All Forum Posts by: Tommy Brant

Hi BP family - hope you're well!

Wanted to pose this as a question while also ranting a little bit.

Curious to know if I'm the only one feeling strongly about this?

Some Background:

I'm very entrenched with multifamily syndication space, and I've noticed deal flow pick up since start of H2 2024. I'm on a LOT of people's email lists, and I see multiple investment offerings every day of the week. I've syndicated multifamily offerings myself, and I have deep seated opinions in underwriting and asset management.

There's one thing I seems to be consistent across the industry that I vehemently disagree with, and that's the expense escalator(YOY increases) for insurance.

I STILL see people underwriting for 3% YOY insurance increases. It's like the world hasn't changed dramatically in 5 years. 

Despite the fact that some markets were faced with 200% YOY increases this/last year, there doesn't seem to be a justification for this UW assumption. Hell - even our midwest property with no natural disasters was a 20% increase. IMO the insurance industry will be in catch up mode until natural disasters slow down (IF they slow down?). Until then, I'm anticipating consistent double digit increases in insurance YOY.

My Thoughts:

I personally think insurance expense escalators should have 5-10%(as an avg) expense escalators for the foreseeable future.

Am I alone in feeling this way?

Disclaimers:

Let's agree to disagree to that everyone has "conservative" underwriting. 😂 

Not every deal is truly a good deal. 

Thank you,

TB

Hello BP!

I'm looking for a home builder that will build a house on a piece of land in Dale Hollow Lake (north of Cookeville, TN). 

Already have designs/drawings, and city connections (water , electric) are already present.

Please DM me any recommendations and resources. 🙏

PS - I recognize this question may be a bit misplaced by posting here... consider it my exhausting all resources possible.

PSS - My challenge is I've only seen quotes that contain a surcharge since Dale Hollow Lake is outside these home builders' normal territory. I'm hoping I can get reasonable pricing from someone who normally builds in Dale Hollow area.

Thank you in advance!

Tommy B.

Hello BP community!

A close friend of mine is inquiring on SFH rental properties in the FL market. I'm no expert, so figured I'd reach out to a community that is! 😉

Some Background:

They want to buy a rental in a market they can live in "seasonally" (i.e. snowbirds) , so rural/tertiary market is probably not preferred. Ideally it would cash flow as a LTR or MTR. STR is not out of the question, but I'd proposing the question as a LTR first and foremost. I recognize that coastal invites a whole number of issues regarding insurance, so if we can keep the markets to "coastal, but not TOO coastal", that would be preferred. Ideally, demographics would be largely positive (growing population, job growth, etc.)

My thoughts:

I suspect that leaves us with central and north FL(Orlando, Jacksonville, etc.). Admittedly, I don't know a lot about S FL, so I'm open to re-thinking my position there.  I recognize hardly anything cash flows with today's interest rate + housing evaluation, but anything that comes close (or came close historically) would be much appreciated!

How you can help me:

I'm looking for specific market + submarket + neighborhood suggestions. The more specific, the better! 🤓  (Please exclude the "class D assets in class D neighborhoods" suggestions 😊)

THANK YOU in advance to any and all talking points and suggestions for insights on FL market!

@David Cozzi

Think about what role you see yourself playing in mutifamily deals.

Real estate is a team sport and that fact is exacerbated 10x in multifamily.

If you’re going to be FINDING deals, consider books on underwriting deals, and analyzing markets. 

If you’re going to be FUNDING deals consider books on raising capital and leveraging other peoples money. There are definitely some legal lines to mind here so do your research. 

If you’re going to be MANAGING assets, look up asset management books in multifamily. A average asset manager can turn a screaming good deal into an average deal. Be above average!😬

Sorry for the generalities, but I’m hoping this helps👍

@Stephen Jones

Agree with others this looks like a good deal on paper.

The parts where I’d advise caution:

If these are expenses from the broker, there is likely being something left out of the expenses category to make NOI be higher. I suspect your true expenses will be a tad higher.

Expect your taxes to increase post-purchase. Every county is different, so be sure to mind that in your projections.

If this is a screaming good deal, you can afford to hire someone else with due diligence reports. May be worth shopping around until you find one that’s done 70 year old builds. Mind any potential code violations, deferred maintenance, and your big ticket capex items(re-paving parking lot, loose handrails, amenity repair, roofing, scope plumbing lines, etc)

It’s unclear to me if you’re buying this with your money or other peoples money. If OPM, you’ll need to construct a sound business plan. Only reason I bring this up is because 1/1s are the hardest to justify rent increases for. 2BRs have the best potential increases for rent increases.

If you’re buying this with your money, hold it forever and you’ll look like a genius 🧐 haha

I know I said a lot, but I hope there’s something in there to help you analyze this deal.

Best of luck on this project 👍

@Aziz Bangurah

Congratulations! Great questions.

Don’t feel bad if you don’t have everything figured out by the time you jump out of the airplane.

I personally am a fan of the PM handling everything, but I would recommend interviewing them and 2 others. Google interview questions for a property manager, and field them all the same questions. Be careful of the potential “fee you-to-death” answers.

My personal opinion - I’ll pay higher rates and low fees VS low rates and high fees. I like to have a predictable income/expenses and the heavy fee model is riddled with surprises 🤮

I like having a PM because I effectively sacrifice no quality of life for having a rental.

If I were in a position where I could trade time for equity, I would consider doing the property management myself.

Hope there’s something in there to provide guidance. 👍

Here’s to your first of many rentals 🍻

@Jason Malabute If your looking for easily available, high volume, recently sold data I’ve found that Reonomy is the best for this. It has a 7 day free trial, and during this time you can export 50 records at a time based on how far you’re zoomed in on a map. 
I recently did this to grab past 5 years data on 50-100 unit apartments complexes as I’m trying to understand some different sub markets in the southeast. 

Yardi and Costar don’t give any sort of trial, so they’d effectively ask for $2k+/mo for you to see recently sold info. 
 

If you just want to see what’s on market, there are numerous platforms referenced above. My experience has been this is super low inventory, and doesn’t give you an idea of $/door or $/sqft for multiple asset classes that I’m trying to research. 

Hope this helps!

Thank you @David M. for the resources. I will check them out! Cheers,

I get that, @Justin Goodin I didn't want to overcomplicate the question with a small army of different roles in this example, ha

Thank you for your input, @Brian Adams! I appreciate you taking the time to provide the breakdown. I like to see how you value the different "lanes" of a syndication deal