All Forum Posts by: Account Closed

Yes! If OpEx is being reported at 26% than economically speaking, the market would not support it. There would be a huge influx of dollars to that market since this would mean that the properties in this area are reporting high income and low expense. It doesn't make sense. 

Again, I would stick to my rules and walk if a property doesn't show at least 45-50% Op Ex. There is no point of me digging further because I know when I underwrite, the numbers will just not work. And when it comes to DD and I find out the numbers actually do not work, then I just wasted all my time. I would advice you not think "What if..." and rather let the numbers and your analysis of the market do the talking. Hope this helps!

@Todd Keith

I generally wouldn't even look at a deal or offering memorandum if the broker/owner is reporting the expense less than 45-50% of the income. 

This is a good analysis. Also, keep in mind there are acquisition, lender required reserves, and closing costs. So it really wouldn't just be $100k out of pocket.

For those of you who currently own/ invest in Multifamily (50 units above)- what is your criteria in taking into consideration the Age of the property? (i.e. will you invest in a property that was built in 1942? or one that is 50 years old?, or just recent ones?) Any specific criteria you have regarding age of buildings in multifamily? Would love to hear your thoughts

@Mindy JensenHow do you search inside a specific forum? 

Hi BP - Would anyone know of any Multifamily Due Diligence training (books, seminar, gurus, etc...) available? I am always trying to enhance my DD skills and would love to see what others are doing.

Thanks!

Hi Zachary, 

You can go the route of syndication. Issue a high (8+ %) Preferred Rate of Return and a LOW percentage of the upside to the investors. After stabilization (if value add), refinance the property, basically pay off the investors and end up owning majority of the asset.

HI BP - has anyone ever attended the Real Estate Guys program on "How to Win Funds and Influence People"?

Just wanted to know your feedback on the program if you ever attended. 

Thanks

Congrats, Jordan!!! All the best to you

@Sarah O'Neal

Hi Sarah,

I reviewed the offering memorandum you supplied. The expenses make up only 20.93% of the income. IMO, that seems low. There are expenses missing such as contract services, trash removal, legal fees, management fees, licenses,permits, pest control, landscaping, any maybe more etc.. But I don't feel comfortable with the fact that expenses are only 21% of the income.

Second, upon reviewing the rent roll, it seems the current rents are already above the market rents. The max current rent for a 1bd/1ba is $1525, where the market rent for the same unit is $1475. That doesn't make me comfortable either. However, it would make me comfortable if you have a plan to address your high rent compared to the market. Will you be doing any value add on this property? 

Keep in mind, just one vacant unit will have a severe effect on your income. 

Also, keep in mind the acquisition and closing costs related to property inspection, lead paint inspection, lender fees, 3rd party reports, title policy, survey, recording, transfer taxes, and any other lender requires reserves for closing.

In addition, just know that this is just an initial overlook based on what was provided in the OM. You will uncover much more during due diligence. What is the deferred maintenance? repairs costs?,  What is the market cap rate and at what rate are you buying at? etc...

Keep these things in mind as you progress to dig further in this property. Feel free to email or call me if you'd like to talk further. 

All the best to you!

Mitul