All Forum Posts by: Rodney Miller

There are tons of books and information on the subject.  I have been loaning money for years as a side business.  You'll want to start by consulting with a good real estate attorney in your area to make sure you are in compliance.   I am not an expert by any means so take this with a grain of salt.  It helps if you are an active real estate investor.  Being an investor you understand the local market and costs to rehab property.  I simply limit my loan amount to what I would purchase the property for which is usually 60% of the value.  I make the borrower have some skin in the game and I always have an attorney draw up the paperwork.  Good luck!

@Kevin OBrien I would start with reading books, listening to podcasts, and finding a local meetup group where you can be around folks that are doing deals. You might also want to start attending some multifamily conferences. I just returned from The Best Ever conference and there was a good mix of experienced and inexperienced multifamily investors. The R2R in Dallas happens every few months and is geared towards new investors. You'll get great information and meet a lot of experienced and new investors in the multifamily business. When you are ready to jump in you might want to do a handful of passive deals with an operator that you have vetted and trust. Investing passively in a few deals will give you great insight into the nuts and bolts of larger syndication deals. Finally, when you feel ready, seek out an experienced operator to partner with. You can bring value by sourcing the deal, helping to raise capital, etc..... What I have outlined here is precisely how I made the transition from SFH's to Multifamily. Good luck!

Here is the link to sign up:  https://www.meetup.com/Learn-M...

Our Meetup is growing!  Come learn Multifamily in OKC!  The is no fee to attend and no selling, just good information!

Investment Info:

Large multi-family (5+ units) commercial investment investment in Pryor.

Purchase price: $4,200,000
Cash invested: $1,200,000

The Parks@1220 is a 100 unit garden-style apartment complex located 30 minutes east of Tulsa, Ok in the town of Pryor. Trident purchased this property named Prairie Village, in March of 2019. Our plan was mostly a yield play and required very little CAPEX. Overall this has been a home run for our investors in both cash flow and overall investment returns.

What made you interested in investing in this type of deal?

Scale. I got tired of chasing down SFH deals.

How did you find this deal and how did you negotiate it?

We bought this off of an investor from Utah which turned out to be Mitt Romney's son. We sourced this deal through a commercial broker. We were 2nd in line in terms of offers. The original offer fell through and we were awarded the deal.

How did you finance this deal?

The property was 100% occupied when we purchased it thus we were able to get agency debt via Freddie Mac.

How did you add value to the deal?

This was a very low CAPEX project. We were able to make minor improvements, increase efficiencies, and raise the rents to achieve our proforma numbers.

What was the outcome?

We are exceeding our proforma numbers and are at 98% leased.

Lessons learned? Challenges?

There are always buried bodies in every deal. Expect supprises after you close.

@Linda Weygant

Thank you!

@Brian Eastman

Great advice! Thank you!

@Justin Windham

Thanks, Justin! Unfortunately, I have employees and can't do the Solo401k.  I have looked for ways to self direct my group 401k but doesn't seem to be an option.

@Brian Eastman

Very confusing.  That's the way it was explained on another Solo 401k advisors webinar. I didn't think my numbers were vague.  So if I receive a  K1 showing $100k in profit after depreciation and take out the $1,000.  exemption there is no way to estimate a ballpark figure for UBIT?   My CPA can't even help me with this stuff LOL!

It would be nice to take an apartment syndication deal to your CPA or Tax professional.  Give him your estimated profit based on the proforma presented, and get some idea of what the tax implications might be.  But no one can seem to do that.  Thanks for the information though.  I'm gonna keep drilling down.

Someone mentioned earlier that UDFI taxes were not substantial. From my understanding, UDFI in an IRA is a 35% tax on the debt-financed amount of the investment. So if you invested in syndication with 80% leverage and your profit is $100k you would be taxed $100k x .80 = $80,000 x 35= $28,000. That's substantial!