Real estate capital raising and syndication
Multifamily Value-Add Investor Mandate: What Dylan Looks For
Multifamily Value-Add Apartment Building Investor Mandate Interview
Multifamily sponsors and operators who want to know what an equity investor expects before they send a deal.
Summary
Dylan invests only in multifamily, and he looks for existing value add apartment buildings of 75 to 300 units. He avoids new development and larger portfolios of 400, 500 or 1100 units. His two goals for 2020 are wealth preservation through assets held 10 plus years, and partnering with good owner operators who need equity for their deals.
He is happy to be a limited partner and prefers to stay hands-off. If a sponsor asks him to fund the majority of the equity, he typically wants carve-outs such as buy and sell decisions or spending above a set threshold. He searches nationwide in stabilized, high-growth markets near major metros and names Arizona, Portland, Florida, Michigan and St. Louis.
Five points worth keeping
- One asset class, kept simple. Dylan calls himself a one-trick pony who looks only at multifamily. He says he likes to keep things simple.
- Value add, 75 to 300 units. He wants existing value add properties in the 75 to 300 unit range. He does not like deals of 400 units, 500 units or 1100 unit portfolios.
- Equity only, usually as an LP. Dylan provides the equity piece and does not want to manage the asset. On smaller equity checks he stays hands-off. On a majority of the equity he typically asks for carve-outs on major decisions.
- Nationwide, but high-growth markets. He looks for stabilized markets around major metropolitan areas. He also mentions some international interest in Costa Rica and Belize.
- Discipline through market cycles. He says sticking to set criteria helped his portfolio through 2008 and 2009 and again now. He buys in areas with steady corporate jobs and reviews about 200 deals to find one.
Said on the call
"I don't want to think about the asset. I did that for a long time, so we don't mind providing the capital."
"No matter what's happening in the market, just stick to your criteria. It's been hard because we have to look at 200 deals to get one, but that's okay."
"So we don't do that. We do just the equity component of the puzzle."
Facts from this talk
- Dylan targets value add multifamily properties of 75 to 300 units.
- His stated goal is to hold assets for 10 plus years for wealth preservation.
- He says he looks at about 200 deals to find one.
Sources
From Richard C. Wilson's Centimillionaire Strategies YouTube channel: Multifamily Value-Add Apartment Building Investor Mandate Interview. Quotes come from the video captions, lightly edited for readability. Figures are the speakers' own estimates and experience.
General education only. Not legal, tax or investment advice.
Talk to a securities attorney to explore options around LP control rights, major decision carve-outs and partnership agreement terms. Do not use AI to write your own legal agreements.
Related questions
- How much should a real estate sponsor charge in fees?A common structure I see is a 6 to 8 percent preferred return, then 20 to 25 percent to the sponsor, with higher splits above a second hurdle.
- What is a joint venture equity partner in real estate?A joint venture equity partner in real estate is a partner who puts up equity capital for a project while another party, the sponsor, finds the deal and runs it.
- How do I build an investor list for real estate deals?Start with people who already invest in deals like yours, then record what each one wants.
Questions about this video
What size multifamily deals does Dylan prefer?
He says his sweet spot is value add properties of 75 to 300 units. He does not like deals of 400 or 500 units, or portfolios of 1100 units.
Does Dylan want to manage the property?
No. He is happy to be an LP and does not want to run the asset. If he funds the majority of the equity, he typically wants carve-outs on decisions such as buying, selling and spending above a threshold.
Where does Dylan invest?
He looks nationwide in stabilized, high-growth markets near major metros. He names Arizona, Portland, Florida, Michigan and St. Louis, and he also looks at some international markets such as Costa Rica and Belize.
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