All Forum Posts by: Duke Giordano

Who would these benefit?  I am a high W2 earner investing in RE syndications.  Not sure if there is any value to the above options?

@Alina Trigub and @Luke Miller.  Thanks so much for your thoughtful responses.  

Not to put people on the spot but in this current market, whats your thoughts on precisely what you would do if you were an LP(me) in this current market with 300k to come in?  Would you come in all at once and diversify across asset classes (MF, Self storage, Mobile home etc 50k a piece) and geographic diversity.  Or would you come in one deal at a time over the next 3-6 months to be all in over 2-3 year period using same diversification goals (asset class and geography).  

Any LP or Syndicators feel free to chime in and your thoughts on why?

Hello All,

Thanks in advance for your reply.  I have several hundred K to invest, have vetted syndicators for the last few months and I am at a point where I know I am coming into the real estate syndication market its just a question of when and how.  I have two questions that I have been pondering that would appreciate some help with:

1. As I stated I have several hundred K to invest, and the ultimate goal is to cycle/ladder 5-7 syndication deals diversified across asset class and geography.  Taking into consideration where we are in this real estate cycle my main question is whether or not I come into these 5 to 7 syndications all at once at this time (as deals arise) or whether not I come and gradually sort of wanna time to get a better idea of where the market is going to go. Obviously coming in gradually would not give me complete diversity across asset classes and geography but it would give me a little bit of a guard against an impending recession.  It seems fairly universal speaking with the syndicators the markets are extremely tight and competitive right now and finding a good deal it is not so easy to do especially in the multi family world. Every scene preferred returns and I are projections start to decrease of the last six months or so.

2. Question 2 is more of a projection/ prediction. For those who have experienced recent recession's (2008 etc.) even though past recessions does not predict future lines I'm curious how the recession itself affects real estate syndication deals in a concrete practical sense. What makes deals in a recession better for a LP? Obviously I think the cost of the investment/asset would go down but I'm curious as to what components of a specific deal are effected directly. Meaning does it affect the cap-rate? Does it affect the preferred return? Hold time? Projected IRR? Since there's less competition, do syndicators have to make the rate of return more competitive for investors?

Mainly I am trying to get an idea of what the true value of waiting or coming in to RE syndication market more slowly on these deals, in that what would be the big back end benefit for me if I were to wait a year or come in slow versus coming in all at once now.  I have spoken with several advisers who pool investors for syndicators and a few of them have said they are waiting on the sidelines for the last year or so since the market is way too tight right now to get a deal.  Saving cash on sideline.

Thanks in advance,

Duke

Thanks for the insight Linda, and sorry for your loss. It seems like they are accepting investments for a deal in Hudson County NJ new construction.  Any insight?

Any updated opinions or news on this company?  They have a new offering new construction in Hudson County NJ.  Not sure its a great time in the market to get into New Construction though.

Its seems like their current offering is new construction in Hudson County NJ, but as someone who invest post tax and looking for ability to depreciate and offset its own income not sure new construction is the right avenue for tax benefits of this type of passive investing.

Thanks for the info all, yes it takes time to find a good combination f investment along with a good combination of operators.  I am doing my best to do so.

Thanks Brian, I truly appreciate your insight and your time.  It takes time to weed through the best way to formulate these foundation of 5 or so investments to start the passive RE portfolio and the make up of such. 

To find out whether a fund invest as a middle man via another syndicator is this spelled out in the funds PPM or would I just have to ask?  Whats the best way to see this?

Hello All,

Thanks in advance for your comments. I am a high income W2 earner looking to start a passive income RE portfolio in the near future and trying to narrow down its composition between Syndications and PE Funds.  A large component of what I am looking to do is both passive income, but as to not try to increase my taxable income so although taxes are not the sole reason they are a big component of the selection below.  I am prepared to, and have been doing initial due diligence on sponsors and funds, but not looking to have any day to day role or liability (turn key is out).  As I am in the process of vetting a number of syndication sponsors and also fund managers and I am trying to get a good read for the sake of comparison between Individual real estate syndication deals vs RE Private equity fund (such as Broadstone, MLG, Grub, Origin etc).  The plan is to deploy several hundred thousand in capitol (from a post tax brokerage account) split up across 5 investments or so to start for the sake of both Diversity and possible Passive pairing to help with taxes (Ex one may give more losses and other more passive income and thus offset).  I am mainly looking at equity deals since this is a post-tax brokerage account but would be open to other deals if appropriate such as debt.  Specifically I am looking to compare:

1. Minimums (seems like some funds have higher minimums vs Indiv Syndications)

2. Hold Time and tax implications (most syndications seem 5 yrs vs Funds in the 7-10 year range)

3. Return (overall return as either Preferred vs IRR (Many syndication with a Pref 8% vs Funds some 6%)

4. Depreciation - Does one have an advantage over the other from a Depreciation/losses standpoint?  Ability for cost-segregation/bonus depreciation?

5. Exit/Exchange at end of term: I believe you can do a 1031 with individual syndicator but some funds allow something called a 721 exchange to also transfer into a new fund without a capitol gain realized.

6.  Taking above into consideration what is some passive pairing options/thoughts to offset one another (such as two funds that give off more income considered passive and 3 syndications that depreciation/losses to offset for 5 total).

Thanks in advance

Duke

Hello All,

I am looking to dabble in the Real Estate arena and mainly looking at syndication deals as well as Funds that have tax benefits. My goal is primarily to diversify from the market more than a public REIT, but also to help with some sheltered income from a tax standpoint as someone who has all W2. As someone who currently has all W2 income 500k+ I am trying to figure out syndications/Funds that are quality, but also wont completely turn my taxes int a nightmare. Believe it or not I still do my own taxes. I was looking at Broadstone, but their 200k min kinda steep, them looked at MLG Fund IV but it appears that with the regular fund you would get like 10+ K1 which would make taxes a pain and their 1099 MLG Fund i think you then lose Depreciation which would be one of the main deductions I get, (Since I dont think I can use pass through deduction at least as I understand it since my income is already over 500k). Just trying to see if anyone has experience/recommendations on high quality syndicators/funds that have favorable tax options in my circumstance?

Thanks in advance

Duke