MFH is the obvious choice when it comes to jumping into syndications because it is the shorted logical leap for a single family home investor.
Here are some other reasons:
- We need more housing for class-C and class-B renters due to population increases and rising interest rates
- Inflation favor hard assets
- We are no longer a buying nation we rent (think millennials)
- The government is trying their best to incentive investors – Follow the money people!
- 2018 tax changes with bonus depreciation make it better for projects like large apartments to get better tax treatment than ever before via a cost segregation.
- Large employers or job growth
- Population increasing
- Rent increases
- Occupancy/Vacancy stabilized
Typical business plan:
- 60+ units or more to get economies of scale and to have dedicated staff on site
- 1970-1980s Class B or C buildings
- Utilize Fannie Mae or Freddie Mac Non-Recourse debt with up to 12-year loan terms
- Buy right – rehab units with $2,000-8,000 per unit – reposition by improving operations and stabilizing rents for exit
- Property cashflows day one after purchase
- Re-brand (new signage and online presence)
- Poor existing property management
- Old tired units or leasing center
- Outdated amenities
- Creative improvements using best practices and technology
- Additional opportunity for extra income