All Forum Posts by: Omar Khan

Interior renos are between $4-6K depending on the unit type. 

This deal had rents anywhere between $200-300 below-market so a lot of upside without the value-add program (which will juice returns nicely).

For us: 2 days. 

But you can crank it out in a day with more people. 

 Thanks. Neal is a very valuable resource and a great mentor to learn from.

@Lennon Lee Thank you

@Andrew Coulton There are a ton of DFW based resources/syndicators. You can always go down the guru option, some are better than others (@Account Closed has a good suggestion). 

At the end of the day, you will need to pick 1-2 things and excel at them as opposed to trying to learn everything about the industry. That will propel your progress. 

Last month, my company (Boardwalk Wealth) closed on a 138-unit apartment community in Jacksonville, FL.

After closing on this deal, I like to reflect and extract lessons that I’ve learnt along the way.

The overarching lesson is: the power of relationships. A simple lesson that we all claim to understand but few have truly mastered.

To close this deal we had to raise $4.1M. Not the largest capital raise in the world but nothing to laugh at.

While capital raising can be somewhat of an arduous task what’s worse is when a major investor pulls out with 6 weeks left till close.

Poof! $2.5M in capital gone, just like that...

I would like to share how we were able to raise $3.5M+ in 6 weeks and go from being undercapitalized to being overcapitalized in a matter of a few weeks.

Relationship Building

The old saying, “Your network is your net worth” is very true.

The real estate business is all about relationships. This deal wouldn’t be possible if it weren’t for the relationships we developed over the past decade.

Most of the time you’ll hear, “Find the deal and the money will come.” That is a bunch of baloney!

Before a deal even takes place, you’ll have to establish solid relationships with investors, capital partners, team members, brokers, vendors and a whole host of other individuals.

After that, maybe… you have a decent shot of closing a deal.

Investor Relations

I’ve raised money on the institutional and non-institutional sides. From experience, I can tell you that there is no clear path or “5 Step Guide To Success”. Just a ton of consistent, focused efforts that lead to exponential long-term results.

Raising capital is a marathon and not a sprint. Investors usually invest in the sponsor first and the deal second. In other words, not many people will hand over $50K-$100K to someone they don’t know or trust.

It pays to nurture your investor pipeline and develop a robust process around investor relations. Starting out, I would not recommend paying for an expensive CRM software as you need to keep your cost structure down.

Nonetheless, developing a tight phone script, ,process for contacting new investors and keeping in touch with existing investors/contacts is critical to long-term success.

Don’t wait for a deal. Start laying the groundwork now!

Case in point - San Jose Apartments.

After the investor pulled out, we were $2.5M short. What did we do? Panic?

Exactly the opposite.

I picked up the phone and started “smiling and dialing”.

We knew we had a great investment and this was just one small hiccup along the way. In a few weeks, we went from being undersubscribed by $2.5M to being oversubscribed as we raised $3.5M+ (this is also a different, but nice type of problem to have).

This wasn’t an overnight thing. I had deep relationships with 2 parties that raised the bulk of the capital. Those relationships were built through constant engagement and offering value without expecting anything in return.

Team Members

Having the right team is critical. When it’s game time, you better know how to execute! Knowing that we had a team that has sponsored over 2,000 units and raised millions of dollar prior to this deal was a big comfort.

However, it’s important to note, our working relationship is similar to our relationships with investors, they’ve both have taken years to develop.

Brokers Relations

Money-Check, Team-Check, Broker-?

In order to acquire San Jose Apartments we knew we needed to develop a strong relationship with brokers.

We achieved this in a couple of different ways:

1. Have a tight investment criteria
2. Nail down the top 3 submarkets
3. Property tours: physically walking properties is critical

Our investment criteria is simple but easy to remember.

Investment Criteria

• Value-add, B/C
• 100-200 units
• $10-25M
• 1975+ vintage
• 10-15% below-market rents

We also provided guidance by listing our top 3 submarkets with specific reasons for investing. This helps guide the conversation with the broker and ensures they have clear framework to operate.

Lastly, no amount of underwriting, due diligence and/or talking on the phone is going to overcome physically touring properties. It allows an sponsor to stand out from the thousands of tire kickers who are “looking for a multifamily property”.

Put all three of these together and you’ll be on your way to establishing credibility and a professional working relationship.

Conclusion

Unforeseen circumstances are part of the game. You must know how to roll with the punches.

Having an established network of relationships separates the wheat from the chaff. Don’t wait until you have a deal in hand.

Start today to cultivate the right relationships with the right people.

P.S. None of this would be possible without our star team of @Lennon Lee, Stony, @Neal Bawa (Anna Myers and the Grocapitus team), our co-GP partners and our wonderful investors. 

@Account Closed (even though I wrote it). 

Your target market ($100K+ investors) don't invest because of social media marketing nor do they have time for meetups. I don't want to sound rude but your target market also does not care for your personal story, obstacles and triumphs. What they care about is track record. Nobody wants to be a guinea pig on your first deal. 

Starting out (and later as well) the bulk of the magic happens with personal, face-to-face meetings (unless you have a tight phone sales game). 

Having a bubble and easy-going personality is nice but your target market perceives such behavior as frivolous and amateur-ish (again, this is not about you because I don't know you... just my thoughts having dealt with this level of client).

@Navroze Pirza Great suggestions here. You should spare yourself the hassle and just develop good relationships with brokers and other property owners. That will help you get real-time data as opposed to market averages. 

As @Josh Oaten mentioned, I would suggest building maps to really drill down on your target market. 

@Faraad Mohamed You can go through "Islamic" banks but most of their lending is going to be a joke because (A) they source their capital from (mostly) the same sources as other financial intermediaries , (B) calling interest a profit or service fee does not change the underlying substance of the transaction and (C) servicing/interest substitute fees are egregious which often make financing not attractive through these institutions. 

Please verify this independently but I did read (a long time ago) that ICNA came out with a ruling allowing interest if it's below 30-40% (again, not sure about the exact #s) of the entire capitalization.

I wouldn't dabble in real estate if you want to scale up quickly without leverage. Other dependable businesses might be better long-term solution or you can always partner with more equity partners to help you scale up quickly in you real estate endeavors. 

@Matthew Schaefer Great advice above OR you could save yourself the hassle/mental anguish/pain/cost and go with a solid broker if your market. Kinda the same way you don't kill a cow yourself when you want a steak or build your own car. 

FYI: I am not a broker.

@Trey Knight Work-life balance does not exist. Plus, you look like a young guy i.e. can/willing to make sacrifices. 

I would never compromise on family, sleep and eating right. After that if you have to reduce your exercise (not a viable long-term option), not socialize, move into a less-demanding W2 job (only if there is upside in what you're planning on doing), etc - go for it. 

I run everything by my calendar and still struggle. Hire an assistant to schedule your calls, emails and other tasks.

But remember, there is no balance. That's only found in HR manuals ;)