All Forum Posts by: Mark Robertson

Grade school fairness?? Are you serious? I've invested in over 30 real estate crowd funding deals and not one had a catch up provision. I got my MBA in your home town of Austin and I'm pretty happy with the finance skills I learned.

If your project grosses a 20% return on equity before any payout, does the investor not get 10% and you catch up until you get the same return as the investor. i.e. the next 10%?

In your pro forma there is about $190k in equity. If the project makes 20% or $38K, then the investor gets the first $19k, then the sponsor gets the next $19k. Everything after that is split 60/40. Therefore the project "made" 20% and the investor kept the first 10%.

There are plenty of deals that are 8% preferred and 70/30 splits thereafter. Assume a project's gross return was 20%, then under that scenario, the investor earns 16.4% (8% + (.7x12).  Under your 10% preferred with a catch up scenario, the investor only keeps 10%. If I have the option of picking (and I do), I will pick the 8% 70/30 deal every time.  (Assuming similar deals)

@Bryan Hancock 

It looks like a pretty promising deal. The only negative I see is the  10% preferred with a make up to Inner Capital. As an investor I would see no return form 10% to 20%.  For me that's a deal breaker.  Why not keep it simple and do a straight 8% preferred and then the split?  The way I look at it unless you execute flawlessly, the only return I will get is 10% and I am in 2nd position. If I compare it to other deals, I would much prefer a flat 12% return in first position like the Patch of Land deals, then to have to count on an investment making 25% before I saw a 12%+ return.

 It looks an investors return would be 13% if the projected netted 25%.  Am I reading that right?

A few of the crowdfunding sites have proven to be quite effective and efficient.  Realty Shares raised $1 million in under 24 hours for a medical office property last week.  Realty Mogul has at least 3  million+ dollar raises. The cream rises to the top and in my opinion the top 4 Real Estate crowdfunding sites at the moment are Realty Mogul, Patch of Land, Realty Shares,  and RealCrowd.

Jon, I think your wrong on the funds as well.  Real Crowd has listed at least 3 funds. (2 are live now) Realty Mogul raised over $3 million dollars for a Mobile Home Park fund.

I agree that if you don't have the time (or want to devote it to real estate investing) then the syndicate route is a great way to go.  The problem is finding the right syndicates.  Syndicators can only pitch their deals to investors that they have a relationship with.  Some savvy syndicators are active on places like BP, where they can develop the relationships and then can pitch their funds and projects.  The problem is the average Joe does not have access to 99% of the syndication deals because he does not know or have a relationship with the syndicators.

The good news for accredited investors is the jobs act now allows syndicators to advertise their deals. It's called crowdfunding.  Crowdfunding is pretty much the old school syndication, but on the internet.  With this rule change, your deal flow increases exponentially.  All deals are not created equally.  The new challenge is picking the best deal and the best developer for your risk tolerance. You just have to learn how to do proper due diligence.  There are many threads on crowdfunding & due diligence on BP.

The simple version: 1. Find a crowd funding platform that you trust and believe in.  2. Then find the developer you can trust and believe in.  3. Then do your due diligence on his/her individual investment.

Crowdfunding gives the investor access to deal flow and that is a huge change.  It also gives the investor with  somewhat limited resources the means to diversify their real estate portfolio.  You do give up some of your return to the portals.  However, as you develop more relationships, you can bypass the platforms and work directly with the RE sponsors.  I've done about 30 crowdfunding RE deals this year and so far so good.

Mark

I've invested in a few dozen crowdfunding projects and there are about 6 quality sites out there.  However, Crowdfunding will only work for the experienced developer.  The portals & investors will not consider an investment if the developer is not experienced with a good to great track record.  I can't imagine getting any funding on the first 5 or so projects through a crwodfunding site.  (At least not one I would use)

Mark Robertson

Welcome to BP.  Its a great place to network.  I've done 32 crowdfunding or angel investments online since Dec of '13. I developed a small group of investors that share their due diligence via email on a lot of the crowdfunding real estate deals for the top 4 or 5 crowdfunding platforms.  Let me know if you want to compare due diligence on future deals.

As a result of our research, 2 deals were removed from platforms (and investments refunded!) and one platform changed their fee structure after our complaints.  The squeaky wheel does get noticed.

Mark Robertson

Austin, Raleigh & Silicon Valley are very hot. CNBC says Georgia is the #1 state for business this year. There are lots of places that are growing right now.

Mark

@Bryan Hancock I pulled the trigger on Linden today...a nibble.

I been checking out groundbreaker for over a month now. Some really odd projects have popped up and disappeared. Pretty sure I saw a colorado pot investment with really no supporting numbers or proforma that was up for a while and is now gone.

I clicked for more information on many other deals and never got access or heard back from anyone. (the only one I used that hides info from accredited investors) The deals you can see have been up for quite a while and don't seem to be reaching their goals. I pretty much wrote that platform off. Let me know if it pans out for you.

Mark

Jon

I got my MBA at UT, so I was intrigued with the Linden deal. Also, Fundrise has the Austin apartment I lived my first semester as an investment opportunity now...small world sh#$.