All Forum Posts by: Michael Ward

Hi Cory. Start networking now! That way, whenever you do come back stateside, you'll be ready with the connections you need to start moving faster. I'm in Northwest Arkansas, and I don't know the Conway market, but with the two colleges there, I bet it's a good place to get started. Good luck with your endeavors, and enjoy Europe! I spent a year in France and loved it. 

Hi all. I'm a real estate agent and my question is for other real estate agents who have seen David Greene's most recent webinar geared toward agents on How to Make 6-Figures in Your Business. I was not able to participate live so I watched it a few days later. Overall, I thought it was very good webinar, hitting on the high level challenges, goals, and requirements of becoming a successful agent. As we all know, we need lots and lots of leads to generate business, and he wraps up the webinar by attempting to teach us how to generate those leads. At least, that's what he purports. 

However, the finale of the presentation is a pitch for why we should become Premium members. Frankly, I was disappointed with the ending. Don't get me wrong, I generally see some value in the Premium membership, especially the agents in bigger cities with thousands of BP members. But I tend to disagree with his position that we as agents on BP should tell ourselves that our biggest source of leads to build a 6-Figure Business is the Premium membership, especially for those like me who are in smaller markets. I acknowledge that I am getting leads from BP already as a Pro member and as I become more active in the forums, but all of the leads are investors looking to buy deals (small and large). And that's great! I want those connections! But the reality for an agent is, finding a buyer for a good investment deal is the easiest part of this business. The hard parts are 1) finding deals and 2) getting listings, neither of which he addressed in the webinar.

So, my questions to those of you who have watched the webinar are: Do you agree or disagree with my response to the webinar and why? Are you a Premium member (or plan to become a Premium member) and why do think the value is there? And have you been successful in finding investment deals and/or generating listing leads through BiggerPockets?

Hi Christine. I'm a real estate agent in Northwest Arkansas, and I'd be happy to chat with you about investment properties. What kinds of properties are you looking for? Feel free to send me a PM as well.  

@Jonathan Yeh

If the numbers work then a new build can be fine. From a pro forma perspective, if it pencils then it’s worth looking into. But obviously new build is riskier because of potential time and cost overruns. The general contractor can make or break you so choose wisely. Permitting and city inspections can cause delays or changes. And keep the design simple. But In my market, lots of developers are building new, as long as they can get A class rents.

I know nothing about lending in Calgary, but you will need some equity. Often, if you purchase the lot with cash and you are a solid guarantor (or can bring on a solid guarantor), then a bank will loan the full amount needed for construction. It’s usually based on appraised finish value. When you run the numbers, include the cost of financing (origination fees and interest payments) in the loan budget. Where I am, I can draw from the loan to cover monthly interest payments.

@S Thakkar

Maybe $100/SF is realistic, so we can stick with that number. The simplicity of complexity of design will drive the hard costs. But does that cost include all the costs of site work (clearing, grading, etc) and paving? 30 units on 2 acres will have a lot of concrete, so get a handle on that. And all the utility costs, are those included in that $100/SF?

Also, 21,000 SF is just the total SF of units, but you will have other common spaces (balconies, hallways or corridors, stairs, etc) so again, the design is critical to understanding hard costs. What will the building form what look like?

For soft costs, usually $20-$25/SF is reasonable. You’ll have civil, structural, MEP engineers, in addition to architect. Typically, the developer should be getting paid a fee as well, but that isn’t always the case. There are legal fees, surveys, bookkeeping, permit fees, inspection fees, due diligence costs.

I think 6 months to 80% lease up is unrealistically aggressive. I haven’t done much development, but one of most accurate statements about RE development is that everything takes way longer than you think it should.

Finally, always always include some

OpEx. Even new construction has issues.

@S Thakkar

In Arkansas, 30 unit multi family construction would probably be more than $120/SF in hard costs. Probably more like $140+. Maybe Dallas is cheaper. Commercial construction is complex. Fire suppression alone can add $5-$10/SF. You really need to understand the true hard costs. And site work costs are a big part of that too.

Your soft costs are way low. Architect and engineers charge a lot and you’ll need them not just for design but also for construction administration. More importantly, your cost of financing will be significant and you don’t seem to account for that at all. You have to budget for origination fees and the interest carry. You’ll be paying interest for 12-18 months before you’ll see any income. But you can use the loan to pay for the interest if it’s budgeted on the front end.

Finally, as already stated and I'm just echoing, your NOI is unrealistic.

@Sam Eknoian Be sure to look into your financing options. I had a client/colleague who bought two small 2/1s on a single lot and couldn’t get a conventional mortgage. No issues with zoning or permitting at all, but it was an issue for lenders. I’d suggest discussing your options with your lender

#riskcapital

@Kyle Tipton It’s going to be hard for contractors and property managers to talk about teaming up when the proposal is nebulous or theoretical. They are all quite busy around here, so to get their attention you need to pitch them on specific opportunities that will pay them. Teaming up will result from building those relationships over time.

Agents are different, sort of. They tend to be busy too, but the bigger issue is twofold. On one hand, most agents don’t invest or work with investors, so most won’t be a good fit. And on the other hand, working with investors can be a lot of work for low commissions selling cheap houses, so some agents just focus on finding clients with different goals or larger budgets.

That said, I am an agent, so feel free to PM me with specific questions about the market or the kinds of properties you’re looking for

I'm a Fayetteville native and, although I'm an agent, I know the region well. I haven't yet invested in MF myself, but it is one of my goals. I have sold a handful of small MF properties and one 60 unit property for clients. Fayetteville is the University town and has a lot going for it. Very high quality of life, lots of fun things to do, and high rents and sales prices (for this region, not compared to, say, the west coast). Bentonville is the least likely place to find a deal given its meteoric rise in property values due to massive amounts of capital (mostly private, mostly driven by Walton money) invested in the downtown area. Rogers and Springdale are more working class and home to larger immigrant communities. There are a lot of small and mid size MF properties, but everyone knows it's a strong market here so it's hard to find opportunities that cash flow. That said, they do exist, they're usually off-market B and C class, and they usually need work.

Renting to students is a great option in Fayetteville if you can find a property close enough to the University. But the 4 BR townhouse market, alluded to above, is saturated, so be careful with those. Demand is strong for 1 and 2 BR apartments close to campus and close to the downtown area. For a small metro region, there is a lot of growth here. Feel free to PM me. I'd be happy to chat more