All Forum Posts by: Russell Gronsky

On the flip side, if you guys are fans of Michael Blank's Syndicated Deal Analyzer, why do you prefer it over Real Data's REIA Professional?

I'd like to refine the question, if I may...

I'm looking for analysis software that will ingest financial statements and spit out metrics about the property. Manually entering items off the rent rolls and financial statements into an excel sheet is a pain. I found redIQ and AxioMetrics to be promising based off their websites and some testimonials but I was curious if anyone has tried either option and what their thoughts are...or maybe neither is worth the effort? 

@Todd Powell, I couldn't agree more. These are scum of the earth who think the world owes them something while they contribute nothing of value.

So an update to the situation:

After a significant amount of research and phone calls to sheriff, multiple lawyers, police, court house and a few fellow investors, I gave them an unconditional 3-day notice to quit.

Once the courts open, I can get them out...once the back log of cases gets worked. 

The craziest part of this to me is the sheriff told me point blank, that they are not doing any evictions right now. None. 

A part of me understands all the reasons, not the least of which is health of the sheriff deputies who have to actually do the eviction. However, there is a part of me that is absolutely furious that scum like this can just take advantage of me and because I follow the law, I get to just smile while I get hosed by the process. Guess I'll just chalk it up to this being part of the business. 

Thank you all for the constructive feedback. It has been very helpful.

Another CA sob story but after searching the forums, I find situations not exactly like mine so here goes.

This starts out same as other stories, I had a tenant on a lease, she moved out and left her daughter and her husband in my apartment. Turns out, they have been living illegally in my rental for a few months. 

Here is where it twists a little different than other stories I found in search: They have not been paying rent and now that the tenant who was on the lease moved out, they told me to pound sand and won't pay anything until they get evicted.

With the current corona situation, who knows when evictions will pick back up again.

So my question is this, since they never paid rent, never been on a lease and won't pay rent going forward, can I have them removed immediately as trespassers?

Thanks in advance.

Every loan you do comes with a "Due on sale" clause that basically says if you transfer title to another entity, the bank can immediately call your loan. Doesn't matter how you do it but if the name on title changes, that clause is triggered and you can find yourself in a world of problems. This is why it is paramount that you get your bank's permission before you transfer title with a mortgage on the property. Normally, banks are okay with it if you get their permission.

Sounds like unfortunately, your bank is NOT okay with it so you'll have to refi with another bank to get away from this one. So call around, start with local banks or credit unions and ask them if they are cool with doing a refi and then letting you move title to your LLC.

Even better, maybe the bank will do the refi in your LLC's name to begin with? This is highly unlikely, by the way....but worth asking. The worst that will happen is they will say "no".

@Allyssa McCleery, thanks for the tip of lenders. I thought about asking for interest-only financing for at least a year (or more if a lender will agree to it) so I can get the place built/rented but defer payments...that's an even better idea. 

However, about the CAP rates....the comparable building 2 blocks away is using the market CAP rate (a little fudging of numbers but not as bad as I've seen from other sellers) but it hasn't sold in over a year. Now there might be something very wrong with the building but I'd still like to use it to justify to the seller of this shell that the CAP rate needs to increase since the comp is getting no action at current CAP rate. Now comes the art of the deal that I need to get just right. If I suggest a CAP rate that is too high, the seller will balk but if I suggest too small of a CAP rate adjustment, I'll leave a lot of money on the table so I was hoping for some insights on how to go about coming up with a higher (but not too high) of a CAP rate so I get the seller to agree and stay in the deal.

I'm also still working out several scenarios for the second issue with lost revenues. The potential of deferred mortgage payments is a nice Ace in the hole if I can get a bank to agree to it but I need to work out several scenarios assuming I won't get that kind of deal. I've been buying rentals and I've been flipping for the last 14 years but it's all been residential stuff so not sure if a bank will be enthused at giving me a payment deferment for 12+ months on a shell that needs to be built. It's a tremendous opportunity but I think the only activity in Real Estate that comes with more risk than this, is doing brand new construction so the pool of banks interested in this kind of opportunity will be small, even before asking for all the payment relief.

So I was playing with some ideas over the weekend on how to accurately evaluate a commercial shell and so far, this is what I came up with:

I can do an analysis on what the building should be producing, based on current market rents in the area, expected expenses and come up with what the NOI should be. Then, I can apply the current CAP rate for the local market and come up with what the building SHOULD be worth. Then, I'd work backwards from that number, subtracting out all the construction expenses to actually build the apartments.

This gets me to a good start but I feel like I'm missing some pieces here.

First off, there is a fully built and rented out comparable building 2 blocks away that is currently for sale. It has been on the market for over a year now so I believe the asking price is too high. While the asking price of that building is a little higher than it should be in my opinion, it isn't too much over what it should be and with the multi-family space being so hot, I'm surprised it hasn't sold. So this is one indicator that despite the decent NOI, the market has not been willing to facilitate an exchange of owners for over a year now. Long story short, I think I need to apply a higher CAP rate to the NOI I came up with on my analysis to get a more accurate (lower) property value once it is built out and rented out. But if the market CAP rate isn't accurate, how to determine the accurate CAP rate to use?

Second, while I have the numbers for how much each apartment would cost to build, my mortgage on the shell would be due each month and I will have 0 income until I can build out and rent at least 1 apartment (assuming the city would be willing to grant me a CO for each apartment completed, instead of making me build out the entire building before issuing me one CO for the whole property) and find renters willing to move in at a discounted rate until the construction is over and they won't have to deal with the daily noise. So I would be paying for construction out of pocket and for the mortgage out of pocket so I believe I need to factor in lost rent due to construction into the price I'm willing to offer for the shell. But how best to calculate that? Should I take the monthly gross rental income for every unit, multiply that by the time it would take to complete the entire project and deduct from my offer price? What if the city is willing to give me individual CO's for each apartment as it completes? Factor that into the price reduction on the offer, even if I can get partial rent from tenants that are willing to deal with construction noise? I'm guessing the answer here is, whatever the seller and I can agree to is how to do it but is there an industry standard for how to do this I can reference?

Are there other costs/lost revenues I need to account for in my analysis before making an offer?

@Davy Singleton, it is 8,076 sq ft. The unit mix (prior to the full gut) was 9 units that are 2-bed 1-bath at approximately 750 sq ft and 1 unit that is 3-bed 1-bath at 1,194 sq ft.

Hey all,

I'm hoping a more seasoned commercial multi-family investor can help me with this issue:

I found a building that used to be a 10-unit apartment building but the previous owner gutted it completely and now it is just a shell. It has exterior walls, windows, exterior doors, subfloors and a roof. I can do an analysis for how the building should perform once it is built out and rented out but how do I figure out how much this shell is currently worth?