All Forum Posts by: Colton Fairchild

Multiple syndications with experienced operators.

@Eric D. The high per unit cost of this project is causing you to have a low CoC return. If your pref return is 8% and your CoC return is 4-5%, how do you plan on ever making any money as the GP?

I’d recommend evaluating more deals. This project seems like it’s not good for the LPs or GP (at least at this purchase price).

@Eric D. You should read Best Ever Apartment Syndication Book by Joe Fairless.

Congrats Ryan and welcome to BP. Fort Worth is definitely still a solid area to invest... I know there are a few people in that area on BP. Be aware of the STR laws and restrictions in the DFW area. Many of the cities like Ft. Worth, Arlington, Grapevine, etc. are trying to ban certain parts of the cities from allowing STRs at all (just search on google and you will find the info). Grapevine, TX is trying to ban them from the whole city. The big hotels and resorts have a lot of say here.

Also, when you are evaluating potential properties make sure you factoring in the high property taxes. 

@James Wise Good point. I have never purchased a new construction home with the intention of making it a rental. A lot of these zero down loans are only available if you use the builders lender... so if you buy a Highland Home they will incentivize you to also use Highland Lending.

@Daniel Torres Your first sentence says you have capital but not a lot a time. This is generally a great scenario for syndication offerings... allowing you to be truly passive. One advantage to syndications is that you can find an experienced operator with a proven track record.

@Kathleen McCabe Sure, this is possible but there will not be any cash flow. You will actually end up with negative monthly cash flow because the monthly payment will be so high.

I am assuming that you are talking about buying directly from builders in all of the new subdivisions in DFW. I see a lot of these builders offering zero down and no closing costs because they have too much inventory.

Example: You purchase a new construction home for $250k - $300k and put zero down. Your payment will be well over $2k per month when you factor in P&I, insurance, taxes, HOA, etc. let's say it totals $2,500 per month.... but you can only rent it for $2,000. You would have to come up with $500 per month.

Yes I have. The rate is completely up to you and her. Since you are not putting money down she might want a higher rate. Anything from 3 - 6% is reasonable in my opinion... just have to run your projections at various rates and see what you can do. If she is more focused on getting a higher purchase price and doesn't care too much about the rate then this can also be an opportunity worth evaluating. 

I can't really speak to how to do that in CA but in TX we just have a local title company facilitate the title transfer. 

Also, you'll have to figure out the length of the financing. If she is 70+ she most likely does not want to deal with this for the next 30 years. You could always keep it as 30 year amortization but have a balloon payment at year 10. This way she only has to think about it for 10 more years...

@Eric D. These fees are reasonable but we do not know the risk, investment timeline, projected return, etc. All of this is important when someone is looking at your fees.

Depends. The benefit is that EVERYTHING is negotiable with seller financing. If a seller doesn't want to hold a 30 year mortgage you can always propose a 30 year amortization with a 10 year balloon.