All Forum Posts by: Andrew Hogan

When vetting a sponsor, I always advise that people do their research when it comes to sponsors and deals. When you’re considering an investment sponsor, do due diligence. Remember that a mediocre sponsor can make a good deal go south, and a great sponsor can make an average deal more favorable. Keep in mind to always:

• Ask for references: Email references and set up a time to call them. Ask some open-ended questions and find out what they have to say about the sponsor.
• Look at the team: Is the sponsor a one-man show? If there’s a team, what do they bring to the table?
• “Stalk” the sponsor online: Do some basic internet searches. If you’re not finding much about the sponsor, that could be a red flag.

Welcome to Indy! You'll find a much more favorable market here over Chicago! There are a lot of players so I think you are right to soak in the information before jumping in. Best of luck!

@Beary Bowles It will be interesting to see what ends up working. This is one of the reasons why we stay away from low-income and focus primarily on workforce housing (lower middle class, lots of blue-collar, some low-end white-collar tenants). Best of luck!

Great tips Charles! Remember that you can also call the Ghost Busters :-)

Hey Samuel, sounds like a solid plan. Most people these days spend first, then invest. Typically what others do in your situation is partner with an experienced operator to handle the day to day things.

That way they don't take on a second or third job but are still able to build the wealth bucket with a hands-off approach.

@Bart H. That's exactly why you've got to be extremely disciplined in your underwriting and acquisitions these days. Many high value-add investors right now will be FORCED to sell at a discount during the next market correction.

 At this point in time, we only choose properties that cash flow out of the gate and don't have a ton of problems to solve.

Any sponsor that can get agency financing with 10+ yr rate lock is able to mitigate their downside risk and enable the asset to cash flow through a buyers market. 

At the end of the day, it comes down to who is running the show -- whether it's single-family or multifamily it's a make or break.

@Diane G. I was referring to the next market correction. Not present time.

I'd talk to a CPA or Attorney to get the best legal answer. I know that most syndications don't accept 1031's going in, but the most experienced sponsors are able to offset 60-80% of each dollar invested in paper losses from cost seg and depreciation, thereby creating the same effect without the time crunch and added stress.

@Diane G. lol, that's one way to phrase it. I hope that retaliation on BP has never gotten that extreme. 

Totally agree that if you aren't going to self-manage, you had better vet the heck out of who you choose to run your business for you. Sounds like you're fortunate enough to dedicate a good amount of time to your own investments. There is a host of others who want to benefit from real estate, but just don't have the time for a second or third job. They also limit their downside risk when partnering with a proven sponsor who has a solid track record. 

Great discussion here with great insights. I think that everyone has given a good estimation (not expectation) as far as returns. There will be a day and time when 20-30% IRR to investors is the norm again but definitely not at this late stage in the cycle!

@Hunter Thompson is a proven investor in the space. He may have some pointers.