All Forum Posts by: Duke Giordano

Hello Ryan,

I would start with @Brian Burke book "Hands off Investor" as well as some other books such as "Investing in Real Estate Private Equity" by Sean Cook.  Both are great reads.  There are some excellent website out there, but I would just caution be sure that the platform is not raising capital or being compensated by the sponsor in some way as you can see as to how that would be a built in conflict of interest.  Happy investing, and happy to help if you need further guidance.

As many have stated, you need to be clear on if you intend to be a passive investor (invest your money in other peoples deals) or an active investor and buy your own rental properties etc. where you manage everything on your own.  There are several resources for each of those categories, but the vetting process for each has unique nuances that are slightly different.  

Agree, being a passive investor has a lot more land mines in the current environment than a few years ago.  Having said that, everything runs in cycles and soon there will be a great opportunity for those passive investors who are ready to take advantage of the current fall.  Many have already seen this firsthand but the worst is yet to come unfortunately.  There are good resources out there for passive investors if you dig a little, focus on your education and build up cash reserves for the upcoming opportunity.  Be wary of those passive investor sites that are pitching you deals that they are incentivized to do so, without any vetting.

Happy to help any way I can

John,

Your asking the right questions and you are correct and having a bit of trepidation right now based on the current market conditions. I've invested in over 25 Limited partner deals and I would say less than 5% of the deals I see today, if that, are even worth considering in this current market. That's just my opinion as a conservative investor. Ian provided excellent info and hes a great resource as well as his group. 

There are other resources out there that help you with your education process if you look, as well as vetting syndicated deals and what to look for.  If I were you at this juncture I would focus on building up my cash reserves and keeping it in the risk free 4 to 5% interest rate accounts and build this cash fund for opportunities over the next 6 to 18 months. Separately I would focus your time on education and making sure you're comfortable with what you were looking at in deals and had a bedtime appropriately. 

Happy to help anyway I can.

I second Brians book, as a great place to get the foundation of what to look for as a limited partner.  Now more than ever is a time to be careful in this economic market, focus on your education and your overall plan what you want to get out of real estate investing, and how you see your role. 

Separately, there are some great websites and resources if you do a little digging to help in the education process, but dont rush it in particular at this juncture of the market.   Happy Learning!

Agree with much of the above.  Before jumping into syndications take the time to educate yourself to have a foundation of whats entailed, and the risks.  Now is a precarious time to invest so really need to drill down on education.  Some of the resources mentioned are good, there are other websites and resources that help with that process as well.  best of luck in your journey.

Great post. Was strongly considering STR loophole year 1 with a new home purchase at the shore, but the problem is the land value at the shore in some cases is valued at 85% total value. Thus on a million dollar home, house (Depreciable) value is only 250k, so depreciation is roughly 25% of that at say 62K, and income bracket even if highest 37% rate the actual tax loss is now down to 23K. With the cost of Cost Seg 3K, NET loss off W2 is now 20k. Not bad but need to be sure its worth it to rent out to people, get and pay for LLC for liability purposes, and minimize your personal use stay at the shore for 14 days? Debatable in these scenarios...

Hey Guys,

Currently have a WY LLC but trying to shop around a bit on ongoing maintenance cost after it is formed. Looking to get a little bit of advice and shop around on possible companies that are used to maintain LLCs specifically in Wyoming. Since this LLC is basically used to house passive syndications there is not much overall activity from a business standpoint otherwise investing in syndications as an LP passivly.

1. For any of those who have a Wyoming LLC if you would share with the typical cost for maintenance is including all is costs such as: maintenance of LLC itself in terms of keeping track of minutes, state filing fees in Wyoming which I believe is $62, and then I also think there might be a registered agent fee as well but I'm not sure if that's baked into the LLC maintenance fees.

2. I'm trying to get an overall feel of what's fair and reasonable for an annual maintenance cost for maintaining our Wyoming LLC including all in cost as above.

3. Secondarily, do you have specific companies that some of you have experience with and would recc to maintain a WY LLC.

4. Lastly, If one were to decide switch companies from the one which the WY LLC was formed, how complicated it it to switch to another firm to maintain the LLC, and what is involved?

Thanks in advance

Brian thanks for your comment, and I agree,

As always great to hear your opinion, and your honesty is always appreciated.  I agree with Brian, in this environment be very wary of many deals as it is just not easy to pencil out profit without finding a special deal.  That is why it is important to have tools and metrics one can use to illuminate this obvious deal inefficiencies for limited partners to be aware of.  Here are a few examples that are not hard and fast, but important nonetheless in this environment.

1. Fundamentally, when an interest rate on a loan is at or above the going in cap rate that is a hard deal to pencil.  

2. Fundamentally when one need to use 50-55% LTV, you lose some of the compound effect of leverage on a deal, that makes it hard to pencil.

3. Any deal with a bridge loan right now, run away from...  FAST

4. in the above scenario, operators are often trying to offset/overcome the above variables with risky rent growth assumptions in the 6=% rate annually, and this is a dangerous assumption.

There is only so many levers to pull and push.  I am basically sticking with MF deals with fixed rate debt, tolerable prepayment penalty which are very very hard to find.  Possibly a MF deal with Class A shares less than 15% of total LP (Fixed rate return, no upside at back end, but need to get 10% or more return), vs possibly ATM deals to capture bonus depreciation.  That is honestly it right now.  Having said that, as Brian alluded  I think there will be very interesting buying opportunities in the next 6+ months as bridge loan fixed rates expire and when these deal come about one needs to be ready. STAY TUNED

Agree, much volatility in the debt markets due to the uncertainty.  At this point when evaluating deals I am much more likely to jump in in a deal that has fixed rate debt, even if it's in the 5% range, simply because I can see how the underwriting is affected and how this plays out.  Lastly, I want to see a somewhat nimble prepayment penalty/Yield maintenance that dissolves or dissipates after 2 to 3 year hold to allow either a refinance or an exit.  I am avoiding bridge loan deals right now. Fundamentally is difficult to justify some of these deals and have an interest rates higher than the cap rate. It is very difficult to create net positive returns in those deals so keep an eye out for those metrics and analysis.  Overall, need to be judicious and detailed as a limited partner when evaluating deals in this current market. Thankfully there are tools out there to help do so.