All Forum Posts by: Kyle Critchnau

I don't currently have anything in the Tulsa market (I'm in several others nationwide) but I've always got my eyes open for something around here. Be glad to meet you, let me know when you have dates that you'll be out here and we can figure something out. 

I'm also in Tulsa, I'm a former wholesaler turned multifamily syndicator. I'd be happy to get together over lunch or something while you're here, just let me know!

In syndication, the real estate aspect is only part of the experience required. A lot of people here on BP seem to only focus on that (not saying that's a bad thing, this is after all a real estate forum) but there's more to it. In any syndication, an investor is investing in the sponsor just as much as (or even more than) they are investing in the property itself. Now, as others have mentioned, track record can be (and often is) part of that. I've also seen other people bringing in family members on a deal, or investing out-of-market with their friends. In all of those cases, it's a personal relationship and trust that is most important. 

I say all that to say, any way you can build that trust is a good approach. Whether it's doing fundraising for a nonprofit, or simply telling everyone you come into contact with that this is what you're doing (the proverbial "elevator pitch"), or even being involved in the management of deals with an established sponsor (that's the road I'm taking personally), there are many ways to get to that point. 

@Scott Skinger like I said I haven't gone through it yet, that's helpful feedback for when I do get into it though. Thanks!

I just downloaded this: https://www.adventuresincre.com/all-in-one-underwr...

Haven't gotten the chance to look over it yet, but it's a pay-what-you can deal and I've had it recommended to me. @Michael Blank also offers the Syndicated Deal Analyzer that I've seen several BP members mention using.

One other thing: if you're a buy-and-hold, just looking for cash flow and not a value-add, then cap rate is much more important because your numbers are going to stay fairly flat. A value-add (raising rents, increasing occupancy, implementing utility billback, etc) is going to compensate for a lower initial cap rate. 

@Tommy Spijkers what constitutes "a deal" is going to be very goal-dependent. A syndication will be looking at overall distributable (to your investors) cash-on-cash return over a certain period (usually 5 years, sometimes more sometimes less), including equity at the sale at the end, whereas if you're buying it as a buy-and-hold, you'll be more interested in cashflow over an indeterminate period of time and treat it like a normal rental. You'll also need to include debt service during the hold either way. These are numbers that aren't included in many broker-provided calculations, and if they are, they're calculated using the same rose-colored glasses that the original pro forma numbers are.

Overall, though, once you decide your goal and what constitutes a deal for you within that goal, then you can go from there and evaluate properties using the specific calculation lessons from here.

@Tommy Spijkers others have given you good advice, particularly in regards to the lack of management and vacancy numbers. The central question is one that I don't think has been asked: is this your pro forma, or the broker's pro forma? Rule #1 of Commercial and Multifamily Real Estate: Never, ever, ever, ever, EVER buy on the broker's pro forma. Because the broker's pro forma will be the rose-colored glasses, everything works great, best possible version of the numbers. Often, they're not attainable right out of the gate (if at all), because you can't just go in and raise rents on the long-term tenants, and even if you are legally able to, they may all move out once you do. And then, you may have to spend another $100K in upgrades to get it there. I would recommend modeling a 5-year hold, using the T12 numbers for expenses and gradual rent increases to market rents, and find out what it would take to get there from the market. Once you've done that, then see if it looks like a deal from there.

One other question: what's your goal with this deal? Are you looking to buy it for yourself as a buy-and-hold? Are you wanting to do it as a syndication? Or are you wanting to do the analysis and wholesale it?

@Omar Khan makes a great point as well, 12-24 units may not be the best size for a syndication structure, though that partially depends on your market. What you can get 12-24 units for in California may buy you 100 in Oklahoma City or a smaller market. 

@Kyle Burkhardt That arrangement will be part of the operating agreement of the LLC that you form to purchase the property. Before they invest, they'll also need to have reviewed the private placement memorandum (PPM). You'll need an attorney for both cases. If you haven't already, I'd recommend checking out Joe Fairless' podcast, Bill Manassero's podcast, and the articles here on BP about syndication. There's a lot more to syndication than just the property (in fact, you can syndicate just about any kind of business, from real estate to a movie production to sheep), and the investment part of the deal is even more important than the specifics of the property.