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

@Steven Kleppin, good thinking ahead!  In most multifamily companies I've seen, the PM is a separate company, even if the owner(s) is (are) the same.  That would be for asset protection reasons.  

One precaution is that frequently people hire attorneys or accountants who are not CRE investors themselves so the advice given is not from the perspective of an investor. This is an important requirement, IMO.

Otherwise, you've got a good start on the basic functions and roles.  

@Ashley Garner, we've used Kim Lisa Taylor and Dugan Kelley and been very happy.  You can also check out Jillian Sidoti, Mauricio Rauld and Gene Trowbridge.  From our contacts, all of them are very good and reasonable.

@Marquis Cobb, I recommend you read the book "Multifamily Investors Who Dominate" by Beau Beery.  It is an excellent read on developing relationships with brokers.

@Jeffrey Allen, good questions and good advice here.  

An SEC attorney can explain and advise you about the 506b or 506c structure of your investment offering or whether a JV structure is appropriate. Usually they also can form the LLC(s) which own the property. A syndication normally requires 2 or 3 LLCs which GPs and LPs separately own.

A separate issue you need to also ask for legal advice on is how do you own your % of each property.  I am not an attorney, an accountant or a financial professional, but I recommend everyone get proper advice from professionals who themselves are real estate investors.  A professional who does not invest in real estate themselves does not fully understand the issues that real estate investors face.  This frequently causes bad advice even though well intentioned.

Asset protection is critical.  Too many people, IMO, own property in their personal name instead of a corporate entity.     This exposes two way liability risks.  If there is an accident or incident at a property and you are sued, your other properties and personal assets are exposed.  Likewise, if you or a child of yours is cited for a vehicle accident and you are sued, the plaintiff can go after all of your properties.  Check with an asset protection attorney.

Good luck to you.

@Michael B., the reason I don't invest in Miami is the deals don't cash flow, typically.  We invest in other parts of Florida and other states, but if you need to manage your own property, you'll have to have patience finding one in Miami.  You might partner with another operator or two (or investor) to take down a larger property (>80 units) in Broward or Palm Beach so you can afford to pay a PM to manage the day to day operations.  Good luck!

@Jensen Escobar, another resource to learn from is Charles Seaman's live underwriting webinar on Saturday afternoons.  He sends a link with the deal before the live webinar so you can follow along and ask questions.  That should be very helpful and speed up the learning curve.  Register here: 

https://zoom.us/meeting/register/tJwld-yoqj4oHda_TRp8lbpZ1aA_hPXHqke2

That's the conundrum of your question.  There is no right answer except whatever is your preference and is why you need to get demos to see how they work.  Loopnet is definitely not what you are looking for.  Loopnet has mostly properties that haven't sold elsewhere and have been on the market a while.  I don't use it, but I've heard ProspectNow is very good for property ownership.  The problem with property ownership data is most commercial properties are owned by entities which can have names affiliated which are not the true owners.  Some databases do a better job of detective work in tracking down the true owners.  Part of the decision is what kind of reports do they have, how friendly and easy to use is the user interface, and, especially, how many and which databases does the service interface with and how well do they integrate the data from the various sources?  Again, it is a personal preference.

@Samuel S., to my knowledge, there is no national commercial MLS. Some of the mentioned databases have all of the public information from county assessors, but sales data is different. Someone can correct me if I'm wrong.

@Samuel S., you're asking a question similar to what kind of car should I buy, or what kind of dog should we get?  It's a matter of personal preference and you likely won't know that until you use the database.

But, you are correct, there are many services out there.  CoStar is the most widely used and has the most mature set of reports, but it is also a bit controversial with their business practices.  I'd suggest asking several of the services for a demo of their systems to get a better idea of what you like.  And prepare a list of questions about the specific information you'd like to get out of the system.

Having said all of that, a few more systems to check out or ask about include Axiometrics/RealPage, Propstream, ProspectNow (for owner data), Moody's/REIS, and others.  Another newer service is RockVal.  I have no relationship to any of these products and would urge you to look into these and others to see what fits your needs. 

@Yogesh M sayanakar, investing in real estate is always a personal decision.  If you were an experienced investor very knowledgeable in a local market and had intelligence of a significant change in the local market that would impact the valuation of properties in the area, then it might make sense.  As a first time investor who is learning the business, it is a much riskier proposition.  I have never invested in a negative cash flow property, but then I am not a developer and I am not only investing my money and my family's money, but that of other investors so I am a conservative investor.  My own view is it is better to invest in properties that cash flow positively or with other investors who can help you learn the business and after gaining experience you can choose to invest in higher risk properties.  But it is your decision.  Good Luck!