All Forum Posts by: Percy N.

@Tony Nguyen, yes, for a 100+ unit property I would start with an established PM who knows the market, has established relationships, processes, resources, and systems in place. 

You still need to be careful about who you select as PM and that it is a good fit for your type of property and aligned with your goals for ownership.

Once you get to a point that you have or exceed the capabilities of the PM company, you can consider taking this on yourself but keep in mind it takes a lot of resources behind the scenes (accounting, technology, vendor mgt, etc) not just an onsite leasing and property maintenance.

Good luck with your journey.

What was the motel's average occupancy? If they scraped by with say 50% occupancy, that would be a lot lower than what an apartment occupancy should be.

Get professional advice to size this. If apartment units share hot water, they typically have boilers that are expensive to purchase and operate.

Also think about whether you intend to have the tenants pay for the utilities related to hot water and how that would be computed.

@Mike Cumbie do you have a recommendation or suggestion on the "hub" cellular camera?

Has anyone installed a WiFi Mesh over a large outdoor area (40 acres in our case)?

@Ken Martin, I have seen something like this been done but it is a complex topic that requires input from legal (SEC and RE) counsel, CPAs and a lot of coordination across the investors.

Have you looked into a DST structure?

Maybe a little late for the original poster but in case someone still searching for this, look at the REOLing Go. It works over 4G LTE via a sim you can get from a provider like Tmobile. 

It comes with some cloud storage for free and can be extended. Easy to setup, which requires their app you use to scan a QRCode on the camera. A live stream is available and a motion detector is setup to send 8 sec segments to the cloud which can then be viewed.

The battery life is not bad but it depends on the usage. You can get a solar panel to make the install totally "wire-free".

Overall, not bad for the price.

@Scott Roelofs, that is interesting but the federal status of cannabis still makes me uncomfortable investing in that space

@Jim Glover, many good answers here. But it all comes down to what you want and how active you wish to be in managing these properties.

If you plan to personally manage and maintain the MF, then yes it could be more headaches. However, if you leverage the benefits of scale, it will allow you to get professional property managers for a more reasonable rate than SFR and you can higher dedicate leasing and maintenance.

This is why I moved away from SFR rentals and flips to MF and now only invest in a min 125-150 units because of what I mentioned above.

Again, there are many ways to make money in real estate including SFRs.

Couple personal experiences I had in SFR which may be mitigated by MF:

- Tenant turnovers generally mean 8-10% vacancy. I have had tenant turnovers take 1 - 8 months in this market. The 8 months is extreme, but it can happen. Ultimately made it a flip and sold for a $100k profit.

- I had a tenant who trashed a nice SFR causing about $25k in damage. Got a judgement against them but good luck collecting. That was the last straw. I also have good tenants but one bad apple can have a bigger impact on an SFR, I think.

- Maintenance - roofs etc are more for a single-family per unit than a larger MF building which has 8-12 units in a typical garden-style apartment.

Again, neither of these are totally hands-free operations unless you want to invest as a Limited Partner in someone else's deal, just slightly different headaches ;-)

@Jack Thanadabouth is there a reason for desire a 5 unit vs a 4 unit property? 

If you want to go for a commercial loan, the requirements are more stringent and you may not see much benefit for just 1 unit difference (depends on the numbers).

Also, with Corona, Freddie and Fannie are requiring 12 months PITI in escrow, not sure if this applies to the small balance loan but if so, that will also impact your returns.

Who is going to be doing construction management for the new build?

How much construction background do you have?

Lenders and investors will want to know that important fact.

How many investors are you looking for? Will they be active? If not, you may be selling a security and will need a PPM.

Have you confirmed if new Multi-Family the highest and best use for the land?

Have you considered partnering with a developer where your contribution is the land?

@Ben M., what is the main reason the investor is averse to debt?

Debt is a tool and if used correctly can be a powerful multiplier.

In 2012-2015 I used to buy REO properties all cash since cash offers were preferred by the REO sellers at that point. I did not refinance them out (just sold over time) but in retrospect, would have bought a lot more if I refinanced them a year or so after buying them.

If you get a non-recourse loan, even at 60-70% LTC, you should be in a good position provided you buy it at the right price and do not overpay.

Is there an initial investment period and then a long hold or will you be buying over a period of time?

What is the amount the investor is putting in over the investment period?

The structures involving 1-2 parties are all over the board. It comes down to what each party is comfortable with. i.e. If you had to do this yourself, how long would it take you and therefore what are you willing to give upfront?

I would start with something like straight 80/20 split for the investor and as you get more deals under your belt and build your Net worth, cash reserves and experience, switch to 70/30, then 60/40, etc.