All Forum Posts by: Dan Biber

I've used both in rental properties.  Glue down is more durable, but the substrate needs to be appropriate.  Concrete floor or some other smooth surface (hardwood floors, etc.)  For upstairs, I use LVT/LVP that's click/lock directly over the OSB subfloor.  The LVT/LVP I use is around $1.25/sf, but it has the rubber backing and is 4.2MM thick. For stairs, I use the LVT/LVP and glue/nail it for the risers and use Behr deckover paint for the treads.  It's a super thick paste like paint that has sand in it for texture/anti-slip and comes in 52 colors.

Thanks,

Dan Biber

Great question.  The references the property manager provides are obviously great references.  Here's what I've done before.  I'd find out which properties this management firm is managing and read tenant reviews online. I'm watching for trends regarding tenant complaints about management/staff/work orders, etc.  Maybe even drive by those other properties and see how they look, talk to tenants, etc.  

Thanks,

Dan Biber

Hello BP folks.  With low inventory levels and highly competitive nature of buying existing assets, I'd love to hear from anyone who's doing ground up development projects of any asset type.

Thanks,

Dan Biber

Great question.  For me, the trends are important.  Are crime levels the same, going up/down, etc.  I usually go to City Hall and ask for a crime report for the neighborhood.  In GA, through open records Act, cities/counties must provide the data.  It gives me an idea on what kind of crime occurs.  Driving around the area at night helps too.  After that, the decision is based on this data and whether or not the crime issues are fixable. Misdemeanors and drug use is manageable.  However, gang activity/violence/shootings/etc. is not fixable by owning few houses on the street.  

Thanks for reading.

Dan Biber

The purchase price can be dictated by what your goals are and what the play is for this asset. I'm sure the seller has a price point in their mind, so I would start there and determine what the offer price would make sense in order to execute your business plan (flip, short term hold, long term hold, etc.), expected financial returns. There are many variables and more assumptions that go into underwriting a deal to determine what it's worth today and what is it worth to you. For example, I just walked away from a multi-family deal because seller wanted market value for an asset that needed quite a bit of CAPEX work and complete new tenant base. The risk of the deal was increasing with every due diligence discovery, while financial return projections were coming down (discovery of additional CAPEX work needed, etc.) So, the deal didn't work for me anymore and the lower return projections weren't appetizing enough. However, another group came right behind me with a completely different situation (1031 exchange money) and paid more than market value with all cash. I'm sure they discovered the same issues as I did, but their underwriting was quite different than mine.

Agree with not installing sub-meters, rather just charging a flat rate for water.  1 bed is X.  2 bed is Y, etc.

Thanks for reading.

Dan Biber

Great question. Yes, having each property in its own separate LLC is the best approach from a liability standpoint. Many if not most commercial lenders require a SPE (single purpose entity) for a deal they're financing. For insurance, yes, having umbrella liability would be desirable if your asset can support the additional OPEX (operating expense) without significantly impacting the financial returns you and/or your investors desire. Also, many MF insurance firms offer a blanket type policy whereby you roll all of your properties under a single policy. We do that with all of our office properties here in Atlanta with a firm Pritchard & Jerden.

Thanks for reading. 

Dan Biber

Great question.  Don't give up if you have enough time in the contract to find a solution.  Best approach would be to find a partner or several partners with whom you share common goals with.  Pull your resources together and be able to acquire the property.  You'll need the following all combined together with all partners: cash for down payment, net worth equal to loan amount, post close liquidity.  While you keep looking for deals, also look for partnership opportunities.  It could be a passive investor opportunity with a local operator from whom you could learn, get experience, partner on future deals, etc.

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Dan Biber 

Of course, everything is speculation at this point.  We've never been through such a pandemic where literally the entire planet shut down.  As far as metro Atlanta deal flow, it's certainly slow.  Hardly anything comes up on CoStar, Loopnet, etc.  Most MF owners who need to sell, get a local MF broker on board and they market the deal to a handful of buyers without spending the time/money on putting together an offering memo.  Yes, the current terms from agency financing certainly helps.  I have not seen any on or off-market opportunities that are priced lower than pre-COVID.  I forecast some opportunities on smaller MF deals where the following happens: mom/pop operation or residential type mgmt, non-agency financing debt that's maturing soon, sub-standard mgmt pre-COVID that's exacerbated today with collection challenges.  

Again, pure speculation.

Thanks for reading.

Dan Biber

Great question.  It really depends on what your goal is for this asset.  This deal is too small for agency financing (Freddie/Fannie), so your best bet would be community banks (Quantum National Bank, American Commerce Bank, etc.)  or credit unions. These two are Atlanta locals and have capacity in their multi-family buckets.  If it's a heavier lift deal with rehab, vacancy, etc., you should look at a bridge loan 12-24 months and refi. into something with more runway.  There also many private money lenders here in Atlanta that can help too.

Thanks,

Dan Biber

For a larger multi-family deal, I forecast the exit (reversion cap rates) only. Since we typically acquire value-add multi-family assets, going-in cap rates don't mean anything. The better financial return metrics would be cash-on-cash, IRR, equity multiple. What the financial return metrics to focus on is really based on what your goals are. Short term hold, long term hold, only your equity, other investors in the deal, etc.

For smaller multi-family deals, I mainly focus on cash-on-cash returns.  Anything over 15% cash-on-cash, I'm satisfied with.

Thanks,

Dan Biber