Real Estate Deal Analysis & Advice

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Joe Fairless
  • Investor
  • Cincinnati, OH
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Closed on 250 apartments in Houston, Texas yesterday! 2 Lessons Learned...

Joe Fairless
  • Investor
  • Cincinnati, OH
Posted Aug 6 2015, 07:46

I'm proud to say that my group closed on a 250 unit yesterday. It's the second deal I've syndicated and both of them have been over 150 units (first one was 168). 

A couple syndication and multifamily lessons I've learned so far from these deals:  

1. If you are not doing the property mgmt yourself, then have your local mgmt partner put their own money in the deal. This creates much more accountability and aligns the interests. I didn't do this on my first deal (mistake) but did it on this deal in Houston. 

Bonus pts: if the local partner also brings in investors. That adds another layer of accountability and alignment of interests. 

2. Yes, money will find good deals but you shouldn't wait for the deal to get the money. On my first deal I raised over $1M and had to do it after finding the deal. It was a...character-building experience :) I don't recommend that same experience to others. On my second deal I had already prepped most of my investors so it was much smoother. I still brought in new investors but the overall process is much better when you prep investors before you have a deal. Note: I don't actually receive money before I have a deal. I only speak to investors about a hypothetical deal (or past deals) and gauge their interest level in investing. 

Bonus pts: How do you prep investors before you have a deal? Easy. Schedule a meeting with them and learn their financial goals and how they evaluate success with their investments. Then, talk to them a little bit about what you're doing. At the end of the conversation ask them "If I find something that meets your financial goals would you like me to share it with you?" I've never had anyone say no. Then, keep them updated as you look at properties and, when you have one, they are well aware of everything and more inclined to invest. 

Bonus bonus pts: another way to do this is to create a fund where you actually do raise and have money wired before your deal. I haven't done this before but it's a natural evolution from raising money on a deal-by-deal basis. 

For anyone who wants to raise money and do syndicated deals, I'm confident these two lessons I've learned will help you be successful. 

Joe 

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Andrew Syrios
  • Residential Real Estate Investor
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Andrew Syrios
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ModeratorReplied Aug 26 2015, 19:02

That's awesome Joe! Well done.

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Joe Fairless
  • Investor
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Joe Fairless
  • Investor
  • Cincinnati, OH
Replied Sep 4 2015, 03:44

@theo 

@Theo Hicks I know we're meeting today in person but wanted to also respond to your post so others know I didn't forget about ya. 

1. The closest thing I have is a collection of interviews I've done on other podcasts where they've asked me about my deals - you can find them on my website under Media 

2. When I present deals to investors I first gauge their interest, then, if interested, I send them the opportunity, then I set up a call with them to discuss 

3. For my first deal, the people who invested were people I know throughout life - from being on flag football teams together to being on the Alumni Advisory Board at Texas Tech together. 

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Theo Hicks
  • Rental Property Investor
  • Tampa, FL
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Theo Hicks
  • Rental Property Investor
  • Tampa, FL
Replied Sep 4 2015, 06:43

@Joe Fairless Thanks for answering my questions and taking the time to meet with me this morning! 

@Brandon Turner @Joshua Dorkin You guys need to interview Joe for the BP podcast! He has a lot of information that the BP world needs to hear, especially for the newer-intermediate investors that are looking to take their real estate businesses to the next level!

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Account Closed
  • Hermitage, TN
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Account Closed
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Replied May 30 2016, 17:27

Hello, i been reading you post and i have a question..... so for my 1st home I wanted to buy an duplex then stay for about a year then use it as straight rental property..... how does if work regarding FHA loans? Then eventually I want to get my own home.... would I be able to get another FHA loan or will it most likely have to be an conventional loan...oh and I been hearing that these days you don't really need the whole 20-30% down on a traditional home loan..... any tips, ideas, help would be greatly appreciated...thanks!!

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Roger Lin
  • Burke, VA
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Roger Lin
  • Burke, VA
Replied Jun 12 2016, 20:42

Thanks Joe! I know you posted this more than 10 months ago but it suddenly became very relevant advice now that I am building up my own syndication business. I love your strategy to get money before you have a deal. It makes perfect sense and I agree with you that the natural progression is to raise a fund. I am starting to do that before my third deal firms up. Thanks for sharing. 

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Joe Fairless
  • Investor
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Joe Fairless
  • Investor
  • Cincinnati, OH
Replied Jun 13 2016, 09:37

@Roger Lin awesome, congrats! And I just closed on a 320 unit and wrote about lessons learned on that one too. Here you go: 

https://www.biggerpockets.com/forums/223/topics/31...

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Roger Lin
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Roger Lin
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Replied Jun 13 2016, 10:06

Thanks I read that too already! I think we are doing similar things and I have much to learn from you. Thank you for sharing your experience.

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Christopher Lombardi
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Christopher Lombardi
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Replied Jun 13 2016, 10:25

Hey @Joe Fairless, thanks for the good info.   When you purchase a deal of that size, does the bank still give you non-recourse debt?  Or do they require someone to guarantee it?

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Joe Fairless
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Joe Fairless
  • Investor
  • Cincinnati, OH
Replied Jun 13 2016, 10:31

@Christopher Lombardi yes it's non-recourse but there are "bad boy carveouts" that that make it go recourse. Some of those carveouts include fraud and gross neglect. 

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Christopher Lombardi
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Christopher Lombardi
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Replied Jun 13 2016, 10:33

@Joe Fairless, thank you.  I was wondering about that.