All Forum Posts by: Scott Skinger

+1 to @Ned Carey's comments and I would add, the sooner you engage a lawyer the better...even before you negotiate too many terms. It is hard to change terms or back out of something after you have come to an agreement.

@Luis Fernandez The seller of one of the buildings that we're buying right now is represented by a real estate lawyer without much commercial or MF experience. It has been a pain in the ***, costing us more time, money and headaches. We have two other deals that were under contract later this deal and will close sooner, largely because of this lawyer. 

Don't go on the cheap, it is worth paying a higher hourly rate for someone who knows their stuff and has a lot of experience. You will actually pay less $ because they are more efficient and they will probably win you more money through contract structure and negotiation.  

You should definitely consider a lawyer to help you run point on this transaction. It would be good to get a recommendation here on BP or elsewhere instead of just looking one up. Make sure that you get a lawyer that is experienced in commercial RE and not just a RE lawyer that specializes in residential, which is the majority of them.

+1 on Neal Bawa

Honestly, the best way to learn how to analyze risk and income for loan purposes is to get "hands on" with it as if you are investing yourself. Anything related to investing in MF is going to be good knowledge for you. If I'm in your shoes, some of the resources that I would use would be:

1. Start with books/podcasts - Wheelbarrow Profits, Michael Blank, Todd Dexheimer, lots of good apartment books and podcasts.

2. Then know the numbers - Frank Gallinelli's book, start reviewing underwriting models...buy one, create your own, talk to people who have experience.

3. Underwrite 50+ deals - learn the nuances that make or break an investment, learn how to be conservative and factor in the unexpected. Ask others for feedback.

4. Talk to a lot of people - brokers, bankers, investors, PMs, everyone has something to share that is more or less relevant to what you're doing and how it impacts the overall investment.

@Alex Babayev I think the more important point that you make is buying "wherever the numbers make sense". 

My point in my last post is that the example you've given is not really apples to apples. Where do you see markets and assets that are of "like kind" where you have the choice of 40 units renting at $500/month or 20 units at $1000/month?

Where I buy on the south side of Chicago, a 20 unit building renting at $1000/month is a nice building in an up and coming neighborhood with upside rent potential. The 40 unit renting at $500/month would be a heavily distressed asset in a war zone.

Not enough information given and I would have a hard time calling either route a "strategy" without more info. This question is market/area dependent, building dependent and investment strategy dependent. Fill in a few blanks and I (others) will be able to give you better feedback. Important to know:

-are your example buildings in the same market? same neighborhood? same condition?

-what are market rents in your examples

If you want my simple answer, I will take more units, with the idea that I have more economies of scale on expenses and more leverage on renovations and raising rents.

@Josh Stack Sorry for the delayed response here and to your PM. Instead of responding to your PM, I will respond here to share views with the public. For the most part, I agree with the above posts by @Ben Leybovich and @Dan Handford.

First off, it is very hard/impossible to give you a "quantitative" answer, that's just not realistic. Why? Because, I've purchased Jake & Gino's course/program and gone through probably 1/2. I've also purchased Michael Blank's course and gone through 2/3. I use MB's SDA everyday and have educated myself pretty thoroughly on it. In addition, I go to conferences/meetups, host an MF mastermind group, talk to brokers, talk to other investors, talk to attorneys/banks/PMs daily, go on property tours, listen to podcasts, read BP posts and more. I also have 15+ years as an entrepreneur in the tech world. All of these collective experiences contribute to my knowledge and experience. Right now I have 5 deals under contract with a couple different partners. Which of the above is directly responsible for these deals? What is the % share that each have contributed to my knowledge to get these deals? Don't ask me...I have no  clue. 

Another thing I have learned...the more I learn about MF/REI investing the more I realize that there is to learn. Every opened door leads to 10 more doors to learn/open behind it. That's overwhelming or exciting, just depends on how you look at it. I find it exciting.

Regard Jake & Gino specifically. They have a great program, great course and great community. I have spoken with @Gino Barbaro on several occasions, he is a wealth of knowledge and genuinely cares. I believe in their product but more importantly I believe in their integrity and the power of their community.

Similar to Gino's words above, I believe that education is an investment. I like to quantify this by setting a budget for my goals. For example, it might be something like."I want to learn MF investing in 2018 and purchase 100 units. In order to do this I need to educate myself. I'm willing to invest $5000 in my education to accomplish these goals. This includes conferences, courses, one on one calls, anything. What is the highest and best use of my time and money?" Pick and choose wisely but don't suffer from analysis paralysis. 

If I had to do it over again, I would buy both J&G's course and Michael Blank's course. They both have great information, open your mind and open the door to other opportunities to learn, network and grow.

Good Luck!

Haha, the Polka King! Interesting Jack Black movie.

Grant Cardone is legit, I guess, some like him and some don't. He's not my cup of tea. Also, even in a situation like this where you have a "celebrity" investor, you need to do your due diligence on the operator (Grant Cardone) and the individual deal. Regarding his training, seminars, etc. you also need to consider each individually and decide if the cost is a good investment for you and your goals.

If you're trying to calculate his margins using your numbers above adding up to 99.5% (leaving him .5%), you're not reading them correctly and looking at different pieces of different pies. Syndicators make their money on acquisition fees, asset management fees and on refi/exit fees. All of these fees are baked into the deal and payout percentages. 

There are a lot of great syndicators/sponsors out there and here on BP, check out @Joe Fairless, @Todd Dexheimer, @Brian Burke and @Ivan Barratt, just to name a few. Go to their website, research them and read the PPMs on their deals. See how they stack up to Grant Cardone, really, completely different investments.

Good Luck!

BTW, where did you end up buying?