I am looking into Realtyshares and found interesting investment in Texas.
I am not very sure what will be real return but
16~19% projection sounds attractive.
Is this a good deal?
I am not the expert that others are but my thoughts
- young sponsor never been through a downturn. short track record.
- 9% preferred is good, better than the standard 8%
-60/40 split after 16% IRR is not good, there are deals with better splits
- Generic value add play, invest in units....raise rents....sell at higher price due to increase NOI
- I dont like the short 2 year hold but some would love it
- I think the fees are high, but not unreasonable. I think they said they were paying for renovation so that would balance it out
- exit cap rate of 6.5 seems optimistic in an interest rate environment that is going up. So even if they see the NOI increase, can you really trust that cap rates remain so low?
- conclusion (my opinion only), a pretty generic deal with a young sponsor and middling to less than average financials (fees and waterfall)
I think you could find better deals on Crowdstreet or Realcrowd. I would at least look at the deals on those sites before you invest.
I love syndication, if you are just jumping in I think it is a great way to invest. Good Luck
@John Nachtigall is providing some truly great feedback! I would go on to say if you don't yet know what a good deal looks like you should not participate yet. If you really want to be able to spot great deals it's easy! Read 100 offerings before participating in one. An offering a day will keep the doctor away! Or in this case may save your hard earned principal you'll be putting at risk! :)
If you are really new, some suggestions on education
on this site David Thompson is super knowledgeable.
the bible that every recommends is Investing in Real Estate Private Equity by Sean Cook. that is a pen name, the actual author is a private equity veteran, but he didn't want to be seen to promoting himself or his company, written very well
there are a few, but I think the RealCrowd series is really high quality. only 15 so you can catch up pretty easy.
I have had a ton of fun educating myself. I have really enjoyed learning something new. This is completely different than retail investing.
It looks aggressive, but achievable if the market stays hot. I would say their fees are high and they are not being conservative. Doesn't mean it's a bad deal. You need to look carefully at it and at all the details
Another reason it’s a bad option for syndicator when working with these types of crowdfunding sites is that you don’t get to harvest the investor list for repeat business.
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