All Forum Posts by: MARK F.

- Proximity to our main (and public) location ... 10 mins drive away 
- Affordability
- Existing Improvements & Layout (structures w/ concrete flooring, electric, water well, laydown yard, barbed wire fencing)
- Semi-Private location (this will not be a business site where our customers will visit) 

It's tough for me to get over the environmental concerns of the Junkyard next door.  The junkyard shrunk in size over the past 20 years to the point where there were only a couple of scrap autos there in 2019.  It was purchased in 2020 ... (6.3 acres for $21K + $24K in unpaid property taxes) and there are now approx 100 scrap autos on the property.

We are considering a commercial property purchase to hold & use for expansion of our business. There are currently (3) buildings … a large warehouse, a 4 bay service shop and a small office building on the 4 acre county lot. The asking price seems fair to market.

My biggest concern ... It’s next door to an auto salvage lot that’s been around for 15+ years.

Attorney is placing a Phase 1 ESA approval contingency into our offer.

Let’s speculate for a moment that the property passes either Phase 1 or Phase 2 ESA and we purchase. 15-20 years down the road we're ready to sell.  Maybe the property passes current standards but what if it doesn’t … I could have an essentially worthless property.

Please share any thoughts on this subject. Thanks in advance.

Hey Andries - You have made great suggestions here that I added to my notes. I just wonder about this one I quoted. It makes good sense however in practice it could open oneself up to a Fair Housing Complaint. After studying Fair Housing Laws, I have jotted in my notes that it is a violation to direct people to certain parts of a community, building or floor. How would you protect yourself from this?

There's conflicting information about the "Correct" way to prorate rent.

At least some professional property managers state the correct way to prorate rent is based on a 30 day bankers month, regardless of how many actual days there are in a month.

Doing the math, this arrangement generally works to the favor of the property owner/landlord, albeit slightly.

I have also been told that certain states legally require rents to be prorated based on a bankers month.

Thanks for reply's. Greatly Appreciated.

Hello All

Total newbie to multifamily here... green as grass and doing my homework.

Trying to find advantages (if any) to getting a state RE license considering business plan is to invest in multi-family properties.

Here's my reasoning....

Potential Advantages

- Learning nuances of RE (certainly applies to single family homes, multi family, I don't know)

- Access to MLS (once again a boon for SFH investor, I think does nothing for multi investor as these properties are not listed on MLS)

- Networking w/ other RE agents/realtors (a bonus but I think achievable w/o getting license)

- Potential to pay less commission to sellers agent on properties (this is speculation on my part, I don't know if this would apply)

Disadvantages

- Course, licensing & annual fees

From what I gather, getting a state RE license may not be the best use of time/resouces for a multi family investor although I would appreciate some viewpoints from more experienced investors.

Have a Great Day!

J Gary

I live very close to Chicago and am familiar w/ the city but not the condo market.

If you don't mind me asking, in which neighborhoods are $30K condos available?

Yes. Thanks for responses.

Didn't really consider the vicious cycle of people losing jobs -> unable to pay rent -> doubling up occupancy by moving in w/ friends or relatives = higher rental vacancies

Jeremy: Wasn't aware of large percentage of multifamily distress (i.e. foreclosures) relative to single family residences. I would guess this cycle also began w/ high unemployment -> inability to pay rent -> lower NOI for multifamily owner(s) -> multifamily mortgage default

Regarding the high levels of vacancies, yes all information definitely points to regional differences in vacancy levels. It seems as though Midwest generally has higher home ownership rates and higher rental vacancies while rental vacancies in the south and west have historically been lower and are currently trending lower at a greater percentage vs other regions

Here is my attempt at embedding the chart again (hope it works this time).

This chart compares the NAHB Index vs US Census Bureau reported vacancies. Also interesting to note is the NAHB arrives at their figures by applying different weight to different classes of properties. Class A weight = 36%, Class B = 46% and Class C = 17%

Here is the multifamily vacancy chart from data gathered and reported by the NAHB.

*in case chart doesn't display you can find it here...

http://www.nahb.org/generic.aspx?sectionID=238&genericContentID=149100

it is downloadable in an excel spreadsheet

The Multifamily Vacancy Index (MVI) measures multifamily housing industry's perception of vacancies on a scale of 1 - 100. Any reading above 50 would indicate increasing vacancies, likewise any reading below 50 would indicate declining vacancies. The MFI peaked in 2009 with a reading of 70.2 and has been falling like a rock ever since. For comparison Q3 2011 reading was 35.1.

I have just begun studying the multifamily industry and I would speculate the wave of foreclosures during the last recession would have forced people out of their homes and into rentals i.e. multifamily units.

According to the chart multifamily vacancies rose to a high level during the recession, and peaked in 2009.

Why?

Al,

You bring up very interesting ideas. It falls more in line with what I would consider an opportunistic strategy vs. a value added strategy. Your ideas contain higher risk than I would be willing to consider at this moment. I understand how this has proved successful for you, high risk offers a potential for high reward.

You say social issues (crime & blight) can be easily resolved by organizing the community. I would think this could be very challenging and potentially entering into the realm of politics.

I commend you for enriching yourself through tactical investing, and improving the communities you invest in.

Bryan,

Having already read some of your other informative and educated posts, I appreciate your response.

I am also intrigued by deal flow. I am assuming the best source of deal flow is found by networking with other investors and CRE professionals. Bryan, please let me know if I am on the right track here.