All Forum Posts by: Arun Iyengar

I've had Wash and Coinmach. Got to say that I was not happy with either one. There are 2 approaches:

1. They own the machines and collect the coins and share with the owner at the negotiated rate

2. They own the machines and you, the owner, pay them a monthly rental fee. You collect all the coins and there is no sharing back with either vendor.

I have both options. In the first instance, I really see that I am leaving money on the table. Also, their contracts are very favorable to them and stays with the property even after you sell it. So I am stuck with them for a while in one of my buildings.

In the second instance, I found them to be quick the first few times there was an issue, but after that when the same issue (not working washer) repeated, they started to say that it was my issue as the owner for faulty plumbing. Needless to say, I got rid of them and bought my own washer and dryer. And of course, now they work fine with no issues (with the same plumbing).

My recommendation would be to buy your own and if you don't want that, rent machines.

@Austin Manor
With $20K down, if you are netting $833/month or $10K/yr, that is a 50% cash on cash return. This is a fantastic investment.

However, make sure that you are fully calculating the expenses. If the property is older, you will have repairs and upgrades, so you will likely have to set aside some money to have a safety net when that occurs. This is usually at around $200 per unit per month. What is the vacancy rate in your area? If this is in the 8%-10% range, you will need to lower the monthly rents to account for it, even if the property is fully occupied the day you buy it. Do you have adequate insurance for all the region appropriate hazards included in the expense? 

If you have taken all the above into account and still get $10K per year (50% CoC return) on a $20K investment, this is an excellent opportunity. I usually am happy if I get 10% CoC on my deals.

@Diogo Marques your reasoning makes sense. Thanks for explaining your thoughts.

@Joel Owens Agreed with the size of the deal impacting the % of equity to take. The one I am thinking about will be just under $10M, and so will be on the smaller size. All of this info has been really good and helps solidify my charges and equity.

@Diogo Marques thanks for the numbers. With a 30% equity split, why is there a charge of 1% on sale? Is that because you are also a broker?

@Jeff Greenberg Yes, I understand and I can always front that.

@Jeff Greenberg that is my idea as well. I have a number of other multifamily investments on my own and so feel I am fully invested in real estate for now. Good to know that it worked for you without bringing in your own funds.

@Clifton Kaderli The metric most investors look for will be the project IRR. The second interesting metric to them will be their Cash on Cash return, and the growth of that during the period of ownership.

I am sure other experienced syndicators will have a lot more metrics to add to the above two, but those are the main two that I focus on with my investors.

@Kusum Chanrai I recently made an offer for a larger complex in Houston with M&M. However, I don't think you have to worry about being disadvantaged if you are not represented by M&M.

In my case, the offer price was not stated and I offered the "whisper number" that the selling broker had suggested. The broker came back and upped the number even more and I chose to walk away from the deal. The key question to ask yourself is not what the cap rates can be, but what will your exit pricing look like? Hurricane Harvey has created an artificial pricing demand with many (like me) out of state buyers thinking there are deals to be made. For example, if you buy at $80K per unit in an okay part of Houston and in 5+ years, sell again at $80K per unit, the cap rate or cash on cash may definitely not be worth the investment.

Good luck and hope this helps.

@Lane Kawaoka good question, but it is important to ensure that any deal with an investor is not a one and done. 

@Todd Dexheimer thanks. I haven't set a target yet for preferred return given the low cash flows from deals in the pricey silicon valley. I am approaching this as more of an equity gain with some dividends given for investing the cash.