Ask Mike Mondays: Syndication Investor Returns

ASK MIKE MONDAYS - “Michael, I want to be a syndicator. Does offering a PREFERRED RATE of return t...

oldcapitalpodcast oldcapitalpodcast | 3 years ago

Structuring investor returns is critical for your success. With tons of capital on the side lines…the historical apartment investor yields are falling. Lots of new investors are living in the past when it comes to investor yields. If you GUARANTEED a higher rate of return to your investors- than what the property is currently earning- you are going to be in trouble. Michael discusses those challenges today and what you should consider. Michael Becker has purchased over 10,000 apartment units b...

ASK MIKE MONDAYS- “Michael, I don’t want to SOUND LIKE A ROOKIE; what questions should I ask the...

oldcapitalpodcast oldcapitalpodcast | 2 years ago

Nobody wants to sound like a rookie when they first enter the apartment business. Especially when having an initial conversation with an important listing broker. Michael, gives you some preliminary questions to ask. Also, when should you bring in your property management company or the lender to review the deal? Finding the right balance on WHEN you should bring in your advisors is critical to your success. In addition, Michael offers you a few examples of when he stumbled in operating apartmen...

ASK MIKE MONDAYS - Can I get a LOAN PRE-APPROVAL on an apartment transaction?

oldcapitalpodcast oldcapitalpodcast | 6 years ago

Michael discusses what lenders are looking for when applying for financing on an apartment transaction. With apartment lending- the quality, condition and location of the asset are the most important factors in underwriting. A PRE-APPROVAL is not going to be available because 2/3rds of an apartment lending decision is based on subject property. The lender needs to have a complete picture on a number of critical underwriting variables. Examples: Where is property located and age? What are histo...

ASK MIKE MONDAYS - Michael, What is a LURA?

oldcapitalpodcast oldcapitalpodcast | 5 years ago

To promote affordable housing, some older properties may have an income restricted LURA. A LURA is a LAND USE RESTRICTION AGREEMENT. It runs with the deed. This recorded regulatory agreement may restrict the amount of rent you can charge a tenant, based on the tenant’s income. If you rehab a property and are expecting to increase rents to justify the cost…a LURA may prevent you from being able to raise rents in the future. Make sure you ask the seller’s agent if the property has a LURA.

ASK MIKE MONDAYS - Michael, how long does it take to be educated, prepared and confident to become a...

oldcapitalpodcast oldcapitalpodcast | 4 years ago

Successful investors send back road maps to folks following them. Michael, discusses some steps that you need to follow. How do you go faster? Having the right mentor can significantly reduce the time it takes to go faster. Learn from educators that have real life experience in apartment investing will help you from making bad and costly mistakes.

ASK MIKE MONDAYS - Michael, What do you think about sponsors offering a PREFERRED RATE OF RETURN to ...

oldcapitalpodcast oldcapitalpodcast | 5 years ago

Michael discusses the opportunities and challenges that deal sponsors must consider IF they want to offer equity investors a preferred rate of return on their investment.

ASK MIKE MONDAYS - Michael, I’m a PASSIVE INVESTOR and I am reviewing someone else’s underwritin...

oldcapitalpodcast oldcapitalpodcast | 6 years ago

IF you are a passive investor you want to review a realistic PROFORMA before you invest. Michael discusses line items on the operating statement such as rental rate growth, loss to lease, property tax step-up costs, and future labor costs. Are the assumptions from the SPONSOR too aggressive?

ASK MIKE MONDAYS - I want to a buy an apartment building. What do I look for in the numbers?

oldcapitalpodcast oldcapitalpodcast | 5 years ago

Michael explains to a potential apartment buyer on what is important in the operating statement. Do you look at the trailing 1, trailing 3, or trailing 12? What is important? Michael talks about the importance of analyzing the trend line of income and expenses.

ASK MIKE MONDAYS - What does it take to become a deal sponsor?

oldcapitalpodcast oldcapitalpodcast | 7 years ago

What happens first; raise the investors money or find a building? Or is it vice versa? Before you do either, you must understand what it takes to be the managing member (responsible party) to operate an apartment building. Michael explains how a deal syndication works and being transparent with your investing partners.

ASK MIKE MONDAYS - Michael, what reports should I be receiving from my apartment management company?

oldcapitalpodcast oldcapitalpodcast | 5 years ago

Michael discusses the different reports that a management company should be providing to the managing member every month. Obviously, it is better to overly communicate with investors and partnerships with detailed monthly operating statements.