All Forum Posts by: Scott Morongell

@Ariel K. it really depends what your goals are when it comes to investing. If the IRR is the same, I think most would opt to invest passively since they wouldn't have to work for the same amount of return (not to mention the additional tax benefits on larger deals).

I have investors who have 10+ units and now would rather invest passively now since the extra few % they can make on their own portfolio isn't worth the additional headaches that come along with it. 

Cap rates are market are placed on markets, submarkets, asset type, and asset class. Deals with value-add plays are known to be traded even lower than a market cap rate because they can increase the value of the asset, therefore, there isn't as much emphasis on a going-in cap rate. Where this type of investor cares is what type of exit cap they are going to project on the sale (assuming they will sell it in 5-10 yrs time). Investors who are looking for completely stabilized with little to no value add left will find themselves buying deals at or sometimes above market cap rate.

 You can or, you can just syndicate all the capital and stay at the helm of the ship. Sometimes easy isn't always the best route.

Institutions, family office, or just large PE firms that will co-gp or be a large portion of your LP capital won't just give you money. They will also have a pile high set of documents for you to sign that you must stay compliant within. If your not example: miss your KPI's for 6 months straight they can essentially override you and take over as the asset manager. Also in the paperwork will have language in regards to liquidating the asset and who gets paid out first etc. You're essentially giving up control in the deal for convenience of equity. 

@Cole Souza I would partner up with someone who is local to the market and has a ton of experience already in a heavy lift value add play like this. 

@Bobby Shell I don't blame you for wanting to invest with a group that has been around for a long time. Unfortunately, as many have previously mentioned, those groups don't hang on bigger pockets. Their list of investors is so deep and every deal is oversubscribed in 24hours. There are a couple of guys like Brian who are still on BP and they're doing it to give back (plus potentially raise a few $$)

So how do you find long term sponsors? I would personally set up a google notification for all the markets you'd be interested in investing in. For example "charlotte multifamily" every deal that travels you'll get a good alert with a news article. You can dig deep and see if they run a syndication structure. 

There are also syndicators out there who you may be presently surprised if you invested with them. Finding out what their thought process it, who they learned the business from, and where they plan to take the business to would all be great talking points.  

@Matt Wills the real question is how confident are you in the team behind the project? You will find very quickly that sponsors who are good do not work for free. If you confident and trust in the team and still like your net return then the fees are no longer a deciding factor as to whether or not you should invest. Hope this helps!

 A lot of people starting out struggle with raising capital. If you can get in with the right capital partners you can buy a lot of units in a very short period of time. Keep in mind that by using this type of capital structure your hands become tied quickly. They will force you when to sell, buy you out of the deal, kick you out of the deal, etc. You are essentially working for fees at this point and don't have as much money coming in or upside potential as many people think. 

@Tanner Enderle I would suggest spending some of the 6mil on education if you want to buy bigger deals. I would also stay patient as now isn't exactly the best time to buy with extremely compressed cap rates. The old saying was, look at 100 deals to buy 1. It well north of 100 deals to buy 1 in today's hot market. After you get educated "assuming you want to go buy larger apartment complexes", I would suggest investing passively with a high-end operator to see a deal in real-time develop and transition. After you feel comfortable with the process I would suggest finding a market and studying it so you can execute on a good deal when it comes around. I would look for semi large apartment complexes so you could possibly buy 2-3 of them instead of sinking the full 6mil in just 1 deal. 

@Bryan Mitchell I know people who have bought deals off loopnet. I personally have not. As Erik mentioned it's where deals go to die but every once in a while you will come across a decent deal that was maybe listed from a far less experienced broker.