MF Residential RE questions related to syndicating deals.

[Matthew Allen]

In advance, I appreciate any advice that you can give pertaining to my new career endeavors in 2021.

For some context, for the past 20 years, I’ve owned multiple businesses that pertain to IT Consulting and Technology. Those businesses will continue to grow and flourish, and excitedly I’ll be spending more time on building a Residential MF RE portfolio. Our family will be deploying our capital to purchase our own properties, and deploying capital (matching funds) within deals that we find/syndicate.

For the last 3 years, we’ve followed the buy/hold strategy, buying smaller MF (Duplex, Six Plex, etc). Moving forward, we will be focused upon larger deals, likely 50 doors or more.

That said, we’re new to syndicating deals and I have the following questions. I’d love to hear back from you on this thread, or perhaps I can buy you a virtual Cup of Coffee over the Phone or Zoom Call.

Questions to follow:

1. From your crystal ball, what mistakes am I going to make initially in doing Residential MF RE syndication?

2. How are you sourcing investors? I have no interest in being another Social Media or Podcast guru, from my perspective it’s too noisy out there nowadays.

3. How are your deals structured? I've had a couple of convo's this year already and it seems that everybody is structuring on the acquisition, management, tiered equity split on disposition based upon IRR achievement. Is your asset management fee based upon NOI or Rev?

4. Do you believe there's an opportunity to deliver a reasonable IRR to your investors buying assets that have already gone through the value-add process, or is the ONLY way to generate the necessary IRR to go the value-add route?

5. Considering we’re likely going to have to underwrite 150 assets in 2021 in order to acquire 2-3, are there efficient tools (Website Calc, Spreadsheet) that can be used to easily run the numbers?

6. What tools are you using for Investor Relations? Are you using IMS (RealPage) or Juniper Square? Are there more affordable solutions to begin with as a smaller, newer to market, investor such as myself?

7. What advice do you have in deal flow? While we've had success in acquiring off-market, FSBO deals, which were smaller assets, I'm 99.9% sure that everything 50 units or greater are likely to be source always through brokers? Right? We're probably wasting our time hunting down and cold-calling ownership of those larger assets. Right?

8. What other questions should I be asking that I might have missed? 

Incredibly grateful beyond my ability to communicate it. 

Matthew Allen

All6N Investments, LLC

[Taylor L.]

Plenty of people syndicate through pure networking. You just don't hear about them much on social or podcasts because it's not what they do. Many of them stand on stage for 30 minutes, give a powerful presentation, then the investor leads come pouring in. You'll typically see asset management fees based on income rather than NOI.

How you're generating IRR really comes down to your strategy. The proven strategy is value add with a liquidation event in a few years, can you come up with another strategy that produces returns that your investors would be satisfied with?

There's also Investor Deal Room, that may be a better option for you. 

You'll probably find most of your deal flow through brokers, yes. Although going direct is not unheard of.