All Forum Posts by: Ben Leybovich

Interesting. I see some of what I think great comments and some that completely miss the mark, in my opinion.

@Greg Dickerson says - you need to buy on actuals, not pro-forma. Let's think this through:

If the building is not performing and you make an offer on actuals, it's going to be a low offer that won't get you the deal. And if the building is performing great and you make an offer on actuals, then you'll have to pay a lot and there won't be any value left to capture. 

So, it's kind of neither here nor there...

Paying valuations consistent with actual T12 doesn't work in the current cycle. The fundamentals are strong for multifamily and this reality has not escaped the sellers. Regardless of whether the building is performing or not the sellers want part of your future value.

Now, can you afford to give the seller part of your future value? Depends. Think of it this way:

You buy at 4% cap. Naturally, you can't cash flow that. But, if you can fix the occupancy and renovate units to improve rents by $300, then upon your basis you may be at 7.5% cap in 2-3 years. First, you can cash flow 7.5 cap. More importantly, you've created a lot of value.

So, aside for the reality that while buying on existing financials worked 10 years ago but doesn't work today, underwriting what is currently there may be completely missing the opportunity, which brings me to the comment by @Erik W., which is, in my opinion, the right way to think. So please refer to it.

Now, we have to preface this by saying that it's all about the location. Tertiary markets are dangerous, specifically this late in the cycle. And, anything under 100 units is challenging. But, all things considered, this should offer some food for thought.

Good luck!

Brent, we have to conceive of BP as a business. In business, you do things that are most likely to monetize the most. As @Scott Trench indicated, you and I constitute a tiny minority of the audience on BP, which may not be essential for the overall monetization strategy (no maybe about it). That said, the evolution of the site will do just fine without you and me. We are a casualty of business realities, and BP is fine and dandy with that.

This is why I am asking Scott if there is a way that makes sense. BP can't really allocate human capital to a project that will not monetize much, and I get that. We are a minority, but we are here. So, I am just wondering if there is a more or less painless way to create something like a subscription platform that would attract enough revenue for BP to feel good about having done it...not sure that there is. But, certainly not necessary for the evolution of the business. Just a want.

Hahah Lovely response, Scott! All good points and all makes sense. I am not done with this yet, though...

How about the idea of a higher-level section of the blog? Perhaps an additional fee of $5/mo - $10/mo to access? 

As a writer, I need engagement. Just like when I played the violin, I did my best on the large stage instead of the practice room. The value to me is in the energy of the back and forth, and I think that if we were able to get that 1/10th of the BP audience who crave higher-level content in one place, thus making it easier to find said content, I would be able to write the content I want and get the engagement I need.

Scott, this type of content should be considered expert advice, so I think many folks would happily pay a few additional dollars to gain access.

We spend out lives in pursuit of freedom. Money does facilitate it, yes it does. But, money in and of itself is not the joy in life. Spending minutes with and for whom I want is what money buys for me. 

In the context of my writing, I want to speak to an audience of like-minded readers/writers, who can appreciate and engage on a different intellectual level. Is there a way to acknowledge that we are indeed here are on BP, though getting lost among the 99%, and make it easier for us to come together in an elevated environment designated for us? I bet we'll pay to have this opportunity.

We could do our own webinars, on-line classes, and our own meetups. And Ben Leybovich could help...

Thoughts?

 I stopped writing on elevated topics on BP as of about a year ago.I'd write an article about Rich Dad, and I'd get 300 comments - as if this is the defining knowledge in this universe. But, I write a technical piece, and - nothin'...

I suppose if you are paying attention, there must be others. I'' try again.

But, if @Scott Trench is reading this - perhaps we can have a subsection of the blog aimed at higher-level content? Perhaps it can be paid subscription, even. Scott, I stopped writing for the most part because the energy in writing is a 2-way street, and when none is coming back it's difficult to convince yourself to write. With the average intellectual worth on BP being what it is, higher-level content simply gets lost on the blog. Anything we can do? 

I am happy to announce that the second season of Multifamily Syndication Unscripted podcast is out!

Sam, Scott, and I have been trying for months to get the second season together, but time has been at a deficit. So happy to finally come back with what we hope will be some educational and entertaining content for you.

Straight to the Content

There are only 5 episodes in Season 2. We made the decision to be as concise and pragmatic as possible. We had a lot of thoughts to get out to you, and not a lot of time. So, this is action-packed with not a lot of fluff...

The main thrust of our intention behind Season 2 of Multifamily Syndication Unscripted is to deliver a debrief of our activities in 2019. Last year was very active for us. We closed on $50M of multifamily in Phoenix, for which we raised $20M in equity. And, we hope to double this in 2020.

In this season Scott played the role of the moderator. Scott asked questions, and Sam and I did the best we could to answer. This format seemed to keep us on track and focused.

Feel free to reach out for clarifications of anything you hear on the show. I encourage you to leave comments on this article. I promise I'll stay engaged!

And, please give us a 5-start review on whatever your platform of choice. We appreciate it!

Please Enjoy!

Listen on iTunes

Listen on Podbean

Listen on JustAskBenWhy

Listen on Stitcher

Listen on Spotify

PS: Come join our Facebook group for further discourse.

Oh, yes, Sorry about that, I think you asked before.

 Yes, LTL is loss to lease. However, LTL is a loaded subject. I think I need to write a blog on this topic, but the rent-setting ecosystem consists of the following:

1. In-place Collections - this is what is actually being deposited into the bank.

2. In-place Schedule - this is the current schedule of asking rents.

3. As-Is Market - this is what the current schedule should be in as-is condition.

4. Renovated Market - this is the proposed schedule post-renovation.

When we talk about LTL/GTL it's important to understand which line-items we are comparing. For example:

1. If the unit in as-is condition is being advertised at $825, but there are these units on the RR that are rented for less, then there is LTL. 

2. If I come in and note that withot doing much of anything I can hike rents by $100 in as-is condition, and my schedule for this unit will go up to $925, then I book an additional $100 of LTL.

3. Then if I remodel this unit and plan on getting $1,125 for the same unit, that's an additional bump, which is the renovation bump I reference.

Hope this helps

Tim, all community amenities are now in place, including a new office, gym, playground, and dog park. Unit renovations will be at 50% in a couple of months. We are a bit ahead of schedule there.

We typically use a 3+1+1 bridge that we cap for 3 years.

We've got several projects going on with a cumulative construction budget of around $6M. We are fully funded on all of those, but more are in the pipeline.

Feel free to reach out.

Guys, I offer this training from time to time. I do this live. The content is very advanced.

https://www.justaskbenwhymultifamily.com/

Please see the link above. Feel free to reach out should you have any questions.

Limited time only. But, if we can get a group together, we can run the training in the next few weeks.

Thanks all,

Ben

I would recommend my own :)