All Forum Posts by: James Friery

Thanks for all the replies, guys. With regards to what you said, Nate, my paranoia rests on how easy it is to "cook the books." The difference between what he is reporting and what he is claiming is certainly making underwriting tough and leaves a lot of variables left for the imagination. So far the seller has been very cooperative with providing the necessary documents, but again, these "write offs" are a major concern. Copies of all 30 leases are being sent to me and I should have them by tomorrow. The rent roll has been certified as well. I guess I'll just tread lightly and if I smell any more smoke I'll back away. Again, thanks for all the help, and if any of you have more suggestions I'm all ears

Hello all!

I recently begun my due diligence on a 30 unit outside of Binghamton, NY and there are some questions I have regarding the seller's financials. Long story short: the seller is claiming GSI around 240k but only showing 175k and 183k for his 2014 and 2015 Schedule Es. We ran into some issues with the bank over these discrepancies, but it looks like we can deal at 70% LTV.

Furthermore, the seller has provided what seems like a plausible explanation for the missing income, showing how the missing money is "written off" in his management software. So far the seller has been very cooperative providing the necessary documents, etc. 

Given all of this, I know I need to "trust, but verify," so any suggestions on how to handle this is appreciated. The missing income would indicate around a 25% vacancy and his currents are showing a fully occupied property. I'm going to take a trip down there very soon and verify receipts, etc. 

If any of you have any suggestions or need more information please feel free to message me. Thanks for all the help, BP community!

Looking for something in the 500-1.5m range.

Hello all,

I'm looking for a small to midsize apartment complex in Upstate NY/ Vermont area. Please feel free to PM or call my phone (607) 267-0586 with any offerings. Thank you!

Right? And we're still exploring conventional financing as well. I'm just trying to brainstorm some strategies here, and getting wrapped around some mental gymnastics haha.  It would work for say 10% down, 5% interest, 30 year amort, 7 year balloon. I like the property and area, so I'm wondering his price/my terms and just offer based on it appraising out to 550k, and load up with other contingencies. Any thoughts? 

Hello all,

My pops and I have been searching for commercial properties in college town markets across NY  and stumbled on a 13 unit in Fredonia, NY. Briefly speaking, we liked what we saw and have been negotiating with the seller. The place is a re-positioned motel: One 3-unit house with 10 units in a separate building out back. The house has 4 bedrooms upstairs (being rented out to students @ 1950 per semester, they pay utilities), 2 bedroom downstairs @ 750 per month, and a one-bedroom rented out @ 650 with the landlord paying electric. The other ten units consist of 4 studios (550 per month or 2700 per semester, utilities included), 5 one bedrooms ( 650 per month utilities included) and one 2 bedroom that rents for 800 (with utilities included). The place is being offered @ 575k and the proforma is as followed: 

GSI: 107400

        -$11939 (taxes), $4339 (insurance), $1380 (trash dumpster), $400 (snow removal), $10,447 (Utilities)

= 78,895 NOI 78895/575000= 13.7 cap (pretty neato right :p)

My numbers based on assumptions:

GSI: $107400

       - $11939 (taxes), $4339 (insurance), $400 (snow removal, seems low), $10447 (utilities), 10%  Property Mgmt ($10,740), 10% vacancy/repair ($10740), 5% Cap Ex ($5370 first year, 300*13 a year afterward), $1380 (dumpster), $1000 (landscaping), $300 (accounting fees)

=$50745 NOI/575000=8.8 cap

Additional info: the seller bought the place in 2003 for around 140,000. The building has a market value of 296k based on tax records. 

Without writing a novel here (sorry to all of you helping out!) my initial offer of 462,500 was countered with him holding the papers @550k with 25% down, 6% interest, 20 year amortization with a balloon due in 7 years. This breaks down as followed: $137,500 down payment (without including inspection fees, lawyer, environmental, etc- any advice or insight on this would be greatly appreciated too) and the payments would be $2955 a month. At the end of the term the balloon would be around $320,000. 50745 NOI- $35460 P+I= $15,285 cashflow/137.5k down payment+closing costs= 11.11 COC (high side since closing costs weren't included). In 7 years, that amounts to 106,995, and with time value of money considered that would be significantly less than the initial investment.

Any thoughts? I'd love to bounce back ideas on how to structure the debt, exit strategies with refinance, etc. I'm also an agent, so I stand to make a co-broke here. Thanks for any help!

Welcome, Brian!

Nailed it, Steve!

I have one Sect.8 tenant and the experience has been pleasant so far. Just like fair market tenants you have to screen, screen, screen. I did my background checks and did all the paperwork at their prior residence. Some people just need a leg up.

Regarding that place in Lansingburgh, I agree a 7 Cap is ridiculously low. However, it's in area where there are other "loft" style apartments around and much of the crime is to the south. The neighborhood itself has people improving their homes, and young artist types moving in. You have people across the river in Cohoes paying obscene amts in rent (Harmony Lofts) after all... Which in itself is kind of scary.

Perhaps we'll pass on this place, but I feel that middle of the road B type properties are pretty stable. What are all of your thoughts on what's going on with all of these "luxury" apartments being built? Can our region absorb 1000+ apartments @1500 a clip? I'd love to know all of your thoughts.

Great advice from you guys,  thanks everybody! My thoughts are to expect a 7 cap from places such as Latham and nicer areas as well. This is a C building made into a B (at best) and just based on what I know (I don't have the actuals) it appears to be very expensive to run.