Multi Family Investment - Wilmington , NC area

Member since 2020 · 51 posts · 9 votes

Hey everyone , I'm new to the forum and i've enjoyed the vast amount of education that Bigger Pockets has to offer . My question is , Im looking for 24-50 Unit Multi-family apartment complexes , the market is over priced and anything that comes up isnt even close to making a 15-22 % ROI . What should I do , save cash and Wait till the market stabilizes a little in a year or 2 ( hopefully ) or invest in a different department like retail commercial that may yield 8-10 % ROI ? I have multiple retail buildings and i have been wanting to invest in larger multi-family units for quite some time . Where should i look for deals , Off market ? Drive areas , look for address and write them ? Contact every Broker ? Loopnet ? I know the answer may be to do all of them but I run a few business and that is my main concern so i cant invest too much time from that and affect my primary income. Any Thoughts

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Ronan DonnellyPro Member

Investor · New York City, NY · Member since 2012 · 332 posts · 385 votes

Hi @Mike B., my approach is to find the people who are experts in sourcing deals and to partner with them by providing my expertise in investor relations and I also bring my own capital to deals. You can make it even easier for yourself by investing as a limited partner in a syndicate so that it is entirely passive. You may have to share some of the profits but it is a much faster way to scale.

Some other benefits are:

1) You can spread your risk by investing in multiple deals, geographies and asset classes (Multifamily, self storage, etc.)

2) You are gaining leverage by partnering with people who have got skills, relationships and time that you don’t

Good luck!

[email protected]

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Ronan DonnellyPro Member
Investor · New York City, NY · Member since 2012 · 332 posts · 385 votes
6y
Hi @Mike B., my approach is to find the people who are experts in sourcing deals and to partner with them by providing my expertise in investor relations and I also bring my own capital to deals. You can make it even easier for yourself by investing as a limited partner in a syndicate so that it is entirely passive. You may have to share some of the profits but it is a much faster way to scale.
Some other benefits are:
1) You can spread your risk by investing in multiple deals, geographies and asset classes (Multifamily, self storage, etc.)
2) You are gaining leverage by partnering with people who have got skills, relationships and time that you don’t
Good luck!
[email protected]
3 Reply
Jeremy Garrido
Investor · wilmington nc · Member since 2015 · 9 posts · 0 votes
6y
Hi Mike,
I'm pretty much dealing with the same issue. Killing time looking/buying single families and waiting for these prices to level off a bit. Gotta contact some commercial brokers because never know when someone is trying to dump some assets.
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Mike B.
OP
Member since 2020 · 51 posts · 9 votes
6y
Ronan Donnelly , you have a good point . I haven't done too much research on syndication but from what I understand , and correct me if i'm wrong . You don't get the depreciation , the return is minimal 4-6 % , still better than banks , but the money is tied up for years , you can't leverage it or refinance for another deal whenever you need . The sponsor may not be the brightest . Just listing a few factors that are kind've important . My goal is to make my passive income equal to or more than my business income which isn't easy but its my goal in the next 8-12 years

Jeremy Garrido- people have recommended to me to buy single family but i think for me , waiting for the right multifamily deal even if it'll take a while will be better for me .

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Ryan Webster
Member since 2019 · 89 posts · 65 votes
6y
@Mike Bianchi
When looking for assets of that size the most effective approach I've found is to contact the owner directly for unlisted assets. Hire a VA through upwork or similar site. You'll need a web scraper to search appartments.com for assets in your market and meeting your criteria. Then have them cross reverence the data with local tax records to find the owner info. You may need to skip trace to get thier contact info. You can use been verified or similar service. From there review your list pick your favorite assets and make contact with the owner. Ask them if they would consider selling now or in the near future. If they are not interest now follow up with them consistently.
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Mike B.
OP
Member since 2020 · 51 posts · 9 votes
6y
helpful post , I appreciate it
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Mike B.
OP
Member since 2020 · 51 posts · 9 votes
6y
Just curious , Ive only known conventional lending for the retail commercial buildings i have and some SBA for specific parcels but what are the better type of lending options and banks for Multi-family for these kind've units where it makes a great deal of difference between 20 and 25 year Amortization or even 30 years if possible . And lending with shorter seasoning periods where you can refinance quicker , maybe that has to do with negotiating with the bank but why not ask bigger pockets . My average commercial deals range around 1mil with your average 20 year amort and 20% down / 3 year pre payment penalty , 5 year fixed and 3 year adjustable until it balloons . Just want to get your opinions on lending as that is very important .
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Taylor L.
Rental Property Investor · RVA · Member since 2016 · 5k+ posts · 4k+ votes
6y
Originally posted by @Mike B.:
Ronan Donnelly , you have a good point . I haven't done too much research on syndication but from what I understand , and correct me if i'm wrong . You don't get the depreciation , the return is minimal 4-6 % , still better than banks , but the money is tied up for years , you can't leverage it or refinance for another deal whenever you need . The sponsor may not be the brightest . Just listing a few factors that are kind've important . My goal is to make my passive income equal to or more than my business income which isn't easy but its my goal in the next 8-12 years

Jeremy Garrido- people have recommended to me to buy single family but i think for me , waiting for the right multifamily deal even if it'll take a while will be better for me .

Most syndications target and perform much higher than 4-6% returns and do provide you with depreciation. It depends on the deal. My man @Yonah Weiss's company Madison SPECS did a cost segregation study on one of my properties. Otherwise known as Component Depreciation ;).
Virtually all multifamily, self storage, and mobile home park syndications do use leverage. Regarding sponsor experience, yes - the more experienced the sponsors, the better.
1 Reply
Mike B.
OP
Member since 2020 · 51 posts · 9 votes
6y
@Taylor L. I’ll have to do more research and get a better understanding of syndication then , I just never really thought of it as an option . I personally like to know what I buy , analyze it , see it , drive by it , it could be an ego thing . But overall , if a syndication brings in a few percentile less than if you had to do the deal yourself with your time and sweat , I’d be a fool not to educate myself more on .
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Taylor L.
Rental Property Investor · RVA · Member since 2016 · 5k+ posts · 4k+ votes
6y
Originally posted by @Mike B.:
@Taylor L. I’ll have to do more research and get a better understanding of syndication then , I just never really thought of it as an option . I personally like to know what I buy , analyze it , see it , drive by it , it could be an ego thing . But overall , if a syndication brings in a few percentile less than if you had to do the deal yourself with your time and sweat , I’d be a fool not to educate myself more on .

Good on you for being open minded. I do agree that being able to easily go see property that you own is pretty cool. However as you said, it's also cool to not have to swing the hammers yourself
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Account Closed
Investor · Fort Worth, TX · Member since 2019 · 120 posts · 147 votes
6y
@Mike B.
Hey Mike! What I do may not to be what you're looking for...but I was where you are a couple of years ago and remember the frustration of trying to buy the mid-size deals (25-50 units) and figure out a way to scale after we (my Father and I) sunk quite a bit of capital into one deal. We realized this strategy wouldn't get us where we wanted to go very quickly.
We did quite a bit of research, eventually found the right mentor (can offer advice in this area, too), and dove in to apartment syndication - and never looked back!
We chose apartment syndication over retail because of recession-resistant nature of B and C class value-add type projects. My Dad has been a professional trader and money manager since the late 90s and based on current market conditions we know there's a crash coming at some point- what typically gets hit the hardest is retail and A-class apartments. So we found our sweet spot buying B and C class value-add apartment buildings in solid markets - and our investors love this strategy. When you underwrite it correctly, and purchase it at the right price, we are confident we can weather any market condition which gives our investors peace of mind.
It sounds like you understand the syndication concept so I won't bore you with the details...but I do want to touch on returns ... typically a 5 year project with a refinance at year 3, 90-100%+ total return, 10-13% cash on cash returns annually, and minimum 15% IRR + a ton of tax benefits (up to $40K in write offs for every 100K invested). <--these are investor returns... the returns are even higher when you are the syndicator or a part of the General Partnership putting together the deal and managing the asset.
I'm a part of an amazing group out of Dallas (Think Multifamily - Mark Kenney is our partner and mentor), and our group is pretty active- we've done $250M+ and 4300 units in the last 12 months alone. The group is made up of people who are trying to create great cash flow and build wealth through apartment investing - and there's a lot of different ways to get involved and join a General Partnership (and a much better use of capital).
Happy to help any way I can... again, this may not fit your goals or be the path you're wanting to go down, but I wanted to throw another option out there for you!
Best of luck in your investing journey! Happy to help any way I can.
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Mike B.
OP
Member since 2020 · 51 posts · 9 votes
6y
@Keeley Hubbard i don’t mind hearing more . It’s intriguing enough to want to educate myself further .
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Rick MartinPro Member
Rental Property Investor · Redondo Beach, CA · Member since 2017 · 411 posts · 477 votes
6y
@Mike B. finding brokers who are doing a majority of the deals in your target market off of Loopnet is a good strategy. Being in NC, it sounds like you can drive for dollars, and also purchase a lists for a mail campaign. In terms of returns being a limited partner in syndications, you can find deals out there that will project 8% COC, 15%IRR and a 18-20% Average Annual Return, based on a five year hold. 4% seems low. Also, some syndicators allow you to peek behind the curtain and learn as a Limited Partner. Learn while you earn.
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Mike B.
OP
Member since 2020 · 51 posts · 9 votes
6y
Thats a little more manageable , any recommendations on syndications from your past experience or peers that have tried syndicators and have a good COC yield and lets you depreciate , money doesn't get tied up too long and if i'm able to learn from it , thats even better . Of course , my goal is to still find a nice size complex, make a decent ROI annually with the option to refinance after 24-36 months after , hold that asset and try it again . For me , i dont necessarily have to wait 2-3 years to pull out cash to buy another property , I can manage purchasing 1-2 per year if the right deal comes and with the right management team which is very important of course .
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Rick MartinPro Member
Rental Property Investor · Redondo Beach, CA · Member since 2017 · 411 posts · 477 votes
6y
@Mike B. you can pm me if you wish.
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Adam Capani
Real Estate Broker · Raleigh, NC · Member since 2018 · 9 posts · 2 votes
6y
Mike, Im a commercial broker in the Raleigh area and cover all of NC. The market you are in is the same exact market everyone else seems to be trying to get into which is pushing pricing up and lowering you ROI. The best strategy is to find off market deals, which are harder and harder to find these days. Good luck with your search, if I come across anything I will reach out!
0 Reply
Chris Salerno
Rental Property Investor · Charlotte NC · Member since 2019 · 306 posts · 183 votes
6y
Originally posted by @Mike B.:
Hey everyone , I'm new to the forum and i've enjoyed the vast amount of education that Bigger Pockets has to offer . My question is , Im looking for 24-50 Unit Multi-family apartment complexes , the market is over priced and anything that comes up isnt even close to making a 15-22 % ROI . What should I do , save cash and Wait till the market stabilizes a little in a year or 2 ( hopefully ) or invest in a different department like retail commercial that may yield 8-10 % ROI ? I have multiple retail buildings and i have been wanting to invest in larger multi-family units for quite some time . Where should i look for deals , Off market ? Drive areas , look for address and write them ? Contact every Broker ? Loopnet ? I know the answer may be to do all of them but I run a few business and that is my main concern so i cant invest too much time from that and affect my primary income. Any Thoughts

Mike, I would say look into syndication in the meantime. If you are not wanting to invest passively, I would start to build relationships with brokers that focus on the 24-50 units. Loopnet can help with this but you will pay top dollar.
I would build strong relationships with brokers, go to your local meetups, and cold call.
Meetups can help a lot when it comes to building relationships with small owners, even large owners some times.
They are out there.
You just have to hunt!
looking forward to your success!!
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Evan Polaski
Cincinnati, OH · Member since 2020 · 4k+ posts · 3k+ votes
6y
@Mike B. I feel your pain. I have been writing letters to owners for a very similar product in my market, but at this point no one is willing to sell. It can be hard to be patient, but that is the only option we have sometimes. I am curious how you are calculating your ROI? Since ROI does not take into account any factor for time, it is not always the best way to compare deals, but certainly one of many metrics to keep in mind.
Typically, you will see IRR, Multiple, and Cash on Cash used when looking at deals.
As for syndication, there are many, many operators out there, and each has their own investment criteria. As noted, some focus on creating their value and exiting as soon as possible, while some are longer term holds. And, as you may know, there are trade-offs to both when measuring performance. Typically, the longer you hold an asset, the lower the IRR, but the higher the multiple, and vice versa for a short hold period.
At the end of the day, regardless of the path you choose, this is very much a relationship and networking business (hence why we are all on Bigger Pockets). If you are trying to buy your own deals, it is pounding the pavement with brokers and owners. If you are looking for something more passive, it is setting up calls with syndicators and finding some whose business plan aligns with your goals.
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Roni E.Pro Member
Specialist · Earth 2.0 · Member since 2019 · 598 posts · 271 votes
6y
I would look at doing Joint Ventures, and understand the market is very hot and returns are compressing. Also, it is very important that they Syndicator you are investing is somewhat "battle tested" e.g. can move quick, seen a downturn, and so forth.
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Mike B.
OP
Member since 2020 · 51 posts · 9 votes
6y
Originally posted by @Adam Capani:
Mike, Im a commercial broker in the Raleigh area and cover all of NC. The market you are in is the same exact market everyone else seems to be trying to get into which is pushing pricing up and lowering you ROI. The best strategy is to find off market deals, which are harder and harder to find these days. Good luck with your search, if I come across anything I will reach out!

Yea , I agree . From what i read , most off market deals come from either property management groups , multi family commercial brokers and mortgage brokers . The issue is , being small and newer to the process make its harder . it may help or worsen that I have my goal set on a 24 -36 unit ( Preferably 60k-100k per unit ) . Maybe a B- C+ type property , $1,900,000 price point for 24 units , 25% down with $ 480,000 . $ 6,500 per unit rehab which could be a bit much since i don't expect all units to need that much and some will need more i'm sure . Closing cost of around $ 25k-40k along with inspections ( mechanical , plumbing , electrical , structural . Insurance around 12,000 a year give or take and taxes around 7,000 . Again , these are just rough numbers but from my investments , if i had to analyze and estimate , these would be the numbers . Property management at $ 2,160 , Cap X at $ 1,000 , landscaping at $600 , vacancy at 10 % for $ 2,160 . Simple repairs at $ 500 , Insurance at $500 and Insurance at $1,000 and a mortgage of $ 7,500 . 25 % down with 4.75 Interest rate on 30 amortz . With these numbers , you can have a solid ROI of 11 % with $ 675,000 all in of course a decent IRR . But these numbers have some fat that can be trimmed , but i try to be conservative . Income based on 24 units with 2bd 1 bth at $ 900 per unit , which will vary on neighborhood and units but i will use lower figures . Now these are cosmetic changes , if the complex needs roof replacement ( $ 30k ) and building needs paint ( $ 10k ) , asphalt is cracking ( $ 7k ) new hot water ( $ 5k ) , then that ROI % return will be shot . This would be my ideal scenario that id like to invest in because i know in reality , the property with better Property management will yield better , less vacancy , less repairs and just overall better care which will yield a higher ROI of 15%-20% especially with a refinance 18-36 months down the line .

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Mike B.
OP
Member since 2020 · 51 posts · 9 votes
6y
Originally posted by @Evan Polaski:
@Mike B. I feel your pain. I have been writing letters to owners for a very similar product in my market, but at this point no one is willing to sell. It can be hard to be patient, but that is the only option we have sometimes. I am curious how you are calculating your ROI? Since ROI does not take into account any factor for time, it is not always the best way to compare deals, but certainly one of many metrics to keep in mind.
Typically, you will see IRR, Multiple, and Cash on Cash used when looking at deals.
As for syndication, there are many, many operators out there, and each has their own investment criteria. As noted, some focus on creating their value and exiting as soon as possible, while some are longer term holds. And, as you may know, there are trade-offs to both when measuring performance. Typically, the longer you hold an asset, the lower the IRR, but the higher the multiple, and vice versa for a short hold period.
At the end of the day, regardless of the path you choose, this is very much a relationship and networking business (hence why we are all on Bigger Pockets). If you are trying to buy your own deals, it is pounding the pavement with brokers and owners. If you are looking for something more passive, it is setting up calls with syndicators and finding some whose business plan aligns with your goals.

Your absolutely right , time should be measured in calculating ROI , if the difference between letting someone do the work ( syndication ) and me doing the work is a difference of 5-7 % then i should do the syndicator so i can focus on my business but i feel with the right deal and enough experience , i can make out better than a 8-14 % return that syndicators offer .

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Evan Polaski
Cincinnati, OH · Member since 2020 · 4k+ posts · 3k+ votes
6y
Originally posted by @Mike B.:
Originally posted by @Evan Polaski:
@Mike B. I feel your pain. I have been writing letters to owners for a very similar product in my market, but at this point no one is willing to sell. It can be hard to be patient, but that is the only option we have sometimes. I am curious how you are calculating your ROI? Since ROI does not take into account any factor for time, it is not always the best way to compare deals, but certainly one of many metrics to keep in mind.
Typically, you will see IRR, Multiple, and Cash on Cash used when looking at deals.
As for syndication, there are many, many operators out there, and each has their own investment criteria. As noted, some focus on creating their value and exiting as soon as possible, while some are longer term holds. And, as you may know, there are trade-offs to both when measuring performance. Typically, the longer you hold an asset, the lower the IRR, but the higher the multiple, and vice versa for a short hold period.
At the end of the day, regardless of the path you choose, this is very much a relationship and networking business (hence why we are all on Bigger Pockets). If you are trying to buy your own deals, it is pounding the pavement with brokers and owners. If you are looking for something more passive, it is setting up calls with syndicators and finding some whose business plan aligns with your goals.

Your absolutely right , time should be measured in calculating ROI , if the difference between letting someone do the work ( syndication ) and me doing the work is a difference of 5-7 % then i should do the syndicator so i can focus on my business but i feel with the right deal and enough experience , i can make out better than a 8-14 % return that syndicators offer .

I was actually talking about time in terms of time value of money. I.e. I am over simplifying here, but you pay $1mm for a property, hold it for 10 years and sell for $2mm, you pay $1mm for a property, hold for 30 years and sell for $2.5mm. Your ROI is larger on the second scenario, even though your money was out for 3x as long. In the 20 year difference, what could you have done if you had taken the first option.
But you are correct, your personal time is a currency you can never get back. So being able to free up more of that has a value beyond strictly financial.

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Mike B.
OP
Member since 2020 · 51 posts · 9 votes
6y
@Evan Polaski
Ahh , sorry , I understand now . Good question , yes , I would choose the first , and work on another project . But My goal is to buy and hold , refinance if the market appreciates the value and basically do the same as the first option without having to sell years . I would like to purchase a 1-2 properties every year if possible depending on market , hold and refinance down the line . I work so my other Income can help purchase my properties to help speed the process .
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