All Forum Posts by: Ronan Donnelly

It’s all about dealing with the difficult questions and scenarios up front. Each person should commit to delivering against a specific role. Good luck!

@Johnny Lau, it’s a great question. I started with single family homes and once I got to close to 10 I realized that I had created a full time job for myself. I ultimately switched to syndications firstly as a LP investor and subsequently as a GP.

Some of the things that I love about syndications are:

1) They are entirely passive post investment and they enjoy all of the benefits of physical real estate ownership (appreciation, depreciation, LT cap gains, cashflow, 1031 exchanges etc.)

2) I get access to professionals in return for a fee

3) I can more easily diversify across geographies and asset classes

SFH's are popular because they require less capital to get started but many people who started there ultimately end up syndicating larger assets.

@Bobby Smith, 25% is about average for a down payment and the bank will likely require that if that 25% isn’t coming from you directly that it is raised from others as equity I.e. no fixed term repayment schedule. Each bank is different so the best course of action is to engage with some local banks to understand how they evaluate both you as a borrower and the deal itself. Good luck!

Hi @Basanta Khanal

1) the pros are that you get to build exactly what you like and with prefab (modular) construction you have the potential for cost savings and an accelerated project. The cons are that it is going to be a lot more work to buy land, get planning approval, design and construct the home etc than just buying an existing home. Along with complexity comes risk

2) It’s likely that you can get financing but because your project is not cookie cutter you will have to look around for financing

3) Run the numbers and let them inform you if this is a good option versus buying an existing home

Good luck!

Hi @Phuong Le, a few thoughts for you:

1) How about pricing out the service that your GC is offering with other GC’s so that you can get a sense of what the dollar value of the service is. This can inform how much equity you provide in return

2) Partnerships are a big part of most of the success stories on BP so embracing that mentality early can enable accelerated scale

3) I like arrangements where incentives are aligned so it’s a positive that your GC cares about the project outcome and value created as much as you do

4) With 4 kids and a full time job you may want to include some passive investing via syndicates in your strategy.  In return for capital you get access to all-star teams who charge a very reasonable fee and you get the same economic and tax exposure as you would with doing your own direct investments.

Good luck!

Hi @Collin Schwartz, I always find it helpful to look at these decisions from the perspective of what the market wants. E.g. do you get the kind of tenants that care about and place a premium on investments in technology?

I like to think of it in terms of highest and best use of capital. How much time and capital do you need and what return do you get for it? Let the numbers guide you. Good problem to have though.

Hi @Adam Parker, I prefer multifamily for the following reasons

1) There are economies of scale. For any asset purchase you have to find a deal, due diligence it, negotiate the sale, arrange financing etc. It isn’t 10x the work to buy a 10-unit versus a single family home

2) Intrinsic valuation - commercial multifamily is typically valued based of the NOI and prevailing cap rates in the area. This gives you a little more control over the value of the asset versus single family homes that are valued off comps

3) Rental income with a single family home is digital and vacancies can really impact returns. With multi-family, you have multiple income streams and it’s unlikely that all will stop at once.

Another signal to pay attention to is that there are numerous examples of people on BP (myself included) who started with single family homes but have subsequently moved on to larger commercial deals, often via syndicates. Good luck!

Hi Jeff, buy and hold is a great strategy for building long term wealth in that is leverages appreciation and debt pay down/equity build up.

Syndication is the creation of a team of people required to source, due diligence, fund, due diligence, asset manage and ultimately dispose of a deal, typically 100+ units. In return for access to the expertise (the Sponsor/GP team), the capital providers (Limited Partnership Investors) pay a fee which enables them to be passive, but to still enjoy all of the benefits of physical real estate ownership. 

How to get in contact and qualify sponsors/GP’s  is a great question. It requires up front work but if you find a good one then your only constraint to scale is capital. This article may help: https://www.biggerpockets.com/...

Cameron, totally agree, Cash is king but it doesn't have to be your cash.