All Forum Posts by: Theo Hicks

Thanks to everyone who recommend Best Apartment Syndication Advice Ever!

Congrats @Jevon W. You can definitely use this experience to transition into doing your own deals in the future!

Great reply @Jack Martin. Just to add to your points, I think something else that is important is having alignment of interests. Maybe that falls into the "fair model" point. But I think it is important for the syndicator to have their own skin in the game so that if they fail, they don't just lose out on making money but they lose money as well. Even better if they have other aspects of their business that aren't specific to that deal (i.e., podcast, conference, books, consulting programsetc.). Because if they do something shady on one deal, their overall reputation takes a hit and they lose more than just the trust of the investors on that deal. 

Is the plan to buy with your own capital or raise capital. If it is the former, then work on the credit score, save up, and work on your education in the mean time. If it is the latter, you need to answer the question: "why would someone invest with you?" If you don't have a good answer to that question, brainstorm what you need to do in order to have a good answer. Start a thought leadership platform like a podcast or meetup group, do a few deals on your own (see my first point), hire a mentor/consultant, wholesale, birddog, etc.

1. Pick a market

2. Go to Loopnet and create a list of 20 brokers

3. Contact brokers, letting them know your investment criteria

4. Follow-up every two weeks with brokers, providing them with a piece of information that shows them your ability to close on a deal and asking if they have any new deal currently or on the horizon

The future value is based on the future NOI and future cap rate. If you are underwriting 5+ year projections, you should have the NOI. People have different methods for calculate a future cap rate. The best I've seen is adding 10 bps (0.1% each year) to the in-place cap rate. For example, if you want to know the future value in 5 years and you buy at a 5% cap, assume a 5.5% cap rate.

Mid to high 40% for class A and B, 50% for C, and high 50% for D.

Repairs: visit the property in-person and create a list of all the items that you think you will need to repair. Ideally, you bring a GC or a representative from your property management company to help you identify and estimate the costs. If they cannot make it out, take pictures of all the items that you think you will need to repairs, come up with your own estimates, and ask you GC/PM for feedback

Vacancy: based on the market and the historical vacancy. Keep in mind that if you are doing a lot of rehabs, the vacancy rate during renovations will be higher than the vacancy rate after renovations

CapEx: if you are referring to ongoing reserves, $250 to $300 per unit per year is standard for multifamily

Management: your property manager will tell you

Maintenance: based on the market averages and historical maintenance. Plus, if you plan on addressing a lot of deferred maintenance upfront, the ongoing expense should be lower.

Overall, work with a property management company who specializes in that market and in similar properties.

Hi Joe,

All of those markets, like all markets, have their good and bad areas. Once you pick an overall MSA, you will want to do a more detailed market analysis in order to determine the good and bad neighborhoods. Obviously visiting the neighborhoods in person is best. But you can all pull Census.gov data by census tract in order to determine the good and bad areas. You can look at live deals as well.

Correct. There is no one size fits all return structure. It will vary based on factors like the type of deal, the business plan, the GP's experience and track record, and the GP's relationship with the investors.