All Forum Posts by: Scott Meitus

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Lisa,

The answer to your question is likely "yes", in that you are typically not required to make any physical changes in the building to convert it to condominium ownership.

However, there are many "moving parts" in this process, so I would strongly suggest speaking with a qualified, local real estate attorney about the specific requirements for both the State of Texas, as well as any possible municipal requirements.

Hope that helps.

At $2.5 million for 120 units, land cost is $20,833 per unit.  Off the cuff, this seems fairly pricey for an area supporting average rents of $1,300 per month.  Obviously there are other factors involved, this is just my impression from the info you provided.

Steven,

My understanding is that the SEC will not be involved unless it is a "public offering".  That said, you may still want to limit investment to only accredited investors, as this gives you a much higher level of protection should things go south.  

Good luck!

From a broad perspective, I have found that working only with accredited investors will provide you with quite a bit more protection if the deal goes south.  I have seen too many examples where close friends and family members become very litigious when money is involved.  

Zack,

I may be able to help.  PM me for details.

Thanks

Scott Meitus

Marty,

I agree with Bruce, $100K (while a good amount of money) probably isn't enough for you to acquire an asset that will generate enough profit to make up for your lost salary.

Two options, bite the bullet and stay employed long enough for your to acquire enough in assets that you can give up your current job and have a decent amount of income already in place.  Or, consider syndicating your first deal.  With $100K, you could raise up to about $900,000 from outside investors (family, friends, associates, etc.) and your 10% stake in the deal would likely be enough "skin in the deal" to make the investors comfortable.

Good luck!

Be careful with using IRR as a return metric. It can, at times, produce very misleading results. I authored an article about this recently, and the relevant paragraphs are here:

"The IRR is, simply put, the discount rate (expressed as a percentage) at which the net present value of an investment becomes zero. Typically, the advantage of using the IRR is that it allows for an easy comparison between investment alternatives with an option offering a higher IRR being preferable to an option with a lower IRR.

However, when choosing an option with a higher IRR, you may actually be choosing an option with a lower real rate of return. Although it seems improbable, real returns can be distorted because of the most dangerous assumption inherent in IRR calculations, this being that interim cash flows will be re-invested at the same high rates of return. The IRR is only truly accurate when an asset generates no interim cash flows, or when those interim cash flows can actually be re-invested at the actual IRR. As such, in most instances the IRR will be distorted, and in many cases, significantly so."

Article Source: http://EzineArticles.com/9525183

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