All Forum Posts by: Jay Chang

Even as an apprentice or mentee, there is still a lot of value you can add to your mentor.

Assuming your mentor is quite successful, he probably doesn't have time doing everything himself and wouldn't mind using a little help for free.

For example, when I was just starting out, I connected with a local developer building 30-60 unit apartment/mixed-used in Los Angeles. He was interested in expanding into Culver City and Monrovia, so I did some code research for him. I put all the information on zoning and bonus dwelling units together into a nice report for him, and he found it very helpful. We ended up becoming really close friends, and started looking at ground-up projects together.

I was also connected with another retail developer who was working on a $100 million renovation project next to Disneyland. He was looking for potential tenants, so I helped him connect with some people. He ended up signing contracts with one of them. The truth is, I didn't know any of these tenants, but I called them up and presented them the project. I sold them the developer's idea and vision. 

None of the stuff I did require much expertise. You just need to dedicate time and effort. 

Hopefully these examples will inspire you to add value to your mentors. Don't be one of those mentees that just keeps taking, even if you are paying money to your mentor. Continue to add value to others, and you'll go a long way in life :)

Generally speaking, a fast-growing regions like Los Angeles or San Francisco have low CAP rates. People are willing to pay more in these areas because these regions are growing fast. In other words, investors are willing to sacrifice consistent cash flow in return for future appreciation, which isn't realized until the property is sold.

On the contrary, the properties with high cap are located in areas associated with low-growth, which has less demand relatively. The demand is lower because of their low-growth, not because of the high cap.

If you find a high cap property in a fast-growing region, then the demand for that property will be extremely high. For example, a 7% cap multifamily property in Los Angeles with lots of value-add opportunities... People will be bidding for this property left and right.

Hope this helps!

Try to find a local mentor that's familiar with multifamily properties. Maybe even considering partnering with the mentor on this deal. First deal is always nerve-wracking, so it helps to go into the deal with someone a lot more experienced. 

For anybody that is interested in meeting amazing people or creating passive income by investing in apartment syndication.

Meetup Link: https://www.meetup.com/MultiFamilyMasters/events/262542446/

Location: Meeting Room B inside the Central Library (630 W 5th St) in DTLA

Parking: Joe's Auto Parking at 746 S Hope Street ($6 Flat Rate after 4 pm M-F) It's the building with orange and yellow stripes.

The parking building is 0.3 mi (8 min walk) from the Central Library. Just come out on Hope Street and turn right (heading North). After 3 blocks, you will reach the Central Library.

Special Guest: Adam A Adams. Bio Below! Speaker topic: Capital Raise

6:00-6:50. Networking

6:50-7:00. Announcements/Ice Breaker

7:00-7:50. Panel Discussion/Speaker/Presentation

7:50-8:00. Q&A/Closing/Photo

8:00-9:30. Networking at Karl Strauss Brewing Company

No mandatory fee. Suggested donation at the event: $10.
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Adam Adams has educated thousands of investors through coaching & mentoring, real estate conferences, radio & podcast interviews, masterminds, and his world renowned Meetup group.

Adam is the host of the Creative Real Estate Podcast. His efforts to educate and inspire other investors has earned him the prestigious title "Master Investor". He is also a three time Hall Of Fame winner from RE Mentor for his successes in multifamily syndications.

Today Adam is partnered in 7 multifamily syndications (Approximately 1,400 doors, valued over $90 million dollars).

Adam's company, BlueSpruce Holdings, focuses on finding and managing apartment communities to allow passive investors to receive the four most important things: 1) cash flow, 2) diversification, 3) tax benefits and 4) time freedom.

Adam's role in BlueSpruce is to position the company to attract capital. They have raised millions of dollars from private investors and continue to grow their brand as one of the top syndication teams in the United States.

A lot of apartment units in Los Angeles have been taken offline recently (either to be converted to condos or to be demolished for a new development project). The number averaged 7 units a day for the past (3) months. 

Historically speaking, converting apartments into condos is a sign of the real estate market overheating. I believe 7 units a day is not a negligible number, so I would argue that the LA market is starting to show signs of overheat.

I am curious to see if many other markets are experiencing the same.

Maybe there will be a crash in a year or two? 

Consider investing in Raleigh or Atlanta. Both great cities with very strong growth. I have also heard great things about Tampa Florida.

I personally invest in Phoenix, AZ because it's close to Los Angeles, where I live. If you live in NY, I recommend you to stick with the East coast.

Rentometer is good for approximating your rent. If you want to see comps, try apartments.com. Find three houses that are similar to your residence, and the average of those three houses should give you a fairly accurate rent. 

If you want to be really accurate, considering visiting the actual houses by pretending as a potential renter. This way, you can make sure that the finishes and appliances are comparable. Of course, this method is a lot more time consuming.

I would invest in multifamily syndication because it's easier to scale (typically $35k min investment in each syndication deal). I'd also consider investing in ground-up developments, since they offer greater returns (typically $100k min investment in each syndication).

I highly recommend you not to put all $500 k into one deal because diversification is key!! Especially putting $500k into your first deal. You'll most likely make a lot of mistakes. 

To minimize risk, you should invest in markets that have a healthy growth trend, such as Raleigh, Phoenix, Las Vegas, and many more. You should also diversify your portfolio by investing in different areas with different syndicators that all have a solid track record. Diversification is key to minimizing risk, so you should also consider putting some of the money in stocks.

Hiring a good subcontractor can make your life so much easier. Here's what I recommend you do when vetting out subs.

1. Ask for references. Talk to owners/contractors that have hired this sub before. Hopefully you hear good feedback
2. Check if the sub has done a similar project before. Similar finishes, work, and project size
3. If it's a GC, you should visit one of their projects to see if they are managing the job well. This might not apply to subs because the entire job is not representative of a sub's work
4. Do a level bid for at least 3 subs using the same scope, and don't just hire the cheapest sub
5. Make sure the sub has enough workforce for your project

If you are interested in reading more about construction management, here is my blog post. 
https://www.biggerpockets.com/blog/construction-management-101

Don't let the tenant know that you are the landlord, because the tenant may start asking for unreasonable requests. Refi only if you can take out a significant amount of money. Otherwise, you're just wasting money on the prepayment penalties. Good luck!