Multifamily Syndication Deal Structures

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In today’s episode we are covering:

– Types of multifamily deal structures

– The power of preferred returns

– Fee’s in multifamily

VIDEO TRANSCRIPTION

00:00
we’re good oh yeah we do have some
00:02
people in hawaii
00:04
i wish i was back in a while yeah i’ll
00:06
leave the complex stuff for me then
00:08
i wish i was back in hawaii in some days
00:09
man but uh hey
00:11
thanks for tuning in everybody once
00:12
again money mondays here from the
00:14
disrupt tv studios houston texas
00:17
you’ve got your friends ferris and ben
00:19
here from disrupt equity
00:20
yeah so this is america so for those of
00:22
you tuning in for the first time monday
00:23
mondays 3 30 central every
00:25
week on mondays and we talk about
00:28
different topics
00:29
you guys are more than welcome to
00:30
suggest topic titles we will entertain
00:32
them
00:32
actually this is a topic that someone
00:34
has suggested so we’re happy to kind of
00:36
do suggestions but at the end of this we
00:37
will do q a you can ask anything you
00:39
want
00:40
and today’s episode is what then we’re
00:42
talking about syndication deal
00:43
structures right you know how to put
00:45
deals together for those that don’t know
00:47
yep that’s actually probably a good
00:49
place to start and then from there we
00:50
can talk about the structures right all
00:51
right so syndication is
00:52
essentially a way that you’re
00:54
structuring a deal where you’re pulling
00:55
everybody’s money together
00:57
right as the down payment but in order
00:59
to do that right you’re forming an llc
01:02
and as the general partners or the
01:03
managing partners of the deal
01:05
me and ferris would then sell shares to
01:07
investors right
01:08
and that share’s worth a certain amount
01:10
of money let’s just call it a thousand
01:11
bucks
01:12
right so if you put fifty thousand
01:13
dollars in i’m selling you 50 shares of
01:15
that llc right
01:16
so i’m gonna pull all of those investors
01:18
together right and i’m gonna use that as
01:20
our down payment and our working capital
01:22
for the deal
01:23
right so now they are the lp partners of
01:26
the deal and we’re the gp partners of
01:28
the deal
01:28
right you can call them managers and
01:30
members there’s a couple different ways
01:31
you can do it but
01:32
you know a lot of people know the lpgp
01:34
structure so that’s kind of what we’re
01:35
going to describe it as today
01:37
so you know that’s kind of what a
01:38
syndication is in a very very simplistic
01:40
way
01:41
you know that you’re pulling people’s
01:42
money together in order to buy bigger
01:44
assets right
01:45
you know because you know when you tack
01:47
on a couple zeros to some of these
01:48
syndication deals some of these big
01:49
multi-family
01:50
properties that we buy and some other
01:52
commercial assets you’re going to
01:53
quickly run out of money even the most
01:55
wealthy of people
01:56
right so it’s always better to kind of
01:58
leverage everybody else’s
01:59
time money you know and you know so you
02:02
know
02:03
pulling everyone together you guys go do
02:05
something bigger harder better together
02:06
yep absolutely absolutely so all right
02:09
so let’s get right into it
02:10
so what do we got we got multi-family
02:12
syndication deal structures
02:14
so let’s talk about kind of the most
02:17
common ones that we kind of see right
02:19
you know in our world now you can
02:21
structure a deal
02:23
let’s caveat this you could structure a
02:24
deal a thousand different ways
02:26
as long as it’s legal right as long as
02:30
this person is all right with the deal
02:33
structure and you’re all right with the
02:34
deal structure you can put a deal
02:35
together
02:36
right so we have friends of the business
02:38
that structure their deals a lot
02:40
differently than we do and kudos to them
02:43
right you know
02:44
um we have a little bit more i guess
02:47
run-of-the-mill way that we structure
02:48
ours
02:49
you know so maybe i’ll start off with
02:50
the way that we do ours so
02:52
and i’ll get into preferred returns so
02:54
just bear with me here folks
02:55
we have an eight percent preferred
02:57
return right which we’ll talk about here
02:58
in a minute
02:59
and then after that we have a 75 25
03:01
split 75
03:03
going to our lp investors 25 going to
03:06
the managers
03:07
right and remember that’s after the
03:09
eight percent preferred return
03:10
right so that’s kind of our vanilla way
03:12
we feel like that’s the best of both
03:14
worlds but just to people understand
03:16
right structures can be anything you
03:18
want yes that’s what i’m saying 1090
03:19
could be a 90 10.
03:20
it’s ultimately about you and your
03:22
equity group and what they’re looking
03:24
for
03:24
and what you can perform on and is there
03:26
kind of a happy ground right
03:28
yeah it’s a negotiation yeah it’s really
03:30
a negotiation obviously the different
03:31
ways the structure results in more or
03:33
less money for the operators and more or
03:34
less money for the
03:35
for the lps so something to keep in mind
03:37
but like ben said kind of the industry
03:39
norm right now is seven or eight prefs
03:41
right and then from there you know i’ve
03:43
seen everything from 50 50 all the way
03:45
up to 80
03:46
20 splits right so what does it prefer
03:48
to turn to then for those that don’t
03:49
understand we keep talking about a prep
03:51
right now again people do some people
03:53
don’t have preps at all
03:54
right but kind of in the prep world i
03:56
think that’s really what’s becoming more
03:57
and more popular right
03:59
what does it prefer to turn back and i
04:00
think a pref was really that’s that’s
04:02
really what you’re probably gonna hear
04:03
but
04:03
the i guess the the longer phrase it has
04:06
preferred return right it’s they’re
04:07
synonymous
04:08
so a preferred return or a pref right is
04:11
essentially a
04:12
it’s a percentage that is paid on the
04:14
amount of money that you’ve raised
04:16
right so let’s use whole numbers right
04:18
let’s say we’ve raised a million dollars
04:20
and our preferred return is eight
04:22
percent right what’s eight percent of a
04:24
million dollars right
04:25
eighty thousand right that is what is
04:27
owed to investors then looked me
04:29
straight at the eye and he’s like i got
04:30
that right right
04:31
hey hey i could get some of that math
04:33
correct right you know
04:35
i had to practice that one before this
04:36
one so that’s just you know i’ll caveat
04:38
it with that
04:39
so anyway so we’re paying 80 000 out
04:41
right that’s the first 80 000 that goes
04:43
out
04:43
it goes to our investors as the
04:45
preferred return now
04:46
let’s say that you’ve made a hundred
04:48
thousand at total
04:50
right in terms of cash flow that 20 000
04:53
is now spit
04:54
split 75 75-25 with your investors
04:58
yeah and maybe just to simplify it a
04:59
little bit right all it means is that
05:01
investors get an eight percent
05:02
annualized return on their money
05:03
first yes and anything after that is
05:06
being split with the sponsors
05:08
right so it’s a way to make sure that
05:09
the investors eat first before the
05:10
sponsor see right you need to make sure
05:12
you’re getting deals that can support
05:13
that so
05:13
yeah that’s what the preferred return
05:15
model is and it kind of helps make
05:17
things you know a little bit more
05:18
investor friendly right because again
05:20
you know if the deal doesn’t make enough
05:21
money to pay that prep well you as a
05:23
sponsor are getting nothing on the
05:24
upside
05:24
yeah and so you know again there’s a lot
05:26
of ways to structure the preferred
05:27
return so make sure you know between
05:29
compounding between accruing i mean all
05:32
of that so
05:33
make sure you read a company agreement
05:34
we’re not lawyers we’re not cpas we’re
05:36
not
05:37
one thing to mention at least the way
05:39
that we’ve structured it right is that
05:40
that money is still out right so
05:41
you know we do a lot of value add plays
05:43
we do a lot of repositioning
05:45
you know sometimes that stuff takes time
05:46
right 12 18 24 months right
05:49
so if you’re not able to hit that
05:50
preferred return which is what it’s
05:52
called in the industry right
05:53
that money is still owed to investors so
05:55
you usually have a catch-up period where
05:57
you try to catch up on the pref
05:59
or even if you go all the way to a refi
06:01
or you go all the way to
06:02
say a sale right that money that wasn’t
06:05
paid as part of that preferred return is
06:06
still owed to your investors
06:08
before we get dime one so i always like
06:11
to kind of let people know that because
06:13
it’s kind of a little bit different
06:14
you know way of structuring it preferred
06:16
returns is something that we introduced
06:17
probably about six or seven deals ago
06:19
you know we’ve both done some more
06:21
vanilla 80 20 splits
06:22
and some other things too so you know i
06:24
mean obviously we want you know folks to
06:26
know that you can do it a thousand
06:27
different ways
06:28
but once we kind of started opening up
06:30
our investor list of people kind of
06:32
outside texas
06:33
you know people are their expectation
06:35
was that there was a preferred return
06:37
included in that right so let’s talk
06:40
about other deal structures right you
06:41
know
06:42
yeah so maybe the next one right so you
06:44
could do the prep or without the
06:45
preference so those are the most common
06:47
you know 60 40 with an eight press 75 25
06:50
with no prefer to turn
06:52
right the next common way really is kind
06:54
of what we call waterfall right you hear
06:56
that a lot
06:57
it’s more popular i guess on the kind of
06:59
private equity
07:00
institutional world but really what it
07:02
means is that you are
07:04
making your money in tranches so it’s
07:06
really the scenario we had a deal that
07:07
home run
07:08
right our investors made a ton of money
07:10
we you know we did well but we didn’t
07:11
get to milk all that upside right
07:13
had we had a waterfall what it means is
07:15
that investors get up to a certain
07:17
return right the sport
07:18
is more favored towards them up until
07:21
certain return return
07:22
then that waterfall hits right if you
07:23
kind of think about a waterfall right
07:25
there’s different
07:25
legs different tranches well once
07:27
they’re they hit that return
07:29
now after that the upside is more on our
07:31
favor right so it really motivates the
07:33
sponsor
07:33
to get those home runs because if you
07:35
hit that home run right you’re getting a
07:36
lot more money on that upside versus
07:39
keeping it 75-25 so to give you an
07:41
example it might be a 75-25 split until
07:43
you hit an 18 percent irr
07:45
yep then after 18 ir might be 50 50
07:48
right
07:48
you know or it could be anything right
07:50
once again folks you like don’t
07:52
overthink it right you have to determine
07:54
what your investor your equity pool is
07:56
willing to accept right
07:57
and what they think is a good deal right
07:59
you know because like i said we’ve
08:01
we’re friends with people that their
08:03
deals are completely different than ours
08:05
but
08:05
guess what their investors are happy
08:07
right you know so beyond the waterfall
08:09
another way that we’ve seen it is almost
08:11
structured almost like debt
08:12
right so you know it’s not really dead
08:14
because you’re obviously still taking
08:15
out a loan right but it’s kind of
08:17
structured that way
08:18
whereas the investors are investing in
08:20
money and then they get a straight
08:22
say preferred return maybe it’s 10 let’s
08:24
just keep it straight simple
08:26
they get none of the upside right but
08:28
they get their preferred return they
08:29
still get the tax benefits of investing
08:31
in commercial real estate
08:32
they get all the other benefits right
08:34
you know but
08:35
they don’t get the upside you know we’ve
08:37
also seen deals where there’s been
08:39
different classes right where you can
08:40
have maybe that’s one class and then you
08:42
have maybe
08:43
you know somebody that has a less of a
08:44
preferred return but then they have you
08:46
know some of the upside
08:48
you know and i think you know those are
08:49
starting to kind of become more and more
08:51
popular we’re seeing we’ve been seeing
08:52
those lately
08:53
and you know i kind of actually like it
08:54
right because all of our investors are
08:56
investing for different reasons and they
08:58
have different timelines right
09:00
some investors of ours are very very
09:02
patient some are you know hey this is
09:04
what
09:04
i this is my retirement this is what i
09:06
live on right and so
09:08
they have to take that into
09:09
consideration when they’re looking at
09:10
each deal but if you give them
09:12
both options right they might be more
09:15
likely to invest in your deal too so
09:17
you know as long as it’s legal and your
09:19
investors are cool with it and you can
09:20
structure it that way i said go
09:22
for it right yeah so that’s just some of
09:23
the deal structures we’ve seen so
09:25
maybe to pause for a little bit let’s
09:26
kind of go through some of the q as if
09:28
anyone has any
09:28
or not q a but sorry go through some of
09:30
the comments if anyone has any comments
09:31
or questions go ahead and leave them we
09:33
will answer them live
09:34
that’s the first one ronnie says what’s
09:36
up guys
09:37
plaid mondays and of course we were
09:38
waiting for that one i
09:40
i literally i was i was i was in my
09:42
closet this morning i was like i’m gonna
09:44
wear one
09:44
yeah and i did wear a black shirt so um
09:48
uh i did this for you buddy ryan says
09:50
preferred equity yep yes equity
09:52
yeah absolutely we’ll get into that here
09:53
in a minute yeah uh chris collins
09:56
basically says oh what’s up guys
09:57
what’s up buddy what’s up man we’re
10:00
still you got you gotta fly into houston
10:01
man we owe you some tacos
10:03
all right buddy it’s been a while i’ve
10:05
seen three classes in one deal
10:07
a1 preferred equity a2 common equity a3
10:10
fund of funds
10:11
yeah all right well we’re not going to
10:12
go through all that because i think it’s
10:13
going to complicate those viewers right
10:15
but
10:15
you know to the point right there is
10:17
another so there’s preferred returns
10:19
there’s preferred
10:19
equity yeah right which is almost i like
10:22
to consider basically like another loan
10:23
right
10:23
yeah it’s there’s a different group of
10:25
people getting money first
10:27
and the investors are after that we
10:28
don’t like that structure so much today
10:30
yeah because essentially you are
10:33
ensuring you pay someone else a complete
10:35
return before you’re paying your
10:36
investors anything so yeah it seems a
10:38
big potential that investors don’t make
10:39
anything and it’s just very you know
10:41
you see that more on probably bigger
10:43
deals too maybe you know i mean
10:45
you know we’ve been hit up by those
10:46
preferred equity shops i’m not as a big
10:48
a fan and
10:49
and either as ferris or that type of
10:50
structure but you could certainly do it
10:52
that way it calls mezzanine
10:54
right second note right all that stuff
10:56
is essentially all the same things
10:58
preferred return or preferred equity
10:59
excuse me
11:00
you know um so that’s but it is it’s
11:02
another way of structuring it that’s
11:04
good
11:04
yeah so uh chris says ferris your mic is
11:07
super low volume
11:08
off channel look at that chris you
11:09
should come down to houston help us fix
11:10
our studio i know you’re an expert
11:12
yeah dude what’s going on mr hollywood
11:15
over there man
11:17
well see but he says in the multiple
11:18
classes does the preferred return
11:20
versus the straight percent return get
11:22
put lower down on the totem pole for
11:24
being paid
11:25
my worry is oh i get paid less yes
11:27
actually chris usually it doesn’t that’s
11:29
actually my problem
11:30
with some of these you know the
11:31
different classes right a lot of times
11:34
some of the classes are structured
11:35
almost like debt right and so it’s
11:37
something to keep in mind
11:38
because a lot of times yeah those
11:40
investors are going to get their return
11:41
first
11:42
then anything left over yeah the you
11:44
know the deal might underwrite like it’s
11:45
going to give a big return
11:46
but i don’t like it because you’re
11:48
you’re the third person getting fed and
11:50
that’s the problem right
11:51
food runs out you’re getting nothing so
11:53
that’s something to keep in mind and i
11:54
think you know i caveat that with just
11:58
read the operating agreement because you
12:01
know
12:01
there’s absolutely no reason why someone
12:03
couldn’t structure it that way
12:04
right you don’t need to structure it
12:05
differently so yeah and keep that in
12:08
mind
12:08
you know there’s definitely a potential
12:10
for that right but then there’s you know
12:11
i mean ultimately every deal is
12:13
different
12:13
and that same structure might work on
12:16
another deal too right but something to
12:17
kind of keep in mind right you know and
12:19
and understanding how the numbers flow
12:21
right you know a lot of people might
12:23
sign up for something
12:24
they don’t quite 100 understand it you
12:26
got to read that ppm and that company
12:28
agreement
12:28
you got to ask questions and you have to
12:30
underwrite these deals on your own
12:32
folks spend the two minutes it takes to
12:35
read the section that talks about
12:36
distributions read the section that
12:38
talks about a cell
12:39
yeah if you don’t read anything at least
12:41
read those two things so those will help
12:42
you understand
12:43
what the structure is right is it
12:45
compounding is it not is it accruing is
12:47
it not right there’s
12:48
there’s deals that they pref does not
12:49
accrue so as a sponsor you know if it
12:52
doesn’t pay out so what
12:53
that’s good you know so there’s things
12:55
to kind of keep in mind you know and
12:56
that’s not how we do ours like i said
12:57
ours rolls over
12:58
right you know and so that’s what i was
13:00
talking about earlier right if it goes
13:02
all the way to sale
13:03
and we owe you know say four points from
13:05
that year one right
13:06
those four points get paid out first so
13:09
you know something to kind of keep in
13:10
mind so chris asks
13:11
what question can i ask be asking the
13:13
sponsor to really clarify when do i get
13:14
paid
13:15
i think it’s exactly i mean i’m glad
13:17
you’re bringing this up because this is
13:18
something that
13:19
i’m seeing it’s more popular and it’s
13:20
been rubbing me a little bit right so
13:22
i’m glad we’re at least talking about it
13:23
but
13:23
you know ask the sponsor what is the
13:25
order of payments right what happens if
13:26
you only have enough to pay
13:28
fraunch number one crunch number two
13:30
does trunk three get anything right
13:31
because again you have to really look at
13:33
that because you know let’s just give
13:34
you an extreme example right let’s say
13:35
tranche number
13:36
two you’re raising five million dollars
13:38
number one you’re raising
13:40
a hundred thousand dollars tranche
13:41
number three sorry you’re raising a
13:42
hundred thousand
13:43
that’s not a lot of money for tranche
13:45
number three right but you have to be
13:46
able to pay that
13:47
you know the prep on that three million
13:49
or the four million before you get to a
13:51
dollar on tranche number three
13:52
there’s a very very almost extremely
13:55
high possibility that charge number
13:57
three never gets anything
13:58
right and so you have to really look at
14:00
that and i think it’s really
14:01
understanding the order of payments and
14:03
it really goes back to what i said read
14:04
that section about the preferred return
14:06
which classes are getting paid and then
14:07
understanding hey
14:09
you know and i think chris maybe the
14:10
simplest way to ask them and say hey
14:12
let’s say your noi you know your actual
14:13
distributable cash in one year is half
14:15
what they said it is
14:16
ask them who gets paid what that’s
14:18
probably the easiest way that’s actually
14:20
then you can understand okay transfer
14:22
number one is getting they’re probably
14:23
getting whole
14:23
trunks number two they’re probably not
14:25
going to get everything they wanted and
14:26
then you can see is trunks they’re going
14:27
to get anything right is it shared are
14:29
they sharing the risk or
14:30
essentially it’s tranche number three
14:32
usually this is what i see tranche
14:34
number three is signing up for more risk
14:35
with the potential of more return but i
14:37
think people don’t really realize how
14:38
much more risk that is
14:39
yeah and i think folks you have to
14:41
realize what is being projected their
14:43
projections right
14:44
these are not guarantees things happen
14:46
you know especially on kind of value add
14:48
you know 30 40 year old assets you know
14:50
you’re gonna so that that was actually a
14:52
good example right you know i mean if
14:54
half of what you’re talking about is
14:55
true right you know i mean is anybody
14:57
who’s gonna get paid yeah
14:58
right and i think that you have to you
15:00
have to ask those tough questions and i
15:02
always tell people too right
15:03
you need to be prepared to underwrite
15:04
the deal on your own too and see
15:06
if you can back into the numbers that
15:08
the sponsors are well you know people
15:09
ask us hey can i have the
15:10
t12 and rent roll and ask us all kind of
15:13
you know like
15:14
like like they’re gonna offend me or
15:15
something i you know that’s fine
15:17
you know we’re an open book you guys
15:18
underwrite it if it doesn’t work for you
15:19
doesn’t work for you right
15:21
you know and so you need to be prepared
15:23
to to see if you can get to those
15:25
numbers on your own
15:26
too right you know so that’s something
15:27
that’s something to kind of think and
15:29
keep in
15:29
consideration yeah so uh preferred
15:32
returns we kind of talked about what
15:33
those are right so let’s talk about
15:35
fees right and i don’t think that we
15:38
call this kind of fees and multi-family
15:39
but
15:40
we’ve seen this as fees in commercial
15:41
real estate across the board right
15:43
yeah you know some of the more common
15:46
runs let’s just go
15:47
from most comment i’ve seen in pretty
15:49
much every deal asset management fee
15:50
what’s an asset management fee man
15:52
asset actually so asset management fee
15:55
is basically a fee that is being taken
15:57
for running the day-to-day right the
15:59
property manager is doing the on-site
16:00
day-to-day
16:01
but there’s kind of the back office
16:02
representing the ownership group as a
16:04
whole so
16:05
that’s what the asset management fee
16:06
industry norms is kind of that one and a
16:08
half two percent that’s what we’ve seen
16:10
right but really it’s again to ben’s
16:12
point it’s important to understand all
16:13
the fees because
16:14
we see deals again we we consider
16:16
ourselves very simple
16:17
fee structure fee light in a lot of ways
16:20
we’ve had people tell us we should be
16:21
increasing our fee
16:22
right it’s important to understand not
16:24
just the structure but also the fees and
16:25
is the sponsor
16:26
motivated to make the deal actually
16:29
perform or are they just making a lot of
16:30
fees and they’re just piecing out right
16:31
yeah
16:32
and so common fees right acquisition fee
16:34
is a good one
16:35
that one’s usually one to two percent
16:37
it’s kind of the norm but one to two
16:38
percent of what though right
16:39
price all right and so but you can
16:41
actually back to asset management to
16:42
your point
16:43
it’s one and one and a half to two
16:44
percent of collections yes total
16:46
collections for the month each month
16:48
so if you collect a hundred thousand
16:49
we’re taking 1.5 we’re taking fifteen
16:51
hundred dollars
16:52
right you know so people need to
16:53
understand how that works right so
16:54
that’s probably that’s the most common
16:56
because we’ve seen that pretty much
16:57
across the board right regardless if you
16:59
have a prof or not
17:00
doesn’t really matter everybody’s always
17:01
usually taking an asset management fee
17:03
right you know acquisition fee is
17:05
probably second
17:06
most common that we’ve seen in the
17:08
industry and like farrah said it’s
17:10
usually one to two percent of we’ve seen
17:11
it
17:12
smaller than that we’ve seen it
17:13
significantly better yeah
17:15
there are some guys that make more on
17:16
one deal than we make up three and
17:18
that’s okay
17:18
it’s all right it’s all right um you
17:20
know now we take it off of the purchase
17:23
price
17:23
people also have taken it off of the
17:25
equity that they raised so yeah there’s
17:26
different things you know there’s
17:27
different ways so you need to ask that
17:29
and we
17:29
every actually every single webinar that
17:31
we’ve ever we’ve ever done we always get
17:32
asked that same question so you need to
17:34
ask your sponsor that right are you
17:35
taking that off of the equity raised
17:37
or are you taking that off the purchase
17:38
price right because then you’ll be able
17:40
to determine what that acquisition fee
17:41
is
17:42
disposition fee yeah disposition fee is
17:43
a fee for selling the property
17:45
yep right it’s a lot of work to put
17:46
together so i’m hell less on the phone
17:48
today with a broker on a deal
17:49
we’re selling right now yeah we don’t
17:51
take a disposition fee today right but
17:53
again a lot of people do and so
17:54
understanding that because again if
17:55
you’re getting nickel and dimed every
17:56
step of the way
17:57
someone’s making a lot of money at least
17:59
is investors being you know are they
18:01
are they being made whole or not yeah um
18:03
and again this was a fee usually one
18:04
percent
18:05
yeah one to two percent once again it’s
18:07
it’s it’s similar in a way to the
18:08
acquisition fee right and one just
18:10
one on the buy one’s on the sale right
18:13
and then you keep going through we got a
18:14
refinance fee yeah we’ve heard of a
18:16
refinance fee as well so similar kind of
18:17
like a disposition
18:18
we’re doing a refinance right now it’s a
18:20
lot of work yeah and we’re not taking a
18:22
fee we don’t take the repairs
18:24
you know in fact the only two fees that
18:25
we take is acquisition and asset
18:26
management so
18:27
yeah all these other fees are just fees
18:28
that we’ve heard of folks that that
18:30
people take and asset management
18:31
well i know so yeah i’m sorry no no but
18:34
you know
18:35
it does not mean if they take fees
18:37
that’s not a bad deal yeah i’m just
18:38
just putting that out there that we
18:40
don’t take them um continuing on
18:42
construction management fee
18:43
a construction that’s one we haven’t
18:44
taken honestly as an operator we
18:46
probably should be taking them
18:47
because it’s just a lot of work
18:48
depending on the deal we’ve done deals
18:50
that are deep value add
18:51
brought the deal down to 40 occupancy
18:53
brought it back up 295.
18:55
there’s a lot of work that went into
18:57
that a lot of headache a lot of stress
18:58
and you know
18:59
again we can buy that deal and make a
19:01
lot of money for investors or we can buy
19:02
a simple deal that’s a lot less work for
19:04
us and so
19:05
it helps kind of share that workload
19:06
that burden that effort i mean that’s
19:08
you know that takes a lot of time from
19:10
not only managing the contractors but
19:13
you know um doing the draws you know and
19:15
just making sure that you’re coming in
19:17
under budget or on budget and dealing
19:19
with the lenders you know they have a
19:20
lot of requirements a lot of paperwork
19:22
on their side that all
19:23
takes time folks you know so i’d say the
19:25
first year or two
19:26
as a um as a gp or as a sponsor
19:30
if you’ve got a value-add play that’s
19:32
going to be where a majority of your
19:33
time is going to be spent
19:34
yep yeah and then let’s see what else is
19:36
there what are the fees that we’re
19:37
missing
19:38
there’s i’ve seen there’s an ap or uh
19:41
ronnie mentioned
19:41
there’s a loan guarantee yeah yeah
19:43
that’s a loan guarantor fee right so
19:44
that’s
19:45
if you sign on the loan as the as the
19:47
loan guarantor right now we’ve heard
19:49
something i’ve heard of
19:50
broker fees that’s the one we’ve seen
19:52
right where people pay essentially their
19:54
in-house an in-house broker or another
19:56
broker
19:56
yeah gotcha gotcha yeah so that’s
19:58
another one which again i mean like
19:59
how’s that different than acquisition
20:00
fee
20:01
so you know understand we’ve seen like
20:02
all six of those on one deal yeah
20:04
we’ve seen and it’s not that there’s
20:07
good and bad but there’s something to
20:08
keep in mind well that one was bad
20:10
but you know that was good so let’s go
20:12
through some money mondays we do this
20:13
monday every every monday 3 30 central
20:15
we talk about a bunch of different
20:16
topics if you have ideas for future
20:17
topics let us know we’re happy to go
20:19
through them
20:19
but at the end and which is right now
20:21
we’re going to go through q a so if you
20:22
have q a
20:23
go ahead and list it we’ll go through
20:24
questions you know to me this is the
20:25
best part it’s the most fun part
20:27
for us i think so kind of going through
20:29
so chris says
20:30
that’s a great response if there’s a
20:32
lower return year one year than you’re
20:33
projecting
20:34
you know that will really show how it
20:35
works and yeah chris like i would just
20:36
say i would be blunt
20:38
half half the return what happens you
20:40
know it happens too right you know i
20:41
mean with these
20:42
value add and repositionings you know i
20:44
mean people right out the gate thinking
20:46
they’re gonna get money month one it
20:48
just doesn’t work like that just
20:49
mathematically doesn’t work
20:50
so you just have to ask those tough
20:52
questions yeah so we did get we didn’t
20:54
get a question ahead of time right
20:56
um any warning signs passive investors
20:58
should look out for with certain deal
21:00
structures
21:01
we kind of talked about this before i
21:03
wouldn’t say if there’s warning signs
21:05
you know i would say that you just need
21:08
to be comfortable with the deal
21:09
structure just like what chris was kind
21:11
of asking about
21:12
you know you need to understand how it
21:13
works right and then you have to say is
21:15
that
21:16
is that in line with my risk profile and
21:17
what i want to make out of a deal
21:19
that’s one thing but to me the warning
21:20
sign is purely if
21:22
the deal doesn’t perform did the sponsor
21:25
just make a ton of money
21:26
right that’s ultimately you know i want
21:28
the sponsor motivated to make sure the
21:29
deal performs hits his metrics and then
21:31
he can make i’m happy for them to make
21:32
money right yeah
21:33
and so to me it’s you know is it the
21:35
deal that you know because you can
21:36
position any deal like it’s going to
21:38
look great yeah and so it’s really are
21:39
they making a ton of money up front are
21:41
they actually motivated to hit those
21:43
metrics hit those hurdles whatever you
21:44
want to call it so yeah
21:45
that’s the that’s that’s what i would
21:46
call my you know warning sign
21:48
yeah you have to look at that and then
21:50
you know ultimately if
21:51
if there are a bunch of tranches before
21:55
it gets to where you’re investing to
21:57
like with the prep equity and some of
21:59
these other
22:00
real creative structures you know be
22:02
careful
22:03
right you know it could be you could you
22:05
can step into a situation where you do
22:07
get
22:07
essentially nuke like on a prep equity
22:09
deal folks you know what what they don’t
22:11
really tell you is that
22:12
essentially if there’s no more money and
22:14
as long as you paid your pref equity off
22:16
everybody gets nuked out you know so you
22:18
have to be very very careful on those
22:20
deals yeah so i would say that’s
22:21
probably the biggest warning sign but
22:23
everything else you just have to say hey
22:25
i’m fine with him taking a fee or i’m
22:26
fine with the structure let’s go for it
22:28
right
22:28
absolutely so continuing on we’ve seen
22:31
longer in turkey so we talked about
22:33
those
22:33
chris says your money your monday lives
22:35
bring so much value guys keep them up
22:37
thank you chris we appreciate it yeah i
22:38
mean we need that type of feedback buddy
22:40
yeah i mean
22:41
you know we we think through this stuff
22:42
we’re trying to educate folks because we
22:44
want people to do the
22:45
the business the right way ronnie says
22:46
what about a guru fee we haven’t taken
22:48
those but
22:49
no you know you know we’re good guys we
22:52
should know
22:52
we’re everybody that knows me knows how
22:55
to tie that
22:56
um you know and in fact you know those
22:58
people should be giving some money back
23:00
yeah so let’s see ronnie says for new
23:02
construction i’ve seen development
23:03
construction fees yeah absolutely yeah
23:04
right i mean it’s a
23:05
developer it has to get paid some ways
23:07
it’s a two-year project so yeah it’s
23:09
a it’s a developer fee it’s essentially
23:10
what it’s called you know yeah
23:12
so continuing on uh chris says uh so all
23:16
these fees are baked into the return
23:18
of for investors but are there any
23:21
that investors should run from to me
23:23
disposition fee because it can
23:24
incentivize a sale even if returns
23:26
to investors are light yeah um this
23:29
position is an interesting one
23:30
but also you talked about the refi fee
23:33
right
23:34
so you should understand one thing that
23:36
we didn’t really talk about we kind of
23:38
glossed over
23:38
is what what is considered a return of
23:41
capital versus return on capital
23:43
right and so previously we’ve made the
23:45
mistake where we did a refi
23:47
and the sponsors didn’t get any of that
23:48
upside because we didn’t pay down the
23:50
the
23:50
pay down the the capital and so really
23:53
in that model as a sponsor
23:55
you know you’re not motivated you know
23:56
the interests aren’t online so i look at
23:58
deals as
23:59
a sponsor motivated or are the interests
24:01
aligned
24:02
for a refi and a seller all right yes
24:04
there’s a disposition fee but also if
24:06
there’s a refi fee they’re just as
24:07
motivated right so
24:08
you know now you got to make sure that
24:09
they’re not getting one not the other
24:11
vice versa but something to think about
24:13
it’s about keeping interest aligned to
24:16
where no matter what you do
24:17
right and as a sponsor operator writes
24:19
your fiduciary duty to get returns for
24:20
investors
24:21
that’s first and foremost but then from
24:22
there you want to make sure that
24:24
whenever sponsors make money there’s a
24:25
clear incentive around making sure the
24:26
investors are getting compensated
24:28
accordingly and i’m going to take the
24:29
contrarian argument that
24:30
that the dispo fee the disposition fee
24:32
might actually incentivize somebody to
24:34
increase the value
24:35
right yeah above and beyond where it
24:36
might be because they’re going to get
24:38
paid at the sale too
24:39
right you know everybody could say any
24:41
one of these fees can kind of be
24:43
picked apart right you know that’s why i
24:45
always go back to
24:46
you know as an lp or as an investor do
24:48
you feel comfortable with the business
24:50
plan
24:50
with the deal with the sub market yeah
24:52
and the sponsorship team
24:54
if so you know and the one thing that i
24:56
wanted to point out right
24:58
is that we have seen deals and we have
25:00
seen decks from
25:01
from sponsors that are that are showing
25:03
gross numbers
25:04
they are not actually ben brought up a
25:06
good point yeah one thing to understand
25:08
is are the numbers you’re looking at
25:09
gross meaning the entirety of the the
25:12
investment
25:13
or is that returns to investors because
25:15
those are very different things right
25:17
let’s just pick a simple example let’s
25:19
say you have a 50 50 split no pref
25:20
right well maybe that deal is gonna make
25:22
a million dollars year one
25:24
okay great you know let’s say you raised
25:26
five million so you got a 20 return
25:28
but really now if that’s 50 50 the
25:30
investors only got 500 000
25:32
so they’re getting 10 percent not the 20
25:33
they thought so that’s this little thing
25:35
to kind of keep in mind yeah you’ll see
25:36
the stuff
25:36
stuff folks just to look out you know
25:38
project level irr versus investor level
25:41
right you just
25:42
you have to be very careful i’ve seen
25:43
that type of creative you know
25:45
um you know ways of structuring uh their
25:48
decks and
25:48
kind of positioning stuff and that’s
25:50
ultimately not that great so let’s keep
25:52
going so for those of you tuning in
25:53
monday mondays
25:54
every monday 3 30 central typically go
25:56
for just about 30 minutes talking about
25:57
a bunch of different topics
25:59
this week we’re talking about
25:59
multi-family deal structures and fees
26:02
and you know
26:02
if you have questions feel free to leave
26:04
them or going through the q a right now
26:05
if you have ideas for future topics let
26:07
us know
26:07
but the q a is the best part it’s the
26:09
most fun part you know we can kind of
26:10
learn together with everybody else
26:12
and one thing one thing i want to point
26:13
out real quick you know the deals that
26:15
you’re going to see from us folks is all
26:16
going to be net
26:17
right so the any fee that we would take
26:19
whether it be acquisition or asset
26:21
management fee
26:22
everything that’s presented most
26:23
sponsors do that i mean i know but they
26:25
don’t
26:26
said earlier so i just want you to know
26:27
that the ones that you would see from us
26:29
are going to be net to investors so
26:31
keeping going down so we’re going to run
26:32
short on time
26:33
uh isaac says what can investor look out
26:36
for when it comes to return
26:37
of versus return on capital right look
26:39
at the company agreement look at the ppm
26:41
it really talks about basically a
26:43
distribution is that a re
26:44
is that paying down the investor capital
26:47
stack
26:47
right or not that’s really what you’re
26:49
looking in for right you’re trying to
26:50
understand
26:51
what that capital account looks like and
26:53
when is that being reduced because some
26:54
people also on distributions
26:56
are paying it down yeah so we’ve had an
26:58
investor trying to argue with us
27:00
about the splits and he said oh you guys
27:02
are taking a lot and he’s showing
27:03
another jail and then i kind of
27:04
after we dug in with them we realized
27:06
well yeah your deal is basically paying
27:08
down and so the sponsor is going to
27:10
always get that 25
27:11
regardless of the prep because each year
27:13
you’re paying down that
27:14
the investment and so they owe less so
27:16
to give you guys an example
27:17
let’s say i invested a hundred thousand
27:19
dollars i got ten thousand dollars year
27:20
one
27:21
so now you’re one i’m owed eight percent
27:23
of a hundred thousand so i
27:24
owed eight thousand dollars so now that
27:26
eight thousand dollars came
27:27
it paid down it could have paid down my
27:29
investment ten thousand or eight
27:30
thousand depending on the language but
27:32
now year two i have ninety thousand
27:33
dollars or ninety two thousand so now
27:35
i’m about eight percent of that and it
27:36
basically
27:37
for the investor over time my investment
27:40
capital drops right so something to keep
27:42
in mind again not there’s not good and
27:43
bad
27:43
but understand them because there are
27:45
nuances that make a big difference
27:46
yeah and have your lawyer or your cpa
27:49
kind of walk you through this folks if
27:50
you don’t fully understand it yeah so
27:52
you know because it can get very very
27:53
complicated the one thing i wanted to
27:54
point out is on a refinance
27:56
the way that we structure it right is so
27:57
say we’ve raised a million dollars
28:00
and let’s just keep it simple we get a
28:01
million dollars out right you know on a
28:03
refinance
28:04
that’s going to essentially give
28:06
everybody their money back so now the
28:07
preferred return
28:08
is no longer right why is that it’s
28:10
because you haven’t you no longer have
28:11
any money in the deal
28:13
right the preferred return is always
28:14
paid on the money that’s still in the
28:16
deal
28:16
now let’s say we only made eight hundred
28:18
thousand right now our preferred
28:20
return is paid on that 200k that is less
28:22
that’s how we structure because again
28:24
it goes back to what chris said earlier
28:26
aligning interest with the refi in a
28:27
cell
28:28
right so something to keep in mind so um
28:31
keep going so john ontario says nicely
28:33
line up on screen gents thank you john
28:35
we gotta have you come down here and um
28:37
you know yeah i tried to line up my head
28:39
right here i told ben not to keep
28:40
swaying but he’s
28:44
we could do an episode with you yeah man
28:46
um let’s see miles wallace says new to
28:48
group
28:48
good afternoon everyone welcome miles
28:50
thanks buddy glad you’re here
28:52
chris collins says what isaac said great
28:54
question as returns come in does it
28:56
lower investor equity
28:57
et cetera so there may be a and then say
28:59
return of capital return on capital so
29:01
again just to rehash it
29:03
the things you want to look for is does
29:04
distributions does that pay down the
29:06
capital stack or not
29:07
does a refi paid on the capital stack or
29:09
not those are probably the two
29:11
biggest ones to kind of keep in mind i’m
29:12
trying to think if there’s any sneaky
29:13
stuff that i’ve seen yeah
29:14
that’s probably the the major two if not
29:16
the only two yeah so let’s see
29:18
so ernest says ernest harbor how’s it
29:20
going earnest
29:21
i was actually just thinking that they
29:22
hadn’t heard from me in a while uh he
29:23
says i’m feeling very learned
29:25
glad if we can learn you then you know
29:27
i’ll take it
29:28
um ronnie says what people don’t realize
29:31
is gps make the most moneys at the end
29:32
after investors get paid at the sale
29:34
ronnie i agree but i also disagree it
29:36
depends on the structure right
29:38
some guys make their money on the front
29:39
end and they’re just trying to buy as
29:41
much as they can
29:42
really quickly right yeah um ernest says
29:44
fees and b’s are both part of life
29:46
if the lp’s getting paid with a gp at
29:48
that point just becomes the label
29:50
totally agree ernest it’s basically just
29:52
it’s just making sure that
29:54
they’re that the lps are getting paid
29:55
you know so you know people
29:57
should not care if the gps are making
29:59
money if the lps are making money right
30:01
yeah that’s kind of how i look at it
30:02
folks i mean
30:03
you know i mean the people are like oh
30:04
you know that said there’s a fee in
30:05
there or
30:06
and this other deal doesn’t have a fee
30:08
well i mean if if our
30:10
if our deal is making just as much if
30:11
not more does it matter right i mean you
30:13
have to kind of think of it like that
30:14
right because there is a one thing i
30:16
always kind of tell people especially
30:17
new investors
30:18
there is a significant amount of work
30:20
that we have to do under these deals
30:22
you know we we live and breathe this
30:24
stuff every single day every single week
30:26
right you know so don’t think for a
30:28
second that we’re just buying a deal and
30:29
coasting through it
30:30
to the sale it doesn’t work like that
30:32
you know yeah so let’s keep going so
30:34
isaiah yes i apologize for if i
30:37
mispronounce i think it’s
30:38
isaiah yes thanks guys for valve
30:40
information what’s up ben
30:41
you didn’t ask me for what’s up so i’m
30:43
gonna let that slide this time but hey
30:44
hey says what’s up
30:45
uh ernest says exactly ronnie says deal
30:48
level irr is a term i’ve seen for
30:50
passive investors always ask for net
30:52
returns completely agree
30:53
so that means you know ask for the
30:55
returns that your dollar is going to get
30:56
you
30:56
not what the problem yeah what the
30:58
project’s going to get yeah
31:00
rob asks as a potential investor is
31:02
there a common model that allows
31:03
investors to have
31:04
more participation in the upside at the
31:06
end and then ernest kind of went ahead
31:08
answer i said
31:08
yes that’s what equity waterfall comes
31:10
into play well actually
31:12
it’s the opposite the waterfall lets
31:13
these sponsors participate make more on
31:15
the upside
31:16
i would say right rob’s question if you
31:18
want you could be what we talked about
31:19
earlier right
31:20
just a straight split right you know
31:22
you’re getting a straight split
31:24
like we had a deal that we sold that was
31:25
just a straight split and our investors
31:27
did really well on that deal like i said
31:28
had we done
31:29
a waterfall we could have milked more of
31:31
that upside and so
31:32
the things that make it more investor
31:34
friendly it’s better splits
31:35
preferred returns always help the
31:37
investors you know assuming the splits
31:38
stay the same right
31:39
and um you know understanding the
31:42
waterfall i mean i guess i have heard of
31:43
a waterfall going the other
31:44
direction right i guess you know maybe
31:46
on a development maybe that’s the
31:48
argument right where
31:49
it’s actually becomes more investor
31:50
friendly over time so maybe earnest
31:52
you’re right but yeah so
31:53
something to think about um so chris
31:55
collins says gp fees are earned for sure
31:58
thanks buddy yeah a lot of people don’t
32:00
realize this is a lot of work guys
32:02
gals you know yeah it’s been more than a
32:03
year about our last deal and trust me
32:05
we’ve done a lot of work on deals since
32:07
then
32:07
so yeah yep you got to uh yeah we’re
32:10
trying to find the right deal so
32:11
hopefully soon
32:12
so yeah so money mondays for those
32:14
youtubers we got a lot of participation
32:16
participation we like the participation
32:17
the q and a’s the fun part
32:19
i think it helps everyone else learn
32:20
something so yeah we wanted to we wanted
32:22
to be interactive we love the q a we
32:24
love the the comments
32:25
let us know if there’s topics that you
32:26
want to talk about we don’t have to talk
32:28
about multi-family
32:29
we love anything real estate anything
32:30
being an entrepreneur business processes
32:32
technology let us know what we can talk
32:35
about seriously
32:37
he’s happy you guys so you know we’re
32:39
happy to talk about starbucks here too
32:41
so
32:42
yeah hey where’s my starbucks baby
32:43
where’s drinking sorry buddy
32:45
this news you lose but no for those of
32:48
you tuning in monday mondays every
32:50
monday 3 30 central we typically try to
32:51
do for 30 minutes we’re already over
32:53
you know and we’re just going through q
32:54
a so people have questions feel free to
32:56
ask and
32:57
you know we’ll leave it up for another
32:58
minute or two and we’ve got a lot of
32:59
questions today so yeah let’s see
33:00
so um we have another question how has
33:03
in-house property management changed
33:05
advance your business what about
33:06
investor returns
33:07
yeah it’s made a big difference yeah i
33:09
mean we you know some deals that we
33:11
took over just you know challenged right
33:13
i mean you know trying to get everything
33:15
re-situated cleaned up and it’s funny
33:17
looking at our charts and our charts are
33:18
literally like this
33:19
so our expenses have dropped
33:21
significantly i would say that it’s
33:23
you know every every property management
33:25
company can drive revenue right you know
33:27
for the most part but what they do a
33:29
really poor job of is expense control
33:31
and i think we have been buttoning that
33:34
up over the last eight months you know
33:36
probably better than anybody yeah and it
33:38
just really but it takes time
33:39
real deals just take time it’s it’s a
33:41
it’s like moving a gigantic
33:43
boat out of the way of a of a glacier
33:44
right you know i mean it’s not going to
33:45
just be like let’s just turn
33:47
the wheel real quick and i was just
33:48
talking about i mean one of our deals i
33:49
was kind of just having all sorts of
33:51
drama six months ago we’re feeling
33:52
really good about it now so
33:54
you know it’s made a big difference and
33:55
we you know we’re doing third party now
33:57
too and so that’s helping us continue to
33:58
build out all the systems we’re just
33:59
scaling up and
34:01
and you know rethinking that business
34:03
how do you give a level of transparency
34:04
visibility that no one’s ever given or
34:05
seen and so
34:06
i mean our expenses have dropped
34:07
significantly and just accountability
34:09
right across the board i mean we’re just
34:11
you know now we can charge here now we
34:13
can trust the information coming from
34:15
the property right
34:16
where we were you know you’re almost
34:18
cringing because you know they’re either
34:19
lying
34:20
to you or they’re just trying to paint
34:21
the best picture of what’s going on at
34:22
the property right
34:23
you know so we got a lot of transparency
34:25
that’s happening too which is good
34:26
because it allows us to make educated
34:28
decisions on that’s exactly right and if
34:30
we have a problem we quickly
34:31
there’s not 10 10 layers removed pick up
34:33
the phone let’s get it done yeah
34:35
um so let’s see let’s do two more
34:37
questions so what miles says this is the
34:38
high quality education bros excellent
34:40
and ps
34:41
i’m in a multifamily grant cardone et
34:42
cetera how do you guys agree with a 16
34:45
unit theory
34:46
do you know a 16 unit theory i do not
34:48
know a 16. i don’t know what the 16
34:50
union theory is
34:50
let’s see what the internet tells me 16
34:52
unit theory let’s see if i can get us an
34:53
answer really quickly
34:56
it’s probably going to take way too much
34:57
time to kind of figure that out miles
34:59
ben disrupt equity.com ferris
35:02
disrupt equity dot com my email to the
35:05
world man sorry buddy this is what it’s
35:06
all about right you know so yeah why
35:08
don’t you
35:08
once you hit us up you know love to try
35:10
to kind of chat and
35:12
see what you’re working on and you know
35:13
we’ll try to answer that question for
35:14
you offline yeah apologies
35:16
so let’s see so we would do one more
35:18
question all right so let’s see we got a
35:19
comment
35:19
great content guys this is my first time
35:21
joining and i’ll be joining future
35:22
sessions for sure
35:23
chris we’d love you to have you on and
35:25
if anyone has any more questions let us
35:27
know oh and one other thing we have
35:28
cheat sheet put together disrupt
35:29
equity.com
35:30
mf cheat sheet so go ahead and you know
35:33
you can grab it there
35:34
yep yep and this is just some stuff that
35:36
we’re putting together we’re trying to
35:37
get best practices folks like we talked
35:39
about earlier we want people to do the
35:40
business right
35:41
right so it’s not going to cost you any
35:42
money we’re not selling anything yeah so
35:44
chris says
35:45
check it out don’t buy anything smaller
35:46
than 16 units that’s what okay
35:48
i i actually i would go further i’m
35:49
going to create the ferris the ferris 70
35:51
unit theory
35:52
don’t buy anything less than 70 units i
35:54
mean you know my first deal i almost
35:55
bought was a 36 unit i’m glad i didn’t
35:57
right
35:58
that was 32 right that’s sorry 32. yeah
36:00
i remember 32 unit
36:01
and you know it didn’t do it and we have
36:04
a 90 unit where
36:05
you know 1-1 staff wise it makes sense
36:07
you could probably get away with up to
36:08
70 units
36:09
75 units but depends on what rents are
36:12
yeah and i’ll give an example we’re
36:14
managing a deal that that’s a
36:15
a 50 unit and a 30. you know you have to
36:17
kind of start to get really creative
36:19
with staffing
36:19
yeah and it’s not necessarily the most
36:22
cost effective way so
36:23
ideally if you can try to do 70 unit and
36:26
above right
36:26
i mean anything 16 definitely becomes a
36:28
problem because then you’re also in with
36:30
16 units you’re in a weird spot is it
36:31
like a residential property management
36:33
company
36:33
or is it a commercial most people aren’t
36:35
going to touch it they’re most
36:36
residential
36:37
don’t know what to do with it yeah
36:38
they’re going to you’re going to be in
36:40
that weird gray area right you know
36:42
whereas
36:42
you know 70 and above you will get legit
36:45
third-party property management
36:46
companies that will touch that right
36:48
especially
36:48
if the revenue is high enough because
36:50
they all base their fees on revenue
36:51
folks so
36:52
just so you know and that’s you know
36:54
that’s what that’s it’s not that we
36:56
wouldn’t buy a smaller one we
36:57
it’s not that it’s just going to be more
37:00
property management intensive to do
37:01
something like that
37:02
right yep you know all right what else
37:05
we got
37:05
so let’s see one guys for those of you
37:08
tuning in monday monday through this
37:10
every monday 3 30 central today’s topic
37:12
was talking about deal structures and
37:13
fees
37:14
people should understand the structures
37:15
and fees that they’re committing to and
37:17
so uh we did a bunch of different topics
37:19
if you have ideas for future topics let
37:20
us know otherwise we’ll pick something
37:22
and again the best part is q a at the
37:24
end so let’s see
37:26
uh and you know so we’re going through q
37:28
a right now we’re already a little bit
37:29
over time
37:30
but let’s see mike says yes i heard
37:31
grant cardone say that actually my
37:32
question was about the 32 unit rule
37:34
70 units is huge yeah i mean honestly
37:37
it’s buying a seven unit and a 32 is not
37:40
that much difference
37:41
it’s just a little bit more equity and i
37:43
know that’s where people get jammed up
37:45
right
37:45
you know find other people business real
37:47
estate is a relationship
37:48
business that’s why we’re doing this
37:50
that’s why we do anything we do it’s all
37:52
about knowing people building up your
37:53
partnership building out your network
37:55
finding people that are like-minded
37:57
where can you network and so work any
37:58
network you can network i mean
38:00
zoom zoom zoom these days but
38:02
conferences multi-family masters were a
38:04
group of part of so you go join the
38:06
multifamilymasters.com facebook group’s
38:08
a good example
38:09
do you know national meetups across the
38:11
country on that as well
38:12
we have a conference that we host the
38:14
next one will be sometime february
38:15
hopefully
38:17
we’ll see what happens there but uh you
38:18
know it’s definitely critical so
38:21
if it’s a deal there are people that
38:23
will happy to partner with you to help
38:24
get that deal done
38:26
all right cool man this one was pretty
38:28
popular yeah
38:29
let’s just go ahead and call it a wrap
38:30
all right well thanks for tuning in
38:32
everybody
38:33
catch us next week we’re all glad to
38:35
have you guys on and again yeah monday
38:36
monday is 3 30 central we will see you
38:39
again again next monday
38:40
what’s our topic ben he doesn’t know
38:42
that’s why i’m asking him what’s coming
38:43
up the ins and outs
38:51
so ben how do you calculate irr uh uh i
38:54
got a smart partner he usually does all
38:56
those calculations for me
38:58
all right well we’ll call it a wrap so
38:59
thank you

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