All Forum Posts by: Mark Kelley

Hi all, thanks for considering the below questions and providing your thoughts.

I've been involved in SFH investing, and recently have started looking towards investment in other people's multi-family development projects (syndication?).

I am evaluating my first investment opportunity and am admittedly novice to multifamily and syndication. I have received the vision and high level prospectus for the development, a subscription agreement to purchase Class A membership interests in the company, and a sheet outlining past development completions and their returns over the last about 10 years.

I am meeting the CEO of the development and investment company on Friday. My primary question to the BP community is this: What are some of the questions I should be asking right out of the gate to qualify this investment opportunity? 

Here are some of the details that I discern would be helpful to know:

- Property type is senior living center, mix of independent living homes and apartments, assisted living apartments, and care residences. Large shared spaces and common areas. (100 beds total)

- Development with intention to operate, including food services, activities, and care.

- Advertised expected return: Preferred 6%, IRR Year 6 28%, and return on equity 13%

- Development team is a major capital investor and also will be self performing some of the work

Thank you for any insight you may have. 

A recommendation from the tech startup space, Crossing the Chasm by Geoffrey Moore. It’s all about the technology adoption lifecycle and how to market hi tech products. It’s concepts have had the biggest impact on my career as I’ve tried, failed, and succeeded. There are many lessons one can apply to real estate, especially if someone identifies a tech play in real estate. Since this book is basically the handbook for every technology startup, it also gives you perspective to recognize the marketing strategies of the high profile tech companies around us and how consumers and businesses adopt and leave behind their products.

Lots of good perspective above. I’m personally of the discipline that a well funded 401k is good to have alongside RE and other investments, and that tapping into a retirement account for anything is last resort.

In my personal judgement and with only the limited info I have about your situation, I would aim to max out the pretax savings in the 401k. For both you and wife. That would be $19,500 per person per year pretax. Do this alongside RE investment like your doing now. Let’s say you end up keeping the W2 for the next five years while building out the RE business, you’ll have likely banked a chunk of change in a tax deferred account without much effort or thought with decades more for it to compound.

- mwk

@Greg Blasso

@Max T.'s suggestion sounds reasonable. 

Like Caroline, I'm leery of tenants offering upfront payment, granted my skepticism is based off a sample size of one. A prospective tenant who happened to be a semi-celebrity talked a big game about upfront payment when seeing a property. He didn't lease it, and a few months later I saw headlines he had allegedly defrauded thousands of fans. Made me think he would have somehow jammed me too.

@Chris Frydenlund I've been living in an Airstream for the last 9 months while traveling around the country, and I've had similar thoughts about converting it to an AirBnB when I come off the road.

I would encourage you to do whatever you can to find a situation in which you have access to 'full hookup' for water, sewer and electric. Without these, you will have major headaches when people with limited RV experience come to stay in your Airstream and want to use water, sewer and electric like they are in a house. When relying on waste water holding tanks, fresh water tanks, and generators, a camper needs to be conscientious about creating waste water, using water, and managing power. If cycling a bunch of AirBnBers through who don't know any better, you will have problems, even if you educate them with rules.

I recommend you find a nice RV park in a desirable natural area, such as near a national park, and with some desireable amenities, like pool, playground, full bathroom facilities, and laundry, and try to work out a deal in which you rent a full-hookup site from them for the season or year, put your Airstream on it, and rent it through AirBnB.

If you find the right park, you could probably develop a solid business relationship and possibly add more units of it works. You may have to call around though, as I doubt all would be interested.

Don't know if this violates any AirBnB regs, though this is where I would start.

I have no idea on cash flow. It seems worth the research though.

Hey @Shaun Palmer or others, have you looked at Pittsboro at all for buy and holds? I've not and am not buying now because I'm traveling, but I've heard about the town's growth on and off for a few years as well as Goodnight's backing of Chatham Park, a major project which it seems the locals resist because it will turn a small town into a bigger one. It's about equally close to Raleigh, Durham and Chapel Hill, and I've had a couple friends with families move from Raleigh to Pittsboro when they wanted a bigger house/more land while having similar commute to RTP area offices. I'm surprised I see/hear so little about the area on this forum, even through searches, so I thought I'd throw it out there. Maybe I'm missing something that makes Pittsboro a bad area, as I haven't looked into it deeply, but If you are thinking about placing a bet on growth over the next ten years, then it could be worth investigating. 

Hi @Donald Dickerson, if your are keen on tracking your net worth, free software like mint.com is a pretty nifty tool for doing so and showing trends in spending, income, and net worth. 

In North Carolina, we have the occasional hurricane blow over the outer banks or other coastal areas. Some hurricanes are devastating, others do minor damage.

Has anyone marketed to owners of second homes, beach houses, following hurricanes to see if there is motivation to sell?

Curious if others have attempted this with any success, as it seems a plausible way to go about getting a deal on a second home or investment. 

Hi @Terry N.. Not looking for tenants right now so can't share perspective on demand.

How are you advertising the unit? wondering if perhaps the channel could be the cause.