All Forum Posts by: Jeff Greenberg

Diversification is absolutely key, but the beauty of real estate is you can also be diversified in the different markets, and property types. You could passively invest in syndications, notes, private lending, and other areas of RE. You still need to do your dd but after that it is mostly passive

Looking for a PM recommendation for MF properties over 50-100 units in the south Houston area.

If you are familiar with these areas post or PM your information. I would like to talk to you about the area. Thanks

Valerie,

Unless you are going to have one or two lenders (first and Second lein)you are talking about pooling funds.. No grey area here. You are in the Security Zone. Very soon, mid September you will be able to advertise for "accredited investors". Consult an SEC attorney before you start.

Gathering investors is one thing, but getting someone to invest in you, yes you is another. What experience do you have that would interest investor. Investors of the caliper that you are looking for, can buy the deal themselves and hire staff to run it. What are you bringing to the table?

Before you are able to use OPM, you need credibility. This usually means experience and a track record. As stated above, this takes time. There are also things that you can do to expedite the process. Get educated, study the forums on this site, visit the book store and the library, attend REI clubs (the ones that believe in education not selling you something), find a mentor (someone that is doing what you want to do), learn to analyze deals, analyze lots of deals.

Your question was, how do you use OPM in a MF investment. Here is how we do it. Initially we use our money for the travel, ernast money, inspections, loan fees, lawyers fees, and other various upfront fees. Working with an SEC attorney we setup an LLC that will own the property.

A loan is taken out for 70-80 ltv. The investors will buy shares or units of the LLC through a Private Placement Memorandum (PPM) created by the SEC attorney. The funds raised are used for closing costs, down payment, capex, funding operations, etc.

All of our upfront costs will be reimbursed at closing. Our company will manage the entity and will receive cashflow and equity.

As far as how the ownership, cashflow and equity is split up depends on the deal. I have seen deals from a 50/50 split to a 75/25 split in favor of the investor. It all depends on how strong the deal is and what returns can be offered to the investor.

There are those that would be happy with all of a little pie, and those that would be happy with a small piece of a bigger pie.

At face value the deal looks great with an 8+ cap and a 15% cash on cash.

Let's look deeper. As Joel pointed out with ABP your expense would come in around 60% including management , but not debt. All of the numbers need to be confirmed. A 4.12 loan is not easy to get these days so you may have an issue with that. I would also say that this looks too good for a 2008 property. What do you know about the deferred Maint? When you figure cash on cash make sure you consider closing ang lender cost as well as capex reserves.

Lastly, what is the market occupancy and is this calculated in?

Good luck

@Venessa Redman coming from the position of a PM should be a great help to you when you are able to invest in your own property. This is a great place to start. Look for properties and underwrite them. We look at over a hundred properties before we find one that works to our satisfaction. Keep getting educated. Find a mentor that is doing what you want to do, and find a way to be of service to them. Pay your dues and learn from them.

Good luck

D Scott, I have no problem with the brokers prequalifing the client, and I have been asked for POF before being shown a property. It does sound like Janice did not pass the interview and received the brush.

Another reason that you neeed to come off as an experienced investor is this. When you start off building a relationship with a broker her/she will usually start off by bringing you all of the junk they could not move. Don't just throw out the junk and move on to another broker. Go back to the broker and tell them why this does not work for you. The more professional you come across in your analysis the more respect you will gain.

Good job keeping the emotions in check and letting the numbers do the talking.

10% does seem high. Seems that you should be able to get an 8% and no units for that size. That is what I am paying on a 20 unit in RGV.

I also dislike All bills paid as the tenant abuse the use of utilities if they do not have to pay them. See what is happening in the market. We are in the process of buying a All bills paid building where this building is one of three out of 40 properties surveyed that are All Bills Paid. The PM's we talked to have no issues with implementing RUBBS.