All Forum Posts by: Ryan Konen

That great you are being cautious. Communicate is king and key in syndication. Usually a sponsor should be responsive within a few days, usually quicker when you have follow-up questions. 8-day delay without any update can be concerning. The “first-come, first-serve” urgency might be their style, but without a timely responses, it could signal future communication issues down the road and frustration on your end. Trust your instincts, and if it feels off, it’s probably worth considering other sponsors.

If you’re comfortable with the tenant risk and low cash flow in exchange for a solid property in good condition with long-term appreciation potential, then proceeding could make sense, maybe you you can negotiate some concessions?  But if tenant stability and needing cash flow are higher priorities for you, then it may be worth re-evaluating or looking at alternative properties that offer more reliable cash flow from day one. Have you considered adding a short contingency that allows you to evaluate the tenant’s new job status within a specified period? That might offer additional peace of mind.

Welcome!

Pretty much you buy a property, then quickly sell it to another buyer without making any significant improvements or repairs. The point is to profit by finding a great deal on a property, then passing the deal on to another investor willing to pay more.

i think that would look great!

Quote from @John Barnes:

For an off-market deal, the broker doesn’t necessarily have a fiduciary duty to me if I’m the buyer, correct? In that case I’ll want a real estate attorney for the closing process. Any other advice you can provide in that situation to make sure I don’t get taken advantage of?

Certainly! Here’s the advice restructured into paragraphs for a forum post:

---

In an off-market deal, it’s important to understand that the broker typically doesn't owe you a fiduciary duty unless it's explicitly stated in the agreement. This means they are generally working in the best interests of the seller, not the buyer. Given this, it's essential to have a real estate attorney involved in the transaction. Your attorney will review the contract, help with due diligence, and ensure that the closing process is handled properly. They will also spot any terms that may not be favorable to you and can assist with negotiating the deal.

Due diligence is key in any real estate transaction, but especially in off-market deals. Start by conducting a title search to ensure the property is free of liens or legal disputes. Verify the zoning laws and any required permits to ensure the property is suitable for your intended use. Don’t skip a professional inspection of the property, as there could be hidden issues such as structural damage or code violations. If it’s a larger or commercial property, consider conducting an environmental check to assess potential risks like contamination or flooding.

It’s also important to request a full property disclosure from the seller, which may include known issues or defects with the property. While some jurisdictions require this by law, it’s always good to ask for confirmation and ensure it’s documented. Given that the deal is off-market and there might be limited information on pricing, you should compare the property to recent comparable sales in the area (comps) to confirm that the price is fair. Getting an independent appraisal can help verify the market value.

Even though you may be dealing directly with the seller without a broker representing you, don’t hesitate to negotiate the terms of the deal. Your real estate attorney can help ensure you get the best terms possible, and they can also guide you through any challenges that may arise. Be sure to clarify all aspects of the financing and closing costs as well, as these can vary depending on the type of property and deal structure.

Finally, while off-market deals can sometimes seem quicker, it’s important not to rush through the process. Take your time to carefully review all aspects of the transaction, and make sure you’re fully informed before moving forward. By being diligent and involving an attorney, you can avoid potential pitfalls and ensure that you’re protected throughout the deal.

The typical price for land development varies widely depending on the scope of the project, the location, and the type of development (residential, commercial, etc.). However, when it comes to compensating a developer or engineer, a 33% cut of the gross revenue can be seen as on the higher end, though not necessarily excessive depending on the specifics of the deal.

Here’s a breakdown of what to consider:

### 1. **Standard Compensation Models**

- **Flat Fee**: Engineers and developers are often paid a flat fee for their services. This can range from a few thousand to several hundred thousand dollars, depending on the complexity and size of the project.

- **Percentage of Profit**: Some developers or engineers might be compensated with a percentage of the project's profit or the gross revenue, typically ranging from 10% to 30%.

- **Equity Stake**: In certain cases, a developer might receive equity in the project (such as a portion of the profits), which might be higher if they are taking on more risk or responsibility.

### 2. **33% of Gross Revenue**

- This is on the higher end of compensation for land development. It would typically be negotiated in cases where the developer or engineer is adding significant value through their expertise, connections, or risk management.

- If your uncle is providing all of the funding and handling the construction costs, the 33% share to the engineer might reflect a major role in the development process, such as managing zoning, permitting, or complex site engineering.

### 3. **Risk and Reward**

- If the engineer or developer is assuming some risk (such as project financing, delays, or cost overruns), their higher percentage may be justified.

- If they’re only doing the engineering or planning with no investment or risk, then a 33% share of the gross revenue might be on the high side, and 10-20% might be more typical.

### 4. **Comparing Local Norms**

- The compensation structure can vary greatly by region and the specifics of the land development project. It’s a good idea to review local real estate development compensation norms or even consult with a lawyer to ensure the deal is fair.

In your uncle’s case, the terms seem fairly favorable to the engineer if he is only handling the development and not contributing any capital. However, if the engineer is assuming a larger role (for example, project management, approvals, etc.), the 33% could be justified.

For due diligence on small apartment complexes in Florida, you can indeed use a combination of professionals:

1. **Real Estate Accountant**: For verifying financials like T12, P&L, bank statements, and rent rolls. They can analyze the property's financial health.

2. **Property Assessor**: To inspect the physical condition of the property, including the building, systems, and any necessary repairs.

3. **Third-Party Due Diligence Companies**: There are companies that specialize in multifamily due diligence, but if you're having trouble finding one, you could also reach out to local commercial real estate brokers who might have recommendations for specific providers in Florida.

To analyze market data in Wisconsin, experienced investors often turn to resources like the U.S. Census Bureau for demographic insights, homeownership rates, and population growth. Zillow and Redfin provide data on average rent and housing prices, while the Bureau of Labor Statistics is valuable for job growth and employment trends. Additionally, local economic development agencies can offer specific data on metro area job trends and economic development. These tools combined can help you assess investment potential in Wisconsin’s metro areas effectively.

I think it is Made to Stick by Chip and Dan Heath