All Forum Posts by: Bennet Sebastian

@Brian Burke thanks so much for the feedback. As far as this particular deal is concerned I found a needle in a haystack. I'm getting it at an 8% cap rate based on 50% occupancy at market rents. I'm drafting up the financial terms of the operating agreement and splitting of cash flows is the only thing I haven't outlined yet. I'm trying to keep it as simple as possible. I think I'm leaning towards an 8% annual return hurdle with a catch up provision. 

I am getting ready to syndicate my first deal. I am offering my handful of investors an 8% preferred return and a 60/40 split thereafter. The deal will yield a 15% annual cash on cash return and I expect to hold it for five years where the overall IRR should be upwards of 30%.

Do I distribute all of the 15% each year and take my 40% of the profits above the preferred return? Or do I just distribute the 8% preferred return and keep the excess cash flow as retained earnings which would then get distributed at the time of sale five years from now. I haven’t discussed this part with the investors yet because I’m not sure what is the most common method.

Thanks

Just wondering if others here have experience raising money without a PPM. I have a friend who has been syndicating investments for years with the same group of investors without using one. 

I'm buying a small office property and will be raising $200k from 4-5 accredited investors that I have an existing relationship with. Do I need a PPM or can I just use an LLC operating agreement with a joinder for each investor?

I’m debating getting it as well to get comps  but also to have access to all the loopnet listings. It’s $400/month which doesn’t include actually posting properties on loopnet. That’s another $100/month per listing.

I had loopnet a few years ago before costar bought them and I used to pay about $50/month to access all loopnet listings and it included one premium listing post. So this is a bitter pill to swallow at these prices. 

I am in the early stages of evaluating the purchase of a small multi-tenant office (6,250sf) building with an asking price of $500k ($77/sf) which I'm going to offer $437k for ($70/sf). There is one 3,550sf suite that is currently occupied by a tenant on a 1-year lease with several one year renewals. That tenant has a gross lease at $15/sf (about $10 net or $35,500 after operating expenses) which is is consistent with the market.  

The remaining 2,700sf is a large open space that would more than likely need to be built out at a cost of about $100k. Additional expenses include updating the exterior ($15k), potentially renovating the existing tenant's space if they vacate at the end of their lease ($35k), leasing commissions for both spaces ($25k). So total potential outlay would be $612k or $98/sf. 

Once fully leased it should spit out $62,500 NOI and assuming an 8% cap rate at sale would result in a valuation of $781,250. After selling expenses I would be looking at a gain of about $115k. I expect it would take at least a year to stabilize the property before I could sell it or do a cash-out refi.

Is the juice worth the squeeze? If so what would be the appropriate financing strategy here?

OK, so I'm going to try and follow the suggested framework for asking financing questions. 

Your goals and story: 

I am in the early stages of evaluating the purchase of a small multi-tenant office building that is 50% partially leased with an asking price of $500k. The remaining space is a shell and would need to be built out at a cost of an additional $100k.

Type of property: 

Office

Location of property:  

Central Florida

Purpose of financing: 

Purchase, renovate and buildout. 

Type of financing sought: 

Not sure. 

Current or prior ownership of real estate: 

I own one medical office currently. Have owned, leased and flipped several offices and a townhouse in the past five years. 

Occupancy: 

Gross lease at $15/sf (about $10 NNN) on half the space. Tenant is on a 1 year lease with several 1 year renewals.

Value of property at present and/or your offer price: 

$450,000

After repair value: 

$780,000 based on a $62,500 NOI and an 8% cap rate.

Anticipated or actual appraisal issues: 

Not sure

Current rents per month: 

$15/sf gross

Fair market rents per month: 

$15/sf gross

Down payment or equity: 

Depends on the loan amount available

Source of down payment funds, if applicable: 

Own funds and limited partners

Income Source: 

Day job is general contracting

FICO: 

Excellent

Credit issues: 

None

Additional details: 

Goal is to hold this property for between three and five years. Purchase price of $500k and improvements of $100 for a total requirement of $600k. Should I use short term private money to purchase and buildout the property and then put conventional financing after it's stabilized? If so what kind of terms would I be looking at? Wondering what would be the appropriate financing strategy here. 

Thanks

@Logan Hartle have you had any luck with buying properties by contacting tax delinquent owners? If so could you share your approach? 

@Henry Clark thanks for the suggestion. I don't know anything about this but it certainly sounds interesting. 

Anyone have any other ideas?