All Forum Posts by: Chase McArthur

@Dean Hunter

As a professional underwriter, I'd be happy to cross check your numbers. As @Brian Burke was saying there may be something off however, that would depend on how you are structuring the deal. There are several ways in which the returns can be structured, it really isnt just "investors get 20% pref". There are depths of complexity to preferred returns and they all depend on varying factors like capital stack and variations in the tranche among other things. Is that 20% calculation the "simple" pref or are you including a kicker? There are specifics that should be addressed when building your structure to present to investors. You need to consider the following when approaching sophosticated investors, things like:

When will the initial capital outlay be recovered? Will there be reinvestment? Is there going to be other layers in the stack (senior, mezzanine etc.) Will pref equity be converted to common for reinvestments for the remainder of the horizon? How long will the horizon be? What is your exit strategy? Will there be a minimum hold requirement? Such aspects should be considered before you decide the returns you will be offering. A properly structured deal would most likely never support 20% returns.

@Kyle Mitchell

As part of the due diligence I have done in the past it wasnt unusual for me to talk with the current tenants about the property, current management and rents. I would be making some phone calls. Aside from the possibility of a skewed rent roll (which is likely) having month to month tenants occupying 25% of the property poses a bigger potential risk.

Obviously I can't speak for your state laws but here in VA month to month tenants can leave at any time without incurring any penalties. This creates an obvious problem should you decide to raise rents. I would check on your state laws regarding periodic tenancy.

@Sonny Sach

Dump youre SF portfolio and expand into commercial. Since residential properties are the most secure, scale your operations. Multifamily properties are going to be your best and most efficient investment for cash flow in the residential asset classes. So instead of owning multiple SF properties (which are difficult and very expensive to maintain) trade up for a larger commercial asset. Relatively lower overhead and better cash flow potential.

@Matthew Neal

PM me.

@Paniz Kosarianfard

Miami is always a good investment, Tampa is hotter right now though. PM me, I'd be happy to discuss the FL market with you.

@Anthony Katsonis

Surprisingly I've never heard of the Buffini approach, I'll have to look into that.

Yea, cold calling is a mother, but at this point it's second nature, just like calling a friend. I've built my self up enough to know the value I can bring so if I get the cold shoulder, I'll just try again next quarter, haha. Consistent persistence.

@Anthony Katsonis

It appears I'm in a different boat from most of you as I am in commercial real estate. However, as previously stated, finding a niche and becoming the best within that particular asset is always the best approach.

Specialization is my niche as I only deal with multifamily investment properties. By specializing I have become an expert in a certain class of assets which affords me the ability to approach potential clients as an advisor first and an agent second. It may not produce immediate listings but eventually everyone sells. If they aren't selling assets they are expanding portfolios so either way business is generated.

As for generating new business, its all about beating up that phone. My business strategy when contacting prospects isnt about hounding them about selling their property, it's simply to establish and grow a relationship. Most of the time, unless the client brings it up sooner, I dont even mention listing their property until the 2nd or 3rd meeting, sometimes I even advise against it, at least temporarily.

And no matter how many listings I have, I always make time to go back to the phones every week.

@Josh Cochran

Yea that's nuts! The sad part is I'm sure people actually invest with them with those ridiculous fees.

If you have $100k to throw around I suggest you structure your own deal.

@Josh Cochran

So these are actually fees from a syndicator?

@Josh Cochran

So I did some digging and found your property. First off, if you can syndicate this whale as your first deal, KUDOS!

Just a rough guesstimate though, this is about a $22M deal, maybe a little more so when you factor in what your fees would be, it gets a little out of hand.

I ran the rough numbers and you would end up just shy of $2M in fees by the end of the horizon. Then you'd split the equity 65/35.

Just out of curiosity, how did you get yourself positioned to potentially be a syndicate for this deal?