Take Advantage of A Cash Call!!
A quick thought about Multi-family properties who are making cash calls.
At first blush it looks like the Titanic after it hit the iceberg.
The property is underwater, its losing money every month.
But, the cash call could also represent an opportunity to get into a solid investment at a low valuation.
When interest rates were low, it was easy to make money.
With higher interest rates, sloppy management quickly puts properties underwater.
When a property is makes a cash call, look at the fundamentals.
- Optimized Rent - Is the rent optimized to the market?
- Real Occupancy and Economic Occupancy- What would the P/L look like if it was fixed?
- Delinquency - What would happen if deliquefy was under control?
- Expenses - Have a hard look at every line item?
Most LPs do not do the necessary work.
Be the LP that does.
Ask for the information.
Use the information to negotiate a better return.
