All Forum Posts by: Brian Burke

@Henry ClarkThe first thing you need is a very strong, experienced regional operator.  The second thing you'll need is a feasibility study (is there demand for this use in this area at this scale).  Third is a cost analysis for conversion--these older hospitals can be far more trouble than they are worth.  

We have an old hospital not far from where I live and it's been a vacant eyesore for over a decade, costing the county more than a million dollars a year just for security.  It just sold at auction where an out-of-town developer is going to tear it down and build housing.  The teardown cost probably exceeds the land value.  

I don't know the size of this facility you are looking at, but in the picture it looks quite large--perhaps hundreds of rooms/beds.  That would be a lot to absorb in one spot, so the feasibility study would be critical.

You’re probably right, @Jay Hinrichs.  As an example, we are buying two facilities built in the 2000s for $20,500 per bed—it probably costs 10 times that to build these new.  We are buying another two for about 60% of the seller’s loan amount.  For us, building doesn’t make sense.

But converting is another story.  Depending on the cost of the building and costs of conversion, as well as supply/demand factors, a conversion might make sense. But a ton more risk than what we are doing.

I’m not sure what is meant by “retirement home”, however. We are buying skilled nursing, assisted living, and memory care facilities. These, plus “independent living” make up the landscape of senior housing / healthcare real estate. When I think of “retirement home” I think of a Del Webb community with golf courses and Pickleball courts. That’s not what we are doing and probably not what @Henry Clark means based on the photo above. 

Quote from @James McGovern:

I would ask what is the cheapest fastest legal way for others to become syndicators?

Probably by going to work for an active syndication sponsor, work your way up, then work your way out on your own.  You’ll gain experience and get paid while you do it.

Starting any syndicate will cost between $10K and $40K depending on complexity, and putting a property in contract and getting through due diligence will require $10K to $1M or even more, depending on deal size.  

“Cheapest” isn’t really in the syndication vocabulary.

Quote from @Jay Hinrichs:

@Brian Burke   Brian while your over in Maui you could go snag a deal !!! 

 No thanks, Jay!  I come here to enjoy the beaches, buy the local banana bread, buy stuff from the local artists at the craft fairs, support the restaurants, play the golf courses…I long ago ruled out flipping houses or investing in rentals here. My condo is in a resort area and zoned hotel, it’s not the type of place locals would buy or rent—going beyond that would overstay my welcome.

There are few things the locals dislike more than mainlanders coming in and buying up the real estate—I recall a few years ago a mainlander bought a foreclosed house in a remote village, and by the press accounts that followed, that became a very unpleasant experience, to put it mildly.

I saw the auction announcement in the Maui News a few days ago, and looked it up.  There is a condo in Kehei, mainland owned, hotel zoning, so maybe this one is fair game.  If it goes it’ll get bid up, I’m sure, but I doubt it’s worth $1.5 as alluded to above.  There is a house upcountry, my guess is it redeems, but it’ll probably get bid up if it goes, and as an outsider I wouldn’t touch it.  There is one vacant lot, a whopping 218 square feet (you read that right) in the middle of nowhere surrounded by water district land that last sold at a tax auction 9 years ago for $25K.  Now that’s the typical “tax auction sucker hole” that anyone with tax auction experience knows are the dominating offerings at these auctions.  Maybe this time the county will credit bid it and dedicate it to the water district to break the cycle.  Most likely this one will be the only property that sees the auctioneer’s gavel on Tuesday.

@Scott Trench thank you (and @Jay Hinrichs) for the shout-out, and for all you’ve done to keep BP growing after my friend and founder @Joshua Dorkin handed you the reins.  The success of this site has contributed more to my success over the last 13 years than any other single source, and for that, and your role in it, I’ll be eternally grateful.  You will be missed by us “old timers” but I’m glad you’ll still be around to improve the lives of so many BiggerPockets Money listeners so they can also experience the success enjoyed by many longtime members of this site.

I’ll never understand why sponsors do this. I’ve always allocated all depreciation to the investors, and to me as the sponsor only pro-rata to my co-invest.  Then I see sponsors bragging on social media about how they pay no taxes because they get all this depreciation even when they have no capital in the deal.  Makes no sense.

Quote from @Robert Ellis:

Sunbelt national, and existing only.  

@Harrison Lane shares, or LLC units, yes. There's a market, but you have to make the market, it won't come to you.

It depends on how you define multifamily investing.  Small stuff, like duplexes, 4-plexes, even 20-unit type of stuff is still viable for wealth building over the long term if you can find long-term financing such as local bank debt, and you are in a decent rental market.

If you define it as large multifamily, such as 100-unit and up apartment complexes, it gets more complicated.  This sector has been virtually un-investable for over three years, and remains so today.  It pains me to say it because this has been my primary business for over two decades and no one likes to see their industry non-viable, but I just have to call balls and strikes.  I sold 3/4 of my portfolio in 2021 and 2022 and my only wish is that I could have sold it all.

Maybe in a year or two I'll see the signs that point to a good re-entry point.  Today is certainly better than any time in the last three years, but there is just no rush--bottoming will be a process, not an event.

@Jay Hinrichs I suspect that “lunch eating” is about to see a repeat performance.  Owners of class C apartments with matured or maturing loans may feel a sense of hope now that the 10-year is dropping.  With the thought that lower rates will allow them to escape disaster by refinancing, many of these will have little to show for it. All the lower rates will do is encourage their lenders to force a sale at a complete loss to the owners because the lenders see lower rates providing hope that a buyer at or near loan value will materialize.