You may hear that multifamily is a team sport. Indeed it is. In addition to the sponsorship team (aka the General Partner “GP” team), there is an extended team key for the execution of the business plan.
Like in a well synchronized orchestra the sponsor as the conductor leads the way, with the deal team members being a key part of the orchestra that follow the score (business plan), where each brings their unique tune, steps in or pauses when needed, so the LPs can enjoy the music (cash flow) flowing through.
So you may wonder – who are these key orchestra team members.
It would not be possible without finding the deal first. It all starts with the real estate commercial broker – a key partner who will source the deal and share with the acquisition team.
The lender is your largest partner, providing 50-80% of the capital stack. The sponsor team may work directly with a lender they have a pre-established relationship with or with a commercial mortgage broker who will source the loan product with the optimal structure and pricing.
When documenting the deal you want to ensure that you have an experienced real estate and syndication attorney by your side, not only in documenting the deal but also guiding you through the process to ensure you follow all SEC and other regulations.
The property manager (PM) is the key team member who will manage the day to day operations and follow the business plan of the sponsor team. The property manager is the boots on the ground who knows the market, the tenant base, the property. Smaller assets may be managed directly by the PM team offsite. Larger assets will also require the hire of onsite staff. In addition, for larger assets it is not uncommon to also hire an asset manager who will oversee the property manager and ensure the day to day operations align with the business plan and its timely execution. Many operators have that function in-house.
In most value-add deals, the units or common areas will require updates and rehab work. This is where having a well vetted contractor and team (whether it is roofers, electricians, etc.) comes into play to execute on the updates in a timely and quality manner.
In prior snippets we discussed the tax advantages of real estate. And that is why you want a CPA well versed in real estate. For larger assets, it is also not uncommon to have a book keeper to keep track of all the accounting and records and various reports.
Last but definitely not least is your insurance broker who will source the optimal insurance coverage for your property to protect your assets.
Each team member has their role and they all beautifully come together to execute on the business plan and create a beautiful masterpiece, which will make many happy – passive investors with the cash flow and local communities and residents who get to enjoy a better asset.
Download The Busy Professional’s Quick Guide To Investing In Multifamily here.
Disclaimer: The information presented does not constitute legal, accounting, tax, or individually tailored investment advice. Past results do not represent or guarantee future performance.