All Forum Posts by: David Thompson
David Thompson has started 7 posts and replied 875 times.
Post: Syndication vs. Direct Ownership
- Investor
- Austin, TX
- Posts 933
- Votes 1,127
Good for you John. Keep exploring. Alternative assets as you mention do not have to stop at real estate asset classes. Proven oil reserves, timber, cattle, etc are also interesting niche areas to continue to educate yourself, participate as a limited partner. I was talking to a close friend of mine here in Austin last week and we are contemplating a monthly meetup group to educate folks on alternative asset classes, non-correlating, that provide a more holistic approach to building durable life long portfolios So much of magazines, financial advisors talk only of stocks, bonds and annuities. In today's information age your really can find a lot of avenues that can offer lower risk, cash flow and preservation of capital that few rarely learn about or participate in. Your passion can lead you to new ideas to consider.
Post: Syndication vs. Direct Ownership
- Investor
- Austin, TX
- Posts 933
- Votes 1,127
Hi John,
Syndication seems to be right up your alley. I think it gives you a lot as you mentioned including instant expertise, geographic, niche and sponsor diversification. That said, I see a natural side to a lot of folks that want to do something active. Hence maybe why you migrated to BP and other DIY sites. This runs across investment spectrums from financial planners and research suggesting hard to beat index funds with investors who think they can beat the market buying their own favorite stocks. When they have an investor itching just to be in the game more actively, then they say go ahead and take 10% of your portfolio and have at it. I also think that doing something active is not only about the money, but you do learn more and hence, that can make you a better educated investor overall, develop long term relationships w/your direct partners and maybe investors down the road.
I would just be prepared to be realistic. If you think you are going to beat the experts, then its a different type of active. If you have limited time, interest or talent in this area then you either partner w/experts on the local level who have that experience or as you have done, put a sizeable amount of your REI funds into syndications and enjoy your time outside of work with family, friends, activities that are more meaningful for you.
Couple articles below to support your passive side.
Post: How to meet apartment sponsors/leads being out of state
- Investor
- Austin, TX
- Posts 933
- Votes 1,127
Hi Tony,
Thanks for reaching out and appreciate Brian's mention @Brian Adams. DFW is a strong area of interest for many syndicators. Getting an overview and understanding of different models and approaches is sound. I'm attaching this for readers who are interested in DFW and tips on vetting sponsors.
Post: NEW INVESTOR from London, UK
- Investor
- Austin, TX
- Posts 933
- Votes 1,127
Mark,
Given your life experiences and distance, do you really want to be actively owning rental property in the U.S. and manage it from abroad? SFRs have had a nice run but at this point, who is going to do the buying for you? Are you just going to buy retail and buy n hold or work w/a sophisticated partner that can find value and create value? Are you an accredited investor and if so, have you ever thought about owning and being part of a larger multi-family deal such as value add apartments in strong growth markets? Something to consider if you haven't. Get all the benefits of owning real estate, be a partner in the deal but having experts who know the market manage it for you. I even think that due to the advantages of commercial real estate of forced appreciation in value add deals and scale you have built in advantages you can not achieve w/SFRs. Review the blog and let me know what you think.
Post: SELLING INVESTORS ON A DEAL
- Investor
- Austin, TX
- Posts 933
- Votes 1,127
Adam,
Here are some things I've learned in raising capital that you may find helpful. I also have some podcast interviews on my BP profile page that you may find beneficial.
Post: Any apartment investors willing to offer advice?
- Investor
- Austin, TX
- Posts 933
- Votes 1,127
Hi Robbie,
Couple ideas.
1) Join a local MF meetup group or start your own - just network to see who is doing what, who the players are, learn your market, etc.
2) Hire a coach and see how you can help them
3) Two of the best ways to start getting into MF w/o a lot of capital is raising capital for others and learn from them.
Post: Moving from owning single family to multifamily
- Investor
- Austin, TX
- Posts 933
- Votes 1,127
Nicholas,
You have $1.5m and you are new to multi family. I'm not sure if that is all your nest egg but certainly would ponder a few alternative thoughts. I like the MF idea since that is where I spend most of my time. I also like diversification and learning from other more experienced MF investors by being their partner. Here are some ideas:
1) Active / Local - Take some of the capital and designate that as active capital. Active means you will learn by either doing this on your own but better, seek out a more experienced partner or two in the MF game that need some capital and would allow you to learn w/them (locally preferred). You find roles you can play on the team. The other portion of the your capital you designate as passive by investing w/experience partners in a syndication outside of your area.
2) Syndication + Geographic Diversification in MF - I like syndication for out of state investing. You find an experience operator who has been doing this for some time / has a solid track record and is in strong markets, has access to solid deal flow, underwrites conservatively and is open to educating their more serious and sophisticated investors who "with intention" want to earn and learn. You could easily take $500K and get yourself in 3 - 5 solid deals.
3) Syndication + Niche Diversification (+MPH/SS) - Do 1, 2 above and add a third component by diversifying into a few alternative niches w/very solid histories and strong future trends by investing in pools of mobile home parks (MPH) and self-storage (SS).
I would not advise taking $1.5m by yourself and say I'm going to go into MF and learn the ropes. Don't confuse success by riding the wave that lifts all boats w/your SF rentals and confuse that w/expertise. Be smart, patient, and selective. Couple blogs to get you thinking.
Post: Benefits of a multi unit building vs. several single family home
- Investor
- Austin, TX
- Posts 933
- Votes 1,127
Hi Bill
My personal perspective is to focus more on cash flow and less on appreciation as the latter is less of a given. This is the reason most folks migrate to MF vs SFRS and not the other way around. Also, should be less administrative oversight with one insurance policy, one property tax bill, etc, you get the picture.
Personally I still maintain a handful of SFRs but have not added in a few years since finding more cash flow and less hassle as MF allowed me to hire a property mgr outsourcing additional headaches.
If you are accredited, I'd take a serious look at being part of a larger value add MF property via a syndication. You can get your cash flow, plus scale, forced appreciation, geographical diversification and no weekend calls from residents. I have an investor who used to own a 100 unit property, sold it, and now exclusively invests as a passive investor alongside the GP (experts), he gets most of the benefits w/o any hassles.
Post: Apartment Investing: 100 duck-sized horses or 1 horse-sized duck
- Investor
- Austin, TX
- Posts 933
- Votes 1,127
Hey Zach,
Good question. Let me take it from your analogy and use 100 units. Under either scenario 20 or 100 units, you are getting into commercial real estate valuation model (based on property income) vs single family homes or any units less than (5 such as a small MF) which is based on comparatives sales values. I like 100 units because you then can start introducing not only the valuation model difference but also scale. Its at this number of units that you can get professional onsite management to oversee your property and you are essentially the asset manager ensuring that the right property management company executes your business plan. The acquisition of that 100 unit should be "value add" meaning you can renovate interiors, exteriors and with improved operational efficiencies increase rents, decrease expenses and create a higher NOI. NOI / cap rate = new FMV of that property.
If you did the same thing with 100 houses, you may see some higher rent but if the house across the street just sold for "x" price and it had similar square footage and layout in same neighborhood, you may not see a higher price for it. Couple of articles to get you thinking. The first one gives you an example of "forced appreciation" and scale. The other two 28 ways each to increase revenue and decrease expenses.
https://www.biggerpockets.com/blogs/9145/53820-why...
Post: Out of State Investment (Austin/Houston/Portland)
- Investor
- Austin, TX
- Posts 933
- Votes 1,127
Ajitesh,
Sounds like you are looking into Turnkey properties. I think its all achievable, being in Austin I think there are a lot of good spots in Texas if you are thinking long term. Austin has had quite a run up but San Antonio and Dallas I like. You mention apartments and passive investing. Turnkey is certainly an option but still not entirely passive. Since you are in SF my hunch is you may be accredited and then options open up for you to participate in apartment syndications. You, as limited partner, provide capital to the general partner and help acquire value add apartments. The GP is solely responsible for selecting, improving the value, managing the asset. You focus on what you do best, work and family, while the experts create value. Here's a few articles to get you up to speed on vetting the GP (sponsors) and why I large value add apartments have unique advantages like scale and forced appreciation that would be hard to obtain in a turnkey type small MF investment. I think if you are thinking out of state, passive, and cash flow, syndication is strong option for you.