All Forum Posts by: Brian Briscoe

There's definitely risk involved in NOT doing the syndication paperwork, but you are also correct in saying the fee is a much larger percentage on the smaller deals. Our smallest syndication was $1.1 million and we paid for the syndication docs. It wasn't a risk we were willing to take.

Good question - and it depends on what you're looking to get out of it. 

I did a handful of single family properties before going into multifamily. I got to a point where lenders wouldn't give me another loan and I didn't know enough to be able to push past that. So, naturally, when I made the decision to scale and take my business to the next level, I decided to get into bigger and bigger multifamily properties. What I decided to do was learn to syndicate even larger multifamily deals, and I'm now partner on over $50 million in apartments...

Obviously, my situation and path are different than you and I'm not recommending that you do as I did. I will share WHY I went that path and maybe that'll help...

First of all, I wanted real estate to replace my day job. I looked at how fast I could save up down payments on single family properties and projected that it would take over 10 years to build a SF portfolio big enough for me to exit my W2. There's also the difficulty getting loans once your portfolio gets to a certain size. For me, 10 years was too long and the lending aspect seemed too difficult to keep going in the SF space (of course, there are ways past those to blocks, but I didn't know that at the time).

Buying smaller multifamily became attractive because I could make one purchase and own many units, but I ran into a similar situation as before in that it would take me a few years to save up the down payment for another and I was afraid that it would take a long time to snowball.

Finally, I landed on the syndication model where you find larger properties and also people that want to invest in real estate and bring the two together. I settled here because I wasn't limited by my own bank account... I could keep buying larger and larger properties as fast as I could find investors - and best part is, I could also find partners to share the load.

Bottom line, look at WHERE you want to be in 5 years and pick the path that gets you there. I wanted to go big quickly, so syndication was my choice. The SF or small multifamily models will also help you grow your wealth and passive income. 

Economic and population growth are top of my list. If the economy is expanding and population is growing, there will be increased demand for years to come. Along those lines, I look at the drivers for both of these.

On the flip side, I also want to see higher-than-average growth in single family prices and rents as that would indicate that the supply hasn't quite kept up with demand. On the same token, I'd also look at the expected deliveries of new housing units to make sure they're not overbuilding.

Much lower on the list, I look for places that I like to go... give me an excuse to get out of the house for a bit...

Congrats on making the jump @Jason Malabute

Where are you looking now for multifamily? I found that the jump from SF to MF was quite a bit more challenging than I thought it would be, but you're exactly right about focus. Get your focus right and the rest will follow.

I'd be happy to hop on a call with you and chat about the transition.

Uhhhh... don't ignore the county and hope they go away. Bad advice. Do anything BUT that.

Regarding the county v. homeowner's rights... Could you imagine what would happen if everyone could modify their homes as they see fit? Taking out a load bearing wall to open up the floor plan could be disastrous - especially if someone does the work and passes it on to the next owner. End of the day, there's a good reason counties have building codes and inspectors that enforce the codes. Your rights to do whatever you want inside your home do have a limit...

If the cost is low, just pay and move on. 

If it's going to be expensive, see if you can appeal to the empathetic side of the county rep you're talking with. Tell them your realtor gave you bad advice and now you're stuck in an unfortunate position. You want to obey the law and make things right, but  Ask if there are any other options available.

@Dave Carter

For smaller deals, a joint-venture or partnership structure are more common than syndication. When you do, it doesn't make as much sense to charge the fees that normal syndicators do if you're partnering with 2-3 other individuals. You're also not likely to have to incorporate a preferred return to your partners either.

Sweat equity is typically worth about 25% of the equity in syndications, but when you add the fees up (3% acquisition, 2% asset management, disposition fee, etc), the relative percentage that goes to the GP (sweat equity guys) is higher. If you're also contributing capital (like the equivalent to your down payment on a duplex), you can justify a higher percentage ownership in that small property.

Looking at a 4-plex v. a duplex, the juice may not be worth the squeeze, but if you set your sights a little higher, I'd say 25% of a 12-plex is much better than all of a duplex... 

Pet fees are in place at our properties to offset the costs associated with having pets in the units - pets do a lot of damage to properties and we do maintain certain amenities at the property specifically for pets. In a few of our properties, we've added pet-friendly amenities and the increase in rents/fees (whatever you want to call them) is our part of our ROI on amenitizing.

It does need to be spelled out in your agreement who gets these fees.

People are buying at 4 caps because there are a lot of people that specifically want to invest in real estate. High demand and lots of money flowing in raise prices.

Low cap rates are indicative of lower perceived risk.. in a uncertain market, lower risk assets are the bell of the ball.

How to buy now? Higher down payments on long term debt or higher leverage on bridge debt. One is low risk with lower expected returns, the other may be a bit riskier…

Not 100% sure I know why you're asking...

If you're looking for syndicated deals to invest in, you need to find syndicators. The hard part is many of them do 506b offerings which don't allow advertising, so you won't necessarily find them. I do syndicate and usually have a few deal each year for people in my network. I also run a weekly networking event where a bunch of syndicators attend that you're welcome to attend. Another great pool is to jump in multifamily real estate forums on FB...

I know a few people that run the Windy City REI - I can link you up with them.

Here's their meetup page: https://www.meetup.com/windy-c...

I am friends with several there and a few of them have large portfolios. You could definitely find help there.