The Robinson Flats PPM FAQ

Below are the FAQ we received regarding the Private Placement Memorandum (PPM) for our investment project called The Robinson Flats:

  • Could you sell apartments without having to do any fixing up? No. Must renovate. The apartments, except for unit 8 being remodeled, definitely need to be renovated. I think $45-50K is very conservative. (MLH)
  • Do current tenants have to move under the TIC rule? Yes. Tenants must move with Tenants-in-Common / Ellis Act strategy. (MLH)
  • Do they get first dibs to buy their unit?  No. No first dibs. (MLH)
  • It’s a big down payment number, I thought it was 25%  of purchase price. True. I’m assuming the owner’s existing debt, then refinancing after purchase. The current rental income is low and Loan-to-Value percentages for standard financing given the below market rents is not feasible. (MLH)
  • Have you had the property inspected? Yes. I’ve inspected each unit at least 5-10 times. I used to manage this property. (MLH)
  • Have you completed a TIC project before? No. This will be the first TIC project, though I have been involved in TIC flip projects before. (SS)
  • What type of discount does a TIC provide to buyers? Generally, the rule of thumb is that TIC properties are 10-20% cheaper that competing condos. (SS)
  • Do you need to setup an HOA for TIC? No. This is not a requirement of TIC projects. (SS)
  • Do the TIC buyers own percentages of the whole building or a specific unit? The way it’ll be designed, they’ll own a percentage of the company, and also have specific control over a unit that they “buy”. (SS)
  • What if the tenants don’t want to move? Tenants do not have a choice when you file an Ellis Act to the property. The only thing they can do is stay in the apartment, continuing to pay rent, until they are required to leave after the maximum of 12 months. (SS)
  • What if the tenants want more than $20K to vacate? We have budgeted a maximum of $20K per household, which is the maximum required for senior citizen and/or disabled tenants. (KJ)
  • What other projects have you completed? Do you have a Case Study for review? Several. Visit our BRE Investment – Invest Projects section, to view a list of projects we have completed. And our highlighted project is: The Montana Bungalows. (RS / SS)
  • Which each unit have its own APN? No. These TIC units are not condos, and will not receive their own Accessor Parcel Numbers (APNs). (SS)
  • Who will provide TIC lending to the future buyers? The leading lender for TIC financing is Sterling Bank & Trust. Here is the link for more information: https://www.sterlingbank.com/home-loans-tenants-in-common.html. (SS)
  • Will there be central AC and heating added during the renovation of the apartments? (SS) No. Instead, we will install mini-split systems (which most people have experienced either at hotels and/or Airbnbs). Here is an Amazon link as an example: https://www.amazon.com/PIONEER-Air-Conditioner-Minisplit-Heatpump/dp/B01DVW6G42/ref=sr_1_3?crid=2A5YQ8MB5SJSI&keywords=mini+split+ac%2Fheating+system&qid=1582178133&sprefix=mini+split+%2Caps%2C207&sr=8-3