All Forum Posts by: Marc C.

PM me your email, and I'll share Old Capital's guide to multifamily financing. Marc C

Dozens of companies post area market analyses. Marcus and Millichap, CBRE, Berkadia ALN. Plus your local lender and apt. broker should be able to get specific. Good luck. Keep us posted. Marc C

Talk with a local portfolio lender who knows your market. The national banks can't think outside a small, Maru-sized box. Let us know how it goes.

I heard one syndicator say he looks to just split the profits on everything 80 to the passive investor, 20 to sponsor. So, 20% of the cash flow and the rise in equity go to the sponsor. That's similar to a hedge fund and it's so much easier to plan for and budget for than preferred returns, IRR, etc. But, if everyone else is out there pitching 10% preferred returns and taking fees, investors might balk at "just" 80%. Personally, I want to try it. Any thoughts?

I personally think brokers are too busy to serve a new, small investor. Try direct mail to out- of town building owners. Don't make the letter lengthy, just hook them. Try to follow up by phone. You might find some retiring Mom and Pops are willing to carry a note. Create a credibility book you can show bankers, investors, brokers. It should include your business plan for a fictional property. Jake and Gino have one. The Michael Blank does too. PM me with your email and I'll show you mine.

Remember, under most securities laws, you need to KNOW your investors, professionally or personally. You can't just around talking with strangers about the specifics of the deal. I would start with a 15-page pitch deck that includes no promises regarding returns, but covers the team, your experience, why real estate, etc. Maybe a sample property. Show that to anyone (in person) and as many rich folks as you can find. PM me with your email, and I'll send you mind. Networking to find accredited investors is the hardest part of any startup. Keep in mind your state may have looser securities laws if all the investors and the business is within that state. Keep us posted! Marc C.

Jeff K: Just tracking the rates listed at the site I mentioned. Few sites post apt. rates. I've already lost a SFR buyer because she couldn't qualify after the .5% rate increase on the residential side. But, as the other posters said, it is technically the buyer's problem. Except the house was tied up for a long time and ultimately didn't sell...which makes it MY problem. Which was my original point. Sellers can't deny things have changed. As to the Trump Effect, no you can't blame him or anyone. But how does one deny the stock market craziness and the resulting bond market declines since the election? Can't pretend it didn't happen. What if it continues? Makes bonds less attractive, and, ultimately, real estate. Very basic economics. Enjoying the discussion! Keep it up!

Greg S. - Sort of. At some price and interest rate, the property doesn't meet the bank's Debt Coverage Ratio of 1.25. The deal will fail then unless the seller agrees to a retrade or the buyer puts in more equity. A seller needs to be realistic to changing market conditions, no? Marc C.

This was for a small $717,000 deal. I didn't show any additional capital contributions.

And we're not even accounting for a selling cap rate that is 1-2 points higher than what you bought it for...for me, a 1 point increase in selling cap trims the investors IRR by 5 percentage points. YIKES! Yet I look at all these PPM's for multifamily group investments on www.crowdstreet.com and others and they all seem to assume selling at the same or lower cap rate 5-10 years out. REALLY? Is that a conservative outlook that demonstrates the sponsor's fiduciary responsibility to the passive investors? 

"The trend will continue until it doesn't."