All Forum Posts by: Pope Lake

Hi BP! How do you pay for and time the various due diligence reports that need to be completed during the due diligence period of an apartment building being under contract? 

I know that several DD reports have to be done during the DD period (ex: financial document audit, PCA, ESA) but is there any sequence in which these are conducted? For example, if an ESA is done and it finds substantial environmental contamination on the grounds, then it might not make sense to do the deal. But what if you've already paid for several other DD reports before finding this out? Are these sunk costs at this point? 

Furthermore, I'm curious how these costs are paid for - whether out of the capital account, your own pocket, etc. 

Thank you! 

@Charles Seaman interesting what you bring up about changing the asset class of a property. As I've been looking at various listings, I've come across a great many that make it seem like upgrading the class would be too forced. 

Very prudent point on how it's better to acquire during a buyer's market. Point taken on your cash back senario as well. 

@Richard Tavetian I'm transitioning to multifamily from SFR as well so I'm glad you posted. If you haven't already I'd get the Best Ever Apartment Syndication Book by Joe Fairless. Would be great to connect and share experiences.

@Charles Seaman many thanks for sharing and it is great to hear your story. Would you say that your strategy is more of a value add - so you'd try to upgrade a C class building to B class? 

Also, when you mentioned getting cash back at closing, was this from the previous owner forwarding you the latest rent payments? Thank you. 

@Jared Carpenter It's good that you're taking this time to be productive and form a battle plan. I recently purchased a SFR in Birmingham which I plan to BRRRR. Fortunately contracting work will begin soon and my schedule won't be too much impacted by COVID-19. Staying in close touch with my team - my contractor, property manager, long term lender - has been one of my top priorities.

Outside of this, I've been learning a lot about the commercial multifamily space, and am positioning myself to syndicate an apartment building soon. I'm spending a lot of time educating myself - namely reading, talking with folks who have experience in this arena, and researching different markets that'd be best to execute my strategy. 

@Courtney Buck best of luck and you're right; will be good to watch out for motivated buyers in this environment. 

@Greg Dickerson thanks for the info. Will be very interesting to continue to monitor LTVs going forward. 

@Greg Dickerson what have LTVs in the commercial multifamily space been pre COVID, and what have you seen them shifting towards with the advent of this crisis? 

@Courtney Buck thanks for outlining your approach. In terms of your overall strategy for the types of of properties you pursue, would you say it's mostly buildings with the opportunity for value add? Further, what is your strategy for improving a large number of units with occupancy around 90% at purchase - do you offer tenants renovated units so that you may renovate theirs, for example? Thanks.  

Thank you gentlemen!!

How do you track pay-outs during the life of your apartment building investment? Specifically, how do you best track distributions to investors, investor returns, capital account balance, etc.? Is this separate from your underwriting model? If there is a certain software that is used I'm interested to find out what this is as well. 

Thank you! 

@Grant Greene the 20% was on the all in price so roughly 22k.