What CoC returns do you typically see as an investor who puts money into a syndication deal for apartments? (As a passive investor, not the person who puts the deal together).
How does it compare to investing in your own SFRs? Is it more or less lucrative, or about the same?
It seems to me like most syndicated deals are about buy -> improve -> sell. Are there deals where the owners hold indefinitely to reap the cash flow? If I'm looking to hold long term for the cash flow, are syndicated deals a good option?
This will be highly dependent on asset type and class, market, strategy, etc. A turn around project might have low cash flow initially but a big payoff (via sale or refi) with a couple years. I've seen some "long term" purchases, though, where initial yield was only 5% (with an interest only loan!).
Kevin Bupp did a podcast with an investor (Jeremy Roll) who only invests in passive syndication. If I recall correctly, his minimum criteria was 10% cash return from day one, with 20% IRR over the life of the project.
If you are going to invest, make sure you understand the deal, the market, and the sponsor very well.
I am in the syndicated field, but cannot discuss this online due to SEC guidelines. Please call me if you'd like me to answer your question. I'm on PST. Thanks
I have seen anywhere from 7-15% COC on purchase of "value add" Projects with an increase in that once the property is renovated and re-positioned. And for "yield-play" apartment projects, I have seen from 5-10% COC returns usually.
The big question is making sure that your investment philosophy meshes with the sponsors long term plan for the Project.
As Leslie states, if you want to specific deal structures and projections, you will have to contact us privately.
As for SFR's, once you factor your time into the equation if you are self managing, you are usually going to average out around 8-20% as well. But you will have much less chance of being able to control the upside equity appreciation because SFR's are bought and sold on a comparative market basis.
Eric Tait, Vernonville Asset Management | 1‑877‑668‑3311 | http://www.vernonville.com
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