All Forum Posts by: Ameet Mehta

Hey Ray,

Great to hear you're getting into real estate investing! That first deal can definitely feel like a big step, but trust me, it's an exciting journey.

Starting with Brandon Turner's book is a smart move. Keep learning and absorbing all you can—it'll make you more confident in your decisions. Starting small is okay; it's all about gaining experience and building from there.

Networking is also super valuable, so get involved in local groups or forums (other than BiggerPockets). It's actually very helpful to connect with others who can offer advice or even partnership opportunities. And don't worry about setbacks; they're a normal part of the process. Stay persistent and keep moving forward.

And here’s something I’ve learned the hard way: When you're looking at deals, be thorough and cautious with your numbers and always plan for unexpected costs—it'll keep you on the safe side. Lastly, be patient. Finding the right property can take time, but it's worth it.

Good luck, and feel free to share your progress or ask questions. The community is here to support you!

Hey Carlos,

You are lucky to have a friend there so they can gauge the market and oversee the operations. They can give you a better feel for the neighborhoods, property conditions, and any particular quirks of the market.

About properties sitting on the market for 30-60+ days, it could be due to market conditions, pricing, or the need for repairs. High insurance costs, especially in flood-prone or hurricane areas, can also affect demand. For a typical duplex or triplex, insurance can range from $1,500 to $3,000 annually, with flood insurance adding $600 to $2,000+.

I’d suggest starting with a thorough market analysis to get a better understanding of the neighborhoods you're interested in. It's also a good idea to compare insurance quotes and check local tax rates as they can impact your cash flow. And, of course, check out financing options to ensure you're getting the best mortgage rates and terms for investment properties in the area.

Best of luck with your search! And feel free to ask more questions as you go along.

Hello Kenneth!

It sounds like you're on the right track with your move into GP/LP deals. Given your background in ground-up development, you've got a solid foundation.

For LPs, a target IRR of 12-13% is pretty standard and attractive, especially in the current market. The 80/20 split you're proposing, shifting to 70/30 and 60/40 as IRR hurdles of 14% and 15.5% are met, aligns well with common practices. This structure incentivizes the GP while offering LPs a fair share.

Don't forget the preferred return aspect, which is typically around 6-8%. This helps reassure LPs that they will see some returns before profits are shared, giving them a bit more security. Cash-on-cash returns are another important metric, and aiming for a range of 6-10% can be appealing for LPs, as it provides a sense of the annual income they might expect from their investment.

Lastly, it's always a good idea to benchmark your offerings against other similar projects in your market. This will help you stay competitive and align with current trends. Also, building strong relationships with your investors and maintaining open communication is key to establishing trust.

Your deal structure looks promising, and with your background, I'm sure you'll do well in this new venture. Best of luck with your upcoming projects!

Your father's preference for bank financing is understandable. While private lending can sometimes offer more flexibility, traditional bank financing often comes with better terms and rates for commercial real estate (CRE). But yes, 30-year fixed rate loans are uncommon for CRE so I wouldn't expect much there. And a common option is a loan with a 5 or 10-year term and a 25 or 30-year amortization, with a balloon payment due at the end of the term.

Banks usually look for a DSCR of at least 1.25. This means the property's NOI should be 1.25 times the debt service. I would consider a 70% LTV ratio realistic for a cash-out refinance, especially with strong financials and your father's excellent credit. That said, terms can vary by lender, but here a private lender can offer those favorable terms, so yeah, definitely weigh both the options, man.

Doing a cash-out refinance can provide the funds needed for the next purchase, but it can also affect your debt profile. Adding to the last point, ensure the new debt does not negatively impact your father's DSCR or other financial ratios in a way that might make it harder to secure the next loan.

From what I understand, you will only be able to attain REPS with your second W-2 only when you’re able to ensure that more than half of your total working hours are dedicated to real estate activities and exceed 750 hours per year. Do you have that? If yes then I’d say you have a chance.

Ground-up construction work qualifies as a real estate activity, but you need to carefully track your hours to ensure you meet the IRS criteria. Plus, you would need to maintain thorough documentation of your hours spent and the activities on which you spent it, not to mention you must absolutely know the ins and outs of the type of activities that qualify you for REPS before you keep your stand at the tax court.

Hey Nina Sid! I know a good commercial real estate syndication group, they go by the name of Elevate Commercial Investment Group. They recently orchestrated a remarkable syndication deal and bagged 110% AAR in just under 13 months, which I don’t need to tell you is massive. So you should definitely check them out, maybe get in a conversation to understand their monthly returns for long-term projects. They know what they are doing and I have worked with them previously so I can vouch for their genuinity.

That’s amazing! As I was reading your question I was thinking about suggesting you to go with real estate syndications. And I’d like to think of myself as someone who has some experience in real estate syndications and due diligence in particular. So, here goes my advice:

[Since you already have confidence in the sponsor and know their work, you have made the due diligence easier.]

First: Verify the sponsor’s past performance especially for similar deals. Reach out to investors with whom he has previously worked with. They should be able to give you an honest answer.

Second: Analyze the current market. Evaluate the local market conditions and trends for multifamily properties in the area. Go beyond Cleveland I’d day, look at other markets in Ohio and compare. Understand the demand, rental growth potential, and economic factors in the area. You don’t want to invest in a deal if there is no long-term growth in future.

Third: Inspect financial projections. Do not fall for over-promised numbers. Scrutinize the assumptions behind the projected CoC yields and IRR. Ensure the renovation costs and timelines are realistic. Wherever possible, raise questions for any doubts you may have.

Fourth: Do not forget legal and compliance research for the property in question. Since you have been working in the real estate investment sector I assume you have a real estate attorney. So, have them review all documents, including the Private Placement Memorandum (PPM) and operating agreement. Also, verify whether the syndication complies with SEC regulations.

Fifth: Understand the fee structure. Clarify all fees involved, including acquisition, management, and disposition fees. By the time you reach this step you will have known which fee is not applicable for this particular transaction. Ensure you ask the sponsor if there are any such fees.

Now, here are some questions I would ask if I were in your position:

• What are the specific renovation plans and budget details?
• How will tenant occupancy and rental income be affected during renovations?
• What is the exit strategy and timeline?
• Are there any contingencies or reserves for unexpected costs?
• What are the terms for investor distributions and reporting?
• Can I exit the syndication before the stipulated exit timeframe? If yes, how?

I hope this helps. Let me know if you have any more questions. Good luck!

Hey Andres!

Investing in syndications and investment clubs can be a fantastic way to get into real estate without the hands-on hassle of managing properties yourself.

But given today’s market with all its ups and downs—economic uncertainty, inflation, and rising interest rates—it's totally understandable to feel a bit cautious. These conditions can affect property values and rental income, which might lead to lower returns or even paused distributions. That said, if you're thinking long-term (2-3 years or more), you might be able to ride out the current volatility.

To keep things on track, it’s smart to spread your investments across different types of assets and regions. Do your homework on the syndicator or investment club you’re considering—check out their track record, team, and investment strategy. Make sure you understand their plan for getting your money back and how they aim to provide returns.

Staying informed is vital for newcomers—learning about the market, connecting with other investors, and maybe starting with smaller investments to get your feet wet. You might also want to explore other options like Real Estate Investment Trusts (REITs) for more flexibility or even direct ownership of smaller properties if you want a bit more control.

But remember, even though the current market might feel a bit intimidating, focusing on long-term goals and making informed choices can help you navigate it confidently.

Wow, can’t believe Crexi was trashed on BBB. I wouldn't be so sure to trust their ratings though. My advice: stick to Google Reviews. I can’t say about Loopnet but Crexi is a good platform. In fact I know a few people who have had good experiences with Crexi. You can also try SponsorCloud. They have this feature where the investors’ accreditation status verification is automated. This has made the prospecting and due diligence process much simpler. And hey if you do try Loopnet let us know how your experience was.

Finally someone who wants to know this. You see LPs exiting syndication is very uncommon because they typically invest with the understanding that their capital is committed for the entire duration of the investment period, which is mostly outlined in the offering documents at least all smart sponsors do that. In fact everyone knows that real estate syndications are illiquid.

That said, I have witnessed just once that a limited partner exited a real estate syndication before the sponsor could execute their exit strategy. The limited partner privately sold his share to another investor in the syndication but at a 35% discount. This was just 2 years before the original exit plan of the GP. Yeah, so, on rare occasions LPs try to exit syndications but this is possible only through the GPs approval and that all parties involved are on the same page. Additionally, new contracts and paperworks are made to ensure transparency but that’s another tedious task if you ask me.