All Forum Posts by: Percy N.

I would even keep it informal until about 20 units or $1mil

@Storm S. we have used 506(c) and it seems you got good advice from @Kim Lisa Taylor and @Jillian Sidoti

We just went under contract on a 284 unit deal in Houston, TX. We used a local attorney for the PSA (purchase sale agreement) and who was familiar with local laws and customs like using the Texas equivalent of an ALTA title insurance, etc. Also keep in mind that for commercial projects, a large (6 figure) deposit will be required and in hot markets a portion of it will be non refundable.

Great opportunity to partner on 284 Units in Houston.

Serious inquiries only please.

Good and timely topic as we are doing DD on 3 properties (total 385 units) right now.

Been using a combination of:

- Slack

- Trello

- Google Docs (and drive)
- Dropbox

- MS Project

Will look at Wrike, thanks for the suggestion.

@Kusum Chanrai, 

     As it has been mentioned, it comes down to your experience level, desire for active or passive investment, etc.

I was in a similar position to you not too long ago and looked at various investment options (wrote a blog post about it here - https://www.biggerpockets.com/blogs/10305/67660-fi...). My conclusion was that MF made sense for me and I started to look for opportunities in different markets.

As you probably know, there are economies of scale that come with MF over a certain number of units (generally 75-100 but depends on the property and market). So we started to look at properties in the $10-$20MM range. Along the way we found others like us and we partnered on a 101 unit deal in Dayton, OH.

We just signed a 284 unit portfolio deal in Houston yesterday (after a year of constant looking and issuing about 20 LOIs in that market). As @Brian Burke mentioned, the hot markets are tough to break into but if you can identify a good deal, well worth it. We may look for partner on this deal as well (some Family Offices also expressed interest).

My point is there are many ways for you to get involved with MF. As a passive investor you can invest as a LP, if you want to be on the GP side and more active, you could be a loan guarantor, co-sponsor, help with DD, help with asset management, etc.

Hope that helps.

Talk to the commercial dept of the local bank that does portfolio lending.

@Tab Teehee what finishes do the competition have? What is their rent? Occupancy levels?

Then work the numbers to make sure you have good cash flow post renovations when you underwrite for the avg rent for a similar unit in your market.

Do you need to change the HVAC? That can be very expensive. Do you need new cabinets or can you refinish?

@Dana R., congratulations on starting a successful business.

Having started and successfully exited businesses, I know it is not easy.

If you are looking for a passive investment, I would recommend you also look into investing in a syndication deal (whether multi-family or other) as an option, along with the other out of state options you are considering.

The larger size of the deal gives you economies of scale (typically over 75-100 units) that single family residences would not.

@Steve Vaughan, thanks for the heads-up.

@Garison Clemens, as others said, it would depend on the market. Are there many similar apartments with just 1 bdrms? If so, what is the historic economic occupancy? This unit mix would not excite me.

Would the deal cash-flow if there is even a temporary drop in the housing benefits program? Do a stress test to see how much of a reduction in benefits you can absorb.

I have heard of special lending programs and maybe even some tax benefits, but would need to research more to validate them.