Property Manager and Investor

[Blair Mauney]

I am new to real estate Syndication.  But I have been a broker/owner of a property management company for several years.

I am interested in purchasing, along with other investors, an apartment complex located out of state (out of the state I currently manage/broker in).  I would like to use the services of my own property management company without obtaining a license in the other state ....because i am not managing for a third party.

Does anyone have experience with this scenario?

[Franklin Spees]

Blair, I can relate a bit to your situation. I'm a licensed attorney, broker, and owner of a property management company, here in California. Similar to your situation, early 2017 I approached a friend/colleague of mine and recommended we put together a syndication to purchase a 50 unit property in a secondary market. The plan was to raise a couple million among friends and family, locate an acquisition/rehab property, hold for 5-7 years and sell turn key. That was the initial plan anyway and then things quickly escalated from there. My partner had a lot more horsepower than I did (good partner to have right?), and we came across a three property 450 unit portfolio in surrounding counties for a total acquisition price of about $50M. We decided to make a run and it was an extremely competitive process. Long story short, we needed to raise $12M in about 60 days, with $1M going hard at day 60. We were able to raise about $8M (4 short) and long story short, ended up partnering with a national management company and an institutional investor to raise the full $12M. It was a complicated and stressful process for me with a huge learning curve. Many discussions with investors, lenders, insurance agents, contractors, etc. The model was essentially purchase 90's construction units at about $100K, putting $5K-$7K into each unit, raising rents, stabilizing expenses, and then selling at $125K per unit in 5-7 years. The properties are already outperforming expectations.  One thing for you to keep in mind would be to make sure you have the right team, investors and research any potential securities issues when you solicit passive investors. You'll need good counsel. Hope this helps to encourage you to pursue a syndication. Best of luck.