All Forum Posts by: Charles Seaman

@Andrew Gingerich Your math might be right, but your cap rate might be wrong (using the NOI's you provided and a 7% cap rate, your math does appear to be right). It's tough to find multifamily trading at a 7% cap rate currently. Is 7% a realistic cap rate for the area that you're looking in?

@Wes Short First off, welcome to the multifamily space!  I wish you a lot of prosperity in it and hope that you broker many deals in it.  Oftentimes, the best brokers that I deal with are responsive, give good feedback on deals to help them get done, and they're strong negotiators.

@David C. Most of my experience is in the 50+ unit space, so the brokers on that side are very informed, but they're also very selective about who they work with because they want to make the most of their time.  Oftentimes, I find that brokers in the 2-50 unit space are residential brokers that are trying to break into multifamily.  So I wouldn't say that they're any less motivated than single-family home brokers, but I would say that many of them probably specialize in single-family homes and don't focus on multifamily until they start making money from it.  So you may need to work on finding somebody that's more seasoned in that space.

@David C. when you say multifamily brokers, are you referring to brokers that work with smaller multifamily deals (2-50 units) or larger multifamily deals (50+ units)?

@David C. Many of them own a percentage of those units, but they don't own the units outright.  It takes a lot of money to control that type of portfolio outright.  But it's no different than any other money manager that uses other people's money to acquire assets.

You're welcome @Justin R.  You'll likely find it easier to deal with Arbor for agency debt than a traditional bank.

@Justin R.  Arbor, Greystone, and CBRE Wholesale Lending are all good agency debt options.  I've worked with Arbor the most thus far, but I have good contacts at all three companies.

@Mallikarjun Reddy Pateel You're correct.  The clock starts sticking after you have an executed contract.  The due diligence period would be included in the 90 days (it's the first 30 days or however many days you negotiate).

You're welcome @Mallikarjun Reddy Pateel. You can definitely include a list of items for due diligence. We include a summarized version in our LOI and have a separate checklist that further elaborates on them. You can also add in an expiration date. Our LOI includes one, but I've never truly seen the purpose of adding one (at least not in the current market). It's probably much more relevant in a buyer's market.

@Mallikarjun Reddy Pateel my replies are below.

1. There's a good chance that you'll form a single-purpose entity to buy the property. This entity typically will be formed after your LOI is accepted, so you should submit the LOI on the letterhead of whichever entity you use to build your business with.

2.  90 days.  We typically shoot for a 30-day due diligence period, a 30-day closing period thereafter, and a 30-day extension period if needed.

3.  30 days.  If you're willing to go with a shorter due diligence period, then that's even more favorable.

4. Other than price, the two other factors that make LOI's more attractive to sellers are nonrefundable EMD and shorter due diligence periods.