How did you get started? What did your first deal look like? Knowing what you know now, what would you do first if you had to start all over from the beginning?
How I started - out of frustration with 80 houses and 400 apartments and up to my eyeballs with tenants and toilets, and almost zero cash flow...
Bought my first property with a partner, each of us signing the note, and putting up 50% of the down payment. I will NEVER do that Again. All my partnerships now are structured with one person (ME) as the General partner or Managing Partner and any/all other partners are limited partners.
Over 6,000 units and 30+ Self Storage Facilities under my belt - what would I do first if I had to start all over from the beginning? Remove any other distractions to focus on Self-Storage, and quickly learn the craft of raising private equity to syndicate more and bigger deals to grow my holdings much faster and safer.
I would have house hacked a 4 unit when I was young and unmarried. Self management and all. Would keep flipping up my investment principal to larger and larger MFs....
But law has turned out to be a very good alternative.
Interesting subject....following this thread.
@Scott Meyers Great advice. I can definitely understand your reasoning for being the only GP in each deal. I am exiting residential real estate for the same reason as you stated...cash flow. Nothing beats self storage. Im hoping to break into self storage syndication this year.
Invest in what you believe in and are passionate about. I love commercial retail. Others love self storage, multifamily, warehouse,office,etc.
It goes on and on in an almost infinite numbers of ways.
Get focused on what you like and drown out all of the other noise ( what others like and are focused on doing etc.)
@Mike Carr I got started with a live in flip. Knowing what I know now, if I were starting over, I'd buy a 4 unit and house hack. I then would do nothing but focus on a 100 unit or larger multifamily syndication for my next deal.
Good thread. With my old business partners/investors, I found a 4 acre industrial zoned property processed the entitlements for 100,000sf facility in Brentwood, CA and they raised the capital/debt to build it. The % wasn't a whole lot but gave confidence to do it on my own and ability to do more for a larger slice of the pie. Starting out, I talked to as many people in the industry as possible (owners, management companies, developers, builders, toured 100 facilities, talked to the managers onsite, etc.) and found you will get 1,000 different opinions on what works best and what you should do. Ultimately you have to make those decisions but it was helpful to have as much of the information as possible to make that decision. For example, we debated doing climate control (CC) units and spent hours talking & touring to ultimately decide not to pay to install CC. The main reasons were the additional up front cost but also the fact most onsite managers said they never turned it on and/or the owners told them to turn it off because the electricity bills were so high. Also, in a down economy those were the first to lose their potential rent premium. What we did end up doing instead was prep the interior (larger/hallways) buildings to add a second floor later. These two had similar costs and we saw greater potential value in the prep for 2nd floor as that additional sqft would have significantly less cost to build than the ground up construction (ie land basis would be $0, no site work, etc.).
One thing I also did to determine fair % shares within the GP (I was not successful btw) was to break out the different roles (see below I hope) then allocated a % to each and then allocated to different people. This seemed the fair way to slice the pie. I did this on my second deal and everyone is happy.
|Business Item||Project %|
|Execution of Business Plan/Idea||10.0%|
|Site Acquisition and Purchase agreement||10.0%|
|Entitlements (inc costs)||10.0%|
|Capital Raising, Financing||10.0%|
|Lease Up, Property Management,||10.0%|