I was rewiring building C when the new owners walked through with a clipboard

Should add, they asked us to bid the rest of the exterior lighting for all four buildings before we left the site. New owner's guy handed me a card that said asset manager. I had to look up what that meant in the truck.

The paint being fine is the whole thing. I own nine units and I promise you nothing about the outside of my worst year showed up on the siding.

Wait, the loan came due and the rate did not work, and that alone loses you the building? I have been reading about notes for months and that sentence still surprises me every time.

@vellum yes, that is most of what happened to a lot of 2021 vintage deals. Short term floating debt, a plan to refinance in three years, and the refinance did not exist at a payment the property could cover. The building was never the problem.

Under replacement cost is the phrase everyone is using right now and it is doing a lot of work. It is only meaningful if the rents ever get to a level that supports the build cost. Buying cheap relative to a number nobody can currently achieve is still just buying cheap relative to a number.

@ledger that's the argument I hear on every call I sit in on lately. The counter is that nothing new gets started at these rents either, so the pipeline dries up and the existing stock fills. I don't know enough yet to say who's right.

Two months free on a four year old building is brutal. That is a full sixth of the year gone before you pay anybody.

I did landscape contracts for a portfolio like this for two years. You could always tell who was in trouble by who started asking for quarterly instead of monthly mulch.

Honestly the thing I take from this is that a building can look completely normal and be a disaster. That scares me more than any spreadsheet has.

@marlow same. I keep telling myself I'll be able to see it when I walk a property and this thread says no.

You can see some of it. Walk the parking lot on a Tuesday night and count cars against unit count. It's rough but it caught a fib for me once on a 12 unit.

The hard hats with the stickers still on them is the detail that made me laugh out loud.

Two more cranes visible from the parking lot is the actual story here. Whoever bought it is betting those are the last two.

@solder did they hold the maintenance supervisor? New owners on value-add deals usually clear the whole site staff, and that guy is the only person who knows where the shutoffs are.

Somebody signed a purchase agreement on that building while your crew was standing in it. I'd love to know what the diligence period looked like and whether your punch list ended up in it.

It did, or a version of it. On anything over 100 units the buyer runs a property condition assessment and a unit walk of some sample of the units, and your GFCIs and the lighting run end up as line items in an immediate repair number. That number gets argued over and sometimes comes off the price. The photos of the water heaters were somebody pricing remaining useful life.

@sextant so the guy taking pictures of water heaters was doing math on when they die. That is oddly reassuring, someone was actually looking.

Four years old and already changed hands under distress. I've held dirt longer than that building has existed.

I passed on a deal in that vintage band in 2022 because the sponsor's exit cap was lower than the going in cap. Everybody told me I was being difficult. I've thought about that a lot this year.

A floor of empty units in building D and the pool still open and clean. Something about that is sad.

The lender in that story probably had a worse two years than the owner did. Handing back keys on a performing-ish asset with a rate problem is a conversation nobody enjoys.

@arbor beat me to it. The cranes are the underwriting. Everything else is paint.

I priced a three story garden build last spring and the number was so far off what I remember from 2019 that I re-ran it twice. Materials and labor both. So yeah, buying finished product below build cost is real, I just didn't expect to hear it from an electrician on a punch list.

Meanwhile I'm fighting over $4k on a single family. Different sport entirely.

The two months free is what kills you on renewal. Year two the tenant is looking at a real rent for the first time and half of them walk. Then you're re-leasing into the same market that made you offer the concession.

@trellis that's the part owners never budget. Turn cost times a churn rate nobody wrote down.

@solder bid the lighting job high. New owners on a fresh value-add have a capital budget approved and a timeline, and they are the easiest customer you will ever have for about nine months.

I came into this room to figure out what the first deal costs and I'm leaving with the fact that a whole apartment complex can go under without anyone noticing while the pool stays open. Fine. Noted.