All Forum Posts by: Andrew Lax

My CPA is telling me that I cannot use the sum of all my rental properties losses grouped together as one large loss to offset capital gains of the sale of 2 of those properties. He is saying that I can on only use the losses of each property again the capital gain of each property. Is he correct? Please advise

I'm in the Tampa area and you can get top dollar for units needing to be renovated. I don't think the time and effort would be worth the gain. What are the ARV values of the properties if you renovate and how much of your time would go into it?

 I have participated in my fair share of residential syndications.  Virtually all pitch a means of forced appreciation. I cannot remember a single one that obtained funding without a forced appreciation opportunity.

The 2nd to last syndication I joined was purchased with initial negative cash flow and achieved the capital raise exceptionally quick.  They had successfully implemented the same sophisticated value add around a dozen times, each time achieving returns that resulted in maximum GP profit share. 

Are you indicating you had a syndication that you sponsored that successfully found LPs to invest in that was based on cash flow without an appreciation play (without a Value add)?  Can you provide me your investor presentation?   Even if it was not cash flow negative, I suspect the investors came in for the value add (for the appreciation play). As indicated I have not seen a successful fund raise without an appreciation play.  I know I would not choose to participate in a syndication if there was such a syndication without an appreciation play (which I have never seen) because the return would not meet my buy criteria.  Purchasing with negative cash flow can result in increased value add potential.

I hold by my statement, if we only pulled those with 8 digit plus net worth (or successful syndication sponsors), buying for appreciation would whoop the buy for cash flow.  I know my vote.  I also know my worst appreciation play out of all my purchases would whoop any primary cash flow play. 

Why does (virtually?) every residential syndication have an appreciation play?  It is because the appreciation provides the high return. Do the sponsors not know what they are doing?

Something to ponder.

Note I am not saying you cannot do well investing for cash flow.  I recommend you start in a market you have intimate knowledge regardless if it is high cash flow/low appreciation or vice versa. Note beginners are not syndication sponsors. After you have some experience, you will be better prepared to branch to other RE markets.

good luck