All Forum Posts by: John Sayers

Cool I do quite the same. Mine has automatic color highlights if a payment is past due so if no red flag, nothing to review.

Know Bruce P in Austin? He MAY have some general info based on a 2020 deal in Nashville TN. Not sure if he did that deal but it did include 3.34 acres and a foodhall.

"It's unreasonable to expect the GPs to significantly come out of pocket on the front end of deals as there are plenty of expenses involved in
acquisitions, due diligence, asset management etc."

Yes, due-dill reimbursements for sure. I see the out of pocket due-dill items routinely reimbursed at closing. Some sponsors then take additional acquisition profits/fees/income day one; depending on size of deal, they have been over $500K in profit. If the deal flops flat day two, only one party walks away much better off financially than before.  Do 4 or 10 a year and the incentive seems it could focus one to be doing new deals, for the addictive injection of $. The AM fee keeps the lights on, and good operations rewards everyone if the business plan and execution are solid. Bad plans or poor execution don't warrant any reward.

I find it interesting that some investors leave public markets and fat hedge funds in search of better aligned options and yet ignore that some private equity groups use every last fee they can find to milk a deal that results in structures that are quite like what they were leaving. One's where the GP can almost never lose $ but the LP has it all on the line. An almost taboo topic where most advisors are the GPs doing the education of new LPs.

New passive investors should note fees like the Disposition fee for example. It is one item that could simply just be part of the splits/waterfall. The fee is also not always worded to protect the investor in a weak or bad deal outcome. Some docs are written to reward a GP even on a losing deal, and yet it gets overlooked. Additionally, the norm of using a percentage vs a flat rate reasonable fee for the efforts, seems a Wall Street type remnant.
Ultimately new passive investors should be aware of if there are too many seemingly "small" percentage fees when comparing different deals. Prefs and waterfalls cannot be compared from deal to deal without also considering the fees sizes, # of fees, type of fees and the OA distribution rules which can impact the numbers, and the risks, quite differently.

Good info. I 2nd this 100%; "Spend the time to understand the structure of the specific deal you are looking at and be sure to ask as many questions "

As a passive investor, be sure to also know the diff between "Return on" and "Return of" capital. That 1 letter has a potential to make a big difference to your net return, overall risk position and how aligned the "alignment of interest" actually is.

I'm on very passive side. I have invested in partials & funds. I do not buy notes directly, nor manage directly etc.

Key is the operators that I'm partnering with. They must be credible, honorable, skilled/knowledgeable, then the deal/fund parameters come in to play.

Best to ask a SEC attorney. Presuming not your deal, or employee of the sponsor; what other active role (other than raise $) will you have in the deal? That is a question you may need an answer for if interviewed by SEC.

The SEC lawyers I know of generally say that raising $ for others requires a license, unless, you can find an exception to fit under. Acting like a broker dealer is scarily common. A ton of questionable money raisers are running around as "co-GP", but do they "really" co-GP or is it a shell title with no authority nor a legit role outside of raising $ for a cut? One day the SEC my let them know the fine when they investigate a deal that has a complaint of some sort. 

There was a concept query of public (2021?) by SEC on allowing some transaction-based compensation, but no idea where it landed.

They are doing a 300+ unit multifamily complex in Williamson. Wonder how many projects in area.

At what point do the investors say "this is a bit much", "wish it would slow" or "my good tenants are being crushed". Complicated but...just seems less community minded than before in some cases.

Meetup is the site name.

I THINK it is back now and held every 3rd Tuesday of the month The Brewtorium 6015 Dillard Cir A · Austin, TX
I've not made it to new location but check the meetup site for Austin Multi-Family Active and Passive Investing Group.