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About PassivePockets®

PassivePockets is a resource for investors looking to learn about, find, vet, and discuss syndicators. The private world of real estate syndication has great opportunity for investors and has produced significant returns in the past, but it also comes with significant risk.

Investors often struggle to find investment opportunities, compare them to the universe of similar opportunities, and build frameworks around what a “Good” syndicator or deal looks like.

PassivePockets arms investors with frameworks and detailed descriptions of “ideal” investment opportunities and syndicators, and compares real-world offerings to this idealized model. Investors will get the following:

PassivePockets Features:

  • Repetitions in due diligence as experts evaluate live investment opportunities one by one.
  • A framework for “good” to compare syndications and deals against in a variety of asset classes.
  • A list of syndicators and their live offerings to browse and consider
  • A community to bounce ideas off of, provide ratings and reviews of syndicators, and to share experiences, including positives and negatives
  • Due diligence checklists to vet syndicators
  • Due diligence checklists to vet assets/deals
  • A directory of deals
  • Community feedback/discussion on operators and thoughts on current offerings
  • Live and recorded due diligence sessions analyzing current offerings

How It Works

PassivePockets is a platform and community for investors interested in private real estate investments. It’s platform will offer many solutions to investors, including:

  1. Frameworks for “Good” in evaluating a syndicator and deal:
    • A “Good” multifamily syndicator, for example, is someone with a strong track record, who works full time in and on their real estate business, who knows a specific market or handful of markets extremely well, who puts their own capital into deals, at risk, alongside investors. Who charges a modest salary during the acquisition, management, and disposition of their deals, with their big economic incentives tied to great long-term returns for investors.
    • PassivePockets will provide detailed frameworks for “Good” in a variety of asset classes, and then compare live offerings to this framework. We believe this is a powerful way to train investors on how to do their own due diligence. While not every syndicator or deal will meet the idealized standard, investors will be able to, over time, get comfortable with where they are willing to make tradeoffs.
  2. Live Deal Webinars and Due Diligence:
    • PassivePockets will regularly invite syndicators onto the platform to preview their offerings, and answer questions developed by BiggerPockets. While investors are still expected to do their own due diligence, we believe that this offering will help make finding, hearing, and discussing investment opportunities easy, helping PassivePockets members become relative experts in evaluating deals quickly.
  3. A directory of syndicators and their offerings.
    • This directory will feature both the people/companies that are raising capital, and any live offerings. PassivePockets will seek to accumulate as much information as possible about syndicators, including their track records, current deal performance, etc.
    • This directory will also contain community sourced feedback, including feedback from community members about whether they like the current offering, and why, and for those who have experience investing with a capital raiser, their overall opinion of them, including around items like transparency, fee structure, returns, operational excellence, communication, and most importantly, whether they would invest again with the operator.
  4. A community to discuss and debate investment opportunities:
    • A forum to discuss general private investment opportunies.
    • A private forum, only available to investors, not capital raisers, to privately discuss fundraisers and challenges.
    • Ability for members interested in an investment to pool together as one block of capital to enter into certain deals, allowing for lower minimum investments, or allowing investors to negotiate as one larger block of capital for better terms.

Frequently Asked Questions

A real estate syndication is a partnership involving a group of investors who pool resources to purchase a single investment. An example of this would be a group of a few dozen investors (referred to as “Limited Partners”) pooling their money with one manager (known as a “General Partner) to purchase a large apartment complex.

A real estate private fund is professionally managed pool of capital intended to be used for the purchase and management of a collection of real estate assets. A real estate private equity fund, for example, may raise capital or capital commitments, and then purchase multiple assets of a certain type and in a certain region.

There are theoretically infinite amount of ways to invest in real estate backed investments. Some of the most common ways to invest include:

  • Investing in single-asset multifamily/apartment complex syndications
  • Investing in multi-asset multifamily/apartment complex private equity funds
  • Investing in real estate backed notes or debt, including single notes
  • Investing in private equity or credit funds that purchase a collection of debt
  • Self-Storage single assets and private equity funds
  • NNN single assets and private equity funds
  • Mobile home parks and mobile home park funds
  • Etc.

Many investors find real estate syndications and passive opportunities through their personal and professional networks. PassivePockets intends to create a directory of these opportunities to better help investors find and vet opportunities.

There is no one way to identify a “good” investment opportunity from a bad one, just like there is no universally accepted way to identify a good stock from a bad stock. However, PassivePockets will work with investors to identify the questions that investors should be able to ask, and receive answers to, in the most common types of real estate investment opportunities.

Similar to determining “good” from “bad” with individual investment opportunities, doing due diligence on and determining if a capital raiser is “good” or “bad” is an art. PassivePockets intends to help investors identify the traits that investors tend to look for in good operators, including transparency, strong track records, work ethic and full-time effort put into their businesses, and alignment of incentives.

The best time to invest in real estate is when investors have a strong personal financial position. Commercial real estate values are down substantially from their peak in 2021. And, while they absolutely may continue to see pricing declines, a declining market may present a buying opportunity for savvy investors and operators.

Debt backed by real estate is senior to equity. While debt investments can absolutely lose money, and there are many examples of notes in today’s market that will not trade for their book value (resulting in investor losses), real estate debt investments can provide security and strong cash flows.

Returns from Passive Investment Opportunities run the gamut. Investors report staggeringly high returns over the past decade on many private syndications and funds, in some cases of upwards of 30%, and other investments have produced 100% losses of principal or more. Investors need to beware that while Passive Investment Opportunities provide substantial opportunity, they also present substantial risk. Many investments are presented to investors promising returns of 8-25% annualized. Whether these returns are realized is a matter of the quality of the thesis, operations, market conditions, and chance.

Passive Investment Opportunities can come with the risk of loss, including the risk of losing 100% of invested principle. Investors should not consider private investments unless they could withstand the loss of all of their capital. Furthermore, in some cases, investments have the right to call for additional capital. Occasionally, these capital calls can be mandatory. Investors should carefully read the legal terms of any investment decision they contemplate to understand if there are risks beyond the dollars they commit to the deal.

Syndications and private equity funds come with notoriously high fees. They often include an acquisition fee, management fee, refinance or disposition fee, and carried interest. PassivePockets believes that alignment of incentives are critical, and will seek to highlight any opportunities where capital raisers can make high fees without delivery of returns, or where fees incentivize aggressive acquisition/trading of properties, and not the generation of returns for investors.

Private real estate opportunities provide every conceivable combination of return profiles for investors, including simple interest, preferred cash flow/distributions, tax advantages, and long-term capital gains opportunities. There is something for every investor goal, assuming of course, that the returns promised by a given investment are realized.

What exactly is a crowd-funded real estate syndication?

The Power of the Crowd
A crowd-funded real estate syndication is a type of real estate investment that pools funds from multiple investors to purchase or develop a property. It is usually facilitated by an online platform that connects investors with real estate developers or sponsors.

Fractional Investments
In a real estate syndication, investors can typically invest smaller amounts of money than they would need to purchase a property outright. They can also diversify their investments by investing in multiple projects, and can benefit from the expertise of the sponsor who manages the project.

Higher-Yield Returns
Investors may receive returns in the form of rental income, capital gains from property appreciation, or a share of the profits generated from the sale of the property. Investors must meet certain eligibility requirements to participate, as regulated by the SEC.

What is an accredited investor?

An accredited investor is an individual or entity that meets certain financial requirements and is legally allowed to participate in certain types of investments that are not available to the general public.

In the United States, to qualify as an accredited investor, an individual must have a net worth of at least $1 million, excluding the value of their primary residence, or an annual income of at least $200,000 (or $300,000 for a married couple) for the past two years and a reasonable expectation of the same income level in the current year.

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