All Forum Posts by: Mike Lorence

Several on this thread have commented on Florida.  This is why we picked up everything and moved to Florida.  So that we can be local to where we invest.  I believed in this market so much we went through the pain of relocating here to the Sunshine State.  It makes things so much easier.  The riches are in the niches.  Inch wide, mile deep.

Many people feel we are near the end of the sellers market in multifamily. I'm not so sure I believe it.  In fact, I had a podcast guest who said "We're going to buy $5 billion (not million, billion) in multifamily this year.  And my prediction is that we're going to look back at 2021 five years from now and say 'man, that was some cheap real estate!'"

Stress testing the underwriting is key. You can do an Excel sensitivity analysis. This is helpful because Excel will graph out which input variables have the biggest impact on the output variables such as IRR, CoC, etc. We typically start with 0% rent growth in year 1 which is conservative here in Florida (Jacksonville had 4.9% rent growth in 2020). @Brian Burke - congrats on your book.  You're killing it.  

Check avg income, % below poverty line, & racial diversity of the census tract where this is located.  In 15 seconds it will tell you if you're going to have a really hard time or easier time of making money.  Go to www.city-data.com and type in the city. Then click on the census tract where the property is located.  You want to see $45k+ income, good racial diversity, and low % below poverty.  Real estate is hyper local.  This is a hyper local free tool to hack the analysis.  

@Donggie Hong Volatility, measured by the ratio termed "Beta" is extremely higher in the equities markets compared to multifamily investing.  Good news with paper assets like stocks are that they are liquid.  However, the returns you get in multifamily syndication are going to be 4X to 5X higher than S&P 500 for many reasons.  You get less liquidity in multifamily but a much higher return.  Most stock brokers quote equities returns BEFORE brokerage fees which is something important to know.  You may want to consider putting some money into multifamily syndication. There is less volatility in multifamily than single family.  In a downturn, single family tends to loose value but MF doesn't.  That's not true everywhere.  But it's a high level anecdote.  

Jeremy Roll is an example of someone who is completely full time LP.  I'm interviewing him on my podcast about it soon.  That episode will go deep on the topic.

Agency debt is typically 75% LTV and can be in the 3-4% range it today's nearly free money environment. Bridge debt is more expensive but you can borrow up to about 80% LTC (Loan to Cost) which means you can borrow your capital expenditures used to rehab the property. With agency debt, you must raise the equity to do the renovations which dilutes the returns.

I picked up my entire life and moved to Florida so that we can invest locally in Florida multifamily.  I believe in the market that much.  We considered Dallas, Phoenix, etc but it's possible that they won't have the long run population and job growth that will match the I-4 corridor in central FL.  Best areas in Florida for job and population growth AND value add workforce housing investing are: Tampa, Orlando, Lakeland, Ocala, Gainesville, Tallahassee, and Gainesville.  I'm not saying Florida is the best.  But it was good enough for me to bet the farm on it.  Should I do a podcast on this thread to go deeper on it?

To raise capital: pick 1 and only 1 method (i.e. platform) and get really, really good at it before you branch out into anything else.  I've done 250 paid speaking engagements with several million in speaking fees.  I didn't do anything until I perfected that skill.  Then I went to podcasting.  Examples of a platform: podcast, meetup, blog, youtube channel, etc.  This is how you create predictable inbound lead flow.  

This is exactly why we take a geoniching investment strategy [inch wide, mile deep].  We are geoniched in that we only invest in Florida multifamily.  And on top of that, we only invest in a handful of areas in Florida don't produce positive cashflow (i.e. south FL). There are many successful syndicators who are wide area investors [mile wide inch deep] but I think it may be getting a little harder to make that strategy work since the riches are in the niches.  I might do a podcast on this thread to go deeper on the topic.  What do you think?