All Forum Posts by: Theo Hicks

Hi Ray,

Since you don't have any previous real estate experience, your three best options are:

1. House-hack: find a 2 to 4 unit property, purchase with a FHA loan, live in one unit and rent out the other.
2. 25% down investment: buy a 2 to 4 unit property with a 25% down investment loan. This is a small enough deal to minimize risks while giving you real world education
3. Passively invest: invest in a credible apartment syndicators deal. You won't learn as much about real estate as you would with options 1 and 2, but you will learn some and it is relatively low risk since you are plugging into a proven system

@Mauricio Rauld laid it our perfectly. Based on your message, 506(b) is the way to go. Only other option is a JV, but the investors will need to have a specified active involvement in the deal. Your best next step is to reach out to a securities attorney in your market that specializes in apartment syndications.

Thanks for the book shout out @Mike Taravella!

@Account Closed exactly. but if you don't have any excel experience, I would start by learning about excels functionality first before venturing out to make your own, because it will be an extremely frustrating experience. I am sure there are millions of "intro do excel" videos on Youtube.

Create one from scratch in Excel. Should take less than 10 minutes with the help of a YouTube video, like this one: https://www.youtube.com/watch?v=N924D6tGOG8

Another option is to charge a monthly utility fee - we do ~$50 a month for heat (we have a boiler) and water.

I always recommend (at least attempting) to make your own model from scratch. You will learn a TON about apartments through that exercise. Another option is to take an underwriting course, which typically come with a free financial model (I took GetREFM, which is a solid introductory course).

Depending on your excel experience, I recommend downloading a free apartment underwriting template as a starter, but ultimately create your own using the free one as a guide. You will learn a TON about underwriting from creating the model.

Since you are interested in passively investing, I would go through the MF forums on BP and DM the syndicators who are the most active/most talked about. Then, qualify them by asking questions about their track record.

8% pref, 70/30 profit split.

Most favorable structure to GP I've come across is: 6% pref, 50/50 split, 12% annualize CoC hurdle, 0/100 split thereafter (0% to LP, 100% to GP)