All Forum Posts by: Ron Jacobsen

Thanks for your feedback @Chris Seveney

I have two questions that I'm looking to get your feedback on in this post. But first some background.  My companies own 31 rentals properties in and around Raleigh/Durham NC, they bring in around $440K in rents annually, two are short term Airbnb rentals and the remainder are long term rentals, average rents are around $1200/mo, Zillow values on these properties would be north of $6M, debt is around $2.4M, on most of the portfolio we have long term fixed debt at a sub 4% rate.  A friend and private lender of mine has a very successful business that generates a lot to cash.  He has proposed buying an interest in my rental property business, perhaps upwards to 50%.  This is a very trustworthy individual who I have the highest regard in and have know for over two decades.  The main motivation I would have to consider putting a deal together would be to diversify my net worth as it is overly allocated to real estate.

First question: I'm looking for a CPA or sophisticated investor who have experience in M&A or deal structure to help me create some deal scenarios.  I'm expecting to compensate this professional for their time.  Any recommendations?

Second question: I'm curious if other rental investors reading this post have general opinions on selling an interest in their portfolios?  Hypothetically, for the right price and terms, is this something that you would consider attractive - why or why not? If so, what conditions would need to be present in the deal structure to make it attractive to you?

Thanks for any feedback you provide.

Alix,

You haven’t mentioned any background in this area but if you don’t have any experience with motels or multifamily I’d be very hesitant buying an older asset and getting into this category. Your renovation costs will be considerable and if you haven’t done a market study re: feasibility, I’d hold off. 

Welcome @Carlos Bennerman to the Triangle! I’m just around the corner in Cary. Happy to help. 

@Patrick Gray @gregdickerson gave you very sound advice.  Having spent 20 years in developing and managing hotels, hotels are only for the most experienced investors who are prepared to risk big $$ and perhaps win big $$. 

@CL Tumlin - if you’re buying them right, it’s never too late. Don’t buy skinny deals and you’ll never regret investing. Find your conservative underwriting criteria and stick with it. I’m 54 and have bought 10–12 rentals in the last 5 years. I plan to buy many more.

@Mark Huneycutt - you could likely get a 30 year am if you lived in the property as a residence.

@Cory Lucas - don't add water and capex. Capex is spent as needed and doesn't impact monthly cash flow on a routine P&L basis (unless it's spent) - just save up 6 months reserve cash.

@Helen Shi - I’ve had a good experience with AirDNA and their customer service is excellent.

@Sam Eknoian - if they’re not all on city water and septic, you’ll want to know if they’re sharing a well or a septic system. This could be problematic if/when you ever wanted to sell any of them to a owner/resident. Also, is there a shared driveway? If you ever subdivide these properties, you’ll need to execute a shared driveway agreement between the parcels.