All Forum Posts by: Scott Jenkins

Thanks for the input so far, but to rephrase, I guess I'm really asking if anyone has any resource on PROPER ways to structure deals to avoid selling a security. I already know my GP/LP structure currently in use is not the best. Really just looking for answers for work arounds. And as a CPA having worked in tax for 15 years, there are certainly work arounds!

Also would friends have to be accredited investors? I assume not.

During studying for the CPA exam over a decade ago, I first encountered SEC rules for raising capital and syndication. But I'm not interested in syndication. I am reasonably proficient at finding local friends to invest in deals. But no where have I been able to find guidance on raising capital while "avoiding" SEC solicitation rules. Has anyone run across a great book, video, or resource on this topic? Am I able to solicit "friends" on Facebook or LinkedIn or biggerpockets for that matter without risking SEC conflict. Most on Facebook are at least acquaintances, but what level of familiarity must I have with someone? I never seek more than a few investors from friend pools. Is there a limit on the number of people I can seek as investors? I set up separate entities with GP/LP structure on deals.

Investment Info:

Large multi-family (5+ units) buy & hold investment.

Purchase price: $960,114
Cash invested: $130,114

New construction duplexes. 1 Bedroom 1 Bath units. High end finishes, crown, wood floors, custom cabinetry, custom showers, granite counters. Thibodaux market has a shortage of 1 bedrooms, especially in the higher quality market. These 1 bedrooms rent for the same price the average 2 bedroom goes for in Thibodaux. $1,250,000 appraised value. Year 1 Cash on Cash Return 21.9% with a 232.5% IRR. $750 per month per unit.

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

Purchased premium property location at land premium.

How did you finance this deal?

Traditional bank 20 year loan with 20% down on phase 1. Borrowed against equity to complete remaining units.

How did you add value to the deal?

Self contracted new construction. Sub'd all work.

What was the outcome?

Amazing cash flow

Lessons learned? Challenges?

Higher finishes don't add tremendous building costs when done reasonably, and increase the interest in and quality of the property dramatically.

Investment Info:

Large multi-family (5+ units) buy & hold investment.

Purchase price: $960,114
Cash invested: $130,114

7 single story new construction duplexes (14 units). 1 Bedroom 1 Bath units. High end finishes, crown, wood floors, custom cabinetry, custom showers, granite counters. Thibodaux market has a shortage of 1 bedrooms, especially in the higher quality market. These 1 bedrooms rent for the same price the average 2 bedroom goes for in Thibodaux. $1,250,000 appraised value. Year 1 Cash on Cash Return 21.9% with a 232.5% IRR. $750 per month per unit. Property named THE PORCHES. Rent to primarily young professionals in a college/medical town.

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

Purchased premium property location at land premium.

How did you finance this deal?

Traditional bank 20 year loan with 20% down on phase 1. Borrowed against equity to complete remaining units.

How did you add value to the deal?

Self contracted new construction. Sub'd all work.

What was the outcome?

Amazing cash flow

Lessons learned? Challenges?

Higher finishes don't add tremendous building costs when done reasonably, and increase the interest in and quality of the property dramatically.

Investment Info:

Large multi-family (5+ units) buy & hold investment.

Purchase price: $354,963
Cash invested: $45,000

New construction- two 3-story triplexes in historical downtown district. Premium property location. Land cost was high, so we made the decision to build up. This was my first new construction project requiring commercial and fire/sprinkler code construction methods. $354,000 in building costs, appraises for $510,000. Year 5 Cash on Cash return is 29.9% with a 481.9% Return on Investment taking into account appreciation and debt pay down.

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

I have always dealt with new construction multi-family since prior to age 25.

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

This was the only vacant land in the downtown area to have come available in 20 years. The premium paid for land was more than worth the additional premium. Paid asking for land with multiple bids in on it. Maximized profits by building up.

How did you finance this deal?

20% cash down out of pocket on first building, with second building being financed using equity in the first building.

How did you add value to the deal?

Sub contracted all labor and construction

What was the outcome?

Amazing ROI!

Lessons learned? Challenges?

Lessons learned were additional costs and difficulties of building triplexes vs duplexes, as it relates to commercial building code and fire sprinkler system requirements.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Synergy Bank, Patrice Oncale, Thibodaux, LA

Investment Info:

Large multi-family (5+ units) buy & hold investment.

Purchase price: $354,963
Cash invested: $45,000

New construction- two 3-story triplexes in historical downtown district of Thibodaux. Premium property location. Land cost was high, so we made the decision to build up to maximize profitability. This was my first new construction project requiring commercial and fire/sprinkler code construction methods. I design all of my own buildings utilizing Chief Architect software. Had to fully research additional commercial building codes, as well as required annual commercial inspections. Had an engineer review and certify plans, with no changes recommended. Tenants love this property, and I never have to advertise, as former tenants always find my next tenant. I literally never have more than 2 days vacancy to flip the unit. Class of tenant is very high in this property, with only minor touch-up painting required upon move-out. With $354,000 in building costs, the property appraises for $510,000. Year 5 Cash on Cash return is 29.9% with a 481.9% Return on Investment taking into account appreciation and debt pay down.

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

I have always dealt with new construction multi-family since prior to age 25.

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

This was the only vacant land in the downtown area to have come available in 20 years. The premium paid for land was more than worth the additional premium. Paid asking for land with multiple bids in on it. Maximized profits by building up.

How did you finance this deal?

20% cash down out of pocket on first building, with second building being financed using equity in the first building.

How did you add value to the deal?

Sub contracted all labor and construction

What was the outcome?

Amazing ROI!

Lessons learned? Challenges?

Lessons learned were additional costs and difficulties of building triplexes vs duplexes, as it relates to commercial building code and fire sprinkler system requirements.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Synergy Bank, Patrice Oncale, Thibodaux, LA