All Forum Posts by: Chihiro Kurokawa

@Sam Grooms 

I hear you, the truth is that joining an expensive mentoring group will give you all the tools you need to succeed EXCEPT the greatest determining factor which is effort. Regardless of the mentor there will ALWAYS be disgruntled ex-students who didn't find success. The stakes are high when you're paying that kind of money.

Luckily for me I had already been through this by paying over 6 figures to go to B-school which also had no guarantee of success. 

There are people purporting to be experienced "syndicators" who have marketed themselves very well, but they lack operational experience. Many "syndicators" have been unable or unwilling to find their own deals and so they sign up with others to raise capital to get a piece of the promote. I think there is absolutely nothing wrong with this so long as they are transparent about it. 

However I take exception to people who build significant reputations on the basis of having done X number of deals but their involvement in those deals is strictly as a capital raiser. They're promoting themselves on podcasts, in person and online as syndicators and implying that they're taking deals through the cycle when in fact they're raising capital and then building little or no asset management experience. When I listen to the podcasts I'm not even sure the interviewers know! I think this is straight-up unethical and deceptive. 

This is not a criticism of capital raising specialists who are transparent about what they do, such as @Alina Trigub, @David Thompson, GoodEgg etc. I'm bringing this up because I know the poser is eventually going to bring a deal to market and pick up investors based on false pretenses. It seriously concerns me that people will invest their money while being misled about the GP's inexperience with regard to multifamily operation. 

@Account Closed 

Whew! There's a lot of sobering (and perhaps brutal) commentary on this thread... I'm about to close my first deal (128 unit value-add in a TX tertiary metro with 170k population) and I can share how I did it. 

I had been trying to get into multifamily for two years before I got this deal under contract. I was spinning my wheels and going nowhere fast. In April of last year I joined a mentoring group called Think Multifamily with Mark and Tamiel Kenney. It was 7 months after joining that I got this deal locked down. Yes I paid them a ton of money to join their group.

I got traction immediately after joining because I had essentially "bought" credibility because I now had a partner who as of today has about 4,000 units that he has syndicated. This is in addition to being in a group of similarly motivated people, getting educated via videos, conference calls and in-person classes, and also having direct access to Mark who has the experience. It is difficult to imagine a scenario in which somebody with that caliber of a track record is willing to spend one-on-one time with you unless you've paid them or they're your family/close friend etc. 

The other piece is that I underwrote many, many deals over those two years. By the time I found this one I was pretty decent at underwriting so I knew it was a good one. But even so I went to a number of trusted colleagues other than my mentor to confirm my assessment. I kept chasing it and I eventually had an accepted LOI.

In order to raise the capital stack which is greater than like 5X my current net worth, I knew I needed an additional experienced partner beyond my mentor in order to ensure execution certainty. By this point I knew the deal was good enough that I could find somebody. I went to two established, reputable syndicators who said no due to reasons that had nothing to do with the deal, and then the third one I went to said yes. It was a great fit for various reasons. 

And that's how I partnered on my first deal with two big-time well-known investors who've combined for over $550M in value-add multifamily. The bottom line though is that the deal simply must be good enough to attract people like that. My mentor Mark obviously has the right of refusal so if the deal is mediocre it won't fly. Nonetheless once I had them on board I was able to "borrow" their reputations to raise a significant amount of capital from my network even as a first-timer. 

I'm not compensated in any way to mention the Kenneys or Think Multifamily. 

Here's how I would do it:

Rental property is worth $200,000.

Mortgage balance is $100,000 so you and your partner share $100,000 in equity.

You own 50% of the property.

200,000 * (100,000/200,000) * 50% = $50,000 in value applicable to your net worth. 

The outstanding loan counts against you so you must net that out. I believe this applies even if the property were owned by a single entity in which you had 50% ownership. 

Thanks for the feedback!

Does your attorney handle the securities AND real estate side of things, giving you a one-stop-shop for all things legal with your deal from A to Z?

I'm wondering whether this is more common, or if syndicators more often use a separate securities and real estate attorney. I'd also like to ask your opinions on pros and cons of both. Thanks! 

If you're decent at Excel it's not that hard to create one - look up articles and YouTube videos on how to do data tables (the kind with two variables, not one). 

"While you're there pondering whether the glass is half empty or half full, I've already drunk the water."

Yes it's competitive right now and many apartments are trading at crazy cap rates. But why would it be any easier in the future?

When things cool off and brokers start having to make calls, what makes you think they'd be more likely to go with an unproven newbie then vs. now? Their criteria doesn't change; they want the highest price possible *given they have* execution certainty. They're still going to call their proven buyers.

Furthermore if you can go from being a poser to being an owner in today's climate, doesn't that put you in that much better position to succeed later?

I don't think the question is about "when should I start?" but rather "do I have the time/persistence/desire to do this?" If the answer today is no, chances are the answer tomorrow will still be no.

Hey Bart yes it is a ton of money to get into most if not all of these mentorship groups. And it took me 15-16 months of trying to make it happen in multifamily to finally come to the conclusion that I essentially needed professional help. No it is not impossible to do it on your own but it is extremely difficult. Case in point, about 7 months after joining TMF I had my own deal under contract. Mark's mentorship was crucial in making that happen.

"OK that sounds great, but 'everybody' is getting into syndication now, they're overpaying and when the recession hits their deals will blow up." Then these gurus will pack up their bags and sit on their millions on a tropical island...right?

Not necessarily. What if...

...Your "guru" eats his own cooking and takes downside risk in his students' deals? 

...The "guru" tells you not to pursue a deal far more often than he tells you to chase one, because you're still inexperienced and you're underwriting too aggressively? 

...Your deal is good enough that experienced syndicators who aren't affiliated with TMF want to partner with you on the deal? 

If there's a way to learn how to take down apartments just through books, podcasts and/or an internet course then have at it. It didn't work for me though, I did such a course (which was very reasonably priced) and it did not help. You have to shake hands with and talk to people to get anywhere in this business. 

My opinion is that one should learn from those easily accessible and free information sources to establish a solid foundation. You certainly don't need to pay thousands of dollars to learn that stuff and frankly you shouldn't. 

Once you understand how freaking difficult it is, take a hard look at yourself and decide whether you want to devote the time. Then take another hard look at yourself and decide whether you want to spend the money on mentorship. If either of those are no's, keep doing what you're doing.