Rental Property Investor · Singapore · Member since 2018 · 128 posts · 48 votes
My partner and I started investing in SFH doing mainly BRRRR exactly 3 years ago. We starred with 160k and right now we're liquidating our portfolio and should have a bit over 300k to work with.
Our end goal is to have cash flow but it's not our primary objective for the next 5 years and we would prefer growing our equity as much as possible, then 5 years from now converting it to cash flow.
Another think to point out is we're foreigners so the max leverage we can get is 60-65% LTV.
Given all the above, how would you recommend we utilize these 300k for maximum equity growth in a 5 year period?
Investor · Fairfax, VA · Member since 2015 · 1k+ posts · 801 votes
3y
syndication is not the answer when your in growth mode. You dont need cashflow right now, so i agree with the residential flip or value add strategy and continue to leverage your money. Once you bury your money in a syndication you are stuck and dont have access to your capital.
Investor · Indianapolis, IN · Member since 2018 · 2k+ posts · 1k+ votes
3y
My thoughts would be to use the 300K to partner on flips or lend on flips in smaller markets.....like here in IN, you can purchase something for 70K.....30K on rehab and its worth 170K.....
Investor · Denver, CO · Member since 2023 · 161 posts · 52 votes
3y
Hey Roy,
If it were me and I wanted to have both consistent cash flow (that beats what most investors get with rentals), and growth, and a timeline of about 5 years, I'd invest in a syndication.
I work at a real estate investment advisory in Denver and we specialize in helping clients invest either in DSTs (1031-exchangeable syndications), or alts (cash syndications).
Our offerings are underwritten by our managing broker-dealer and are only open to accredited investors, but here's an example of one:
Cantor Fitzgerald may have a self storage facility in Vegas, let's say. The minimum investment is $100k, the hold period is 5 years, the annualized cash flow paid monthly is 10%, and the IRR or the return on invested capital upon sale of asset in 5 years is 15-25%. So there's a rough example but that's cash flow, growth, 5 year hold.
If it were me and I wanted to have both consistent cash flow (that beats what most investors get with rentals), and growth, and a timeline of about 5 years, I'd invest in a syndication.
I work at a real estate investment advisory in Denver and we specialize in helping clients invest either in DSTs (1031-exchangeable syndications), or alts (cash syndications).
Our offerings are underwritten by our managing broker-dealer and are only open to accredited investors, but here's an example of one:
Cantor Fitzgerald may have a self storage facility in Vegas, let's say. The minimum investment is $100k, the hold period is 5 years, the annualized cash flow paid monthly is 10%, and the IRR or the return on invested capital upon sale of asset in 5 years is 15-25%. So there's a rough example but that's cash flow, growth, 5 year hold.
Feel free to reach out if interested.
I agree that investing in a syndication or fund could be a good fit given your situation.
We syndicate self-storage projects. Even if there is a crash, and people downsize, those people will have a need for self-storage, as evidenced by storage occupancy rates during past recessions.
And during inflationary times, our rental rates increase. We're also able to evaluate our rates, and keep pace with inflation, on a monthly and quarterly basis because of shorter term leases.
These syndication can provide an 8%+ cash-on-cash return - providing you monthly cash flow - and a 15-20% IRR over the length of the project. Most of the syndications and funds have hold times similar to your goals.
Investor · Wheat Ridge, CO · Member since 2013 · 75 posts · 41 votes
3y
@Roy Gottesdiener I'd agree that syndication would allow you to leverage other groups. We are specifically focused on healthcare real estate - a niche overlooked by a lot of mom and pop investors but aggressively pursued by pension funds and 1031 exchange deals. Write you're looking for maximize equity growth. Is your goal to have the largest portfolio? What level of cash flow are you looking for, or phrased another way, comfortable forgoing for equity growth?
Wholesaler · usa · Member since 2021 · 221 posts · 67 votes
3y
@Roy Gottesdiener@Brock Mogensen I would look into being an LP on some syndication deals, learn the process and scale scale scale, buddy. Brock might be someone worth messaging and having a conversation with. Best of luck Roy.
Real Estate Syndicator · Milwaukee, WI · Member since 2018 · 1k+ posts · 907 votes
3y
Investing in a syndication as an LP could be an option. Really depends on what your REI goals are. Are you looking to be active in your investments or passive? The answer to that questions will play into your investing strategy.
My partner and I started investing in SFH doing mainly BRRRR exactly 3 years ago. We starred with 160k and right now we're liquidating our portfolio and should have a bit over 300k to work with.
Our end goal is to have cash flow but it's not our primary objective for the next 5 years and we would prefer growing our equity as much as possible, then 5 years from now converting it to cash flow.
Another think to point out is we're foreigners so the max leverage we can get is 60-65% LTV.
Given all the above, how would you recommend we utilize these 300k for maximum equity growth in a 5 year period?
Realtor · Denver, CO · Member since 2020 · 338 posts · 331 votes
3y
Hey @Roy Gottesdiener! Already a good amount of info in here, and in short... It will come down to your goals and time requirements. If you want to be passive, and not have an active role in deal syndication would definitely be the route to go. Just make sure to vet the GPs, and operators thoroughly and always underwrite the deals yourself. Want to be extra careful putting your money in with someone you don't know.
However, if you want to be active and be the sole owner of your investment, then I would pursue some larger commercial deals. Either in the multifamily or commercial space. It will give you economies of scale, and you can have an on-site manager to handle the day-to-day. Instead of spreading that cash over 10+ smaller properties, this would limit your headaches and time consumption. Couple this with some value add, or different rental strategies and you could be well on your way to your goal!
Real Estate Broker · Kansas City Metro · Member since 2015 · 2k+ posts · 1k+ votes
3y
@Roy Gottesdiener I would 1031 exchange into a cash flow market with good landlord friendly laws, no rent control and leverage most of your equity. Right now your equity is not working for you. A midwest market could net you the highest gains. I am of course partial to Kansas City but there are a few others if you are not familiar with KC?
Investor · Fairfax, VA · Member since 2015 · 1k+ posts · 801 votes
3y
syndication is not the answer when your in growth mode. You dont need cashflow right now, so i agree with the residential flip or value add strategy and continue to leverage your money. Once you bury your money in a syndication you are stuck and dont have access to your capital.
Real Estate Broker · Farmington Hills, MI · Member since 2019 · 44 posts · 16 votes
3y
Syndication might not be too bad of an idea if it's a value add play and allows them to get into a larger more stable asset.
Flips are good if you're comfortable with them but it's more risky and better to have a market with a strong team that you are confident in.
I'd imagine best scenario if you want full ownership is a BRRR on a small multi-family. Ideally you could a value add play on 6-10 units by leveraging financing.
Strategy may vary depending on market. In the Midwest, I can get a small multi with 300K but in more urban markets that is tough.
Rental Property Investor · Singapore · Member since 2018 · 128 posts · 48 votes
3y
@Kerry Noble Jr thanks, not a big fan of flips mainly because of the lack of consistency, if I could finish 1-2 every 6 months that would be incredible but from my experience it's very difficult funding relevant deals
Rental Property Investor · Singapore · Member since 2018 · 128 posts · 48 votes
3y
@Ben Rhodin I agree commercial makes most sense, I'm starting to get into this world but I have no idea how people are buying 4-5 cap with interest in the 7s
Rental Property Investor · Singapore · Member since 2018 · 128 posts · 48 votes
3y
@Nicholas L. Great question. We had good deals with a lot of built in equity and I don't think our current area is going to see a lot of appreciation, so rather taking the capital and putting it somewhere else
I hear you, but asking "What areas are going to appreciate the most?" is one of the toughest questions to answer.
The point I was making was that if your properties are rented, your equity will grow with the debt pay down. And if you sell and don't 1031, you're likely going to get absolutely crushed with fees and taxes... so a lot of equity to give up, to try for more.
Rental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
3y
@Roy Gottesdiener
Just curious why you sold your cash flowing properties? I would put 20% down on as many SFH you can buy under the median price in growing areas. Starter/affordable homes are in the biggest demand. I see home and rent appreciation the greatest with this price point.
Investor · Boise, ID · Member since 2014 · 3k+ posts · 3k+ votes
3y
If you started with $160k and have been brrrring, now you are liquidating and will have $300k- what markets have you been investing in? How many SFH BRRRRs have you done? In my market over that time frame, that equity growith of $140k would be less than one deal.
From the way you've worded your statement, it seems you understand the power of equity, but I'd likely be looking at markets in red states with historically aggressive appreciation. Over time, you'll see much better and much more passive returns.
Real Estate Agent · Houston, TX · Member since 2021 · 1k+ posts · 715 votes
3y
"Consider syndication as an option if you're looking for a value-add opportunity that could lead to a larger and more stable asset. While flips can be profitable, they are also riskier, and it's important to have a strong team and market knowledge. A BRRR approach on a small multi-family property could be the best scenario for full ownership, especially if you can leverage financing to execute a value-add strategy on 6-10 units. However, it's important to adjust your strategy based on the local market - while you can find a small multi for 300K in the Midwest, it may be more challenging in urban markets."
anything else you can share about your goals and how much equity per property you have?
"should I sell one or more properties" and "where should I invest in real estate in the US" and "what should I do with 300K" are all VERY different questions...
CDs are paying 5% right now. not being flippant. that's a great, nearly risk free investment.