All Forum Posts by: Nate O.

Looking for people's experience investing in rentals in small rural towns . I have an opportunity for a 4 plex in a small town in Iowa(less then 250 people) located 15 minutes for a town of 6,500. I currently live in the state but in one of the larger population centers about 1.5 hrs away. The deal, when fully occupied, will cash flow nicely but I worry about finding and keeping tenants with such a small population base.

Does anyone have any experience and/or tip with this type of markets that they can share?

So I'm about to venture into uncharted territory for myself in the commercial development arena and I'm looking for a crash course on the development side of the project. I have extensive experience in creating buildings (registered architect) but have never really dealt with the financial/investor piece of the puzzle. 

-What I'm looking at project wise:

-$12 mil dollar new commercial office structure (includes cost of property, demo of existing structure, -new construction, build out, holding costs) - higher density urban location

-40k sq. ft. to be rented out at $14-20 sq ft.  per month

-major tenant is on board for 35k of the space at said rates assuming the project falls into place

-2 year construction project

My questions mainly revolve around the financial aspects.
What are main numbers that stand out to an investor in a pro forma?
Does it typically make more sense to look at private investors rather then bank financing?
What types of rates would an investor be looking for a ROI on a project like this? 10% 12%?
What amount of money down (skin in the game) would investors be looking for from the developers?

I'm sure I am missing a ton of relevant information. I'm in the process of putting together all of the numbers for the pro forma so I can get this in front of the right investors. Thanks in advance.

I searched for profitable duplexes in the Iowa City areas for a couple years with no luck. The market is tight here unless you start looking at newer places in North Liberty. I ended up jumping on a foreclosure opportunity instead and am in search of my next deal.

Went through the process of getting a preapproval on a mortgage/construction loan with a local credit union for a Fannie Mae property. After submitting the bid, the listing agent came back with questions regarding the financing. Turns out that Fannie Mae with not turn on water/allow a gas meter to be installed prior to the closing which makes getting an appraisal on the house impossible for a local loan. Has anyone else experience this issue with Fannie Mae and have a work around?
I ended up pulling financing together through the Fannie Mae homepath program which does not require an appraisal and ended up winning the bid but now need to figure out the financing. Would prefer to use the local since the rates and terms are more favorable. I would appreciate any help/suggestions! -Nate