All Forum Posts by: Account Closed

Hello all,

So I've got an interested seller for 16 units I'm trying to acquire. He's given me his last 3 years financials (as reported to the IRS), but I haven't been able to get the T-12 or rent roll. We've only been talking for a week and I've still got my PM giving me his thoughts, but I don't want to push too hard at the outset.

Have you ever ran into this situation? Do you ever make offers without all this info? If so, how do you adjust for unknowns? If not, how do you approach this without pestering a good lead away? How long does your typical pre-negotiation stage last?

I think he's motivated, especially with some of the units likely being student renters. I just don't want to turn a warm lead into no lead, ya feel?

Thanks,

DK

@Lee Yoder

Great stuff, that's exciting!

@Faith Hill

Yes, but many situations are different. (And we're living in unprecedented times.)

I spoke with a SS operator we work with the other day. They've had a slower rate of new customers, but their churn isn't anywhere near negative. Rental collections have been high in this downturn.

In their words: "people will lose a house or car, but they like to hold onto their stuff."

@Wade G.

I look at it from a return on equity stand point. More equity = lower returns. Less equity = more returns (in hopefully more places.)

Same thing goes for a risk stand point. Less equity means less for a potential attorney to go after. Less risk in a market downturn (I'd rather my 20% drop 20% than my 100% drop 20%.)

You should keep something in your properties as a hedge, but at some point your equity has diminishing returns.

I've got a relative considering purchasing a farm house with some large acreage. The main question is a what to do with the 60ac tract that's been split into 4 paddocks for use with cattle (and was being used until 2 years ago.) We need to keep bona-fide farm status and would love to find someone to lease it out -- but are totally unsure how to find an operator Any suggestions? Thanks!!

@David Gotsill

Thanks for that! I believe in getting legal counsel on most things, but you're right, it really does come down to a yes/no call about the operator/opportunity. There's not much influence as an LP -- you're riding the bus, not driving it. Which is the beauty (and occasionally the pain.)

Is there anything you'd find in a PPM that would instantly make it a no-go for you?

@Mike Dymski Definitely agree with you on that!

@Jerel Ehlert Thank you for the response. Can I trust general counsel to do this or should I look for something more specific like an SEC or RE attorney?

@Christopher Smith It is known. But which one has had the most impact on your investing?

@Chris Seveney Thanks for the input. And that's something that's been on my mind lately: how do you vet opportunities with a 5+ year shelf life this late in an expansion cycle?