All Forum Posts by: Drew Shirley

@Jonathan Jewell The syndication attorney has to form the new entity and draft the company operating agreement with the specifics on how the profits and losses will be allocated, draft the private placement memorandum (a massive, highly detailed and complex document), file the exemption documents with the SEC and the state securities board, draft the subscription agreement for the investors to put their money in, draft the investor questionnaire, review the verifications of accredited investors, etc. Oh and hurry up because we want to close.

It's a huge undertaking. 

There are tons of wholesalers out there right now picking up deals. Go to a neighborhood that got flooded and write down all the phone numbers from the "We Buy Houses" signs you see. Or google "We Buy Houses Houston." Call those numbers and ask to be put on their buyers' list, start analyzing deals for fix and flip. 

Or go door knocking. Or do postcards or door hangers. You will get calls. You just have to be ready to answer the phone.

Takeaway from this is that if you tell your spouse water is wet, she's not going to believe you. I have the same experience. :)

Get an independent corroboration from someone who is... well, not you, and your spouse will be more likely to listen. 

I have talked to several hard money lenders in this area and they all required that borrowers had pretty much enough liquidity to pay them back out of cash reserves. Which begged the question--if I had that much liquid, why would I need you? It was frustrating. 

That being said, I think there are a lot of great deals to be made right now after Harvey. People who have flooded 2 or 3 times are fed up and ready to walk away from their houses. Start making offers, find good deals. At the same time, start talking to people you know who have access to capital. Find a couple of good private money lenders or equity partners to help you fund the first couple of deals.

@Stefanie Jensen

I'm no psychologist but it doesn't sound like there will ever be a deal that your husband likes. There are always problems with every property that can give you an "out" to never buy anything. 

One thing you could try is to buy your first property without any of your own money in the deal. Bring in a private lender or equity partner who puts up all the cash, then have a plan to cash them out after a year or two -- maybe by fixing up and renting out, then refinancing.

If you are only risking time and sweat equity, then there's no reasonable objection to a great deal. Of course... bringing in partners or lenders lowers your returns. I get that, but it might be worth it to get that first deal done and then show your husband that it really works. 

Or if that doesn't work... well, then save your own money that you earn and buy properties. Your husband can take the money he earns and stuff it in his mattress.

I'm working on my first apartment syndication and would like to re-invest part or all of my acquisition fee into the project as more "skin in the game." 

Is there a way to do this without paying taxes on the reinvested funds?

I'm pretty sure I'd have to receive the acquisition fee in an entity that allows retained earnings, but I don't want it to be a C corp. Any other way to do this?

I'm confused - the master lease option doesn't transfer title, so the seller wouldn't have to pay tax on the entire amount. 

(I'm not a tax lawyer, so I suppose it's possible the IRS could classify it as an "installment sale," but even then, the gain would be spread out. Right? I can't see how the IRS could require all depreciation to be recaptured without a deed transferring title.)

With a master lease option, you're looking at 3% down instead of 10%. Worth a shot.

I don't, but look around here and see if you can find anyone in that area. Also call up the local multifamily brokers and find out who the players are in your market. Then cold call them and ask how you can help them. 

If the stated NOI is $142k, the actual NOI will probably be less. You will pay higher property taxes than the current owner and you might pay higher expenses.

If this is your first deal, you would be wise to partner with an experienced operator who can not only get you a better rate on your financing, but also help underwrite the deal and manage the cash flow going forward. There's no substitute for experience.

Hi Brian, my favorite book on multifamily is  by Steve Berges. He explains the value-add strategy thoroughly but clearly. 

If you are interested in a truly passive income stream, consider investing in an apartment syndication. I am working on my first one, and my investors (who are all accredited or sophisticated) will receive at least a 6% preferred return and 2/3 of the profits over 6%. My goal as the sponsor is to generate for the passive investors a 10% cash-on-cash return and a 20% internal rate of return. 

Good luck.