Anyone has invested with Open door capital? How was your experience?

[Hemal Adani]

Hi, I'm curious to learn how your experience has been with Open door capital or something similar. Pros & Cons. Also post if you know something similar.

[Karl Denton]

Are you referring to Brandon Turners company? I haven’t invested yet but I cant imagine its a bad experience. If its not his company and your referring to the real estate company down south, absolutely DONT invest with them. 

[Hemal Adani]

Yes. That's the one.

[John McCullough]

Yes,  I invested in the Lone Star Portfolio earlier this year and the distributions and improvements are preforming as expected. There are some great webinars which go in depth to explain the details. Not sure of cons other than not being able to directly control the investment like I can my rentals.  What are you considering?

[Joanne Laipson]

I'm in Open Door Capital's Fund 4 and I'm extremely disappointed. By their own admittance, as I write this on 8/1/23, their latest update (received today) acknowledges they are STILL behind target. They've been at this Fund for a couple of years now with no turnaround in sight (despite glowing monthly reports of an imminent turnaround that never materializes). This time, they have PAUSED quarterly distributions and TTM NOI is now close to 40% BELOW projected targets. Not good and continuing to get worse and worse.

I initially got involved with them because I wanted to be in mobile home parks and they seemed to have a successful and longer track record than others.   However, my take on this is they did not do sufficient due diligence on many fronts, including city government challenges, operating challenges, infrastructure challenges and marketing challenges.  Because of this lack of due diligence, their projections were way off.  Rather than underselling and over delivering, they over sold and under delivering.  Currently, they appear to be rushing into putting lots of offerings on the market these days but if Fund 4 is any indication, they are not doing the required due diligence on the quality of what they are offering.    Go into any investments with them with extreme caution. 

I suspect the early funds were good. That's how they built their reputation. However I'd be very suspect of anything more recent. I've stopped considering them for any further investments for sure. Who knows if I'll ever see my initial investment in Fund 4 returned, let alone any ROI. I'm not holding my breath.

[David Leong]

Whoa... Joanne L. Thx for sharing AND so sorry, that makes me a little worried since I just recently invested with ODC. Their pitch deck looked pretty easy to follow and compelling but that's the sales pitch which always "looks good". I guess I'm not as keen nor experienced enough in knowing if they will be able to EXIT future deals now because they have only proven it once which isn't a long track record at all... it maybe is a future indicator of their inability to BRRRR for their LP investors. Since they have Exited only one deal so i'm wondering if they have gotten over their skis given your Fund 4 report.

[Joanne Laipson]

Hi David L, the timing of your response was fortuitious as I just received the July 2023 update on Fund 4 this past week.  Still significantly lagging but yet again with promises of an imminent turnaround.  Much longer report this time which suggests they are getting lots of questions and concerns particularly in light of having paused distributions. 

Occupancy is down relative to projections and operating expenses are up relative to projections.  Their explanation: "The overall theme for 2023 is that unexpected roadblocks and delays throughout 2022 put us behind our originally targeted timelines for infill (occupancy increases) impacting how quickly we could increase revenue."   So I stick with my initial assessment - insufficient due diligence was done at outset.  To pause distributions two years into the fund (when, presumably, some contingency was built into the financial model at outset for 'surprises') suggests a magnitude of issues that were not caught during due diligence. 

Are they in over their skis?  My opinion is yes.   Take a look at what they have going on: https://odcfund.com/our-offerings/.  It's hard to focus when you have so many balls in the air and some of those balls need dedicated attention because you didn't do your homework at inception.    Brandon Turner's post on Twitter on Aug 29: "There is a big difference between being busy and being effective, and in the case of a lot of investors; they believe that because they're buying properties, means they are going to succeed."   Ahem, perhaps they should take some of their own advice!

So, David L, if your objective is a successful exit (or even predictable returns as forecasted - which was my objective), my opinion is stay far away from Open Door Capital.   There are many other plan sponsors out there who are willing to be held accountable for delivering on their projections without whining about unexpected roadblocks and delays  - that they should have anticipated had they done their homework.   Personally, I don't have confidence any longer that Open Door Capital is doing the type of due diligence required to deliver to their projections.

[V.G Jason]

There are one of the two syndications I am in-- not looking good. 

[John McCullough]

Quote from @V.G Jason:

There are one of the two syndications I am in-- not looking good. 

 What is the other syndication?  How is it doing?  What syndication would you recommend for current investment?

[V.G Jason]

Quote from @John McCullough:

Quote from @V.G Jason:

There are one of the two syndications I am in-- not looking good. 

 What is the other syndication?  How is it doing?  What syndication would you recommend for current investment?

 I would not recommend a syndication.

[David Leong]

Thanks Joanne L. I appreciate your honest assessment and perspective. Super helpful! I only hope they will have a concentrated effort to right the ship, be forthcoming about the blindspots, recovering for you and all the other investors in Fund 4. I invested with ODC fairly recently for some of the same reasons many others have, Brandon, his positivity, energy and drive to succeed, ability to build a competent team, the network he has built, the communication and the investment structure the sponsors invested in themselves. ultimately, It is STILL our job as investors to monitor our money, ask questions and evaluate the sponsors' thru their reports.  Sadly the underwriting seems to have been an oversight in the areas you had mentioned, of course sponsors will always cast the brightest light on every situation but we and they must remember we aren't paying for their education but expect the experts to lead the investors thru experience and wisdom. I interviewed another Syndication and appreciated the fact they said 1) They never lost any of their investors money 2) They aren't currently entertaining deals until they are more solid on the market's direction.  3) their Exits are designed much shorter than ODCs.  Because I retired a few years earlier, I don't have a huge runway to recoup after big mistakes but I need reliable investment vehicles, that can still deliver a decent return within a 3-5 yr. window with surety and consistency.  NOTE: I did speak to an ODC rep. today about Fund Exits and i will say he was very transparent and honest about the state of all the funds. 

[Dan Rowley]

@Hemal Adani   There are a myriad of more experienced/seasoned syndicators out there if you look.  But I get it... there is affiliation with open door to BP and so that's a big part of their marketing.

[Jim Peret]

I'm in their Sunbelt Diversified Fund. Seem like it's having the same problems as Fund 4. Finally after one year I started getting monthly dividends of 1% annually. But after four checks they paused distributions on this fund also. Same issues as Fund 4. Interest rate increases which they bought insurance to limit increases to 2%. Also they weren't increasing rent and filling vacancies fast enough. I think they need to dig in and fix this stuff instead of leaving it to property management alone. But they'd rather spend their time finding more syndications then worry about current investors. 

[Chris Seveney]

Quote from @John McCullough:

Quote from @V.G Jason:

There are one of the two syndications I am in-- not looking good. 

 What is the other syndication?  How is it doing?  What syndication would you recommend for current investment?

 HAve you looked into private credit / debt funds?

[John McCullough]

Quote from @Chris Seveney:

Quote from @John McCullough:

Quote from @V.G Jason:

There are one of the two syndications I am in-- not looking good. 

 What is the other syndication?  How is it doing?  What syndication would you recommend for current investment?

 HAve you looked into private credit / debt funds?

I have not but will.  Do you have any specific recommendations?

[Chris Seveney]

@John McCullough

Companies that have good reputations are PPR, aspen and Labrador lending

[Tammy Skeath]

I have invested in Open door capital fund 5 and have been disappointed as well. Their distributions are at an annualized 2% which is way below their projections. I would not invest with them again. They seem more concerned with more and more funds than delivering to their current investors. It’s very disappointing…

[Madhan S.]

I have invested with Open door capital (Brandon Turner) in two different projects - Array at Austin and Cypress at Houston. Both of them have had poor results and stopped monthly distributions since June this year (they had projected 6% and 8% CoC). I am disappointed in their results due to poor NOI and I believe they didn't do a decent job in due diligence prior to purchase. Hope NOI and CoC will improve in the near term, until then avoid putting any new money.

[Aaron Gordy]

@Madhan S.  Boots on the ground is critical. I am not privy to any particulars of the deal at all. The array is located on Burton Drive. Burton drive is in the rapidly gentrifying Riverside/Oltorf corridor. On the surface it looks great. Underneath the surface its a little more dicey and one has to be very calculating. That particular area is known for clay deposits in the ground that can really mess up foundations. Buying a property with foundation issues is not necessarily a problem if the purchase price is reflective of the risk. With foundation issues, one could have plumbing, drywall, flooring and even roof issues and alot more. I rebuilt a house in the area a decade or so ago that had cracks in the walls that I later discovered had a 6 foot diameter bee hive in it. That was a grand slam home run deal because it was purchased right even with those unknown issues. Foundation issues are very very real there and can really destroy returns if not careful.  

[Devin Ponda]

Quote from @Chris Seveney:

@John McCullough

Companies that have good reputations are PPR, aspen and Labrador lending

 Chris, 

Would you be willing to let us know if you've invested in any of these 3?

-Devin

[Chris Seveney]

@Devin Ponda

Labrador lending I have invested in.

The others I haven’t because honestly my fund is a competitors to the others.

[John McCullough]

Quote from @John McCullough:

Yes,  I invested in the Lone Star Portfolio earlier this year and the distributions and improvements are preforming as expected. There are some great webinars which go in depth to explain the details. Not sure of cons other than not being able to directly control the investment like I can my rentals.  What are you considering?

 2024 Update  Distributions will temporarily pause due to higher insurance costs, lender restrictions, and higher interest rates.  Overall projections are not far off from estimates.  

[Matt McCurdy]

What syndicator is doing well right now?  Most were using short-term debt and got a BIG surprise (not the good kind) when interest rates spiked up.  I've heard of rate cap locks going from $40k to over $1M in some instances.  In Lehman's terms, the forecast/financial projections most syndicators wrote up in 2020, 2021, and even 2022 are not worth the paper they are written on.

The good syndicators will be looking for these distressed syndicators and help leverage their capital to increase the ROI for the investors. The challenge is to figure out: do you have a distressed syndicator or a good syndicator?

[Travis Timmons]

My take is that if a fund has an influencer's name attached to it, they're core competency is promotion and fund raising rather than being a good operator. It's the equivalent of the guy with the expensive car and big house acting rich vs. the actual rich guy that lives in a modest house, drives an old truck, and buys his clothes at Costco. Give me the boring option that promises a modest return all day.

[Carlos Ptriawan]

Quote from @V.G Jason:

Quote from @John McCullough:

Quote from @V.G Jason:

There are one of the two syndications I am in-- not looking good. 

 What is the other syndication?  How is it doing?  What syndication would you recommend for current investment?

 I would not recommend a syndication.

 Run away from syndication until 2026

[Jeremy H.]

I am trying to understand the benefits of investing in a syndication - is it the monthly/quarterly distributions? Dividend stocks can do this. Is it the diversification? Stocks again can diversify (and frankly I don't see the benefit in investing in real estate related stocks - there are much better options) Are there any tax benefits?

Most of the reason I got into RE is because I control the asset. I control the price I buy at (equity gain at the buy), I can force appreciation on my own terms, I get the monthly cashflow, I get direct tax benefits, appreciation and loan paydown that directly affects my net worth since I own the asset. Without those benefits, I think I'd just stick the the stock market...easier, simpler, longer history, solid returns over the long term...