All Forum Posts by: Ryan D.

That's a good question, and comes up regularly even in smaller transactions. If you "win the war", with the idea that you have no intention of actually paying what you offer, are your morally/ethically ok with this (though many buyers do this and the seller likely expects it, especially at this level of transaction). You can always tell the seller that suspect what the other buyer is doing, and that your offer is firm and you will not try to renegotiate after it is accepted (putting appropriate language in the contract reflecting this). You can also expect to be a backup offer, again firm with no later-renegotiating, that looks favourable if the other party tries to lower the price after signing the contract. If the other party wins with an obviously unrealistic bid, and then tries to lower the price with out any justification (I.e. not supported by something found during due diligence) this will sour the transaction, the seller may refuse and your offer looks more attractive.

Make sure it is in the contract that you can terminate your relationship with the management company without having to pay any kind of penalty! If you do hire one that you later have to fire for doing a crappy job, you don't want to be stuck paying to get rid of them!

Keep it up Lee, this thread is fantastic!

Thanks Andrew. 2 are in CA, 3 in Fl. I'd be interested in one LOC covering multiple properties in a given state if I could find that - then I'd be able to have just 2 lines to cover all my properties, rather than 5 lines. Do you know of any lenders who will do this?

Hey BP community, I am looking for recommendations for a bank/credit union/etc that will write a line of credit against a whole portfolio of residential properties, as opposed to against a single property at a time.

I have 5 properties with a good amount of equity that I want to tap, and currently I have RELOCs against two of these. I have found that the smaller RELOC ($30k) carries a much higher interest rate than the larger ($110k). To avoid having to deal with multiple lines at various interest rates, I would like to find a lender that will offer a single line of credit against my full portfolio (which consists of 4 MF and 1 SF, in California and Florida).

I've called over 20 banks thus far, and have found lenders who will write me a loan against the full portfolio, but thus far I have not found someone who will offer a line of credit. HELP ME BP COMMUNITY MEMBERS!!!!!! Have you come across any lenders who will offer this???? 

Thanks in advance folks!

A lot of people have suggested using QB for tracking your rental income & expenses - the problem here is that you still have to enter all these transactions manually. That's fine when you only have a few units, but quickly becomes impractical as your portfolio grows - manually entering 5 units worth of transactions each month is fine, but 15, 50, 100, etc, not so much. 

Is there a software solution that will automatically import income & expenses from a management company's software? For example, if someone has several management companies who all use Appfolio, is there a software package that will automatically connect to the management company & download/import the transactions each month? I'm thinking something along the lines of what mint.com does.

The numbers I posted have vacancy (3 turnovers per year) and maintenance ($100/unit/month, which has been my typical experience) accounted for.

I don't own anything larger than a 4 plex (this is my first foray into commercial multi-family) and all those clear $200-225 per month per unit. I'm wondering if the profit per unit is even a metric that I should care about if the overall ROI and cash flow are good???

I need some help from the community for a gut check on my analysis. I'm looking at a 14 unit complex with rents that are fairly under market. With rents AS IS, the deal (with a purchase price that I think is reasonable) is yields:

• CCR of 12%, $1,150/mon cash flow
• Cap rate of 8.7% 
• but the profit per unit is only $82/month!

Once the rents are brought up to market rate, the property performs really well:

• CCR goes to an excellent 25% , $2500/mon cash flow
• Cap rate goes to 12.5%
• he profit per unit goes up to $170, better but still fairly low.

I'm torn here, the CCR/CapRate/Cash flow has great potential, but the profit per unit is terrible (I make $225-250/mon/unit on all my other properties). Wondering what the community thinks about the profit per unit metric?

Albert & Marc - excellent information! Thank you very much, that is definitely helpful! Can anyone recommend a good commercial realtor in the Seattle-Portland metro areas who deals with smaller apartment buildings/complexes?

Jennifer Lee - that's seems bad for you, isn't it? If you bought at 5% cap rate, then moved rents up, and now the building is a 9% cap rate, this can happen without changing the valuation of the property at all, yes? You've basically doubled the rents, but all you have to show for it is a higher cap rate rather than keeping the same cap rate and now having a higher valuation (& equity). I quests that's really the focus of my question: what cap rate will a bank use to value a building? Do they always use the cap rate at which you bought the building, do they use the "going rate" for the local market (and how does one find this number???), or do they have some bank-specific number. Basically, I want to be able to plan a refinance after raising the NOI, and I want to be able to predict by how much I would raise the value of a building, and to know that I need to know the cap rate by which it will be evaluated. Yes? Maybe I'm missing something here.