All Forum Posts by: Theo Hicks

If you are asking about loan terms, as @Alina Trigub said, contact a commercial mortgage broker. They will provide you with the loan programs that would work with you background and business plan.

If you are asking about underwriting, I always recommend creating your own model and practice by underwriting live deal.

@Jacob Phillips That is great. You will be able to obtain a lot more information since you personally know the owner.

I would either start with a smaller buy-and-hold multifamily or passively invest with an experienced syndicator.

Like the majority, if not all, investments, a return isn't guaranteed. There are always risks of not only receiving a return lower than projections, but losing the majority/all of your initial investment. 

Even if you find the best sponsor with the best track record, there are still risks that are outside of their control. So, before investing, to minimize the risks, know the syndicator (and their team), know the deal, and know the market.

Hi Harry,

Unless you have experience with successfully taking similar deals full cycle, you will likely have to rely on family and friend. If family, they will have to gift you the money. If a friend, they will need to have some other active role in the deal to qualify as a JV.

I would avoid rule of thumbs and underwrite based on the historical 12 months and your income and expense assumptions for after you take over the property.

Hi Joe,

If you plan on pursuing a 203k loan and the BRRRR strategy, you will need to add a ton of value to the deal in order to refinance without having to put additional capital down.

For example, you 203k a $150k property with $50k in rehabs and the ARV is $250k. You will have to put 3.5% down on $200k, which is $6k, and the loan is $194k, If the ARV is $250k, you have $56k in equity, which is ~22%. But if the ARV is $225k, you have $31k in equity, which is only 14%. So in order to refi in this situation, you'll need to bring the remaining 6% to the table. And that is assuming you can get a 80% LTV loan, whereas 75% LTV is more realistic.

PPM (private placement memorandum) is a document which disclosures information and risks of a deal and is put together by a secures attorney for a syndication.

A syndication is an investment strategy where an active investor raises capital from passive investors for a deal, sharing in the profits.

One thing I wouldn't do is purchase a property using all $1 million (which it looks like you aren't going to do anyways). I think you next steps will depend on your current level of real estate experience and knowledge and time availability. 

If you have minimal experience and knowledge, I would browse the BP forums for various investment strategies to see which one/ones resonate with your goals and interests the most. Then, I would spend a few months educating yourself on that strategy. Then, I would start with one small property following that investment strategy. I would definitely take advantage of the relatively low interest rates and secure a loan rather than pay all cash.

In the meantime, I would investigate some passive investing real estate strategies like apartment syndications. That way, you can put a portion of that million to work immediately.

@Jordan Santiago No problem and thanks for the book purchase!