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All Forum Posts by: John Lyszczyk

John Lyszczyk has started 24 posts and replied 143 times.

Post: Starting out in Multifamily Syndications

John Lyszczyk
Pro Member
Posted
  • Rental Property Investor
  • Marine City, MI
  • Posts 145
  • Votes 230
Originally posted by @Chris Levarek:

@John Lyszczyk You are correct. The establishment of the legal documents will take you verbalizing your intentions and business plan to the securities attorney. Here is how the process works :

Start with a free intro call, usually available with an attorney, and layout what you plan on doing. They will show the weaknesses or strengths and provide inputs. If you feel they are a good candidate, you then proceed on structuring the documents together.

For about 3-4 weeks, the attorney will work with you to customize their existing template to fit your needs. If you want a 30/70 split, they will add it. If you want a specific affiliate named as partner, they will add it. If you want a butterfly museum as an acquisition fee they will add it, maybe...

As @Ashton Levarek, these can be customized and highly detailed. 40-60 pages of a PPM are not uncommon, hence why it takes 3-4 weeks to deliver it. ...And of course then you must reread it yourself to ensure you are not missing anything...

The second go around will be easier as you have your own template in place from the first unless the structure changes dramatically.

My recommendation is either invest passively on a deal to gain access to the documents and see firsthand how they work and the process unfolds. All documents even those you will not sign should be presented to the investor as Exhibits at signing, so can really show you what these look like. 

Alternatively, you can actively run through a deal and allow yourself the extra time with a qualified securities attorney to learn, gain feedback and review the syndication agreement, operating agreement and PPM.

Third, you can join a mentorship that will share such documents from previous deals or have an amazing partner/friend/mentor who will show you one.

Interesting how those three recommendations seem to align with the recommended steps from @Ashton Levarek how one gets into multifamily ;) It's almost like we are brothers.

 

Thank you for the help! I'm jotting down notes and circled "write in butterfly museum" lol

This gives me a clearer picture of what my next steps are. Sent you a PM. Once again, thank you for your feedback! It's greatly appreciated!

Post: WI: Starting Investment $?

John Lyszczyk
Pro Member
Posted
  • Rental Property Investor
  • Marine City, MI
  • Posts 145
  • Votes 230
Originally posted by @Abigail Ford:

@John Lyszczyk - Thank you!! As I am fresh out of college (and I stayed local for it) I am new to even the simple aspects of home/property buying hence why I wound up here. I was originally planning on doing my mortgage through my primary bank (a national branch), but they don't have any locations in Wisconsin! Any advice on if I should find someone here or if doing the mortgage process remotely works out okay?

I tell my clients to work with a local Mortgage Loan officer as their company will likely use local appraisers who know home values well in your area. In my experience, having a local MLO also comes with having a better customer experience. I have had clients use companies like Quicken Loans and on all occasions its been a bad experience. They often have either very little or too many communicators involved in transactions and they use out-of-area appraisers who aren't familiar with the market. Electronic documentation management is great, but most local MLOs can match that and offer the same great rates. I'd rather work with someone who I've met in person before. Just my personal preference.

Post: Starting out in Multifamily Syndications

John Lyszczyk
Pro Member
Posted
  • Rental Property Investor
  • Marine City, MI
  • Posts 145
  • Votes 230
Originally posted by @Ashton Levarek:

Hey @John Lyszczyk

So one of the first action steps regarding this would be to find good syndication attorney and set up a meeting. You don't know what you don't know of course so a way around all the fees for free information try and find/attend some meetups that host a syndication attorney as a guest speaker. You'll be able to ask all the newbie questions without racking up an enormous bill. @Yonah Weiss just hosted a great virtual meetup and the presenter had an awesome presentation on syndication requirements, stipulations to raising money, etc. (We actually run a meetup of our own that does much the same thing - if interested PM for details)

But that said, there are about 101 ways to structure a syndication. Each lawyer will likely have one they prefer and recommend which is why it'll be beneficial to hear more than one take on that subject. For example for our first syndication we actually completed a 504 offering because that was what our attorney recommended.... we learned a lot on that first one. (The most common offerings are 506b and 506c.) @Chris Levarek - care to weigh in on this one?

Hope that helps. 

This was very helpful. I will send you a PM for more info on Syndication meetups. I'd like to attend if they are virtual, but would travel if necessary. Thank you!

Post: First move in my REI adventure

John Lyszczyk
Pro Member
Posted
  • Rental Property Investor
  • Marine City, MI
  • Posts 145
  • Votes 230

@Brian Ricard Welcome! Thank you for your service! To reiterate what @John Walter said, start with the end in mind and work towards it. Are you looking to continue to house hack and back fill tenants as you continue to acquire more properties? How many are you looking to acquire? Timeline? Established what your 1,3,5 and 10 year goals are and write out a plan. 

If you're looking to establish rentals for passive income while you work, then I think renting it out and refinance cash out to acquire more properties would be a good move. If you think selling would be more profitable and allow you to buy a property with better cash-flow then that also would be a good route. 

In summary, establish what you want to do long term and take action on it. Best of luck!   

Post: Starting out in Multifamily Syndications

John Lyszczyk
Pro Member
Posted
  • Rental Property Investor
  • Marine City, MI
  • Posts 145
  • Votes 230
Originally posted by @Ashton Levarek:

So my brother/partner, @Chris Levarek, and I often get asked how can someone get into large multifamily investing? 

They love the better economies of scale, they love the tax benefits, they love the idea of not having to be an expert on it all but just being able to focus and excel in one area, while also working on a team and contributing toward a unified goal. 

But.... How do I get started in syndications for the purchase of 50, 100, 200, plus unit properties? 

So after a long talk we realized that there are 3 common ways people get started... and become successful, and we've actually used 2 of these methods... somewhat effectively. 

The three most common ways to get into large multifamily investing and apartment syndications.

1. Pay for a mentorship - Pros - get access to their network, professionals, and advice. Cons - Often a large deposit is needed, no guarantees on deals though - still have to do the work

2. Go it alone, self educate, learn through trial and error. Pros - Bigger returns possible, lessons learned are likely learned from making mistakes, and therefore will be remembered better. Cons - Higher risk of mistakes, failure, takes even more work, and slower to scale

3. Partner with an experienced team on an active deal, either as an active investor (General Partner) or a passive investor (Limited Partner). Pros - learn through their deal, earn returns while you learn, see everything develop in real time. Cons - still have to do your due diligence on the team, the market and the asset itself (but above all you MUST know and trust the team - cannot say enough about this - the numbers and market don't mean squat if the team cannot execute).

We actually started with #2 in October 2018, buying small residential multifamily deals - duplexes and quads. Then in Jan 2019 we completed (stumbled through0 our first syndication on our own. We quickly realized that partnering was going to help us scale much much faster, and allow us the benefit to learn from their experience, as well as pick an choose what we liked from their processes/system of acquiring a large property and executing such as massive business plan. So when a larger and more experienced syndicator saw what we were doing and asked us to partner on their next deal... well it just made sense. And now we're closing on a 220 unit, with another 2 lined up behind it. 

Hope that helps.

Thanks for sharing, Ashton! Not sure if you can answer this, which it's fine if you can't, but I am curious about legal documentation when structuring the deal with GPs and LPs. Did you explain to a lawyer what you wanted to accomplish he was able to put together a LLC and other legal documents to spell out rules, responsibilities, earnings allocations, etc? Is there a set of documents that I would need to become familiar with if I wanted to start my own syndication?

Not asking for anything super detailed, but rather a starting point so I can do my own research and work. Any feedback would be greatly appreciated!
 

Post: Rental Payment Management Software

John Lyszczyk
Pro Member
Posted
  • Rental Property Investor
  • Marine City, MI
  • Posts 145
  • Votes 230
Originally posted by @Chris B.:

The biggest issue I had was finding a system that allowed for me to charge a daily late fee for late payments. I charge $10 a day, per day to encourage the tenant to get the rent in. With many of these types of systems, there is one late fee on one day and that's it. I don't find that effective in encouraging payment once they are already late as there is no additional motivation. I'm giving Innago a try starting in August. I find their UI to be non-intuitive / challenging unfortunately, but support is good and it has the capability to do what I need.

I charge a $10 per day late fee as well and I can understand your position on trying to encourage tenants to pay on time. It would be nice for the amount to reflect daily what they owe. I'll have to check out Innago. Thanks for your feedback man!

Post: Rental Payment Management Software

John Lyszczyk
Pro Member
Posted
  • Rental Property Investor
  • Marine City, MI
  • Posts 145
  • Votes 230

@Lucas Miles Thank you for the suggestions! I am going to do more research on buildium, TenantCloud and RentRedi. Much appreciated! 

Post: WI: Starting Investment $?

John Lyszczyk
Pro Member
Posted
  • Rental Property Investor
  • Marine City, MI
  • Posts 145
  • Votes 230
Originally posted by @Abigail Ford:

Hello BP!

I recently made a cross country move to Wisconsin following my college graduation. This means I'm not overly familiar with the local market (I would like to stay local for my first investment[s]). I have been reading and studying rental property investment and have saved up $20k to get started in my real estate journey. I am interested in achieving steady, passive income so that I don't have to work full time anymore and can be a stay at home mom. I currently work for a property management company who oversees condos, and am onsite in the office to help residents. I would love to be able to manage my own property but definitely need to learn more about what goes into that. I have set a goal to have purchased a property (I am looking at either single family homes or a possible duplex/triplex, depending on what I discover as I continue to study to the area) or at least be actively looking at deals before the year is up. 

My question is: what ducks should I have in a row before making the plunge and purchasing my first property? I would like to have some savings left over for personal emergencies and other misc. costs - so I will continue to save. What costs should I expect, other than a down payment and closing costs? Are there any ballpark numbers to know I've saved a comfortable enough amount? Do I need to have established an insurance policy, found a management company beforehand, etc? I'm basically just looking for clarification on the sequence of events I should be following.

Thank you in advance for taking time to read/reply!

Hey Abigail,

Other than closing costs and down payment I would anticipate two additional costs when buying a single family homes or 2-4 unit homes: inspection and appraisal. These can range from $250-$500. This will be paid before you close on your house. As far as insurance goes, you just need to get a quote for coverage on your home before closing. Your Mortgage Loan officer should be able to give you an relatively accurate estimation of total closing costs and monthly payment well before you arrive at closing.  

Post: Brand New to Investing, Seeking Advice

John Lyszczyk
Pro Member
Posted
  • Rental Property Investor
  • Marine City, MI
  • Posts 145
  • Votes 230

@Jake Abbatacola Welcome! Read "Rich Dad Poor Dad" and "Millionaire Real Estate Investor". Very good books for staying motivated and educated. Save, save, save. If you have a private money lender willing to lend you the money for say 3 to 5 years that wouldn't be a bad route to take as long as you can make the payments and satisfy the note within the terms. 

If you're not buying you need to be learning about your markets you want to invest in and the processes you'll need to implement when you're ready. If you're looking to buy rental properties, then you'll need to start educating yourself or gaining experience in the following areas:

-landlording/property management (lots of learning here)

-Financing options (FHA,Conventional, Private Money, Hard Money, Cash-out Refi options etc.)

 -Networking (MLOs, PM Lenders, mentors, Real Estate Agents, CPA, Attorneys,etc.)

-Finding and negotiating deals

Lastly, I would say manage your lifestyle and be mindful of what they call "Lifestyle Creep". Monitor your income and mitigate expenses. I took an extreme approach to lifestyle management and being a minimalist, but it pays off when you realize how much money you're saving. 

Good luck and I wish you the best on your journey!

Post: 2020 House hacking in Atlanta??

John Lyszczyk
Pro Member
Posted
  • Rental Property Investor
  • Marine City, MI
  • Posts 145
  • Votes 230

@Christopher Johnson Hey Chris, I'm not from Atlanta, but I thought I'd share my experience briefly and lend some advice. House Hacking is a great way to start off considering that you'll not only offset the cost of living, but as a result you'll gain experience in landlording and managing rental properties. If your goal is to scale, you'll learn quickly on what you need to do to accomplish that. 

I'd start by researching financing solutions that are available to you. Maybe reach out to a few MLOs and ask them how to get started. Maybe get preapproved? Secondly, start researching your market and driving to those areas of interest. Real Estate agents can be some of the best resources when it comes to finding out information on a specific market. Call them and ask them questions to find out more info. 

If you plan on renting out a room of the house you plan on living in (Single-family) keep in mind that you may be seeing/spending a lot of time with this person, so finding someone who is like minded or has qualities that you like is very important.