Posted over 2 years ago

Have I Found the Holy Grail of Passive Real Estate Investing? (Part 3)

Normal 1492713814 Monty Phyton And The Holy Grail Movie Quotes

You Can Read Part 1 Via This Link

You Can Read Part 2 Via This Link

Performance Update 3 (April 2017)

Another set of quarterly reports have been made available, and payments made for the various performing portfolios I invested in. These were for the first quarter of this year. The returns I report below are annualized from the date of 100% occupancy and rounded to the nearest 1/10 of one percent. Portfolio 5 was my first investment of this year, and started earning February 1st. The homes in this portfolio were only about 50% occupied at that point, and are not yet close to full, so it is too early to report. The other three portfolios are all providing earnings at or above the range projected on rental income (9-11%). While Portfolio 3 is way above the projections so far, I anticipate that likely to come down with more time.

Equity Portfolios

Portfolio 1 (15 months): 10.6%
Portfolio 2 (11 months): 11.4%
Portfolio 3 (3 months): 14.4%
Portfolio 5 - too little data

The first debt portfolio I invested in only became fully occupied as of March 1, 2017, but the annualized return is for the entire quarter. Just to remind readers, these debt portfolios have a guaranteed interest payment of 8%, anything above that is from a share of rental income. The projection is 9-10% from interest and rental share, which I anticipate this portfolio will reach or even exceed, now that it is fully occupied.

Debt Portfolios

Portfolio 4 (1 month): 8.8%
Portfolio 6 (no earnings yet, see below)

In March I made my 6th investment, and this was a Debt Portfolio in a 46 unit apartment complex. This was the first such offering that this company made, but they plan to do much more in the multiplex space with medium to large buildings. This portfolio started earnings on April 1, and the buildings are undergoing rehab now. It is not expected to be fully stabilized for 12 months, and in addition to the debt (mortgage) carried by the investors, the company also took a seller-carried loan, which has to be paid off in three years. After achieving full occupancy and with forced appreciation, the company plans to re-finance all, or nearly all, debt via a bank loan in about 18 months. At that point I and the other investors will get most or all of our capital back and still be paid a share of the net rental income. Of all my investments with the company I consider this one the most risky. It has the most moving parts to bring together and execute well in a fairly tight timeframe. I suppose it is a testament to my continued and growing confidence in the company and its people that I took the plunge.

That confidence was significantly enhanced by my second visit with the company earlier this month. On my first visit, over a year earlier, I met only the co-founders of the company who gave me a tour of their properties and their large office space. As it was a weekend, no other staff was available then. This time I had the great pleasure of meeting much of their growing team. I even sat in on a staff meeting, which was run with both professionalism and a sense of fun, as each of the various departments reported – acquisitions (SFR and multiplex), construction, property management, client relations, etc.

One staff member, the Director of Client Relations, I had spoken with frequently but hadn’t previously met. She took me to some properties I wanted to see, including the apt complex portfolio I’d just invested in. I got to see some of the progress on the rehab work and meet some of the construction staff. Five days later I took a drive to their second city of operations, and met a couple of their team members in that city. As this was my first time to this city, their local acquisitions guy toured me around this much smaller city and the neighborhoods they are operating in.

I came away with a good feeling of how they are handling growth, the high quality of the people, their level of transparency, and the care they have for their community and each other. I also observed some areas that may not go as targeted in their goals and timelines – acquisitions for example, but still appreciate their ambitiousness and adaptability. 

Performance Update 4 (August 3, 2017)

I am a little later than I hoped in writing this update. I received my Q2 2017payments and reports nearly a month ago, but this is the first chance I’ve had to write.

Again, the returns I report below are annualized from the date of 100% occupancy and rounded to the nearest 1/10 of one percent. Portfolio 5 only has one month of full occupancy, so I would say the returns are skewed to the upside. I expect to see more modest returns in the future. Just look how Portfolio 3 has come down from the previous quarter. It is also worth noting that Portfolio 1 has been in a downward trend for at least 6 months. Last quarter was a particularly hard hit, with three (of 10 homes) having expensive turnovers. Now back to full occupancy,  I am hopeful that the rest of the year will be better for P1, and the trend will reverse.

Equity Portfolios

Portfolio 1 (18 months): 9.7%
Portfolio 2 (14 months): 11.1%
Portfolio 3 (6 months): 10.6%
Portfolio 5 (1 month): 13.5%

I now have full quarter income on both debt portfolios, one a SFR, the other an apartment complex. For Portfolio 4 this is the first quarter full quarter of full occupancy, and the income is up to nearly the expected range of 9-10%. The apartment complex is still any number of months off from being fully stabilized, and the payment I received is purely interest on the debt.

Debt Portfolios

Portfolio 4 (4 months): 8.7%
Portfolio 6: received 8% interest payment

As I write the company is taking investments in their second apt complex. This one a 50 unit, that is already 90% occupied, and an equity portfolio. It is their largest offering yet, by far. It also has the largest minimum investment of $20,000. I am considering whether to invest, and will cover that decision – yay or nay, when I next report.

Performance Update 4 (Nov 7, 2017)

 Q3 2017 payments and reports were paid on time again last month

I am adding some additional tracking information.  In addition to the reporting the annualized returns from the date of 100% occupancy, I am also adding a tracking of just the last reported quarter in brackets ( ), also annualized and rounded to the near 1/10th of 1%.  This will give readers a clearer idea of the fluctuations that occur in returns. 

Equity Portfolios

Portfolio 5 now has its first full quarter full occupancy.  All other Equity portfolios, multiple quarters, including 1 & 2, which are both well over a year.

Portfolio 1 (21 months): 9.5% (8.2%)
Portfolio 2 (17 months): 11.6% (13.8%)
Portfolio 3 (9 months): 10% (8.3%)
Portfolio 5 (4 month): 12.2% (13.3%)

Debt Portfolios

Portfolio 4 had a good return this last quarter and is now squarely in the projected cash flow return range of 9-10%. Portfolio 6, the apartment complex was at 74% occupancy as of the end of the quarter.  Remaining renovations on vacant units which were burned out at purchase, are now being completed, with a waiting list of tenants being developed for those units and others that are turning over.  Exterior renovations have been completed on this value add multiplex.  It looks likely to be fully stabilized early next year.

Portfolio 4 (7 months): 9.4% (10.4%)
Portfolio 6: received another 8% interest payment

My 7th Investment

As I wrote about in my previous update, I did make a decision to invest in the 2nd apt complex this company offered - a 6 building, 50 unit mix of 1, 2 bedroom, and a few 2 bedroom town homes.  By a factor of nearly 3, this was by far the company's largest offering ever, and it took them months to get it filled.  I took my time in making this decision, and got in toward the end of October when I was in the city again for another REI visit.  I took another look at the property.  

My investment came well after the company took possession of the property, initially putting a lot of their own funds in. By the time of my investment some of the limited scope of work had already been completed, and I believe the occupancy was already 94%.  This was an Equity portfolio, an all cash deal, and I will be calling this my Portfolio 7.  It is structured differently than any previous offering, with a preferred return of 8% to investors plus a 75% share of net rental income once the preferred is paid.  75% of profits from sale also go to the investors. They plan to refinance this property 12-18 months after possession, to return most (maybe 75%) of invested capital to investors.

Just today they announced they are taking reservations for a 3rd multiplex they just put under contract. Details won't come out until later in the process.  Stay tuned.

There's More in Part 4

You Can Read Part 1 Via This Link

You Can Read Part 2 Via This Link



Comments (88)

  1. Great Article! Thanks for taking the time to write it. If possible could I get the name of the company? Thanks


    1. Thanks Travis, I PM'd you that info.


  2. Thank you for the information of your investments.   I would love to know the company you are investing with.  


    1. You bet, @Mike Jacobson!  I went ahead and PM'd you that info.  If you haven't already, be sure to read  Part 4

      .


    2. Larry,

      Very detailed 4 part article. Please PM me the name of the company.

      Thanks


  3. Thanks for sharing your investing experience/knowledge. I am new to investing. Just discovered your articles. Could you please PM me the company name?


    1. Sure @Jingyuan Yang. I received your PM and have replied with that info.


  4. @Larry F. - great article and I really appreciate all of the updates. I have just started with real estate investing and am looking at different turnkey and crowd funding options. Could you please PM me the name of this company? Thank you and keep up the great work!


    1. @William Troy Weisler Will do!


  5. @Larry F. This was a nice read.  Can you send me the name of the company?  Thanks!


    1. Will do @Sam Stout!


  6. Thank you  for sharing your experience in such helpful detail.  Would you please send me the name of the company you're working with?


    1. @Michael O. Thank you for reading, and I am glad it is helpful.  I sent you a PM with that info.


  7. Larry, thanks for the posts. Can you send me the company info? Thanks.


    1. Hi @Dan Lin, I just sent you that info via PM.  If you haven't already, be sure to read (Part 4) of this series to be most current on what they are doing, and my most recent reports.


  8. Hi Larry..I am new to Real Estate investing, new to Bigger Pockets and I am currently researching Equity based Crowd Sourcing. I Am not able to find a deal in this market, so rather than sitting back, I've decided to invest in Crowd funding(Equity based). Can you please send me the name of the company.

    Thanks for sharing the information with all of us, it is folks like you who provide value to others, this is what I love about BP. I had an unpleasant experience with a Turn Key company, so I started looking into other ways of making money in Real Estate.


    1. @Vamsi Boddu Thanks for the kudos.  I will go ahead and PM that info.  


  9. Please msg me the information. thank you.


    1. Done.


  10. Hey Larry,

    Thanks so much for documenting your quest! Would love to find out the name of the company. Cheers!


    1. @Cruz Molina I sent you a PM via colleague request.


  11. I would be interested in learning more if you don't mind sending me more information.  


    1. @Mitch Miller I sent you a PM/colleague request.


  12. Hi Larry,

    This sounds interesting.  I'd love to know more details.  I'll send you a message.  Thanks!


    1. Got it. 


  13. Great reads Larry. I would love to get more information on the company you’re working with. 


    1. Thanks Chris.  I am glad you found it useful.  I will send you a PM/colleague request.


  14. Great posts Larry.  Would love to know the name of the group you are crowdfunding these portfolios with.  please send me a PM/colleague request so i can continue to follow your writing. Thanks!


    1. Sure Bob.  I received your colleague request and sent you a PM with that info.


  15. @Larry Fried Thanks for sharing! I would love to know what this company is! Could you PM me? Thanks so much in advance


    1. Sure @Beatriz Delgado Diez.  I have sent you a PM/colleague request.


  16. Hi Larry, great article! I am looking for some opportunities to place some capital and this company sounds interesting. Could you please PM me some more info? Cheers.


    1. @Rick S. Thanks for the kudo, and I am glad you found the articles useful.  I have sent you a colleague request/PM.


  17. @larryfried

    This looks great Larry! Can you please PM me the company info, thanks!


    1. @Stephen Steric I just sent you a PM/colleague request. 


  18. @Larry Fried Hi Larry, thanks for sharing! I have been reading a lot on passive REI, but never had the courage to move forward. This gives me hope and inspiration. Could you please share with me the details of the company you are working with?


    1. @Pankaj Singhvi Sometimes the first step in REI is the hardest to take.  I am glad to hear you are feeling encouraged to act.  I sent you a PM with the info requested.


  19. @Larry Fried Thank you Larry for the write-up.  Looks interesting and would appreciate more information.


    1. @Ben Goodall You are welcome.  I sent you a PM/colleague request.


  20. very excited . I am new to investing This looks like a good way. Could you please PM me the company name?


    1. @Hannok Rall I sent you a PM with that info.


  21. Nevermind Larry, I saw the same question in the comments of the 2nd update you wrote...


  22. Larry,

    I apologize if this has been asked, but what's the difference between this type of an investment and a REIT?  

    Chris


  23. @Larry Fried - Thank you for the informative article. Please send me the info about the company.  It seems a very good investment option. Thanks a lot.


    1. @Wira G.  I have sent you a PM/colleague request.


      1. Can you share the company with me?


  24. @Larry Fried Thank you for writing these great articles. I received your colleague request and look forward to continue reading your pieces and connecting further!


    1. Thank you, @Cody Zucker.


  25. Thank you Larry, your article gives a lot of insight and does get one excited to learn more about the company. Please send me more information. 


  26. @Larry Fried very interesting piece. I like the frequent updates and I couldn't stop myself from reading from 1-3. Could you please PM me the company name?


    1. Will do, @Spencer Karr! Glad you felt compelled to read all 3.


  27. Hi Larry,

    Outstanding article, very interesting and detailed.  I am also interested in any  info you are willing to share concerning the company and where they invest.  Thanks so much.


    1. @Kevin Brown They currently invest in two midwest cities, and have plans to open a third soon.  I will PM you.


      1. Thanks for the updates. Could you please share the company with me as well? 


  28. Thank you very much for sharing your experience. If you could, would you please send me the name of the company you're working with?


    1. @Mahary Araia  I sent you a PM/colleague request.


  29. I found this company and it's model sounds like exactly what I was looking for.  Found you unofficially referenced in the forum about them.   Thanks so much for sharing the info!


    1. You are most welcome, @Kara Smits!


  30. @Larry FriedVery interesting. Seems like these crowdfunding opportunities are growing. Can you PM with more info!? Cheers.


    1. Hi @Gaison Ontai I sent you a PM/colleague request.


  31. Hi Larry,

    Thank you for sharing your experience! Can you please PM me the company info? Thanks again!


    1. You bet, @Ryan Lynch.  I will send you a PM/colleague request.


  32. @Larry Fried - Great article and thanks for sharing your experiences! Would you mind sharing further details about the company?


    1. You bet, Brian.  I will send you a PM.


  33. Hi Larry.  Thanks for taking the time to write this great article and especially for being kind enough to email everyone who is requesting more information.  Like everyone else, I am extremely interested in learning more about this company.  I would really appreciate it if you could send me the details as well!  Thanks very much!


    1. Sure Michael.  I will send you a PM.


  34. @Larry Fried - great article, thank you for sharing your thoughts and experiences with this!  Would you mind sharing further details about the company?

    Thanks in advance!

    Jarrett 


    1. Sure Jarrett.  I will send you a PM/colleague request.


  35. Hi Larry, Thank you for sharing your great experience! Could you please PM me the company info and other details? I've been looking for companies like this for quite a bit. Thanks in advance!


    1. Thank you, @Tyler Youn.  I sent you a PM to connect.


  36. @Larry Fried

    Thanks for referring me to this blog. Very insightful and seems like something I would like to pursue further. Would you mind sending me more details? 

    Mahalo, 

    Raffy 


    1. You bet, Raffy.  Will connect with you via PM.


  37. Hi Larry - would you mind sharing what city or state they invest in - and PM me w/ the company info as well?  i've also been looking to diversify into apartments and funding larger deals.  Thanks in advance!


    1. You bet, Jennifer.  I sent you a PM/colleague request.


  38. Thank you Larry for the detailed posts and sharing this information. Would you please send me the name of the company you are working with?

    Thanks!


    1. Abhishek B. I have sent you a PM/colleague request.


  39. Thx for the great articles. I enjoyed the read. I am also interested in learning about this company. I would like to invest in apartment complexes as well and haven't come across many options yet as I'm still a new investor. Please PM me.


    1. @Jason Eala You bet.  I will send you a PM/colleague request.  On the apts, I have learned that they have a second apt complex (50 units) under contract, and will likely be offering to their network of portfolio investors this summer, assuming all goes through.


  40. @Larry Fried Great article. Do you mind sharing the name of the company with me? 


    1. @Jeuirs Pena I just sent you a PM/colleague request.


  41. @Larry Fried - Thank you for sharing your experience with cloud funding. Sounds like a more doable approach with OOS investing. Please send me the info of the company that you are working with as well. 


    1. @Yan Tong You bet. I think you meant "crowd funding".  Yes, I have found it an very low stress way to do OOS REI.  I sent you a PM/colleague request.


      1. Thanks for sharing this information Larry.  Sounds like a great way to invest out of state without any of the usual headaches.  Could you PM the name of the company to me?


  42. Aloha Larry,

    Thank you very much for sharing your experience in such helpful detail.  If you could, would you please send me the name of the company you're working with?

    Thanks!


    1. You bet, David.  I responding to your PM with that info.


      1. @Larry Fried 

        Hi Larry, Thanks for the write up! I would love to know who that company is. Can you PM me?

        Thanks!

        Jayson


  43. @Larry Fried - great write up. Thank you for putting all of this out there. This was very informative and helpful!


    1. Thank you, Josh for the kudo & appreciating.  I am delighted to know these articles are of help.