All Forum Posts by: Travis Doyle

Thanks for the responses, we are looking to syndicate a 1mm portfolio and was curious how people get paid in this event. I assumed with no bells or whistles, everyone would just get paid pro-rata based on their slice of the equity pie.

Is it normal to remove investors from these kind of things in the event of a refi?

Hi guys!

I want to thank the very many kind, knowledgeable people here on BP for all the help. I have a quick question. If I raise money through syndication. Let's say 100k purchase with a holding period of 3-5 years. We cut ourselves 30% equity in the deal. At the end of that holding period, we refinance after the property is worth 200k and take 150k out. We dish out cash flow pro-rata during the holding period.

2 questions:

1) What does the cash return at the refi event look like? Who gets what? I assume we just split the 150k by equity ownership at that point? i.e. I take 50k for myself and the other 70% get 100k.

2) What about the remaining 25% equity left in the property? What does the sponsor do with it? What is the industry norm for this? Does the sponsor usually buy them out?

What essentially happens after the refi? I would think a sale closes the deal, but it seems that a refi keeps it open indefinitely?

Hey guys!

My current partner currently owns 90 units, all multi-fam. He is currently passing up deals because we no longer have any capital. We created a private placement fund and am about to starting asking friends and family for capital.

How should I go about structuring this? We were thinking to just take equity in the deal of around 20-30%. Most of the projects require a lot of renovation. Is an acquisition fee, assets under management (1% gross revenue), and sale/refi fee appropriate here?

I thought cutting ourselves equity was the easiest option, as it provides an incentive for us to make the portfolio profitable. What do you guys think? Would writing a note be easier? We are just looking for capital to fund deals and thought this would be the best way.

Hey guys!

I am an investor from New York and am trying to raise capital for my friend who does development and currently owns about 90 units. I am trying to help him grow, as he doesn't like to ask people for money. He is currently passing up deals because of a lack of capital. We were looking to raise 500k-1mm in a private placement fund.

Primarily investing in multi-family deals that need renovations that pump out cash-on-cash returns between 12-17% His current strategy is just buy and hold rentals right now and I am torn on how to sell this to investors.

What is the best way to structure this? Cut ourselves some equity? Maybe 20-30%? Is this too low?

Also, do you guys generally charge a 1% gross revenue fee, acquisition fee of 1-3% and sale/refinance fee of 1-3%?

So assuming I took out 100k from investors, and made 12k NOI per year, are you saying I would need to pay out 12k per year for about 7-8 years before returning the preferred return? I am super new, but are you saying to make whole the investors first before the pref? Is that the norm? I can't think that is the norm, right?

Thanks David! I guess I shouldn't be doing just buy and hold. I am just torn about how to raise capital from friends and family. Most of our deals require a decent amount of sweat equity to get a decent return. Maybe just cutting equity is a safe bet?

Most of our investors want 10%, but we need to work pretty hard to achieve 12-15%. Which is about what we would need to give them that kind of return.

Hey folks--trying to setup a fund to attract some private capital and was thinking of two options to structure it.

A) we dilute our investors equity and cut ourselves some, maybe 20%

B) offer them a preferred return

It seems like most people go with option B, but how?

Let's say I am working with a 12 cap, bought for 100k, 12k in NOI with a 10% pref return, where I split profits above 10% with investors 50/50. *I am not invested at all.* How do I make money on this? Am I thinking about this correctly?

1) I pay 10,000 to the investors

2) I then pay the remainder of the profits until everyone is paid back

3) once everyone is paid back 100%, then I start my profit sharing after the 10% hurdle is reached and pay myself 1,000

The problem being is that we do not have a "liquidity event" to speak of after we purchase the home, we just hold...so as a sponsor, am I supposed to wait years down the line until everyone is paid back in full before profit sharing after the 10%?

Why would anyone do this? I would have to wait years to make 1,000 dollars off this deal.

If you have experience in this field and would love to chat, I am all ears. Just let me know!

Thanks

Greetings,

I currently live in NY, and am looking for the best investment vehicle to pool funds for investing in real estate. My partner is very established and people want to invest with him. I was wondering, what vehicle will give us the least headaches. I am all about doing my own research, so if you point me in the right direction, I would greatly appreciate it.

We want complete investment authority, while paying yearly interest during the life span of the fund.

Is there a simpler easier process for someone who is just starting out? I greatly appreciate any insight you can provide.

We are probably looking to raise between $1-3mm from friends, and was looking for the right vehicle that won't be cost prohibitive.

Thanks again!