All Forum Posts by: Bryan Hartlen

@Matt Waggoner I’d recommend consulting a lawyer but 

- you should be able to do this. Our property management company signs leases on our company’s behalf all the time. I don’t know if this is because they are Legal registered agents (hence check with a lawyer)

- would also suggest you make sure you are aware of the risks you are accepting when/if you want our properties that are in your personal name and not an LLC.(check with a lawyer if you're not sure of the risks).

- if you can swing it, you may want to consider keeping tenants on MTM for a couple months until you’re sure you want them long term. 

Good luck!

@Kevin Morgan I'm no expert so treat this comment accordingly… but I think you answered the question yourself. You're selling a business so use the STR/MTR cash flow. As long as you include the unique capex costs for the furnishings in the pro forma I would think the model should hold. Prior to this year's market adjustments, we had seen some lenders loan on the NOI of STR income streams (which put the property's value well above traditional LTR comps). So I think the logic holds.

@John B. I think you’ll find that the answer to the question is that it depends. It depends on
- how good your local team is (or how good you are at building a team)
- how organized you are - when you’re not there to see things you need to be more thorough in the questions and processes you use to ensure you are getting the property, rehab and tenants that you expect
- how well you are buying your properties - there is a greater opportunity for mistakes so you need more cushion
- your personality: do you need to know every micro level aspect of the project or are you comfortable managing it at a macro level
We've bought 10 value-add SFR properties without every seeing them. We've kept 5 and flipped 4. Our first few we're more bumpy than our last few as our processes have improved. That said, you were asking about purchasing 3 - 10 units…. We're currently looking to move into small MF space (10 - 40 units) and our plan is that we would physically visit the property during due diligence to get everything set up and to increase the odds that we quickly identify more of the differences between SF and MF investments.

That is the investor's issue. From your end it's just money. You don't care whether it's IRA or after tax money. You just make sure that you pay returns to the entity you received the funds from.

You should be asking the city. Besides the fine, the current owners most likely have an obligation to return it to the original configuration.  You’re issue will be zoning first; is a triplex an option as currently zoned?  If it is then you’ll need to have their work inspected which could require minor or major changes. I’d call the permit office and ask if it’s possible to have someone come look at the property (most likely for a fee) - but you’ll at least know what you’re up against before you sign.

@Tony S. if I understand you correctly you're asking what would the general contractor fee be for managing the rehab of 18 units at a total cost of $270 - 330k... with a potential for more business down the road.  In the single family rehab world, we assume that we're paying a 10 - 15% premium to a General Contractor to manage the rehab. For this premium they are responsible for selecting and managing subs, managing material purchases and for all work being performed to spec (this is a financial risk for the GC also - if work needs to be redone it's on their dime). 

It sounds like you're still planning to select the subs and you just want oversight - like a foreman. If that's the case I would expect you would pay less than 10%. It would also depend on whether you believe this will be a fulltime job for the life of the project. If it is you might be able to pay an hourly rate. In either scenario the final fee, may depend on your local labor market.  Finding trustworthy, knowledgeable contractors is still tough in our markets. 

They could be cashing out for any number of reasons - I wouldn’t take it as a sign.  But plan to do your due diligence on any property whether stabilized or value-add.

Hard money is typically interest only for a 12 month period…. So you’ll need an exit strategy to pay that loan off within 12 months. 

A little off topic but we avoid Centerpoint from an investment perspective as the word on the street is that they are a PITA to deal with from a permit, inspection and fee perspective.  

@Rebecca K.we didn’t use Roofstock. Haven’t met many that have… so we’re not sure if it’s worth the cost (time and dollars). 

I would echo what @Andrew Syrios says and make sure you are every bit as thorough when screening and to the best of your ability scope out your housing authority’s process to see if you have a good one or a PITA. 

A couple other points to consider.  

- Sec8 payment is only ‘guaranteed’ if your housing authority is paying the full rent… if rent is split between the authority and the tenant and something changes with your tenant’s situation you can find yourself with a tenant that is no longer current.  There are processes for the tenant to request a change in rent through Sec8 but it’s a process they need to initiate and manage.  

- There is a regular property review by the Sec8 inspectors. In Birmingham where we have our properties this is an annual review and a cynical man might say that the inspectors try to justify their positions by finding something that needs repairing with every review and their criteria appears to be more personal than repeatable.  

- In times of rising rents, we’ve found rent increases are slower to implement (again because of the bureaucracy). When approved, the increase has been retroactive.  Setting rents for new tenants is pretty fast with the authority but getting an increase for a renewing tenant is slower. 

- Finally, it’s been our experience (which isn’t vast) that Sec8 tenants tend to be long term tenants. This may be because of the process required on their end to move or it may be that they are grateful to have a home. But it is nice to have most roll over from year to year.