All Forum Posts by: Thomas Loggins

Are you planning on financing this first property? If so, you might want to determine what the lender requires in the loan structure. If you borrow under your personal name and then deed the property into LLC ownership, it might violate your loan covenants. I have heard / read that investors do it all the time with no consequences, but it could create a covenant violation that will allow the lender to call the loan. Some loan docs clearly define what are "Permitted Transfers", and anything other that those could be an event of default.

I'll let someone with more experience on the matter correct me if I am mistaken. 

@Bradley Lemen, my plan is to start out with multifamily as well. This strategy gas changed over the last year as I have educated myself and become more comfortable with the idea of starting out bigger. 

I think start out bigger makes sense if you have your ducks in a row, so to speak.

Hi @Stephanie Sicard. While I am not a real estate investor, so I cannot speak as an expert on the topic, it seems to me if your strategy is to start with a multifamily property you shouldn't let anyone talk you out of it. If you understand / recognize your "why" and educate yourself enough on your "how", you can absolutely start with multifamily.

@Michael Ealy

Thanks for sharing.

@James Bradin,

Are you referring to your quad in FL? If so, I imagine you should focus less in the increase in rents and more on any sales comps versus your property. If it's 4 units or less the appraiser will be concerned with the comps, not the income / cash flow. Cap rate won't matter.

Hopefully you have a relationship with an agent in the local market who can help you find comps; especially if the agent knows you plan more / future investing in the market and could throw more business their way.

2 years is plenty of time.

DISCLAIMER: I am not an investor so take my inexperienced advice for what it's worth. Hopefully other experienced investors can provide additional guidance.

Thanks to everyone for the comments. I am grateful.

@Charles Seaman, good question. I guess I need to make sure I understand the difference between online sponsor platforms and crowdfunding. In particular, I am referring to the Teg D, 506c model that is limited to accredited investors, where one gets included on an investor list after an initial vetting conversation / discussion.  

Like any investor "wanna-be", I read a lot and listen to podcasts of syndicators and sponsors (GPs, I assume) who pool capital from passive investors to target value-add multifamily opportunities. 

While I have significant experience on the debt side of multifamily real estate, I don't have a lot of experience on the dynamics of syndicating equity. I understand in general how equity relationships work (GP vs. LP, active vs. passive, preferred returns / promote, etc.) as I have to review operating agreements at times and I have reviewed promote waterfalls. But I am not an expert.

My question is: Why would these online, value-add investing platforms need or want to reach out to "mom and pop" investors, accredited or not, to raise capital? 

In most of the deals I see, underwrite, asset-manage from a lender perspective, I see the same sponsors raising equity from the same known investors deal after deal, without the need to reach out to the general public for equity contributions. I will note that pretty much ALL of the deals we finance are institutional-quality properties with exit strategies of either 1) refi via long-term, permanent takeout (life companies), or 2) sale / disposition to institutional investors.

So as I individually attempt begin my personal investing career (currently in learning mode with capital ready to deploy), I understand that I can't just walk into a room full of sophisticated, savvy and experienced investors and announce that I'd like to participate in a "sure thing", ground-up 350-unit, class A apartment building in midtown ATL. I get it. 

But why would these online, value-add strategy platforms need or want my equity contribution? Do they not have access to the more sophisticated investors? Does the equity that would be provided by such savvy and experienced investors demand demand higher returns than mom and pop can demand (i.e. more expensive equity)?  What else?

Thanks in advance for any comments.

@Roger Brogan, just a question. If you are having a hard time finding sufficient rent comps 15 mins outside of the downtown area of a smaller, secondary / tertiary market (correct me if I am wrong), should you be calling agents / brokers to better understand the dynamics of the neighborhood? Do you know any other real estate experts in your home town that might know the neighborhood. Just asking. I am an newbie, too.

Add what @Erik Whiting posted above about researching rents to what I mentioned. I need to remember that I work in a world where rent rolls as presented are for the most part close to actual, and market information sources are widely available to verify reported rents.