All Forum Posts by: Jay Mitiguy

Hey @Tom Martin! It has been awhile. Hope all is well with you and Amanda. I'm stoked you're getting ready to get into another project! What did you have in mind? Feel free to message me and I can shoot you my cell in case you don't have it. Have a good one!

@Pete Meck @Mark H. Porter

As a resident of Milton and investor in St Albans, I somewhat echo your comments Mark. St. Albans has a more cohesive infrastructure and a true downtown area which help support the local economy. Milton, not so much. It's more of a mishmash of random zoning districts that don't always seem to make sense, but on the flip side, it's a "bedroom community" to Burlington so prices are stable and tend to grow with the Burlington area markets. St Albans is just far enough away that it tends to react to market conditions in it's own way, but as Burlington continues pricing people out the market, Franklin County in general is showing signs of growth. I've been investing there for 5-6 years now, and it's been a good market for me. I think Milton has a better base of people to choose from for higher quality tenants, but finding 2-4 unit properties is almost impossible; there are trade offs for sure. All things considered, if I could find properties that met my criteria in Milton, I would invest here without question.

@Account Closed Awesome! google hangouts is good with me. Never used it but can't be too difficult to set up, I imagine. Any other takers? We can start up a week from today if we get enough folks to participate.

Hey All,

Been absent from the forums for awhile but I'd be down to try and get a zoom meetup with a few people. Anyone have a paid account that could set up a room? If someone can host it, would Thursdays at 7 for an hour or so work for most people? Depending on the level of interest it may make sense to do a couple meetings split by geography, but time will tell. Hope everyone is safe and healthy days!

As a VT native and investor in both VT and NC, I have to disagree with the general notion that VT is more complex than other states. It is often more expensive, and can be difficult to find qualified tenants, depending on your market, but legally speaking, it isn’t any more complicated than other states. Different, yes; complicated, not necessarily. 

While the legal system does lean in the favor of tenants, we are definitely not the only state with this set up and many, many people invest here successfully. It really boils down to finding a market with the right tenant demographics, and putting systems in place to properly screen prospective tenants. The eviction process can be expensive if you pay a lawyer, but you can save yourself a lot of money getting familiar with the process, the necessary documents and procedures to file. I’m far from the smartest person I know, and I can do it myself if I choose to save some $. I often buy distressed properties and have to evict the existing tenants upon acquisition and it takes around 3-4 months to finalize the process and regain control of your asset. If you’re investing in this style, build those numbers into your pro forma and plan for it in your renovation schedule. Problem solved! It’s all a function of proper planning and having adequate cash reserves. 

I would say the biggest hurdles we face, outside of the tenant friendly laws, would have to be the high cost of living and property taxes, however, the high rents achieved in more populated towns/cities does account for it. Overall, VT can be and is a great place to live and invest in, but it takes proper planning and good systems, just like any other investment. 

@Barry Ruby WOW! What a great post! I really appreciate all the information and I will definitely log your wisdom in my files. It's apparent you've spent many years not just developing real estate, but doing so successfully! I'd be glad to do a screenshare or something in the near future. I'm always up for learning new stuff!

@James Dickens Thanks for the vote of confidence.

@Roni E. Thank you for the insights Roni. Any piece of new information is greatly appreciated! I wouldn't have considered school capacity as an issue for on-going development, but it makes sense when I think about it.

@Joel Owens Great input! All of those are important considerations for sure. My biggest concern is the potential for another recession before getting it stabilized which would crush a project like this. Until then, I only see cap rates compressing in this particular market, so future values could likely be based on a 3-4 cap, at least until the bubble bursts again.

@Guifre Mora Just shot you a PM

@Greg Dickerson Thank you for the feedback. Based on some very rough calculations, this is what I'm coming up with:

10.21 acres @ 18 units per acre for intermediate density zoning = 183 max total units

@ $1,100/mo in avg rents (this is fairly conservative and could be closer to $1,200) x 183 units = $2.4m annual GR

Using expense ratio of 35% leaves $1.56m for NOI

Cap rates in the area are hovering in the 5-6 range depending on product class and neighborhood, so let's use 6%, leaving us with a stabilized value of $26m.

Not knowing the cost of construction in this particular market, I'm estimating a per sqft cost of $130 x average unit size of 1,000 sqft x 183 units = $23,790,000

Land is listed for sale at $995,000 but owner is willing to trade in kind for equity in the deal which eliminates capital requirements for land acquisition.

In my extremely inexperienced opinion, this deal seems too skinny to consider, but am I overlooking anything obvious? It goes without saying I understand the economics are very market specific, but can you point out any flaws in my logic? Would it make more sense to scale the project back and try to keep hard costs to a fixed number and work it from that angle? When you build your models, are your per sqft costs inclusive of all infrastructure and pre-building expenses?

@Justin Morrow I appreciate the input as well. I have some capital to deploy in the range of a couple hundred thousand bucks that I was willing to put in the deal to cover soft costs and any remainder would be applied to the equity piece. I appreciate the additional financing options, as I was unfamiliar with C-Pace. I'll do some homework on that and see if it's worth looking into down the road.

@Barry Ruby I wholeheartedly agree about the "dance" you speak of, but I suppose that's part of what I like about CRE. The game of real estate is fascinating and limitless which allows anyone with a good work ethic to thrive, which I really enjoy. You hit the nail on the head with some thoughts I had rattling around in my noggin, in regards to the path of progress for the project. Never having done anything to this scale, I'm a little unsure with what steps need to happen and when. I've started a word doc outlining my thought process and will be working on organizing those thoughts more methodically over the next couple of days. Regardless of the outcome of this specific deal, it seems like a good exercise as it will likely be needed in the future for any development project.

All that being said, if this deal comes together, then creating an investor pool is my next big hurdle. Is it safe to assume I'd have to create a syndicate in order to go about that? Can you syndicate development deals, or are they solely reserved for existing assets that need repositioning?

Thank you all again for the input!

Hello world of BP. As you guessed from the title, I'm looking for insight on how to dig into a potential ground up development opportunity I was presented with yesterday.

A little background on me: been investing for 5ish years, focused on small multi-family and some mixed use. Have successfully bought, rehabbed and sold several properties after 2-3 year holds and continue to hold a few properties that I want to keep long term. I have experience with decent sized rehabs on mixed use buildings, and put together a financing packages that included grants from the state and city where we did the work.

My question now is, how do I begin to dive into a much larger deal? I recently moved markets (and my home) and in that process came across a potential deal where the current land owner would give the land for development for equity in the deal. It's a little over 10 acres and is zoned for high density res (18 units/acre), and is 2 miles from a very well known university in NC. Being new to the area, and not fully understanding their processes for development, where would you suggest I get started? Who should I be speaking to, and how would you go about underwriting a project like this? I found an financial modeling tool on A.CRE that seems very robust, but there is a lot of data required that I don't have and honestly wouldn't know the best person to get it from.

Any input would be greatly appreciated as I hopefully take my next step into the CRE/Development playground!

Thanks - Jay

It stands for Home Equity Line of Credit. They allow you to use existing equity in a home you already own for revolving credit, much like a credit card works. They are lower interest than credit cards and the bank some has security because it's tied to your home as collateral.

@Christian Bateman A few years ago these were much more common but you can still find the occasional deal like this. The city has improved greatly in the last 5 years and more investors have found this area can provide solid value and returns.