All Forum Posts by: Lucas Miles

@Michael Smythe Propertyware doesn't have affordable properties capabilities does it? We have both HUD Section8 and USDA RD properties, so affordable capabilities is a must for us.

@Frank K Hwang we have used Buildium for a handful of years now, have had good success for the most part. Seems like their "award winning customer support" as they claim it, has really gone downhill quickly. We will likely be switching to Appfolio or Yardi Breeze soon, they are more expensive but seem to better solutions for larger portfolios.  

@Tyler Condon ask for referrals for other properties they manage of the same asset class, ideally in the same location. 

Act like a prospective tenant and call the "for rent" listing for a property they currently manage, how does this conversation go? Are they friendly, knowledgeable, if they don't answer, do they call back in a reasonable time? 

Ask the CEO/owner of the PM company, how they view their relationship with the owners of the properties they manage. They should view this as a partnership, and no a "we do everything and send you your report at the end of the month" 

@Jake LaRoche I'd recommend having an attorney draft one for you, if your worried about the costs. Make your own "generic" one, then have an attorney review it for you, may save you a bit. Lot of good resources online for what you should have in this lease for the "savy investor/landlords", make sure to follow your state guidelines. If you have an connectors with other investors in your state/area, might be able to get them to share one with you. Lease we use is often growing/changing, and/remove different things as we learn and have new experiences so don't expect the first one you use to be 100% all inclusive. 

@Danny Pacheco The easiest way to "spread out his capital gains", rather than paying them all in one year would be to sell on a "contract for deed" (language may be slightly different in your state, but same principals apply). 

Instead of you giving him the 100% purchase price in the same near, he basically becomes the bank. You pay him, some % up front, then you pay him in monthly payments (with interest) for X amount of years. When the X years is over, then you would pay him the remaining amount you owe him. Terms of this are fully up for you and the current owner to negotiate, purchase price, % down, monthly payments, interest rate, amortization years, etc. Often is a win win for both parties. 

@Kyle Nelson I'm a buyer in those areas, mainly looking for multifamily, but love to connect regardless, I'll shoot you a connection request!

@Allen L. isn't that always how it goes! ha

@Allen L. did you end up going forward with this deal? Looking to connect with other investors in the Section8 HAP asset class. 

@Brad McCoy did you end up going through with this deal? We just closed on our first Section8 deal with HAP contract and are looking to connect with other investors in the same asset class. 

Investment Info:

Large multi-family (5+ units) commercial investment investment.

Purchase price: $814,000

37-Unit - HUD Section8 HAP Multifamily

Overall the project was situated decently well at closing, occupancy was mid ~85%, and overall the property was in very nice condition. Little to no rehab/capex spending was needed. Current ownership was not local, and didn't have a presence anymore. Expenses at the property were were getting out of hand, and needed to be corrected.

How did you find this deal and how did you negotiate it?

This was found off market, we have developed a process to find off market deals.

How did you finance this deal?

Lending was another challenge, lending restrictions were starting to tighten up, and we had to get a bit creative with our lenders to get the financing we needed to close. We used one of our existing local lenders to provide the majority of the purchase, and the rest was provided from our investors.

How did you add value to the deal?

To decrease expenses, we are 1. Bringing in different management 2. Installing thermostats with regulated heat control (we pay heat) 3. Removing some of the on-site staffing that is not needed 4. Renegotiating some utility contracts (garbage and removing some on site office paid internet/phone bills) 5. Change all lighting to LED

To increase revenue: 1. Turn one of the units that is an office back into an apartment. 2. Increase occupancy 3. RCS (Rent Comparability Study) to increase rents

What was the outcome?

The property appraised for 1.4M the day of closing. We will quickly correct the excess spending, and fill the vacant units with quality residents. Our investors benefit from immediate equity creation, and long term predictable cash flow, overall a great investment for us!

Lessons learned? Challenges?

Being a Section8 HUD building, there was an immense amount of paperwork and due diligence that was required. HUD performed extensive due diligence on us, and had to approve us as buyer's and our management company and mangers. Approval process took about 4 months. We learned a lot about project based Section8 buildings, but are now actively pursing more projects like this.