All Forum Posts by: David Friedman

Hello BP,

I've been asked by a religious organization that owns several acres of land to help them develop an 80+ unit, 55+ community.

I've never developed on "Tax Exempt" religious property before and I'm not sure the best way to go about this.

The goal of the religious organization is to provide income to their organization from the rent and thus creating long-term sustainability for their organization. At the same time, they want to provide housing opportunities for their community.

They are looking to us to bring capital, construction financing, construction company (Basically everything).

Some questions I have for BP:

1. Is the best vehicle for this partnership going to be a JV?

2. If they do not want to split off the land from their place of worship, will that be an issue? I'm guessing the lender and investors will want this as its own separate parcel. (This one is really stumping me).

3. If the religious organization has some capital, but not a lot, and you are expected to bring the rest of the equity as well as everything else that comes with developing, what is a fair split to bring our development skills and resources to the table? Fees? Equity? How much?

4. From a moral viewpoint, I'm not sure if I want to own equity with a religious organization. I don't think I have it in me to foreclose or sue them unless they were extremely malicious in their actions towards me.

Thank you for any advice you can give!

@Edmund V.

A non-judicial state such as California allows foreclosure auctions to happen very quickly. Once you’re the highest bidder on the property, you own it. Some judicial states allow home owners who defaulted to contest and or pay the overdue balance up to a year after you’ve purchased the property at foreclosure auction.

We are assembling adjacent parcels in Southern California and I am looking to connect with other investors with assemblage experience. Any tips or experiences you could share would be helpful.

Some background on our current assemblage:

We have purchased a large piece of land, a few multifamily properties and an office building. All adjacent to each other. Our current strategy is to purchase properties in order of the best deal. We have reached out to the owners that don’t have their properties on the market to see if they are interested in selling. If someone lists their property for sale on the open market, then we pursue the property (Within reason) so that other people can’t block our assemblage.

We are using different entities to hold  title to the properties.

If we purchase enough of the surrounding property, we would like to approach the city and rezone the land from office to mixed-use (Residential over retail).

Any thoughts or strategies you have employed to make an assemblage successful? Thank you BP!

We have one section 8 tenant that we kept when we purchased a multi unit in San Bernardino. Her rent is higher than everyone else's and it's almost guaranteed. She also keeps the place clean so it's no different to me. Other than that, most of my tenants are responsible, hard-working people. Inevitably when you manage so many units, you're bound to get a bad apple here or there, but I've had no major issues that I think sets San Bernardino apart from any other surrounding city. Most people's fear to even research San Bernardino as a possible place of investment has given me great returns over the years.

That being said, if you don't know what areas are better or worse than others, you're likely to overpay for multifamily in San Bernardino. I recommend you analyze some deals out there for practice and maybe you'll end up liking one of them.

I grew up in Yucaipa. Multifamily is pretty sparse in general in Yucaipa and Redlands, and even more so finding a good deal. I purchase most of my multifamily in San Bernardino. We just purchased a 6 unit last year and we were able to basically double rents before new state rent control laws kicked in. I stick mostly to commercial now because of residential rent control. I’m usually looking for pretty extreme value-add deals and multifamily with existing tenants is pretty much a no-go for me now. I do see some vacant multi-units occasionally here or there such as when the owner occupies one unit but is selling so they can move out.

I’m always looking for good multifamily deals, so if you ever find one, but can’t take it on due to capital restraints or whatever reason, let me know. I do syndicate larger deals with multiple investors as well.

I do have a deal lined up. $1,050,000 for 26,000 sq. ft. not including the basement space. I’ve never developed or purchased a hotel space before, but I do own several adjacent properties. I own a building on the same block that is 30,000 sq. ft. and we are currently converting the ground floor to retail and upstairs to creative office. The historic building has a parking lot and we could further develop that lot (Zoning allows 100% lot coverage).

I’ve remodeled several historic houses before and I’m confident I can return this property to life. It’s mainly available capital and hotel experience that I am lacking. Maybe we could discuss?

@Michael Ealy, Have you ever incorporated a historic building into one of your hotel developments? I'm interested in converting a 1920's building into a boutique hotel and developing a brand new hotel that would be "attached" in an effort to attract high end customers. The building is in a dense downtown area and I can purchase it for peanuts including some excess land (For the new hotel development). Thoughts?

 Stable in the bank’s sense of the word means you are collecting rents from a property consistently for 6 months to a year while owning it. So when I talk about stabilizing a property, I’m talking about buying the property, getting new tenants and pushing up rent to market and then holding it for a while. There are all different kinds of loans out there for self-employed people. You’ll need a mortgage broker to help out. Refinancing is always easier because you have all the time in the world to get through a complicated purchase since you already own the property.

15 day close, cash or hard money, but I always use leverage to purchase and to hold. Once I stabilize the property, I’ll refinance out with East West Bank. It’s extremely hard to get a cookie-cutter loan from Wells Fargo or any other conventional bank as someone who is self-employed.

San Bernardino, CA. My favorite place.

I just picked up 6 units for $550,000 and they all rent for $1,000 each. Anybody that says you can't achieve the 1% rule in California isn't trying hard enough.