All Forum Posts by: Ronan Donnelly

Hi @Jamie Turbyne, in order to improve your changes of being successful at investing in a syndicate you need to be able to evaluate the following:

1) The Sponsor - this is the team of people that source, the deal, get it under contract, define and execute the business plan and who manage the property managers. The most important factors in my opinion are their track record, whether or not they specialize in the asset type/business plan that they are offering

2) The Deal - you should be able to underwrite a deal and if you cannot there are many educational resources that will allow you to learn how to. You should look for conservative assumptions in the underwriting model, especially because of the long trend of declining cap rates / rising prices.

3) The Financing - is there financing in place for the duration of the business plan, are there penalties for refinancing (this is one exit strategy), are the projected rates realistic?

4) The Management Company - look at their track record, do they specialize in the area that the deal is located, do they have experience executing the type of business plan proposed

5) The Market - you need occupancy and ideally higher rental rates to make your investment work. We can be more confident in this if we see employment, population and wage growth, diversity of employment and a balance between supply of apartments and demand

I could go into so much more detail on any of those bullet points but I wanted to give you an idea of what to look for. I would suggest registering with a number of syndicator once you select an area and an asset class so that you can familiarize yourself with the kind of deals that they offer. Good luck!

@Kevin Hoodwin, thanks for posting such a great question and I see that you have already got some great advice from @Abel Curiel and @Karl B. I find it helpful to think about these questions from an inverse perspective, i.e. what would a superstar buyer look like to an agent. If you can nail that then you will attract the superstar agents. Here is what I think an agent would look for in a superstar buyer.

1) Verification that they are able to fund the deal - prepare a financial statement and have it signed off on by your CPA to show that you are able to complete the kind of deal that you are looking for

2) Very specific requirements - know exactly what you want so that you can make it very easy for the agent to focus their search efforts

3) Be responsive and provide clear feedback - e.g. I will pass on that deal because it does not meet criteria x

4) Actually close some deals to build a track record

5) Articulate your business plan clearly so as to empower the agents to understand what your future needs are

Apart from that my advice would be to use an agent as just part of your search plan. Look for properties yourself by direct mailings, driving for dollars etc. Nobody cares more about you finding a deal than you :) Good luck!

@Tyler R Cox, I have invested in a number of syndicated deals and would be happy to share my experience. DM me if you have a specific question. 

@Kevin Powell, if you want truly passive income you should invest in a fund or a syndicate. Each of these options can allow you to me more specific about what you invest in, including the specific asset and market but are truly hands off. Turnkey is sold as passive but it really isn’t as you have to manage the manager, file all the tax returns, renew insurance, get the mortgages etc. Good luck!

@Vincent Sottile, I would echo what @Brandon Cohen said. There are deals to be had, especially since the market has been going down, and depending on the area it can be cheaper to buy than rent. The downside is that a NYC purchase requires significant capital which could be earning good returns elsewhere. I personally bought recently because the market has been very soft, by looking at a lot of deals we eventually found a good one, there are significant opportunities to add equity and it was cheaper than renting in my area. Happy to share specifics if you DM me. Good luck!

@Karen Higgins, in general I look for terms that ensure our interests are aligned so for example, pay a % of revenue earned rather than a fixed fee, avoid terms that encourage turnover etc. Good luck!

Hi @Matthew Karp, congratulations on starting down the path of Multifamily investing. It has better economies of scale and more business model flexibility than single family homes which means more ways to make money. There are a ton of great educational resources and books available and if you read those you will likely be in a position to ask some well qualified and specific questions on the forums. In terms of groups you can look on BP for meetups or you can search for local users to make connections. Good luck!

@Matt Lord, the main benefits are depreciation, long term capital gains, tax free cast out refi's and 1031 exchanges. I leave it to tax professionals to go into the specifics of each but you can learn a lot yourself by searching the forums. Good luck!

Hi @justin Laczynski,

Cap rates have compressed as a result of the general "search for yield" and the subsequent amount of capital in the market. In aggregate there hasn't been enough supply, relative to demand and this too is pushing prices up / cap rates down. These macro factors are difficult to predict and there are opportunities in every market provided you have the right strategy. Some options for a rising market with low supply are:

1) Analyze a ton of deals and make more offers than you have in the past, you will get a good one eventually

2) Partner with someone who has got good deal flow and bring other elements of a successful deal to the table e.g. capital, asset management skills etc

3) Focus on your credibility in front of listing brokers, if you can demonstrate a track record, financing in place and clarity as to what you are looking for, this will help

4) Ramp up your marketing activities, think about what you are not doing today that could bring more deals if you were to start doing that activity

etc... Good luck!

Hi @Austin Craven, there are many ways that we can reduce the risk of a real estate investment and selecting a good area is one of those, but not the only one. When selecting an area to invest in we look for population growth, wage growth, employment growth, employment diversity and a balance between supply of rental units and demand. Most of this data is available from the US census bureau or some of the many sites that aggregate that data. Whilst this data can help you with selecting a MSA, you will also need to do sub-market due diligence. This can be a bit more subjective e.g. is there a Whole Foods nearby, is it in the path of progress? Getting this right will set you up for success but don't forget about the importance of being able to source, analyze and due diligence the deal itself, the management company, potential tenants, financing etc. You will find help on all of these topics and more on BP. Good luck!