All Forum Posts by: Chris Winterhalter

@Davis Havens

Congratulations for having the ambition and drive to start investing in real estate at such a young age. I would definitely educate yourself as much as you can over the next few years....both theoretically and practically. The University of Florida has a great real estate program. Have you decided to go to college? A solid education creates both knowledge and connections that can be used the rest of your life.

@Annunciata R.

A few things to note...you will not be able to get around having a CA contractors license. If you employ people for anything construction related in California including something as minor as window cleaning or installing drapery you will need to be a CA licensed contractor. Also most small business work comp comes from the State Insurance Fund in California. I know we had to provide our CA contractors license to even get coverage (we are doing two hotel projects here this year). I'm not sure if you have dealt with the EDD in the past however they are extremely strict in everything that they do. My business partner and I run a hotel construction company...we did three large hotel projects last year with a total of close to 500 rooms including full public space guts with less than 5 employees. We spend more time finding really good quality subs at great prices. Lower subs prices generally come at a price...which generally relates to needing really good project management and supervision. We pay more however have a lot less headaches. There's a difference from being a true GC and having an all in house operation. Scaling in the development/investment side is challenging enough. Adding in a full in house construction crew would make it even more difficult. It's definitely possible however like mentioned above you will need additional team members to handle the work productively and efficiently. I would start with a mix of sub-contracted work and a few in-house crew members. A project manager, 1-2 carpenters, and 1-2 general laborers. It's always easier to add employees than deduct employees. Good luck!

@Thierry Van Roy

There have been so many puns on my name this winter! Every cashier or server likes to make a crack at me. But no...I don't have the ability to Halt the Winter. I wish I did though.

I think @Todd Nordstrom is on the right path with what you need. You need to employe an architect, designer, engineer, and/or GC that has experience in something similar to help make the project come to fruition. Keep the thread up to date on what happens.

@Joel Owens No clue? Come on you definitely have a clue.

@Verlincia Cuyler

Welcome to BP!

Do you have a mortgage on the property right now? How much equity do you have? If you have a previous relationship with a local bank I would discuss the situation and see what type of financing they can offer. Local banks will do refinances with cash out and or/rehab costs based on the ARV (somewhat). They are generally very conservative with these loans and want a strong borrower, good track record, compelling story, appraisal, and a qualified GC to handle the work. Also these loans are harder to get if you don't have a previous relationship with the bank. Call 5 local banks to get their appetite for these types of loans. Be very frank with them....ask questions like "how many acquisition and construction loans have you done in the past two years on properties with 5-30 units. Did the borrower have a previous relationship with the bank etc etc."

Good luck!

@Ron Steele

I take it you are working with local banks correct? They are probably not going to use your appraisal however that doesn't necessarily matter. I would shop it to several other local banks that have an appetite for multi-family's under 500k, in your area, and size. A lot of local banks will go up to 80% LTV for a well capitalized local operator with a track record. They might only go to 75% for a cash out refi though. It depends on the story of the property and how much cash you have invested (and very much the bank). While you are negotiating I would also push for a lower rate. That will help offset the refi costs.

Let's say it's appraises out at 300k with your 200k balance. At 80% LTV that is a max loan of 240k. Don't forget about appraisal, closing costs etc. So at best you would be pulling out 35k in cash. It might be worth while on your side however you might want to evaluate your options. Good luck!

@Brad Carver

What about...

-Commercial construction firm

-Property Management Company

-Engineering firm

-CRE lender

-Health care services

-Plastic surgeon

I like most of your ideas. Are you handling the leasing? What are you doing to generate leads?

@J C

Are you looking at a 6.5% cash on cash return or a 6.5% cap rate. If it's truly a hot area in Queens and you are underwriting the property correctly then a 6.5 cap deal is probably a steal. If you don't understand older buildings then be very careful when estimating costs. Get a qualified inspector to go through the building along with a contractor that you trust. You might be under estimating the maintenance costs.

@Thierry Van Roy

What do you mean by beach club? Like a beach club house? Or like a night club at the beach? I think you could work with a really good custom builder and architect to design something that is reconstructable for the season. Some dollars and planning would need to be put into the project upfront to optimize the design and logistics. I know someone that would be great at designing the project and running the construction portion (however that doesn't really help you in France). What's your vision for the project?

@Zaid R.

It's not a done deal with Cerberus yet. My hometown player Kroger might swoop up Safeway before the bidding period ends.

http://nreionline.com/blog/analysts-encourage-kroger-bid-safeway

@Bradley White

If I was the owner I would definitely ask for proof of funds. They may or may not ask however you need to be ready and able to provide one if the question arises. I would ask for POF no matter if your offer was cash or with a financing contingency. A 22 unit complex is somewhat small to ask for a company resume however they might want to know your background and success with multi-family real estate. You wouldn't provide a pre-approval letter however you could have something similar provided by a local bank (if they actually will give you this).

You don't need to include an explanation of financing with a cash offer or a financed offer within your LOI (but probably a POF letter). Also you might want to go straight to the P&S and bypass the LOI with a 22 unit property.

I definitely don't want to discourage you however I always laugh (quietly) when I speak to a wholesaler that "specializes" in wholesaling multi-family complexes (not 4 and under). To be able to consistently wholesale a multi-family complex you need to be a well capitalized highly successful operator that understands wholesaling. Essentially a highly successful owner/broker. Best of luck!