All Forum Posts by: Josh Walker

@Shane O'Donnell - I am in 8 of Joe's deals and they are all performing very well. Speaking only to the deals I am in, the cash flow has been strong and consistent, 3 or 4 have refi'd in the first 2-3 years of the deal, it has been very common to receive an additional distribution at the 12 month anniversary of a deal based on NOI over and above the pref, communication is excellent and Joe is a great guy.

Recently, he has changed his deal structure, offering either 10% flat (no upside) or a 7% pref with upside.  It is interesting to thin through this structure (which has become more common with other sponsors as well).  The deal would have to perform very very poorly for the 10%'ers not to get their full 10% as they are first in line.  That being said, if a deal becomes a homerun, the 7%'res have all of the upside.  

I hope that this is helpful and I wish you luck!

@Jordan Burnett - I have personally invested in almost 40 separate deals and have never had a capital call.  This is undoubtedly a last resort for a sponsor as it will all but assure that those investors will be extremely reluctant to invest with that sponsor again.  

I would focus on a few things the front end to mitigate the chances of this ever happening.  While, as we are seeing with COVID, unforeseen circumstances can happen, there are some things to consider.  

- Day 1 cash flow: We focus on deals that have very strong day one cash flow.  This alone greatly de-risks the chances of a capital call.  

- What level of occupancy is required for adequate debt coverage?  

- As some have already mentioned, how much is the sponsor holding in reserves?

- The market: How diverse is the local employment?  I would be leery of a market that is reliant upon only 1 or 2 strong employers.  

Hope this is helpful and I wish you luck!

@Eric Pope - one thought as a potential work around if you cannot find a bank to HELOC a rental - and assuming you have a mortgage on your primary residence - could be to ...

1. Do a cash out refi on the rental

2. Use those funds to pay down your mortgage on your primary residence 

3. Recast your mortgage on your primary to get that payment down (should cost about $300)

4. Create a HELOC from the equity now in your primary

IMO - transferring equity from rentals to your primary only makes your financial/risk position stronger.  I'm certain there are holes in this, but it can certainly be a viable option. 

@Caylon Haggard - I am unfamiliar with Three Pillar Communities, but I have invested with a couple of outstanding MHP syndicators and love this asset class.  Happy to discuss if you are interested - just shoot me a PM.  

I wish you luck!

@Alan Hale - I have been in the same boat.  As has been mentioned - DFW is a very difficult market right now.  Very expensive and very limited supply of non A class apartments.  I went the route of investing in syndications.  I view this similar to hiring great people and letting them do what they do.  I spent a long time vetting GPs/sponsors and invested through who I believed would best increase my capital.  For anyone in your position I always recommend at least considering syndications.  

I love discussing syndications with anyone interested and have a summary doc that goes through some of the ins and outs of syndications.  If you even want to discuss further or are interested in this documents, shoot me a message.  

Take care and I wish you luck!

@Brett Aquila - I've been down the path that you are going down.  I discovered syndications, fell in love with them, didn't know much about how to do due diligence on syndications, spent a year or so figuring that out, and still very much love syndications.  

We have formed some great relationships with a handful of sponsors/GP's and we now help some of them raise capital for their deals.  I have a document that we put together (basically what I wish I had early on) that may be helpful.  

But the #1 rule ... there is no such thing as a good deal with a bad sponsor.  Anyone can make a proforma look great.  

Shoot me a PM if you want to discuss further.  I love talking about this stuff with anyone interested.  I wish you luck!

Depending on your desire to do something active again - I would consider investing it in a strong cash flow syndiacation with a very proven sponsor. 

@Joann Lim - I would definitely consider investing it into a strong cash flowing  sydicated deal with a very proven sponsor.  

@Shane Thomas - there is no such thing as a good deal with a bad sponsor

@Thomas Donnellan - I have gone down the same path you are taking and, as you are doing, vetting the sponsors is the #1 piece.  I have personally invested in almost 40 separate deals (7 of which happen to be Joe's deals).  I have learned a ton about vetting sponsors ans I am happy to discuss as much as you would like.  

For my personal investments as well as what we raise capital for, we focus on cash flow.  As you have discovered, MHP's can be amazing.  We have a very strong relationship with an outstanding sponsor with a great track record.  Another asset type I would consider is small apartments (a handful within a single deal).  These are performing much like MHP's from a return standpoint.  I have a couple of additional thoughts in mind as well. 

Shoot me a PM if you would like to talk.  I would love to discuss our similar paths.