All Forum Posts by: Daniel Liu

Syndications in general are a form of speculation  hoping luck is on your side with a specific market, a specific project and a specific syndicator. Good luck!

You are literally loaning your hard earned money to someone else who will also get a loan on top of your money to acquire some property for a fantasy proforma based on too many moving parts where no one is safe. 

Read carefully any PPM for any of these syndications and identify how many times the SEC demands the following disclosures: 

1) you can lose all your money 

2) there are uncontrolled risks 

3) there are no guarantees 

4) the numbers are all hypothetical 

5) the syndicator will use leverage 

6) the market usually fluctuates 

7) the SEC does NOT have a copy of the PPM 

8) the SEC neither read nor approved the PPM 

9) the SEC does not vet the syndicator 

10) the offering is not registered with the SEC 

11) there are conflict of interests 

12) the SEC encourages you to seek professional advice 

Etc etc 

The game of real estate is based usually on investing in your own back yard and getting some reasonable leverage and if things go against you, then decide if they are issues related to the market cycles and you can hold on till the market shifts and recovers or you should just dump the project at a loss and pay off your loan. And if it is not related to the market cycles then you ate in a bad project and you should try to resolve the issues or again dump the deal and take sone losses. 

When you are in a syndication. You ate passive. You lose all power when giving your money to some hopeful person called a syndicator who often puts little to no money in the actual deal and whose only claim to fame is that he may have an over hyped deal. And some these syndicators are great presenters with lots of data and great promises. 

One last comment about the regulators: the SEC will do nothing to a syndicator with a failed project, so long as he/she shows that they did not do anything blatantly or willfully illegal and were merely incompetent failed syndicators. I am an attorney and have seen a lot of these underperforming or non-performing equity offerings. 

I invested in many syndications myself, since 2009 and all have delivered less than promised or could not deliver and went belly up except one that has remained a steady performer for over 14 years now. They were all equity syndications except the one that has continued through the years and guess what it is a debt fund (not an equity syndication). None paid through Covid as promised except that one and none have grown and continued to perform except the one that was a debt fund. To be clear, a fund has multiple type of assets in various locations with various strategies. Just like a mutual fund but better because the unit/share price stays the same and you get s steady reliable periodic pay out. And you can take out the pay outs or compound them. 

That debt fund has operates steadily through the years despite the 2009-10-11 market decline, the global pandemic and now the interest rate increases. Most of my money is in it since 2018 because of the cross collateralized security since it is a debt fund and i steadily cashed out of all other syndications that have continued to deliver less than promised or not deliver at all. Btw I can cash out from this ongoing debt fund at anytime and go back in or add money at anytime. They charge no fees at all. Yes zero fees. The fund manager is reachable and he personally has a high net-worth and continues to invest millions in his own fund. I mention this so you can compare that structure to other offerings. 

I have cashed out partial amounts previously with no issues and I periodically go see various projects the fund has at anytime. The fund manager stays at less than $200 Million in total assets and with less than 100 investors. 

Those whose experience in syndications or in real estate investing started in 2011 forward have no idea what a bad market does. The market has been on the upswing with low interest rates since 2012. Ironically I’ve noticed most people who started in the syndication business on Bigger Pockets whether as GP or LP (General Partners who set it up or Limited Partners who invest passively) have not experienced a true decline in the market so I predict a bloodbath in 2024 

I will write a booklet about what to look for if investing in a syndication (or better yet: in a fund) and will post it somewhere on BP because as a tax attorney for high net worth individuals I have seen it all and so many good people lost money as passive investors because the hopeful syndicators were amateurs! 

Once the tenant moves out you are allowed to charge any amount you like. There are no laws restricting mark-to-market rents. 

The City/County/State rent caps only apply to leases that are being renewed. 

There is a State of Emergency in effect and anti-price gouging laws apply. For items not available before the SoE and hitting the market after the SoE, you can raise prices a max of 50%. This would apply to your unit.

Your biggest concern with setting the rent should be the near future. 1) Your insurance is guaranteed to go up, probably dramatically.  2) You may get an insurance assessment bill to cover the CA Fair Plan losses. Guesstimates are around $1000 per unit. 3) Demand is crazy right now. The builders that were building rentals are most assuredly going to switch over to rebuilding the higher profit multi-million dollar homes. The so-called glut of rentals is gone and prices are strongly higher. Prices are easily up 15% since the fire.

@Matthew Turcotte

I would look up Dave Hook, a really savvy investor who is in multiple asset classes.