All Forum Posts by: Peter Dalal

Patrick Ragan

Under ground Oil tank in general is a risk, when you would like to purchase the property , which has tank installed on it. Manny BPs have warned about the risk associated with it on this post and they are absolutely correct . As mentioned by Darren Sager, have the seller pay for the actual cost of removal and have it removed before closing.

Some times from the oil leaking tank, the spillage can be substantial and only way you can assess is, when one start removing it. The damage could be in thousands. It is how you mitigate the risk and how you word it in your offer.

I had done several Sanitation garages, Fire stations and libraries in city of New York and fortunately, City of New York had paid for removal of tanks and contaminated soil around it. The cost was in hundreds of thousands, as the tanks were leaking for years, when we open the area around it.

Good luck!

Peter Dalal

Dear Minh l

Good remark by Tom Lafferty !

In multi family Acquisition, the price for door is not that important factor.

Basically institutions or experienced investors are looking for Cap rate based on type of class of property , underwriting based on actual numbers [ not proforma numbers]. Also other factors are cash on cash returns , Annualized return etc.

Many times two exact property side by side are sold at different prices ,as one is calculated by very inexperienced person and one by seasoned investor and we wonder what went wrong here?

In multi family acquisition [approximately twenty and up] process hardly comps are used for evaluation of property. Rents are also being considered as mean rate of area and Average rents to areas during underwriting process. So if the rents are jacked up by broker, you may want to check the going rates. [ www.rentometer.com]. Ask for last few years actual lease and copy of canceled checks and or deposits.

Hopefully, it helps.

Peter Dalal

Dear Jeffrey

As stated by Jeff Greenberg, Job growth is an important factor in recognizing market cycles. Also migration patterns are very important as well, which Jeff stated.

There are four phases to the Market cycles: Buyers market phase one, Buyers market phase two, Sellers Market phase one and Sellers Market phase two.

According to your requirement on the post, you are looking for Buyers Market phase two, which is one of the four parts of the Emerging market cycle. Many markets in the USA have already passed Buyers Market phase one. The cycle duration between each phase is about three to five years. However, the complete duration between all four phases of the market cycle is approximately eight to twelve years.

The order of these cycles are:

Buyers Market phase one, Buyers Market phase two, Sellers Market phase one and then Sellers Market phase two.

The following are typical characteristics of this cycle: [Buyers market phase II]

* Single family homes prices first rises

* Market demand absorbing oversupply of the properties

*Job growth is increasing in area: Please look at www.bls.gov, call Chamber of commerce in the areas to find out which big corporations moving in to areas of interest.

* Migration started happening from out of town people

* Price appreciations in the area slowly

* Rents in those areas slowly increase, after being stagnant for couple years

*Demand for housing starts increasing in the area

*Time duration for the property to stay on market decreasing slowly

* Very little speculations

*Existing properties in the areas start getting rehabbed

*Number of foreclosures started decreasing

Note: In my knowledge, David Lindahl was the first one to recognize Emerging market cycles and genuine person to follow. He has written many books such as Multi-Family Millions and Emerging Real Estate Markets.

There are approximately 17 markets steadily growing on a technical analysis basis for the last year. They normally create a wealth phase and referred to as the "millionaire making phase".

The following is my observations on the basis of technical analysis for the cities you mentioned on the post:

Your question about Houston: It is a tricky market and long term technicals are still not verified. However short term looks good

Question about Dallas: It is a market going good for a quite bit time. But long term technicals are still not verified. However short term looks good

Oklahoma city: Good for short term, however last three quarters are iffy on technical basis

Kansas city, MO: Short term technical basis for four quarters looked good and last two quarters started looking good since last two quarters

Raleigh (NC) : All short terms technical looking good for at least one year, however mixed signals for the current quarters for long term and red signals for last three quarters for long term technical.

Scranton (PA) : All short term and long term technicals are favoring this city for at least last four quarters, which is a pre-requisite for wealth building phase. In short, this is one of our favorite city on our list on our web site. The wealth building criteria also includes at least three percent price increase on long term basis and must be in line with National, State and Regional basis.

Note:

You may want to contact the Department of Labor and Chamber of Commerce in the above cities to verify the job growth. If both technicals and fundamentals are in line with each other and you recognize the characteristics in to the desired cities, you are in right direction.

Hopefully, the above explanation, may help you little bit. Let me know, if you have further questions.

Peter Dalal

Disclaimer:

Any information presented here is for Educational Purposes only. Past performance is not indicative of future results.We are not registered investment advisors, tax advisors, legal advisors, nor financial advisors.Please consult your investment advisor/tax advisor and legal counsel before investing. The above article may not be 100% accurate, so please consult your investment/tax advisor and legal counsel before investing.You are responsible to check with and follow current SEC laws. You may visit www.sec.gov for any updates.

Dear Dave

I am glad , I was helpful to you.

Peter Dalal

Dear Dave

Good question to ask. First let me thank Chris to give clarification on actual meaning to Rubs, as many in the industry does not know it.

The fair way of billing is the combination of Occupancy data and deduction for common area usages. Each state and municipalities have set rules regarding what criteria must be used in RUBS billing methods. There are at least six basic criteria have been used in the industry.

My suggestion would be to hire an independent National company to avoid any conflicts with tenants and policing the billing.

You may want to look in to :

MultiFamily Utility Company Inc.

Corporate account:

Residential account:

They are Nation wide and genuine. [ We are not affiliated with them in any respect]. I am pretty sure that they have Connecticut operation.

Hopefully, this information may help you.

Let me know, if you may need any help.

Thanks.

Peter Dalal

Dear DB

Welcome to BP family.

Uve and Joel are correct about not living in the same building, you want to own. Also, the suggestion of Uve about stating yourself as a Property manager is the way to go.

For your retirement accounts , you may want to convert in to self directed accounts and there are several companies there who provides that kind of service.

Also, before you purchase multi-family, you may want to learn how to analyze them and do underwriting yourself. It is quite different than regular single family acquisition.

Please let me know, if you need help.

Thanks.

Peter Dalal

Dear John

Welcome to BP family.

I am from Queens , NY.

Let me know, if I can be of any help.

Peter Dalal

Hi Angie

Welcome to BP!

Columbus, Ohio is one of the emerging market as per Emerging market cycles study. Great opportunities out their.

Good luck to your real estate business and let me know, if I can be any help to you in your business.

Thanks.

Peter Dalal

Dear Alex:

Welcome to BP, one of the best and quality places to be! Lots of smart and experienced professionals are on this forum.

My advice is: Stay focused, learn a few things, and apply what you learn. There are so many courses out there within this industry. It may be wise to seek the opinion(s) of others on this forum prior to investing your money, time, and efforts in educational courses/seminars.

Much practical knowledge can be gained here in this environment before you spend lots of money on educational material. However, it would be smart to have a coach or a mentor for you. [ Please note that I am not a coach or mentor.]

Good luck and please feel free to let me know if I could be of any help or assistance to you in your business endeavors.

Thank you.

Peter Dalal

What is Syndication in Real Estate Acquisition process?

Syndication is basically the joining of parties/individuals that are engaged in an enterprise of common interest. For this particular purpose, it is for real estate. There is usually a party that is active in the management and day to day operations (most likely you) and the other party that is passive (most likely your private money partner).

Generally there are three phases in the syndication process:

1. Origination : This phase involves planning, property acquisition, registration satisfaction, disclosure, and marketing.
2. Operation : This phase is really where the sponsor handles/manages the syndication and the real property
3. Liquidation/Completion : This phase involves the resale of the property

Before jumping into the first phase, Origination, you will want to establish the company that will purchase and own the property you are looking to acquire. It is best to consult a lawyer as to what entity structure you should form for this company. However, many people form a Limited Liability Company (LLC) because there is a limit in liability as well as a stronger operating agreement. Another thing to keep in mind is you will want to form a second company that will be the managing member of the first company.

Origination

During this phase, you will want to look for the property that the investors will be investing into with the returns that they are hoping to achieve. Any property should be secured through a Letter of Intent. Once this is completed, then you can complete the Private Placement Memorandum (PPM).

*It is extremely important you follow SEC rules and regulations. You must consult your legal counsel when it comes to offering any PPM.

Operation

Operations is when you will manage the day to day operations of the company and the actual property. You must keep open communication with your investors during this phase to keep their confidence in your investments.

Here are some points when you should communicate with your investors:

• Monthly : You should send out to your investors an executive summary of what had taken place at the property over the past month, including revenues, expenses and cash flow
• Quarterly : You should have a quarterly summary of what took place at the property. You may want to consider a quarterly call with your investors.
• Annually : Annually, you should notify your investors of the tax information and budget for the following year. At this time, you should also have the Scheduled K-1s, Partner's Share of Income, Deductions, Credits, etc all distributed

Liquidation

During this phase, you are either refinancing the property or reselling. All investors, the sponsor, and any liabilities should be paid at this time. Final tax documentation should also be provided for this property.

You may want to dissolve the LLC that was created to purchase the property

Disclaimer:You are responsible to check with and follow current SEC laws. You may visit www.sec.gov for any updates. We are not registered investment advisors, tax advisors, legal advisors, nor financial advisors. Any information presented here is for Educational Purposes only. Past performance is not indicative of future results.The above article may not be 100% accurate, so please consult your investment advisor/tax advisor and legal counsel before investing.