All Forum Posts by: Spencer Gray

Even though we are neighbors (Indiana), we have a hard no Illinois rule. The political environment is toxic and a major liability. Between taxes and rent control, too much risk and there are better markets. 

Courses, gurus, books, getting your MBA ,etc  - it always comes down to: you get out what you put in. You know, the love you take is equal to the love you make. 

Like most things in life, it's not black a white, gurus/coaches can be both incredible and horrible. 

It was AFTER doing about 8,000 units of MF projects, about 4,000 as an LP and 4,000 as a GP, and scaling our syndication business before I signed up for Michael Blanks Platform Builder course. My first multifamily course. I have mentors in the space, but they're colleagues/partners/associates.

Could we have figured out how to build a marketing system and investment platform ourselves? Of course, and we were already in the process of doing it.

But we wanted to go faster and build it TODAY, not kick tires and experiment for a year. We wanted to understand best practices, SOPS, and to get a view "under the hood" of Michaels marketing machine. 

I love what @Lee Ripma said - $30k is a rounding error in any decent size syndication deal. If you are serious and you put the time in and getting into a network is going to get you where you are going faster with less risk/mistakes - then I don't see a problem with it. 

In my Platform Builders Course/Mastermind with Michael Blank, some of the other syndicators in the course are the real deal and taking action, some are frankly wasting the $25k and will never do a deal. 

There are some syndicators out there with minimums that are $25K, I rarely see offerings that allow investors invest less than $25k. $50k-$100k is more typical. 

While I 100% agree with @Nick B. , you could check out Verivest - it's a new online platform that "verifies" and vets sponsors with background checks and monitors the deals to make sure everything is kosher. You can filter by investment minimum. 

Congrats @Justin Goodin ! Great market and nice looking deal. 

If you are looking for multifamily deals your time/money would probably be better spent taking all the major brokers out to lunch/coffee after touring a deal. 

Relying on loopnet/crexi will not get you the best deals.

This is how the process works:

1. Seller gets several BOVs (broker opinion of value) and quotes from local brokers. 

2. Seller chooses broker.

3. Before bringing the deal to market the broker floats the deal to known buyers and potential buyers they have a relationship with or have known deal criteria. This is their primarily list, the A list of buyers and the list any serious buyer needs to be on. They aren't sending these "off market" opportunities to people who are only looking online. The brokers like this step because they don't have to spend time and money on marketing, tours, etc. 

4. If they can't hit the whisper or strike price it is then marketed first to those on the brokers email list. Tours are scheduled, offer dates are usually set. This is the secondary list. 

5. Some brokers will at the same time list on loopnet/crexi, others will wait a few weeks before putting it on any online list, or they will wait and see if how much traction comes from their primary and secondary lists. If there's little traction they will throw it out to the general public. 

There isn't a ton on the market right now, so buying better access to loopnet really isn't going to increase deal flow in a material way. Networking with brokers to get on the primary list should be the goal - at least the secondary list. 

You often have to close a deal with the broker to get on that primary list, so at least shoot for being on the secondary list. 

We have the national co-star subscription, it's expensive (like $40k/yr), but we're also trying to take down $100-200M in multifamily this year and need the best data in order to make good/quick decisions and not to rely on brokers for everything. 

What kind of projects/markets/strategies are you interested in? 

It depends on what kind of investors you are looking for. You can go to an equity broker and pay 3% for checks >$5M-$10M but you have to have a track record and there are strings attached. 

Otherwise, the answers above are spot on. 

For Indy I would either go SFR or invest in a large (100+ unit) MF as a passive investor (LP) in a syndication.

You'll probably get a slightly better return the SFR route, but it may consume more time.

What kind of cap rate compression are you seeing in your market?

We are seeing year over year .75-100 bps of cap rate compression (prices going up) in several Midwest and Southeast markets that we are active in or are monitoring. For example, last year a solid B class 100+ unit multifamily asset in Indianapolis was trading for around a 6% cap rate, today everything seems to be trading closer to a 5% cap rate. 

Markets like Charleston that were trading in the mid 5% cap rate range last year seem to be trading in the mid to high 4% cap rate range. 

Our team heard from a broker today that some A class deals in Atlanta are trading in the upper 3% cap rate range.  

For those who are actively pursing multifamily acquisitions, is this what you are seeing as well? How is this affecting your strategy?

Absolutely @Justin Goodin - persistence is key. Having micro goals along the way is important but BIG goals I feel should take at least six months to realize. 

Last year our goal was to sponsor 2 multifamily syndications and co-sponsor another 2. I set this goal near the end of 2019. By mid fall 2020 we were closing on two sponsored deals, with another sponsored project and two co-sponsored deals under contract to close before the end of the year. For the year we ended up acquiring ~$150M in assets and added ~1,000 units to our portfolio, well above our stated goal. 

This year we are looking to acquire ~$200M in MF assets and so far the going is tough. Prices are up, competition is up, and deals are few and far between. I could easily say "it's not worth the effort, the market is overvalued, let's wait it out," but that's just lazy. There ARE good deals out there, you just have to keep going, keep pushing.