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Oct. 24, 2022

Critical Levers and Deals that Make Sense for Limited Partners with Josh Eitingon

Critical Levers and Deals that Make Sense for Limited Partners with Josh Eitingon

Real estate investors, especially multifamily syndications, work out deals almost often. And the market is filled with deals that at first look would be nice and awesome to get. However, due diligence should be done before closing the deal. With that being said, General Partners, Limited Partners alike should take time to think if the deal makes sense or not.

In today’s podcast episode, we interview Josh Eitingon, co-founder of DXE properties. Today’s topics are locked-in on the 3 critical levers in a real estate market, deals that make sense for multifamily units, and common mistakes that Limited Partners make in a deal which will help aspiring real estate investors in finding the best deals in the real estate markets. 

Josh's First Multifamily Apartment Unit Acquisition

Josh started investing in multifamily investment at an early age. He was able to acquire a 20-unit apartment and invested a total of 350,000$ to make it utilizable. Eventually, Josh held on to the property for 15 months and was able flip it successfully for 500,000$. That is a 42.85% gain over a year and three months and he was like “this is the best business in the world, what could possibly go wrong?”

The Deal Size that Make Sense for Multifamily Units

Having the right idea on how a good deal looks like is very important for Limited Partners and General Partners alike. According to Josh, the bare minimum that makes sense for a multifamily unit is 80 doors so that you can hire a full time maintenance person and an office manager. Anything below than 80 would require you to do scattered site property management. 

Common Mistakes that Limited Partners Make in a Deal

Josh discussed in the podcast the most common mistakes that LPs make in a deal. He said that being too extravagant in renovation costs and capitalizing improvements out of cash flow is one of the common mistakes LPs make. Doing this actually exposes themselves to risk if they are not expecting to bring in more capital to the deal (capital calls) because renovations tend to take time and rental income (cash flow) tends to stop because of the ongoing renovations. That is why it is important to become conservative with renovation costs to leave some money on the side because cash is always king.

Josh's 3 Critical Levers in a Real Estate Market Deal for Limited Partners

Josh said that there are 3 Critical levers that LPs should consider when they are closing a deal for multifamily properties.

    1. CapEx Renovation - Capital Expenditure for renovation should be established at a specific comfort level that would not force you to ask for more capital just to keep the deal alive. As discussed in the podcast, you should be able to leave some money on the side because renovations often take time and that duration is when rental income is at a minimum.
    2. Exit Cap - Always plan ahead your exit price for the property. Always make sure that the exit cap is at a price that is attuned with your business plan and a comfortable rate that gives a significant amount of returns for you and your investors.
    3. Rent Growth - Rent growth has been on a steady growth over the past 10 years but expect it to slow down at some point. So as an LP, be comfortable and always be flexible with rent growth by comparing, adjusting offerings to future ones. 

Who is Josh Eitingon?

Mr. Eitingon is the co-founder of DXE Properties.  Mr. Eitingon serves as the acquisitions and financing leads for the firm, with over 10 years experience in both. He brings a keen eye to each acquisition, identifying opportunities for growth.  With a focus on optimizing property performance, Josh works closely with management to drive each business plan.

Prior to DXE, Mr. Eitingon founded JAE Property Group.  JAE was born with his first real estate investment, a 20-unit distressed property in Cincinnati, OH.  Mr. Eitingon oversaw all major operations of the company and was instrumental in all phases of acquisition, asset management, and investor relations. Through JAE, Mr. Eitingon and partners established a portfolio of multifamily investment properties clearly fitting into a well-defined investment strategy.

Prior to JAE, Mr. Eitingon led the acquisition team for a real estate investment company located in Huntington, NY.  Josh was an integral part of the company’s growth from its infancy to the purchase of over $100 million dollars’ worth of multifamily real estate.

Mr. Eitingon is a Chamber of Commerce award recipient. He is a graduate of the University at Albany and resides in Long Island, NY.

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