All Forum Posts by: Tyler Lynn

Hey Guys, 

Seems like everyone has touched on ways to put it together and then bring it to investors, I would definitely second that you should be using a NDNC. But as Steve said this owner will be getting calls from brokers/other investors. What I would highly recommend is now that you have a potentially motivated seller, create a relationship. Call him a few times a week, make it casual, talk about things other than the deal. If you can create a relationship they may just let you have the last offer if they do get offers from others, or even better they may take your offer even though someone else came in higher or the broker told them they could sell it for them for much more. Relationships are everything and if you can get this seller to like you it may go a long way for getting this deal under contract. 

Thanks!

Agreed with Arn, 

Underwriting, underwriting, underwriting! Your offer should be based off of everything that goes into your analysis of the property and what returns they will create. These large capex items will definitely play a role in your underwriting. Having the new roofs and a/c may be able to lower cost, however I wouldn't change your analysis much on that. Definitely use these as negotiations as for why your price is where its at. Good luck!

Hayden, 

The approach you are suggesting is similar to the one we use. We have a template that we use and insert property specific information on Word, print it out, sign, and hand written address. I think it does matter to have some parts of the letter show that you personally put effort into it and makes it more personable while still being efficient, because with mailers it still is a numbers game. If you only send out 10 perfectly written mailers it won't get you where 1,000 typed letters will get you. But being somewhere in the middle is a great strategy. 

Well done Pat! Congratulations, some great takeaways from the way you and your team stuck through it and the power of relationships! 

1. Connect with Brokers: Create a relationship and build credibility that you are a strong buyer, that way they may bring you "off-market" listings before it gets brought to other buyers. 

2. Paid Resources: Costar and Reonomy are expensive, but very helpful tools for commercial real estate investors.

3. County Property Appraiser: Do an advanced search giving specifics on things like: year built, sqft, number of units, etc. And this will give you a strong list of apartments, with the owner's or LLC's information to come with.

4. Drive for Dollars: Drive around town looking for apartments, especially those that look like they have deferred maintenance. Then use the county's property appraiser website to get the owner's info!

Good luck!

Are you looking for rent comps or sales comps? For rent comps I use apartments.com often and this works great for finding similar units and what they are renting for or at least being advertised for. For sales comps it depends on the market. Technically as a 5+ unit multifamily I prefer to use the income approach with market cap rates. However certain markets will treat these 6 units based off of previous sales as a price per door type approach and ignore the income approach all together. If this is the case a local broker or even real estate agent can help you pull comps or previous sales. 

Off-line marketing is extremely dependent on the market you are located in. In a more tertiary/rural market, I've seen more tenants brought in from a single yard sign than any online efforts. For a more primary or secondary market I think flyers and hand outs work great. If you are in a say a college town, and are providing a student housing asset then this would be the place to put out flyers and cards promoting your prices and specials. If you have a more typical renter demographic I would ask the major employers that support the market if you could do the same. You choose markets based off of employers in the market, why not market directly to them. 

Real Estate investing can be a great investment vehicle, especially apartment buildings. It all depends on the deal and the operator. That is the reason I'm not a fan of condo's, it provides a lack of control. It could be a great deal, but one special assessment and it could kill cash flow for a few months to a few years. 

I would agree if you are going to be the sponsor of this deal and also provide the asset management going forward then you should definitely get more of the deal. But the deal only works if you are giving your partners returns they will be happy with. I try and achieve roughly 8% CoC and mid-teens IRR for my investors. If your partners are only equity partners and passively investing with you, then I would underwrite the deal and adjust the equity splits based to get them the returns they desire.

Yeah, FHA will only allow you to have one loan at a time, the only ways around this is to refinance, or they have certain clauses like if you move for work reasons you can get another. If you don't capture the 20% equity though it would be easier to just start with the conventional owner occupant loans on the next one.