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Need advice from Real Estate/Rental Property Mastermen ITT
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Date: March 31st, 2020 9:13 AM Author: Khaki Floppy Church Building Been planning to invest with others in a residential apartment building. The deal was all arranged before COVID got bad. I'm very concerned now about tenants being unable to pay, and unable to be evicted (state already passed rules against eviction and the eviction courts are closed indefinitely). I told the sponsor about my concerns, and asked if we could negotiate a price reduction on the building. There's already a purchase agreement, but we could easily get out. The sponsor is completely opposed to renegotiating price (thinks this would be unscrupulous). He's also arguing that COVID is just short term, he's a long-term investor, he's seen bigger issues and gotten through them, recessions are actually good for rental properties, blah blah blah. I'm not opposed to taking a risk and going forward with this investment, but it seems crazy we don't try to get some sort of price reduction. I haven't put up any money yet, but have committed verbally and don't want to screw this guy over by pulling out. Any thoughts or recommendations about how to handle this would be appreciated. (http://www.autoadmit.com/thread.php?thread_id=4493800&forum_id=2#39906023) |
Date: March 31st, 2020 9:22 AM Author: disrespectful appetizing brunch Unscrupulous? (http://www.autoadmit.com/thread.php?thread_id=4493800&forum_id=2#39906062) |
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Date: March 31st, 2020 9:32 AM Author: Khaki Floppy Church Building He thinks renegotiating will tarnish his reputation as an upstanding slumlord. (http://www.autoadmit.com/thread.php?thread_id=4493800&forum_id=2#39906124) |
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Date: March 31st, 2020 9:36 AM Author: disrespectful appetizing brunch That's great. It's bullshit but his problem is not your problem in any case. Back the fuck out before you get a bad investment so he can be "scrupulous." (http://www.autoadmit.com/thread.php?thread_id=4493800&forum_id=2#39906146) |
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Date: March 31st, 2020 9:35 AM Author: Wonderful lake lodge Back the fuck out.
Even without this fraudvirus, it's a shitty deal to get into.
Never invest in anything with a sponsor. You will get fucked over. |
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Date: March 31st, 2020 9:36 AM Author: Wonderful lake lodge And never do anything in real estate with a partner unless you're the sponsor. (http://www.autoadmit.com/thread.php?thread_id=4493800&forum_id=2#39906143) |
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Date: March 31st, 2020 9:41 AM Author: Khaki Floppy Church Building I trust the guy not to screw me over, just not sure I trust his judgment in going forward with the deal. Why is a sponsor so bad? (http://www.autoadmit.com/thread.php?thread_id=4493800&forum_id=2#39906173) |
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Date: March 31st, 2020 9:42 AM Author: Wonderful lake lodge Just read any book on real estate investment and they all say this.
If this guy's so good, why can't he get money from a bank? |
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Date: March 31st, 2020 9:45 AM Author: Khaki Floppy Church Building He is getting money from a bank (around 75%). He doesn't have enough cash to put up all the equity. (http://www.autoadmit.com/thread.php?thread_id=4493800&forum_id=2#39906199) |
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Date: March 31st, 2020 9:47 AM Author: Wonderful lake lodge Why not? If this guy is worth his salt he should be able to refinance a different property to get the money. Guys likenuim are usually serial scammers. (http://www.autoadmit.com/thread.php?thread_id=4493800&forum_id=2#39906209) |
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Date: March 31st, 2020 9:37 AM Author: Bipolar wrinkle sponsor? other investors or like a company?
who physically collects the rent? i', guessing the sponsor does. |
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Date: March 31st, 2020 9:39 AM Author: Khaki Floppy Church Building One man sponsor who also acts as management company and collects rent. This is pretty small time. 5-10 other investors. (http://www.autoadmit.com/thread.php?thread_id=4493800&forum_id=2#39906160) |
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Date: March 31st, 2020 9:42 AM Author: Bipolar wrinkle you think he won't fuck you over?
how big is this building for 10 investors and a sponsor?
as for this virus shit, it's nothing it's like h1n1 and everything will be fine in weeks. |
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Date: March 31st, 2020 9:49 AM Author: Khaki Floppy Church Building This is small time. The sponsor is just the one dude who will also manage the property. The 10 investors is because he's scraping together from friends/family/prior investors. I don't think he'll intentionally fuck me over (and not really sure how he even would). My concern is that we both lose money. |
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Date: March 31st, 2020 9:50 AM Author: Wonderful lake lodge Hint: 90% of time partnerships go to shit, no one intends to fuck anyone over. |
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Date: March 31st, 2020 9:51 AM Author: Bipolar wrinkle why don't you hire a property manager to collect rent and do maintenance? what's this sponsor getting exactly? (http://www.autoadmit.com/thread.php?thread_id=4493800&forum_id=2#39906247) |
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Date: March 31st, 2020 9:56 AM Author: Khaki Floppy Church Building he's the property manager. He's getting a property management fee on collections, a closing fee and a promote after return of investment + preferred return hurdle. He's not getting any cash out of the deal at closing; the closing fee is added to his equity investment, which is much larger than mine. (http://www.autoadmit.com/thread.php?thread_id=4493800&forum_id=2#39906292) |
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Date: March 31st, 2020 9:59 AM Author: Wonderful lake lodge BACK THE DUCK OUT (http://www.autoadmit.com/thread.php?thread_id=4493800&forum_id=2#39906312) |
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Date: March 31st, 2020 9:37 AM Author: racy grizzly hominid immigrant I’d want a price reduction (http://www.autoadmit.com/thread.php?thread_id=4493800&forum_id=2#39906150) |
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Date: March 31st, 2020 9:37 AM Author: Khaki Floppy Church Building Advice please. Is the sponsor right that renegotiating is bad business practices or is he just being stubborn? I've seen a lot of deals put on hold, but nobody is straight up lowering prices. Is it crazy to go ahead with this, or is it more like we are paying 20% too much (which I could live with)? (http://www.autoadmit.com/thread.php?thread_id=4493800&forum_id=2#39906151) |
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Date: March 31st, 2020 9:39 AM Author: Wonderful lake lodge BACK THE FUCK OUT. You ARE VEING TAKEN ADVANTAGE OF. THIS WILL END BADLY
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Date: March 31st, 2020 9:40 AM Author: Wonderful lake lodge Especially if you're not a chill bro willing to just give up control. (http://www.autoadmit.com/thread.php?thread_id=4493800&forum_id=2#39906170) |
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Date: March 31st, 2020 9:37 AM Author: drab turdskin deals are renegotiated all the time in real estate
if someone thinks a deal shouldn't be renegotiated despite extremely fucking material changes in the surrounding market, you have to ask yourself what their real concern is |
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Date: March 31st, 2020 9:44 AM Author: Wonderful lake lodge LJL at renegotiating leases in areas with rent control. (http://www.autoadmit.com/thread.php?thread_id=4493800&forum_id=2#39906183) |
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Date: March 31st, 2020 9:44 AM Author: Khaki Floppy Church Building I don't think he has any nefarious motivations. My concerns are 1) he's emotionally invested in the deal and 2) he's concerned about his reputation if he renegotiates (he's basically said this, and that it's a small market where everyone knows each other).
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Date: March 31st, 2020 9:46 AM Author: Wonderful lake lodge Hint: 90% of time partnerships go to shit, no one intends to fuck anyone over. (http://www.autoadmit.com/thread.php?thread_id=4493800&forum_id=2#39906202) |
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Date: March 31st, 2020 9:46 AM Author: Bipolar wrinkle never get emotional over real estate. he's basically telling you to eat shit because...perhaps he's getting a cut playing both sides. think about it. shouldn't he be on your side. (http://www.autoadmit.com/thread.php?thread_id=4493800&forum_id=2#39906204) |
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Date: March 31st, 2020 9:54 AM Author: drab turdskin okay let's assume for a second that he has nothing to gain from this situation
why would you enter into an agreement where the underlying has tanked in value? you would only do this if you were buying in at a ludicrously low price, where a huge haircut on the former FMV wouldn't bother you. is that the case here? because if not, get out. |
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Date: March 31st, 2020 9:48 AM Author: Rebellious Kitchen Knife it sounds like to me that the sponsor makes money even with a bad deal (kick back from seller? fees for closing the deal? Management fees going forward?) and his interests are not aligned with yours (http://www.autoadmit.com/thread.php?thread_id=4493800&forum_id=2#39906223) |
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Date: March 31st, 2020 9:54 AM Author: Khaki Floppy Church Building he gets a closing fee and a management fee based on collections (we would need to pay a management company anyway). But, he's putting up a lot more equity than me, so if the deal really is shit the fees won't make up for his losses. (http://www.autoadmit.com/thread.php?thread_id=4493800&forum_id=2#39906272) |
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Date: March 31st, 2020 9:49 AM Author: flickering sepia stage residential REITs have been slammed. there's no way the fair market value of RE hasn't declined. (http://www.autoadmit.com/thread.php?thread_id=4493800&forum_id=2#39906230) |
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Date: March 31st, 2020 9:50 AM Author: ruddy laughsome multi-billionaire If rents take like a 25-35% hit in major areas, most of the multifamily builds are in bankruptcy and most owners are underwater. (http://www.autoadmit.com/thread.php?thread_id=4493800&forum_id=2#39906243) |
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Date: March 31st, 2020 9:52 AM Author: Wonderful lake lodge Not at all.
Most have been owned for a few decades or more and have reasonable financing.
Will still be a bloodbath, but most building are fine. |
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Date: March 31st, 2020 9:54 AM Author: ruddy laughsome multi-billionaire Ya my bad - I meant to say new owners/new builds
You are very right about the longer term holds/reasonably financed properties/rent controlled properties.
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Date: March 31st, 2020 9:57 AM Author: Wonderful lake lodge CR.
All my heavy hittng Jew real estate friends position it so that prices could drop 50% and they'll be fine. |
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Date: March 31st, 2020 10:05 AM Author: Khaki Floppy Church Building I'm hearing lots of "Back Out," which is what I expected. Assuming I don't want to back out for personal reasons (this is a longtime friend), how do I go about convincing him to negotiate price or cancel the deal altogether? I thought about reducing the amount I put in. I also told him to delay the deal as much as he could and see how April 1 turns out for his other properties. (http://www.autoadmit.com/thread.php?thread_id=4493800&forum_id=2#39906352) |
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Date: March 31st, 2020 10:15 AM Author: disgusting charcoal school cafeteria main people Unlike others itt, I am a real estate attorney. The story above sounds like a story which will 100 percent end up in a lawsuit.
The only fair thing to do on a deal is to ask for extensions due to covid until economic impact on real estate markets is clear or back out. Sounds like your buddy already has his deposit hard and is just trying to find suckers like you to save him. I don’t agree with the above price cuts, that’s plain predatory and fear mongering when we don’t know what is going on. |
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Date: March 31st, 2020 10:21 AM Author: Khaki Floppy Church Building We all negotiated and "committed" to the deal before COVID. He said the deposit is only a few thousand bucks and he could back out, but doesn't want to bc he still believes in the deal. This is pretty small time, and may not be worth it for the seller to sue. |
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Date: March 31st, 2020 10:25 AM Author: disgusting charcoal school cafeteria main people The Seller's sole recourse is the deposit. No wonder your buddy is pushing for the deal, he just doesn't want to lose the deposit. The fact that you would be willing to share in the deposit loss is insanely bitchmade. The sponsor always suffers that loss. Your buddy is acting totally delusional to save his deposit. that's the story here. (http://www.autoadmit.com/thread.php?thread_id=4493800&forum_id=2#39906464) |
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Date: March 31st, 2020 10:15 AM Author: wine deranged garrison This is one of the dumbest OPs we’ve seen in awhile. Enjoy your fucking. (http://www.autoadmit.com/thread.php?thread_id=4493800&forum_id=2#39906410) |
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Date: March 31st, 2020 10:19 AM Author: Coiffed locus Sounds like you really want to be the sucker....everyone has told you the same thing but you're not listening. Either this is flame or you are retarded. (http://www.autoadmit.com/thread.php?thread_id=4493800&forum_id=2#39906429) |
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Date: March 31st, 2020 10:25 AM Author: Khaki Floppy Church Building I wouldn't agree to this investment now. I agreed to invest before COVID and don't want to go back on that agreement. |
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Date: March 31st, 2020 10:26 AM Author: Hateful titillating rigpig (http://www.autoadmit.com/thread.php?thread_id=4493800&forum_id=2#39906472) |
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Date: March 31st, 2020 10:43 AM Author: Coral Orchestra Pit (http://www.autoadmit.com/thread.php?thread_id=4493800&forum_id=2#39906581) |
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Date: March 31st, 2020 10:20 AM Author: disgusting charcoal school cafeteria main people BTW, nobody in this topic asked the right question. Is the deposit hard on the deal? This guys buddy probably just doesn’t want to lose the deposit and is willing to defraud his friends to do so with market puffery. Lol at OP (http://www.autoadmit.com/thread.php?thread_id=4493800&forum_id=2#39906433) |
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Date: March 31st, 2020 10:22 AM Author: Khaki Floppy Church Building See above. Deposit is minimal. I would pay my buddy a portion of the deposit to get out. (http://www.autoadmit.com/thread.php?thread_id=4493800&forum_id=2#39906446) |
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Date: March 31st, 2020 10:26 AM Author: disgusting charcoal school cafeteria main people You don't legally owe him any part of the deposit. Tell him you are not investing due to covid. He is a sponsor and that is his risk. If he gets mad at you, he's just a scammer. (http://www.autoadmit.com/thread.php?thread_id=4493800&forum_id=2#39906470) |
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Date: March 31st, 2020 10:37 AM Author: Khaki Floppy Church Building I know I don't owe him, but I'd still offer it. He probably wouldn't accept. My share would be very minimal. (http://www.autoadmit.com/thread.php?thread_id=4493800&forum_id=2#39906537) |
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Date: March 31st, 2020 10:39 AM Author: disgusting charcoal school cafeteria main people Please listen to my legal advice as a practitioner. Of all my clients, I cannot think of one that doesn’t have an estranged friend or family member from an investment gone bad or even dispute regarding investment. Please don’t invest in these kind of partnerships, these stories end really really bad. (http://www.autoadmit.com/thread.php?thread_id=4493800&forum_id=2#39906557) |
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Date: March 31st, 2020 10:55 AM Author: Khaki Floppy Church Building Ok but I already verbally committed, so backing out will also be bad for relationship. (http://www.autoadmit.com/thread.php?thread_id=4493800&forum_id=2#39906670) |
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Date: March 31st, 2020 11:28 AM Author: mahogany voyeur corn cake you are quickly going from merely ACTING retarded to potentially going full retard (http://www.autoadmit.com/thread.php?thread_id=4493800&forum_id=2#39906871) |
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Date: March 31st, 2020 12:14 PM Author: Hairraiser peach place of business I believe this is what experts call a material change in conditions. (http://www.autoadmit.com/thread.php?thread_id=4493800&forum_id=2#39907147) |