All Forum Posts by: Giovanni Isaksen

Development is a three dimensional problem; there's cost, time and what a developer friend calls 'brain damage'. Does the jurisdiction want your project, do the neighbors, how willing is the building department to work with you to accomplish your project when the city wants it? These questions help quantify how much brain damage you'll have to endure. 

Relatively speaking Houston has a reputation for being fairly pro-development but it's good to consider all three dimensions when looking at a development deal, especially if it's your first.

@Ryan York I recommend running the numbers both ways against the rent bumps to see which produces the results you're looking for. Different factors such as your intended holding period, whether or not you have an IRR hurdle and others can make a difference. That said and as @Michael Le pointed out a properly written loan request would roll the rehab into the overall cost of the project and be financed at the lender's LTV which would reduce your out of pocket up front.

We tend to think of Boeing as a local company but ever since the C suite packed up and moved off to Chicago all we are to them is a high-cost legacy burden. WA state, the counties and cities like Everett bent over backwards to give them yuge tax breaks in return for commitments to keep jobs here but since the day they signed Boeing has been trying to weasel out of its end of the bargain.

And it's not even really Boeing anymore. Ever since the snafu on the 777 created by trying to build a plane with all subcontractors (Warning to RE investors as well) the McDonald-Douglas faction pretty much took over running the company and it's Boeing in name only.

That said, the hope in Everett* was that the Dreamliner's composite construction would spawn an industry hub of high-tech composite development and manufacturing. Looking at the layoff list in the article it seems to be mostly the engineers and technical workers who are getting the ax... not a good sign for those high paid employees who could afford class A & B rents. Class C properties in Everett and surrounding Snohomish county will probably continue to do as well as ever. 

B and maybe even A props there will benefit from people being priced out of Seattle but there's a lot of new A supply coming online which depends on continued local hiring at MSFT, AMZN, EXPE, GOOGL, DATA, FB, AAPL, SNAP, etc. If these companies continue to fill all the office space they're building, buying or leasing then rents will continue to grow in the Seattle core; those not rolling in tech green will have to look further out for affordable rents and that should benefit Everett.

*In 2015 I did extensive research on Everett employment and the apartment market there for a client.

We tend to think of Boeing as a local company but ever since the C suite packed up and moved off to Chicago all we are to them is a high-cost legacy burden. WA state, the counties and cities like Everett bent over backwards to give them Yuge tax breaks in return for commitments to keep jobs here but since the day they signed Boeing has been trying to weasel out of its end of the bargain.

And it's really not even Boeing anymore. Ever since the snafu on the 777 created by trying to build a plane with all subcontractors (Warning to RE investors as well) the McDonald-Douglas faction pretty much took over running the company and it's Boeing in name only.

That said, the hope in Everett* was that the Dreamliner's composite construction would spawn an industry hub of high-tech composite development and manufacturing. Looking at the layoff list in the article it seems to be mostly the engineers and technical workers who are getting the ax... not a good sign for those higher paid employees who could afford class A rents. Class B & C properties in Everett and surrounding Snohomish county will probably continue to do as well as ever. 

B and even A props there will benefit from people being priced out of Seattle but there's a lot of new A supply coming online which depends on continued local hiring at MSFT, AMZN, EXPE, GOOGL, DATA, FB, AAPL, SNAP, etc. If these companies continue to fill all the office space they're bulding, buying or leasing then rents will continue to grow in the Seattle core; those not rolling in tech green will have to look further out for affordable rents and that should benefit Everett.

*In 2015 I did extensive research on Everett employment and the apartment market there for a client.

Hi David, it sounds like you are talking about duplexes, triplexes and fourplexes is that right? Out west that's how they are typically referred to. Some say anything under 10 units is a 'plex but generally multifamily is 5+ units. I think if you rephrase your question you should get responses from agents and investors familiar with the North Bend market.

Good hunting!

@Jonathan Johnson a lot of good replies here so I'll just add a couple higher level thoughts:

If you're in the business of owning apartments as opposed to being a landlord professional property management is a must. To me it's not a deal if it doesn't work with 3rd party mgt. That said it's not fire-and-forget, you still have to manage the manager. IREM has a white paper on the difference between property and asset management (industry term for managing the manager):

http://www.irem.org/Bookstore/eBooks/id-13374117/I...

When it comes to staffing my experience owning a general contracting company taught me that you need to have that function centralized, in the case of real estate preferably by the property management company so that you're not in the cat herding business. Putting all leasing, turnovers, repairs & maintenance in the hands of the mgt co. allows them to deliver the best performance they can and allows you to judge whether they're doing a good job or not. They're either hitting their budget and delivering the returns you need or they need to step up their game, they have no excuses when they have control of the entire operation.

One of the considerations with two buildings is how close they are to each other to reduce staff 'windshield time' driving back and forth between buildings. Since the two properties are not big enough to have their own separate teams, sharing the staffing between the two can work if they don't have to spend too much time going from one to the other. If they're not easily driveable I would make a criteria of your property management company search that they have other buildings near each of yours so that they can share staff between the different properties.

When you have a large enough concentration of properties in one market area then it will become a consideration as to who owns the management function, your 3rd party provider or yourself. There are a lot of issues around this, not the least of which is do you want to take on starting, growing and operating another separate business in addition to what you're already doing. Many mid-to-larger apartment companies do bring it in-house but it seems like the national property managers get a lot of business too. I'd say when choosing between the two becomes an issue, you'll have a good problem on your hands!

@Tamiel Kenney Agree with you that Ken's books are a good introduction to multifamily investments. To get a flavor of his approach check out BP podcast 52, McElroy's interview. Here are the Amazon links to the books: The ABCs of Real Estate Investing http://amzn.to/HdXVf1 The Advanced Guide to Real Estate Investing http://amzn.to/1bcWx50

One other book to add would be Frank Gallinelli's What Every Real Estate Investor Needs to Know About Cash Flow... And 36 Other Key Financial Measures Updated  http://amzn.to/2oyTCQP Frank covers how to do the math on real estate investments which is key to succeeding.

Plumbers here in the Seattle area also seem to like PEX but the key is making the right kind of connections. I don't really have any helpful input beyond PEX being flexible and so maybe a bit easier to work with in a retrofit like re-piping your existing building. Probably which ever one your plumber feels most confident about is the best.

PEX is said to outlast copper, not sure what that's based on but if you want good background to ask detailed questions of your plumber check out the replies in this BP thread:

https://www.biggerpockets.com/forums/84/topics/176...

I'm sure your plumber can find the galvy to PEX or copper fittings they'll need, the challenge will come from finding a threaded galvanized pipe joint in your wall that is still in good enough shape to be unthreaded without crumbling from being rusted together.

Good hunting-

@Andrew Johnson if the drains and supplies are galvanized from the 1940s it's just a matter of when they'll fail not if, with the walls open now is the time to repipe... not when the unit is finished with a tenant in place and there's water damage to both the building and the tenant's belongings.

Michael, what is your anticipated holding period?