All Forum Posts by: Matthew Orton

We own a fairly new student housing property by MSU. The previous owner fully furnished about 75% of the two bedroom units with cheap leatherette couches and loveseats, along with equally cheap chairs, beds, tables etc. Unfortunately, I didn't recognize the low quality of the furniture when we bought the building.

Can anyone recommend a line of extremely durable furniture made for student housing? 

Thank you!

Thank you all for your input. I appreciate it!

Hello,

We recently purchased a 35,000 sqft student housing complex right across the street from a Big Ten university. The property is professionally managed and the management company is well respected and diligent. 

I remember the college years, living in dorms, etc and I understand that college students aren't always very self-aware. Like most all property management companies, the property managers have employees on call 24/7 to handle emergencies etc. It seems that with the new batch of students coming in, there have been numerous noise complaints, which are billed to me at $55 (one man-hour) per incident. Last month the noise complaints were $400+ and it has been a couple of hundred bucks a month since the beginning. 

How do other student housing owners (with managers) handle this?  Does this just go with the territory or is there something else that can be done? My first thought was to implement a fine, but for that, you'd need to catch the culprit in the act. Evicting a student in Michigan is expensive and time-consuming. Any ideas would be appreciated!

Thank you.

Hello,

We recently purchased a 35,000 sqft student housing complex right across the street from a Big Ten university. The property is professionally managed and the management company is well respected and diligent. 

I remember the college years, living in dorms, etc and I understand that college students aren't always very self-aware. Like most all property management companies, the property managers have employees on call 24/7 to handle emergencies etc. It seems that with the new batch of students coming in, there have been numerous noise complaints, which are billed to me at $55 (one man-hour) per incident. Last month the noise complaints were $400+ and it has been a couple of hundred bucks a month since the beginning. 

How do other student housing owners (with managers) handle this?  Does this just go with the territory or is there something else that can be done? My first thought was to implement a fine, but for that, you'd need to catch the culprit in the act. Evicting a student in Michigan is expensive and time-consuming. Any ideas would be appreciated!

Thank you.

So, you're saying that the SEV has the potential to stay at 50% of the original $8M purchase price, even if I am paying half that? In other words, my $4-$5M purchase price will not reset the SEV to a much lower rate?

Joshua,

Thank you for this information. 

To fully analyze this property, I need to determine the absolute max that property taxes will be. From what I've gathered from here: https://www.michigan.gov/documents/treasury/STC_Guide_to_Basic_Assessing_2012_405304_7.pdf

"The authority of government to levy taxes is contained in Article 9 of the Constitution of the State of Michigan. Article 9, Section 3, states that all property shall be assessed uniformly and shall not exceed 50% of true cash value."

https://www.michigan.gov/documents/treasury/Merged_Volume_III_With_All_Edits_051817_575835_7.pdf

"Article 9, Section 3. The legislature shall provide for the uniform general ad valorem
taxation of real and tangible personal property not exempt by law. The legislature shall
provide for the determination of true cash value of such property; the proportion of true
cash value at which such property shall be uniformly assessed, which shall not, after
January 1, 1966 exceed 50 percent; and for a system of equalization of designated real
and tangible personal property in lieu of general ad valorem taxation. The general ad
valorem property tax shall be uniform upon the class or classes on which it operates."

Based on this information, I am assuming that at sale price of $4M, although the property taxes will probably be lower, the max they can reach, by law, with a millage of 80, is 50% of max SEV of $2M or $160k per year. At a $5M sale price, we'd be looking at a max SEV of $2.5M or $200k per year, which it will be capped at unless the laws change.

I have an opportunity to buy a student housing property that was sold a few years ago for $8M, at a reduced price of ~$5M due to Covid and a few other issues. The property has an SEV close to 50% of the original $8M purchase price at ~$4M and property taxes are currently ~$320k per year. 

I’m not completely familiar with how things work in Michigan so I’m wondering whether, after sale, the SEV will decrease to reflect a max SEV of $2M (50% of $4M sale price) equating to ~$160k per year in property tax?

Thank you,

Matt

Thank you for all of the great info! Although I’ve always shied away from REITs, I’m also considering this as a possibility. With the latest stock market plunge, I would guess that there are at least a few COVID-19 resistant REITs trading at bargain prices although it’s difficult to determine whether we’ve actually seen the bottom yet.

Can a REIT be coupled with a specific type of insurance to guard against catastrophic loss?

Can they be traded Into different REITs once purchased through a 1031 via a Delaware Statutory Trust or are you stuck with the REITs you’ve chosen? 

Any suggestions for specific REITs and advisors to get through this process?

https://www.fool.com/millionac...

 

I'm in the middle of a 1031 exchange with three multi-family properties identified and at the end of my 45 day window. I originally had two student housing projects in escrow and on day 43 of 45, the lenders backed out and I had to scramble to find new properties in less than 48 hours. I completely understand why they did, with universities closing and students vacating

With the volatility of the markets right now, I'm more than a bit reluctant to pull the trigger on any of the multi-family projects that I selected, knowing that I will be walking face first into issues with vacancies, moratoriums on evictions and ensuing legal issues not to mention the possibility that the lender could decide not to fund at the very last minute.

I've been investigating possible alternatives to a 1031 exchange (outside of paying capital gains) and the only real alternatives I'm seeing are the Deferred Sales Trusts and 453 Installment Sale options. With the Deferred Sales Trusts, I see that there are built in fees (~1.5%) that are there to pay legal in the event of an audit, which begs the question...if they are legit, then why would the possibility of an IRS audit be built into this transaction?

Any other options out there I'm not seeing?

I'm looking for a property management company specializing in Student Housing in Tallahassee, Florida. What % should I expect to pay and should I expect to see additional "leasing fees" etc?