All Forum Posts by: Marc Weisi

@Arn Cenedella   Hahaha understandable. Will reach out.

@Arn Cenedella  Thanks for the valuable insight!  While I ultimately chose to not pursue either (see my post just above yours), it's because I've done what you said and gotten much more clear on my goals:  to scale up my portfolio through commercial multifamily syndication. Btw, I think I may have been on a webinar with you a couple weeks back hosted by Jerry Sanchez and Richard Coyne. Would love to connect soon!   

To add to what @Raymond Temprano said, once you have the list of a few competing roofers, try to get references for investors/owners they've worked with in the past (and call/email them) and maybe even a few addresses for jobs they've done. Then you might drive or send someone by those properties to see what kind of job they did. Lastly and most importantly in my opinion, try to meet them at their job site to see how they conduct themselves on premise. It's likely that if they run their other projects poorly and sloppily, they'll do the same for yours. 

@Michael Kunis DM me and I'll send you a list of PM's that we vetted about 6 months ago. I can also send you a questionnaire we developed to get a better feel for how each operates. Aside from the property itself, choosing your PM is probably your biggest decision as an investor, so take your time and educate yourself on what to ask. Happy to help however possible.

@Brandon Svitak  @Derek Mei  2 years later and...  I'm doing neither!  Instead, I'm focusing on syndicating larger deals vs. working on either of these side hustles. The reason comes back to my ultimate goal: to be investing full-time in the next few years.

 My conclusion after talking to a different inspectors, agents, and some of the most successful investors was this: If I'm trying to make real estate investing my full-time, then I should work on bolstering the areas I enjoy/am good at today instead of trying to do trades that only indirectly relate to my goal of becoming a full time investor. You see, I enjoy finding deals, raising capital, and acquiring properties but didn't think I could do this without understanding construction or having a way to find attractive deals. What I found out was that the greatest investors out there have team members for the things they're not good at/don't have experience with. Instead of spending time strengthening my weaknesses, I can put that time/energy into focusing on my strengths/core competencies and partner/hire out for the rest.

A couple of years back, I found a partner (@Gonzalo M. Trenosky) with complimentary skills and we're now working on scaling our multifamily real estate portfolio with each of us focusing on the sides of the business that we know and do well at. I hope this helps others out there that are swayed toward thinking that they have to do a side-hustle only indirectly related to their goal (if that's investing). If I had to boil it down: Clarify your goal and double down on your strengths. That said, never stop learning/improving those strengths.

@John Erlanger I agree 100%. As you said, it's how much investors are willing to pay per $1 of NOI.

@Elliot Vann   I think we're on the same page that cap rate shouldn't be used to assess whether a deal is worthwhile or not. Cap rate, to borrow a term used in financial markets, is a measure of risk premium first and foremost. Has to do w/ investor sentiment of the market more-so than anything related to investor returns. 

To dispel a common misnomer about cap rate, it's NOT what your return would be if you paid all cash. I know this is an un-popular view but it doesn't even account for transaction costs or initial rehab (on value add assets), so not even that is correct I'm afraid. Use it but do so in the context of other, more meaningful return metrics.

@Anne Williams   Just a word to the wise as someone who has had both good and bad Section 8 (and non Section 8) tenants:  Vetting tenants is all the more important w/ Section 8 as you will jump through a lot of hoops from the municipality. When you choose a good section 8 tenant, it's great. However, a bad one can make your life very difficult. Ask for past landlord and personal references and then follow up w/ them. Go through your normal checks (background, eviction, credit). Section 8 is a double-edged sword so you want to be very careful w/ vetting. Also, once you acquire the property, visit the local Section 8/Housing Dept. and try to get in good with them. Knowing someone there that you can call will make your life a lot easier. 

@Elliot Vann   For more reasons than I can probably fit in one response, cap rate really isn't the best metric to use for (a) residential investments (1-4 units) or (b) whether to know you're buying a good deal. You can always pick out newer investors by their use of cap rate. See below:

1. The fact is, cap rate isn't used widely in residential space (very common in 5+ commercial multifamily space) so frankly it's holds little use other than bragging on forums about a "9 cap you got in a 6 cap market". Thus, sellers & brokers/agents likely won't know how to interpret your desired going-in cap rate of 9%.

2. Nearly everyone calculates cap rate differently. With the same deal, ask 10 different investors and you'll likely get 10 different answers. For example, do you include Capex reserves in your cap calc? Did you include PM fee regardless of whether or not you plan to use it? Are you including General & Admin? What vacancy rate are you assuming? These are just a few of MANY assumptions that go into the NOI calculation.

3. Cap isn't a good measure of the return you'll receive especially since you use leverage (which is by design but often missed by most investors).  

4. Cap rates are a point-in-time snapshot. They tell you next to nothing about how the property will perform. For example, would you rather buy a 6 cap that has way under market rents on the path of progress that you know you can push to a 9 cap OR would you rather buy a 7.5 cap that is in a non-appreciating but stable market and is charging market rents?  Looking at the 6 vs. 9 cap tells you nothing about this trade-off.

In short, you should be running your numbers based on your desired return, point blank period. Choices of return may be IRR, cash-on-cash, avg annual return, equity multiple, or many more. All of these metrics tell you way more than any cap rate ever could.

**I hope none of the above comes off arrogant, I just see a lot of investors get tripped up by cap rate when they should be focused on more meaningful metrics. Hope this helps.

@Christian Beyer   Good to hear it all turned around on this project. I can definitely feel your pain but it's often the hardest times (in life as in real estate) where we learn the most. The same grit, determination, and adaptability that allowed you to turn all it around will serve you well in years to come!

Hi @Jonah Richard , being that many SEC laws are national, I wouldn't worry about finding a local attorney--> different advice than I'd give you if you were looking for a transaction/closing attorney. There are many SEC attorneys that have a footprint in all 50 states, so do some searching online. I'd recommend using one that puts out tons of content on SEC securities law, syndications, etc. as they're most likely specialists in this corner of real estate.