Ashcroft capital - Paused Distributions
Member since 2020 · 9 posts · 8 votes
Ashcroft capital - Paused Distributions
Most Popular Reply
Melanie P.Pro Member
Rental Property Investor · Member since 2023 · 1k+ posts · 922 votesI guess there are about 20 suckers born every minute. Every one of you in this is an accredited investor, right? A two-second glance at their materials reveals that when they distribute funds from a property sale one of the categories is: unpaid distributions. This has been the plan since the start.
Investing in real estate is not that hard. I can't imagine what would make anyone put their money into one of these things. Pure laziness I guess. TBills are paying over 5% if you need lazy guys. No need for this nonsense.
248 Replies
- Rental Property Investor · San Francisco, CA · Member since 2013 · 1k+ posts · 1k+ votes2y
Quote from @Carlos Ptriawan:
Quote from @John M.:
The industry is dependent upon the lenders and the lenders are skittish now a days. Ashcroft is doing the right thing by pausing and finding another lender. I like that they are not taking an asset management fee as well. I'm pushing a lot of my financing over to life insurance companies because the banks are hard to deal with and there seems to be less renewal risk with insurance companies.
lender is the one that would go bankrupt if they continue financing while asset valuation going down ( an increase of 1% cap rate is equal to asset valuation lowered by 8-12%). The problem with lender is they can't anticipate market risk volatility, almost as similar as subprime mortgage lender; lot of these lenders are just assuming "favourable market condition" would continue without end. Now when the Fed made radical U-turn, they're all the one that's holding the bag. But inherently in this syndication dog-eat-dog world, at the end of the cycle someone would be wiped out.
See this is the reason I personally stayed away from commercial RE, incl. multi family. I always worked with 2-4’s because I could secure long term 30 year financing. It doesn’t sound like refinancing nowadays dried up like 2008-2010, but man I remember how bad banking was those days! Thank god I was with 30 years fixed and just rode out the bad times until 2013 when banks became liquid again. Of course ironically, now I don’t even need the 30 year fixed term, as I deleveraged completely and just own outright. I took my gains and sold my 2014/15 acquisitions in late 2021/early 2022, and repositioned my long term prime rentals debt free.
In the RE game you have to know when to take your profits. I (unfortunately) know people that go boom and bust every cycle! And it’s almost always leverage or untimely refinancing that gets them screwed. I guess I’m just not cut out for that sort of drama, so this cycle I just took my marbles and went home. BTW I’m seeing more and more properties turn in my market from folks who brought in 2019-2022 and are now getting spanked big time. It’s sad seeing a 2021 purchase for $1.8 mil now offered for $1.5, and who knows what it will actually close at. You know that person just got royally f*cked.
Stay safe and sane out there! - Member since 2019 · 7k+ posts · 4k+ votes2y
Quote from @Amit M.:
Quote from @Carlos Ptriawan:
Quote from @John M.:
The industry is dependent upon the lenders and the lenders are skittish now a days. Ashcroft is doing the right thing by pausing and finding another lender. I like that they are not taking an asset management fee as well. I'm pushing a lot of my financing over to life insurance companies because the banks are hard to deal with and there seems to be less renewal risk with insurance companies.
lender is the one that would go bankrupt if they continue financing while asset valuation going down ( an increase of 1% cap rate is equal to asset valuation lowered by 8-12%). The problem with lender is they can't anticipate market risk volatility, almost as similar as subprime mortgage lender; lot of these lenders are just assuming "favourable market condition" would continue without end. Now when the Fed made radical U-turn, they're all the one that's holding the bag. But inherently in this syndication dog-eat-dog world, at the end of the cycle someone would be wiped out.
See this is the reason I personally stayed away from commercial RE, incl. multi family. I always worked with 2-4’s because I could secure long term 30 year financing. It doesn’t sound like refinancing nowadays dried up like 2008-2010, but man I remember how bad banking was those days! Thank god I was with 30 years fixed and just rode out the bad times until 2013 when banks became liquid again. Of course ironically, now I don’t even need the 30 year fixed term, as I deleveraged completely and just own outright. I took my gains and sold my 2014/15 acquisitions in late 2021/early 2022, and repositioned my long term prime rentals debt free.
In the RE game you have to know when to take your profits. I (unfortunately) know people that go boom and bust every cycle! And it’s almost always leverage or untimely refinancing that gets them screwed. I guess I’m just not cut out for that sort of drama, so this cycle I just took my marbles and went home. BTW I’m seeing more and more properties turn in my market from folks who brought in 2019-2022 and are now getting spanked big time. It’s sad seeing a 2021 purchase for $1.8 mil now offered for $1.5, and who knows what it will actually close at. You know that person just got royally f*cked.
Stay safe and sane out there!You really have a good thought process as investor (which is rare in biggerpockets but very common analytical skillsets in bay area).
I just read another "best sponsor (yesterday)" got wiped out out in one of their apartment. The reward/risk ratio in this niche is quite disturbing recently, perhaps market condition would be better in the next few years when cap rate reset is over.
One area where I see a sweet spot in syndication is in the industrial space where cap rate volatility only move by 25 bps and expected loan default is less than 2%.
This is also why I keep saying syndication is not active investment. Because it requires hell lot more due diligence /analytics process than simply buying duplex in San Francisco -- with always more risk to LP and more reward/upside to the GP side in anyoutcomes.If we buy duplex in SF we know all the risk is with us.
One reason why industrial space is bit safer outthere I think is because the rent is mildly increasing and there're not too many (speculative) syndicator outthere as it's very niche sector/segment.
- Rental Property Investor · San Francisco, CA · Member since 2013 · 1k+ posts · 1k+ votes2y
Quote from @Carlos Ptriawan:
Quote from @Amit M.:
Quote from @Carlos Ptriawan:
Quote from @John M.:
The industry is dependent upon the lenders and the lenders are skittish now a days. Ashcroft is doing the right thing by pausing and finding another lender. I like that they are not taking an asset management fee as well. I'm pushing a lot of my financing over to life insurance companies because the banks are hard to deal with and there seems to be less renewal risk with insurance companies.
lender is the one that would go bankrupt if they continue financing while asset valuation going down ( an increase of 1% cap rate is equal to asset valuation lowered by 8-12%). The problem with lender is they can't anticipate market risk volatility, almost as similar as subprime mortgage lender; lot of these lenders are just assuming "favourable market condition" would continue without end. Now when the Fed made radical U-turn, they're all the one that's holding the bag. But inherently in this syndication dog-eat-dog world, at the end of the cycle someone would be wiped out.
See this is the reason I personally stayed away from commercial RE, incl. multi family. I always worked with 2-4’s because I could secure long term 30 year financing. It doesn’t sound like refinancing nowadays dried up like 2008-2010, but man I remember how bad banking was those days! Thank god I was with 30 years fixed and just rode out the bad times until 2013 when banks became liquid again. Of course ironically, now I don’t even need the 30 year fixed term, as I deleveraged completely and just own outright. I took my gains and sold my 2014/15 acquisitions in late 2021/early 2022, and repositioned my long term prime rentals debt free.
In the RE game you have to know when to take your profits. I (unfortunately) know people that go boom and bust every cycle! And it’s almost always leverage or untimely refinancing that gets them screwed. I guess I’m just not cut out for that sort of drama, so this cycle I just took my marbles and went home. BTW I’m seeing more and more properties turn in my market from folks who brought in 2019-2022 and are now getting spanked big time. It’s sad seeing a 2021 purchase for $1.8 mil now offered for $1.5, and who knows what it will actually close at. You know that person just got royally f*cked.
Stay safe and sane out there!You really have a good thought process as investor (which is rare in biggerpockets but very common analytical skillsets in bay area).
I just read another "best sponsor (yesterday)" got wiped out out in one of their apartment. The reward/risk ratio in this niche is quite disturbing recently, perhaps market condition would be better in the next few years when cap rate reset is over.
One area where I see a sweet spot in syndication is in the industrial space where cap rate volatility only move by 25 bps and expected loan default is less than 2%.
This is also why I keep saying syndication is not active investment. Because it requires hell lot more due diligence /analytics process than simply buying duplex in San Francisco -- with always more risk to LP and more reward/upside to the GP side in anyoutcomes.If we buy duplex in SF we know all the risk is with us.
One reason why industrial space is bit safer outthere I think is because the rent is mildly increasing and there're not too many (speculative) syndicator outthere as it's very niche sector/segment.
I think you mean “syndication is not PASSIVE investment” right?!? It’s active in the sense that you need to do a lot of due diligence to separate the sh!t from the shinola…sort to speak ;)
- Member since 2019 · 7k+ posts · 4k+ votes2y
Quote from @Amit M.:
Quote from @Carlos Ptriawan:
Quote from @Amit M.:
Quote from @Carlos Ptriawan:
Quote from @John M.:
The industry is dependent upon the lenders and the lenders are skittish now a days. Ashcroft is doing the right thing by pausing and finding another lender. I like that they are not taking an asset management fee as well. I'm pushing a lot of my financing over to life insurance companies because the banks are hard to deal with and there seems to be less renewal risk with insurance companies.
lender is the one that would go bankrupt if they continue financing while asset valuation going down ( an increase of 1% cap rate is equal to asset valuation lowered by 8-12%). The problem with lender is they can't anticipate market risk volatility, almost as similar as subprime mortgage lender; lot of these lenders are just assuming "favourable market condition" would continue without end. Now when the Fed made radical U-turn, they're all the one that's holding the bag. But inherently in this syndication dog-eat-dog world, at the end of the cycle someone would be wiped out.
See this is the reason I personally stayed away from commercial RE, incl. multi family. I always worked with 2-4’s because I could secure long term 30 year financing. It doesn’t sound like refinancing nowadays dried up like 2008-2010, but man I remember how bad banking was those days! Thank god I was with 30 years fixed and just rode out the bad times until 2013 when banks became liquid again. Of course ironically, now I don’t even need the 30 year fixed term, as I deleveraged completely and just own outright. I took my gains and sold my 2014/15 acquisitions in late 2021/early 2022, and repositioned my long term prime rentals debt free.
In the RE game you have to know when to take your profits. I (unfortunately) know people that go boom and bust every cycle! And it’s almost always leverage or untimely refinancing that gets them screwed. I guess I’m just not cut out for that sort of drama, so this cycle I just took my marbles and went home. BTW I’m seeing more and more properties turn in my market from folks who brought in 2019-2022 and are now getting spanked big time. It’s sad seeing a 2021 purchase for $1.8 mil now offered for $1.5, and who knows what it will actually close at. You know that person just got royally f*cked.
Stay safe and sane out there!You really have a good thought process as investor (which is rare in biggerpockets but very common analytical skillsets in bay area).
I just read another "best sponsor (yesterday)" got wiped out out in one of their apartment. The reward/risk ratio in this niche is quite disturbing recently, perhaps market condition would be better in the next few years when cap rate reset is over.
One area where I see a sweet spot in syndication is in the industrial space where cap rate volatility only move by 25 bps and expected loan default is less than 2%.
This is also why I keep saying syndication is not active investment. Because it requires hell lot more due diligence /analytics process than simply buying duplex in San Francisco -- with always more risk to LP and more reward/upside to the GP side in anyoutcomes.If we buy duplex in SF we know all the risk is with us.
One reason why industrial space is bit safer outthere I think is because the rent is mildly increasing and there're not too many (speculative) syndicator outthere as it's very niche sector/segment.
I think you mean “syndication is not PASSIVE investment” right?!? It’s active in the sense that you need to do a lot of due diligence to separate the sh!t from the shinola…sort to speak ;)
correct I meant to say that LOL
In reality to become LP one need to be founder/accountant/CFO-level when examining how this GP operates. The DD process is not just executed prior to investment but also during investment period.Syndication has similarities to VC investing except the return is much less with equal market risk.
For me if I have to invest at multifamily, my term must be 50% LTV 10 years fixed debt, Year 1 DSCR must be above 1.30.
Otherwise I would not even look at anything else. These GP kid that has 80% LTV floating buying at cap three are just suicidal. But well, some people is crazy.
- Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes2y
Quote from @Carlos Ptriawan:
Quote from @Amit M.:
Quote from @Carlos Ptriawan:
Quote from @Amit M.:
Quote from @Carlos Ptriawan:
Quote from @John M.:
The industry is dependent upon the lenders and the lenders are skittish now a days. Ashcroft is doing the right thing by pausing and finding another lender. I like that they are not taking an asset management fee as well. I'm pushing a lot of my financing over to life insurance companies because the banks are hard to deal with and there seems to be less renewal risk with insurance companies.
lender is the one that would go bankrupt if they continue financing while asset valuation going down ( an increase of 1% cap rate is equal to asset valuation lowered by 8-12%). The problem with lender is they can't anticipate market risk volatility, almost as similar as subprime mortgage lender; lot of these lenders are just assuming "favourable market condition" would continue without end. Now when the Fed made radical U-turn, they're all the one that's holding the bag. But inherently in this syndication dog-eat-dog world, at the end of the cycle someone would be wiped out.
See this is the reason I personally stayed away from commercial RE, incl. multi family. I always worked with 2-4’s because I could secure long term 30 year financing. It doesn’t sound like refinancing nowadays dried up like 2008-2010, but man I remember how bad banking was those days! Thank god I was with 30 years fixed and just rode out the bad times until 2013 when banks became liquid again. Of course ironically, now I don’t even need the 30 year fixed term, as I deleveraged completely and just own outright. I took my gains and sold my 2014/15 acquisitions in late 2021/early 2022, and repositioned my long term prime rentals debt free.
In the RE game you have to know when to take your profits. I (unfortunately) know people that go boom and bust every cycle! And it’s almost always leverage or untimely refinancing that gets them screwed. I guess I’m just not cut out for that sort of drama, so this cycle I just took my marbles and went home. BTW I’m seeing more and more properties turn in my market from folks who brought in 2019-2022 and are now getting spanked big time. It’s sad seeing a 2021 purchase for $1.8 mil now offered for $1.5, and who knows what it will actually close at. You know that person just got royally f*cked.
Stay safe and sane out there!You really have a good thought process as investor (which is rare in biggerpockets but very common analytical skillsets in bay area).
I just read another "best sponsor (yesterday)" got wiped out out in one of their apartment. The reward/risk ratio in this niche is quite disturbing recently, perhaps market condition would be better in the next few years when cap rate reset is over.
One area where I see a sweet spot in syndication is in the industrial space where cap rate volatility only move by 25 bps and expected loan default is less than 2%.
This is also why I keep saying syndication is not active investment. Because it requires hell lot more due diligence /analytics process than simply buying duplex in San Francisco -- with always more risk to LP and more reward/upside to the GP side in anyoutcomes.If we buy duplex in SF we know all the risk is with us.
One reason why industrial space is bit safer outthere I think is because the rent is mildly increasing and there're not too many (speculative) syndicator outthere as it's very niche sector/segment.
I think you mean “syndication is not PASSIVE investment” right?!? It’s active in the sense that you need to do a lot of due diligence to separate the sh!t from the shinola…sort to speak ;)
correct I meant to say that LOL
In reality to become LP one need to be founder/accountant/CFO-level when examining how this GP operates. The DD process is not just executed prior to investment but also during investment period.Syndication has similarities to VC investing except the return is much less with equal market risk.
For me if I have to invest at multifamily, my term must be 50% LTV 10 years fixed debt, Year 1 DSCR must be above 1.30.
Otherwise I would not even look at anything else. These GP kid that has 80% LTV floating buying at cap three are just suicidal. But well, some people is crazy.
50% LTV at 1.3 DSCR sounds risky. Why 50% DSCR with very little cash flow? Sounds like you're ok with massively overpaying for a property.
VC investing is extremely high risk with 1 in 10 investments making money, so to compare the 2, shows that you have no knowledge of either.
- Member since 2019 · 7k+ posts · 4k+ votes2y
Quote from @Todd Dexheimer:
Quote from @Carlos Ptriawan:
Quote from @Amit M.:
For me if I have to invest at multifamily, my term must be 50% LTV 10 years fixed debt, Year 1 DSCR must be above 1.30.
Otherwise I would not even look at anything else. These GP kid that has 80% LTV floating buying at cap three are just suicidal. But well, some people is crazy.
50% LTV at 1.3 DSCR sounds risky. Why 50% DSCR with very little cash flow? Sounds like you're ok with massively overpaying for a property.
VC investing is extremely high risk with 1 in 10 investments making money, so to compare the 2, shows that you have no knowledge of either.
hahaha ,VC investing is at extreme high risk but one successful startup could make 999% of the return.
The 50% LTV 10 year fixed-debt is all core GP that I follow. The DSCR 1.3/1.4 is coming from lender. You can say whatever you want to your LP after you lost all your LP capitals.
- Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes2y
Quote from @Carlos Ptriawan:
Quote from @Todd Dexheimer:
Quote from @Carlos Ptriawan:
Quote from @Amit M.:
For me if I have to invest at multifamily, my term must be 50% LTV 10 years fixed debt, Year 1 DSCR must be above 1.30.
Otherwise I would not even look at anything else. These GP kid that has 80% LTV floating buying at cap three are just suicidal. But well, some people is crazy.
50% LTV at 1.3 DSCR sounds risky. Why 50% DSCR with very little cash flow? Sounds like you're ok with massively overpaying for a property.
VC investing is extremely high risk with 1 in 10 investments making money, so to compare the 2, shows that you have no knowledge of either.
hahaha ,VC investing is at extreme high risk but one successful startup could make 999% of the return.
The 50% LTV 10 year fixed-debt is all core GP that I follow. The DSCR 1.3/1.4 is coming from lender. You can say whatever you want to your LP after you lost all your LP capitals.
My point is 50% LTV means nothing if you're overpaying by 30%. 50% LTV with such a low DSCR means that your cash flow is really low for what you're paying. At 50% your DSCR should be better than 1.5.
Your criteria is far too risky for me.
- Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes2y
Quote from @Todd Dexheimer:
Quote from @Carlos Ptriawan:
Quote from @Amit M.:
Quote from @Carlos Ptriawan:
Quote from @Amit M.:
Quote from @Carlos Ptriawan:
Quote from @John M.:
The industry is dependent upon the lenders and the lenders are skittish now a days. Ashcroft is doing the right thing by pausing and finding another lender. I like that they are not taking an asset management fee as well. I'm pushing a lot of my financing over to life insurance companies because the banks are hard to deal with and there seems to be less renewal risk with insurance companies.
lender is the one that would go bankrupt if they continue financing while asset valuation going down ( an increase of 1% cap rate is equal to asset valuation lowered by 8-12%). The problem with lender is they can't anticipate market risk volatility, almost as similar as subprime mortgage lender; lot of these lenders are just assuming "favourable market condition" would continue without end. Now when the Fed made radical U-turn, they're all the one that's holding the bag. But inherently in this syndication dog-eat-dog world, at the end of the cycle someone would be wiped out.
See this is the reason I personally stayed away from commercial RE, incl. multi family. I always worked with 2-4’s because I could secure long term 30 year financing. It doesn’t sound like refinancing nowadays dried up like 2008-2010, but man I remember how bad banking was those days! Thank god I was with 30 years fixed and just rode out the bad times until 2013 when banks became liquid again. Of course ironically, now I don’t even need the 30 year fixed term, as I deleveraged completely and just own outright. I took my gains and sold my 2014/15 acquisitions in late 2021/early 2022, and repositioned my long term prime rentals debt free.
In the RE game you have to know when to take your profits. I (unfortunately) know people that go boom and bust every cycle! And it’s almost always leverage or untimely refinancing that gets them screwed. I guess I’m just not cut out for that sort of drama, so this cycle I just took my marbles and went home. BTW I’m seeing more and more properties turn in my market from folks who brought in 2019-2022 and are now getting spanked big time. It’s sad seeing a 2021 purchase for $1.8 mil now offered for $1.5, and who knows what it will actually close at. You know that person just got royally f*cked.
Stay safe and sane out there!You really have a good thought process as investor (which is rare in biggerpockets but very common analytical skillsets in bay area).
I just read another "best sponsor (yesterday)" got wiped out out in one of their apartment. The reward/risk ratio in this niche is quite disturbing recently, perhaps market condition would be better in the next few years when cap rate reset is over.
One area where I see a sweet spot in syndication is in the industrial space where cap rate volatility only move by 25 bps and expected loan default is less than 2%.
This is also why I keep saying syndication is not active investment. Because it requires hell lot more due diligence /analytics process than simply buying duplex in San Francisco -- with always more risk to LP and more reward/upside to the GP side in anyoutcomes.If we buy duplex in SF we know all the risk is with us.
One reason why industrial space is bit safer outthere I think is because the rent is mildly increasing and there're not too many (speculative) syndicator outthere as it's very niche sector/segment.
I think you mean “syndication is not PASSIVE investment” right?!? It’s active in the sense that you need to do a lot of due diligence to separate the sh!t from the shinola…sort to speak ;)
correct I meant to say that LOL
In reality to become LP one need to be founder/accountant/CFO-level when examining how this GP operates. The DD process is not just executed prior to investment but also during investment period.Syndication has similarities to VC investing except the return is much less with equal market risk.
For me if I have to invest at multifamily, my term must be 50% LTV 10 years fixed debt, Year 1 DSCR must be above 1.30.
Otherwise I would not even look at anything else. These GP kid that has 80% LTV floating buying at cap three are just suicidal. But well, some people is crazy.
50% LTV at 1.3 DSCR sounds risky. Why 50% DSCR with very little cash flow? Sounds like you're ok with massively overpaying for a property.
VC investing is extremely high risk with 1 in 10 investments making money, so to compare the 2, shows that you have no knowledge of either.
I was always taught VC investing is like "playing the ponies". The art is in making sure the 1:50 that win's, is worth it all. The 1 and the 49 fails.
- Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes2y
Quote from @Carlos Ptriawan:
Quote from @Todd Dexheimer:
Quote from @Carlos Ptriawan:
Quote from @Amit M.:
For me if I have to invest at multifamily, my term must be 50% LTV 10 years fixed debt, Year 1 DSCR must be above 1.30.
Otherwise I would not even look at anything else. These GP kid that has 80% LTV floating buying at cap three are just suicidal. But well, some people is crazy.
50% LTV at 1.3 DSCR sounds risky. Why 50% DSCR with very little cash flow? Sounds like you're ok with massively overpaying for a property.
VC investing is extremely high risk with 1 in 10 investments making money, so to compare the 2, shows that you have no knowledge of either.
hahaha ,VC investing is at extreme high risk but one successful startup could make 999% of the return.
The 50% LTV 10 year fixed-debt is all core GP that I follow. The DSCR 1.3/1.4 is coming from lender. You can say whatever you want to your LP after you lost all your LP capitals.
Carlos I am confused....
When I use your example and play with the #'s, this looks to pencil out as if it's a residential investment property. DSCR ~1.0 hitting around 70% "LTV".
Which still, DSCR of 1.0 at 70% LTV is dumb in my opinion UNLESS the investment is with a mitigating strategy of value-add or positioning for some appreciation event which is now other investing and the operational (hold) is not the focus for investment returns, it's just a cost of position, and a whole different "beast" entirely.
Point is, that's a HORRIBLE DSCR for any "syndicated" investment at 50% LTV. I'd argue that "value" is BS, and one grossly over-paid. That REAL "value" is significantly less meaning that 50% "LTV" in reality is more like 65%+.
- Member since 2019 · 7k+ posts · 4k+ votes2y
Quote from @James Hamling:
Quote from @Carlos Ptriawan:
Quote from @Todd Dexheimer:
Quote from @Carlos Ptriawan:
Quote from @Amit M.:
For me if I have to invest at multifamily, my term must be 50% LTV 10 years fixed debt, Year 1 DSCR must be above 1.30.
Otherwise I would not even look at anything else. These GP kid that has 80% LTV floating buying at cap three are just suicidal. But well, some people is crazy.
50% LTV at 1.3 DSCR sounds risky. Why 50% DSCR with very little cash flow? Sounds like you're ok with massively overpaying for a property.
VC investing is extremely high risk with 1 in 10 investments making money, so to compare the 2, shows that you have no knowledge of either.
hahaha ,VC investing is at extreme high risk but one successful startup could make 999% of the return.
The 50% LTV 10 year fixed-debt is all core GP that I follow. The DSCR 1.3/1.4 is coming from lender. You can say whatever you want to your LP after you lost all your LP capitals.
Carlos I am confused....
When I use your example and play with the #'s, this looks to pencil out as if it's a residential investment property. DSCR ~1.0 hitting around 70% "LTV".
Which still, DSCR of 1.0 at 70% LTV is dumb in my opinion UNLESS the investment is with a mitigating strategy of value-add or positioning for some appreciation event which is now other investing and the operational (hold) is not the focus for investment returns, it's just a cost of position, and a whole different "beast" entirely.
Point is, that's a HORRIBLE DSCR for any "syndicated" investment at 50% LTV. I'd argue that "value" is BS, and one grossly over-paid. That REAL "value" is significantly less meaning that 50% "LTV" in reality is more like 65%+.
that's minimum, lender is asking for minimum of 1.4 DSCR.
I'm not buying anything higher than 50%LTV to be in safe side. What's the argument for this I don't understand - Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes2y
Quote from @Carlos Ptriawan:
Quote from @James Hamling:
Quote from @Carlos Ptriawan:
Quote from @Todd Dexheimer:
Quote from @Carlos Ptriawan:
Quote from @Amit M.:
For me if I have to invest at multifamily, my term must be 50% LTV 10 years fixed debt, Year 1 DSCR must be above 1.30.
Otherwise I would not even look at anything else. These GP kid that has 80% LTV floating buying at cap three are just suicidal. But well, some people is crazy.
50% LTV at 1.3 DSCR sounds risky. Why 50% DSCR with very little cash flow? Sounds like you're ok with massively overpaying for a property.
VC investing is extremely high risk with 1 in 10 investments making money, so to compare the 2, shows that you have no knowledge of either.
hahaha ,VC investing is at extreme high risk but one successful startup could make 999% of the return.
The 50% LTV 10 year fixed-debt is all core GP that I follow. The DSCR 1.3/1.4 is coming from lender. You can say whatever you want to your LP after you lost all your LP capitals.
Carlos I am confused....
When I use your example and play with the #'s, this looks to pencil out as if it's a residential investment property. DSCR ~1.0 hitting around 70% "LTV".
Which still, DSCR of 1.0 at 70% LTV is dumb in my opinion UNLESS the investment is with a mitigating strategy of value-add or positioning for some appreciation event which is now other investing and the operational (hold) is not the focus for investment returns, it's just a cost of position, and a whole different "beast" entirely.
Point is, that's a HORRIBLE DSCR for any "syndicated" investment at 50% LTV. I'd argue that "value" is BS, and one grossly over-paid. That REAL "value" is significantly less meaning that 50% "LTV" in reality is more like 65%+.
that's minimum, lender is asking for minimum of 1.4 DSCR.
I'm not buying anything higher than 50%LTV to be in safe side. What's the argument for this I don't understandThe argument is that you are using 50% LTV as a "safe" metric, yet turn around and say 1.3 DSCR (now 1.4 DSCR). If you are only getting a 1.3 or 1.4 DSCR with a 50% down payment, that is only because you overpaid. The only way to justify such a low DSCR with a 50% LTV, is that it's a large value add and you are able to increase the NOI to a much greater DSCR.
- Member since 2019 · 7k+ posts · 4k+ votes2y
Quote from @Todd Dexheimer:
Quote from @Carlos Ptriawan:
Quote from @James Hamling:
Quote from @Carlos Ptriawan:
Quote from @Todd Dexheimer:
Quote from @Carlos Ptriawan:
Quote from @Amit M.:
For me if I have to invest at multifamily, my term must be 50% LTV 10 years fixed debt, Year 1 DSCR must be above 1.30.
Otherwise I would not even look at anything else. These GP kid that has 80% LTV floating buying at cap three are just suicidal. But well, some people is crazy.
50% LTV at 1.3 DSCR sounds risky. Why 50% DSCR with very little cash flow? Sounds like you're ok with massively overpaying for a property.
VC investing is extremely high risk with 1 in 10 investments making money, so to compare the 2, shows that you have no knowledge of either.
hahaha ,VC investing is at extreme high risk but one successful startup could make 999% of the return.
The 50% LTV 10 year fixed-debt is all core GP that I follow. The DSCR 1.3/1.4 is coming from lender. You can say whatever you want to your LP after you lost all your LP capitals.
Carlos I am confused....
When I use your example and play with the #'s, this looks to pencil out as if it's a residential investment property. DSCR ~1.0 hitting around 70% "LTV".
Which still, DSCR of 1.0 at 70% LTV is dumb in my opinion UNLESS the investment is with a mitigating strategy of value-add or positioning for some appreciation event which is now other investing and the operational (hold) is not the focus for investment returns, it's just a cost of position, and a whole different "beast" entirely.
Point is, that's a HORRIBLE DSCR for any "syndicated" investment at 50% LTV. I'd argue that "value" is BS, and one grossly over-paid. That REAL "value" is significantly less meaning that 50% "LTV" in reality is more like 65%+.
that's minimum, lender is asking for minimum of 1.4 DSCR.
I'm not buying anything higher than 50%LTV to be in safe side. What's the argument for this I don't understandThe argument is that you are using 50% LTV as a "safe" metric, yet turn around and say 1.3 DSCR (now 1.4 DSCR). If you are only getting a 1.3 or 1.4 DSCR with a 50% down payment, that is only because you overpaid. The only way to justify such a low DSCR with a 50% LTV, is that it's a large value add and you are able to increase the NOI to a much greater DSCR.
I am saying as minimum.........
anyhow ....
US real estate market will be 'very ugly' next year, Howard Lutnick warnsThe CEO of Cantor Fitzgerald said $700 billion in defaults are coming
https://www.foxbusiness.com/real-estate/us-real-estate-marke...
- Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes2y
Quote from @Carlos Ptriawan:
Quote from @Todd Dexheimer:
Quote from @Carlos Ptriawan:
Quote from @James Hamling:
Quote from @Carlos Ptriawan:
Quote from @Todd Dexheimer:
Quote from @Carlos Ptriawan:
Quote from @Amit M.:
For me if I have to invest at multifamily, my term must be 50% LTV 10 years fixed debt, Year 1 DSCR must be above 1.30.
Otherwise I would not even look at anything else. These GP kid that has 80% LTV floating buying at cap three are just suicidal. But well, some people is crazy.
50% LTV at 1.3 DSCR sounds risky. Why 50% DSCR with very little cash flow? Sounds like you're ok with massively overpaying for a property.
VC investing is extremely high risk with 1 in 10 investments making money, so to compare the 2, shows that you have no knowledge of either.
hahaha ,VC investing is at extreme high risk but one successful startup could make 999% of the return.
The 50% LTV 10 year fixed-debt is all core GP that I follow. The DSCR 1.3/1.4 is coming from lender. You can say whatever you want to your LP after you lost all your LP capitals.
Carlos I am confused....
When I use your example and play with the #'s, this looks to pencil out as if it's a residential investment property. DSCR ~1.0 hitting around 70% "LTV".
Which still, DSCR of 1.0 at 70% LTV is dumb in my opinion UNLESS the investment is with a mitigating strategy of value-add or positioning for some appreciation event which is now other investing and the operational (hold) is not the focus for investment returns, it's just a cost of position, and a whole different "beast" entirely.
Point is, that's a HORRIBLE DSCR for any "syndicated" investment at 50% LTV. I'd argue that "value" is BS, and one grossly over-paid. That REAL "value" is significantly less meaning that 50% "LTV" in reality is more like 65%+.
that's minimum, lender is asking for minimum of 1.4 DSCR.
I'm not buying anything higher than 50%LTV to be in safe side. What's the argument for this I don't understandThe argument is that you are using 50% LTV as a "safe" metric, yet turn around and say 1.3 DSCR (now 1.4 DSCR). If you are only getting a 1.3 or 1.4 DSCR with a 50% down payment, that is only because you overpaid. The only way to justify such a low DSCR with a 50% LTV, is that it's a large value add and you are able to increase the NOI to a much greater DSCR.
I am saying as minimum.........
anyhow ....
US real estate market will be 'very ugly' next year, Howard Lutnick warnsThe CEO of Cantor Fitzgerald said $700 billion in defaults are coming
https://www.foxbusiness.com/real-estate/us-real-estate-marke...
Ok let's use some CONTEXT here. He also said a lot of leveling statement's as well, such as the sky isn't falling etc etc..
Many are talking on this, and I myself have been one of them, for about a year now.
And as I have said on it, it's a HUGE slow-rolling freight train heading to a bridge that's been blown out. It's well know, super obvious to all in CRE finance and CRE as a whole. And, most importantly, very easily avoidable. Very VERY easy.
For the combination of how easy it is to relief, the sheer size of it especially when considering the systemic fallout it would hold in regional banking, and who it most hit's ie elite class; for this "holy trinity" I am 97% certain it will NOT happen.
SO why all the drum-banging on it? Well, gotta sell the "disaster" before public will smile at the "cure" right?
It's the messed up PC world where in now where if proactive measures were done on such politicians heads would be demanded for "saving the rich". But, ironically, sell the disaster first, those same people will be DEMANDING bail-out checks get sent asap.
So, that's what I hear from these, I hear the message behind the message. I hear the intent and reasoning.
No side R or D will "win" from a regional banking crisis, it's a universal item to be addressed. All that changes this year is the "how". That's what's really playing out now, the "how" to relief aid for CRE.
Not to mention the ground work was already laid and tested during covid on residential segment now wasn't it. So it's a ready action to deploy exact same to CRE this go-round and use the previous as case study to it's assured success and value for "taxpayers".
Just wait n see, it will work it's way onto campaign trail and become a campaign issue to throw around. Remember, never let a good crisis go to waste.
- Developer · New York City, NY · Member since 2015 · 812 posts · 718 votes2y
I will also be looking for deals to scoop these failed syndications on pennies on the dollar during the end of 2024 and through 2025. No outside money necessary. It's going to be 2008-2012 all over again. Rest assured, Wall Street and private money know of this too. It was a perfect trap for the inexperienced "syndicators".
- Member since 2019 · 7k+ posts · 4k+ votes2y
Quote from @Calvin Thomas:
I will also be looking for deals to scoop these failed syndications on pennies on the dollar during the end of 2024 and through 2025. No outside money necessary. It's going to be 2008-2012 all over again. Rest assured, Wall Street and private money know of this too. It was a perfect trap for the inexperienced "syndicators".
There you go !!!
- Member since 2019 · 7k+ posts · 4k+ votes2y
back to the topic, I head Ashcroft stopped distribution in all their apartment.
- Investor · Hillsboro, OR · Member since 2016 · 304 posts · 153 votes2y
Feb2, 2024 video from Brandon Turner. His new fund will be HML. Similar to discussed.
youtube.com/watch?v=zYmq6nyVWYw
- Investor · Central Virginia · Member since 2020 · 393 posts · 253 votes2y
Elevate syndication deal... this after they asked LPs for $100k in December.
- Investor · Newport Beach, CA · Member since 2019 · 190 posts · 176 votes2y
@Chris Webb I think that was the second capital call as well.
We’re going to see quite a bit of this in 2024, most thought it was going to come in 2023 but foreclosures take awhile. Most of the loan modifications that sponsors are touting almost assure this outcome as well. That should translate into 2024 being a good year for new investments.
- 2yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Quote from @Christie Gahan:
Feb2, 2024 video from Brandon Turner. His new fund will be HML. Similar to discussed.
youtube.com/watch?v=zYmq6nyVWYw
Sounds like he is going to the Dark side joining those of us that fund real estate instead of owning it like he says in the video you need to make sure who ever is running the lending knows what they are doing .. I suspect he will have that handled. the majority of my investors that we manage funds for are retired landlords who tire of the three Ts and just want to clip coupons. So Smart move on his part. Not all syndication on income properties work out as we know.. and of course loans go bad anyone who has been in the business has seen loans go bad myself included its impossible to have a perfect record loaning money unless you just doing a few a year very close to the vest.. But to be a business doing volume your going to have defaults.. Borrowers die mid project ( I have had 2 of those last 3 years) they get divorced or other life events.. - Investor · Member since 2019 · 74 posts · 70 votes2y
Quote from @Carlos Ptriawan:
back to the topic, I head Ashcroft stopped distribution in all their apartment.
I don't think that's true. There are some single property deals that I'm on. One had long term debt to begin with. There has been no disruption at all. Another one had recently been refinanced and they caught up all distribution and started monthly distribution. The last one was planning to refinance but didn't work, I believe they are looking for options.
- 2yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Quote from @Chris Seveney:
Quote from @Carlos Ptriawan:
Quote from @Account Closed:
Anyone else getting notified this morning of paused Ashcroft distributions due to refinancing issues?
We have been working on refinancing the asset in order to access the equity and create liquidity to earnestly restart the renovations. The new lender we initially signed up with for the refinance notified us that they would not be able to provide the new loan at the agreed upon terms due to current market volatility.
We continue to pursue alternative refinancing options and anticipate having a new loan closed within the next six months. To remain conservative with liquidity and continue increasing NOI through unit renovations, we are pausing distributions beginning this month. Your preferred return will continue to accrue and will be paid at the next capital event, or when cash flow allows.
While distributions are on pause, we are not collecting its asset management fee and Birchstone Residential is collecting a reduced property management fee.
70/80% of syndications are in trouble in 2024. Especially if they have multiple portfolio in asset structure.
You would lose money 100% for sure. What we don't know whether you lose 50% or lose 100%.actually you can lose MORE THAN 100% if they took accelerated depreciation, you may end up owing more than your investment. That happened I believe on those houston deals.
that also wiped out syndicators in the late 80s or syndication investors. - 2yMelanie P.Pro MemberRental Property Investor · Member since 2023 · 1k+ posts · 922 votes
Quote from @Justin Goodin:
Quote from @Account Closed:
I've never invested with Ashcroft, but it's clear you have picked a strong and experienced sponsor team to invest with. Pausing distributions is not necessarily a bad thing. You should be thankful that they provided you with a well defined reason and provided context to what is happening with the investment. Every sponsor does NOT take the time to do this.
If Ashcroft is pausing distributions on this asset, I'm certain it's the absolute best decision and in the best interest for the investors.If you have no experience with the company what makes you "certain" that they made the "absolute best" decision?
Did you miss the part about using $18 million of capital from the investor's pockets they stopped remitting to in order to purchase a rate cap in order to get another investor to take a 20% interest in the project away from all the LP investors. As things stand those who sent them money might get back the bare minimum return if the asset sells one day. They have zero upside on their money and lost use of it for years and years.
What information are you privy to that gives you such great confidence in these wonderful decisions?
- 2yMelanie P.Pro MemberRental Property Investor · Member since 2023 · 1k+ posts · 922 votes
Quote from @Daniel Han:
Quote from @Carlos Ptriawan:
back to the topic, I head Ashcroft stopped distribution in all their apartment.
I don't think that's true. There are some single property deals that I'm on. One had long term debt to begin with. There has been no disruption at all. Another one had recently been refinanced and they caught up all distribution and started monthly distribution. The last one was planning to refinance but didn't work, I believe they are looking for options.
It sounds like you have a special knack for locating troubled investments. I've been to the race track and hitting a Trifecta is hard to do! Glad everything is going to work out, according to the guy who has money in three of them and would really, really like everything to just work out.
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