All Forum Posts by: Spencer Gray

Nice work, Danny! My goal for the year is to purchase $100M of CRE assets via syndication.

A more recent goal is to attend 10 conferences / industry events before the end of the year. 

Hey Nick,

I'm always happy to connect with like minded individuals. I'm also interested in hearing about your marketing company. I invest in and sponsor multifamily deals in the Midwest. 

At the end of the day lenders want to make sure there is someone in the deal with deep enough pockets who can theoretically make things right if needed. 

I love California but could never live there. The tax and regulatory environment is a deal killer to me. Coming from Illinois it won't be as much of a shock but still. That and I could never settle for 10 round magazines... 

The preferred return in many ways is a measure of perceived risk and the premium paid by the sponsor to the investor for that risk. The higher the preferred return the higher level of perceived risk. That risk is mostly related to the experience of the sponsor just as @Andrew Hogan explained. 

A preferred return doesn't make as much sense in deals where there is no or very little cash flow in the the deal such as a new development or a very heavy rehab/reposition. There still may be a preferred return as LPs want some idea of a minimum return on their equity even if it is accruing not not actually being distributed. In these deals instead of a preferred return there may be a series of waterfall hurdles bases on the IRR of the project. This is often more useful from a sponsors perspective since there is no pref being accrued and the splits are based on the eventual disposition or other capital event.

I'm not as in touch with properties in the 20-30 unit range but larger assets (100+ units) are trading in the low to mid 6% range. You may see some in more B locations trading in the high 5%, low 6% range. 

Off market deals can be a little better.

It depends on the size and market but most importantly your tolerance for risk. 

I prefer cashflow day 1.

Why not invest in an asset in appreciating market that will provide the best risk adjusted ROI and when it's time to retire he can sell/refi and then decide where he wants to live?

The two main reasons are: 

1.) Take emotion out of investing. If your dream retirement home is also your investment property you are likely to make decisions that you otherwise wouldn't if it was a pure investment. These decisions probably won't be smart ones. The goal should be to be set up for retirement in the terms of financial freedom/flexibility not just a place to hang your hat. 

2.) 10 or 20 years is a long time to know where you'll want to be. 30 years is (like you said) a really really really long time. Ideally your friend may be a bit more well off and would like to retire in something nicer than a $100k condo. Maybe he won't want a condo at all. If his family has grown (kids, grand kids, pets, etc) he may have different needs than he does now. 

All I know personally is that I have no idea what my wants/needs will be in 30 years.

@John Corey Thanks for your insight! I definitely agree that CF does not nor will it replace traditional methods of syndication. I do see it as an avenue to create broader access to opportunities that traditionally have been sequestered to the country club house or other similar groups. That's all great and is the bread and butter of the industry, but there's a much larger swathe of the population that would invest in real estate if there was an easy way to access the deals. 

If you continue to invest you run the risk of loss. That being said larger multi family deals operated professionally have one of the best risk adjust returns of any asset class.

If you put your money in a bank you absolutely will loose purchasing power via devaluation of the dollar.