All Forum Posts by: Laurence Obi

@Laurence Obi

A lot of great books and podcasts have already been mentioned. I found a ton of value in using Rod Khleif’s educational material (most of his books and material are free).

Also, it sounds like you are specifically looking to improve your ability to normalize expenses when underwriting multifamily properties. Your best resource for this will be a local property manager. Make sure the PM deals with the type of asset you are looking at, similar size, similar class, etc. Build a relationship with the PM and bring them on a walk through of the property with you. They should be an expert on where the income and expenses are and where they could be. 

Last, David Toupin has a great deal analyzer specific to multifamily and multifamily syndication. In his deal Analyzer he offers a cheat sheet with an average cost per unit per year of each major expense line item. I’ve found this info really helpful to use as a placeholder in my underwriting until I find more accurate info from a PM or through other means. 

Please let me know if there are any other ways I can help you succeed. 

@Laurence Obi

There are two typical scenarios you have in this case.  

1. The property is non-conforming which means; when it was built the rules were different and it complied at the time, but the rules changed and now it’s out of compliance very common occurrence.  You are ok.

2. The property is under a zoning exception (zoning variation) and is legal as built.

A third option was someone made a mistake when it got built and it never got corrected.  In any of these situations there is no reason the title company won’t proceed.  That have an exception in the title regarding the encroachment issue, but it shouldn’t prevent you from closing.

The worst case is if the building were to be destroyed by fire or other means (usually the 50% rule is applied) the rebuilding would not be allowed unless in compliance with setbacks.  Most cities have this rule.

Can you give some context as to why it's coming up now? Is it actually a title issue?

If it's part of the original structure and it's been over the setback for 20+ years, your title insurer may be willing to insure anyway. I know I've run into this in Texas a few times and with a little pushing, I got the title company to agree to remove the encroachment from the coverage exceptions.