All Forum Posts by: Jason Mak

@Michael Farrugia  I think you are looking for an answer focusing less on the technicalities of the deals (debt ratios) and more in response to your personal financial situation right? 

I think many/most banks would look at your personal financial schedule and income as they want to know that you, who are signing the loan is a financially sound.  However, if you really have a good real estate deal tied up, I'm sure you can find someone to loan you the money - afterall, there are bridge lenders out there who won't even run a credit check as long as they are the first and only lien holder to the property.   You will just need to talk to several banks and/or loan brokers....it can certainly be done.

Do you have anyone that can partner or co-sign the loan with you?

nice job Byron - just keep in mind that if you want to buy another property in the Los Angeles area, $270k might not get you much these days as the market is pretty crazy.

@Ronald Rohde  got it - thanks for the response.  I too have heard that from some of my friend who service and transact with the institutional players like Equico.  They said that since these guys are companies are transacting so often and have inhouse teams that can handle the transaction, they simply pay $100-$200k to agents/brokers instead of a %.  

I'm sure as you said, there are plenty of other ways for an agent to monetize off the relationship

Regarding larger multifamily investments $20M and higher.  

I recently spoke to some commercial brokers who were receiving flat commissions ($100-$200k) from institutional players to sell large commercial property deals instead of the 3-5% commission that I see for $5-$10m dollar deal size that I typically look at.

Can any institutional investors on BP speak to that?  I'm sure many agents will be inflamed but I'm just curious if this is true.

@Ramon Wilson

Thanks for sharing this email exchange with what I presume to be one of the many brokers/agents working the crazy market.  

A lot of people are speculating on the idea that land and supply in LA is severely limited and people are still trying to move into LA, therefore they can justify these inflated prices and have confidence that prices will continue to go up.   

Sure, you can call that speculative as most people are playing the appreciation game and not following the cashflow ideals that most BPers adhere to.  But that's the LA market (and most large metropolitan cities), for you.  The investors who pay these seemingly inflated prices here just have a different mindset and risk profile.  

I'm not saying what's wrong or right and I share similar thoughts to you but we just need to understand that we are playing in a completely different playing field. 

That being said, there are still cash flowing deals out there that still make sense!  I know that as a fact and you just gotta keep looking and making offers

Hello BP

I always see commercials properties "priced replacement cost", even in the current "hot market" of California.  I wanted to see what type of factors can attribute to a properties marketed like this:

1. Listing brokers not knowing what the true replacement costs are today (hard, soft, land costs) and purely using this term for marketing purposes
2. The property being built many years ago when construction costs and land value were considerably lower than they are today

I'm wondering if the original owners depreciation is also being considered?  

@Austin Fruechting  @Mike Dymski  I hear what you are saying that this is an invalid assumption, I was just trying to frame the question where the focus is on quality vs. quantity from a operational perspective.  Financial returns would obviously be critical.  Thanks for the comments!

@Chase Keller I think from a value add perspective, you are right there might be more potential and scalability when you have to play with....i.e.  one roof or one paint job can positively impact more units.  Additionally, fixed costs can be spread out over more units.  I learned this lesson when I owned a hotel, there were lots of fixed costs.   There are lots of things I consider less desirable, but off the top of my head, mainly a less desirable area.

@Andrew Johnson  @Shaun Patterson  great insight from both of you ...thanks for providing an insightful response rather than simply saying "it depends".  :)

@Jeff Kehlyeah that's what i'm getting at when I say "similar financial profile and returns"  I know it's not realistic but just trying to frame the question.  I think you are on the spot that the smaller number of areas in a better area would have better appreciation.  @Aaron Gordy thanks for confirming this sentitment

@Paul Staszel i agree with you, I only stated that I would use a 3rd party management company to remove the "management factor" from the question and to focus on the other attributes of the investments...thanks!

Just wanted to hear about people think.

Assuming a similar financial profile and returns and assuming that you would use a 3rd party management company to manage the property, would you rather buy a larger building with more units in a less desirable area?  Or a smaller building with less units in a more desirable area?

@Joel Owens yes that's right.  So in your opinion what is reasonable compensation for the leasing agent to negotiate/mediate the lease signing when no marketing is required?

Thanks in advance

@Kusum Chanrai  yeah those sound about right for leasing commission when marketing is required.  In my case, i have already found a tenant but just would like an agent to assist with the lease negotiations...no marketing required

For what it's worth.  I had some furnished apartments that I rented to corporations for their employees to live in.  They requested W9 an I obliged.  Like @Lee L. they always paid their rent on time and never gave me any trouble.  It was not a big deal for me.