All Forum Posts by: Charles Seaman

@Elvon Bowman I'm glad that it helped you.  Sometimes, seeing the same situation through a different perspective can be helpful.  If you want to talk through it a bit, I'm glad to do so.  Message me and we can set something up.

@Elvon Bowman Thinking big is important, but it's also helpful to take a practical approach.  My replies to your questions are below.

1.  Aiming for larger properties on your first deal (100+ units) is definitely very ambitious.  It's certainly not impossible, but it's probably going to take you more time and more deals to win one.

Like you, this was my goal when I first started out.  I looked at somewhere between 150 and 200 deals before getting my first deal and that was at a time when market conditions weren't as tough as they are now.  Ultimately, I wound up doing a 92-unit deal my first time around and realized that part of the reason I was struggling to win deals was simply because I lacked the credibility to be do so.  I then decided to modify my criteria to look for deals that were 50+ units and found that I had much more success in that space because most credible bigger buyers aren't looking at deals that are smaller than 100 units.  While I didn't want to stay there permanently, it was a stepping stone to build my track record.  You may want to consider a similar approach.

While having an experienced PM and knowledge is beneficial for you, it means very little to a broker or seller.  Your ability to close means almost everything and you'll need to make them feel confident in your ability to do so if you target bigger deals right out of the gate.

2.  Certainty of a buyer's ability to close is always important, but it's even more important right now due to the market conditions.  A higher offer from a buyer without a track record is often considered a worthless offer by many brokers and sellers.  The only way they would seriously consider a higher offer from an unqualified buyer is if they have no offers from better qualified buyers and their back is against a wall.  Submitting real offers that you feel confident actually closing on and having a strong sponsor to work with that has a track record will go much further towards you winning deals.

In short, you can pursue larger deals right out of the gate if you want to, but generally expect that it'll take you longer to win one and make sure you have the right players on your team so that you're prepared to win them and to close them once you do.

@Nadia Jones Starting and running a fund is a separate business because it's something that you need to actively market for and regularly work on attracting capital to invest in. While there are definitely benefits to running a fund, it's tough to achieve success with funds as a beginner because oftentimes investors are attracted to the track record of the person or team running the fund. A JV structure is good for a one-off deal because the only commitment you have is to the investor(s) and that individual project or deal.

So in part, the answer to your question depends on what your objective is.  And in part, it depends on the investors and capital that you have access to (this tends to play a factor in many decisions when raising outside capital).

If you do want to go the fund route, you might want to consider using Avestor.  They run a customizable fund platform that many fund managers have started using in recent years.

I'm not involved in the development space much, but a newer person can generally only offer so much to a more experienced person in this business.  The biggest things you can offer in development are finding a deal, finding capital, or construction expertise.  If the developer that you're partnering with has experience doing similar deals, then there's a good chance that they have construction expertise and easy access to deals.  Capital always tends to be the sticking point, especially right now due to market conditions.  If you can align with capital partners who want to fund deals for your more experienced developer partner, then I'm sure that will make you instantly attractive to them.

@Robby Sanchez Calling property managers who know the market(s) that you're looking in will produce the best results.  Keep in mind that a rule of thumb is simply a rule of thumb.  It doesn't mean that every property will fit that rule of thumb.  Too many people get caught up in this thought when they underwrite deals.  Also make sure that you're using 
"per unit" numbers for your rules of thumb because this is much more accurate than simply looking at the expenses as a percentage of the property's income.

@Lorenzo L. That's a solid plan.  Learn as much as you can from the developer in the role you're in and aim to be an asset to them so that you get more opportunities to learn and grow.  Prior to syndicating deals, I worked for a commercial real estate investor in NYC for 14 years and gained a lot of knowledge and practical experience while in that role.  Without that experience, I probably never would've went into syndication.

@Lorenzo L. It depends on the size that you're focusing on.  If you're looking for properties less than 50 units, you'll have a lot of success with calling owners directly.  If you're looking for properties that are 50 units or larger, you'll generally do better focusing on broker relationships.  While there are some deals 50 units or larger that transact without a broker involved, they're definitely few and far between.

You're welcome @Lorenzo L..  You can test that side of it out to see if it's a good fit for you, but take some time to find which side is the right fit for you because that will be a key to achieving long-term success.

Also build as many sponsor relationships as you can in the beginning because that'll give you plenty of options when you find a deal.  If you do a good job with building sponsor relationships, then you can probably get to the point that they'll allow you to use their track record.  This goes a long way when you're trying to find deals or to attract capital because nobody really wants to be anybody's "first" in this business.  Once you have a few deals under your belt, then your track record will speak for itself.

@Lorenzo L. You do bring up some fair points and it's often tough to stand out from the crowd when so many others are doing the same thing.  Any deal has three (3) important components: finding deals, finding money, and running deals (this one doesn't matter until you find the first deal and the money to go with it).  Aside from educating yourself, the next steps are to honestly assess yourself and see where you best fit into the equation and to build sponsor relationships because these will be very important for you as you start out.

If you determine that you're best suited for the "finding money" part, then the content approach is a good way to get your name out there.  While I've done that, it was never my greatest strength.  I personally find that appearing as a guest on other people's podcasts helped to get my name out there.  You might find that this will help you as well.  Aside from using social media and content, make sure to "put yourself in the right rooms with the right people" and don't be afraid to roll your sleeves up with some good networking.

@Wendy S. There are many good paid coaching programs, but not all are the right fit for each individual.  When checking out programs, it's important to understand what they offer and how it aligns with what you need.  You can find a lot of cheaper coaching options and you can also be successful without paid coaching.  Many of the higher priced options offer stronger networks than they do coaching, so you're really paying for the network more than you are anything else.

It sounds like you already have some knowledge of real estate from your past experience.  What do you feel your greatest need is as you transition from single-family to multifamily?

@Kristin Boekhoff I generally buy larger multifamily properties, so I don't have any personal recommendations, but I did check with my insurance broker.  If it's newer than 1973 for a property this size, he recommended checking out Farmers Insurance.  He said that they're usually very competitive for properties this size.