All Forum Posts by: Charles Smith

You're probably going to have a hard time raising OPM until you have a track record of successfully leading acquisitions.     For a 1st time lead, I want them to have a significant amount of their own equity in the deal.    Lenders will often look for prior experience as a key principal, esp. if you don't already have a significant net worth relative to the loan.

Finally, brokers place a lot of weight in their perception of how likely the buyer will be to close the deal.    It's a very competitive market, you're often up against institutional funds that can fund an all-cash deal.

My path is to learn as much about the business as I can as a passive, become a KP at some point, and when I get enough CF to justify quitting my day job, then I'll look at becoming a lead.    It def. won't happen overnight, but it's a big responsibility and I want to devote 100% into doing it right.    Good leads can make incredible money, bad leads can be done in one.

Yup, but lenders want to put their money in the hands of guys who have a proven track record of success, not guys who are buying their first deal.  100+ units are much more complicated than just being able to do the basic analysis -- the real world issues that you'll face (management, local politics, local economic changes, cash flow forecasting, etc) aren't things you can read about...you have to experience it to understand it.

Also, it's very uncommon for lenders to put up more than 80% of the money -- they know that if the deal is good, you should be able to find the other 20%+ pretty easily, which will reduce their exposure.

@Charles Smith It takes time, education and money.  Or some mix of the three.

I've been working in this arena for the past 10 years.  6 years on the development side and the last 4 focusing 100% of my time on large multifamily acquisitions.  

If I had family money or a really, really rich uncle I could have gotten started on my own sooner, but I'm now just at a place where I have enough of a track record, equity relationships, lender relationships and broker relationships to start going out on my own, putting together large multifamily deals as the sponsor. 

It's a little unfortunate that it all came together towards the top of the cycle, but that's something for me to deal with and figure out how to make work.

This is all a long way of saying, listen to all the other posters here who say get education and start small.

As Paul implied, the best way is to start by getting educated.  If you have no knowledge, no experience and no access to money, there is absolutely no path to success.  So, start building those -- take some training, find a mentor, get a job with a commercial firm, start finding investors, etc.

@Charles Smith 

We try to get a CAP of 8%+, cash on cash 12%+, and debt coverage ratio 1.6%+

Paul

@Charles Smith I think 1000 names is a decent list to get started. You may not get 2-3 deals a month mailing to that amount, but hopefully close. What sort of schedule do you plan on sticking to?