All Forum Posts by: Brian Orr

I just found that $129! but i think it's worth it @Tj Hines

Hey all,

This is about my 5th deal and I'm trying to syndicate a small 10 unit property. Here's the info, it may be long:

I was planning to invest in this through my current partnership LLC. My partner decided she wanted to be more passive and I simultaneously gained interest from friends who wanted passive opportunities... I decided to try the syndication model which will basically be my newly created "sponsor" company as the GP and my partner, 1 or 2 investors and possibly myself personally as LP's the building purchase LLC. Problem is I'm caught up on the projections for all this. I've tried the straight acquisition analysis, i've tried waterfall schedules etc... What I've been unable to account for in the models I've found is specific line estimates for Sponsor fees, day one rehab and unit turnover rehab. I've tried plugging them into models I've found but it never works right combining all the moving parts.

I've raised enough for the down payment and the full exterior rehab as well as the first 2 or 3 turnovers. I have no idea how to account for this on these models. It's skewing the return terribly in some, mostly by not allowing the repositioned income potential in year 2 and the future NOI and so on...

The bottom line question is, can anybody offer up a model I can use to get this all down efficiently and accurately? And of course, any other advice will be appreciated.

@Brock Mogensen @Tj Hines I actually have a follow up to this that I'm getting ready to post on the forums... 

How do I calculate the projections for investor returns in a syndication? I've found a dozen models, but I can't find one that accounts for the sponsor aspect of it, nor the day one rehab on the property, or line item turnover rate per unit for the reposition. You guys have anything you've worked with?

@Brock Mogensen that's interesting. This is a C building being favorably underwrote by the lender at 35% expenses. I'm projecting a huge downward adjustment in sub-metering and some up front rehab to knock down on maintenance which total 23% current expenses... Can you elaborate a bit more on when it does and doesn't factor in?

@Nasir El Ameer What I mean by that is giving distributions from cash flow (after Pref) to reduce the principle exposure. The lower I can get that down, the pref expense dollar amount goes down (in addition a quicker return for the investors) and by the time it comes to refi that's 5% less in the expense column.... 

I may just be talking a lot of maybes or not even sure what other repercussions come of that like taxes and such... Ultimately I'm writing my business plan and plotting the exit/refi on this property, and that 20% seems real high in addition to the standard OpEx. And then lower valuation, etc... etc... Am I adding too many expenses here and cutting the opportunity for a favorable exit based on a lower NOI? Is there any way around it?

@Nasir El Ameer Thank you for the input. I've been through that lender preliminary valuation and they're at 35%. T-12 actual expenses are 39% but there's a lot of fat to be trimmed in maintenance and water. It's currently self-managed but the prior 2 years with mgmnt the expenses were 43 & 49%.

Ok so the income and certainly target income supports the mgmnt and syndication expenses, so then here's my next question... Would I phase out the preferred return through principle returns, and reduce the CapEx prior to the exit? That 10% would be a huge difference in the bottom line for the new valuation.

By the way, if you haven't guessed, this is my first syndication.

Hey all, I'm curious to know how this gets represented, maybe you can help? Here's the example of a small 10 unit syndicated deal, which is currently self-managed...

Current OpEx water, sanitation, maintenance, taxes, insurance, landscaping, exterminator, but I'd also have these:

Property Manager 8%

Asset Manager 2%

Preferred Return 5%

CapEx Reserves 5%

Because these are specific to what my operation would be, and may or may not be expenses incurred by a future owner, how are these looked at by the bank when considering a refi, or by a future buyer? Is this 20% considered in operating expenses therefore above NOI, even though it's somewhat discretionary?

Hey BP family,

I've spent most of my life in civil service and the music industry. Had a cup of coffee in the corporate world right out of school but never looked back. That is, until I started my REI business. As it's growing I'm understanding how much of a business it really is, and the types of things I need to do to execute it properly.

BP19 will be my first conference I'm ever attending, and anyone on here knows why I would be doing so... My question is, how do I make the most out of being there? What should I bring? Are we wearing suits? Can I stash my family in downtown Nashville? Is there even any time to spend with them? And ultimately, how do I approach this opportunity to generate the highest return in both experience and education?

If any conference Veterans have tips I'd be happy to hear them... Looking forward to any advice and to meeting you all there!

Some great points here, thank you

@Scott Rubzin try Jayson Philbeck at Alliance on Main Street