All Forum Posts by: Pat G.

I would create a new LLC for the property and partnership you are creating and then spell out ownership interest in the LLC documentation and meeting minutes, etc. I am not a broker, lawyer, or professional giving legal advise, but from experience if you place that new property into an existing LLC and somebody sues that existing LLC for something that doesn't even have to do with the new property that new property could be part of that legal action as well. If it is to save a few bucks, let me tell you I would sleep better at night knowing that there is nothing coming at me from something someone else did or didn't do. Any good lawyer can do a search online to see how many properties an entity owns, more the better - bigger payday$$$.

That is why most CRE properties have one LLC per property, to limit exposure. Don't mean to scar, and I am not giving legal advice, just my own experience. Good Luck!

Sean: Any type of creative financing is possible, but does it make financial sense? I would start from the end and work backwards. What type of rent do you think you can get from Airbnb, what will the turn be each week, month etc. I don't know what rents are in your area, but I doubt they would cover your mortgage amount with taxes and insurance? Also, make sure that the city that this property is in will let you do a Airbnb, a lot of towns have laws or make it very difficult for homeowners to do that. 
For a $1.5M purchase that is $300K down (20%) with a loan balance of $1.2M. A 30 year mortgage at let's say 4% would be PI (principle and interest) of ~$3,353.43 a month. (give or take a few). Then you would add in taxes, which would be considered non-homestead and then insurance. 
For any lender hard or private they are going to want to see a game plan - how they are going to get there money back. I am assuming that this is a single family residence? For those prices I would look at buying a small 5-10 unit or bigger apartment complex. Just my thoughts.

Zack: Congrats on the closing and moving forward. Go to a local REIA meeting and see if you can find a real estate attorney, one that owners property or has owned property so that they know more than you do at this stage. Ask them for their forms and process they use. Don't be afraid to pay for this advice, in my experience it will be well worth it. You could also talk to local property management companies and ask them about their process and if they would manage the tenant for you.
Good luck.

My experience has taught me that you will not change the behavior of other people. It sounds like the previous landlord didn't make the tough decisions so you as the new owner have to. If you let this guy stay and continue with the way he has been doing "his life" then the only other type of tenant you will attract is ones just like him. Then you will have 2 slobs to deal with. First talk to a real estate attorney, one who has rentals himself and get good legal advice. Second follow that advice and start making his behavior not welcome in your property. If you don't tackle this right now, you will start to make excuses not to go to the property and then you will think "Real Estate doesn't work". It works and people make a lot of money doing it. Another idea is to hire a 3rd party property manager and have them do what you are unwilling to do. NOT that I am saying you are unwilling. 
Good luck.

@Brad Noe All good advice given so far, don't know if I can add but the "tired landlord" and "has "other properties" peeked my interest. I am assuming this 29 unit is in your city, if not no problem. I would first check the crime stats with a site like https://www.trulia.com/local and see if the area is in a green area. As others have said, the area may not be the best but if you know that going in it could be an opportunity. Second you have to decide if you want to be a landlord of a class C or D area. I am guessing on the area here so don't get mad. Third, ask him where the other property is located and maybe that one is in a better area, and buy that one. He probably has a pre-payment penalty as mentioned by others, but if you can do a deal on both properties it may make sense. Loan assumptions are not a quick thing either and you will need a strong sponsor. Ask a local broker what the going market cap is and then divide the NOI by that to get a down and dirty value. It may also be that "being tired" he has just let things go. It is hard to give real actionable advice without knowing more details. Hope I added a little bit of value, hit me up and we can run some numbers if you want.

Hey @Federico L. I am an out-of-state investor looking to break into the Orlando market in multi-family 24 units and above. If you guys want we can jump on a conference call and see how we can take down a property or two. I currently do direct mail campaigns to get leads.  Let me know. Thanks, in advance.

Apurv: Great job on taking action. There are two other ways to finance or make this opportunity work. One is Seller Financing, and the second is Assumption of the current loan (if possible). 

I am surprised that that many banks turned you down, double check your numbers. In your case doing seller financing may be the only way other than like someone already stated - Walk away!

Don't force the deal, when I did I usually got spanked!

Good luck.

Tom:

Congrats on the opportunity.

Industry standard for expenses in the Self Storage industry are 30% -35%. Now, I know that you are not a "true" self storage facility, but you should use some guidelines. 

I agree with the other posters, you need an onsite manager who is going to do the day-to-day that the owner is currently doing. I would sit down with the current owner and have him explain what he does on a daily basis, or follow him around for a day. You will learn that he does a lot of stuff. 

Actually you may need a couple people, one in the office and the others in the yard. I don't know what else is done there on a daily basis. It sounds like a lot more than would go on in a true self storage facility. 

Good luck!

Matthew:

First Thank You for your service to our country! 

Second, you must create a Investment Package to show to prospective investors. The areas in this package you need to cover are things like the following:

• About the Property
• About the area where the property is located
• The Opportunity and Business Plan for the property
• Investment summary and potential ROI
• How is their investment safe
• Financial Projections
• Returns on Sale or Re-Fi

Third, Tell everyone you know that you have this opportunity and are looking for private investors and then for the ones who express interest set up another sit down meeting with them to go over the package in detail. (i.e. Investor Meeting, Luncheon, etc.) 

NOTE: I have to say here that with raising private capital there are rules set forth by the SEC that you have to know and follow. The one private money guy that I have used and trust is Alan Cowgill. I have worked with him and I know him to have great knowledge. His course is very good and is put together in conjunction with his SEC lawyer. If not Alan you need to get hold of a course that will give you some guidance. 

Fourth, read whatever course you choose to purchase and in there, if you buy Alan's, he will give you set by step instructions on how to find these private investors that will not get you into hot water. 

Good luck!

Clyde:

Check with your city's Chamber of Commerce and the Economic Development people for your state or county and ask them what businesses are looking to expand or move into the area.  This you already know... Look for a commercial broker that specializes in your type of building. Drive around and look to see who is listing other buildings like your type and contact them. Friends or not, who is paying the mortgage each month? 

Do some research and find out what is the growing industry in your area, be it autos, tech, medical, etc. and then contact the real estate division of those companies to see if they are thinking of expanding. 

Change to another use, i.e. self storage, vehicle storage, boat and RV storage, etc. I noticed in Google Maps a lot of homes behind and across the street and down the road. 

Good luck