Creative Capital Podcast 109: Buying Your First Multifamily Deal: Part 2

Oct 26, 2021

Welcome back to the Creative Capital Podcast with Josh Ferrari! This No-Limit Minute Segment is Part 2 of a multi-part series about buying your first multifamily deal. I am going to take you through the step-by-step process of acquiring your first multifamily deal and share all the things you need to know before starting your journey. In this episode, I will talk about everything you need to know about writing and submitting an LOI or letter of intent. I will share all the items that should be included in your LOI and the things you should consider before preparing it. I will also talk about negotiating an LOI and the importance of having partners throughout the whole process. Listen in!

[00:01 - 13:02] What You Should Know Before Writing Your LOI

 

• What is an LOI?
• Why it’s important to get your boots on the ground
• Your partners need to have the ability to raise money
• Asking for early access to the property and documents
• Reviewing the flood map

 

[13:03 - 33:15] What to Include in Your LOI

 

• Seller’s current insurance policy and title commitment
• Surveys and existing leases
• Current and past capital expenditures
• Architectural/engineering feasibility studies
• Phase 1 report
• Real estate taxes and insurance bills
• Active service agreements
• Why it’s important to keep occupancy rate at 90%

 

[33:16 - 44:11] Negotiating an LOI

 

• Stick to your original offer as much as possible
• Explain your offer
• Priming the attorney before the LOI becomes official
• The importance of having partners
• Engage with your insurance broker
• Be a great steward of the investors’ money

Key Quotes: 

 

“You want to try to include as many things as possible in the LOI that you're going to include in the PSA because it's going to keep things very simple. It's going to keep things very honest and open, and everyone's going to be on the same page moving into the transaction. Hopefully, you can try to mitigate as few as possible surprises as you move into submitting this LOI and going through this process.” - Josh Ferrari

 

“When we're doing this due diligence, I'm not only doing this for me and my name’s sake and making sure that I feel comfortable with buying this particular asset and managing this asset in perpetuity or the next couple of years, but it's also for the investors. You're doing all this so that they can have a solid investment to buy.” - Josh Ferrari

 

You can reach and connect with me on Facebook, LinkedIn, Instagram, and Youtube 

 

You can also email me at [e-mail] 

For more information about Ferrari Capital visit us on our website https://www.ferraricapital.com

 

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