All Forum Posts by: Bobby Larsen

Largely dependent on the neighborhood and size you're referring to but the fundamentals of Jacksonville aren't great right now. They have a significant amount of new supply being delivered over the next 18 months so rent growth will likely be flat over that time. Combine that with insurance premiums skyrocketing and the overall market's challenge with interest rates, distressed properties are on the horizon. With that said, prices have already dropped significantly so the factors I just mentioned will lead to good long term buying opportunities. Overall, I just think that Jacksonville has a bit more challenges than most regions in the near term so prices probably have a bit further to fall but it's already 75%+ of the way there.

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.

We acquired our first multifamily property in San Diego this year- 61 townhomes. We’re also based in San Diego so that was part of the decision but as other have mentioned there are pros and cons.

Cons - it is very landlord unfriendly, especially within the city proper. Friendlier than LA and SF but still difficult. Evictions can take 6+ months and even longer right now as they are still processing pandemic evictions.

Pros - Rents are more stable and likely better rent growth. For all the cons of California, people still want to live here. Most of the out migration are either those that can’t afford it or those wealthy enough that it makes sense to move residency for part of the year. I always say, California has to give people reasons not to live here whereas every else has to give people reasons to live there.

Second, I don’t follow the herd mentality of investing. The hate towards California is at an all time high and despite being warranted in many ways, theres much more room for positive surprises compared to the hot markets today that are oversaturated with investors. Many of which were C+ markets 2 years ago and haven’t historically been great for investing.

The eviction process in San Diego is terrible. On month 4 of several evictions from tenants who haven't paid in 12 months and have no interest in payment plans. Has anyone had any luck completing an eviction the past 4 or 6 months? 

I’d be interested. We own a 49 unit property in Westshore, Tampa but are looking to acquire more and in the 50-150 unit range.

What are we defining “crash” as?

I’m not sure if that’s true for the 4-10 unit space compared to the 50+ units after you correctly account for the higher expense load on 4-10 units. It is true for 50-125 units versus 125 to 500 units because the cost of equity is lower (at least as of today). Large institutional

investors are flush with cash and they can put larger check sizes to work with the same level of work.

As most others have said, simply raising equity and handing the capital over to someone else requires a license.

With that said, LP equity receives some level of voting rights in partnerships so you could structure your agreement, even through a side letter agreement, so that your “passive co-GP” has some voice in the decision making process. The more responsibilities you take on, the more acceptable this scenario is. My recommendation is to involve yourself in some manner going forward whether it’s investor relations, debt, analysis, or high level strategy.

Personally, I think those percentage fees are pretty light. Loan guarantor will require 10-20%, bringing in the LP equity is probably 25-50%, and providing the GP co-invest is another 20%.

If your sole contribution is finding and managing the deal, you probably aren’t more than 25% of the GP.

@Ben Leybovich

Well said. The 0.1% expansion rule also ignores the obvious fact that the buyer controls the going in cap rate. Just because you decide to pay more doesn’t mean the cap rate will be lower in the future.

Side note but also one of the most obvious flaws I see in people underwriting exit caps is that they do not reassess taxes in the proposed asset class. It doesn’t matter in some markets but if you’re growing taxes during your hold at 2-3% and values at 5-6%+ then exit caps with reassessed taxes vs those without have a huge impact. More some reason, this seems to be ignored outside of California.