All Forum Posts by: Rick Martin

@David B.Multifamily. You can control the investment more by improving NOI.

If we are talking about right now, I think investors want to see some conservative LTV, fixed-rate debt and early and consistent cash flow. Now is probably not the time for more speculative investments. If they see a discounted price based on current market conditions, they might feel better protected. The potential to add value is key, but through forced appreciation and not organic rent growth.

In normal conditions, I would say higher net-worth investors seek higher total return over cash flow, but right now I sense people are a little gun shy with what the future might hold.

Keep learning, keep networking, and start to build some equity by starting with a duplex or Quad. The BRRRR method is a great way to grow.

Yes, and also the PPM and subscription agreement. Can be as low as $10k total on up. $10k would be on the extremely low side. Lots to learn with syndication, so be well educated and align with an experienced partner or two. 

I have heard of folks syndicating as low as a 28 unit, but most of the money went to investors. You don't want that scenario, or you may lose motivation. I know of another who succeeded on a 44 unit. It also depends on the unit rent. 75+ is the rule of thumb for professional 3rd party property management.

I would only sell to 1031 into larger builds to achieve your goal of scaling. Your biggest challenge will be the debt in the current environment, but opportunity may be right around the corner, so sharpen your knife. It wouldn't hurt to speak with lenders and a qualified intermediary (for the 1031). I can give you a few QI recommendations if it comes to that. DM for those whenever you wish.

@Stephen Jones congrats on your accomplishments. Have you considered JV'ing with partners, or syndicating? You could also look to 1031 exchange some of your properties into a larger building.

If you want to get into the RE business and take on land-lording, I would say look to establish good relationships with solid property management in whatever state you choose. Maybe Florida or the Carolinas could work for you, given your proximity. If you find it is the cash flow, appreciation, and tax advantages you like, but not necessarily the land-lording or finding and qualifying for deals, consider leveraging the experience and network of a syndicator(s). Then you can invest in any state you wish.

I would throw my hat into the Tampa Bay, St Petersburg market for a appreciation.

The legal costs of syndicating are quite steep up front. I don't think syndicating an 8-12 unit building is feasible, and you won't have the luxury of hiring professional, third-party property management. Maybe a JV is a good route to start as you build up unit size. You want to be well equipped and not experiment with investor money.

In the world of value-add, you make your offer based on your defensibly underwritten Pro-forma. Otherwise, you may not find deals that pencil. Pro forma isn't bad as long as the assumptions are conservative and defensible. One needs to project the numbers one can achieve while operating. While I see rents growing in specific markets, you would still like to see realistic organic rent growth. In this high inflation environment, 3% is very reasonable, IMO.

Re-trades are occurring, so reversion caps should be adjusted downward. Buyers are having their proceeds reduced with higher rates, so how can values not alter in the near term?

The critical measurable I look for in a value add is the delta between current and market rents. You must capture most of that delta as a buyer, so allow for that margin on the offer. I am not sure many LOIs will go out based on current rents.