All Forum Posts by: Tom Lafferty

Make sure you get a securities attorney to help you.  It will seem expensive, but WELL worth the cost.  Check out www.syndicationlawyers.com  I heard Gene Trowbridge speak last weekend, and he literally wrote the book on this stuff.  He's got lots of good info on his site.  Also google 506(c), 506(b), and the JOBS act.  That'll get you a lot of information.

There was a real estate investing event a few months ago at which several successful investors in the DFW area were part of a panel.  Somebody asked if they used PPM's for their deals, and all but ONE said they do not.  There were comments such as, "the SEC isn't following the little guys," and "If you know all your investors well enough you don't really need one."  That scares me to death as a deal sponsor.  All it takes is ONE investor to claim they didn't understand the investment, and they can screw up the whole partnership.   If you're only dealing with accredited investors, I guess you're somewhat more protected, but I still like the protection.  

we use glue down vinyl planks.  I wanted to go the allure route, but too many people told me the seams were coming apart after a while (haven't considered the ultra, as it is just too expensive).  The allure ultra is much thicker than what we use so it will look a lot nicer.  But we're paying $1.60/ft installed, and it looks ok considering the property.  If a single plank or area gets damaged, just peel up and glue in new one(s).  Suitable for wet areas too...

Darn it Tony!  You know I'm trying to keep my focus on MF,  but our apt manager just told me about a friend who works at a MHP, the owners of which are wanting to sell, along with five other parks.  Now I'm going to have to attend!

payroll is usially in addition to the management fee unless it's one of the off site situations, which your 8% may be.  Basically there would never be anyone sitting in an office for a certain number of hours.  The PM co would take calls, send contractors as needed for repairs, and write leases/renewals as needed.  Best offer I found for a setup like that was 6%, but the PM also got 50% first months rent of all new leases and $100/renewal.  

A traditional PM charges a percentage, and you pay them for payroll costs.

That insurance may be accurate for your area. We may have different hazards than you do.  

Our 32 unit was on a RUBS before we got it, and I believe the billing was being done by a company named Hocutt.  Not sure if they're only local to DFW or not.  We switched to all bills paid.

I'm still curious about your 8% management fee and no payroll costs.  How is that set up?

I can't offer too much help because I don't know your area, but if you've done a solid market survey of surrounding properties and your numbers are in line with them, it could work just fine.  Biggest thing that jumps out is how your payroll is zero?  Is your management company one that does off-site management with no office hours?  I looked at a few of those for a 32 unit but went with other options.  If they are using that kind of setup, are they charging leasing fees as well?  Those can add up quick.  

Are you projecting any rent increase?  Is the property full all the time, as well as the neighboring properties?  If so then the 8% vacancy is probably ok (assuming you're lumping bad debt, loss to lease, etc in the 8%).

On the sub metering, have you looked at using a RUBS?  There are additional costs associated with billing utilities back to residents that way, but you wouldn't have any cap ex to re-wire the place.  

I am jealous of your $225/door insurance!!  I'm paying $400/door but we have hail here.  

I'm searching there as well, and everyone told us to avoid Del City.  We ended up making an offer on a property there anyway.  There were definitely some rough areas a few miles away, but this one looked solid.  I think you've just got to look at the actual property, but in general, we were told the better areas were the NW part of town.  Also depends what you're looking for, A,B,C class? Age? Price range?

No, I decided to pursue apartments and have not done anything with single family homes.

we're not using big pro forma rent increases or high occupancy for our projections, and planning on holding for 5-10 years.  Still a concern, and I'm trying to learn all I can...

@Gagan G. , we are still waiting on the seller to choose a buyer to work with.  It seems to be moving slowly, but I have been working with a PM company that we will use if our offer is accepted.  I'll send you a message with the info...