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Multi-Family and Apartment Investing

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Marc Warren
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Multi Family Syndicate Recommendations

Marc Warren
Posted Nov 29 2022, 12:28

Does anyone have any recommendations for a good syndicate with a track record in multi family.  I already have some investments with Ashcroft.  Was wondering if there were any other firms I should look at.

Thanks,

Marc

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Larry Fried
  • Investor/RE Broker
  • Eugene, OR
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Larry Fried
  • Investor/RE Broker
  • Eugene, OR
Replied Dec 4 2022, 12:27

As others have posted, the rising interest rate environment is a reason for extra caution in deals.  As a LP in many deals myself, I certainly feel the headwinds going forward with any syndicated deals. For over six years, I have been tracking my own record with one particular crowdfunding company via my BP blog articles now in four parts starting with:
Have I Found the Holy Grail of Passive Real Estate Investing?

I do quarterly updates in (Part 4)

You might find it an interesting read.
 

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Jared Prevost
  • Lender
  • Tampa, Fl
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Jared Prevost
  • Lender
  • Tampa, Fl
Replied Dec 7 2022, 14:10
Quote from @Brian Burke:

@Marc Warren, this is a great time to research potential investment providers, learn more about their companies, and investigate track records.  But if you are looking to make an investment now, be extra cautious.  

No matter what you see or read about any syndication sponsor, if they are offering you an investment opportunity now, scrutinize it very carefully. Maybe they have the deal of the century, and if so, great.  But in my humble opinion, which I'll probably take heat for, and maybe I'm wrong, is that right now isn't the best time to be buying.

There are two reasons why sponsors might be buying right now.  1. Because they have found a great deal (I haven't found any but that doesn't mean they don't exist).  And 2. to generate fees to keep their office doors open.  I suppose there is also a third reason: they think they found a good deal, but they are wrong.

As you do your research, seek out firms that are financially solid enough that they don't have to buy anything at all and can still pay their company overhead.  Watch out for groups that have built a huge mouth to feed and must transact to feed it.  There are more than a few of them out there.


If I had to guess, I would say more than 50% of investors calling themselves syndicators have been raising money for multifamily or other commercial real estate assets for less than two years. A lot of underwriting is going on from folks who learned from a coach but haven't actually seen underwriting become realized in a deal before.

Speaking personally, our group has shifted our investment criteria to invest in deals that are 'interest-rate agnostic'. In other words, we can hit our return metrics regardless of where interest rates go. The result... not moving forward with any deals that hit our criteria since July! A lot of investors in our database are stashing cash away now to invest in 2023 when it's believed that there will be more deals and fewer buyers (which of course means better purchase prices for investors).

If you like passive investing but are concerned with risks in the multifamily space, it might be worth considering a debt fund or private lending. You could also passively invest in small business funds.

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Paul Moore
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  • Commercial Real Estate Fund Manager
  • Lynchburg, VA
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Paul Moore
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  • Commercial Real Estate Fund Manager
  • Lynchburg, VA
Replied Dec 9 2022, 08:19

Hi @Marc Warren! You got a lot of great advice above. I recommend that you find a community of like minded investors and get advice from them. One group we recommend is Jim Pfeifer's Left Field Investors. Another one is @Ian Ippolito's Private Investor Club. You should get more than enough recommendations there. 

Though I wrote a book about multifamily investing in 2016 (The Perfect Investment) I have expanded to also invest in self storage, mobile home parks, RV parks and more. I recommend a diversified portfolio. 

Happy investing!

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Paul Moore
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  • Commercial Real Estate Fund Manager
  • Lynchburg, VA
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Paul Moore
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  • Commercial Real Estate Fund Manager
  • Lynchburg, VA
Replied Dec 9 2022, 08:22

Hi @Marc Warren! I think you got some great responses above. I would recommend you join a group of like-minded people. @Jim Pfeifer's Left Field Investors and @Ian Ippolito's Private Investor Club are two suggestions that would offer a lot of value and information from similar thinking members. 

I wrote a book in 2016 about multifamily investing (The Perfect Investment) and have since added self storage, mobile home parks, RV parks and much more. I believe in a diversified portfolio. 

Happy investing!

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Marc Warren
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Marc Warren
Replied Dec 9 2022, 08:38
Quote from @Paul Moore:

Hi @Marc Warren! I think you got some great responses above. I would recommend you join a group of like-minded people. @Jim Pfeifer's Left Field Investors and @Ian Ippolito's Private Investor Club are two suggestions that would offer a lot of value and information from similar thinking members. 

I wrote a book in 2016 about multifamily investing (The Perfect Investment) and have since added self storage, mobile home parks, RV parks and much more. I believe in a diversified portfolio. 

Happy investing!

@Paul Moore - I've gained a lot form this post.  Very appreciative for all the responses.  
My father-in-law had a client who had a lot of real estate investments.  The ones they like the most were the RV parks.  I could never quite figure out if the rv parks were really more profitable than an apartment building.  Or if what they liked, was that almost everything was in cash

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Foti Karastamatis
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Foti Karastamatis
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Replied Dec 9 2022, 23:32
Quote from @Marc Warren:

@Brian Burke - The reason I'm looking is because the offerings I'm seeing from the sponsors I know, are not nearly as compelling as they were a couple of years ago.  I wasn't sure if the market has changed, or if they just haven't found good opportunities.


The market has changed substantially! Cap Rates and Interest Rates are way too far apart, the wrong way. For instance, a 4 cap property in Fl back in April when interest was, say 3%, was selling substantially higher than that same 4 cap property with 7% interest rate. In April, you could put 30% down with 70% debt at a 1.20 to 1.25 DCR or DSCR (debt service coverage ratio). Now it takes,(I've seen many) 50%+ equity down and a DCR of 1.42. The deals are still out there but its not like it was 2-3 years ago with the super low interest rates. True market sellers will sell because they have to and the market will determine the price. The investors demand their money back at the end of the investment period they signed up for. The ones getting hurt are the one that used an ARM with high LTV instead of fixed or I/O for 3 years and now have to refi or sell because a balloon payment is nearing.

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Bobby Larsen
  • Investor
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Bobby Larsen
  • Investor
  • San Diego, CA
Replied Dec 12 2022, 22:35

Look for syndicators that are established but not too large that they are essentially equity allocators churning fees at this point.

There are many good ones out there, I’m a syndicator myself, and happy to provide outside referrals if you DM me.