All Forum Posts by: Chris Grenzig

@Michael Daharsh I think Paul is not wrong, but it also depends on what you want to achieve. I'll give you my journey very quick and hopefully that'll help you understand if it's right for you.

• 24 years old, working full time in finance and hating it
• Jan 2016 my cousin and mom bought a flipping course and dragged me along, 1st introduction into real estate
• Failed for 8 months to flip anything
• Went to tons of networking events and meetups
• Met John who is one of the founders at Toro
• Invested 100% passively in a little 8 unit project he was doing to learn from him and put money to work
• Decided that the 4 of us would JV on another 17 units
• Quit my job full-time to work at Toro Aug 2016
• JV'd an 82 unit property
• Focused fully on Toro for over 3 years and we've closed over 4000 units since.
• I would never have the experiences and insight into multifamily properties, commercial real estate, and so much more if I didn't passively lean into someone more experienced then me and then use them as a spring board to increase my own knowledge and experience. I was fortunate enough that it's evolved into an incredible role with Toro, and I am essentially running the companies holdings in Florida and much more. However, I was free to do that because I was young and able to be flexible. It's not for everyone, but it was right for me.

@Yonah Weiss any deal cost is going to dilute the returns to the LP, whether it's acquisition fee, travel cost, attorney cost, lender cost, etc. Many of those are necessary, but they still result in less money into the pocket of the LP's. Basically, it comes down to the fact does the deal support the additional cost in equity, and is the deal good enough to the other LPs to do so. If it is, then why would it matter? If you could give your LPs a 30% IRR over a few years by giving up equity, that would probably be fine in the eyes of the LPS because they wouldn't have the deal without it.

@Bellman Tumasang you got to reverse engineer it. I'm sure you've been pitched or marketed to by brands, sales people, marketers etc. What worked and what didn't? It's the same thing here. People want to work with people they like, are going to do what they say, and provide a good relationship.

Start small and grow from there, if you try to start 50 broker relationships tomorrow, you're going to be stretched too thin and inevitably start many of those poorly. 

Have a criteria in mind for what you're looking for. If you call and say I want a good deal, they have no idea what that is. Is it 5 units, 50 units, 500 units? Is it a brand new built property that has no headaches, or a distressed property with a ton of upside? Is it in certain areas, markets, neighborhoods, submarkets? And so so much more.

Take every deal they give you and take the time to genuinely look at it and give feedback on why you do or don't like it. Even if you know within 90 seconds it's not for you, really look at it and then call them back and explain why it's not for you.

@Melissa R. figure out how you best consume information first, then go and find the information available there.

Could be books, podcasts, audio books, videos on YouTube & social media, could be meetups/small groups, could be 1 on 1 meetings, etc.

Then find the person/people you resonate with and see if they have information in that medium and start consuming.

@Yonah Weiss I'm not particularly knowledgable in this area, but I thought I've read/heard that LP equity raisers are technically not supposed to take any fee unless they have their brokers license or are apart of the GP structure. Maybe thats just for the standard 506 reg D filings and not true for other filings, or there could be work arounds, but I do remember hearing that. Hopefully someone can chime in/clarify who is more knowledgable.

As far as a fee vs equity for finding a deal, it's what do you want and what does the buyer want, and what can you negotiate.

@Phil Li I'm born and raised on Long Island and I've lived in Brooklyn now for 2+ years. I would seriously suggest thinking about of state/area investing because landlord tenant laws are continuing to get worse and worse and I don't foresee it getting any better. You can also get much better cash flow/yields and invest in similar types of markets that are similarly recession proof if that is a concern. I'm 100% invested in the Southeast and Midwest US and I don't think I'm ever going to buy investment property in NY/NJ unless things drastically change.

Bud proof of funds means you have the money to close, if you don't you need a partner that does, and provide proof through bank statements...theres not a "place" to get them

@Michael Wang I believe if you have a W-2 in a non real estate company or not at least a 5% owner (like @Basit Siddiqi mentioned) than you need to be able to show a certain amount of hours to be denoted as a real estate professional in which case your passive losses would offset...I believe...maybe

@Natasha Verela you shouldn't be buying properties anywhere for the sake of cost of entry and cash flow. There are dozens of reasons on what market to choose and price point and returns are only part of that. 

Population, population growth, ease of access, resources available, population growth, unemployment, unemployment trend, job growth, job diversity, supply vs demand, median income, education level, local economic development, landlord/tenant laws, etc.

And then a lot of that should not only be applied to the whole market but also the submarket/neighborhood you're looking at too.

Investing anywhere is a risk vs reward, so is the return worth the risk it provides. Thats why NYC and LA are 3-4% cap rates because the risk is much lower than places like Lexington, KY for example. The return SHOULD be higher there, but the likelihood of losing money there is greater so they have to balance out. 

Understand what your investment goals are, then back into what metrics you want to see from a market, then find the markets that fit or are closest.

@Shafi Noss tax advantages from syndication aren't usually quoted because it depends a lot on the person investing in the deal on what benefits they received.

Look at it on a cash flow every year, an annualized return, an IRR and an equitymultiple basis. Some place more empahsis on some of those metrics more than others.

Cash flow is how much are you receiving in dividends every year.

Annualized return takes all cash flow and sale proceeds, totals it up, and divides it by the number of years for a return per year basis

IRR is annualized return but accounts for the time value of money ( a dollar today is worth more than a dollar tomorrow, you would rather a 20% IRR in 3 years vs 4 because you could hypothetically reinvest that money after sale in year 3 and your 20% reinvested would be higher)

Equity multiple is the same as total gain ((Principal + total income gained)/principal = equity multiple, ($100k invested + $100k gain)/$100k principal = 2.0 equity multiple)