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Updated 2 days ago,
What do you think of syndicate sponsor Goodegg Investments?
I am starting to get into syndicate investing and have been reading Brian Burke's "The Hands-off Investor" which is a pretty in-depth guide to analyzing real estate syndications. He says it all starts with the sponsors so I'm looking to get feedback from the BP community on sponsors that I'm researching. First up is Goodegg Invesmtents. They look to have some success with taking deals full-cycle and currently have a sun belt multi-property offering that I'm researching. Has anybody invested with them who can provide some valuable feedback?
Quote from @Gregory Reid:
Quote from @Jessie Dillon:
just my 2 cents.. i'm not a fan of the syndication model. there are better ways to invest more passively where you have more of a say in what goes on, can achieve higher returns, and can have your personal interests at a higher priority.
Can you share more on this?
@Gregory Reid see my reply to steven ^^
Quote from @Richard Ibeh:
Quote from @Jessie Dillon:
just my 2 cents.. i'm not a fan of the syndication model. there are better ways to invest more passively where you have more of a say in what goes on, can achieve higher returns, and can have your personal interests at a higher priority.
Hey Jessie --what other passive RE models are you referring to?
@Richard Ibeh see my response to steven ^^
Quote from @John Sayers:
Quote from @Jessie Dillon:
just my 2 cents.. i'm not a fan of the syndication model. there are better ways to invest more passively where you have more of a say in what goes on, can achieve higher returns, and can have your personal interests at a higher priority.
Can you elaborate on the better ways? Thanks!
@John Sayers see my response to steven ^^
@Jessie Dillon, within your partnership, would you break down your fees and waterfall in your JV deals?
A 50/50 split, while not uncommon in the world of flipping, is very sponsor friendly, relative to the typical syndication which will typically start at 80/20 or 70/30 splits, with a vast majority of proceeds going to the LPs, along with a preferred return that gives them 100% of the cash flow up to a certain annualized return metric.
Fees can certainly impact how the "true split" really looks at the end of the day.
@Evan Polaski I don't include any fees, not even an acquisition fee or ongoing asset management fee.
Sorry , a bit confused Ms dillon, trying to learn more about syndication, are you bringing 50% of the capital for the down payment to buy the property and your partner the other 50% and they are getting the loan for the debt portion, hence getting 50/50? or if not 50% capital required why wouldn't the other partner just find a realtor and CPA to find/underwrite the deal and 3-5% for property management then own/keep 100%?
Quote from @Adrienne Binder:
Quote from @Hyun Kwak:
Jason or Steven, would either of you be willing to post an update on your experiences with BAM and Goodegg - I am looking at both and wondering if things are still going well with your investments?
We invested with both companies in 2021. BAM is consistently paying out monthly with Class A shares but class B shares stopped paying out almost immediately with the interest rate hikes. However, all properties in the funds are stable and we still feel pretty confident that things will pan out well.
Our biggest gamble in all of our investing was with Goodegg. We placed our biggest bet on a single property, class B shares. Like our other class B shares (we also invested in Praxis), they stopped paying out pretty quick when the interest rates when up. They have been incredibly transparent but they are currently deciding on a capital call or selling the property at a major loss (70-80%). I’m praying they opt for the capital call and someone has more to invest (we don’t). The loan has come to term and they can’t maintain the property and the current interest rates. BAM and Praxis have definitely managed the situation better at this point in time.
Do you have an update on the Goodegg investment?
Quote from @Jason Phillips:
Hi Steven - Sorry for the delay, but I am an investor with Goodegg (Hotel Fund and Wealth Fund II) and I have nothing but praise. Great people, intuitive platform, get their K1s out on time and returns have met expectations...one of the reasons I am invested in two funds at this point as the first investment was really to test the waters and validate I was a good fit.
Finally, someone answered the question. I appreciate your post. Most of the other posts provided general information that is good to know but did not answer the specific question. I would love to get your views four months later. Would be interested in connecting to learn more about your experience.
Goodegg has stopped distributions on the offering I bought a couple of years ago, called Congaree Villas, and has not been forthcoming with revised financial projections that explain why it has done so--even though it says the property is still cash flow positive and has adequate reserves. It has provided no estimate of when distributions will be resumed.
Nonetheless, it continues its barrage of self-promotion and continues to project large profits on current offerings.
The proof is in the pudding. I am 80 years old and rely on investments for retirement income. I have to caution would-be investors: Don't count on the returns they say they expect to achieve. It's hype, not substance.
BUYER BEWARE!
Quote from @Geri Randall:
Goodegg has stopped distributions on the offering I bought a couple of years ago, called Congaree Villas, and has not been forthcoming with revised financial projections that explain why it has done so--even though it says the property is still cash flow positive and has adequate reserves. It has provided no estimate of when distributions will be resumed.
Nonetheless, it continues its barrage of self-promotion and continues to project large profits on current offerings.
The proof is in the pudding. I am 80 years old and rely on investments for retirement income. I have to caution would-be investors: Don't count on the returns they say they expect to achieve. It's hype, not substance.
BUYER BEWARE!
Wow. Thanks for sharing.
Quote from @Geri Randall:
Goodegg has stopped distributions on the offering I bought a couple of years ago, called Congaree Villas, and has not been forthcoming with revised financial projections that explain why it has done so--even though it says the property is still cash flow positive and has adequate reserves. It has provided no estimate of when distributions will be resumed.
Nonetheless, it continues its barrage of self-promotion and continues to project large profits on current offerings.
The proof is in the pudding. I am 80 years old and rely on investments for retirement income. I have to caution would-be investors: Don't count on the returns they say they expect to achieve. It's hype, not substance.
BUYER BEWARE!
Dear Geri, Very, very sorry to hear about this investment gone bad. It looks like "Good Egg" is simply an Entity that collates funds, and then invests those funds on your behalf with the actual sponsors/general partners that actually purchase the properties, get the loans, manage the properties and distribute the funds. Effectively good egg is simply a P.O. box that takes a Commission out of your hard earned/saved money, in return, for purportedly providing due diligence to vet the potential projects and sponsors, on your behalf. Clearly, they failed in their primary responsibility to you as their layer of due diligence was a mere gossamer like patina. Real estate syndication investing is still quite valuable as it can offer higher Returns than investing in public REITs but not as high returns as direct ownership and management of real estate by some experienced people, but with the benefit of being far more passive, than direct ownership/management. But I would strongly advise, never letting somebody else do your due diligence on an investment for you.
First of all, as seen here with Good Egg, they have no alignment of interest with you. Their interest, like a real estate agent, is simply to churn incoming flows of money at a high rate in order to get their Commission and their cut. Which means they are probably advertising new Deals all the time even though their prior offers are collapsing. I doubt they've offered to make you whole on your investment having failed at their primary/only job of due diligence. In future, please try to only invest directly with general partner/sponsors, not through any incompetent "intermediary". There is absolutely no need to have this extraneous and superfluous layer in the form of "Good Egg" and other companies that simply collate funds, take a fat commission and then route the money to the actual GP/Syndicator. It is not very difficult or complicated to evaluate commercial real estate, there are plenty of good books available that can teach you how, textbooks, online courses, community college classes, even excellent youtube videos etc, and it is actually quite enjoyable in the process to learn.
If this is not something you're interested in delving into and learning to a high degree, then investing in publicly traded REITs would be another good option for you, which have historically returned about 13.5 per cent Per year over the past 50 years (1977-present), beating the US stock market by two per cent and even beating private real estate investing by 4 per cent (that's compared with the average real estate investor, not the experts here at Bigger Pockets). There is lots of information on how to analyze publicly traded REITs as well. They give the benefit of instant liquidity and being able to sell them when you need the cash. And you can also buy them when they're beaten down and underpriced due to market overreactions like currently, due to rapid rise in US 10yr rate.
I've read and watched multiple Good Egg offerings and they are typical of many feeder funds and to be fair like many primary GP/syndicators as well for both taking on unnecessary risks and also charging confiscatory fees, as #1 they have no skin in the game and #2 they get a big cut up front whether project fails or not, find GPs that are investing >10-15% of their own cash into every deal.
good luck and sorry this happened
Quote from @Paul Azad:
Quote from @Geri Randall:
Goodegg has stopped distributions on the offering I bought a couple of years ago, called Congaree Villas, and has not been forthcoming with revised financial projections that explain why it has done so--even though it says the property is still cash flow positive and has adequate reserves. It has provided no estimate of when distributions will be resumed.
Nonetheless, it continues its barrage of self-promotion and continues to project large profits on current offerings.
The proof is in the pudding. I am 80 years old and rely on investments for retirement income. I have to caution would-be investors: Don't count on the returns they say they expect to achieve. It's hype, not substance.
BUYER BEWARE!
Dear Geri, Very, very sorry to hear about this investment gone bad. It looks like "Good Egg" is simply an Entity that collates funds, and then invests those funds on your behalf with the actual sponsors/general partners that actually purchase the properties, get the loans, manage the properties and distribute the funds. Effectively good egg is simply a P.O. box that takes a Commission out of your hard earned/saved money, in return, for purportedly providing due diligence to vet the potential projects and sponsors, on your behalf. Clearly, they failed in their primary responsibility to you as their layer of due diligence was a mere gossamer like patina. Real estate syndication investing is still quite valuable as it can offer higher Returns than investing in public REITs but not as high returns as direct ownership and management of real estate by some experienced people, but with the benefit of being far more passive, than direct ownership/management. But I would strongly advise, never letting somebody else do your due diligence on an investment for you.
First of all, as seen here with Good Egg, they have no alignment of interest with you. Their interest, like a real estate agent, is simply to churn incoming flows of money at a high rate in order to get their Commission and their cut. Which means they are probably advertising new Deals all the time even though their prior offers are collapsing. I doubt they've offered to make you whole on your investment having failed at their primary/only job of due diligence. In future, please try to only invest directly with general partner/sponsors, not through any incompetent "intermediary". There is absolutely no need to have this extraneous and superfluous layer in the form of "Good Egg" and other companies that simply collate funds, take a fat commission and then route the money to the actual GP/Syndicator. It is not very difficult or complicated to evaluate commercial real estate, there are plenty of good books available that can teach you how, textbooks, online courses, community college classes, even excellent youtube videos etc, and it is actually quite enjoyable in the process to learn.
If this is not something you're interested in delving into and learning to a high degree, then investing in publicly traded REITs would be another good option for you, which have historically returned about 13.5 per cent Per year over the past 50 years (1977-present), beating the US stock market by two per cent and even beating private real estate investing by 4 per cent (that's compared with the average real estate investor, not the experts here at Bigger Pockets). There is lots of information on how to analyze publicly traded REITs as well. They give the benefit of instant liquidity and being able to sell them when you need the cash. And you can also buy them when they're beaten down and underpriced due to market overreactions like currently, due to rapid rise in US 10yr rate.
I've read and watched multiple Good Egg offerings and they are typical of many feeder funds and to be fair like many primary GP/syndicators as well for both taking on unnecessary risks and also charging confiscatory fees, as #1 they have no skin in the game and #2 they get a big cut up front whether project fails or not, find GPs that are investing >10-15% of their own cash into every deal.
good luck and sorry this happened
looks like they are a fund of funds setting up crowdfunding to invest in other offerings. Do not know much about them, but the Fund of Funds model will be an interesting case study during the next 3-5 years especially as deals go bad and investors look to these sponsors and the level of due diligence they did will be very interesting to see how they handle the lawsuits, as its not an if but a when, regarding a lawsuit.
- Chris Seveney
Quote from @Steven Rosenfeld:
I'm researching. First up is Goodegg Invesmtents. They look to have some success with taking deals full-cycle and currently have a sun belt multi-property offering that I'm researching. Has anybody invested with them who can provide some valuable feedback?
It is clear from the interview that their main skill set is raising money and they partner with other "Co-GPs" who focus on the operations. While raising money is an important skill, what makes or breaks the investment will be operations. As a result, I would spend more time trying to understand who they are partnering with than anything else.
Have you invested with Good egg investments. I'm considering their hotel fund. Would like to share your experience?
@Raghu Got
Have you read any of the comments in this chain?
- Chris Seveney
Yes Chris. Thanks for checking. I want recent updates from the current investors. Would you like to share any details?
Have 3 investments in GoodEgg - 2 have stopped making payments. They seem to have a good team but this is something not thought out it seems , in their support I do have DSTs which have had the same issue and have not been making payments.
Use caution while investing - don't expect things to go always right all the time.
Diversify if you can with smaller amounts so risk is distributed.
Hi Paul, How can you tell that Good Egg is an entity (or fund of funds) that collates funds and invests those funds on your behalf (i.e. more of a capital raiser) rather than the actual operator/GP of the proposed property that is advertised for sale? It seems a bit misleading to advertise as the actual syndicator if you are not? (I'll admit I am a fairly new potential investor)
@Audris Tien
It Is known in the industry - read the website - logically two people could not manage $1.4B in real estate? That would take a huge team. (If that number is accurate)…
- Chris Seveney
Quote from @Chris Seveney:
@Audris Tien
It Is known in the industry - read the website - logically two people could not manage $1.4B in real estate? That would take a huge team. (If that number is accurate)…
@Audris Tien, it is very hard to tell, depending on how the capital raiser chooses to present it. I went ahead and downloaded GoodEgg's track record to see how they do it, and let's just say it would be easy to assume they had more control than they did on a lot of the deals.
All told, if the company website, and the People that work there according to LinkedIn, are not showing any operational roles, they are likely a capital raiser. Acquisition people, asset managers, finance/accounting roles are all needed to run properties, even if the property management is outsourced.
If you still aren't sure, google the properties listed on the website with the "property name city and acquisition". Again, assuming you are looking at groups that do larger deals, there is almost always a press release and it will note who the buyer and/or seller is. If you see the same company you are looking at, then likely the actual operator.
And, if you still have questions, ask them. Ask who is sourcing their deals. Who handles their asset management? Get into details on how renovations are done with units occupied, what systems they use to mitigate tenant fraud on applications, how they set price levels for the units? How are they picking markets? Ask to see their underwriting of the deal. And also, with so many 506(c) operators out there, google the name of the new deal and see if you are finding someone else marketing the same deal and ask why.
At the end of the day, it can be hard to tell. Last I heard, GoodEgg started sourcing their own deals in 2020 or 2021, anything prior to that they operated as a capital raiser for other groups. I am not sure if they are still trying to source their own deals or have gone back to being a capital raiser for others.
Not going to lie, there are a lot of concerns I have in looking at GoodEgg's website and their track record. https://drive.google.com/file/d/1mgMyZFdo5mH_-A4ni21_IEWxWMO...
Many of the deals listed are known to be other operators. Almost half are Ashcroft deals. I believe they played a role raising capital for these deals, but the language used on their track record implies they played a very active role in the sourcing, execution and sale of the assets, which is very likely not the case.
Quote from @Audris Tien:
Hi Paul, How can you tell that Good Egg is an entity (or fund of funds) that collates funds and invests those funds on your behalf (i.e. more of a capital raiser) rather than the actual operator/GP of the proposed property that is advertised for sale? It seems a bit misleading to advertise as the actual syndicator if you are not? (I'll admit I am a fairly new potential investor)
Goodegg Investments – This Is Is How We Make Money Through Real Estate Syndications (youtube.com)
what's most annoying is the slide at 50sec, she has on the left the GP which "does all the work and takes on HIGH risk, while on the right the LP who does no work and bears low RISK". I'm like "What, What, What!!!"
RISK is the potential for loss. and who in their structure of 3% acquisition fees, 3% asset management fees, and lord knows what pref/split fees they charge is bearing the RISK when only the LP is bringing any capital to the transaction? WHAT!!!! (I almost threw something at my monitor, but took a deep breath and realized my wife would be very upset if I broke another one :)
They are not doing anything illegal, they are just CRE Remoras, who exploit less experienced investors, and there are hundreds like them. Their mere interposition in the process adds a layer of unnecessary fees, and I just don't see what value they add.
Syndication investing is awesome, it has given me sp500 beating returns for 30 years, fantastic tax benefits, great geographical diversification, a wealth of knowledge about this country and the economy in ways that a nerdy science type guy like me would never have known about. And as an LP, I can do 75% of my due diligence from my desktop computer, the rest is going to the properties themselves, going to sponsor meetings, talking with other investors etc, which is a ton of fun.
good luck :)
Thank you both @Paul Azad and @Evan Polaski for taking the time to explain and go in further detail!
Quote from @Aj Joshi:
@Steven Rosenfeld , I am in the same shoe now as you were 10 months ago!
I am considering Goodegg investment too. Did you end up going with them?
Any thoughts you would like to share?
Appreciate any updates regards to this Syndication or any other that you liked? Thanks!
AJ, did you ever invest with GoodEgg? If so, how has the investment worked out for you? What has GoodEgg been like to work with?
Do not invest with GoodEgg! I have invested 7 times. 5 of 7 are not paying out and have not paid out and now asking for more capital. they have no idea what they are doing. they are over their heads. I regret investing with them. Run away.
Also passiveinvesting.com is partnered with them. Also bad.