All Forum Posts by: David Lilley

@Christian Orellana $2.5mm would be a 4.7% cap. This sounds pretty aggressive for a stabilized property considering the amount of people fleeing your state.

@Taylor L. is correct, engage a broker to do a Broker's Opinion of Value. This costs nothing to do.

@Linda Roberts give this a read:

https://www.lawmtm.com/termina...

You need to give them proper notice that you are terminating their tenancy at will status and they can either sign a lease or vacate. If they do not vacate, then you file for eviction.

It seems this may be a bit tricky if you don't do everything exactly right. I would recommend using an attorney who specializes in evictions in your jurisdiction.

@Jordan Becker correct. It is dependent on what you purchase the property for. 

@Jordan Becker depreciation starts when you buy the property and place it in service (start renting it). Straight line depreciation is over 27.5 years so, if you bought the property for $1,000,000 and this was also your cost basis, subtract land value from that and divide by 27.5.

Look up cost segregation and bonus depreciation.

Liquidity requirements are usually 9-12 months worth of debt service. 

@Matthew Wright for agency debt, the loan size will need to be $1mm+, so purchase price of $1,250,000. However, I would be looking at local/regional banks right now. Competitive rates and some may not require COVID reserves. If you go Freddie/Fannie, you will have to escrow 6-12 months (depending on LTV) of principal and interest payments. That really hurts the returns on most deals.

@Eric Alvarez what @Bruce Lynn said. Number of units will definitely come into play as well. I lot of the really good firms won't touch anything that doesn't support onsite management. Whenever you have a property lined up, give me a shout and I'll give you a short list of companies to contact. 

@Andy Olsson I hear it is becoming more common in the multifamily space. Not sure about new construction though. I wouldn't think you would need to cut out the pref on new development deals as these typically have the highest returns. I would lean towards a safer, value-add investment right now.

@David Braun the only way to compete with that is to not compete. Either focus on finding off-market deals where you are the only horse in the race or pick a different market. I was in the same predicament when I started out, so I started looking in less competitive markets until I gained enough experience/confidence to compete with those hard money offers. 

@Rami Polatchek contact @Dane Ohlen

He is the one you are looking for! Highly recommend!

@Phil B. I don't think the clauses in Purchase and Sale Agreement will be enough to cover your bases here. The issue I see is the seller having operational control of the entity (LLC) that owns the property. If you don't amend the Operating Agreement he can sell or not sell/refi or not refi.

If you and your partner buy into the seller's LLC individually (not together in an LLC), how do you all intend to split profits?