All Forum Posts by: David Thompson
David Thompson has started 7 posts and replied 875 times.
Post: What is the best strategy to maximize cash flow?
- Investor
- Austin, TX
- Posts 933
- Votes 1,127
Hi Ikka,
The top niches we like now are large value add apartments, mobile home parks and self storage. These niches have a history of strong cash flows with healthy underlying trends of folks seeking affordable housing, becoming more of a renter nation and our liking to keep stuff in good and bad times. All have solid downside protections w/the right properties, operators with conservative underwriting. I like to see investors diversifying via niche, geography and sponsor to reduce risks. Best way to play is as a limited partner in syndication deals IMO. Here's a few links to further your education.
https://www.biggerpockets.com/blogs/9145/54155-sel...
Post: What special touches/amenities do you add when you renovate?
- Investor
- Austin, TX
- Posts 933
- Votes 1,127
Jody
These are great tips and the thread is interesting. I might add that depending on the size of the apartment I would encourage you to look for "value add" amenities from an investors standpoint (revenue adders) as well as expense reduction opportunities. Here's a laundry list of ideas see links.
Post: What's the best way to raise $1M+?
- Investor
- Austin, TX
- Posts 933
- Votes 1,127
Ian
@Jay Hinrichs offers some sound advice around experience and what investors and lenders will be looking for. I don't really advice on the crowdfunding way because you won't be developing your direct relationships w/your investor base that is critical for long term success, it becomes a crutch IMO. Plus, they will be looking for the same experience that you may not have anyway. You want to own those direct relationships, you will have more power and control over the long term. Lots to share but here's a couple articles below that might help.
MHP is a very interesting area and has people's attention but its also a new area for a lot of investors so education and partnering w/experienced folks in MHP will be beneficial especially early in your growth.
https://www.biggerpockets.com/blogs/9145/67627-rai...
Post: How Do You Come Up With Large Multifamily Down Payments?
- Investor
- Austin, TX
- Posts 933
- Votes 1,127
Adam,
Is this a one time deal to ride off into the sunset or are you wanting to build a business and do large apartment investing ? If the latter, don't mess around w/creative this or that. Learn syndication and use OPM to do it. Carve out a nice piece for all your efforts, keep your investors happy and continue. It's a business like no other and the sky is the limit. Couple articles to inspire you and make you think bigger !
Post: Investing in Small Towns
- Investor
- Austin, TX
- Posts 933
- Votes 1,127
John,
Did a recent blog on why I like big city investing over small city investing, including a look at the long term trends....hope this adds to your knowledge bank.
Post: MULTIFAMILY IN DFW AREA TEXAS
- Investor
- Austin, TX
- Posts 933
- Votes 1,127
@Tamiel Kenney Citigate manages our portfolio in DFW as well and like Tammy, my partners are very high on them.
Post: Getting to $100M networth
- Investor
- Austin, TX
- Posts 933
- Votes 1,127
I wish I had copied my last response to a similar post. Get your education, work for a syndicate in commercial REI, learn the ropes, start your own company, find other partners that complete the team and have skills you don't have (raising capital, finding deals, managing and creating value in the asset, etc). Use bank leverage, OPM (investors capital for the down), you carve out a GP position and as one of the key principles get 10% of the entire deal. You can syndicate anything but say you do MF apts. You get successful at that and start buying value add apartments getting 1/2 to 1/3 of the 30% GP split. Do 4 - 6 deals per year w/an average of $10m to $30m deal. It won't take you long to get there. I'm working w/partners who are doing this. I don't recommend going to other intl markets as the previous post mentions. The U.S. offers some of the best legal and tax structures in place that are the envy of the world. You don't need to mess w/higher risks of currency, changing legal, tax laws, etc.
Post: Starting Out in REI - Which Path to take?
- Investor
- Austin, TX
- Posts 933
- Votes 1,127
Daniel,
If you are an accredited investor (earning over $200K for past 2 years with an expectation to continue so) then you have some other options besides turnkey. There is ample support for a variety of niches but having invested in both SFR and MF, I prefer MF syndications. You can get great returns and be truly passive, but also learn if you have intention. As a passive investor, you can diversify into MF, storage, mobile home parks, you name it. SFR is a way but most SFR investor migrate a portion of their portfolio to other REI asset classes over time and often to syndication after the hassles of owning several homes starts to take its toll. You could also put some money to work in both turnkey and syndication deals to see which works better for you. The ease of totally passive investing w/syndication is hard to beat though. Here's an article on why I like investing in large apartments and 25 FAQs on syndication to ponder.
Post: Which strategy builds massive wealth the fastest?
- Investor
- Austin, TX
- Posts 933
- Votes 1,127
Syndication: You get to use leverage (bank), use of OPM (investors for the downpayment), exercise your entrepreneurial skills to create value and take advantage of favorable tax laws. Work with a syndicate and learn the business. You can syndicate anything but let's say you do MF apartments since that has been a strong wealth creator that has earned its stripes and offers a favorable future based on a number of demographic, economic and behavioral trends. Once you have earned some experience (track record), set off on your own and start your own CRE syndication business. As the GP you could get say 30% of the split (say you get 10% of the 30% for being a key principle adding value such as raising capital, finding the deal, asset management, etc).
Syndication is a team game to if you want to go big, find some solid partners that have skills you don't have but need. An experienced syndicate team that develops a proven track record and can get their investors solid returns will be in demand, capital will come and you are basically matching deals w/money. GPs do put money into the deal but the return on their personal investment can be very significant if they add key value as they could earn say 10% of the entire deal as one of the key principles in the GP.
Post: Is this fair?? 1.3 Million syndication structure.
- Investor
- Austin, TX
- Posts 933
- Votes 1,127
Hi Cole,
Yes, 1-3% acquisition fee; 1-3% asset management fees are the main fees that syndicates charge and are industry averages. Syndicates with a lot of experience and solid track record get 2-3%. Newbies in the 1% range. Splits 70/30 very common for experienced operators and I see clubs / newbies going 80/20 or 75/25 to just get some experience going and attract investors in w/higher potential returns for the limited partner. Any investor w/experience won't signup for a 15% fee off the top. Certainly roles should be defined but if this is a partnership the partners should be putting in money into the deal and aligning w/the investors. The GP should be getting most of their return on the backend not front end.
Couple other tips. Raising capital has important legal considerations so seek out a competent attorney w/SEC experience in doing syndications. Here's a few blogs to review that might help you as you enter the syndication game and position yourself favorably w/investors.