All Forum Posts by: Jeff Greenberg

Karen M.

I have to confess that I was able to get into Syndications years back through seminars. I knew that I did not have enough money of my own so I had to learn how to do it legally with other peoples money (OPM). Instead of putting the funds I had into small MF or SFH, I invested in myself and read everythig I could find, talked to everyone, and spent some money on a some select seminars. Some were a waste of money, but others provided a wealth of information as well as a wealth of contacts that I still use today.

The other people, started out to be friends or others that I or my partner had met over the years. Because the projects can span 5-7 years there is always a need to find more equity investors. I currently run two REI clubs, and attend 3 others. I meet people at chamber meetings and in my doctor's and dentist's office. There are many people that would love to invest in CRE, but don't have the time to: find the deals, get the education to be successful, or to asset manage the project. Our goal is to create the Synergy by bringing all of the pieces together and insure a successful outcome for all.

Great to see young people on BP. Now if I can just get my son converted.

Welcome Ben

Mark,

I don't think that we answered several questions. What is your goal is for the money? Will you be working another job or will investing be a full time commitment? Do you have any background in construction or rehabing? Do you need cashflow from this money or do you have another income to live on.

Not having those answers makes it difficult to provide you with good suggestions.

Mary Joe,

I can more easily answer your question of passive/semi passive investing. Depending on how much money you are talking about, my suggestion is this. First I would spend time getting educated on how to properly evaluate the type of investment you are interested in. I would not become a hard money lender, but I would provide private funds for an established successful HML. Let them do all the hard work and return you 10-12%. There are HMLs that will take the points up front and give the equity partner the full % return. Your job would be to double check the investment after the HML has underwrote the deal and holds the deed to protect your investment. You could also invest in fix and flippers, but only established ones with strong track records.

I would not suggest small MF that cannot afford property management. Your time is better spent finding more deals to fund, not as a property manager. If you like the comfort and security of low risk MF, find a syndicator with a good track record and be a passive investor.

As a passive/semi passive investor your job is to find projects to invest in. All of your time should be spent checking out the deals. No it does not have to be real estate, diversification is good.

I may be late to this tread, but I thought that it was such a good question that I put in my two cents anyway.

I buy multifamily properties through syndicated deals with multiple equity investors. We are also looking at self storage and senior housing.

Brian welcome to BP,

There are four legs to the REI chair. Money, Credit, Time, and education/Experience. New investors usually have time but not the other three. Go to REI club meetings and find people with the other legs that you are missing. BP is also a good source for meeting people.

You don't have to cut your teeth on SFR. You can start out with small mf or find someone doing larger mf and find out how can you be of service to them.

There are many ways to start out, even without much money.

Good luck

Mei Liu Congratulations on your investments. It seems that we are neighbors as I am in Agoura Hills just down the block.

The old cliché "cash is king" is very true in Real Estate. There are many things that you can do involving RE, but it depends on what returns you are looking for and how hands on you wish to be. You stated that you do not have a job. Will you be living off of the returns of your investment? Have you looked at the cashflow that you will require?

Hands on management is fine if that is of interest, but when it takes away doing things that will make you more money, such as finding more deals, then it is not such a good use of your time.

You can make some great returns 10-12% loaning your money to Hard money lenders and have them loan out money to flippers and rehabbers. They get to do all of the heavy lifting and you get good returns.

Southern California MF is down from where it was in 2005, but you are still looking at 5 or 6 Caps. We buy out of state and don't start looking at them if they are at least an 8 Cap at asking price with value adds.

MF is not something you should enter into without education and experience. You can make a lot of money and lose it just as fast. There is another discussion on BP where the MF vs SFH debate is being discussed. You may want to look at it.

Appreciation is not the name of the game right now, If you get it great, but don't count on it. Forced appreciation is another thing and MF does give you more options to force appreciation.

Jeff

Is 10 Cap the market Cap for this age property? I would guess not. 11k noi on a 140,000 purchase would be an 8 Cap. This is a 8% coc without financing. Getting a 75% ltv loan at say 4% will gets you a 14% coc return after debt service and you still have 105k to look for another deal.

"I think the building/grounds itself isn't worth more than 110k max given the area."

The building and the land is worth the income it produces. This not single family. This is commercial. What he paid doesn't matter either. i know properties that have increased in value over 100% in two years. Has the bulding and land increased in value, no, but the business that you are buying that use that land and that building is what is important.

It never hurts to try to get a lower price and owner financing. You need to verify all of the expenses. What is he leaving out. Is he self managing and are you going to.

Get a break down of all of the rev and expenses. Taxes: what are you taxes going to be after sale. Insurance: what is his coverage, Repairs and Maint: are your costs going to be in line with his or is cousin Bob doing the maint on the cheap. General admin: not much in the small props, but it costs for the evictions, accounting, legal. Marketing, Property Management. Contract Services: Pest control, Lawn Sometimes seller slip and leave expense out. Check out the numbers.

What is important to you? Cash on Cash return or cash flow. What numbers are you looking for?

It seems that my route was a little different then most of those previously mentioned. I came into real estate very late in the game and didn't and still don't have time to use the monopoly method of creating a portfolio. I did go to a seminar on investing in MF properties and became a voracious reader of anything on MF ownership and investing. I did invest, as a passive investor, in a syndicated portfolio investment and was able get a better understanding of the process.

My first investment was a 20 property in which I used none of my money and walked away with 50k at close. My partners and I own only 25% of the deal, while our investors own the other 75%. This property is in Texas and I am in California, with my partners in Alaska and Penn.

I continue to do investments with partners in Colorado, Texas, and many other states that are showing growth in this economy.

I continue read books such as McElroy's, and he also wrote a chapter in the Real Book of Real Estate compiled by Kiyosaki which I recommend. Books by Lindahl, Trump, George Ross, and others line my shelves

I also go to certain Seminars and conferences knowing full well that the "gurus" will try to upsell and very few of the attendees will ever perform. From these events I have gained groups of friends and fellow investors that I can call on. From this circle of investors I learn more and more. I attend 5 different REI groups including 2 I run as well as a mastermind group. BP is also a great place also to learn and meet people.

The four green houses to the red hotel is a great slow and steady way to wealth. I started much too late in life and don't have the time left for that.

My recommendation is this, read, read, and read. Find someone that is doing what you want to be doing and find a way to be of service to them. It doesn't matter if they are local or three states away. The law of reciprocity works.

There are many ways to skin the cat.

I don't know the Milwaukee Market, but I know in CA we might find a 7 cap in some of the smaller markets. If it is an 8 CAP, it is way out away from everything or a very bad neighborhood. You might try your smaller markets. You might also look for a broker that goes out and hustles up some off market deals. The good deals are going to go to those clients that he knows will close, so sure he thinks that you are a strong player.

The advantage also in the smaller market is the big players won't be interested. The disadvantage in the smaller market is it is harder to get a loan and it could be harder to get good management.