i just hooked up with a direct commercial(apartment/multiunit) lender and a condo conversion consultant last week. the meeting went extremely well and they were impressed with my creative investment knowledge and how i understood their thought process on commercial acquisition/disposition. they also liked that im young because they know im going to be aggressive.

theyre going to present multiple 8-15 unit apartments for me to work on just as long as i can pool in 20% in capital from my current investors. they said that i should play a passive role with the 1st transaction so i can learn the whole process from A to Z. they said after the 1st deal, i can actively be the project manager and charge a $60k-80k management fee for my LLC. they also said it should be easy for me to send out investment proposals to newer investors to pool in more capital. projects will range from 6 months - 1.5 years depending on the legal paperwork. the net profits coming in will be divided accordingly to a flat rate of return to my investors and any equity remaining after distribution will be shared to the pool as an incentive to reinvest for the next project.

while my new partners will handle the front end(project management, legal paper work, tract mappings, state/city approvals, etc.) they also said i can handle the backend by listing the individual condos after the rehab. its a minimum of 8 listings guaranteed per year.

worse case scenario if we cant convert the apartment, we have to increase the rent to generate a good cap rate and create a positive cashflow. we would also have to sit on it for 3-5 years till we can refinance or liquidate the property.

so cool

give me about 6 months to become knowledgeable in this niche and ill be glad to share it with you guys/gals

Awsome deal Alvin. Is this your first commercial property? Sounds like a great way to get your foot in the door if it is.

thanks seth
yea this will be my first commercial property.
although they want me to bring in 20% the conventional way, i told them i have other creative ideas where i can negotiate with the seller to carry back the 10-20% down payment with their own equity and give the seller a larger percentage in the net profits or structure a 10% note 5 year balloon. from the top of my head, i can think of 10 ways to profit from this niche. if i sat down and brainstormed maybe i can think of 15-20 ways to profit. one of the main reasons why i added this to my tool belt is because i can acquire condo's at a wholesale price. i can sell it bulk wholesale to other investors or just retail it to first time homebuyers for maximum profits.

buy high sell low
buy high sell high
buy low sell low
buy low sell high

here's an example
8 unit apartment
$1.2 Million
$150k per unit
$30k construction per unit
$350-400k market comps per unit after converting

this investment would be great if i can get the seller to carry.

So let me get this straight Alvin. Your job on the project will be to convert (run down?) apartments to condo's? If so, do you have a construction team set up? Do you sub-contract each part out?

How exactly does this process work? Are these upper end apartments already, or is there going to be an extensive amount of work done?

it can be a run down apartment or a high luxury apartment. it doesnt matter. just as long as we can get the approval to do the conversion.

yes we have a construction team that focuses on rehabbing apartments.

give me a few days to explain the process.

I'm so pissed.

I was planning on saving that conversation we had, but I screwed up and closed it.

Hopefully I don't forget it all!

i have a copy from trillian in my log file

ill forward the text file tomorrow