All Forum Posts by: Jeff Greenberg

@Travis Kramer Let me start with a correction.

Rule 505[edit]

On October 26, 2016, the Commission repealed Rule 505.[4] It previously provided an exemption for offers and sales of securities totaling up to $5 million in any 12-month period. Under this exemption, securities could be sold to an unlimited number of "accredited investors" and up to 35 "unaccredited investors".[5]

The Rule 505 exemption was phased out and its provisions integrated into the Rule 504 exemption. Rule 504's capital limit increased to $5 million and Rule 505's "Bad Actor" provision was added to Rule 504.[6][7

I am guessing that you meant a 506b or 506c offering.

The three big challenges of a MF syndicator are finding the deal, finding the equity partners, and getting the debt.  Because of your and your partners background, you have a great start at the credibility to find the investors.  You need to put yourself into situations where you are able to mingle with potential high net worth individuals.  Tell everyone you talk to what you are doing and how your background and experience will be brought into play.  You can advertise if you do a 506c offering, but without a syndication track record, it may be more difficult.

In most market MF prices and seller expectations are very high.  The cap rates are compressed and good deals are hard to come by.  Because of the difficulty in getting the good deals with any consistency, I have passed on the idea of a fund , at this point in time.  I wouldn't want to feel any pressure to do lessor deals because I had money that needed to be moved.

There are many books out that can help with the valuation part.  Look at Dave Lindahl's Multifamily Millions to get you started.  The key to value add is similar to a fix and flip.  Look at your after repair value- renovation costs-profit you want=what you can pay.  The nice thing about commercial, if you have the noi and the market cap, you can calculate the value.  I know that this is all very simplified, but books have been written on this topic.

@Taylor Shapiro first your math is off "3 month lease GOI: $34,000" but you somehow recover with the "Total GOI: $240,000"

You did not provide us with your expenses.  I have found expenses to be 35-40% on small SH properties so your 100k fits in.  $240,000 GOI on an 800k purchase looks pretty good.  I would be a little cautious on the summer intern money.  What is the history?  We normally about 10% occupancy during the summer.  Make sure that when comparing other properties, go beyond the comparison of the quality of the product, but also the distance from the school.

The main thing that I have found in student housing is your expenses are higher due to the expense of the turns.  The extra damage caused by the students comes out of the deposit or is paid by the students.  The other large expense is marketing.  It is critical that you do it right and during the lease up window.  Miss that, and you can be toast for the semester or year.

How is this a syndication?  It sounds more like a partnership.

I would start out with some books. Dave Lindahl's Multifamily Millions, and the Complete Guide to Buying and Selling Apartment Buildings by Steve Berges.  Biggerpockets, and Joe Fairless podcasts. Old Capital podcasts to learn about commercial financing.  Do some upfront work on your own before you seek help from others.  Show them that you are self motivated and come to them with soe book knowledge.  They might then be more will to help you out with the practical.  

Don't reach out to an experienced investor and as them to mentor you.  Reach out and offer your services to do anything that they need to be done.  Volunteer and pay your dues.

@Bill Exeter  Thank you so much for you presentation.  It was a great crowd and a lot of good questions.

@Christine Palmer I do run the group in Santa Monica and also one in Thousand Oaks.  Beginners and Advanced investors are all welcome.

Thanks @Ali Boone that was a good meeting despite the room issue and loud music.  Good questions and great response from the experienced investors.

https://www.biggerpockets.com/forums/521/topics/526237-la-santa-monica-meetup

Have fun!!

Thanks @Ali Boone are you going to be there, this Sat.

@Mike Dymski Interesting. I have never heard of a custodian going beyond just making sure the transaction is a legal use of IRA funds. I did have an interesting request from a well known custodian, asking me to modify my operating agreement to state that I was not investing in the deal with IRA funds. I couldn't figure out what this had to do with protecting their client. When I told them that I wouldn't make the change, they let their client invest anyway.

If my custodian wouldn't tell me why they are refusing the investment, I would change custodians.  I would also do a more extensive vetting on the sponsor/deal, and see if I could find anything.