Syndication / CREI

[Jason SanMartin]

Hello all,

It's been a long time since posting as I've been undergoing the learning phases of being a landlord for a few years with a recently sold MF investment property I owned in Norfolk, VA. I'm looking to leverage those proceeds into a bigger scale investment with CRE. I'm considering out of state this time and/or local and am just curious as to who may be out there looking for an integrity partner in their next deal? Definitely in a position to learn the CRE side of things and see how we could build a positive and lasting partnership/friendship.

[Patti Robertson]

Syndications scare the hell out of me. It's a fancy new term for an investing strategy that has been around forever. Back in 2005 I invested as a preferred member in a couple of LLCs (one per RE project) with an international company who had their fundraising office in Norfolk, VA - Wextrust. They started out legit with good intentions. They bought real buildings with the intention of adding value then selling them. They paid an 8% dividend, which we chose to reinvest into their HML fund. They started over spending on operations and they overpaid for properties. They ended up in a tail spin trying to recover, and created a fake investment project to raise funds in. It ended up being taken down in 2008 by the SEC as a Ponzi. Then the market crashed, contractors walked out on the job, the SEC appointed a receiver who knew nothing about real estate, and the result was after 11 years of receivership, we recovered 10% of what we had invested. People in general have good intentions. When things go bad, they tend to make bad decision so as to not disappoint those who are counting on them. I know local investors who had a similar experience with Greg Pinneo, out of Seattle. I am sure some of these will work, but we are again in a market where properties are priced high. What could go wrong? Personally, I prefer to just invest in smaller projects that we can fund 100% on our own with no partners. Just be careful out there!