I am considering joining LU in Houston as a Preferred (PIG) member for MF investing and would like some feedback on the actual mechanics and timeline from signup to cash flow from someone who has been through the process. What is the good, bad and ugly? How do the prospective deals get communicated/allocated to potential investors? How big is the pipeline of deals compared to potential investors? What is the typical investment per share? And of course, overall, are you satisfied with your membership?
Thanks for the input!
You should be able to do this on your own especially if you live in the local area. Unless you are good with giving them big fees or they make a ton off you then go for it.
@Paul Stephan , I'm not a LU member, but have read up on other posts to judge its value. Search and read for yourself, but as for me the $15k+ cost for a MF training program is crazy. Network and meet actual MF investors instead. You'll probably learn a lot more that way and can use the $15k for a seed money and marketing. Now their basic program is only a few hundred I think. That's not too bad for a quick crash course in REI. They aren't the only game in town teaching REI though.
I am a Preferred Member in LU...
How do the prospective deals get communicated/allocated to potential investors?
If you are a lead investor - typically through the LU multifamily broker, an outside broker, on loopnet, or though word-of-mouth.
How big is the pipeline of deals compared to potential investors?
As far as multifamily deals, I don't really know. I am a passive investor in MF, but have several SF. On average, I see 1-2 MF deals close per month. I know several leads that are looking for their first deal and several others that have to turn away passive investors because they are over-subscribed (too many people wanting to invest).
What is the typical investment per share?
Most of the MF deals I've seen were done in $25k increments.
Overall, are you satisfied with your membership?
I am satisfied. My advice is to only join if you are willing to spend money to save time. It's a trade, money for time. If the membership cost will keep you from being able to invest, don't do it. But if you have the extra money, then do it. The time it would take you to learn what you need to learn, find a competent and willing mentor in multifamily, could take valuable years. Meanwhile, a 15% post-tax ROI is average in multifamily; not to mention these properties go up in value as rents rise, so you have a capital gain working as you collect quarterly distributions. This is why it's worth it to some to trade money for time.
Here's my advice on each membership level:
Financial Freedom (FFP): Worth every penny. They spell out everything you need to get started in single-family buy-and-hold investing. Sure the information is probably out there for free if you look for it. But for $400-500, it's worth it to me to have it all consolidated in one place; and answers to my questions are only a phone call away from a local investor who understands ROI, cash-on-cash return, etc.
Challenge: Personally, I would pass on this. The only real add you get above the FFP, is their realtors will look for properties on MLS and from wholesalers, then break down the numbers and send them to you. You have to be quick to respond or the property will get tagged by another member. This level also gets you access to a mentor that will help you evaluate the property and numbers and guide you through your first few deals.
Preferred Investor (PIG): If you have at least $100k to invest and time is valuable to you, then this level is the best way to go. I have not seen anyone do multifamily like LU. Look at who wins the NAA IRO awards year after year. Here, there are two paths - invest as a passive investor (become a member of an LLC that buys apartment complexes) or as a lead investor (operates and manages the LLC that buys the apartment complexes). Most passive deals require $50-100k minimum investment; and to be a lead you should be able to qualify as an accredited investor and be able to contribute enough funds to be the highest equity holder.
I hope this was helpful.
Very helpful and much appreciated, thanks for the response!
@David Martin, I just participated in the two day class 2 weekends ago, but I wanted to ask you if it's true that you can make 100, 200 or up to 300% on your investment after the MF is sold. Is this true? Also, does LU really hold your hand if I wanted to become a lead and be responsible for an LLC to avoid losing money?
I thank you in advance.
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