All Forum Posts by: David Thompson
David Thompson has started 7 posts and replied 875 times.
Post: Single Family vs. Multifamily
- Investor
- Austin, TX
- Posts 933
- Votes 1,127
Hi Jarvis,
Have owned SFRs, small MF and large MF. It really comes down to scale and the commercial valuation model (income based) where you can force appreciation w/a value add property. Can't force appreciation per say in SFRs and small MF (4 units or less) because they are valued on comparison valuation model. If economy slows down I'm pretty much stuck w/a price that will be close to what my neighbors have been selling the same type of home recently...I have less control. With an apartment I have more control to drive value because its going to be based on the income I can drive out of it w/higher rents (via renovations) and better operational efficiency. Scale is simply lowering the cost per unit. Some examples of both in blog article below.
Post: Apartment Investor Conferences in 2017/2018
- Investor
- Austin, TX
- Posts 933
- Votes 1,127
@Jeff Greenberg and @Andrew Cushman, thanks for the insights. I attended and spoke at Joe's conference in Denver this past Feb. Over 40 speakers on a wide variety of topics not just multi family but other alternative real estate assets as well. I talked w/@Benjamin Lapidus on Friday and they are planning another conference that Joe will sponsor in Denver believe same Feb timeframe in 2018. Please reach out to Ben for more info.
Post: Raising Capital for Multifamily Deals
- Investor
- Austin, TX
- Posts 933
- Votes 1,127
I like @Brian Adams comments around balance. Definitely put together a plan of attack on reaching investors and make that part of your practice each week. Could be from a variety of channels. Evaluate over time what are natural paths for you. When I started out I thought the two most obvious paths were my former corporate career network and the MF local meetups I was attending. After doing a few deals, I discovered these were not initially good paths for me. The two paths that have worked very well are my wife's network and bigger pockets.
I've a blog post on 10 things I learned raising $1m in two weeks. I think it will be a helpful starting point for you. The second blog is good for thinking about your ideal client. I'm also sharing a more comprehensive approach to finding capital and building an investor base if you are thinking long term which you should be. The ability to raise capital is an important, meaningful and lucrative area to focus and get better if you like it. You can team up with some of the best operators out there and become part of many deals as a general partner and help them in a variety of ways. Your growing investor base creates buying power to negotiate better deals in a win/win approach.
https://www.biggerpockets.com/blogs/9145/53959-vet...
Post: Little help analyzing a syndicated multi family deal
- Investor
- Austin, TX
- Posts 933
- Votes 1,127
Gianluca,
Although there are general frameworks to think about, it usually boils down to 3 major things:
1) Market - is the market (city) and submarket specifically growing at or above natl averages (population / jobs) to support higher rents. Review rent growth in the area recent history and projections. Identify the catalysts for future growth.
2) Deal - is the deal conservatively underwritten. Review the assumptions. Simple and easy to understand business case. Experienced sponsors under promise and over deliver. If something looks to rosy I get concerned.
3) Team - track record and integrity
Here's a top 10 list of things to think about when vetting a sponsor.
https://www.biggerpockets.com/blogs/9145/53959-vet...
Instead of just investing right away, what if you reviewed several deals in your specific niche area to get familiar with these 3 things and established your own criteria. Then put your criteria to the test when evaluating deals. I think your confidence level would soar by having knowledge going in on what is acceptable for you given your risk tolerance.
Post: What to do with 401k through employer
- Investor
- Austin, TX
- Posts 933
- Votes 1,127
Hi Aaron,
I wrote a few blog posts on this. To bad you are not in a community property state because there is a very creative way that most folks are not aware of to gain access to your 401K while still working.
Post: What are you investing in with your Solo 401K?
- Investor
- Austin, TX
- Posts 933
- Votes 1,127
Hi Jeff,
Here's a couple articles that you might find helpful including how to vet sponsors and why I like investing in large value add apartments.
Post: Purchasing a list of accredited investors
- Investor
- Austin, TX
- Posts 933
- Votes 1,127
Lots of good comments above. I think of broker / dealer lists and operations where hundreds of folks are cold calling and getting warm leads then forwarding those to folks willing to buy the lists. I've been solicited before, its usually "hey, I am going out of business, tired of a phone tied to my hand all day and have a list of 3K names and all have done at least one deal. I'm asking $10,000 and this will be gone by Monday." Highly skeptical and probably scams mixed in there as well. Not worth buying.
As @Brian Adams and @Percy N. suggest, this is a relationship driven business grounded in best practices of thinking about the long game instead of a short term transaction mind set. There are several strategies around designing a comprehensive approach to growing a strong network of clients and prospects. It takes time and practice on what is working and not working to find the best use of your time.
Here's a couple articles to get you thinking on that. Developing a track record takes time but that can be enhanced with purposeful creation of your own business web site, blogging, podcasts, newsletters, books, networking events, etc. You want to give your time and knowledge away to others as you continue to grow. As you grow and see success, you have more to share with others. This content can be a mix of practical success (results in your deals / track record) and relationship / knowledge share to help your clients / prospects get more educated. Key is to be viewed as credible source in your area of expertise.
Post: What kind of cash-on-cash returns are you finding in syndication?
- Investor
- Austin, TX
- Posts 933
- Votes 1,127
Hi Travis,
Are these projected numbers? Ranges are typically 8% preferred up to 10%. Most experienced sponsors want to under promise and over deliver. If these are tracking numbers in year 1 and 2 then that is pretty solid. Keep in mind if you are in value add plays, CoC and IRR can go up as a result of refinancing at the end of the renovation period or if a supplemental loan is applied as well. I'm leary of deals forecasting that right out of the gate as that to me indicates they are not as experienced.
Post: Starting with a remote investment.
- Investor
- Austin, TX
- Posts 933
- Votes 1,127
Hi Max
I live in Austin. I love it here. It really depends on what you want to do. I started in SFR and small MF in Austin then San Antonio. If you are looking for more of a total return concept there are markets in Texas that I believe are better cash flow w/steady appreciation upside. Currently favoring Dallas and San Antonio. Houston getting better. Austin just hard for me to figure on cash flow unless you go further out.
If you are accredited investor even better for out of staters IMO, I like passive investments in MF in areas like Dallas and San Antonio currently. Prices are up everywhere but numbers can still work on some deals in these markets for value add opportunities. See article on why I like large value add apt investments and ideal for out of state where you can participate w/experts, be in growth markets but not have to manage it from afar. We have closed on 9 apt communities in the DFW area in the past 2 years. These types of deals are very attractive to investors especially in CA that are looking for this total return / cash flow concept.
Post: New Investor - How to increase rents
- Investor
- Austin, TX
- Posts 933
- Votes 1,127
Hi Christian,
Some of these ideas may apply to a small fourplex. Just to get you thinking creatively.