All Forum Posts by: Chris Winterhalter

@Jim Workman 

How big is the roof?  Where is the property located? How many roofers have you received bids from? 

Roofers will have varying opinions on their favorite roof system, some like TPO, others PVC, others EPDM, spray on systems etc etc.  Sometimes I feel like the quality of the installation matters more than one material or the other however some systems will be much more expensive and will last longer. 

On your torch down application I'm not so sure the middle layer is necessary especially if you are getting the same warranty.  

@Account Closed 

ListSource really isn't a great option for this.  CoStar might be but I'm not 100% sure.  Honestly it's not the best strategy to get access to these types of deals.  The chance that your mail gets to the actual owner is very slim as it will probably go through a management company etc.  It's also very difficult to obtain a personal name to the managing partner or owner of the entity that owns the real estate.  These deals are still very localized.  The brokers in the area know who the buyers and sellers are for the most part.  Deals that get shopped beyond the inner circle generally land on loopnet or a brokers website (and are generally not deals).  And when you start to get into institutional assets the circle is still small.  It's tough to break into bigger deals, mainly because it's dominated by strong players.  

Why not focus on a specific city or region? 

@Nik S. 

I've never seen a B or C class foreclosure multi-family property with just $555/per unit in deferred maintenance.  It's just never the case.  The properties are generally neglected for a very long time, well before they even go into receivership.  

You will also need to bump up your maintenance costs.  $500 month is only 6k per year which is really low for a C class 18 unit building.  

Is this close to your other building you are buying?  

Also that 66% occupancy is probably more like 40 or 50% economic occupancy.  I would account for 40% at take over.  

@Ken D. 

How well do you know the developer?  Are they know around town?  Do they have a good reputation?  How long have they been in business?  Do they have a proven track record with projects like these? 

If I were in your shoes I would...

• Network with the real estate brokers in town that understand and your size and type of product.  Having a really good successful broker can go a long ways.  Look at the national presence shops like CBRE, Cassidy Turley, Marcus & Milichap, Hendricks & Partners, etc.  But don't leave out the local commercial real estate brokerage firms.  Check loopnet in your area to see what broker has the most listings between 5-50 units.  Talk to other investors.  You are going to want a good broker to help you evaluate the as-is & after repair value of the building.  
• Is the building self managed?  If so I would connect with a really good property manager in the area.  Talk to them about rents, operating expenses, vacancy, turnover etc etc.  You might end up having the building professionally managed.  Either way it will help you evaluate your projections.  
• Talk to local commercial real estate appraisers about your plan.  Is the financing bank going to perform an appraisal based on the projected value of the building? If so then this would be a good opportunity to talk to the appraiser handling the work. 
• Talk to several really good GC's in your area who have a solid portfolio of similar product.  Similar product and design that will yield the highest return.  Get 3-4 bids from General Contractors and spend the time going over the bids and scope of works.  

If after you talk to all of these people you still want to partner with the developer you will be more than informed.  This will allow you to manage the developer with a lot more knowledge.  The developer could have the best intentions however you need to verify all costs and projections.  Good luck! 

@Ken D. 

Please explain profits?  Since you own the property right now (and have for a very long time) I'm not quite sure how you are calculating profits.  Are you trying to figure out what the as-is value of the property is today and then any forced equity after rehab is profit?  

I don't know a lot about the situation however it sounds like the rehab isn't that complicated. I would hire a solid GC to handle the work and not JV on the deal. Is the rehab complicated? Is the rehab going to be design intensive? If so hire a designer. How is the developer estimating construction costs? Is he going to make a profit on the rehab and then on the sale? I just don't think a JV is necessary for this type of deal.

Huge demand for zeeloporps, cap rates have compressed greatly.  I'm seeing inventory shrink up quickly, cap rates are in the low 4's at best across all of Neverneverland.  

For 10k in annual premium that is a really good deal.  I'm paying about $250/unit for property, liability, and LOR.  My liability coverage is higher however not by much.  My policy is priced low (or so I thought) based on all my units which is around 120.  I'm curious to see what other quotes you get back.  

@Nik Suri 

Is liability included in this quote?  If so how much coverage?  

@Mike Giudici 

Is it more expensive than TPO? 

@Mike Giudici 

Thanks for your comments...it's interesting to hear that birds/animals can peck away at the foam.  You make a good point when referencing repairs.  Repairs are probably expensive and not a lot of roofing contractors can perform them.  

@Martin Z. 

Versus a built up tar/paper roof or vs. a rubber roof?  

It isn't cheaper however I like the idea of filling all of the openings, parapets etc with the sprayed on foam.  I feel like the building will be sealed tight if it is properly applied.  I was considering having my construction crew try one roof to see how it turned out.  However I am leaning towards using a spray foam repair system to patch the roof and seal the parapets and then go over everything with an elastomeric coating.  I'm trying to get 5-7 more years out of a building we own before we do a tear off replacement.