Recommended Real Estate Syndications with Bay Area Office?

Question

Hi,

I am currently looking into Real Estate Syndications as I'm looking for more passive cash flow. I'd want them to have an office in the Bay Area, so I can drop by and chat.

The following names have popped up in my search.

- Praxis Capital

- Grocapitus

Has anyone worked with either of these?

If so, can you talk a little about the deals and how they handled a deal that went sour? If you aren't, can you explain who you have worked with? Also, if you have also had a deal that went sour or if there was a capital call or dilution of the original investment.

Would love to also hear about what to expect? How to "run the numbers" for these kind of deals?

Thank you

Jim Pfeifer · Answer

@Jason Riddle Real estate syndications are a great way to generate passive income.  The biggest challenge is finding quality operators - I think narrowing your search so drastically by only looking at operators in your area will significantly reduce the number of opportunities and the quality of the opportunities.  Lucky for you, Praxis Capital is close to you and they are an excellent operator and @Brian Burke's book is THE must read book for anyone investing in syndications.

I would recommend you branch out - these days you don't need to meet someone in person to evaluate them as an operator.  I would also say if you are thinking of investing $50,000 or $100,000 with someone it is not a bad idea to fly out and go visit them - it doesn't need to be someone close to you geographically.

Everyone has different options about how to find great sponsors.  I am on version three of how I find sponsors and I have vastly improved the process since I started.  The first way I found sponsors was by attending a seminar.  I had a roll over self-directed IRA burning a whole in my pocket and I tried to give money to every operator I met - not a good plan.  Some of those deals worked out and some were not so great.  So I moved on to my next phase where I read books and listened to podcasts and I would hear an operator and give them a call.  I had better results with this approach - but I still didn't know if they were just good podcaster/marketer or if they were actually a good operator.  Then I moved to my next approach and this is what I do now - I use my passive investing Community.  I only invest in a new operator if they are introduced to me by someone in my Community who I know, like and trust AND that person has already invested with the operator.  I still do all of the same due diligence, but I am starting from a place of trust - and trust transfers.  My results have been much better with this approach.

I think if you are going to commit any amount of capital to syndication investing, the operator is the most important part of your analysis and decision and limiting yourself to an operator in your area will limit your ability to diversify and to discover multiple quality operators.  I would also recommend joining a Community so you can learn from others, share ideas, share quality operators and leverage the success of others.

Taylor L. · Answer

@Brian Burke from Praxis is very active on the forums and recently released a book through BP, The Hands-off Investor. If you search his name and Praxis on the forums that may help!

Chris Wilson · Answer

@Jason Riddle

I know the feeling well. It's one of the differences between a single property investment and a fund of several properties investment. A few things I have heard often cited from several others about choosing a syndication investment.

1. Choose the operator first

2. Choose the deal second

3. No investment comes out exactly as anticipated, some do better than that others do worse

I look at a few things for my comfort level starting with item #1 above. Then how much leverage is involved , the debt being used, how conservative does the underwriting look. Do you believe in the overall thesis regarding the demographics and employment data which you can get elsewhere as well to validate. I could try to analyze everything to death and drive myself crazy and still be wrong. I wouldn't say that I take leaps of faith but there are just a handful of big picture items that I look to try and evaluate my comfort level with the risk involved. I am never going to understand all the in's and out's as well as a well chosen operator with a long track record. In some ways it's like choosing any other professional. I probably have a slightly better understanding of the risk in choosing a syndication than I do of choosing my CPA, Doctor or Dentist.

Chris Wilson · Answer

@Jason Riddle

I invested with them in 1/2021 and in another fund of theirs this spring. I have been happy with the experience to date and the level/quality of communication. If you are interested in understanding the numbers I would second the recommendation to read The Hand's off Investor by Brian Burke from Praxis.

Chris

Lane Kawaoka · Answer

Talking with the operator is a waste of time... its everything you want to hear. Plus its just trained sales people if they are some what institutional instead of a new operator. Focus on meeting purely passive accredited investors... that is where you will find the real scoops.

John Mazzella · Answer

@Jason Riddle hope your investment search is going smoothly. I know the syndication world can be a lot to maneuver with all of the information thrown at you. If you have any questions I am always happy to hop on a call and help you out. Good luck!

Jason Riddle · Answer

@Chris Wilson

I did end up going with Praxis, but one thing I struggle with is they give A LOT of information. Like 5-7 PDFs where each PDF ranges from 10-50 pages. I've started reading The Hand's off Investor (disclaimer, not yet finished with the book) which is originally why I reached out to them. My question to you is how do you evaluate their large MFH deals, especially when they can add properties to it over time? I'm familiar with how to analyze CoC and IRR for SFH and MFH(1-4), but large commercial (100-200+ units) leaves me feeling overwhelmed with analysis paralysis.

Harish V. · Answer

Grocapitus does not publish any address. You cannot talk to them after you give money, unless they want to talk to you. So that probably does not meet your criteria.

Chris Seveney · Answer

@Jason Riddle

If you are ever in the Santa Barbara area, let me know we have an office there

Recommended Real Estate Syndications with Bay Area Office?

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