All Forum Posts by: Swat Khan

Not really sure why Loopnet includes that term anyway!

Typically multifamily apartment complexes are non-owner occupied, therefore fall into the category as an investment property with loans that would fall into commercial investment loans. 

Joint venture would be an appropriate term to invest / partner with owner. 

Sounds like you are passionate in what you do! I found that if you truly love what you do it's easy to speak with like-minded people. The magic happens when you expand your comfort zone. 

I know that that this thread is a few months old, but just wanted to chime in. 

I can speak from experience that it is possible. For me, I've done them with 20+ multifamily and SFR. The key is structuring the deal or "transaction engineering" and marketing yourself.

It all starts now and you want to just get out there and just start closing transactions to build a track record. You learn the most through transactions and you start thinking creatively. 

Your primary goal if you decide to do little to no money down is to establish credibility first and find motivated sellers. 

@James Wise is right, start doing a few small deals. If you are starting with little money work on your credit score and get a line of credit through an LLC.

Work with local credit unions and hard money lenders. With banks, they will want to see tax returns and credit reports, so this is where your networking will come in and partner with a credit partner and show 19% ownership for you (they won't check W2 and tax returns on partners below 20% ownership) and show 81% ownership to your credit partner who will use his credit to get the loan. This is just the ownership, which means you still negotiate the cash flow and equity on sale (50/50, 70/30, 20/80). All of it is negotiable. But focus on getting better and better at servicing your customers, this is your banks, sellers, and partners.  

Find hard money lenders who will do 65% of ARV with little to no money down. Find deals that are 65% ARV including repairs.. meaning 65% of ARV - repairs = your strike price. You are creating value for your hard money lender.

The key is to get your name out there and let people know what you're doing. Your network will eventually build up and you will have the right pieces to get deals done. There's definitely people out there who want to give you money if you do what you say, say what you do and can demonstrate you know what you're doing. 

Those are just a few of the many ways. 

Welcome to the BP forums. You're from my favorite city. 

You will find tons of knowledge here. As my mentor says, pick " there are a million and one ways to make money in real estate .. just pick one strategy and go all-in". 

Check out the BP Podcast, it's amazing. Lots to learn from there!

Cheers,

Swat

On a straight wholesaling business model:

1. Houses = lots of deals + lots of buyers = quick closings = quicker money 

2. Commercial = less leads + more "sophisticated" buyers and sellers + numbers are bigger + longer to analyze so people move slower + inspections cost more = slower decisions and less closings per year. 

3. Just by this very basic assessment, picking from the two, focusing on flipping contracts on houses + long-term buy and holds on commercial, makes the most sense. My .02. 

1. myfirstam

2. lawyerstitle.com

Then:

1. Find owner name.

2. Skip trace.

3. Call, mail, or email them many times to get their attention. 

Well that post came out looking like an essay. 

 DFW is also awesome for single family rentals. Many A/B/C markets to play in.

Texas overall has been hot and unit prices have been consistently going up since 2008.

Lots of new construction coming into specific sub markets and rents are still going up.

As a buyer, Dallas has a large quantity of desirable Multi-family product, so there's always a deal to be found. The challenge you may face is that we are smack dab in a sellers market and sellers are asking top dollar where CAP rates are low.

They're not everywhere, but driving heavily researched sub market neighborhoods can get you deals but it will take marketing and research.  Look for mismanaged mom and pop deals and out of state owners.

These are usually the same deals you'd be doing in a down market anyway. There's also a lot of 2-4 unit deals that cash flow above 1% rule and you will need to do a solid portfolio to leverage economies of scale.

There are also less competitive 2nd and 3rd tier markets worth looking into for deals. Which again will require research.

if you're marketing, target mom and pop owners adjacent to growth areas, pockets listings from brokers, and/or wait it out until we see the balloons coming due that were originated pre-recession.

Hello BP Nation,

Has anyone bought a vacant assisted living facility with licensing in place?

Story: Seller is retiring and wants to sell all her assets and I'm working with a private investor to underwrite 5 lucrative off-market assisted living residential facilities for an acquisition in the next 3-6 weeks. These are all residential in A/B areas and would love a second opinion on valuing vacant care homes. 

All occupied homes have 5-6 residents.

#1) OCCUPIED:

- 3 are occupied and operating with consistent 12 mo P&L's with NOI year-over-year. These look and can be bought in a portfolio.

#2) VACANT:

- 2 are vacant with "licensing in place".
- Broker said, we can "fill it up on day of closing without going through any additional licensing".

Questions:
A) Are we correct to assume, since there's no income = no value? Just like any other commercial property valuation there it is a liability until it achieves break even occupancy?

B) Or should we reconsider since we can "fill it up at closing"? Broker said he verified that licensing is in place, and they were full "2 weeks ago".

- If so, what else should we be looking to do to cover our tracks?
- would I have to go through inspections again?
- Should I factor in a 1-6 month delay for marketing and lease up....of which I wouldn't have to deal with in a fully occupied facility?

Note: We have been through the headaches of trying to bring a 1960-1975 commercial building up to state standards, and that was no walk in the park working with inspections (fire proofing, sprinkler systems, windows, widening halls, updating bathrooms, etc) Also, seller will give us an 80% note which shows commitment on the part of the seller.

Overall: I am currently leaning towards only the turnkey assisted living residential homes over the vacant ones, however if the licensing is indeed in place and all I have to do is marketing, these could also be a great deal. Any opinions, comments, pointers are welcome.

Thanks in advance!

Swat