All Forum Posts by: Chris Grenzig

@Brandon Johnson When we buy deals we like to see the average rent x 100 equal or greater than the price per door as one indicator of a good deal. $875000/16 = $54,687 which is higher than a $500 avg rent.

This is only one of many different things we look at, but with so little information it's tough to gauge anything else, or anything someone else hasn't mentioned already.

@Andrew Mokotoff When you're looking at markets or areas to invest one thing that people don't consider a lot is the ease of access and desirability. Even if you want a hands on approach, I'm sure you're going to want to check in on the property from time to time. So you need to look at how easy it is to get there, the time required, the money it costs and the area in which it's in. For comparison, Mobile, AL vs Charleston, SC are two markets we are in. It is significantly quicker, cheaper, and imo more enjoyable to go to Charleston than it is to Mobile. Mobile has no direct flights, and costs more money so if I had to choose between the two areas I would choose Charleston. 

If you're looking in the tri-state area, I would look at different transportation options (public and private), the cost, the time, and which area you would prefer to go to. 

@Andres Vanegas awesome looking forward to meeting you!

Hey everyone we just set our latest meetup up in Nassau County, Long Island, New York at the Westbury Holiday Inn for December 13th at 7:00 PM. I know @John Cohen started this thread several months ago and some of you have been to our meetups and events in the past. We've taken a few months off, but want to start up again going into the end of the year and start of 2019.

We're going to be discussing the real estate market and where we think we are in the cycle heading into the new year. Sometimes we'll have a more formal presentation on a topic, but we're going to keep this more causal and just try to facilitate conversation. 

If you have any interest in attending on the 13th or one of our meetups in the future, shoot John or I a message with your contact information and we'll add you to the list and the meetup group. 

Here is the link to our meetup group if you want to join directly: http://meetu.ps/e/G4JrM/zNqhq/f

Looking forward to seeing everyone there!

@Erika Graf I know a lot of people here love books, which is great. Myself I can't stay seated long enough for a book to hold my attention so I was and still am all about the podcasts. Once you start hearing some of the same things said over and over (ideas, terminology, principles, rules of thumb, etc.) you start to pick up on it right away.

@Anders Jax I'm not familiar with hotel structure, but if you take 10% of GP, but GP is only 5% then you would get .05%. Even if it's less you're still getting the same or better returns as the LP because of the waterfall structure and you're getting whatever percentage of GP that you've negotiated.

If the GP, regardless of heir percentage of ownership, makes $1,000,000 mil from the different fees and waterfall structure. If you are 10% of the GP portion (not 10% of the deal) then you make an extra $100k over and above what you make on your money in the deal.

@Anders Jax Gp side has their own money invested as well. So say you made $50k raising money, you would roll that in as GP capital. Depending on the structure, you're money invested doesn't enter into the waterfall structure (why would GP take splits on their own money?), so you make 100% of the cash flow and sale proceeds on your money OR it is treated as LP money going into a waterfall structure and you're the same as LP.

On top of that, whatever percent you negotiated of the GP side, would be the percentage of profits that the GP side is getting from the waterfall structure/fees.

So you get a cut of the GP and you make the same or better returns on your money than the LP side.

When you enter into GP side you have to negotiate also what percentage of fees you get, you might get a portion of the asset management/property management fee (side note 13%?! Thats a rip off if I've ever heard one!), might get a percentage of other fees like acquisition (but they're paying you to raise so they might say no to that), if theres construction management fee, disposition fee, refinance fee, etc.

We only structure our deals with acquisition fee (1-3% of purchase), asset management (1-2% of net revenue), and the waterfall structure.

@Anders Jax If you are raising the money and rolling you "fees" into the deal I would always push for GP side instead of LP. Usually GP money has no hurdles, and you also get a % of the hurdles that is going to the GP on cash flow and sale, so you would make a much better multiple on your money as a GP instead of an LP.

In terms of a waterfall structure, it's so subjective, but I prefer to not take more than the investor unless it's a higher threshold, and I only do 2 hurdles max to just simplify things. Ex. 6% pref, 80-20 to 12, 65-35 over that (stated as investor-sponsor share over hurdle).  However, it's just on preference and who their investors are. But I'll tell you one thing if they can't raise the money on those hurdles, I can almost guarantee they'll change up the hurdles and fees before losing money on a deposit and other costs to run a deal. It's all a negotiation and what sponsor/investors are willing to take. And conversely, someone in a 1031 who owes a lot of money and desperately needs a deal may accept more sponsor favorable terms to get their money in tax deferred...

It's all about who's got the leverage.

@Anders Jax 12-36 month timeframe, sometimes with also contains a no fee agreement after certain amount of deals/dollars from that company/investor. Also, sometimes will involve a step-down for that company/investor in fees received/paid after a certain amount of deals/time/dollars raised. 

End of the day it's about what your leverage is, what can the deal support, and what are you willing to pay/get paid. I also wouldn't overlook rolling fee into the deal or accepting a certain % of GP. 

@Stephen D. find someone experienced, and bring them deals and money for a percentage of the GP side. Doesn't matter if you're 1 or 100% of GP side, you now have a budding track record. Start small and be patient, these things take time. If you want to find deals and want more credibility behind your name, talk to someone experienced and see if you can say you work with/for them and here is there track record. However, don't abuse that because if you start throwing out left right and center and piss them off, they're going to tell you to stop and not work with you again.