All Forum Posts by: Joe Archbold

100% agree but its all about Cash Flow and your time.

Going from SFR to small multifamily is one step. Scaling into large Multifamily is another. Large MF is done via a Syndication and you are on the General Partner side or the Limited Partner side (Passive Investor). Unless you plan to operate or run the deal with your name on the note than the Passive Side is a great place to start.

Passive side LP enables investors to free up time investing with others.

It also allows you to leverage the expertise of the operator and access their markets.

There is no right or wrong both SFR and MFR can be profitable. But you have to consider what your time is worth, and diversifying into other assets in other markets might be a smart play in 2023.

Both a Syndication and an SFR can generate good cash flow. I issue I have with an SFR is your occupancy is either 0 or 100%. I have had too many conversations with investors that got hurt by a bad tenant in their SFR that really set them back.

I actively manage my own real estate made up of 3,4,and 5 unit multifamily units in my market. I also invest in syndications in high-growth markets with experts that can provide a good risk-adjusted return with no active involvement.

Both can be profitable. But for me hands down I would push into a deal with an expert and invest my time in other ways.

Greg,

Congrats on the planning to move out of your W-2. I think many investors feel the need to be active, and nothing wrong with that. As you know true financial freedom comes with creating more free time while your money works. For me I invest in my local market as an active investor in multifamily. I also invest passively through syndications in strong markets with experienced operators with proven track records and access to strong assets.

Do you plan to invest in Seattle area? Some syndicators are returning investments and profits of 2X invested money in 2- 5 yrs. And some are 506B meaning that you do not need to be accredited.

What if you invest now, put your money to work while you determine what type of asset, connect to R/E brokers or prop management companies that may source good deals, and determine what market and learn.

good luck.

Investing as a Passive investor first will enable you to learn about the investment assets, the operators and their strategy to meet the objectives of the project. It will also enable you to earn some revenue while you learn.

After that, your decisions may become more clear. I would also find a mentor or a mastermind group once you are ready to shorten your learning curve and provide access to their network.

Good Luck,

Joe

Sheri,

There are larger experienced syndicators that will 1031 into a LP position that are offering preferred rates to 10%.

I will forward you my contact to better understand your objective.

Regards,

Joe

There is alot of details here and to not get too far into the why, here some detail from FINRA regarding private placements and Reg-D 

Firm Guidance – Private Placement Filings | FINRA.org

Regulation D lets companies doing specific types of private placements raise capital without needing to register the securities with the SEC. The cost to register with the SEC would make most offerings even more expensive and less accessible. And although they don't have to register they do have to file their PPM and be compliant to the rules.

Ethan,

@Peter Albanese is correct, it is really about your time and how active you want to be. I have met more people that are no longer in real estate because they bought 1 unit and it went bad. Today the market is full of challenges related to interest rates and values. 

The Earn while you Learn approach is a good one. Invest with an experienced syndicator and learn how it is structured and make money along the way. Or get a broker that you trust to launch your active investing efforts.

Comparing the two is very difficult. Every investment varies especially in SFR market.

Conversely, syndications in value-add multifamily will target close to a 3-5yr hold and return almost 2X equity multiple and you will have significant tax benefits. They will assist with a 1031 into the next deal if needed. You can rely on an expert to find the asset, run the project, create value, driving up rents and reducing costs, working to meet/exceed investor expectations.

And there are very experienced syndicators that have non-accredited projects that take $50K.

Good Luck

Joe

 100% agree with @Melissa Robbins, What is the track record of the operator? How many full cycle deals have they done?

Are they new to a particular market or do they have extensive expertise operating there? Are they getting off-market projects?

Do they have their own property management and construction for renovation, or are they outsourcing this?

I am less concerned about their fees if they are in line with industry, but I want to know they have skin in the game and align with investors.

Lastly in this market, I would want to hear about their financing strategy, How leveraged they are on projects, and how conservative their underwriting is based on projections.

Wow. sorry fellas not sure what happened with the font above.

@Paul Moore,@Joe Villeneuve,@John Morgan its funny how he has always been a big proponent of paying off your house. With rates this low its hard to argue not using some amount of leverage as your money can do better elsewhere. Maybe it makes sense for the reason that you personal residence is really just an expense/liability not a true investment.