All Forum Posts by: Arn Cenedella

I’m 69 years old and have been in the Real Estate industry for my entire adult life. I’m financially free due to my investing over the decades. 

But I love real estate and continue to help others reap same benefits I have over the years from REI.

Why do I do what I do?

It’s not all about the Benjamins…………..

A wise mentor once told me:

The Benjamins are simply a concrete manifestation of the appreciation your clients and investors feel towards you.

And while we all like to “get paid”, what’s more important to me is the appreciation my clients and investors express. That’s what really rocks my boat - receiving recognition for my efforts on their behalf. Acknowledgement that I have helped them move towards the life they want.

Yesterday, my heart was warmed by communication from three different investors signaling their approval for how @Spark Investment Group conducts their syndication business.

The first was an email from an investor who invested in a Q4 2023 deal:

I have a little cash again and am looking at some other deals but I have to say I was very impressed that you were able to deliver a distribution check at the end of January for GNBP1. I don’t know that any of my other LP deals paid a distribution quite so quickly. Thank you.

The second email was from an investor who invested with Spark the end of 2021 and more recently invested with another operator who is a friend of mine - someone I like and respect very much. However this investor did not feel the communication on that deal was up to par.

I told him he has an obligation to keep investors informed and up to date especially if he wants repeat investing and wants to gain trust. I told him you (Arn) was the best at communicating and that he should follow your (Arn) lead.

The third and final heart warmer was a zoom call with a private equity guy out of NJ who invested with Spark a couple of years ago. He has since that time invested with many other operators and raised capital for some of them.

After some social pleasantries, he tells me:

Arn, I’ve invested in a lot of deals since I invested with you. Most if not all of them have not gone well and I’ve lost money. Your deal was the best one I ever invested in. I wish I had invested with you more often.

THIS IS WHY I DO WHAT I DO!

To receive affirmation, gratitude and appreciation for what Spark does.

To clearly understand the positive impact I have brought to their financial life.

And I, of course, feel gratitude and appreciation towards these individuals who trusted and believed in me.

So it was a good day for ol’ Spark.

🙏

@Max Gabriel

Be careful of the sharks circling. 😀

Spark Investment Group has 60 years combined experience in residential real estate. We are multifamily syndicators and focus on our local market Greenville SC. We are looking for capital partners for our long term buy and hold investment strategy focused on the fundamentals. 

We aim to hit line drive base hits over and over with our approach. We do not swing for the home run.  

Happy to discuss partnership opportunities. 

Arn

@Henry Hsieh

To provide a different perspective:

I am NOT a property manager so I have no skin in this game  

But I can tell you, as a GP involved with over 1100 units and $140M AUM, good property management is a big key to successful investment. 

A good or excellent PM is worth every dollar they earn. 

If you are investing out of area and wish to build a portfolio, one needs to offload some tasks. Property management is one of them. 

What’s your time worth?

@Craig Pillay

Ok, next question. 😀

What monthly income do you need to be financially free?

Start there and work backwards. 

Arn

@Whitney Hutten

I’d be available at that time. 

Arn Cenedella

Spark Investment Group 

Greenville SC

@Craig Pillay

You face the same issue many investors face. 

Sorry to say, there is NO answer as it depends on so many factors. 

If you were to sell a property, what’s your taxable capital gain?

Do you have time to sell via a 1031 exchange?

Off the top of my head, refi than sale doesn’t make sense. You are just increasing all your transactional and closing costs doing it that way. 

I would also caution against getting too leveraged. It can create a dangerous situation. This might lean towards the sale option. 

Your decision should be based on where do you want to be in 5 years 10 years etc. What’s the ultimate goal? That should drive the decision. 

Good luck. 

Arn

@Andrew Freed

Agreed. I would rather under promise and over deliver than vice versa. The thing with long term hold approach, there is generally a real boom that last 2 or 3 years every 7 to 10 years. So if you hold long term you will probablY catch the wave and reap higher rewards than anticipated. 

@Michael Plaks

Thank you for sharing your expertise. 
I learned something this morning. 

🙏

I imagine one has to do a cost benefit analysis. 

Complicated usually means expense. So I imagine the benefits of the cost seg have to be weighed against the legal and professional fees to get it done. 

If I had to guess it might require revision and re-file of prior year returns. 

@Kristafer Nicaj

I’m skeptical you can now use cost seg on a deal bought in 2018. 

The former 100% 80% in 2023 and 60% in 2024 bonus depreciation rules were for the year the asset was first placed in service.

Get CPA advice. 

I’ll be interested to learn if one can retroactively get bonus depreciation. 

PS Gettinf REP status is difficult. Meticulous time records must be kept. If one has another job almost impossible to get REP. 

@William Coet

The returns you mention WERE fairly standard returns for MF syndications before say 2023. 

$100K turning into $200K total is a 2.0x Equity Multiple. 

$100K of that $200K is returning the original $100K investment.

So $100K is “profit” or “income”.

The $100K income will come from total investor distributions over the 5 year hold plus a shares of the profits due to an increase in value. 

Typical might be average $6,000 a year in distributions a total of $30,000 with the balance of $70,000 from increase in value.

So you might look at that breakdown, the more cash flow the less appreciation dependent the deal is. 

Also look at exit cap which is used to determine exit sales price. Should be 6% or higher. 

At the present time, Spark is presenting lower risk acquisition of completed new build MF (so not involved in construction no construction risk). We buy when the buildings are finished and certificates of occupancy are issued. 

At the present time we are projecting a 1.8X Equity Multiple. Invest $100K get back $180K. 

These are NEW builds so no value add risk or major cap ex expense. Long term fixed rate debt with low leverage 55% LTV.

Returns should track risk. 

New ground up development should offer higher returns but lower probability of success. Same with heavy value add. 

Hope this helps. 

Arn