All Forum Posts by: Clayton Bownds

This is a great comment and worth thinking about... chances are, your HELOC is a variable rate that is influenced by the same current capital markets condition as the real estate debt you would be leveraging. This directly impacts your cost of capital and blended returns. What may look great on the surface could actually slow your progress toward your goal.

Wishing you nothing but success... you can do this!

/c

There is a legal mechanism to start your syndication's capital raise structured under the 506b exemption to allow your sophisticated, but non-accredited friends and family to invest before transitioning to a 506c to allow marketing your deal to a greater audience that might not meet the prior substantive relationship requirement. Recently, Mauricio Rauld with Premiere Law Group shared some detail on this in a livestream for which you can check out the replay on YouTube. 

Full disclosure - I've not done this and I highly recommend reaching out to an SEC attorney to get the skinny on specific requirements to stay within the letter of the law. 

Hope this helps!

Cheers,
Clayton

@Michael Le

You know I’m there! You and Juan Vargas continue to add tremendous value through this monthly local MeetUp in the Houston market and I am always looking forward to seeing how you guys continue to raise the bar every event!

/c

Thanks for sharing this... and I think you made the right choice. There are no real failures... only opportunities to learn and grow. Press on!

@Pancham G.

Congratulations!

While I don't have any personal experience with a well feeding a multi-family property, the things I would consider in your position are:

-  Age of the well and components... was the well installed when the asset was built or added later? 

- Maintenance service record on the well pump, gauges, etc... and have any components been replaced and when?

- Is there any conditioning, filtering, softening, etc done prior to use/consumption on the property (if so, similar records for upkeep, etc for those systems/components)

-  Water quality to the end user... this should be fairly easy to test and get a report on

-  Why was the well installed? Is there a municipal service available? (ie. it was the only option) Was it done to save on water costs? Many utility districts won't allow well water usage if they have a way to sell you water, so it may be the former.

-  What size pump systems are used and what do their operation translate into KW usage per month. High amperage draw pumps can be costly to operate (from an electricity standpoint). 

-  Is there a way to improve the efficiency of the well system? ie. cycle-stop systems or variable pressure regulation over older pressure switch control circuits 

-  Well depth and current flow capacity. Are there other wells relatively close by that may be using the same water table? Often times, deeper wells aren't as susceptible to seasonable water table fluctuations. 

Full disclosure - I'm not a "well guy", so take this with a grain of salt, but those are the things that popped into my head when I saw your post. I would think that as long as there are no local municipal restrictions on the continued operation of the well, the water is clean/safe, and the equipment checks out in good order, then it would be a nice differentiation and potential cost savings over water purchase from the utility company. 

You could also look into metering each unit and implementing a form of consumption bill-back to offset your electric expense of operation and perhaps pad the maintenance budget for the upkeep of the systems. 

Good luck and best wishes...

/c

I don't have much in the way of recommendations for collateral on other strategies, but if you are interested in Multifamily, I second the recommendation above by @Tony Lin to check out the Old Capital Podcast. There is a tremendous amount of value being delivered there... there are several out there that provide a wide range of content for investors at different experience levels... Jake and Gino's Wheelbarrow Profits, Joe Fairless's Best Real Estate Investing Advice Ever, etc. The biggest value I get from podcasts are from stories of experience and tribal knowledge shared by the guests being interviewed, so I tend to focus on shows that have a lot of that style content. If you search around, you'll find the ones that you like best for what resonates with you. 

As far as books go, the first book I read on multifamily investing was Dave Lindahl's Multi-Family Millions. I thought it did a good job of laying out the basic framework of apartment investing, but it is heavily focused on value-add repositioning. Wheelbarrow Profits from Jake and Gino is a good intro and easy read. Joe Fairless and Theo Hicks Best Ever Apartment Syndication Book is also worth reading imho. Any one of those would give you enough information to determine if multifamily is a strategy you are interested in investing time, work, and money into and help you narrow down your investment criteria. 

A little self-education up front goes a long way... it's easy to get lost in the sea of "free" information out there... 

/c

I'm also in the greater Houston metropolitan area... and also new to BiggerPockets. Welcome and hello!  

I am attending. I am very much looking forward to making some new friends and learning from others.

Thank you, James!