All Forum Posts by: Theo Hicks

@Account Closed

Here are the brokers I use:

• Capstone
• St. Franklin Street
• CBRE
• HFF
• Marcus and Millichap
• Cushman and Wakefield

I was just offering a strategy to determine the annual mortgage payments, that all. Using the 1.25 DSCR and NOI will give you the max debt service the deal will qualify for. But that doesn't mean you will qualify for that loan. Does that make sense? In the end, the debt service may be lower based on the purchase price.

@Deepti Mandava Nice. Let me know if you have any other questions on passive investing, putting together your own syndications or pursuing 2 to 4 unit opportunities.

@Dean Fiacco A broker sent me an off-market deal within a few months of me meeting him because I implemented those four things.

Another thing to do is attend any happy hours the broker's put on (if that is your thing) or you can try to get 1v1 times by inviting them to some sort of activity based on their hobbies (i.e., golf, set up your own happy hour, shooting range, etc.)

@Steven Foster Wilson. Here are a few paths:

1. Best Ever Apartment Syndication Book
2. Syndication School and other multifamily syndication focused podcasts
3. Read forum replies from syndicators like @Brian Burke, @Alina Trigub, and other top contributors on the MF forums
4. Hire a mentor
5. Passively invest in an apartment syndication
6. Find a local syndicator and add value to their business for free with the hopes to work within their company

Exactly. Complete some smaller deals while at the same time working on your syndication education and increasing your visibility by posting valuable content on the BP forums, attending local meetups and event, and maybe even starting your own thought leadership platform that is focused on adding value to passive investors (like a podcast or a blog).

@Scott Morongell hit the nail on the head (or continuing with the football analogy - hit a 60 yard field goal right down the middle).

Finding the deal is the last step in the process, and finding the money is the second to last step. Before you begin to source capital and deals, you need a team. Before you need a team, you need to know what you are talking about, because all of the potential team members you reach out to will ask you about your business, investment criteria, market, and past experience. So, you'll need to work on your education and real estate experience first before you are ready to dive into multifamily syndications.

With your proven track record, you should be able to attract capital from passive investors for you deals. Start with people you already know, ask them about what they currently invest in to see how the returns they are receiving compares to the returns you can offer, and ask them "if we find an investment opportunity that meets your return goals, would you be interested? Capture their email and start sending out educational newsletters to that list of emails a few times a month. Then, when the time comes, send them an opportunity. 

Since you already have enough capital to handle 10 projects at a time, maybe fund 8 of those yourself and open 2 up to passive investors. If you cannot source enough capital, the back up plan is to fund the deal yourself. You will want to speak with a securities attorney, because syndications are costly and may not make financial sense unless you have a certain number of investors.

If one person brings 100% of the capital and the other person brings 100% of the effort, it is a syndication. If you both bring 50% of the capital and both bring 50% of the effort, it is a JV.

Since you don't have previous real estate experience, it is going to be difficult to raise capital (i.e., syndication). It will also be difficult (but not as difficult as raising money), to attract a partner unless you give up most of the deal. 

You have to think about it from a partners perspective: why would they partner with you? What skills are you bringing to the table? One of those skills can be money, but you said you don't want to passively invest because you won't learn anything (which isn't necessarily true - although you won't learn as much if you did the deal yourself, you will still learn a lot from attending the new deal offering conference call, asking questions about the deal before investing, and reviewing the ongoing updates and financials). So, your best bet is to work on your education, network, and try to do a few smaller deals on your own. Then, you can leverage you education and experience to find a partner.

Lender/due diligence fees

• Appraisal: $2,000 to $10,000
• Property Condition Assessment: $50 to $250 per unit
• Phase 1 Environments: $2,000
• Unit Walk Inspection: $25 per unit
• Lease Audit: $25 per unit
• Property Survey: $5,000
• Earnest Deposit: 1% to 2% of purchase price
• Lender application deposit: $25,000
• Lender rate lock deposit: 2% of loan balance (only applies to agency debt)

Legal fees (assuming it is an apartment syndication)

• Operating agreements: $350 to $15,000
• Private placement memorandum: $5,000 to $15,000
• Subscription agreement: $350 to $5000
• LLC Formation: $200 to $2000
• Having your attorney negotiate the loan documents: $10,000

The costs are general guidelines and will vary depending on the size of the deal and how complicated the GP/LP partnership is.