Certain amount: looking for investment opportunity
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Melanie P.Pro Member
Rental Property Investor · Member since 2023 · 1k+ posts · 922 votesDO NOT listen to the advice in this thread from syndicators to invest in syndication deals. These are investment promoters and the investments they market are highly speculative, difficult to evaluate and there is a high likelihood that you could lose your entire investment. Be very careful about sending money to anyone who claims to be an expert in one of these forums or who has a website that seems to talk a lot about the "easy investor life" without much discussion of the very serious risks involved in the investment.
As to your money, I would say to stand by. There will be opportunity in the next year or two as real estate prices adjust to meet economic reality.
31 Replies
- Real Estate Agent · Central New York · Member since 2023 · 207 posts · 96 votes2y
Hey Gene! I’m in the Syracuse ny area and multi family properties are pretty common here.
It’s important to figure out your goals and objectives, and then that will ultimately give you a few areas that you can narrow it down to. Everything is highly individualistic and there isn’t a “right or wrong”, but what works best for you and your situation.
1) what is your ultimate goal for your ideal investment property? Is cash flow the main objective? Appreciation? A combination of both? It’s important to figure out what metrics are important to you.
2) what Class areas are you looking in? Each class has different tenant pools, appreciation, turnover rates, etc. I’ll attach a link to a page that describes this in detail as there’s some things to note.https://www.realtymogul.com/knowledge-center/article/what-is...
3) who’s your ideal tenant? While you can’t completely control who applies to live in your properties, you most definitely can find areas that are popular with students, young professionals, families, etc.
4) just as important as finding the property, you need to have an exit strategy in mind for the property. Will your identified markets be an easy or difficult area to sell once it’s time? Is this a 5 year property or a 20 year property? All things to consider.
5) how do you plan on managing the property? Out of state can be difficult if you don’t have a reliable team in place. Property managers can also be expensive. Typical rates are 8-12% of income either monthly or yearly depending on manager. Obviously, this can impact your overall cash flow.
6) it’s important to find an agent that knows the area well and understands how to work with an investor, as the process is very different than buying a primary residence.
these are all things to consider, and there is going to be a learning curve associated with the process. I’m happy to be a resource for any questions you may have as you start out the process! - Member since 2024 · 16 posts · 10 votes2y
Thanks for your reply. To add more information,
1. I live in California, so it will probably have to be out-of-state rental property.
2. I will hire a property manager.
3. I would go with A or B class areas.
4. Non-negative cashflow is enough. Appreciation is good enough if it can be better than inflation. I do think we are getting into a 10 year period where growth is slow, inflation is sticky, and asset appreciation won't be as much as what we saw in the past 5-10 years. But still...dollar is trash. Fed really should increase the funding rate for real.
5. Exit strategy: I will just hold onto it 10+ years. Maybe 1031 exchange later. No need to sell.
- Investor · Vermont and New York · Member since 2023 · 308 posts · 309 votes2yYou might want to consider participating in a syndication deal. You provide capital and are totally passive. You'll be invested in real estate but won't have the work and learning curve.
Nothing wrong with purchasing and being more active, but given your question it may be useful to take 20% to 25% of that and do passive syndication investment. - Lender · Austin, TX · Member since 2021 · 447 posts · 441 votes2y
Quote from @Tim J.:
You might want to consider participating in a syndication deal. You provide capital and are totally passive. You'll be invested in real estate but won't have the work and learning curve.
Nothing wrong with purchasing and being more active, but given your question it may be useful to take 20% to 25% of that and do passive syndication investment.If you are starting out investing and are just looking to hedge against inflation, this is a great option.
- 2yMelanie P.Pro MemberRental Property Investor · Member since 2023 · 1k+ posts · 922 votes
DO NOT listen to the advice in this thread from syndicators to invest in syndication deals. These are investment promoters and the investments they market are highly speculative, difficult to evaluate and there is a high likelihood that you could lose your entire investment. Be very careful about sending money to anyone who claims to be an expert in one of these forums or who has a website that seems to talk a lot about the "easy investor life" without much discussion of the very serious risks involved in the investment.
As to your money, I would say to stand by. There will be opportunity in the next year or two as real estate prices adjust to meet economic reality.
- Member since 2024 · 16 posts · 10 votes2yThanks for the caution. Yes, I would rather just put it in SPY than real estate syndication. Well, I want to experience owning a rental property before the time you mentioned comes. Yes there will be a good time to leverage/buy tons in the next couple years. I want to have some first-hand experience first.
Quote from @Melanie P.:
DO NOT listen to the advice in this thread from syndicators to invest in syndication deals. These are investment promoters and the investments they market are highly speculative, difficult to evaluate and there is a high likelihood that you could lose your entire investment. Be very careful about sending money to anyone who claims to be an expert in one of these forums or who has a website that seems to talk a lot about the "easy investor life" without much discussion of the very serious risks involved in the investment.
As to your money, I would say to stand by. There will be opportunity in the next year or two as real estate prices adjust to meet economic reality.
- 2yMelanie P.Pro MemberRental Property Investor · Member since 2023 · 1k+ posts · 922 votes
Quote from @Gene Jung:
Thanks for the caution. Yes, I would rather just put it in SPY than real estate syndication. Well, I want to experience owning a rental property before the time you mentioned comes. Yes there will be a good time to leverage/buy tons in the next couple years. I want to have some first-hand experience first.Quote from @Melanie P.:
DO NOT listen to the advice in this thread from syndicators to invest in syndication deals. These are investment promoters and the investments they market are highly speculative, difficult to evaluate and there is a high likelihood that you could lose your entire investment. Be very careful about sending money to anyone who claims to be an expert in one of these forums or who has a website that seems to talk a lot about the "easy investor life" without much discussion of the very serious risks involved in the investment.
As to your money, I would say to stand by. There will be opportunity in the next year or two as real estate prices adjust to meet economic reality.
What part of California are you in?
- Member since 2024 · 16 posts · 10 votes2ySouthern California/Orange county where the home price appreciation has been crazy. I do have my primary residence, so cannot complain, but it is absurd and needs correction.
Quote from @Melanie P.:
Quote from @Gene Jung:
Thanks for the caution. Yes, I would rather just put it in SPY than real estate syndication. Well, I want to experience owning a rental property before the time you mentioned comes. Yes there will be a good time to leverage/buy tons in the next couple years. I want to have some first-hand experience first.Quote from @Melanie P.:
DO NOT listen to the advice in this thread from syndicators to invest in syndication deals. These are investment promoters and the investments they market are highly speculative, difficult to evaluate and there is a high likelihood that you could lose your entire investment. Be very careful about sending money to anyone who claims to be an expert in one of these forums or who has a website that seems to talk a lot about the "easy investor life" without much discussion of the very serious risks involved in the investment.
As to your money, I would say to stand by. There will be opportunity in the next year or two as real estate prices adjust to meet economic reality.
What part of California are you in?
- 2yMike LambertPro MemberInvestor · The Americas and Europe · Member since 2016 · 1k+ posts · 1k+ votes
If you want to protect against dollar devaluation, you might want to look outside of the US. If your job and retirement account are already in the US and all your real estate is there too, you're gonna be completely dependent on the dollar and what's happening in the US. At that's the approach I took with respect to my home country of Canada when I started to invest internationally. Some food for thought for you.
- 2yMelanie P.Pro MemberRental Property Investor · Member since 2023 · 1k+ posts · 922 votes
Quote from @Gene Jung:
Southern California/Orange county where the home price appreciation has been crazy. I do have my primary residence, so cannot complain, but it is absurd and needs correction.Quote from @Melanie P.:
Quote from @Gene Jung:
Thanks for the caution. Yes, I would rather just put it in SPY than real estate syndication. Well, I want to experience owning a rental property before the time you mentioned comes. Yes there will be a good time to leverage/buy tons in the next couple years. I want to have some first-hand experience first.Quote from @Melanie P.:
DO NOT listen to the advice in this thread from syndicators to invest in syndication deals. These are investment promoters and the investments they market are highly speculative, difficult to evaluate and there is a high likelihood that you could lose your entire investment. Be very careful about sending money to anyone who claims to be an expert in one of these forums or who has a website that seems to talk a lot about the "easy investor life" without much discussion of the very serious risks involved in the investment.
As to your money, I would say to stand by. There will be opportunity in the next year or two as real estate prices adjust to meet economic reality.
What part of California are you in?
There are triplex and larger listings on the MLS right now in Orange, Fountain Valley, Santa Ana, Stanton ETC... think INLAND and NORTH county that you could get into for $500,000 down. With your large down payment they will still be mostly break even, but over time you'll benefit from the crazy appreciation that has been happening consistently in California for a century and the rents WILL eventually catch up.
Plus you'll get the experience you need and better returns that flow from managing it yourself.
- Member since 2024 · 16 posts · 10 votes2y
Quote from @Melanie P.:
Quote from @Gene Jung:
Southern California/Orange county where the home price appreciation has been crazy. I do have my primary residence, so cannot complain, but it is absurd and needs correction.Quote from @Melanie P.:
Quote from @Gene Jung:
Thanks for the caution. Yes, I would rather just put it in SPY than real estate syndication. Well, I want to experience owning a rental property before the time you mentioned comes. Yes there will be a good time to leverage/buy tons in the next couple years. I want to have some first-hand experience first.Quote from @Melanie P.:
DO NOT listen to the advice in this thread from syndicators to invest in syndication deals. These are investment promoters and the investments they market are highly speculative, difficult to evaluate and there is a high likelihood that you could lose your entire investment. Be very careful about sending money to anyone who claims to be an expert in one of these forums or who has a website that seems to talk a lot about the "easy investor life" without much discussion of the very serious risks involved in the investment.
As to your money, I would say to stand by. There will be opportunity in the next year or two as real estate prices adjust to meet economic reality.
What part of California are you in?
There are triplex and larger listings on the MLS right now in Orange, Fountain Valley, Santa Ana, Stanton ETC... think INLAND and NORTH county that you could get into for $500,000 down. With your large down payment they will still be mostly break even, but over time you'll benefit from the crazy appreciation that has been happening consistently in California for a century and the rents WILL eventually catch up.
Plus you'll get the experience you need and better returns that flow from managing it yourself.
Thanks for the recommendations. Oh wow...Fountain Valley...what a niche pocket
- Investor · Arroyo Grande, CA · Member since 2014 · 1k+ posts · 1k+ votes2y
Hey Gene, I read some of the replies throughout the thread too so I think I have some context.
You initially said that you just want RE exposure but it seems you also want to have something that's operating at cash flow break even or better. Your best bet is to look toward the Midwest markets. I specifically like Detroit and own 12-doors there myself.
If you can take on some negative cash flow or if you aren't looking to go max leverage on it, I'd recommend staying as close to home as possible. Again, if you're just wanting real estate exposure, why not buy a SFH rental nearby with $500k down?
I usually recommend staying close to home if it makes sense for your goals. It seems it does in this sense. If someone's goals don't align with their local(ish) market that's when it's generally time to consider out of state investing.
- 2yMelanie P.Pro MemberRental Property Investor · Member since 2023 · 1k+ posts · 922 votes
Hopefully a long time California investor will stop by here to encourage you, but in case they don't please consider attending the OC Apartment Association Trade Show March 28 9am - 3pm @ . Strike up conversation with any fellow attendee with gray hair about how they've done investing in California. It's at the OC Fair and Event Center you can register for FREE on their website.
Gaining a hands on understanding of what it takes to manage a property successfully will make you many times better at hiring property managers, evaluating data they provide, dealing with vendors, and tenants even if you later decide to roll the dice and invest out of state.
Good luck in your journey.
- Investor · Vermont and New York · Member since 2023 · 308 posts · 309 votes2y
Quote from @Melanie P.:
DO NOT listen to the advice in this thread from syndicators to invest in syndication deals. These are investment promoters and the investments they market are highly speculative, difficult to evaluate and there is a high likelihood that you could lose your entire investment. Be very careful about sending money to anyone who claims to be an expert in one of these forums or who has a website that seems to talk a lot about the "easy investor life" without much discussion of the very serious risks involved in the investment.
As to your money, I would say to stand by. There will be opportunity in the next year or two as real estate prices adjust to meet economic reality.
LOL. I am not a syndicator. I mentioned that as an option because the OP sounds like he has very little understanding of RE investing. With that much money, and asking that broad of a question indicates to me that he could possibly get so much other bad advice.
No one is going to be able to give him a one-size-fits all answer.
Regarding your comment:
"These are investment promoters and the investments they market are
highly speculative, difficult to evaluate and there is a high likelihood
that you could lose your entire investment. "
That is true of almost all RE investing and other "promoting" that people do. It seems disingenuous to label on type of investing as speculative and dangerous. When in fact, syndicators have to comply with federal laws about money raising, and generally the persepectus/info sheets and syndicator's history are quite useful in evaluating deals.
To the OP - ignore the suggestion of finding syndication deals. In fact, probably better off investing in REITs. - Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes2y
By reading what you're looking for it sounds to me like passive investing is the best way to go. I would look into syndications, debt funds, hard money lending and even NNN lease commercial.
Before buying your own SF, duplex or apartment, ask yourself how much of your free time do you want to spend on the rental business? Are you wanting to jump on a plane to visit the property and meet with property managers? Are you wanting to be on asset management calls and dealing with issues that arise? Even the best turn-key properties will take up your time and energy. Also, the cash flow on out of state smaller properties is no better than a syndication. It looks good on paper, but then the real expenses hit. At least that's been my experience with the properties that I have owned.
No one direction is perfect. They all have risks and rewards.
- Attorney · Columbus, OH · Member since 2023 · 193 posts · 145 votes2y
I'd recommend investing in an affordable appreciating market - like Columbus, Ohio. With multiple fortune 500 companies (like Intel, Google, and Amazon) investing here, many out of state investors investing here and seeing significant returns.
- 2yMin ZhangBusiness MemberReal Estate Agent · Member since 2022 · 1k+ posts · 1k+ votes
Hey Gene, I recommend you starting in the Midwest because it's affordable and offers good cash flow. Following David Green's Core 4 strategy (realtor, contractor, property manager, and lender) gives confidence to invest anywhere. I focus on Columbus, Ohio, which has seen significant growth, especially with tech giants like Intel, Meta, Amazon, and Google setting up operations, driving up property prices and job opportunities. I also invest in Cleveland and Dayton. Let me know if you need assistance!
- 2yMichael SmytheBusiness MemberReal Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
@Gene Jung you have a few basic options:
1) Invest in a REIT: hands off, but subject to the whims of Wall Street
2) Invest in a syndication: hands off, but you must do a lot of research on the managing member.
3) Invest in Notes or Private Lend: not passive and you will need to educate yourself on market and legalities.
4) Invest in Mutli-family apartments: not passive and you will need a good PMC you can trust
5) Invest in SFR: not passive and you will need a good PMC you can trust
Logical Property Management4.9453 Reviews - 2ySamuel DioufBusiness MemberReal Estate Agent · Columbus & Cleveland, OH · Member since 2023 · 1k+ posts · 1k+ votes
I would focus on appreciation and look into markets seeing exceptional growth. Look into the fastest growing markets in the U.S.
Reafco - Samuel Diouf528 Reviews - Member since 2024 · 2 posts · 0 votes2y
Hi Gene,
I have read the posts in response to you interest in an investment opportunity. The advice that others have posted is insightful and beneficial to anyone looking to start out. You indicated that you want to invest long term. Let me know if you would be interested in discussing such an opportunity in the suburban Chicago area. The properties are high equity single family homes in A to B area(s). Let me know if you are interested in finding out more about the opportunity.
- Member since 2024 · 2 posts · 0 votes2y
Hi Gene,
I have read the posts in response to your interest in an investment opportunity. The advice that others have posted is insightful and beneficial to anyone looking to start out. You indicated that you want to invest long term. Let me know if you would be interested in discussing such an opportunity in the suburban Chicago area. The properties are high equity single family homes in A to B areas. Let me know if you are interested in finding out more about the opportunity.
- 2yMelanie P.Pro MemberRental Property Investor · Member since 2023 · 1k+ posts · 922 votes
Quote from @Tim J.:
Quote from @Melanie P.:
DO NOT listen to the advice in this thread from syndicators to invest in syndication deals. These are investment promoters and the investments they market are highly speculative, difficult to evaluate and there is a high likelihood that you could lose your entire investment. Be very careful about sending money to anyone who claims to be an expert in one of these forums or who has a website that seems to talk a lot about the "easy investor life" without much discussion of the very serious risks involved in the investment.
As to your money, I would say to stand by. There will be opportunity in the next year or two as real estate prices adjust to meet economic reality.
LOL. I am not a syndicator. I mentioned that as an option because the OP sounds like he has very little understanding of RE investing. With that much money, and asking that broad of a question indicates to me that he could possibly get so much other bad advice.
No one is going to be able to give him a one-size-fits all answer.
Regarding your comment:
"These are investment promoters and the investments they market are
highly speculative, difficult to evaluate and there is a high likelihood
that you could lose your entire investment. "
That is true of almost all RE investing and other "promoting" that people do. It seems disingenuous to label on type of investing as speculative and dangerous. When in fact, syndicators have to comply with federal laws about money raising, and generally the persepectus/info sheets and syndicator's history are quite useful in evaluating deals.
To the OP - ignore the suggestion of finding syndication deals. In fact, probably better off investing in REITs.If the OP has "very little knowledge of real estate investing" how in the world do you expect him to qualify, understand and price the risk involved in dealing with a real estate syndicator? Even if he's accredited, he's not suitable to make the investment - of course that doesn't mean that 99% of the people trolling for money on here wouldn't take his. You may want to browse the Syndication Forum here on BiggerPockets for some insight on the current state of that market. Many of the deals are falling apart, distributions "paused" indefinitely, people complaining about losing their principal and guilty pleas in a case against a syndicator that turned out to merely be a Ponzi scheme.
I agree with you that an actually regulated REIT is a much safer choice for someone with no experience. Filing an "exemption" of your securities with the SEC does not amount to the same level of regulation as in other areas of the investing universe.
- 2yTodd AndersonPro MemberReal Estate Agent · Cape Coral, FL · Member since 2023 · 392 posts · 175 votes
Quote from @Gene Jung:
Thanks for your reply. To add more information,
1. I live in California, so it will probably have to be out-of-state rental property.
2. I will hire a property manager.
3. I would go with A or B class areas.
4. Non-negative cashflow is enough. Appreciation is good enough if it can be better than inflation. I do think we are getting into a 10 year period where growth is slow, inflation is sticky, and asset appreciation won't be as much as what we saw in the past 5-10 years. But still...dollar is trash. Fed really should increase the funding rate for real.
5. Exit strategy: I will just hold onto it 10+ years. Maybe 1031 exchange later. No need to sell.
Gene, Considering your goals I would suggest smaller multi family that you own your self. I understand that you don't need the cash flow but don't get into something that you have to pay for long term. Try looking at new Build 2 Rent units. With this, you can own a property during the best years to own. The first years of a properties life offer little to now capital improvements.
If you buy in the right market then you can just "get in the way of appreciation". Markets that the growth is obvious, people are moving there.
Smaller multi family also offers more ways to exit, and if you own it you have the control to exit on your terms. Or the option to refi in a few years and get another in the same situation, with tax free money.
- 2yScott TrenchPro MemberRental Property Investor · Denver, CO · Member since 2014 · 2k+ posts · 6k+ votes
I agree with others on here. Investing with a syndicator, ESPECIALLY anyone doing any form of outbound marketing or with a big social media presence, should be done only be experts who are skilled in evaluating sponsors (dozens or hundreds of due diligence repetitions and hundreds of hours of self study.
If that doesn’t fit the bill start studying. If you aren’t willing to study, go with REITs, or better yet, a low cost index of REITs, or better still a total market index fund. - Cincinnati, OH · Member since 2020 · 4k+ posts · 3k+ votes2y
This thread is borderline comical.
The moral is: if you don't know real estate, it is risky to invest directly and it is risky to invest passively.
"Passive" from a lifestyle definition is very subjective. To some, owning rentals directly is too active. To others, it is "passive". To me, owning rentals directly was more work to manage my manager than it was to manage the rentals (and I was making less money due to management fee and inflated repair costs).
Syndications: you need to know how to really read people, read financial statements, and understand many of the risks of real estate. As other's have noted, there are a lot of sponsors on these forums, running Facebook ads, etc that this current downturn is their real headwind they ever faced. "Syndications", at least most of the ones visible on these forums are marketers first and foremost. There are syndicators out there that are operators first (and yes, they do need to market when they are raising funds) but unlike many on these forums, they are not constant marketers. Unfortunately, the groups that do the least marketing are the hardest to find (clearly), often have very long track records, and their minimums are much higher (commonly $250k+ stated minimums).
Owning directly, OOS: depending on your involvement, willingness to travel to property, you are in many ways facing the same risks as syndications. You still have to vet and trust your team of agents, property managers, contractors, leasing agents, etc. You still have the vet the deal and understand the risks. To me, real estate agents and property managers are basically the same as syndicators, in that they are financially incentivized to get you to buy a deal and/or use them for property management. Yes, you can decide to sell unlike a syndication. But OOS investing is still very much a trust issue. You do get to make more decisions, like which PM to use, how to finance, whether you do the capex project or continue to defer, but that is all work you are doing, which may or may not be too much.
Owning direct locally: well, you live in one of the highest cost of living areas. As you note yourself, appreciation has been through the roof. Hopefully, that continues long term. But I will note (and admittedly I am only familiar with the CA markets from a distance), but for every true foreclosure/investor loosing everything in a syndication, I have read just as many stories about CA tenant that stayed in unit for 12+ months without paying. So, while I know this is probably not the norm in CA, it is also not the "norm" with the well run operators.
At the end of the day, there is no better way or ideal way. Every option has its own challenges and upsides. It all comes down to where you balance your personal perception of risks to the potential reward.
But, in hindsight, I sort of align with Melanie. I have never lived in CA, but man, do I wish I was buying in LA/Orange County/San Diego back in 2010 instead of Cincinnati, OH, where I live. Cincinnati, average price in 2010: $165k. Feb 2024: avg sale price $240k. Similar data points in LA: $330k (2010) to $1.2mm (2024). 45% total average appreciation in Cincinnati. 264% total average appreciation in LA.
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