All Forum Posts by: Reginald Ross

This is part of a larger development plan on an extremely busy but undeveloped 4-way. The C-store is a 40-year old mom and pop business that will subsidize the land purchase.

The plan is to position this corner (I will own all four corners soon) for a brand name to come in and lease.

Hi there! I’m a long time single family turned multifamily investor with roughly $65 million AUM.

I’m branching out and have a C-Store under contract with immediate value-add potential.

I’m fluent in financial statements but have no direct experience with C-Store Income Statements and would love to connect with someone who could give me some high level pro forma underwriting tips and overall advice.

Thanks in advance!

Hi All,

I’m looking to make some connections in or around Madison, FL for an upcoming project.

Specifically, looking to make a solid property management connection as well as nearby contractors for renovation work.

Folks located in Tallahassee/Lake City/Valdosta would all probably be a good fit.

Thanks in advance!

@John L Daly

In short, it’s different for every deal.

I highly recommend Googling “Capital Asset Pricing Model”.

The learning curve is a little steep if you’re not familiar with the finance terminology but it’s an excellent way to actually calculate an expected return for a given asset (e.g. real estate) given the estimated systemic risk and the anticipated specific risks associated with real estate.

Just remember that when it comes to the formula, “garbage in = garbage out” so if you decide to crunch the numbers, make sure the input parameters are accurate (as they can be). This will require some research.

When you calculate the expected return, compare that with your underwriting. If your underwritten rate of return is lower than the expected return you calculated using the CAPM model, you may want to pass on the deal and seek greater returns elsewhere.

@Alex Scott

Hi Alex, I’m an active syndicator with many LP holdings as well. Let me know if you’d like to chat.

@David Cozzi

Hi David! Congratulations on wanting to take the plunge into multifamily. After you do the cannonball into the deep end of the pool, it will become additive. At least it was for me.

Once I accumulated 40-50 SFR's, I met one of my current partners who was obsessed with MF but had never done a single deal.

We started exploring a few deals together, added a third partner and closed on a 42-unit soon thereafter. Less than 6 months later we had acquired over 300 more units.

Now, we’re on track to bust 1000 unit next year which is pretty exciting.

My advice: Find an experienced partner and go through a deal together. Experience is the best teacher.

With a little self reflection, you will begin to learn your strengths, weaknesses, limitations and preferences. If you ever have any questions, feel free to send a message!

@David Cozzi

As a syndicator myself, I typically report assets under management and units owned by the collective ownership group .

Every deal is structured slightly differently and the primary GP group is a trio.

We don’t dive into the equity split minutia because we each have personal holdings, real estate that we purchased as an operating entity with various percentages PLUS real estate that we bought together with co-sponsors.

It turns out to be an odd number with decimal places that just seem unnecessary to report (e.g. we own an average 25.6% interest in 347 units).

I don’t include co-GP holdings because that can skew the numbers too. For example, one of our co-Sponsors owns an interest in over 2,000 units but my trip doesn’t report that on our website because to us, that seems disingenuous.

I agree that some use the unit count as puffery but we just assume that most people understand the nuance.

@Joseph Humphreys

Without capital or experience, you’re best bet would be to LP with an experienced multifamily operator.

@Mahinda Horapakse

My group structures offerings that involve holding properties in perpetuity. They seem or need the most popular ones and usually have waiting lists.

In my experience, the IRR's are higher than than the typical 3-5 year holds and investors don't have to worry about capital gains related to a sale.

@Costin I.

In my opinion, if they are truly tying together cost segregation and the return of 40% of member capital, that is a bit of a stretch.

I’m a syndicator myself and I NEVER underwrite depreciation into an offering because everyone benefits (or not) from it differently, depending on their tax situation.

I do advertise it because it is a major benefit to some LP’s, but I’m not sure how someone can ethically say what your describing with a straight face.

At best, it could be viewed as a bait and switch. At worst, it’s wrong.

As far as the other questions regarding UBIT, etc., you can’t selectively distribute depreciation or UBIT. The SEC and IRS would not be happy about that. If you’re equity interest is 10%, 10% of the depreciation passes though to the LP. If they can fully utilize it is another question entirely.

Recapture is not usually underwritten usually because it’s too nebulous and far in the future to estimate reasonably.

Returns are based on actual cash flows from the deals and the individuals are responsible for managing their personal tax strategies.

Any better?