All Forum Posts by: Omar Khan

@Aakash Shah John Casmon and Agostino Pintus are both active investors in Columbus. 

I can't tag them for some reason but I would use them as they are outstanding folks.

@Allyson Straka Most major MSAs are at or near-peak levels. You have a choice - wait or invest in deals the market is giving. 

Honestly, I would much rather take a low cash flow deal in an attractive market than a marginally higher cash flow deal in a secondary/tertiary market. But I am also not dependent on rental income as my major source of income. 

I would suggest developing relationships with realtors and other professionals in you area to source properties before they become public. 

@Cisco Hood Have an attorney read all your documents (expensive, so make sure it's worth it) and proceed from there. 

@Hadar Orkibi Thanks for the shout out. 

@Pablo Flores These are all great markets. They are also ultra competitive markets including Lubbock (which is oil-driven). 

You will be competing against deeper pockets and local investors with better relationships than a newer entrant. Not trying to scare you because these are amazing markets, just trying to present a clear picture. 

I would suggest developing your location relationships first. E.g. you might conclude Houston is your preferred market but if you can only develop relationships in Dallas/San Antonio then you SOL. 

Also, at the 20-50 unit level you will be competing with a ton of retail investors. At that level, it is less about intrinsic value and more about the emotional value folks attach. Which can lead to very interesting valuations. 

Happy to answer specific questions about each market.

Your lender is correct. You're not buying retail/SFRs. Anything above a SFR and you're veering in the 20-25% territory because they start being considered as investment properties.

Think about it this way: Why would a family live in a 4-plex (all 4 units)? They won't. Hence, the majority of buyers will, most likely, be investors. 

@Account Closed Great idea if you can find the right partners. You might run into issues because you all have the same skillset. Ideally, your partners should complimentary skillsets to ensure that the sum of the parts is greater than the whole.

@Jen Nguyen You don't need a RE license to be an investor. Or in other words, 99% of the RE investors are not RE agents :)

You don't need the exam to develop credibility. The exam is a license that allows you to operate in a certain market similar to licenses by securities brokers, attorneys, physicians, plumbers, barbers and the like. A practitioner's level of competence is not always linked to their qualifications.

Every investment carries an inherent level of risk. That's the price one pays to get returns. 

This is why it is imperative to do research on the sponsor. The market and deal come a distant second and third. 

My blog posts which you might find useful: 

The Inside Track to Vetting A Multifamily Deal Sponsor

Deal Screening Checklist for Passive Multifamily Investors 

Most folks say they want to be active but refuse to do all the work associated with it. A bit like Arnold's saying: "Everyone wants to be a bodybuilder, nobody wants to lift the weights."

Some MF groups are bringing their own equity into the game but they co-invest alongside the LPs i.e. LP capital is not "senior" to their capital. That type of structure is more common amongst institutional players but they are also cutting bigger checks than the typical $50-200K LP investor. 

Nonetheless, most Sponsors do have skin in the game - their reputation. Money can come and go, but hardly anyone can recover from a bad reputation. And this business is all about having a rock-solid reputation.

@Alex Goumilevski In large MF (100+ units), we're averaging around $250/unit. But we also raise renovation budget before closing on the deal and aggressively renovate interior and exteriors. Essentially, capex is separate from the $250/unit #. 

@Nic A. I doubt most respectable lenders are offering 90% LTV. That type of leverage was pre-2008 and we all know how that party ended.

Some bridge products can get you in the 80%-range but even then it will be a stretch.