All Forum Posts by: Daniel Torres

HI All,

Any thoughts on investing in private lending vs hard money vs 1st position performing notes as far as 1) typical returns and  2) availability/ease of finding good investments in said category.

Thanks!

One more thought... I am contemplating investing in performing 1st position notes vs syndications. I am attracted to the control and security afforded by notes but also like the idea of syndications and participating in larger multifamily deals which is something that I aim to do on a smaller scale (but a little weary of increased risk and lack of control.) Thoughts?

Thanks for all of the feedback!

@Chris Soignier, I was looking at multifamily because that is a field that I want to get into directly investing myslef with small apartments and am actively researching,  I figured doing due diligence on syndications could only help.  Horizon is long term and looking more at total return as I am investing through a self directed retirement account and don't need to touch the funds.

@Trevor Ewen Thanks for the great information.  Any thoughts on how to find syndication opportunities.  I suppose the nature of dealing with SEC regulations doesn't allow much advertising of said deals.

@David Miller Thanks for the feedback.

@Leslie Pappas I'll be sure to check out the book, thanks!

Hi All,

I am looking at investing in syndications and wanted to know what criteria/analysis to perform.  I understand track record and reputation are key, but what financial metrics/fine print should I be looking for?  

Thanks

Ian, just start reading some of the tutorials on your website, great stuff! Very big picture and easy to read.  Thanks for sharing

Happy New Year all!   Thanks for all the great input.  Matthew you're the second person to advise me to understand RE well before venturing into note investing, I think that's great advice.  Ian, I like considering the depreciation as tax deferment.  Do you know if you do a 1031 down the line if you have to repay depreciation then or does it transfer to the next property?  Hope you all have a great day.

Hey Patrick,

Thanks for the advice.  Love the idea that rents tend to go up long term with inflation.  Definitely see the benefit to having both in a portfolio.  What type of notes are you investing in? 

Thanks again!

Hi BP community,

I am an aspiring real estate investor yet to make my first investment and I wanted to get some thoughts on the two investments I am currently considering.  If my logic is terribly flawed please forgive me as I've been only looking into real-estate for two months.  I've been listening to Brandon and Josh at 1.5-2x speed commuting 4-5 hours a week (lol, it's true, people think I'm nuts when they hear me) and tackling a little bit of reading (as much as I can with a 20 month old and a 2 week old at home.)  

I am looking at turnkey rental properties vs performing note investing or hard money lending. A couple of assumptions. 1) I am looking at mostly passive for now as I have a 9-5 and a decent income. I would love to continue to learn and get into finding great deals, rehabbing and holding(BRRR) but my knowledge level and time keeps me from jumping in just yet. 2) I have a small business and a solo 401k, but for this discussion assume this is income outside of my 401k coming from after tax dollars and earnings will be taxed at applicable rate. 3.) My marginal tax rate is 33% and I am working off the fact that interest earnings will be taxed at this rate since it will be over and above my 9-5.

OK… Assume I have $100k in the bank

Scenario 1: $100k turnkey property in a "B" neighborhood getting $1000/month in rent. assuming 50% rule of expenses we are at $500 a month in NOI. This could either be with cash or 30k down (25% + closing costs). In cash scenario end up with cash on cash earnings of $6000/year or 6% return. In financed scenario with a $350 mortgage payment, we are at $1800/year, essentially also 6% and in theory i could get 3 properties instead of one. From my very limited understanding much of this income could be tax sheltered through depreciation of said property.

Scenario 2: $100k in either hard money lending (12% interest on investment property with 60% LTV , 3 years interest only with balloon payment at the end) OR in performing mortgage note (80% LTV, 100k note, 30 yr amortized with balloon due in 5 years, also 12% ROI )

The way I am seeing it, even if I get taxed at the 33% marginal rate the 12% turns into 8% after tax which beats out my 6% I am getting on real estate.  I know this doesn't account for amortization and appreciation long term, however I am cynical about counting on appreciation given the recent real estate bubble.

Please enlighten me.  Thanks in advance for the help.

Cheers and Happy New Year!

Danny