All Forum Posts by: Taylor L.

This really bothered me when I had a FSA. I much prefer an HSA. Huge tax advantages with HSAs.

I'm not sure that there are any bad options there, and it's not as though you'll be constrained to invest within a 10 minute drive from your house. Wilmington isn't necessarily close to Charlotte, but you can easily bounce from one to the other for a weekend (for example). 

I'd focus more on general quality of life and where you'd rather live. You can be successful in real estate from any of those markets. 

- Markets: There are a lot of great markets around the country, rather than name markets I like and invest in, I'd recommend that you learn what makes a great market then pick one and dig deep. Get to know it like the back of your hand. Get networked with investors, wholesalers, property managers, and other service providers in the area. All of that will build your foundation so you're knowledgeable, well networked, and ready to roll on deals.

- Viewing the property yourself is great, but getting an independent 3rd party's opinion is even better (like a contractor). If you have an agent involved you can get them to Facetime you and walk you around to see the property. 

- Get off market deal flow coming your way. Don't just look at properties that are listed on the MLS. Get on wholesalers' marketing lists and start analyzing! Be wary, though. Wholesalers' estimated repair costs can be wildly underestimated.

Great points @Chris Seveney. Debt funds in particular generally have more liquidity provisions than equity funds, meaning investors may be able to exit early.

Quickbooks is a classic and most CPAs/bookkeepers will be familiar with it, when you get to the point that you're hiring that out. 

Wave is free but lacks some important features, you may consider that.

Keep putting one foot in front of the other! That's how it builds.

Sharing a few common misconceptions I run into when discussing syndications with passive investors. Funds have gained popularity in the last 4-5 years, but the content & thought leadership around them hasn't quite caught up. They're more open-ended than typical single asset syndications, where fund managers may have the option to continually raise capital and acquire assets which have not yet been identified. 

Misconception 1 - Fund Investors cannot receive depreciation, but single asset syndication investors can - This misconception may arise because REIT investors do not receive depreciation, but REITs are very different from syndicated funds. This is always subject to your fund's specific setup, but most syndicated multifamily funds and one-off syndication deals will pass depreciation pro rata to members, cost seg and all. Always read the documents!

Misconception 2 - All funds are 506c deals - There are operators out there doing 506b funds, you just don't hear about them because they can't be openly marketed! Reg D Rule 506b does not require sponsors to obtain 3rd party verification of investors' accredited status, which saves some cost & complexity. The corresponding downside is that you can't publicly advertise and must have a pre-existing substantive relationship with investors. 

Since funds tend to be much more open ended, 506(c) allows sponsors to publicly advertise & accept capital from accredited investors who they do not have a pre-existing substantive relationship with. Their ability to raise capital is typically much less constrained in that case.

To the other syndicators, operators, fund managers, and capital raisers out there - what common misconceptions or areas for teaching do you run into with your investors? 

Both cash flow and appreciation are keys to my investment strategy. But not just market appreciation, forced appreciation. Buy for cash flow plus upside potential which you can drive (rather than just waiting for the market to appreciate). Then you can refi, sell, do a 1031, etc.

Here's an article which may help: https://www.advantaira.com/sel... 

It could help to speak with a custodian and see what's involved. Self Directed IRAs can incur UBIT (Unrelated Business Income Tax). It would be good to find out if Self Directed ESAs do as well, I don't have information on that but perhaps one of our custodian members can chime in and advise.

@Henry Clark the idea of Federal Reserve independence is supposed to ensure that the Federal Reserve doesn't pay for reckless Federal Government spending by adjusting rates to help the Federal Government pay its debts or to spend more. Tying interest rates to Federal Government debt load in any way will be bad news for anyone holding dollars or Treasuries. If the system works as it's supposed to and the Federal Government's debt load gets too high, then taxes will have to go up.

Here's interesting testimony to Congress of a Vice Chair of the Fed during the Great Recession.

Interesting Excerpt:

"History provides numerous examples of non-independent central banks being forced to finance large government budget deficits. Such episodes invariably lead to high inflation. Given the current outlook for large federal budget deficits in the United States, this consideration is especially important. Any substantial erosion of the Federal Reserve’s monetary independence likely would lead to higher long-term interest rates as investors begin to fear future inflation. Moreover, the bond rating agencies view operational independence of a country’s central bank as an important factor in determining sovereign credit ratings, suggesting that a threat to the Federal Reserve’s independence could lower the Treasury’s debt rating and thus raise its cost of borrowing. Higher long-term interest rates would further increase the burden of the national debt on current and future generations. "

Don't expect the Federal Reserve to bail out the Federal Government with low rates. If they do then it'll only get worse.