All Forum Posts by: Greg Scully

Monthly emails and quarterly financials are usually fine, especially for passive investors.  You may want to have a monthly call/webinar for the active investors/general partners.  There are some software options to help with this,  check out InvestNext.  Heard them on a podcast, checked out their site, not a user yet, but I'm thinking it looks pretty good.

Is there a good book recommendation that covers the project management side of flipping: proper record keeping, contractor management, scheduling etc?  Looking for something granular to help us build out checklists and systems.  Thanks.

@Nate Anderson - Developing my network of passive investors.

@Vlad Denisov - A rent roll, T-12 and and P&L should be available for review from the selling broker. Generally speaking your broker will be in contact with the owner through the selling broker. Rarely will you have direct contact with the owner. Depending on your market, there may be some hurdles to get even the most basic information. The broker may require a NDA or POF.

Loopnet has the reputation of being the place where deals go to die.  We found a great deal on Loopnet, but it's not in the same markets that Cardone plays in.  Perhaps his website should say "I (Cardone) can't find a great deal on Loopnet.".

@Andy C. -  I would certainly get on a call with someone in the industry, especially if the property cash flows well or if you (or any of your partners) are higher income earners that could benefit from a tax liability reduction.

@DJ Roshan - Military bases can be fine a long as their is an otherwise diversified economy.  Closures do happen, and the results can be difficult for communities very dependent on the military presence.

You will typically have access to financials and tax returns, but not at the offer stage.  An accepted offer will gain you access to all the due diligence documents.

@John Hewitt - Define what the price per unit range is for the class of property and market your interested in.  Future listings will have a point of reference for you, and it might help you recognize potential deals.

Make sure you're comparing apples to apples.  Some management companies take a lower percentage of the collected rents, but charge more or take more from lease up fees, late fees, fees and more fees.  

@Adam Martin

1. The LLC that owns the 6 plex would pay the management fee. I would consider the management it's own entity.

2. I would suggest using a lawyer. LLC's can run $800 - $3000 depending upon your location. They'll help tremendously with the language and structure.

3. It's difficult to give advice on numbers, just be sure to include some CapEx for future repairs ($250/unit is common). The better you keep your books, the easier it will be to sell.

Run it like a business.

@Shawn Singh - 

1.  Your interest rate is very high.  Our last bank loan was at 5.5% over 20yr ammo.  I would suggest using a 25 yr ammo as the best case scenario to be conservtive.  We have a 22 unit under contract that may be under 5% with a 30yr ammo and ten year term...Fannie Mae small balance loan.

2. Commercial lending can be very creative and specific to the project. For instance you could get 80%LTV with the rehab costs on a construction loan for a year at interest only...or many other combinations. Talk to your lender, it seems like you have enough information for them to give you some guidance.

3.  I use the existing expenses and then prove them out.  It's common to have somethings under reported.  The 50% rule typically includes capex at 200-300 per unit.  7% vacancy sounds good for a business plan, I would also run it at 10% for a stress plan.