All Forum Posts by: Andrew Campbell

Build relationships.  At the end of the day, people are investing in you as an operator as much (or more) than the asset.  You'll need to show everything that @Todd Dexheimer mentions above and more, but they also need to trust you.  Be building personal relationships, be consistent with communications and stay in front of potential investors.  Then when you find a good deal, they're already sold on you as the sponsor/operator and can make a quick decision about the specific opportunity in front of them. 

Good luck! 

Are you planning to raise equity from investors, or fund this yourself? You may have different parameters and success metrics than your investors might.  Typically investors are going to want to get their money back in a relatively short amount of time (3-5 years) while you might be looking for long-term cash flow--those are completely different goals and will change your criteria/asset type quite a bit. 

Good luck!

Very interesting thread and question. I was talking with an equity group on Monday about the market and where they saw things. The first question they are asking when they see potential deals is what is the going in CoC?

As prices continue to rise, the CoC is getting tighter/lower. While you may be able to model and hit your targets on IRR, and Equity Multiples over a 3 or 5 year horizon, the CoC is a good indicator of the deal and what you are paying for it.

In our value add space of 150+ units in Texas, we are still looking for 8.5%+ CoC.

I also think it is very dependent on what market you are looking in. @Ryan Murdock is a good example. Where Bruce and I live and operate there is a lot early-mid 80's construction, but you see very little inventory built in the 70's and 90's just due to the economy at the time. 

Older isn't bad if it has been taken care of, or if you budget for the appropriate expenses. The Due Diligence period will be critical in evaluating the major systems and understanding if any of those would be required to be updated or not.  That could make or break the deal, and not something you'd really think about on a new property. 

@Michael Bishop--thanks!

Yes, we had limited partners to fund the equity and our CapEx improvement plan. My partner and I both worked our networks for the funding. I touched on it a bit in the article I wrote, but we had several equity groups that pledged money and didn't perform. We raised nearly $6.5mm from private sources.

Thanks @Brian Adams.  Yes, I was the main co-sponsor with my partner.  The biggest challenge was a last minute survey easement title sprung on us 2 days before the original close date, and figuring out who actually needed to sign the amendment.  The deal and property itself was very clean. 

I'll echo the comments about needing a good property manager--but that is the case whether your property is nearby your location or out of state.  Sure, it's easier for me to visit my properties because we're relatively local (all in Texas), but it still comes down to having a great Property Manager and then staying on top of them. 

In my company, I'm the Boots on the Ground, and I recently wrote an article about how important that is to have local knowledge. Whether that knowledge comes from you or one of your partners its a must.  

For me, I'd want to be able to get to my property within 3 hours from leaving my house--whether that's driving or having a very short flight.  Good luck!

Yesterday, we closed on a 192-unit value add property in San Antonio.  It took over four months to close and lots of long nights and preparation, but we're thrilled to have this asset as part of our portfolio.  As always, we learned some valuable lessons along the way, which you can read about here.

This represents the second deal we've done this year, and I hope an encouragement for aspiring investors and syndicators. Fire away with questions if you have them! 

@Bruce Petersen is speaking truth.  We are underwriting to 95% of PP on our deals, and in most of our counties would be thrilled with anything less than that.  Assessors are being very aggressive, so you should be very conservative. 

We've been using 92-95% of mill rate for our underwriting--particularly in Tarrant and Bexar county. Have you guys been getting it closer to 85% when its all said and done? We haven't been so lucky, or need to find a new firm to protest for us.