All Forum Posts by: Duke Giordano

Hey all, 

I had a quick question for you as I am a passive syndication investor in multiple syndications in the range of 10+ K1's annually and there are a few K1's that are coming in late but expected sometime in late May. My options were to file and amend the return when i get K1's vs not filing and applying for extension until Oct.

Based on my current tax situation I was actually receiving a fairly substantial refund from the IRS and my CPA he has recommended we file return and then amend the return when we get the new K1's as opposed to file an extension since I'm being offered a refund from the IRS. I was curious based on some of the CPAs out there what the difference or pros and cons would be to filing and amending the return versus an extension. Is there any difference?  In the case as outlined by my CPA is there any drawbacks to amending the return or is either strategy is perfectly acceptable.  His main reasoning for trying the amended return versus the extension is once again because I was due a fairly decent refund from the IRS and his suggestion was to not let that money just sit there gaining interest from the IRS versus where I could deploy to tell their investments.  Thanks in advance for your time and insight and I'm curious anyone who also experienced these two options.

Hey Guys,

A friend is looking to form a Wyoming LLC for RE syndication investments as an LP (already decided so not really looking for reasons why and why not) and looking for recommendation on firms or websites for this. Looking to form an initial WY LLC and also to maintain the LLC annually with minutes etc? Dont want to go the legal zoom type route but not looking to break the bank either. I am guessing initial cost in the $750-1000 and then ongoing annual cost $150-250 plus Registered agent and WY fee. Does this sound fair? Any recc on places to do this?

Someone mentioned Garrett Sutton Corporate Direct.  Any other reccs would be appreciated that others have had good experience with.

Thanks

Duke

Agree with @Eric Schultz

If you want to be passive, the above outlined plan will do so but it does take some upfront time devoted to education.  Once you have educated yourself it is then about staying up to date on market metrics, and real estate environment, and zeroing in on three forms of diversity (Sponsor, geography, and asset class) across your portfolio.  This will lead to a portfolio that should be better able to handle any changes in a particular niche or team, and to diversify.  Once again, I can't emphasize enough the need to first educate and there are many websites, books, podcasts out there to help with that education.  A few books would be "Hands off Investor" by @Brian Burke, "Passive Investing Guide In Commercial Real Estate" by James Kandesamy is another good one.  Good luck on you journey, the upfront time spent on education will be well worth it and long lasting.

In general, and most simplistically the scenario is as follows:

1. In a fair model and as an LP you get a return ON capitol for any pref or excess cash flow from the deal (It is not desirable for this to be a return of capitol as that would decrease your capitol account) and this is taxable (however usually offset by depreciation).  

2. Secondarily, you get a return OF capital at the time of an Refi/ or Sale and this is not taxable.  

I don't invest in deals as an LP just to get my money back even if that is a non-taxable event.  I invest to make money in these deals.  Need to read PPM and look at distributions section as there are some syndicators out there who may be less than transparent about this.  Need to educate yourself on deal vetting as an LP, and there are many good places and books to learn this.

I have gotten differing opinions on this but is there any way to obtain REP status without owning your own rental properties that you manage yourself.  Examples would be a real estate agent who is active, does it >50% of the time and >750 hours?  Another example is if someone is on the general partner side of deals and actively participates.  I have gotten the most wishy washy answers specifically in relation to those who are real estate agents and how to qualify.

Thanks in advance.

@Naomi Moore

Hello Naomi, its great that you are asking the questions and taking the time.  I agree what others have said in that joining communities will certainly provide value.  In addition, you should consider investing in some great books such as "Hands off Investor" by Brian Burke, and James Kandesamy also has a good book geared toward syndication investing from a passive investor perspective.  Lastly there are websites where you can also find specific tools and vetting materials geared toward helping passive investors invest in syndication deals that can be used as an adjunct to the aforementioned options and resources.  Focus on education first, and take the time to do so.  You won't regret it.

@Andrew Freed 

You are doing the right things asking questions, taking the time to learn the space.  Take your education seriously, and dont underestimate its value when investing in syndications.  In this current environment the market is froth with capitol and is allowing syndicators to get away with some thin margins on deals that could ultimately effect the downstream performance.  I think Brian's book the Hands off Investor is a great resource, and there are many other resources and websites out there to help passive investors like yourself, me included.  I was in your position several years back and taking the time for education is one you will not regret.

@Matthew Thurman good to start thinking about education before investing.  It does take some upfront education and energy to commit to become an informed LP prior to investing in syndications.  There are several places on this forum and others that can point you in that direction.  As a serial limited partner myself I have certainly put in my share of time on education, but it is time well spent.  I am now focused on helping to educate other investors to become an informed LP, as the syndication environment right now is like the wild wild west with so many syndicators out there, and is as important now as ever to be an informed LP.  Many syndicators have rode the market over the last few years, but have not really been challenged at least as of yet...

When investing as a limited partner I echo much of the information previously mentioned. The syndication LLC offers liability protection on its own. If you want additional anonymity or possibly asset protection protecting your limited partner investments from your day job (Ex. Physician) then a personal LLC may be in order to invest through. Many who do this have a revocable trust of ones family to avoid probate then own the interest in the LLC thats investing in syndications. It can get complicated, so worth getting some professional advice on this.

@David Gubb 

David, it is great that you have already started investing and important to explore the questions you are asking.  You need to start by thinking about what you end goal is and then set out a plan to get there.  In addition, you need to be committed to your own education and put in the legwork. Continue to explore bigger pockets, listen to podcasts focused on passive real estate investing such as @Taylor L. and @Travis Watts are great resources.  Lastly, dive in to a few books such as @Brian Burke Hands off Investor, and others.  Left field investors does offer some great resources on their site as well.  There are other website out there that are also there to help passive investors in this education.  Then you just have to put in the leg work and educate yourself, network with other passive investors, talk with sponsors.  There is no easy way to do it but always remember whether it is here on BP or other forums be mindful that most people have an agenda and this is especially true if they are sponsors.  This is not good or bad but just the reality, and you need to keep this in mind.