All Forum Posts by: Percy N.

Who is the contractor and property management company you plan to use?

Let the contractor do the external inspections and give you a quote on what needs to be fixed and have the property manager walk each unit and create a condition report along with estimates to fix items.

No, the angle of the picture is odd.

 It really depends on the government organization.

We have a good relationship with the agencies and invested over $100mm in this market so they know us and know that we mean well and will improve the area.

However, we still had times where permits took too long, supplies were challenging, and labor even more so, etc, etc

As someone said, not recommended for your first deal unless you have a lot of construction experience on your team.

The lenders will want a construction guarantee so there is some risk there.

Also, not sure I would go through the brain damage for 12 units (depends on how the numbers work out).

We converted 88 units of an extended stay-style hotel into corporate housing in another market (maybe will do a blog post on it if we get time).

The key is making sure there is demand for these types of units. We had 66 studios and 22 studios with a loft.

In our case, each of the hotel units had a kitchen so we were able to use that layout without major modifications.

Purchase and construction of all the exteriors and interiors was about $6mm and we sold for $12mm.

Ten-X is a pretty popular platform and as such you will find good experiences and bad.

As with any of these platforms, the properties may have little competition or might face a lot, depending on the market on who shows up to bid (online).

I have not used it in years but had bid on some stuff.

 @Darrin, by Capital Stack, I mean all the funds needed for the project to be successful.

e.g. Sr lender will be 70% of the capital stack, LPs will be 25%, GP will be 5% of the project.

So for a $15mm property purchase, the lender would bring $10.5mm, you (the sponsor) would put in $750K and raise the other $3.75mm (plus any additional working capital, capex, etc).

It will be hard for a first-time sponsor to find a single equity partner willing to write a $3-$5mm check.

There are various ways to structure raising funds from multiple investors, a popular one being a Reg D syndication. 

The loans are typically non-recourse and not considered a contribution by the sponsor per se (at least not an equity contribution).

@Darrin Yon, what is the typical range of the deals in the markets you are looking at?

What is the capital stack structure you envision for say a $15mm deal?

What are your target returns?

@Eric Hempler sounds like to have more experience in certain areas than the typical newbie syndicator, but there is no substitute for real-world experience.

The more visibility/interactions you have on the day-to-day operations side of a sponsor, the less risk for your LPs.

@Todd Dexheimer, good points.

We agree that some of the markets are in a rent-growth bubble, which is why we focus on markets that still have a lot of rent-growth runway remaining.

We also underwrite our deals to be conservative and do sensitivity analysis on several KPIs, one of them being breakeven occupancy.

Yes, so am I.

I do private lending myself and would get at least 2-3x what you want to pay.

We also borrow sometimes and pay 10-12%