All Forum Posts by: Gus G.

Hello All,

I have a question regarding margin loans.

Background:

My family owns about $40mm free and clear in multifamily (111 units - we live in a fast-growing metropolitan city). Recently, we sold our interest in a project and decided to 1031 the proceeds ($1.87mm) into a multifamily property. As everyone knows, 1031 only allows for a 45-day window to identify a replacement property and 180 days for closing. We ended up finding a great 22-unit property at $5.2mm.

Since we are in a competitive market, we wanted to offer the quickest closing possible, so we made the decision to go on margin to make up for the other $3.33mm as a temporary bridge loan and offer a 22 day, all-cash offer. The offer was accepted, and we closed on the property three weeks ago.

1031: $1.87 Margin: $3.33mm
Total: $5.2mm

Question:

The margin loan is attached to a larger investment account ($20mm+), so we have breathing room, should there be a call for margin. Margin loan interest rates fluctuate daily by several basis points, but currently, ours sits between 1.35% - 1.45%. The purpose of using margin was to close on the property quickly. But now that we've closed on the property, we'd like to shop around for a conventional loan, so we can lock in a low(ish) interest rate before the fed increases. Ideally, we'd like to refinance as much of the margin loan as possible, all $3.33mm. Where should we begin looking for conventional loans? What terms should we be looking for? This is our first time shopping the debt markets and would love any guidance. We are a small family office, long-term holders, with no outside partners.

Thanks!

Hello All,

I have a question regarding margin loans.

Background:

My family owns about $40mm free and clear in multifamily (111 units - we live in a fast-growing metropolitan city). Recently, we sold our interest in a project and decided to 1031 the proceeds ($1.87mm) into a multifamily property. As everyone knows, 1031 only allows for a 45-day window to identify a replacement property and 180 days for closing. We ended up finding a great 22-unit property at $5.2mm.

Since we are in a competitive market, we wanted to offer the quickest closing possible, so we made the decision to go on margin to make up for the other $3.33mm as a temporary bridge loan and offer a 22 day, all-cash offer. The offer was accepted, and we closed on the property three weeks ago.

1031: $1.87 Margin: $3.33mm
Total: $5.2mm

Question:

The margin loan is attached to a larger investment account ($20mm+), so we have breathing room, should there be a call for margin. Margin loan interest rates fluctuate daily by several basis points, but currently, ours sits between 1.35% - 1.45%. The purpose of using margin was to close on the property quickly. But now that we've closed on the property, we'd like to shop around for a conventional loan, so we can lock in a low(ish) interest rate before the fed increases. Ideally, we'd like to refinance as much of the margin loan as possible, all $3.33mm. Where should we begin looking for conventional loans? What terms should we be looking for? This is our first time shopping the debt markets and would love any guidance. We are a small family office, long-term holders, with no outside partners.

Thanks!

Hello All,

I'm new to this sub but I've been a follower for a few months. I have a question regarding margin loans.

Background:

My family owns about $40mm free and clear in multifamily (111 units - we live in a fast-growing metropolitan city). Recently, we sold our interest in a project and decided to 1031 the proceeds ($1.87mm) into a multifamily property. As everyone knows, 1031 only allows for a 45-day window to identify a replacement property and 180 days for closing. We ended up finding a great 22-unit property at $5.2mm.

Since we are in a competitive market, we wanted to offer the quickest closing possible, so we made the decision to go on margin to make up for the other $3.33mm as a temporary bridge loan and offer a 22 day, all-cash offer. The offer was accepted, and we closed on the property three weeks ago. 

  1031: $1.87                                                                                                                                                                                            Margin: $3.33mm
Total: $5.2mm

Question:

The margin loan is attached to a larger investment account ($20mm+), so we have breathing room should there be a call for margin. Margin loan interest rates fluctuate daily by several basis points, but currently, ours sits between 1.35% - 1.45%. The purpose of using margin was to close on the property quickly. But now that we've closed on the property, we'd like to shop around for a conventional loan, so we can lock in a low(ish) interest rate before the fed increases. Ideally, we'd like to refinance as much of the margin loan as possible, all $3.33mm. Where should we begin looking for conventional loans? What terms should we be looking for? Should we just sit on the margin loan? The margin loan is collateralized to bonds, not stocks. This is our first time shopping the debt markets and would love any guidance. We are a small family office, long-term holders, with no outside partners.

Thanks!

Hey everyone! I'm 26 years old and I'm looking for any advice on what direction to take my family's multifamily investments in the Seattle area. To give a little context, our family has been passively invested in real estate for 60 years. My grandfather started a construction company in New Jersey in the early 50's and by the end of his life had roughly 3,000 units under management. Five years ago, we decided to sell all of these New Jersey assets and 1031 a portion of the proceeds into Real Estate in the Seattle area. We ended up purchasing an $18.2million 54 unit building and a $12million 33 unit building + a condo ($31.5mm total.) All three assets are owned all cash.

None of my family has any real tangible experience in actively managing and owning Real Estate. Before we reinvested in Seattle, my uncle had managed the entire operation/management. Our side of the family, however, had no involvement. That being said, I am hoping to take over our family's operation of our Seattle buildings/condo (we currently have a 3rd party professionally managing). I've spent the past two years in the management field developing the relevant skill set required to competently manage both buildings (still have a long way to go). Now my question. In the meantime, while I'm gaining experience, we are looking to deploy/leverage the capital stored in both of the buildings to purchase additional units. We have little experience on the acquisition/debt side of the business. Where does everyone suggest we start? Who do we talk to first? We don't want to immediately expose our position to lots of risk - is putting 50% leverage on these properties worth our time? Our much should we leverage given our position? Any advice would be greatly appreciated!!

Thanks,

@Mayer M. @Chris K.Thank you both for the words. I would say half of our investment portfolio is in real estate, the other half is investment on the stock market (also professionally managed). So the portfolio is plenty diversified. However, I'm looking to take the family's Real Estate assets into my own hands and grow them. As mentioned, all three assets are owned all cash, and we are looking to diversify our real estate holdings but putting leverage on our holdings. I do not have the skill set to accomplish this. Do either of you have any advice as to who to speak to first? Any book recommendations? We are obviously going to need professional help, but who do we speak to first? 

Thanks so much for your time!

Hey everyone! I'm 26 years old and I'm looking for any advice on what direction to take my family's multifamily investments in the Seattle area. To give a little context, our family has been passively invested in real estate for 60 years. My grandfather started a construction company in New Jersey in the early 50's and by the end of his life had roughly 3,000 units under management. Five years ago, we decided to sell all of these New Jersey assets and 1031 a portion of the proceeds into Real Estate in the Seattle area. We ended up purchasing an $18.2million 54 unit building and a $12million 33 unit building + a condo ($31.5mm total.) All three assets are owned all cash.

None of my family has any real tangible experience in actively managing and owning Real Estate. Before we reinvested in Seattle, my uncle had managed the entire operation/management. Our side of the family, however, had no involvement. That being said, I am hoping to take over our family's operation of our Seattle buildings/condo (we currently have a 3rd party professionally managing). I've spent the past two years in the management field developing the relevant skill set required to competently manage both buildings (still have a long way to go). Now my question. In the meantime, while I'm gaining experience, we are looking to deploy/leverage the capital stored in both of the buildings to purchase additional units. We have little experience on the acquisition/debt side of the business. Where does everyone suggest we start? Who do we talk to first? We don't want to immediately expose our position to lots of risk - is putting 50% leverage on these properties worth our time? Our much should we leverage given our position? Any advice would be greatly appreciated!!

Thanks,