Syndication distributions: What are y'all doing with them?

Question

Good evening all you wealth creators!

We have been blessed with the opportunity to jump into a few apartment syndication deals over the last 6 months and I have a couple questions for the brain trust:

1.  What are you doing with your cash distributions?

2.  If saving your distributions, where are you saving them?

3.  If reinvesting them, how are you reinvesting them?

Our immediate plans are to put them in *high* interest bearing MMAs and let them grow until exit but not sure that's the best option at present.

Any parting thoughts from some of the more experienced investors?

Thanks and happy hunting!

B

Paul Moore · Answer

Hi @Brandon Beaudoin this is indeed a tough question. As @Chris Seveney said above, I would re-invest them in the fund if you have that option through a DRIP option (distribution reinvestment plan). I invest my distribution from my own fund back that way and about half of our investors are opting for that as well.

Since I can’t invest my IRA funds in my own deals, I am looking at Tribevest as an option to re-invest IRA distributions along the way. Tribevest allows you to set up an LLC with multiple investors, which effectively lowers your personal minimum investment. So if you have say $20,000 sitting around from past distributions you might be able to join say 4 other people through Tribevest and make a $100,000 dollar investment. Or perhaps dozens of other people to make a larger investment. The accreditation rules are still the same for each individual but like I said, it lowers the minimum.

PM me if you want more information on that. Or reach out to @jim Pfeifer at Left Field Investors. I know he has done this numerous times.

Good luck and happy investing!

Chris Collins · Answer

@Brandon Beaudoin don't overthink it :) stick them in a checking account (high interest or other) and reinvest once you get to a large enough dollar amount to invest in the next deal.   Unless you're talking millions in distributions, those small points won't add up to much, so don't overcomplicate it.

Just be clear with yourself whether you're trying to use them for personal spend in your life, or if they're specifically going to be used for future investments.

Great job investing and getting distributions!

-Chris

Ronald Rohde · Answer

I typically save distributions until I have enough to buy another property. We typically save and invest about $1-200k a year, so the $50k in distributions is just a little juice on top.

Chris Seveney · Answer

@Brandon Beaudoin

If fund allows for reinvestment I will reinvest

If not I invest in regulation a+ offerings as they tend to provide slightly higher dividends then a reit and have low minimums such as $500. They also allow accredited and non accredited investors

Zachary Inman · Answer

@Brandon Beaudoin Do any of the syndication deals you invest in have a cash flow/appreciation share split?

Ronald Rohde · Answer

Checking account, maybe some 6 month CD products are good now.

Brandon Beaudoin · Answer

@Zachary Inman

Yes sir, they do.

Brandon Beaudoin · Answer

@Ronald Rohde

Nice!  Where do you leave them until you reinvest them?

Brandon Beaudoin · Answer

@Brock Mogensen

I can see that and have heard of others doing the same.  It's hard not to given the state of economic uncertainty.  Appreciate the feedback.

Syndication distributions: What are y'all doing with them?

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