All Forum Posts by: Charles Seaman

@Kyle Vogeler My replies are below.  Keep in mind that some challenges are applicable in most cases, while other challenges will vary based on your skills, financial strength, and network.

The biggest challenge for me personally has always been raising capital from retail investors (this is also a weakness of mine, so some people will find this part easier than I do).  Oftentimes, it seems like it's a race against the clock to get the necessary equity in prior to closing.  This has only been amplified in recent years due to the amount of fear that currently exists in the market.

There are times when getting your loan commitment letter can take longer than expected, but I've generally found this part of the process to be simpler for me.  Constant communication with the lender and/or mortgage broker, submitting documents in a timely fashion, and routinely getting updated underwriting checklists can help to streamline this process.

As a new syndicator, the single most valuable team member you have is your sponsor/key principal.  These are typically people who have successfully navigated the process before and they can help keep you focused if you veer off course.  Having somebody strong in the transaction coordination and investor relations roles will also be helpful so that you're simultaneously moving the debt and equity along.

If you lack liquidity, then you'll also need somebody on your team who's willing and able to provide the risk capital for your deals.  Some sponsors/key principals will do this.  Others won't.  So make sure to find the people who fit what you need.

The best advice I can offer you is to be as prepared as you can, but to realize that you'll never know everything from a book or a podcast or a course.  You will make mistakes along the way.  Learn from those mistakes so that you can improve on them in the future.  Then make different mistakes and learn from them so that you can keep growing and improving yourself, your systems, and your processes.

@Simandu Yakubov You asked many good, thought provoking questions.

If a seller or broker advertises pro forma, then they are typically pricing the property based on that with the hope of finding a buyer who's willing to bite off on it. Buying it based on the pro forma NOI would take away from the value-add strategy because you're essentially paying the seller for the work that you will do and for the increased NOI that you will generate.

If you find a multifamily property where the current NOI is not at full capacity and you increase the NOI, then the value is determined by applying the area's average cap rate to your new NOI. Keep in mind that the cap rate could change from the time that you buy the property until you go to refinance it, so this could impact your proceeds. Assuming that the cap rate compresses because of favorable market conditions, then this will work to your advantage. If it decompresses because of unfavorable market conditions, then it could potentially work against you.

I typically double check the operating expense numbers I use with property management companies who know the area well.  I recommend getting an insurance indication from an insurance broker, a debt term sheet from a mortgage broker, and property tax guidance from either the county tax assessor or a real estate tax consultant.  Taxes and insurance will typically be the biggest variables in any deal that you underwrite.

I'd be glad to speak with you further about it if you have any questions.  I used to host a free  weekly session that taught people how underwrite multifamily deals, so I can probably give you some pointers.

@Zachary Myers My replies to your questions are below.

1.  I've worked with Arbor, Greystone, and Walker & Dunlop.  For clarification, Fannie Mae and Freddie Mac aren't lenders, so you won't be dealing directly with them.

2.  They are all very responsive and they all offer various loan programs.  If you're dealing with them for agency loans (ex. Fannie or Freddie loans), then there won't be much flexibility because Fannie and Freddie generally have pretty strict guidelines.

3.  The answer to this question is really a personal one.  Are you looking for more cash to invest in something new or for more cash flow from the property that you're refinancing?

4.  Generally, most reputable lenders in this space won't have any significant surprises with terms and fees because they spell them out upfront in the applications that they provide before you move forward with the loan underwriting.

5.  Those lenders are best used for bridge scenarios.  In most cases, you probably don't want to be considering them for refinances, unless the property is underperforming and has an upcoming loan maturity.  These options will be more expensive.

6. It wasn't critical at all in my decision. Agency loans will typically take 45-60 days to close. HUD loans will take drastically longer (I've never used one personally), but there can be benefits to using these loans if you're a long-term owner.

The interest rates in your Key Considerations seem very low for agency loans and they're definitely low for bridge loans.  I'm not aware of any lenders that are currently offering rates in the 2.69% to 4.65% range (it doesn't mean that there aren't any, but I'm not aware of them).  Most of the refinances that I've looked at recently have been with agency loans with rates between 5.50% and 6.30%.  The rates for these loans will fluctuate a bit, based on where the treasuries are at that time.

@John Lasher I didn't, but you're right that it is a common path.  I did work for a commercial real estate investor prior to jumping into syndication, so that gave me a strong knowledge base to start with.

@John Lasher  That makes sense.  I sent you a message.  If you want to discuss it further, let me know and I'm glad to do so.

@John Lasher There are many good multifamily coaching programs out there, but coaching isn't the right fit for every person.  What are you hoping to obtain from coaching?

@Nick Rivers Check your connection requests and inbox.  I sent you a link that might help you.

@Nick Rivers If you've already taken courses and webinars, then the only thing that will help you become more proficient is by actually underwriting deals on a regular basis.  Courses and webinars are great if you're getting basic information to help start you off, but you'll never truly retain the information if you don't apply it.

@Kerry G. You should check out the firm below.  Even though they're based in Manhattan, licensing for architecture work in New York is on a statewide basis.  I've worked with this firm many times in the past and can vouch for them.

https://alparchitecture.com/

@Kerry G. Is the property located in Westchester County?