All Forum Posts by: Sam Grooms

@Daniel Dietz, yes, I started with my plan last year and successfully found an apartment syndication in Texas with projected higher returns and a similarly higher risk plus a storage unit syndication in Florida that was a bit more conservative.  I'm really liking the mix of geographical locations, market influences, and risk levels.

This year I'm hoping to find some suitable deals that are maybe even more conservative than those.  It really feels like we are right at the end of the current high in the cycle and I have very little faith that it'll continue for the next five years.  So I'm going to focus less on the five year projections and more on how stable the investment will be if it all crashes next year.  Low debt; long  term fixed rates; and conservative to the point of pessimism assumptions on attributes like vacancies and price increases will all be very important factors!

I also discovered relatively recently the idea of "funds" that encapsulate multiple real estate deals. Those sound on the surface not unlike an REIT but they apparently aren't and they do require being accredited to participate. I know extremely little so far but the idea of a relatively high return "income fund" that could still be "safer" than an individual property is intriguing and worth a look.

I know a few family members would possibly want to get involved. But I feel terrible and weird to go to them to seek investment. How do I get over this?

What do you think of these fees, fair or a little over-the-top?

- Acquisition Fee - 1% of Purchase Price

- Asset Set up Fee - $8,500 total

- Asset Management Fee - 3% of income

- Disposition Fee - 5% of difference b/n purchase price and eventual sales price

- Mortgage Guarantee Fee - 1% of amount guaranteed

- Financial Services Fee - 5% of capital contribution of each limited partner

- 65/35 Split: After investment repaid

Thank you in advance!!

@Account Closed 

Whew! There's a lot of sobering (and perhaps brutal) commentary on this thread... I'm about to close my first deal (128 unit value-add in a TX tertiary metro with 170k population) and I can share how I did it. 

I had been trying to get into multifamily for two years before I got this deal under contract. I was spinning my wheels and going nowhere fast. In April of last year I joined a mentoring group called Think Multifamily with Mark and Tamiel Kenney. It was 7 months after joining that I got this deal locked down. Yes I paid them a ton of money to join their group.

I got traction immediately after joining because I had essentially "bought" credibility because I now had a partner who as of today has about 4,000 units that he has syndicated. This is in addition to being in a group of similarly motivated people, getting educated via videos, conference calls and in-person classes, and also having direct access to Mark who has the experience. It is difficult to imagine a scenario in which somebody with that caliber of a track record is willing to spend one-on-one time with you unless you've paid them or they're your family/close friend etc. 

The other piece is that I underwrote many, many deals over those two years. By the time I found this one I was pretty decent at underwriting so I knew it was a good one. But even so I went to a number of trusted colleagues other than my mentor to confirm my assessment. I kept chasing it and I eventually had an accepted LOI.

In order to raise the capital stack which is greater than like 5X my current net worth, I knew I needed an additional experienced partner beyond my mentor in order to ensure execution certainty. By this point I knew the deal was good enough that I could find somebody. I went to two established, reputable syndicators who said no due to reasons that had nothing to do with the deal, and then the third one I went to said yes. It was a great fit for various reasons. 

And that's how I partnered on my first deal with two big-time well-known investors who've combined for over $550M in value-add multifamily. The bottom line though is that the deal simply must be good enough to attract people like that. My mentor Mark obviously has the right of refusal so if the deal is mediocre it won't fly. Nonetheless once I had them on board I was able to "borrow" their reputations to raise a significant amount of capital from my network even as a first-timer. 

I'm not compensated in any way to mention the Kenneys or Think Multifamily. 

@Sam Grooms how much did using a title company cost you?