I will have $2M in Cash best way to get 9-10%

New Orleans, Louisiana

Multi-Family and Apartment Investing

I will have $2M in Cash best way to get 9-10%

Member since 2022 · 6 posts · 7 votes

I am looking at selling 2 multifamily complexes (22 units and 6 units) Im looking for a multifamily syndication with an A share and B share setup. Where the A share is paid a preferred % of 9-10% monthly. Since this will be the first time without my apartments, I am looking for monthly income only. I will have a capital gain of $1.2M from the sale of both complexes. Since I am a passive investor, I can do a “lazy 1031” and use the 1st year bonus deprecation and cost segregation of the syndication to offset the $1.2M. I’m looking for a syndication with a good track record of never missing the A share (preferred) monthly payout and has never asked for additional capital. I see Ashcroft Capital does the A/B split and has a 9% preferred and BAM capital changed their A/B split to where the A portion is now like debt so you don’t get any depreciation so they are no longer make the list. I am trying to find more than one (Ashcroft) to diversify.

Thanks

Brad Milligan

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Scott TrenchPro Member

Rental Property Investor · Denver, CO · Member since 2014 · 2k+ posts · 6k+ votes

Quote from @Brad Milligan:

I am looking at selling 2 multifamily complexes (22 units and 6 units) Im looking for a multifamily syndication with an A share and B share setup. Where the A share is paid a preferred % of 9-10% monthly. Since this will be the first time without my apartments, I am looking for monthly income only. I will have a capital gain of $1.2M from the sale of both complexes. Since I am a passive investor, I can do a “lazy 1031” and use the 1st year bonus deprecation and cost segregation of the syndication to offset the $1.2M. I’m looking for a syndication with a good track record of never missing the A share (preferred) monthly payout and has never asked for additional capital. I see Ashcroft Capital does the A/B split and has a 9% preferred and BAM capital changed their A/B split to where the A portion is now like debt so you don’t get any depreciation so they are no longer make the list. I am trying to find more than one (Ashcroft) to diversify.

Thanks

Brad Milligan

A syndication is one way to achieve this goal. If you are willing to forego the 1031, you can also achieve your return objectives via private lending.

I personally am using a different tool - hard money lending. Hard money loans pay at 10+% interest, are short-term, so the money recycles quickly (the vast majority of the time), and you are first position on a deed of trust - meaning you can simply foreclose if things go wrong (research your state laws carefully, as this is truer in some states, and less true in others).

And, an alternative is to simply invest in a debt fund that buys hard money / bridge debt, if you want to hand over the accountability for keeping money at work to someone else.

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Ian Thomas
Real Estate Consultant · Cape Coral, FL · Member since 2023 · 14 posts · 2 votes
3y
Brad, would love to connect with you offline, if possible. Let's connect.
0 Reply
Bonnie Griffin KaakePro Member
Real Estate Consultant · Denver, CO · Member since 2021 · 666 posts · 389 votes
3y
@Brad Milligan As a passive investor in a syndication, you can only use the cost segregation tax benefits against the income from that passive investment. Contact a RE knowledgeable CPA for guidance. And, consider the fact that most syndications are held for about 5 years and then sold. If they take accelerated depreciation there will be recapture...some can be mitigated but not all.
[email protected]303-475-4459
2 Reply
Brad Milligan
OP
Member since 2022 · 6 posts · 7 votes
3y
@Bonnie Griffin Kaake I am working with a real estate attorney who is familiar with what i am trying to do. Sorry i might be explaining the capital gains part incorrectly, but what i am really trying to do is gather names and information on different syndications that have the A/B split and offer a 9-10% preffered return.
0 Reply
Scott TrenchPro Member
Rental Property Investor · Denver, CO · Member since 2014 · 2k+ posts · 6k+ votes
3y
Quote from @Brad Milligan:

I am looking at selling 2 multifamily complexes (22 units and 6 units) Im looking for a multifamily syndication with an A share and B share setup. Where the A share is paid a preferred % of 9-10% monthly. Since this will be the first time without my apartments, I am looking for monthly income only. I will have a capital gain of $1.2M from the sale of both complexes. Since I am a passive investor, I can do a “lazy 1031” and use the 1st year bonus deprecation and cost segregation of the syndication to offset the $1.2M. I’m looking for a syndication with a good track record of never missing the A share (preferred) monthly payout and has never asked for additional capital. I see Ashcroft Capital does the A/B split and has a 9% preferred and BAM capital changed their A/B split to where the A portion is now like debt so you don’t get any depreciation so they are no longer make the list. I am trying to find more than one (Ashcroft) to diversify.

Thanks

Brad Milligan

A syndication is one way to achieve this goal. If you are willing to forego the 1031, you can also achieve your return objectives via private lending.

I personally am using a different tool - hard money lending. Hard money loans pay at 10+% interest, are short-term, so the money recycles quickly (the vast majority of the time), and you are first position on a deed of trust - meaning you can simply foreclose if things go wrong (research your state laws carefully, as this is truer in some states, and less true in others).

And, an alternative is to simply invest in a debt fund that buys hard money / bridge debt, if you want to hand over the accountability for keeping money at work to someone else.
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7 Reply
Brad Milligan
OP
Member since 2022 · 6 posts · 7 votes
3y
@Scott Trench The problem with the debt fund or a debt portfolio you don’t get to use any depreciation to offset the income.
3 Reply
Vessi Kapoulian
Investor · Los Angeles, CA · Member since 2020 · 102 posts · 94 votes
3y
ATM Funds seem to address your goals of consistent 9%+ preferred return, monthly consistent cash flow, and 80% bonus depreciation (for 2023). I know a couple of operators that offer that LP opportunity and I invested with one of them.
1 Reply
Hunter Reed
New to Real Estate · Texas Christian University · Member since 2022 · 119 posts · 56 votes
3y
Quote from @Vessi Kapoulian:

ATM Funds seem to address your goals of consistent 9%+ preferred return, monthly consistent cash flow, and 80% bonus depreciation (for 2023). I know a couple of operators that offer that LP opportunity and I invested with one of them.

Vessi, I have recently started ATM mint machines LLC. I would love to learn what you know about ATM investing. Let's connect and ideate! Thank you.
0 Reply
Andrew SyriosPro Member
Moderator
Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
3y
Private lending or perhaps a syndication would seem like a pretty good way to go for a 9-10% return. I assume you meant annually? If you're looking for 9-10% monthly (which is doubling your money every year about) well, probably commodity or crypto speculation but I would think your odds of losing money are much better than making it and also assume that's not what you meant
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Bob S.
Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
3y
Quote from @Brad Milligan:

I am looking at selling 2 multifamily complexes (22 units and 6 units) Im looking for a multifamily syndication with an A share and B share setup. Where the A share is paid a preferred % of 9-10% monthly. Since this will be the first time without my apartments, I am looking for monthly income only. I will have a capital gain of $1.2M from the sale of both complexes. Since I am a passive investor, I can do a “lazy 1031” and use the 1st year bonus deprecation and cost segregation of the syndication to offset the $1.2M. I’m looking for a syndication with a good track record of never missing the A share (preferred) monthly payout and has never asked for additional capital. I see Ashcroft Capital does the A/B split and has a 9% preferred and BAM capital changed their A/B split to where the A portion is now like debt so you don’t get any depreciation so they are no longer make the list. I am trying to find more than one (Ashcroft) to diversify.

Thanks

Brad Milligan

Simple, buy rentals that will net that. or more. Whether its 4 units, , 8, 10, who cars, 10% is 10% Its all about your network,
0 Reply
Brad Milligan
OP
Member since 2022 · 6 posts · 7 votes
3y
@Andrew Syrios Yes i meant 9-10% annually but distributed monthly
0 Reply
Allan C.
Rental Property Investor · Member since 2018 · 828 posts · 810 votes
3y
@Brad Milligan there are syndicators that allow you to 1031 into their fund if you bring more than $1M capital, so you can achieve your capital gain deferral goal. I’m sure many will reply to your call if you create a new post with a clearer subject title.
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JD MartinBusiness Member
Moderator
Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 17k+ votes
3y
I am nothing close to an expert or even well-experienced syndicate person, but the comment I will make is that I've never had any pitched to me that had a monthly distribution. I've seen annual and semi-annuals but nothing that mimicked the monthly "payday" you get from rentals. Maybe bringing 7 figures to the table gets you a different pitch, but I've never heard one that did what you're looking for.
Is there a reason that a monthly distribution is a requirement for you? Couldn't you simply hold back your first 6 months of "income" and get "repaid" at the end of the syndication? After you got through your first period without a "paycheck" you'd just be getting bulk payments that you'd treat like a semi-annual payday.
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Chris SeveneyBusiness Member
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
3y
@Brad Milligan
If you forgive the 1031 happy to chat offline about some offerings
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Bud Gaffney
Rental Property Investor · Boston, MA · Member since 2019 · 2k+ posts · 1k+ votes
3y
@Brad Milligan following
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Justin Moy
Investor · Kansas City, MO · Member since 2020 · 400 posts · 278 votes
3y
Quote from @Brad Milligan:

I am looking at selling 2 multifamily complexes (22 units and 6 units) Im looking for a multifamily syndication with an A share and B share setup. Where the A share is paid a preferred % of 9-10% monthly. Since this will be the first time without my apartments, I am looking for monthly income only. I will have a capital gain of $1.2M from the sale of both complexes. Since I am a passive investor, I can do a “lazy 1031” and use the 1st year bonus deprecation and cost segregation of the syndication to offset the $1.2M. I’m looking for a syndication with a good track record of never missing the A share (preferred) monthly payout and has never asked for additional capital. I see Ashcroft Capital does the A/B split and has a 9% preferred and BAM capital changed their A/B split to where the A portion is now like debt so you don’t get any depreciation so they are no longer make the list. I am trying to find more than one (Ashcroft) to diversify.

Thanks

Brad Milligan

We're raising for a STR fund right now that is doing an 8 pref with 85/15. No A/B split but the blend of a high pref and equity split give you the best of both worlds. Distributions are quarterly versus monthly because to give them monthly would have costed 6 figures in additional admin costs, so we decided to not spend that cash and instead have larger distributions. DM me if you'd like to see the deck and track record and I can send it your way!
0 Reply
Carlos Ptriawan
Member since 2019 · 7k+ posts · 4k+ votes
3y
Quote from @Brad Milligan:

I am looking at selling 2 multifamily complexes (22 units and 6 units) Im looking for a multifamily syndication with an A share and B share setup. Where the A share is paid a preferred % of 9-10% monthly. Since this will be the first time without my apartments, I am looking for monthly income only. I will have a capital gain of $1.2M from the sale of both complexes. Since I am a passive investor, I can do a “lazy 1031” and use the 1st year bonus deprecation and cost segregation of the syndication to offset the $1.2M. I’m looking for a syndication with a good track record of never missing the A share (preferred) monthly payout and has never asked for additional capital. I see Ashcroft Capital does the A/B split and has a 9% preferred and BAM capital changed their A/B split to where the A portion is now like debt so you don’t get any depreciation so they are no longer make the list. I am trying to find more than one (Ashcroft) to diversify.

Thanks

Brad Milligan

I would say if you look for MF Class A that promise 9% return, that's almost impossible in today's world.

But 9 % is decent return if you invest @HML as private lender, and it's actually much less risky position than being MF investor at this time.
0 Reply
Steve S.
Investor · Columbus, OH · Member since 2013 · 47 posts · 85 votes
3y
I would consider pref equity ("A share") in solid, cashflowing multifamily syndications. To diversify, consider ATM funds and business equipment funds. I have been getting monthly cash flow from these investments in addition to bonus depreciation. Self-storage funds and industrial, triple-net lease funds will also help you to diversify, give you some bonus depreciation, and will get you monthly/quarterly distributions. Get involved with a passive investing community that discusses these topics all the time. DM me if you want more info.
0 Reply
Brock Mogensen
Real Estate Syndicator · Milwaukee, WI · Member since 2018 · 1k+ posts · 907 votes
3y
Love the strategy. For that sum of capital, I would also suggest diversifying across a few deals/operators. That provides some deal protection and also allows you to explore which operator you prefer working with for the next investment.
1 Reply
Brad Milligan
OP
Member since 2022 · 6 posts · 7 votes
3y

@Carlos Ptriawan you are the second person who has said something about hard money lending. While i am not that familiar with this i would love to discuss this in greater details. I will shoot you a DM
0 Reply
Carlos Ptriawan
Member since 2019 · 7k+ posts · 4k+ votes
3y
Quote from @Brad Milligan:

@Carlos Ptriawan you are the second person who has said something about hard money lending. While i am not that familiar with this i would love to discuss this in greater details. I will shoot you a DM

I always measure different reward/risk profile for different asset class. The worst asset class to invest right now is syndication in office or multifamily especialy if it has no discount during purchase price, if there's discount or foreclosure then it may be good. HML private lending has been static for years there're many players, for HML the risk is eventually Npl but this could be mitigated if the HML is only lending to residential with 60% LTV only, for example. There's always market for short term financing that's not being satisfied by traditional banks. Higher risk HML is something like you lend 80% for office/hotelnew construction and similar ground up dev. I am personally still very bullish on everything residential.
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Soup Nikk
California, CA · Member since 2018 · 32 posts · 7 votes
3y
@Vessi Kapoulian beginner here. Would you mind elaborate more on what ATM funds are? Feel free to DM me if you prefer. Thanks.
0 Reply
Soup Nikk
California, CA · Member since 2018 · 32 posts · 7 votes
3y
@Brad Milligan look into Fundrise. They have income funds that return usually 7-11% depending on market conditions. Due diligence is required. But they have growth funds and income funds.
0 Reply
Soup Nikk
California, CA · Member since 2018 · 32 posts · 7 votes
3y
@Steve S. Hi steve, I’m a passive investor and love investing through REITs and syndications. Could you DM me more info on storage funds and other triple net lease funds you are focusing on. Have to collaborate and discuss. Thanks.
0 Reply
Andrew SyriosPro Member
Moderator
Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
3y
Quote from @Brad Milligan:

@Andrew Syrios Yes i meant 9-10% annually but distributed monthly

I figured as much, we may even have some options. I'll DM you.
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Vessi Kapoulian
Investor · Los Angeles, CA · Member since 2020 · 102 posts · 94 votes
3y
@Soup Nikk
To address your question, the ATM fund is a type of passive investment where you invest with an operator of ATMs. The operator purchases the ATM machines and leases them up to third parties (stores, banks, gas stations, and other commercial establishments). The cash flow for monthly distributions is generated from the monthly lease income stream.

I have invested with one particular syndicator that I know personally. However, there are a couple of other well known syndicators that offer this investment opportunity. All are with the same operator.
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