All Forum Posts by: Larry Caper

Happy to see another youngin' eager to learn and jump into the commercial space. You should meet as many players in the game as possible. However, I would focus on reading as much information as possible to have intelligent conversations with the team you'll need to build. There are many books out there that'll give you everything you need to get started. My mentor once told me, "the knowledge is not the barrier, consciously applying what you learn is." To further expound on his story, the commercial space is not as difficult as advertised, but finding team members with alignment of interest is the hurdle. That is the only difference between you and the seasoned guy owning 1,000+ units (you'll be a student of the game for life). Team members include the following (but not limited to): lender, mortgage broker, investors who trust you, property management company, third party companies assisting with due diligence and more. 

I'm in the Denver/Cherry Creek area, feel free to reach out and shoot me a PM.

@Scott Weaver I definitely agree with everything you are saying. However, I wouldn't focus on the cap rate so much when compared to honing in on value-add opportunities, appreciation should be a bonus. At the most basic level, if your underwriting is conservative, secure great financing with favorable terms, add value and increase the income, you are in the driver's seat. 

I'm located in the Denver area running the same play, feel free to reach out!

@Gary B. There are a ton of deal analyzers out there, some more complex than others. Michael Blank has a pretty nice analyzer. However, I would encourage you to build a custom model to reinforce the basics of underwriting and forces your to understand the big picture + granular details behind the "Why". 

@Ronald Gladden As you mentioned, there is not a one size fits all approach, be as creative as you want to be! However, before you invest, please make sure you are clear on the following (in order): 

• Why: What are the external and internal factors leading you down this path?
• What: Identify the MSA, city and neighborhood you want to invest in that is supported by strong criteria/metrics. The criteria you come up with will keep your emotions in control. Criteria should include: conservative underwriting, demographic metrics, population growth, income trends, employment, property management, etc. 
• How: Before pulling the trigger, make sure you have the right players on your team to help shoulder the load and look out for "blind spots".

There are many Apartment Investing / Syndication resources out there. However, the most comprehensive is the 'Best Ever Apartment Syndication Book' by Joe Fairless. Feel free to reach out, I don't mind sharing everything I have come across on my education journey.

@Jasper Cangelosi I'm not an accountant or an attorney. However, as many have already alluded to, hone in on the Master Lease strategy which does not trigger a tax event, but allows you to operate the property as if you own it. 

There is a ton of information littered in-between the sentences @Omar Khan is putting down. I would encourage everyone to sharpen the "real estate finance" saw in the toolbox by purchasing Peter Linneman's book 'Real Estate Finance & Investments: Risks and Opportunities'. The cap rate is not the holy grail because it applies to stabilized properties, only. 

@Derek B. Williams I'm in the same boat. A few books I've found extremely valuable thus far:

• The Millionaire Real Estate Investor by Gary Keller (more of a "mindset" book)
• The Complete Guide to Buying and Selling Apartment Buildings by Steve Berges
• How to Take an Apartment Building from Money Pit to Money Maker by Craig Haskell
• Emerging Real Estate Markets: How to Find and Profit from Up-and-Coming Areas by David Lindahl

Currently, I'm reading Real Estate Finance and Investments by Peter Linneman which is deep dive into commercial finance (the "boring stuff") which I find very interesting.

Industry Trends/News:

• Multifamily Executive Magazine
• Bisnow

@Keivan Darius Hit the nail on the head. The main idea here is: there are deals are out there to be made. A full owner financed at 4.5%, 30 yr am, 30% down with a 10 year ballon is a deal! 

Keivan - Quick question for you. I have not invested in a multifamily deal (yet), but I have been in the educational phase for a while before I pull the trigger w/ a few ex-teammates I played ball with. As it relates to exit during a potential downturn, where are you predicting interest rates to be which then directly affects your cash flow forecast?  Also, what type of structure/terms are you looking for during the refi at the 4-year mark if you plan to hold on to it for while?

@Hadar Orkibi & @Peter M. Thanks for the feedback, fellas! However, yes I understand you were simply providing an example, I just wanted to take his question another layer deeper to get an understanding of how you guys pull equity from a refi. Thanks. 

@Hadar Orkibi & @Peter M. I understand why an investor would pull out all of their equity to buy a larger property to generate momentum/wealth. However, from an asset management perspective, it seems like it is not wise to pull out all of the equity because you'll be over-leveraged with tons of debt on the books. Interested in hearing your opinion on how much (if any) equity should you keep in the property when refinancing.