All Forum Posts by: Tyson Cross

That can be a tough situation. I would have someone come in an inspect further - if they do find mold (which sounds likely), it will need a full remediation. This means likely they would need to treat the mold spores and then possibly remove the rotted drywall, flooring etc. I've done mold remediation work in commercial buildings and it is not fun.

This is tough to go off without more information. I'm assuming this is a commercial building from the information you provided. Is this an office building? Just by what you've given it all depends on the type of lease you offer the tenant. There are several different types (NNN, Gross, Modified Gross) you might want to do some research on those to answer your question. In an office building, typical leases are full service (gross), meaning that the landlord pays for everything. In this type of lease you can pass through expenses to the tenant by using a base year and a prorata share - meaning the tenant's share of the building. In other words, you would divive their suite square footage by the total building square footage to get a percentage. You would then apply that percentage to calculate the op ex. You could also do a modified gross lease in which you would pay for everything except utilities for example. You would then pass the utilities directly through to the tenant.

I hope this helps.

anyone know of a good re attorney in the portland area who has experience doing syndications?

Johnny,

I was purely looking at this deal to educate myself. My goal is to syndicate deals with the intent on acquiring value-add deals that I can then refi or sell within a two-three year time frame. Obviously this is a large deal with a huge amount of prolbems, and further this isn't necessarily the type of value add deal I would be realistically looking to purchase. I would want something more in the 60% occupied range with much less repairs. I simply am looking at all deals and runnings numbers, looking at scenarios etc.

Yeah, I totally agree with you about the increase in cap ex. I have no doubt this property is way higher than 1.5 million in improvements. They anticipated only 700k of this to be interior improvements. Either that means they are not factoring repairs in for every unit, or they are just severely underestimating the repairs for the entire complex. The other issue I see is that these are all flat roofs. This being the case, it could present many roof issues and thus end up costing more money down the line.

Joel, thats helpful to know that the bank could finance it for a period time in order to stabilize. Then you could refi or sell to pay off the existing debt. But what about price? They're listing it at 2.1, but if the repairs come out to be much higher than they claim, say double, how much lower can you offer in terms of purchase price?

Finally, how would you be able to anticipate the cap rate upon exit?

So I came across a 259 unit complex that is for sale and is bank owned. The listing price on the flyer is 2.1 million with another 1.5 in estimated cap ex improvements. The complex is 15% occupied due to the deferred maintenance and poor management. I got access to the financials and they are pretty dismal. The asset is clearly not making any money, so there is really no way to do an income-based evaluation. So, as I think more about this, the only way to really value the property is a market-based approach? How do you factor in the amount of money for repairs? In this case, you could do a full property inspection and realize that the place needs much more than 1.5 million in repairs. If that were the case, I'm assuming you could lower the sale price even more?

The other thing I noticed, being that it is a bank owned property, is that they are requiring cash for the purchase. In this case it needs so much work, that Im sure the only way the bank would feel safe enough to sell this is with a full cash offer. Are there any cases like this where the bank would actually consider financing the sale? Or is it ever possible to get financing from another source to purchase the asset from the bank who currently owns it? It seems like with the right amount of capital, this could be a huge value add project with huge returns.

Did you base your price on including the 10k of work in the one suite and for that matter, all of the minor fix ups it requires? I'm guessing based on the NOI you provided, the cap rate is somewhere around an 8? If that's the case, I think your offer is fine, considering you have at least 10k in repairs. I don't know if I would go higher than that. I always look at the hard numbers to determine value. In this case, if the cap is truly and 8, I would have offered more like $265,000 to account for the repairs. If they try to raise it from there, I say walk. I always look for the BEST deals.

This is the most exciting form of real estate investing to me. I have a background in commercial property management and moving toward my CCIM. Would love to talk with more people interested in forming syndications and or possibly partnering to create a management/investment portfolio.

@Jeff Greenberg, where is the deal you are aquiring located?

@Bryan Hancock, I just started getting familiar with capdominus, so I don't hav emuch experience with it. Given the fact that the SEC requirements are changing, I'm curious to see how it changes the landscape of syndication investing. There will be a lot of people advertising supposed deals. However, I believe it will continue to revolve around the relationships that one builds and maintains. What has your experience been with these types of platforms?

@Will Barnard , I'm about half way through your podcast - good stuff. I think syndication is a great direction to move in down the road with your resume.

So I am learning all I can about syndication right and I know there is a ton of information out there. I'm sure things are changing with the new JOBS Act that was passed last year. I was wondering if anyone has used any of the new websites that are designed to advertise deals for syndication such as Capdominus. I actually participated in a demo last night with someone from this site and thought it was pretty cool. I wonder if anyone has used these sites to raise capital for a deal and what their success rate has been? My feeling is it might be a great way to see who the playhers are and who would be interested in specific deals, but in the end..it's really going to come down to creating a relationship and getting that person to trust you.

Does anyone have a syndication deal in the works or recently completed one? I would be interested to hear about it.

@Joel OwensI'll jump in and answer since he hasn't responded. Joel, I'm currently researching the best place to jump in to REI and there are a few things I know for sure.

1. I need to invest out of state since I live in CA and don't have the capital to start here.

2. I know I want to buy and hold with the best cash flowing properties possible (appreciation would be icing on the cake)

3. I don't have a ton of time to manage the process, nor the capital to rennovate something. However, I do have about 20k to invest.

4. My goal is to acquire enough cash flowing properties as quickly as possible so as to quit my corporate job and focus on REI full time.

5. I would prefer to stay away from the "hot markets" so as to make the acquisition process a little easier.

Thoughts?