Have millions, want to deploy... where?

Question

Hello all -

I'm an entrepreneur and my business should make some millions this year. I'm deploying some in stocks, some oil, some crypto.. and want exposure to RE.

I'm busy running my business and don't have time/ desire to be very active in any of my investments. I'm ideally looking for someone with meaningful experience and success, impeccable integrity, professionalism, who's looking for an LP to fund additional projects.

I'm more interested in this approach vs REITs/ syndicates, because I reckon with the right partnership, I stand to make far more by not paying such high fees on those traditionally passive options. Is this rational?

Jay Hinrichs · Answer

U will open the flood gates with a post like that.. what folks do on BP sometimes is try to follow those that seem to know what they are talking about and might be in a segment your interested in then contact them privately..  Keep in mind BP is a great incubator however there is a lot of Members just starting their journey so you want to make sure your aware of their experience levels.

Account Closed · Answer

Focus more on trust and character than returns. If you know the person really well, know that they know real estate, that is worth more than gold. I would go with someone local, someone you know, someone who is honest and trustworthy, someone who knows what they are doing, rather than a big name you saw on the internet.

Jim K. · Answer

@David C.About once a year, I post about finding some absurd amount of money inside the wall of a foreclosed house or behind a water heater in a dark basement. I do it mostly because the veteran real estate investors here know you never find anything but human feces and decades-old porn behind water heaters, and I think it's a great private joke for all of us about how weird this business is, especially seeing how the newbies react, all offended that anyone could possibly be dishonest here in the forums about finding rubberbanded and cellophane-wrapped stacks of used twenties in a hundred-year-old defunct crapshack in Yinzerburgh, of all places.

And every year, right on the button, I get a bunch of people who insist they know exactly how I should invest my found money. When they start sending me private messages it gets a little weird, but hey, I just ask them for brochures and credibility packets and they evaporate.

Hope you're dealing well with the weirdos.

Evan Polaski · Answer

@David C., it has been about 2 hours since you posted this.  How many DMs have you gotten through these forums so far?  Maybe we need to give it some time for all the syndicators to start pinging you.

I would say you are correct that doing a JV with an operator is likely to be more lucrative than a true syndication.  Of course, deal terms can vary.  There are also syndications that focus on the "retail" investor with $25k/50k/even 100k minimums and then charge 3% acquisition fees.  But there are also syndications out there that charge more "institutional" level fees, say 1% acquisition fee, if any at all.

At the end of the day, if you are prudent in investment analysis, have a good BS meter for smooth talking salesman, and know a bit about real estate to be able to do some basic diligence on the polished presentation many syndicators put together, than you would likely be fine going this route.  But like all investing, don't put all your eggs in one basket that you can't control.

For someone with your background that has built companies, I can imagine completely handing off control in a syndication may be challenging.  While the upside of syndication is that you are not spending your time on the real estate OR business, it also takes a level of "letting go".  If you are simply replacing physical time with mental energy worrying about your syndication investments, I would not say the trade off is worth it.

Nicholas L. · Answer

@David C.

if you don't want to own individual properties, then yes, syndications are one option along the spectrum of passive.

i am not 'recommending' them, because they are not something i have much knowledge of.  there are a bunch of active threads on BP right now on syndications that may be running into issues - they're probably good reads for you, and you can of course reach out to the folks that have posted and ask more questions.

https://www.biggerpockets.com/forums/960/topics/1196320-synd...

now, BRRRRing individual properties - that is something that my scars and i can speak to.  =)  if you don't want to be active... they're a terrible option.

i split my investments between index funds and individual properties.  i don't like the lack of liquidity in a syndication.  but again, that's just me.

Todd Dexheimer · Answer

I think you have a good approach. I would not focus so much on the returns, as I would on the experience of the sponsor and team, location of the property, and overall business plan.

Plenty of sponsors showed big returns, but then got floating rate, high leveraged debt and overpaid for properties. Those "big returns" have turned into big losses.

My best piece of advice is to educate yourself first, talk with a lot of sponsors, and underwrite a lot of deals. Once you've done that, then consider investing.

David C. · Answer

I get it, no post history. It's real - no interest in larping, just looking at options. Fair enough - I have a friend who's done well on some syndicates, if your advice is syndicate - I can ask him for options.

Nicholas L. · Answer

@David C.

I never know if these types of posts are real or not.

And I don't personally invest in syndications.

But... if it is, I think your best bet to find the type of syndicator you've described is... offline, and over a period of months or years.  Through your network, real estate meetups, and building real relationships.

If we could all go to trustedREsyndication.com, deposit $500K and get a risk free 18.2% return in 2 years, we would.

Have millions, want to deploy... where?

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