All Forum Posts by: Steve A.

I work with a couple syndicators directly and also lurk around on CrowdStreet, RealCrowd, Cadre, and the like. Recently I came across CityVest. CityVest pools smaller chunks of money ($10-25k) and invests in institutional-quality funds that have $100k+ minimums. I can meet these minimums, so I would rather invest directly with the institutional funds instead of paying the higher fees through CityVest. One option is: whenever a new offering hits CityVest, contact the fund directly. But I am sure there are many more funds out there than the ones on CityVest. Where can these be found?

Hello!

I would like to create an automated tool to analyze the cap rates of properties for sale within criteria/constraints I set. After a little research, it looks like Octoparse or Apify can successfully scrape Zillow. These are paid services but they are relatively inexpensive. Assuming they can pull the Zillow data I need, the next step is to pull a rent estimate. The most accurate tool I have found is Rentometer. Rentometer charges about 4 cents per API call. Because of this, it would be best to only target particular cities that are interesting for investment and only run properties from those areas. I think this would result in a fairly reasonable cost.

So for example, say I want to look for houses with 2+ beds and 1+ baths, priced under $400k, no HOA, in Ohio. I would set this to particular cities of interest instead of entire states, however, since doing the latter would pull tons of rural properties that would not be feasible to manage from afar (no property management companies in these areas, not enough population for reliable renting). I am sure this could be narrowed down even further to increase the quality of results and reduce costs. Once houses for sale with these criteria are scraped from Zillow, I would plug these in a batch upload into Rentometer and get the rent estimate. This would give me an estimate of Cap Rate.

Now, obviously there are many other factors to consider when buying a rental property. But this would be very helpful. From this list, I could begin weeding out the bad properties. Places with high crime, high insurance or taxes, etc. Eventually I could manually find some nuggets here.

I am going to attempt this, but first I need to know what are the “hot” markets for investors these days? Everything is extremely inflated right now…a few years ago I was finding decent Midwestern properties for the 2% rule without any issue. Those days are gone and I am just trying to get above 1% these days (1% of purchase price is the monthly rent). So “hot” is maybe not the right term in the current era, but you get it.

I am mainly interested in sun belt states and to some extent the Midwest and mountain west. I like TX, NC, SC, TN, FL, AZ, OK, IA, AR, MO, KS, IN, OH, KY, ID, possibly a few others. Within these I figure it will be difficult to find a profitable rental in the states’ “tier 1” cities so I am interested in the outlying suburbs and places like that as long as population is above 50k and stable or growing. When I did some investing a few years ago, Indianapolis, Memphis, Kansas City, and a few others were all popular for cash flow and high cap rates. Where are the high cap rate areas now?

Thanks for your help and feel free obviously to try the method I described above for yourself. Seems cheaper to me than hiring developers or paying for a CoreLogic subscription.

Hello all,

Mods feel free to move if this is in the wrong forum.

Thanks to Jay Hinrichs I discovered the beauty of syndication deals for passive income, diversification, and heavy hitting returns. I’m addicted. Shortly thereafter I found CrowdStreet and RealCrowd and I’ve done several deals on each. For those who don’t know, these are crowd funding platforms that allow accredited investors (like myself) to invest in syndication deals. They provide a nice centralized marketplace for syndications, which could otherwise be tougher to find.

Now that I know this exists, and due to the fact I’m accredited (so I can invest in all kinds of fun stuff more directly than ownership of a public equity) I am wondering if there are other reputable platforms that facilitate direct investment in other alternative asset classes. I’m particularly interested in hard assets like natural resources.

I found Reef Oil and Gas, and then read some negative news reports about them and crossed them off the list. Continuing my search for oil and gas direct investment, I found Crudefunders and this also appeared to have some negative sentiment, although the negative reviewers seem inexperienced and not the type of people who should be making these investments. I then found EnergyFunders, which seems to be the biggest name in the energy crowdfunding space, as far as I can tell. Seems to have a clean record, and they only offer to accredited investors so you don’t have people badmouthing them because their payment on their $5000 investment came a month late. Anyone have any experience here? I also have geologist friends in the field and considered throwing them some cash and letting them do their thing, but drilling can cost millions and wouldn’t provide diversification, so i am not on that level.

For mining operations, the only one I could find was Klondike Strike by Red Cloud. Red Cloud is a big, legitimate company. Anyone have any experience with them or similar mining related direct investments?

For timber I have no idea...I hear you can get a piece of a TIMCO but the minimum is usually a million bucks. Looking for something more in the 100k minimum range for diversification.

I found YieldStreet which is interesting. They have investments in Marine and Legal. Basically related to large tanker/shipping vessels and legal settlements. I imagine these would provide some nice uncorrelated returns.

Also looked into quantitative hedge funds like Renaissance, Two Sigma, AQR....but these appear to be for multibillionaires and Ivy League endowments. There are hedge funds that accept smaller investment minimums but I am a bit skeptical of them.

All of this is of course in addition to regular old investments like mutual funds. Even have some crypto currency. And my main income comes from ecommerce businesses so I’m pretty well diversified in that sense.

Does anyone have experience or advice in this area, or have any other ideas for crowdfunding platforms through which I can invest in alternatives?

These are all great posts that give me a much better understanding.  How would one go about getting a loan from Freddie?  Do you approach Freddie directly somehow or through a loan officer?  It seems it must be a loan of $1mm+.  I am going to pass on this deal with the 8% financing, it just seems silly to pay that. Will probably do syndications, notes, and some cash SFRs til I have enough to start playing with the big boys and getting these favorable rates.

The term being less than the amortization makes me wary. I know it’s typical but is everyone 100% sure they’ll be able to refi no problem at the end of the term? What if you can’t? Some of these syndication deals have fixed rates for 30-35 years

Hey apologies for the vague title, but I am new to looking at investment grade multifamily properties, coming from 1-4 unit properties. These 1-4 units of course have fannie/freddie loans available at 4.xx interest rates, 30 yr am, 30 yr term. When I began looking at 20-40 unit apartment buildings in my price range, I have so far found the financing options to be very poor. I found a lender who does a 30 yr am, 30 yr term surprisingly but the rate is roughly 8%. I found another whose rate is 7% but this is a 5 yr ARM. I don't mess with ARMs, balloons, interest only, or any other funny business. In my situation currently, the loan would be a partial doc... thinking this might be the issue I inquired about it, but full doc only drops the rate maybe 0.5%. How does anyone make any money, in the current environment of low cap rates, where finding an 8 cap is not easy, with 8% interest rates? Just banking on paydown/appreciation? My priority is cashflow and this kind of financing ruins it.

However I am also getting involved in some syndications, and when I look at these deals the syndicators are getting rates sometimes in the 3's.  These are some sort of government loan programs.  I am thinking maybe they are only available to properties of a certain number of units or price range?  Does anyone know the cutoff between these awful 8% rates and the favorable 4% rates?  I need to start looking at properties that will qualify for the lower rates...it doesn't make sense to invest directly otherwise.

You guys have all given fantastic advice. Thanks especially to @Jay Hinrichs who introduced me to MULTIPLE service providers in the space who can assist me. That was invaluable man, thank you.

It does look like syndication is the way to go. I am leveraging the expertise of an experienced operator. I get the economies of scale from hundreds of units. I get on site property management instead of 8-10% off the top (and some guys who I don't use charge first month's rent, yikes). I get 4% HUD interest rates instead of the 8% I could get on my own. The deals seem to cash flow 7-12% in the holding period and then pop at the end for double or more on the money invested. Really compared to anything else it seems like a no brainer. Also I get the ability to diversify geographically, and with multiple syndicators to hedge my bets.

NPN sounds like potentially outstanding returns but yeah, I would have to partner with someone and not sure I am up for that.

Performing notes - I will probably add some of these as well to see how they perform and if I like them.

I already max a SEP-IRA with a bunch of vanguard mutual funds (all equities no bonds). Will probably get some outside of the SEP-IRA as well. I also have a small % of my net worth in crypto and other speculative stuff.

I have this vision of owning an empire of housing spanning the nation...I don’t get that feeling with syndication but I know this is an irrational wish. However, I am going to continue buying SFHs and duplexes at the 8 cap and above range as well with a portion of the money. The depreciation is nice for taxes and I trust my existing PM. 

I'm looking into buying a 21 unit apartment building as well, in another midwestern metro. Seems to cashflow well and doesn't need any work. But the more I look into it, the more this deal looks sour compared to just buying more houses in my current metro and definitely compared to syndication. Why? Because lenders are wanting 7-8% for a fixed 30 yr term, and I don't mess with ARMs or balloons...I do fixed rates and only maintain about a 50% LTV on my stuff. That rate is pretty nasty, and then also the current PM of the property, who I would prefer to keep on board, charges 10% plus first month's rent. I have made it a policy to never work with anyone who charges this much. Can anyone comment if this is wise? The way I see it, first month's rent, assuming transient apartment people who probably only stay for an year on average, could be 10% or more of gross, so I'm being asked for 20% of gross to go to the property manager alone. No thanks.

@Jay Hinrichs thank you very much. Do you by chance have any recommendations for NPN funds or a syndication sponsor?

I am originally from Indianapolis and I know the area very well...anything I see on Loopnet over 8 cap is either in a bad location or in need of significant work.  I'm comfortable with what one might call a "C" class area but those are beyond that IMO.  Maybe there is some good stuff in the $2mm plus range but I wasn't even looking at those as I cannot buy them. (I could with lots of leverage, and without much diversification...so effectively, I can't)

Is there a marketplace of some kind to find those deals? Just the one here on BP or is there a MLS/loopnet kind of arrangement for them? 10% returns? Sounds nice. I'm a bit skeptical because I'm already losing a cut to property management, then with a syndication I am also losing a cut to the people who put the deal together. However I also get their expertise. IF they're good, that is...could go either way.