All Forum Posts by: Lennon Lee

So you mean where do you keep the funds while you find the deal?

This article from @Joe Fairless specifically addresses your question: https://joefairless.com/five-ways-find-first-off-m...

I hope it helps.

Broad answer to a broad question: 

Focus on market analysis first, then make sure you properly vet the sponsor, and only then does the actual deal becomes relevant to analyze.

There are several items you should be analyzing on each category (Market, Sponsor, Deal), but the two big questions you really want answers to are:  

- How are the Sponsor’s interests aligned with mine? (Sub-questions: does he have skin in the game by investing his own capital? Is the GP compensation structure performance based? )

- What’s the strategy to protect the downside? (Subquestions: is the deal cash-flowing? And how does the break-even occupancy compare to historic lows? What is the debt structure? In a raising interest rates environment are they placing long term fixed debt? Is the sponsor planning to do any renovations? If so, does he plan on raising that renovation money (plus reserves) upfront or does he plann to execute the business plan out of the property’s cashflow?)

Only after knowing how the Sponsor plans to NOT LOSE my money, do I care about HOW he is going to GROW it.

As you can see I am assuming here that your question comes from as an investor in the deal. But if you are the one sponsoring/syndicating the deal then the same logic applies and you should be ready to answer this questions.

- ResProp

- WRH

-ConAm

- Tzadik

The earnest money is wired when you execute the PSA. (These days we have part of that earnest money go “hard” or non-refundable on day one or after hitting certain hurdles of the due diligence process.)

When it’s time to close you come to the closing table with your downpayment minus the amount you already put up as earnest money. (If you raised capital from investors then what is common practice is that you come to the closing table with the downpayment plus any additional capital raised for renovations and reserves, and out of that money you pay yourself back the earnest money amount and other out of pocket expenses you incurred to bring the deal to closing)

Love it! Congrats @Holly Williams 

Come join us at The Multifamily Investing Club: October 2018 Meetup for an amazing night of networking and knowledge sharing!

Purchase your tickets Here: https://bit.ly/2A2HsbK

This month our guest speaker will be Eric Jacobs, Principal at Nexterra Capital, LLC. An opportunistic investment company seeking deals in lending, CRE acquisitions, and distressed debt. Eric is also the CEO at Clear Title Group, a full-service title and settlement services company.

An all-around real estate expert, Eric is passionate about helping new and experienced investors take their investing game to the next level through his services at Eric Jacobs Consulting.

Purchase your tickets Here: https://bit.ly/2A2HsbK

As always we'll be meeting at the amazing spaces of Wework Security Building in Downtown Miami on Tuesday October 23rd at 6:00 pm

Come ready to learn, build relationships, and share some knowledge with other multifamily investors and industry pros. We'll be having some inspiring conversations over a few cold beers and some hors d'oeuvre.

Purchase your tickets Here: https://bit.ly/2A2HsbK

The nearest parking garage is College Station Garage and it's only $5 after 6 PM. There is also public parking on the streets nearby.

TICKETS WILL BE $20 AT THE DOOR. (ONLY CASH)

Hi Pablo,

Who is bringing the remaining 25% of the equity? Would that be you? Just trying to understand a little better.

Are your partners going to be actively involved in the operations and/or decision making process driving the ROI? Or will they be totally passive and give you their capital with an expectation of profiting from your efforts as a promoter of the investment?

The answer to the questions above will determine whether or not you are dealing with securities and therefore subject to SEC guidelines/reporting. It will also determine the best way to structure the deal.

Syndication just means pooling resources together, normally financial resources, to achieve a common goal. A real estate syndication IS a Joint Venture at the end of the day.

The legal structure under which the syndication or JV is structured can be an LLC or a Limited Partnership. Whether the LLC, if the deal were to be structured under an LLC, should be member managed or manager managed will depend on other factors.

In a real estate syndication you should get started with the incorporation of the different legal entities (LLCs, LPs, etc) after you are under contract.

Truth is you will (or should) never get a straight answer to the question of How to structure a deal. There is no right or wrong answer to this without really knowing all the details and also what your goals are and what the goal of your investors is.

Hello,

First of all, since you posted the question in the Multi-family and Apartments forum, I will assume that that's what you want to learn about and get started investing on.

You have gotten some great advise up there from other investors so I will just leave you one book recommendation.

https://www.amazon.com/ABCs-Real-Estate-Investing-...

The ABC's of Real Estate Investing is a great book written by a very well known apartment investor and property manager, Ken McElroy.

Also, once you get started educating yourself, ask yourself WHY you want to invest in real estate? What is your end goal? This will determine not only how passive or active you want to be, but it will also will help you to determine what type of strategy you should implement to achieve your goal. (Flippling, Wholesale, Buy and hold, Syndications, Private Lending, etc)

Good luck!

As you already know it is subjective. The classification of multifamily properties is not set in stone.

Some people look at it by Construction Year exclusively, and others weigh in the Property Conditions, Ammenities, etc.

Here is a very general classification by construction year:

Class A: 0-15 years old

Class B: 16-29 years old

Class C: 30+ years old

Class D: 30+ years old in high crime areas.

To answer your specific question about section8 being a Class B or A, I’d say it is not likely. 

Although I know a few class A luxury apartment complexes that offer Section 8 type programs. Not educated in those programs enough to provide further info though.