All Forum Posts by: Luke Easley

Thanks @Drew Sygit. Should we go ahead and get it under contract, then have GCs come through?

I am partnering with 4 individuals to develop a mixed use building. This a 4 story historic building. It has been sitting vacant for many years, so this will definitely be a large undertaking.

24,000 sqft total

Create 12,000 sqft of loft apartments in the upper 2 floors.

Create 12,000 sqft of retail/restaurant space on the ground floor and and basement.

I have never done a project of this size and have never done a commercial develop project at all. My background is in residential and commercial property management and hospitality/short term rentals.

I have questions about the due diligence process and business structure:

- Once we get the property under contract is there a typical time period to allow for due diligence? Is 120 days fair?

- Should I bring in a commercial contractor with me to look at the property before we get it under contract or after?

- I do not plan to bring much if any cash to the table. Would a lender typically lend to a business where the managing partner doesn't have a track record, but there is cash in place to make the necessary down payments and more? My partners have the funds to make it happen, but they do not have the time to put the project together.

- What would typical split in equity be for a deal like this where I am coordinating all the pieces and 4 other individuals are the money partners?

@Brandon Braithwaite we don’t usually have them recorded, unfortunately. We do have a FB group you can join and ask question about the market. It’s Montgomery Alabama Real Estate Investment Club

Hey all, I wanted to give some updates on our meetups. They are still happening and we are growing a lot! Last month we had 100 people show up, had an excellent speaker share about wholesaling and we enjoyed some great southern BBQ! This is also a great environment for networking. I meet new people each month and feel like I learn something new every time we meet. We are currently meeting at Vaughn Forest Church the 3rd Tuesday of each month. Look for us on FB. Montgomery Alabama Real Estate Investment Club

@Peter Philando I manage several in Montgomery and Birmingham. Checkout my website: DwellaStays.com

@Peter Philando I manage several in Montgomery and Birmingham. Checkout my website: DwellaStays.com

I would love to hear your stories about deals you have done similar to this.

I have 3 years experience managing many single family homes and apartment complexes. I have personally flipped 1 house and own an Airbnb/short term rental arbitrage business with 6 luxury apartments.

I also run a local real estate investors meet up with monthly attendance of 100+ people.

I am looking at buying an 83 unit apartment complex. It’s only a few years old, very nice complex, but has potential value add with a small empty lot next to it that could be garage spaces or storage space for tenants.

There is a large market here for furnished rentals, so we would turn several apartments into furnished to increase NOI. And maybe run some as short term rentals to significantly increase income from some of the units.

Deal Details:

Asking: $13,695,000

NOI: $872,180

Cap Rate: 6.37%

Occupancy: 96%

Tenant Class: A

My main question is, how should I structure a deal like this if I have multiple partners? I likely will have little to no money in the deal, but would be the managing partner and doing most of the leg work to make the deal happen. I will have 4-5 partners to come up with a down payment of 2.5-3m.

1. Should we setup an LLC with each of us as members of that LLC?

2. Is it common for the managing/working partner to get a larger share than the others? Or Should we all split evenly?

3. Will the bank have to run each partner’s credit?

4. Would the loan be in the LLCs name? Is that how it usually works?

These are questions, my partners and I would like to know as we have not done a deal this large altogether before.

Thank you for any inputs!!

@AJ H. Thank you. Yes I will definitely need a loan and some partners. I know a several folks with big pockets that could potentially put into some money. I guess my main question is, how should I structure the equity between us? This was my idea and I have the experience to run the building, so I want to make sure I have as much ownership as possible.

Background:

I have lived in my personal residence for 3 years. I house hacked and rented 2 spare rooms on Airbnb that paid for the mortgage, utilities and more each month. I have done renovations and and sold the house and will have 60k cash after closing next week. Some of that will go to pay off some debt and the rest I want to invest in a commercial building.

I have several years experience owning a short term rental business with 10 apartments that I signed a multi year lease on. This has given me a great deal of business experience in the hospitality industry and real estate market.

I now want to buy an actual hotel or mixed used building.

The hotel is 30 rooms, in a great location with new hotels being built around, it needs a lot of work and could great increase revenues with nicer rooms and leaner operations. Building Cost is estimated around $700-$800k. I know with renovations it could be bringing in close to $1m a year in gross revenue.

There's also a 5 year old mixed use building. 48 apartments upper floors and 5 retail spaces in the bottom. Excellent location, but half of retail space has been vacant for years. I could Airbnb one floor of apartments to significantly increase NOI. Building cost is about $3m. Gross income is about $600K.

How can I take my 60k from my house and buy one do these buildings? I’m ready to hustle and make this happen!