All Forum Posts by: James Rader

I don’t think I’m making it more complicated than it needs to be.  I’m leaving no stone unturned and making sure I fully understand every aspect of the deal so there aren’t surprises later.  

For anyone still following, the GP’s accountant had already accounted for it.  I just reviewed the offering again.  The net levered cash flow was reduced by 25% prior to the investors metrics being calculated.  It’s all correct... I’m satisfied now!

Thanks for the replies, everyone. I've been speaking with the deal sponsor and understand their strategy and fees. I also fully understand why they claim a bigger piece of the pie- they're the ones doing all the work. I was just struggling to wrap my mind around the COC returns and how they apply.

I have an opportunity to invest in my first MF as a passive investor. The sponsors are putting 10% down for a 25% equity share. That means that the other 90% down only gets a 75% equity stake in the deal... basically your dollar has less equity power than the sponsors. Here's where I get lost: the COC return as a percentage would no longer be the same for the sponsor and investor, right? For the sponsors, it took less money to earn the equity share, thus a higher COC.... and the opposite is true for the investor. The offering I was given shows the projected COC return for investors, but not sure if it's been corrected for this.

Hoping I framed my question well enough and someone can clarify.  Thanks, BP! 

following this thread...

I'm currently looking in Baytown and La Marque, both seem to be beating the 1% rule. I recently had a realtor recommend some homes in the sunny side/South Park area. After some research and driving around, I'm pretty sure that's an area to steer clear of. There were quite a few nice looking flips for sale though. Haven't bought my first SFR yet, so take whatever I say with a grain of salt!

Have you found much in the Sagemont area? That's close to where you are.

@Eric Hyde, I'm still looking at both but I think you're right on that TK might be a good move on the first one.  One concern I have with the other option is the cost of maintenance. A TK should avoid a lot of maintenance costs the first few years. Even things that are minor could add up when you're paying a contractor to come out and I'm assuming the PM will charge for setting up the maintenance as well but might be wrong on that. As someone who is pretty handy it would kill me to pay someone to do things I could easily do myself if I were local and landlording.   So many things to think about!

@Jade S.- words of wisdom! Thank you so much for the reply.  If I could acquire a property from another investor that would be ideal. Having a history of rental income and vacancy would take some guesswork out.

@Account Closed thank you for the insight. I've been looking at some of the bigger national providers as well as one here in Houston. The Houston company buys distressed, rehabs, and sells direct to the investor. They don't do the PM to the best of my knowledge but contract with a local company.   

@James Wise, thanks for the idea!  I'll start looking for one in my area.

Hello BP,

I live in Houston and am looking to buy my first income property.  I'm planning to buy and hold and plan to use a property manager.  I'm military and move regularly so I want a hands off investment.  Naturally, I've been looking at turnkey companies buy have also been thinking of contacting a realtor to find a home that doesn't need a rehab and is ready to rent.  Searching on HAR, I've found a few that are already tenanted.  My thought is that I may be able to capture more equity if I find a deal outside of a turnkey provider.  Thoughts or advice anyone?

More info- I'll be using conventional financing, 20% down.  I'd like to invest ~25K, so a property in the 100k price range.  Thanks in advance.

James