complex buying questions
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complex buying questions (by James [VA]) Feb 12, 2019 5:20 AM
       complex buying questions (by Roy [AL]) Feb 12, 2019 6:02 AM
       complex buying questions (by Richard [MI]) Feb 12, 2019 6:59 AM
       complex buying questions (by James [VA]) Feb 12, 2019 8:07 AM
       complex buying questions (by Oregon Woodsmoke [ID]) Feb 12, 2019 8:17 AM
       complex buying questions (by Roy [AL]) Feb 12, 2019 8:18 AM
       complex buying questions (by RathdrumGal [ID]) Feb 12, 2019 8:23 AM
       complex buying questions (by David [NC]) Feb 12, 2019 8:26 AM
       complex buying questions (by GKARL [PA]) Feb 12, 2019 8:34 AM
       complex buying questions (by S i d [MO]) Feb 12, 2019 11:55 AM
       complex buying questions (by fred [CA]) Feb 12, 2019 1:24 PM
       complex buying questions (by Robert J [CA]) Feb 12, 2019 9:10 PM
       complex buying questions (by Robert J [CA]) Feb 12, 2019 9:10 PM
       complex buying questions (by Ray-N-Pa [PA]) Feb 17, 2019 3:25 PM

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complex buying questions (by James [VA]) Posted on: Feb 12, 2019 5:20 AM
Message:

I've recently taken on an interest in pursuing a multi-family complex. I'm still in phase one: the dreaming phase.

However, in order to turn the dream into a plan I need to understand more about the business and hope to pick the brains of those already in the business.

1. How would one go about getting a seven figure loan?

2. What information should be requested from the property during the initial feasibility study? (vacancy rate, expenses/income, etc?)

--173.163.xxx.xx




complex buying questions (by Roy [AL]) Posted on: Feb 12, 2019 6:02 AM
Message:

James,

Need more information. What experience do you have currently owning/managing any rental property? I would never consider a 7 figure multiplex unless I had a min. of 10 years experience in managing smaller rental units like SFH or duplexes. --68.63.xxx.xxx




complex buying questions (by Richard [MI]) Posted on: Feb 12, 2019 6:59 AM
Message:

Most lenders will want you to have experience and a track record before they will be comfortable lending on a project like this.

Do you have multi unit experience?

Many cities require an on-site manager when the building is more than a certain number of units. Do you have a manager or will you hire a management company?

How's your capacity as a borrower? Commercial lenders may want 25% down. If you don't have a track record, maybe even more. If you have massive collateral, that may improve your position.

Have you considered a partner of you don't have enough experience or a track record of collateral? --23.121.xx.xxx




complex buying questions (by James [VA]) Posted on: Feb 12, 2019 8:07 AM
Message:

I've been managing a small portfolio of SFH's for 15 years now. I would plan on being the property manager at the complex.

I have a credit score of around 815 and have 120K for a down payment. I'd prefer not to offer up collateral if I can help it. --173.163.xxx.xx




complex buying questions (by Oregon Woodsmoke [ID]) Posted on: Feb 12, 2019 8:17 AM
Message:

Make an appointment to speak with the commercial banker and sit down and talk to him about what the bank requires. I'd talk to the commercial department at a minimum of three different banks.

It's my understanding that you would need a massive down payment and commercial loans tend to be written for 5 years and then they must be paid off or renewed. But different banks have different policies, so you must go and ask around. --98.146.xxx.xxx




complex buying questions (by Roy [AL]) Posted on: Feb 12, 2019 8:18 AM
Message:

How many units are in the complex you are interested in? What condition are the units currently in? What is the neighborhood like?

Having all of your tenants under one roof can be an advantage and also a disadvantage.

I would probably start out having a sit-down meeting with the current owner and/or manager of the complex. Ask to see his income/expense ledgers. If he won't show them, then you need to walk away. --68.63.xxx.xxx




complex buying questions (by RathdrumGal [ID]) Posted on: Feb 12, 2019 8:23 AM
Message:

Get a commercial broker. They will help you with the process, and a good commercial realtor will have off market deals. Get someone who has been in your area for a number of years and has a good network. They will have worksheets for you to use to evaluate the properties under consideration.

There are books on evaluating commercial RE -- get ahold of them and start reading. You should get leases and tax returns for the prior three years. --98.146.xxx.xxx




complex buying questions (by David [NC]) Posted on: Feb 12, 2019 8:26 AM
Message:

They are going to want a 5 year projections of income and expenses for the property as well as 3 year past performance. What needs to be done to the property to improve it, estimates on rent increases, cash flow, occupancy rates in the past and projected occupancy, future major renovation projections, etc. Your plans to increase profitability from it's current state to a better state.

You need to show them that you did your homework and that they will not lose money loaning it to you.

Should be 20 to 30 pages of photos, spreadsheets, and commentary that you can slap on their desk as your "plan".

In addition they are going to want everything on you personally, tax returns, assets and liabilities, partnerships, credit score, life insurance policy, blood type, ... --71.217.xxx.xxx




complex buying questions (by GKARL [PA]) Posted on: Feb 12, 2019 8:34 AM
Message:

I would get the leases and the P&L and verify all numbers. The tax numbers are easily verified by public records. I'd ask for backup on utilities. You can get a quote from your insurance company on the cost of insuring. Basically, you want to take their P & L and recast it to a verified version. Be sure to include vacancy, repairs and capex. Also, you'll want to know the capitalization rate for similar commercial properties in your area and apply that your verified net operating income to determine the offer.

Generally, I know market rents, cap rates, vacancy rates and reasonable utilities going in and can look at a P&L, add the stuff that's typically missing (vacancies, repairs) and determine what the true asking cap rate is. I also evaluate the building to determine if there's any deferred maintenance/major capex coming up. The combination of all of that forms the basis for negotiations.

Banks want 20-25% down generally although my bank will allow secondary financing. I had a track record with them before I did a no money down deal with secondary financing. Credit unions and local banks are where you want to seek this sort of financing. The main thing they're going to be interested in is that P&L. --209.122.xx.xxx




complex buying questions (by S i d [MO]) Posted on: Feb 12, 2019 11:55 AM
Message:

I'm looking at large deals now, so while I haven't bought one yet I've dug thru several down into the weeds.

The ProForma should list all rents and expenses, but I would want to cross check these with the Seller's tax returns. Watch out for things they 'forget', like LL paid utilities, grounds-keeping, snow removal, donated maintenance & management.

If there is currently an onsite manager/superintendent, how much do they get paid and/or do they get free rent? Are they staying after the deal sells?

How many are leases vs. m2m? Would it be possible that the month after closing you see a mass exodus as leases expire and people fear the new land lord?

A few other due diligence tips from an acquaintance who is a MF investor.

* Ask to see the work orders (not in the contact).

* Specifically ask about floods, fires, sewage backups, roof leaks, surface water, asbestos, popcorn ceilings?

* Any problem units (maintenance or tenants)?

Fun stuff...good luck!

--173.20.xxx.xxx




complex buying questions (by fred [CA]) Posted on: Feb 12, 2019 1:24 PM
Message:

Your first step: let a mortgage company qualify you. With that in hand, you will have the answer: to pursue or not. --99.59.x.xxx




complex buying questions (by Robert J [CA]) Posted on: Feb 12, 2019 9:10 PM
Message:

I picked up a half completed small complex. The builder and owner didn't understand that everything cost more and takes longer to complete. Here in Los Angeles it takes on average to get plans approved with permits around 320 days -- that's almost a year.

In my case I had an extermination company tent the half completed structure to make it weather proof while the red-tape and paper trail began. It only took me two years to the go ahead. Codes kept on changing and I had to do many revisions.

Since I'm a licensed contractor that can draw up (draft) modified plans, the cost of revision wasn't too bad it was the loss of income on the purchase just sitting there. --47.156.xx.xx




complex buying questions (by Robert J [CA]) Posted on: Feb 12, 2019 9:10 PM
Message:

I picked up a half completed small complex. The builder and owner didn't understand that everything cost more and takes longer to complete. Here in Los Angeles it takes on average to get plans approved with permits around 320 days -- that's almost a year.

In my case I had an extermination company tent the half completed structure to make it weather proof while the red-tape and paper trail began. It only took me two years to the go ahead. Codes kept on changing and I had to do many revisions.

Since I'm a licensed contractor that can draw up (draft) modified plans, the cost of revision wasn't too bad it was the loss of income on the purchase just sitting there. --47.156.xx.xx




complex buying questions (by Ray-N-Pa [PA]) Posted on: Feb 17, 2019 3:25 PM
Message:

Since you have some knowledge about how to manage on more hands off platforms you will want to gain some experience doing apts.

Just an idea, but since rates are trending upward, and many baby boomers are coming of age - perhaps you should option a small complex and manage it for the future retiree. Then ask for wrap around financing based on the numbers that you have seen first hand.

If there is enough equity, my local bank will allow you to get into it with only 5% down.......but they only loan locally --72.23.xxx.xx



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