All Forum Posts by: Jay Boyle

Hi BP friends.

I am under contract for a 90 unit C class property bought well below market ( I will tell you how it happened) in a high cap rate area in Arizona. I am seeking a lending partner to bridge between bank financing and my own 5% down. There is a very good value add play and flexible exit strategy at 1-3 years. The cash flow is very high so it allows above market monthly payments and No rehab, No flip. Stable occupancy, third party management, third party due diligence. This project is very important to me. I plan to wow my investor with stable cash flow and develop a long term relationship. Fully transparent. Ask me a few questions, lets see if we can work together.

Hi! I need some help planning the entities to hold my upcoming apartment purchase. I have an accepted LOI and we are working on the contract. it is 90 units in Arizona. The planned financing is 75% first mortgage bank loan, 20% private investor lender position (1-8 private investors; refi buy out in three years), 5% sponsor cash. I plan to aquire with an LLC. do I establish another LLC for the investors and that LLC has a second position lien on the property ? any advice about entities would be helpful. thank you all very very much. Jay

Hi I am new to apartments. I presently have a 90 unit under LOI. The financial data I received from the seller shows the incoming security deposits as income and the outgoing security refunds as expenses. is this typical? I am not very experienced with book keeping or accounting but it seems to me that security deposits and refunds are liabilities for the balance sheet but not income and expenses. Am I wrong? thank you very much! jay

Hi 20 units at 37500 is a purchase price of 750,000. The gross scheduled income is 10,000. It's wise to calculate based on 10% vacancy so income is $9000. Expenses are half so your net operating income NOI is $4500/mo or $54,000/ year. The cap rate is NOI/price so 54000/750000=7.2 cap. A thirty year mortgage at 5% is 3650/mo or 43,800/yr if you are only putting down 70,000. Subtract 43,800 from the 54,000 and your cash flow is just 10,800/yr. the debt service coverage ratio is 1.23. Banks will not fund DSCR below 1.25 usually. In my opinion unless there is a major value add like a hefty rent hike, there is no cash flow here. Good luck. Jay