All Forum Posts by: Todd Dexheimer

By reading what you're looking for it sounds to me like passive investing is the best way to go. I would look into syndications, debt funds, hard money lending and even NNN lease commercial.

Before buying your own SF, duplex or apartment, ask yourself how much of your free time do you want to spend on the rental business? Are you wanting to jump on a plane to visit the property and meet with property managers? Are you wanting to be on asset management calls and dealing with issues that arise? Even the best turn-key properties will take up your time and energy. Also, the cash flow on out of state smaller properties is no better than a syndication. It looks good on paper, but then the real expenses hit. At least that's been my experience with the properties that I have owned. 

No one direction is perfect. They all have risks and rewards. 

You're not looking to replace your job and make really good money, plus you live in an area that isn't ideal for buying locally. It sounds to me like investing in syndications is the best way to continue. 

Before buying your own SF, duplex or apartment, ask yourself how much of your free time do you want to spend on the rental business? Are you wanting to jump on a plane to visit the property and meet with property managers? Are you wanting to be on asset management calls and dealing with issues that arise? Even the best turn-key properties will take up your time and energy. Also, the cash flow on out of state smaller properties is no better than a syndication. It looks good on paper, but then the real expenses hit. At least that's been my experience with the properties that I have owned. 

My suggestions: 

1. Raise money and do your own deal, but be sure that those investing with you know that you don't have experience. Find excellent property management, mortgage broker, attorneys, contractors, CPA's, etc. Better yet, find a boots on the ground partner. The type of property you're targeting is lower risk and your return expectations are low.

2. Purchase a smaller multifamily that you can get into for $1.5-$2.5mm. Use your money for a down payment and learn the ropes a bit. I would purchase something that needs some light renovation, like paint and flooring, so you can experience some renovation. 

3. Find a GP doing deals in your desired market and partner with them. Make sure they're letting you take a role in the business. 

I'd be surprised if that is even close to being accurate. Syndication has been around for longer than anyone alive. There are tons of companies that have been around for decades that syndicate, but you've never heard of. If there is a 70% number, possibly it is for syndicators using crowdfunding. 

It sounds like you're doing well in your business. Why do you want to take time away from growing that further to buy real estate? I would think back to what the last 6 months of your life have been like and what the next 6 months+ will look like. Think about how much free time you have and whether or not you want to use that free time to grow a real estate business. Is your time better served growing your current income? If you answer that you'd like to be a full-time real estate operator, then by all means, get into and buy your own deals. If you're doing it for passive income, because you know that real estate is a great investment, then look into passive ways to invest. Some good passive ways are investing in a syndication or fund, buying notes (semi-passive), buying NNN lease (semi-passive).

Sounds like you've been setting up your deals improperly already. If you're growing and taking OPM, please use an attorney. There are already risks, don't make legal and tax issues be another risk. Use a securities attorney and get things set up right. 

I would say that investing in syndication is the definition of a real estate investor. Purchasing your own deal would make you a business owner and a real estate operator, but not an investor. 

@Tim Swierczek my thoughts exactly. I'm not sure what fundamentals anyone from out of state sees in the Twin Cities that would drive them to invest in the market. It makes sense for local investors due to proximity. It's a slow, stable market, with little risk (besides rent control), but certainly not an emerging market. 

$500/month is super cheap for a quality group. My guess is that the group is newer and they're trying to expand, which is why the price is so cheap.This sounds like a mastermind, which typically are going for well over $15k/year. 

 As a GP, if you do it correctly, you can make $1-$5mm+ off of a $50k+ investment. Plus you can make your LP investors a bunch of money as well. 

I'll give an example of a deal we did. I paid my investors their money, plus a 26% IRR on their investment. I received a $117,000 acquisition fee upfront, then $25k/year asset management fee, plus cash flow of about $15,000/year. Then 3 years later at the sale, I received $800k profit.