Apartment-Multifamily Real Estate Syndication

Apartment syndication is a great way to invest your money, but doing so requires a lot of work and maybe even some expert guidance. If you are new to investing, you probably have a lot of questions about real estate syndication. How do you get a project off the ground? How do you find the right people with whom to do business? What is the difference between active and passive investing, and which option is best for you? Over the years, I have helped curious investors like yourself navigate the world of apartment syndication, and have done so successfully. That’s why I am confident I have the resources you need to thrive, and, as my clients have learned, since I left the world of advertising and immersed myself in real estate, my goal is to help you “do more good.” That means freeing up your time so you can use it as you wish. Today, I am happy to share some of my real estate syndication insights with you for free through my comprehensive blog. Below, you will find many posts that can help you get started with apartment syndication, including where to find great apartment real estate, what it takes to stand apart from other syndicators, and how to close the deal on your first deal. After reading these posts, you may want to schedule a planning session, which can teach you how to buy apartments and how to bring in investors; additionally, you can learn how to start investing with me, which would lead to plenty of passive investment opportunities, provided you are an accredited investor.
Syndication Lessons Learned From a 155-Unit Deal

Syndication Lessons Learned From a 155-Unit Deal

Case studies can be valuable teaching tools. They often show us effective strategies and help us avoid common pitfalls.

The instructive case study for real estate pros below is about a syndication deal for a multifamily complex in Texas with 155 units. We won’t name the active investor here, though, and we’ll use the pronoun “they” to refer to this person.

This deal was the investor’s third. In general, when you do something complicated for the third time, you can apply the lessons you picked up the first two times. However, you still have crucial new lessons ahead of you. Those ideas held true in this case.

Specifically, here are three syndication lessons this person has learned on the journey from the novice investor to seasoned dealmaker.

 

1. Play to Your Strengths

Of course, the most useful syndication lessons often come from our mistakes. After we do something ineffectively, we might understand the right way of doing it.

One of the biggest mistakes that this investor ever made was on their first deal. In this instance, this person handled the entire project on their own. They discovered the property, conducted all of the research and due diligence duties, found the financing, underwrote the deal, and closed it, among other tasks.

However, no professional can master every element of a given field. Thus, you should work on the tasks for which you have a natural talent. For the rest, recruit experts.

In this case, the investor grasped the basics of underwriting but was by no means adept at it. They just didn’t have the hundreds of hours of experience that underwriting proficiency demands. Therefore, this part of the project was not as precise as it might have been.

In essence, a real estate team needs at least three experts to thrive. One is an acquisitions manager, someone with a mathematical aptitude and sharp underwriting skills.

Then there’s the money-raiser. This person should be a whiz at networking and pitching investment ideas. Third, the asset manager must have strong abilities in terms of managing people and properties.

Even if you have incredible skills in all three of those departments — and few people do — it would still be unwise to assume all three roles. There are only so many hours in the day, and each component of a deal requires extensive time and effort. Plus, these projects are more fun if you focus on the aspects you enjoy the most.

Ideally, you’d also team up with a business partner, someone whose management talents are different from yours. That way, your company would benefit from balanced, well-rounded leadership.

In short, whenever team members can concentrate on their strengths, the entire group is poised to reach its full potential.

 

2. Be Consistent with Large Distribution Channels

Basically, real estate is all about sales, which means it’s all about marketing. And these days, marketing success requires engaging with people on a regular basis — usually a daily basis.

By doing so, you’ll gain the exposure you need to attract investors and buyers. Plus, you can establish your credibility and gain a key competitive edge in the marketplace.

To do so, target a particular group of people. For example, wholesalers should connect with buy-and-hold investors as well as fix-and-flippers. Rental investors must reach tenants. Sellers should target buyers and vice versa. You get the idea.

Thanks to large distribution channels like YouTube and the industry website BiggerPockets, it’s easy to start your own thought leadership platform nowadays. And, if you place keywords strategically and use other search traffic strategies, the right audience can find you.

Additionally, iTunes is a great home for podcasts, and Amazon is perfect for self-published books. Obviously, you can also reach large numbers of people on Facebook, Instagram, and Twitter. Keep your social media followers engaged with useful tips and appealing photos.

At the same time, don’t expect online success to come overnight. Rather, when you launch such a platform, do so with a multi-year plan in mind. Then commit to this venture, and aim to post winning content once a day, if not multiple times per day. Being consistent will pay dividends. It builds audience trust, loyalty, and interest.

Momentum can take time, but when it finally gets going, it can translate into major increases in conversions. In fact, the active investor in this story has discovered this phenomenon for themselves.

 

3. Raise Money through Recorded Conference Calls

During their first two deals, our investor conducted conference calls with potential investors but did not record them. Instead, they just assumed that serious investors would attend those calls and then finance the deal. As a result, there would be enough cash to close right away.

Unfortunately, that strategy failed. Investors tend to have really busy schedules, and they obviously can’t attend every conference call.

However, you could record your conference calls and send them to all the investors who’ve demonstrated at least some interest in your project. Our investor relied on this plan for the 155-unit multifamily property, and it worked out well.

When you record and send your conference calls, people can watch them whenever they have time. Then, when they do so, they’ll soak in new information, and they’ll get a true sense of your purpose and passion.

Additionally, your viewers can watch your question-and-answer sessions and glean important insights. After all, there’s no way that your investment summary could address every question that potential investors have. On top of that, with recorded calls, people can skip over the questions that don’t pertain to them, saving them time.

For all of these reasons, recorded conference calls are uniquely persuasive and potent marketing tools.

 

Final Thoughts

In the end, experience may indeed be the best teacher. It’s certainly been instructive for the active investor in this story, someone who’s learned indispensable syndication lessons through trial and error. And, if you follow these pieces of advice yourself, you could profit from this person’s experience as well as your own.

 

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The 3 Main Apartment Syndication Accounts

The 3 Main Apartment Syndication Accounts

Real estate investing can be a great type of investment to add to your portfolio regardless of the level of risk you want to take on. Among the most effective forms of real estate investing is apartment syndication, which is commonly referred to as multifamily syndication. This investment occurs when numerous investors pool their money together to purchase larger apartment buildings that would be difficult to manage as an individual investment.

Through apartment syndication, each investor takes on a share of the risks and rewards associated with the investment. If you’re involved with asset-managing this type of investment, you’ll be tasked with controlling several different bank accounts, all of which you should understand before getting into multifamily syndication. The following provides a detailed guide on the three main apartment syndication accounts you’ll have.

 

1. Operating Account

The primary bank account that you’ll be dealing with in a multifamily syndication is an operating account. All of the revenues that are collected when managing the property go into this account. The potential collected revenues include rents, security deposits, and any fees that tenants are required to pay. These fees can include carport rental fees, pet fees, valet fees, and application fees. All money that tenants pay will go into the operating account, which makes this account relatively easy to manage.

Keep in mind that money also comes out of this account for any expenses that are incurred while managing the property. Some of the expenses that must be paid when managing a rental property include ongoing maintenance and repair work, taxes, insurance, and property management company fees. Because the operating account contains all revenues, it should be the account that you use to pay investors, which could be done on a monthly, quarterly, or annual basis.

Since the operating account is a bank account, payments can be made via check or direct deposit. No matter which system you use, it’s important that payments are made smoothly and without issue to keep investors satisfied. Before opening this type of account, it’s highly recommended that you place an upfront fund into the operating account, which is designed to cover any unexpected expenses that occur in the first few months of owning and managing the property.

After one year of managing the property, you should have more than enough revenues collected in the operating account to cover unexpected costs while also paying investors right away. If a boiler in the apartment building happens to malfunction in the first month after the property has been purchased, the costs associated with repairing or replacing the boiler would need to come out of the operating account even if you don’t have enough funds in there. As such, investor payments would likely be delayed. You can avoid this issue altogether by raising extra capital upfront and placing it into the operating account. This fund should be anywhere from 1%–5% of the building’s total purchase price.

 

2. Capital Account

When you’re managing this type of investment, the other account you receive alongside the operating account depends on the type of loan you obtain, which means that there are essentially two accounts that you’ll hold when asset managing an apartment building. If you apply for an agency loan, you could receive a capital account. This account is available when securing a Fannie Mae or Freddie Mac loan. It’s also important that renovations aren’t included in what the loan covers.

If you need to perform renovations on the property, the costs associated with these investments would come out of your capital account. Once your contractor completes the job they’ve been hired for, they should be paid from this account. Keep in mind that your capital account should be funded by your investors when you need to make renovations and pay for other capital expenditures.

This account is necessary because investor money can’t be placed into an operating account. When investors wire funds to you, all of these funds should be placed into your capital account, after which you can pay yourself while also paying for the loan and any closing costs. All additional investments will remain in the capital account until they need to be used for renovations.

 

3. DACA Account

The third and final of the syndication accounts that you can have when managing this type of investment is a DACA (Deposit Account Control Agreements) account, which occurs when you obtain a bridge loan or similar loan program that provides coverage for renovations. In this situation, the lender you partner with may task you with creating a DACA account. When you open this type of account, all of the rents you collect each month should first be placed into the DACA account before you send them to your operating account. While this might seem like a hassle, many lenders allow funds to be transferred from the DACA account to the operating account on the same day.

This requirement is put in place because lenders may not want the money you collect from rents to go directly to you in the event that there’s an issue with the renovations. When lenders provide you with money for renovations, they will have requirements for the debt-service coverage ratio alongside additional timeline requirements and occupancy requirements.

Let’s say that you’re required to complete renovations in a specific period of time. If so, your lender will have a professional inspector come to your property to make sure that the renovations are being completed according to plan. In the event that you aren’t meeting the debt-service coverage ratio requirements or the timeline requirements, you will likely go into a “cash management” phase, which means that your lender will take money from your DACA account to cover the costs associated with the issues that arose.

If the money were to go directly into your operating account without first going into a DACA account, it would be more difficult for the lender to collect the money they’re owed. You will then need to meet the necessary requirements before you can get out of “cash management” and start receiving your money again.

 

Final Thoughts

These are the three types of syndication accounts that you could have when involved with asset managing a deal. With this information in hand, you should be able to avoid making the mistake of paying investors from your capital account or covering renovations with your operating account.

 

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How Apartment Syndication Can Free You From Your Full-Time Job

How Apartment Syndication Can Free You From Your Full-Time Job

Finding a way to leave behind the stressors of the rat race and to enjoy life on your own terms is a primary goal for many people. While many continue to dream, Pancham Gupta has found a way to make that dream his reality through apartment syndication. Gupta had the opportunity to speak with Joe Fairless about how rapidly he executed his transition to commercial real estate investing on a full-time basis.

 

Starting with Single-Family

Pancham Gupta immigrated to the United States in 2003 to complete his college education, and he focused exclusively on his professional career until 2012. At this time, he purchased his first single-family home in New York. This expanded to include other single-family homes as well as a few duplexes and triplexes. As he grew his portfolio of residential real estate investments over the next few years, he continued to work full-time in his financial technology job. However, managing real estate was consuming an increasing amount of time.

 

Scaling with Apartment Syndication

Gupta continued on this path of pulling double duty as a full-time worker and a part-time real estate investor for several years. As he purchased more properties, the amount of time and energy required to manage those properties increased as well. With a limited amount of time and energy available, he realized that scalability was a serious factor that required consideration. By 2017, Pancham Gupta had decided to move forward with his first apartment syndication investment. Between 2017 and 2019, Gupta has been involved in four syndication projects that are valued between $2 million and $19 million. Through his work on these multifamily projects, he has been able to quit his full-time job and focuses exclusively on commercial real estate investments.

In fact, his portfolio of real estate investments has double-digit cash flow and is valued at more than $32 million today. This portfolio is rooted in five different states. He initially invested in smaller residential properties in New York because that is where he lives and works. Those properties produced a healthy stream of income when he purchased them, but their profitability waned over the years as market conditions in the area changed. Gradually, he branched into other states with more lucrative real estate investment opportunities.

 

Partnering Up

In 2017, Gupta joined together with his current partner at Mesos Capital. Together, they pulled together $781,000 from family and friends, and they invested in a 44-unit apartment complex. Specifically, the two partners and one other investor contributed $100,000 each.

The other funds came from family, former colleagues, classmates, and others with who they developed strong relationships over the years. The 44-unit multifamily property was in Charlotte. They originally purchased it for $2 million, and they recently sold it for $3 million. After considering upgrades and closing costs, their profit was approximately $650,000.

 

Raising Funds by Earning Trust

When Gupta was asked about how easy it was to raise the money, he mentioned that having established relationships with high-income individuals was a benefit to him. However, he also mentioned that you can meet such individuals in a wide range of locations. Because of this, the possibility for apartment syndication is open to anyone.

Gupta also mentioned that earning their trust was important. Individuals must trust that you will add value to their portfolio before they write a large check for a real estate investment. More than that, you must spend time talking to them about the value of the deal.

While Gupta says it is easier to get investment capital from those who have more cash to spare, he says that you still have to put in the same amount of time and effort to get them to sign on. However, individuals with deep pockets may also have access to more investment opportunities. With this in mind, there is a need to convince them that your investment opportunity is the right one for them. In some cases, it takes years to get them to sign on.

 

Building Up to Bigger Investments

The second multifamily property that the partners purchased was a 76-unit property in Charlotte with a sales price of $4.56 million. The third property was a 28-unit apartment complex in Charlotte, and they locked in that investment at $2 million. The fourth property was by far their largest commercial real estate investment. It is a 242-unit apartment complex in Jacksonville that they purchased for $19 million.

The first three syndicated deals were purchased in Charlotte in large part because Gupta and his partner were familiar with that particular market. The smallest project was located down the street from the 44-unit property, so its strategic location brought the potential benefit of scaling operations. After Gupta quit his job and was able to spend more time researching markets, he and his partner had the confidence to invest in the larger property in Jacksonville.

Today, the partners are focused on investments with at least 75 units simply because of economies of scale. Generally, Gupta sees that one leasing agent is needed for every 90 to 100 units. By focusing on a larger number of units, they can optimize operations on the ground.

 

Final Thoughts

When Gupta discussed lessons learned through his syndication efforts to date, he brought up the need to raise more capital than you think you will need. Specifically, one of his properties had a major repair issue that cost more than twice what they anticipated. They had to go back and raise that extra money before the repair work could be completed.

Today, Pancham Gupta is principal at Mesos Capital, and he runs a podcast that focuses on personal finance education for high-income individuals. As he looks forward to future investments, he and his partner are looking for opportunities in high-growth areas. These are areas with population growth, job growth, and growth in the real estate market.

 

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What Stage in the Market Cycle Is Your Target Apartment Investment Market?

What Stage in the Market Cycle Is Your Target Apartment Investment Market?

Each year, Integra Realty Resources releases its Viewpoint report, which tracks major trends and development in the commercial real estate industry. One of the data points in this report that is relevant to you as a multifamily investor is their categorization of the major cities into their respective stages in the market cycle. That is, which markets are expanding, which are recovering, which are experiencing hypersupply, and which are in a recession.

Based on the most recent multifamily market data, there is an approximate 50/50 split in markets deemed in expansion or recovery (50.8%) versus those in recession or hypersupply (49.2%).

According to IRR, “There appears to be an intriguing disconnect between the elements that renters themselves and investors are prioritizing in the stress test that is this pandemic. For while market cycle indicators seem to reflect advantage accruing to the least expensive rental markets, the cap rate data show a preference for urban properties over suburban assets and Class A over Class B apartments — and this is true across regions, as well as being consistent in the discount rate and reversion rate pricing metrics.”

Before showing you which stage in the market cycle your target market is in, let’s first define the four stages:

Market Cycle Expansion Hypersupply Recession Recovery
Vacancy Rates Decreasing Increasing Increasing Decreasing
New Construction Moderate/High Moderate/High Moderate/Low Low
Absorption High Low/Negative Low Moderate
Employment Growth Moderate/High Moderate/Low Low/Negative Low/Moderate
Rental Rate Growth Medium/High Medium/Low Low/Negative Negative/Low

 

These four categories are a part of a cycle, which goes like this: recovery to expansion to hypersupply to recession back to recovery:

 

IRR also broke each of these four categories into three sub-groups, which for the purpose of this blog post I will label as 1, 2, and 3. Using expansion as the example, markets in the 1 subgroup have the strongest expansion market factors (i.e., the vacancy rate is decreasing the most, new construction is highest, absorption is highest, employment growth is highest, and rental rate growth is highest), whereas markets in the 3 subgroup still meet the expansion criteria but not as much as the 1 subgroup (i.e., vacancy decreasing at a slower rate, moderate new construction, high absorption, moderate employment growth, medium rental rate growth).

Since this is a cycle, markets in subgroup 1 are closer to the previous market stage, and markets in subgroup 3 are closer to the next market stage. So in reality, the market cycle looks more like this:

 

That said, here are the market cycle categorizations for all of the major cities/markets:

 

Expansion

Expansion 1

  • Phoenix, AZ
  • San Jose, CA

Expansion 2

  • Atlanta, GA
  • Baltimore, MD
  • Cincinnati, OH
  • Columbia, SC
  • Dallas, TX
  • Fort Worth, TX
  • Greensboro, NC
  • Greenville, SC
  • Hartford, CT
  • Jacksonville, FL
  • Las Vegas, NV
  • Minneapolis, MN
  • Oklahoma City, OK
  • Providence, RI
  • Raleigh, NC
  • Sacramento, CA
  • San Diego, CA

Expansion 3

  • Austin, TX
  • Boise, ID
  • Charlotte, NC
  • Columbus, OH
  • Grand Rapids, MI
  • Nashville, TN
  • New Jersey, Coastal
  • Orlando, FL
  • Salt Lake City, UT

 

Hypersupply

Hypersupply 1

  • Broward-Palm Beach, FL
  • Charleston, SC
  • Cleveland, OH
  • Detroit, MI
  • Kansas City, MO
  • Louisville, KY
  • Orange County, CA
  • Richmond, VA
  • St. Louis, MO
  • Syracuse, NY
  • Washington, D.C.

Hypersupply 2

  • Indianapolis, IN
  • Pittsburgh, PA
  • Sarasota, FL
  • Tampa, FL

Hypersupply 3

  • Denver, CO
  • Los Angeles, CA
  • Naples, FL
  • San Antonio, TX
  • San Franciso, CA

 

Recession

Recession 1

  • Birmingham, AL
  • Houston, TX
  • Miami, FL
  • New York, NY
  • Oakland, CA
  • Philadelphia, PA
  • Portland, OR
  • Seattle, WA
  • Wilmington, DE

Recession 2

  • Chicago, IL

Recession 3

  • Boston, MA
  • New Jersey, No.

 

Recovery

Recovery 1

  • Little Rock, AR

Recovery 2

  • Jackson, MS
  • Memphis, TN

Recovery 3

  • Dayton, OH
  • New Orleans, LA

 

What Does This Mean for Me?

Each of these markets is categorized based on the following factors: vacancy rates, new construction, absorption, employment growth, and rental rate growth trends. So, one thing to think about is if you can find a submarket or neighborhood within one of the hypersupply or recession markets that have expansion or recovery factors. In other words, just because the overall market isn’t in the expansion or recovery phase doesn’t mean that you should abandon that market nor that you won’t be able to find great investment opportunities. In fact, you’ll likely be able to find more deals and have less competition when you’re not pursuing expansion markets.

Additionally, if your market is in the 1 or 3 subgroups, you’ll want to monitor those market factors to see if the market has moved to another stage. This would be a good thing if your market moved from hypersupply 1 to expansion 3, and it would be concerning if your market moved from expansion 3 to hypersupply 1.

Lastly, just because your market is in the expansion phase doesn’t mean that every deal is a good deal. You should still complete a full underwriting analysis based on your business plan and perform the proper due diligence on all prospective deals.

 

Are you an accredited investor who is interested in learning more about passively investing in apartment communities? Click here for the only comprehensive resource for passive apartment investors.

 

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Are Short-Term Rentals Worthwhile for the Multifamily Community?

Are Short-Term Rentals Worthwhile for the Multifamily Community?

Due to their cost-effective nature, sharing economy apps such as VRBO and Airbnb have established themselves as a popular new way to secure a place to rent for a short term. These short-term rentals, popularly known as vacation rentals, are typically used for one month or less. They give renters a feeling of home with all the necessary amenities, but do not tie them down to a long-term commitment. Such rental spaces are generally located near tourist destinations. Some renters even use them for business trips.

 

The Rise of Short-Term Rentals

The popularity of such short-term rentals can be gauged from the fact that Airbnb alone has more than 6 million listings across 100,000 cities around the world. They cater to a whopping 500 million guest arrivals. With such impressive figures, this aspect of the rental business has rightfully earned a gold-star rating in the minds of budget-conscious travelers, who can get a rental for an average of $80/night. However, short-term rentals are not limited to budget travelers. There are plenty of listings for luxury homes and villas that cater to the well-heeled as well. This across-the-spectrum clientele makes short-term rentals highly sought after among many multifamily communities.

When the economics of short-term rentals are analyzed, we find that such apps provide a cost-effective renting option to a wide array of travelers such as business professionals, vacationers, and many other categories. More than half the renters who use these apps do so because they feel they are getting value for their money. The level of satisfaction with these rented properties is a mind-boggling 93%, with about 2 million renters clocking in each night. These excellent fundamentals make a valid case point for offering short-term rentals in addition to the standard long-term options as a part of a multifamily community’s leasing and marketing strategy.

 

Benefits for Homeowners

For homeowners, short-term renters are a source of extra income. Why continue to waste money on an idle asset when it could make you money instead? The buyer effectively receives all benefits of short-term ownership without any long-term costs, and that makes it a win-win situation. This industry is expected to be worth more than $300 billion by 2025. It makes sound economic sense for multifamily units to take part in this sharing business and reap the economic benefits.

The popularity of such sharing apps is driven by Millennials and Gen Z, for whom the internet is their breathing, living world. They form the largest class of renters of apartments, both long- and short-term. It makes sense, then, for a multifamily community to offer them the facilities that best suit their lifestyles. Their active presence on various social media platforms can also ensure many more leads for a multifamily community.

 

A Proactive Approach to Subletting

Airbnb has done its research well and has found a new category of sublets, which are longer than the usual short-term stay, but shorter than the standard one-year lease. They have a dedicated page for sublets greater than 28 days and up to 6 months. Currently, most of the sublet listings are from single homeowners or from those who rent out individual units. So far, these listings have mostly affected those with less than 50 multifamily units. However, given its increasing popularity, it is only a matter of time before larger multifamily businesses are also forced to cash in.

About 43% of vacation rentals have taken place in multifamily units such as apartments and condos without the knowledge or permission of multifamily unit managers. It is in the best interest of these managers to change their stance and allow such short-term rentals by joining vacation rental app listings. As the saying goes, “If you can’t beat them, join them.” Property managers might as well get a slice of the pie when the going is good.

 

Final Thoughts

It has been apparent for some time that residential units have been aligning with the hospitality industry, and that it has been going on for many years. The niche between an apartment and hotel, a comfortable place to call home in the short term, is what vacation rentals are all about. This trend can be converted into a steady cash flow for multifamily communities, which will help them to lower operating costs, boost brand recognition, and have a positive impact on the bottom line.

 

About the Author:

Veena Jetti is the founding partner of Vive Funds, a unique commercial real estate firm that specializes in curating conservative opportunities for investors.

 

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3 Reasons to Invest in Others' Apartment Syndication Deals

3 Reasons to Invest in Others’ Apartment Syndication Deals

Many investors prefer to take part in apartment syndication deals as a general partner, which allows them control of what is going to happen with the property. Even if that accurately describes you, there are several reasons why you should also take part in these types of deals as a limited partner. Here are three of the more significant ones.

 

1. You Learn How to Be a Better General Partner

One of the most important things that you can do is educate yourself on the investment process as much as possible. A way for someone who is generally a GP to do that is by being an LP, experiencing exactly what this process is like for those on the other end. Learning more about this perspective and putting yourself in their shoes will help you know how to better attract the types of LPs you are looking to get involved with.

This learning process applies to every aspect of the experience that you have as an LP.

For example, consider the initial email that you receive from a GP. Analyze it. What about it works for you, and what about it does not? These can be things that you see working or not working for most people, and they could be things that simply do or do not work for you personally — this doesn’t mean that they are necessarily wrong.

A significant benefit of going about this process in this manner is that you can learn new ways of doing things that work for you that you had not considered before. You can also realize aspects of how you had been going about things that you thought were working fine but, from this new perspective, you have realized are not working nearly as well as you had thought.

Of course, this learning process does not just apply to that opening email. You want to apply the same principle to how a GP goes about the rest of the steps. These include things such as the sign-up process and the deal itself. Does the former go smoothly? Does the latter provide financing that works for you and makes sense, being broken down in a way that an average LP would understand it? Also, do the fees make sense, and are they appropriate? How is the profit split? How is the underwriting structured?

What about the deal presentation? How is it structured? What would you change about it, if anything? Are you continuously updated on the status of your investment? How often? Are the updates regular and detailed? How often and with what method do you receive distributions? Do you receive distributions within the original time frame that had been communicated?

Also consider what happens when something goes against the plan, such as something adversely affecting the property. Are you kept abreast of those developments, or are you suddenly kept in the dark, unsure of what is happening? It is a significant red flag to receive slow or nonexistent communication from a GP once challenges are being met and addressed.

Another thing to consider is what happens when a GP comes to an investment agreement with you or other LPs but then later backs out. How is that decision communicated? Is it a simple “we backed out” message with few or no details, or does it include specifics on exactly what had caused this decision to be made?

More communication is generally better than less, whether things are going according to plan or not. Of course, GPs should also make sure to not inundate LPs with information. Finding a good balance is important.

 

2. You Can Test Drive New Markets as a Limited Partner

If you want to invest in a new area, you should learn about it beforehand. This can involve thorough research that you pay for. Another way that you can go about this is to take part in apartment syndication deals in these markets as an LP. For example, if you are currently focused on properties located in Georgia, but New England starts intriguing you for a number of reasons, you could then invest as an LP in Massachusetts and nearby states before you decide if you want to be a GP there.

This will not only allow you to experience these new markets as an LP, but you can also gain a much greater insight into how these markets are going for GPs. In addition, you can generally gain access to market research that any GPs that you are working with have done on the area without needing to pay for it yourself.

 

3. You Are Able to Better Network With Other Investors

Networking is one of the most important things that any person in any aspect of the business world can do, and that is very much the case with apartment syndication deals. Going to invest in deals that GPs have put together and serving as an LP on them is one of the best ways that you can improve as a networker.

One of the most significant reasons for this is that this process provides a natural way to remain in contact with other GPs Staying in contact with others in this manner is generally better than doing so through sporadic lunch meetings or similar means.

 

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How Kyle Mitchell Did His First Multifamily Syndication in Only 8 Months

How Kyle Mitchell Did His First Multifamily Syndication in Only 8 Months

Like many other real estate investors, Kyle Mitchell got his feet wet with real estate by investing in single-family homes on the side. He spent the majority of his days working as a regional manager for a management company specializing in golf courses. When he invested in his first single-family home several years ago, his goal was to develop a stream of passive income. Today, he is the co-founder and managing partner at Limitless Estates, a firm that specializes in multifamily syndication. How did he make such a swift professional transition from a first-time investor to an active commercial real estate investor?

 

The Scalability of Single-Family Investment Properties

Approximately six years ago, Mitchell started building up his portfolio of single-family homes with the intention of continuing on this path until his passive income needs were met. He eventually accumulated a total of nine investment houses, and he continues to own these homes today. However, he realized after a few years that the scalability of single-family investment properties was limited. He hoped to grow his passive income stream at a faster pace, so he took a closer look at multifamily investment properties.

 

Identifying the Right Multifamily Property

Kyle initially decided to invest in a multi-unit apartment complex with his fiancée, Lalita, and they focused their search on the Tucson market. Mitchell estimates that he and Lalita traveled to Tucson from California approximately 10 times before they stumbled on the right property. Because they were out-of-state buyers, they took a boots-on-the-ground approach to familiarize themselves with the market and with key players who they wanted to team up with in various capacities. The property they located was a 42-unit apartment complex that they ultimately purchased for $1.65 million.

 

A Closer Look at Finances

Initially, Kyle and Lalita planned to purchase the property themselves, but they ran into a roadblock with financing. When they transitioned to a loan application for a Fannie Mae multifamily loan, they needed to take on a few investors to provide additional required capital. Altogether, they instilled $1 million in equity in the property. Approximately $350,000 of the upfront funds were allocated toward renovations. Specifically, the renovation funds have been used for interior and exterior painting and replacing sliding glass doors with wooden doors. In addition, funds were applied to replace railings, rebrand the operation, buy a new sign, and add amenities like a barbecue area and a dog park.

 

Post-Closing Insight on the Property

As is the case with many real estate investors, Mitchell and his partners learned more about their multifamily property after closing. Specifically, they determined that the former property management company did not communicate well with the established tenants. The partners have since improved the situation by bringing a new property management company on board. In addition, the investors discovered that the renovated and improved property could support a rent bump. Overall, this was a $125 per month increase per unit plus an additional $35 per unit per month for RUBS.

 

A Look at the Project’s Equity Partners

Kyle believes that one of his most insightful quotes of all time is, “Real estate is a team sport.” This applies as much to the property management company and third-party professionals that it takes to make a project successful as it does to the investors. When Mitchell and Lalita determined that they needed to take on investors, they were approximately 30 days away from closing. They had to scramble to find the right investors for the project. Ultimately, they found investors who were willing to participate with between 5% and 15% equity in the deal through a meetup group. Mitchell acknowledges that some of his investors ultimately were not able to contribute as much as they thought they would simply because of life factors. He references events like extensive traveling, having a baby, closing on other investments, and more. In hindsight, he realizes that he should line up investors before the deal kicks into gear and that he should have access to more equity than he may ultimately need.

 

The Decision to Focus on Real Estate Full-Time

After purchasing the property, Kyle and Lalita decided that he should focus on managing real estate investments as his full-time work. He left his old job and has not looked back. Overall, the couple realized that they did not collectively have enough time or energy with full-time careers to focus on building the relationships necessary to be truly successful as multifamily real estate investors. In fact, Mitchell states that some of the best advice that he can offer to other aspiring investors is to break out of your comfort zone. He believes that true growth comes when you push yourself to the limits, and he views his shift away from his salaried job in this way.

 

Focused on the Future

With this commercial real estate property purchase under their belts, the investors are ready to look forward. Mitchell plans to sell his nine single-family investment properties. While they are profitable and he may take a loss on their sale, he believes that his assets may be better focused on multifamily investments over the long run.

 

Networking and Developing Relationships

One of the meetup groups that Mitchell participates in has approximately 10 members and operates in a roundtable format. Each member of the group has the opportunity to talk about projects that he or she is working on over the next month. This gives members the chance for both education and networking. Mitchell also participates in a much larger meetup that focuses specifically on educating investors.

Going forward, Kyle and Lalita plan to continue attending the meetup groups every other week. They also run a podcast and host a free webinar to help others who are getting started as real estate investors. You can keep up with the pair’s future endeavors with multifamily syndication through these platforms.

 

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How to Asset Manage a Newly Acquired Apartment Syndication Deal

How to Asset Manage a Newly Acquired Apartment Syndication Deal

You’ve just closed your multifamily apartment syndication deal. You should take a moment to celebrate. Then the real work can begin.

Yes, apartment management — and all commercial real estate management — is highly complex. And it demands a long-range commitment. Expect to be asset managing for at least the next five to 10 years.

The secret is to break this role into smaller, more digestible tasks. Below, we’ll examine four of those crucial responsibilities.

 

Business Plan Execution

This step is more of a guiding principle — one that encompasses every other step. Essentially, you should keep making sure that every part of your business plan is being enacted.

For starters, keep close tabs on your budget. Are your operating expenses staying within an acceptable range? Are your projected premiums on target?

Your property management company should list all of your income and expenses in a software program. If you have access to that software, check it periodically. If not, the company should send you a financial report at the end of every month or even more often.

Thus, you can keep comparing financial projections to reality. And you can discuss any discrepancies with the management company. Find out what caused them and how you can overcome unexpected losses.

 

Weekly Performance Reviews

Weekly performance reviews can help you stick to your plan. To begin, establish your key performance indicators (KPIs), the data points you wish to monitor. If you’d like, your management company can help you determine your KPIs.

Using the acronym MOM, you can organize your KPIs into three categories: money, occupancy, and management.

The money category could include the following:

  • Gross potential income, the amount you’d earn if you rented all your units at market rates.
  • Gross occupied income, the money you’re actually making.
  • The amount of money collected the previous week.
  • The money collected month to date.
  • The month-to-date delinquent number.

If this last number seems high, find out why and how your management company is addressing the issue.

For its part, your occupancy category might feature these seven KPIs:

  • The number of pre-leased units.
    This group can include vacant units and units with leases expiring at the end of the month, so long as they have new leases already signed.
  • The number of eviction notices distributed in the past week.
  • The total number of eviction notices on the books.
  • The number of scheduled setouts.
  • The number of denied tenant applications, which indicates the quality of the leads your management company is supplying you.
  • The number of lease renewals.
  • The number of people on your waiting list.

You want this final number to be as large as possible. Properties with excellent reputations tend to have long waiting lists. A long waiting list will also give you extra security whenever evictions or move-outs are numerous.

The management group, meanwhile, could include these stats:

  • The current occupancy rate percentage.
  • The total number of units occupied during the past week.
  • The number of move-ins in the last week.
  • The projected number of occupied units — including those that are pre-leased — along with a projected occupancy percentage for the end of the month.
  • The number of filed evictions.
  • The number of skips, people who don’t move in when they told you they would.
  • The number of transfers, those who move from one of your units to another.
  • The total number of vacant units.
  • The number of vacant units that are rent-ready and not rent-ready.

With all of these numbers, look out for trends. If, for instance, the number of evictions or vacant units keeps going up, create an action plan with your property management company to deal with the issue.

Moreover, early on, set expectations for these data points. And share those expectations with your management company so that everyone’s working toward the same goals.

 

Investor Distributions

As an asset manager, you’re in charge of investor distributions, paying your investors at the frequency you’ve established. It might be once a month, once a quarter, or once a year.

However often they go out, it helps if your management company sends the distributions. Then you could just oversee the process.

Also, your investors will decide how to receive their payments: by check, direct deposit, or another means. Be sure to check with your management company to see if they can send payments via those methods. If not, you, your investors, and the company can work out an alternative.

 

Renovation Management

Apartment syndication asset managers ensure that all interior renovations, exterior renovations, and building upgrades are completed on schedule and on budget. Once again, your management company will take care of the day-to-day work.

You’ll fund your renovations with your existing capital, or you’ll secure a loan from a bank.

If you have a lender, you’ll communicate with it throughout the renovation. That’s because your lender will likely supply you with payments as you go along rather than handing you a lump sum at the outset. If you didn’t reach certain budgetary and scheduling benchmarks, that lender would likely cease payments.

In all of this, try not to be overly aggressive as far as how many renovations you request or how fast you want them done. Instead, collaborate with your management company to set a rigorous yet realistic schedule, one that doesn’t overtax its resources.

How do you renovate a multifamily complex with residents, though? Well, you might begin with your vacant units. You could then transfer certain tenants to those upgraded vacant units while you renovate their residences. Or you could just raise rents, inducing some people to move out.

Additionally, you might ask people if you could renovate their homes while they’re still living there. In exchange, you might put them up at a hotel or offer them the upgraded unit at no extra cost. You could devise your own creative solutions as well.

In short, by handling these tasks, your management should be more manageable.

 

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The Difference Between Real Estate Funds & Single Asset Syndications

The Differences Between Real Estate Funds & Single-Asset Syndications

Passive investors in private real estate often have two investment structures available to them: a single-asset offering or a fund-style offering. Today, I want to explore the two options from the passive investor’s standpoint. In this analysis, I am comparing closed-end funds to single-asset, closed-end offerings.

There are often more similarities to these two structures than there are differences, but each sponsor has the ability to cater their offerings to match the needs of their investors. And from a technical standpoint, funds are syndications since the fund is combining investments from multiple passive investors.

From a legal structure, a single-asset offering and a fund are often very similar. Both structures entail the investor taking ownership in a limited partnership. During the subscription process, the investors will be asked to execute a subscription agreement, limited partnership agreement, and private placement memorandum. It is common for sponsors to carry over many similar terms, particularly if they are transitioning from a single asset to a fund model, but this isn’t always true.

With specialist sponsors — for example, those focusing on unanchored strip centers or value-add multifamily — the business plan is often consistent because the returns of a fund, just like a single asset, are driven by the actual operations of the asset. With diversified investments, the sponsor may offer funds with specific asset classes — for example, a retail or an office fund.

The biggest differences between a fund and the typical single-asset offering come down to when the assets are named. The common route for a single-asset offering is for the sponsor to source and get an asset under contract, then take the offering out to their passive investors. A fund will often take the offering out to the investors and raise commitments before naming any, or most of, the assets the fund will ultimately acquire. Additionally, a fund will often retain the rights to acquire multiple assets, creating a diversified portfolio of assets under a single investment offering and limited partnership.

Just like any private offering, there are many variations of offerings available, and the highlights above are what I would call “typical” structures. There are funds that own a single asset, and occasionally syndication offerings that are presented as a portfolio of assets.

The biggest benefit to a fund is the diversification a fund offers. Similar to a mutual fund or ETF in the public equities market, a fund investment often provides exposure to multiple assets with a single investment. Additionally, there can be operational efficiencies and cost reductions that occur in a fund model — for example, a single legal document versus unique documents for single-asset offerings, or a single K-1 from the fund versus multiple if invested in multiple single-asset offerings. In some funds, your investment can get to work faster, as some funds accept capital regardless of acquisition timing.

The benefit to single-asset offerings is the control you are afforded in your investment decision. Depending on the fund you are comparing to, a single offering also gives you a little more control over when your capital is deployed, as many funds, but not all, utilize a commitment and call style of funding, which could result in having to sit on idle cash during the investment period of the fund.

As noted in the opening, there are many different ways a sponsor can structure single-asset offerings and funds, so this article cannot be all-encompassing. At the end of the day, the two structures can be very similar, if the sponsor structures them as such, and the investor’s decision then becomes whether or not they value diversification over the ability to select which assets they choose to invest in.

 

About the Author:
Evan is the Investor Relations Manager for Ashcroft Capital. As such, he spends his days working with investors to better understand their investment goals and background. With over 13 years in real estate, he has seen all sides of real estate from acquisitions to capital raising on the equity and debt side, to operations, and actively invests himself. Please feel free to connect with Evan here.

 

 

 

 

 

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Making the Move from Active to Passive with James Sumaya

Making the Move from Active to Passive with James Sumaya

There were several reasons for James Sumaya to head for the blossoming city of Denver, Colorado. Leaving Los Angeles meant an opportunity for him to be closer to family, and to experience a better cost of living and quality of life. But beyond these benefits, moving to Denver also opened a new field of professional opportunities, as well.

Over the last 10 years, James had worked with asset management firms overseeing real estate transactions involving a wide range of asset types including hospitality, office, industrial, multifamily, and retail, ranging from as small as $10 million to more than $100 million. After spending much of his career gaining broad but in-depth professional experience, the time had come for James to narrow his professional focus.

“Now that I’ve moved to Denver, I am working with a group that focuses only on doing multifamily deals directly with a value-add business plan. So I’m narrowing down from a broad focus, doing all types of assets and all manner of business plans, and now I have the opportunity to focus more on one asset type and in one market,” James said.

James had also become increasingly interested in multifamily syndications for his personal investments. Both his personal and professional goals aligned with a renewed passion in passive investing.

“I was really focused on finding reliable and stable cash-flowing investments with some opportunities for appreciation. I do own some investments directly and in the syndications. And I’ve debated where I want to focus my efforts going forward,” James shared. “Given my professional background, I certainly have the ability to pursue the direct approach, but it’s really difficult to beat the ease and simplicity of investing in a syndication with a good sponsor.”

As with many investors, James manages a diversified real estate portfolio with a combination of single-family assets and multifamily syndication investments. However, to James, each investment comes with a completely different approach to ownership.

“They each have their pros and cons. In syndications, you’re really vetting the sponsor more than anything else. If you end up with the wrong group, you don’t have any recourse to rectify that,” James said. “Whereas with the direct approach, you have more control, but you’re also dealing with all of the decisions, too.”

Managing the element of control between passive and active investments also has implications beyond the bottom line of your portfolio. For James, passive investments are an opportunity to build additional wealth without creating an additional job.

“It’s easier to do syndications when you’re working a more traditional day job because the attention required on those deals is so much lower than doing something direct,” James said. “If you move into that direct space, then you’re effectively creating another job for yourself. One that you’re in control of, but at the end of the day, it’s something that’ll require more time and effort and still have elements of being a day job in some manner.”

For James, genuine pride in real estate has come in the quality of his syndication portfolio, not necessarily the quantity of investments within it. His excitement for his future in real estate is woven into the diversity of assets, from the location all the way to the age of the investments. The depth of his portfolio also isolates the bottom line if a deal were not to perform as expected.

“My focus on syndications was born out of looking to hit a cash flow number. I think that a lot of people looking for financial independence have a number that they would like to hit,” James shared. “Continuing to find deals that will generate consistent cash flow will build a portfolio up to a level where you have some options for yourself to do something else and walk away from a traditional day job.”

 

About the Author:

Leslie Chunta is a marketing consultant with nearly 15 years of experience in creating dynamic marketing programs and building brands for startups to enterprise organizations. She has worked agency- and client-side with high-growth companies that include Silicon Valley Bank, JPMorgan Chase, SailPoint, EMC, Spanning Cloud Apps, Ashcroft Capital, Netspend, and Universal Studios. www.thelabcollective.com

 

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4 Tips To Scale Your Business From Single-Family Homes to Apartment Communities

4 Tips to Scale Your Business from Single-Family Homes to Apartment Communities

Yusef Alexander is a Los Angeles-based real estate investor who has been in that field since the 1990s. Although he started off with Los Angeles rentals, he later focused on apartment communities located in Georgia and elsewhere in the South. As he did so, he transitioned from spending his time on commercial real estate and single-family homes to focusing on those aforementioned multifamily apartment communities. As a result, he is a solid person to listen to in order to learn how to scale your business in a similar manner.

One property that he got involved with in early 2019 is a 172-unit multifamily building in an upper-middle-class part of Atlanta, which ended up having a purchase price of $8 million. He then planned to engage in light-rehab and high-end rehabs, costing $3 million in total and ultimately selling it for nearly three times that.

 

Consider Various Costs

Of course, also be sure to consider all of the costs that will go into rehabbing these units. These include the costs of hiring workers and paying for what needs to be installed as well as any costs connected with consulting with a design firm to determine just how these rehabbed units should look when all is said and done. And take into account that the design costs could be significant if you will be making major renovations to the apartment community property as a whole, such as installing a pool, building a gym, and so on.

An additional aspect to consider is that some of the units that are being rehabbed are going to need to be de-leased — i.e., empty — during those times and won’t be bringing income in.

Another recommendation to consider if you are looking to scale your business from commercial real estate or a different type of real estate to apartment communities is to fully research similar properties in the area. For example, if you discover that a similar real estate venture is offering spaces to rent for a similar price that you are, go through the process of applying for a place there, see what they are offering for that price point and consider why.

 

Determine Value

Also take into account that if you are going to join in on a purchase with one or more others, you should ensure that the split is as fair as possible. In Alexander’s case, three owners were reduced to two. As a result, he and the other person agreed to have a third party (a broker) determine the price (the worth) of this particular asset (the apartment community). They also had a desktop appraisal from a financial group that is trained to do appraisals on properties such as these do the same and compared the figures.

If the two numbers are not in close agreement, you will want to either go with whichever one is trusted more, go with the average of the two, or, if simply getting the deal done is of utmost importance, go with the higher one. In Alexander’s case, they decided to go with the higher appraisal, which was from the broker.

 

Diversify

To scale your business, it is also worth considering combining being an active investor with being a passive one. For example, Alexander is an active investor in that 172-unit place while he is a passive investor in a 355-unit apartment community, also in Georgia, that he became a minority partner of a few years prior. In total, he’s active with two communities — both in Georgia — and passive in five others.

However, note that these investing focuses require different skill sets. For example, knowing as many details as possible about the other partners in a passive investing opportunity is of utmost importance, as you will not have as much control over the situation after the money has been invested.

 

Remain Diligent and Disciplined

For those new to investing in apartment communities, one of the first pieces of advice that Alexander would give is to surround themselves with people who are already knowledgeable in this field and soak up that knowledge.

And, as they progress through the years, continue to remain diligent and disciplined. Also make sure to keep long-term focuses in mind, including ways to exit these opportunities later. When you get into a project, determine how you expect the entire process to go from beginning to end, throughout any renovations and other aspects of owning it, until it has been sold.

Also, make sure that you take into strong consideration just how important location really is as it relates to real estate.

One of the mistakes that Alexander made early in his real estate career was buying a residential property next to a gas station. Of course, making that type of purchase does not necessarily make something a bad deal, but in this case, it did. Unexpected issues related to the gas station, such as the smell that emanated from there, various people constantly loitering, the significant and annoying lights that it had up and on at night, all contributed to lower the property’s value.

Conversely, you may also be able to secure a place with an enviable location that hasn’t made that aspect of its listing obvious to other investors, getting a nice deal on it as a result.

 

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Active vs. Passive Income

Active vs. Passive Income

Real estate investors love to talk about passive income. But what is passive income? Is there active income? This article is going to answer those questions and more.

 

Passive Income

Passive income includes rental net income, limited partnerships, and other enterprises in which the recipient of income from those sources is not materially participating. Such income is usually taxable but is treated differently by the IRS. That different treatment has guidelines for the recipient to consider:

  1. If you have dedicated 500 hours to a business or activity from which you are profiting, that is considered material participation.
  2. If your participation in that business or activity has been all the participation for that year, that is considered material participation.
  3. If you have participated up to 100 hours and that is as much as anyone else involved in the activity or business has participated, that is also considered material participation.

Thus, only truly investing in a business and stepping back to receive profits can be categorized as passive income. For example, if you put $25,000 into a business and the owners pay you a portion of the profits each year, then you have passive income. IRS Publication 925 sets out the specific criteria for passive income treatment, for those of you looking for further authority on this topic.

Passive income is taxed anywhere from 10% to 37%. Depending on what Congress does this year and during this administration, taxes may increase. While it may not feel like you are passively investing in your real estate activities, the IRS has concluded that unless activities are performed to fulfill responsibilities as a real estate professional, like a real estate agent or broker, those activities are passive. 

More importantly, your passive income is only offset by passive deductions such as:

  • Property management fees
  • Maintenance and repairs
  • Utilities
  • Landscaping
  • Professional and legal fees
  • Wages paid to a W-2 employee who receives a salary or hourly wage
  • Advertising costs
  • Tenant screening fees
  • Commission, leasing, and referral fees
  • Mortgage interest payments
  • Property tax
  • Insurance premiums
  • License and registration fees
  • Travel expenses directly related to the rental property
  • Home office expense
  • Office supplies
  • Telephone and internet
  • Dues and subscriptions for professional organizations such as a real estate investor club
  • Continuing education expenses such as attending seminars or enrolling in courses and coaching
  • Depreciation expense to reduce taxable income
  • Pass-through tax deduction (or QBI deduction) of up to 20% of the net rental income, subject to certain limitations

 

Active Income 

Active income generally refers to wages, tips, salaries, commissions, and income from materially participating in activity or business. For purposes of real estate, there are two criteria that MUST be evaluated:

  1. More than half of the personal services the taxpayer performed in all trades or businesses during the year were performed in real property trades or businesses in which the taxpayer materially participated.
  2. The taxpayer performed more than 750 hours of services during the tax year in real property trades or businesses in which the taxpayer materially participated.

Both of these criteria must be met. Moreover, IRS Section 469(c)(7)(A) and 26 CFR Section 469-9(g) require the taxpayer to make an election on their tax returns. Talk to your CPA or lawyer about these issues.

 

About the Author:

Brian T. Boyd, JD, LLM, www.BoydLegal.co

 

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A Look Inside BEC2022 Headquarters: Gaylord Rockies Resort

A Look Inside BEC2022 Headquarters: Gaylord Rockies Resort

Don’t get us wrong— we’re definitely excited that the Best Ever Conference will be back in person in 2022. But we might be even more thrilled to be hosting the event at the vast 500,000 sq. ft. Gaylord Rockies Resort in Denver, Colorado. We’re looking forward to spending February 24–26 at this location for several reasons:

 

Setting the Scene

You’ll know you’re in Colorado the moment you enter the Gaylord Rockies for its classic Colorado rustic cabin décor. Guests can experience breathtaking views of the Rocky Mountains from the stunning 75-foot-tall atrium lobby windows. The resort truly captures the Rockies’ ambiance — waterfalls included.

 

Location, Location, Location

The Gaylord Rockies is a short 10-minute drive from Denver International Airport and is about 30 minutes from downtown Denver. For transportation options from the airport, there are taxis and rideshares such as Uber/Lyft, plus the Gaylord Rockies’ shuttles for guests traveling to or from the light rail station at 61st and Pena, located near the airport.

 

All You Can Eat

The resort offers an array of restaurants and bars on-site, including:

 

Mountain Pass Sports Bar

A casual spot with burgers, sandwiches, and a wall of craft beers on tap. There is a 75-foot big-screen TV in the bar to catch your favorite game on.

 

Pinyons

The hot-spot lobby bar and the perfect place to view the sunset from the Grand Lodge.

 

Old Hickory Steakhouse

Provides a more upscale vibe with high-quality beef, fresh seafood, and fine wines. This is a signature Gaylord Hotels restaurant that can also be found at other Gaylord properties.

 

Monte Jade

An eclectic Asian-themed restaurant and sushi bar.

 

Vista Montagne

Seasonally-inspired Italian cuisine.

 

Casual Grab & Go

Rockies Marketplace or The Cocoa Bean, which brews Starbucks coffee.

 

Winter Fun

Did we mention the pools and waterparks? The Gaylord Rockies Resort’s pools are open year-round, and the outdoor pool is heated through the winter, so it will be open in February when the conference takes place. Visit the Relâche Spa for luxury and relaxation, or the Relâche Fitness Center, which offers modern fitness equipment including Peloton bikes. The resort will also offer seasonal winter activities for guests — check back closer to the conference date for more details.

 

Ready to Book?

There are exclusive hotel room discounts for BEC attendees the week of the conference — check out the discounted ratesYou can also visit us at besteverconference.com for more information about the BEC2022. We hope to see you this winter!

 

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5 Colorado Travel Tips for the 2022 Best Ever Conference

5 Colorado Travel Tips for the 2022 Best Ever Conference

Who’s ready for some après ski? Best Ever Conference attendees often use the conference as an opportunity to vacation in Colorado either before or after the conference. It’s truly the perfect winter adventure to get your team together before or after the BEC, or even for inviting your family and friends to join. Let’s face it, this past year has caused us to pause many of our vacation plans, and we’re all eager to get back out and create some exciting experiences. With that in mind, we’ve put together our top Colorado travel tips to help you make the most of your stay.

 

1. Pack your gear.

If you are planning on venturing outside of Denver, don’t forget to pack your snowboard, skiing, or sledding gear. Some of the most popular ski resort towns in the world are located in Colorado such as Aspen, Breckenridge, Keystone, Telluride, and Vail. These ski towns offer incredible resorts located close to town, as well as shopping, restaurants, and other winter activities.

 

2. Book early.

It’s certainly not too early to book your ticket and travel plans for the upcoming BEC. You won’t want to catch a case of travel FOMO by skipping out on your opportunity to secure your spot and travel accommodations. Hotels and vacation rentals start booking in the summer for the upcoming winter season, and since this year is the year of travel, many vacationers are securing their winter lodging already — especially the ski-in/ski-out homes.

 

3. Remember your lift tickets!

In addition to booking your stay, it is highly recommended to book your lift tickets in advance as their prices are expected to increase throughout the year. Those who purchase lift tickets early always receive the best discounts, and they avoid the risk of waiting until the resorts sell out.

 

4. Explore Denver.

Interested in staying local in Denver? There’s plenty to experience in the Mile High City. Did you know Denver brews more beer than any other city? Denver’s downtown area offers a wide variety of brewpubs, eclectic restaurants, and world-class galleries and museums. Another popular location to explore is the artsy hotspot neighborhood River North Art District (RiNo).

 

5. Snag an exclusive resort discount.

The BEC is offering limited exclusive discounted rates at the Gaylord Rockies Resort for attendees. The Gaylord is extremely convenient for travel as it is just minutes from Denver International Airport. The rustic resort is the perfect retreat for a winter vacation — indulge in tranquility at the resort spa, indoor and outdoor water complex, and lazy river, and soak in the picture-perfect views of the nearby Rocky Mountains.

 

There is so much to look forward to this winter at the BEC, and with these Colorado travel tips in your back pocket, you’re sure to have an incredible time both in and outside of the conference. Secure your spot today by visiting besteverconference.com.

 

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The Top 3 Trending Multifamily Amenities Right Now

The Top 3 Trending Multifamily Amenities Right Now

In the multifamily industry, change is constant. Over time, the industry has weathered many a storm, thanks mainly to being on top of the curve in innovation. This tendency has seen a relatively stable sector, even though the industry has faced its fair share of highs and lows. Whatever the economic impact on this sector, it has consistently delivered in customer satisfaction, promoted local businesses, and implemented newer technology and amenities to improve customer experience.

The new generation of renters is tech-savvy and demands the best amenities that provide comfort and enjoyment in multifamily units.

The pandemic has accelerated apartment searches due to the economic downturn. Though the searches have matched the levels that were seen before the pandemic, customer expectations have changed and property managers have to enhance their offered amenities if they expect to convert leads to leasing. 

During the pandemic, precautions have had to be put in place for the common good. Common areas have to be sanitized on a regular basis and on-site staff on duty has to be provided protective gear such as hand sanitizer, protective masks, and, if the situation warrants, PPE kits. In these circumstances, which amenities and services can be provided while keeping operating costs within budget? Learn which amenities are quickly gaining popularity below.

 

Catering to the Work-From-Home Renters

Over the years, many multifamily units have provided co-working spaces to the work-from-home labor force. However, due to the pandemic, more and more people are working from home, so having a co-working space will be a definite attraction to prospective clients looking to lease apartments. Offering improved and updated amenities in co-working spaces will be of prime importance to residents since it has been predicted, even after the pandemic, that this may be the new norm.

Since health and safety have been prime concerns, workspaces should have properly distanced workstations and seamless Wi-Fi connectivity with sufficient charging outlets to prevent crowding. An added attraction like a coffee bar, pool table, etc., can also provide an enhanced ambiance.

 

Attractive Outdoor Spaces

Scientific researchers determined during the pandemic that outdoor, open-air settings were safer than crowded indoor settings. Most people prefer being outdoors to being cooped up indoors anyway, and all the time we’ve spent indoors during the pandemic has reportedly increased anxiety levels.

Providing amenities for physical fitness, tables, and chairs in a well-laid-out garden setting or a play area for children can act as a mood enhancer. Many residents of multifamily units are drawn to amenity-loaded outdoor spaces.

Offering a spacious balcony and patio in residential units is another well-thought strategy for multifamily developers. Additional popular amenities that can be provided include dog walk areas and open-air lounges. All these amenities add to a pleasant living experience, which will attract many prospective residents.

 

Remote Technology

Technology is also a clear front-runner in helping people overcome the effects of the pandemic. Cloud computing and social media apps, for example, are optimizing businesses like never before. This evolution of technology and its incorporation into daily life has allowed a semblance of normality. It has allowed us to connect with family and friends and order food and groceries, plus a host of almost limitless items. Even getting medical advice remotely from a qualified doctor is possible. Multifamily units must offer such amenities, or they will lose prospective clients.

The upheaval caused by this pandemic has affected almost everyone, including the multifamily housing industry; however, challenges can be mitigated by making subtle changes in the current business model. The multifamily unit should offer as many useful amenities as possible in order to become a hot, sought-after living space in the city. Investing in extra amenities may cost money, but in the long term, it is money well spent.

 

 

About the Author:

Veena Jetti is the founding partner of Vive Funds, a unique commercial real estate firm that specializes in curating conservative opportunities for investors.

 

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The First Timer’s Guide to the Best Ever Conference

The First Timer’s Guide to the Best Ever Conference

With a name like “Best Ever,” it’s easy to get excited, and maybe even a little intimidated, about attending your first Best Ever Conference. You might be wondering what makes it the best ever, and how you can get the most out of this conference. And we want to help!

That’s why we’ve developed our First Timer’s Guide for your first Best Ever Conference to ease your mind and help you get the most value out of your time.

 

How the Best Ever Conference Is Designed

The Best Ever Conference, known throughout the commercial real estate industry as the BEC2022, is designed specifically for commercial real estate professionals to focus on relationships and education that will directly impact growth for both you and your portfolio.

 

Our Speakers

Our speaker selection process isn’t about who we know, it’s about what YOU want to know!

Our team listens to and actively engages with commercial real estate investors like you all year round to ensure we stay at the forefront of the commercial real estate investing industry, choosing speakers with expertise and topics that you want to learn about most.

Past speakers have included industry giants such as:

And more importantly, past topics have included:

  • How to Scale Your Syndication Business
  • Lessons in Becoming a Better Leader
  • How to Build a Powerhouse Investing Team, and
  • Multiplying Your Real Estate Portfolio

 

Here are some tips for getting the most out of your time at the BEC2022:

 

Before the Conference

In the weeks leading up to the conference, take some time to create a game plan for your experience. Consider who you want to meet, which services and vendors you might be interested in learning more about, and what topics and insight will be most valuable to you and your goals.

 

Set Your Speaker Session Lineup

First, we encourage you to check out the BEC2022 speaker lineup on our website at besteverconference.com. We will update the conference website regularly as new speakers are confirmed.

Research each of the BEC2022 speakers before the conference. Get to know who they are, what they bring to your table, and the type of information that will be presented. Consider how this information can help you grow your business and portfolio.

It is also a good idea to make note of any questions that come up during your research that you would like to ask the presenters.

Now, break the different speaker sessions into three categories to set your custom speaker session schedule:

  • Must attend
  • Would like to attend
  • Don’t need to attend

 

Shortlist Your Exhibitor Interests

Another good way to make the most of your time at your first Best Ever Conference is to take a look at the exhibitors that will be present. Which exhibitors do you want to learn more about?

Next, go ahead and make a shortlist of the exhibitors you’re most interested in and keep this in your back pocket to make the most of your downtime between sessions at the conference.

 

At the Conference

Balance Your Time

As with most conferences, the top three things you’ll do at the BEC are learn from speakers, network with speakers and other attendees, and browse the exhibitor booths. To get the most out of the Best Ever Conference, you’ll want to strike a balance for the way you spend your time.

Set your speaker schedule into your calendar with locations and reminders so you’re never late to your “must attend” speaker sessions.

During your “don’t need to attend” sessions, try to make your rounds to the exhibitors based on your preparations. Spread these visits out to allow for plenty of time to take care of your basic needs and stay comfortable, fresh, and energized throughout the conference.

And last but certainly not least, plan to spend the rest of your time networking with speakers and other conference attendees.

Most likely, you’ll have questions for the “must attend” speakers — either prepared questions from your pre-conference recon or questions that came up during the presentation. Here is an insider tip: Don’t try to talk to the speaker immediately after their presentation. That’s when everyone is going to want to talk to them and you’ll spend a lot of time waiting in line or look like a weirdo running up to them to get to the front of the line. Instead, talk to them between sessions, at private events, and in the additional group events and parties that will take place at night.

All Work and No Play — Not Us!

Lastly, we’re excited to announce that the BEC2022 will be held at the Gaylord Rockies Resort in Denver, Colorado.

Many BEC attendees use the conference as an opportunity to vacation in Colorado either before or after the conference — skiing and snowboarding are the most popular activities. If this is the case for you, don’t forget to pack your snowboard, skiing, or sledding gear!

 

After the Conference

The value from the BEC doesn’t stop at the end of the conference, it only continues. The relationships you will develop and the knowledge that you take away can be implemented immediately and last a lifetime.

If you haven’t already, check out www.besteverconference.com to learn more about the Best Ever Conference and reserve your ticket today. Check back often for updates, and we’ll see you at the Best Ever Conference in February 2022!

 

 

 

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Managing Up With Jonathan Ghaly

Managing Up With Jonathan Ghaly

As he looked back on his real estate career, Jonathan Ghaly realized that he first worked for a syndicator before he started doing deals with one. In the mid-2000s, Jonathan got hired as a property manager for a 100-unit apartment building. On his first day, he was handed a keychain full of keys and a cell phone that rang non-stop.

Around 2007, the syndicator started to take risky gambles, unbeknownst to the tenants. He began to take on additional investors while subsequently not paying down the mortgage. With the economic crash, the syndicator turned all of the properties into foreclosure, leaving Jonathan to find his next steps.

 

Early Success

“I learned a lot. He introduced me to ‘Rich Dad, Poor Dad,’ and the cash flow game. I saw his mistakes, of course,” Jonathan recalled. “During the crash, I had my real estate license already, and no one was hiring. So I just said, ‘Well, I might as well try to sell real estate.’”

Jonathan’s real estate career started to flourish. He started with two deals his first year and steadily grew upwards. In 2013, he transitioned from only selling properties to buying properties of his own.

“I partnered with a friend because I was just too scared to pull the trigger in the beginning, and we bought eight units together,” Jonathan said. “I bought him out a few years later, and then I just kept buying more.”

 

Coffee Talks

Today, Jonathan’s portfolio consists of 15 rental properties and an assisted living facility, in addition to his investment in multifamily syndications. Reflecting on the community of people who helped elevate him to this place, he said it all started with one friend and a morning coffee session.

“I felt the need to call a friend of mine who I had helped buy his first couple of properties. He was a teacher and he quit to be a fix-and-flipper. I said, ‘I would love to just talk about this stuff — what we’re doing and what to invest in and what not to invest in — with you. Would you have any interest in meeting on Thursday mornings and having coffee at my house?’” Jonathan shared. “He said, ‘Perfect. My kids go to school right near there. I’ll drop them off and come over.’ This beautiful friendship came out of that, and we put everything on the table as far as investment stuff.”

Jonathan’s inner circle of like-minded investors continued to grow larger, with others interested in their open and honest discussion of real estate and real life.

“These investor-mentor meetings or inner circle meetings are amazing, even if it’s once a month. After my experience with it, I would highly recommend it to any investor because you never know what good can come out of it,” Jonathan said.

 

Shifting the Game Plan

Even with a trustworthy network, Jonathan Ghaly believes that the work is never done with self-education and believing in your own intuition on a deal.

“Experience is a big word in the industry. But even with that, a lot of people can have experience but still go through a protocol. So, are you like a machine just going through protocol without common sense? Or do you really understand real estate where you can get creative, and you can see through these blind spots? Because it’s all about shifting the game plan. Keep educating yourself in real estate, and don’t get distracted,” Jonathan shared. “I can get really distracted, but when I do all this research about these other things, I come back and realize it doesn’t beat the real estate return.”

 

The Importance of Trust

Reflecting on his journey to date, Jonathan Ghaly believes that the fundamental element of any successful real estate partnership is similar to that of marriage: trust. While some things are learned the hard way, it’s essential to surround yourself with a team that complements your strengths and can compensate for your weaknesses.

“Find a partner you can trust with your life because it is a marriage. I find myself constantly partnering with people who are exactly like me,” Jonathan said. “We should build our teams up so that the strengths and weaknesses, and skills and non-skills, are really evening out and covering everything across the board.”

 

 

About the Author:

Leslie Chunta is a marketing consultant with nearly 15 years of experience in creating dynamic marketing programs and building brands for startups to enterprise organizations. She has worked agency- and client-side with high-growth companies that include Silicon Valley Bank, JPMorgan Chase, SailPoint, EMC, Spanning Cloud Apps, Ashcroft Capital, Netspend, and Universal Studios. www.thelabcollective.com

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4 Tips to Raise More Money From Passive Investors

4 Tips to Raise More Money From Passive Investors

Have you ever found yourself asking: How could I raise more money from passive investors for real estate investing? If so, you’re definitely not alone. It’s one of the industry’s most common questions.

To help you out, here are four proven strategies for earning more funds from passive investors. If you can incorporate all four of these techniques into your work, your syndicate should keep thriving.

 

1. Launch a Thought Leadership Platform

Your network, also known as a sphere of influence, is one of your most valuable assets. Grow it, and you’ll almost certainly grow your business. You’ll have more leads and more opportunities, and more people will be eager to invest with you.

A thought leadership platform is the best tool for growing your network. Examples of effective platforms include blogs, podcasts, and video channels. Real-life events can work, too. Interview formats are often ideal for these platforms. You can invite experts to share their knowledge, and you’ll attract many of their fans when you talk with them.

Flourishing thought leadership platforms share two qualities. First, they’re consistent; new content gets released at regular intervals.

They also focus on unique topics. They’re not bland, generic, or overly broad. For a marketable topic, try to incorporate an intriguing aspect of your life. For instance, if you are or ever were a schoolteacher, you might focus on how educators can invest on the side and how they can teach real estate lessons in the classroom.

Remember that a thought leadership platform is a long-term proposition. It will almost certainly take time — maybe a year or longer — to see impressive results. A good place to start, though, is with people you already know.

That group could include friends, family members, coworkers, neighbors, classmates, and the people you see at church or the gym. And those individuals might recommend your platform to people they know. Some of these people may even be willing to invest in your syndication projects.

In addition, make sure you’re posting your content on large and popular distribution channels like Facebook, LinkedIn, YouTube, and Bigger Pockets. Such channels make it easier for web searchers to discover you.

 

2. Ask Positive Questions

The words we use impact the way we think and vice versa. Thus, if we often use negative phrasing, we tend to think negatively. And negative thinking limits our options, sometimes on a subconscious level.

Maybe you’ve asked yourself and others questions like these:

• Why aren’t I more successful?
• Why can’t I ever find good leads?
• Why do my syndication attempts always fail?

Because these queries focus on negative concepts, they reinforce in your mind a certain idea: that you won’t ever succeed.

Therefore, if you’re talking with an expert or just doing your own research, it’s much more productive to pose positive questions. Ask about proactive steps you can take, questions like the following:

• What’s the first thing I should do to raise capital for a particular deal?
• Where can I go in my community to find outstanding leads?
• Who in my sphere of influence could help me attract new investors?

When you put forth such questions, you get solid information that you can use right away.

More than that, these questions put you in the frame of mind for business success. Instead of making you feel defeated, they can empower and energize you. They remind you that you are in charge of your destiny and that you have the resources to improve your situation at any time.

 

3. Make Your Own Opportunities

Once you’re asking good questions, you’re ready to create great opportunities. Never sit back and wait for passive investors and deals to come to you. Go out and find them.

If you’re in need of funds, for example, go to as many conferences, meetup groups, Bigger Pockets forums, and other networking events as you can. Contact leading industry bloggers and other online influencers as well. Over time, your network should grow considerably, and your investment income should do likewise.

In the same way, deals are waiting for you. Of course, you can employ old-school methods such as cold calls and direct mail. And, once again, it pays to be an enthusiastic networker. Reach out and build relationships with as many local property owners as possible. You’ll get inside intelligence that way, and those people just might call you first when they’re ready to sell.

 

4. Find Complementary Partners

A business partner can be extremely helpful. When you join forces with someone, your sphere of influence will immediately double. You can accomplish twice as much in a given week or month. You can motivate one another to ever-greater heights. And, if you choose the right person, your weaknesses will no longer hold you back at all.

That’s because the ideal business partner is someone who’s good at what you’re not so good at. As a result, the two of you can both focus on your strengths, leading to a more formidable operation overall. For example, if you’re a whiz at underwriting but not so hot at marketing, seek someone who’s a genius at the latter.

Naturally, finding such a person requires introspection. You have to honestly and objectively assess your past performance to figure out what you do well and less well. Also, never feel bad about any weaknesses. Everyone has professional weaknesses, and being able to recognize them is, well, a strength.

Finally, all of these methods have something in common. They’re not one-offs. Instead, they’re behaviors for the long haul. They’re techniques that can win over passive investors year after year. In that way, investing in success really is a way of life.

 

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How Anthony Chara Scaled His Business From 10 Single-Family Homes to 1600+ Apartment Units

How Anthony Chara Scaled His Business From 10 Single-Family Homes to 1600+ Apartment Units

Anthony Chara impressively increased the size of his business from nearly a decade of looking after single-family homes to overseeing more than 1,600 apartment units spread across the country. Of course, telling Anthony’s story includes sharing investing tips and interesting experiences; however, according to Chara, it all ultimately comes down to one thing: not giving up.

As he mentioned in a recent interview, the most important thing that an investor can do — and the most important thing that people in all walks of life can do —is push past roadblocks and learn from the setbacks we all experience from time to time. The learning that is done during these times is invaluable.

How Did It All Come Together?

Anthony Chara’s housing story started in 1993 when he and his wife moved to a different home but continued owning their former residence and rented it out. That gradually increased to 10 of those types of homes until, eight or nine years later, he started learning and putting into practice new strategies such as fixing and flipping homes and engaging in wholesale deals. He soon realized that doing those things was a combination of hard work and considerable rewards.

He entered the apartment aspect of real estate for the first time in 2003 and quickly discovered that the rent checks that he was receiving from those units were significant, particularly in cumulation but also individually in many cases as compared to single-family homes that he had worked with in the past. In the years that have followed, he has been in business with several 100+ unit complexes with the largest at 410, and this has now become his investing focus.

Working With Insurance Companies

One thing every real estate investor needs to take into account is that it is generally not easy to get insurance companies to pay out what they should when they should — for example, when covered properties are damaged in a hurricane. Anthony Chara learned this firsthand when a hurricane damaged a property that he owned in Panama City, Florida. However, it helped to have a public adjuster looking to ensure that the amount paid out was appropriate given the policy and the incident.

He added that ensuring that you have the right type of coverage prior to events such as these is also a must and, conversely, it can prove to be tremendously damaging from a financial perspective if you do not. He is thankful that he had solid hurricane protection for this property located in a hurricane-prone area.

Benefits and Challenges of HAP and HUD

Anthony Chara has also experienced benefits and challenges from working with the United States Department of Housing and Urban Development (HUD)’s Housing Assistance Program (HAP). One of the most significant benefits that he pointed out is that units that are associated with HAP are ones that he receives steady money from, even if they are empty.

However, many of those who are individual buyers or part of a syndication who want to take advantage of that will need to get a HUD loan; a bridge loan may be part of or a substitute for that process.

Also, consider other issues that could arise when working with HUD. For example, a manager who was working for Chara’s syndicate was blacklisted by HUD for repairs that the individual had overseen at a previous property. That resulted in months being spent on rectifying the situation, on the extensive related paperwork, and on hiring a new manager, a period that was partially extended because HUD must interview and confirm any candidates. In the meantime, HAP-related funds were not being paid.

Chara added that other HAP-related issues can also lead to funding being cut. These issues can include dissatisfaction with the condition of the property or how it is being taken care of. Since this is a relatively unpredictable aspect of the arrangement, it is something that an investor should take into account. As a result, Chara said that a good balance for him is to have about 30% of his units under a HAP contract.

It is also important to consider HAP’s voucher program, which is not as immersive. For example, a renter with a voucher will go to complexes that they like and ask if their voucher will be accepted. Although owners of contracted units have a say in who will live there, HAP employees typically end up making the selections.

What Should Go Into a Pre-Purchase Inspection?

One of the most significant ways to earn more money or, more to the point, not lose more money in the big picture is to inspect properties that are being considered and think of issues that may arise in the years to come. Things to look for, according to Anthony Chara, include the drainage in the area. For example, is there somewhere for rainfall and melting of snow to go? It’s also important to inspect the condition of parking lots, roofs, furnaces, air conditioners, mold, and insects. For example, ensure that asphalt parking lots are regularly sealed and restriped so that they do not turn to gravel and mush as the latter prospect results in a much more significant financial burden than the former one does.

Simply put, being as proactive as possible about things such as these will help investors better scale their real estate business and continue to grow their income.

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How to Provide Value to a Partnership Without Capital

How to Provide Value to a Partnership Without Capital

How does one bring value to a partnership? I was asked this question last week while speaking with a young man who is interested in real estate investing. His conundrum is that he only has a small amount of capital. Thus, he wanted to know how he could provide value to a partnership that would provide him an equity stake in a deal. Unsurprisingly, this exact question is bandied about among new investors and old. Not all partnerships are on equal footing from day one. Within this blog post, I hope to provide some insight into how to provide value, earn equity, and become a partner when there is no money to invest on your end.

 

Bird-Dogging the Deal

The first and most popular way to obtain an equity stake in a deal is to be the one to find the deal. This means that if you are the hopeful investor with no money, your value is in finding the property, seller, or bringing people together. So how does one find the deal or bird-dog? Answering that is not as simple as it sounds. The short answer is that there is a lot of time spent scouring neighborhoods, property listings, tax records, looking over tax dockets at the courthouse, going to those properties, talking with the owners or agents, and becoming familiar with every aspect of the property. Once a property is identified, what is the deal?

Any investor that will bring money to the table will want to know the numbers. The non-money investor needs to have all the numbers crunched and know that deal backward and forwards. Know the value add and how this deal can be a good buy. Is it simply return on investment or is it an appreciation play? What is the value of the deal? Know the goal of the deal. Simply buying a property is not enough; it is important to know how the deal will bring value to the partnership.

Once you have found the property, be it commercial or residential, you then have to be able to show the money investors how they are going to see returns on their investment. There are numerous apps, programs, and websites that can help you prepare a pro forma on the property. Investors want to see numbers. Numbers control the deal. Know your numbers.

 

Finding the Right Partners Once You Have the Deal

Once you have a deal put together, how do you find the right partner? It is simple to say “networking” and shrug, but that is not a genuine answer. Websites like Best Ever Commerical Real Estate, meet-up groups, and talking with your banker, real estate agent, lawyer, accountant, or insurance agent are good places to start. Those points of contact need to be cultivated to grow relationships. Organic relationships will generate more leads than you can possibly imagine. That said, there are plenty of money investors out there that are looking for deals. If you look enough, they will be everywhere. Investors are always on the lookout for new deals.

Once you have found a potential partner, it is paramount that you and they start the vetting process. You need to learn as much as you can about your partner. That does not mean their blood type and mother’s maiden name, it means that you need to make sure that your soon-to-be partner has the capital, has experience in investing, and is willing to be transparent with you — after all, this is a marriage of sorts.

 

Structuring Your Equity Stake

What does all your effort calculate up to in the deal? Is it 5%, 10%, 15%, 20%, or more of the deal? Is there an equity earn-out? Meaning, does your equity in the deal increase once the money investors have recouped their down payment? The answer to this question is that you need to have this number in your head when you create the deal. You need to understand and realistically value your efforts in putting this deal together. In the context of syndication, this is the role of the general partners. The GPs bird-dog the deals and it is the limited partners (the money investors) that bring the cash to the table. However, not every deal is a syndication. Most deals are simply buying a building, house, or multifamily property, but the concepts are the same.

Spend the time with your potential partner in outlining your partnership agreement. It is time well spent. Speak with a lawyer who handles partnerships, LLCs, and does real estate work. Do not cheap out on getting the right advice — these boxed agreements online will do you more harm than good. Get a tailored partnership agreement. Ask questions and understand the agreement as well as you understand your deal. Learn about the new ideas of the lawyer or your partner. Structuring your deal is as much an art as is putting the deal together. Find the right structure for you.

 

Good luck out there!

 

About the Author:

Brian T. Boyd, JD, LLM, www.BoydLegal.co

 

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Boost Your Investment Growth in 2022 With the Best Ever Conference

Boost Your Investment Growth in 2022 With the Best Ever Conference

It’s official — the Best Ever Conference is going to be back in person and better than ever in 2022 in Denver, Colorado.

Attendees will have the opportunity to take full advantage of engaging keynotes, workshops, and networking with top real estate investors and innovators, all while forming long-lasting relationships with other high-quality attendees.

Investors eager to boost their growth in 2022 will want to mark their calendars for this game-changing event.

We asked Hunter Thompson, Managing Principal of Asym Capital, to share his thoughts on the Best Ever Conference. “There’s a part of me that wants to try to say, ‘It isn’t REALLY the best ever!’ but, you know what — it actually is,” he said. “When it comes to the caliber of the speakers, the networking opportunities, and the overall energy of the event, it just might be the ‘Best Ever!’”

Hunter added, “If I’m going to take the time out of my schedule to travel to a conference, it needs to be a five-star experience. Best Ever never fails to deliver on that requirement, which is why I attend every year.”

Purchasing a ticket today will allow attendees access to monthly virtual group discussions known as Mini Masterminds, which have already started. These Mini Masterminds provide the opportunity to immediately begin connecting with other attendees and continuously build relationships prior to meeting in person at the conference.

The BEC three-day agenda is going to be packed with next-level value and opportunities for growth. Not one day will be the same.

Want to elevate the experience? There is a limited amount of VIP tickets available. These tickets include everything in General Admission, plus additional exclusive opportunities to meet conference speakers, attend private social events, and more.

To purchase your ticket today, visit besteverconference.com.

 

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6 Tips to Succeed in Uncertain Times

6 Tips to Succeed in Uncertain Times

These have been uncertain times over the past year-plus, and they have made the act of investing in apartment properties much more unpredictable than before. Although there will always be demand for homes, the value of properties such as these will tend to fluctuate even more during uncertain times.

One of the best things that an active investor can do upon investing in single-family apartments and engaging in multifamily investing is taking a close look at what the competition is doing.

For example, consider all of the ways that you can simplify the renting process for the prospective renter. If you can place the entire process online, from providing basic information about your rentals to the signing of a lease, that would be preferred. However, if that is not possible, whether permanently or temporarily, make as much of it as easy to research and complete as possible.

 

Visuals

Having photographs of the property both inside and out is a must-have. Probably around 25 would be the best balance of not too few and not too many.

In addition, consider offering virtual walkthroughs to allow your virtual visitor to experience their prospective new home more fully without needing to leave their screen. This allows them to either be sold on it on the spot or be intrigued enough to want to learn more or see it in person. This can be done through one or more videos or through a more immersive walkthrough experience.

Of course, these online visuals have become especially important over the past year-plus as so many have felt that it is not in their best interest to actually come on-site unless they must. A lack of a virtual walkthrough or a poorly put-together one can turn off prospective renters, particularly if your competition is offering this feature.

Regardless of what visuals you are providing, keep in mind that prospective renters will also want some visuals of what the neighborhood is like and what is nearby. Is it near a park? What is the view like from its windows? As is commonly known among those involved in apartment investing, location is one of the most important features that renters consider.

You may also want to consider uploading a drone-flyover video.

 

Thorough Listings

Another step that you should take as an active investor in these types of properties is being thorough in the text of the listings for each place you own. Well-written, engaging text that both educates and draws in the visitor is preferred. At a minimum, you want some prose there. Not only is this essential to draw the reader in, but it is also important for SEO-related reasons.

Regardless, make sure to include all of the necessary specifics within the listing, such as its price, location, number of bedrooms, type of flooring, if it includes a balcony, if pets are allowed, how much a security deposit would be, and if utility costs would be included in the rent or paid for separately.

This limits the need for potential renters to contact you with questions, saving time for yourself and your staff. It also removes what could be a mental stumbling block that may cause them to move on and consider different properties to rent.

 

Applying, Being Screened, and Completing a Lease

Active investing at a high level also means that you should make the application, screening, and lease completion process as simple as possible. Group those steps together as part of a procedure on your website or, in lieu of that, otherwise simplify them as much as possible.

One of the benefits of investing in a significant number of apartment properties is that you can have one application take care of the application process for all of them. The same goes for screening; the more places that a prospective renter can be simultaneously screened for, the more apt they will be to ultimately decide to rent one that they have been approved for.

The lease-signing step of the process might be the most difficult one to incorporate into your website, and this may require the prospective renter to instead make a trip to your property, but do consider doing this if you can.

 

Metrics

As you progress in this active investing opportunity, it is important to keep abreast of your metrics. For example, keep up to date on how many of your visits turn into applications and, of those, rental agreements. See how those figures vary from apartment type to apartment type and see how tweaking certain aspects of your listings affect these things.

 

Apartments.com

One of the best examples that you should consider mimicking as an active investor is Apartments.com. See what about its design impresses you when you put yourself in the shoes of a prospective renter. Of course, you could also simply use their services for listing your rentals if that ends up making the most sense financially and otherwise from your end.

 

Non-Apartment Properties

Of course, many of these recommendations can be applied to commercial investing and commercial properties as well. Whether you are taking advantage of a multifamily investing opportunity or a commercial investment opportunity, you want to ensure that your properties are being shown in the most positive, informative light possible and that those who want to take advantage of any commercial properties that you own may do so with ease, from the inquiring stage to agreeing on a rental.

 

 

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The Advantages of Voice Technology in the Multifamily Industry

Not only has the next generation arrived — they have arrived with a loud bang. Businesses have been forced to listen to their voices and needs like never before. Over generations, different aspects of our social lives have been affected by new innovations and have been incorporated as daily necessities. Electricity, machines, automobiles, etc., played a part in revolutionizing society and the way business is conducted. Today, it is voice technology’s turn.

How the voice technology revolution is changing business

No longer do you have to physically input commands into a device. Now almost everything can be voice-activated. Using a simple command, you can switch on your TV, lights, fans, or air conditioner, and the limit is almost endless. How did this voice revolution come about? Other than the obvious reason that it makes life simpler, the subtext lies in the much wider availability of smart devices.

No manufacturer would be stupid enough to market a smart device without voice command capability. Even the employees would not buy such a product. Alexa, Siri, etc., have become ubiquitous at homes and workplaces, so much so that we take them and their capabilities for granted. More than 70% of owners of smart devices say that they use voice commands routinely to activate or deactivate their voice-powered devices.

By incorporating voice technology into all available digital assets, voice searches will become easy and routine. Even though today traditional text search is still popular, it is slowly giving way to voice search as a means to find information on the internet. About half the routine searches conducted on the internet are voice commands, and it is an even larger figure when searching for local businesses. This underscores the importance of voice search features, not only for businesses but also for multifamily units.

 

Some advantages of voice technology in the multifamily industry

The multifamily industry has been quick to realize the advantages of incorporating voice technology into the development of multifamily units. This technology can be leveraged as a selling point since it adds more facilities and other convenient features to be offered to investors and/or renters. The multifamily industry will be positively impacted in many ways on a day-to-day level as well as in the long term.

 

  • Voice technology can be integrated to make marketing the lease easier.
  • Renters’ FAQs can be handled by chatbots, especially during after-office hours.
  • Installing chatbots and using natural language processing will help reduce labor costs while ensuring queries get answered.
  • Apartment residents will benefit from voice-tech-activated smart appliances such as thermostats, lighting, etc.
  • When this technology is incorporated, even mundane things like heating up dinner become simple and convenient.
  • The on-site property manager can utilize voice tech to ensure prompt rent payment, stay on top of maintenance issues in real-time, and more.

 

Incorporating voice technology into your multifamily properties

 

Speak the users’ language.

Developers of multifamily units have been strategizing the needs of the end-user. Voice commands during internet searches tend to be longer than text searches. End-users generally build up a rapport with their smart devices and talk to them like a family member or friend. When introducing voice tech, it is better to incorporate various forms of speech that tend to reflect the type of interaction between friends. It will be informal commands to a large degree and the incorporated voice technology should be able to accept this in stride.

 

Create a more inclusive environment.

Voice tech, being inclusive in nature, will make for an easier and more accessible leasing process. It helps those with impaired vision and motor skills, which is an important advantage. Due to its usefulness, voice tech has become routine and a necessity for most consumers. Such technology, incorporated within the multifamily unit, contributes greatly to ease of living.

 

Optimize your website for voice search technology.

Voice searches in multifamily units also tend to be almost totally local. To ensure the search throws up relevant material, the community details should be accurately and consistently displayed on your website. Since such local searches tend to be reflected in social media platforms, ensure your pages are in total sync with such platforms. Update your profile with relevant and important details, which will ensure that search engines give prominence to your listing. It will score a big plus with consumers.

 

Voice tech is here to stay, and multifamily developers have a very valuable tool in their hands to positively impact their bottom line.

 

 

About the Author:

Veena Jetti is the founding partner of Vive Funds, a unique commercial real estate firm that specializes in curating conservative opportunities for investors.

 

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5 Best Tips for Investor Relations

Over the years, I have had the privilege of serving in investor relations with a number of firms. Starting out, I worked for a brokerage firm that had trillions of dollars in assets under management. I later made a 180-degree turn to a startup real estate syndication firm where I built an investor relations platform and served as Director of Investor Solutions. Currently, I serve as Director of Investor Relations at Ashcroft Capital, a group I have grown with and have been investing with for years.

I have never written a blog or article on the topic of investor relations. My primary focus has been on helping others learn how to invest and create wealth for themselves. Today, I felt compelled to share five tips for investor relations that can help you. Whether you are involved in investor relations yourself, or if you’re hiring for an investor relations role, or even if you’re simply an investor looking to partner with a firm, these five tips will help you create better conversations and awareness. Let’s get right to the point:

 

1. Discuss the Good AND the Bad.

Everyone loves to talk about the positives, best-case scenarios, and strong past performance. The truth is, it can create skepticism among some investors if you fail to mention the risks or the downside scenarios as well. You create more trust and transparency if you do not gloss over the negatives, but instead, proactively put them out in the open.

 

2. Be Visible.

It may not be a great idea to start raising capital or promoting your deals without a network, community, or online presence. Make sure to create content on social media outlets, be a guest on podcasts or host your own, and build a thought leadership platform.

Some firms and/or general partners have thousands of followers on one outlet and post there frequently (on Facebook, for example) but they are missing thousands of potential investors who prefer using LinkedIn or YouTube instead. It is better to post a small amount of content on multiple social media outlets than to go heavy on one outlet. The key is to be visible in as many places as possible when someone Googles your name or firm.

 

3. Professionalism.

Newer syndication groups have reached out over the years and asked me to take a look at their website, slide deck, or deal overview from the perspective of a Limited Partner investor. I always circle back to professionalism. For anything you post or distribute, it is critical to remove typos, glitches, or anything that might suggest your team is unprofessional or simply doesn’t care.

Also, what you say and how you say it is really important, so be aware of your messaging. When I join investor Zoom calls or podcasts (for example) I always wear a clean pressed button-up shirt and/or a sports jacket. It may seem unnecessary while working from home, but impressions go a long way. Always be professional.

 

4. Know Your Target Audience.

Funny story… I gave a speech years ago when I was first trying to network with more accredited investors. I had an investor/realtor friend of mine in Orlando who was wanting to start a local meetup for real estate investors. I decided I would partner with him on one of the first meetups.

I marketed the event, created a PowerPoint, rehearsed my speech, got all dressed up, traveled to the event, and gave it everything I had. When I finished the presentation, the audience applauded, and I remember thinking, “I killed it!” Only one problem: It turned out that nobody in the audience was an accredited investor. Lesson = Know who your target audience is, where they hang out, what they do, and get out in front of the right crowd to avoid wasting time and energy.

 

5. Respond Quickly.

Oftentimes it is not about whether YOU are ready to pitch your deal, it is when YOUR CUSTOMER is ready to invest. If one of your investors decides out of the blue that they are ready to deploy $100K today, and they email, text, or call, you better be ready to help them out ASAP. You can lose an investment simply by not responding quickly enough.

On a personal note, a couple of months ago I was looking to make an investment with an operator. I emailed three quick and easy questions after reading their project overview and never heard back. I placed that capital with another operator a couple of weeks later. We work in a very competitive space — something to keep in mind. Responding is also a form of professionalism.

 

In conclusion, I will leave you with a bonus tip…

 

Be Adaptable.

Things change rapidly in today’s world. New conferences, new social media outlets, COVID — you must be adaptable and open to experimenting to see what works. When one door closes, pivot and look for another. If one strategy stops working, be adaptable. One of my mentors told me years ago: “Double down on what works.”

 

 

To Your Success,

Travis Watts

 

 

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How to Save Your Commercial Real Estate Company From Catastrophe

Real estate is a wonderful way to make lasting relationships, create wealth, and provide society with something it needs in the form of housing.

These are things people say when things are going well, and everyone is making money. However, what happens when things go bad? I am not talking about the kind of small “b” bad. I am talking about the big “B” bad. The kind of bad where you and your partner(s) are saber-rattling and lawyers are being called, big litigation budgets are in the offing, and you can see this very profitable business venture nose diving over things that should have been dealt with on the front end of this venture.

 

The Agreement

I cannot count the number of times I have met with a client who has been sued by a partner or is ready to sue their partner. From a partner refusing to allow access to the books and records, to one partner taking too much money, to cutting off a partner’s distributions, these are the issues that a little pain on the front end with a lawyer would have obviated.

How so? By writing a partnership agreement or operating agreement detailing who will do what, when. The best place to start drafting your problem-solving document is at the end of that document. What does this mean? This means that you draft a partnership agreement or operating agreement by breaking up the company first. It is best to agree on how to close the company and split the assets and profits when you and your partner(s) are getting along and everything is rainbows and butterflies with a pot of gold at the end of that rainbow.

Dissolution agreements or clauses help you construct the front end of the document. It is here that you can find out who is going to put some skin in the game. At the beginning of a venture, it is easier to have everyone agree that they will only get out their pro-rata share of what they put into the company. Thus, when the venture buys that apartment building, everyone knows: 1) how much equity everyone has, 2) how much each person paid for their equity, and 3) how much each person will get back if this venture ends.

 

Discuss the Details

Far too often good friends, business colleagues, and/or family decide it would be a good idea to be business partners and fail to approach business as the transactional matter it is. Not only will this naivete lead to hurt feelings and irreparably damaged relationships, but it will also lead you to the courthouse steps.

A partnership or other business venture that has not had the foresight to discuss the hard issues about its inner workings will ultimately find itself strangled to death by lawyers and the legal system. Notwithstanding the legal fees each party will pay their attorneys, the Judge has the ability to order a receiver to take over the business, wind up its affairs, and sell the assets. This means that your largest investment could go on the market against your wishes, sold for less than you and your partners think the business is worth, and you will only get what you can prove your equity is or was.

 

Understand Your Dynamic

In the context of syndication, it is important to know and understand these issues very well, either as a general partner or a limited partner. What do the documents say? What do those clauses mean? How much do you get if things go sideways?

Typically, a syndication deal is very well papered with documents, and you should be able to know how you get from A to Z. If you do not know your exit strategy or how you get your equity/money out, then you have some homework to do.

Syndication is successful because of the general partners who put the deal together. But those deals cannot work without limited partners who fund the projects. GPs and LPs need to understand their dynamic in a syndication relationship. Take the time to sit down with a pen and go over your partnership agreement. Know what you can expect in good times and bad.

 

 

About the Author:

Brian T. Boyd, JD, LLM, www.BoydLegal.co

 

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10 Tips for Your First Apartment Syndication Deal

Getting into multifamily syndication can be one of the most lucrative areas of commercial real estate, but it can also be quite intimidating. You’re not only responsible for your own money and success, but you also have other investors entrusting you with their finances.

We recently spoke with Mo Bloorian, a 25-year-old investor who has acquired over 100 units in just two years. Mo’s best-ever advice is to just get started. Don’t worry about your age or experience level — if you want to get into syndication, you’ll make it happen. Read on for more of Mo’s best tips for doing your first apartment syndication deal.

 

1. Don’t Wait — Just Get Started

Mo can be an inspiration to everyone. Many of us feel that we’re too young and too unfamiliar with the real estate business to get started. We may make excuses that we’ll invest when we’re a little more secure in our careers and when we’ve taken the time to learn more.

Mo did the opposite. He jumped in and he’s been learning as he goes. He started as a real estate agent and then used some of his equity to buy a duplex. From there, he was hooked, and he’s been taking risks ever since. Mo’s bold attitude has helped him get successful quickly.

 

2. Sometimes You Have to Look Outside Your City…

If you live in an area where multifamily syndication is difficult to turn a profit, you may need to look outside your city. Some cities and regions are just naturally better for multifamily properties. If you, like Mo, live in an area like New York City, it may be too expensive for you to invest.

Instead, Mo started looking in upstate New York. He found the properties to be much more affordable and he did really well on turning a profit. Just start widening your search circle until you find an area that will be profitable.

 

3. …But Stay Within Driving Distance

While some apartment syndicators will work with commercial real estate from all over the country, Mo prefers to stay within driving distance from where he lives. His properties are all only a few hours’ drive for him.

He suggests keeping your properties relatively close, especially if you’re working closely with management or if you’re involved with value-add properties. For active investing, you need to be able to visit the property in person. When there’s an issue, sometimes the best way to handle it is to take care of it yourself. You can have a more hands-on approach if it’s somewhere you can reach in a few hours.

 

4. Look for Hidden Gems

While some properties are an obvious win, there are some that are hidden gems. These properties often seem like they’re in such disrepair that they’d be too much trouble to renovate. However, don’t just overlook a property without giving it a chance.

You may be surprised that some properties that look awful may just need some simple repairs and some changes in management to give you a significant value-add.

 

5. Network and Cultivate Strong Friendships

One of Mo’s biggest accomplishments comes from networking with other young professionals who are passionate about investing. He made it a point to connect with others and learn as much as he could from them. As a result, he was tipped off about some of his best deals.

Investing is difficult to do completely alone. If you are willing to work with others, you’ll often be considered when they have new deals come up. You may even find out about prospects before others if you’re friends with the right people.

 

6. Work With People Whose Skills Complement Your Own

While it’s great to have friends who share your interests, you also want people who can complement you when it comes to active investing. Mo and his partner each handle different parts of their business and each play to their own skills.

You’re not going to be great at every aspect of being an active investor. Instead of trying to do it all, surround yourself with people who excel at the areas where you don’t. You’ll have a much greater chance of success. Focus on what you do best and find talented people to handle the rest.

 

7. Management Skills Are Important

There will be times when the people you’ve hired to manage, maintain, or renovate properties aren’t quite meeting your expectations. If you want your investment to be worth it, you’ll have to step in and manage the situation.

 

8. You Don’t Have to Break the Bank to See a Return on Value-Add Properties

Many investors think that value-add properties involve spending tens of thousands of dollars in order to increase their profit on a property. However, Mo feels that in many situations, you’ll only need to sink a few thousand into each unit to get a really good return.

Focus on the areas that’ll make a big difference, like the kitchen and baths. If you can improve these areas, you can definitely increase the rent.

 

9. Consider Using Local Banks

When you’re just getting started, you may not have a lot of equity. It can be difficult to get larger banks to lend you money. Instead, you can work with local banks. Local banks are much more willing to take risks on a new investor.

 

10. Build Trust With Your Investors

When you’re working in apartment syndication, it’s imperative that your investors trust you. You can gain trust with a proven track record. You can also be upfront about everything. Your investors will appreciate your honesty and will be more likely to work with you in the future.

 

Final Thoughts

As an active investor, getting your first syndication deal can be challenging, but you can be successful. Remember to find the right people and play to your skills. Above all else, follow Mo’s top advice: jump in as soon as possible and start making money.

 

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5 Things to Expect After Investing in First Real Estate Syndication

5 Things to Expect After Investing in Your First Real Estate Syndication

You’ve selected a commercial real estate sponsor and invested in your first deal. Once the due diligence is completed and the deal is closed, what comes next?

Here are some insights into what a passive investor can expect after investing in their first deal.

 

1. Deal Updates

Nearly every syndicator will approach investor communication differently, but most will send some sort of deal update via email. The ideal frequency is every month, but some sponsors elect to send deal updates on a quarterly basis.

The first email will notify you of the closing. Ideally, the email is sent the day of closing and includes a FAQ-style guide that answers common questions, like:

  • When, how, and how much you are paid (first-time and ongoing)
  • Contact info of the point person
  • When you will receive deal updates, and what the updates will entail

Each syndicator’s deal update communication will also be different. Typically, important operational metrics are included, like occupancy rates, preleased occupancy rates, and collections rates. If these metrics are nowhere they are supposed to be (which depends on the investment strategy), then an explanation of the problem and the proposed solution should be communicated.

For value-add opportunities, updates on the number of renovated units and rent demand will be included. The important thing here is how the actual rent premiums compare to the projected rental premiums. If actuals are below projections, an explanation of the problem and the proposed solution should be communicated.

Other information a sponsor may include in a deal update email includes capital expenditure updates, market updates, and resident updates. They may also include details on other investment opportunities available.

 

2. Financial Reports

Another best practice for real estate syndicators is to provide actual financials on the investment. The most common financial report is a profit and loss statement, which breaks down all income and expense line items. This will promote transparency and allow you to see exactly how the investment generates money and where the money is going.

Quarterly financial reports are the most common frequency. However, more and more syndicators are using investor portals to manage their passive investors. If you are investing with such a syndicator, you may be able to access financial reports more frequently.

 

3. Distributions

At some point after closing, you will begin to receive distributions. The amount and frequency of the distributions will vary based on the syndicator and the investment strategy. For example, core or value-add investments may pay out distributions immediately while opportunistic and distressed investments may not pay out distributions for a few years. However, you should know the amount and frequency of distributions prior to closing, and the syndicator should adhere to those terms. If the amount or frequency of distributions does not align with what was originally communicated, the syndicator should provide an explanation in the deal update.

Eventually, once the investment is sold, you will receive your original investment plus any profits, when applicable.

 

4. Schedule K-1

The Schedule K-1 is the report the sponsor sends to you each year for your tax returns. Once a year, you should receive your personalized Schedule K-1 tax report. Oftentimes, sponsors will communicate the timing of the K-1 in the FAQ portion of the original closing email.

 

5. Educational Content

Many real estate syndicators create educational content for their passive investors. This could be in the form of an exclusive newsletter or webinar, a specific section on their website, an eBook, blogs, podcasts, and/or YouTube videos they post to their website, etc. The purpose of this content is to help you learn more about what you are investing in.

 

5 Things to Expect After Investing in Your First Real Estate Syndication

After you have invested in your first real estate syndication, expect to receive deal update emails and financial reports from the syndicator. Based on the timing outlined in the PPM, you will also begin to receive distributions.

Once a year, you will receive a Schedule K-1 report for your tax returns.

If you want to be proactive and learn more about what you are investing in, the syndicator may offer additional educational resources, either by sending out a newsletter or posting information to their website.

Bottom line: you can be as active or as passive as you want. You can do nothing except check your bank account each month, or you can read every deal update email and financial report. My advice is to be active in what you enjoy and passive in what you don’t enjoy.

 

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