@Ben Leybovich   @Sam Grooms  

Was this syndication offered only to accredited investors or both accredited and non? 

Also hope to hear some updates as things progress. 

Are you looking for other deals only in Arizona or any market?

Originally posted by @Joseph M. :

@Ben Leybovich   @Sam Grooms 

Was this syndication offered only to accredited investors or both accredited and non? 

Also hope to hear some updates as things progress. 

Are you looking for other deals only in Arizona or any market?

Most of our investors were accredited, but it was a 506(b) offering open to sophisticated investors, too. 

Phoenix is our top market right now, but we're also looking in other markets that have the fundamentals we like to see, and where we have local connections. I'll let Ben decide if he wants to share what markets those are. 

@Sam Grooms Thank you for answering this question in detail. I was looking for a in on syndicates and you so eloquently explained it from your experience. To reitirate, if i where to sponser a deal, i should take myself out of the cashflow projection only deal finder fee, management fee, and exit fee? Joel S

@Sam Grooms or @Ben Leybovich ,

Thank you both for sharing how these things work with all of us. Quite the inspiration on many levels, from building relationships, building your reputation, how all the different players can benefit for each roll etc....

On a deal similar to this, what is the typical minimum investment you would be looking for from an investor in a round number? as in 50K, 100K or 500K?

 I see that you do not like the idea having 1031's come into the deal which is understandable. What about 'Self Directed' investments, either SDRIA or SOLO401K?

Thanks, Dan Dietz

Originally posted by @Daniel Dietz :

@Sam Grooms or @Ben Leybovich ,

Thank you both for sharing how these things work with all of us. Quite the inspiration on many levels, from building relationships, building your reputation, how all the different players can benefit for each roll etc....

On a deal similar to this, what is the typical minimum investment you would be looking for from an investor in a round number? as in 50K, 100K or 500K?

 I see that you do not like the idea having 1031's come into the deal which is understandable. What about 'Self Directed' investments, either SDRIA or SOLO401K?

Thanks, Dan Dietz

Dan, thanks for the kind words. The minimum investment on this deal was $50K. This number will usually change with the size of the raise. We raised over $3.5M, and to be honest, $50K was probably too low. Think about the math. If every investor would have done the minimum, we'd need 70 investors to raise $3.5M. That's a lot of investors in a deal. 

I would love to be able to take 1031's, but they just don't make sense in a syndication. We'd have to structure it as a TIC or DST, per the tax code, and the cost/benefit isn't there for the sponsor. We do take self-directed investments, and we had quite a few on this deal.

Originally posted by @Daniel Dietz :

@Sam Grooms or @Ben Leybovich,

Thank you both for sharing how these things work with all of us. Quite the inspiration on many levels, from building relationships, building your reputation, how all the different players can benefit for each roll etc....

On a deal similar to this, what is the typical minimum investment you would be looking for from an investor in a round number? as in 50K, 100K or 500K?

 I see that you do not like the idea having 1031's come into the deal which is understandable. What about 'Self Directed' investments, either SDRIA or SOLO401K?

Thanks, Dan Dietz

Dan, it's not that we don't like 1031. It's that taking 1031 money requires a DST, which is a trust, and as per stipulations within a trust the managerial functions are layered with scopes and restrictions. What we do is value ad, we create value by making strategic improvements. However, doing so requires us to stay nimble. Working within the confines of a trust makes this difficult. Thus, you will mostly see Class A syndication done with a DST, but those are more coupon investments without the value ad.

SOLO and SDIRA are where a lot of money comes from for these syndications. And the minimum buy-in is driven by the size of the stack. This one was $50,000, though lots of investors came in with more at $100,000. And few higher than that. 

We raised $3.5M for this, and $50,000 minimum was manageable. For a $6M raise I would likely cut off at $100,000 minimum. 

Hope this helps.

Originally posted by @Joel S. :
@Sam Grooms

Thank you for answering this question in detail. I was looking for a in on syndicates and you so eloquently explained it from your experience.

To reitirate, if i where to sponser a deal, i should take myself out of the cashflow projection only deal finder fee, management fee, and exit fee?

Joel S

Joel, I'm not completely sure what you're asking, so let me know if I don't answer your question. 

When you're forecasting cash flows for your investors, yes, you'll want to subtract your management fee from the property's cash flow. This will give you distributable cash flow, or investor level cash flow. On the acquisition and exit fees, you'll need to include these as part of your closing costs for their respective transaction. 

Haha @Sam Grooms - we should probably coordinate so we don't both answer the same questions :)

Guys, this last question relative to the minimum buy-in was interesting. This is neither here nor there, and might even belong more on the blog, but there is but 1 guy on BP whose opinion I value so much that he can actually change my mind, and it's @Brian Burke . Pretty unheard of, actually...

Anyhow, a long time ago I asked Brian - how big of a deal can I do? To which he replied - how much money can you raise...? Most beginning syndicators are lucky to raise $300,000... If you have no stack, you have no deal. 

Lots of you reading this post wondering what it's going to take for you to be me - the answer is a question: 

How Much Money Can You Raise?