Where would you make a large investment?

Question

I have a good amount I need to invest. With the stock market and the real estate market at a high I'm looking for advice on my best course if action. I have been reading about the turnkeys and I'm attempted to try this.

Charles Worth · Answer

@Mark Ellis

If it were me (and it was) I would start with private lending if you do not really know as much about RE. You should still learn but in a private lending deal you are typically first lien, get personal recourse against the person's assets and are out in 6 to 12. You also get paid for delays (i.e. interest costs accrue). The biggest downside its taxed as income but it allows you to really get to know the real estate operator you are funding and their operation before you make an equity investment with a long timeframe (TK has a long timeframe).

Syndicated deals (crowdfunding) is also an interesting option though the time frame can be long here too (you can also do private lending through crowd funding but my personal preference has been to actually know the people i fund but that is just a preference)

Charles Worth · Answer

@Larry Fried

Good point, certainly agree.

I only deal with very few sponsors and I turn down way more deals than I do.

@Mark Ellis

With that being said, its tough to develop the ability to pick those people starting out esp. if you have a loaded gun in the form of a cash sitting on the sideline earning nothing. I would say talk to a lot of people, use BP and I really hate to say this because most people on the site a new, but initially I just wouldn't deal with anyone without a very good track record. Good luck.

John Cohen · Answer

@Mark Ellis I would get very comfortable with a longterm deal and sit back and cash flow. I'm a huge believer in Multifamily space, but thats just me. Would love to talk and see if I can answer any questions you may have. You just have to make sure your investment lines up with what your looking to accomplish

Rosston Smith · Answer

Invest in multifamily apartments, or lend money 8-12%

Adam Bontrager · Answer

Hello @Mark Ellis

Any of the options discussed (turnkey, private notes, and crowdfunding) have their own set of benefits and risks.

Turnkey, although promoted as completely passive, still requires more input from the investor than notes or crowdfunding.

Notes and crowdfunding are very similar but while crowdfunding is easily accessible and can often be completed online, notes generally require quite a bit of networking on the part of the investor.  I personally prefer crowdfunding because it's more flexible and can easily be conducted virtually but I'm obviously biased due to my previous experience with crowdfunding. :)

@Larry Fried brought up a really great point.  No matter which strategy you decide to pursue, the quality of the sponsor (operator) actually carrying out the project is one of the most important factors.  Look at their track record, Google them to see what others are saying, and do some research yourself to see if their claims match the market conditions.

Feel free to reach out if you'd like to discuss further or if I can answer any additional questions.

David Thompson · Answer

Mark,

Some good ideas shared above, diversification is probably the best and ensuring you vet the track records and experience of the operators you are thinking of investing in whatever niche you decide to go.  Syndication in large multi-family operators that are experienced and can gain forced appreciation thru value add (think house flipping on a grandeur and more sophisticated scale) is an excellent style type.  There are operators out there searching and investing in the best markets/submarkets, choosing solid value add apartments that are bankable.  Returns in the 10% CoC and 20% IRR are achievable still w/the best ones.  Reach out if you'd like to discuss more.  We are currently favoring opportunities in North Dallas where the job and population growth has been excellent and projected to continue for the next 3-5yrs.  Top 5 in the nation if not the best.  We have another opportunity brewing in Q4 for accredited investors.  If you'd like to learn more, reach out to me.

Larry Fried · Answer

@Mark Ellis I think Charles covered it well.  I have done all three forms mentioned, private lending, turnkey purchases, and crowdfunding.  I would say no matter what form of RE you do, it is important to get to know the operators or managers before making a large investment.  Starting small, and diversifying can take time to deploy all the capital you have to work with, but it can also potentially safe you from making costly mistakes.

Leslie Pappas · Answer

Hi @Mark Ellis, if you're an accredited investor you might consider investment into DSTs. They are hands-off, institutional grade real estate investments, and they allow you the option to diversify. You can buy into institutional grade $50-125M projects with as little as $100,000. Professionals with decades of experience and very impressive track records do all the heavy lifting for you. You get potential cash flow, tax shelter and appreciation. Loans are non-recourse.

Ian Ippolito · Answer

@Mark Ellis,  I think you're asking a very good question by looking at the timing of your investment in seeing what makes most sense.

You have a lot of options other than just turn key investments. As someone mentioned above, there's crowdfunding and there's actually about 150 sites to choose from. Also there is one crowdfunding site: restock that specializes in where essentially residential turnkey properties.  But the best investment depends on your personal situation. It may also be a combination of the above.

1)  what do you intend to use this money for? The reason I'm asking is I want to understand how much risk you can take with it.

2) are you an accredited investor or a non-accredited investor?

Where would you make a large investment?

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