All Forum Posts by: Joshua Christensen

Very Simple @Jaren Taylor.

You need an SEC attorney that specializes in Syndicates  and more than likely a transaction attorney to set these up for you.  Some will handle both for you.  

No legal advice here, other than get good legal counsel on those two matters.  You will need different attorneys in different states depending on where they are licensed.  

Billing is different for most and more than likely, you'll pay a retainer of some sort up front and have a balance due.  Different with each shop.

Sounds like you haven't done one yet.  Start with a small one on the first couple to work out your system kinks.  It will save you a ton of money upfront and you'll gain the experience to upgrade to larger deals.  

 Courtney, that's a great question.  I have another one for you.  In your 'assumptions' and projections, Would you rather...

1. Over estimate the costs and not need them?

2. Underestimate the costs and come up short needing the funds?

It's all in how conservative you are in your approach to underwriting your deals.

Even when a Seller says they've improved the property, the tenants are still tenants and do damage to brand new improved units.  They didn't pay for it, so they don't take care of it like an owner.

Before you make assumptions about costs based on a seller's contribution to improvements, find out what they improved?  Roof, plumbing, electrical upgrades?  Those should not need attention (in a perfect world) for some time.  Kitchens, flooring, windows, doors, etc.?  Well, those will need attention after every moveout.

This is where your tenant screening comes in.  You have to be on top of it without exception.

Best wishes to you Courtney.

When faced with scenarios like this, it's tough to answer such a specific question with limited information.  It is easy to provide well-intended 'bad' advice.

My questions to you would be... 

1. What will help you sleep better at night?

2. What decision is your significant other leaning towards, what stress is in your relationships?

3. What income streams do you have besides REI, or is this it?

4. What has your CPA / Financial advisor recommended?

5. What are the tax ramifications of a sale, if any?

So your debt is currently $3000 per month and your property earns you $1000 per month?  Is that a correct assessment?

@Nick Rutkowski Thanks for sharing this very painful experience.  Wow!

I've seen some doozys as well.  I agree that working with people is easier and more cost effective than the alternative.

As I read this, I'm considering creating a Cash For Keys written program that I can give my tenants at lease signing to remind them to come to me rather than just stop paying.  I'm not quite sure what it would look like, but I definitely want my units back in rentable condition with as little down time as possible.

Thanks!  Have an amazing weekend

Investment Info:

Large multi-family (5+ units) commercial investment investment.

Purchase price: $7,800,000

124 unit Garden Style apartment community located near Oklahoma State University in Stillwater, OK.

What made you interested in investing in this type of deal?

We are a General Partner in this Syndication.

How did you find this deal and how did you negotiate it?

Off Market Deal

How did you finance this deal?

Bank Financing

How did you add value to the deal?

We're improving units, management efficiencies and bringing rents to market value.

What was the outcome?

We just acquired it in Dec 2024

@Elvon Bowman, Congratulations on taking such a jump.  

I agree with @Charles Seaman and I'll add a bit.

1. You didn't say whether you're doing this on your own, with partners, or as a syndication.  Advice will be different on each path.

2. Are there going to be banks involved, creative seller financing or all cash?  That makes a big difference in the answer to what Charles eloquently referenced regarding confidence in your ability to close.  Sellers and Brokers need to know you can close.  They often refer to it as 'certainty of close' when reviewing offers.

3. Bigger deals can be a good angle to attack AND that being said there is a greater deal of risk involved.  Especially with newer investors.  You don't know what you don't know.  Trustin your PM partner is important and they will follow your lead, so don't expect them to provide you with your business plan.  PM's are there to follow YOUR plan.  You need to know what to look for, what to address, and have solid buisiness acumen to run a MF operation of that magnitude. Smaller deals may sound "small" and yet they can provide a great deal of experience.

4. If there are banks involved on a multi-million dollar deal, you will need a partner with experience for the banks to consider it.  Unless you're working with Private Money that is going to carry the risk of your lack of experience, banks want to see experience, Net Worth and liquidity after close to consider the terms.

I started with single family, four plexes, and remodel flips for a lot of years before getting into larger deals. Our first accepted offer was a 320 unit deal that we contracted, put up non-refundable (yeah, I know) earnest money, and thought we had our financing and money in place to do the deal. 2 weeks before closing a major (several million) partner pulled out leaving us short of the funds needed to close. We lost multiple 6 figures in EMD$. It hurt, a lot. It was like paying for multiple Master's degrees to get our "real world" experience.

I backed up, regrouped and went smaller to gain more experience.  Today we have 540 units in a few states and things are not without challenges.  We've had a lot of good experiences and some not so good ones.  Each deal comes with a different set of surprises even for the most experienced operators.

Take your time and don't rush it.  Your best teacher will be experience and that can't come from books and formulas.  You get out there and put deals together with your eyes wide open to avoid as much as you can.  Also be open to knowing that you are acquiring a series of problems.

You're in the solution business.  The seller is selling because of problems they may be facing.  You're inheriting those (some known and some unknown).  Your PM will create new challenges for you that you will have to face.  Your contractors, staff, and the financial markets will create challenges.  You'll have tenants that don't pay, damages made, and potentially other disasterous situations occur on your properties.  (I'm currently dealing with a lawsuit for wrongful death on one of my properties - fun right?)

The point is that most of the books and gurus out there will sell you the dream and get you hooked on buying into their programs without giving you all the nitty gritty details.

You're running a business and must treat it that way.  If you think you'll hand it off to your PM to run and take the great amount of passive income as your great reward, there is so much more to it.  

Caution.  Slow down to go faster.

Many blessings to you!  Happy New Year.

Hey there @Isaac Watson,

It's a great question.  It sounds like you are just getting started.

"Creative Financing" can mean a lot of different things depending on who you're talking with.  It mostly means you don't want to deal with banks initially.  Answering your question is hard as this is a pretty broad question.

Sourcing deals.  Networking, local meetups, door knocking, mailers, wholesalers, online forums specific to your area of interest.  

Best Route. That's a decision you have to make.  All strategies can be lucrative and all can be costly.  You need to determine the best route for each deal you do.  Have multiple strategies when you're putting deals together so that if one doesn't work well, you can pivot.  

House Hacking is a good route to get started.  Live in one unit - It's a great strategy when using a bank for financing as the down payment and interest rates are more favorable to owner occupants.  

The best advice I can give you for seeking counsel in online forums is learn how to ask specific questions and provide as much detail as you can.  The quality of answers to your are directly correlated to the quality of your questions asked.  

Example.  Chat GPT.  The more specific the input, the better the output.  People are no different.

Best wishes.

Hey there @Tayvion Payton!  Happy New Year.

I grew up in Dallas, graduated at Lake Highlands,  and my sister manages a complex in old East Dallas actually.  

Analyzing deals. You're buying a business, so you need to read the financials. Income and Expenses. You need to understand how to drive the Net Operating Income to produce a good solid return. Understand how to "add value" to the property and evaluate cap rates, IRR, cash on cash returns. There is a lot to understand, so pick up a good book. Brandon Turner here on BP has written a few good books to help.

Lessons Learned:  Never let your emotions get in the way.  When you're desparate for a deal, you'll find ways to "make it work" that may cost you severely in the long run.  Be patient and don't force deals.  If it feels forced, walk away.  Sometimes the best deals are the ones you don't do.

General Tips:  If you have the ability to manage a small 4 plex when you start, it can be an invaluable education.  You'll make a lot of mistakes which will train you what to look for in a PM.  The biggest differences between residential and commercial:  Scalability, financing are very different, property taxes may be different, Insurance is definitely different.  Never Assume anything.  Investigate and do your due diligence.  Keep your head about you.

Ask this question:  'What reasons should I walk away from this deal?" vs. "How can I make this work."

Finally, when you're talking to brokers, lenders, etc.  know that they earn their living on commissions.  They're not bad people, and they do want to spend their time with loyal clients.  Don't use them to get what you want or you may find yourself working with bad ones.  If you say you're going to do something, meet up or call them, DO IT.  Never ghost anyone.  If you ask them to write an offer, don't disappear for weeks at a time after you make the offer.  Be available and take those calls when they call.  They are working for free until you close a deal with them.  Respect that. Most investors don't and it is bothersome.

This is a people business, so take care of the people who take care of you.  

Best wishes.  I hope this helps.

Hey there @Llamier Guzman you have a good idea as a foundation.

1. House Hacking using the VA loan to live on one side while renting the other is great.

2. BRRRR all comes down to finding the right distressed properties at the right price, then identifying the right long term financing. Typically, the initial upfront for the rehab is either cash or a high interest loan (hard money or private). You really need to know your numbers well and build in some good cushion.

Tools I use to evaluate rentals and loans.  

1. Find a couple of lenders who lend in the area you are looking at.  Credit Union, Brokers, Banks (all have different advantage & disadvantages).  Ask them a lot of questions about their loan programs and the costs associated.

2. RE Brokers in the area are a key team member as they should know the area, good rental areas, and they will be a good resource for rentals (possibly, if they deal in rentals). Note:  Not all brokers are equal, so you really have to interview several to find who you're looking for to partner with.

3. Karl's Mortgage Calculator - This is a downloadable app for your phone.  It is invaluable to quickly calculate a mortgage payment.

3. Zillow has a lot of valuable information, but keep in mind that it's algorythms don't work in every market.  States that are non-disclosure don't have as much public information and Zillow doesn't have access to non-public info for their analytics.  Their system will kick out info, so be careful and verify what you see on there.  You can get an ok idea of what houses you're considering might be renting for (at least from a 'listed' price point) to guage how much you may be able to lease yours for.

4. Find a good property manager that you can bend their ear.  You'll need one when you move so identify one early to tell you how strong an area is for rentals.  They can be a very valuable resource when deciding if a property is a good investment or not.  

Real estate investing requires a good deal of research, so build your arsenal and over time you'll be an old pro.  Best wishes to you.

Hey there @Dalton Foote!  It sounds like you are off to a great start for 2025 and have a good plan.

Finding good deals is often the most difficult part of the process.  @Matthew Drouin and many others have good success with direct mail.  You need a solid proven system to find the deals.  

I've found deals in local online groups on Facebook, simply asking people for what I want.  I've built relationships with property managers who have distressed properties in their portfolios that can communicate directly to owners.  Many pm's are owners of a lot of properties.  

When looking at discounting properties to find a deal, I tend to lean into what the seller is looking for when I know I'm holding.  If I'm flipping, my discount needs to be deep to create a spread.  For a long term hold, time and my value add will create my spread.  Sugar wins a lot more deals than vinegar.  

Happy New Year and best wishes to you.