All Forum Posts by: Scott Anderson

Are you saying the new tenant basically wants new flooring when he resigns a lease in April? This is extremely common and typically would be provided by the property owner. This is a typical tenant improvement allowance (amount provided per square foot can vary significantly from market to market and depend on building type/quality). If the tenant is saying, “I will sign a new three year lease at this property starting in April if you provide new flooring” then I would almost 100% agree to this and it would be the landlords responsibility. New paint and flooring is a pretty typical lease renewal tenant improvement in commercial space.

The rule is basically that you can estimate NOI is 50% of the total potential rent at the property. It would include all opex, such as management tax insurance utilities as well as vacancy, concessions, collection loss. Just a rule of thumb to quickly analyze a property but shouldn’t be taken as fact. Need to see actual historical financials.

Basically. I’ve only ever purchased a property in my home state so I don’t have experience with setting up LLC elsewhere. The process of preapproval and getting the loan can/will occur over the same time as the LLC setup. Obviously those two things will need to happen before close

You will need insurance in the name of the partnership (LLC) and it sounds like this is a new partnership so anybody that owns more than 20% will have to personally guarantee any bank loan. Don’t try and get fancy with a quitclaim deed or whatever you’re thinking. Just create an LLC and have initial capital contribution into the LLC be enough to fund acquisition (down payment + closing costs + legal funds to start LLC) and have operating capital from day 1.

Why is he getting turned down for financing just because it’s commercial? Is he trying to get a non recourse loan or does he not have enough money to qualify?

This is a pretty broad question. Depends on your experience and how much free time you have to commit. Also depends where the properties are located. Long distance investors should use PM from the start. I personally have only used PM as I don’t want the hassle of owner managing the properties. If all the properties are close you can probably manage 10-20 houses on your own if you have a good amount of free time.

@Steve Weihe most of the multifamily stuff that has been on the market a while is located in rougher parts of town or is overpriced. I've looked at every multifamily on the MLS probably multiple times. If you want to PM me whatever you're looking at or have questions about I can give you my thoughts. I have no interest in buying anything currently on the MLS so no worries there.

More than happy to critique as well Dennis. I’m a commercial appraiser so I’ll probably be more conservative than most. I do a ton of larger multi family work and I’ll give it to you straight.

I think it would depend on what it actually took to find the deal and what else you bring to the table. Just finding a deal that is on the market and bringing partners in isn’t really worth 5-10% of the equity if this deal is accessible to others. Do you have some kind of expertise that warrants this? Especially if you’ve never spearheaded a partnership/syndication of this type i would be hesitant to give you a substantial amount of equity. I think a waterfall setup would be much more fair.

@Richard Olshove let me preface this with the fact that I'm not an investor in SFRs in Huntsville. I was born and raised there and that is where my rankings come from. I'm involved in real estate enough to know that sometimes it is difficult to invest when you have intimate knowledge of a place. I, personally, would not invest north of 565 and east of Jordan Lane but that is where you're likely to find properties that meet the 1% rule. In terms of decent rent/sale price ratio, I like the Parkway estates area near the intersection of Byrd Spring Road SW and S Memorial Parkway. You may also be able to find enticing deals in the square created by S Memorial Parkway, Mountain Gap Road, Hobbs Road, and Bailey Cove Road. The issue with the Huntsville market as an investor is that there are a ton of people in Huntsville that make $75-100k a year and real estate values are significantly lower than other metros. Due to that, the higher end apartment/house renters are generally going to buy a house rather than rent an apartment for $1,500 a month. Also, jobs here are extremely stable and (other than active military) people aren't as concerned with their job moving, which might stop them from buying.