All Forum Posts by: Emilio Ramirez

Any specific books, websites or threads you can recommend that deal directly with different forms of entity structure for real estate? I asked a lawyer a similar question and she debated whether or not an LLC or a C Corp was a better structure. I did not get a warm fuzzy feeling from her comments and will be looking for a lawyer with more relavent experience. Need to educate myself more, however.

Thanks for all your input. Ralph is spot on. I was actually looking at a 10 unit multifamily, but own one of the duplexes he describes with a thermostat that has the plastic box over it. The 10 family has a central boiler and radiators in each of the units. I was pricing switching the central radiant heat for heat pumps in each unit that would provide heating and cooling. That way I would be able to have each unit separately billed by the utility and add A/C as an amenity. Are there any other techniques for making the tenants responsible for the heating/cooling with a centralized system instead of individual units? It seems to be that the older properties that haven't been through a recent remodel or upgrade need to include heat and sometimes cable and internet to be competitive. The newer properties get away with making the tenants pay for everything because of the newness factor. In Milwaukee anyways.

Wow. That makes a lot more sense. The local housing authority allows up to a 12% developer fee. I could not make the numbers even come close with that. I got as low as 6% and it started to look a little better, but I'm thinking now that I will probably have to drop it down another notch or two. Thanks for the input.

Example one: I am hired by an investor to develop a 50000 sf apartment complex.He owns the land, all contracts are with him and I manage the process.Upon completion of the construction of the project I am done and the property management firm he hired takes over. Assume 5000000 total development costs. This scenario would lead me to believe that I would want to maximize my fee and the owner would want to minimize it. Any idea of a typical range?

I don't know if this is more specific or not. I will post more detail or option two later. Thanks.

What are typical development fees as a percentage of total development cost? Is there a different structure when the developer has a full or partial ownership position versus being hired by an owner to develop a project?

In the milwaukee area, a lot of properties advertise heat included. If I were to find a deal with existing tenants in this condition the rent would have to be lowered if I made them responsible for their utilities. Right? Sorry if this is a thread hijack?

I've been looking at multifamily properties on MLS, backpages, loopnet, etc and applying the 50%/2% rule to them. I've also been looking at the cap rate, cash on cash return, IRR and NPV. On the surface, none of these seem like good deals and don't come close to meeting the 50/2 rule. Many of them seem to be overpriced by 3-400% in order to achieve a 20% cash on cash ROI. What is the game being played here? Do people actually buy these properties at these rates? Is the seller just starting high, knowing that the offers he is going to receive will be lower?

Here's an example of what I'm finding typically.

# Price:$598,000
# No. Units:12
# Building Size:11,520 SF
# Price/Unit:$49,833.33
# Property Type:Multifamily
# Property Sub-type:Garden/Low-Rise
# Property Use Type:Investment
# Construction Status:Existing
# Commission Split:2.5%
# Cap Rate:8%
# Occupancy:100%
# No. Stories:2
# Year Built:1977
# Lot Size:0.57 AC
# Tax ID / APN #4023
# Parking Ratio:17 / 1,000 SF

I understand that is not necessarily the best way to find a bargain purchase, but I am seriously wondering who buys this type of property? And why?

What if there are spots worn down to the bare wood?