All Forum Posts by: Chris Winterhalter

@Kim Handelman 

Larger multi-family and commercial properties are more difficult.  Under 50 units is easier but you still deal with a great amount of entities owning the assets.  

You can spend a lot of time researching.  Once you know the entity name you can search the states SOS website & sometimes pull up articles of incorporation, filings, ownership names etc.  However this can also turn up more questions, with other entities owning that entity, old addresses, property management addresses, attorney addresses etc.  CoStar probably has the most accurate information however won't tell you everything either (if you have a broker with access have them pull a report).  

Does the property have any for lease or property management signs?  You can even confront one of the tenants outside & ask for their management contact.  However the best bet from a scalability perspective is being well networked with brokers, property managers & investors in the area.  Somebody probably knows who owns the complex & has a contact number.  

Also mailings are less likely to get something accomplished, phone calls & face to face interaction are more effective in that space.  Good luck! 

Twilio is developer based & not really consumer oriented.  However it has a lot of functionality for you online marketing heavy investors.  Numbers are a few bucks a month & the minute pricing is cheap.  They also have a lot of features, forward to this number, ring 10 seconds, forward to another, hit voicemail etc etc.  

I just signed up for Phone.com based on a friends recommendation (it also offers fax).  I've used Twilio & Vonage in the past depending on the need.  

@Account Closed 

Cap rates have indeed compressed across all CRE asset classes however if you can lock in solid non-recourse low interest 10 year fixed debt/30 am then that 5MM, B class (stable or growing) apartment complex, 7 cap deal is a solid deal. Interest rates will definitely affect cap rates, but so will inflation. It's tough to predict the future however if well managed the investment will provide solid returns.

Cap rates of 10+ don't really exist on multi-family of any size today.  And single families with cap rates don't exist past that point either (if you think they do then truly do a 20 year analysis, have professional management in place or pay yourself for your time involved, & then calculate the return).  Now the return on a single family might be strong because of appreciation growth but that's a whole different topic.  

@Roy N. @Huy N. 

I will note that if you are buying out of state from your investors or yourself that most states will require the business to pay the individual state tax even on flow through entities.  States don't want to go after individuals that are not residents essentially.  

@Jeff Greenberg 

I hope you are doing well.  I am very familiar with the area.  I grew up about 20-25 mins away from the campus.  Are you looking at a deal in the marketplace?  

@Huy N. 

Each partner is issued a K-1 based on ownership percentage & operating agreement structure (if you set up a LLC with a partnership tax structure). Everything flows through the entity to the ownership group. The K-1 flows through to the personal returns. Spend a little money and talk to the right lawyer & CPA. You definitely have to be careful raising funds so I won't give legal advice on the syndication portion (although it's cost prohibitive at your deal size). Are you putting money into the deal? What is the role of the other 4 investors?

@Mike Oconnell 

Some states will have a form they upload to their government site.  I searched Virginia briefly and found something (although I would verify).  And as Wayne & Mike stated understanding your mechanic's lien laws is very important.  

And remember even with a good relationship it can be difficult getting lien releases after final payment has been issued.  Set up a system with progress payments (partial/conditional lien releases) & final lien releases (unconditional/final lien releases).  If you have a system set up you are more likely to follow it.  If you are an owner GC you might have several dozen contractors/vendors.  That's a lot to keep up with while managing everything else (without a system set up).  

@Brit Foshee 

First nice job on the residential property sale.

For commercial financing it really depends on your deal size & property type.  Commercial is very broad & many lenders specialize.  Deal size & property type will dictate your direction.  

Under 1MM-2MM in loan size 

Then you need to find a local/regional bank or credit union.  Loans will generally only be fixed for 3,5,7 years & many with balloons.  Amortization is generally 20 years with some going up to 25 years.  Full or limited recourse.  

Find the lenders who are lending on this type of property in your area on a regular basis.  Talk to 5-10+ lenders about your scenario.  Give them as much information about your personal situation as possible.  They will tie the loan towards the property but also your global income.  Talk to brokers & investors for referrals on who is currently funding their deals.  The more banking contacts you have before you get the deal under contract the better.  

Over 1MM-2MM+ in loan size 

Then you can enter the capital markets with CMBS, Life Insurance, etc debt. This will generally be non-recourse but will come with slightly higher premiums under the 5MM space. Closing & legal costs are higher than local banks. However you can generally lock in 10 year fixed rates. Underwriting will be different from a local bank. Net worth generally needs to equal loan size.

Find the lenders who specialize in your commercial property type.  Find a local or region firm in your area as well.  Reputation is everything & you want to make sure you are working with a firm that understands the process (especially since it's your first deal).  Be as honest with them as you are with the local bank.  Don't leave details out and run by any scenarios that you think might be challenges.  

Be as organized as possible with your offering package & executive summary.  Organization goes a long way to streamlining the process (with all lenders).  Make sure you understand what the lenders want when you get the deal under contract.  Good luck! 

@Jordan Sloan 

If you are trying to market your deal you need to do that in the MarketPlace section not the Real Estate Investor Marketing Help & Advice.  If you are actually seeking advice then the forum is probably better than email until we have more information.  

@David Wooten 

Is it titled as one property?  

Every property will be different but for a Class C property with rents in that range you will have higher operating expenses.  Maintenance & capex will depend on the current condition and planned rehab.  If you are able to do an extensive renovation then you will enjoy lower operating expenses.  However tenants in this class & range are much harder on properties than say a B class at $1,000/month.  But cap ex will depend on your rehab & planning efforts.  If your roofs have 3 years left, then that should be added to your capex over the next 3 years.  Let's say it's 80k to replace the roofs, well that's $2,222/month.  Setting a percentage can get you into trouble with Class C buildings.  But I understand you are trying to underwrite the deal.  1.5% is a ridiculous number and shouldn't be used though.  5 service calls can eat up that number before you actually have a repair.  Your local broker doesn't own real estate or just wants to sell the deal (but I'm sure he's really nice).   

With a 100 units you gain some efficiencies and can potentially have an on-site manager or on-site maintenance man.  However at the rent level you don't have a ton of available cash so it needs to be the right person, right fit etc.  

What's the asking price?