All Forum Posts by: Jordan Santiago

@Jordan Santiago could you share a link to the story. Sounds interesting.

 Jordan,

Sure it can be done. I've acquired 8.6% of what they have doing it longer because I focus on quality deals. That's why I never lost money even during the Great Recession of 2008-2009. In fact, I've made more money during that time. It remains to be seen if they will survive the next downturn.

I am not discrediting those guys though. Good for them. They're smart & they hustled - they bought right after the downturn and they aggressively raised capital. They probably gave away 90% of their equity (is my suspicion) in order to raise big money in a hurry. 

But, I only give up 30% (and sometimes 50% of the equity). In other words, even if I assume 50% equity, with the 1,000 apartment units I hold now, I am making the same money as someone with 5,000 apartment units who give up 90% equity and I have 1/5th the management headaches.

But going back to your question: how is acquiring 21,000 units in 8-9 years even possible?

1. Don't start with buying houses but rather partner up with established apartment syndicators.

2. Focus on finding good deals (100+ units as institutional investors love 100 units and above)

3. Aggressively raise BIG capital from institutional investors leveraging on the credibility and track record of established apartment syndicators (and give up 90% equity)

4. Hire out great PM companies

5. Do value-add on the apartments acquired 

6. Raise rents, raise value 

7. then Refinance to buy even more apartment communities

In other words, do BRRRR but with apartment complexes

Wow Michael, what a great response. Congrats on your success and thanks so much for the advice and tips!

Try reaching out to the "power brokers". They might seem a bit more serious, but make sure you're saying the right things and speaking their language too.  

Could you provide what asset class and size you're looking for?  Not all brokers are the same.   

For example, some multifamily brokers may only specialize in Class A or B that are over $20M.  While other brokers may focus on Class B & C under $20M.  Then there are brokers who focus on smaller deals.

@Luke Miller Has provided some sound ways to connect with brokers.  Then there is the tried and true way of just networking and going to event\conferences.

@Jordan Santiago

I'm sorry I realized I didn't answer your question as far as cons. 

I'd say a con is having to develop trust with a team, sometimes without meeting. With anyone you work with I'd ask to talk to past investors that they've worked with before. Ask to even be connected to an investor where the deal didn't go as planned. If they're great, they should be afraid to be a bit vulnerable and show how they corrected a hiccup. 

no problem. Good luck to you

It depends on your time horizon, but I'm seeing target equity multiples in my markets and syndicated deals in the 2.0-2.5x range. Typically syndications will be on a 3-5 year targeted exit. The dollar amount will be relative to the base rent amount, so a better question would be how much under market the rents are based on a percentage. There's also other ways to increase the income (coin laundry, storage, pet rent, etc.). For a newer investor, I would tend to think that a "light" value add project would be worth pursuing, such as one with rents 10-20% below market with some inefficiencies in management, expenses and vacancy slightly higher than the market average. If you find projects with rents far below market and high vacancy, it may be a deeply distressed property and it could wind up being a capital intensive endeavor.

First you need to analyze the surrounding area of your competing properties and determine what they are offering vs what your subject property is offering. Are you in the middle of rents? Bottom 20% of the market in comparison to comparable properties? Determine the rents in the market. A good indication of where you can position the property would be comparing it to the rents achieved in a comparable property where value has been added. Then it's just number crunching. How much rent are the competing properties getting in excess over yours? Determine that delta and then determine how much it will cost you to add the value needed to achieve those rents. The deduced projected NOI factoring debt and principal will be your expected return. As far as "what makes it worth it" is a question where the answer is specific to the investor. Different investors have different motivations and expected returns. Depending on the market, I would want at least 10% cash on cash.