All Forum Posts by: Evan Demchick

@Account Closed is based in California. He might need a property manager to look after his rental though

@Account Closed is based in California. He might need a property manager to look after his rental though

I think this is an interesting question and can be tackled in a number of ways. First off, the fact that two firms involved in a trade have differing opinions is to be expected. That is the reason why one is a buyer and one is a seller.

Personally, I would rather invest with Equity Residential/the investor who looks to free up capital when yields are low. With that said, I think it is more about investment goals than anything else. Large insurance companies, endowment funds, etc. are probably looking for mid single digit consistent yields, as well as a safe place to park capital. If so, what Starwood is doing makes a ton of sense. Put another way, is this investment a replacement for long-term bonds, or a replacement for another investment (value-add real estate, stocks, etc.)?

Also, we don't know who the transaction was financed. I assume both players have access to favorable debt, but if someone can purchase at a 5 cap, and finance the majority of the purchase with long term debt between 3-4%, the equity yields are actually reasonable and should grow (even modestly) over time.

I am not sure if this answers the question, but I think what both groups are doing probably makes a ton of sense in satisfying the goals of their investors. 

It is a lot of what has been said but most banks I've talked with generally won't care much about it being in an LLC, as long as the personal guarantee is the same. To them, they still have the asset and you as lines of recourse. And yes, the smaller the bank the more likely they are to work with you. I would mention to them that you are looking to build a portfolio- a constant source of deals normally entices small banks.

I would think is the safer route, rather than holding the property under your name where you have liability from a number of different angles.

Likewise, if you are having trouble securing bank financing, you may want to look into a bridge loan, prove out the income for a year, and then circle back with a bank. Obviously, you don't want to have a high interest rate locked in, but if it is the only way to close on an otherwise good deal, the short term cost may be worth it. Just something to think about.

I would agree with a lot of what @Devin Beverage said. I think that is low for class C, as class A in Miami is probably around 5 (lower for institutional). I would think you would want around an 8 or so for class C.

I think two questions are more important: 1) Is the NOI correct? Think about all costs that could associated with ownership and look at the CURRENT rent roll. Sellers a lot of time will try to tell you what the rent COULD be.

The other important question is if the return is worth it. 8% cap rate may be the current market rate for Miami, but that does not mean it is worth it for you. There may be a value add property with more upside, a nicer building in a different market, or a different asset class in general (like the stock market) that better suits your investment needs.

@Steve KarpYes there is. They meet every Thursday, including tomorrow at 12pm. It's the Denny's at 3151 9th Ave. I plan on being there. Feel free to reach out and join. 

Thanks @Account Closed.

Hey Chris,

As Nick mentioned we are both builders and developers in South Florida, working from Pinecrest up through Boca Raton. I would be happy to discuss current deals we have in the pipeline, as well as our general goals for future projects. Also more than happy to to offer a local's perspective on various sub-markets and asset classes. 

Looking forward to hearing from you.

@Account Closed Thanks will do

Hello BPers,

My firm has a long history of building luxury spec houses in Miami and throughout South Florida. Traditionally, we have financed the builds with 100% firm capital. However, we are looking to get a construction loan on a house we are building that will be listed for between $6-7M. I have been looking to banks to lend at bank rates for about 70% of the costs. I would also pay a higher rate for a private lender that would presumably account for a larger portion of the capital stack,

I was wondering if people knew the best strategies to look to acquiring this type of financing,

Thanks,

Evan Demchick
Hollub Homes - Relationship Built.

I would be interested as well. Always good to meet as many people doing a variety of things. Keep me in the loop and let me know if you need help setting things up- would be happy to pitch in.