All Forum Posts by: Jeff Greenberg

@Jay Hinrichs You are correct that most brokers will require some vetting.  Typically when someone comes to me and tells me that they have been asked for proof of funds, I know the broker is doubting their experience and ability to close.  I welcome deals found by other investors on the hopes that they happen to discover a diamond in the rough.  I don't care about their experience, but how we would split the deal would depend on what they brought to the table.  On one hand, if they brought a finely tuned presentation of the deal with all of the info on the deal and market strength, compared to a deal straight from the broker as a birddog.  The partnership would look quite different depending on the value added.  It does come down to what the investor brings to the table.

@Adam Gregory you are bringing something. You are bringing the deal. Find someone that can do the deal and partner with them. You can have them sign a NCND document if you are not under contract. Do you have it under LOI?

@Branton B. I always disliked the per unit calculation as it did not take into consideration how efficiently the property is being run, the effect of deferred maint, satisfaction of the tenants, or desirability of the property.  The only time I have ever used this calculation was to see if the asking was in the ballpark of this market.  When I bought my Houston property for under 21k per unit, when the market was at 25-35k per unit, it reinforced my evaluation that it was a great deal, under market.

I would be interested to see what methold that the appraiser used. Income approach doesn't work without a cap rate. On a very small property he could comps. If you have NOI and sale price you can find the cap rate for that deal.

Try CKR Management.  They were great to work with while I owned in Houston.

http://www.ckrmanagement.com/index.aspx

Welcome @Brianna Babienco to BP.  In order to buy out your investors, that would have to be clearly stated in the PPM from the beginning.  Now let's say that you do that, you could refi and buy them out.  The issue would be, could you buy them out at a price that will be a good deal for you.  I do have the wording in my current deal, but I will need to look closely at the  numbers to see if it works for me.

On a recently closed deal I had the option of doing a refi or selling.  for me as the sponsor it was a choice of 9k a year in cashflow or 135k at sale.  You can guess the choice we took.  This was on a value add deal where the investors received a 120% return on a 3 year hold.  Everyone left happy.

The biggest problem is this.  Your greatest value on a value add deal comes in when you sell.  

My understanding is, that depreciation reduces the bottom line profit of the owning entity. Ira’s are not effected by the increased profit unless is increases distributions, and only on the percent affected by UBIT.

I am not a CPA and would love to hear their opinion.

@Jeff Kehl Can you expand on this statement "but if your investors are mostly accredited I'd be surprised if many of them can take advantage of it."

@Yonah Weiss How does this work for SDIRA investors? Is there still an advantage to them?

There is a book called Leverage Your IRA by Matthew Allen. iralending.com In the book he provides comparisons of investing in RE within and outside of IRA funds.

This should help answer your questions.

Even if, and that is a big IF, your cap rate may be different because your property taxes may go up, he could be self managing, or doing some of the maint. himself.  This is a tight market right now and having an expectation of a 10% coc first year may be unrealistic in you area at this time.  Also, when the broke gives you a coc return number, take a look at what he is using for the cash in number.  I have seen many times they only use the down payment.  No closing costs, no deferred maint costs.  Your coc should included all capital brought into the deal.