All Forum Posts by: Adriel Hsu

@Duncan Hayes No you can still have closing costs and title assigned to end buyer.

As mentioned, normally an affidavit of heirship can take care of it if probate has not been filed, that requires 2 third party "witnesses" that knew the deceased on top of the heirs signature.  Talk to your title company.  If there are no 3rd parties, there are alternate methods. Title company will literally tell you step by step what you need to do to clear title.

Don't stress too much about them.  Treat it like a normal deal. Probates are usually the best deals in my experience!

@Joe S.

For agency debt, they require 3 months of stabilization and 1 year of ownership (seasoning) before they will refi.

For 11 units though, it probably wont qualify for agency debt and he could probably refi it anytime with smaller banks and credit unions but it would be prudent to show at least 3 months of the newest rents for the lender to feel comfortavlr

@Remington Lyman

That’s great in theory, but in real world application, near impossible to time your sale and have an actual good 4plex deal to buy that makes sense pop up within the allotted timeframe, and if you’re lucky enough, hard to repeat 2 more times

You mention: "Definitely, all the apartments needs cosmetic work and to be updated. This building was built in the early 1900-1920. I did go thru it with my contractor and roof will need to be replaced as well."

So figure ~$40,000 in roof replacement and cosmetic updates for 6 units. How much can you bump rents after the updates?

I don't see a budget for Property Mgmt, so I'm assuming you will self manage, but factor in the time you will need to do showings for lease ups and other things related to property mgmt.

Who does lawn maintenance if any? Did you factor in quarterly pest control? 

Class A area or Class C area for tenants?  If Class C and the asset is 100 years old, repairs and maintenance will be higher unless plumbing and electrical was completely re-done within the past 20 years

@Alexander V.

It really is up to each appraiser and lender. There is not set rule. In some ways its luck of the draw on the appraiser, especially smaller multifamily (5-30 units under $1M loan).

On my 14 unit, the appraiser creates their own pro-forma on what market costs for operating expenses as well as market rents and then divides by their "market" CAP rate.

I say that in quotes because mine is in a tertiary market, and since its such a small market, they put a generic CAP rate of 10% for the entire region (3 counties). They were comp-ing my property to some in the ghettos while mine was in the best school district.

I know based off actual multifamily price per door that my little niche area was cap rates around 7-8 not 10.

Had to fight with the bank

Theres no hard rule to guarantee you what the appraiser will come up with unfortunately

@Steve Morris I think the discussion is on syndications, not REITs as those are two different vehicles of investing

Builder's here in Houston quoted me $65-75 per sq ft (including garage sq footage) for building including permits. $65 for a cheaper rental grade home on pier and beam while $75 per sq ft for a 2 story house on concrete slab with quartz and stainless steel.

Only other expenses is architectural plans ($1 per sq ft) and the price of the lot and any costs like clearing it or re-platting it into multiple lots etc.

Investment Info:

Large multi-family (5+ units) commercial investment investment.

Purchase price: $1,400,000
Cash invested: $400,000

32-unit

Class B-

Approximately ~$7,000 cashflow per month after mortgage in Year 1 and 2 (Interest Only Period)
Approximately ~$5,000 cashflow per month after mortgage in Year 3+

Investment Info:

Large multi-family (5+ units) commercial investment investment in Nederland.

Purchase price: $630,000
Cash invested: $170,000

14 units

Class B

~$1,800 cashflow after mortgage

Finished re-position Oct. 31, 2019.

Currently on final rent increase cycle.

What made you interested in investing in this type of deal?

Good location

How did you find this deal and how did you negotiate it?

Driving for dollars and mailed owner

How did you finance this deal?

Local credit union

How did you add value to the deal?

Upgraded interiors and exteriors and raised rents and decreased expenses

What was the outcome?

Fully occupied and rents increased on average ~$75 per unit.

Investment Info:

Large multi-family (5+ units) commercial investment investment.

Purchase price: $1,400,000
Cash invested: $400,000

32-unit
B- Complex

~$7,000 cashflow per month after mortgage in year 1 & 2 (interest only period)
~$5,000 cashflow per month after mortgage year 3+

What made you interested in investing in this type of deal?

It was in a good location and property was in good shape.

How did you find this deal and how did you negotiate it?

I found it driving by and sent letters and cold called

How did you finance this deal?

Freddie Mac SBL Loan

How did you add value to the deal?

Raise rents by ~$50 per unit

What was the outcome?

Rents were successfully raised

Lessons learned? Challenges?

A challenge was that COVID-19 hit right before closing and closing was delayed and new COVID-19 addendum required by Freddie Mac to bring an extra year's worth of mortgage payments up front to escrow.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

CBRE secured financing and did an excellent job.