All Forum Posts by: Joshua Ferrari

Best Ever Apartment Syndication - Joe Fairless

Traction - Gino Wickman 

Extreme Ownership- Jocko Willink 

Advanced Tax Strategies - Amanda Han and Matthew MacFarland

So Good They Can’t Ignore You - Cal Newport

10X Rule - Grant Cardone

Raising Private Capital - Matt Faircloth 

Vivid Vision - Cameron Herold 

The 4 Hour Work Week- Tim Ferris 

The Miracle Morning/The Miracle Equation - Hal Elrod

The Hands-Off Investor - Brian Burke

Rich Dad Poor Dad/Cashflow Quadrant - Robert Kiyosaki

Never Split The Difference - Chris Voss 

Crushing it in Apartments and Commercial Real Estate - Brian Murray

Multi-Family Millions - David Lindahl

Wealth Can’t Wait - David Osborne 

Miracle Morning Millionaires - David Osborne

Retire Early with Real Estate - Chad Carson 

I’m sure I’m missing a million others, but this ought to be a good start! 

Multifamily Syndications will give you the utmost freedom in your investment. I’m actually a multifamily syndicator located in Mobile, AL.

Brian Burke just came out with his book “The Hands-Off Investor” which goes in depth on how to vet syndicators and how to find the best opportunity for you. I highly recommend the book.

Continue to educate yourself in exactly what it is you’re looking for and what best suits your needs before approaching any syndicators.

If you need any additional information on how to vet syndicators, or what a good investment really is, there’s tons of forum posts on the topic of syndications.

All in all, I recommend lots of learning before jumping into anything. I’m happy to help if you need any additional information!

Yes. Small, local banks & credit unions. Typically you only have to create a checking account with them to be able to pre-qualify. 

Lending is going to be hard right now. I’ve talked to all of my lenders and they all recommended that, if I don’t need to buy right now, then I should wait it out. Unless the deal is piping hot, any subpar deal just requires too much capital upfront to make returns worth your while with all the new lending requirements. 

That’s not to say you should walk away from this deal. Triple check that the deal has a large profit spread and if so, then it’s still something to consider, but your numbers have to be spot on. In such a volatile market, there isn’t much room for error. 

Another issue I’m seeing in the multifamily space, is that we have no idea where collections will be in the coming months due to COVID-19. There’s even talk of a bill being passed completely suspending all rents and mortgage payments for an entire year. I wrote a blog post on it today if you want to check it out on my website. 

Cap rates seem to be changing slightly as well. How much? We have no idea. It depends on the longevity and severity of this pandemic. 

If you buy now, the market could drop, even if just a little, and it could plateau there for 1-2 years. Multifamily specifically is beginning to see rents plateau in most areas and even decline in some. (First time we’ve seen that in decades) 

Real estate is seeing a lot of changes and the key is to be constantly watching all of the changes and trying to figure out what the new “normal” will be in the market place. 

Agreed with @Brian Garrett. Keep that kind of information to only close, trusted friends & family. 

There are tons of different ways to get lending. Hard money loans don't typically look at you so much as they look at the deals ability to produce sufficient income for the debt service. However, hard money comes with points (fees charged by the lender) and typically a higher interest rate. 

If you happen to know anyone else with a big chunk of money you could consider private money. Then you two can hash out all the terms amongst yourselves and leave the big banks out of it. 

Owner financing is also a creative option to getting deals done. Your ability to solve the sellers problem could score you amazing terms that make the deal extremely lucrative for both you & the seller. 

Commercial loans as well would be a prime opportunity due to the fact that they too, don't look closely at your personal financial situation. 

You could also try partnering with someone that does have proof of income and split the equity or pay them a fee for their contribution to obtaining financing. 

I'm sure I'm missing 1,000 other options. There's tons of forum posts on lending that I'm sure would help you have a better understanding of it all. You could also check out our website on my personal page that has tons of blog posts and podcast episodes on syndication and how that's another possibility for funding the deal. 

If you have $1M, and only need to invest $1M into it, I would recommend only using maybe 20-30% of your money and for the rest use OPM or a loan. That way you'll have an equity cushion when things go awry. You'll also be able to take the leftover 70% of your $1M and invest it into other assets in an attempt to diversify your portfolio so you don't have all your eggs in one basket. 

Say you invested all of your $1M into a deal and something went horribly wrong, like COVID-19 and the government mandated that you couldn't charge your tenants rent. Now you're screwed, and you've lost all of your money. Whereas if you only had 30% of it in there, your diversification would cushion you from the blow.  

Using OPM requires good character and great trust between you and the investor. Never take it for granted if someone is allowing you to use their money to invest in real estate. Take care of their money as if it was your own. 

I would highly recommend finding one and attending! I found my mentor/partner at my first REIA and having a relationship with him has made me tons of money, and helped me avoid a lot of costly mistakes. It takes you from slow to grow in your investing journey and allows you to scale a lot faster in the business through high quality relationships in your local area.

1. I would start with your own ability to close first. See what all your lending options are and have that squared away, with a few backup plans, just in case.

Lending is tightening up pretty significantly, as well, in all facets of real estate.

- LTV's are decreasing (Higher Down Payment)

- DCR's are increasing (Higher Equity in the Property)

- Lenders are requiring up to 12 months cash reserves in operating expenses at closing

- Interest rates are currently down

- Net Worth requirements are increasing

- Rate Locking for loans is being pushed back further and further in the closing process causing an unsettling of knowledge on whether the deal will make sense or not

2. Since the deal is only 8 units, it’s probably a mom & pop owner whom you could approach yourself, but it depends on your end goal. A lot of brokers already have close relationships with commercial sellers and could get you a better deal than if you went straight to the seller. You’ll just need to find out who the broker is, if there is one, and let them know you’re interested in the property. 

3. Typical due diligence jargon for multifamily properties includes: 

- T-12 (Trailing 12 months) Includes the last 12 months of operating expenses & typically any renovations they’ve done to the property 

- Rent Roll includes all current tenants, lease renewal dates, vacant units, rent owed for each unit, rent collected or not, security deposit info, etc. 

- OM (Offering Memorandum) The broker will have the OM only if the property is on the market. If it’s off-market there’s no need to ask for one. Every broker’s OM is different, but it’s typically an analysis of the surrounding area, their version of the financials, their version of a pro-forma (how they think the property will operate after you renovate or purchase the property), what they believe the cap rate to be if purchased at asking and if all their numbers are correct, pictures of the property, current property vacancy rate, etc. 

- Property Tax Information. The good brokers will send you what the current property tax info is & you can calculate from there what your new taxes will be based on your purchase price and what the city will say is your new assessed value times whatever the Millage Rate is for your area. Calling the city for a general idea is usually what you have to do for upfront due diligence. If you get the property under contract, then you’ll need to really narrow down what that number will be. 

This is mainly all you’ll need from the seller, and all other due diligence will be up to you. Be sure to have all your numbers right before making offers. 

4. I don’t see net worth being an issue for a property as small as this one. You could even go the private money or hard money route for something at $350K. If the lending route you choose to go decides they do require a certain net worth, you can always find a guarantor that will sign the dotted line on the lending that will, in essence, have them take on the responsibility of the loan in return for a fee or a percentage of equity in the investment. Their percentage, or fee structure, depends on the level of risk they are encompassing. If the loan is non-recourse, for instance, they might not need a higher return & vice versa. 

@Shyla Cooks 

It’s very specific to each person. We started out wholesaling, then switched over to a house hack/syndication, which has been absolutely phenomenal for us. 

Multifamily Syndication is the path we chose with our first real estate purchase, but we gained a lot of knowledge of the business through investor relationships and the wholesaling side of business. 

We’ve been doing multifamily syndication now for over 2 years. This is, without a doubt, my favorite niche. 

You could take the wholesaling journey, the house hacking journey, the buy & hold journey, the house flipping journey, the AirBnB journey, the BRRRR journey, or a plethora of other routes.

My recommendation is decide which one best fits your end goals and stick with that one. Best way to find good deals on small multis is via off market opportunities. Whether that be through a wholesaler, a direct mail campaign, bandit signs, yellow letters, billboards, word of mouth, etc. 

That will typically give you a lot more wiggle room on price. Now, I’ll also say the economy might be seeing a slight dip in pricing in the coming months. You’ll want to pay close attention to the “days on market” analytic on websites like Zillow. 

If you see properties on market for 60, 90, 120 days, prices are probably going to begin to drop in your local market. So, if you aren’t in any hurry, I would recommend waiting it out just a little longer because your opportunity might be a lot more lucrative in the coming months for whatever niche you decide to pursue. 

Lending is also beginning to tighten up quite a bit. I've seen properties at the closing table suddenly have reserve requirements sky rocket & LTV's decline (more money at the closing table) just because of the unknowns moving forward.

Before pursing an opportunity, I would have your lending 100% figured out. Even having a couple backup plans would help tremendously & increase your ability to make the best offer for you. 

Welcome to BP & to the beginning of your real estate investing career! I’m an active multifamily syndicator in Mobile, AL.

There are tons of different ways to get started. First and foremost, you have to be in this for the long haul. This is definitely a “get rich slow scheme” but it’s an extremely lucrative journey! 

Real estate is all about relationships. If you can have a relationship mindset in this business, you’ll more than likely be successful in the long term. 

Gaining accredited investor’s, lender’s, & broker’s trust, is going to take a long time before they see how truly serious you are. Being consistent and active in the business is key to beginning to gain trust with these individuals. 

My best recommendation in the current state of our economy is to learn, learn, learn. Educate yourself as much as feasibly possible & begin calling other local investors in your area who are doing the same thing you want to be doing. If gaining a mentor is an option for you then that would seriously catapult your timeframe to success. 

You’re welcome to check out our website, which you can find on my personal page. We’ve got tons of blog posts, newsletters, & podcasts about this exact niche. 

1. Education

2. Relationships

3. Trust

Definitely depends on your local market. Look at other rentals in your area with the same bedroom/bathroom count that have some amenities that you would like to add. See what they are able to charge and give them a call and ask about their occupancy rates.

Sure they might have a really nice rental in your area, but are tenants even interested in renting such a property? 

The absolute biggest value add component that you can administer is adding bedrooms. If you can buy a 3/2 and turn it into a 4/2 or 5/2, you can charge a SIGNIFICANT amount of rent more then you would be able to if you just kept it a 3/2 and made it look nice with vinyl or hardwood flooring, a brand new kitchen, a spruced up bathroom, and a new paint job. 

If you want to go that route, see what other 4/2 or 5/2 rentals are going for and what their amenities are. See how their occupancy rates are and what might you be able to do to your rental to allow it to cash flow the same. 

I’ve seen a spike in rent as much as $3,500 more per month due to 1 or 2 additional bedrooms. Granted, those were in primary markets, but the principal is still the same. 

In the units that we have renovated in my market, the thing that got us the biggest “bang for our buck” was adding washer & dryer hookups, adding new vinyl flooring or refinishing old hardwood flooring, new paint job, new appliances, countertops, & cabinets in the kitchen, & repaving the parking lot.