Skip to content
×
PRO
Pro Members Get Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
$0
TODAY
$69.00/month when billed monthly.
$32.50/month when billed annually.
7 day free trial. Cancel anytime
Already a Pro Member? Sign in here
Pick markets, find deals, analyze and manage properties. Try BiggerPockets PRO.
x
All Forum Categories
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

All Forum Posts by: Andrew Schena

Andrew Schena has started 4 posts and replied 44 times.

Post: Tax foreclosure gut rehab questions

Andrew Schena
Pro Member
Posted
  • Developer
  • Boston, MA
  • Posts 45
  • Votes 23

Hey Joshua,

A couple of questions I've got off the top is how many square feet is your building?  How good of a relationship do you have with your GC and as a general average, what is he charging per sq ft for basic rehab of low end apartment finishes?  That will give you a rough shot idea as to what your full guy rehab costs will be.  I advise you to obviously break down each construction cost to get your real budget etc, which you should have to track progress in conjunction with a payment schedule as to not get too far over your skis during the process  

I think 6 months is much to short a time frame to rehab 6 units.  I think you're between 9-12 months.  Again, it depends on your GC and his subs.  Here in Boston, 6 months would be a dream to get 6 units done.  Then again, if you're paying top dollar for your GC, maybe he can get it done.  You need to have an honest conversation with him.

Regarding layout, who cares how they're laid out now if you're doing a true full gut? If you are you're going to be removing most every wall except structurals. If you plan on keeping the existing layouts, then that's another story. If you are doing a true full gut, you have the opportunity to "re-layout" each floor plan to maximize the amount of space, therefore possibly increasing your bedroom counts, therefore increasing your cash flow and value of your building. You'd need to hire an architect to layout those floor plans for you. A good architect will provide you a full set of construction docs as well, including structurals (if needed), window and framing schedules. If you indeed have the rail car layout (I'm personally unfamiliar with) and you can't get as much money for them, then it's a perfect opportunity to maximize the layouts and bedroom counts. Just be sure to nail down those construction costs and don't let them get too crazy. You need to find the happy medium between cost and ROI.

Best of luck!

Post: Deal Structure on Spec Homes

Andrew Schena
Pro Member
Posted
  • Developer
  • Boston, MA
  • Posts 45
  • Votes 23

He may not be trying to slip one past you, but is presenting his Standard Operating Procedure.  If this is the first time you've done business with him like this, and vice-versa, your're moving out of the friend role and becoming a biz partners. Friendships can go out the door really quickly in these situations. Definitely address the subject up front before things get further along, or else you'll resent it and him throughout. Good luck!

Post: Deal Structure on Spec Homes

Andrew Schena
Pro Member
Posted
  • Developer
  • Boston, MA
  • Posts 45
  • Votes 23

IMO I think the builder should be building at cost if its a 50/50 partnership. This is his way of making a paycheck during the process of the builds, especially if he's not building profit into his subs prices. I dont disagree with it normal developer/builder relationship, but in a 50/50 deal you either take the same, or it comes out of his profit in the end.  Maybe you structure a different percentage?  Who found the lots? Is he bringing more to the deal than the construction?  To me, you're paying a GC Fee, if you will, and he gets paid to do the construction, and make 50% of the profit. If you're putting up the cash and carrying the loan, I would take issue with it. Now if you found the deal too, I would really consider changing the deal structure. 

Post: Determining multifamily expenses/deal sponsors

Andrew Schena
Pro Member
Posted
  • Developer
  • Boston, MA
  • Posts 45
  • Votes 23

Insightful and much appreciated!

Post: Starting out in Boston

Andrew Schena
Pro Member
Posted
  • Developer
  • Boston, MA
  • Posts 45
  • Votes 23

Hey Josh,

Welcome to BP!  Depending on the area of Dorchester and Hyde Park, you can find a multi for $500K.  The east side of Dorchester will be tough, as pricing in Southie is driving people to go to Dorchester for more affordable deals.  Hyde Park you can find some pockets of multi fan to fit that budget as well, but you've got to decide what neighborhoods you're willing to invest in. Have you considered Quincy?  Great T stops, highway access, etc.  Just a thought.  We own two 2 family's in Wollaston, and they've been great. Either way, touch base with me tomorrow or PM me and I'd be happy to sit down with you and review areas and details.  

Best,

Andrew Schena

Post: Creative Investing: 0% Interest Deals?

Andrew Schena
Pro Member
Posted
  • Developer
  • Boston, MA
  • Posts 45
  • Votes 23
Originally posted by @Account Closed:
Originally posted by @Christopher Cole:

It's just a balloon payment of $70k after 10 years.  If you can't figure out how to get just $70k to keep the apartment complex after 10 years, you must be a lot better at making deals than apartment management :)

 What?

 In Sue's defense, Chris, you never mentioned the $70k balloon note at the end of term. 

Post: Fees for Private Placements?

Andrew Schena
Pro Member
Posted
  • Developer
  • Boston, MA
  • Posts 45
  • Votes 23

@Bryan Hancock & @Giovanni Isaksen

Thank you both for your insight. It's very much appreciated.  

Post: Fees for Private Placements?

Andrew Schena
Pro Member
Posted
  • Developer
  • Boston, MA
  • Posts 45
  • Votes 23

I've been raising capital now for almost 5 years and placing private money into structured equity positions in our properties LLC's, which have all been flips. My question, however, revolves around a potential fee structure. Do you think charging fees is appropriate? What are your opinions on what an alternative asset class like these should charge for fees, if any? Full disclosure, we do make a majority of our money with our own equity position in the LLC's. I am searching for answers about collecting funds up front on acquisitions and management of the assets while under construction. Sometimes these properties run 6-9 months, if on time, and there are no paychecks in between, so we started discussing the issue.

In examining other alternative asset classes, such as hedge funds, venture capital structures, and some other alternative assets charge a 2/20 fee (2% of funds held and 20% profit earned, with some funds even higher on the profit end). But I also know that REIT's return 90% of profits, but have layered fees.

I've seen larger syndication deal memorandums charging acquisition, management and asset disposal fees.  If we were to charge fees, what is fair?  Also does a fee get deducted out of their return of initial equity, or out of profit, or both, depending on structure.  Maybe I've been listening to too much Bloomberg radio.  

Thank you for all your thoughts in advance!

Andrew Schena  

Post: Economics of Multi Family New Construction

Andrew Schena
Pro Member
Posted
  • Developer
  • Boston, MA
  • Posts 45
  • Votes 23

I ran rough numbers and using the 50% rule, as your maintenance costs should be lower due to new construction, I come up with a 5.1% IRR. ($2M invested to a $7M project). Can new construction drive higher rents? An extra $100/unit can get you to a 6.5% IRR. Not sure of your market or competition, but I would hope it's solid in both areas. It's also a lot of risk on the construction side to be held to budgets unless you've got rock solid budgeting and contractors.

Post: R-15 zoning

Andrew Schena
Pro Member
Posted
  • Developer
  • Boston, MA
  • Posts 45
  • Votes 23

Before you can legally make the existing 3 unit building a 4 unit, you need to speak with your building and/or zoning department to receive their blessing. Otherwise, you could have insurance issues, if anything were to happen. 

Your best option is to get the full property performing before you move in, as your occupation in the larger building does not enhance your cash flow. Start on the two family and get them rented is my opinion.  While your rehabbing, start the process of reclassification of the 3 family to a 4.