All Forum Posts by: Forest Wu

@Forest Wu

Broker dealers search you will want to find those investing in alternative investments

Happy to send you a list

BREIT by blackstone is private, not publicly traded, and is only sold by blackstone chosen financial advisors, it has 4 different class shares and most have huge load fees (1.5-3.5%) and yearly AUM fees (1.25%), and if you sell <12 months from any share purchase they charge you an exit fee of 2% of NAV price , so be careful with that one

I've invested in many syndications for passivity/market beating returns/tax benefits 

currency debasement running at 15% a year since GFC(2008), (ie M2 money supply growth) so you have to get >15% just to tread water in USA now

@Forest Wu

got it - makes sense.

it seems like, as an LP, you give up both liquidity and control. that's what makes it unappealing to me. if i buy a REIT or index fund i give up control but have high liquidity.

of course if you find the 'perfect' syndicator you get returns that will outpace the market.  but that's the challenge, right?

Quote from @Forest Wu:

Hi BP family, would anyone have recommendations on the best way to find offmarket syndication opportunities with GPs/operators that have great track records? I'm avoiding deals provided through platforms like FundRise, RealtyMogul, CrowdStreet, etc since often times those deals are the worst in terms of performance. 

Put differently, I'm assuming some of the best GPs/Operators don't bother marketing and already have a reliable group of investors to turn to. Any idea how to be a part of those specific groups? 

First, every investor has a different risk tolerance, financial situation and financial goals. So a sponsor that one investor loves will look terrible to another and vice versa.

I'm a conservative investor and so a different investor will have a completely different opinion from me (and setup). I have a a 7 figure passive portfolio in syndications and all of the deals (that I'm in currently) were found off-market (i.e. and not through a crowdfunding platform). And that's not due to lack of looking, because I wade through thousands of deals a year (and typically will invest in only a few each year).

And right now, there really isn't an option for an investor like me to go through crowdfunding platforms like CrowdStreet as they no longer have enough volume (they only have 1-2 or so deals now, versus 20-30 in the past). And I'm actually concerned for their viability and ability to survive in the future.

And RealtyMogul and Fundrise don't currently offer deals that meet my personal criteria (of sponsors who have at least a full ballistic cycle of experience with little to no money lost, low leverage, fixed-rate deals, sponsors that put high skin in the game, don't take inordinate compensation etc.). Others will strongly disagree and like these types of deals and feel they're great matches for them. And that's fine, too.

There is an apartment operator that has multiple real estate cycles of experience (decades) with no money lost, low 65% less LTV, and high 10%+ skin in the game.

They market under 506B so are prohibited from posting publicly on the Internet and instead function by referrals. So if you're interested, private message me and I can give you their details.

Forest,

Access is the hardest/ most complicated piece. If an operator/syndicator is using a 506B to raise capital, he cannot advertise. If they use a 506C, they can advertise but usually have a narrow window as they are raising capital for an existing project. That raise will include prior investors, GP partners investing as LP, and other HNW investors adding $50K to $1M to the raise. So, for many Syndicators with powerful track records, the raise may fill very quickly.

If you are looking to gain access to live deals, evaluate projects in various markets, and even access projects in varying asset classes such as value-add multifamily, industrial, self-storage, etc., then you should consider connecting with a broker-dealer group.

Broker-dealer groups provide access, due diligence review, and regulatory compliance for evaluating and participating in the syndication space.

Always interested to connect and chat.

Joe

@Forest Wu

just curious, it sounds like you've invested in syndications in the past.  is that accurate?  what is appealing about them?

@Forest Wu

Yes there is much hype about MF distress.

It’s over hyped in my opinion.

While lots of MF assets are in distress, within the total universe of MF properties, I suspect only 10% are in distress.

The truth is generally distressed properties have little or no equity in them so at the end of the day, the lender will be the one in charge.

And the lender will want to sell to a cash buyer who can write a check.

Say a lender is owed $25M on a property, buyer is underwater. The bank might sell the property for $22M provided the NEW buyer can write a check for it.

So whatever distressed assets are out there, inexperienced investors won’t be getting them. Experienced investors with plenty of cash Millions in Cash will get them.

There are tons of great syndicators out there. I agree on avoiding the big fundraising platforms..can find better deals directly with the operator.

I would start with answering the following questions:

Do you want stable cashflow or less cashflow with greater upside potential?

Do you have a preference in what market the asset is located?

Do you have a preference on asset class (multifamily, industrial, self storage, etc.)

Are you accredited?

How much capital are you looking to invest?

These are all questions that will narrow down which syndiacators to talk to.

I’m a multifamily syndicator and could toot by own horn but won’t. 😀

Check into Left Field Investors.

This is a great group of LPs who share their experiences with GPS across the country. The cost to join is nominal but well worth it.

You might also check out the Best Conference in Salt Lake City starts April 10.

LFI has a one day full day LP presentation the day before the Conference on Tuesday April 9.

This would be a great place to start your search.

Good luck.

One word of advice is you come across a deal where the GP is promoting 8% cash on cash 20% IRR, I'd be very skeptical given the current debt market.

Quote from @Forest Wu:

Hi BP family, would anyone have recommendations on the best way to find offmarket syndication opportunities with GPs/operators that have great track records? I'm avoiding deals provided through platforms like FundRise, RealtyMogul, CrowdStreet, etc since often times those deals are the worst in terms of performance. 

Put differently, I'm assuming some of the best GPs/Operators don't bother marketing and already have a reliable group of investors to turn to. Any idea how to be a part of those specific groups? 

 Every person who will reply to this post is  most likely a syndicator or fund manager (well 2/2 so far).

You can search here on BP, there are groups like Left Field Investors as well. 

Contrary to popular belief, yes good operators do market and spend money on marketing because there is so many bad offerings out there they still need to be noticed. 

As Arn mentioned about what people offer, first rule of investing is do not even look at the projected returns first. That is the worst place to start. Look at the deal, the leverage, the risk and everything about the deal, then think "what is the risk of this going good or going bad, and what should I be paid for that risk". Where am I in the capital stack. I love all the debt funds where investors are saying "first position secured liens" - well yes that is what THEY invest in, but read the fine print that states "your investment is unsecured and not tied to any of the liens".... Add that they have bank financing as well and you are an unsecured creditor behind a lender....  Review all of this and then see if it matches your appetite.

For example I have seen someone offering 40% annual returns. I look at what they do which is unsecured short term financing to companies out of money - so that could easily be 40% or 0%. Roulette is 50% so I feel like that is not worth it. On the other end I have seen deals that have no leverage, are boring but can get you 7-10%. Are you ok with that? Or would you rather take on more risk to get 12-15%. On a $50,000 investment is the extra $1000-$2500 worth that risk?

As Arn said, I would