Viewing Properties and Analyzing Deals

Multi-Family and Apartment Investing
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Viewing Properties and Analyzing Deals

Reed Meyer
Investor · Chicago, IL · Member since 2020 · 66 posts · 55 votes

Over the next year I plan on raising money for a syndicate multi-family investment. I will be looking in the 16-32 unit range.

Given my lack of experience I will need to bring a lot to the table in order to raise money from investors. I will need a home run deal that offers downside protection and a significant preferred return (8% or more) in order to convince an investor to provide the down payment. I also understand that I will need to gain the investor's confidence by being an expert in the local multi-family market. 

My plan is that outside of my 60 hour work week I will view properties and analyze deals on the weekends just to increase my knowledge and understand what a good deal really looks like in my area. I want to improve my "deal combing" skills in order to have an elite understanding of where value can be added, what makes a high quality area, where I can generate appreciation due to an area's rent disparity, and what makes a deal just "feel good". Does anyone have any suggestions for the best approaches to do go about this? Should I just be going out to properties on my own and checking them out from the outside and asking pedestrians about the area? Should I be arranging viewings with the properties' broker? I am thinking I want to be viewing 6+ properties every single weekend.

Thanks a lot. Any and all responses are greatly appreciated and no suggestion is too far fetched. I will put it in any amount of effort necessary (even if it seems unreasonable) to ensure that I can be trusted by investors and able to raise money without a track record.

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Avery CarlBusiness Member
Real Estate Agent · USA · Member since 2016 · 909 posts · 1k+ votes
6y

Have you ever invested in a syndication? I'd suggest reading as many books and podcasts as possible, but in the end experience is going to trump all of that. If you haven't ever invested in one before, I would start there to get your feet wet.

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  • Avery CarlBusiness Member
    Real Estate Agent · USA · Member since 2016 · 909 posts · 1k+ votes
    6y

    Have you ever invested in a syndication? I'd suggest reading as many books and podcasts as possible, but in the end experience is going to trump all of that. If you haven't ever invested in one before, I would start there to get your feet wet.

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  • Hadar OrkibiPro Member
    Rental Property Investor · USA / NZ · Member since 2016 · 1k+ posts · 812 votes
    6y

    @Reed Meyer I agree with Avery, sound like you need to pump up your education.

    Getting educated will help you and propel you to place where you find the answers.

    Apart from Reading books and podcasts, you need to establish your investment criteria, then research and choose a market (are you prepared to invest out of area?) followed by building relationships in that market. then the next step is to create deal flow.

    There is a lot to learn... I hope that helps.

    And BTW, "Feel Good" is not a factor with multifamily investing in my opinion. Hard facts, market knowledge and conservative assumptions and more important when investing or raising money.

    Last thing you want is to Sugar coat a deal. 

    1Reply
  • Mandela Muhammad
    Investor · Bronx, NY · Member since 2015 · 52 posts · 22 votes
    6y

    @Reed Meyer

    Want to learn fast jump on the phones cold calling and researching same time. You learn way more by simply picking up the phone. Take plenty of notes after a few hundred rejections you will eventually form a list of investors and criteria they would back you on. Start with newly renovated properties forsale by owner listings.

    1Reply
  • Reed Meyer
    OP
    Investor · Chicago, IL · Member since 2020 · 66 posts · 55 votes
    6y

    @Mandela Muhammad thanks a lot Mandela. What kind of things do you try to learn from these conversations? Any specific questions you think are good to ask?

    0Reply
  • Hadar OrkibiPro Member
    Rental Property Investor · USA / NZ · Member since 2016 · 1k+ posts · 812 votes
    6y

    @Reed Meyer  When you do your Rent Cops Market research you want to call neighboring communities (when looking at larger multifamily properties) to check if the rent they advertise is including utilities, and if they offer any concessions etc etc. 

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  • Evan Polaski
    Cincinnati, OH · Member since 2020 · 4k+ posts · 3k+ votes
    6y

    @Reed Meyer, if you are just in education and research mode, I would not be calling brokers for showings.  I would be calling brokers in that space for coffee or lunch and ask as many questions as possible.  Ask them about deals they have done, what they are seeing in the market, how they got started, what their focus is, who their buyers are and what they know about them, etc.

    Start to build these relationships now, but be clear you are just learning.  Let them know what you are thinking about in terms of deals you want and your overall structure.  Ask them if they know anyone they could connect you to doing something similar or different.

    Meet with mortgage brokers, ask similar questions. What does financing look like these days?  What covenants are required? One of the hardest for many is the net worth piece.  Most commercial non-recourse (agency or private) require a 1:1 net worth on the loan amount.  So you need a $1mm loan, you have to have a $1mm net worth or someone to bring into the sponsor to guarantee that loan.  Additionally, you will need to balance the amount you invest, with the liquidity covenants of the loan, which these days are pretty conservative, i.e. 10% or 18 mo debt service.  So if you have $100k available in liquid assets, that could be gone for the 10% liquidity requirement on a $1mm loan.

    1Reply
  • Greg Dickerson
    Developer · Charlottesville, VA · Member since 2018 · 4k+ posts · 4k+ votes
    6y
    Originally posted by @Reed Meyer:

    Over the next year I plan on raising money for a syndicate multi-family investment. I will be looking in the 16-32 unit range.

    Given my lack of experience I will need to bring a lot to the table in order to raise money from investors. I will need a home run deal that offers downside protection and a significant preferred return (8% or more) in order to convince an investor to provide the down payment. I also understand that I will need to gain the investor's confidence by being an expert in the local multi-family market. 

    My plan is that outside of my 60 hour work week I will view properties and analyze deals on the weekends just to increase my knowledge and understand what a good deal really looks like in my area. I want to improve my "deal combing" skills in order to have an elite understanding of where value can be added, what makes a high quality area, where I can generate appreciation due to an area's rent disparity, and what makes a deal just "feel good". Does anyone have any suggestions for the best approaches to do go about this? Should I just be going out to properties on my own and checking them out from the outside and asking pedestrians about the area? Should I be arranging viewings with the properties' broker? I am thinking I want to be viewing 6+ properties every single weekend.

    Thanks a lot. Any and all responses are greatly appreciated and no suggestion is too far fetched. I will put it in any amount of effort necessary (even if it seems unreasonable) to ensure that I can be trusted by investors and able to raise money without a track record.

     You do not want to try and set up showings with no ability to perform. That will kill your credibility. You want to start with reading The Best Ever Apartment Syndication book by @Joe Fairless as well as the resources he has on his site. You could also start a podcast and interview brokers, lenders, apartment mangers, other investors and syndicators. You will learn a ton from them while marketing yourself and your business. 

    1Reply
  • Roni E.Pro Member
    Specialist · Earth 2.0 · Member since 2019 · 598 posts · 271 votes
    6y
    I would as @Greg Dickerson said get Joe Fairless book. I would also get Michael Blank SDA course it will help understand underwriting. I would listen to audio and video podcasts, you could check out The Old Capital podcast and check out James Eng youtube page. Instead of jumping into a 16 unit deal or so forth right away. Why not try a house hack or do a couple of 4 unit deals as this way you could loans from your local bank, credit union and so forth. In the 4 unit deal you could live in one of the units and the other three should cover all & any expenses and maybe put in your pocket as net cash flow,100 to 200 a month. This will be a good learning experience. Last if you do this I would advise your neighbors/tenants you are the Property Manager. 

    Originally posted by @Reed Meyer:

    Over the next year I plan on raising money for a syndicate multi-family investment. I will be looking in the 16-32 unit range.

    Given my lack of experience I will need to bring a lot to the table in order to raise money from investors. I will need a home run deal that offers downside protection and a significant preferred return (8% or more) in order to convince an investor to provide the down payment. I also understand that I will need to gain the investor's confidence by being an expert in the local multi-family market. 

    My plan is that outside of my 60 hour work week I will view properties and analyze deals on the weekends just to increase my knowledge and understand what a good deal really looks like in my area. I want to improve my "deal combing" skills in order to have an elite understanding of where value can be added, what makes a high quality area, where I can generate appreciation due to an area's rent disparity, and what makes a deal just "feel good". Does anyone have any suggestions for the best approaches to do go about this? Should I just be going out to properties on my own and checking them out from the outside and asking pedestrians about the area? Should I be arranging viewings with the properties' broker? I am thinking I want to be viewing 6+ properties every single weekend.

    Thanks a lot. Any and all responses are greatly appreciated and no suggestion is too far fetched. I will put it in any amount of effort necessary (even if it seems unreasonable) to ensure that I can be trusted by investors and able to raise money without a track record.

    0Reply
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