All Forum Posts by: Paul Moore

Hi @Jacob Rosenkranz if you find a great forum where there is a lot of discussion about operators, you should be able to get feedback about this particular operator. If you are not finding that, perhaps it is not a red flag but maybe they are a new side. I would absolutely not trust an underwrite that assumes a further compressed cap rate. While that could happen, that is a HUGE red flag in my opinion.

I would recommend you check out the private investor club at the Real Estate Club Crowd Funding Review to help you vet passive income opportunities. You can also check out Jim Pfeifer’s Left Field Investors.Third I would buy @Brian Burke's wonderful book The Hands-Off Investor. This BP book is a gem in helping people like you vet passive income opportunities. I think that these resources will give you a lot of insight and help you with learning about the operator selection process.

Happy investing!

Hi @Chris Clothier. You have gotten some great responses above. You may want to start looking at the different investment options and which path suits you best.

I would recommend you check out the private investor club at the Real Estate Club Crowd Funding Review to help you vet passive income opportunities. You can also check out Jim Pfeifer’s Left Field Investors. Third I would buy @Brian Burke's wonderful book The Hands-Off Investor. This BP book is a gem in helping people like you vet passive income opportunities. Good luck! 

@Steven Rosenfeldcongratulations on your success so far! You say you do not want to work for anyone again…then I would certainly NOT recommend actively acquiring residential or commercial real estate. It is a job and it often doesn’t pay well 

I would recommend you check out the private investor club at the Real Estate Club Crowd Funding Review to help you vet passive income opportunities. You can also check out Jim Pfeifer’s Left Field Investors. Third I would buy @Brian Burke's wonderful book The Hands-Off Investor. This BP book is a gem in helping people like you vet passive income opportunities.

I agree with some of the folks above who said diversification is key. There are ways to get diversification by investing in a diversified fund, however, if you decide to use some of the money in IRAs you could certainly construct your own diversified, passive portfolio. It seems like you are in a great position. Best of luck!

Hi @Brian Cassanego. Congratulations on your success so far! As was pointed out above, you are in a great position but not maximizing the use of your equity. The 1031-exchange would be a great option, but it would still mean you are active as an owner and property manager. If I was in your shoes, after investing in real estate for a few decades, I think I would sell the asset and spread your money across several syndication deals. If paying the capital gains tax on that is too painful however, you could sell it and do a 1031-exchange into a Delaware Statutory Trust. A vehicle like this will maintain your 1031-exchange but allow someone else to take over the headaches, hassle, etc and provide you a moderate and stable return. Another option would be to sell your property and invest in a syndication with a very steep depreciation curve. We have invested with mobile home park operators who provide huge paper losses in year one and that could help you a lot if you decide not to do a 1031-exchange. My two cents. Happy investing!

Hi @Vishnusai Yoganand, you got some great responses above. I am going to take a slightly different tact here.

You didn’t say if you plan to do this full time or not, however, I assume by your later comments that you do not plan to start out that way. After talking to about 2000 investors over many years, I really believe that this is a difficult time to start out part time and do so profitably. You are swimming with sharks. There are many investors with years or decades of experience who are bidding on the same properties you are. It is very likely you will overpay and you could make some big mistakes. Now there is nothing wrong with making mistakes. I even had a podcast for 4 years called How to Lose Money!

Anyway, I would highly recommend getting a paid coach or mentor if you are going to go down this path. Or, investing in a syndication and learning all that you can. If you have a profitable career, a family, hobbies or anything else it will be extremely hard to do real estate on the side and do it very well and starting out now. However, if we go into a recession and there are deals to be had and you have cash that could be a different story. 2009 through 2012 were some of the best years ever to invest in real estate. Feel free to PM me and reach out if I can help you in any way. Happy investing!

 @Nathan GesnerI wholeheartedly agree! Hi @Jason Reinhardt, here is a funny little story. I built my first multifamily facility in North Dakota in 2011 and the next one the following year. After several years in the multifamily arena I promised my wife I would never do anything else. I am in my 50s and I have been investing in real estate for over 20 years. I wrote a book on multifamily investing and even dared call it the The Perfect Investment . But after years of banging my head against the wall with similar experiences to yours, we switched to self-storage and mobile home park investing. There is so much more upside and if you can acquire the right facility it is likely to be quite profitable. Not all of them are. PM me if I can assist you and feel free to check out Storing Up Profits, a BP book that was published last year. Happy investing!

@Duke Giordano Great question and you got some great replies from some pros above. I agree with you that in times like this it makes a lot of sense to be more careful. The problem in part is that it’s hard for most retail investors to tell the difference between a lucky amateur and a professional right now. Both are doing so well. But there’s going to be a day when the tide goes out as Warren Buffett says, then we’ll see who is skinny-dipping.

We were not as successful as Brian and Todd at finding great value add acquisition opportunities in the multifamily realm. As a result my firm expanded into the Self Storage and mobile home park arenas. The benefit of this is that there is often a lot of meat on the bones. A lot of upside that could be harvested that was left on the table by mom and pop operators who owned before. This ever growing margin of safety between net operating and come and debt service, also known as the debt service coverage ratio, provides a wonderful buffer in uncertain times. Good luck!

Thanks @Bryan Mitchell!   Yes, @Mason Haley please PM me and I will be glad to help you in anyway I can.  

As someone who is about to enter my 4th decade as an entrepreneur, I would remind you @Steven Barr the importance of keeping a big WHY in front of you when you are starting out all the way to the end of your race. I recommend donating generously to causes you care about before you set money aside in savings or anything else for that matter. I actually wrote about this in my very first BiggerPockets article in 2017: How My Journey Out of $2.5M in Debt Inspired Me to Live a Charity-Focused Life. Happy investing!

@Eli Shicker great question. I think you got some real good answers above. One thing I want to point out is that the acquisition fee can take a large toll on the equity. It’s sort of like a front-end load on mutual fund. 

For example, if the acquisition fee is 3% of the purchase price, that night not feel too bad. But consider this: if the leverage is 75% that means the acquisition fee is really 12% of the equity. When you add on other closing costs and fees, this becomes a big burden on your investment. I do believe that syndicators and fund managers should be paid for their efforts, but sometimes the toll on investors is just too high. Happy investing!