All Forum Posts by: Jim Pfeifer

This all seems very strange - did you ask the GP why they are offering to buy you out?  Are they giving you 12% from April 22 until now?  Just the fact that the deal is underperforming because they didn't underwrite correctly and they are offering to buy you out - I don't think I would want to be part of that deal.  There are plenty of other operators out there who will be better stewards of your capital.  I would take the offer and move on!

@Tyler Sorensen These days you don't need to find just local people - join a Community of investors who are investing in real estate syndications and you will shortcut your learning process.  It's likely you will find some local people in the group, but I think the key to success in passive investing is finding like-minded people to share experiences.  Real estate syndications are long term, illiquid investments completely out of your control.  The best way to avoid mistakes is to learn from those who are already doing it - that's where a Community is helpful.  You can't walk out your front door and talk to your neighbor about real estate syndications - they will think  you are crazy!  I have become a much better investor - with much better results - since I found people to share experiences with, both local and online!

@Ibrahim Ahmed I am not a tax professional or legal professional but I can share how I have handled this. I have invested in over 100 syndications and almost all of them have been through various LLC's. This isn't necessary, in my opinion, especially when investing on your own but I had an LLC so I decided to use it.

1. If you group capital together with others with the intent to invest - some syndication attorneys will call that a security. I use Tribevest when investing with groups, and they have a voting feature that I think makes everyone equally passive and active in the LLC, so that covers the SEC issue. Consult your own attorney!

2. I have found that using an attorney, CPA or other professional is worth the extra cost. I hire professionals to do professional things that are outside of my expertise. That said, Tribevest makes it easy to invest with a group. I am in multiple tribes for many different reasons, but the bottom line is - when investing with friends or family - I haven't found a better solution. Tribevest will set up the LLC and register it with the state, they will set up your business bank account, allow voting, messaging and storing of documents. They are even working on doing the LLC tax return and sending out K1's. They make it really easy for people to contribute money to the LLC directly from their bank, so you don't have to handle anyone's money or chase people down to get their money into the LLC.

3. These LLC's are pass through entities so the only issue is that you will get a K1 from your investment and that K1 will be sent to the LLC your created. Then you will need that LLC to file a tax return and send K1s to the members. So it adds a layer of K1s. I recommend anyone who invests in a syndication be prepared to extend their tax filing, but the extra layer makes it more likely. I haven't always had to rile extensions, but sometimes operators send late K1s.

4. I don't think there are downsides - if it's a group LLC, it adds some friction in the form of K1s and decision making, but the main benefits of group investing are reducing minimums, increasing diversification and becoming a better investor because you are learning from your peers as you go!

Good luck!

The most important decision you will make as a passive investor in real estate syndications is the partners you choose to manage the assets for you.  There are many ways to find quality operators, but I haven't found a better way than using your network and a Community.  When I started out investing in syndications, I went to a conference and started investing with people I met there - not a great way to vet operators.  I then decided to listen to podcast and read books in order to find quality operators.  This was a better approach, but not much better.  I struggled to discern if someone was a great asset manager or a great podcaster/marketer.  Now, I only invest in a new (to me) operator is they are introduced to me by someone I know, like and trust who is a member of my Community and they have already invested with the operator.  Trust transfers.  I still do the same due diligence on these sponsors, but I am starting many steps ahead of where I was in my previous approaches.  

Investing in real estate syndications is much different than buying small multifamily (I used to do that as well) - these investments are illiquid, long-term and completely out of your control.  If you choose the wrong operator, you are stuck with them - you can't sell and you can't control the asset.  For this reason, a Community is essential to your success - you can collaborate, share resources and knowledge, and learn from others.  Bigger Pockets is a great place to start.  There are also several Communities focused specifically on syndication investing.

Good luck!

When I was first starting out, I did not have a good way (and I didn't understand how important it was) to find quality operators for my syndication investments.  I ended up investing in a few deals that I would never invest in knowing what I know now.  One of the things several of those investments have in common is I was investing in an operator who had excelled at one thing and was now doing something new.  One operator was a single family home operator and made a pivot to office.  Another was a turnkey advisory company who started lending to cannabis operators.  These investments did not end well for me and are the only ones I lost money on.  What did I do wrong? First, I didn't have a way to find quality operators so I wasn't investing with the best in class operators.  Second, I was a guinea pig - they were doing something new and thought that their other real estate experience would transfer.  It didn't and I lost money.

What I learned was I needed a better way to vet operators.  My first few investments I made with people I met at a conference - I just assumed because they were there, they must be good.  Bad assumption.  When I realized this wasn't the best way to find operators, I started reading books and listening to podcasts to find operators to invest with.  This was a much better approach than throwing money around at conferences, but I still had no idea if someone is a great podcaster and great marketer or if they were a quality asset manager.  I had better results with this new approach but it was still not the best way to find quality operators.  Then I started working with my Community to effectively crowd source operators.  We would share information and compare notes.  Today, I don't invest with a new operators unless they are introduced to me by someone in my Community who I know, like and trust AND that person has invested with the sponsor.  I still do all of the same due diligence on the sponsor but because I trust the person referring me and they have experience with the operators, I am starting the process many steps ahead.  Trust transfers.  This is the same way I find a new attorney, CPA, plumber or any other professional I hire for something.  I don't go to the yellow pages - I go to my Community and ask them.  The difference in my investing results has been clear - I find better operators this way.  Will every deal work out - nope.  That will never happen, but at least I am working with quality operators and that makes all the difference!

This has been a huge headache for me for a long time!  I started out using Excel, but once you get beyond 10 investments it gets complicated.  I have several Excel sheets talking or more accurately, arguing with each other and it's chaos.  We tried to develop a web-based tracker and we had some success but it just wasn't good enough.  Then we found Vyzer.  It's a great tool for managing real estate syndications - and it can handle standard wealth management tracking as well.  

Vyzer was developed by a couple of guys who had a tech exit and starting investing in syndications and they had the same frustrations we all do - how do you track all of your investments.  They looked around and found out that this problem had not yet been solved.  They ended up building a tool that is optimized for passive investors in syndications.  I have been using the tool since last May and it has been a game changer.  They are incredibly responsive to feedback - I sent them a six page Word doc with change requests and they have implemented (or are working on) most of them.  

Their solution is very comprehensive as is the reporting and forecasting functions - but best of all it takes about 2 minutes to enter a new investment and about 15 seconds to enter a distribution.  

As you may have noticed, I am a big fan!

@Percy N.

I think it's a lot easier to keep current than my Excel files!  You are correct that I don't think a vast majority of syndication investors will use something like this - but if you are in more than 5-10 deals, it can certainly simplify things.  I haven't used many of the other features, but it could replace the wealth management tool people are using to track all of their investments.  I think that's one of the big benefits is that you could have all of your finances/investments in one place.

@Paul Moore @Randy Smith

I have been using Vyzer for over six months and it is fantastic! It is much better than my Excel spreadsheets - it gets very complicated to track everything in a spreadsheet.  We tried to develop our own web-based solution with this and it just wasn't good enough.  Then we found Vyzer and have been very pleased.  I have given them pages of feedback and they do a great job of incorporating recommendations in updates to their platform.  The Founders of Vyzer developed this platform specifically for passive syndication investors - it's the first tool like this that I have found - but you can also use it for all of your wealth management.  

I agree that the cost is higher than you might expect, but with the number of deals I am in - including the group investments I have - it makes sense for me.  Distributions take about 20 seconds to enter and a new deal takes just a couple minutes. It's a time saver for me and that makes it worth the cost!  This is designed to be the only wealth management platform you will need and I think if you look at it that way, it might justify the cost for you.

I assume you are looking for operators and funds to invest with passively in real estate syndications?  If that is what you are looking for, you are correct that the most important part is finding quality operators.  But before you do that, there are other factors you need to think about when picking the operator.  What asset classes are you interested in? What markets? Are is your accreditation status? Are you investing for cash flow, appreciation or a combination? Are you looking for long term or short term opportunities?  These questions and more should be answered before you start searching for operators because you will want to connect with different operators based on your answers.  The operator will always be the most important part of the equation, but you need to factor in some of these other items into your process.

@Barry Fuchs

That is a very difficult question to answer not knowing your situation.  Are you looking for cash flow or appreciation?  Do you want a quick return of capital or a long term investment? How much risk do you want and what type of return are you looking for? What asset classes are you currently in? 

It's hard to make a recommendation not knowing some of the above questions, but much of this is what is discussed in passive investing communities once you get to know the people in the group. BP is great for active investors and general advice but to be a successful passive investor I think you really need to be part of a Community.  You can share and learn from others' experience and your path will be much quicker and likely more successful!