Underwriting a value-add apartment syndication

[Stephanie Martinson]

Hello all,

I think I found a deal!  It's a 10 plex value-add apartment.  I'm in the process of coming up with an offer price so I have a few things I am hoping that someone may know the answer to...

1) I'm including the acquisition fee, closing costs, financing fee, operating account funding, and the down payment for the total equity that I'm planning to raise from my investors.  Do I need to also include the cost for renovations here, or is that pulled out through a loan and then the property is re-appraised after stabilization?  

2) If the property is on the market, do I still give an LOI or do I just make an offer through my broker?

3) I only have about $250,000 in verbal commitments and I need to raise $365,000.  Should I make an offer and assume I can hustle to find the rest of the money, or wait until I have all the verbal commitments?  

Thank you all.  I appreciate your knowledge to help me through this process.  I am scared as hell, but I know I can do it!

Stephanie Martinson

[Alina Trigub]

@Stephanie Martinson

Congrats on taking action!

Looks like you got the answers to 1 & 2. 

On 3, I'd consult with an attorney, perhaps even a securities attorney. Since you're looking to have investors in a deal, it may be considered a security. So depending on what the deal structure is going to be, you may need to qualify your investors as accredited and/or sophisticated. Maybe @Amy Wan can help.