All Forum Posts by: Brandon Riahi

@Taylor L. , @Jeffrey Donis , @Mike S. , @Basit Siddiqi , @Chris Levarek   Thank you for your help - it has clarified things for me quite a bit. @Chris Levarek, yes it is a Debt Fund vs equity. If I proceed I will send you details I have but it looks like I am leaning  more toward the equity side as the debt fund would treat income as interest and is not very tax efficient. 

I need to dig deeper in to BP as finding a good syndicator let alone a good deal seems daunting. With regulations the way they are and not being able to market to investors; it seems the best way to find a great syndicator is to network and find folks that have had good experiences.  

Hello All, 

Most of our portfolio is in single family homes. We are trying to diversify and have been looking in to syndications and Red D funds. I believe the syndications would be standard multi family and industrial investments that provide a K-1. The Reg D fund is an unsecured fund where a turnkey provider is using funds to purchase more homes for investors. In this case there is no K-1 and instead there is just a 1099 issued at year end.

I wonder if we could trouble you all for a bit of knowledge:

1. Is there any liability risk associated with these and consequently should we go to the trouble of holding these investments in a or multiple LLCs?

2. If so do you have to have an LLC in the state where the syndicator resides.

3. If I live in Texas and invest in a California syndication to I have to file a California tax return?

Thanks in advance for your help - I apologize if these questions are rudimentary,

@ John Laney I haven't crunched the final numbers yet but it looks like 6.77% vacancy/lost rents for the year. The 25% was specifically for that one month. This is a truer figure as it includes rents "skipped out on" by tenants in addition to the actual vacancies - something that I feel that the industry should include in their vacancy figures, but never seem to do. I believe the 90 day Gar applies to newly purchased homes or to consecutive months unrented. We have not had that happen, to be able to comment.

Yes we budgeted for 10% of rents. This was more than sufficient in years 1-2, but beyond that you'd be safer at 10+%. If I were to guess, I'd bet we are somewhere between 12-15% this year.

Hope that helps

Hi @Andrey Y , Midsouth's year runs from Dec to Nov; so I will post a more detailed update after year end. That said here's a quick response for the time being.

There was a huge improvement over last year until August of this year. 25% vacancy that month in a portfolio that numbers in the double digits of units - so that is a red flag (plus one more the next month). The result besides loss of rents were huge repairs that are still coming in. I am sure repairs will run well above their 10% target and have a huge impact on return. With most homes within 3 years of rehab; this seems high. There have been issues with lost rents where tenants miss portions of rent and leave owing more than a month's rent as well, but that is a gray area where I give them the benefit of the doubt. For an investment that is supposed to produce stable cash flows, with little risk; it does not seem to be achieving those goals. At a net return of sub 6.5-7% there are many great REITS out there that can provide similar returns even though I would have to pay tax on them but with none of the headaches; so I'm really looking forward to seeing where this number falls. Frankly 2018 will be a show me year as to whether their system is broken.  They are nice folks so I'm rooting for them.  We purchased one home with Memphis Invest that's an A-B class but really want to see how it fares after 3 years before adding. If they can keep the returns stable for 3+ years we will add heavily especially if we get a correction - so far so good. Like Memphis, we have had a number of repairs in Dallas; however, appreciation has vastly compensated for this. At this point we favor markets that have both growth and appreciation but you have to buy right and these are getting pricey so our next focus would be on higher quality/class homes in stable markets.  

I had have had a few folks ask for updates so I thought I'd just do a quick post. After a couple of operating years I'd say that I have had mixed experiences. I have purchased a number of homes through them. They make buying super easy and are very friendly and responsive people to work with. I would say the first year and a half were amazing 10+ % returns. Our returns have diminished since mid 2015 primarily due to vacancies and more recently - repairs. Love the folks enough to hang in there longer but have stopped purchasing until I can see the trends reverse. Had a return of 6.84% in 2015. The first 6 months of this year we were at 8.39% annualized and the last 3 months were really bad- dropping that return to 7.44% annualized - with the toughest months ahead. This is primarily due to repairs in the last 3 months of 13%, 32% and 23% and a vacancy in each of the last 3 months (plus just informed of one more). Still if we can net around 7% by year end its not that bad - but not great either, for the risk. Below that and I believe you can find better returns elsewhere; that are much more liquid or at least provide some upside. I would say if you do proceed, make sure you have put enough down on the homes that you can cover not getting 50% of your rents (July we received 54% and August 56%). We don't have just a couple homes with them - so that means a whole lot needs to go wrong for that to happen. We recently purchased a home through Memphis Invest. The return starts lower (higher cost property but a higher quality one as well) but its what you keep that counts so we have a wait and see attitude. They have a good rep. If they do well, we have budgeted for 5 more homes with them in 2017 and my uncle is ready for 10 once he sees how we do (fortunately we told him in time to hold off until this or next year). It is true that your operator/manager is vital - but neighborhood quality is just as vital as even the best operator will have a tough time in a poor neighborhood.Hope that helps

@Curt Davis -  3 of them are in 38127, some in 38128 as well. The remainder are all around. In hindsight I would have spent more time researching the area for myself. The operator is key but a bad neighborhood starts them at a disadvantage. At the time I was running 2 businesses working 100+hours a week. Hindsight is 20/20 but a lesson learned is invaluable so I posted hoping I could help ...

I have had mixed experiences. I have purchased a number of homes through them. They make buying super easy and are very friendly and responsive people to work with. I would say the first year and a half were amazing 10+ % returns. Our returns have diminished since mid 2015 primarily due to vacancies and more recently - repairs. Love the folks enough to hang in there longer but have stopped purchasing until I can see the trends reverse. Had a return of 6.84% in 2015. The first 6 months of this year we were at 8.39% annualized and the last 3 months were really bad- dropping that return to 7.44% annualized. This is primarily due to repairs in the last 3 months of 13%, 32% and 23% and a vacancy in each of the last 3 months (plus just informed of one more). Still if we can net around 7% by year end its not that bad - but not great either, for the risk. Below that and I believe you can find returns elsewhere. I would say if you do proceed, make sure you have put enough down on the homes that you can cover not getting 50% of your rents (July we received 54% and August 56%). We recently purchased a home through Memphis Invest. The return starts lower (higher cost property but a higher quality one as well) but its what you keep that counts so we have a wait and see attitude. They have a good rep. If they do well, we have budgeted for 5 more homes with them in 2017 and my uncle is ready for 10 once he sees how we do (fortunately he waited until this year). Hope that helps

Recently attended an event with them in Dallas. We were interested as we have a number of rentals with another provider but with slightly higher vacancy / collection / repair issues than expected. We wanted to see if the higher prices we had heard about with Memphis Invest would provide a solution to these issues - and result in a higher level tenant. They seem well liked by their investors I talked to at the meeting.

Thank you @Trevor Ewen for the thoughtful and detailed response.

Thank you @Leslie Pappas I have been thinking about accreditation. I know we qualify.

Sorry - Title should Read :

Syndications how to find them, Vett them and timing