All Forum Posts by: Taylor L.

 An Accredited Investor has earned over $200k per year for the past 2 years with the reasonable expectation they'll earn that this year ($350k for married couples) or has a net worth over $1 million excluding the value of their primary residence. There are a few other more niche qualifiers as well. It's a category defined by the SEC.

@Marc S. if this is a 506b or 506c deal I'm not sure what particular regulation they're referring to, just ask them to be more specific. This may be a business decision they've made. 506(b) has a limit of up to 35 Non Accredited investors, which means some sponsors set a higher or more strict minimum investment for Non Accredited investors. This sounds like a restriction in the other direction, though. They may have set other limits with regards to what percentage of an investor's net worth they're willing to accept as an investment.

From the data I've seen, home prices in most markets are still up year over year, but are down quite a bit from earlier this year at their peak. Additionally, rates are significantly higher now than they were a year ago, so the actual cost of buying a house is higher.

The capital markets are still functioning well and debt is still available, it's just more expensive than it was for the past few years. Capital is still available for the multifamily market as well.

Did the say why? That may be a requirement the sponsor has. Reg D Rules 506(b) and 506(c) do not set such a threshold. They do have different rules around accreditation though.

Over-rehabbing is a big trap that newer investors can fall into. There's nothing wrong with fixing your property up to be the nicest in the neighborhood, but fixing it up to the point where it's totally out of place is a mistake. Your property's value will still be based on comps in the area. 

It's not necessarily a given that just because this area is next to an improving area that it'll improve as well. That is a positive trend, but there are many factors beyond proximity that'll determine whether an area will grow or stagnate. 

You can buy real estate using Self Directed retirement accounts. Self Directed IRAs and Solo 401ks are the most common vehicles in this space. There are a number of caveats, however. Your self directed retirement account has to act as its own entity, separate from you - you can't mix your money with your retirement account's money, for example. The term to research in that regard is disqualified persons.

There are a number of other considerations as well, such as Unrelated Business Income Tax (UBIT). Dig into that too.

The changes in the market have more investors 1031ing into syndications using TIC arrangements as well. DSTs aren't the only passive option for 1031s.

Michael Blank's SDA is a good tool if you're just getting started. Established teams will almost always build their own proprietary underwriting spreadsheets which they won't share around. Michael's is popular and reasonably affordable.

Are those investors going to be totally passive participants, or will they have an active role?

If passive, the most common route is to syndicate under Reg D Rule 506(b) and use an LLC to hold the property. Active participants get one share class with voting rights and control, passive investors get another share class without voting rights or control.

It's also a great reminder to always have a long-term focus. The pundits are constantly focused on today, this week, or this month. They're not telling you to build a robust strategy and focus on growing your wealth over the next 5, 10, 15 years. It's always about right now.

Have you checked Meetup.com as well? That's the best online source I've found for in-person real estate networking events.