All Forum Posts by: Drew Shirley

Thanks everyone... spinning a lot of plates at the moment, but the response to my email has been quite encouraging. I'll keep you updated. 

I'd probably recommend you form an LLC and figure out how much everyone will invest, how the profits and losses will be split up, etc. Then actually deposit the money in the LLC's operating account. Cutting a check makes it real. Before that, it's just talk.

I've done a couple of single family fix-and-flips but I've always wanted to invest in a bigger multifamily project. I think the biggest mistake I've made in the past is wanting to do it all by myself - not asking anyone for mentoring, or capital, or anything. It's taken me a long time to realize that real estate is a team sport.

So this week, I've reached out to several investors who have done the kinds of deals I'm looking for - 100+ unit Class C properties with value-add potential. And just today I sent out an email to 400+ people I know who are either accredited, sophisticated, or know who people are. That was a scary moment. I've never been comfortable asking people for money -- or anything, for that matter. But I took a few deep breaths and hit send. 

I've already had positive responses and interest from 10 people on the list. Now I've got to get my pitch deck ready! Oh, and find a deal. No problem, right?

Trottie, I have a pretty good letter of intent form and I'd be happy to send it to you for free. 

Wesley, 

I think you'll have to talk to the owner and pin him down as to exactly what his tax situation is. If it were a property tax situation, you could probably find out the details from the county appraisal district. But if it's an IRS lien, he may be the only one who can access that info. 

If your properties are in Texas, I'd recommend a series LLC. I would generally charge $1,000 to set one up.

Thank you all for the great responses. 

I am looking for my first multifamily deal in Houston, Texas in the 50-100 unit range. My plan is to add value and then re-sell or re-finance.

I was hoping to find a property that was 20 years old or less, but the vast majority of the properties that I see are at least 30 years old and most of them are more than 40 years old. 

When does a property become so old that all the maintenance headaches cancel out the upside?

1. If your agent won't submit your offers, fire him.

2. Offer what you'd be willing to pay and not a cent more. If your agent doesn't understand that, fire him.

3. If you're evaluating this on an income approach (as you should be), your price will likely be lower than the "comps." If your agent doesn't understand that you need positive cash flow, fire him.

Your agent works for you, not the other way around.

If you aren't putting any money in the deal at all, it's going to be tough to find a 50/50 split right out of the gate.

What I usually see in terms of splits is a preferred return to the capital investors (7-9%) and THEN a 50/50 split of the remaining profits. 

Or

A 3% acquisition fee to the syndicator, then a 70/30 split of profits (70% to the capital investors). 

And 80/20 is certainly not unheard of, although I wouldn't do a deal for 20% unless it was a monster.