Achieve Investment Group

Menu

Year: 2022

3.02* Return in 5 Years – Story of Boston Wood Apartment

by
james kandasamy austin

Our Boston Woods investment was located a short 10 min drive from the Medical Center in San Antonio, TX at Intersection 110 and Loop 410. We were able to find this deal using an off-market strategy, reaching out to the sellers directly. Using an off-market strategy in procuring a deal can help make it a more advantageous investment. It is comprised of 174 originally split into 3 locations: FKA Cumberland, Villa Madrid, and Westchester. Constructed originally in 1970, 1974, and 1984 respectively. We combined the three properties into one – Boston Woods. Purchasing deals at the market cap rate can be a great investment as long as there is a value-add component, which in this case there clearly was. Our decision to merge the three properties into one not only streamlined this property- but was a huge marketing advantage as well.   Acquisition Purchased in November 2016, 6.51% cap rate Cash out of pocket: $3.76 million Initial Financing: $4.66 million at 4.61% Capital Repairs: $1.52 million Purchasing deals at the market cap rate can be a great investment as long as there is a value-add component, which in this case there clearly was. Our decision to merge the three properties into one not only streamlined this property- but was a huge marketing advantage as well.   How Did We Find the Deal? Off Market Strategy Using text blast campaign to Sellers. Negotiated with Sellers for almost 8 months. Sellers are partners with bad relationships. Sellers are sophisticated Land developers/brokers Learn to Find Deals using an Off-Market Strategy Previous Management Marketing Issue Top three Largest PM companies in San Antonio Right strategy Managing Three Properties as One Horrible marketing with phone greetings with 3 different names.   We increased rental income from $.75/sq. foot to $.92/sq. foot. We utilized multiple crews for the rehab, implementing a partial rehab plus full rehab strategy to slow resident turnover and keep tenant occupancy up throughout the process.     We spent $1.3 million within 12 months of acquiring this property with a total budget of $1.5 million. It’s important to pump capital into the property ASAP to increase valuation. By doing this we were able to quickly convert $1.3 million cash in the bank to $75k NOI – a 50% increase.   At the end of this project: We increased rent by $130 per door Reduced expenses from 67% to 48% NOI increase of 86%- with a value increase from $6.9 mil to $13 mil Cash flow increased 7/8% based on the initial investment Altogether an INCREDIBLE 117% return from Initial Investment! Boston Woods is a prime example of Achieve’s focused strategy, skillful execution, and top-tier returns. Key takeaways from this investment include strategies of off-market acquisition, choosing a property with a value-add component, choosing to name the property with a marketing advantage, using a near-to-far rent comp, having multiple crews for the rehab- utilizing a partial plus full rehab to keep occupation and rent up during the process.

Austin Housing Market Predictions 2022-23

by

The Austin housing market is shifting. The market reflects what is happening in other major cities across the country. While activity appears to have slowed slightly in recent months, home prices in Austin are still on the rise. Home values are over 13% higher than they were in June 2021, when compared with historical averages of 5-6%. As a result, the Austin real estate market is exhibiting indications of slowing down. However, it should be noted that fewer homes are being sold than in previous years. The trend of a slowing growth rate in sales indicates market stabilization, but the demand is still outpacing the supply in a market where housing prices have reached all-time highs. As a result, Austin home prices are skyrocketing, and buyers are bearing the brunt of the burden. Low inventory, high buyer demand, and rising prices will continue throughout the year; however, there are signs that the market will eventually cool off when inventory rises or prices reach their apex. The median sales price is surging in double digits and will continue to rise over the next twelve months. The Austin Board of REALTORS®‘ Mid-Year 2022 Central Texas Housing Market Report shows that a triple-digit gain in active listings year over year pushed housing inventory levels over 2 months. The market is moving towards pre-pandemic sales activity and inventory. The Austin market is not balanced, and it still favors sellers. Homes still closed at over 100% of the list price on average in June. Residential home sales declined 20.3% year over year. There is an influx of homes on the market. The median price rose 13%, setting a record of $537,475. New listings jumped 19.6% to 6,160. Housing inventory increased to 2.1 months of inventory, up 1.5 months from last June — a sign of a seller’s real estate market. Austin Housing Market Predictions 2022-23 Austin’s housing market is likely to continue the trend of recent years as one of the hottest markets in the nation. The biggest drivers of residential real estate demand are Austin’s economy, which has diversified and strengthened over the past two decades, and companies like Google and Tesla moving operations here. As more companies move here, that means more people looking for homes, and Austin is also attractive to outside investors. With a steady influx of job creation in the pipeline, the housing market will continue to post strong numbers well into 2022. Big companies moving here will also play into what happens to the housing market.Corporate relocations are at an all-time high and the housing demand is rising rapidly. Because of this, the supply cannot meet the demand, and this region has a higher probability of withstanding economic downturns.According to their report, the value of the Austin Metro housing market grew by $141 billion or 126% in the past decade. In 2010, the market was worth about $111 Billion. In 2019, Austin’s total housing value grew $22 billion or 9.5%, year-over-year.NeighborhoodScout’s data shows that real estate in Austin has appreciated 169.47 percent over the last ten years, which is an average annual home appreciation rate of 10.42%. This figure puts Austin in the top 10% nationally for real estate appreciation. During the latest twelve months, Austin’s appreciation rate was 26.34%.According to the Zillow Home Value Forecast (ZHVF), Austin-Round Rock Metro’s home values have gone up 25.2% over the past year and are expected to rise by 7% by June 2023. Austin High Rise Deal Coming Soon..!!! Stay Tuned for more updates. If you would like to be notified of our future opportunities, please join our investor network below.  Join Our Investor List

Midyear Multifamily Market Outlook

by

As the Federal Reserve has increased interest rates and inflation has risen, the likelihood of a recession in the near future has grown. The sharp rise in interest rates has already impacted volume as borrowers and investors may have sidelined deals until volatility levels out. Despite the increased uncertainty, multifamily performance is expected to remain strong for the year. Multifamily fundamentals have begun to moderate in the second quarter – a trend which is expected to continue throughout the rest of the year – with growth projections still well above long-term averages: Gross income is projected to increase by 6.8% and the vacancy rate to remain unchanged at 4.8%. Rental growth has been exceptionally strong, up 16% over the year ending in June. Occupancy has remained above the long-term average. Tight rental markets indicate that the number of construction permits issued and the number of housing starts will have a limited impact on the market this year. Due to the volatility of Treasury rates, we expect total originations for the multifamily sector to contract slightly in 2022 to $440-$450 billion, but underlying multifamily fundamentals will continue to attract investors. Texas Multifamily Outlook – July 2022 According to most objective metrics and standards, multifamily assets in major Texas markets still represent strong investment propositions relative to other commercial sectors and the stock market. Houston After losing thousands of jobs to the flu pandemic, Houston recovered all of them by 2022, with multifamily construction directly benefiting from the bounce in economic growth. Rents rose 0.7% in April from three months earlier, to $1,293, while the occupancy rate for stabilized apartments in the 12 months ending in April was 94.1%. Average Rent: $1,293 (0.7%) Unemployment Rate (%) : 4.1% Average Occupancy Rate (%): 94.1% New Apartment Units Under Construction: 23,382 Dallas-Fort Worth In Dallas-Fort Worth, the pace of growth in apartment rents continued in the first half of 2022, driven by in-migration and company expansions and relocations. The average rent rose 1.2% on a trailing three-month basis through May, to $1,525. The occupancy rate was up 90 basis points in the 12 months ending in April. Average Rent: $1,525 (1.2%) Unemployment Rate (%) : 3.2% Average Occupancy Rate (%): 96.2% New Apartment Units Under Construction: 47,011 Austin The growth of the Austin metro area has been spurred by its reputation as an eclectic, creative community. The population grew by 28% in the last decade and housing demand is on the rise, which has led to a trend of rising rents. Although the rates softened during seasonally slow periods, rents have since picked up again and reached $1,744 on a trailing three-month basis through May. Occupancy rates are at 95.7%. Average Rent: $1,744 (0.8%) Unemployment Rate (%) : 2.5% Average Occupancy Rate (%): 96.2% New Apartment Units Under Construction: 42,118 According to research from the National Multifamily Housing Council (NMHC) and National Apartment Association, roughly 4.3 million new apartments will be necessary by 2035 to meet increasing demand. Texas, Florida, and California account for 40% of future demand and will collectively require 1.5 million apartments by 2035. Join Us For A Daily 60-second Coffee Break Series For Passive Investing In Commercial Real Estate With James Kandasamy, The Best-selling Real Estate Author And Mentor.

Multifamily Real Estate As A Hedge Against Inflation

by

Inflation is a serious concern for investors. When inflation is up, interest rates tend to be up as well. That’s because the Federal Reserve will raise interest rates if inflation increases to keep it in check. When interest rates are high, it makes sense for investors to look at other ways to make money. One way is through multifamily real estate. Multifamily real estate is a good hedge against inflation because it’s an asset that can increase in value and provide income. As inflation increases, the value of your property will increase. In addition to selling it at a higher price, you also have the option to rent it out and make money from your investment. When you buy a multifamily property, you’re purchasing more than just a house. You’re buying an asset that can be rented out and generate income for you. This means that if inflation increases, your property could also increase in value. This is one of the most important reasons why investing in real estate is one of the best ways to protect yourself against inflation. High Inflation And The Stock Market When inflation rises rapidly, it becomes difficult for investors to make money on the stock market because stocks are considered long-term investments and tend to increase more slowly than inflation over time. For example, if inflation were 10 percent per year, stocks would have to go up 11 percent just for the investor to break even after taxes and fees were removed from their returns. Multifamily Real Estate As A Hedge Against Inflation Inflation is a severe concern for real estate investors. Inflation can erode the value of investments in real estate and other assets, making it harder to generate income. However, there are several ways that investors can hedge against inflation to protect their portfolios. One way to hedge against inflation is through multifamily real estate investments because this asset class has historically withstood the economic pressures of rising prices. This makes sense when you consider that the cost of living also increases over time. As rents rise, so does the demand for more affordable housing options such as apartments and condominiums. Multifamily real estate is an asset class that can hedge against inflation in a few different ways: It can provide a relatively stable cash flow over time. It can act as an inflation hedge because it increases in value over time. The property’s value is based on its income stream, which increases as rents increase due to rising rents and inflation. For example, if you own a building that brings in $2 million per year in rental income and your annual mortgage payment is $1 million per year, your net cash flow (income minus expenses) will be $1 million per year (assuming no vacancies). This means that if you are paying 6% interest on your mortgage loan, the value of the building is $20 million ($1 million / 6% = $20 million). If the building appreciates by 3% per year (which would happen if rents were increasing), then after five years, it would be worth $22 million ($22 million – $20 million = $2 million). While you still pay off your mortgage loan at 6%, your net worth has increased by 3%. Another way to hedge against inflation is by ensuring that your properties are well-maintained and managed effectively. If you own an apartment building with tenants who are happy with their living situation, they’ll be less likely to move out or complain about problems with their apartments. This means your property will remain more valuable than others in its area and allow for future appreciation in its value over time. Final Thought Overall, multifamily real estate is an excellent investment to hedge against inflation when prices rise. Of course, it’s still important to research before you dive in and buy property, but once you’ve chosen the right location and established a sound financial plan, you can start building wealth with prudent and practical means. Join Us For A Daily 60-second Coffee Break Series For Passive Investing In Commercial Real Estate With James Kandasamy, The Best-selling Real Estate Author And Mentor.

How To Underwrite a Multi-Family Deal

by
underwriting multifamily deals

Multi-family deals are one of the most popular investments for real estate investors. Unlike single-family homes, multi-family properties have several units and can help diversify your portfolio. However, underwriting a multi-family property is different than underwriting a single-family home. The first step is to learn how to underwrite a multifamily property. This includes understanding how to calculate the value of the property, what expenses are involved and how to determine if the tenants will pay their rent on time. Underwrite a Multi-Family Deal in 6 steps Step 1. Cash Flow The first step in underwriting a multi-family deal is to evaluate the cash flow. The cash flow is the difference between income and expenses, which is profit or loss. So, if you take all the expenses and subtract them from all the revenues, what do you get? If that number is positive, then you have a profit. If it’s negative, then you have a loss. The cap rate is a measure of how much the building will earn on an annual basis, expressed as a percentage of its value. For example: Let’s say that your property has 100 units, each with an income of $1,000 per month and expenses of $800 per month. So your total income would be $100,000 per year (100 x $1,000) and your total expenses would be $80,000 per year (100 x $800). Your cash flow would be $20,000 ($100,000 – $80,000). Step 2. Cap rate? The cap rate is the most important metric in real estate underwriting. It is the rate of return you expect on your investment, and it is calculated by dividing the net operating income (NOI) by the sale price of your property. This calculation will tell you how much money will be left over after all expenses are paid. The second step in underwriting a multi-family deal is to determine the cap rate. The cap rate is the ratio of net operating income (NOI) to the value of the property. Cap rates are used by lenders and investors to determine whether a property is worth purchasing. The formula for calculating the cap rate is: Cap Rate = Net Operating Income / Property Value For example, if you have a property that generates $1,000 per month in NOI and it costs $100,000, then your cap rate is 10%. This means that you would need to pay at least $10,000 per year (1% of $100,000) just to cover your mortgage payment and maintain current operations. Step 3. Net Operating Income Ratio (NOIR) The third step in underwriting a multi-family deal is to look at the Net Operating Income Ratio (NOIR). This ratio measures how much of your net operating income goes towards paying for your debt service (including principal and interest). You want this ratio to be as high as possible because it means that you are using less of your income just paying off debt instead of investing it back into your property or throwing it away on other expenses related to operating your business. Net Operating Income Ratio (NOIR) is a measure of the ability of a property to pay its operating expenses. It is calculated by dividing the Net Operating Income by the total value of the property. The formula is as follows: NOIR = NOI/Property Value The higher the NOIR, the better the deal. For example, if a property has an NOI of $50,000 and its value is $1 million, then its NOIR would be 5%. Step 4. Determine occupancy rate One of the most important factors in underwriting a multi-family deal is understanding occupancy rates. If the building is occupied at 90%, that means there are 10% of the units available for rent. If there are 40 units in the building and 10 of them are vacant, that’s only an occupancy rate of 30%. In this case, it’s unlikely that investors would be interested in purchasing the property because they would have to bring in tenants before they could make any money off it. This can be especially tricky if you’re buying a distressed property where tenants have already moved out or been evicted due to non-payment of rent or other issues. The occupancy rate gives you a rough idea of how much revenue will be generated by your property. The higher the occupancy rate, the more revenue you can expect to generate from your investment. The main factors that determine occupancy rate include: Location – A desirable location will have higher occupancy rates than an undesirable one. For example, if you own an apartment building in the heart of New York City, then you can expect much higher occupancies than if you owned one in a rural area without many amenities nearby. Rent levels – The rent level determines how desirable your property is to potential tenants and therefore influences its occupancies rates. High rents also increase your profit margin because less money has to be spent on marketing efforts and rent concessions (such as free months). However, high rents also mean higher vacancy periods which will reduce your overall income from your property over time Step 5. Calculate expenses: When underwriting a multi-family deal, it’s important to understand how expenses are calculated and what they include. Expenses can be broken down into two categories: operating expenses and debt service. Operating expenses include items such as taxes, insurance and utilities. Debt service includes the mortgage payment, property taxes and any other obligations that must be paid on time by the owner of the property. Calculating operating expenses can be complicated because there are many factors that go into determining what a fair rent is for a unit. If you don’t calculate these figures carefully, you could end up paying more than your expected return or losing money on the investment all together. To calculate operating expenses, you must first determine how much income your property will generate each month. This can be done by analyzing similar properties in the area or using an online rent analysis … Read more

Is It Good Time To Invest In Real Estate?

by

Recently, the U.S. labor department data suggested that the annual inflation rate in the US accelerated to 9.1% in June of 2022, the highest since November 1981. Inflation is a volatile variable when it comes to managing your portfolio. The effects of inflation can devastate your assets, as we have seen in the wake of a downturned economy, war, political unrest, a disturbance in resource availability, or a chilling response to a surging global pandemic. Inflation means that your money doesn’t go as far as it used to. This is true whether you like it or not, and while nobody likes losing money, some people always seem to profit from inflation. What do they know that we don’t know? Multifamily real estate can be an excellent hedge against inflation. To understand why it’s essential to know how inflation works and how it affects the value of money. And when you know those things, you may discover that multifamily real estate can help you protect yourself from inflation’s adverse effects—and even profit from it. Before you begin to understand how residential real estate appraisals differ from commercial multifamily appraisals, it’s important to understand the different approaches these two types of properties take in arriving at their values. Commercial vs. Residential Appraisals Commercial real estate, unlike residential, is appraised using the income method. The more income property brings in, the more it is worth. The commercial real estate valuation formula is Value = Net Operating Income / Capitalization Rate. Net Operating Income (NOI) equals all revenue from the property (all rents, fees, and other income), minus all reasonably necessary operating expenses. Capitalization Rate (Cap rate) indicates the rate of return that is expected to be generated on a real estate investment property. Cap rates are expressed as percentages and vary from market to market. Within each market, cap rates have a historical range. For example, if a property had $300,000 in NOI and the cap rate in that market was 5%, you’d expect it to be valued at around $10 million ($300,000 / 5% = $6 million). Have You Heard About C.A.P.T? Among the key concepts, you should be familiar with are cash flow, appreciation, principal paydown, and tax benefits. Cash flow is the current and ongoing payments to the investor from rents. It is also referred to as yield. In addition to yield, there is equity growth from the appreciation of the property and paying down the mortgage each month. This equity component is realized upon liquidation of an apartment building—we’ll look at an example below to see why this makes apartment investments so attractive. Multifamily real estate has a long track record of beating inflation. Over the last 43 years, multifamily has beaten the inflation rate 37 times. In comparison, the S&P 500 has only beaten inflation 29 times. How can multifamily provide these more stable and consistent inflation-busting returns? Let me run you through three different scenarios: one in which rent growth exceeds CPI, another in which rent growth equals CPI, and a third in which rent growth lags behind CPI. Our hypothetical apartment investment looks like this: 100 – unit property $10 million valuation $1 million in gross operating income (GOI) $500,000 in operating expenses $500,000 net operating income (NOI) 5% cap rate (steady) 5% inflation rate (CPI) 7% rent growth (case #1) 5% rent growth (case #2) 3% rent growth (case #3) Case #1 – High Inflation / Higher Rent Growth When inflation rises, apartment rents tend to rise even more quickly. Since multifamily properties have short lease contracts—typically no longer than one year—they are nimble enough to respond to inflationary pressures and raise their rents in response. This is a real benefit for apartment investors that is not available to other segments of the commercial real estate space. Typically office, retail, and industrial properties utilize longer-term contracts making it difficult for them to respond to inflation. As a result, the only way for them to achieve higher rent growth than CPI is through the re-leasing property at higher rates than those specified in their leases. In this case, we are assuming a 7% rent growth and a 5% inflation rate. GOI – $1 million x 7% rent growth = $1,070,000 Expense growth – $500,000 x 5% inflation = $525,000 NOI – $1,070,000 – $525,000 = $545,000 NOI = $545,000 Our NOI increased by $45,000, so it is clear that our net distributable cash flow (yield) to the investors increased. Now let’s use that NOI number to see how much our equity grew. Value = NOI / Cap rate $545,000 / 5% = $10,900,000 Value = $10,900,000 So, in this case, our yield increased by $45,000 (from $500,000 to $545,000), and the value of our property increased by $900,000 (from $10 million to $10.9 million). We are not losing money to inflation; both values are increasing equally. Obviously, this is an ideal situation for the investor. But what happens if rent growth does not exceed the rate of inflation? What if they both go up equally? Case #2 When High Rent Growth Equals/Keeps Up With High Inflation In this case, both the rate of inflation and rent growth are equal at 5%. Let’s do the math. GOI – $1 million x 5% rent growth = $1,050,000 Expense growth – $500,000 x 5% inflation = $525,000 NOI – $1,050,000 – $525,000 = $525,000 NOI = $525,000 Value = NOI / Cap rate $525,000 / 5% = $10,500,000 Value = $10,500,000 Even when rent growth merely keeps up with inflation, the investor still wins (and profits from inflation). An increase in income of 5% equates to a less than $42 increase in rent for each unit per month. The owner’s expenses also went up 5%, costing him or her less than $21 per unit. The increase in yield is cash in your pocket as well as an increase in the equity value of the property. Everybody wins here. Case #3 When the Rent Growth Lags behind High Inflation … Read more

Investment Opportunities For Accredited Investors

by
Investment Opportunities For Accredited Investors

There are a lot of things you can invest in as an accredited investor, but it can be tough to know where to start. The SEC offers a number of investment opportunities for accredited investors. These investments are usually more complicated than simply buying a mutual fund or opening an IRA, but they also have higher potential returns and fewer restrictions on investment. Accredited Investor Definition Accredited investors are individuals who meet certain income or net worth thresholds set by the Securities and Exchange Commission. An accredited investor is a person who: Has an individual net worth of at least $1 million (excluding primary residence), or joint net worth with spouse of $2 million; Has an individual income of at least $200,000 each year for the last two years (or joint income with spouse of $300,000 each year), and reasonably expects the same for the current year; or Has earned income exceeding $300,000 (or joint income with spouse exceeding $600,000) in each of the prior two years and reasonably expects to match or exceed that income level in the current year. How Much Can an Accredited Investor Invest? The amount of money that you can invest depends on your individual circumstances. The SEC sets a minimum amount of income that qualifies as accredited investor status, which is $200,000 in annual income (or $300,000 with a spouse) for at least two years. If you qualify as an accredited investor based on your income alone, then you can invest up to $1 million in any single private offering. If your income doesn’t meet the minimum requirement, then the total value of your assets must also be high enough to qualify as an accredited investor. The current limit is $1 million in either assets alone or combined assets and income. You can also qualify for accredited investor status if you have a net worth of over $1 million. Types of Investments for Accredited Investors? There are many types of investments that accredited investors can make. These include: Private equity/venture capital: Private equity and venture capital funds are pools of money that allow investors to pool their money together to purchase interests in companies. The investors receive a percentage of the profits made by the fund, usually in the form of interest payments. These types of funds are popular with many accredited investors because they have access to the best opportunities and can have an influence on how their money is invested. For example, if you have $1 million dollars to invest, you might be able to make suggestions as to how your money should be allocated among different companies or industries. Hedge funds: Hedge funds are pools of money that are professionally managed and typically invest in a variety of assets such as stocks, bonds, commodities and real estate. Hedge funds can be an attractive investment opportunity for high-net-worth individuals because they generally have low fees, have no minimum investment requirements, and offer investors the ability to participate in some of the highest returns available in the financial markets. Venture Capital: If you’re looking for long-term growth potential, venture capital is an option. Venture capitalists invest in early-stage companies with the hopes of making a significant return when those companies go public or get acquired by another company. The average time it takes to see returns on this type of investment varies widely, but it’s generally longer than other types of investments. Real Estate Investment Trusts (REITs): Real estate is another popular asset class for accredited investors interested in alternative investments because it offers diversification, steady income and growth potential over time. REITs invest in commercial real estate such as office buildings or apartment complexes, while mortgage REITs invest in residential mortgages like adjustable-rate mortgages (ARMs) or fixed-rate mortgages (FRMs). Real Estate Syndication: Real estate syndication is one of the most popular ways for accredited investors to invest in real estate. It allows an investor to pool their money with other people in order to buy a property. In this way, they can leverage their investment power and purchase properties that they wouldn’t be able to afford otherwise. The Bottom Line All investors should be aware of the various types of investment opportunities available if they want to diversify their portfolio and have a chance for long-term growth for their money.  Join Us For A Daily 60-second Coffee Break Series For Passive Investing In Commercial Real Estate With James Kandasamy, The Best-selling Real Estate Author And Mentor.

How to Add Value to Multifamily Properties

by

If you understand the value of investing in multifamily real estate- you are in a great position. As a multifamily investor, there are many investment strategies you can pursue. Whether as a syndicator or passive investor, it is crucial to analyze all investment strategies to ensure it aligns with your risk tolerance and financial goals. What is Value Add Real Estate? Value-add investing is a real estate investment strategy that involves increasing the value of an asset through renovations, rebranding, or operational efficiencies. This can be achieved through hiring a capable management team to run the property. In multifamily real estate, value-add strategies are used by many investors to achieve solid returns. Let’s understand this from the following case studies: In the following video, James is at one of his properties in Austin, Texas where he bought a value-add deal. Initially, James started the property at 95% occupancy and just after 2 months the occupancy dropped to 65%, but after 6 to 7 months again it has 90% occupancy and is a positive cash-flowing deal right now. You can buy core/yield deals if you don’t want to face dropping in occupancy, but you need to understand that while core/yield deals are less risky, they are also less rewarding.  Value-add deals, on the other hand, have a higher risk, higher value, and higher rewards. Take a look at the videos below for deeper insights: Watch the Video  2-Part Multifamily Deep Value Add Turnaround Case Study Multifamily Deep Value Add Turnaround Part 1 Watch the Video The following is a proud moment for my best-selling “Passive Investing in Commercial Real Estate Book”. A fan sent me his copy of my book 必利勁 to get my autograph, with prepaid postage! I am happy that I am able to truly change the lives of people with my book. We can have millions of assets under management (or even billion!), but nothing beats being an author that can make an impact like that. The title “Author” creates a legacy to be proud of. Take a look: GET A FREE COPY OF MY BOOK

Ultimate Guide to Multifamily Real Estate Syndication

by
Multifamily Real Estate Syndication

Multifamily real estate investment is one of the most popular ways for investors to get into the market. Instead of buying a single property, you can buy multiple units, which greatly increases your profit potential. Multifamily real estate syndication is a process of buying and selling apartment buildings that involves multiple investors. It’s similar to purchasing properties individually but has some additional benefits. What is Multifamily Real Estate Syndication? Multifamily real estate syndication is a process of pooling together funds from multiple investors to purchase a large apartment building or other multifamily property. The pool of investors then receives an equal share of the profits and losses of the property over time. Multifamily Syndication is a type of real estate investment that involves multiple investors. The most common type is a partnership or limited liability company (LLC). These types of entities offer tax benefits, which can help you grow your profits faster than if you were working alone. Multifamily syndications can be done through different types of investments, including: Limited Partnerships (LP) Limited Liability Companies (LLC) Corporations What to Consider before doing multi-family syndication? A multifamily syndication is a financing option for real estate investors, who can benefit from tax-sheltered equity and senior financing. The first step before undertaking any kind of real estate syndication is to determine if it’s right for you. Here are some things you should consider: Be sure that you have the experience and knowledge to do it yourself. Are you looking for passive income? Do you have enough capital to invest? Make sure that all of your investors are fully aware of any risks involved in investing in real estate and understand how they can lose their money if things don’t go as planned. Don’t use anyone’s money without having a contract signed by both parties first because if something happens to one side or the other, there is no legal obligation for them to pay back any money or return any property or assets until a contract exists between both parties and it has been signed by both parties with witnesses present (this should not be done verbally). Is real estate syndication profitable? The answer is it depends. The real estate syndication process allows you to buy a property with other investors, who contribute their own money and share in the profits and losses. You can also sell your stake in the property later on if you want to take your money out or if you no longer want to manage it. This is a great way for investors to pool their resources and buy properties that they would otherwise not be able to afford on their own. By combining their assets, they can purchase more properties than they could on their own. How do you structure a real estate syndication deal? There are several ways to structure your real estate syndication deal: Limited liability entity (LLC): An LLC protects each partner from personal liability for actions taken by others in their business dealings. In other words, if one partner fails to pay their bills, it should not affect the other partners’ finances or credit scores. Limited Partnership Agreement (LPA): The LPA is a legal document that sets out the terms of the partnership. It includes information about your partners, such as their roles and responsibilities. It also details how profits will be split up, who will manage the property, and what happens if someone wants to leave the deal. The LPA should be reviewed by an attorney before it’s signed by all parties involved, so that everyone is clear on what they’re getting into. Joint venture: In a joint venture, the buyer and seller create a partnership, and each contributes capital for their share of the purchase price. The buyer may also contribute labor or services in exchange for an ownership interest in the property. In this scenario, both parties have equal ownership interests in the property and share profits or losses equally after closing costs have been paid off. Members’ loan program: In this scenario, the sponsor raises money from investors and loans those funds back to them via a promissory note at an interest rate above market rates. The sponsor then repays that loan with interest over time from rental income received from tenants in the property. Investors receive tax benefits from their distributions, which are treated like mortgage interest payments on their taxes. A member’s equity program It is the most common way for investors to participate in a syndication deal. Members purchase an ownership stake in the property and receive monthly dividends. The amount of each monthly dividend is usually determined by the number of units owned in the building and by the tenant mix. Benefits of Multifamily Real Estate Syndication Multifamily real estate syndication is a great way to invest in real estate without having to be a landlord. Instead of buying one property, you can buy into a pool of properties that are managed by someone else. The benefits of this type of investment include: No management responsibilities: You can invest in a syndicate and not have to worry about the day-to-day operations or maintenance of your property. Syndicators choose the property manager, so you don’t have to worry about finding a good one and paying for it. Higher returns than other types of investments: Multifamily properties often offer better returns than single-family homes or office buildings because they have more units to rent out and therefore more revenue potential. Liquidity: If you need cash, you can sell your stake in the syndicate at any time without having to wait for an exit strategy like selling the entire property or refinancing it with another lender. You can diversify your portfolio: As long as you spread your investment among different properties and companies, you’ll reduce your risk significantly compared with investing in just one property or project. If one investment goes bad, it won’t take down your entire portfolio with it. You can get tax benefits: Interest … Read more

2.55X Returns – Most Creative Apartment Deal

by

You might have heard about our multi-million dollar real estate deals & their success stories of how the passive investors who invested in these deals became millionaires. But, there’s a lot that goes into making any deal a success. And for the first time ever, I James Kandasamy going to share the “Behind the scenes” of one such success story – SOL Apartments in San Antonio, TX. This was the most creative apartment deal that we have done so far. We bought an Apartment and land beside it to solve a parking problem that existed for the past 60 years. We combined both to create one plate of land. We learned about the entitlement process in this deal Two different sellers closed on the same day. Story of the Deal Found using Broker Relationship – Listed website We have Boston Woods Apartments Nearby This Deal had been in and out of contract 4 times > The issue was parking was a 1:1 parking ratio > The last contract was $5.5m for the Apartments. > Seller was frustrated Fully exterior rehab completed and interior ongoing. Has been 80% occupied from 2012-2017 How did we solve the Parking Problem? Apartment Broker Did suggest looking at vacant lands beside the Apartment But didn’t want to do anything with it or the deal. Did mention that previous buyers were able to contact the land owners. North Side vacant Land owner asked for $1m The previous under-contract buyer negotiated to 500K The Previous buyer pulled the plug last minute due to the risk of converting vacant land to improved land with parking.   The only way to make the deal work was to buy one of the Vacant lands and build some parking lots. but How do we Mitigate the Risk of the City not Approving The Vacant Land conversion to a parking lot? How did we mitigate the Risk? Before Going under contract Spoke to the City officer about the feasibility of Converting the North Side vacant Land to a Parking lot Found out the Parking Ratio requirement. Talked to the City Administrator to ensure all align. The city was supportive and gave verbal “OK” Gone through the city code of development. Hired a Civil engineer Walked with the Engineer Meeting- Civil Engineer/City to get verbal “OK” Understood the process of conversion Parking Lot contractors Vacant Land Conversion Challenges? Engineering Surveys Boundary Survey – for platting the vacant land. Once the land was platted, then it was merged with the apartment. New Large Plat was recorded. Improvement Survey –Parking lot expansion. To determine driveway, # spots, Building corner, etc. Tree Survey – Determine the type of Trees and size To get approval from the City to cut the trees. ALTA Survey – for the Bank that shows A new survey for the Bank. All needed to be approved by the City.   Land Developments Since we positioned this as an “Improvement” and not a New Development. There was no new code Parking ratio requirement. We were able to fit 35 parking spots. (1.3 ratio). We decided to add Playground for residents Dog Park – WIP A Nice Park area for residents   Resolved Parking Issue Brought in much higher paying Demography Household with two cars or more. No more concern about limited parking. Brought up occupancy from 80% to 90% easily. We started charging for covered parking. The only apartment complex with a park in the submarket. Families with children — Playground and Park. The Sale We recently sold SOL Apartments for a total passive investors return of 2.55x equity multiple within 4.5 years. That is 34% per annum cash on cash return for our passive investors. That means, that if you invest $100K you would have received $255K after 4 years. A few more passive investors millionaires were created by James Kandasamy Texas.   The Morale of the Story Value add may not be increasing rent or reducing the expense Creative methods and Risk-taking can bring in huge value Congratulations to our investors who put their trust in us.  We are grateful for your support. If you want to invest with us join our mailing list by clicking the button below. Join Our Investor List

INVESTOR EDUCATION Webinar

Passive Real Estate Investors Need To Know This Before Filing Their 2023 Taxes!

Essential Tax Planning Tips And Strategies Before April 15th With Nationally-recognized CPAs And Tax Strategists "Amanda Han" and "Matt Macfarland"

Watch Webinar Replay