All Forum Posts by: David Lilley

@Scooter Williams you don't necessarily need 35 LLCs. You could put 5 or 10 properties per LLC. That part would be up to you to decide what was acceptable exposure for you personally and what requirements if any your lender had.

What @Chris Seveney said. I'm assuming these are small multifamily properties and you currently hold title in your name? If they are all small properties, you could put groups of 5 or so per LLC if the lender allows it or look into series LLC in your state to see if that is allowed.

We buy $20m+ properties and no one at this level uses land trusts. It is one LLC per property, great GL and umbrella insurance, and if you want to step it up a notch, get a few million $ in a personal umbrella policy.

@Brad Milligan we offer similar classes of shares in our investments. Class A 8% Pref, 70% of the upside. Class B 10% pref senior to Class A shares, no upside. 

 We are seeing lots of opportunity in the Dallas area with the dip in values.

@Roy Gottesdiener if you have the time, I would keep doing what you are doing. You will typically make a higher return the more active you are in the investment. If you are looking for something more passive, just give it to me and I will double it in 5 years :) .

@Richard Helppie-Schmieder what is the meetup on the 29th? It would be great to get a meetup going! We started one just before COVID and have been waiting on construction to finish on a new meetup space since. 

@Dustin Beam are you doing MF? It depends what you see as growth. If you don't want to deal with other people, find more debt. Preferred equity isn't cheap these days, but could help as well.

@Brian Woolery it really depends what you think your average investment will be. My first few deals no one came in more than 25-50k. You may find some people willing to invest in a deal you have no money in, but they will be the exception. 

@George Amezcua one thing to consider about cap rates- higher is not always better. The reason the cap rate is high is because the area is not desirable, so you have less potential for appreciation. Invest with value-add operators who understand the relationship between cap rates and values.

If you increase rents $1 on a property in a 5% cap rate market, you increase your value by $20; that is 20:1. In a 4 cap market it is 25:1 and in a 10 cap market it is 10:1.

Forced appreciation is one of the biggest benefits to commercial real estate. This is how I have been able to net over a 52% average annual return on our full cycle deals.