All Forum Posts by: Percy N.

As usual, it depends.

Does the 80 unit deal have better economics due to scale and ability to potentially support an in-house leasing and maintenance person?

Which deal has the better depreciation? How important is that to you? Are you passive vs active? Recourse vs Non-recourse loan, etc, etc.

@Ryan Corcoran, depends on your objectives/goals and what you intend to learn from the conference.

Is it general knowledge? due diligence tips? legal tips? meet lenders? meet investors? institutional investors (raising over $20mm?), your level of experience, etc, etc. 

There are a few good general conferences that just took place and a few virtual ones that may be coming up. 

Also, look for local meetups and REIAs.

@Adriel Cisneros, I would pose these questions to an SEC attorney.

The raise amount and timeframes can vary based on the individual circumstance.

Our SEC attorney advises us to have the latest disclosures available to investors.

Depending on the loan amount have you looked into a small balance agency loan?

Do a search on the SEC EDGAR database for the name of the partnership entity or the sponsors.

You could also ask the sponsors directly for this information. 

Is this a syndication, closed-end fund or open-end fund?

There should also be state filings depending on the residence of the investors.

@Pra Che, depends on the market and lender.

I would even look into an agency Small Balance Loan.

Typically you should be able to get 70-75% leverage on a non-recourse loan.

Alternatively, you may be able to roll your 1031 proceeds into a larger deal.

We are closing on a $25mm deal, send me a message if you want to discuss a 1031 investment.

Cheers

Percy

Interesting to see the responses through various people's lenses. An interesting study in unintentional bias (yes, as an active sponsor I am sure I also have my bias/opinions).

Couple real-world factors that may influence the decision :

- Primary purpose of investment 

- Tax treatment (e.g. are you looking to offset capital gains?)

 - Investment horizon

Oh....and $10mm does not go as far as you think.

Believe it or not, we are currently talking to a Family Office that is deploying 20x that amount just this year. Depreciation is a big deal for them.

I could write a book (or at least a few chapters) on what to look for in larger multi-family (100+ units).

For a 4-plex, that is closer to an SFR so I would do the typical SFR things - inspection including MEP (Mechanical, Electrical, Plumbing), clear title, zoning, HOA rules (if applicable), etc. Check for signed leases and if you can confirm it with the residents. Ask about current and past delinquencies and if possible cross-reference rent deposits in the seller's account.

Make sure you get a preliminary insurance quote and talk to some banks to make sure you can get lending approved without many issues. If you are planning to buy the property under the name of an entity (LLC, etc) let the lender know that upfront. The rental income should count towards loan qualification.

There are just a few items...hope it helps you get started.

Cheers

Percy

@David Lin, are you looking for a lender (a bank that will issue a mortgage on a property owed by an LLC) or a bank for regular banking transactions?

Almost all banks have business banking for an LLC.

As for lending, it depends on the size of the loan. For smaller amounts, many lenders have restrictions for LLC but for larger non-recourse loans ($5mm+) they will actually require a SPE (Special Purpose Entity) that owns the physical property 100%

@Eric Berkner every property has a unique amount of "hands-on" management it may require.

Forget what is in the OM and budget based on what will be required to execute your business plan.

Class C properties may need more daily supervision and Class A properties require more prompt and high-quality customer service.

A good property manager can make or break the deal so don't skimp on that front. Get input from a few PM companies in the area to see what they recommend. You may be able to split the cost, but it depends on the needs of the property and your plan for it.