The worst thing you can do when acquiring a multifamily building is botching the transition. You get one shot to nail it. Here are the steps we take:

1/X 1. We post letters of attornment and welcome letters on each apartment door advising the tenants of the change of ownership. Chances are the old LL kept the sale hidden from the tenants. This is especially important when you close at the beginning or end of a month.

Got approvals on a 12 unit building. Demoing a 3 family to build it on that site. This thread will be the progress thread. Will try to keep it going in real time. We got the approvals but we don’t have permit drawings yet. We are limited in what we can do until construction permits are issued. In the past few days we are completing the prerequisites for the demo permit.

Let’s talk about break even cap rates (assuming no NOI growth). You need your return to exceed your weighted average cost of capital (WACC) for a deal to make sense. Now assume you pay 7% pref on equity and 3.5% on debt. 1/X If you fund a deal with 70/30 debt to equity, you need to buy at a 4.6 cap for the return to exceed the WACC. But if you can close the deal at 80/20 debt to equity, you can turn a profit at. 4.2 cap. 2/X

I am knocking down a house to replace it with a new custom home. I’m going to keep this thread going throughout the process so you can see what goes into a project like this step-by-step. Having closed on the house, I ordered a survey and passed it along to the architect so we can begin working on plans for the new house. At the same time we began prepping for demolition.

We build to hold so we design for longevity. What does that mean? Here’s a thread element by element: Foundation: precast concrete is the way to go. Large slabs prevent water penetration. Less soil disturbance means less settling. Factory installed insulation means better thermal performance.

Anyone who says that land appreciates and buildings depreciate is 100% WRONG.

Under the right circumstances land depreciates and buildings appreciate as well.

How does this happen? 👇

1/X Scenario 1: Zoning laws change post-construction

When you have an outlier multifamily property in an area designed for lower density, the land value decreased over time and the building value increased. 2/X

We have a few rules which we live by as a company. We view these mottos as the keys to our success in the field. Better lucky than smart.

In conversation, always attribute the majority of your success to good luck because its probably true. Starting out on the heels of the Great Recession played a huge factor in our success. Don't attribute your success to brains and your failures to luck.

A thread with verbatim quotes from the @IlhanMN Rent and Mortgage cancellation bill. Seatbelts fastened! Notwithstanding any other provision of law, the obligation of each tenant household of a covered rental dwelling unit to pay rent for occupancy in such dwelling unit shall be suspended

What to do when you have an insurance claim: So a disaster occurs. Step 1 is to make sure everyone is safe. Step 2 is to immediately mitigate further damage. That means spending your own money to board windows/roofs, and to pump out water and winterize pipes where necessary. If you don't mitigate further damage you will compromise your claim. The very next step is to block the number of every restoration company that markets to you. They specialize in working with your insurer to burn through your policy payout while doing minimal work.

A bit regarding housing vouchers. In 2017, NYC initiated the Special One-Time Assistance voucher (SOTA). The voucher provided a one-time full year of rental payments to a landlord for accepting a tenant from an NYC homeless shelter. The voucher was set at 50% of the tenant's income, and allowed the tenant to move anywhere in the US as long as the tenant had employment in the vicinity. The payment was provided as a single upfront payment to the landlord. This was in some respects a win/win as landlords got a full year of rent upfront, and tenants got

Let’s talk insurance. Y’all already know that not all policies are created equal. Let’s look at the major elements. Actual cash value (ACV) vs. replacement cost:

When your building burns do they pay the value or the cost to replace?

Syndicates Vs. Funds

One of the most frequent questions we get. I raise on a deal by deal basis but both structures have pros and cons. A primary difference is in a syndicate you have full control over which property you invest in, in a fund, investments are at the will of the GP. However you do have the benefit of diversity across multiple properties with a single investment.

How to analyze a deal 101:

You get an email from a broker. First thing you do is back of the envelope metrics for sanity. Calculate cost per square foot for commercial, and cost per unit for multifamily, hospitality or self-storage. Is it in line with the market? If so... Only now you can look at the cap rate (with a grain of salt). Does it match what you're seeing in the market? Good. Now check the gross rent multiplier. Make sure that's in line too. Then you check the underwriting. Are expenses as % of income in line? Great...

One of my favorite charts. Since 1947, there have been only 9 months during which rents decreased. 8 of those 9 months were during the great recession, during which the total decline was 20 basis points. 1/x While I won't claim that rents are recession-proof, historically, they are among the most stable of prices. So how does supply match demand in multifamily? It washes through in vacancy. 2/x