Wired money to BAM & Open Door Capital

Syndications & Passive Real Estate Investing

Wired money to BAM & Open Door Capital

Investor · Fort Collins, CO · Member since 2018 · 165 posts · 127 votes

I made the leap finally this last week and wired money to 2 syndication companies and started investing in our first 2 funds.

1. Barrat Assat Management - Indianapolis Indiana (B+, B++, A- multifamily ) - I am fond of this area because it is a logistics hub, Amazon is building a new center here and there are lots of great jobs.

2. Open door Capital - Brandon Turners Mobile Home Park Fund - I wanted to secure an investment in mobile home parks because of many of the obvious reasons that we have all learned about (buy from mom and pop, increase rents, meter water, lots of room to increase NOI, less cap ex, rent the lot & the owner owns the mobile home, etc)

**** I have done due dilligence for over a year on MANY (15+) syndicators and are still doing due dilligence because I plan to invest with more. My goal is to get into 1 new syndication a year, and Lord willing 2 if we can afford it. It was easy to live with a fear mindset in times like these but I trusted the process and am excited to be entering the multifamily, MHP, and commercial world!

I am happy to answer any Q and share my experience with other investors to help them or add value in any way!

26 Reply

381 views

Most Popular Reply

Account Closed

Investor · Singapore · Member since 2013 · 1k+ posts · 3k+ votes

Originally posted by @Steve Vaughan:

I can see being attracted to passive fund investing living in an extremely expensive market.

I can see the advantages of passive investing as a long-time DIY self-manager.

I always wondered about leverage in these. Say you invest $100k. If I do that in direct ownership RE, I can conceivably purchase $500k worth of RE. Does your $100k stake translate into more equity because the fund is getting financing? With 9verhead and fees, I wouldn't expect 5:1, but maybe 3 to 1 when your % is figured out?

Commercial financing scares me. Are your funds using agency debt or are their loans callable and /or expire after a few years?

I understand why you sought these asset classes, but did you find these sponsors superior to others in the same class? Barrett I believe has been around a while. Have either of these sponsors weathered a storm or recession before?

Thank you for any insight and for starting this thread👍

You ask why would someone take $100K and put into a syndicate rather than buy a 500K property. I can think of many reasons

1. No liability or debt other than the investment itself. No need for reserves

2. No need to manage it. Totally passive. The GP provides the expertise.

3. A different asset class. A 200 unit apartment is a different beast than a fourplex.

Of course you give up control and liquidity so vetting the sponsor is the most important thing here which the OP seems to have done.

9 Reply

See this reply in the discussion

108 Replies

Jump to latestLatest

Sort by

Sam B.
Member since 2019 · 106 posts · 32 votes
6y
@Bobby Shell
Congrats! Any thoughts with regard to the current recession and your timing? I guess I’ve been hesitant as I assume these deals were put under contract at pre corona prices but not sure.
1 Reply
Bill F.
Investor · Boston, MA · Member since 2015 · 1k+ posts · 3k+ votes
6y
@Bobby Shell

Congrats on taking the leap, that is a big hurdle that a lot of people can't get over.
What are your goals for RE investing?

What quantitative and qualitative factors lead you to pick these two funds over the others you looked at?
1 Reply
Bobby Shell
OP
Investor · Fort Collins, CO · Member since 2018 · 165 posts · 127 votes
6y
Originally posted by @Sam B.:
@Bobby Shell
Congrats! Any thoughts with regard to the current recession and your timing? I guess I’ve been hesitant as I assume these deals were put under contract at pre corona prices but not sure.

All I have learned is that these assets are recession resistant. This capital came from selling a single family home, and i wanted to get it invested into more recession resistance assets. We will see if that stands true this time around!
The bubble is corporate debt, student debt, and other areas, by investing in MHP's I felt totally safe because if the government prints money and we go UBI this to me is a very strong asset. For the multifamily deals i made sure to stay away from the A++ and more luxury assets because those people will start to live within their means in the next 9/12 months.

1 Reply
Bobby Shell
OP
Investor · Fort Collins, CO · Member since 2018 · 165 posts · 127 votes
6y
Originally posted by @Bill F.:
@Bobby Shell

Congrats on taking the leap, that is a big hurdle that a lot of people can't get over.
What are your goals for RE investing?

What quantitative and qualitative factors lead you to pick these two funds over the others you looked at?

My goals are to cover expenses first, then replace my income, and be capable of having no job by 40, I am 33 now and will always want a job, i just set a 7 year goal to achieve that so that I can enjoy time with my wife and future kids, and take care of our family and circle of friends if ever needed in emergency.

Overall these two funds were chosen because MHP's are typically more recession proof and safe. And with Indianapolis the city has never been a big boom or bust city when it comes to recessions. As it relates to corona virus, I was very interested in the fact of the Amazon expansion in this city which is being build 1 mile from the apartment complex. Fedex also has their #2 facility here (behind #1 memphis). I see a massive need for growth in shipping and logistics, this corona virus econommerce trend is not slowing down, we are just accelerating to the future sooner... The assets in this fund were affordable and most rents were under current market rents by 20%+ as well so there was room to increase NOI for these B class assets as well.

Overall I was nervous naturally because of the uncertainty of everything lately, but felt confident in my last year of research and remember feeling this same way when buying my first rental.Taking the leap is the hardest part.

Lastly, know that the "money printer go brrrr" as the internet has said, I do not think the government is going to stop stepping in to help get America through this, people are saving 33% more and incomes are actually up substantially due to government checks. Rents I believe will highly likely be paid and people will adjust to this new lifestyle and staying indoors. The next demographic cycle, in my humble opinion will actually cause more people to buy homes for privacy and cleanliness reasons (I know I am going out on a limb here saying that), but we also still have a shortage of apartments until 2030~ or so. *end rant* :)

4 Reply
Joanne Eriaku
Realtor · NY · Member since 2020 · 167 posts · 169 votes
6y
@Bobby Shell congrats, I'd like to know more like initial investment, ROI, why both versus one syndication?
2 Reply
Steve Vaughan
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
6y
I can see being attracted to passive fund investing living in an extremely expensive market.

I can see the advantages of passive investing as a long-time DIY self-manager.

I always wondered about leverage in these. Say you invest $100k. If I do that in direct ownership RE, I can conceivably purchase $500k worth of RE. Does your $100k stake translate into more equity because the fund is getting financing? With 9verhead and fees, I wouldn't expect 5:1, but maybe 3 to 1 when your % is figured out?

Commercial financing scares me. Are your funds using agency debt or are their loans callable and /or expire after a few years?

I understand why you sought these asset classes, but did you find these sponsors superior to others in the same class? Barrett I believe has been around a while. Have either of these sponsors weathered a storm or recession before?

Thank you for any insight and for starting this thread👍

2 Reply
Bobby Shell
OP
Investor · Fort Collins, CO · Member since 2018 · 165 posts · 127 votes
6y
Originally posted by @Joanne Eriaku:
@Bobby Shell congrats, I'd like to know more like initial investment, ROI, why both versus one syndication?

Each investment required 50k minimum. No ROI yet, but on average 7-8% cash on cash (with conservative underwriting).
The reason I chose both was for diversity. The mobile home parks are a fund that are within multiple states across the US. The Indianapolis syndication is a fund across multiple classes, B+, B++ and A- (this limits exposure to just say C class or B class)
I hope that helps! Happy to answer other Q's
1 Reply
Bobby Shell
OP
Investor · Fort Collins, CO · Member since 2018 · 165 posts · 127 votes
6y
Originally posted by @Steve Vaughan:
I can see being attracted to passive fund investing living in an extremely expensive market.

I can see the advantages of passive investing as a long-time DIY self-manager.

I always wondered about leverage in these. Say you invest $100k. If I do that in direct ownership RE, I can conceivably purchase $500k worth of RE. Does your $100k stake translate into more equity because the fund is getting financing? With 9verhead and fees, I wouldn't expect 5:1, but maybe 3 to 1 when your % is figured out?

Commercial financing scares me. Are your funds using agency debt or are their loans callable and /or expire after a few years?

I understand why you sought these asset classes, but did you find these sponsors superior to others in the same class? Barrett I believe has been around a while. Have either of these sponsors weathered a storm or recession before?

Thank you for any insight and for starting this thread👍

Barrat has done work since 2015, they choose lower LTV for less leveraged debt. 5-7 year holds with ability to hold up to 10 years. (this approach is very very common for all syndicators who are seeing value add B class properties. This is one thing I quickly realized from my research)
Open door - (Brandon Turners group) has Brandon obviously, but his team which includes Brian Murray has a wealth of experience that takes the trust to another level. These guys have tons of experience and also work with conservative underwriting.

When taking into consideration the hurdle and preferred return for investors (before GP's get to eat) there should be a 2.5 equity multiple on these deals with the conservative underwriting, Lord willing we achieve more!

1 Reply
Bobby Shell
OP
Investor · Fort Collins, CO · Member since 2018 · 165 posts · 127 votes
6y
Originally posted by @Sam B.:
@Bobby Shell
Congrats! Any thoughts with regard to the current recession and your timing? I guess I’ve been hesitant as I assume these deals were put under contract at pre corona prices but not sure.

Everything I have learned recently is the newer investors are sitting with money on the sidelines but the wealthy are investing more into these assets. I could be wrong, but my research has shared that the experienced investors are taking action right now and investing into these deals and getting their cash out of equities and bonds. I do not trust the bond market right now with the FED buying up 1.3 billion or whatever in ETF's and the propped up equities market with their junk bonds.
With the government printing, the 33% increase in savings of American's and massive drop in consumer spending I believe rents will stay consistent and rents will be paid. This is just my humble opinion

0 Reply
Jonathan G.
Investor · Marietta, GA · Member since 2015 · 382 posts · 258 votes
6y
@Bobby Shell
What’s the proposed timeline on the 2.5 equity returns?
0 Reply
Taylor L.
Rental Property Investor · RVA · Member since 2016 · 5k+ posts · 4k+ votes
6y
Originally posted by @Bobby Shell:
Originally posted by @Sam B.:
@Bobby Shell
Congrats! Any thoughts with regard to the current recession and your timing? I guess I’ve been hesitant as I assume these deals were put under contract at pre corona prices but not sure.

Everything I have learned recently is the newer investors are sitting with money on the sidelines but the wealthy are investing more into these assets. I could be wrong, but my research has shared that the experienced investors are taking action right now and investing into these deals and getting their cash out of equities and bonds. I do not trust the bond market right now with the FED buying up 1.3 billion or whatever in ETF's and the propped up equities market with their junk bonds.
With the government printing, the 33% increase in savings of American's and massive drop in consumer spending I believe rents will stay consistent and rents will be paid. This is just my humble opinion

Keep in mind that the Fed's printing has also propped up the real estate debt market, which at least temporarily prevented a correction in real estate prices. The debt market crash was one of the major factors in the Great Recession. The Fed has learned that they need to prop up those markets to prevent overnight crashes.

For a summary of their recent debt purchases: https://www.newyorkfed.org/markets/ambs/transaction-summary
@Bobby Shell what are your top criteria for syndicators? It sounds like you've looked at a few and most likely have a process for doing so by now.
0 Reply
Bill F.
Investor · Boston, MA · Member since 2015 · 1k+ posts · 3k+ votes
6y
Originally posted by @Bobby Shell:
Originally posted by @Bill F.:
@Bobby Shell

Congrats on taking the leap, that is a big hurdle that a lot of people can't get over.
What are your goals for RE investing?

What quantitative and qualitative factors lead you to pick these two funds over the others you looked at?

My goals are to cover expenses first, then replace my income, and be capable of having no job by 40, I am 33 now and will always want a job, i just set a 7 year goal to achieve that so that I can enjoy time with my wife and future kids, and take care of our family and circle of friends if ever needed in emergency.

Overall these two funds were chosen because MHP's are typically more recession proof and safe. And with Indianapolis the city has never been a big boom or bust city when it comes to recessions. As it relates to corona virus, I was very interested in the fact of the Amazon expansion in this city which is being build 1 mile from the apartment complex. Fedex also has their #2 facility here (behind #1 memphis). I see a massive need for growth in shipping and logistics, this corona virus econommerce trend is not slowing down, we are just accelerating to the future sooner... The assets in this fund were affordable and most rents were under current market rents by 20%+ as well so there was room to increase NOI for these B class assets as well.

Overall I was nervous naturally because of the uncertainty of everything lately, but felt confident in my last year of research and remember feeling this same way when buying my first rental.Taking the leap is the hardest part.

Lastly, know that the "money printer go brrrr" as the internet has said, I do not think the government is going to stop stepping in to help get America through this, people are saving 33% more and incomes are actually up substantially due to government checks. Rents I believe will highly likely be paid and people will adjust to this new lifestyle and staying indoors. The next demographic cycle, in my humble opinion will actually cause more people to buy homes for privacy and cleanliness reasons (I know I am going out on a limb here saying that), but we also still have a shortage of apartments until 2030~ or so. *end rant* :)

Thanks for the insight Bobby, I appreciate it. Have a good one.

0 Reply
Bobby Shell
OP
Investor · Fort Collins, CO · Member since 2018 · 165 posts · 127 votes
6y
@Jonathan G. 5-7 year hold, with the capability to of moving to 10 year debt if necessary
1 Reply
AJ ShepardPro Member
Real Estate Syndicator · Portland, OR · Member since 2014 · 453 posts · 312 votes
6y
When looking at syndications, are you mainly looking at funds or at projects? What type do you prefer to work with and why?
0 Reply
Account Closed
Investor · Singapore · Member since 2013 · 1k+ posts · 3k+ votes
6y
Originally posted by @Steve Vaughan:
I can see being attracted to passive fund investing living in an extremely expensive market.

I can see the advantages of passive investing as a long-time DIY self-manager.

I always wondered about leverage in these. Say you invest $100k. If I do that in direct ownership RE, I can conceivably purchase $500k worth of RE. Does your $100k stake translate into more equity because the fund is getting financing? With 9verhead and fees, I wouldn't expect 5:1, but maybe 3 to 1 when your % is figured out?

Commercial financing scares me. Are your funds using agency debt or are their loans callable and /or expire after a few years?

I understand why you sought these asset classes, but did you find these sponsors superior to others in the same class? Barrett I believe has been around a while. Have either of these sponsors weathered a storm or recession before?

Thank you for any insight and for starting this thread👍

You ask why would someone take $100K and put into a syndicate rather than buy a 500K property. I can think of many reasons
1. No liability or debt other than the investment itself. No need for reserves
2. No need to manage it. Totally passive. The GP provides the expertise.
3. A different asset class. A 200 unit apartment is a different beast than a fourplex.
Of course you give up control and liquidity so vetting the sponsor is the most important thing here which the OP seems to have done.

9 Reply
Bobby Shell
OP
Investor · Fort Collins, CO · Member since 2018 · 165 posts · 127 votes
6y
Originally posted by @AJ Shepard:
When looking at syndications, are you mainly looking at funds or at projects? What type do you prefer to work with and why?

I am not educated enough to be bias towards one. The reason I chose the funds is because those were the two best deals that became available by 2 of the top 6 syndicators I am choosing to partner with based on my 1st year of research.
I am not against a syndication. I am not only about funds either. More concerned with the deal and the GP. I like the idea of the fund right now during economic issues because I want some diversity within different classes in Indianapolis, as well as geographic diversity in the MHP fund

1 Reply
Bobby Shell
OP
Investor · Fort Collins, CO · Member since 2018 · 165 posts · 127 votes
6y
Originally posted by @Account Closed:
Originally posted by @Steve Vaughan:
I can see being attracted to passive fund investing living in an extremely expensive market.

I can see the advantages of passive investing as a long-time DIY self-manager.

I always wondered about leverage in these. Say you invest $100k. If I do that in direct ownership RE, I can conceivably purchase $500k worth of RE. Does your $100k stake translate into more equity because the fund is getting financing? With 9verhead and fees, I wouldn't expect 5:1, but maybe 3 to 1 when your % is figured out?

Commercial financing scares me. Are your funds using agency debt or are their loans callable and /or expire after a few years?

I understand why you sought these asset classes, but did you find these sponsors superior to others in the same class? Barrett I believe has been around a while. Have either of these sponsors weathered a storm or recession before?

Thank you for any insight and for starting this thread👍

You ask why would someone take $100K and put into a syndicate rather than buy a 500K property. I can think of many reasons
1. No liability or debt other than the investment itself. No need for reserves
2. No need to manage it. Totally passive. The GP provides the expertise.
3. A different asset class. A 200 unit apartment is a different beast than a fourplex.
Of course you give up control and liquidity so vetting the sponsor is the most important thing here which the OP seems to have done.

Agreed 100% -- There are many people that are far smarter than me that said they wish they had done syndication/funds sooner. I also had 1 nightmare property and I do not want to manage homes at all right now when my W2 pays so well and I am likely having a child within the next 1.5 years (Lord willing).

0 Reply
Daniel McNulty
Financial Advisor · Indianapolis, IN · Member since 2018 · 294 posts · 165 votes
6y
@Bobby Shell
I have had numerous convos with BAM / Ivan. I like them a lot and they are well regarded in the community here.
It's an exciting time to put $ to work for sure. I'll be interested to see how this vehicle fairs compared to their others.
0 Reply
Bobby Shell
OP
Investor · Fort Collins, CO · Member since 2018 · 165 posts · 127 votes
6y
Originally posted by @Daniel McNulty:
@Bobby Shell
I have had numerous convos with BAM / Ivan. I like them a lot and they are well regarded in the community here.
It's an exciting time to put $ to work for sure. I'll be interested to see how this vehicle fairs compared to their others.

Thanks for sharing Daniel! I hope the city is safe and things are going well? How have the riots and protestors been in the local news for you? And how are you feeling overall the city is doing over the last week
0 Reply
Daniel McNulty
Financial Advisor · Indianapolis, IN · Member since 2018 · 294 posts · 165 votes
6y
@Bobby Shell
Relatively speaking it could be worse, but there were a handful of shootings and two deaths. It also seems to be limited to the heart of downtown which is mostly commercial. Property destruction / fires seems to be mild compared to other cities at least.
I pray we all come out better and wiser on the other side of these sad and difficult times....
1 Reply
Bobby Shell
OP
Investor · Fort Collins, CO · Member since 2018 · 165 posts · 127 votes
6y
@Daniel McNulty
Amen bro. Thanks for the reply. Praying for our communities and that our officials do the right things
0 Reply
Paul Shannon
Rental Property Investor · Fishers, IN · Member since 2016 · 335 posts · 470 votes
6y
Enjoy this thread.
I’m considering an investment in a value-add syndication and actually spoke with Ivan/BAM last week. I’m really in the exploratory phase right now with the mindset of being ready in 6-12 months for an investment after finding the right sponsor.
I’m impressed with BAM and putting money to work sooner would be preferred. However, I’m having a hard time with the uncertainty in the market right now.
A value-add deal relies on raising rents to achieve a higher NOI and exit price. We have downward pressure on rents right now. If jobs don't come back when stimulus ends, NOI will suffer and defaults will increase. There seems to be a lot of jobs that won't come back. Inflation will come in time with the money printing, but that could be years. If that happens, cap rates go up with interest rates.
Ultimately I feel as though pre-Covid deals face a lot of headwinds. If they are financed with low LTVs, they'll be fine, but I anticipate longer hold periods. I value liquidity and if returns are going to be closer to 10% IRR than 18%+ potentially, Im not willing to lock up money for maybe 10 years. A post Covid deal would have the ability to underwrite these factors in to a purchase.
Am I missing something hear? Value opinions.

1 Reply
Andrey Y.
Specialist · Honolulu, HI · Member since 2014 · 1k+ posts · 1k+ votes
6y
Originally posted by @Paul Shannon:
Enjoy this thread.
I’m considering an investment in a value-add syndication and actually spoke with Ivan/BAM last week. I’m really in the exploratory phase right now with the mindset of being ready in 6-12 months for an investment after finding the right sponsor.
I’m impressed with BAM and putting money to work sooner would be preferred. However, I’m having a hard time with the uncertainty in the market right now.
A value-add deal relies on raising rents to achieve a higher NOI and exit price. We have downward pressure on rents right now. If jobs don't come back when stimulus ends, NOI will suffer and defaults will increase. There seems to be a lot of jobs that won't come back. Inflation will come in time with the money printing, but that could be years. If that happens, cap rates go up with interest rates.
Ultimately I feel as though pre-Covid deals face a lot of headwinds. If they are financed with low LTVs, they'll be fine, but I anticipate longer hold periods. I value liquidity and if returns are going to be closer to 10% IRR than 18%+ potentially, Im not willing to lock up money for maybe 10 years. A post Covid deal would have the ability to underwrite these factors in to a purchase.
Am I missing something hear? Value opinions.

If you tell me I can lock up a safe 10% IRR deal for the next ten years.. I'll do it in a heartbeat.
Get into 20 of these deals at $50K a pop, and we are talking some certain income coming in that is passive and tax advantaged.
Look at risk-adjusted return. Days of 18% IRR proformas with 3% yearly rent growth are over. I would underwrite 1% but hey I am not a GP. I leave that to the pros.
4 Reply
Daniel McNulty
Financial Advisor · Indianapolis, IN · Member since 2018 · 294 posts · 165 votes
6y
@Paul Shannon
Exceptional value added operators make a substantial portion of their returns in sourcing and acquiring properties, no different than your approach probably is to SFH. Granted that is dependent on market supply to a degree, but my point is that true value add has a degree of forced appreciation to generate returns outside of just rent increases.
Your concerns regarding inflation are valid, but most experts agree inflation is several years out at least. Arguably, the labor force / employment numbers will go hand in hand with inflation, putting upward pressure on rents as inflation becomes a factor again.
All that said, I completely agree on your view of pre / post covid deals. Plenty of opportunities raising capital that have little to no pre-covid deals baked in. Unfortunately, I don't know if this BAM vehicle has them baked in or not.
A more nuanced view is the expanded risk of deal flow / operational concerns as a syndicator ramps up from one off deals to fund structures with extended terms. Sitting on the sidelines and waiting for better deals to come around is now less of an option. Many do it exceptionally well, but its an added risk. Team size, # of markets covered and total capital targets become an equally important risk to align evaluate.
1 Reply
Rene D.
NV · Member since 2019 · 254 posts · 57 votes
6y
@Bobby Shell great thread! I too am looking to diversify, specifically in ODC.
Congratulations on making the leap!
0 Reply

Join the conversationCreate a free account to reply, vote on answers and follow this thread.