All Forum Posts by: Taylor L.

Preferred return is a percentage of invested capital. The preferred return is paid out of the cash flow after debt service, taxes, and all other expenses.

The LP/GP split of cash flow should come before the full amount going to the GP.  That is the incentive to perform above your 10% cash flow goal.

Local Chambers of Commerce will have at least some of that data.

The best tool is the one you'll use consistently. 

I know people who have built significant contact lists by just using Excel. That approach did not work for me at all.

I use ActiveCampaign. If you want to publish email newsletters you'll need a proper newsletter tool like Activecampaign, Mailchimp, and so on.

Biggest tip: Try a bunch of CRM tools and see which one you like. Most will have a free 1 or 2 week trial. Hubspot has a great free version. Their paid packages get quite pricey, but the free version is quite good considering the $0 cost.

I'll be at Best Ever in Salt Lake City. It's the best conference for high value networking with people who are active in all types of asset classes. Tons of value and not a huge pitch fest!

I wouldn't. EMD is money he is at risk of losing if he can't close the deal. Taking out a loan for EMD would make it way, way too tempting to look past issues in DD and close no matter what.

I'd also be concerned about the ability to close in general if cash is too tight to fund even the EMD. Maybe he can find a partner to provide risk capital in exchange for a piece of the deal?

You'd need to start with getting the current financials to see how it's performing, along with doing a local market study to determine the current area's supply and demand. 

How much competition is there? What are their rates & occupancy?

Is there any room to add value to this property by improving operations, improving marketing, etc?

VAs have become integral to my business. Your observations about how VAs can be treated by others are totally accurate and very unfortunate. 

It's incredible how much you can get done by simply:

- Treating your VAs well, like people with feelings and families to provide for (because they are!)

- Paying them on time, in full, at a fair rate

- Giving clear instructions, setting expectations, and providing training for relevant tasks

Start with your immediate sphere of influence and people you already have a relationship with. Who are you wholesaling properties to? Why not have a coffee or meeting with them and talk about their business model and funding sources? Maybe find out if they'd be open to partnering.

Have you looked into joining Richard Wilson's Family Office Club? They have several in person events with Family Offices every year. He has a very full schedule this year.

Here are several questions I'd ask:

How many of those GPs are actually just acting as capital raisers (without a license)?

Who is the lead person on the team? You need an ultimate decision maker because there will be disagreements amongst the team at times, it's just natural. Decision making by committee is not effective, particularly if the committee is filled with inexperienced people.

What is the GPs' skin in the game?

Have they all done a deal together before?

Do they already own any multifamily in the immediate area? Texas is huge, with many distinct markets. Where is it specifically?

What is the age of the property?

Numbers: What is the capex budget? Reserves? Exit cap rate vs purchase cap rate?

I'd set the return projections aside and focus on the team, the property, the neighborhood, and the business plan before that. Projections are just numbers on an Excel sheet, anybody can make projections.

Red flags to me based on what you've described: 

-10 GPs: That's a lot. 

- None of the GPs have done a full cycle deal

- 6 of them doing Asset Management: really?

- C Class: I do not do C Class properties anymore, personally. Too many headaches, expensive to upgrade.

I don't like it. BP has a great book, The Hands Off Investor, by @Brian Burke. Pick that up first! There are a ton of options out there, even for non-accredited investors. Investing time and energy in getting educated is well worth it.