All Forum Posts by: Jaren Barnes

@Robert Carlson I might be speaking outside my wheelhouse here, as I haven't done a syndication yet, but I believe you just include it in the raise from the limited partners. 

If I understand it correctly, you raise all the money needed to acquire the property in terms of the down payment, due diligence costs and closing fees, as well as (at least a portion) of the rehab budget, from limited partners and then make sure the numbers work to pay them back a handsome return over 3-5 years or so. 

I'm interested to see what others says on this, who are actually experienced in syndications, but that's what I believe to be true.... sorry if it's not that helpful lol!

Hey BP!

I'm wondering what everyone's favorite direct mail/direct response marketing course is and why?

I'm not married to it being real estate specific - any direct response, copywriting or direct mail specific courses - go!

@Jonathan Klemm Thanks for your comment! I agree that those are A&B areas but I don't know if you're going to catch the path of growth there - maybe if you got an amazing deal, but I don't think you'll see 12 caps like @Mahesh Sam was mentioning. 

To your defense though, I'm not going to see those cap rates in the Orlando market either - and you might see higher cap rates on average in good Chicago neighbors compared to Orlando... but when the entire metropolitan area is bursting with growth like Orlando or Tampa... where as a whole, people are leaving Chicago (and the midwest in general) I just don't know if it's a good trend.

Sure if your goal is strictly cash flow and holding for the long haul Chicago can definitely work and I'll probably eventually figure it out and invest here myself... I'm just leery!

@Jaimie Steinher thank you! I really appreciate your post. I think you're the only person on this thread that has given me anything remotely quantifiable. 

I thought the article was good - I'll PM you with some follow up questions maybe we can work together when I move back to the city next year.

@Brie Schmidt ... but what areas in Chicago have a population increase compared to the overall population decline? What areas have low crime and how does it compare to, say, the national average?

You say you haven't had issues in A/B areas... but what are those areas? 

And did you get into those areas 8 years ago, and were able to ride a growth wave? 

Where would you invest now, if you were starting brand new?

I want to be very clear where I'm coming from: I GENINUNELY want to invest in Chicago. My family and I plan on settling here (I actually live in NW Indiana, currently 45 minutes from downtown Chicago but the plan is to move back to the city next year at some point).

So I'm genuinely seeking your advice, @Brie Schmidt - I know you're one of the leading experts on this market and have been active in it for years.

@Mark Ainley I'm looking forward to your insight as well!

@Mark Ainley that's awesome! I'm happy to be wrong! I love Chicago. Where do you think are the best places to invest in the Chicago area and why?

@Brie Schmidt would love your insight on this as well. 

I'm working with a partner towards getting my first larger multifamily (30-100 units), and did a pretty extensive research project about a month ago that took me an entire weekend to complete.

Ideally they say you should do your home market, so I looked closely at Chicago.

 I compared 8 different markets all across the US and unfortunately, Chicago ranked the worst in my analysis. 

Orlando FL scored the best, and Tampa FL got second. 

This was the criteria I used (it's heavily based on the Best Ever Syndication Apartment book written by Joe Fairless):

Criteria

1. Unemployment
   1. Get this information from Census.gov under the “Selected Economic Characteristics” data table
   2. Calculate the unemployment change over a five-year period using the unemployment percentage for the city for the last five years
      1. Ideally, you want one that is decreasing
      2. A low, stagnant rate is acceptable
      3. A high and/or low increasing rate is unfavorable

1. Population
   1. Both the city and MSA population data can be found on Census.gov
      1. The city data will be under the “” data table
      2. The MSA data is located in the “Annual Estimate of the Resident Population” data table
   2. Calculate the population change for both the target market city and the metropolitan statistical area (MSA) using the population data for the last five years for the market
      1. An increasing population is ideal
      2. A stagnant or decreasing trend is unfavorable, Especially if apartment supply is on the rise

1. Population Age
   1. Find this data on the Census.gov website under the “Demographic Characteristics” table.
   2. Calculate the population change for different age ranges using the population age data for the most current year and the five previous years
      1. The increase or decrease of the proportion of people in specific age ranges will dictate the property types that will be in the most demand.

1. Job Diversity
   1. Census.gov under the “Selected Economic Characteristics” table
   2. Determine whether a specific industry is responsible for a large percentage of jobs or not.
      1. Best Case:
         1. A market with outstanding job diversity will have no single industry that employs more than 25% of the employed population
         2. 20% is e even better
      2. Decent Case:
         1. If one single industry does employ more than 25% of the employed population, it’s one you trust the future of.
            1. This is determined by:
               1. Looking at the top employers or businesses and your research (talking to locals, reading local articles)

1. Top Employers and Businesses
   1. Find this information by Googling “CITY NAME + TOP EMPLOYERS)
   2. Determine the top 10 employers in the market
      1. If a certain industry is dominant in a market, analyzing the top employers and businesses allows you to determine whether the majority of those jobs are provided by one or two companies, or whether the risk is spread across multiple companies.
      2. This will allow you to track any developments within that company (are they creating a new facility, or cutting jobs?)
      3. Ideally, you want several employers to spread the risk associated with a dominant industry

1. Supply and Demand
   1. Census.gov under the “Selected Housing Characteristics” table
   2. Determine by analyzing the five-year rental vacancy rates and median rental rates in the market, as well as the year-on-year ccreated for commercial properties (five or more units)
      1. The number of five or more unit building permits won’t tell us much on it’s own.
         1. However, a huge red flag to you would be when you see an increase in the number of permits in combination with an increasing vacancy rate and/or a decrease in median rents
      2. As vacancy increases, median rent and new building permits should decrease… and vice versa
      3. Best Case:
         1. Low or decreasing vacancy rates and increasing median rents
      4. Decent Case:
         1. High vacancy rate that is decreasing
         2. Stagnant vacancy rate
      5. Worst Case:
         1. Increasing vacancy rate and/or decreasing median rent
         2. An increase in the number of building permits (5+ units) in combination with an increasing vacancy rate and/or a decrease in median rents

1. Miscellaneous
   1. Research Other Characteristics relevant to the strength or weakness of a market
      1. Examples:
         1. Landlord vs. tenant-friendly state?
         2. Property taxes?
         3. Upcoming construction?
         4. Is this market considered one of the “top markets” in the country?

Order of Importance:

Tier 1 Ranking:

Supply/Demand, Job Diversity

Tier 2 Ranking:

Top Employers, Population and Unemployment

Tier 3 Ranking:

Age, Misc.

@Tyus Foster awesome, my friend! I’m rooting for you!

@Tyus Foster If I may be so bold - I know you don't know me from Adam, so definitely take this with a grain of salt - but I'd maybe challenge the "worry about being abused by your will to work."

I'm 28, so I'm not saying this as an old crotchety man, believe me!

My wife is from a former Soviet Union nation, and she really helped me see work in a different lens than how I did when I was a kid. 

The ability to work hard is a gift - especially when it comes to working for someone super successful. 

There are a lot of people in developing nations who would kill for the opportunities we have here in America.

In our generation, for some odd reason, we lead a lot with making sure our "rights" aren't violated, but neglect to see the full value of the opportunity in front of us. 

I definitely encourage you to join up with people that have a similar moral compass as you do, but once you find good soil to plant in, I'd suggest you give everything you got to the opportunity before you- no holding back at all!

I did that at Simple Wholesaling - a wholesale company out of Indianapolis I used to work for. 

I found my former boss and he hired me part-time at like $10 an hour. 

Within a month, I was full time and within a year and a half, I was making more money than I ever had in my entire life!

@Brett Snodgrass gave me an inch and I got everything I could out of that opportunity but how I did it was I literally slaved away - working 6-7 days a week (even on Christmas), for close to three years. 

Even though this is counter-intuitive, you get promoted in life the more you serve and promote others - at least that's how it's worked in my experience so far. 

@Brie Schmidt what are your favorite Chicago neighborhoods to invest in and why so? 

@Tyus Foster I would just go in with the heart to radically serve them and be super humble. Even if you're bringing them coffee, or scrubbing toilets in the office, whatever you can do to work for the person you want to be like in your life and career. 

Tell them you'll doorknock if you have to, and if they have a need they'll find something for you to do.