All Forum Posts by: Steve Priola

@Bryan Hartlen  As I understand it, (which is why I am I posting for information as I may not be correct in my answer to you),  a city, county or state housing authority supplements a Residents rental payment as long as they are working a job, but do not make enough money to afford the rent per a communities rental qualification policies regarding income. Example: We require a conventional Resident to make 3.5 times the rent to qualify to lease. 

The idea is to help folks who are working in the general area of their employers, but are often priced out of the market that end up commuting for long periods and can eventually "burn out" and check out of that job in that specific area leaving the area employers hurting for staff. I can keep going down the rabbit hole, but I am guessing you know what I am getting at. 

I can charge and get $2800/month from a conventional Resident as they walk in the door qualified via their income, credit score, background check. The workforce Resident may qualify on credit and background, but they fall short on income and are rejected. 

Biz model: Again, I am assuming some things here: As I understand it, I should still be able to get my $2800/unit, but be able to approve folks who fall short of income requirements who are a part of the workforce housing program VIA the programs subsidy. 

I have "heard" the subsidy can come from different forms such as a tax credit direct to the property or the Resident has a voucher and/or the housing authority pays me direct for the difference that the Resident does not pay. I am not too interested in a tax credit scenario and there could (again, I am not sure) be some strings attached that could effect the resale of your property. E.g., the property must maintain its workforce housing status for X amount of years and you could lose out on buyers not interested in that model. If the market and/or just your personal exit strategy is showing it is a excellent time to sell, you might be "stuck."

Upsides: 

1.It appears to me that you would be able to expect/count on the income from the housing authority. 

2.The workforce Resident appears to have an appreciation that they are getting a A-class unit for less than market and they have "skin in the game." 

3. It appears you are always able to enforce your lease. Example: If housing pays their portion of the rent and the Resident defaults, you can still enforce the lease even though partial rent has been paid by housing.

4. I can only speak about our lending partner, but they are ALL OVER the idea. Our reposition plan will be a large project and cost. We have shared our preliminary proforma with them and the lender has given the blessing to move FWD. So, it appears lenders like the space, It was easier to get this approval than it was for our 1st conventional reposition of this same property. 

5. I believe that our occupancy should be at 100% and our only vacancy would be between turns as I am aware there is a large list of approved folks waiting for this type of rental unit. So, I am guessing there is less marketing and leasing expense as people are waiting in line. 

6. Possible zoning and planning buy in and area city/county political support. Again, the project will be a bit bigger than our last reposition and I feel it would be helpful to have these parts of the puzzle on our side.

The difference between the 2 models (my opinion only) is most of the elements I mentioned above would not be available at the conventional level.   I do not have any hard data to support my opinion as of yet. My opinion is based on 2 conversations with other folks who have 12 units or less running the same model. 

Last and not least. I Love this city and town. We are attempting to be a positive force in our community. I was a Paramedic for 13 years in our MSA and know from personal experience there are good people that work hard and care about where they live (Eg. not trash a unit/property). 

I "think" as long as we continue to qualify applicants per our current policies in a fair manner using Fair Housing Guidelines, we should be OK. Our current qualification model has been working very well with minimal Resident lease non-compliance. If the only change is the income piece, then I am hoping would should be successful. 

I hope that all made sense.

Hi all. We have a 46 unit complex that is ready for a reposition. The location is superior and the density will probably allow us to end up with 64 doors when we are done with the project. Our MSA is in serious need of affordable housing and we are interested in the workforce model. 

We are a conventional owner/operator business and I am looking to network with someone who is currently and owner/operator of a workforce housing asset. I just don't know what I do not know. 

Happy to chat here on this forum for others to learn whatever someone has to teach or we can connect privately as well. 

Thanks for anyone's consideration. 

- Steve 

Charleston SC MSA - Owner manage 46 units. 1 person deferred and is now paid up as of this month. 3rd party manage 48 units, 3 people deferred and all are now paid up as of this month. Have colleagues that manage or own in the 180 to 366 unit class A and B space and they are all saying VERY low numbers for deferral and no outright no pays. We are all kind of waiting to see what happens when the cash injection runs out. HOWEVER, most Residents that are self reporting say they are working from home or working side gigs. Last bit of info to share; had a call with an agency lender we do business with and VP of lending indicated they are in a "wait and see" mode. VP said they have had some "trickles" of loss in commercial and residential space, but are bracing for possible wind fall 3-5 months down the road. 

Investment Info:

Large multi-family (5+ units) buy & hold investment in Charleston.

46 units renovated to studs - rehab and reposition - property is doing well. Happy to share lessons learned if you have questions. Before and after photos attached.

Hey Sarah. No common building. Really the only "amenity" we have is some of the buildings have Marsh views and we are going to put some decks on the back side and charge a premium for those. 

We have an empty lot up and the fromt end of the property that we were shy 2 feet on set back to put up a quadraplex. We are not sure what we are going to do with it, but you just gave me an idea!!!! 

I would want that building to generate income somehow however. 

Bring back the 80"s arcade room and a pizza shop? :)

 For now that lot acts as a staging ians storage area for the construction guys stuff.   

 The town we are in and the location of this complex aree both supporting that rental rate. 

 We are the only brand new from the studs up renovated community in the area and we are close to the downtown, beach access, main highway access areas. 

 This community is so unique in that there are no units above /below or in the front or back of someone and it's just one shared wall (duplex).  

We used this stuff called  "green glue" and added 3/8 inch sections of drywall on top of the existing fire wall with the green glue between the extra drywall and we were able to decrease sound transmission significantly which has been another huge leasing / selling point. 

 When we set out to start this project the one thing I always remembered about renting was that  it drove me crazy that I was paying money to listen to my neighbor cough or sneeze in the next room.  Come to find out, a lot of other people feel the same way and this extra expense appears to be paying off as an great added feature and benefit. 

I too have been amazed. 

We have been getting five units delivered every 30 days and have been marking up the rents $20 per delivery of sets of 5. We are trying for 769 on the next set of 5 due for February 20 delivery. 

We started marketing, people have been coming in to look at the last set of units thatnare just being finished before they get moved into, and people are filling out applications without blinking at the latest 769.00 rate (includes W/D rental and that expense is loaded into the net rent per unit calculation).  

 I really think the success is due to a mix of location, newness of product, washer and dryer in unit and the uniqueness of the community. 

Our proforma is based on getting 699 per unit after W/D expense with the bank on the construction loan and they are pleased with the results so far. 

And that 699 is BEFORE the removal of the old / existing water expense to the  Community as I talked earlier about how we added individual sub meters to the property.   

Interesting stuff  

PM me and I'd be happy to share anything else that you would be interested in hearing about it. 

Hey Marc. 405 SF per unit and every one is exactly the same. At 749 Gross potential rent that is  1.85 / SF.  After W/D rental expense we are at about a 1.79.  

My 2 cents. When / if you get ready to get going on working on a purchase, I would recommend checking out Charles Dobens MFIA. He is a real estate attorney that specializes in MF and teaches you how to purchase. I attended his course a couple years ago and closed on a MF deal a year later. Good info. You do have to pay to be a member of his site, but I found the info to be well worth it. If you can catch a class, I would attend. 

I was the receiver of a great reach out today by someone who had read something I posted about the MFIA class in Bigger Pockets and I realized I have not been on here for two years!!

Having said that the reason why I have not been here is; 

I was really busy applying concepts and knowledge that I learned from using this site.

Short story long; our business has grown over the past two years and I'll get straight to the point. 

I just wanted to share our experience on a 46 unit Renovation and the topics discussed are in no order whatsoever.

We were able to acquire a duplex community in an awesome location.

This community consists of 23 buildings with 46 tiny little units in a duplex set up.

These buildings were initially built as army barracks that were never put into service and a local dentist bought them from the military and had them trucked down to a great little site that has some marsh views and is in the heart of a really neat city. The location is excellent.

These buildings are made with 2 x 4's / 4x4's and have trussed roofs. They are sitting on brick / mortar foundations and are hurricane banded. They were placed on the site in 1974 and survived a huge hurricane with $1500 worth of damage to the entire property and made it all the way to last year when we picked up the community.

The initial idea was to sweep the community to a blank slate and put up quadruplexes.

Throughout the planning stages of that idea, we had people in and out of the property. Our visitors would say how "neat" and "cute"/ "quaint" the community was and really liked the space as the whole tiny houses concept is hot these days.

So, we reached out to a local college business school and recruited some students to do a market study for us and found that we just might be able to make the tiny space concept work on this property.

Instead of spending a lot of dollars to sweep the property and build it from scratch (never-mind finagling the financing for such an undertaking), we were able to spend a fraction of the cost to renovate these units with a great response and a good return.

In addition to learning that the tiny home concept may work for many demographics, we also found that the 55 and older community may be very receptive to these types of units. We decided to plan for the long term in case we needed to do a demographic shift and we renovated the units to get the doorways a little bit larger and hallways a little bit wider to accommodate for any unfortunate needs if in an EMS crew needed to get someone out of the units / property. Have I mentioned these are tiny 1- bed / 1 baths?

On our comp study (we actually did that ourselves and didn't have the students do it for free :) ), we learned a large part of the competition did not have a washer and dryer within their units.

Most of the neighboring multi-family complexes are much larger than ours, but close to the same age in years ( + or - 10 years) and do not feature washer / dryer connections in their units and if they do have any laundry, it is a coin operated facility.

So, we designed an area in the bedroom for a stackable washer and dryer and we have found that this feature has been a huge factor and people's leasing decisions.

One of the biggest problems for us on this property was the fact that the property has one meter for the entire complex so therefore the old owners were paying everyone's water and really not charging people for it. 

When we performed our due diligence on the property we knew we were going to do something with it and that "something" would include the tenant paying their water bill.

These units were taken down to their studs and all insulation electrical and plumbing was replaced.

When the piping was replaced we used that opportunity to install a sub-meter water meter. (Say that fast 3 times). 

We partnered with a company by the name of NES who is a sub-meter billing Company. We verified with the water dept that we could sub-meter and charge tenants for water and then placed the actual meters off the main water supply for each unit.

These little water meters were not that expensive and they work like this: 

The meter is placed on the cold line that goes to the water heater and reads actual usage by the tenant.  The meter has a transmitter on it that sends a signal to two antennas that are sitting on top of our office.

Those antennas feed data received by the water meter transmitter to a controller box that has a cellular antenna on it where in NES is able to dial in remotely and take meter readings on a monthly basis.

NES then sends the tenant the water bill (sewer use is factored in as well) and the tenant brings the water bill to us in the the office and pays it along with the rent. We have a water utility addendum in their lease and we did check with the local judicial folks to make sure they would enforce an eviction for nonpayment of water bill.  I was "assured" that if the water bill was not paid, it "could" be considered a breach.

Removing the monthly water bill expense definitely was huge to our NOI as I'm sure you can imagine.

We learned a lot of lessons in this process (yes, some of them cost some money) and if anyone would like to network with me about the lessons learned, I would be happy to share as I learned so much from using this site, I feel it is the right thing to share as that is what we do on Bigger Pockets. 

I am not sure if it is allowed that I post our site to check out before and after pics, but here it is; - Click on River Oaks and you can see the photos. 

Please remove our site info if I violated a posting rule. 

I hope everyone has a great rest of their week and keep on keeping on!!! 

- Steve 

Hey Tonji. I just finished a weekend workshop with Mr. Dobbens. Here is a copy of an email that I sent to a different person who inquired about his classes. Hope this helps. 

Please pardon any grammatical or spelling errors in the email as I used voice to text as I was "on the go"  when I responded to this person that day. 

Copy of email as follows: 

I just finished up with the weekend workshop that Mr. Dobens held in Charleston, S.C.

First, a little background about me so you can kind of get a feeling of my understanding of what I learned and how I found the information to be correct and useful.

Started in Multifamily in 1998 as a leasing agent in Denver Co. with Simpson Property Group (388 units) and worked my way up to an assistant manager. After getting to that level, I was privy to the numbers that were happening on the community and realized what kind of NOI was being realized and I had my first "light bulb turn on" moment if you know what I am saying.

I live by a mantra, "I don't know what I don't know" and am always looking for information, classes, people and networking opportunities to increase my knowledge base and of course "people base" to get me further in my investing business. That is exactly how Mr. Dobens approaches his training.....what we are doing is a business and the business should be managed with out emotion and "gut feelings." His approach is real data / numbers based / driven and he clearly has high level business knowledge. Frankly, I would have paid $5000 for the weekend. There is real value in the information that is shared / taught.

So, here is the run down:

First, I did pay to be a member of the "Multi-family investor Academy" as a online student and attended 2 conference calls and went into the web site and downloaded materials and read as much information that I had time to. It was clear to me that the ROI just to be a member of the site and attending the conference calls was well worth the money paid. This is not a "RA-RA lets go out and make money by taking out a cash advance on your credit card and flip a property" type deal. It is a straight up business / strategy based program with facts and data and / or real life examples to drive home the concepts to make you understand the reality of what to do or NOT DO. That to me is the best benefit. Leaning what NOT to do or to put something into place to protect your deal.

The weekend class started right on time and we got right into it. Again, there is no, "welcome to the first day of the rest of your business life, we are going to be rich" RA-RA, BS. We went around the room and each person did a little intro / bio and I would like to speak to that really quick.

I became aware that I was in the right place when I saw the people that I was surrounded by. To my left (and I am not making this up), was a 34 year old guy who started his business at age 26 I think it was and now owns/manages over 2200 units and talked about deals that he was doing that were out of this world interesting. To my right, a multifamily housing broker who has sold over 500 deals throughout his career. You ever hear the saying, "you are influenced and are like the people you surround yourself with?" Well, those were the 2 guys that I was surrounded by, so that validated the class pretty much right off the rip for me.

In my other "work life," I am a part time Paramedic and I am a big fan of "order of operations" when it comes to anything related to learning and execution of a new concept. Charles presented all the information in the correct way in order to build on concepts initially presented. We started with letters of intent and moved onto the offer and then into due diligence. Now, if you have made many offers on a lot of properties in your career, then you may of course know what you need to know. Something that may sound as simple as a drafting a letter of intent and then writing up an offer to purchase probably sounds mundane and maybe you may think you have been there and done that. I assure you, the guys to my right and left were taking notes and of course all of us were learning. The dialogue that is created by the discussion of these concepts is beyond valuable. I was taking notes, on the notes I was taking, if you get my drift. Please understand the class went into may other subjects, just giving an idea of the start and flow of things.

The most valuable part of the class for me was the forensic accounting part of the due diligence process. It gives you the information and tools to dissect a deal even before you go walk on a property. There is good and bad income that comes into a property and line items in a historical budget statement can tell you a lot about a property and how it has been run and what may be inside the numbers that a current owner and/or broker may be trying to hide from a prospective buyer. The forensic accounting process discussion was of course much more in depth that what I am saying here, but I am just trying to give you a quick overview. 

I could easily continue to write a few more pages to continue to get my point across, but the bottom line is yes, it is well worth the time and investment to become a member of MIFA and yes, you MUST go to the next weekend class that is held. You will not be disappointed. This is not guru, this is not hype. In my humble opinion, it is high level and a person should come into this training with some sort of property investment experience and maybe even owned and / or managed something over 10 units as what is taught / discussed is, well, multifamily driven and hopefully that made sense.

I don't mean to come off like I know it all or someone who is just starting out would not benefit, but having a little experience will help you get more out of the class as you can apply concepts learned immediately to your day to day operations. If you are the type of person that reviews what you have learned immediately and then maybe go back to that information once a week while your getting initial experience, then you would benefit even if you were new to multifamily.

I hope this helps. I hope that I did not come across cocky or a know it all as I can assure you I DO NOT know IT ALL. I walked out of the weekend VERY aware I do not know it all, but I gained serious knowledge and increased confidence and that my friend in my humble opinion, is what is is all about.

You are welcome to email be back if you have any questions or you to call me as well.