All Forum Posts by: Theo Hicks

If you are securing debt, the lender will lend based on the appraised value. So, you will either need to renegotiate the price or pay a larger down payment to cover the difference between the appraised value and the contract price.

If you haven't done a deal before, I always recommend investing in the market in which you live. There are good neighborhoods in most markets. Attend local MF meetups in the area to learn about the best neighborhoods and then start your search.

As others have said, it depends on how the GP/LP partnership is structured. Unless it is a heavy value-add deal, distressed deal, or new development, you likely won't receive 100% of your capital back at a year 2 refinance. What is more likely is that you will receive a portion of your capital back. If that is the case, then one of the following will happen:

• You receive the same preferred return based on your original investment and the GP catches up at sale
• You receive the same preferred return based on your new capital account (original investment - refinance)

I find that there are two types of passive investing. 

1. Invest with another company (apartment syndicator, crowfunding, etc.)
2. Buy your own properties and place them under 3rd party management.

No strategy is completely passive. But of the two strategies above, #1 is more passive than #2, because once you find one company to invest with, you just need to analyze their deals and decide which ones to invest in. But once you invest, the ongoing time commitment is very low.

For strategy #2, you will need to continuously find new deals, but that process can be automated. Plus there is more upside. Once you buy the deal, as long as you place the property under a trusted management company, the ongoing time commitment is also very low.

Personally, I am using strategy #2 to build up a large nest egg, and then I will strategy #1 and live off the cash flow.

Practice underwriting on-market deals

Reach out to brokers, get a list of their recent sales, and visit those properties in person. Follow-up with the broker, letting them know what you did and didn't like about the property

Do the same thing for the properties managed by your management company

And listen to podcasts and read books of course.

To name a few differences:

• Debt: commercial debt and residential debt have some differences. Most commercial loans are shorter in term and have higher interest rates that may be adjustable.
• Management: management is cheaper (as a percentage of collected income) than on residential
• Occupancy: one vacancy at your duplex has a larger negative effect than one vacancy one MF
• Underwriting: more expenses and income line items for commercial MF

Typically, onsite management begins around 50 units. Any sized building above that could potentially be 100% occupied or 0% occupied. So when analyzing deals, make sure you look at the current occupancy rate.

1) pull data from the county auditor site

2) use a paid service like ListSource or CoStar

3) pay a VA to create a list for you (Upwork is a good service to find someone to pull a list for you

4) partner with a broker

Hi Garrett,

There are a lot of posts on BP that discuss the LP compensation structure for syndications. The most common is an 8% preferred return and a 50/50 profit split. But it is completely negotiable.

One thing I would add is that you will have more success raising capital if you invest in the deal. That way, you have skin in the game.

Thanks for the book shoutout @Account Closed