All Forum Posts by: Percy N.

@Johnie Hsu the main reason is to differentiate "investment management" (or Capital Mgt) from Operations or Property Mgt.

We are vertically integrated i.e. we are an investment management firm that also does its own property management, but we have different entities for each.

@Chad Olson OK that changes things.

What is the business plan?

How long are you telling investors they would need to hold the property?

Is there a refinance part of the plan? Will that return some capital?

Investors will expect to see a cashflow projection on how their capital and return are being paid out over the investment term.

Most will look at the Average Annual Return, some the IRR and some will factor in the distributions during the hold period.

@Dustin McCluskey that amount of land seems a little low to me for 45 units but might work in your market.

What construction background do you have?

Typically you want a lender who will provide a loan for the land acquisition and finance 100% of the construction (this is done via draws after the work is completed so you should expect to cover some of the expenses up-front). The GC will also require a mobilization payment. There will be soft costs of architects, engineers, etc and of course you will need to cover the debt while there is no incoming revenue. All of this means you need very good underwriting and the ability to manage the project so that it stays on time and within budget.

The lender will want construction guarantees with milestones.

Supply chain and labor issues, while getting better, can still pose a risk.

Raising the capital needed, especially if this is your first project is a whole other ball game. 

It will be challenging and the best bet is to bring in a seasoned sponsor, but if your numbers are accurate, not sure this deal is big enough or lucrative enough to attract seasoned sponsors with a good investor base.

@Chad Olson, which area is this in and what is the market cap rate?

Assuming this is Built To Rent?

The biggest risk may be during the construction phase with budget and time overruns.

Who is doing the construction and what type of contract is in place?

@Vidit Maini, what is your goal of investing in an Opportunity Zone?

Make sure you fully understand the pros and cons of investing in a QOZ.

Also make sure you know the requirements for an existing property to qualify for this benefit vs new construction.

To get the most benefit from this program, you will need to hold the property for 10yrs. Is this in line with your investor's goals?

@John Morgan that sounds crazy for SFRs, especially if it is listed as a tenant responsibility in the lease.

What is next, you need to provide a can opener since the resident does not have one?

If you want, you can always provide them an option of - Tenant responsible for $0 additional or we hire a lawn service for you $50/mo additional.

It is a common issue in complexes with an HOA that takes care of the common areas but the residents are supposed to take care of their immediate surrounding area/yard.

@Justin Youngblood a lot of it depends on your market - the demand for rentals and the class of rental.

e.g. If it is a luxury apartment with a significant premium, then I would want to make sure it is "ready to show" (maybe even do some light staging).

You could start marketing it as a "Coming soon..." rental which will get the word out but not make it look stale.

Also make sure the tenant moves out on the agreed to date otherwise it will cause problems. I have a higher daily rate once the lease expires, that generally motivates a timely move.

Free = they sell your data.

There are paid services like verifyinvestor.com which sometimes come bundled with an investor management system.

@Tony S., great job.

A couple of questions that may help other readers with some more context:

What year did you buy these (was it 2 yrs ago? so 2020)?

How did you finance these properties and rehabs?

Are you planning to cash out the equity to invest in other deals or 1031?

Thanks

@Boikie Jacob please clarify your question.

The structure of the deals also depends on the size of the investment you seek and the underlying asset, so any light you can shed on that would help provide better answers.