What are your thoughts about owning and managing some 29 doors versus putting money into legit RE syndication. There is a seemingly reputable company based out of Portland, Or that does many vetted deals, called Crowdstreet.

I am curious if its worth the headaches to keep large equites in properties I manage vs. the returns with bigger players in deals out there in RE syndication? Anyone have thoughts on this. Thank you in advance!

Nice portfolio! You have done great things with your properties. 

Remember tics? Everything is great until economy has a hiccup.

Maybe keep your favorites and...?

@Todd Powell

A lot depends on your bandwidth and personal preferences. Do you have the time and desire to continue acquiring and actively managing your properties?! If so, then continue as it will definitely bring you higher returns. However if you’re really good making money outside of real estate, then let the experts do their job and invest via syndications.

If you want to learn about credibility of crowdfunding sites then @Ian Ippolito is your guy.

Last but not least you can also do both: active and passive investing. And then see if you can balance it out with your job.

Best!

If you own the properties on your own and you have the ability to add value, force appreciation, etc. then your returns can potentially be greater than investing in someone else's deals. You also have the control of if/when to sell or refinance. 

I will also say that I sleep better at night knowing that I have control over my properties and my risk profile and not a stranger. No matter how good their track record is. Tenants, termites, toilets, evictions don't keep me up at night. My property manager takes care of all of that.

If you like what you do and you don't care to own and manage on your own, then you're better off investing in someone's syndication, a REIT, or even the stock market. Less risk and less work but potentially less reward.

Cheers, 

Paul

It is definitely about preference.  If you invest passively, you are more-so investing with the person not the property.  And if you invest on your own, you have the problems that come with smaller properties and/or some dreadful management companies.

@Todd Powell

For someone with your experience, it would usually boil down to two concerns:

1) Time
2) Diversification

If you have time to run the acquisition and all the management, then you are in a good position to do the 29 doors. That's usually the first consideration that keeps people from doing it.

Second is more nuanced, do you want the diversification? Putting your money with another syndication diversifies you away from... yourself. Not many people would take this bet. It's not a terrible idea, particularly if a good portion of your money is already invested in your own projects. I would also suggest regional diversification as well. Then you can isolate your funds from local exposure.

@Todd Powell ,

I own properties directly and also invest in syndications passively. In my opinion the best option is to have both in your portfolio as they each have their unique advantages and disadvantages and neither is superior to the other in all ways.

The units you directly own give you the most control. You can know exactly what’s going on with all of them, which equips you to best decide which to keep and which dispose of, etc. You can also structure them exactly how you want. For example if you are very conservative you can go with owning them with no debt, which most likely isn’t possible through a syndication. Also, if you are time rich and money poor, you can build a lot of sweat equity by doing the management or working on your directly owned properties and generate a higher return 

The downside is that of course all of that takes work and effort. A passively owned syndication avoids that. You will probably be able to hire a manager that has years more experience than you would ever hope to gain on your own, and thus avoid a lot of the mistakes you might make on your own. You can diversify into numerous asset classes that are probably too expensive for you to do completely on your own such is much larger multi family, office, or real estate etc. You can also diversify the same amount of money into a larger number of properties, asset classes and strategies.

The downside is that you have to be able to vet a manager and feel comfortable relinquishing control. If you can’t do both of these things then passive investing is probably not a good choice.

As far as CrowdStreet., it is one of about 100 platforms out there, and has one of the largest selections of deals. However, I would caution you from assuming that the deals are vetted from the point of you of protecting you as an investor. You still have to do your own due diligence because not every deal is a good one, and the more conservative you are, the less good deals you will find.  This is true of amy platform or  syndication… not just CrowdStreet.. 

Todd, you are in the same boat as I am. 24 doors, 9 property managers in 7 states. I received my first Syndication offering last week, looks very promising. I am hoping to be about 25% Syndication and 75% SFR rentals in a couple of years. As I am approaching 60, getting grandkids and enjoying the golf course more, Syndication seems like a good opportunity.

Originally posted by : @Ian Ippolito

...it is one of about 100 platforms out there, and has one of the largest selections of deals. However, I would caution you from assuming that the deals are vetted from the point of you of protecting you as an investor. You still have to do your own due diligence because not every deal is a good one, and the more conservative you are, the less good deals you will find.  This is true of amy platform or  syndication… 

[Working around a system quoting bug ...]

No interesting in talking about a specific platform. I get the impression that CF platforms are nothing more than a marketplace. That the quality of the investment opportunity is something the investor needs to decide for themselves. The platforms are not making a promise, offering a guarantee or can otherwise be counted on to make good on a bad investment. Is that a fair statement?

I am completely fine with DD not being the responsibility of the platform. I just want to make sure I have it correct.

Originally posted by @Lance Bloggs :

Originally posted by : Ian Ippolito

...it is one of about 100 platforms out there, and has one of the largest selections of deals. However, I would caution you from assuming that the deals are vetted from the point of you of protecting you as an investor. You still have to do your own due diligence because not every deal is a good one, and the more conservative you are, the less good deals you will find.  This is true of amy platform or  syndication… 

[Working around a system quoting bug ...]

No interesting in talking about a specific platform. I get the impression that CF platforms are nothing more than a marketplace. That the quality of the investment opportunity is something the investor needs to decide for themselves. The platforms are not making a promise, offering a guarantee or can otherwise be counted on to make good on a bad investment. Is that a fair statement?

I am completely fine with DD not being the responsibility of the platform. I just want to make sure I have it correct.

It depends. Some of them are marketplaces with other people's deals (like CrowdStreet and RealCrowd. Some of them are showcases for their own deals that they originate or joint venture (like ArborCrowd). And some are a combination (like 1031 Crowdfunding).

But many of them will tout their due diligence as being very rigorous and/or superior to others. Unfortunately they also have an existential conflict of interest: without posting deals, they can't make any money. So personally, I wouldn't recommend depending on that. And yes, at the end of the day there is no guarantee that the investment will be good. So the investor is on their own and has to be able to do their own due diligence.

After over 1000 strategy calls with investors and coaching clients over the past couple years here is what I tell W2 employees... For those who are able to save more than $30k a year or have substantial liquidity (over 200k), being a landlord and especially flipping is a lot of work. If you like it cool/good for you... but just remember why we got into this... To be free from a JOB. A lot of us (80%) who start drinking Kool-Aide will be financially free in 4-7 years pending taking action. So I always urge people to start with the end in mind and take a more passive approach.

Do the math here… you with 300 dollars per property (2 months of work to buy a turnkey rental) you are going to need 20-40 of these to replace your income. I have 10 of these and have systems in place but have 1-2 evictions a year and 3-4 big things that happen. Image if I had 30, just 3 x those numbers.

Directly investing in a turnkey rental or small MFH is a good way to start to learn and build up the war chest to go into my scaleable investments such as private placement syndications. Whatever you do, try to be as close to the investment as possible. This is the fundamental problem I have with Wall Street who takes too much fees off the hard-working efforts of the middle class.

If your net worth (income minus expenses) is under $200,000 or barely save $30,000, syndications are not for you. Stick with these Turnkey rentals despite what Gurus (who are trying to sell you their program) tell you for now. They have a little higher gains (a lot more volatility) but a syndicator who is willing to put you in a deal with more than 10-20% of your net worth is asking for trouble.

Originally posted by @Todd Powell :

What are your thoughts about owning and managing some 29 doors versus putting money into legit RE syndication. There is a seemingly reputable company based out of Portland, Or that does many vetted deals, called Crowdstreet.

I am curious if its worth the headaches to keep large equites in properties I manage vs. the returns with bigger players in deals out there in RE syndication? Anyone have thoughts on this. Thank you in advance!

 Well here is a toilet that I imagine you weren't expecting to see. This is the reality of property management.

@Mike McKinzie

Thank you! I will be a grandpa next month! My son now works for Crowdstreet in Portland and it seems there are some good deals. I am thinking that might be more passive than me managing all my doors! Thanks for the input

I've self managed about what you have, Todd (a few dozen) for quite a while so I hear you.  It's a lot easier than it used to be with online rents and payments, but can still be a pain.

I would explore getting a PM if any are decent in your area.  That and/or selling off a least favorite or two, spread out to reduce the tax hit or exchange.  I did that with 4 over the last few years and am much happier.  Landlording is a 95/5 business I have found.  95% of your problems are caused by 5% of your tenants or holdings. 

I'm still not sold on passive investments. Lots of fat and middlemen getting that way.  Acq fee, mgt fee, liq fee, offering and legal fee, admin fee, waiting fee, yada, yada.  

There are still tenants, toilets and termites, but now it just costs 10x more to get it taken  care of. Easy enough to get overcharged by a PM. At least you'll still have a say in important decisions

Nice balanced discussion so far.  Well, until I put a little hair in it.. LOL

@Todd Powell I have no real opinion. I just wanted to mention though that crowd street is a platform, not a sponsor. Investing in syndication is all about the general partner and their ability to succeed. Crowdstreet just connects the LP to the Gp. Be sure to get the GP best you can.

@Mike Nuss

I absolutely agree with you my son just started working there a few months ago and deals with the heavy hitters he sees the very best deals or sponsors I think they call them I might be able to get in some of these is why asked the question

Interesting discussion. Having been in a landlord for a long time, I think it has to do with age and what is going on in your life. I was much more hands on but now I am trying to be more passive. Has anyone tried a DST or Delaware Statutory Trust for 1031 exchanges? And there are always REITs.

@Todd Powell that’s awesome. I’d ask him how they underwrite the deals and if they have some sort of scoring system or experience underwriting for the GPS. 

@Todd Powell

There are many solid private placement opportunities still out there, especially if you are an accredited investor. Diversifying a few $50k plays in well-vetted syndication deals, with an experienced operator, will likely outperform most individual investors’ efforts.

It’s not uncommon for these accredited investor deals to have 15% - 25% ROI. Some operators return investors’ original capital back in a few years, leaving their investors’ with equity share until the sell date. This period of “infinite returns” really boosts the IRR on these deals, especially if you re-deploy that same capital in a second deal while you are still in the first deal.

Once you have done your due diligence to find the right operators to invest with, this style of investing becomes truly passive.

As others have mentioned, if you have the time and risk tolerance to do your own deals, there is greater upside compared to investing in syndications. But there is also greater downside because you own 100% of the risk.