BiggerPockets

Catch as catch can!

Tuesday, March 02

Hello Fellow B-Ps!

 

I've been plagued with an interesting dilemma since 2010 began..  Not only do I have REO products that are direct to seller, BUT I also have buyers!  

 

I would say that the biggest problem that I am witness to recently is that those clients that I truly love working with aren't jumping on the properties that are the true "peach" deals and are left instead with the tired and worn out deals that most investment groups have long stood up from the investing "table" and moved onto the next deal.

 

This is NOT a complaint, I just hope that I can impress upon my fellow Big Pockets bloggers that unfortunately the great opportunities are such that you take them down first and then spend the next 2 to 3 weeks getting the due diligence done.

 

I've closed on $194M in SFRs this month alone and also have a Las Vegas Hotel REO, luxury Las Vegas Condos, and a super-secret New York project that is about to close as well.

 

The groups that did get to the finish line first were those investors that were able to quickly review the numbers and see that there was enough meat on the bones to proceed forward to the dating phase.  (It's not a marriage until the deal is funded and you have the deeds in your hands!)

 

Just some thoughts from someone that has had the wonderful opportunity to work with a few of the investors on this website.

 

Cheers! :)

 

1031 Exchange Opportunity in DFW Market

Friday, January 22

Property metrics have continued to improve since we talked. We will probably be listing the property at $1,940,000 ($32,881/door).

2010 Budgeted rents are $417,000 and total top line is $432,280  = 4.51 GRM

Total Expenses budgeted at $274,131 ($4646/door).

Budgeted NOI of $158,149

That’s an 8.11 Cap Rate BUT a local buyer can get rid of third party property manager and save another $15,130 (3.5% of topline).

That change gives a Pro-Forma NOI of $173,279 yielding a 8.88 Cap on an improved, stabilized property.

Another $50,000 invested in a new 50 ton chiller for the big side of the property would get rid of window units and should save $15K/year in electricity and replacement. 3.33 year payback and boosts NOI to $188,000.

Currently have 55 units occupied (93.2%), while budget assumes 91% occupancy. We just bumped 2 bedroom rents to $725 this week (all bills paid) as we have few left, and will probably bump 1 bedrooms later this Spring to $615. That’s not in the budgeted number assumptions and will add about $6000/year to the top line starting this Summer. We’ve been running a $199 move in special, but will look to change the concession to a smaller number and let the property sell itself. Safe to assume new concession of $250 off first month rent, or something to that effect. Again, not in the budget. We assume 3 turns/month starting in March.

We’ve sunk over $225K into the property to date, and have a few more small capex items to get done. Maybe another $5-7K all in. Clearly this is going to be a solid deal for the right income investor, as we are leaving some upside in the deal. Financing is going to be the tricky part, as we don’t have 2 full years to document, your buyer(s) sound like first timers, and it’s a class C product.<!--Session data-->