All Forum Posts by: Nick L.

Congratulations!

If the lowered assessment is likely to stick, the tax saving should drop straight to the bottom line and increase the valuation by NOI / cap rate. So if your cap rate is 10% the valuation should increase by $80k. This would be reasonable for a refi, for example.

However most buyers will assume that the city will reset the assessed value to the actual purchase price at the first opportunity. So the reduced taxes may have little to no effect on any actual sale price.

Most cities are seeing an apartment boom right now. There is a big movement to urban infill over suburban garden apartments. Even in my third tier city of Milwaukee, WI there are thousands of new urban units being developed. Bigger cities are going even more nuts.

I am doing one such development. I believe mine will succeed even in a tougher market because of a combination of pricing, unique position, aesthetic appeal and some other qualitative factors that set it apart. But of course every developer believes that! I am underwriting conservatively in the expectation of an overbuilt market.

This is a common structure with LIHTC credits. Essentially the developer sees no cash flow or equity upside for decades, so the developer fee is higher than usual to compensate. Here's how it works in my state. You would be eligible for a 9% fee based on the information you gave.

I am just the other side of the Lake Express Ferry from you, and have some 1031 funds that I'm keen to reinvest. Please let me know some details.

@Michele Harrington This could be a great deal... if you are the one to capture the upside. This is typically done through a master lease + option to purchase. The seller gets a guaranteed income during your improvement period and a guaranteed sale price at the end. You get the risk/reward of making improvements and raising rents, plus the upside of increasing value beyond the sale price. 

I would not go for a master lease without an option, unless the lease term was long enough for you to capture the cash flow benefits of all your improvements.

@Martin Z. Interesting question... I'm looking at white box to completed store, and you're looking at just the grocery-related build out. I'm going to guess it's a bit less than the $35-40 PSF I mentioned above. Maybe $30 PSF? 

That's just a guess though. Hopefully someone with actual knowledge will swing by soon :)

Also, I found another relevant thread here: https://www.biggerpockets.com/forums/32/topics/131...

@Sean Pincus made a great post in that thread.

@Martin Z. I am also interested in this question for an upcoming project. In my case I need to distinguish between the cost of constructing the building to white-box specification and the cost of building out from white box to completed store.

I found these links but am not sure how reliable they are. @Christopher Telles @Jo-Ann Lapin @Joel Owens, how reasonable do they look? Looking at these, I figure the build out from white box would be between $35-40 psf on average.

http://www.rsmeans.com/models/supermarket/

http://newmarketadvisors.com/assets/Uploads/Constr...

http://www.chainstoreage.com/article/annual-store-...

I agree with the other comments. Also, you could add a contingency in house #2's contract that states you will only buy it if you can get #3 under contract for less than $xxx. That incentivizes #2's owner not to talk to #3. If the price of #3 does go above $xxx and you still want it, you can always waive the contingency.

Hello Austin experts,

I'm looking at some multifamilies in the area. I know the general areas but not the ins and outs of each neighborhood. 

Curious to know what you think of the St Edward's University area? What would you think of some 1% rule multis around there? Is the area gentrifying or stagnant? Any particular red flags to watch out for?

I see that @Saberian Younger and @Jim Robertson are keen on 78741 and 78745. Presumably St Edward's should be even better since it's in 78704 and close to South Congress. Or am I missing something important?