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

@Alex Scott, In addition to getting input from BPers, I'd recommend you check out a book or two.  

Best Ever Apartment Syndication Book by Joe Fairless, Apartment Syndication Made Easy by Vinney Chopra, and How to Legally Raise Private Money:  The Definitive Guide to Syndication and Raising Money for Real Estate and Small Business by Kim Lisa Taylor will all help you understand syndications better.

@Justin Martin, more information would be needed to determine whether this is a reasonable investment.  These requirements can be normal for an older building or in an historic district.

If this is one of your first investments, you need to find a very experienced partner who has experience with the same issues you are facing.  Ask brokers, lenders, appraisers or others in the business to recommend a trustworthy partner.  This is not an investment to do without an experienced partner.

If you find a trustworthy, experienced partner, you should be sure to learn everything you can about each step of the project so you gain as much knowledge as you can yourself.  Each investment you make helps you learn more about the business that will help in future deals.

There's an old saying.  When a man with money meets a man with experience, the man with experience leaves with the money and the man with money leaves with experience.  Be sure your partner is well thought of by multiple people.

Good luck.

@Kyle Woodruff, you should also get Brian's book, The Hands-Off Investor, An Insider's Guide to Investing in Passive Real Estate Syndications, which, although aimed at passive investors, has a ton of excellent information for all of us.  Brian explains how to analyze offerings for exactly the kind of question you have and many more.  I highly recommend it for all investors.

@Ricardo Louis, it depends on the type of deals and the role you want to play, although, the sources are similar. If you are an active investor looking for SFH and residential multifamily (<5 units), the sources @Evan Polaski recommends are excellent.  

If you are a passive investor looking to invest in deals offered by syndicators or operators, I recommend you attend any of a number of multifamily conferences that attract both active and passive investors, but focused on larger commercial multifamily properties.  Google search for names like Joe Fairless, Neal Bawa, Michael Blank, Dave Lindahl, Jake and Gino, Rod Khleif, and Dan Handford.  They all put on live and/or virtual conferences where you can learn about the business and network with investors who can answer your questions and possibly become partners.

Sounds like a good, basic plan.  When you know a unit will turnover (ask tenants early if they will renew or leave), start advertising the unit asap.  Keeping units occupied as much as possible makes a big difference.

Assuming you'll renovate some units, be sure you have the funds for the rehab expenses set aside and try to keep turnover as short as possible.  Schedule the construction crew (if not you) as early as possible, too.  

Good luck!

@Joseph Yallop, congratulations on this deal!  A walk-through is your opportunity to verify every unit's condition, develop specific rehab requirements for the property, and find any surprises you did not expect.

Be sure you inspect every unit.  In my first walkthrough, I took notes, but I did not have insepction software to make the note taking easier.  I had to manually go through my notes to tally up all the work that had to be done, find the urgent fixes (water leaks, etc.) for maintenance, and put together a detailed budget.  Even having a spreadsheet would have been better than my manual notes.

Look for priority maintenance needs: water leaks under water heaters, inside under sink cabinets, clogged air filters, dripping faucets, etc.  For significant maintenance repairs, have the seller fix them.

Don't accept the seller's claim that certain units can't be inspected for any reason.  That's a red flag.

Good luck!

@Sam Shah, the bigger issue, in my opinion, is liability, much more so than a few dollars.  I am not an attorney, but I would strongly urge you to seek legal counsel who handles commercial real estate and asset protection issues.  

If anything negative happens while owning multifamily properties in your personal name, it puts your entire estate at risk, including other real estate.  It is very easy to do proper asset protection and not that costly.  If you are going to be in this business for the long run, why take the risk?  Even a relatively minor setback could take multiple years of legal hassles, thousands in legal expenses, and delay or force a restart in building your wealth which would have an even longer impact on your retirement date.

Definitely shop around for commercial loans.  Rates are historically low and closer to residential than what you wrote about, at least from what I've seen.

Good luck, Sam.  

@Jonathan Bell, an SEC attorney is your syndication attorney.  He/she will create the legal structure and the documents you need for your syndication.  You should interview several to see which one best fits your needs and personality.  This attorney can be located anywhere.  Some you might want to check out are Kim Lisa Taylor, Jillian Sidoti, Mauricio Rauld, and Dugan Kelley.

You also need a commercial real estate attorney who can handle the buy/sell transactions and knows the state and local laws and regulations. Some SEC attorneys do both or have other attorneys on staff who can handle the CRE transactions.

Good luck to you!

@Eli Epstein, it depends on location, construction, exposure to weather events, etc.  I invest in larger MFs, but I've seen prices from $350/unit/year to over $1,200/unit/year.  A commerical insurance broker should be willing to give you a quote for free.

@Dan Holtz, @Nitzan Mosery has a good idea.  It is almost always best to try to work out a solution that benefits all parties in a transaction, if they both want the transaction to go through.  Think of the ways you might structure the deal with the seller so you both win.