All Forum Posts by: Ki Lee

Hey BP,
 
From what I know, the seal coat for the asphalt provides nice look and also provides some protection against the elements, but I also learned that seal coats won't last on older asphalt and it's pretty much not worth it.  What are your thoughts?  At least one vendor said that the best way to handle it is to redo-the asphalt, but in the mean time just do hot-fills on the pot holes and skip on the seal coat.

So my partner Dan and I just acquired a 36 unit in Columbus, and part of the renovation we are doing is the parking lot. The asphalt is
pretty old, and there are numerous cracks and some small pot holes. We got some quotes from asphalt professionals, and they wanted to do a hot-fill for the pot holes, apply a new seal coat, and then re-stripe the parking lot.  We are thinking of just doing the hot-fills for the pot holes.

Again, class C area and not going for the brand-new look.  There is value in aesthetics, but its secondary in consideration.  Most units around the block has similar condition parking lots. 

What's your experience on this?

Thanks for all the suggestions, guys.  It seems like LVP is a little costlier, but maintaining it would be easier and cheaper.  

Bigger Pockets! 

I would love to hear some of your opinions and experiences regarding flooring. 
Do me a favor.  Sometimes it's easy to jump to a conclusion about what's "better" based on one's personal experiences and situations.  Please see if you can help me realize the best move based on my specific situation.

Asset - Class C apartment building built in the 1960's.

Tenant class -Mostly blue collar hourly workers, usually families.  rents $700-$750 in columbus

Unit type - 2/1 townhouse style apartment, 2 stories with BR and BA upstairs.

Investment objective - 5 year hold.  Renovate units to increase rents and dispose at a profit to trade up

Current rents are over 25% below market.  Units are very outdated and run down. We want to do small upgrade in finish to raise the rents.

My partner and I are looking for the best bang for the buck.  We are looking to be agile and nimble in renovating the units. Flooring seems like a big cost.  We see that a lot of LVP's are $3-$4/sqft plus labor.  The latest vendor quoted about $6/sqft installed, and another said that he thinks that he can do for $5/sqft installed.

An investor that we know told us that she uses peel & stick floors.  They run about $.97/sqft for material. Obviously we need to add labor cost, but the material cost is 50-75% cheaper than LVP.  It's known that quality LVP lasts longer than cheap stick & peel, but the question is - does it make sense mathematically to invest more upfront?

I have heard that peel & stick suffers a bit from indentation, so when a tenant moves out, a new floor is in order.

I'm thinking that if LVP costs $6/sqft to install, about $3/sqft is labor.  so if we assume that the labor is the same for peel & stick, it's about $4/sqft installed.  So LVP is about 50% more expensive.  This tells me that if the LVP will last at least 50% longer than peel & stick, it may be worth it.

What are your thoughts and experiences with peel & stick?  Am I looking at it the right way?  It seems like the quality/durability of these products have improved in recent years.  Again, I'm not looking at this from the perspective of someone that's going to hold it for 10-20 years where the most durable material is the best.

Thanks in advance

This does sound familiar to my situation. @Wes Eaves What I did was 1031 our of my triplex into MF apartments with a partner. Here's how we structured it. I had my sole member LLC, and my partner also has his sole member LLC. We took title to the property as TIC, not JV. Then we created a third entity that is a management company(again, not JV). The management company gets a check from the property manager and distributes funds among the partners and handles paying mortgage, taxes, and other bills

Investment Info:

Large multi-family (5+ units) buy & hold investment in Columbus.

Purchase price: $1,410,000
Cash invested: $364,555

Contributors:
Austin Steed, Jake Fugman, Trey Golston, Jeff Tyndall, Remington Lyman, Bryan Pham, Brandon Sturgill, Alina Trigub, Mitch Provost, Michael Ealy, Dave Foster

My partner and I closed on a 36 unit deal in North part of Columbus two weeks prior, and successfully closed on these 24 units. They are 2/2 condo units out of 300+ unit complex, managed by onsite management company.
The complex was built in 1998, the units and the mechanicals were in good shape. It was a turn-key deal where we didn't have to invest in any improvements or deferred maintenance. I would categorized the area as C+/B-.
The current plan is a long term hold for cashflow.

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

It was a turn key portfolio with nice cash flow with potential for big upside due to significant development in the area. The units and the mechanicals were in good shape, the financials were strong, and the property enjoyed very low vacancy with a solid onsite management in place.

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

Our broker brought this to us off-market. We negotiated about 10% from the original asking price.

How did you finance this deal?

Local bank, portfolio loan. 75% LTV, 4% interest, 10 year term, 5year fixed, 25 year amortization, full recourse. 2% prepayment payment if we refinance with another lender, otherwise no prepayment penalty.

How did you add value to the deal?

It's a turn key property. There is some room for rent growth, but its slow and steady. We have plans for potential STR or corporate housing.

What was the outcome?

This is a new acquisition.

Lessons learned? Challenges?

Doing 1031 with a partner can be tricky. The LLCs and the ownership structure has to be facilitated properly. We did TIC (tenants in common) with single-member disregarded LLCs where we were able to close in our respective LLC's but since it flows down to our individual tax, the 1031 requirements were satisfied.

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

Dave Foster for 1031 exchnage, Bernie McGuiness from FC Bank for loan.

There were also many people that I met on BP who helped me navigate many questions and provided support/encouragement along the way -

@Mike Ealy,@Steve Rozenberg, @Bryan Pham, @Brandon Sturgill, @Remington Lyman, @Jeff Tyndall, @Austin Steed, @Alina Trigub, and many more

Investment Info:

Large multi-family (5+ units) buy & hold investment in Columbus.

Purchase price: $1,410,000
Cash invested: $364,555

Contributors:
Austin Steed, Jake Fugman, Trey Golston, Jeff Tyndall, Remington Lyman, Bryan Pham, Brandon Sturgill, Alina Trigub, Mitch Provost, Michael Ealy, Dave Foster

My partner Dan and I closed on a 36 unit deal in North part of Columbus two weeks prior, and successfully closed on this 24 unit portfolio. They are 2/2 condo units out of 300+ unit complex, managed by onsite management company.

The complex was built in 1998, the units and the mechanicals were in good shape. It was a turn-key deal where we didn't have to invest in any improvements or deferred maintenance. It had 98% occupancy and solid financial history. I would categorized the area as C+/B-, with mostly working class tenants, but some white-collar professionals as well. The pricing was such that we can enjoy nice cash flow with some room for slow, but steady growth in rent. The area is also poised for appreciation, evidenced by new class A building coming in the vicinity and other developments taking place, potentially setting up for significant rent growth in the near future. We strictly buy based on cashflow, not on any speculation of future appreciation, but we felt that this property checked the boxes for both.

The current plan is a long term hold with steady cashflow, but we will consider cash-out refinance or selling if the price goes up more than expected.

We got financing from a local bank, 4% interest, 75% LTV, 10 year term, 25 year amortization, full recourse loan. This deal was a 1031 exchange, executed by Dave Foster and his amazing team. We met a lot of great people on Bigger Pockets along this journey, and they have been very helpful in answering my questions, giving me advice, sharing contacts and other useful information, and providing me with encouragement and moral support.

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

It was a turn key portfolio with nice cash flow with potential for big upside due to significant development in the area. The units and the mechanicals were in good shape, the financials were strong, and the property enjoyed very low vacancy with a solid onsite management in place.

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

Our broker brought this to us off-market. We negotiated about 10% from the original asking price.

How did you finance this deal?

Local bank, portfolio loan. 75% LTV, 4% interest, 10 year term, 5year fixed, 25 year amortization, full recourse. 2% prepayment payment if we refinance with another lender, otherwise no prepayment penalty.

How did you add value to the deal?

It's a turn key property. There is some room for rent growth, but its slow and steady. We have plans for potential STR or corporate housing.

What was the outcome?

This is a new acquisition.

Lessons learned? Challenges?

Doing 1031 with a partner can be tricky. The LLCs and the ownership structure has to be facilitated properly. We did TIC (tenants in common) with single-member disregarded LLCs where we were able to close in our respective LLC's but since it flows down to our individual tax, the 1031 requirements were satisfied.

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

Dave Foster for 1031 exchnage, Bernie McGuiness from FC Bank for loan.

There were also many people that I met on BP who helped me navigate many questions and provided support/encouragement along the way -

@Mike Ealy,@Steve Rozenberg, @Bryan Pham, @Brandon Sturgill, @Remington Lyman, @Jeff Tyndall, @Austin Steed, @Alina Trigub, and many more

Thank you everyone.  We just reached an amicable deal with the seller.  They gave us a lot of concessions during the process, so we yielded a little bit to their requests in good faith, and also because it wasn't a lot of money.

Hey Buckeyes!

I'm new to town, sort of.  My name is Ki and I'm from Southern California. I've visited Columbus several times since about this time last year, but last month my partner and I planted a flag here by closing on two portfolios, a 36 unit and 24 unit apartments.  We love Columbus, and are excited about our journey here.  We met a lot of great people and built a fantastic team.  We'd love to meet even more new friends.  We would love to network, share ideas/contacts/ and find other ways to add value to each other. We fly into Columbus several times a year, and would love to go to an OSU game and/or have a beer in Short North.  I would love to connect with any investors/brokers/lenders/legal counsels/accounting experts/contractors/handymen and more!

Scenario - 4 units

Unit A - rent $500.  Paid on time                            0 balance

Unit B - rent $500.  Did not pay.                       $500 balance

Unit C - rent $500.  prepaid next month's rent - $500 credit

Unit D - rent $500. Paid on time                             0 balance

For simplicity sake, let's say that the buyer closed on the 31st, the last day of the month.  We don't have to worry about rent proration.

So Unit B tenant did not pay $500 rent, and Unit C tenant prepaid the next month's rent.

On closing, the buyer is due 0 in prorated rent because they closed on the last day of the month. 

Now, for the balances and credits - Does the $500 non-payment and $500 credit cancel each other out where the seller owes the buyer $0 at closing?  Or does the seller still have to pay forward the $500 prepayment from Unit C although there is $500 in uncollected rent from unit B?

Thank you, everyone.  I gotta say that Columbus is really growing on us.  Not just that it's a great place to invest, but it seems like the people in town are very cohesive, proud of the neighborhood, and caring of the people in the city.  The transformation that took place in neighborhoods like the Short North and Franklinton are amazing, to say the least.  I've heard of many community projects designed to lend a hand to those in need.  Hot Chicken Takeover is my favorite restaurant in town, not just for the delicious chickens, but for their incredible mission of helping people get second chances in life.  It feels like home away from home, and we are excited to plant a flag here.  We look forward to updating many new acquisitions here in the Buckeye town!