All Forum Posts by: Larry Caper

@Tyler Mundy Happy to see so many interested parties interested in MFRE! However, I think you should double down on education. At an extremely basic level you should understand and be able to articulate: investment criteria, underwriting best practices, property management, exit strategy, securities law, macro- and micro-economics among other topics.

The more comfortable you become you mitigate the risk of making a life altering decision. 

There are a ton on books and podcasts out there, but if I'm in your shoes, I would pick up 'The Best Real Estate Syndication Book Ever' by Joe Fairless and read (and reread) it until it becomes second nature. 

Enjoy the process!

As a young guy, I've watched guys younger than me get ahead of themselves for the sake of getting into the game (and they are making good money - for now). I get it, we all start somewhere, but it has to be a deal because anxious behavior will lead to destruction at some point when buying on pure speculation and future projections. The comments that you all (@Jonathan Twombly @Serge S. & @Mike Dymski) have submitted on this forum are invaluable. The typical, "what is a syndication" questions are fine for some (we all start somewhere), but every so often conversations full of wisdom are necessary, like this one. As a new synidcator, one who does not mind "taking the stairs" (studying reports, sifting through historical data, analyzing macro and micro trends, etc.) before making a decision, I find comfort in knowing what I've been telling my group of anxious investors (many of them young athletes) mirrors what you all are saying.  

It's really sad "gurus" are preaching to new investors (and syndicators) that MFRE is "recession-proof" for the sake of increasing their reach, followers, viewers and/or investor database. Thank you all for your wisdom, insight and transparency.  

@Nate Anderson Initially, focus on "going deep" rather than listening to 10+ podcasts - information overload! I would hone in on the three to five that thoroughly cover: market cycles/data, capital raising, underwriting best practices, securities law, due diligence, property management and biz systems. I would compliment the podcasts with information rich books that'll walk you through the process, beginning to end. 

Podcasts: 

• Old Capital Podcast by Michael Becker & Paul Peebles
• Lifetime Cash Flow through Real Estate Investing by Rod Khelif
• The Real Estate Syndication Show by Whitney Sewell

Books: 

• The Best Ever Real Estate Syndication Book by Joe Fairless
• How to Take an Apartment Building from Money Pit to Money Maker by Craig Haskell

With those few resources above you will have everything you need to educate yourself. The next phase is all sales and marketing, both you and the business. Brokers, banks, sellers and everyone else inbetween will do business with a guy they know, like and trust. Build the right relationships at the right time and stay the course, you will succeed. 

@Account Closed if his friends and family are expecting a return without being involved in the day-to-day (or have a role and/or responsibility), the equity raise is considered a syndication. 

Disclaimer: I am not an attorney. Please consult with a securities and/or real estate attorney.  

As others have mentioned, as the operator of the deal you should clearly understand what a syndication is before jumping the gun. A syndication is considered a security and there are certain laws you have to abide by before raising capital. Educate, Educate, Educate. 

More specifically, @Oleg Shalumov I have yet to do a multifamily deal due to the "experience" hurdle, we have access to funds, liquidity and net worth. As you suggested to Alum, "partner with a person who has a deal". How have you seen this structured when two groups partner on the deal, specifically for the group responsible for the equity investment? 

@Ismael Reyes Congrats! I cannot tell you how excited I get when I see people's hard work pays off. 

You are an inspiration to all aspiring operators. As you can see, there are a lot of people in the forum eager to learn the granular details surrounding how the deal was put together, structure on the GP-side and everything else in between. The is a huge opportunity for you and your team to scale quickly by creating transparent content. I know I'm preaching to the choir, but you know when the first domino falls, the others begin to fall a little faster. Buckle up and enjoy the ride! 

@Carlos Arjona I would say @Todd Dexheimer hit the nail on the head. 

The principle he's referring to (and what I refer to: Ready - Aim - Fire. 

• Ready: This is an opportunity to arm yourself with knowledge, wisdom and know-how from experienced players in the game. At this point, you are aggregating data points, criteria and ratios you feel comfortable with. At the conclusion of this phase, you know without a shadow of doubt what you want, how you want it and why you want it. 
• Aim: You have done the "hard" work in the previous phase. You know who you are, your risk profile and the type of deals you feel comfortable with. You place those deals which meet your criteria within your crosshairs. Anything out of your scope should be ignored. At this point, you are not technically looking to "disqualify a deal", you are more so "ignoring what doesn't fit your predefined criteria".  
• Fire: You are armed with knowledge, you know what to shoot at (and you know what to ignore), you are ready fire at whatever fits your criteria. 

Overtime your underwriting will become unique to your criteria and your eye will be trained to disqualify a potential deal.

@Manu Kaina IV I would start "shaking trees"! As you stated, the numbers make a lot of sense, you should be able to finance this deal with a commercial loan. Many people have listed great suggestions including: 

• Contact local owners of similar properties to further understand how they financed their deal 
• Contact local credit unions and community banks who are eager to partner
• Contact a regional bank who sees the value in the property 
• Visit a local REI group/meetup and gather as many referrals as possible

"If you want to go fast, go alone. If you want to go far, go together." 

Focus on surrounding yourself with quality/knowledgeable people and identify creative methods to find a "snowball" property, something that isn't out of your league that provides the proof-of-concept (and confidence) you need to level up. Yes, education is important to learn the fundamentals, but I'm a firm believer in learning on the fly and immediately applying what you learn.  

Much like yourself, I'm looking for my first commercial property (35+ units). My real estate mentor informed me, "do not focus on deal size, hone in on deal/team quality, the rest will take care of itself." Become clear on what your goals are, why you choose those goals and start building relationships with an alignment of interest to bring the goal to fruition.

As Seth mentioned, the strategy is dependent on the property, there is not a one size fits all approach. However, you will see a lot of individuals (and some groups) are overleveraged. In the event there is a downturn in the economy, vacancy rates creep or anything affecting top-line revenue, it will become difficult to service the debt (i.e., monthly debt payment). The more cash you can bring to the table, the better (e.g. for example 30% equity vs 20%). You also want to have cash in reserves for a "rainy day" (a tree puts a hole in your roof).