All Forum Posts by: Sri L.

What does your W2 have to do with being a real estate investor? All kinds of people end up being real estate investors. It's hard to profile them like that. 

@Prabhat M.

Buy more number of units. It can cash flow at 4 units and above.

"Cash for keys/tenant buyouts" - then renovate, this will increase your income and help you cash flow.

I started refinance on a property 45 days ago, appraisal was done right as covid hit, rate is locked in, but now they've gone cold i.e. very slow responses.

They reduced my loan amount, and not a lot of cash-out money, I am ok with that, but now I am thinking they may not come through at all.

Anyone else experiencing the same? 

@Ryan Daigle My background is in multifamily BRRR and fix and flip. It is risky but it's worth exploring if I can mitigate the largest risk while I'm in the DD/contingency period. I'm pretty confident this is do-able based on talking with the city. I'm lining up local boots on the ground, land use consultants and financing.

@Josh Stein - cool, glad to know. Any idea how they managed to wrap up hotel operations? 

@Don Konipol - very cool, I love hearing about your experience. Good point about it not always being “highest and best use” especially the older ones. And appraisals being “off”. The key now is to line up the re-zoning and the financing. Will keep this thread updated as things progress. 

This seems unintuitive to convert a hotel to a multifamily, but from my underwriting it seems for the property I just got into contract (in the mid west) a multifamily conversion seems more lucrative than operation as a hotel. I am a multifamily investor, not in the hotel space, so I would like some feedback:

• -Typically hotel is considered "higher and best use" than multifamily, and maybe if I operated it as such it could be, but this property is poorly managed, and has no flag on it, and because I am a multifamily investor I look at it as a multifamily play and it is looking like a slam dunk IF the city approves the re-zoning. I have no interest in operating it as a hotel.
• -Will require re-zoning, talked to the city and a land use consultant seems like it is do-able in a 45-90 day period (kept contingencies on during this process with optional 30 day extension)
• -100+ rooms, Each room is 470sq ft approximately(so this will be studio or 1bed apartments), with some suites bigger 
• -Not sure what to do with conference hall and restaurant
• -Will be hiring a consultant to do the re-zoning (since I'm an out of state investor + this is my first time doing rezoning). Consultant has worked with Marriott before but has not done a hotel to multifamily re-zoning. 

Questions

Has anyone financed such a deal, even with low leverage? I assume I have to go hard money, but even such it seems like it would be a niche of hard money lenders who would lend on a deal like this.

I would like some input on how to shut down a hotel - do you refund those who have booked? What if there's a restaurant that has a lease/contract? Who do I need to hire to make sure this goes per plan?

Anything else I should be aware of?

@Amit M. Yes definitely not a good time to sell fully stabilized properties. Posting here sounds like a good idea -let me put my thoughts together and post on here. Thanks! 

@Alliya Pinckney - sure thing. It’s very early stage and I’m slow with content but it’s much needed, I think. 

@Amit M. Hi Amit - no buyout costs since San Leandro was not rent controlled back then. Didn’t mention that it’s by the BART as well. Approximately 600k in renovation all financed, 250k in holding cost, 200k sale costs, refi in 18 months after acquisition at which point we took cash out and it still cash flowed. Thought we’d keep this one but decided to sell and get more cash flow out of state (hasn’t happened yet). Didn’t end up 1031-ing it because of losses we have from this and other properties. I’m looking into re-zoning and repositioning now and I saw that you’re familiar with it - mind if I ping with a few questions? 

Thanks @Ryan Daigle! 

Investment Info:

Large multi-family (5+ units) commercial investment investment in San Leandro.

Purchase price: $2,973,216
Sale price: $4,730,000

Apartment BRRR in Bay Area, CA

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

Goal was a million dollar profit

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

On market deal

How did you finance this deal?

Hard money

How did you add value to the deal?

Gut & rehab all units, W/D in unit, exterior renovations, landscaping, paint, security systems, new gate & signage, lobby, storage units, repaved driveway

What was the outcome?

Very close to class A rents

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

Nick Myerhoff - agent
Conventus - Lender
Opus Bank - refi

I started a Bay Area Apartment Mastermind Group to answer some of the commonly asked questions + like minded folks

https://www.facebook.com/groups/learningapartments

Bornstein is our lawyer too. He is the best. Just wanted to add that :) Good luck!