All Forum Posts by: Todd Dexheimer

 I would say it's the opposite. Buying a duplex or small apartment teaches you very little about passive investing in syndications.

1 red flag is if they make their deal sound as if it is the best deal ever. 

Another is not having enough capital reserves. Depending on the risk of the deal, they should have 8-18 months or principal and interest in reserves as well as a renovation reserve of at least 10% above the anticipated project cost. 

Also, little to no experience, a large group of "general partners," and big growth assumptions.

Here are some things to think about: https://www.biggerpockets.com/...

This all depends on how the investment was set up. I our case, projecting a sale or refinance in 5-7 years. Typically our assets are sold, which then we distribute the principal investment back to the investors and their split on the profit. 

If we decided to keep the asset, it's because we can refinance, provide investors their investment back and still cash flow nicely. In our case, we provide the investor capital back and still share in the profits as originally split. 

Other sponsors my vary in the way they do business, so check with each sponsor prior to investing. 

Plenty of syndications take non-accredited investors. You just need to build relationships with them. 

@Jay Hinrichs 1 in 5 houses bought in 2022 sold to investors. Investors don't own 1 out of 5 houses.

Getting the money for a large MF is done with one or all of these: 

Lender: Agency (Fannie mae, Freddi Mac), Bridge, Mezzanine, etc

Private investors: Typically through a syndication or private REIT

Family Office: Typically through a syndication or private REIT

Joint Venture: Pooling your money and time with other active partners money and time

Institutional Capital: Large funds that bring a big chunk of the equity needed for a large slice of the deal

I don't believe we are going to see a crash. The US has only seen 4 down cycles with more than 15% overall price reductions over the past 250 years. The inventory is still near all time lows, there is currently a ton of equity in people homes, with most of the country holding long term debt at low interest rates. 

Will we see a slow down and maybe even a reduction in prices? Quite possibly. Interest rates and the shaky economy definitely will impact home values, but a reduction in prices causing a crash is less likely (not impossible). With that said, markets are local, so some may see a 15%+ correction. 

I've been investing since 2008 and have heard people calling for a crash since 2013. The second the market began to rise there was shadow inventory that was going to crash the market, then a double dip recession, then it was stocks go through a cycle every 6-8 years, so real estate will go down with it, then COVID, now this. Certainly, eventually, we are bound to see a crash, but most of the time it's just a small slow down/dip. 

Sounds like 2 different GPs and the way they distribute funds. We distribute a straight percentage each quarter, then have a catch up at the end of the year. Let's say cash flow says we can distribute 8.72% (annualized) to the investor, we would distribute 8% (annualized) to the investor. Then at the end of the year we would make up the difference. We do this to avoid the yoyo effect of cash flow. 

Get the money first, then focus on getting the deal. The deal never brings in the money. 

Eric, it is against SEC rules if you're receiving an ownership share for raising money and you are not a licensed broker-dealer (not to be mistaken with a real estate broker). You need to look for a Securities Attorney (not a real estate attorney)

As @John Sayers mentioned, you can get ownership with a GP by doing other things, like bringing the deal, asset management, data research, etc. Just not raising capital and I would shy away from "investor relations" or any thing with investor services and getting paid.  

There are a ton of co-GP's running around getting paid for raising money, but that doesn't mean that what they're doing is correct. It all works out well when the market is going up and investors are getting paid, but when the market softens and investors lose money, the complaints and lawsuits come in and the dominoes fall. 

Be sure you contact a securities attorney to sort through all this and get a legal opinion.