All Forum Posts by: David S.

Can you clarify your comment regarding waterfalls @Greg Scott ? When I think of waterfalls, I think of something like the LP getting say 1) a 7% preferred return 2) return of all capital AND then 3) the GP gets 25% split of all future proceeds/profits.  So when you say that you prefer the syndicator gets a fixed % of all the profits, are you suggesting you see better alignment with the GP just getting a straight split without LPs getting preferred returns? If so, how is that better alignment?

Aside from the waterfall, alignment for me also comes from the GP co-investing an amount that significantly above what he may get in acquisition fees. I see far too many having effectively no co-invest once you net out the acquisition fee.

A total cost of 6.3Mn over 23 units equates to 274K/unit...this appears unbelievably low for San Diego...I'd want to see full development budget detailing hard, soft and financing costs as well as month by month projections showing construction and lease up cash flows.

What's the 2.2Mn purchase price for? Vacant land or small property that will be converted to 23 units?

Also would need more background/history on Mike the Builder.

 I would think most landlords, who choose to be landlords in very Tenant friendly San Francisco, would pony up the 5.2% knowing that the rate has gone up and down throughout time, unless they want to run the risk of their tenant's finding out and called out as being a bad landlord, being taken on by the very helpful San Francisco Tenants Union or taken to Small Claims Court.

Maybe there is a silver lining in California's recent change in security deposits that limit it to one months rent when it used to be up to 2 month's rent for unfurnished units and up to 3x for furnished units.

By the way, I took a look at your Company, https://www.getwhale.co/  Since your firm is only offering 4.2%, were you trying to market in San Fran before discovering the Rent Board rate?

I have been presented with an opportunity to invest in a Class A multifamily syndication in the Old Hickory Lake/Lakewood area of TN.

I am doing my own due diligence but would appreciate advice from others in the local area given all the new supply that has come on recently and still to come in the Nashville metro area.

My understanding is that this submarket is not that affluent but there is a lot of development going on, is right “in the path of progress” and would offer an experience for Class A renters that is unique from all the downtown development. So the potential for appreciation over the mid to long term should be strong.

To start, I'd do a Discounted cash flow analysis and cap it like a regular income producing rental....do you know the rent the tenants were paying in the two sales you showed?

 That quote does seem reasonable. Curious, why you are choosing the 2,500 deductible? We saw an 85% increase in our premium this year and because of this, we are choosing to go with the highest deductible we feel can live, effectively choosing for catastrophic purposes only.

With insurance premiums for apartment properties increasing so dramatically in recent years, I am leaning towards trying to save some costs by increasing my deductible to the highest deductible possible. For example, I could save about 18% by increasing the deductible from $5,000 to $25,000. While that is a huge jump in deductible, my thinking is that we should avoid submitting any claims anyways since that would likely result in premiums being jacked up the following year or even droppage of coverage.

Does this make sense? Are there other issues I should be considering?

With insurance premiums for apartment properties increasing so dramatically in recent years, I am leaning towards trying to save some costs by increasing my deductible to the highest deductible possible.  For example, I could save about 18% by increasing the deductible from $5,000 to $25,000. While that is a huge jump in deductible, my thinking is that we should avoid submitting any claims anyways since that would likely result in premiums being jacked up the following year or even droppage of coverage.

Does this make sense? Are there other issues I should be considering?

Has the company been doing this a long time and is reputable? If so, I would be inclined to give this a try since California keeps changing the rental laws in favor of the tenant. In fact, can you share the name of the company since I am thinking of trying the MTR/traveling nurse route with one of our vacant apartment units in San Francisco.
 

 Can you please share the names of these "many great sponsors out there (happy to provide a few) that have a long track records, have never lost a property, and know when to dial up or back leverage/purchases while still being able to provide 20-30% annual returns over the past 20 years and multiple cycles."?