look at. I know in my small aprtment portfolio my expenses account for 60% of gross rents as opposed to the 50% rule...

Just wanted to see if anyone had some experience to draw off of....

BP Team,

We are doing the underwriting on a development project where we hope to build 2 new 8 unit buildings with Class A apartment housing.

My question is what has your experience is with the "50% Rule" when it comes to new construction? What would a good estimate be for the annual pro forma for expenses? Obviously my expectation for CapEx costs are lower but curious if some of the more experienced developers on the site have developed their own expense guideline for new apartment construction.

Thanks!

Kris