All Forum Posts by: Tony Lin

Your main drivers will be population growth with a diversified job market that's growing along. Places like Austin, Dallas Fort-Worth, Indianapolis, etc. are all areas to consider. 

I personally don't mind investors who wants a more active role, depending on the person of course. Usually you want to get to know your investors ahead of time before inviting them to join on deals as this avoids a lot of headache and questions down the road. 

My investors are welcome to learn with me during the process. I've benefitted from someone else offering me the opportunity to participate and enjoy helping people grow. 

@Kumar Gaurav  You may want to consider doing a 1031-exchange into something local and keep doing your multifamily while living in one of the units. You can keep your equity working for you. 

@John Vanhara @Matt B.

Yes Fannie and Freddie service a significant portion of commercial loans. In fact they did 140 Billion combined in 2018. The loans originate direct with Fannie/Freddie unlike the residential method where loans are later sold/guaranteed by them. There are a number of direct DUS lenders that underwrite loans on their behalf. 

They have special small balance loan programs for loans under 5-6M. They offer attractive terms and is very much worth looking at. I work with Old Capital lender broker for my commercial loans. 

In general the partners need a combined networth of the loan to qualify, and have enough liquidity after closing. People sometimes bring in high network partners as key principals and their main contribution is just to qualify for the loan. I would definitely look into agency loans as first choice. 

I would recommend not diving in head first so quickly for OOS, especially at this stage of the market. It's not your local neighborhood and it'll take time to get to know a metro and build up a reliable team. Talk to more local investors, visit the place in depth, and attend conferences. For my multifamily properties I estimate it'll be at least 6 months before I'm ready with the team and knowledge to start bidding. 

Lot of great answers already. Just to add that there are indeed sponsors that take a equity percent in the asset as opposed to just a percent split of the profits. 

You're walking the same path I was a few years back. Bay Area rentals will net you maybe .4 or .3 % on purchase price to rent ratio while out of state 1% is doable. 

A good agent will help you value potential rents and time to lease. Understanding the fill rate for each metro is also important. As with most rentals, you want to concentrate in markets that have population and job growth. Try to narrow down your search to just a couple then focus on finding a good team to purchase and operate your property. 

Fannie Mae and Freddie Mac are really the Cadillac of Commercial multifamily loans. ~4.2% on 12yr term, 30 year, Non-recourse loans. Up to 80% leverage and 3-4 years of interest only. Able to get 2 supplemental loans. 1.25 DSCR.

The returns differ based on the project type: cash-flow, value-add, or hybrid. There are different returns with different risk profiles. 

Hybrid deals are popular with some cash-flow to start and additional appreciation down the road. These days on large multifamily deals I'm seeing about 8% cashflow and 15% annual return as an achievable goal. The returns certainly have come down from the craziness we've seen from few years ago. 

@Audrey I have a few multifamily assets in Dallas that I manage remotely from California. My partner and I travel quite frequently (about once a month) to check on the property and work with the property management company. However we don't charge any of these travel expense to the property/investors. We get paid a standard asset management fee and to me this is part of the sponsor's own expense. 

I was a passive investor myself and structure my deals on how I would want to be treated as a passive. If a syndication group is charging 2-300k to remotely manage a property, then I might as well go with a syndication group that's local and get higher returns, no?