All Forum Posts by: Theo Hicks

JV, creative financing (seller financing, lease option, etc.), or good ole' saving up your money until you can afford the 25% down payment.

You've done a few deals, so you should be able to attract passive investors for more SFRs. As @Seth Ferguson mentioned, your friends and family might be saying no because you aren't presenting the opportunity to them properly. Why are they saying no? 

@Charles Carillo thanks for recommending our book!

@Sam Ng Understandable. At the end of the day, it comes down to finding a syndicator you can trust - even if they invest outside of your market. I would check out the Multifamily forums for syndicators who post valuable content. There are also "syndicator lists" on BP forums as well.

If you are willing to move, the best way to get started in real estate investing is to house-hack. Acquire a 2 to 4 unit property with a 3.5% down FHA loan. Live in one unit and rent out the others.

If you aren't willing to move, you will need to save up for a 25% down payment or pursue a creative financing strategy with the owner, like seller financing or lease option.

Hi Jon,

One of the most common structures is a preferred return with a profit split. For example, an 8% preferred return and a 70/30 profit split. That means the investor receives a return on capital of 8% on their capital. Then, all remaining profits (ongoing cash flow and sales profits) are split 70/30 - 70% goes to investors, 30% goes to you.

Of course, the way you structure the profit split is completely up to you. For example, I know one syndicator who offers a 6% preferred return and a 50/50 profit split until the investor has received a 12% annualized return, at which point the GP gets the remaining profits.

• Expect to put 25% down for the loan, and expect to need 30% to 35% in liquid capital to cover the remaining project costs
• Loopnet is an option. But your best bet is to reach out to brokers in your market and get set up on their automated mailing list. But you don't want to reach out to brokers until you have a property management company. And you don't want to reach out to a property management company until you've educated yourself enough on the apartment syndication process, have an idea of how you will fund your deals, and evaluated your target market, amount a few other things

Also depends on your experience. Do you have previous real estate experience? How familiar are you with the syndication process?

If you haven't done a deal before and don't know much about syndication, I would BRRRR a few properties first. Then, leverage that success (and the education you gained studying apartment syndications) to raise money for other people to invest in apartments.

If the people bringing the money don't have an ongoing active role in the deal, it is a syndication. You will need to work with a securities attorney on that deal.

In regard to returns and profit split, 8% preferred return with a 70/30 profit split is common on value-add deals. You could also put in a hurdle (for example, once a 13% IRR is achieved, the profit split goes to 50/50).

Hi Danny,

Thanks for reading the book. 

Your strategy moving forward is sound. Work on your education to put yourself in the best place to succeed when you are ready to reach out to potential team members and investors.

@Juan Restrepo. It is the active side of the syndication deal. GP = general partners, who put the syndication together and manage the deal after close. LP = limited partners, who are the passive investors.