All Forum Posts by: Bobby Larsen

@Taylor L.

Great! Let’s see if we can get a few others interested and we can brainstorm how to structure.

@Eric Berkner I've been investing in Portland the past 7 years.  I agree that investments there require more conversations with investors but there are plenty of experienced sponsors still investing in the area.  I don't know about properties with less than 20 units but I haven't seen anything more than a 4.25% cap rate the past 12 months.  Larger, institutional properties, are 3.5-3.75% cap rates which believe it or not is a discount to the 3% cap rates in cities making the headlines.  Portland metro might not get as much attention but the suburbs are still very heavily pursued.

I know mastermind groups are a common thread but was wondering if there’s such a thing as a mastermind group between experienced sponsors or a co-sponsor group. I thought it would be interesting to put together a group of sponsors that have at least $50m in properties and can raise $2m+ LP but looking to scale to larger properties, see more consistent deal flow, and share knowledge. Debt terms have also become much more attractive for larger properties which has never been more important than in this low cap rate environment.

Let me know if anyone is part of a group like this or would be interesting in forming one. I have some ideas on structuring.

As other have said, you have many many options. A DST (not a fan if you have other options), finding your own upleg, or investing with another sponsor either as 100% owner or a tenant in common. As a tenant in common, your entity would own a percentage of the passthrough entity which holds title to the property. All options are very common. Investing as a tenant in common is only complicated if your exchange entity owns more than one property. 10% cashflow is going to be extremely difficult in today's environment but 6 to 7% cashflow and 10 to 12% total return with appreciation is realistic.

Time is ticking with a 1031 though, so you'll need to move quickly.

We're in a high fee environment right now and even taking that into consideration, these fees are high.  Maybe I'm misreading, but no initial hurdle?  Just 70/30 out of the gate... after a 2.95% acq fee?

It's also important to know the expected hold period, especially as it relates to the acq fee.  A 3% acq fee is a whole lot material on a 3 year hold than it is on a 10 year hold.

Depending on the experience of the operator and the investment profile, 5% to 15%.  Anything more than 15% then I would expect a capital contribution as well.

@Jason Malabute

Assuming you don’t increase rents on “unrenovated” units to push turnover, renovating units based on natural turnover and small rent bumps typically won’t increase vacancy above market norm. Unless the renovation time is unusually long.

Interesting thread, mastermind group is a new term to me but let me know if you guys form a group and what you’re looking to do.

We’re active in the 30+ unit multifamily space. I’ve spent my whole career in the industry but always interested in networking with new people.

That is just crazy, in my opinion. I’ve never understood the paid mentorships.

There’s a wealth of knowledge in this forum and an endless number of experienced sponsors willing to answer questions. If I was trying to break into the industry, I would approach a few small- to mid-level sponsors and ask if you could provide help to their organization in exchange for a mentorship.

@Joe Archbold

Interesting! I haven’t come across BDs in the private placement space.