All Forum Posts by: Greg Scully

@Kevin Giraldo - Population growth is a big factor, and generally speaking Orlando has some good fundamentals.  Having a good property manager will be key.  I would also suggest touring the market for a couple of days to help put your research into context.  

Here's a good article about market selection.

https://www.biggerpockets.com/blog/2015-11-16-how-to-choose-areas-multifamily-deals

@Andrzej Slugocki - Generally it can wait until the property is identified and at least under contract. Residential lenders may not lend to an LLC, so keep that in mind if you are staying under 5 units.

@Steven Ko - We're seeing that as in a historic district in one of our markets. Larger older homes were converted to multi's to support the growth of the local college, now the downtown area is coming back and new money is converting them back to SFR for resale. Typically these are properties that are in rough shape and have had the certificate of occupancy revoked. Bringing them up to code as a multi is cost prohibitive, but it works for a conversion back to residential.

@Manuel Scott - You're getting 0% return on your equity, and the rates are incredibly low now.  Conservative leverage could be a good model for you.

@Cindrell Harry - Local banks will often require higher LTV and DSCR, as well as shorter terms and amortization. Try and get some get some term guidance from them so your underwriting assumpitions are realistic.

@Charles Seaman I was referring to cap ex reserves as an expense item (250-300 a month), and whether or not it is included in NOI for terminal value calculations. Thank you for the example.

@Frank Jennings - It could be a negotiation tool.  Expenses tend to be inflated on tax returns and under reported in the marketing package.  

Focus on your business plan to determine if it's worth pursuing.

@Justin Goodin I'm partnering with someone informally to reach common goals. We invested together in a couple of deals and found that we work well together and have complimentary skill sets. We did not form a legal entity for the day to day collaboration, instead we leave the entity and business structure to be defined by each opportunity - typically an LLC.

@Greg Dickerson - Wow, seems like a lot.  I'm going to mirror open lot parking at local storage facilities. In our market it's about $40 for uncovered lot parking.  I would pay that (and probably a little more) for the convenience of having it on site.

@Charles Seaman - What about the terminal value calculation?  Some include Cap ex Reserves and AM, some just Cap ex, some don't include either.  

Some basic scenarios I've run revealed a difference of 3% in the IRR. No big deal if the IRR is 20+, however the difference between a projected 12% and a projected 15% may be mean the difference between getting funded or not.

I've never seen "how is your terminal value calculated?" on the list of questions to ask syndication sponsors.  Perhaps it should be there.