All Forum Posts by: David Thompson
David Thompson has started 7 posts and replied 875 times.
Post: What's Possible in First Year as a Syndicator
- Investor
- Austin, TX
- Posts 933
- Votes 1,127
I just completed my first full year working with a syndicate group that focuses on multifamily investing. From hiring a great coach, to developing a network, and launching a real estate business / brand, I wanted to share some things to excite folks on what's possible in a short period of time. I'm grateful for the BP community as its been a strong catalyst to support my early success and share this with you as an inspirational opportunity to explore what's possible in a short period of time.
There's six ways that my mentor has identified to get into multifamily from a career perspective that also worth reviewing below. Finding deals or raising capital are one of the best ways to work with a syndicate to add value. Any other avenues or stories to share that would help others ?
Post: My review of Lifestyles Unlimited in Houston Texas
- Investor
- Austin, TX
- Posts 933
- Votes 1,127
Michael,
You should read this. Personally, coaching was the most important catalyst in advancing my career in commercial real estate bar none. I think it can benefit a lot of folks but they need to be ready to act, with the time to work it and patient. But it can happen fast w/the right person and situation.
Post: What would you do with $850k?
- Investor
- Austin, TX
- Posts 933
- Votes 1,127
Michael,
You would be looking most likely out of state. Once you do that, being more passive in orientation is a viable strategy. I currently favor syndications where you are partnering w/experts who have experience in their respective niches. Currently favored niches include value add multifamily apartments (200+ units); pooled investments in self storage and mobile home parks where you might be investing in several properties spread out over several states in leading growth cities. There are long trends in place and these assets have fairly low betas compared to the market in general and some downside protection built in. Think folks store more stuff in good time and bad. Affordable housing and more renters are long poles in the tent. Here some light reading on these areas.
https://www.biggerpockets.com/blogs/9145/53820-why...
https://www.biggerpockets.com/blogs/9145/54155-sel...
Post: Still good time for self storage unit investing?
- Investor
- Austin, TX
- Posts 933
- Votes 1,127
Hi Vincent, agree w/David, its a pretty resilient sector, people buy stuff when times are good and store stuff when times are tough. There are more revenue opportunities from storage as well and despite all the big companies constructing new sites, the industry is still vastly in the majority of mom n pops and fragmented. Here's a brief blog that you might find beneficial.
Post: Do you invest in IRA and/or 401k any more?
- Investor
- Austin, TX
- Posts 933
- Votes 1,127
I think the best opportunity is to setup your own company and establish a solo 401K. You have much higher contributions limits and unlike IRAs, with the solo 401K you are not hit by the UBIT tax on the income coming from leveraged part of the deal.
Post: Best strategy to cash flow with $250k?!?!?
- Investor
- Austin, TX
- Posts 933
- Votes 1,127
Charles,
As I understood the original post, he's looking for cash flow to pay some bills. The strategy of lending money and getting interest income is not a smart strategy as its is not tax efficient. In contrast, syndication via LPs flow like MF apartments are very tax efficient, tax advantages of property tax and mortgage interest deductions, accelerated depreciation making these very nice vehicles for putting cash in your pocket w/o a high tax bill during the hold period. Often times you will see very little of any taxes on the annual K-1 statement until you sell, then you recapture on the depreciation. Use of 1031 exchanges can continue to defer most of the potential sale taxes.
Post: Best strategy to cash flow with $250k?!?!?
- Investor
- Austin, TX
- Posts 933
- Votes 1,127
Hi Chris,
Are you an accredited investor? Syndications open up a lot of possibilities and most of the operators require accredited status. I like large, value add multifamily, self-storage and mobile home parks where there are strong trends in place for more renters, storing stuff in good times and bad, and increasing demand for affordable housing. These niches have some downside resiliency with the right sponsor, location and management. Most of the deals I review offer say a 8% preferred return and target 8-10% cash on cash returns with upside of 18% to 20% IRR over say a 5 year hold period.
So, to get $4K/mo off $250K is a bit of a stretch but many of these sponsors offer refinancing or supplemental loan opportunities to return equity back to investors in a shorter time horizon like 2-3 years which could increase CoC and IRR numbers that can get you in the ballpark you desire.
Once you identify a niche or two you like, vet the sponsors. Link below is a decent overview of ideas and embedded links to drill down into. Hope this helps.
Post: Why do a lot of investors stay away from medium to larger multis?
- Investor
- Austin, TX
- Posts 933
- Votes 1,127
Why I like investing in large value add apartments. For passive investing, syndication is the way to go. If you want to be active, think of your skill sets and what you can bring to the table. As someone mentioned above, large apartment investing is a team sport. You have folks dedicated to finding the deal, negotiations, doing the due diligence, raising capital, asset management, etc.
I talked to a syndicator today who did his first 100+ deal and he said he did it end to end largely by himself but never again. Another way is to join a club and some of these things will be a bit easier and you can focus more on finding the deal and less on the capital because the club has templates and hundreds, thousands of investors. If your deal fits the template and gets guru stamped then capital raising can happen in 48 hours.
Another angle which I took is if you think you have some network of investors, you can find syndicators to partner with, become part of the GP and do various activities to help the sponsor. You learn, earn and grow your investor base off of more experienced operators. Build a track record and then branch off on your own with those investors. It's difficult to start in large MF but its is very possible. Review of few of these blogs to get some ideas.
https://www.biggerpockets.com/blogs/9145/61278-wor...
Post: Syndication, what is the #1 question holding back investors?
- Investor
- Austin, TX
- Posts 933
- Votes 1,127
Ha, thanks Michael ! Or, another reason.... your an investor decides to go "active"...ha. Excited to hear about your latest deal. Wish you and David S the best in running that one !
Post: Syndication, what is the #1 question holding back investors?
- Investor
- Austin, TX
- Posts 933
- Votes 1,127
Hi Michael,
Good question. Here's my top 3 rankings.
1) The investor is not accredited and hence does not qualify.
2) The second thing is lack of liquidity or timing.
3) Diversification - they may be over concentrated in an asset class or geography or both.
Ironically, its rarely that they don't like the market, deal or sponsor.