All Forum Posts by: E. C. "Stony" Stonebraker

@Philip Liu  We've sometimes shown the seller our underwriting and ask them if we've missed anything or done anything wrong to justify their price.  Our hope is to buy the existing property as it currently performs.  It also depends on the competitive situation.  If you are buying true off-market, the competitive pressure is less to increase your offer.  With a seller broker and multiple offers, you likely have to match or beat other offers.  Just don't fall in love with a property and make an offer that exceeds your pre-determined max.

@Philip Liu  The classic rule is to buy based on actuals, not potential.  If the seller thinks it is worth more, he/she should put it into shape to be worth it.  However, in this seller's market, many buyers will push the limits and buy based on at least some increase in value over the current value, depending on their confidence in the upgrades.  You should always try to be precise in underwriting and let the returns of the deal and your confidence in your underwriting guide you.  This may call for guidance from more experienced investors for your initial deal(s).  You may also want guidance from brokers, contractors, or lenders for specific questions on your underwriting.

@Rob McDonald, most syndicators started out as LPs or invest as LPs as well as are GPs in their own deals.  I've been and am both.  As an LP, once you invest in a deal, most syndicators send out monthly emails with a summary of the property performance for the previous month and provide the property financial reports on at least a quarterly basis.  Some have a quarterly webinar for invetors in their deal to discuss the performance and answer questions.  All should be available in between these formal communications to answer questions from investors.

All of that is typical, but will vary from one to another.

If you are considering investing as an LP, do exactly what you are doing, but get feedback on specific syndicators who you see on social media or who investors you know have invested with.  Pay for a background check.  Ask attorneys, contractors, accountants, and brokers who may know the syndicators you want to know more about.  There is nothing like doing your DD on sponsors.  It is more important that you have a trustworthy, experienced syndicator than is any specific deal.

@Gustavo Gonzalez  Normally, the property management company uses software that has owner access to all the reports you'll need.  Otherwise, you can use one of the same software systems which can import financial data from each property into your system to see the financial performances.  It sounds like you are building a nice portfolio and should keep the bigger picture in mind.  That said, Appfolio and Yardi are two of the bigger names in property management software.  Here is a page from a Google search I did that lists 10 systems you can evaluate: https://butterflymx.com/blog/m...

We've used Resman, Appfolio, and Yardi and each has differences that make your personal preferences important.

@Joseph Humphreys The previous suggestions are excellent.  You should search for multifamily meetups and events, either in your area or events that have large CREI attendees.  Look for events put on by the names you recognize from online searches or podcasts and find out what you can about the events.  But talk to others on BP or other online channels to find out if the events you've found are more sales pitches for the sponsor's coaching or other programs.  Many will be fine, but others are just to get people to spend more money on programs of moderate value.

Finding partners is about networking and meeting people to find people who you are compatible with and who need help from less experienced people.

The networking was excellent at DML.  It was especially refreshing since we haven't seen many people in person since early last year.  I'm planning to go again next year.

@Ryan Van Duyne  It is a bit more complicated than that.  I would recommend you read Joe Fairless' book "Best Ever Apartment Syndication Book" or Kim Lisa Taylor's book "How to Legally Raise Private Money." You can listen to podcasts and watch videos on this topic, too.  Ultimately, you'll need to speak to an attorney to get the full story.

Limited Partners (LPs) in this space want you as a GP to be incentivized to do the best you can.  That means you'd need to offer a preferred return to the LPs before you get any of the cash flow from operations.  This is different than the question you are asking, though.

Having said all of that, to answer your question literally, you would split the net monthly profits 70% to LPs and 30% to you as GP and upon sale, you would do the same split of the final proceeds.  

The setup in your question, though, is not realistic, IMO, but if you want to talk more, please contact me and I would be glad to talk it over with you.

@Guy Idan, I recommend attending any of the several in-person real estate investing conferences or local meetups, depending on your interests.  It is best to meet people and develop a relationship and a sense of their principles.  Get some referrals by asking investors, contractors, lenders, attorneys.  This is a business that attracts a lot of sharing and good folks, but also a few less than stellar people.  Do your due diligence on potential partners.  It is more important than finding deals.

If your interest is in fix and flips, wholesaling, or small multifamily, local REIAs might work best.  For large multifamily, several of the name coaches and investors have conferences of 200-800+ once or twice a year each that are excellent for networking.

Investors have multifamily meetups in cities all over the country, too.  Do a google search for "multifamily meetup" or similar search in your city.

Good luck!

@LaShelle S. Congrats on your interest in such a rewarding business.  I am not from your area, but I would suggest you keep listening to podcasts and Audible books and searching online for a real estate meetup in your area or in an area where you drive to (assuming you stay overnight).  Your best bet is to find trustworthy partners who are experienced and need some additional help.  The biggest factor is if you can trust your partners.  This business is a team sport.  Experienced partners can answer questions and provide guidance that helps reduce mistakes and reduces the time it takes to learn the business.  Good luck!

@William Costello, yes, I'll be heading there tomorrow.  Looking forward to it and meeting you there!