All Forum Posts by: Kyle Bryant

I'm not a securities attorney, but I wish I played one on TV. My understanding is that Rule 504 and 505 each allow non-accredited investors, but 504 places a $1M on your capital raise (unlimited non-accredited investors, though). Rule 505 limits you to a $5M capital raise and 35 non-accredited investors, plus it requires certain extra disclosures. I would be interested to see which states no longer recognize 504s. They must have more restrictive state securities laws, which is always confusing.

There are people around here (and in Houston, too) who work full-time (or mostly full time) while investing in Multi-family deals. Some are passive investors, and some are syndicators, but the ones I've met all have outside jobs as well. Your most difficult task will probably be breaking into the multifamily market for your first deal.

@Bruce Petersen That makes sense. Thanks.

@Abel Sng I understand what you're getting at. I've come across a few deals where there was a great vision for the property without the ability to execute on it. In my mind, the co-sponsor would help with raising capital and guiding me in the execution of the vision for the property. But it's good to know where I should set my expectations. I don't want to be greedy, but I do want to get in the game.

Ok that makes sense. The investors get what they get, but they should know not to expect a full preferred return rate until later on. I am looking at a deal now that would have minimal cash flow for at least 6 months during rehab phase, so I was wondering how to pitch that to investors. Big upside, but they’d have to wait a while.

How would you suggest structuring a deal where the projected cash flows won’t cover the preferred return until year 2? Do you put a big kicker on the back end, or raise the preferred return for year 2? Or just leave it be?

Bruce Petersen how active do you generally plan to be in the management or repositioning of the apartment complex? Do you take an active role in rehabbing or repositioning, or do you generally lend credibility to investors and provide guidance for the newbie syndicator?

Experienced syndicators please weigh in for me. Have any of you co-sponsored a deal with a new investor? Under what conditions would you consider doing this? Are you looking for a certain percentage of the GP equity? (i.e., you want 50/50 of a 70/30 split). What characteristics would you look for in the newbie you are co-sponsoring with? If they are sourcing the deal, doing the dirty work, and trying to learn on the fly, what makes a co-sponsoring deal attractive, if anything? 

And to keep the discussion on topic, veterans weigh in here. Have any of you "co-sponsored" a syndication with a MFH newbie? One of the big hurdles to putting together a syndication, it seems to me, is that investors want to vet the syndicator and make sure he's legit, etc. Lenders also want to see the same thing. So it's a high barrier of entry for a first-timer. Hence the "co-sponsor" idea: find someone who has done a few MFH syndications as a principal, and then agree to split the GP equity portion 50/50. 

Has anyone successfully done this?

Originally posted by @Drew Shirley:

@Michael Le Thanks for the info on the meetup. I'll be there and I look forward to meeting you. We can hit up @Kyle Bryant for some free drinks.

 You may receive a free drink, but it'll cost you! I look forward to meeting some new folks on Thursday.

I'll be following this thread as I'm in the same boat. I've been listening to the BP Podcast episodes that focus on multi-family investments, and those have been really helpful. As an attorney, the legal side of things is really appealing as well, so I've taken a stronger interest in these types of investments.