All Forum Posts by: Michael Gilman

You can structure as a joint venture (typically 5 or less partners) and this avoids the complexities and regulatory pitfalls of a syndication

Understanding the terms and metrics is one thing, but its another to really understand the assumptions and if they are appropriate. This is very tough as a passive investor unless you are very familiar with the market. A few easy ways sponsors ramp up projections to make any deal look like a winner:

1.  Cap rate on sale - Using todays cap rate and not taking into account possible compression as a result of rising rate environment. 

2. Rent growth - Higher annual growth than supported by historically or fundamentals

3. Replacement and Operating Reserves-  Not factoring in an appropriate amount per unit

4. Faulty comparables on renovations bumps and value-add possibilities

5. Loan terms at refinance (if applicable)

Various considerations in play. Happy to provide a quick free consult. 

Here is my attorney profile: https://www.portalerandazzo.co...

@Mark Koster Your analysis is sound. To further mitigate risk on passive syndication consider investing in value-add with existing stabilized cash flow. This will typically be in secondary and tertiary markets, but its hard to go wrong when you cash flow from day one plus have the value-add execution to force appreciation.  

This case study illustrates how Cross Mountain Capital ("CMC") achieves exceptional returns in an "under the radar" market. In addition to investing in high growth MSAs, we like sleepier markets like Vermont and New Hampshire. These markets are characterized by historically strong demand fundamentals, limited inventory, and a dearth of existing real estate operators. In addition to acquiring assets at favorable pricing, our success in these markets is due to CMC's self-management of the portfolio through our in-house property management division, MSA Properties, LLC, which allows us to achieve operational efficiencies and cost savings.

This example involves the 20 unit School House Apartments, which belongs to a larger portfolio in the region. The property was purchased in 2015 using creative financing. A bank provided a regular way commercial loan at 75% LTV and an additional 20% of leverage was obtained through an asset backed line of credit. The building was acquired at a 9% cap on "as is" at a rate of 4%, so debt service was a non-issue. During the hold period, renovations were accomplished on a gradual organic basis with a small budget of $1K - $5K per unit for maximum ROI, as leases expired and rents were increased upwards of 20%.

The full post can be found here with larger and clearer informational images: https://www.crossmountaincapit...

As someone who has owned and operated large SFH and multifamily portfolios, multifamily is the way to go for economies of scale, ease of management and ultimately higher returns. Most that start in SFH transition to Multi. Also easier to scale up with multifamily by using additional leverage on a regular way. commercial loan.

Hi Gal, we invest in southwest NH(Keene, Claremont, Hinsdale...) and are currently in contract on a large portfolio in the area.  If there is a virtual option I would like to attend the next one. Thanks!

The most common way is to focus on the Metropolitan Statistical Area. There is a streamlined way to compare markets through third party providers such as Reonomy, Costar etc.. I personally use Offerd , which I believe is best in class but also most expensive of the options. 

Here are some free tools to aid the comparisons:

https://datausa.io/ > Quick Graph on the Market

http://www.city-data.com/ > Extensive Market Data on median income, population growth, crime, etc

https://www.niche.com/ > Combines Market analysis with Reviews

https://www.point2homes.com/ > Market Analysis with cool graphs

http://www.justicemap.org/ > Income Map at neighborhood level

https://www.deptofnumbers.com/ > Data on Employment, Rent, Income, GDP

https://www.census.gov/quickfacts/fact/table/US/PST045219 > Population and Demographic info

https://multifamily.cushwake.com/Research > Great Market reports on all Major Cities

https://www.berkadia.com/research-and-resources > Great Market reports on all Major Cities

https://alndata.com/market-reviews/ > Multifamily reports on all Major Cities

https://www.apartments.com/ > Rent Comps

https://www.rentometer.com/ (edited)

In many states and depending on the purchase & sale contract, you should be able to hall them out for trespassing and breach of contract. If there is a post possession agreement it should not give them tenancy because then you will have to go through the court process as a landlord/tenant. 

@Brandon Bruckman is spot on with the two methods (DST and TIC). We will structure around an investors 1031 considerations depending on check size relative to deal size.