All Forum Posts by: Giovanni Isaksen

@Chris Kennedy  great point on #4, persistence pays off.

@Michael Blank  we're seeing the same low to mid double digit unlevered IRRs be attractive to our clients' investors too. The trick for the clients will be executing to those returns on their value add strategies.

In CRE sometimes the seller will specify a title company but if we're in a market where we have one we prefer working with we'll specify them in our LOI. We've rarely gotten any pushback on our selection.

The other thing to keep in mind is that someone at your lender has to 'sell' your loan request to their higher ups to get your loan approved so the sooner you supply the answers to the requests for information the closer you will be to a term sheet... or a request for yet more information.

Good hunting-

We're seeing two things at work in our markets, the first is that institutional buyers with a lower cost of capital are compressing cap rates even in markets they wouldn't touch a couple years ago and somehow other owners in those markets, even small ones think their properties are worth a premium cap rate.

As a result our private equity and syndicators are looking at value add deals where there is a lot of work that needs to be done up front. We just took a run at one of the hairiest deals ever which I almost didn't show to my private equity client. Fannie was auctioning the note, owner was in bankruptcy and there was a Phase 2 on the property which was located in a market we wouldn't normally be looking in (smaller, not much growth). Ultimately the enviro issues/risks/costs were just unquantifiable so we passed.

The other thing we see happening on the west coast and there's reportedly the same on the east is overseas flight money is paying up, in cash, for properties. These aren't investors in the true sense that they're looking for X return on their investment, they're really just getting their wealth out of their home market before the political winds change and in to ours which they consider more stable and where the rule of law is more entrenched. So we just keep digging and working our networks to find properties 'bad' enough to have the upside we need.

If you think things are bad in the States though, have a look at Vancouver BC. I did a BP post on it here: http://www.biggerpockets.com/blogs/5055/blog_posts...

The one upside is that if you're a long term holder and don't have investors who want their money back in 5 years you can buy things today that will work well over the next 20-30 years, especially if you can tie it up with long term fixed rate money.

But @Sharon Tzib if it doesn't have five or more units it's not actually a multifamily it's a plex. If you can buy it with resi financing it's not, people can call them whatever they want but if they insist on calling something smaller than five units a multifamily they won't be taken seriously.

+1 on @Jean Bolger 's comment. If you are dealing with professionals and want to be considered one yourself you need to speak the language. In the apartment world multifamily is five or more units, anything less is residential. In fact some consider anything less than 10 units a plex. I will defer to @Sharon Tzib on the hyphenation but a house by definition cannot be a 'multifamily'.

@Mark Caramanna  two questions: Is this a one off project or will you be doing more rehabs as GC? Have you done and construction contracting before? If this is your first time I recommend hiring someone with GC experience in your type of project to spec out the project and do a rough estimate that you can tighten up with bids from subcontractors and suppliers. Software (or an app) can organize your estimate and make it look professional but it won't tell you what to put in the estimate, and that's the make or break part.

If this will be an ongoing part of your business I recommend finding or building the estimating functions as a part of your accounting system so that you can track costs from job to job. The ability to do a post mortem on each to project will allow you to learn from your mistakes and build an institutional memory of what things actually cost so that estimating will be more accurate going forward and be done more efficiently. By integrating the estimating into the accounting system you will also avoid repetitively re-entering everything into multiple programs.

At the construction company I sold we built the whole system in QuickBooks and could turn an estimate into RFQs, POs, and invoices relatively painlessly and it kept track of all the costs, even the ones we missed on the estimate.

+1 on @Account Closed 's advice. But even before that think long and hard about getting in bed financially with 3 other people. It really is like getting married... unless you each have clearly defined responsibilities so that everything which needs to be done is covered by someone, and then on top of that have a structure to buy one or more of the partners out of the deal in case things don't work out between you all.

One of my favorite sources of properties is feuding partners who are willing to sell below market just get away from the others in the deal, don't become one of them ;)

Good hunting-

Great work @Philip Williams , thanks for sharing. Looking forward to hearing how it all goes.

@Melissa Chinn  from your posts on the other thread it sounds like your CPA was able to answer your questions. If not @Amanda Han  here on BP is a CPA who specializes in working with real estate investors.

Good hunting-

You're welcome @Bridget Smith-Osbourne Remember that the rents and expenses need to be verified as well as the initial repairs.

And of course beyond that whether the location is good too.