I’m currently in a situation that I have been debating as to how I should go about it. I thought this forum could generate an interesting discourse on pathways/investment ops.
My dad owns a construction company that has generated him substantial cash and has given me the opportunity to invest about $600-800k on his behalf. I’ve worked for my dad’s construction company every summer/winter since I was 15 years old.
We have discussed putting his money into a small multifamily value-add deal in LA/OC/SD with the hopes to exit in a few years.I would ideally like to build my dad’s portfolio on the side while working. Once it is built up enough I could leave my job with enough experience to go out on my own to build my own company through this portfolio.
My biggest question is… what would YOU do if you were in my situation?
Depending on how finance-able I/ the deal are, I'd do value add retail but that's because I would know how to lease the thing.
If it's your first deal and you guys don't have much experience in owning RE, why not just got for a stabilized deal? It'll give you a few years of ownership experience that would help a lot.
Retail is something I've entertained, but I'm not as confident with the leasing process. My dad has done a few ground up construction projects and TI's in retail, but that is about the extent of it.
For the most part, his experience in RE is from developing SFRs back in 2004-2007 (still owns and rents one out). I've absolutely considered a stabilized deal, however with the low caps in SoCal we would need to be in the 40-30% LTV range in order service the debt and cash flow. My thought process was that, because of our construction background, a small multifamily value-add deal wouldn't be too difficult and could provide us solid cash flow and disposition ops.
I work for a fund that handles those exact types of deals. Let me know if you have any questions.
PM'd.
Bump
I would find someone who has been working in the development/brokerage business and is starting out on their own doing small deals and you can act as a capital partner.. This way you can learn the process and also see estimated costs vs. actual costs while earning a decent/modest return on your money.. Do a few of these and then do your first deal.. This is a boring approach but I think it would end up being worth the wait. Thoughts?
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