All Forum Posts by: Theo Hicks

You are referring to a syndication. A common structure is to offer a preferred return to the passive investors and a profit split thereafter. For example, an 8% preferred return and a 50/50 split of the profits. As the general partner, you can charge an upfront acquisition fee for putting the deal together (i.e., 2% of the project costs) and an ongoing asset management fee (2% of collected income).

But since you are doing a syndication, you will need to follow securities law, so you will need to find a good syndication attorney (i.e., securities attorney).

If you have any more specific questions about syndications, feel free to reply to this message or send me a DM.

House-hack or seller financing are your two best options. 

As Matt said, it is negotiable. But the fix and flip isn't going to cash flow month to month, so your investor will understand. 

I would just provide the T-12 and current rent roll and let your r agent market the property however they like since that is their expertise.

Starting out: house-hacked a duplex in 2013

Now: own 13 units and am in the process of doing my first apartment syndication

Worst decision: not doing a 203k loan on my house hack, failing to do proper due diligence on boilers

In my underwriting model, I input the current market rents and the stabilized market rent (which I calculate using the same method Brian mentioned above). Then I input a renovation timeline (I use 2 to 3 years months). The output for month one is the current market rent and it increases by 1/# of month * (stabilized - current) each month for for two to three  years. 

Thank you to everyone who recommended Best Ever Apartment Syndication Book! Means a lot to hear how much value it has and is adding to your multifamily investing businesses.

Creating a website for passive investors is a good idea, and would be an even better idea if you actually start passively investing yourself. That way, you can provide real-world advice rather than theoretical advice.

Since you don't have any experience, partnering with a residential real estate broker may be better than going at it alone, but it would be much better to partner with a commercial real estate broker with apartment experience. Or even better, an investor with apartment experience. But anyone with experience won't bring you on as a partner until you have value that you can add.

I think everyone has experienced "cold feet," especially on their first few deals. Take the emotion out of it as best you can and rely on the cold-hard facts - the numbers. 

Paid coaches will provide you with a proven, do-it-yourself system, offer connections to investors and other apartment professionals, and help you navigate the gray areas. They should be actively investing as well. They can expedite the learning curve, keep you accountable and on-track to complete your first deal. If they don't do these things, I would avoid that program.

Also, a mentor is not a knight in shining armor. You will only get as much out of any paid mentorship as you put in.