All Forum Posts by: Charles Seaman

@Trevor West These are the best suggestions that I can offer you as you start out.  It sounds like you're already ahead of the game by having selected your target area.  Building strong sponsor relationships will help you grow your business faster than anything else.

1. Pick a target area. You want to focus on one area so that you're familiar with the area and so that you have meaningful relationships with brokers, property managers, and other professionals that will ultimately lead to you getting better deals and better information.

2. Find sponsors. Sponsors are people that have the financial and experience track records to qualify for the loans that you'll need to acquire properties (unless you're not planning to use any debt). If you develop good relationships with them, then they might even let you use their track records to get good deals that you wouldn't get otherwise and to attract investors that would be more skeptical about investing with somebody that has no prior track record.

3. Find investors. Many syndicators make the mistake of spending too much time finding deals and not enough time finding investors. You should be spending as much time finding investors as you are finding deals. It's often said that you'll be able to find the money if you find a good deal. While there is truth to that in certain regards, it's tough to do that in syndication because there are strict rules and regulations that must be followed when raising capital.

I'm looking for a money partner for a multifamily buy and hold deal in NC. I'll find the deal and operate the deal in exchange for equity.

I already have a 20-unit deal identified that makes sense.  My typical model is syndication, but I don't think that this deal would be a good fit for syndication.  It would be a good fit for a buy and hold that produces continuous cash flow.  If you're interested in finding out more, please feel free to reach out and I'll be glad to discuss it further.

You're welcome @Carnet Williams.  If you have the option of using Excel, I'd suggest doing so solely for the fact that Michael and his team specifically say that the Syndicated Deal Analyzer isn't designed to work with Google Sheets, so some features will not work properly.

@Carnet Williams Are you using the same lender to finance the acquisition cost and the rehab cost?  If so, the best way to do it is to go to the "Summary" tab and select "Yes" from the drop down menu that appears underneath "Using Loan to Cost?"  Then go to the "Loans" tab and manually adjust "% Financed" underneath "Repairs and Reserves" and "Closing Costs."

If it doesn't work properly and you receive a circular error message after doing this, then click "File," followed by "Options," followed by "Formulas," followed by checking the box next to "Enable iterative calculation."  It should work properly after doing this.

@Dustin Garrels Always use the actual numbers from the T-12.  Look at the income on a T-3 annualized basis and the expenses on a T-12 basis.  Many lenders typically look at it this way, so it makes sense for you to do the same.

Keep in mind that it's still a seller's market (although, that's starting to change), so you won't be able to negotiate price based solely on actual numbers in many cases if you want to be competitive.  But don't overpay either.  Now is NOT the time to chase deals, but it is a good time to move forward with any deals that make sense.

@Alberto M. Unfortunately, there really is no exact science to accurately predicting a future cap rate because none of us have a crystal ball.  Most groups typically underwrite deals with the assumption that cap rates will be higher when they sell a property than when they buy it (and that's probably a very good idea in the current time).  On the low side, I've heard of groups using a terminal cap rate that's 0.5% higher than the acquisition cap rate.  On the high side, I've heard 1.5% higher than the acquisition cap rate.  While it's great to be very conservative and use a terminal cap rate that's 1.5% higher than the acquisition cap rate, it'll also likely make you unable to be competitive on most deals.

The best suggestion that I can offer you is to really know the area that you're looking to invest in and to study historic cap rates.  Look at what cap rates were when times were good and when times were bad and also assess where that particular area was when those conditions applied in comparison to where it is now.  Past performance is no indicator of future results, but it is the best resource that we have available to us (unless somebody has a crystal ball).

Lastly, the other reason that cap rates will likely stay compressed, even in a down market, is due to the increase of dollars in the money supply.  As long as the government keeps the printing presses on, then people will have more dollars to throw at investments.

You're welcome @Rodney Robinson

@Carnet Williams Your thinking about the new construction property not being competition is absolutely correct because both properties will be competing for different tenant bases.  If anything, as more new construction occurs, it'll allow you to push rents at your property because it'll leave less non-luxury apartment units in the area, meaning that demand will be greater for the product that you're offering.

You're welcome @Matthew Cooper

@Arn Cenedella Thanks for the kind words.  I'm glad to see that our thought process is on the same page.