All Forum Posts by: Ethan G.

Hey there! I'm looking to do my first BRRRR in Texas but I'm sure how to get started to find the right deal. I'm live/own in Austin which is a super competitive market to find a brrrr deal. I've started looking along the I-35 corridor for a potential deal using the MLS but there aren't many vacant properties at a reasonable discount that would result in at least a break-even brrrr. Though to be fair I haven't made an offer even it is low ball.

Now I'm thinking about going off-market but I don't even know how to begin finding off market deals. To start I want to buy SFR properties with ARV in the ~200-220k, working backwards that means I'll need to find the properties with an all-in price of 150k.

What's an area in Texas that will allow me to do a BRRRR where I can at least break even?
If off-market is the only way, how would you get started searching for off-market deals?

At least in ORegon I asked my attorney if they could trade fee's for % ownership and she told me its not legal in ORegon.

My Dads partner for 25 plus years was an attorney out of Oakland Ca but those were all CA deals.  So I suspect its state specific

@Ethan G.Thank you very much. It was through a good friend of mine who is a syndicator.

If you want to fill this role as a loan guarantor, you essentially need three things:

1.  High net worth.  Typically, the loan guarantor needs to have a net worth at least as much as the loan amount. So, if your net worth is $10 million, you can sign on individual loans up to $10 million.  And while the individual loans would be no more than $10 million, you could sign on as many of those as you would like.

2.  High liquidity. Typically, the lender will require that the loan guarantor have at least 10% of the loan amount in liquid assets. Including cash, stocks, bonds, etc. So, if you want to sign on a $10 million loan, you will need at least $1 million in liquidity.

3.  Experience.  The last piece is that the lender will likely require that you have experience being part of these types of deals and signing on these types of loans. For example, you would likely have to be a cosigner on at least one or two Fannie Mae loans before Fannie Mae will allow you to sign by yourself. Likewise with Freddie Mac.

 If you have all three of these qualifications, many operating groups will be happy to offer between 5% and 20% of the total general partnership equity in return for your being the loan guarantor.

A couple ultra high net worth individuals I know make many millions of dollars per year by simply signing on non-recourse debt.  Of course, they had to get their net worth well into the nine or 10 figure range to be able to qualify for this role in large deals.

And I also know a couple securities attorneys who get GP equity for handling the legal aspects of the syndication.

If you want to be invited to participate with GPs in larger deals, you need to have one more useful skills to contribute to the partnership.

Some skills that many operating groups need:

- Ability to find deals

- Underwriting, proforma analysis, rent comps, market analysis, etc

- Due diligence and create accurate budgets

- Asset Management

- Construction Management

- Investor relations

Or, if you have a high net worth, many GPs will provide equity in return for your signing on the debt.

All of these things are valuable to operating groups, and if you're really good any one or more of them, you may be able to trade your skills for equity in a deal(s).