Multi family investing FAQs
Why invest in multi family properties?
Multi family properties are like small businesses that produce cash flow. This allows your money to work for you and earn you money each quarter.
As the property produces cash flow for you, it also pays down the loan used to purchase it.
There are also tax benefits in the form of write offs & depreciation.
As the property produces cash flow for you, it also pays down the loan used to purchase it.
There are also tax benefits in the form of write offs & depreciation.
Where do we buy multi family property?
We buy in areas (markets) that have demand for multi family housing. We determine this by looking at the amount of apartments an area has compared against the amount of jobs coming to the area.
We also look for areas with low unemployment, a high rate of population influx and diversified jobs so that, if a major company leaves the area, there are still enough jobs (and renters) left.
We also look for areas with low unemployment, a high rate of population influx and diversified jobs so that, if a major company leaves the area, there are still enough jobs (and renters) left.
Who can invest?
We are looking for accredited investors who either earned more than $200K (or $300K together with a spouse) in each of the prior 2 years or have more than $1M of net worth not including the value of their primary residence. Sophisticated investors who have a pre-existing existing relationship with us can also invest.
How can I invest with you?
Our investors typically use one of the following strategies:
- Cash investment
- Home equity line of credit (HELOC)
- Self directed IRA
Who are our team members that help put together & run the deal?
Mentors. We are often add experienced multi family investors to the general partnership.
Property management. We recruit the best who know the area well and have proven track records of managing multi family properties.
Securities lawyer. We have a lawyer who specializes in these types of property purchases and syndications to protect us all in the unlikely event of something going wrong.
The bank. We have developed relationships with banks that are willing to loan us the money to make these deals. They always check our numbers thoroughly and will not loan us money if they do not think the deal checks out.
What if happens if there is a downturn?
We ride it out earning cashflow. We are always careful to chose bank loans with terms of at least 10 years so that we do not find ourselves in a situation where we have a loan that is due to mature in the middle of a downturn
Why invest in multi family property instead of stocks?
When you invest in multi family property, you you own part of a tangible asset as opposed to investments such as stocks where you do not own a tangible asset.
While other investments such as stocks can produce cash flow in the form of dividends, the value of the stocks is variable and can suffer from volatile market swings even if the fundamentals of the company you are invested in are unchanged.
While other investments such as stocks can produce cash flow in the form of dividends, the value of the stocks is variable and can suffer from volatile market swings even if the fundamentals of the company you are invested in are unchanged.
How do we find & acquire properties?
We have relationships with commercial brokers. These brokers find potential sellers and match them with buyers like us
What is your investment used for?
A typical deal will need a 25% down payment of the purchase price. In addition, we may need extra funds to pay for renovations etc. Your investment, along with the investments of others and ourselves are pooled together to pay for this.
Who owns the property?
The properties are purchased under a new LLC company that we form for the specific purpose of owing and running each property
General partnership (GP)
The general partnership are the people finding the property, finding the loan, running the property etc. This is not a passive role and involves a lot of work. The GP owns 30% of the property and profits.
Do the GP’s have ‘skin in the game’
Always. We invest along with you in our properties – usually at least $100,000. We will be right there with you in the LP pool.
Our success is your success so our interests are aligned
Our success is your success so our interests are aligned
Mentoring
We believe in sharing our knowledge so that everyone who wants to can invest in multi family properties.
If you interested in learning the business, become a limited partner and we can teach you how it works and even include you in the weekly calls to our property managers
If you interested in learning the business, become a limited partner and we can teach you how it works and even include you in the weekly calls to our property managers
When and how often do I get paid?
We pay you every quarter.
Usually the distributions will begin after a 6 month repositioning period.
Usually the distributions will begin after a 6 month repositioning period.
Why invest in multi family property instead of bonds?
Bonds can be a safe investment but the lack of risk is reflected in the return you make.
Bonds could make you 1% on your money whereas multi family property could make you 9%.
Initially, this may look like you are making 8% more but you are not. You are making 900% more!
Bonds could make you 1% on your money whereas multi family property could make you 9%.
Initially, this may look like you are making 8% more but you are not. You are making 900% more!
How long is the investment?
This is a long term play.
Investing with us involves investing money for 5 – 10 years
However, depending on the deal and the financial climate, we will endeavor to get at least 65% of your money back to you within 5 years. Even after this, you will still have an investment that is producing money for you.
Investing with us involves investing money for 5 – 10 years
However, depending on the deal and the financial climate, we will endeavor to get at least 65% of your money back to you within 5 years. Even after this, you will still have an investment that is producing money for you.
Can I lose money?
There is risk in every investment but we believe that our conservative analysis will see us through even in a down turn. Your investment and your returns will take a priority over our returns. If you get paid and we do not, so be it.
Who owns the LLC that owns the property?
The LLC is divided up into the general partners (GP) and the limited partners (LP). As an investor, you will be a limited partner (LP). As the team running the project, we are the general partners (GP).
Limited partnership (LP)
As an investor you will be in this group. This means that, once invested you do not have to do any work. You will be a completely passive investor.
The limited partnership owns 70% of the property and profits. Your individual ownership will depend on how much you invest with us.
The limited partnership owns 70% of the property and profits. Your individual ownership will depend on how much you invest with us.
Are the general partners paid when the deal closes
Yes. Finding the deal, underwriting, arranging the bank loan, performing the property due diligence, visiting the site, putting together the legal paperwork and closing the deal takes a lot of work. For that, the GP is paid an acquisition fee at closing, usually 1% – 2% of the purchase price.
What if some of the apartments become vacant?
We analyze, or underwrite, the deal based off the vacancy being at a conservative 8% for 10 years into the future. For year 1, we bump it up to 10% to allow for potential tenant moveouts as the rents are raised.