All Forum Posts by: Brian Briscoe

So, supplemental loans also have limitations. Depending on what type of loan you have, there may be a minimum of $1M on the supplemental with the caveat that total LTV cannot exceed a certain percentage (75%-80%)... If you have to bring a ton of cash to the table, it will dilute earnings.

What's the loan interest rate?  If it's higher than prevailing rates, that may be grounds for a discount.  Theoretically, the value of the property is independent of the financing, but the seller is in a position where they need the buyer to assume a loan that is not advantageous.  Maybe they can find a buyer that will pay full price (i.e. group doing a 1031 with just the right amount of capital to close).

Couple of options:

-Offer investors a combination of preferred shares and common equity shares.  The preferred shares are lower in the capital stack (i.e. paid out to investors first), so lower risk, and therefore lower expected returns.  If the deal is right, you may be able to find a single entity that becomes a preferred equity partner (family office maybe).  They'll require a higher rate than a standard loan, but far less than common equity shareholders will want to see.  The combination of assumed loan and preferred equity could bring numbers back into the green for other investors.

-Find someone with 1031 money... if the size of their payout is big enough, they may take lower returns to be able to park the money tax-free.

We negotiated a master lease on a similar situation (we ended up buying outright).  This could lock up the property for a while and give you time to arrange better financing (or allow more time for the YM to burn off).  Obviously, this would have to meet the seller's needs too.  In our case, we'd give a smaller down payment upf front and would then operate the property for 12-24 months and pay the owner a monthly fee.  Somewhere in that 12-24 month range, we'd purchase the property.  Benefit of this for us was it would give us time to work financing out.  Benefit for them was they'd have time to find their own 1031 property...  

Good luck...

@Yinglu Wang

What size are your properties?  We use SDMC for our apartments. Pretty sure they do all sizes.  We pay $30 per unit per month plus payroll for 100+ units... not sure what that translates to for smaller properties as a percentage...  They’re in West Columbia.

https://www.sdmcinc.com/

Efficient and fast may not be the same route...

So you’ve amassed some decent cash flow already. Great job!  One option, and already pointed out, is to stick to what you’ve already been doing. If it’s produced that kind of income, you should be able to rinse and repeat. Of course, that may not hit your timeline, but I think that’s the most efficient route....

Fastest route... that depends. I like to look at return on equity. You’re making just under $2k per month = $24k per year - divide that by you’re total equity and you get an annual return on equity...  It may be best to tap into that equity and get it working in higher return investments.

I do apartments... most investment opportunities I've seen recently are projecting mid-teens as average annual returns. If your return on equity is much less than that, your strategy could include selling or refinancing your current portfolio to release the equity and invest it in something like apartments....

We’ve used Madison Specs on all of our cost set studies so far... thanks @Yonah Weiss!

There are free options... college interns.  Looking at that option now for several areas of our business.

Like @Taylor L., I want to keep my content in my voice with my personality shining through.  So I'm not outsourcing the that part... I will soon have someone polish it up and make it useable in several mediums and formats...

 I've lived in every time zone in the US plus a handful outside of the U.S.  In DC metro right now, but that's definitely not the answer to "where are you from?"...  Also grew up in a bubble that I'm happy to have spent a lot of time out of it (though I'll likely end up living back in the same bubble with a frequent flyer card).

 Aaron -- I find it amusing that your location is set to "All over the USA"  As someone who has moved frequently, it's sometimes hard for me to answer the question: "Where are you from?"

Two degrees in math and one in international relations.

One very analytical and one soft science.  

Mathematics is a very logical subject... with theorems and postulates and structures that follow certain rules... I can apply the lessons learned to analysis, due diligence, solve problems, etc.  Though, you really only need HS math to analyze apartments...

International relations  taught me that not everything follows rules and some things just can’t be categorized.

Overall, these degrees taught me different ways of thinking and approaching problems...

What's up JB!  We've had verbal commitments drop... fairly common.  Not nearly the 80% you're talking about.  We do make a habit of asking where the money is coming from...  there have been a few people that we've been able to disqualify with this question.  

I think the most common drop for us is someone who wants to invest retirement funds but hasn't started the process to start a qualified self-directed retirement fund...  When push comes to shove, they just can't invest.  Had another guy recently commit to $50k and didn't even have that much in his investment account....  Also had one whose funds were supposedly coming from selling an investment property... when the property didn't sell for the price he expected, he backed out. 

Not sure how you're asking for commitments, but a few key questions can reduce the number of people that back out.

@Diane Heidke

My second property was a condo...

HOA was reasonable, took care of a lot of maintenance, and offset several of my expenses.

Whether a condo works depends on many factors. Do an income v. expense analysis and see how it pans out. Raleigh is a hot market now... if it continues to go up, the condo will appreciate handsomely over the years.

My condo never cash-flowed (San Diego) and you can’t have very many of those... but I walked away with a 6-figure payday when I sold it several years later... That one condo, although it gave me a big payday, also kept me from investing for the next several years because of the strain on our budget...

Bottom line, run the numbers and if you cash flow, it’ll probably work out.