All Forum Posts by: Jacob Chaney

@Troy H.Yes, that is correct.  Our partners guarantee us x number of students per semester and receive special pricing based on that guarantee.  They sign contracts with us for between 1 - 3 years.  I've been doing this for almost 10 years now with tax records to prove it.

@Russell Brazil Really great food for thought Russell. Thank you for the information.  I will do some more digging and re-evaluate my strategy.

@Russell Brazil Would you mind expanding on your point? Everything I've read from books indicates that income is treated different for appraisal purposes based on where it is derived.  I'm having trouble wrapping my head around if it's documented via leases, contracts, tax purposes etc. why it's not valued the same as more conventional 12 month leases.  Are there any books you recommend or websites that discuss the reasons as to why this is the case? I'm eager to learn more.

@Anthony Dooley Thank you for the feedback Anthony. I'm not interested in selling the building but I would be interested in cash out refinancing. If I can double the NOI of a property (no matter how I do it), I assumed I doubled its appraised value.

I run a student housing program in Washington, D.C. that sees me receiving anywhere from 50% - 100% more than normal market rents.  I have contracts in place with large universities and colleges along with a track record for my business model stretching back almost a decade.

My strategy has been to buy or build my own multifamily property believing that at today's cap rates I can really force some appreciation through my program.  However, I spoke with a local developer who has been in the business for decades and he tells me that any underwriter or bank would view my income stream with great suspicion and would not value it the same as they would conventional 12 month leases.

Does anyone have any thoughts or experience in the matter? I would love to hear from commercial multifamily underwriters or lenders out there.  I once believed that as long as it's documented and can be proven that income is income is income from the point of view of an appraiser. 

Just wanting to know if I should rethink my entire strategy.

Thanks for the responses @Paul Tschetter and @Wayne Brooks. This definitely was a lesson for me. The seller and I had negotiated and operated in good faith up until that point and I had no reason to believe he wouldn't honor our agreement.

This would have been my first multi-family purchase so I guess these kinds of lessons are learned through experience and the hard way.

I was just wondering if my attorney who knew the situation would normally inserted language in to the contract release to prevent this sort of thing from happening. I wonder if other RE attorneys would have insisted on some language to prevent this.

I had a 6 unit apartment building under contract in Washington, DC that requires that tenants be given the first right to purchase (referred to locally as TOPA).

The seller contacted me 3 weeks prior to close and said that he still had two tenants that had signed statements to vacate but were still residing in the property. He was concerned that merely having a signed purchase contract without offering them the right to purchase would put him in violation of the law and open him to civil/criminal penalties. He suggested I release him from the contract and then once they moved out on the agreed upon date and the property was 100% vacant we would sign another contract. This sounded reasonable and I asked my RE attorney to draw up a release.

Once the tenants moved out and the time to re-sign the PA came around the seller informs me "I'm sorry, I have another for $250k more, all cash". I found out later that this purchase was made by my competitor.

Should my attorney have placed language in the release in order to protect me from something like this happening? I thought that's what I was paying him for. I hired him to look out for my interest.

I have no desire to take any legal action but now this same attorney is claiming that I still owe them $1800 in fees from this deal I believe they had a hand in sinking.

Advice? Thoughts?

I wasn't pleased with the performance of my last RE attorneys I used to put together a deal. They weren't very response and dragged their feet putting paperwork together and were terrible at communicating with me.

In my market I have to be able to have contracts and other paperwork done quickly for rapid settlements.

Any DC investors care to share or recommend a good investor friendly RE lawyer or firm?

Thank you Carlos, it's most definitely Washington, D.C. Is he in LaSalles corporate DC office?

I'm highly interested in purchasing a specific property that is not on the market. This is a class A building in the perfect location. It is owned by Jones Lang LaSalle. Where would I even begin to inquire about an asking price or their willingness to part with this asset? Which office or officer would I even start with? Do I just submit an unsolicited LOI? Make a phone call?

Anyone have any experience purchasing large multi-families from large corporations like Jones, Lang, LaSalle?

@BillGulley I never considered asking the lender if they would simply allow for a commercial loan on all of the units. That's a very good point. We also have a condo property where we own 5 out of the 6 units and perhaps we could ask them the same question in that scenario as well.

I really appreciate everyone's input. BP has definitely proven to be an invaluable resource to me.

Thank you all so much for the input. The purpose of going the reverse way is for commercial financing appraisal/purposes. We subscribe to the buy and hold strategy so we're not worried about having individual parcels to sell or flip later on down the road.

Our strategy is based around being able to force appreciation by increasing the NOI and then refinancing out to get our money back and do it again. Much more difficult to "force" appreciation on a SFH then on a 10 unit apartment community :-)