All Forum Posts by: Joseph Bramante

 Sorry Michael, that is no where close to 300%. More like 200% return excluding closing fee. $3M all in (assuming 500k rehab). 750k down. Refi at 3.75M and cash out 1.5M. 

My greatest deal was a 26 unit purchased for 650k with 700k in rehab. Appraised for 3.4M with a 2.2M refi loan. Cashed out 207% return

Lots and lots of cash. Low leverage debt with cash on hand. If that happened again, im sure the lenders would would offer concessions to owners to help with the recovery process. It does them no good to take a property unless the owner is truly operating it poorly. 

But yeah, cash and low leverage is the way to go if you're concerned about that. 

Get your CCIM certification. Its a classroom style training that will teach you more than the books or podcast. I have read Multifamily Millions, my first book and favorite, but the course work at CCIM is much more detailed. If you have long term aspirations for this industry, thats my recommendation. 

 I agree with Todd and can vouch for sellers going "lean" on expenses leading up to a sale or refinance. We go into "expense management" mode and everything gets tossed into capex. So be sure you are checking there to bring some things back above the line. For a 48 unit property, we would base expenses on benchmarks for our market. That size property would operate at about $5,000/unit in expenses. i.e. $240k/yr total expenses. We learn these benchmarks from underwriting a crap load of deals. Try looking at some other properties for sale nearby and see how the expenses stack up. Taxes are always tricky but your broker should be able to help with that. 

@Brian Adams well thank goodness you're not. I would spend too much time explaining things to you. But you would certainly be a lot richer if you were. Every syndiciator knows investors do not have access to the PPM until it is complete, thus they would have no idea what changes were made in the background. But i'm sure you knew that as well and just forgot while trying to be cute with your response. 

This forum is meant to help other investors or aspiring syndicators. If you have any further witty comments, please feel free to private message me and I will happily answer them for you.

 I wrote one, didn't use it, sent it to my firm, and they used it word for word, specifically on the Risk section. They may have added 1 risk but nothing substantial. So like I said, when you have done enough of these, you can take a stab at doing it yourself, but even I decided not too. Thanks for allowing me to clarify.  

I've done #2, its sucks. won't be doing that again. 

If you are an experienced syndicator, you won't being doing any of that stuff you mentioned. Otherwise you wouldn't have lasted as long as you did in the industry. 

And I never said anything about using a "Top 20 law firm" for securities matters, I was referring to them for the Operating Agreement. Two different things. However I am sure you have schooled a lawyer or two at a top 20 firm, though you may be the exception :)  And the reason i recommend the Top 20 firm is more for deal experience than pedigree. A big real estate firm is more likely to use a pedigree firm with thousands of attorneys on payroll than somebody who runs their own practice.  Therefore, when you use that pedigree firm as a client, you get the benefit of using the same agreements that the guys 10x your size are using, but you are also paying the same price as them, maybe more, so its probably not something you want to do right out of the gate. We waited until our 4th deal to do it but it was a huge difference compared to the OA we were using from a smaller firm downtown. 

Just to repeat, I don't write my own PPMs and I do outsource it. I do, however, know larger groups that only deal with accredited investors who write it themselves. They could afford to pay any legal fees should something occur, especially with the hundreds of thousands they would be saving in legal fees over the course of a few years for PPMS.

Absolutely, its always important to make sure the PPM is completed and filed correctly. The more important doc for the Passive is actually the Operating agreement within the PPM since that dictates how the company will operate after the closing. You can certainly ask who completed the PPM. The attorneys name and contact info is usually written inside of it in the front section. If the Sponsor is using a firm to produce the PPM, that firm should have completed at least several hundred PPMs in the field with a perfect track record of success (i.e. no SEC claims.) Some even offer guarantees and money to cover any legal expenses should an issue arise. 

If the sponsor is writing the PPM themselves, it is likely only for accredited investors since they don't require a big section on disclosing risk. I would not recommend anyone write their own ppm for non-acredited investors unless they have done several already, the offering is identical to the previous offerings and they know how to file it. I don't personally because I prefer to outsource it for time savings and it helps me sleep at night. But it is an option.    

The operating agreement usually doesn't change much after a sponsor has done several deals. We found it helpful to use a Top 20 law firm early on to write our operating agreement to include all of the terms and conditions that their much larger clients in the industry are using so that we could grow into it. Plus the worst thing is when you are 2 -3 years into a deal and something happens with an investor (death, divorce, bankruptcy, etc) and the agreement isn't clear on how to handle it. Once the operating agreement is set, the sponsor can start recycling it for new offerings or simply have their attorney update the few lines that changed for a few hundred bucks. 

Hope that helps

 Why would I reconsider when I am correct? If you had read the following comments, you would have seen an attorney agreeing with me. Are you an attorney? How many PPMs have you done? 

The only person cutting corners here is you in how you obviously didn't read my full post or bother to check my profile with my background. I clearly stated only after a person has done a few deals. i.e. not for newbies. 

Yes, "I" am playing in the big boy world. Which is why I know these things. 

I'm the same way. On our bigger deals, its still one of the smaller expenses, and I myself intend on continuing to outsource it. Though as we do more multiasset funds, its mostly copy and paste so we will do those. On smaller properties it is a larger expenses but investors are also less experience. Anyway, i was just throwing out an option.