All Forum Posts by: Bellman Tumasang
Bellman Tumasang has started 49 posts and replied 116 times.
Post: How do you research real estate markets?
- Posts 122
- Votes 11
Originally posted by @Joe Villeneuve:
First of all, everyone doesn't say that.
Second, those that do, what does all of "that" tell you about the market...and making money in that market?
Well not everyone what I mean is people just say to look at different markets. I watch a lot of real estate videos people like Grant Cardone, Meet Kevin, Graham Stephan and Ben Malloh.
What do you suggest I do to research a real estate market?
Post: How do you research real estate markets?
- Posts 122
- Votes 11
Originally posted by @Stephen J Davis:
@Joe Villeneuve is right. That is what speculators do, not investors. I can go into any town or city in America and make money with real estate. People always think the grass is greener in other cities or states. I guarantee you can make money right where you are with very few exceptions. Run comparable sales on rents and find the areas of your town that rent is higher than PITI and maintenance and vacancy. It is usually the $150,000 to $220,000 homes that rent between $1450 and $1700. This is the sweet spot for investing. The higher priced homes don't demand much higher rent so don't cash flow as well and the lower priced homes are much harder to manage due to the mentality of the clientele. Look in your own backyard first. Get this information from a realtor on your team or online from the local realtor website.
Thanks what websites do you suggest?
Post: How do you research real estate markets?
- Posts 122
- Votes 11
I know everyone says in order to research and find good markets to invest in real estate you should look at good job growth, incomes, migration etc but how exactly do I find out this info? Do I ask brokers, go to brokerage firms, search online if so what reliable websites because the internet says a lot of things?
How can I keep up to date with new info on markets?
Post: Forming a real estate private equity fund?
- Posts 122
- Votes 11
To start investing in real estate do you suggest that I create a real estate private equity firm such as Blue Estate LLC to hire employees, sponsors and create property LLC's to buy properties with only my own money and perhaps leverage debt from a lender such as a bank then eventually when I've built a good track record to raise money from investors hire an attorney to register a fund with the SEC such as Blue Estate Equity Fund I?
To fund the private equity real estate firm Blue Estate LLC can I pay all management fees such as acquisition fees on purchase, disposition fees on sale of property and asset management fees on revenue to Blue Estate LLC which I can use to hire employees and pay legal fees etc?
Do I then pay sponsors such as myself and any I hire in the future to help out on deals a profit split such as an 80/20 split?
I am thinking about using the TellUs rental property management app to collect rents online, I have heard that it allows you to assign each property it's own bank account which is useful for a property LLC is this true?
Does the TellUs app allow you to monitor conversations with the property manager and tenants?
Can all rents be paid to the Property LLC bank accounts instead of the property's managers then I pay the property manager their cut?
Does the TellUs app have a desktop version I believe it only has an IPhone and Android app?
Post: Opinions on the TellUs rental property management app?
- Posts 122
- Votes 11
What are your opinions on the TellUs rental property management app?
Is there a desktop version?
Is it also suitable for big business with lots of units even billion dollar businesses?
Post: Syndication fees explained
- Posts 122
- Votes 11
Originally posted by @Roni E.:
The Following is not Legal or Tax advice. I would reccomend you speak to a Syndication attorney and Real estate attorney.
Let's say a real estate private equity firm called Blue Estate LLC had $1BN AUM. 80/20 split, 1% acquisition fee on purchase price, 1% disposition fee on sale price and 1% asset management fee from revenues.
Response OK.
Let's say they raise $25m from investors in Blue Estate Equity Fund I to purchase a $100m apartment building and hold title and $75m financing in Property I LLC. 6% cap rate so $6m NOI and also assuming 50% expenses on revenue of $12m and interest only rate of 4.5% so annual debt service is $3.375m so distributable cash after debt is paid is $2.625m so a 10.5% cash on cash return. $2.1m (80%) is paid to investors and $525k (20%) is paid to sponsor(s).
Response FYI you are budgeting an interest only debt which is doable for a few years but Year 4 or Year 5 it will probably P & I. So your math is correct based on those assumptions.
Upon closing of the property is $1m (1% acquisition fee) paid to Blue Estate LLC?
Response yes you could do that.
Response It seems you are making Blue Estate LLC the manager of Blue Estate Equity Fund 1
Upon sale of the property let's say for $110m is $1.1m (1% disposition fee) paid to Blue Estate LLC?
Response yes your could do that
Each year is $120k so $10k per month (1% asset management fee from revenues) paid to Blue Estate LLC?
Response yes your could do that
So let's say I solely own Blue Estate LLC and I hire employees to work for Blue Estate LLC to help our such as a director of investors relations, CFO, portfolio manager etc.
Response OK
I then form Blue Estate Equity Fund I with Class A and B membership interests with Class A having no voting rights, 80% profit rights and being sold to investors and Class B having 100% voting rights, 20% profit rights and being owned by Blue Estate LLC.
Response Correct
Does it make sense to pay management fees to Blue Estate LLC so that I can cover expenses such as salaries etc and hire sponsors etc.
Response that is technically already happening you are getting 1%, $120k. So you might need multiple properties so this way you have $500k or whatever to cover your overhead.
I plan to set up my own real estate private equity firm one day so I want to get the whole structure figured out, do you agree with my structure proposed above?
Response it is doable but I prefer to follow the KISS method. It might be just easier each property has its own llc and sell this shares. As what you want to do is raise a a large amount of money, and might be what is considered a Blind Pool as you want to raise the funds first then find the asset.
I know I may have gone into a lot of detail but you know I learn with examples.
I highly appreciate the time you take to read this and your feedback is appreciated.
Response It seems you are making Blue Estate LLC the manager of Blue Estate Equity Fund 1
Yes because I am. It’s a hypothetical example just to let you know.
Post: Syndication fees explained
- Posts 122
- Votes 11
Originally posted by @Roni E.:
So let us go through an Example
$10 Million Acquisition Price (The cost to buy the apartment complex)
$3.5 Million Investor Capital (So investors put in $3.5M to own 80% of the project, 80% of the LLC in this security/investment)
Let's assume the Complex produces $2 Million in Gross Rent. So yearly the sponsor will earn 1% Asset Management of the $2M yearly which is $20k. This is for the sponsor asset managing the deal. There is still a third party management company handling all day to day items.
Let's say Yearly after all expenses are paid plus the mortgage that is $500k left over. So the investor would get 80% of the $500k which is $400k and the Sponsor gets yearly $100k.
The Sponsor at closing will earn an Acquisition of 1%. So take $10M times .01 equals $100k. That amount is paid to the sponsor at closing.
Let's say in 5 years that complex is sold for $14M, so disposition fee of 1%. So take $14M times .01 equals $140k paid to the sponsor at closing.
Let's say the profit is $3.5M at closing. So investors would get 80% of $3.5M which is $2.8M and the Sponsor would get 20% which is $700k.
So the 20% split, the acquisition fee, disposition fee, and management fee is all going to the Sponsor. In the P&L there will be line items of what the third-party property management firm will be charging using 3% or less if 300 units or more. Then there will be a line item for salaries and so forth for the property manager at the site, maintenance folks and so forth.
I hope this helps.
Ok yes I understand that but how about this hypothetical example.
Let's say a real estate private equity firm called Blue Estate LLC had $1BN AUM. 80/20 split, 1% acquisition fee on purchase price, 1% disposition fee on sale price and 1% asset management fee from revenues.
Let's say they raise $25m from investors in Blue Estate Equity Fund I to purchase a $100m apartment building and hold title and $75m financing in Property I LLC. 6% cap rate so $6m NOI and also assuming 50% expenses on revenue of $12m and interest only rate of 4.5% so annual debt service is $3.375m so distributable cash after debt is paid is $2.625m so a 10.5% cash on cash return. $2.1m (80%) is paid to investors and $525k (20%) is paid to sponsor(s)
Upon closing of the property is $1m (1% acquisition fee) paid to Blue Estate LLC?
Upon sale of the property let's say for $110m is $1.1m (1% disposition fee) paid to Blue Estate LLC?
Each year is $120k so $10k per month (1% asset management fee from revenues) paid to Blue Estate LLC?
So let's say I solely own Blue Estate LLC and I hire employees to work for Blue Estate LLC to help our such as a director of investors relations, CFO, portfolio manager etc. I then form Blue Estate Equity Fund I with Class A and B membership interests with Class A having no voting rights, 80% profit rights and being sold to investors and Class B having 100% voting rights, 20% profit rights and being owned by Blue Estate LLC.
Does it make sense to pay management fees to Blue Estate LLC so that I can cover expenses such as salaries etc and hire sponsors etc.
I plan to set up my own real estate private equity firm one day so I want to get the whole structure figured out, do you agree with my structure proposed above?
I know I may have gone into a lot of detail but you know I learn with examples.
I highly appreciate the time you take to read this and your feedback is appreciated.
Post: Syndication fees explained
- Posts 122
- Votes 11
Originally posted by @Roni E.:
So let us go through an Example
$10 Million Acquisition Price (The cost to buy the apartment complex)
$3.5 Million Investor Capital (So investors put in $3.5M to own 80% of the project, 80% of the LLC in this security/investment)
Let's assume the Complex produces $2 Million in Gross Rent. So yearly the sponsor will earn 1% Asset Management of the $2M yearly which is $20k. This is for the sponsor asset managing the deal. There is still a third party management company handling all day to day items.
Let's say Yearly after all expenses are paid plus the mortgage that is $500k left over. So the investor would get 80% of the $500k which is $400k and the Sponsor gets yearly $100k.
The Sponsor at closing will earn an Acquisition of 1%. So take $10M times .01 equals $100k. That amount is paid to the sponsor at closing.
Let's say in 5 years that complex is sold for $14M, so disposition fee of 1%. So take $14M times .01 equals $140k paid to the sponsor at closing.
Let's say the profit is $3.5M at closing. So investors would get 80% of $3.5M which is $2.8M and the Sponsor would get 20% which is $700k.
So the 20% split, the acquisition fee, disposition fee, and management fee is all going to the Sponsor. In the P&L there will be line items of what the third-party property management firm will be charging using 3% or less if 300 units or more. Then there will be a line item for salaries and so forth for the property manager at the site, maintenance folks and so forth.
I hope this helps.
Post: Syndication fees explained
- Posts 122
- Votes 11
Everyone please help me out I’m really confused. Let’s say a syndication deal or equity fund consists of an 80/20 split, 1% acquisition fee on purchase price, 1% disposition fee on sale price and 1% asset management fee of gross rents.
Does the 20% split get paid to the sponsor individually and then the management fees such as acquisition fee, disposition fee and asset management fee get paid to the management firm LLC?
I keep researching and it says sponsors get paid these fees to them I thought the firm gets the fees to hire people such as sponsors etc and sponsor only get an equity split and perhaps a salary as they work in the management firm?
Someone please explain with an example structure as that’ll really help clear my confusion up.
Post: Tellus App. Anyone actually using?
- Posts 122
- Votes 11
Hi guys I’ve read good things about the tellus app I just have questions for the people who use it and know about it?
Can each property have its own bank account such as a bank account for Property 1 LLC and another for Property 2 LLC?
Can tenants, landlords and property managers use the app at the same time?
Is it true that Landlords can look at communications between tenants and property managers?
Can rent be paid to the property LLC instead of straight to the property managers bank account then you collect the proceeds and pay the property manager their cut?
I’ve done research and it turns out that TellUs has an app for both android and iPhone for rental property management but is it also possible to do this online via their website like a desktop version? If I had a big property company with many properties and tenants instead of using an app I’ll rather use a website?
Thanks for the answers could you please explain any other features please ❤️