All Forum Posts by: Michael Le

Just know that there is risk to you even if it is a non-recourse loan, so I would never do it unless I was totally comfortable with the lead sponsor(s).

As you already mention, getting a real estate attorney to review will be the best. Generally we have contingencies relating clear title (if there are liens the Seller is responsible to clear it), clean environmentals (Phase 1 and Phase 2, not sure if this is relevant for small residential), and that we should have full access to all units and common areas for our due diligence.

Well, yeah, I know I could sell it day one but I was just responding to his entire paragraph dedicated to how he would leave his reserves in BTC. 

Personally for my passive investments I would never invest into a MF syndication that had operating reserves in the form of crypto. If it went down then not only am I losing those reserves but I am putting my entire MF deal at risk too. The upside, however, is only the extra value from the crypto. There is no upside to the MF portion of the deal itself. So in that sense I only see downside risk.

 I think people involved in his group are much more active on Facebook than BP. His FB group has nearly 37k members.

As far as I know there is no rule that says you have to own it more than 1 year. You might have misheard that it's not 'worth it' unless you own more than a year. I do my cost seg immediately when I buy a property so my investors and I can take advantage of depreciation in the same year we bought the deal. 

You have to recapture the depreciation at the time of sale anyway so there is no point now.

The debt service does come into play eventually but not 'above the line'. Above the NOI line is for operating expenses only and debt service is not considered that. It doesn't mean it's not important but it's done so you can more easily compare properties. Below the line is where the debt service and capital expenditures are removed to come up with your Net Income.

That being said, that means that a unscrupulous broker/seller could push operating expenses below the line to boost the NOI numbers so you need to be aware and look through the financials closely.

The NOI calculation does not include debt service, so your monthly mortgage statement is separate. Similarly, the cap rate is an unlevered number, as to be able to compare properties apples to apples (since properties are likely to have different loans on them) so it also does not take the loan into account.

So in your example the broker/seller is saying that if you bought the property for cash it would generate $74k a year in cash flow. Assuming their income and expense projects are correct then that will give you a 6.36% return.

I have a copy I got years ago (2006, I think) from CREOnline. I think Ray used to be active on there. Not sure if they still sell it there but maybe look for this contact and reach out to him directly?