All Forum Posts by: William Coet

I am seeking suggestions for how to prevent tenants from disabling smoke alarms. Verbal warnings and statements written into the lease may not be effective. I've seen plastic bags taped over alarms!!

This is important to me as they can harm others in multifamily settings by disabling them.

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Originally posted by @Ben Leybovich:

Originally posted by @Michael Ealy:

Originally posted by @Ben Leybovich:

There is a lot of fear of new construction in the multifamily sector. I am not sure I understand why. I think we can use it to our advantage.

@Sam Grooms and I buy apartments in Phoenix. Statistically, considering the demographics, it is thought that Phoenix will need 150,000 new apartment homes by 2030. Currently, there are about 15,000 in the pipeline. The construction costs are up tremendously. Construction volume is also capped by a shortage of skilled labor, as much as anything else. Even if we wanted to build 50,000 units in the next 2 years, we can’t.

So, how do we use this to our advantage?

We just closed on another community. This is a 94-unit community a block away from downtown Mesa. This location is designated a QOZ, and as such a ton of new construction has already broken ground, and a lot more is planned. The community sits right on top of the light rail, with the station right at the corner. Sun Crest backs up to the amazing Pioneer park that the city just spent $8M renovating.

The downtown Mesa is in midst of a fantastic revitalization, and we believe within a few years it will become a hub! Especially considering the ASU expansion that is coming in.

Talk about the Path of progress!

This was a smaller acquisition for us, but we couldn't pass up the growth prospects. We paid $10.6M and we will complete a $3M renovation scope, which will include the construction of a new office and gym, expansions of the pool and a bark park, as well as the typical for us interior scope which includes cabinets, granite, appliances, and W/D install.

Here’s the kicker:

New construction in Phoenix rents for an average $1,500 per month. In this location, looking at the filed permits, I think many of the rents will be North of $2 sq.ft with an average per unit of at least $1,700 - $1,800.

Our re-positioned average pricing is $1,200. These units are large, so this pricing equates to $1.30 per sq.ft.

So - what we have is a community that will offer 85% of what new construction offers in terms of location, finishing surfaces, and amenities, but at 65% of the cost, or less. It will become the budget-friendly option for anyone wanting to be in what will become a trendy location in the East Valley in one of the hottest growth markets in the country. It will offer tenants much of what Class A will, but at a large discount.

Congrats Ben.

Your assessment is right on the money. That's our approach as well not just in our apartment acquisition but also with hotels.

We look at new construction costs and the rents they get and compare it renovating an existing building and the rents we can get. If there's parity or not much difference, we can build new. If, the latter is better like in your case, then we buy existing buildings.

In Cincinnati, in the B and C submarkets, there is not much new construction coming in the pipeline but demand has risen up and continues to go up with about 20,000 new jobs coming in. Hence, rents are increasing,& values continue to climb.

Michael, you bring up an interesting point. There's not much new construction (if any) coming to the C+/B- sub-markets. In those locations, the very viable questions is - will new construction ever come there? Or at least come en-mass? If jobs are coming, and the momentum is in the right direction, but the sub-market is either cost-prohibitive or land-locked, then what you and I do can be seen from yet another focal point altogether...

Ben, Congrats on your new acquisition. I have a question about this your reference to sub-markets in your last post. Specifically why would a sub-market be cost prohibitive? Is it primarily because of lower rents in C and B sub-markets? Is it because of land acquisition costs?

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-The Fixed Rate HELOC is 5.49% for 20 years.
-Here is the info for the ARM:

• Rate variable based on Prime -.51%. This rate includes all applicable discounts.
• New minimum monthly payment will be Interest Only
• There is a $50 annual fee that is waived for the first year

1 Vote

There's an endless list of areas to reduce long-term maintenance. Each with different cost implications. Some things that come to mind that may not add too much to material costs and likely reduce long-term costs are:

-One piece tub and shower units (they can be cheaper than sectional units and you can usually get them into a new build).

-High quality bathroom paint with mold inhibitors

-carpet tile or LVT (luxury vinyl tile) with releasable glues so that a single tile can be replaced easily.

-Toilets that don't clog easily (I like Toto)

-A single heating system with submetering or heating added into the rents can be more affordable than maintaining independent systems (be warned though that you may have to administer the bills with submeters which is definitely a time consumer) Electric baseboard heat can require no maintenance for several years (but is typically more expensive to operate depending on energy costs). You may want to consider heat pumps and their maintenance requirements (I don't have a lot of info. on these but plan to look at them soon).

-Get faucets that are known to be reliable and easy to repair (parts are common and readily available).

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Snow and cold is nothing to be intimidated by. In the south they have to maintain AC, and in the north it's heating systems. Absolutely connect with a few reliable and trustworthy heating techs and a handyman or two. People that have been in the area for a long time doing work are usually the best.

It's not a bad idea to pick up a few new electric space heaters to have on hand in the event of a no-heat situation. Make sure the tenants know how to operate them safely (no extension cords, no loose items near them, check the plug occasionally to ensure it's not getting hot to the touch, and ideally run them on the 750 watt setting and not the 1500 watt setting).

Also, there is a lot of small multifamily that has the utilities separated, but regardless if it is or isn't, if the numbers cover your expense you are ok.

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When a sale is listed as "cash to existing financing" can the "cash" be raised as equity from existing properties? If so, what is the best way to do this?

Thank you

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When a sale is listed as "cash to existing financing" can the "cash" be raised as equity from existing properties? If so, what is the best way to do this?

Thank you

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@Mike Wood Are you doing all of the labor yourself? Are you hiring laborers? Are you subcontracting portions of the project? If so, what do you hire done?

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Originally posted by @Trey Kern:

We've got guys who build in Hampton Roads for less than $70/SF and they are not tract builders by any means. They are building 1,600 SF minimum usually, but I don't think that build cost is totally out of the question.

Is the $70.sf price materials only? What does it include? That is much lower than most people are pricing.

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Originally posted by @Russell Brazil:

@William Coet

Then I know there is no dual agency as Fannie Mae doesnt allow dual agency. So you definitely are just unrepresented.

Does this mean the selling agent/broker gets the same regardless of if there is a buyer's agent?

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All Forum Posts by: William Coet

William Coet has started 207 posts and replied 570 times.

Post: Preventing Tenants From Disabling Smoke Alarms. Suggestions?

Post: Why Is Everyone So Afraid of New Construction in Multifamily?

Post: What Should We Do? Adjustabale Rate HELOC or Fixed Rate HELOC?

Post: Ideas for Smart Construction - New Multifamily Idea

Post: Investing in multifamily properties in areas with bad winters

Post: What Does Cash to Existing Financing Mean?

Post: "Cash to Existing Mortgage" question

Post: New Construction Homes- What am I missing?

Post: New Construction Homes- What am I missing?

Post: Negotiating Commision with Agent Who Is Broker + Dual Agent