All Forum Posts by: Jeremiah Mon

@Spencer Joseph

For Value-Add Multifamily, you can forget about your entry cap rate. It doesn’t apply to unstable properties. Set your purchase price once you have everything else in your underwriting to get the returns you need.

Set you exit cap rate to be 50-100bps above from your entry cap; depending on the risk of that particular market.

@Jack Zhuang

Invest in large multifamily B/C class. We control the cash flow and force the appreciation of value instead of waiting for the market to go up.

Waiting for the market- They call that “hopium.”

@Ryan Wydler

Strongly consider @Stephen Glover and @Wes Ripley concerns.

@Joe Donohue

All valid concerns which is why I invest only in large B/C class 100unit+ apartments with long term fixed rate debt. The economies of scale and control will give you many advantages over a BRRRR.

I don't have a BRRRR myself but I would think you'd need good tenants with "recession resistant" jobs and be in a workforce B/C class area. The appreciated value of your 2-4unit would drop, but you could maintain your cashflow as long as you have good tenants.

In regards to your debt, it will be difficult to refi when the yield curve is inverted and banks aren’t willing to lend. In that case, make sure you have at least two 1 year extensions carved out with your lender.

Hope some of that makes sense. Everyone should be paying VERY closely to the market right now with crashing bond yields, trade wars, etc.

In the meantime, apartments are doing just fine. 🤗 ... unless your A class

@Shane Willcox

Commercial real estate is a relationship business. Your network is your networth. The more people you know, the more access to deals that you have.

The downside is, if you’re not vetting properly, you could run into a few wolves in sheep’s clothing. Integrity is always key. Find people who are positive an always growing in their personal development.

Success rarely exceeds personal development- Jim Rohn

Very important points @mike dymski 

-If a capital raiser has those sneaky fees and are not honest up front to the investor, one should not be partnering with that capital raiser. I believe there are also SEC regulations against such practices. 

- As a deal sponsor l, you have to explain how profits are split, and its outlined in the PPM. If they cant thoroughly explain that, then run. The LP split is for LPs, should never be touched by GP. For splits and carries on the GP side, that could be very very complex to the passive investors. Imagine a 20million deal. There are multiple sponsors and capital raisers involved in the deal and that GP pie can be cut up into many many pieces. Does a passive investor really want to know all that?

- I always tell my investors that my compensation is always on the GP side, never on the LP that could impact their returns. And i only partner with honest deal sponsors that do the same.

-never heard about sponsors giving GP compensation to high equity investors unless they need them as a loan guarantor. There has to be a valid reason why your active as a GP  per SEC regulations. You run the risk of an SEC audit.

@Maksim Easley

If you’re going big, you must have a mentor or a heavily involved partner with the track record and experience. Otherwise, educate yourself and go small, learn as you go.

Ready, fire, aim!

Continue to learn everyday and read books, lots and lots of books. Several have recommended fantastic books already, make the time to read them.

@Joon Kim

I think the biggest benefit is having more access to deals. Yes it can get confusing, but it doesn’t impact your return either way.

@Amy Wan pointed out that most deals are in a 506b structure, meaning you must have a prior existing relationship with a GP before being offered the deal.

-If you know the Capital Raiser only, but the Capital Raiser is a GP in the deal as an active “Acquisition Partner,” then you can be offered the deal without having that prior relationship to the deal sponsor.

In short, capital raisers can give you the benefit of more deal access without taking the time and effort to vet the sponsors yourself -although you’re free to do this yourself. You must know, trust, and like the Capital Raiser to do all the vetting for you.

The commercial syndication world is like a huge ecosystem of symbiotic relationships between many different organizations! Were just small fishes in the pond competing with institutions and sovereign funds. Lets help each other out and grow big together!

@Thuy Pham-Satrappe

I buy multifamily properties for cash flow, and “forced” appreciation as the cherry on top. 🍒

That means, value add. My focus is mostly on large 100unit+ deals, and investment criteria could differ a bit from small 2-4units, but generally same concept.

Cash flow is king. Financial independence is the goal.

@Davit Gharibyan

Simple, value is based on actuals, not projections.

However, it is a sellers market and will be for awhile. You’ll end up paying a premium despite the actuals.

Start with the end goal in mind- what are you investment criteria and projected returns?