Help - having trouble finding deals

[Ben Leybovich]

Guys, we are having trouble getting deals. Are you finding stuff?

Last week we competed on 150+ units. We had known from the get-go that it was part of a portfolio, but we were hoping, based on broker guidance, that the seller will break up the portfolio to get the highest price on each asset. 

I have reason to believe that ours was the best offer - traded as a portfolio in the end…

It sure seems that vast majority of assets are trading as portfolios now days, which makes sense. These guys bought up portfolios a few years back, by and large with 1031 moneys, waited for the cap rates to compress, and now they are unloading. 

Now, my team, which includes @Sam Grooms and @Brandon Turner can show a combined balance sheet of about $10MM. I can bring more onto the sponsor team if need be. The question is - how much more?!

A typical portfolio is plus or minus 700 doors. On the low end we’d need to show $35 MM on the balance sheet. And in a lot of markets it’d be double +.

So, is this what the market is telling me? I mean - if we are not able to take down such a portfolio, we are limited to one of individual assets, which are seemingly far and few between. There is some smaller stuff out there, but I don't know how to build a syndication-grade management model on a 60-unit.

What are you guys seeing? What are you buying? If you are buying, are you syndicating? And if so, to what hurdles are you underwriting? 

I even spent about an hour on the phone with @Joel Owens discussing other asset classes, such as strip malls. This would be a whole another kind of learning curve, but I can't see paying $122/door in Charlotte for $950 blended weighted rent. The cap rate compression game is over.

Thanks, guys!