All Forum Posts by: Chase Louderback

Hi @Gino Barbaro

Looks like we had the same thoughts since we made a similar post at almost the exact same time.  I have seen offerings with 75/25 equity split, no pref return all the way to 70/30 with an 8% pref. The 70/30 with an 8% pref does seem to be most prevalent.  

Best!

@Pramod Yash

I agree with @Mike Taravella, setting up a thought leadership platform could position you as an expert in the market and help with both deal-sourcing and capital raising.  As for the execution of value-add programs you could always partner with an experienced operator on your first couple of deals and get their insight.

Passively investing in a few deals may be a great way to get the behind the scenes of the process.  Make sure you have that conversation with the operator up front so that you are both on the same page.  

If you are interested in learning more about syndication specifically there is the Real Estate Guys Syndication event that could be great.  This could also be a great networking event for potential partners and capital.  Hope that helps and feel free to reach out anytime!

I'm glad that the other broker was able to help you.  It sounds like you found a good (and bad) broker and it shows through pretty clearly.

@Oleg Shalumov @Brian Burke @Seth Ferguson @Todd Nurnberger Thank you all for you the feedback.

We have been underwriting deals at 75/25 equity split with no preferred returns and a 5-7 year hold.  The market environment has also made it pretty difficult to get the investor returns needed to raise money so that preferred is almost necessary.

It's interesting to see what everyone else is doing.  

@Amir B. going to agree with @Zach Cummins.  I haven't actively been looking for deals in the Midwest but I hear that deals there are good for cash flow and just less so for long term appreciation. From your initial post it sounds like you are looking for cash flow so that could be a great market for you.

Hi Everyone,

So I am curious what other syndicators and groups are currently doing in the market and everyone's opinion on offering preferred returns for investors.  

I have seen splits ranging from 90/10 to 60/40 and from no preferred returns up to a 7-8%.  What are you doing? What are your thoughts on if you should offer preferred returns and what the equity split structure should be for you to take on a deal?

From what you have said in your first comment it sounds like cash flow is your first priority followed by appreciation and ability to scale long term.  So, that being said, I would look for a larger property in a good area that gives a decent initial return, and has a strong probability of strong growth in market rents, jobs and population.  

Keep in mind that if you are using your own cash, then you are at a strong advantage over the syndicators.  You could accept a bit of a lower return up front and you don't have to get paid fees.

Hopefully that helps.

Hi @Jay Williams

So are you planning on flipping this property or holding it?  Also, are you saying they will list it for ~580k and be worth a little over 600k after renovations?  It seems like an extremely tight spread for a flip if that were the case. Cash flow seems like it could be tight for a buy and hold at $580k as well with the rent comps.

Have you had the opportunity to check with a real estate attorney yet, Kiersten?  The verbiage of the addendum sounds pretty clear cut that the buyer will receive the security deposits at settlement.  

Someone else mentioned the pro-rated rent for February.  Hopefully that is covered in your contract as well, but you should make sure you are getting that if the seller has already received the full payments for February.

As for the lease, does the seller have the only copy or is it possible that the tenant for that lease may have a copy which the seller signed?  Sometimes landlords will fill out two contracts with everything completed except for the signatures and just sign twice.  It could be possibly they signed one copy and forgot to do the other.

Hi @Amir B.

Most importantly you need to get educated on the business.  Understand how the valuation of multifamily works, how to underwrite deals (even if you plan on being passive), how to analyze markets, etc.  Then you can decide if you want to be active and buy multifamily or passive in another sponsors deals.  

Once you are at that point you have many different directions you can go and it will ultimately depend on your goals.