All Forum Posts by: Chris Grenzig

@George Liu 80% with a higher rate? I would be careful you're not over-leveraging the deal, I would look at breakeven occupancy. Most loans are priced out on debt service coverage ratio, so I would ask the broker why you can't get higher and see what he says. If he says the DSCR, I would look at the DSCR for the bank loan and make sure you're comfortable that it's enough to cover, stress test it and make sure your downsides are covered. I would also then look what your breakeven occupancy is for the deal with the two loans and see if the risk is worth the returns. Just my 2 cents...

@George Liu okay I don't think that really changes anything for me, if prime is 5.25 plus an extra quarter thats 5.5 ands you're getting quoted 4.3-4.5 with a broker. You're saving over 5 points for the next 5 years and it'll cost you 1.5 points extra up front. At the end of the day it's just what you're willing to accept.

A lot will depend on the leverage they're offering as well, and any interest only periods, the amortization, etc.

@George Liu his he quoting a floating rate or fixed a prime plus a quarter? Isn't prime now like 5.25% so thats a 1% difference in rate which would make up for the 1% extra in closing cost just inside the first year alone?

Investment Info:

Large multi-family (5+ units) commercial investment investment.

Purchase price: $25,600,000
Cash invested: $1,900,000

Plan is to rebrand, landscape, exterior paint, and somewhat overhaul the exterior, renovate interior units and sell within 3-5 years after implementing our capital plan.

How did you find this deal and how did you negotiate it?

Broker relationship, listed deal

How did you finance this deal?

Bridge lender

How did you add value to the deal?

Exterior/amenity enhancement, 150+ unit interior upgrades planned

@James Pettinelli key to our of state ownership is 100% predicated on having good quality management. You can buy the best deal in the world and it will turn to dog **** if you have a poor manager. Secondly important is having 1-3 OTHER managers as warm leads in case the manager you thought was great, is actually not. Everything else is important, but not as much as this.

@Travis Gibson I think the question you should be asking is what are the pros and cons of selling and redeploying (or taking out a mortgage and redeploying) rather than asking people what you should do. There are hundreds of ancillary reasons to choose one avenue over another, that no one but yourself can take into account. For example, do you want to have control or give up control? Do you want partners or be the lone investor? Do you have the balance sheet to secure larger loans? Are you comfortable with increased risk with mortgages over being in all cash? Do you want to be within driving distance of the property or can it be farther away? etc.

Maybe too, the question should be asking for potential routes to go with the properties you currently have, and what are the pluses and minuses of those routes. That way you can start to narrow down and eliminate options and find the best ones that work for you.

@james hawkins at the end of the day its all about what your investors are looking for. There is obviously a much smaller pool of people who are willing to invest with someone that doesn't have a track record regardless of brand and education. That's why a lot of times I think JVs are a great way to get your foot in the door, or start with you and a few partners who are all in it together to build up that track record, before you move on to syndicating out equity and being the lone operator.

In terms of brand, honesty, transparency, no ******** tends to be the best approach in my opinion. You're taking peoples hard earned money, the most important thing is to make sure they understand 100% what it entails and no matter how its going, keep them informed as things occur.

@george liu we always use a broker, the upfront fees just include in your underwriting, the rates are much better and you know you're getting the relationship they have with the bank to help your surety of them closing on the deal and helping get through any problems that arise during their underwriting and DD.

@Austin Works ignoring if the sale was 1031 applicable or not, it depends on the sponsor if they're willing to complicate their structure by incorporating TICS and incurring higher costs because of it. Usually it would have to be a good chunk of the . equity for it to be a conversation as the investor is also probably going to have to be a key principal on the loan too.

@Omar Khan I appreciate it, but all our meetups are free so what money are they getting back?!

Not much of a guarantee my friend :)