All Forum Posts by: Account Closed

The general hold time is usually 1 year. I personally think this deal sounds great (going purely from the numbers) because you have a real value add opportunity if you are buying on actuals. 

Also, there is no harm reaching out to some of the larger banks you plan to use for the re-fi and pick their brain. Learn how they underwrite, then evaluate the deal conservatively using their criteria. If the numbers still pencil go after it. 

good luck!

The deal analyzer is great and worth the money, but if I could offer a piece of advice... I would make sure that you spend time educating yourself on each individual metric shown. Learn how it is calculated, and most importantly how to interpret it. 

If you already understand what you are looking at, it can really speed up the process of a quick analysis. 

I am in Houston and I have noticed that it seems like earnest money goes hard in most cases.

Also, it seems like terms are getting very strong in general. Deposits are higher. Recommended feasibility period can be ridiculously low in my opinion.

This could just be Houston but I would expect it’s similar most places.

A prepared T12 and Rent Roll are a must. I would say responsiveness is also key. It drives me nuts when I wait days for a reply or I get a one word reply from a broker.

Hello, You can try a 75/10/15 structure (or modification). This stands for 75% loan, 10% owner finance, 15% equity down. In theory this is a win-win-win because the bank still gets first lien, the owner could potentially work the deal at a higher price, and the seller can leverage their returns. One problem with this is that bigger banks will typically not allow this kind of structure. Another option is to bring in equity partners on the deal. I think this is preferable because you are not over leveraging in a tight market. Plus they can bring some useful experience to the table if you get in a bind.

I would try to tie up the deal first. Unless I misunderstand your first post, it sounds like the seller has not confirmed they will take your offer. An LOI with your terms is usually a good way to kick things off. The deal structure itself really depends on the details in my opinion.

One thing I can add here is not to take these numbers at face value. Always verify if the numbers provided are true. Also, even if each number on the P&L is reported correctly some will likely change after purchase (such as property taxes). With an older property you may need to consider higher maintenance expenses and reserves over time.

What I've found is that two or three brokers seem to control the majority of the market's multifamily inventory. I have been fortunate that they have all been willing to help me as much as required. The top brokers have access to all the data that you mention.

I go after many properties off market as well and actually have had a relatively easy time connecting with owners. What I have found, however, is that in many cases owners will test the market once they know people are interested in purchasing the property and find a broker. 

I just went through one case where I was about to sign a contract at $1.2M for a property I found off-market at a great location. At the last minute, the owners pulled out and listed the property with a broker for about $1.4M. The property was already over-priced to begin with so it hasn't sold yet, but going straight to brokers in the beginning can save some headaches and allow you to focus on building the business. 

Just my two-cents.. 

Let us know how it goes! If you are down in the Houston region, I can give you some good contacts. 

I got here a little late... let me know if you do it again. I'll do my best to make it. Would be really cool meeting everyone. 

Thanks,

Jacob

I agree 100% that MF is a better investment... especially when considering vacancy risk. 

From my personal experience it has also been pretty competitive. I would agree there are less buyers, but I would say the difference is that when you go for bigger MF properties the competition is more sophisticated. Owners are also typically more sophisticated as well. 

I also agree that most new investors start in residential. The barriers to entry are lower.