All Forum Posts by: Chris Collins

Great job @Account Closed ! Can't wait to hear how it turns out. 

1st question: Are you investing in your market? Or out of state?

2nd question: Have you talked to a lender? I don't know your team of course, but do you have the net liquidity and post-closing liquidity covered? If no, you need to get that lined up with KP's and then model any compensation into your analysis so you don't end up with thin margins after adding them in. 

That's my only advice at the moment without knowing much about the deal or your plan to structure it.

Also, your 'lawyer' is most likely different than an 'SEC Attorney' which you will definitely need to draw up your PPM ($10-15k). So be aware of the difference.  Local attorney deals with contracts and such, SEC attorney deals with the PPM and how you structure your payouts and what you're promising your investors.

Also, have your prop mgr assist with the due diligence.  

Go get 'em!

Hey @Adam Robin great job taking action and keeping moving.

Seller says "Also try package deal" but keep in mind this may not work with traditional lenders, and you'd end up buying it as 2 purchases, with 2 closing costs.  That would affect your cash on cash return.

Hit up Hunter Willis at Stone Capital 

seven one nine - three five seven - seven three six one

they deal with a lot of 'packaging these 2 properties into 1 deal' to save you closing costs.  Feel free to tell him I sent you his way if it helps.

I know about zero about NOLA market, so I wouldn't have much to offer on expenses for this property which would greatly affect your analysis. Did you call a local prop mgmt company and find out what their numbers would be for this duplex? 

Go get 'em!

Great job assembling your team!  And best of luck finding your mentor.  Sounds like you're willing to work, so that should benefit you in this quest :)  Besides having a mentor who may possibly lend his/her credibility, here are some other ways to build credibility for yourself.

-Buy a SMALL multifamily property using your own cash. Leverage that experience to who investors you know what you're doing.   Be specific with (and emphasize) your cash-on-cash returns that you achieve.  Bonus points if you show you are advanced and achieved a cash-out refi or raised rents by X % etc. 

-Invest in other deals as a passive investor and leverage that experience to gain clout with potential investors. Be clear that you were a passive investor but also articulate what exactly you learned from the property. Speak as if it IS your property (since you do own a portion of it!)  True, you didn't 'do the work' but by understanding it and having your money on the line with a real property, you can still leverage that experience with investors to an extent.

-Start a meet-up.  Teach others what you've learned, but be transparent about what you have and haven't done if they ask.  Then share any/all successes as they come up.  

-Be 'the real estate' guy in your circle of influence.  Turn every conversation into real-estate somehow (without being annoying).

-Ask for referrals when you have one-on-one conversations, both referrals of who you could learn from, and who may be interested in your deals that you will be bringing to the table eventually.  

-Perfect your elevator pitch.

-Put together your pitch deck with a theoretical property. Won't help with your number of deals you've done and track record, but will add to your credibility.

-Write blogs/articles/start a website

-Make videos

-Go on-site and make videos/take photos. Show that you're "really in this" and not simply a "newbie."

Overall I think it's a tough hurdle to overcome, but you can do it!  Also, don't assume that people won't invest with you.  You may be right, but can't hurt to ask, and if they say no, promise you'll get back to them when you have 1 or 2 under your belt.  They'll respect that you followed through and may invest later.

Good luck!

@Chase Gu I would also recommend checking out @David Thompson's website (in his signature above), under 'BLOG' and read all those articles. That will give you a great understanding of many aspects of syndication.

Hmm, what would I want if I moved to a townhouse in your complex, and what could you make money from... 

I have laundry in my unit so I don't need any facility.  

I don't necessarily want to pay for the use of a pool...  

A gym would be good, but now you're competing with places like 24 hr fitness (which are cheap), so what could you offer me that's cheaper than 24 hr fitness (yet still enough cool factor to make me want to work out and pay for it) but will also be worth YOUR money to maintain...

I don't think an office center is useful since I would have internet and a printer in my unit.  This isn't a hotel where people need a quick printer/internet access (where the 'office center' is rarely used anyways).

I don't see the use of an Amazon box since I have a townhouse and the package would be delivered to my doorstep, and if I'm paranoid of theft, I can approve Amazon to unlock my house and deliver the package inside.

Its the entryway to your property, but you said you don't own the entire property? Then it's not really the entryway to your property, simply a building that sits at the beginning of your pieces of a large property? Is that right?

A daycare isn't a bad idea, but you should probably check: 1. is your tenant base in need of daycare? Do you have MANY families that need care for their 4month-3 year old children?  Are you interested in the insurance and laws that govern daycares?  Are you looing to RUN a daycare? Or simply get it zoned for daycare and sub out the space?

Daycare is also it's own zoning, and often they don't let the area have more than X number of them. So check if there are more around you? (quick google maps).

I think if it were me, I'd look into making it a house and selling it off to someone. May get less than premium pricing since its at the beginning of a subdivision, but maybe you do some landscaping that puts the property more in its own parcel? Tall trees, fence, etc. And sell it as a house with pool. Or at least ask some local realtors if they think it could sell as a SFR to begin with. (I don't think you'd necessarily want to keep it as a rental since you'll have your bread n' butter townhouses next door then this black sheep 1-off to cause you potential problems?)

Disclosure: I have never dealt with this situation personally, so I'm simply trying to put myself in the shoes of one of your tenants in the townhouse there.  Think simply and 'daily life' to get some perspective. 

Hope that's helpful in some way!

@John Whitridge are you planning on doing 506(b) or 506(c) offerings?  These are very different and can be marketed very differently.

But I echo what others are saying re: @Michael Blank.

You'd also do well to go buy his syndicated deal analyzer. The videos alone give you a great insight into what you're actually pitching to investors from a return-perspective. 

@Elle Bi yes if you're being offered an investment and the offering is stating 'accredited investors only' (and if it's being advertised to you in any fashion regardless...) then it will be a 506(c) offering and be for accredited investors only.  Simple as that :)

I would say that the credibility will depend on how you spin it to investors, and what you are personally learning from your passive investment.  If you simply invest passively, then go about your day and receive checks, and nothing more, then whether you have 'credibility' or not won't matter when it comes to running your own deal.  

But you can certainly spin it to potential investors that you are 'involved in multifamily real estate and list off all your 'investments.'  That's a great way to gain personal credibility in my opinion. 

@Elle Bi Do some quick google searching on 506(b) and 506(c) to get your footings there.

if an offering is 506(c) investment offering then yes, you 100% will need to be accredited and are generally 3rd party verified (you can't simply 'check a box'). 

If an offering is 506(b) then that investment can take up to 35 non-accredited investors, but then the offering has many limitations (mainly surround the 'advertising' of the deal).

Also echoing what @Andrew Johnson mentions about credibility.  It may get you some credibility with your future investors, but banks/lenders give about zero weight to a passive investment.  (I've had calls with lenders about a specific area where I'm a limited investor, and the response was basically 'so what?')

I would suggest downloading Rod Khleif's book on syndicating multifamily (Free from his website) or also pick up a copy of Crushing It from Amazon.

Great job jumping in!

I would agree with @Juan Vargas .  I have a friend who manages large multifamily properties here in LA, but he's not yet an investor. Every time he tells me about his day-to-day dealings for his job, I yell at him 'Why are you not RUNNING and operating these deals?! Why are you working for someone ELSE doing their work when you clearly know everything there is to know about running these properties to their full potential?!" 

He would make a GREAT operator at this point.  Can't wait to hear other's opinions on the question. 

Great attitude @Dante Foreman .  Another thing to consider, if you invest in syndicated deals as a limited partner (passive investor) neither your credit score or financial history come into play.  Once you can show that you're a sophisticated investor and have the money to safely invest, you can invest in many offerings.  You don't 'control' the deal, but you're 'in real estate.'  Just another of (many many many) opportunities out there that you can think about.