All Forum Posts by: Michael Le

 My apartments all have Business Interruption insurance but it is for loss due to physical loss, such as fire/flood. My insurance broker says it's a bit gray but that I'd not likely qualify.

High rise in downtown Houston has a drone that will take pizza delivery from bottom floor to the roof top :) I guess that saves the 5 minutes of elevator trip? lol

You ask what the best size to start but I don't think there is a one size fits all answer. Take your comment about 'not worth it' and 'not good enough'. For whom? Because everyone's return expectations are different. If you have investors that are okay with 5% COC then the deal could work. If you have 2 partners that want 25% yearly return on there money it might not.

And also, a 70 unit property in Dallas is different than a 70 unit property in some small town in Alabama. The 70 units in Dallas might average $1100 a month in rent whereas the one in Alabama might be $600 a month. That one in Dallas would likely make sense because it generates enough income and the expenses will not likely be much more. Whereas the one in Alabama will likely not make sense because a refrigerator costs the same regardless if you charge $1100 or $600 a month in rent.

Why do you consider it overpriced? Do you only buy used houses, cars, clothes? Some people value newer items and are willing to pay more for it. In the case of multifamily, institutions/family offices/life insurance companies etc will pay more for a new apartment complex because it's a safer product to put their money into. The returns might not be as higher but they're more interested in wealth preservation than high returns. 

Right now a lot of 1980s products in my area selling for close or above replacement costs. So it could make sense to build and have something 30-40 years newer.

Thanks to both @Brian Eastman and @Justin Windham for you clarification on that UBIT matter.

Brian brings up UBIT, which I do not believe affects Solo 401ks (as it does to SD-IRAs). But Brian is correct that the transaction requires an arms length relationship, so you would be in violation if you (as the trustee) used it to invest in your own deal.

You should be running numbers based on how you can run the deal - that goes for income and expenses. So yes, use the tax based on what you think it will be, in which case will likely be closer to what you paid for it than what it is currently.

Good deals (real ones) are harder to find than capital right now. But that doesn't mean random people will invest with you (assuming you're structuring the deal that you can even advertise to random people), so that means you will still need to focus on building that investor database.

It's a common enough split. A 10% of the equity raise is actual a decent amount to contribute from their side. Fair or not is up to you to determine based on their experience, what sort of project it will be, etc.

Looking to hit a target number and then doing just 1-2 deals a year to keep from being bored. Traveling and hobbies the rest of the time. Hope to hit that target in about 5 years or so.