All Forum Posts by: Jay Ben

Do you have a pitchdeck presentation?

@Jay Ben: Asking a syndicator how they are performing relative to their projections.

The question I ask is, just that: how are your deals performing today relative to where you projected to be at this point?

So if the sponsor bought a deal 8 months ago, they should know what they projected for month 8 in their underwriting.  Let's say they assumed they would have 48 units renovated by now.  They projected revenue would be at XXXXX for the month and expenses would be YYYYYY.  I ask them how that compares to how they actually executed for that month.  For the last 3 months, etc.

Per the original post, if you are only looking for syndicators that project the highest return, you are likely to end up with groups that are great salesman, but likely not the best operators.

@Jay Ben, the class rating system is generally subjective.

For properties: things like age and amenities drive the rating.  'A' is relatively newly built with a full amenity package: typically resort level pool, fitness center, dog park, in unit washer and dryer, playgound(s) if mostly family area, maybe covered parking/garages, etc.  Class B would be older (maybe 10+ yrs old) with the same amenities, or you could argue that new construction, but with cheap finishes and "bare bones" amenities, would also be B.

For area: it commonly comes down to crime, schools, and convenience/entertainment access.  Good schools and low crime, near interstate access but 15-20 min drive to major employment hub may be a Class B area.  

Again, there is no definitive way to break this down.  I seen deals marketed as Class B properties that I would certainly classify as C-ish, and yet have also described things as B, that others say "that's an A or A-".  I like walkable areas, so anything that requires full car use is Class B to C, to me, but others don't mind driving 20+ minutes for everything, so they think of those areas as A.

@Ian Davies, to echo Chris: I would be very cautious of "high" IRR deals in today's market. Personally, I perceive a fair amount of risk in the market. And if a group is out there projecting that 20% IRRs are still achievable for a typical value-add play, I get very suspicious, and ask for a lot of "projections vs actuals" on current deals to confirm their assumptions.