All Forum Posts by: Amber Boskers

@Rick Martin

Hi Rick,

Thank you so much for your response.

Risks/Rewards are what I'm concerned about. I haven't partnered with the parties involved before but am hopeful this is the start of a very beneficial and long-term business relationship. I don't want to be naive about this deal though. 100 or 200 units is definitely more appealing to us...

Those are interesting splits for syndication. The two cash investors are going in 60-40 with the $500,000.

Your renovation budget per unit seems reasonable... the units are 1 bed 1 bath. The leftover budget from the units will be put towards capital expenditures.

Ok, that's good to know the acquisition fee is within a decent amount.

Thank you!

Amber

@Joe Villeneuve

Understood. Thank you for your response and all your great points. You're right.

@Joe S.

Thank you for your response Joe.

It's a JV not a wholesale (mixed up this deal with another). Yes, you are correct.

@Jillian Sidoti

The managing party will acyually be doing the property management of the building.

@Charles Seaman

Hi Charles,

Thank you for detailed feedback.

1. Yes, it is a JV.

2. I think it's because 60% of the cash is to be from me.

3. Ok.

4. Correct. Offering a staggered buyout to the long-term tenants could be an interesting option to consider.

5. OK, that's good to know that for a JV it is a reasonable split. Around 8%.

I have to decide whether to go ahead with it or not. It seems like a fair deal based on conservative assumptions, I'm not sure what is holding me back on it. If the numbers work out then there shouldn't be a problem.

Thank you so much for your input! I really appreciate it.

@Jillian Sidoti

Hi Jillian,

Thank you for your feedback. It is in Florida. The rental comps in the area for similar but updated units are $300/month higher. The property is older and needs some attention. When leases come up for renewal the units will be vacated and renovated.

Yes, a new property management company will replace the current one.

Okay, that's good to know the 50-50 is reasonable.

Thank you!

@Amber Boskers Correction: NOT a wholesale.

Here's the scenario:

12 unit apartment complex

Off market

2 units month to month

10 units 12 month lease

Units are $300/month Below Market rents

Absentee owner

Property is free and clear

Purchase price $1,600,000

$50,000 closing costs

$24,000 acquisition fee to managing party

$500,000 cash by two investors

$75,000 cash by managing party

$200,000 rehab budget

Financing $1,300,000 of approximately $1,900,000 budget.

2 year time frame to rehab and bring units and rent up to market standard.

3-4 weeks vacancy per unit for rehab

Refinance at year 3.

Managing party wants 50-50 rental distribution split.

I'm concerned about several things:

1. Not enough cash.

2. Too much upfront debt.

3. Rehab term of 2 years is too high.

4. 50-50 doesn't seem right and am looking for feedback in this from seasoned multifamily investors.

Thoughts?

Here's the scenario:

Have been approached with a 12-unit apartment style complex deal.

Absentee owner looking to sell

Off-market

Rents $300/Unit Below Market Rents

2 units - month to month

10 units - 12 month leases

Wholesale deal

$1,600,000 purchase price

$200,000 rehab budget

$50,000 closing costs

$24,000 acquisition fee to wholesalers

Property is free and clear.

$500,000 cash from two investors

$75,000 cash from wholesalers

Wholesalers will oversee rehab and manage property.

Financing the rest, intend to refinance in 3 years after stabilizing complex by renovating units and bringing rents up to market standards. Two year time frame for rehab. 3-4 week vacancy per unit for rehab.

Wholesalers want 50-50 split on rental income distribution. 50% to wholesalers, 50% to cash investors.

There are several things I don't like about this deal:

1. Not enough cash upfront.

2. Too much debt because of #1.

3. Two year time frame for rehab is too long. 4. Don't like 50-50 .... Looking for feedback about this from seasoned multifamily investors.

Thoughts?

@Caleb Haynes Zillow is a tool but it's not always an accurate tool... don't base your underwriting or projected rents on Zillow. Use Zillow in addition to several other resources to get your numbers. Conventional financing with 2% down isn't a competitive offer if you are up against other offers providing higher down payments or full cash offers. Consider increasing your earnest funds, pivoting to a different market or looking into finding off-market deals. Or just keep submitting offers on properties in your preferred area and maybe you'll get a deal. Good luck in your search.