All Forum Posts by: Stuart Udis

@Mohan Chhabra We can agree do disagree, but what did your diligence process consist of? I see you are in CA. How knowledgable of the Philadelphia market and more spceficially Kensington neighborhood are you? Did you hire a local attorney to review the offering docs? To review the transaction? Did you speak with local commercial brokers to get a better understanding of the how the transaction was percieved by market participants? (It was a very widely publicised property even before selling).  Did you speak with local leasing brokers to understand how the property would be obsorbed once completed? These are the lowest hanging fruit of diligence steps an LP can take. Which if any of these did you take? 

@Mohan Chhabra I beleive your expectations with respect to Crowdstreet are out of touch with reality. Its a market place platform where Sponsors pay a fee to have their deals promoted to investors. Why would you expect Crowdstreet to have skin in the game or take a role in deals that go bad? There's honestly no reason for the company to take on that type of exposure. A co-gp who's role is raising capital? Sure, but not a marketplace. 

My "aha" moment occurred when I learned the importance of focusing on assets peoeple need. I personally owned and invested in real estate for 10+ years before this was crystalized in my head and was the byproduct of becoming an accidental landlord when I pivoted from selling a four unit ground up building as condos to rentals in 2022 when rates increased. 

They were 3 bed and 2 bed + flex room units in a desirable neighborhood where the housing inventory consisted of an abundance of quality for-sale housing but the rental inventory consisted almost exclusively of vintage garden style apartments and "tired" apartment units over commercials spaces. It did not pencil for the well maintained single family homes to be rented. Therefore the tenant who outgrew the apartment options, despite wanting to remain in the neighborhood as renters would move on. My units happened to check the box for these tenants where occupancy/retention has been great and  where the units rent at a preimium. I coincidntally turned over two of the units for the first time in the last month with a total of 7 days down between both units. 

Since completing this building in 2022, becoming more deliberate about understanding who my tenant/buyer will be and ensuring I am building or renovating a product that satisfies their needs has been critical to my investmnt strategy. Previously my underwriting and approach primarily revolved around researching other completed projects ensuring I am building to the same specs to achieve the same pricing.  While my deliveries the past few years have been rentals,  I am consistently acheiving premium rents and my occupancy/absoprtion rates have outpaced my competition. I am in the process of breaking ground on my first for-sale projects where this mindset existed from the start.

@Mohan Chhabra  Between construction costs and financing, development is difficult in this environment. I truthfully don't know of anyone who executed flawlessly in the Kensington/Fishtown markets in the past few years. Even if construction execution went well lease ups were/continue to be a challenge due to over supply. I believe absoprtion will improve in the next few years with with the steep decline in new starts., so that's at least an improving condition for building owners. Layer on issues caused by the artist tenant delayed vacancies and I can only imagine how frustrating the process must be for yourself and fellow LPs.  

However I am not aware of any duty Crowd Street owes, its my understandig its merely a marketplace. What did you expect Crowd Street to do in the event the project did not perform as well as you hoped?  Even the website makes the following disclosure:

Hi John, that's what I instructed her to do, just seeing if I can provide her with some ammunition. RE: your comment about this becoming an issue, I am seeing this firsthand. In the past month I've reviewed two applications with derogatory remarks related to student loans. I personally use a service called Zumper for my tenant screening which spits out a "tenant score" and believe the scoring system may be more forgiving for student loan missed payments than a typical credit report. Missing a student loan payment is truthfully not a huge red flag or  consideration with my screening process. I accepted both applicants. I am fortunate to have properties that attract a high quality tenant profile where its easy to look past something like a missed student loan payment. I understand mortgage lending, particularly for owner occupancy loans tends to be strictly numbers based. As if buying a home wasn't difficult enough already, I can see student loan reporting becoming a real problem.

I am currently renting a condo and the tenant has expressed interest in purchasing the unit at the end of her lease. However she informed me she recently received negative reporting for failure to make 3 consecutive payments. I do not believe the misssed payments were financially driven, rather lack of oversight. She asked if I had any guidance on removing the negative reporting and admittedly informed her I am no familiar with this process other than it being my understanding goodwill requests are generally rejected and the credit repair companies are generally subscription based money grabs.

The one thing that stuck out in our conversation was the fact she initially applied for indiviudal student loans each year or semester (can't recall) and she pays one amount monthly that covers each individual loan yet each loan is reported indvidually so she has  4 or 5 90 day late derogatory marks on her report.  Assuming there was a financial element to the missed payments, it seems unfair to not have the opportunity to pay monthly for individual loans and the failure to pay all resorts in derogatory marks against all. Seems inequitable. Has anyone come across this or used this sucesfully as a basis to remove reporting?

$1.5M to $5M is an enormous spread. What differentiates the price point? Lot? Home? Combination of both? Also, in most markets there comes a price point where "high end" means the buyer truly cares who the builder is. It can become very difficult to deliver a product if you if you don't have the requisiite name/brand. Important to know this ahead of time as you may find youself having to associate with a builder that checks that box as well.

You are raising completely irrelevant scenarios. This forum thread is about syndications. One of the most complexed and demanding investment strategies that carries enourmous responsibility. Paying for an MBA or Law Degree (while I can argue may not be the best ROI for many) is very different than paying for a sydnication course. Let's stay on topic here. The individuals who are paying $10K for a syndication course are not taking the information they learn to seek employment, continue to learn their craft, build a balance sheet and then strike out on their own. They are spending $10K beleiving they will immediately be able to go out and raise capital and syndicate real estate transactions. Are you telling me the person without the financial means to make a $100K LP investment should be raising millions in capital to pursue 50 unit apartment syndications as the GP because that's what's happening. If you believe that is acceptable then you are the type of dilusional real estate investor these coaching and mentorship programs profit off of.

@Zach Howard  I am not against education whether it be through a book, these forums, coaching or mentorship but you can't teach a balance sheet. I also recognize syndication can mean a lot of different things and I am referrring to the courses and mentorship that supposedly prepare you to jump into 50+ unit buildings. If I were to offer the students out there pursuing those various mentorship programs two options: 

Option A: Invest $100K in a syndication where daily access is provided from acquisition diligence through exit and make a ROI on your capital; or

Option B: Pay $10K to take a syndication course

Guess what option most will select? Option B. You know why? They don't have $100K to their name. Now explain to me how someone who doesn't have $100K to their name should be receiving training on how to syndicate 50 Unit real estate transactions?

@Max Pfeifer You are definitely asking the right questions. I am generally in favor of purchaseing investment real estate in an LLC but one of the exceptions is the ability to acquire a property using FHA financing. The leverage (when good purchases are made) can be such a powerful tool to turbo charge your real estate investing journey.

Just be mindful of the transactional costs associated with buying and selling real estate (namely selling). It's critical to focus on growth areas where you can benefit from appreciation. Without appreciation, unless you hold that real estate for an extremely long time, you are likely bringing a check to settlement when you sell an FHA property levered at 96.5%. At the same time, there's no better ROI than hitting on an FHA property where you put down 3.5% that appreciates significantly.

Also, despite what you may read on these forums or see elsewhere there is absolutely no reason to create an LLC to mange the property, collect rent or do any other function related to the property you acquire in your name using an FHA loan. Provides zero protection or benefit whatsoever.