All Forum Posts by: Jeff Kehl

@Justin R. That's on the wrong side of the state for the bankers I work with.  They want to be NW of Atlanta. But here's a few things for you to look at. I have done loans recently with Lima One and RCN Capital. I think they both do multifamily. They will be more expensive than a good local bank but not by a lot. PM me if you want a direct contact.

Also, I have not done any business with them but a CBRE lender sent me several contacts for sub- $1m loans. I will forward the emails if you PM me.

@John Pflederer I'd say you have a number of issues going on. 

First, lower end apartments like that in the $400/month range are just hard to cash flow. Especially when you're rehabbing them. I can rehab a $800/month apartment for about the same as a $400/month apartment. Vinyl Plank and paint costs about the same for each.

Second, when I buy a value-add apartment I don't really count on it cash-flowing until I have rehabbed all the units and replaced all the tenants. You need to bite the bullet and raise rents on the hold-over tenants. If they stay, great. If not, you will have some more expense to rehab those units.

But what you will find is that once you go through that process your cash flow will get much better. Even if you get some turn-over after the rehabs it is not nearly so bad because the vinyl plank won't need to be replaced. So mostly you're just looking at painting and cleaning.

One more caution and one encouragement.

Caution - if we get a recession this is exactly the type of property that will have trouble because the tenants can't pay their rent.

Encouragement - it is fairly impossible to replace lower end apartments in small towns theses days. Cost of construction is very high so no one is building them and your rents should continue to rise over time.

@Justin R. where is the property located? If it's a good property I have a few bankers I could introduce you to.

@Andrew Turner sure I could remove Rome as a keyword alert but then I would not get alert when someone was truly interested in the Rome market... Are you truly interested in the Rome market?

@Andrew Turner Anyway you could leave Rome off your list? I ask because I get a keyword alert every time you post and that seems to be every day...

@Scot Poore I'm biased because I'm heavily invested in the Rome market. But I have also looked at Athens and Huntsville and I think you'd be fine in either of those as well. I'm not familiar with the other ones so I won't comment. Generally though, you want to look for a strong economic base with good job and population growth. Also look at diversity, Rome has Medical, Education and manufacturing. Look for that, not just one thing. You just don't want an 'oil town' or a place that makes cars and has nothing else going for it.

@Jason Merchey I've invested in 7 syndications over the last few years but it was all money I can lose and it won't affect my life substantially. That's when you want to invest in syndications not if you're risking a large amount of your net worth on 1 deal. Especially now. 

Most of the deals I look at today are flat out frightening. We're at the top of the cycle AND everyone and there brother thinks they would be a good apartment syndicator. 

In some I look at their cost of capital is very close to or more than the the cap rate they're paying for the property.  Essentially this means they're borrowing say $1 million dollars at 6% interest for an asset that pays a 5 cap or $50k per year. So their plan is to lose $10k per year right? Well they say they're going to paint and put in new flooring which will make the rent grow so it's not a problem. 

That strategy has worked well for the last 5 years but I doubt it will last much longer.

Also, just about every syndication I look at gets 2-4 years of interest only on their loan. That means that the deal looks much better than it is in reality for the first few years. What happens when the economy turns down at exactly the same time their interest only period stops? 

The last point I would make is that all of those many people who have started syndicating will not stop syndicating just because the market gets frothy. It is their occupation now and they need to keep doing it up to and past the point where it makes sense.

Caveat Emptor.

@Josh Shneyderov people like to confuse these calculations a lot for various reasons but it is very straightforward. How much cash did you put in and how much cash did you receive(put backin ) over time. Do it by investment and where the money came from has absolutely no bearing.

@Jay Graham Hi Jay, I think you have a good marketing theme. Farmland is a 'hard asset' they aren't making any more of. World population continues to grow so it follows we need more food and valid farmland should increase in value.

You're not original in this thought though. There are two publicly traded REITS I know about that do this Farmland Partners (FPI) and Gladstone Land (LAND).

In addition I hear pitches all the time about buying coffee, cacao, and other agriculture products in South /Central America.

So I'm curious how you would differentiate yourself from them.

I was a bit disappointed to see you say 'high total risk rated returns'. Okay so maybe there's not a lot of risk but I assume my investments in Farms will be very low returns so I think using the word 'high' is disengenuous.

@Robert Larson what kind of building? Type, Price, tenants, number of units, age? There are many businesses/people that loan money on many different types of property. Depending on the lender/property/borrower you will find very different criteria.

Generally banks should be your first stop. No offense intended but you look very young in your picture, do you have a credit history/score? If not you should start working on that immediately. 

If the standard lenders don't work for you, look at private lenders, basically people in your area/you know that have money. 

It's tough to make a decent rate of return on money these day so most people that have some savings will listen to a pitch if you can make them a good return.