All Forum Posts by: Michael Blank

@Giovanni Isaksen interesting about your comment about oversees money. I was approached by an oversees syndicator, and he was looking for a modest return in the US for his clients.

Based on the feedback so far, it's tough all across the country to find good returns, and the only way to do is by finding value-add deals. Nothing new there I guess!

For those of you syndicating the deals, what is the range of IRR (or returns in general) you feel you need to achieve for your investors to get deals done?

I am getting a good response right around a 12% average annual return. Just note that these are friends & family and high net worth individuals, not sophisticated and/or institutional investors.

How about you?

@Sam Henry LOL! I'll have to ask the listing agent to see what it went for -;)

So I've been looking for deals in the Washington DC, Baltimore and Richmond VA area, and I've spoken with a half a dozen other investors nationwide, and the theme seems to be the same:

NO ONE SEEMS TO BE FINDING ANY DEALS.

I have two questions:

1. My first question is, what kind of returns are you looking for in your deals? 

I'm syndicating my deals, so I will have investors involved. I am looking for deals with IRR's between 12% and 15% for the investors. (The 12% IRR for investors assumes they own 70% of the building and get no preferred rate of return, and the exit is in 5 years. To compare apples to apples, the IRR would be about 16% if I were to own the building 100% myself). I could theoretically achieve that kind of return by buying an 8 cap on actual financials as long as there is enough upside to achieve those returns.

But I'm just not getting into those kind of deals. I am being out bid by crazy money, I don't know where it's from and why they'll put up with lower returns.

For example, I'm negotiating a 46 unit (B- property) right now: the seller is asking for $2.1M, I'm offering $1.7M, the seller agreed to $2M and they're totally set on that number and won't consider holding a second. I can't pay any more than $1.8M to make my returns.

A 24 unit, C-Type Property in Baltimore, asking price is $1.2M, there are two offers at $1.0M but the bank is not budging from their asking price, my max price is $900K. At $1.2M the cap rate is 7.8% with a projected IRR of 6% (!!). Who is willing to pay that? On the other hand, at $900K, the IRR for the investors is 13% with a cap rate of just over 9% going in.

2. If you're doing deals, what kind of returns are you projecting for those deals?

I'd like to hear from people who are actually doing deals, and what kind of IRR you're projecting for those deals, and any info about these deals you're willing to share.

Thanks!

@Tom Scott I think you thinking big out of the box is a good thing. Don't ever change that. Most people make the opposite mistake and limit themselves by thinking small.

On the other hand, the practical advice and caution by others in this post are worth paying attention to also. 

If you're going to raise money, read posts from @Ben Leybovich   and myself on the Bigger Pockets blog 'cause we tend to write about apartment building investing and syndication. Read 'em from cover to cover and you'll get a ton of information. Then, as @Joe Fairless advises, build an "advisory board" of other experienced investors and leverage their expertise.

Good luck, you're on the right track !!!

@Brian Burke , you wrote "The debt portion (the 65%) is readily available these days in the form of bridge debt with better terms than I would expect to get from a crowd funding portal" and I agree with that. @Paul Lopez , I don't know why you wanted to over-complicate the "debt portion" part with untested crowd funding. I would consider crowd-funding for the 35% *equity* piece, but based on discussions so far, crowd-funding is not ready for this yet, but I think it will be eventually.

@Jabari Adams , I wrote a BiggerPockets blog article on this topic called The Ultimate 8 Steps To Getting Started In Investing In Apartment Buildings. Hope that's helpful.

@Nathan J. , it's important that you talk to at least 3 other banks or better yet, brokers. While the terms you got from your credit union look pretty good, you can probably get a longer term (like 10 years), and it's always better to have multiple options.

@Tara Piantanida-Kelly, looks good -;)

@Brian Burke is encouraging me to think bigger. @Brandon Turner , thanks for encouraging me to do more stuff online. @Scott Isley thanks for organizing a master mind group to keep me on track!

I was looking for assets between $1M and $2M at the time ...

Thanks!