All Forum Posts by: Sean Wilkinson

Thanks John, all good stuff. I too have been getting many of my new tenants on section 8 for this reason exactly. I think you're right to the concept above not being a great concept. I am just spit balling as there is just frustration with the limited recourse we have as landlords.  Appreciate it!

Being fully bound from being able to do evictions for nearly any lease violation, I am concerned on the future of how this will play out. I'm looking for any loopholes or ideas with current leases or future leases that will give us (landlords) some ground so we are not fully at the mercy of the tenant.

If there are any lawyers out there, would it be legal if I "lend" tenants money for rent on a different note aside from their lease that is than enforceable if not paid on? Or at least I could send it to collections? Trying to get creative! 

Thanks!

Hi @Dan M. Thanks so much! There was one unit that was not up for rent previously as the old owners had lived in it so we were able to essentially get one additional dwelling that accounted for about $1,500 of the increase. Aside from that we instituted a ratio utility billing and some general rental increase to get up to market. With that it really made this shine... We of course also did some interior renovations on turnovers and were able to up those rents a bit. This is one of my favorite deals we have done to date. 

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Walla Walla.

Purchase price: $115,000
Cash invested: $70,000

Buy and Hold: This was a distressed duplex when purchased. We did some major renovations including adding an additional basement unit in what was previously wasted space. We are now wrapping up all renovations and will be refinancing this into long term debt. Once this is accomplished, this property should gross $3,250/ mo while cash flowing approximately $2,000/ mo after all expenses.

Investment Info:

Large multi-family (5+ units) buy & hold investment in Milton Freewater.

Purchase price: $1,450,000
Cash invested: $230,000

Buy and Hold: This is a 27 unit deal that we bought in 2019 and have brought gross rental incomes up from about $12,500 to nearly $20,000. We were able to secure seller financing on a 30 year note with $200,000 down. This now cashflows about $6,000/ mo on average while currently paying about $30,000 of principle each year.

Thank you @Michael Franssen and @Marlen Weber! 

Investment Info:

Single-family residence fix & flip investment in Walla Walla.

Purchase price: $100,000
Cash invested: $40,000
Sale price: $185,000

Flip Six: We bought this property from someone who had planned to flip it themselves and ended up running into all kinds of issues and running out of time. It was about as straight forward as can be with all new plumbing, framing and electrical all ready finished. We simply came in and wrapped it up and made a great first home for a good friend of ours.

@Scott Mac Hi Scott, the idea would be to obtain a bridge type loan on the purchase where the lender would hold a Capex reserve. This does make the equity need slightly more, but on a bridge product you can get 75%-80% LTV. If Cashflow could not cover operations, you would have to capitalize accordingly (or have deep pockets!).

@Don Konipol Hi Don. Thank you for your thoughts here.  I was somewhat vague on this post in a first attempt at putting this idea to paper and getting others to track the thought process so I apologize there are still some missing pieces to the puzzle here. But that's what this tool is for –– for others to put holes in the concepts and improve them. Don't get me wrong, this is by no means a "by the book" strategy for a deal syndicator. I have personally worked in and around a boutique sponsor which owed at the time around 7000 units. I quickly realized that those numbers don't mean a whole lot without ownership and the ability to control the future of the deal. That is why it has become very important to me to figure out a why to hold properties long term with more ownership. I flipped homes for a while and that is essentially what I realized syndicating was on a large level. From a cash-on-cash return it can be great, but the constant disposition and acquiring is a massive undertaking for each and every deal with their various obstacles. I'm much more interested in long term indefinite yield from wholly owned assets that I would hope to sit on long term. So the question that lead to this post is "how can I scale to large multifamily and have a good amount of ownership with relatively little personal powder to put in the deal?" Now on the sponsor assumptions, as I'd imagine you know, this can widely vary. For instance, your fee structure is quite a bit higher than I typically see. However your ownership structure is quite accurate with what is usual, though I have seen sponsors achieve 30% split on heavy lift properties by not charging fees. The reason I mentioned the 30% is because I am trying achieve more ownership than I have seen even in the richest syndication deals.

Now Let me rephrase some of these points.. First addressing the sellers: if they would like to sell this deal and have had trouble selling, you are their buyer. You offer a decent sale price which they are hungry to take. They can sell and get what they want for the property as long as they take some of their proceeds and place in the deal for a few years as a decent preferred return. Again, not a "by-the-book" deal. 

Addressing the equity partner: Say the sellers put in 75% of the equity need. You now only need 25% of the equity and for that 25%, you are willing to give 50% of the upside of the deal along with a pref. As a partner/investor, I would take this deal any day if numbers made sense and it was a solid deal of course. Why would they care if you had 50% of the ownership and the sellers were only making the preferred return if they got 50% of the deal with only 25% the equity need? 

Bottom line on my end is I am 23 years old, own 88 doors by in most cases getting very creative.. I also have a 250 unit deal in the pipeline with this exact structure outlined above that I have talked to both sellers and equity sources and and it is looking like it might potentially work. Everything is still up in the air but if it works, it'll be something I will undoubtably continue to pursue as a strategy to maintain more ownership. 

Again, Appreciate your wisdom you have to share from your 20 years of experience and I welcome any other holes you can put in the idea. Thanks!

This is my first forum post here so hello everyone! I just wanted to get some feedback on a Strategy I have been thinking about for either 1) getting much more ownership in a JV large multi family deal, or 2) getting into larger Multifamily with less cash.

Here is the concept - target large Multifamily properties that 1) have been on the market awhile to where the seller would be fairly motivated. 2) properties that have been held for a long enough time that the sellers should have significant equity or be making a large profit in a sale.

Typically buying large Multifamily as a sponsor you give up 70% of the ownership to whoever brings in the equity... but say you request the motivated sellers to put a large amount of their sale proceeds back into the deal on a preferred return basis and count this as equity YOU bring to the table! Then you hold that for a few years, do a value add play on the property through better management and upgrades and you refi out and payoff the sellers fully. Now you are sitting with much higher ownership as a sponsor (if not fully owned), with much less equity.

This could also be a very attractive way to raise capital! Say you know a creditable person that could leverage their name to get agency debt. Then you have sellers put in 75% of the equity need and your creditable partner put in 25% of the equity. You then give a pref and a 50% upside on the deal to your partner and keep 50% of the upside as the sponsor for bringing in the other 75% of the equity (though it was simply the sellers doing for wanting a quick sale). Your partner now has 50% of a deal that took only 25% of the equity need... would be hard to turn that down. Win-win-win! Sellers are able to sell and maintain a good investment for the next few years. Investor gets more ownership for less equity. You get more ownership as the sponsor. What are your thoughts on this strategy?