All Forum Posts by: Don Konipol
Don Konipol has started 222 posts and replied 5502 times.
Post: Minimum Acceptable ROI for Syndicated Investments
#1 Innovative Strategies ContributorPosted - Lender
- The Woodlands, TX
- Posts 6,275
- Votes 9,912
Quote from @Ned Carey:
@Don Konipol your last post suggest we are at similar points in our careers and I feel very much the same way.
I also agree that cap rates are still way too low and above what Warren Buffet would call the property's call intrinsic value.
Question for you. Historically do REITS sell at below NAV and does that vary over time? Where are we now for NAV compared to historic values for REITS?
Thanks
Since “REITs” are actually a form of a C corp that doesn’t pay tax at the corporate level, and must have 75% of its assets invested in real estate, and since the interpretation of real estate has expanded significantly over the years, REITs cover a wide variety of properties, business strategies, methodologies, and management motivations.
The short answer to your question is that theoretically, the higher the growth in FFO per share the REIT is able to generate from Organic growth, and not for example because they’re able to refinance their debt at a lower rate, the higher the multiple of FFO they command, and usually the closer to or amount over NAV they sell for.
Although I utilize the advice of two analytical firms both specializing in REITs, I ultimately make my own decisions as to what to invest in me how much. However, my investments line up pretty close with the “model portfolios” these two advisors publish, with the exception that if the stock isn’t at least 20% below NAV I won’t invest; I prefer REITs that easily cover their dividends with their earnings from rents and pay 6% or more, are internally managed where the top corporate players own a significant amount of stock, and where their property holdings can be easily valued (not so easy with many “speciality” REITs. I also stay away from REITs heavily invested in a long term declining market (office buildings) and a market that is overbuilt to where most players struggle to operate profitably(hotels).
The portfolio I’ve put together in the last three months now consists of 13 stocks - 11 REITs and two real estate type investment companies that have chosen NOT to be taxed as a REIT. The price I paid on average is 65% of the NAV; my dividend yield on cost average is 7.3%, the price paid on average was 11.5 times AFFO. The breakout areas types are
Residential 24%
Health Care 16%
Industrial 16%
Asset Managers/ Infrastructure Debt 11%
Timberland 8%
Diversified 8%
Ski Resorts 8%
Cannabis 8%
Net Lease 3%
Post: Minimum Acceptable ROI for Syndicated Investments
#1 Innovative Strategies ContributorPosted - Lender
- The Woodlands, TX
- Posts 6,275
- Votes 9,912
Quote from @Ned Carey:
@Don Konipol Very interesting perspective on REITs. When I looked at them Long ago it seemed returns over the long run were about like the stock market in general. I figured why have the risk of real estate for average returns. I also looked at size as not a positive but a negative.
I can easily beat average returns substantially on a particular deal. Obviously my type of deal making can only scall so far. So now that I have built some wealth, your analysis looks very intriguing.
Ned, your unique knowledge, experience and expertise in the tax sale Maryland market will always lead to higher returns than a passive real estate investment.
But the two issues as I see them are (1)how much money can you put to work in a specialty investment arena and (2) how much time and effort do you want to devote to it.
When I exam my own situation I realize that my individual real estate and mortgage note investments are made up of two parts- the return on my capital and the return on my time. Since we syndicate our bigger deals or invest thru our fund, we are utilizing the capital of about 80 other investors, so it’s relatively easy for us to recognize how much of our income is from our personal work effort and how much is from passive investing.
As I get older the excitement/fulfillment of searching, identifying, analyzing, negotiating, managing, etc a real estate “deal” has become greatly lessened. And looking at what my return would be as a passive investor in private partnerships vs investing in selective REITs (heavy analysis still required) the differential doesn’t seem to be worth the greater effort, higher risk, and potential problems for my heirs when I pass away. I’ll probably always (hopefully I’ll be able to) do direct investment in property/notes when they come across my radar. However I believe we are in a market where there are more deals to be had through NAV discounts in REITs than in the (imo) ridiculously low cap rates that much commercial property is selling for.
Post: The Downfall of BiggerPockets Forums?
#1 Innovative Strategies ContributorPosted - Lender
- The Woodlands, TX
- Posts 6,275
- Votes 9,912
I’ve been a member and active forum contributor of BP since 2009. People arriving at BP since say 2015 should (if they’re available) read thru some of the 2009 - 2012 posts. Talk about CRAZY!
Post: Minimum Acceptable ROI for Syndicated Investments
#1 Innovative Strategies ContributorPosted - Lender
- The Woodlands, TX
- Posts 6,275
- Votes 9,912
Quote from @Chris Seveney:
Quote from @Ned Carey:
@Don Konipol I am with @Chris Seveney I would say about 10% for a note fund
In a syndication for a hard assets like and apartment bldg. I would want a 15% projected IRR with a min 7-9% preferred return.
Running a couple of private real estate funds, this is kind of like recommending people invest with the “competition”. But there is no MORTGAGE REIT that is a substitute for a portfolio of private loans. In the U.S. there are 199 publicly traded REITS - 159 are equity REITs while 40 are mortgage REITs. ALL the mortgage REITs utilize VERY DANGEROUS amounts of leverage (8 X or more their equity) to “gig” yield to investors. The history of mortgage REITs is that management is able to walk the tightrope for a while and provide double digit yields to investors - but at some point they make a wrong guess on interest rate curve and lose 30 - 90% of their equity. I stay away from mortgage REITs.
Post: Lawyers/Professionals experienced in foreclosure home
#1 Innovative Strategies ContributorPosted - Lender
- The Woodlands, TX
- Posts 6,275
- Votes 9,912
Quote from @Ken M.:
Quote from @Jamie Bateman:
Ha! I guess it's all relative. @Ken M.
What I'm sensitive about is that I buy my foreclosure properties using creative financing, which is a little complicated and there are some overlapping laws that are being enforced in a couple of jurisdictions. It's my suggestion that anyone buying using creative financing needs to really know their stuff.
Using cash to buy foreclosures has never been a problem.
In a couple of places, like Washington State, you can go to jail for soliciting a property facing foreclosure, unless you are an attorney, a lender or a certified foreclosure counselor and you can't offer to buy the property even then. It has to be an "arms length" "legitimate" offer.
California and Oregon have similar statutes.
Foreclosure is an interesting mix of local, federal, banking, bankruptcy, and non-judicial/judicial laws.
Post: Medical Office Investment Group
#1 Innovative Strategies ContributorPosted - Lender
- The Woodlands, TX
- Posts 6,275
- Votes 9,912
Quote from @Solace Medina:
Quote from @Don Konipol:
I've owned a few medical office properties in the past. Minimum total price for a smaller, yet still "efficient" property would be in the $1,500,000 + range in the less expensive states. Financing of up to 50% at 2 or 3 % over "base rate" can be had. Any LTV over that would require hard money rates, which would make cash flow negative. So, if you are able to find a cash flowing property in a low cost area you would realistically need $750,000 plus emergency capital of your own money to do a deal that has any chance of success.
Most smaller medical office buildings were occupied by solo practitioners or small partnerships. In the last 5 years those are gone, ALL medical practices are now part of major group practices. As leases expire the major practice administrators either consolidate and relocate practices into large medical campuses, or negotiate leases with retail strip centers that have empty space and are willing to sign a long term lease at way below market rent to attract an “anchor”.
I no longer invest directly in medical real estate, I invest in medical office REITs.
The large cost to get into medical offices is very intimidating. What makes it worth it is, I do think that medical offices can be one of the safest investments. I have seen the trend of smaller practitioners moving to large medical buildings. I have also seen retail strip malls leasing to urgent cares and other medical tenants more often now.
How has medical office REITs been performing for you? What type of return are you getting? How long does your investment stay in the REIT?
The large cost to get into medical offices is very intimidating. What makes it worth it is, I do think that medical offices can be one of the safest investments. I have seen the trend of smaller practitioners moving to large medical buildings. I have also seen retail strip malls leasing to urgent cares and other medical tenants more often now.
How has medical office REITs been performing for you? What type of return are you getting? How long does your investment stay in the REIT?
1. Do I have the expertise necessary to analyze, negotiate, and manage this investment?
2. Do I have the experience necessary to do the same?
3. Do I have the capital necessary to buy the property without ending up over leveraged and with having sufficient emergency capital?
4. Do I have the temperament to deal with the risk, tenants, and uncertainty of direct investment in real property?
5. Do I have the financial cushion to deal with a large loss to my capital?
6. Do I have the time to devote to managing this investment?
7. If my spouse/significant other turns against me as a result of the consequences of making this investment am I willing to accept this consequence?
Post: Airbnb Arbitrage viable strategy?
#1 Innovative Strategies ContributorPosted - Lender
- The Woodlands, TX
- Posts 6,275
- Votes 9,912
Quote from @Marisa Nack:
Is rental arbitrage a good option for starting out instead of buying on a limited budget?
Post: Missing K-1s. Non-cooperative Sponsor. Foreclosure. What do I do?
#1 Innovative Strategies ContributorPosted - Lender
- The Woodlands, TX
- Posts 6,275
- Votes 9,912
Quote from @Nick B.:
The Story:
Back in 2019 I invested in a new construction of an apartment complex.
In the spring of 2020 the sponsor informed investors that there would be no K-1 for 2019 because the company had no income. This was his CPA's advice.
Then in 2020 through 2023 the property was still under construction and still produced no income. Hence, the sponsor kept telling the investors that he would not issue a K-1 for each of those years because (you guessed it) there was no income.
In the spring of 2024 the project was foreclosed because the sponsor fell short of funds (cost overruns) and could not get a stop-gap financing. Investors lost all that they put into this project.
In September of 2025 the sponsor sent out final K-1 for 2024 showing a 1231 loss which was 60% of the original investment. The capital account for the beginning of the year was something like 35% of the original investment and zero at the end of the year.
When I asked him to explain the difference, he quoted his CPA saying that final K-1 does not show the whole picture (duh!) and each investor must track their capital basis and similar truisms. In other words: a typical non-answer.
He then kept ignoring my requests for the missing K-1s for the previous years.
After reading IRS publications I found out that K-1s must be issued starting from the first year even if the company had no income. K-1 is not required only if a company also had no expenses. It is still recommended to issue a K-1 for the partners to keep track of their capital account ls and basis.
Based on that information, I need to either have previous years K-1s or establish my basis in some other way in order to properly write off my loss.
Questions:
How can I obtain the missing K-1s provided that the sponsor is not cooperating?
Would reporting him to IRS and SEC make matters better or worse?
What happens if I don't include that 2024 K-1 in my 2024 filings (besides not being able to claim a loss)?
Can I write it off as a worthless investment?
--
Nick
@Basit Siddiqi just provided the answers you need, for FREE.
I would engage his services to handle my tax returns if I were in your situation.
Sorry the deal went south, it’s a risk we always take - especially when we’re passive investors.
Post: Norada Capital Management suspending payments
#1 Innovative Strategies ContributorPosted - Lender
- The Woodlands, TX
- Posts 6,275
- Votes 9,912
Quote from @Jay Hinrichs:
Quote from @Dewayne C.:
Quote from @Paul Azad:
Norada Capital 23% promissory notes ending up as just an honest business failure was about as likely as a chronically depressed Leming surviving the annual ocean crossing.
Not too optimistic about the current DOJ aggressively prosecuting so he may only get probation and some community service where he has to help the elderly with their retirement finances. :) what could go wrong.
please people, If any investment offers high returns aka >3x the 10yr yield, and says low risk, then it's always a scam and run away as fast as a Leming
It wasn't 23%. 15%. And there are several private entities that do offer this percentage of return. Some higher. But scammers are getting so good at it, it's hard to tell which is honest and which is a criminal. In some of the review sites, he is still getting positive reviews! And he was doing business right up till he was served! I now just go to my financial advisor. At least it will be on him if he gets scammed.
Just curious why would anyone take on line reviews seriously for an investment in a NOte or RE deal ?? to me these can be totally manipulated. The only reference I give to folks that do deals with me is from my Commercial Banker on his letter head and with his personal phone number. Now granted there have been scummy bankers but I find with mine he is only going to tell the truth as he see's it working with me for 3 decades .. reviewing my tax returns and financials annually and watching my bank accounts daily :) I just never got the yelp type reveiws for RE or money investments or why anyone would rely on them. ??
Post: Direct mail info
#1 Innovative Strategies ContributorPosted - Lender
- The Woodlands, TX
- Posts 6,275
- Votes 9,912
Quote from @Abraham Berkowitz:
Hi
I sended out 4500 postcards September 10, and today the 25th I didn't receive any calls not even from the angry people those it Make any sense?
I builded my vacant homes high equity list and tired landlord list through Propstream, and I also sended through Propstream, what's your experience?
You’re using 1975 marketing in 2025……
The only reason mailers worked in the last 15 years were the number of elderly homeowners who still read their mail, had land lines, and wrote paper checks. Now even my 93 year old uncle uses an iPad, messages on his iPhone, and pays his bills electronically.
What advantage is Propstream when everyone has access to the exact same information, leads, etc.?
You need to either become very creative in identifying potential sellers and extremely skilled in executing and negotiating “deals”, or invest $120,000 + annually in marketing, and have employees skilled in delivering results.
I know a couple of successful wholesalers who are lone wolfs and have done pretty well. They acquired extensive knowledge in a niche area of COMMERCIAL real estate and have the persistence, knowledge and skills to take a potential transaction to fruition. The other successful wholesalers who I know are in residential and have large organizations with heavy monthly nuts.