All Forum Posts by: Peter Grote

Hi everyone,

I'm a bit late to the thread which began 3 years ago, but I invested in 2 value-add syndications with Grocapitus which have since sold, and I made a decent return on capital. Neal is a capital raiser and so all projects with Grocapitus will be with a different group of GPs as you can see from closely examining the portfolio page on their website. I have no other investments with them at this time. 

Their focus currently appears to be on new development, mostly in the boutique BTR space. These projects are just beginning to break ground so they have yet to establish a track record in this area. I believe that Neal is a very successful capital raiser by virtue of being in the Bay Area with ties to the tech world, so he has tapped a wealthy investor group through his Multifamily meetup and educational content that he provides.

I agree with the comments above that as an investor we always must do our own due diligence which can and should take time to be done carefully. If you invest repeatedly with one operator who is repeating something you've seen them do successfully in the past, then it may be easier to do your due diligence more quickly. When you are investing with a capital raiser, you are ultimately investing in whoever they are partnering with as the operator, and you must do your due diligence on that complete team and look at their track record. 

@Ray Trounday. The original loan was for $236k beginning 4/1/19 at 6.35% (w/ 30 yr am so P&I is $1468)

@Bob Malecki Thanks for the input Bob. I'm wondering if it would be even more difficult to sell a note that is in 2nd position rather than 1st?

I've got a performing note that I had not anticipated continuing to hold that I'm wondering what my options are for selling it? I loaned a relative money for him to purchase a home on a 1 acre parcel that he plans to subdivide and develop. His original plan was to quickly refinance the property with a business partner who unfortunately dropped out of the project. I'd like to get my $ back so that I can deploy it in my own RE projects and yet the bank loan that he qualifies for on his own would only give me 60% of my original capital back. I'm wondering where I go to possibly sell the note and what typical note buyers would be looking for? Rough numbers are currently $236k remaining on the loan at 6.35% interest.The property was just appraised at $285. Thanks! 

I currently have a hard money loan that I did on a property at 12% interest and am in 1st position on the deed since I provided the full capital for purchasing the property with cash. The new owner thought he'd be able to quickly get a traditional mortgage but is finding that he's not qualifying due to being self employed as a contractor and so shows variable income. I'm interested in restructuring his note  so that he can begin making monthly payments to "season" it and then ultimately sell it to another investor as a performing note. 

I'm curious if a 6% interest rate on approx 250k (on a 30 yr am) would be something that I will be easily able to sell? and if so, could I do so after a few months, or does it typically need 6 months of seasoning? Also what would be a typical amount that I can hope to sell the note for, 85%, 90%, 95%, 100% of it's value? And are there other costs I should budget for in that sale?

Thank you!

@Pete M. I own a number of SFRs in East Tacoma and as others have said, neighborhoods can vary dramatically block by block. Nothing beats going there yourself and walking around and talking to the neighbors, deciding if this is a building you want to own in this particular location. $425k certainly sounds low for a rehabbed 4-plex currently in Tacoma, and so I'd suspect either very bad neighborhood or perhaps some issues with that 4th unit being non-conforming. Due you due dillegence! Happy to help in any way if you have other questions. 

Hi Casey,

I'm wondering if you know the market, or if you are taking the broker's word for the "market rents?" Even if the current rents are below market, what is the strategy/business plan for bringing them up to market? If you've budgeted $200k for rehab, then over what period of time will that be occurring? A realistic projection might be to bring all 22 units up to market rent with rehab over a 2-3 year period, unless you're dealing with a building that's only 50% occupied currently - in which case it shouldn't be 2.4M. Lastly I see you projecting a cap rate at resale or refi of 5% but the broker lists the market cap rate of 7.3%. If anything, you should project a higher cap rate at the time of refi (probably in 3 yrs, rather than 1) given the rising interest rates. Hope that helps!

I'm curious what calculators people like to use for multifamily deal analysis. I've used Michael Blanc's Syndicated Deal Analyzer which I think is great if trying to put together a syndication, which I'm not, so I'm wondering if people use something simpler that can still help to analyze P&L and project CoC returns annually as well as IRR. Perhaps I can be doing that already with the SDA I have and just aren't using it properly?

@Hoa Nguyen

Originally posted: "Would lenders see participation as a passive investor in a syndication even with an experienced sponsor as a positive when the time comes for me to do my own deal though? Or would lenders favor me doing a smaller say 6 unit MF on my own to build experience and work my way up to larger units?"

I think that if you are interested in gaining experience and knowledge then a passive investment would fulfill this goal, depending on who you invest with, regardless of how a future lender might view it. If you are wanting to learn more about MF, then finding a sponsor that has experience and will allow you to be as involved in the experience as you'd like, from an observation perspective, will allow you to grow. As others have said before, it is the deal itself that a lender will be underwrite, and if it's a good one they will lend as long as you have the financial standing to back it.

Now, how to vet a sponsor that you might want to invest with is a whole other category for discussion!

Is there a way to bookmark blog posts on BP to be able to review them again in the future. I find myself reading articles that I like and having to copy the url and emailing it to myself. If this feature doesn't exist it would be a great one to add!

thanks!