All Forum Posts by: Matt Moreland

Hi, @Pradeep Shrestha! Unfortunately I can't speak on firsthand experience with any official programs, but I can share what worked for me and hopefully it will translate to something you could also do in Cincinnati with it being such a large market and there being so many great investors there.

I was going about my business calling property owners getting to know who owned what in the markets I was analyzing for myself and my clients, and came across a lot of the same names/companies holding some of the "best" properties I came across. Often times bigger than anything I could imagine owning at the time, but certainly folks I wanted to introduce myself to and see what all kinds of real estate they are into. 

Always something to talk about when you get on the line with another investor and most are more than happy to share their journey and reminisce on when they were trying to take down their first big deal. Most people would probably be surprised how many massive investors are altruistic and want to see others crush it, and are willing to give their time to help them shorten the learning curve. In fact, there are a lot of great people like that on these forums, thankfully.

Now when I come across something off market that I think would interest them but may be out of the buy box for me and my clients, I hand it off to them. A small gesture for taking the time to visit and share their wisdom. Often times this leads to a phone call asking about the deal, which allows you to "peek behind the curtain" if you will, and learn more about how they analyze a deal. Hint: most of the time it's just like the rest of us!

I never do anything expecting to get time with them out of it or to be able to ask them questions, but over time many of these investors have organically become part of my ecosystem and people that I regularly text with or grab a bite to eat with when we're in the same city. People who call me when they come across something they think would be a great investment for me. 

Nothing against any of the good mentorship programs that might be out there, but I just hear so many horror stories of the "mentors" who have not ever done the things they are teaching others to do and are making their living off of the mentoring itself rather than the subject matter they profess. I would almost rather take that same amount of money that they'd be charging and offer to pay a local investor to show me the ropes on a big deal they're working on or give an hour's worth of guidance to help work through a specific hurdle. 

All the best, and please keep us updated on how it's going! We are rooting for you, Pradeep!!

@Rob Birch being both in commercial real estate and an investor in a landscaping company, I have some firsthand insights that hopefully will be helpful.

From the perspective of an investor or syndicator, the appeal of xeriscaping is the reduction in water usage, landscaping maintenance costs (no more recurring weekly or bi-weekly mowing and shrub maintenance costs), and an overall clean appearance that requires fewer inputs and less time to keep looking clean and polished for residents and touring potential lessees. These can all be had if the execution is done properly.

That being said, xeriscaping does also have a few *potential* drawbacks. First off, it can be incredibly costly to install. I cannot speak firsthand on a large multifamily property as our guys have never done anything larger than 4-unit properties, but I could easily see it reaching into the six-figures very quickly for a reputable company to do the prep work and install.

Once installed, it can be fantastic and last for years without needing extensive work to maintain it. The key is finding an installer who is skilled and ensures that it is done properly. Since the craze that really took off in 2018, we are already seeing lots of xeriscaped properties that have been overgrown with weeds, washed away down to the soil, or blown away down to weed barrier. If you can find someone who will ensure it is done properly with a plan to mitigate extreme erosion from rains and winds, and who will make sure that all preventative steps are taking to reduce the volume of weeds that pop through, then I can see it being quite advantageous. 

PROS: 

-Looks really nice, especially here in Texas where it goes with the whole "southwest" vibe we've got going on.
-Reduces input costs (fewer amendments needed for fertility and growth, much less water usage)
-Easy to maintain and keep clean

CONS:

-Can be very expensive to install properly
-Erosion can be a serious problem if you get significant winds or rainfall and don't have a plan for how to handle it
-If installed incorrectly, it ends up being more of a money pit than maintaining a lush green landscape.

What's the current water usage like on the property you're considering for transitioning over to xeriscape? Not exactly sure what the precise threshold is for it making financial sense, but I imagine with 3-4 bids and historical landscaping water usage data you could analyze how long it would take for it to pay for itself. Happy to hop on a call if you have any questions or want to spitball on the subject--we've had some good luck getting approved to drill irrigation wells (even in cities) for multifamily properties, essentially trading out years of high watering bills for one bigger upfront cost to get the system switched to well water. Not sure if this is a possibility at that property, but definitely worth looking into simply due to the allure of nice lush grass when seeking to attract renters.

All the best and keep us in the loop how things are going!
-Matt

Quote from @Henry Clark:

Happy valentines from Belize.  Thank goodness for Self Storage. Looking at 5 acres with a view.  $30,000.  Would offer $20,000 as a starting.  Needs to be cash.  Financing down here would be 50% down at 15% interest. 

Singing with the mariachi band. 

Happy Valentine's to you and yours! Looks like y'all are having a great time down there. Beats the weather stateside right now!! 

Nice! Sounds like it'll be a game changer in multifamily. Love seeing more tech and industry developments coming out of Lubbock!

@Henry Clark just now seeing this. Wow, this is invaluable, thanks for sharing and going into such great detail. Not super knowledgeable or experienced with self-storage so this was great.

This is definitely not a huge surprise. Hearing some of the metrics that syndicators were purchasing multifamily at when it was peaking had my eyebrows curling wondering how they thought it was going to work out for them and how they'd be able to make distributions.

With prudence and patience good deals can still be had. I would much rather the GPs tell me that they are waiting for the double or triple base hit (or even better, a home run) rather than rushing into a deal not knowing how they were going to pay me my returns or if they would even be able to.

Ronald said it right. The bank will usually look at market cap rates for similar assets as a rule of thumb but will ultimately value it based on the models their institution uses to minimize risk for themselves and make sure they're hitting the numbers they need based on property income and loan payments.

Looks like there are some courses on Udemy and Coursera that include spreadsheets to use. Linking here to the best rated course on Udemy.

Hey, Matthew! Nice find! It can be surprisingly difficult to find base hits that are on market sometimes so I'm curious if this is publicly listed or if it's off market? 

When acquiring commercial properties with long(er) lease tenants in-place at acquisition, a few questions I ask myself are:

-How do I feel about the lease rate and ROI when factoring in inflation, property tax increases, insurance rate increases, etc. over the lifetime of the lease?

-How long do I plan on holding this property in my portfolio? Is it a longterm hold, a 5-10 year hold, or a hot potato?

-How much capital do I have to invest in order for this deal to work? Is this the highest and best use for that amount of capital? 

Overall, it does not sound like a bad deal. Finding something with a tenant in place at acquisition can be a great base hit, but is rarely a home run. Conservatively modelling out what your cash flow will look like over the lifetime of that lease would be my suggestion for your next steps. That's a good bonus that they have the 5% escalation already baked into the lease for June 2026. 

If you'll be working with a lender, get in touch with them and send over any models you've built out and they'll also run their own independent numbers to confirm and determine what terms they'll offer on this deal. They will likely require a personal guaranty for the loan amount, so go ahead and pull together your up to date PFS and have that ready to send over when you get connected with them and that will help the process go much more quickly.

Best of luck and keep us updated on how it is going!
-Matt

@Nicholas L. Hey, Nicholas! I think we are all in agreement, just stating our opinions slightly differently. Just like any other investment opportunity, it would be unwise to drop your whole $50k into the first one you stumble across. Instead, they should be doing their due diligence before putting any capital into a project (whether an individual property they acquire themselves or into a passive vehicle such as a syndication). 

The difference is when looking for a great team to invest your capital with, there is less info out there about what exactly goes into that process. That being said, there should still be at least as much due diligence done since these are other people who will be managing your capital on your behalf. Looking for a team with a strong track record of acquisitions, dispositions, and investor returns/payouts is a good starting point, and at a minimum you should have several conversations with them before investing any capital with them. Even after investing, this communication should not stop. Ask to speak with other investors who have invested with them before, and interview them to get the benefits and downsides of investing with that particular group.

Either way, you bring up good points and I think we are all here hoping that OP proceeds carefully whichever route he goes!