All Forum Posts by: Percy N.

@Hope Fick, congratulations and I respect your vision.

A commercial property like this is valued based on its NOI (Net Operating Income) divided by the market cap rate.

So $21,000 x 12 = $252,000 NOI

Assume the cap rate is 5 (could be more or less in your market), $252000/0.05 = $5,040,000

You should be able to get a 70%-75% LTC loan on this (minus any reserves and fees).

Hope that helps.

Start at your local REIA.

Atlanta is a hot market for multifamily, so I am sure you will find folks there.

@Gary Woodring,

Do you own large multifamily?

Yes, 1,000+ units. Smallest is 88 units, largest 390.

Did you use a Mortgage Broaker?

Yes, we have used a mortgage broker. Typically, they will charge 1% of the loan amount.

Do you own properties in multiple states?

Yes, 3 states currently, though majority of the properties are in one geographic area to help with economies of scale.

Do you manage the properties yourself?

We started with 3rd party mgt, but nobody is going to care about your properties as you do, so we are bringing it in house.

If you have a 3rd party PM do they use a trust account or do you write the checks and pay the bills?

Most PM on larger properties will open an account with them as custodians. PM would enter invoices into the PM software, we used to review the larger bills to be paid every week and they would cut the checks, etc.

There are many groups out there - just do a search including on BP and Facebook.

In fact there are more guru based "mastermind" groups out there than true gurus in real estate - so be careful. 

My recommendation is to start with your local REIA or look for some RE groups on meetup.com

Seems like a bridge recourse loan offer. 

Odd it mentions 401k as liquid assets and my guess is that "starting at 7.99" means you will end up much higher. Private money is around 10-14% these days just based on the assets.

If you have a good asset, go talk to a local bank or credit union to get a LOC or refi out.

@David C. it's not necessarily a bad thing unless the "MTM" folks don't leave when you want them to and it turns into a prolonged eviction (depends on your market).

What size properties are these? 

Look for a "builder's risk" policy.

Ditto to what Lane said. 

Yes, the sponsor team's experience is important but so are the assumptions in their underwriting.

A good sponsor will have conservative assumptions (e.g. cap rate higher at exit).

I also like to see the sponsors have skin in the game.

David,

         MFH will certainly scale faster and is the reason I focused on that asset class. 

Initially, I was looking for a 20-50 unit complex to purchase myself but the numbers would not support dedicated leasing and maintenance, which was a must-have for me. Thus, I started to look for around 100 unit complexes and pool some capital for the purchase. 

The minimum number of units we would look at is 150 (unless we have other properties in the immediate area), with a sweet spot being ~250.

Not saying that you cannot make money on smaller complexes, but it typically requires more hands-on management. If you are going to hire a property management company, how much priority will they give you?