All Forum Posts by: Phil Christian

Cap X upfront: 

$$$ based on immediate work you would like to do initially after closing add that cost to your basis then math out your Cap Rate (yield on cost / forward cap). 

Cap X "as-needed when needed... but maybe": 

For underwriting the Cap Rate put it below the line. This $$$ you may or may not do so it will negatively effect your underwriting and business plan if you unnecessarily budget.   

Cap X Lender Required Reserves: 

Below the line in the form of $250 a month (for 12 units).  You're Cap Rate will still look healthy but your Return on Equity will be reduced by the $250. 

If it's what you say it is it sounds like a complete re-build. 

Interior Units: $25,000 a unit ($300,000)

Roof: $20,000

Exterior Repairs (Stucco & Wood): $15,000

Exterior Paint: $20,000

Gates/Railing/Fencing: $10,000

Windows: $20,000

Hardscape: $30,000

Landscape: $30,000

Furnishing/Mail Boxes: $4,000

Site Lighting: $5,000

Electrical Re-Wire: $7,500 unit ($90,000) 

Re-Plumb: $4,000 unit ($48,000) 

Laundry Facility: $5,000

Garage/Parking: $4,500

20% GC Fee

= $61,350 per unit. 

I was a little off but I didn't take into consideration extensive drywall repair on the interior units.  Nor did I take into account code upgrades/ADA.  This said, I retract my previous number and would budget $65,000 a unit... if it's as bad as you say. 

Post a picture or link of the property. 

 The Social Media line item is Facebook...  The Rent Hit rate is probably single digits compared to other sources but we have been getting rents. 

Property Management is an operating expense. CAP X is a..... CAP X expense.

Put property management in OPEX, above the line and put CAP X below the line.

If it is as much work as you say so, I'd start with $75,000.00 - $85,000.00 a unit and work your way from there. 

I know for a fact that Craigslist has fallen out of fashion in core SoCal markets with the demographic of "our" resident's.  On average our resident's are 34 yrs old and a 1 person household makes $65,000 and a 2 person household makes $92,000. 

90 days written notice is CA state law.  Check for local laws.  You can also call the local Section 8 representative.  There is typically a person that specifically handles Section 8 for a particular submarket. 

These projects are all in SoCal and grouped within a 2 mile radius of eachother.  

Oddly enough, I have been an asset manager on larger (private client & institutional) communities and drive by was always the largest traffic & rent source. This being said, these communities are 10-50 units each and the "drive by traffic" is exclusively unqualified prospects.  In the last ~2 years we have only received 1 rent from drive-by traffic.  This always strikes me as odd because our locations are prime real estate and conventional wisdom has been proven false for us. 

Hands down Zillow/Trulia/Hotpads (they are all the same company) have been the #1 source of traffic and rents. 

No question, just sharing some info which could help. 

We own and operate ~350 units spread across 15 different communities (logistical nightmare) in Southern California and all projects are going through a major re-position / value add plan. We do not pay for any online advertising. The management team consists of four (4) in the front offices and here is their traffic & rent numbers for last week (week ending March 25, 2018). 

What type of product is this for? Multi-Family, Office, Industrial, Retail?

If it's multi-family you can use the CAR form. 

If it's office, Industrial, Retail use AIR forms.