All Forum Posts by: Michael Blank

What's a good rule of thumb to project laundry income?

Thanks!

Michael

Hi guys - thanks for recommending my podcast, I appreciate it. I desperately need to add more episodes to it, so thank you for the reminders!

Michael

Hi everyone --- to re-open this discussion. I, too, am starting to look into tax credits in order to purchase & renovate apartment buildings. I understand how they work in general, but my question specifically is: how do they work in terms of the capital stack?

For instance, let's suppose a project cost $400,000 for an existing apt building and that  $1,000,000 will be required for rehabilitation, for a total project cost of $1.4M. Assume that 100% of the 30 units will be used for low-income housing. Assuming you get 4% tax credits, 4% of $1.4M is $56,000 per year in tax credits, times 10 years is $560,000 in total tax credits. Finally, assume that the tax credits can be sold in the open market at 80 cents on the dollar to raise a total of 80% x $560,000 = $448,000 for your project.

How does this $448K in tax credit equity fit into the capital stack of the project?

Specifically:

Total Project Cost: $1.4M

Minus Tax Credit Equity: $448,000

Balance: $952,000

I know that I can get a construction and development loan for 75% of the total project cost, which would be $1,050,000, which would easily cover the $952K required. So the actual loan amount would be $952,000 which would be an LTV of 68%.

Is my understanding correct, then, that the capital stack looks like this and will NOT require any other equity from investors?

Thanks for shedding any insights on this last missing piece of the puzzle -;)

Michael

I will, thanks Carl ...!

Michael

Northern part of the city ... thanks!

Hi there ! I'm looking for a contractor who can handle a full-gut rehab for a 36-unit apt building in Baltimore city. Any referrals would be appreciated ...

Thanks!

Michael

I own 6 franchised pizza restaurants and they were great for about 4 years, but the concept was never great, and the stagnant sales were overtaken by steadily increasing expenses. I'm looking to extricate myself from these in favor of more real estate (apartment buildings specifically). 

Restaurants is very management intensive, even with a manager in each store. There are always problems. People quit, systems break.

If you do go into the business, make sure the AVERAGE franchisee is happy and making money. Don't just talk to the top 10% in the chain. Really look at the average.

Michael

@Nathan J. Check out my BP blog post on this topic

5 Reasons Why Bigger is Better with Apartment Building Investing

Hope that helps!

Michael

@Rusty Knowles I've written quite about on the BP blog about the topic of raising money. Here are some posts you might find helpful:

A Step-by-Step Guide to Ace Your First Investor Meeting

How to Structure Syndicated Investor Deals: What Investors Are Looking For

How To Be Taken Seriously as an Up-and-Coming Real Estate Syndicator

Syndicated Apartment Building Deal: a Case Study

How to Find Investors To Fund Your Real Estate Deals

The # 1 Secret to Raising Money to Invest in Apartment Buildings

Hope that helps!

Michael

Check out my podcast " Apartment Building Investing" on iTunes or at www.TheMichaelBlank.com/podcasts ... I have 16 episodes where I talk about investing in apartment buildings or interview other successful investors.

Also, Joe Fairless has a Podcast Best Real Estate Investing Advice Ever where he interviews real estate professionals about their best advice for their profession.

Hope that helps!