All Forum Posts by: Charles Carillo

In this episode, Mauricio J. Rauld talks about "Navigating SEC Regulations When Syndicating Real Estate"

Here is some of what you will learn:

- 506 B or 506 C, which ones used more.

- Advertising an offering is illegal when raising for 506 B’s.

- How are syndicators able to promote their businesses while not promoting an offering.

- What mistakes are commonly seen on social media with syndicators?

- How should a foreign passive investor prepare to invest in US syndications? 

Listen to:

https://podcasts.apple.com/us/podcast/gi46-navigating-sec-regulations-when-syndicating-real/id1478632257?i=1000473849523

YouTube:

@Danny Greene

There are a number of real estate "gurus" out there that focus on all different types of investment strategies; multifamily to wholesaling. The issue I feel with wholesaling, in general, is there is a low barrier to entry, with most new wholesalers being unlicensed and they are looking only for quick cash. Pile this onto the fact that you have unsophisticated homeowners who find themselves in financial distress and it is a recipe for disaster. On the other hand, there are also very legitimate home buyers and wholesalers out there that get a bad name because of these fly-by-night wholesalers. It is only a matter of time until states start cracking down on this.

@Wilson Lee

It seems you have really done your homework. I would try to revisit the cash for keys with a much larger amount and have one of these attorneys draw up some sort of lease termination agreement that they are required to sign. Possibly the normal one month or two months of rent for keys is not going to cut it but you start getting that to 6-12 months of rent and people might reconsider. A couple things to think about; anybody can sue anybody or anything. If you feel that 6 or 12 months of rent is a lot, you can divide that by the hourly rate of a good litigation attorney ($500?). Lastly, there are free legal services available to tenants (especially in California). You need to expect that you will be paying and they will not.

@Leo Myatt

This is a subjective question because every investor has a different skill set and goals. If you are looking for heavy value plays, you might want to find undervalued properties with blatant deferred maintenance etc. If you are looking to just do some cosmetic upgrades, you are going to search out a property with good "bones" and mechanicals that do not require major CAPEX items...like roofs. Figure out what you are looking for, what you are doing with the property and what your expected exit strategy is.

@Martez Bynum

Direct mail campaigns depend on who you are mailing to and can vary from area to area. Are you mailing multifamily owners or single family owners with utility shutoffs? Commercial properties or fire damaged rentals? Sending a postcard to a large apartment complex or a yellow letter to small multifamily owners? Similar to any other marketing campaign, you need to choose 1 or 2 routes and check your success with each. Make sure that you are prepared to test each campaign for at least a couple months. Make sure you can track each of them as well.

@Samantha Smith

I do not think you have to be nervous about finding a good renter in any market; it might just take longer. Just layout the requirements for renting and put that in your ad.If you go this route just make sure that you have a good reserve fund and be aware that you probably will have a couple months each year where you collect no money because of a tenant changeover etc. I cannot speak to selling and reinvesting since there a number of variables.

@Account Closed

Step down is the easiest to explain and typical with bank commercial financing. Usually they are; 5,5,4,4,3,3,2,2,1,1. This means that the first 2 years of the loan will have a 5% prepayment penalty, the next 2 will have a 4% prepayment penalty and so on.

Yield maintenance is a little more complicated and is determined by the unpaid balance and the current yield on the U.S Treasury that is closest in maturity to the loan maturity date. As the name states it maintains the lender's yield. If you have 5 years left or 10 years left it would coincide to that U.S Treasury. Not to get too technical, the simplified calculation is:

yield maintenance = remaining payments present value x (loan rate - treasury rate).

Example; you have 10 years left on a loan with a remaining balance of $1mm. You are paying a rate of 4%. The 10-year U.S Treasury has now decreased to 1% (for example). You now need to pay the lender back the remaining loan balance plus an amount using the calculation above to cover the lender's initial anticipated return. 

In essence when the institution made a loan to you, they planned on making the yield of the loan on their money for X years. If you disrupt this, you need to cover their yield (above the current U.S Treasury). If U.S Treasuries go up, the lender can actually profit by lending the funds at a higher rate and accepting your prepayment. There would actually be no yield loss to the lender. There would still be some sort of prepayment fee/penalty you would need to pay on the remaining balance but not the yield maintenance. Other than selling the property, you would not be paying off a property loan early in an increasing rate environment.

@Allan Tolbert

I would say seller financing is the best financing option.

@Luke Carl

I have had this before. Possibly having another walk through before signing the lease? Make sure it is the exact apartment they are renting, not a model. Before we hired 3rd party management, we would have a checklist that was required to be completed before an apartment was "rent ready". After you rent hundreds of apartments you are going to find people like this that are just wanting some sort of discount. There really is nothing you can do. If you start finding that 15%+ of people are having remorse (there are probably twice as many that don't say anything), maybe there is something you need to change.

@Avvy Morales

I am not sure why you would rent a house that was not safe. This is really the main concern here. If the house was safe during COVID, I would just switch them to month to month and deal with them leaving later this year.

I guess if you really ran out of options you could be the first landlord ever to contact your city and report your own property as being unsafe and they might condemn it. That might make the repairs more expansive but at least you would not be sued.

I would offer them cash for keys, for them to move out ASAP. Have them come up with the amount. I would also offer them money towards moving etc (they pay the moving company themselves, not you). Even if it costs you a few thousand to get them out; that would be eaten up in legal fees in one day.