Category Archives for "Podcasts"

Occupancy Went Down After Cleaning House at Property but Value Increased with Vinney Chopra

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In this episode, we welcome Vinney Chopra. Vinney is an experienced multi-family real estate investor and has closed a total of 26 multifamily syndications in his years in the industry. Tune in as he shares his journey from migrating to the US 40 years ago with $7 in his pockets and the tough decisions he had to face to reach where he is now.

Vinney Chopra’s Interview Show Notes:

  • 00:22 – Introducing today’s guest, Vinney Chopra
  • 00:50 – Vinney’s background
    • From India to San Francisco 40 years ago with just $7 in his pocket
    • He was a mechanical engineer
    • His life as a motivational speaker
    • Getting into real estate investing
  • 03:56 – Vinney’s sore thumb tough decision
    • The struggle was really in hiring
    • The most money lost throughout his career involved hiring the wrong people
  • 06:15 – What Vinney looks at now in a resume
  • 08:17 – A tough decision that had a great outcome
    • Getting a property in Houston 5 years ago
    • A-Class renovation happened
    • Vinney reclassified tenants that made rentals go up
  • 10:55 – The strategy Vinney uses in making decisions
    • Basing decisions on logic: positive vs negative
  • 12:19 – Need help with passive real estate investments? Go to HandfordCapital.com
  • 13:16 – Vinney’s favorite technology: iPad and iPhone
  • 14:12 – Vinney’s favorite quote: Let things happen, don’t sweat the small stuff because life is too short, and you have to be always giving value to people around you
  • 16:20 – Vinney’s favorite book: The Power of Now and The Miracle Morning
  • 17:32 – Connect with Vinney  on his websiteMoneil or by texting SYNDICATION to 474747

Key Takeaways from Vinney Chopra:

  • A resume should not be the sole basis for hiring people.
  • Sometimes, even good hires turn to bad ones in a snap.
  • Look at decisions in a logical way where stakeholders get a win-win situation.

Mentioned Resources by Vinney Chopra:

Who are Dan & Dennae Handford? Find out by listening to episode zerowhere they share their journey as true, authentic serial entrepreneurs.

My Interview With the “Systems Guru”: Vinney Chopra

I first heard Vinney on a podcast in which he was talking about how he came to this country with only $7. From there, he accumulated property after property after property, and he now has a youth academy focused on 18-year-olds and is managing over $200 million worth of multifamily units.

Today, I wanted to speak with Vinney and hear his story because it’s chock-full of value and wisdom. To learn his story, methods, and strategies, refer to the video above. I’ve included timestamps below so that you can navigate the discussion at your leisure:

1:15—Vinney’s modest upbringing and journey to America with only $7

2:50—Going from an engineer to a salesperson

6:25—From student to teacher: Training and coaching about multifamily sales

8:28—How to pivot from single-family real estate to multifamily

10:28—Vinney’s deal-finding techniques

13:52—Expanding his reach to marketplaces across the country

16:55—What is an offering memorandum?

18:00—A short break and a word from our sponsors

21:34—Back to our show!

22:19—Vinney’s biggest “why”: What kept him going through the hard times

27:14—How much time Vinny spends finding or raising money versus finding a deal

28:37—Advice for single-family agents about our turning market: Should we be cautious or carefree?

32:38—Wrapping up his previous company and meeting in the middle: How he manages to operate as CEO when his marketplaces are all over the country

33:38—Vinney’s Youth Academy; his advice for those just starting

36:56—Vinney’s family; Moneil Management Group, one of his companies, is named after both his children

38:16—Vinney’s parting words; an invitation to reach out to him

I’m so grateful to have had Vinney Chopra on my show. He is a fountain of wisdom and knowledge about multifamily syndication and so much more.

To reach Vinney and his team, text the word “Syndication” to 474747. He believes in prompt communication, so you can expect a reply shortly after. After he has collected your email address and contact information, he can offer a range of free things, including a sampling of his courses. Additionally, you can visit his website at www.VinneyChopra.com to see all his podcasts, interviews, techniques, and more.

Vinney also likes to blog on the BiggerPockets website, where his content has gotten him named Editor’s Choice for the last three or four months. To read his blogs, visit https://www.biggerpockets.com/users/vchopra

If you have any questions for me, you are always encouraged to reach out to me and my team at Katcam Real Estate. We’d love to hear from you.

The Long Road to Multifamily Syndication Success — with Vinney Chopra

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This episode of the Real Estate Investment for Cash Flow podcast features Vinney “Smiles” Chopra, a successful multi-family syndicator, fundraising consultant and motivational speaker.

Vinney shares his inspirational story on how he came to find his calling which eventually led him to move to the United States with only 7$ to his name. He goes on to share his business experience, pitfalls, successes which may inspire any listener to put in the work, and maybe follow Vinney’s example in the real estate industry.

Kevin and Vinney discuss the advantages of multifamily home investments, emerging markets and management perspectives. Vinney also gives practical tips and tricks on how to thrive in the business that he himself employs in his real estate career.

Quotes:

“To be better, you really got to have the drive that nothing can stop you.”

“You start dreaming about it, you start thinking about it, you want to learn more and more and that’s what I did.”

“Nowadays, we feel like we can overcome everything, and we could do overnight success, I just want the audience to know to please hang in there, even if you had success or no success but you got to get a coach or a mentor and do get into it.”

“It’s a team sport. You can’t do it alone, you’ve got to find some good like-minded persons.”

“The key thing is to be the best detective ever, to find the information, before the broker knows about it, so that’s how I’ve been able to purchase these properties.”

Discussed in this Episode:

  • How Vinney got into the world of syndication
  • Vinney advises on business partnerships
  • Kevin and Vinney discuss emerging markets
  • Self management vs Outsourcing

Job Opportunities with my Team: Click Here

Recommended Resources:

  • Check out our company and our partnership opportunities by visiting SunriseCapitalInvestors.com
  • Would you like to partner with us on future MHP deals, call 844-CASH-FLW to learn more or click here to schedule a time on our calendar.
  • Grab a free copy of our book “The 21 Biggest Mistakes Investors Make When Purchasing their First Mobile Home Park…and how to avoid them click here

CREPN #184 – Syndication Profits from Multifamily Sale with Vinney Chopra

Syndication Profits are proportionally the greatest when the property is sold.  

Multifamily Syndicator, Vinney Chopra, takes us through a recent property sale, providing insight to investor earnings, including payment during operation and through the disposition.

Preferred Return

Most multifamily syndicators provide a level of preferred return to the investors from operating the property.  These proceeds are distributed either monthly or quarterly. Vinney pays his investors quarterly, providing a level payment for three quarters, with bonus returns paid after the fourth quarter.

When you buy a value add property, you have to implement your value add plan in order to increase the value.  Renovations, rent increase, etc, are all examples of ways to increase the net operating income and the property value.  

Syndication Profits When You Sell

When investors invest their money into a syndication, they are informed of the exit strategy and a  window of time for when the property will likely sell. It is upon the sale of the property that the majority of the syndication profits are realized.  

In a recent sale, Vinney received a Broker’s Price Opinion that the value had increased over $3 million since he and his investors purchased the property.  When the investors learned of the valuation, they elected to sell.

Once the decision to sell is made, investors are made aware that the quarterly distributions will cease until the property is sold.  This is a measure to conserve cash incase there are some buyer due diligence requirements to complete the sale. This avoids the need for a cash call from the sellers and or a discount at closing.

The sales process can take several months.  For this reason, it is very important to vet the buyer’s ability to close.  If you chose the wrong buyer, and they fail to close, you can lose market time, and frustrate your investors.  

When done properly, the syndicator buys a property, implements the value add plan improvements, increases the rent, noi and market value.  The cycle is completed with a successful sale. This makes investors very happy, and likely willing to invest with you again.

BIGGEST RISK:  Each week I ask my guest what is the Biggest Risk they see that real estate investors face.  

BIGGEST RISK: SEC Regulations:

Be transparent.  Make certain you follow the rules, have pre existing relationship with investors, and they can afford to invest in your deal.  You must guard your investors interest.

Syndication Profits are proportionally the greatest when the property is sold.  

Multifamily Syndicator, Vinney Chopra, takes us through a recent property sale, providing insight to investor earnings, including payment during operation and through the disposition.

Preferred Return

Most multifamily syndicators provide a level of preferred return to the investors from operating the property.  These proceeds are distributed either monthly or quarterly. Vinney pays his investors quarterly, providing a level payment for three quarters, with bonus returns paid after the fourth quarter.

When you buy a value add property, you have to implement your value add plan in order to increase the value.  Renovations, rent increase, etc, are all examples of ways to increase the net operating income and the property value.  

Syndication Profits When You Sell

When investors invest their money into a syndication, they are informed of the exit strategy and a  window of time for when the property will likely sell. It is upon the sale of the property that the majority of the syndication profits are realized.  

In a recent sale, Vinney received a Broker’s Price Opinion that the value had increased over $3 million since he and his investors purchased the property.  When the investors learned of the valuation, they elected to sell.

Once the decision to sell is made, investors are made aware that the quarterly distributions will cease until the property is sold.  This is a measure to conserve cash incase there are some buyer due diligence requirements to complete the sale. This avoids the need for a cash call from the sellers and or a discount at closing.

The sales process can take several months.  For this reason, it is very important to vet the buyer’s ability to close.  If you chose the wrong buyer, and they fail to close, you can lose market time, and frustrate your investors.  

When done properly, the syndicator buys a property, implements the value add plan improvements, increases the rent, noi and market value.  The cycle is completed with a successful sale. This makes investors very happy, and likely willing to invest with you again.

BIGGEST RISK:  Each week I ask my guest what is the Biggest Risk they see that real estate investors face.  

BIGGEST RISK: SEC Regulations:

Be transparent.  Make certain you follow the rules, have pre existing relationship with investors, and they can afford to invest in your deal.  You must guard your investors interest.

CREPN #169 – Multifamily Syndication Structure and Fees with Vinney Chopra

Multifamily Syndication Structure and Fees provide a significant opportunity to make money.  Who better to ask about the numbers than the sponsor of twenty-six syndications, Vinney Chopra.

To buy a large multifamily property through syndication, it takes the coordination of several like minded investors.  The General Partner, finds the deal, builds the team, and gets the commitment from the limited partners to invest in order to close the deal.  

Members of the LLC

The owner of the property is the LLC entity created specifically for this property at closing.  Members of this entity are the General Partner, sponsor, and the Limited Partners, investors. The range of ownership depends on the specific deal, but a split range of 20-40% for the General Partner and 80-60% for the Limited Partners is common.  The specific opportunities are spelled out in the private placement memorandum. The opportunities to make money are numerous for the Limited Partners including:

  • Distributions; this is from the operational cash flow.  Distributions can be tied to a preferred rate of return for the LP’s.  This payment can occur as frequently as monthly – quarterly. The LP and GP can participate in the excess over the LP’s preferred return on a predetermined percentage split.
  • Disposition: When the property is sold, the equity gain is split between the GP and LP based on the ownership split.   
  • Refinance: If the market supports it, a refinance can return the investors capital before selling the property.  

So what’s the reward for the General Partner?  Below are the various ways to get paid as the sponsor of a syndication.

Acquisition Fee

The acquisition fee ranges from 2 to 4% of the purchase price.  It is the sponsor’s reward for putting the deal together and raising the funds needed to close.  A good rule of thumb for the capital raise is 30-35% of the purchase price. The money raised will cover;

  • Down payment 20-25% of purchase price
  • Closing cost
  • Annual insurance
  • Annual taxes
  • Syndication Fee
  • Real Estate Legal Fees
  • Capital Expenses deferred maintenance ( more if significant improvements needed)
  • Acquisition Fee

Loan Sponsor “Enhancer” Fee

In order to borrow the funds needed to close the deal, the lender one investor guarantee the loan.  This individual must have a personal net worth greater than the loan amount. The fee for this obligation ranges from a flat fee to a percentage of the General Partnership.

Asset Management Fee

Throughout the course of holding the property, the asset manager is responsible for overseeing the property manager and any repositioning of the asset if a value add plan is to be executed.  A sponsor will also prepare and provide regular reports to investors on the property’s performance. The Asset Management fee is typically 1-2% of annual collected income.

Property Management Fee

If you have enough units, consider creating a property management firm.  This is an excellent opportunity to serve your investors and collect a fee.  Fees range from 4-10% of the total income collected depending on the size of the property.  When you are the property manager, you can negotiate better deals with your suppliers for the benefit of your investors.  

Refinance Fee

While operating the property, if the market supports, there may be the opportunity to refinance and return some equity to the investors.  The proceeds of the refinance are paid to the investors to return their investment capital. When you can return the investors original capital and continue to pay them a quarterly distribution makes investors happy.  The sponsor can charge a refinance fee, 1%, for doing the work necessary to complete the refinance.

Disposition Fee

When it’s time to sell the property, sponsor will charge 1 – 2% of the sale price.  The fee is for the work required to prepare the property for sale. This includes: conduct property tours, gather the broker price opinions from four different brokers, and meet with CRE Brokers.

CREPN #165 – Letter of Intent & Purchase Sale Agreement with Vinney Chopra

The Letter of Intent and the Purchase Sale Agreement are significant steps towards closing your multifamily purchase.  

When you find a multifamily property, you run the numbers.  If the numbers show promise, it’s time to engage the seller to see if you can put the deal together.  The initial non binding offer used by buyers is a Letter of Intent. If you and the Seller find agreement in principle, you will formalize the offer with a Purchase Sale Agreement.

Letter of Intent

The Letter of Intent is a non binding presentation to the seller that spells out the framework of your offer, your intent to purchase the Seller’s apartment building.  This should be addressed to the selling broker, not the Seller. To see a sample Cover Letter & LOI used by Vinney, click here.

The Cover letter should summarize your intentions.  It should also include any relevant experience you or your team has closing on Multifamily Properties, to give the buyer confidence you will close if they accept your offer.  

The Letter of Intent is not binding, so it does not require legal review, but should contain::

  • Property details, address, number of units.
  • Identify that your offer is based off of the numbers provided by the selling broker.
  • General terms & conditions to purchase by your company or assign:
    • Purchase Price
    • Estimated requirement for Capital Expenses
    • Earnest money, Vinney recommends at least 1% of the sale price.
  • Timeline to complete the purchase:
    • Due Diligence timeline
    • Inspection Period
    • Extensions if needed and conditions to extend
    • Closing period
  • Financing period:
    • Lender approval letter
    • Down payment funds
  • Readiness of Property, including occupancy percentage required.
  • Inspection documents required from the Seller:
    • Financials
    • Rental Agreements
    • Survey
    • Phase I Environmental Assessment

Because you will be offering less than selling price offered, it is to be expected that the Seller will either reject or counter your initial Letter of Intent. After some back and forth, if you are able to reach agreement in principle with the Seller, you need to put the property under contract.  This is accomplished using a Purchase Sale Agreement.

Purchase Sale Agreement

The Purchase Sale Agreement is a legal, binding agreement.   The PSA includes all of the items in the LOI and spells out all the legal performance requirements for both you and the Seller.  Each property is unique and requires that you have your attorney prepare and review to protect you.

Vinney advises that you communicate early and often with the Seller during the Due Diligence period to avoid any surprises.  He suggest that your compose a Repair Letter as soon as you know the condition and any additional capital expenses that you were not aware of prior to your offer.  

Similar communication regarding the financing should be made to keep the Seller in the loop.  When you do this, the Seller is more likely to credit you additional funds to fix the problem, or accommodate the time needed to obtain financing to keep the sale on track to close.

CREPN #161 – Multifamily Underwriting with Vinney Chopra

Multifamily Underwriting has three key aspects for consideration to determine if you have a true investment opportunity.  They are Market, Financials and Physical Property.

Market Keys for Success

When looking for a Market it is important to look for an emerging market.  An emerging market is one that has jobs, jobs, jobs. Population of the city is not as critical as the number of jobs and its distance to a major market, however you will want to set some minimum population criteria.  

You are looking for growth.  Talk with the locals to determine the true prospects for new jobs. Call the local brokers, property managers and the chamber of commerce and to to the building permit office to find out the path of progress and where the population is moving.   

While underwriting the market, get to know the real estate professionals that you will need on your team.  These are the boots on the ground that will be able to provide you with potential properties. Vinney has found that you will be more successful if you specify exactly what you are looking for, class of property, neighborhood, number of units, etc.

Once the brokers know your criteria, they will bring you deals.  

Financials for Multifamily Underwriting

There are two aspects to your initial multifamily underwriting. You want to start with the financials.  How is the property performing financially? At the same time, you can do an initial property inspection using online searches or with the help of your broker.  

Vinney recommends that you never fall in love with the property.  Only fall in love with the numbers.

What to look for in the numbers.  Start with the rent roll, and expenses.  You are looking to identify areas where you can save money, or those that will be different than the sellers.  Vinney recommends you use his Deal Analyzer. You can list the sellers numbers, and the numbers you find that will reflect our operating cost side by side.   This will more clearly identify if the property is a real investment opportunity.

One key metric is Cash on Cash ratio.  This provides a simple measure of the net return on the cash required to close the deal.  Vinney looks for 10.5% as a minimum for the multifamily properties he acquires.

If the initial numbers look good and you pursue the property, you will need to do a more thorough analysis to confirm the sellers numbers including bank statements, utility statements, leases, trailing twelves, etc.

The Physical Property

The physical property has two aspects you are looking for during your physical inspection; value add opportunities and capital improvements that are needed.  

The best investment opportunity will be one that you can add value to.  This could be updating the kitchen and baths, painting the exterior, adding storage space, dog parks, etc.  These improvements that residents are willing to pay more. This translates to a higher Net Operating Income and higher property value.

The condition of the physical property cannot be underestimated.  During the physical inspection, you are looking for the physical condition of the property; roof, plumbing, electrical, heating & cooling systems, paint, parking lots, landscaping, etc.  Make notes when you find needed repairs.

Vinney has had greater success by communicating immediately with the seller’s broker about any needed repairs rather than waiting.  By communicating right away, the seller is not caught off guard at closing.

When you determine the repair cost, Vinney has been successful by requesting a seller credit at closing rather than a sale price reduction.  The benefit of a credit is that you have the funds needed to make the capital improvements needed instead of paying for out of cash flow.

To develop your multifamily underwriting skills, get in the habit of analyzing deals.  This practice will sharpen your ability to recognize when a true investment opportunity comes your way.

CREPN #153 – Building Your Multifamily Syndication Team with Vinney Chopra

Multifamily Syndication is a team sport. You will multiply your success when you create a winning team.

Vinney Chopra has successfully purchased over 26 multifamily properties through syndication. In this interview he describes the members you need on your multifamily syndication team for success.

Relations at all levels are key to your success in all real estate investing. For newer syndicators, you can overcome a lot when you have experienced professionals on your team.

Once you have selected an emerging market to invest in, you need to find the following members for your team.

Partner: this is the person you identify with that shares your vision and can share in doing the work that needs to get done. Someone with a different skill set that compliments you tends to work best. There are numerous jobs that need to be taken care of and together you can divide the work and conquer. One thing to consider is a partner with strong financials. Chose your partner wisely because you will likely be working together for multiple years.

Multifamily Acquisition Team

Commercial Real Estate Brokers are essential to success.  Due to the nature of commercial real estate, having relationships with multiple brokers can pay dividends.  Brokers have the relations with the local property owners, know the market, the properties, owners and who is a potential seller.  You will do best if you present your specific buying criteria so they know exactly what you are looking for.

Loan Broker is your source of funding.  The amount you will qualify is dictated by the networth of your general partners.  An experienced loan broker will know the various programs available and be able to find you the best funding.

Attorneys are critical to the legal structure needed for your success. The attorneys will form the LLC entity for the property and your operating company.  You also need a securities attorney to prepare the private placement memorandum, operating agreement and subscription agreement. Each of these are critical your ability to raise money and stay out of trouble.


Multifamily Due Diligence Team

Property Manager has the critical needed experience managing multifamily properties.  The property manager will also help recognize issues during your inspection that need to be addressed with the seller.  An experienced property manager has will convey confidence to lenders and your investors. A good property manager has relations with contractors, knows the laws and has systems to deal with most situations.  Their experience is key to the profitable operation of your property.

Investors: Start talking to everyone as soon as you decide you will be investing using syndication model.  You must have a prior relationship with your investors who invest in your syndication. Without investors, you will never buy a property.

CPA: Your CPA will prepare the annual financials you need to communicate the property’s performance to your investors.  Your investors will expect your numbers to be presented in a standard accounting format.

Contractors of all types.  The good news is that with multiple units, you have the chance to achieve economies of scale.  When you find a quality contractor that provides the best service and price, add them to your “preferred vendors” list.  These are your go to solutions when a problem arises. Let the contractors know that there will be additional work in the future and see if they can recognize this future work in their pricing.

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