All Forum Posts by: Theo Hicks

@Steve W. Chapters 13 to 16.

Will these 3 to 4 others only bring the capital or will they have other responsibilities? If they are strictly passive investors, you will need to work with a securities attorney. The added legal costs will likely make the deal no longer make financial sense. 

If all the investors are also actively involved in the deal, it is a JV.

@Ronak Shah said it perfectly. Typically, you won't see a flat fee because that doesn't promote alignment of interest since the GP gets paid the same amount regardless of how the deal performs.

Hypothetically, sure. But just because a deal cash flows now doesn't mean it will cash flow forever. Plus, there are extra headaches that come from investing in D markets.

Profit split is cash flow above 8% and profit from sale.

A good strategy is to distribute 8% each month/quarter no matter what. Then at the end of each 12 month period, distribute the extra profits then. For example, let's say the deal cash flows 10% year 1, you distribute the 8% each month/quarter. Then at the end of 12 months, when you determine that you cash flowed 10%, you distribute 70% of 2% (so 1.4%) at that time. Keep in mind that any cash flow above 8% is considered a return of capital. So the capital balance is reduced. You can either do 8% pref on the new capital balance or continue to distribute 8% based on the initial capital balance and catch up at sale.

Also, the sales profits are the profits after all closing costs, paying back the remaining debt, and returning the investors' remaining equity.

My plan is to build up a few million dollars worth of equity from buying my own properties, at which point I will liquidate and passively invest in apartment syndications. So that is an option that is about as passive as it gets.

$30 to $50k will allow you to purchase a $120 to $200k property (25% down payment). And that doesn't even account for renovations or reserves. So I would find a market where you can by a value-add duplex for around $100k ($25k down) and use the remaining capital for renovations. Then, do the BRRR strategy to pull out some of the capital to rinse and repeat.

Check out @Joe Fairless with Ashcroft Capital. They have nearly 20 deals in Dallas and Houston!

As @Alina Trigub said, it depends on your goals. If your goal is to ultimately run a full-time active real estate business, then you probably want to continue to acquire deals on your own. But if you are trying to supplement your full-time income with passive income, then syndications might be a great avenue.

Hi Nick. It is really up to you. I know passive investors who go all in with one syndicator and others who diversify across multiple syndicators.

In regard to good qualities, I think transparency is a huge. If something goes wrong, do they let you know, how quickly do they let you know, and are they already working on a solution? 

Another is their visibility. If a syndicator also has a large online and in-person presence (i.e., writes books, has a blog, podcast, youtube channel, hosts meet-ups and conferences, etc.), if they do something shady on a deal, not only will their syndication business be negatively impacted but their entire brand as well. On the other hand, if they are fairly unknown and you cannot find a lot of info about them or their business online, that is not  good sign.