All Forum Posts by: Dan Rowley

@Nate Powley  yes, more profitable than I could have hoped for even.  But I bought in at lower cost basis before the market values really jumped up and I also secured low rate fixed conventional financing - as I bought several years ago.   So, the timing worked out in my favor, though this is not always going to be the case.

@Nate Powley  Hi Nate,  I'd suggest the good 'deals' in UT market left the station several years ago, but that would not be helpful.  I own several there and I do have a referral on new construction BTR 4-plexes if interested DM me.  

@Reddy Rangareddy   Not sure what your investing objectives are but if you finance that property with current debt and say rent is ~$2k/month or maybe even a little higher, then it won't cash flow.  Appreciation potential certainly may be there but are you ok with neutral or negative cash flow?

@Bob Regent   I have seen all kinds of groups suddenly marketing these type of Pref Equity funds.  Many of them are savvy marketers but don't have background/experience in pref equity space but lead folks to believe it's just an  'easy button' to make stellar returns.  I'm not so sure and I think some are finding out that it's not so easy.

# of doors is generally for marketing purposes and I don't find much meaning in it, so take it with grain of salt.  Especially in syndications, where often those touting # of doors may not even be the primary GP managing the deal and it may represent 1-2% ownership of those doors.

I've always thought investing via HELOCs were risky, and now only more so as the rates are typically adjustable and would not be very high. For example, if you had bought some RE with HELOC funds a couple years ago and now have to service that debt at twice the rate, that could be really painful. Also, read the fine print HELOCs terms can also be changed or terminated if the bank changes their mind.

Seems clear they are running a 'fund' model and they are not the lead sponsors/GPs.  It appears that the appears that very low investment minimums are a key selling point. 

You'll want to make sure you understand the K1/tax filing implications because if you own very small piece of let's say 10 properties in 10 different states you would potentially receive 10 K1s (one for each deal) and 'may' have tax filing requirements in 10 states.  Consult your CPA but this may be way more trouble than it's worth for very small $ investment(s).

@Solomon Rosenberg  I'm sorry to hear about the deals gone bad.  I have not read every single message in this thread but why are you hesitant to share the name(s) of the sponsors with which you lost money?  Seems to me this would be a forum for doing so and you could be providing a valuable service to other investors.  

@Scott Trench

I think you have overstated the risk/reward here for GPs...

I would not want folks to be under the illusion that mngt fee is nearly as high as you state.  It's not % of the equity/$ raise but rather it's a % (often 1-2%) of revenue/rents collected.  This means there are significantly lower $s paid in ongoing mngmt fee (vs. the $2M you list).  And, I'd argue that often the work/effort GPs (hopefully) are putting in to manage the property probably exceeds the fee $s.

Also, 25% of net worth put into a single deal is not really realistic and if that were the bar then I believe there would be very few syndicated deals offered to LPs.

You also have not factored in that GPs are 'on the hook' if it's recourse debt used in the deal, while LPs have not exposure at all.  Certainly there is a $ value to LPs for this.

@Jennifer Cramer  This is one of the more challenging times to invest given the macro dynamics of rising interest rates and falling RE valuations, it's tougher to get a handle on what is a good deal.  Very experienced investors are struggling or have simply paused investing until things perhaps settle a bit more.  that said, there are distinct differences with actively investing vs. passively investing and you should do research to find out which you may prefer.  To manage your own properties out of state is not a simple matter.  good luck!