All Forum Posts by: Dion Huey

@Bryan Hancock  Great recommendation on learning from a local syndicator!  I hadn't considered that.  Thanks again!

@Marc Bautis  thanks for the link to this book.  I will check it out.

There are a lot of books out there about real estate, many of which I have purchased in the past.  However, oftentimes I have bought books with good reviews, but were not suitable for what I am trying to accomplish.

Thanks again for the recommendation Marc!  I am going to purchase this one.

Thanks for all of the responses!

@Michael Le Thanks for the reply.  I think its pricey because I have bought several courses in the past that sold too much hype.  I bought into one of Sal's courses back in 2008 for $1,500 and didn't feel it had much substance.

I totally agree on the networking.  I am more interested in learning about the structure and management process of the fund.

Hey Community!

Does anyone know of any good books, or courses out there that are practical and useful for guiding new RE investors on setting up and raising funds from private equity investors?

I am currently working in commercial real estate in NYC, and part of my job is daily sourcing of off-market deals.  I get some good deals that come across my desk, for example, yesterday, I met with an owner of a building on a prime shopping street in Brooklyn, that is willing to accept $7 million for his property even though the building is worth $10 million.  I come across many deals like this every week and rather than just brokering the deals and collecting a commission, some of these would make great buy and hold.

I recently came across Sal Buscemi's Investor Syndicate, but it seems a bit pricey at $97 per month. Another one was the Commercial Property Advisor (CPA), but I don't think he focuses on raising money.

Any tips would be greatly appreciated!

Thanks so much!

Happy Investing!

Dion

Hi Bruce,

1. This sounds like a triple net lease opportunity, so you would not have to pay taxes, insurance and maintenance on the property if you have a quality tenant.

2. I would consider locking up the property for a period while you find a tenant.  This is a great way to mitigate risk if the seller is willing to allow you to lock up the property while you search.

3. When you are analyzing this type of deal, you will want to look at the (a) cash flows that can be produced, (b) the credit (look at the credit metrics on their balance sheet, ie. debt-to-equity ratio, quick ratio, free cash flows) quality of the tenant, (c) scrutinize the guarantor.  More than likely you will get non-investment grade tenants depending on the market you are investing.  For example, you may have a McDonald's lease from you, but more than likely, it would be a franchisee.  Therefore, you will have to scrutinize the credit profile of the franchisee, not McDonald's since it would be the franchisee on the hook should something go wrong.

Good luck!

Hi John,

I suggest cold calling the companies to source the deals yourself.  We cold call everyday here in NYC for deal sourcing, and we can find some great off-market deals.

Good luck!

Hi Broaderick,

Comps may not be the best source for determining value of a 20+ unit multifamily property if they are not 20+ unit properties as well.  Even if they were, I would still focus on the free cash flows produced from the property, and your required rate of return to determine how much you are willing to pay for the property.

Take for example in NYC where I work in commercial real estate, we could have two different 20-unit buildings in the same area selling at significantly different prices due to the cash flows.  I looked at an 8-unit building today in a prime location that we priced would sell for $10 million, and another on the same busy street about 20 yards away on the market for $20 million.  The most recent sale happened 12 months ago for a similar property at a $5 million valuation.  Again, I highly suggest looking at the free cash flows produced by the property.   If you have any questions regarding how to set up the cash flow model, you can shoot me an email and I will send over a simplified template we use.

Best,

Dion

Hi Mario,

Unless you have signed an exclusive buyer representation with your agent, you can contact any seller's agent you wish.  The problem with going directly to the seller's agent is you are going to be up against a seasoned negotiator that will push you into paying top dollar for the property.  Remember, the seller's agent represents the seller and not you, so they are only concerned about getting the best deal for the property owner.  Depending on the market you are shopping in, most agencies will split the commission, so it does not really matter to you from a financial perspective whether you purchase through your agent, or direct through the seller's agent.  However, your agent would try to negotiate the lowest price for you.  In other markets, such as NYC where I work in commercial real estate, many brokerages do not co-broke, so you would be better off going direct to the seller's agent, or cough up some extra cash to cover your agent's commission.  I hope this helps.  What market are you investing in?