All Forum Posts by: Dakota Enck

Wow. Thank you. If this works, I owe you one

Jay, that is super helpful. I just started in this job about 2 weeks ago and was surprised by how difficult it was. That said, while the company does have a few high net worth individuals that have funded deals for us through personal connections, they can only reinvest what they have or made, there’s just not enough of them to keep growing. 

I have personally now looked at the books, returns, job sites, spoke with tenants, etc.  to try to understand. It must be the state of syndication and wariness around it as it so often fails. 

The company I work for has been doing multi-family construction builds (anywhere from 30-300+ unit apartment buildings). We even have a sister property management company, landscaping company, and real estate brokerage. 

We find land constantly, have a proven track record of super high IRR (worst build was 18% IRR).

Our owners take on all of the debt, personally guarantee it, and even put up 11% cash. Everything by the book, legal contracts, waterfall preferred returns (even some starting at 12%)

Yet, I’m still having a ton of trouble finding HNW individuals to invest even with it clearly being a solid private deal. Every now and then someone will come in with 5m cash due to a business sale or something. But, what am I doing wrong?

I've been trying (with little success) to wrap my head around the numbers and having little to no experience in real estate investing, I could use a word or two of advice. Here's the situation:

I have a potential business partner who has a lot of capital (i.e. several million) and fantastic credit. He also has friends that are in similar situations financially. I, on the other hand, am a young entrepreneur with neither. I'd like to propose a model where leverage the partner's (him or someone else) cash and credit to cover the down payment and part or all of the mortgage while I stage, list, and manage the short term rental on Airbnb, VRBO, etc.

I'd like to work it out so that the investor receives a 20% return on his or her investment yearly, while I receive compensation for the other part. How in the world is this possible? 

Unit: 315k

30/yr fixed mortgage: 1628/mo; After utilities etc. 2k/mo

Monthly rental income: 3150/mo (126/night with 80% occupancy in a prime location) 

Cash flow excluding principal paydown, appreciation, and tax benefits: 1150/mo

How could I make this work so that he could receive a 20% annual return on his investment and I could still make money? Please comment below and help me understand how I could arrange this partnership.