All Forum Posts by: Jason Stubblefield

Congratulations on your success!  The general answer is that you can structure the deal however you choose to.  Some experienced investors will want to see a preferred return as @Spencer Gray mentioned, however a complicated deal structure could complicate things.  I would suggest viewing the deal as your investors would.  Make sure that they get a great return on their investment and then keep the structure as simple as possible.  

I would narrow down your market to 2 or 3 that you really like.  After doing that you can go to Loopnet.com and search for brokers in that market.  Type a brief message about your company, assets owned, credibility, ability to close, etc.  Send this message to all the brokers (excellent task for a virtual assistant) in that area.  That should get some deal flow coming your way.  Right now you can expect to have to review several deals before you find the cash flow that you're looking for, but this will help start relationships with the brokers who may have profitable listings.  

There is some great advice here.  At this point you are trying to garner interest for a future deal.  Be completely transparent about the fee structure.  In the beginning you may want to consider lowering the fees if necessary.  You want to be in the business long term so building a solid investor base and finding profitable deals is of primary importance.  You're not advertising a security or soliciting for a specific deal so engaging a security attorney at this point isn't necessarily required.  

It definitely seems like a classic mom and pop situation.  If the tenants have been there that long then the leases are probably month to month - meaning you can raise the rents with a 30-60 day notice depending on state/county laws.  Get an inspection to find out what deferred maintenance needs to be addressed.  Are you going to self manage?  If not then you'll want to find a property manager and come up with a plan of increasing rent and upgrading the units.  It sounds like a deal with a lot of potential.  You could easily double or triple your money depending on how much upside is there.  Just make sure you know your numbers.  

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@John Pflederer What is your expense ratio?  It's not uncommon to see expenses near 55%-60% on a C class building.  If you're expense are above that it sounds like you may be suffering from some mismanagement.  Here are some ideas:   

1) Override your property manager's decision about not raising rents.  We've offered to upgrade tenant units while they still lived there to justify the additional rent  

2)  Look into self managing the property yourself.  This isn't as easy but it's also not that hard.  There are companies that will handle all of financials remotely (you will need to give them copies of leases and rental checks).  Then you can hire a part time leasing agent and/or maintenance person at an hourly rate.  

3) You could shop the PM to other management companies and see how there bids align against your current company. 

4)  Find another owner and offer to share in their management cost.  Management fees get cheaper the larger the property is.  

Hope this helps. 

Hey Tony. I've structured a deal similar to what you're trying to do, however it wasn't with an FHA loan. I would suggest you reach out to a few FHA lenders in that area to see what if really feasible. In my situation I got a commercial loan with a local bank that allowed my 75% bank financing, 10% seller financing, and I had to fund the remaining 10 percent. If the FHA loan route doesn't allow that, you could look into some local lenders to get to the structure that you desire. If neither one of those options work there are ways to get creative. One possibility is to form an LLC to purchase the property by which the current owner has some ownership in the entity. You'd want to speak with a RE attorney and the lender to make sure that structure is acceptable. You've got options but you'll have to do a little research to see what the best possible route would be. I hope that helps.

Your most reliable resource will be to contact brokers in the area.  Where do you find brokers?  You will find them on some online websites.  Loopnet.com, Crexi,com, and cityfeet.com are a few sites where you can find brokers listing properties in your area.  Hope that helps. 

I would be very cautious with doing that.  Also you should consider what your overall plan is with the property.  If you're keeping it long term then it's only a matter of time before something goes wrong.  You could consider your credit options and/or possibly look to purchase it with a renovation loan to fix anything up front.  One other option is to place a home warranty on the property for a monthly fee.  This should limit your major cost but beware that it is a warranty/insurance company and they have carve outs where they won't pay.  Hope that help. 

Hey Jason (great name).  I don't think you're violating any rules but then again I don't make them.  I think there are some solutions to what you're looking for.  Feel free to contact me if you're interested in having a conversation.