Hi,
Showcase I realize in life there will always be someone smarter, more educated, more experienced, wealthier and more knowledgable than me, I am but a little fish in a big pond of sharks and whales! I can admit when I am wrong, when I read something and answer without really understanding or when I just don't know the answer; as there are a lot of things I lack expertise in but commercial real estate, construction, development, management and finance is not one of them!
You act like every one on this forum is out to get you, you ask questions without really wanting the answers, the more you speak the less I think you know, I could be wrong but you continue to post things that just aren't necessarily correct!
You can advertise for real estate secured investors all you want provided there money is secured by a deed of trust and not a securities IE: stock shares or LLC units alone! You can put together 5 or 10 investors as partners in accordance to percentage of investment provided thier investment is secured by a deed of trust and they are all general partners!
You can advertise for investors for a real estate deal as no legal entity is set up initially and the group determines the investment percentage and entity type which is directly (No Entity) or indirectly (Corporation or LLC) secured by real estate! This structure must fit Regulation D; Sections 504, 505 and 506 and investors must meet the sophistication standard if required for compliance!
What you can not do is advertise for investors for a legal entity that already exists and is seeking capital in exchange for stock or LLC percentage prior to determining to buy and invest in a specific property! This is a securities offer!!!
The SEC created Regulation D; Sections 504, 505 and 506 specifically for raising capital without registration for a Corporation or LLC. There are specific regulations and compliance issues to adhere to and must be met to insure legality!
You can not Tombstone Advertise for investors for securities at any time in the US with the exception of California Sec: 25102 for a SCOR offering of $1m or $5m dollars under Regulation D; 504 or 505!
The other legal way to create real estate capital is a REIT (Real Estate Investment Trust); which can be one of three types: A direct property ownership REIT, a Mortgage REIT, or a hybrid of both!
If your looking for lenders I have a comprehensive list of Hard Money Lenders! What state are you and your projects in?
Here at REIClub we are not lenders (Although there are a few) we are investors of various types, education levels and interests in real estate! We are mostly looking for participation by percentage of investment!
Showcase, deals are presented here as questions "how do I find investors for an apartment complex deal needing rehab?" and interest is expressed here by PM (Personal Message)! (Internal Email system directly if someone seeks more information.)
Now you summarily dismissed my earlier post:
Hi,
Showcase 260 the reason fellow investors get involved in projects as partners is because the other person brings something to the table, either has experience and a track record managing and turning around large properties or has a large block of cash making it beneficial to partner with another person!
If you use the fifty / fifty rule for apartment properties and re-adjust income for a 10% vacancy factor, assuming your $2.8m proforma is correct re-adjusts income to $2,520,000 per year or $210,000 per month! Under the 50 / 50 rule this allows $105,000 for management, expenses and reserves and $105,000 for debt service and positive cash flow!
The debt service amount of $105,000 will provide a 10% profit margin on a debt service payment of $93,875 per month which supports a value of $17,000,000 and a cap rate of 13.5, now actual numbers will vary on the assumption that once rehab / remodel is completed market rent rates will improve effectively lowering the cap rate!
If your able to buy this property for $3,500 a unit it tells me this property needs a major rehab badly to restore the $35k to $40k per unit value, to do this the property would really require roughly $23k per unit or a $11.5m dollar restoration. The fact that current occupancy is 50% tells me this property is becoming uninhabitable!
With a major rehab / remodel this property would effectively become a class B property and with proper management and reserves would probable insure another 30 years of residential life!
It is no wonder your investors are dragging thier feet as your numbers don't make sense and nobody wants to be a slum landlord, your rehab numbers only provide $5k per unit in repairs which has to be alotted to the interior and exterior and does not provide for changing the overall complex to effectively attract new tenants!
GR
And you responded with a fairly bad answer:
Mr investor I thank you for you uneducated assumption about a property you have never seen. I have been a home builder and house flipper for over 10 years and I know what it costs to fix the property I described above, the buildings are solid with a brick exterior the roofs are new some units are down aprox 75 which will cost 12k each to fix while the other unoccupied units will require 1k to 3k each along with other improvements like 300k to pave parking lot. The reason the units have a low vacancy is that the past owner lost the complex because overleveraging and bad management. I don't need someone to tell me what the property's worth I'm looking for someone who is interested in funding this awesome deal!!!
altered due to rules violation
The nice thing about real estate is the ability to project specific financial equations, it is not only do-able; but can be done very precisely and accurately without seeing a thing, it is the same way developments are analysed in order to determine financial feasibility! We also know a brand new structure can not be built for less than $70 dollars a square foot or so, and arguable we could subjectly argue for a number a little smaller or much larger depending on what part of the country your in!
Mr. Showcase you absolutely need to know what this property is worth, but whether someone were to invest is another question as if your projects are in bad, declining area's of the US where street gangs rule thier turf with violence and fear, no one would express interest in that situation, however cities evolving and changing, growing out of past problems and into becoming growth area's, an exspanding population and a thriving, growing private enterprise base are interesting area's for growth investment!
Now which one of these is really true?
"The current investor I have is dragging his feet due to it being in a c- to d+ area the complex still has an upside of aprox 15K per unit."
OR
"I have currently 4 private investors who have invested with me multiple times, and the reason they were dragging thier feet on this deal isn't because they didn't want to do it , it was because they didnt want to spread themselves to thin."
You see one of the things about business is mis-statements tend to come back to haunt you for interpritation and clarification?
Now your rather proud of your credentials and shared them eagerly "I have been a home builder and house flipper for over 10 years"! I think that's great my congradulations to you for achieving over ten years!
Now Mr. Showcase you have accused me of uneducated assumptions however you should fairly know with whom you speak.
I have been investing in real estate for 32 years and have a professional background in Construction Management and I am a third generation licensed contractor holding engineering and building contractor licenses in multiple states including California since 1991.
I am a second generation developer and currently manage multiple corporations doing business in development and tract home building, we manage a group of corporations holding and managing national / international assets in class A: apartment properties, flagged hotel properties and office / retail properties.
We manage a group of natural resource companies in precious metals and coal and operate companies supporting these natural resource endeavors! We are also involved in education, security services, construction management, publishing, and venture capital. If you include working (Apprenticing) for my families development and construction company as a teen I have 38 years in construction!
So next time you jump up and down and want to argue someone is uneducated and making assumptions be careful to wait just a moment and think about this experience because there are always others out there who know more than either of us and are probable smarter, wealthier and more knowledgable than we are!
GR
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