All Forum Posts by: Justin Goodin

100% agree. The crazy thing is many people do not even know you can invest in large multifamily apartments. 

#1 - Asset Type

Within the real estate world, there are a variety of asset types to choose from. You can invest in retail, industrial, multifamily, office space, self-storage, and more. By varying the types of properties you invest in, you’re hedging against broader changes to the economy.

#2 - Location

At any given time, one city might be booming while a neighboring area may be experiencing a lull. Smart real estate investors desire properties in growing areas or those expecting growth.

By diversifying across multiple cities, counties, or states you can take advantage of the potential across several markets and hedge your bets against a correction in any one area.

The challenge in diversifying across geographical locations is obtaining the research, connections, and more that you’d need to feel comfortable investing in them. This is what makes passive investing so attractive - you can leverage the expertise of the sponsor team in each market.

#3 - Asset Class

Aside from asset type, there is also asset class, which is a range of moderate-to-luxury unit prices within each asset type. Take an apartment complex, for example, and consider the range between moderately priced units, nicely developed units for the upper-middle class, and finally, the ultimate luxury apartments that are available in some areas.

Certain asset classes, like the more conservatively priced units, do well during rough-patches in the economy. Luxury properties do best during the so-called booming economic years. It’s important to have both in your portfolio so that at any given point in the economic cycle, your portfolio is profitable.

#4 - Hold Length

Real estate syndication investments have an associated hold time which can range between 3 -10 years (or more). Consider varying the hold time of your investments, so you’re not entering and exiting more than one deal at a time.

#5 - Funds

One of the easiest ways to diversify quickly is to invest in a real estate syndication fund. A fund pools together investors’ money to buy a variety of assets within a specified period of time. Funds can be defined by geography, asset type, or asset class.

At certain points in the market cycle, it will feel as if the market will go up forever. Conversely, it may feel like the market will continue a downward spiral forever. We know that neither of these are true and that during one phase of the cycle, portfolios should be diversified in preparation for the next phase.

Keep these 5 ways to diversify in the back of your mind as you explore potential deals. Doing so will help you find various opportunities to diversify your portfolio, no matter the current market cycle.

 I do but don't think BP will let me post.

Totally agree and thank you for sharing this. I also think the investment summary should be pristine and top notch. It should clearly outline everything about the deal and the strategy. A good investment summary will answer questions that the LPs already planned on asking. 

The well put together and pristine offering package definitely displays the professionalism of the team, however, investors should not take the pretty colors or pictures to make their decisions. 

I definitely would start there. There are tons of recommendations that have been stated in the forums. Really helped me when starting out and still read a ton today. 

 Thanks! Financed with a local community bank.

Some investment summaries consist of gorgeous graphics and iconography, professional photos and clear tables. Others are written like textbooks and include haphazard low resolution phone pictures someone probably threw in at the last minute. Sigh.

But here’s the thing. Regardless of what an investment summary looks like, you have to be able to swallow your initial impressions (good or bad) and look at the numbers and business plan for what they really are.

If you decide to invest because the investment summary looks pretty, you may be putting yourself at risk, if you haven’t done proper due diligence on the deal and the team.

• Project name (often the name of the apartment complex)
• Photos of the property and area
• Overview of the submarket
• Overview of the deal
• Details of the business plan
• Projected returns and exit strategies
• Detailed numbers and analyses
• Team bios

In a 1 page summary, you get bits and pieces of each of these elements, though you would need the full investment summary to get all the details.

If this executive summary landed in my inbox, here’s what I would do. I’d start by skimming through the whole thing.

In skimming this executive summary, here are the things that would jump out at me:

• Off-market
• Value-add
• Track record
• Strong submarket
• Proven model
• Equity multiple
• Unit count

Investment Info:

Large multi-family (5+ units) commercial investment investment.

This was an off market deal in Indianapolis, IN that we acquired directly from the owner. We plan to put this property through a substantial value-add strategy including interior renovations, exterior paint, and a new professional sign. After completing the renovations we plan to refinance and then hold long term to collect cash flow!

Investment Info:

Large multi-family (5+ units) commercial investment investment in Fortville.

Purchase price: $4,250,000

Ridgeview Apartments is a 48-unit community located in Fortville, Indiana, a growing submarket of Indianapolis. Ridgeview was sourced off market through a broker relationship.

Ridgeview was acquired from 'mom & pop' owners and will go through an awesome value-add strategy by renovating the interior units, adding amenities, billing back utilities to tenants, and implementing a professional property management company to improve inefficiencies.

 Thanks for reading. 

Again, I think the reversion cap rate is highly specific to the market, business plan, and property age. I would say on average, we are using a 10 basis point per year increase when looking at deals. Glad to know they were using a conservative exit cap! Good thing to notice when evaluating deals.