All Forum Posts by: Christopher Nemlich

Two of my colleagues and I (all accredited) are interested in combining our funds to gain greater diversity across more syndications than we could individually. Could anyone advise on the proper way to structure this based on their experience? 

@Brian Burke @Brock Mogensen @Chris Salerno

Thank you all for the helpful responses. What is the typical investment minimum found for deals through these direct (i.e. not through crowdfunding sites) syndicators?

@Chris Salerno You suggested identifying a market first before finding a syndicator, but it seems unless I'm investing in my own market then market is less relevant than perceived strength/experience of the syndicator and strength of the investment itself. Am I thinking about this incorrectly?

I'm looking to diversify into real estate but need to remain fairly passive given my day job. I've started off by putting a turnkey duplex under contract that will close this week, but the more I look at it the more I think turnkey won't give me the scale or upside I eventually would like. 

This brings me to syndicated deals. I've looked at a few crowdsourced websites like Crowdstreet and Cadre, but I suspect the best deals are not found through those public forums. Any advice on how to get started in this area? 

A policy like this doesn’t sit well with me. If the provider feels they have fairly priced a property they should at least be willing to let you walk away from it if it under appraises, or move you to another property of theirs that will appraise to price.  

@Bryan Noth Let me try to clarify a bit. J Scott's article only considered the cashflow portion of return, not the appreciation gains as well. My point is there may be times where taking negative leverage makes sense if you have limited capital to hep expose you to great OVERALL return when including appreciation. That said, if you're banking on appreciation it's high risk to begin with obviously. 

@Bryan Noth That makes sense. I suppose the over time discussion comes down to whether you look at it as a single decision point that happens at the beginning of the investment or a daily opportunity to make a different decision at any given time. 

Do you feel adding negative leverage makes sense to expose you to more appreciation? Obviously that comes with more risk.

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Reading J Scott's post here got me thinking a bit deeper about when and when not to leverage. 

It's particularly relevant to me currently as I am currently self employed, so stuck with interest rates in the 6.1-6.6% range. I estimate my loan constant at 7.3%. Based on this, for any property with a cap rate >7.3% I should aim for as small of a downpayment as possible and for anything <7.3% cap rate I should put as much cash down as possible. It would be nice if it were this simple, but I don't think this properly accounts for other benefits such as interest deductions or potential appreciation gain. Would it be proper to compare the loan constant against (Cap Rate + Appreciation assumption) instead? 

Secondly, I found an article here that suggests that what starts as positive leverage through financing becomes negative leverage over time, but I'm not sure his math is correct. Any thoughts?

@Account Closed Thanks, I will take a look. 

What I'm really trying to get at here is a bit less about out of state v. in state, but rather the best ways to deploy my capital to maximize my returns. I want to avoid spending it all to get 5-6 doors and then be stuck while I wait for cash flow to accumulate for the next.

 25-40k Is my approximation of a 20-25% down payment plus closing costs for turnkeys in the 100-200k range.