All Forum Posts by: Jonathan Orr

@Jennifer Vincelli if you want to keep it off market, I may suggest what Greg said about calling local developers. Another option would be to find a agent/broker you know and would to talk with them about "potentially" selling your property, may be able to determine price instead of letting a developer potentially low ball you. There is nothing saying that once you talk to an agent that it must go on the MLS. They may know of someone for a referral fee which would keep it off market, but it sounds like you may want to avoid brokerage fees (Don't blame you).

Good luck!

@Bennet Sebastian adventuresincre.com has some good starting places with development proformas for different asset classes.  Of course it is just the math so you will need to provide the input for development costs and construction.  To find that information you most likely will need to talk with a GC you know that has experience in it.  Also talk with the city it's located in, they can help you estimate your cost for permits and any entitlement fees that will be charged from a cities perspective.

@Jeff Owen I am sure you know that CAP rates are determined by dividing your NOI over PURCHASE PRICE. You can then back into a CAP rate or if you want to determine a price via cap rate then divide NOI by your CAP rate. To find cap rates, that is determined by the market (look on loopnet, local brokers for comps, etc...). If you are trying to find where your local cap rates are trending, CBRE put out a nationwide average cap rate for different asset classes in top 20 cities, that may be a good start.

To do all of this, as you mentioned you need to have a P&L on the specific property. Prior to writing a LOI or making any offer the owner or broker should provide you with that P&L. If they wont provide you a Trailing 12 P&L (big red flag).

Hope this helps

Hey BP, I am setteling a lawsuit and a portion of the settlement is that I am securing my settlement with a 2nd trust deed on a property the defendant owner.  To paint the picture, the building is worth approximately $4 million.  He has a traditional mortgage on it for $1.25 million.  My 2nd trust deed will be for the amount of ~250k.  The property is located in Orange County CA and I know of what I need to do to file the 2nd deed (my attorney is preparing all of the documents).  My question is, do I have to notify the 1st mortgage or is that the responsibility of the owner of the property?  

Not to worry, I am taking the steps that if he defaults on my 2nd trust deed to go through the foreclosure process but I want to make sure after I file it correctly that I am not missing anything I may need to do (such as notify the 1st or anything else).

Any recommendations or tips is appreciated!

@Gary Nicholson I feel your pain, I would say if you are thinking of acquiring a property for investment rather than just a "free" place to live, look out of state.

House hacking in CA specifically is for building equity in properties by the income you receive from renting out other units and using that to pay down a mortgage (increasing equity and hoping for appreciation).  If you want cash flow, look out of state in my opinion.  I have moved my search to only doing out of state projects simply because of the cost and the headache that comes with it.

@Jason Padgett you are on the right track with finding a partner/mentor to teach you the ropes when it comes to development and learning costs, because there is no straight answer, each deal will be slightly different. As for commercial investment acquisition, there is a website called adventuresincre.com, great website that has a ton of underwriting models and they have web tutorials on how they are made and how to underwrite. It gives you a base so you can eventually create your own models but gives a good grasp of what you are looking at from a numbers sense. Everyone is right that development and commercial really is a learn as you go type of industry.

Partners and reaching out to seasoned professionals is the way to go. Of course we all make mistakes and you just learn to adapt and know for the future what to do and not do.

For development a very easy read that is more case study inspired is a book called “the real estate game” dives into the mind of a developer and what he looked for In deals

@Jonathan Trimboli PM me and we can chat

@Jonathan Trimboli I completely skipped all residential when I started in Real Estate.  I would not be afraid to find a partner who has experience in Multi Family.  Additionally, I great tool for obtaining the right loan is finding a good commercial mortgage broker.  Yes, they make deals more expensive through points but starting out, if you don't have a relationship with a lending institution, they are awesome people to have in your corner and the good ones are well worth what they bring to the table.  They can walk you through the process to make sure you have your checklist right to be approved for a loan.  

Prior to any of that, be sure you have the knowledge or the people surrounding you who can evaluate deals efficiently so you know you are getting in the right deal.

That is a question for your lender. I will say that I had a client purchase some investment duplex's in CA and his lender would not allow any portion of the property to go under a LLC per the Loan agreement. What would be the benefit to rent under a LLC if the properties Title is under your personal name? From my perspective the potential renter would be renting from the owner of the property and if your Lender does not allow you to place the property in a LLC I think you may be out of luck.

I have an opportunity for a development project that would better fit a condo/townhome project rather than traditional Multifamily. I wanted to know if anyone has a underwriting for condominium or townhome development? I have a few excel models, but wondering if anyone else has a model they prefer? This would be my first townhome project so open to different underwriting. I have the Adventures in CRE for their condo development model but would like a model that goes into a bit more detail in determining cost on a per sq ft basis. Thinking I may need to build a model.

Thanks BP!