All Forum Posts by: Quinn Konitshek

@Donna Greene

Are you a long term holder in real estate? Do you have any experience in multi-family acquisitions? How much equity are you bringing to the table?

Those are some starting questions to think about, however if you feel confident enough to take this property down, I'd say go for it. No one ever became wealthy without a little risk, just make sure you have a great team on your side (Broker, Lender, Lawyer, Property Manager).

@Ryan Hayhurst 

I really like the San Antonio market because it's a major MSA in the Texas triangle that is full of growth, a landlord friendly state like Oklahoma, and there's plenty of small multi-family properties that cash-flow well.

@Phillip Sinclair 

The best way to look at Houston multi-family is that if you start in the middle of the loop like montrose/midtown and you start heading north towards college station cap rates will slowly start rising. College station will most likely be your best option for cash-flow while an urban market like montrose/midtown would most likely be the best opportunity for appreciation. Both plays have their pros and cons, it ultimately depends on your investing goals. 

@Brian Geiger 

The waterfall is a the disproportionate distribution of cashflows to investors. In a typical private equity structure, the GP and LP will receive their pro-rata share of distributions up until a preferred return. Once the project's IRR reaches that preferred return, the money will be distributed disproportionately based on the IRR hurdles achieved. This means the GP will receive a promoted interest after achieving their IRR hurdles stated in the operating agreement and providing outsized returns for the LP investors.

A GP might bring 10% of the equity to the table, and the LP's 90% of the equity. The LP can be a sole entity, or multiple investors, and the rest of the capital stack will normally be funded by senior debt. Even though the GP only brought 10% of the equity to the deal, their distributions of profits from the venture will most likely be far north of 10%, due to their operating requirements in the deal, while the LP is a passive investor. 

@Christen G. @Carnet Williams

A personal financial statement is not a brush off! It is a huge part of getting a commercial loan for any deal. They may have been "brushed off" after submitting the PFS and the lender didn't think they could get the deal done based on the situation. However not all lender's are created equal and some are lazy. 

A bank/fannie mae/freddie mac/debt fund wants to know how liquid the sponsor is, what their experience looks like, their liabilities, their assets, and real estate owned. A personal financial statement is the only way to understand this, because running someone's credit wouldn't offer up this kind of crucial information.

There are some lenders who wouldn't require this, however it is an opportunity cost. What you give up is higher interest rates and fees, for less documentation required. 

In short, to get the most aggressive financing a borrower will need to provide a personal financial statement.

@Sam Considine  While i'm not a vacant land flipper, but rather a multi-family investor, I can attest that you should keep going on your marketing and something worth your time will come! Marketing takes time to fruit, don't give up too soon. You're going to be a real estate mogul in no time!

@David S. Going into a deal 100% financed is in most cases not the best choice. You first have to understand the feasibility from the credit line to allow you to do such a deal, and the primary lender on the deal will know where the funds are coming from so don't think you can act as if it is equity. Do you have enough capital to fund this acquisition in a normal equity/debt split? You should also look at the downside and have capital reserves should any problems arise in this property.