All Forum Posts by: Nick B.

1. Identify comparable properties.

2. Call/visit each one to get current asking rents OR get that data from CoStar, Yardi, Axiometrics, etc.

SFHs are not valued on cap rates.

You need to walk quite a few properties with a general contractor and/or PM to get an idea of "light" vs "medium" vs "heavy" rehab. 

Another option is to invest with multiple sponsors, see all their deals pre-purchase, and compare them with after-rehab. That way you would know what other sponsors are budgeting and what results they are achieving. 

There are no shortcuts.

A typical large syndicated deal pays 7-8% preferred return and 70/30 split on anything above those 7-8%. Asset management fee is 1-1.5% of collected rents.

Given a choice between that kind of a deal structure and yours, where would someone invest?

I'll sell you my house for $2M at any time :-)

@Jason Stubblefield, this is exactly what I have in mind. Thank you

Hi Brock,

Thank you for chiming in. I don't mind doing something else besides raising money.

The real question is how do I convince people to invest not even with me but with whoever I refer them to? Not just convince but also get a soft comment from them.

For example, let's say I tell you: "Brock, if I show you a deal with projected returns of X% with A, B, or C as a sponsor, would you invest in it and how much?" 

Suppose you know A, B, and C. Would you commit to me and not them directly?

Look up the property at the county property tax website. It should have amount of taxes assessed on that property for the last year. 

Then look at the way property taxes are calculated going forward. I.e., how will the taxable value change upon sale and what it the tax rate.

Hello Legal Eagles!

I spoke with several syndication groups about joining them as a money raiser and got similar responses:

"If you can prove that you can raise at least $500K we will consider you. But we cannot make you a part of a GP upfront because we don't know if you can really raise the money".

So, this is a classical Catch-22 problem: how do I prove to them that I can raise a stated amount if I cannot tell prospective investors that I am raising money for such-and-such deal and I can definitely not advertise?

Does it boil down to convincing a syndicator that I can do it and have them making me a part of a GP? I.e., if I become an "official" GP, I can advertise for 506c deals and hopefully raise money that way. But If I don't meet the minimum, they would quietly remove me from the GP, so no harm is done.

Can this tactic work? Is it even legal?

How have other people overcome this obstacle?

Thanks 

@Trent Barga,

Last time I checked lenders required DSCR to be over 1.3. With 1.2 you may have to opt for a bridge lender, provided there is value-add component that can push your DSCR higher.

Of course, initial DSCR is inversely proportional to your purchase price: the higher the price, the lower is initial DSCR that is based on the current income.