Understood Mike... thank you for your feedback.
- I have already finished one of the classes offered by Michael Blank, I provided my review about it here ----> Real Estate Journey of Rome Wells diving in deep, but not 2 deep
- I am also still in the process of dissecting recommendation links that Omar provided @Omar Khan
- Majority of the key points mentioned by Omar I indeed already satisfy just within less than 3 months of my diving deep but not too deep journey.
- Specifically, the portion that I found interesting in Omar's recommendation is... within the article that talks about ... what to look for in deal sponsors....
Here is Omar's recommendation...
Investing Strategy – Determining the Sponsor’s Edge
- Can the syndicator concisely articulate the investment strategy? <---Rome Wells answer as of this moment 65% yes.... I can't say full 100% since I only dived into this field less than 3 months ago.
- Is there intellectual rigor backing the strategy?
- Although backtesting is critical, it is important to have a forward-looking outlook to determine if the strategy can be consistently applied across multiple deals. <--- to be honest, I have no intellectual rigor other than the simple fact... if the deal makes sense from cap rates standpoint and has upside value potential factor, meets rules of thumb... then that's good enough for me. After all how bad can it be... buy low and sell high... (obviously I realize there is millions of other factors involved... which I am in the process of learning about and dissecting them one by one... as well blogging about them in my blog free of charge... but in general there is no intellectual rigor involved in the strategy.)
- Does the syndicator suffer from the shiny object syndrome? <--this one i found interesting... in the beginning stage... yes... it's imperative to have the shiny object syndrome... to see the entire spectrum of possibilities and chose the model that makes most sense....(hence which is why I am here on this website to see what makes sense vs what doesn't make sense)
- Sponsors can chase after the “flavor of the month” and lose focus. We prefer to work with sponsor with clearly defined niches who can easily articulate their strategy. <-- my strategy is purely multi-family and no retail of any sort.
- To paraphrase Charlie Munger, “if someone can’t describe what they do in a few sentences, then they don’t know what they’re doing.” We agree with Charlie’s assessment. <-- indeed... for now i am all over the place... but once again... I am in the journey of analyzing what makes sense by analyzing entire spectrum of possibilities in the context of where I am at in life...
Now... there are many other key points that Omar mentions in his article... which yes indeed looks very well structured with an amazing level of details.... that indeed I must admit... places me and infuses me and fast forwards me into my potential future self.... from the standpoint of me being the syndicator... vs me being passive syndicator....
In fact Omar's article infuses my mindset into multiple perspectives. The perspective of a syndicator and a passive investor...
It's very interesting to see how Omar put everything together...
Especially this paragraph below...
Asset Management
- The sponsor is responsible for overall asset management and being an effective steward of investor’s capital.
- We like to understand the key plans and how they will be implemented in managing the asset efficiently.
- A key facet of asset management is communications. We prefer sponsor teams to provide regular communications. In this business, over communication is preferred. The communication does not have to be extensive. It could be as simple as a few bullet points outlining operational details, major wins (and losses) and how issues are being handled.
- The point of regular communications is to make the investor aware of how the sponsor is working with the property manager to address current and emerging issues. <--- I think this is where i need to improve my communication skills... to speak bullet points to folks vs my blabber wellpoint as pointed out by Nick...
It's also interesting to see this point... from Ombar..
- We also like to see sponsor commit their personal capital to deals (also called, sponsor investment commit). The idea is for all parties to have skin-in-the-game. At a minimum, it should be a six-figure investment. More is better. <--thanks Omar... I had a suspicion that I would need to bring my own funds on the table in combination with syndicating the deal.... (although i don't have a lot of money, knowing this bullet point ahead of my journey indeed y structuralizes me a bit... in the direction of... having money for the deal vs... just buying smaller multi family property and then after getting that first deal... looking for other investors who would invest with me....)
- But it is also unreasonable to expect a sponsor to invest sizeable chunks into every project. There is a ton of “sweat equity” that goes into finding, operating and divesting an investment. The sponsor investment commit is a good symbolic gesture but should not always be expected. <--- in regards to sweat equity i imagine Omar is referring to... marketing and other ... things that syndicator does...
- Based on my analysis it seems to me that there is a lot of expectations from potential investors in regards to.... a particular deal.... I guess the real question comes into play.. and of course that is understandable... if someone wants to invest... with you then they would want to know everything about the deal... kind of obvious here... but I wonder if every deal sponsor actually follows all of these key points...
- To be honest... lots of great points... and i realize that I still need to learn a bit more... before I syndicate any deals...
- Thanks for the advice to everyone
For now I will just continue blogging to create better track record... and look at buyer's market areas where it's feasible for me to create the A team... the type of area where there is no economic downhill... the type of area where there is buyer's market.... and the type of area that is within 2 to 3 hours away from Manhattan NY.
By the time i am ready to dive into commercial real estate world of multi family housing deals deeper... perhaps by that point I will gain some better understanding about the entire field...
Thanks once again everyone for your patience in reading my questions, comments/responses.
