All Forum Posts by: Thurben James

If you are going to do a debt structure, you will need to be in the 10-12% return range to investors. No savvy investor would take 7% with zero upside. That being said, both structures work well. A lot of it depends on what the deal can support as well from a return perspective.

@Thurben James

Sounds great but try and find an investor who will take only a 7% return to be in second position and 100% LTV and sponsor has zero skin in the game….

@Thurben James

Cash flow should never be used for CAPEX.

Some first-position lenders do not want to deal with a 2nd position lender. You need first to verify they are okay with this.

You must be very careful since if any investors are "passive," it becomes a syndication, and then you must consult an SEC attorney.

It sounds like your investors will pool their funds together (they probably will create one LLC) and become a 2nd position lender. Most 2nd position lenders will want the investor to have skin in the game (invest their own money) AND be paid a double-digit return.

When you purchase property, you ALWAYS need to have reserves, but in this scenario, you really need to have reserves since you will need to make 2 large debt payments every month. These are debt investors, so in most situations, you will be paying them from the beginning and unable to skip a month. One benefit of equity investors is that you can tell them that distributions won't start for 3, 6, 9, or 12 months after you close, giving you breathing room to get the property on the upswing before distributing cash.

Hi Thurben! It's great to see you here. How many properties have you bought so far? Or would this be your first one? It sounds like you're looking to do an all cash purchase, which would definitely be great for cash flow if that's your main goal. However, your cash-on-cash return would likely be much lower than if you bought multiple properties using financing. Connecting with property managers and contractors is definitely a smart move for building your network. I would suggest connecting with a realtor who is familiar with investment property. They typically have many of those local connections already established.

Hey Thurben, welcome to BP!

Ohio is a great place to invest in multifamily. Have you been investing for a while now? If you're new to the market, I'd recommend getting a feel for the area and starting with a low-risk property. If you're investing for appreciation, I'd consider using leverage.

Hey Thurben, I moved to Columbus a few years ago (from Portland, Oregon which was super expensive) to become a full time real estate investor, and ever since, I've completed quite a lot of BRRRRs, flips, and own a successful rental portfolio here in Columbus Ohio. There's so many catalysts for population and job growth (Intel, Honda, Amazon, Nationwide Hospital, etc). I can definitely tell you there's still a lot of positive cash flowing and 1% rule deals and you get amazing appreciation. As an investor and agent here in Columbus Ohio, if you have any questions or want to connect, definitely reach out!