All Forum Posts by: Michael Bishop

Paul, depending on your strategy and whether you prefer to be passive or active, I'd also say that you should consider VERY large deals (large multi-families aka apartment complexes). You'd of course have to take a passive role in this type of investment (unless you have access to a ton of capital and the know-how to acquire and operate one one your own), joining a syndicator as one of their investors/limited partners. But, if the right deal is found, apartment syndication can be very lucrative. Plus, some like the passive aspect of them as opposed to SFHs where you're responsible for every aspect of the deal from purchase all the way through eventual sale.

Can't forget about forced appreciation. Small (in relative terms) changes to the property will/can have a much larger impact on FMV with larger multi-families as opposed to SFH.

While I definitely agree with your "I care more about my money that anybody else will" comment, I think there's something to be said there. An appealing syndicate deal will have terms built in to protect your money and give the general partner more motivation to perform. One obvious example is the presence of a preferred return, which promised investors a return before the sponsor takes their cut. Standard to see around 8% here. A less appealing deal might have a lower or no pref, meaning the sponsor will get paid right off the bat, giving them less of a reason to perform. Another example might be an IRR hurdle. I.e. an 80/20 or 70/30 split until investors reach an 18% IRR, 50/50 split thereafter. This should be welcome sight to an investor because it is a marker of performance of the property, ultimately affecting how much money the sponsor will make (and we're all in this to make money). In a nutshell, look for a waterfall structure (or a payout structure with hurdles built in). In it's absence, a sponsor will be paid no matter the performance of the asset = not a very comforting sign.

Another note to mention is that, although yes more people are involved, that's the beauty of a real estate syndicate - pooling multiple resources together to accomplish a goal that one would not be able to accomplish alone. Each team members expertise in their filed likely trumps that of a person who does everything on their own. For that reason, I'd argue that MF syndiates could be considered less risky (if the right deal is found, that is).

Hi Joyce, I compiled a list at the beginning of the year of 5 or 6 of the most most commonly recommended CPAs in Austin on BP. I then did a bit of research myself and did a phone interview with my top 3. Landed on Josh ray at Ray CPA.

http://www.theroundrockcpa.com/

That was one persons opinion though. Good luck in your hunt!

If it's lack of experience the lenders are concerned about, have you thought about partnering with someone who has more experience, via a syndicate? If you want to remain the General Partner, and have the cash for a down payment (i.e. you don't need to raise capital, thus adding limited partners), one thing you could consider is partnering with a property management company who has a proven portfolio in your market.

Hi @Samantha Vice, quick note about your current expenses. You could consider implementing a RUBS - ratio utility billing system. There are a number of ways that utilities are typically calculated using RUBS, but the general idea is that water, sewer and trash bills could be split among residents based on occupant factors (how many people live in the unit), square footage, or a combination of both. This would decrease total expenditures, thus driving monthly cash flow up. Just something to consider!

@Austin Fruechting - mind sharing your favorite books/educational resources? I saw earlier in the post that you PM'd some folks this info.

@Adam Juodis - a lot of the Allure Vinyl planks have underlayment pre-attached, so laying an additional layer yourself is unnecessary, which makes it even easier.

@Scott Steffek - where do you operate out of and do most of your deals? Asking out of curiosity as I grew up in Crown Point, IN (moved to Austin in late 2014 for work) and am very familiar with the entire region. I've thought several times about trying to make a deal work there while living here in Austin.

Another thing I'd check on is the height of your current trim. If you do end up going with a floating floor, you'll need to lay shoe molding (easier option than replacing the trim completely) and it could end up looking rather stupid if the trim is too short as a result of leaving the tile in.

That being said, if you do decide on a floating floor, look in to Home Depot's Allure ISOCORE. Looks good, is 100% waterproof, has a good warranty, awesome reviews, has underlayment attached, and you can install it with half a brain. Just got done laying some down myself.

First pic is pre purchase, second and third are post flooring, pre shoe molding: