All Forum Posts by: Ken Naim

@Klint Ruud

With you helping him in the Nashville market I'd recommend a JV to buy a value add multi family 10-20 units for less than $1 million. This way you can both be compensated.

@Andrew Tripp

Me too, I'm a bit anxious to get this closed onecway or the other. I'll update the thread once i have a contract in place.

@Cason Acor

Sorry that my question is a bit vague. I'm asking about the listing commission as he is getting paid by the seller when I'm purchasing.

@Klint Ruud

It really depends on if he wants to do active real estate investing. It is very time consuming when starting out and as much as there is to gain there are risks, especially if it is your first time. With a six figure income I'd personally look for a multifamily property ideally 5-10 units (up to $600k) with value add that makes sense with a property manager.

If he more of a passive real estate investor then I'd spmit the money over 4 to 5 real estate syndications in different markets.

To be truly passive and not in real estate with a long time horizon total market index funds are the way to go.

With a six figure income I'd hope he is investing significantly in a 401k so real estate is a good choice for these non retirement funds. This split is how i manage my personal finances.

@Mike Terry

I have noticed an increase in prices lately in beach front higher end condos, closer to $1m in the galt mile. A lot of interest from buyers up north.

Be careful with condo rehabs, some have very strict rules with days/hours that contractors can work. No weekends or holidsys 8am-3:30pm. Have to check daily with id. Apartment buildings require architect plans for anything but the most simple and cosmetic fixes, not to mention permits.

The board of a condo I bought in Jan 2020 stopped all work for 7 months from March till October due to Covid. Made a quick flip into a long hold.

@Mario Cuartas

Refi seasoning will depend on the new lender not the hard money lender. Seasoning is typically only neccessary if you want to refinance based on a higher appraisal rather than the price you paid. So as long as you are not trying to cash out, seasoning may not be required.

Seasoning is also very bank dependent. Tslk to your local banks and credit unions and ask what are the rules. Some of them will service their own loans and have flexibility especially if you have accounts with them.

Lenders can also have prepayment penalties. The hard money loan i took out had a six month prepayment penalty so it would cost me atleast 6 months interest.

Short answer is yes this can work. 25%-35% LTV is the general metric that most banks start with. I've spoken with many brokers and portfolio lenders that can secure loans with lower down payments as long as the debt coverage ratio is high enough. The debt coverage ratio is the NOI/loan payment. At 35% down a debt coverage ratio of 1.2-1.3 is typical but I've had loan terms ask for a DCR of 1.6-1.7 for much lower down payments. As with everything to do with commercial real estate it is negotiable. I had offers of lower DCR with higher interest rates too for example.

I recently made the jump from residential residential real estate to commercial real estate after about 20 years, buying and renting single family homes and small multifamily. I purchased a 40k sqft industrial warehouse in Florida which I have rehabbed and is listed for sale. My agent is very good at spotting opportunities and in the almost 2 years that I have known him, seen many off market deals work out for other investors. This warehouse is looking like it'll return 70+% in less than a year if it sells or 12-18 cap if it leases.

I know literally every thing CRE is negotiable, but what is a standard commission? What would you pay an agent to have him call you first rather than giving a great lead to someone else? I have a good relationship with the broker and he says his typical commission is 10% but he agreed to 7% on this deal, if it sells. Because we have a good relationship I'm not sure if he is joking or serious. I've seen him lower his commission to 3-4% to make an offer work.

Details of this deal.

• Purchased for $1.225m with a 500k hard money loan at 12% +2 points. Closed in 3 weeks.
• Rehab and other expenses to date of $400k.
• Listed for sale at a very reasonable $2.86m with purchase offers starting to come in around $2.6m. 
• Lease rates would be between $20k-30k/month depending on tenant improvements (TI).

Any thoughts or feedback is appreciated.

Investment Info:

Industrial commercial investment investment.

Purchase price: $1,225,000
Cash invested: $1,000,000

Updated 40k square foot manufacturing or distribution facility on a fully fenced 10.34 acre parcel.​ With major renovations completed in December 2020, this 40k sq.​ ft.​ former aerospace manufacturing facility is perfectly situated in Sebastian, FL.​

What made you interested in investing in this type of deal?

The property was very distressed and the potential for a large gain was there post renovation with a very limited downside risk.

How did you find this deal and how did you negotiate it?

I found it through a commercial real estate agent, it was off market and another investor had just purchased it. It needed a lot of work and he was out of state, so he flipped it to me for a quick profit and made a 40% in under a month. It was still 60% of current appraised value and 30-40% of ARV and has the potential to lease at 16-18 cap at the high end, 12 cap on the low end.

How did you finance this deal?

Hard Money 12% + 2 points interest only,1yr.

How did you add value to the deal?

Lots of cleanup, repairs, paving/striping of lot etc.

What was the outcome?

Property listed for sale lease

Lessons learned? Challenges?

Industrial warehouses have a lot of different challenges especially when on a well instead of city water. Large warehouses have expensive price tags instead of every repair being in 4-5 figures, in 6 figures. 100k for paving, 100k insulation, 250k sprinklers etc.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Yes, Brad Kuskin - Commerical Real Estate Agent, Erick Platero - Hard Money Lender.