All Forum Posts by: Gabe Goudreau

Thanks for the advice ! @Matthew Drouin

The one I'm looking at right now is a smaller 8-unit project - only around a $100-125k equity raise + loan guarantee. Not a ton of value-add opportunity, more of a core+ investment in a very small market I'm familiar with - my initial analysis is yielding a 14% IRR & 1.28 EM, so I'm not sure of the attractiveness to investors. I still need to do a deeper dive, but the ownership structure was one of the external factors that I was thinking about.

Very helpful, thank you all! 

Hello, 

I have a few questions about acquiring projects with different partnership structures. 

I know a common practice (at least for syndications), is to create a separate LLC for the property and then raise capital once the deal is already under contract. How does everyone go about getting the property under contract before that? Do most people get the property under contract in a single-member LLC and then assign the contract to the syndication LLC during the DD period? Going along with this, is this different if you're acquiring a smaller deal with just a singular partner?

Would love to hear some input from the GPs out there on the most efficient way to do this.

Thanks! 

Very interesting, I just ran through the numbers of that property myself. I saw a few higher comps that may lead some to push the arv: 956 N Chester - Sold for $182.5k ($133/sqft), 607 N Chester - Sold for $165k ($130/sqft)(2 baths though), and 520 N Bradley - Sold for $170k ($113/sqft)(also 2 baths). Averaging these, I calculated ARV to be $174k. Knocking off $4k for that additional bathroom let's say it's $170k ARV, looking at this for a flip and using the 75% formula and a $120k buy price that only leaves $7500 for a reno budget - I'm no expert but I'm pretty sure it'll take more than that!

Rentometer has avg rents at only $1067/mo so I'm also not sure about paying that much for such little rent for a long-term hold perspective when from what little research I've done you can get more elsewhere for the same buy price - maybe someone looking to park money for tax purposes or an all-cash deal hoping for a big upside? 

Thank you for the advice, crazy times we are in. This deal confuses me too! 

Going through and underwriting a couple of SFH BRRR opportunities I've came across in the Indianapolis MSA, specifically Marion County.

I'm not local to the area, and am not familiar with operating expenses for these types of projects. I'm more used to underwriting MF deals and extrapolating existing T12 data, so this is a bit different for me.

All the properties are 3 beds, ranging from 1000 to 1400 sqft. They are in Fountain Square, Crooked Creek, and Forest Manor/Audubon Gardens.

I normally see expense ratios sitting around 40-50% for SFH's, is this accurate for this area?

With that being said, how is anyone making BRRRs work in today's climate (without heinously lowballing)? The deals I underwrite have been cash flowing right up until I put debt service on them, even with taking a break even amount in a refi. 

Would love to get some inputs, and to connect with pros in the area. 

Thanks! 

My goal is to fix and sell, it is mostly a cleanout from the looks of it, and I believe that it is affixed to the land. Great suggestion about being able to be financed, I will call some local lenders and ask. Thank you! 

There's a property tax foreclosure auction coming up in my area soon (Ingham County, MI) and one of the properties being auctioned I found out is a 3 bed, 2 bath modular home. There are other modular homes in the area, but there is no info about them selling on the MLS to use as comps, I'm assuming this is because they were just purchased as a lot and placed a modular home on it. There is also no open house for this property, I would have to buy it sight unseen.

Does anyone have experience flipping modular homes or should I just stick to the more competitive SFH's on this auction?

Yes, it includes a return of capital at that time. Here is an ss of what I have currently, this connects to other tabs of the model. The ($597k) is the initial equity invested, the $220k is proceeds from a refinance, and the $1.2 MM is sale proceeds. These are based on fictional numbers, assuming a 7-cap valuation at refinance & sale. I will run through an actual deal soon, just trying to fine-tune the model in the meantime. 

Thank you, still going through with fake numbers and entry/exit cap rates to make sure the formulas work correctly. I will run through a real underwriting and see how the cap rate assumptions affect this. 

Hey Everyone, 

I've been building an Excel financial model that can quickly analyze potential value-add multifamily projects and I've run into an issue that I wasn't expecting - when calculating the returns, do you take into account both the refinance and sale proceeds, along with the cash flow? Or just one of the capital events along with the cash flow?  

Currently, when I include both refinance and sale proceeds, I get an unrealistic XIRR of 49%, while the average cash flow throughout the investment (7-year hold period) sat around 8%, and this seems incorrect to me. 

Please let me know some feedback, I can elaborate more if needed. Thank you!