All Forum Posts by: Christopher Telles

As an investor you need to protect your investment, and part of that includes deposits. You are well within your right to demand the broker put communication from them to you in writing as it relates to sensitive contingency expiration matters. Their loan processors may communicate with them however they want, but they have a fiduciary responsibility to keep you informed. If you request this in writing to them then they've been put on notice you are requiring they communicate the status of the hoa questionnaire to you in writing. 

Let s/he know you're nervous about the contingency expiring without confirmation the hoa questionnaire isn't going to be required by the lender, and uncomfortable letting it expire unless you've received said written confirmation.

 I do not have experience in this type of conversion, so I'll reserve comment on whether it is or is not a good investment opportunity. However, I have had to make some quick decisions on whether to take down properties that would be subject to rezoning where time was extremely limited for any type of due diligence.

You might head over to the planning department of the city/county that has jurisdiction over the property (you can't normally do this over the phone) and ask the planning director for his input as to whether it is likely a rezoning for this property would be approved. Of course you request should be peppered with the message that you understand they wouldn't be giving you an approval rather only providing guidance to you as to whether it would be feasible for them to issue a rezoning on the property. 

You'll get a dance around the edges answer of yes, no, it depends. If yes or it depends then ask the question what might be required of the property owner to get that approval. Then sit back and let them talk.

In about an hours worth of time you're likely to know a lot more than you do now about the prospects of getting a zoning change for the property, and that information can then help guide your decision. 

When investing in multifamily they're valued predominately on the income stream or better defined as the NOI. There are other metrics too, but in your case the opportunity is considered a value add play and the overall investment theme is how you can improve value through a turn around, what the property delivers in terms of NOI at closing Vs what the property NOI could be after turning the property around.

You might start out by listening to this podcast http://www.biggerpockets.com/renewsblog/2015/03/26...

and then search the BiggerPockets bookstore or Amazon for books that teach how to analyze multifamily real estate.

 Congrats! 

Quoting Sgt Schultz "I know nothing" of self storage units. Well maybe a little, but its ancillary knowledge that wouldn't be useful to operating an ongoing self storage operation.

I'm a learn as you go kind of guy, and have gotten myself in over my head on more than one project or two, so can kind of relate to your acquisition.

Can I ask you what drove you to buy a self storage property (and hopefully the answer is a value opportunity) without prior knowledge of the business operation?

 I've personally never borrowed using an SBA loan. Professionally, I've been involved in 100's of transactions where my clients used SBA loans. They're a very common borrowing product for small businesses.

As investors we need to deliver a concise message of what we're looking for in an investment to agents and brokers we come into contact with during our travels. Equally important, I think its imperative that we not only communicate this verbally, but also send or hand our buying criteria to the agent in the form of a simple flyer or typed out memo. If you have a website it should be posted prominently on its own page.

We can list off our desires and wants all we want, but if all the information doesn't register with the agent then they're likely to only pick up on the information they want to hear. 

If I'm reading between the lines correctly from those that have already posted, many of you may have already experienced this with the agents you've encountered. Sure, we all know there are agents that are only going to want to put in just enough effort to get you to close on something they've taken you, and its those agents we don't want to burn time with.

And then you have the opposite. My wife and I recently started to execute on a business plan to start and create a fix N flip business. And we've recently had some experiences with residential real estate agents, really a whole new experience level for each of us.

A brief background might help here. Our investment experience is in owning and operating commercial real estate e.g. office, industrial, and retail. My professional background is in commercial real estate brokerage, and together we have owned and operated both large and small commercial brokerages in a major metropolitan marketplace.

Moments before I began typing this message I was reading through some emails my wife sent me earlier today. I was a bit perturbed by the 12 emails. She had apparently spoken with a local real estate agent, and through the conversation told the agent she was an investor interested in buying fix N flip residential, and would like to know of any distress property situations as we would look to buy those too. The range she gave the agent was from $100,000 to $2,000,000.

The broker sent her a list of every property in the mls broken down into 1/2 million dollar increments, I guess to reduce the size of each list (they're only about 300-500 hundreds listings long).

She's run a brokerage before, I mean she literally kept our office running while I brokered, managed, and trained a large sales staff. She knows the brokerage business, and together we've trained 5 - 6 dozen new commercial real estate agents entering the commercial real estate business (about 1/2 of them former attorney's). 

When we began to execute on our plan I suggested she get an agents email when talking to them in person or over the phone, and then email them our buying criteria (I also want to use this to build a list of local residential agents for when we're marketing properties for sale). She didn't do it, and because she didn't do it this guy send her the Chinese phone book of mls listings.

Its funny though, when I questioned why she didn't ask for his email she said she had called on about a 1/2 dozen listing she had found interesting and each of the agents she spoke with really had little if any interest that she was an investor interested in buying property in their marketplace.

You can't change the habits of an undisciplined and maybe unprofessional real estate agent. Thats said, there are many very good and professional agents in every market. And its those agents you want to find and work with to help you grow your portfolio.

It may take you some time to find a really good agent, and you may have to work with some not to good agents until you do, but when you find a really good agent that delivers properties that meet your investment criteria they will add more value to your deals than you'll ever pay them out in commission. 

 Mike, maybe you could offer your thoughts on how you might structure a transaction with these sellers. As a community it would be very difficult to provide guidance without knowing a lot more about the economics of the deal, the sellers hot points (what they've told you thus far aside from them wanting to retire) and what type of financial position you might engage to close on this deal e.g. 20% downpayment, little or no money down? 

Without more input from you its nearly impossible to know whether the deal even make sense from a financial perspective. Is it a turn-key deal? Value add deal?.

Generally for the majority of lenders the business must be operating profitably for 3 years. They will use the revenue proceeds to help a business qualify for an SBA loan but lenders generally will not lend on property primarily acquired as an investment.

@Daniel Changis correct you must occupy at lease more then 50% of the property in order for the loan to qualify under the SBA loan guidelines. You can learn more at the SBA website https://www.sba.gov/content/7a-loan-program-eligibility

 Typo, should have been "Evolves". Unfortunately I can't edit it now.

Partners - how well you interact with friends and family will provide some insight into working with partners you can trust. How well do you trust family and friends? Assuming they were astute individuals would you or could you trust any of them with thousand if not tens or hundreds of thousands of dollars of your money?

I've had partners, and its mostly worked out well. However, I've also been witness to partnerships that have gotten ugly. 

My view is that partnerships in real estate work really well when their is a written partnership agreement and the goal is to widen the bandwidth of the partners to process more, and or to leverage available capital to acquire more.