All Forum Posts by: R Sean

That's probably enough to get you into commercial, and then you have a better class of tenants to deal with.

Unless you are buying a really classy building, apartment dwellers are the bottom of the sludge pot of tenants.

PNW,
Interesting thought. Would you go to commercial or step up in class to a class B+ or A multi-family asset?

0 Votes

I am really at a crossroads.

I'd likely leverage 50-60% LTV for class 'B' properties BUYING BASED ON IN PLACE NOI...not pro forma.

Then I'd improve the asset to just above market comp's to increase occupancy, get it cash flowing nicely, hold for 24-36 months then purge and re-deploy.

Sounds good on paper...

1 Vote

If you had $1M in equity, what would be your strategy to invest in multi-family assets?

- Fixer-uppers?

- Cash flowing?

- Leverage an asset as high as it will go?

And why?

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What can you REALISTICALLY get done in terms of investing while at your desk 8 hours per day? It seems limiting. I can't go review invesment opportunites (til the weekends), I can't birdogg (of can I?)....it just seems being shackled to the desk is extremely limiting. And I can't quit my job at this point.

I need your examples of what can be accomplished while at the office. Thanks fellow BP'ers!

R Sean

0 Votes

Great question Rich. In Houston, you can buy, on average, Class B-/C+ apartments for $20k/door with $600-$700 rents. The math works.

PLUS, apartment renters in this strata in Houston, (can't speak for other TX cities) IN GENERAL would rather spend their money NOT on a SFR, but on a NEW CAR, CLOTHES, etc. to keep up with Jones', when in fact they are entrenching themselves to become perpetual renters. Great for the owners, sad for the renters frankly.

Said plainly, you'll always have a viable tenant pool because of this level of conspicous consumption.

R Sean

1 Vote

Originally posted by Peter Giardini:

No repairs.

Access to premises with 24 hours notice

Allocation of payments in this order... Late fees, fines/citations, water/sewer, and finally rent.

As an aside but related... we implemented a rigorous move-in, safe and clean, and move-out inspection system that protected us 100% when standing before a judge.

That's great Peter. Do you incorporate picture taking on the move-in and move-out too?

0 Votes

Originally posted by J Sparks:

The offer is a 40 unit section 8 complex in New Orleans. It's gross yearly potential rent is $444,336 at 100% occupancy. Expenses are at the 50% mark so NOI is $222,168. He has already made 300k in repairs. Downside is it needs 450k more in repairs and it is currently completely dark. Good side is it still has the 50% depreciation bonus available till the end of this year. His offer is: buy his LLC for 900k and then you can make the repairs for 450k yourself.

My question is how do you factor in the fact that it is completely empty into the purchase price? Also, what would be a ball park offer price with those considerations in mind along side the tax benefit of 50%?

I'm assuming the buyer has an equal gain who can write off the dollar for dollar bonus depreciation.

TIA

Sparks

Sparks,

Unless you have a 5 star legal team, stay away from buying another person's entities. Too much legal exposure. For example, what if the entity has engaged in fraud?

Setting that aside, ask yourself if you'd want to have $1.4M in a dark, section 8, New Orleans apartment complex...and that's assuming his $450k budget is sound.

Before getting to much in the details with this one, you may want to take a step back and think about the strategic issues of this opportunity...or lack therof.

R Sean

0 Votes

Originally posted by Ariane Randolph:

This property consists of 12 units, 2/1, currently no vacancies.
The asking price is $569,000. The annual rent is $86,400, with listed potential rents at $90,000/yr. The units are 3 quads and deeded seperatly.

The property was recently renovated. The seller is a licensed real estate agent willing to accecpt the following financing: contract for deed, owner financing, private, may pay some of the closing cost, wrap around, conventional, and FHA.

I have some questions/comments:
1. Is there an advantage of contract for deed, owner financing, vs. wrap around?
2. I was reading some other post, and someone recommended asking for "Principal Only Mortgage", any thoughts on that?
3. Based on the info, is any more information needed to provide some feedback?
4. Where should I begin?
5. I need assistance with financing the potential portions not held by the owner. I will need a preapproval letter, for the showing appointment?

Any thoughts, comments, or questions; all are welcomed and appreciated. Thanks!
:D

Ariane,

I suggest instead of thinking about how to structure a deal, check to see if the deal pencils first.

Annual Figures

Gross rents $86,400
NOI:........... $43,200 using 50% rule
Net............ $43,200
Profit/door ($14,400) ($1,200/month * 12 months)
Debt service $28,800

Max you could pay is $340k and still achieve your $100/door goal AND that's with very aggressive occupancy assumed (100%).

3 Votes

Originally posted by Justin Hanke:

Hmmm...I'm a newb and didn't remember that rule but good stuff!

Is there an easy way to finance 6 different properties? Seems like ALOT of paperwork and time? How to bulk deals work? Am I going to have 6 closings w/ 6 sets of closing costs?

I could tell you a more complicated answer, but the short one is "yes" to all.

0 Votes

Originally posted by Alan Smith:

FL Flipper: Send me an email if you wish. I am in Texas,looking at lots of MF REO for our company to buy (DFW). We only buy properties which will yield an 11% cap however ,leaving a LOTS of product we won't buy. Send specific age,location,product-type perameters.

Alan, I just dropped you an e-mail to your address above. If you don't see it, check your junk mail. the re: line is "Biggerpockets"...

Thanks. R Sean

0 Votes

All Forum Posts by: R Sean

R Sean has started 6 posts and replied 35 times.

Post: If you had $1M...how would you...

Post: If you had $1M...how would you...

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Post: Investing and working full time

Post: Lets' see who knows what, and why.

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Post: Questions about this Multi deal?

Post: Welcome Feedback on 12 Unit in FL

Post: Columbus, OH - 6 rentals

Post: Multi-family foreclosure properties request