Go to any app on your phone and you can find a house or apartment for sale. It is exciting shopping for investments. However, it is no secret that we are in a hot market. How do we know if the prices sellers are asking are too high? It is not a simple answer, but […]
Real estate investing, like any other form of investing, can be risky. But not all risk is created equally. Some risks can be managed. Fortunately, for real estate investing, much of the greatest risks are mitigated with sound investment practices. These certainly include conservative underwriting, but also achieving flexibility from having multiple options. Multiple Exit […]
It is widely known that the top income source of multifamily investments is rental income. Without the ability to achieve high occupancy and rent growth, many investment opportunities would not otherwise make sense. Aside from rent collections, multiple streams of income only helps the valuation of the property as the investment team positions it for […]
What is a T-12? When underwriting a multi-family real estate investment, one of the common documents expected is the Trailing 12-months report, also known as the T-12. This document, provided by the seller, illustrates the the income, expenses and net operating income that the property has generated within the previous 12 months. This information is […]
When listing multi-family real estate investment opportunities, brokers will often provide the Offering Memorandum (OM) which includes details about the market, property, selling points and financials. As part of those financials, the broker will include financials from the current and/or previous year as well as the pro-forma. What is a Pro-Forma? The pro-forma is simply […]
We have all heard it and most of us working professionals have followed this path suggested to us by well-meaning loved ones or the culture in general. Invest enough in your 401k so that when you are eligible for retirement, you can withdraw from that nest egg and live off of it until you die. […]
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Especially after the pandemic, investors were very wary of student housing, a unique niche within the multifamily asset class. Aside from many students going home during the pandemic and the newfound question of the future of college campuses, there are a few challenges to student housing that keeps investors away. ⚠️ Student Housing Disadvantages First, […]
What is a T12? Effective underwriting is the foundation of multi-family investing. Without good underwriting, any operator is sure to go in blind, betting with hope for positive results and returns for investors. One of the essential documents needed in order to effectively underwrite a real estate asset is the Trailing 12, also known as […]
People that know me closely know that I write articles on real estate investing topics each day. I started writing in July 2020 and now, as part of growing Robinson Capital and acquiring more real estate writing is a regular activity. Especially having gone from weekly article releases to twice weekly, the question that I […]
In the article Physical vs. Economical Vacancy, we explained that not having tenants in the units (vacancy) is not the only impact to income. If residents are not paying, then that is an economic loss referred to as bad debt. Bad debt, or uncollectible rent, is a line item to understand on the P&L of […]
Buying large commercial multi-families can be different from buying in the residential sector (2-4 units). Once you start looking in the five units or more range, you are in commercial territory which involves using commercial loans. Commercial real estate is underwritten differently than residential; whereas residential is valued based upon comparable sales, commercial assets are […]
Financial wealth is not everything. In fact, it should be a means to an end and not the end itself. Unfortunately, many people make it their end, and, even worse, do not know how to measure whether they are winning in their wealth-building journey or not. Rather than be like them, I encourage you to […]
In an earlier post, two types of appreciation, we discussed market-driven appreciation, something that cannot be controlled, and revenue driven appreciation. Market forces drive one and good management drives the other. Unfortunately, some investors are betting on market forces for their returns and placing less focus on the ability to fundamentally grow value through optimizing […]
What is an Off-Market Deal? As real estate syndicators develop broker relationships in key markets, sometimes true off-market deals are presented. This means that the property is not listed or being marketed to the general public. The reason that I specify “true off-market” is because sometimes what is communicated as an off-market deal is not […]
I was recently thinking to myself about operating my personal investments as a business: maintaining systems, gaining efficiencies, automating as much as possible…customer service…. And then I thought, who are the customers in a real estate business? As an individual investor, it seems to be easier to answer, since there are fewer parties involved. When […]
For those who are new to private investing and passive investing in syndications, it can be overwhelming to consider each of the steps to position yourself to make your first investment: the mindset shift to passive income, getting educated on diversification and the attraction to multifamily real estate, networking with others in the space, lining […]
The multifamily asset class is proven to beat inflation, provide cash flow and outsized returns from the increase in equity through value-add strategies. Further, it provides a need to communities who could use safe and decent housing as the supply of housing cannot keep up with demand. All stakeholders can win from investing in this […]
What is GRM? A common metric in multi-family investing is Gross Rent Multiplier (GRM), which measures the price being paid for the rent the asset produces. The lower the GRM, the more favorable. This signifies that the buyer is paying a relatively lower price for the rental income produced. A simple example: if a buyer […]
You may have heard, but in case you haven’t, when it comes to your real estate investment portfolio, your property manager is the most integral part of your team. Why is this? Your PM directly manages your or your team’s real estate assets. They work directly with the residents of your property, have a real-time […]
Like many, my foray into investing began in college after a gaining an appreciation for the stock market. I was attracted to the idea of discovering new companies, investing my cash into their stocks and being able to see my funds in a stock portfolio dashboard. I loved watching those numbers climb. I felt myself […]
The word “Risk” has become such a scary thing; in fact, we do not even treat it like a neutral word. Often, when it is used, it brings with it negative associations or feelings of fear and anxiety. We discuss risk as the possible downside to any decision, opportunity or situation and not the potential […]
On this investment journey, we encounter many obstacles, ranging from speed bumps to mountains. To overcome takes knowledge and experience, a good network and most importantly, a persistent approach to problem-solving. In the multifamily investment business active investors must wear many hats: The list goes on. Any firm that actively syndicates great multifamily investments needs […]
One of the most attractive aspects of the multifamily asset class is the ability to grow the value of the property by improving net operating income, which is the result of improved performance. Physical Value-Add The value-add strategy grows the value of the property by making improvements that does any combination of increasing income and […]
Loss-to-Lease Loss-to-lease is an economic vacancy line item that describes how much the operator is losing by charging rents below the market rates. Especially in fast-growing markets where rents continue to rise, each property will have loss to lease at some point. As the buyer, loss-to-lease could be evidence that there are further opportunities to […]