I'd like your advice......

[Darrin Yon]

Greetings All,

What advice would you give an investor who's searching for an equity partner or an equity partnership for the purchase(s) of multifamily properties? Currently, I'm looking at 100+ unit properties to ensure I have cash flow that's worthwhile once expenses are paid. I'm definitely open to networking and establishing contacts. What are your thoughts? 

[Bjorn Ahlblad]

@Darrin Yon I'd say make sure you have a compelling value proposition. What value do you bring to the table that sets you apart from the crowd.

[Arn Cenedella]

@Darrin Yon

I’m located in Greenville SC.

Network like crazy - go to local investor meet ups - get active on social media - and you will start to find partners.

An equity partner is probably going to want control of the deal - I know I would. 

My suggestion is to start to network find potential capital partners and then go find a deal. Bring in an equity (presumably more experienced) partner share in the profits and learn as you go.

[Chris Seveney]

Quote from @Darrin Yon:

Greetings All,

What advice would you give an investor who's searching for an equity partner or an equity partnership for the purchase(s) of multifamily properties? Currently, I'm looking at 100+ unit properties to ensure I have cash flow that's worthwhile once expenses are paid. I'm definitely open to networking and establishing contacts. What are your thoughts? 

 Equity partners look for:

1. Preservation of capital

2. Someone with experience, integrity and can communicate

3. Preservation of capital

If you are looking to raise $, investors want to see a proven track record, a thorough PPM to understand the business plan, terms, risks and details of the deal.

[Darrin Yon]

Quote from @Arn Cenedella:

@Darrin Yon

I’m located in Greenville SC.

Network like crazy - go to local investor meet ups - get active on social media - and you will start to find partners.

An equity partner is probably going to want control of the deal - I know I would. 

My suggestion is to start to network find potential capital partners and then go find a deal. Bring in an equity (presumably more experienced) partner share in the profits and learn as you go.

[Darrin Yon]

Thanks a lot, Arn my value to any deal is at a minimum I'd be funding 65% and my partner(s) would be all in for the remaining 35% or whatever we came to terms with. I'd be shouldering the financial load. I have what I believe are solid ideas for a partnership and you're spot on, it's the experience I'm in need of in a partner. Thank you again, and I'll follow up on your tips for success! 

Best regards,

-Darrin 

[Percy N.]

@Darrin Yon, what is the typical range of the deals in the markets you are looking at?

What is the capital stack structure you envision for say a $15mm deal?

What are your target returns?

[Darrin Yon]

Quote from @Percy N.:

@Darrin Yon, what is the typical range of the deals in the markets you are looking at?

What is the capital stack structure you envision for say a $15mm deal?

What are your target returns?

Good question Percy. I assume that capital structure you mean how much money would I put into a $15mm deal? At least 60%-65% unless my capital partner could facilitate better financing alternatives. The properties I'm looking at for deals now fall into the dollar amount you estimated in this market. They're typically earning between $700K-$800K+ after expenses are paid and I'm targeting this type of return in my market. These are 100+ unit multifamily properties. My lender has agreed to 70% LTV on these types of properties so I'm basically gauging ways to establish the interests of other investors preferably those experienced in multifamily properties. Hopefully, I've answered your question.

[Justin Moy]

Depends on what you want your role to be. Typically the 3 biggest roles are finding the deals (marketing to brokers or sellers and underwriting deals), raising cash for it if you're using some additional OPM, managing the deals (or managing the property manager). If there's value add there's also possibly construction management but some would say that falls into the asset management category. 

Once you find what you want to do or like to do, look for partners who fill in the other gaps. Nothing beats in person networking in my opinion, my best results have been in masterminds or conventions that costed a bit of money to attend. 

[Darrin Yon]

Quote from @Chris Seveney:

Quote from @Darrin Yon:

Greetings All,

What advice would you give an investor who's searching for an equity partner or an equity partnership for the purchase(s) of multifamily properties? Currently, I'm looking at 100+ unit properties to ensure I have cash flow that's worthwhile once expenses are paid. I'm definitely open to networking and establishing contacts. What are your thoughts? 

 Equity partners look for:

1. Preservation of capital

2. Someone with experience, integrity and can communicate

3. Preservation of capital

If you are looking to raise $, investors want to see a proven track record, a thorough PPM to understand the business plan, terms, risks and details of the deal.

Thanks, Chris being a new investor in the multifamily space I've been able to have a lender agree to 70% LTV for my deals. I'm looking at 100+ unit properties. All things considered, you've given sound advice and I appreciate it.

[Darrin Yon]

Quote from @Justin Moy:

Depends on what you want your role to be. Typically the 3 biggest roles are finding the deals (marketing to brokers or sellers and underwriting deals), raising cash for it if you're using some additional OPM, managing the deals (or managing the property manager). If there's value add there's also possibly construction management but some would say that falls into the asset management category. 

Once you find what you want to do or like to do, look for partners who fill in the other gaps. Nothing beats in person networking in my opinion, my best results have been in masterminds or conventions that costed a bit of money to attend. 

 Thanks Justin, this was helpful. 

[Percy N.]

Quote from @Darrin Yon:

Quote from @Percy N.:

@Darrin Yon, what is the typical range of the deals in the markets you are looking at?

What is the capital stack structure you envision for say a $15mm deal?

What are your target returns?

Good question Percy. I assume that capital structure you mean how much money would I put into a $15mm deal? At least 60%-65% unless my capital partner could facilitate better financing alternatives. The properties I'm looking at for deals now fall into the dollar amount you estimated in this market. They're typically earning between $700K-$800K+ after expenses are paid and I'm targeting this type of return in my market. These are 100+ unit multifamily properties. My lender has agreed to 70% LTV on these types of properties so I'm basically gauging ways to establish the interests of other investors preferably those experienced in multifamily properties. Hopefully, I've answered your question.

 @Darrin, by Capital Stack, I mean all the funds needed for the project to be successful.

e.g. Sr lender will be 70% of the capital stack, LPs will be 25%, GP will be 5% of the project.

So for a $15mm property purchase, the lender would bring $10.5mm, you (the sponsor) would put in $750K and raise the other $3.75mm (plus any additional working capital, capex, etc).

It will be hard for a first-time sponsor to find a single equity partner willing to write a $3-$5mm check.

There are various ways to structure raising funds from multiple investors, a popular one being a Reg D syndication. 

The loans are typically non-recourse and not considered a contribution by the sponsor per se (at least not an equity contribution).

[Colton Hahn]

Quote from @Darrin Yon:

Greetings All,

What advice would you give an investor who's searching for an equity partner or an equity partnership for the purchase(s) of multifamily properties? Currently, I'm looking at 100+ unit properties to ensure I have cash flow that's worthwhile once expenses are paid. I'm definitely open to networking and establishing contacts. What are your thoughts? 

 Meet up with investors in your general area, they generally will know someone who knows someone at least. Reach out to people on groups on social media who are in that market :)

[Darrin Yon]

Quote from @Percy N.:

Quote from @Darrin Yon:

Quote from @Percy N.:

@Darrin Yon, what is the typical range of the deals in the markets you are looking at?

What is the capital stack structure you envision for say a $15mm deal?

What are your target returns?

Good question Percy. I assume that capital structure you mean how much money would I put into a $15mm deal? At least 60%-65% unless my capital partner could facilitate better financing alternatives. The properties I'm looking at for deals now fall into the dollar amount you estimated in this market. They're typically earning between $700K-$800K+ after expenses are paid and I'm targeting this type of return in my market. These are 100+ unit multifamily properties. My lender has agreed to 70% LTV on these types of properties so I'm basically gauging ways to establish the interests of other investors preferably those experienced in multifamily properties. Hopefully, I've answered your question.

 @Darrin, by Capital Stack, I mean all the funds needed for the project to be successful.

e.g. Sr lender will be 70% of the capital stack, LPs will be 25%, GP will be 5% of the project.

So for a $15mm property purchase, the lender would bring $10.5mm, you (the sponsor) would put in $750K and raise the other $3.75mm (plus any additional working capital, capex, etc).

It will be hard for a first-time sponsor to find a single equity partner willing to write a $3-$5mm check.

There are various ways to structure raising funds from multiple investors, a popular one being a Reg D syndication. 

The loans are typically non-recourse and not considered a contribution by the sponsor per se (at least not an equity contribution).

Thanks for clarifying and syndication is definitely an option, I'll research Reg D syndication. You all are a wealth of information.