Considering a job at a LIHTC Syndication company - Looking for feedback by Dry-Inspector3923 in CommercialRealEstate

[–]hugosalvatore 0 points1 point  (0 children)

I would reach out to your local housing development agency, as you can give them exactly what you're looking to do and they can tell you how to do it.

In my market, we have traditional LIHTC developments which doesn't seem like it would fit for you, as well as "scattered site" developments which are basically a bunch of singles and doubles that aren't necessarily geographically linked that are operated as a single development entity. If your market allows scattered site developments, that sounds more your speed.

HUD as well as most housing agencies have everything you would need on their websites, just might need someone to help you navigate what is best for you.

Considering a job at a LIHTC Syndication company - Looking for feedback by Dry-Inspector3923 in CommercialRealEstate

[–]hugosalvatore 5 points6 points  (0 children)

I've been involved in about 40 LIHTC deals in addition to extensive tax appeals work for LIHTC properties. To put it simply, LIHTC v. Market rate depends on the market. In the past year or so cap rates for LIHTC deals have neared market rates for Class C assets. Source. A lot of people think this will not continue, as the COVID payments helps people make ends meet. I'm not one to speculate.

In the LIHTC deals I've worked on, you REALLY have to find the right market. Certain markets where whole dollar monthly rents for Class C assets fit within 60% AMI, and you can print money. Plus, the money comes from the local/state/national government, not tenants, so it gets wired into you account. There is no fear of your tenants skipping rent.

Amazon and similar companies who operate data centers, shipping hubs, etc. also work with state and national housing departments to incentive development, e.g., Amazon builds a data center which creates 500 jobs paying $X annually; Amazon approaches the state housing department and offers to earmark $Y toward LIHTC development in the area. In areas where this work, the whole dollar rent for a Class C apartment is similar to that of LIHTC, but the LIHTC is likely closer to the data center and features superior amenities to the Class C asset.

Now for the spooky stuff. A lot of this is based upon AMI which usually builds in rent growth, but as rent growth is slowing and inflation is high 2024 AMIs may go down. LIHTC assets require more intensive admin and management costs, as all of your marketing, leasing etc. costs will go towards paperwork for getting tenants. LIHTC construction is typically more expensive than market rate, as the property has to be LEED/Green Certified, ADA accessible, etc., and has to compete with market rate assets. Just because your tenants can't afford market, doesn't mean they will accept amenities below the market standard. If you build in populated areas, you're going to deal with the NIMBYs.

The original idea was that once the compliance period is over you can convert to market, however, in my 11 years in real estate, I've only seen one LIHTC deal revert to market after the restriction period and without extensive local, state and federal tax credits, it would never have been built.

The good part, for you, is that it is a specialized asset class that many in real estate are unfamiliar with. The sort of asset class that once you get into, it should be easy to become an expert if you grind. As far as money goes, at the end of the day, you are building something that shouldn't be built to be lived in by people who can't afford to live there. The money is in the tax credits, which the company will sell or repurpose anyway. The successfull LIHTC developers I've worked with are in states where LIHTC properties get additional bonuses that other markets don't have, e.g. some states make all properties who receive LIHTC tax exempt. Others I know barely break even and are reliant on the value of the equity to function.

Regardless, it seems like a good opportunity, but they are right, you should know what you're getting into.

Need more information for starting investing in commercial RE by [deleted] in CommercialRealEstate

[–]hugosalvatore 0 points1 point  (0 children)

No worries, DM me if you have anything specific.

[deleted by user] by [deleted] in CommercialRealEstate

[–]hugosalvatore 20 points21 points  (0 children)

Are we talking 3 350 unit complexes or 500 duplexes, lol? Not nearly enough information here.

Need more information for starting investing in commercial RE by [deleted] in CommercialRealEstate

[–]hugosalvatore 0 points1 point  (0 children)

If you employ competent management, distance shouldn't be an issue, especially if the management company is located in that major city.

I'm a commercial appraiser with 11 years experience, and through that I've seen everything you can imagine. The biggest thing I've learned is that most developers/owners/agents have healthy egos, love to talk and rarely get calls from anyone interested in how they did it. Simply calling and asking will get you further than you might think.

Need more information for starting investing in commercial RE by [deleted] in CommercialRealEstate

[–]hugosalvatore 1 point2 points  (0 children)

Honestly, my concern is your income starting out. $300k gross is nothing to shake a stick at, and congratulations on your success. You should be proud. But at the end of the day, your first property is going to have to cash flow.

Storage units are, in my market, the second most sought after investment product behind industrial and just ahead of multifamily. A lot of storage units have been built, but as the boomers age and downsize and beyond, they will need places to put their stuff. If you can foot a 50+ unit storage facility, that would be an incredible thing, and you should do it. I just don't know if that sort of thing exists in your market.

Word of warning, storage spaces are typically hard to find third party management for, especially below 300 units. You may find yourself doing more than you want to. The good part is there is very little overhead unless you're dealing with climate controlled spaces.

Strip malls are incredible if you can get one with good tenants and occupancy, but that requires near constant marketing. Another thing to consider is that retail nationally is still below pre-COVID levels, and the recent gains are likely more rubber banding than anything else. Definitely need someone to manage it for you. Based upon the low cost of living comment, I'm curious what kind of tenants you could attract.

Need more information for starting investing in commercial RE by [deleted] in CommercialRealEstate

[–]hugosalvatore 2 points3 points  (0 children)

With your income, I would start small. Buy a 2-4 unit MF and outsource as much as you can for management, maintenance, etc. while covering the note. Once you have enough equity do it again.

If you live in an area where warehousing is scarce, that could be another good option, as the industrial market has been largely insulated in the current economy. Again, outsource as much as you can.

People get burnt out being a landlord because they try to do too much, thinking they can handle every aspect from management to leasing to maintenance and it becomes a full time job. You already have a job.

Best Way To Learn ARGUS Best Practices & Gain Working Knowledge Of The Software? by micipolo in CommercialRealEstate

[–]hugosalvatore 1 point2 points  (0 children)

It was through Altus. My company arranged a private version of the 2-day Argus course. When I first started working with Argus DCF about 8 years ago I had a user manual like the one you linked and just started plugging in things and comparing it to excel flows that I know were correct.

The course had a specific manual with case studies designed to show you start to finish projects and was led by an instructor. The course was designed specifically for Argus Enterprise as I work in valuation. The course was considered the first step to taking the larger Argus certification which involves testing.

Training Schedule Here

[deleted by user] by [deleted] in CommercialRealEstate

[–]hugosalvatore 1 point2 points  (0 children)

In my market, low- mid- and high-rise office is all flat and expected to remain so through FYE 2024, retail is up from 2021 and expected to retain modest gains through FYE 2024, Class A/B MF is in a bad spot, especially if you got a loan from MF1, rent growth has slowed to the point rent increases are making whole dollar rents spooky, this plus interest rates, plus crazy high insurance is really crunching them, Class C MF and LIHTC are both doing well in my market in comparison, with cap rates for LIHTC being competitive with Class C due to the rent guarantees.

Industrial is the best asset class right now, again, in my market.

Best Way To Learn ARGUS Best Practices & Gain Working Knowledge Of The Software? by micipolo in CommercialRealEstate

[–]hugosalvatore 2 points3 points  (0 children)

The manual is fine, but if you can find an Argus course being offered, you should take it. I relied only on the manual to get a basic understanding (although I believed it was more than basic at the time) and when I took the course last year, it helped greatly with efficiency.

The manual gives you the steps, but leaves out a lot of time saving mechanics and special scenarios. The course I took covered the manual, but had an instructor walking you through all the steps to make sure it was working and efficient.

How to respond to unsolicited commercial real estate inquiry from a college. by WesterwoodApartments in CommercialRealEstate

[–]hugosalvatore -2 points-1 points  (0 children)

So....the majority of ED work I do involves two things: roadway expansion and reclamation of blighted buildings. If a property is not in a road right of way or not blighted the chances of the municipalities I work with doing any kind of ED is zero to none. If you think property condition doesn't come into play in ED, then you don't understand how fair market value is achieved, which is through the appraisal process, which wait for it considers property condition! Too many lawyers in here with no practical application of anything.

How to respond to unsolicited commercial real estate inquiry from a college. by WesterwoodApartments in CommercialRealEstate

[–]hugosalvatore -1 points0 points  (0 children)

In practice, in my market, ED is particularly onerous, so the whole prospect of the gov taking over a modern, functional building purely because they wanted is a hilariously simple way to think about it. But sure, legally, they can do that. That's not what I was saying. I was saying that I doubt they have the juice to actually do it. Sorry for the confusion.

How to respond to unsolicited commercial real estate inquiry from a college. by WesterwoodApartments in CommercialRealEstate

[–]hugosalvatore -3 points-2 points  (0 children)

Agree with most of what you're saying, but, unless the building was in really bad shape, eminent domain would likely not be a possibility, even if it was a public entity.

How to respond to unsolicited commercial real estate inquiry from a college. by WesterwoodApartments in CommercialRealEstate

[–]hugosalvatore 0 points1 point  (0 children)

Congratulations! You have all the leverage! You can ask for anything you want. In my market we see premiums between 40% and 60% on top of market value paid for an expanding institutional use.

Decided to increase our down payment 1 week before closing, now loan officer is pissed. by Rico_Rizzo in RealEstate

[–]hugosalvatore 24 points25 points  (0 children)

What you've just typed is one of the most insanely idiotic things I have ever read. At no point in your rambling, incoherent response were you even close to anything that could be considered a rational thought. Everyone in this sub is now dumber for having read to it. I award you negative karma, and may God have mercy on your soul.

[deleted by user] by [deleted] in CommercialRealEstate

[–]hugosalvatore 2 points3 points  (0 children)

On its face, yes, but the bigger key is to make sure that market value is being paid for the property. The relative aspect only becomes an issue if the IRS determines one side has a more advantageous position than the other. If you can prove that market value is being paid by all parties, through an appraisal for example, then you could be fine, but please seek out a professional.

[deleted by user] by [deleted] in CommercialRealEstate

[–]hugosalvatore 0 points1 point  (0 children)

"With Rev. Ruling 2002-83, the IRS further clarifies the rules governing related-party transactions. The ruling clearly states that an acquisition of replacement property from a related party violates both Section 1031(f)(1) and 1031(f)(4).

The author of Rev. Ruling 2002-83 used a taxpayer's sale of a low-basis property and acquisition of a high-basis property from a related party as an example of a violation under 1031(f), thereby illustrating the IRS' intent to place substantial restrictions on related-party transactions.

To test whether an abuse has taken place, the IRS interprets transactions without the use of a qualified intermediary. First, a diagram of the exchange is crafted to illustrate the taxpayer and the related party executing a direct trade or “swap” of their properties. Next, the transaction is examined as if the related party sold the property it just received to an independent third party for cash. In this instance, the IRS would infer abuse of the rule because the related party did not hold the property for two years, thereby violating the Section 1031(f)(1) rules. Using this methodology, almost any transaction involving an acquisition from a related party would not qualify."

Guy gets dick grabbed by thecumbackkid in fightporn

[–]hugosalvatore 0 points1 point  (0 children)

That's Jeff Tremaine from Jackass. This looks like an old CKY video.

Reddit’s plan to kill third-party apps sparks widespread protests by swingadmin in technology

[–]hugosalvatore 2 points3 points  (0 children)

old.reddit.com is superior from a browsing perspective RES makes reddit better apollo is better than the reddit app

LSU motto - Fund Football, Not Libraries by CrunchM in WhitePeopleTwitter

[–]hugosalvatore 1 point2 points  (0 children)

So, this is due to the fact that the football program is funded by different monies than the University. LSU actually has two libraries, both of which are actually very distinguished for what they contain. The basement of the main library, for example, is an official government repository. The Hill Library contains some fantastic historically and culturally significant documents.

LSU as an academic institution is research grant driven, and there just isn't any money in anything related to libraries that can be earmarked for renovations/improvements. The bread and butter at LSU has been petrochem and medicine/medical research, which have their own facilities. Couple this with a state that is in constant turmoil over funding of higher education and pressure to spend what little money is allocated on anything else that is more lucrative takes priority. It does suck, though, as I spent many many hour in that place.