Happy Monday fellow BP'ers!  Been a lurker here in the forums now for several months.  I've listened to several of the BP podcasters who discuss MF as well as read several of the threads here on the forums, but was hoping if some of you could challenge a few of the assumptions I've gathered thus far. 

Assumptions:

1) Upon successful repositioning of a property (3-5 years), expect the refinance to be a 7-10 year term product with a 20 - 25 amortization schedule.  If this assumption is correct, then a follow up question is what options does a successful syndicator have at the conclusion of this 7 - 10 year term?

2) Complexes with units < 100 units rarely justify on site property management.

3) FICO scores do not play a role in complexes with units > 100 units.

4) Loans on complexes with complexes > 100 units are non-recourse 

Thanks in advance all!

I learned to write my self limiting beliefs on a piece of paper and then put them through a shredder.

So I'm gonna write this down and then I'm gonna shred it.

I need to already have money and experience in order to buy an apartment complex with over 100 units as my 1st investment.

Now maybe that's a true statement and I shouldn't have shredded it, but I already did.

Ken, I get what you're saying.

The purpose of the post was to get an idea of what experienced MF folks have gone through with respect to the above. Knowing the validity of certain assumptions will help in navigating the process and if need be, choosing another strategy as a means to get there.

1) After 7-10 years sell or refinance again if it makes sense

2) Depends. 90 units definitely needs onsite PM. 10 units - not so much. A class 30 units may have enough income to support onsite PM while C class of the same size may not.

3) Your credit is evaluated but not as strict as for SFR. You have to have no adverse records on your credit though

4)  Depends. If the property is stable  (90% occupied for at least 90 days) and the loan amount is larger than $1M (or more) and the sponsor had previous experience, the loan may be non recourse. If the occupancy is low and the property needs a lot of work, the loan will most likely be recourse although non-recourse is also possible.

Got it.  Thanks Nick, that helps.

For the on site part, I have teamed up with a neighboring property to split those costs. On-site is important for 50+ unit properties, especially in C areas

FICO scores are less important in Multi-family period, even under 100 units. You will still have it looked at and will have red flags if it is under 650

As Nick said loans over $1M that are 90% occupied could qualify for non-recourse even under 100 units

Originally posted by @Todd Dexheimer :

For the on site part, I have teamed up with a neighboring property to split those costs. On-site is important for 50+ unit properties, especially in C areas

FICO scores are less important in Multi-family period, even under 100 units. You will still have it looked at and will have red flags if it is under 650

As Nick said loans over $1M that are 90% occupied could qualify for non-recourse even under 100 units

 Do you own the neighboring property ???

Thanks Todd!

Account Closed no I do not own the neighboring property in the case I was mentioning

Originally posted by @Todd Dexheimer :

@Ken Baker no I do not own the neighboring property in the case I was mentioning

 Interesting.

So you found a buddy with a neighboring apartment complex and you were able to come to an amicable agreement to share his resources.

A sub-contractor for apartment management.

That's really fascinating actually.

Is that a handshake deal or is it in writing ???

I have a handshake deal with my sub-contractor right now, but he is currently mad at me. I know he'll overcome it and that we'll work through it so that we both prosper but I have already made provisions so that I can't be held hostage going forward.

Account Closed it is all in writing and very detailed. 

Originally posted by @Todd Dexheimer :

@Ken Baker it is all in writing and very detailed. 

 Maybe that's really the best way.

I've been operating on a wing and a prayer for so long even I believe my own lies and promises.

I don't have any experience yet, but I have been devouring books on the subject. 

According to "How to Make Big Money in Small Apartments" by Lance Edwards, you should hire a management company which already manages hundreds of apartment doors to leverage their economies of scale. They already have systems in place, including roving maintenance teams which service all of the apartments they manage.

In "Multi-Family Millions," David Lindahl advises matching your property management company's expertise with your type of apartment as closely as possible. You want their specialty to be properties like yours. The needs of a 100+ unit Class A property are very different from the needs of a 25 unit C+ property, for example. A company may be the very best around for one type of property, but completely fail at another kind.

Thanks for the input Elizabeth, much appreciated!

Yes, never thought about matching property management company with the Class of Apartment.   A good question to ask.

Originally posted by @Eric Caulley :

Yes, never thought about matching property management company with the Class of Apartment.   A good question to ask.

Your lender is your biggest partner prior to purchasing the property but your management company becomes the most important to you achieving your business plan after. It is crucial that they not only understand the class of property you're buying but that specific sub-market and demographic. You should also be enlisting them to help come up with your business plan in the first place. They will likely have a better idea of what you should list for your proforma rents and a better idea of your expenses are for a particular property.

 @Michael Le

Thanks for this information! Will keep this in mind.