All Forum Posts by: Vince Liu

Quote from @Taylor L.:

Networking and broker relationships. Today all of our deals come through a network of established relationships which took years to build.

Thanks for the insight, Taylor. Are the brokers you were referring to mostly representing the Seller? Or do they represent you or both sides? 

Hi BP family and MF investors,

I'm looking for a community to have some forms of meet-up on a regular basis for some of our newer MF investors to hold each other accountable in actioning on building our portfolio and business, as well as sharing experiences and knowledges. 

There are not much multifamily investors in the market that I invest in so I'm trying to find a virtual community to be a part of. If anyone knows of any, please let me know! Thank you!

Vince

Quote from @Dustin Beam:

Quote from @Vince Liu:

Quote from @Dustin Beam:

Originally posted by @Darryl Matthews:

@Dustin Beam I have run into this multiple times. Obviously comps always help. The most successful I've been is hiring an outside appraiser. Yes there is an extra cost but I've been able to compare and use the outside appraisers comps to change the opinion. 

Thank you for the advice, we will consider that if needed. Of course I'd love to avoid that, but agree it would be worth it if necessary. 

We really just need him to reevaluate the CAP rate. The appraiser provided a 10 year table showing cap rate changes on A-D classes. He only shows a compression of 0.25-0.5 percent from 2012 to today. That is crazy.

 Hi Dustin - curious to say how did it end up? I'm running into the same issue so wanted to see how did it work out at the end. I feel like you can always sell it, but at the end of the day you would want to own real estate instead of just flip real estate right?

We ended up just going to a different bank. 

I wouldn't normally do this, but I think it's worth letting people know...but the original bank was Bank of the West with Joe Lally as our loan officer. We ended up just being willing to go with the lower appraised value and accepting the LTV of that value. But after paying for expensive appraisals, they came back and said they did not like our level of cash reserves and denied the loan. This was after they received ALL of our financials, so our cash reserves was well known. Furthermore, I asked Joe point blank 3-4 times that if our reserves were not enough, how much would we need to get approved. He hemmed and hawed every time. Basically is was a BS answer. I will never consider him or Bank of the West for future business. Sorry for the rant, but feel like it needs to be said!

That's not good. It's very unprofessional to let that happen. Thanks for letting everyone know! Did you guys end up challenging the appraiser's CAP rate and was it successful?

Quote from @Darryl Matthews:

@Vince Liu I meant your own appraiser. I did not mean out of town more so a third party. Does that make sense? 

 Hi Darryl, yes it does. Thanks for the clarification. Do you usually hire someone to appraise the property before you start the refinance process? 

Quote from @Dave Halevi:

Quote from @Brian Pownall:

Lot of good resources to estimate potential costs. Talk to a local PM/GC in regards to your business plan and estimated costs (ie new cabinets, new flooring, etc). Also some free resources like Heritage Construction. 

On sales price, you should estimate what future NOI will be and use your best estimate of submarket cap rate plus some expansion on that number to be conservative across a hold period.

 I have all the numbers on the attached table.
according to the equation, the sale price is the NOI / Cap rate, which doesn't make much sense bc it's lower than the purchase price.
So, I'm not sure what I do wrong here 

I think you need to figure out the prevailing Cap rate in your market for this asset type to project your projected sale price. The property's current Cap rate is your go-in cap rate, that can vary from property to property based on its value-add potential, location, year-built, and many other factors  

Quote from @Jeffrey Donis:

Hey Kevin,

I would say getting on the phone with brokers and following up with them over time has paid off the most for my team and I. They do receive lots of calls so the most important part is to show that you are not looking to waste their time and follow up with them consistently. Perhaps call them on deals that they currently have listed, explain why or why not it does not meet your criteria. This will help you establish your credibility as well as build a relationship with them. Getting in front of them - in person- is the best way to solidify your relationship, in my opinion. 

Hope that helps.

Hi Jeffrey - thanks for sharing your insights. I'm not sure if this is different from market to market, but should you work exclusively with one commercial broker? Do they expect you to work exclusively to them or they would be open to have more buyers on their buyer's list?

Thank you!

Quote from @Dustin Beam:

Originally posted by @Darryl Matthews:

@Dustin Beam I have run into this multiple times. Obviously comps always help. The most successful I've been is hiring an outside appraiser. Yes there is an extra cost but I've been able to compare and use the outside appraisers comps to change the opinion. 

Thank you for the advice, we will consider that if needed. Of course I'd love to avoid that, but agree it would be worth it if necessary. 

We really just need him to reevaluate the CAP rate. The appraiser provided a 10 year table showing cap rate changes on A-D classes. He only shows a compression of 0.25-0.5 percent from 2012 to today. That is crazy.

 Hi Dustin - curious to say how did it end up? I'm running into the same issue so wanted to see how did it work out at the end. I feel like you can always sell it, but at the end of the day you would want to own real estate instead of just flip real estate right?

Quote from @Darryl Matthews:

@Dustin Beam I have run into this multiple times. Obviously comps always help. The most successful I've been is hiring an outside appraiser. Yes there is an extra cost but I've been able to compare and use the outside appraisers comps to change the opinion. 

 Hi Darryl - when you say 'outside appraiser' do you mean an appraiser from out of town / not local? 

Thanks

Hi @Rafael Norat  - Thanks so much for your insight! Really appreciate it. 

I have not put in a backup offer yet. I'm trying to. My main concern is that even the appraisal comes in low, the seller might agree on a lower price with the current buyer because time has elapsed and they don't wanna start over again with us. How can we make a strong backup offer, that incentivizes the seller to come to us if appraisal come in low

Thank you!
 

Hi BP Family!

I found this 6-plex in my market that is rare to find. It has great potentials after rehabbing based on the current market rent. The asking price is for sure a steal with its current NOI, but it definitely has its potentials.

We really wanted this deal because we felt that the size of the property is a perfect fit based on our current flipping experience and a perfect next deal as we wrap up our current ones. Unfortunately, we lost it to another offer that offered the same price, but higher down payment % in their mortgage contingency, which made the seller more comfortable. However, based on its current NOI and the prevailing Cap in the area, I believe the appraisal value should be at least tens of thousands lower, if not hundreds of thousands, than the selling price (less than $1m).

I definitely learned a whole lot after this but still really wanted to get this deal. Is there anyway to still turn this around? Should we submit a backup offer? If so, what terms in the backup offer would really make the seller turn to us if anything goes wrong with the current buyer?

Thanks all!