All Forum Posts by: Tom Lafferty

@Account Closed , I hope you dont mind me chiming in since you asked about Brian's deal, but hopefully it will give you another perspective in addition to his....

I'm currently working on a multifamily group purchase, and will tell you how your questions apply to my situation. I'm also evaluating someone else's deal this week that I may put some IRA money into as a passive investor, and their deal is structured the same way, so the info below will apply to both.

Interest rate: We will not have a preferred rate. Our investors will share equally in the return of the property, both in monthly cash flow as well as any capital gains at sale or proceeds from a refinance. This return is after a subordinate interest on cash flow and gains that will go to the sponsor, but only after all investors have gotten 100% of their initial investment back. The sponsor will begin getting the additional returns with the first distributions, but if investors have not gotten their initial investment back at reversion, any sponsor returns on those gains don't kick in until they do. There are also deals out there that grant additional equity up front for the sponsor. For example, an investor puts up $100,000 and the deal sponsor gets a percentage right away, regardless of performance. I don't like that setup because it gives money to the sponsor before they've earned it. A sponsor has to be careful with that structure because it can be treated as earned income immediately and would be a huge tax hit. If the sponsor was granted 20% equity in the $100k above, he'd show $20,000 in earned income.

Cash Flow Distribution: This really depends on the deal. On the passive deal I'm looking at, it has a lot of rehab, so there likely won't be much of a return the first 8-12 months, and this is clearly spelled out in the PPM. I know many people that invested in stabilized properties that began getting returns from day one, although distributions are generally made each quarter. On the amount, it seems to depend on the sponsor. I've seen some that distribute any money above a set amount in their operating account (say one months expenses + one months debt service), and some that kept a bigger cushion in the property's account.

Forgive me if all this is too basic, I just thought you might like to hear the perspective of a much smaller scale person than Brian!

I got it working, thanks Kathy!

If anyone thats attending tonight has long-term apartment investing experience, and would be willing to share, please find me. Or any experience for that matter!

I'll be there, having trouble with the RSVP page....

I assume you're talking slab foundation since you're having foundation work done. Retrofitting PVC would be horrendously expensive. Is he telling you that because the house needs to be lifted a great deal? I've had foundation work done several times and never had a problem with cast iron pipes. It does happen, but its not typical. The more they jack it up, the more likely you are to have problems.

$200-$300 each. Perimeter piers (most common) are less expensive than interior piers due to not having to break out and re-pour concrete.

Awesome purchase David! Do you mind naming the property, I think I may have looked at that one!

Where did you find 80% LTV?? I'm working with the main mortgage broker in town for C class properties and the best I've been seeing is 70-75%. I do know of some getting 80% non recourse Fannie loans, but not on value adds, and for sure not first-timers. I'd love to talk to them, I'll even say you referred me!

You don't have to give actual numbers, but isn't 3rd party management costing an arm and a leg on a 32?

Welcome neighbor! If you haven't seen it yet, there's a local meetup coming up. I think it's on the 30th. Just search for dfw meetup and it should pop up. I've got to work that night, but I went to the last one and its really great to be able to put a face to all the names you'll see on this site.

I hate to bring up gurus, as you will find that they are EXTREMELY discouraged around here. But since it came up in a joking manner, check out Sean Terry's podcasts on iTunes. Many will say he makes it sound too easy. Maybe. But if you want 100% free, very detailed information on how to wholesale, it's all there. How to market, what to say to sellers, how to find comps, buyers, rehab, EVERYTHING. All free. The podcast is "flip2freedom"

oh now that's just wrong! Actually I guess it's only fair since so many here have been buying poorly run properties from California owners. It seems many long distance owners are not quite the professional, diligent buyers/operators that you are.

I'm looking at a 104 unit this week that I think is way overpriced, but I've also been told they'll probably get their price. Ill let you know where they're from!