Approaching Physicians about Syndicating Apartment Complex Purchases

[delinquenthouse]

I am an aspiring real estate syndicator looking to invest in apartment buildings around major universities, and renting them out to professional and graduate students.  Based on my research, I feel this is a group that is often not really marketed to by universities and or developers.   I'm creating a pitch book that highlights my investment strategy.    Of course, in a syndication the investor has a passive role because they do not participate in the day to day management, and invest only some capital.  Additionally, I would have some of my own capital invested in every deal.  About 100K.

What is the best way to approach physicians about my investment strategy?  Would you as a physician be receptive to receiving the pitch book by mail, or email?

I'm just trying to figure out ways to grow my potential investor base before finding a good deal for us to invest in.

[NJDoc]

Ok - been there done that...almost exactly. The asset is still clicking along throwing off cash, all good. However, the fund raising was a stressfull nail biting experience.

Lots to go over if you wish, maybe private message me or if you want to talk on the phone I am more than happy to do so.

 

 

 

[Zaphod]

Not sure this is an under served group or niche, sure they may not be marketed to strongly but thats because their somewhat a captive audience and you dont need to market for high occupancy rates. Everyone sees the value I believe, and thats why the properties are so expensive.

I've had the same thought myself so I imagine many people are interested.

[NJDoc]

So, I will reiterate my offer to discuss this privately.

I understand this situation probably better than most people on this board, just my guess of course. But, I have pursued an almost identical track.

If you want to march ahead alone...PLEASE do your research especially on the SEC offering side. Check the rules on RegD offerings. Hire an SEC attorney, especially if you are planning approaching people outside of your home state or people you don't know, file a PPM correctly. Check, double check and triple check any numbers on assets you want to acquire and figure that the reality is that they are 5-10% off in the numbers. S*#@ happens in real estate, esp. in CRE. Be prepared for delayed maintenance on the building you acquire. Be very , very cautious about management companies , as they are not on your side, no matter what they tell you. Be prepared for investors to chicken out at the last minute , leaving you with a contract and closing date and short big money. Yes, it can all go smoothly, but the professionals in this arena, are serious professionals just as you are. They know the game 20x better than you and know how to protect their fees. You will likely be surprised.

Caveat emptor.

 

 

 

[delinquenthouse]

Zaphod,

Let's discuss the idea further.  I'd love to get your input as to why this would or not work?

I guess for me.  It would work because 1. The luxury apartments being built now, are way too overpriced for students.  Yes, I"ve read articles that the parents are opting to pay higher prices than the average because their kids want it.   2  Graduate students/professional students are often saddled with large huge student loans, so they are looking for places that are economically cheaper without sacrificing a quality place to live.  3.  Grad students may have families that will live with them, so a place with a "rent by the bed" policy would not work for them.   3.  The new places going up are resorts probably filled with undergrads looking to party their four years away.  A grad/professional student needs a quiet place to live to focus on the studies, or get a good night's rest from long hours of research.   4. Grad students, first concern is where to live when moving to a new city.  I could fill that void by marketing directly to them.  5.  I've been to lots of the University websites, and most of them do not address the living situation of grad students.

 

Why it may not work?  1.  I can't buy a 200 unit building and fill it with just grad students.  There aren't enough of them.  2.  I may miscalculate their taste in apartments, and they want to live in luxury building.  3.  Yes, they could "rent by the bed" with other grad students.

[Zaphod]

I dont know anything about your overall thesis more than the above, however, its somewhat irrelevant. It could work whether or not your reasoning is correct and blow up even if you are very very correct. The most important part of your venture is the stuff NJDoc is discussing, nothing matters if you cant nail that part.

From my humble yet still offered know nothing in reality about the overall situations your looking into, it seems like your overthinking and estimating a lot about grad students, seem nearly like personal opinions. I wouldnt do anything without studies and focus groups, definitely not on my assumptions. In fact, my assumptions and experience are opposite of yours, most grad students were just recently and most resemble...undergrads. Unsure why you'd only focus on this group unless you feel there is a niche to be filled. In fact I didnt have to work anymore in Med school and had way more time than ever to have a good time. Of course you're not targeting the students money, its the parents, kids dont have anything really and this has been the trend and is very obvious when schools figured this out.

Even if you're assumptions were correct, how scalable and big is the market? Those would be more important to me than making some super niche case work once or twice. Build in flexibility that works for most situations. People are having kids/families later and later, you're fighting demographics with a large part of your thesis, most people will simply want convenience and certain amenities just like any other tenant.

[delinquenthouse]

Thanks Zaphod.for.the.fresh perspective.