All Forum Posts by: Nik Batra

I have been doing some due-diligence on apartment syndication deals. From what I have read and heard, a conservative underwriter should project the exit cap rate at least 50 to 200 bps higher than the purchase cap rate. I have however come across a few deals where the sponsor purchased the property at a much higher cap rate (around 7.3) than the market cap rate (around 6.4) and then projected the exit cap rate at around 6.8 (which is higher than the market cap rate but lower than the entry cap rate). Their strategy is mostly value-ad. Would you consider that conservative or aggressive when analyzing a deal from a passive investor standpoint?

Hope that question made some sense.

Nik

Most investors are advising waiting it out for now due to the economic uncertainties. It is however unknown how long that would last. It would probably take another 12-18 months before we can clearly see the repercussions of the pandemic in the real estate world. It's a long time to not invest at all. Having said that, there are always deals in any economic environment. If you can find the right sponsor, multifamily space provides relatively low-risk passive investment opportunities. 

Appreciate your insight @Spencer Gray

@Taylor L.@Jason Yarusi Thank you so much for your response. That makes me understand it better.

Nik

I have been doing some due-diligence on apartment syndication deals. From what I have read and heard, a conservative underwriter should project the exit cap rate at least 50 to 200 bps higher than the purchase cap rate. I have however come across a few deals where the sponsor purchased the property at a much higher cap rate (around 7.3) than the market cap rate (around 6.4) and then projected the exit cap rate at around 6.8 (which is higher than the market cap rate but lower than the entry cap rate). Their strategy is mostly value-ad. Would you consider that conservative or aggressive when analyzing a deal from a passive investor standpoint? 

Hope that question made some sense.

Nik

@Jay Hinrichs Thank you for the great insight. With a 1-2 month call, I fell it's much safer than other liquid investments with a similar rate of return. I will definitely look into investing some money with IB.

Welcome to BiggerPockets @Shubho Ghosh! I am in the beginner stages myself. I joined BiggerPockets only about 2 weeks ago and it's amazing how many people I have been able to network with already. Make sure you attend your local REIA meetings to get a better idea about your market and network with like minded investors. Wish you success in all your future endeavors.

Nik

@Jeff S. Thanks for the word of caution. I have heard similar concerns about the Portland market as well. I intend to be cautious and measured in my approach

@Steve Milford Thanks for the great advice. I'll try this approach

@Dmitriy Fomichenko Thank you so much for the warm welcome, recommendations and posting tips. I am already using them as I type my response.

@Jay Hinrichs Thanks for your recommendation. From what I have learnt about rarebird so far, I do believe joining that meetup is the natural next step for me given the fact that I would be moving to Portland in the next few months. Btw, loved listening to your podcast episode on BP.