Syndications & Passive Real Estate Investing
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback
Western Wealth Capital: What do you know about them?
They have a new offering as of 2/27/2019
What do you know about them?
Have you invested with them in the past? What was your experience?
Thanks in advance.
They're solid underwriters and performers. Janet is known to not budge on her criteria and price. I doubt she'd overpay for a property. We've competed against them on properties here in Phoenix. Their model is similar to most syndicators right now, underwriting a cash out refi.
Thank you Sam Grooms! I appreciate your candid, abundance mindset about a competitor.
@Sam Grooms
Sam, I'm newer to this and don't know the difference between what I read and reality.
Personally, do you think their fees in this deal are fair?
What do you think of these fees, fair or a little over-the-top?
- Acquisition Fee - 1% of Purchase Price
- Asset Set up Fee - $8,500 total
- Asset Management Fee - 3% of income
- Disposition Fee - 5% of difference b/n purchase price and eventual sales price
- Mortgage Guarantee Fee - 1% of amount guaranteed
- Financial Services Fee - 5% of capital contribution of each limited partner
- 65/35 Split: After investment repaid
Thank you in advance!!
Originally posted by @Josh Cochran:
What do you think of these fees, fair or a little over-the-top?
- Acquisition Fee - 1% of Purchase Price
- Asset Set up Fee - $8,500 total
- Asset Management Fee - 3% of income
- Disposition Fee - 5% of difference b/n purchase price and eventual sales price
- Mortgage Guarantee Fee - 1% of amount guaranteed
- Financial Services Fee - 5% of capital contribution of each limited partner
- 65/35 Split: After investment repaid
Thank you in advance!!
Some seem low, while others seem high.
Acquisition Fee: This is on the low end. Some people charge up to 4%. 3% is very common. As the deal size gets larger, this should get lower.
Asset Set-up Fee: I've never seen this, but its fairly small compared to the other fees.
Asset Management Fee: This is a little higher. 2% is more common.
Disposition Fee: This is structured differently. Usually its just 1-2% of sales price. 5% of the difference seems like a lot. Note that this gets paid out before any pref, and I'm not sure how I'd feel about that as an investor.
Mortgage Guarantee Fee: this is why the acquisition fee is lower, they break it up. We do the same thing.
Financial Services Fee - I've never seen this, and this can have a big impact on your returns. This turns your $100K investment into a $95K investment on day one. Without knowing more about this one and why they have it, it seems a little greedy to me. You see it in other asset classes, just not in the multifamily value-add syndication space.
65/35 split repaid: What's the split before being repaid? This leads me to believe 100% goes to investors until repaid, then 65/35 split. Does that mean all returns are OF capital and not ON capital. And there's no pref?
Lastly, the more track record a sponsor has, the more they can command. Don't spend too much time comparing a seasoned sponsor with a decade plus of experience to a newer operator. I would spend more time making sure that your sponsor is properly incentivized, and that their goals are properly aligned with the investor's goals.
@Sam Grooms
Wise words on "goals aligned" Sam! I believe WWC and my goals are aligned, however with these high upfront fees, it appears the general partners would do well with or without the asset performing, which risk is there with potential market correction coming.
And, I see what you mean, WWC seems to be doing well with their system, so they may be squeezing more juice on deals now b/c they deliver for their investors.
@What's the split before being repaid? -- You are correct, 100% goes to investors first, before the split, so no preferred.
@ Does that mean all returns are OF capital and not ON capital. -- Not sure what this means Sam, I'm too much of a newb.
My concern is that just because there are heavy fees, doesn't mean its not a great investment. I don't think I have any knowledge to know the difference unfortunately, and don't know next steps on how to evaluate. Any advice here?
Do you have any current/future investment opportunities Sam with Whitehaven?
It looks to me like you would be essentially giving WWC a loan to be paid back through the property's earnings or a refy or a sale...and then you would get 65% of all proceeds after you get your invested capital back...Most syndications I have seen, the sponsors offers a preferred return (6-8%) on the investors' capital until the capital gets repaid in full. Then the sponsor gets their share of the split.
Has anyone done a podcast/ Blog / webinar on how to prescreen/ do Due Diligence on an Operator as well as a specific syndication for investing?
A checklist, for both the Operator and specific investment would be helpful....
@Andrew Frishman - here is some food for thought to get you started: https://www.biggerpockets.com/member-blogs/11782/84402-how-to-evaluate-a-sponsor Feel free to DM me with any specific questions, I have invested in multiple deals as a LP and as a GP. Good luck!
Janet is a well-known operator in Phoenix and parts of TX. As @Sam Grooms mentioned, we've competed (unsuccessfully) against them in the highest and best.
Everyone has their "tricks of the trade". WWC likes to create several levels of value add in a community, with various levels of interior improvements. Perhaps one level is just to clean up the unit and install new appliances. The next level up might be to reface the cabinets. Another level might be to add tile backsplash and stainless. They also like W/D install.
In general, I am not aware of anything bad. They seem disciplined, and like Sam said good underwriters. I don't particularly love the methodology for this cycle, which is reflected in Sam and I are doing things very differently, but this is a matter of opinion. There's enough for everyone.
As to the fees, we can argue either way. However, these fees tell me that Janet wants to get paid, and while some of the fees may be on the high side I see nothing wrong with it in general. What we do is hard work and a lot of responsibility. And, ultimately, she is raising the money, which means that enough people trust the prospects of her performance.
You simply have to decide where you stand and play or pass.
Originally posted by @Ben Leybovich:Janet is a well-known operator in Phoenix and parts of TX. As @Sam Grooms mentioned, we've competed (unsuccessfully) against them in the highest and best.
Everyone has their "tricks of the trade". WWC likes to create several levels of value add in a community, with various levels of interior improvements. Perhaps one level is just to clean up the unit and install new appliances. The next level up might be to reface the cabinets. Another level might be to add tile backsplash and stainless. They also like W/D install.
In general, I am not aware of anything bad. They seem disciplined, and like Sam said good underwriters. I don't particularly love the methodology for this cycle, which is reflected in Sam and I are doing things very differently, but this is a matter of opinion. There's enough for everyone.
As to the fees, we can argue either way. However, these fees tell me that Janet wants to get paid, and while some of the fees may be on the high side I see nothing wrong with it in general. What we do is hard work and a lot of responsibility. And, ultimately, she is raising the money, which means that enough people trust the prospects of her performance.
You simply have to decide where you stand and play or pass.
Everyday my respect for you Ben is increasing. You didn't bad mouth your competition and it tells me a lot about your character.
More power to you and Sam!
There are people - even right here on BP - who think that they should tear people down so that they are perceived to be superior.
Also, there are people who "hate" on apartment syndicators for even using OPM (Other People's Money) and don't want to pay us fees we deserve for all the hard work we do. We take on 100% of the liability, do all the work and sometimes even put our own cash on the line and only get a portion of the deal (sometimes as low as 30% or even 20%).
If I want to know more about Phoenix (as I buy hotels all over the country), hope I can chat with either of you. Don't worry - I won't compete with you on apartments :)
They are one of the very few MFH operators who have a long track record.
Hey Josh,
I'm researching Western Wealth Capital at present. They certainly display an impressive track record and have a deep bench when it comes to industry experience. I also like the fact that some of their veterans have been through a full market cycle in multi-family space. Did you invest? If so, what has been your exerience?
@Josh Cochran, @Erik Zamboni -- Let me know how it went. Whats the minimum amount per project. They have come on my radar twice in the last 12 months and both times through the Canada Rein Podcast. I am very much interested to know how it went and decide based on your feedback. So appreciate your PEARLS of wisdom :)
Hey Josh,
I'm researching Western Wealth Capital at present. They certainly display an impressive track record and have a deep bench when it comes to industry experience. I also like the fact that some of their veterans have been through a full market cycle in multi-family space. Did you invest? If so, what has been your exerience?
Hey @Josh Cochran
Just this afternoon I had an extensive conversation with Juliann at WWC. I must say I was impressed and took copius notes. I intend to invest. I'm glad to connect further with additional details if you are interested.
Has anyone in this forum invested with Western Wealth Capital? The company I am working with is looking into the Janet's team and their values, and would love to learn from a current or past investor. Thanks!
@Luke, I started investing with them beginning of 2021. Too new for results, yet feel pretty comfortable, after meeting some of the employees, and meeting Janet, all are very genuine and are appreciative, not pompous.
All the projects that I visited, 3 so far in Dallas this year, have been redone as projected, and proformas are in line with expectations. Hopefully, I will be elated after a few years, as I expect to be so far. Their return profiles on average are 30% IRR on the average deal. I am looking for multi cycled firms to invest thru w/excellent returns, agnostic of investment. I anyone out there knows of any, please reach out. Thank you.
"I use to do business with Western Wealth Capital (WWC), but I no longer do. The reason why is a concern with the ownership structure of this company. This company has a very close business relationship, with a local Real Estate "Guru". In his business dealing this person has had a couple of class actions against him. In the Province of British Columbia, companies are using bare trust agreements (held confidential at Lawyers office) to hide the true owners of Limited Companies.
With this person having a close relationship with WWC, seeing him at the office frequently, and knowing WWC lawyer that uses these Bare Trust Agreements. It does appear that the true owner is this "guru", and the reason to hide his ownership is because of his past business dealings, and class actions against him. I will not do business with anyone that has had a couple class action lawsuits against them in their business dealings.
In business honesty is paramount, if you do not have that, you have nothing
@Messia McKiness Can you please post specifics on who this Guru is? And how exactly you know that they are at least the majority owner of WWC? Many have done quite a bit of business with WWC so these specifics could really help us to vet that out further. Thanks in advance.
For the owners hiding behind the bare trust agreements, you can pull up their names by doing an online search for "David Baines: Real estate investors settle class-action lawsuit" Mr Baines before he retired was a business columnist for the largest newspaper in British Columbia, the Vancouver Sun.In this article you can see the payment the defendants (who I am talking about) had to pay out to the plaintiffs. A number of articles have been written about this specific case, and there was a second class action, two years after that.
You can always pull up the working relationship between the names of the principals (in their website) of WWC, and the person Mr Baines states in his article. They have a long close working relationship.Be aware, that I know all of them, as I did do some business with them
The Province of British Columbia is failing investors in their lack of laws, and the disclosure of "Beneficial Ownership". It is one thing in using it for a single property, but when Limited companies are doing it, it is not good.
And as a person who has been in Business for many years, honesty is paramount, If you do not have that, you have nothing.
If you have any other questions, feel free to ask.
I would like to re-open this thread and ask about their experience with Western Wealth Capital. I have been to several meetups lately and there have been several comments about several deals with them running into trouble recently, but no one could give me any specifics. If anyone has any direct experience with any deals running into trouble please let us know as it is likely there are many more operators in similar positions if they purchased over the last 2 years. Thanks!
My experience with them was good until it wasn't.. Invested in 6 deals - my results below.
A. Villas De Azul -Sept 2020
B. Onnix LV -October 2020
C. Presiodio North - Dec 2020
D. Somerset LIX - Feb 2-21
E. The Carling on Frankford Sept 2021
F. Heather Ridge Nover 2021
As of October 2023:
A,B,C: Each paid out at least once around 10% total . As of October 23 still seems to be cash flowing.
D: Paid 3% total - As of October 23 still seems to be just so cash flowing.
E: Capitol call of 10% .. They are hoping to sell for a 50% loss of original investor money rather than 80% with no capital call
F: Complete loss .. just sold wiping out 98% of investor money..
Looking back they are simply a proxy for interest rates.. Everything was floating rate loans. As long as interest trended down they looked brilliant.. I followed them several years before investing..
I had asked about interest rates and they said they bought caps. Stupid me for not realizing it was only for 1-2 years which is essentially floating rate updated annually or every 2 years.
My Dad farmed thru the 1980's and still mutters how interest rates went high and higher.. never do anything floating. I knew better and alas I am paying for it.
Truly the tide went out and their clothes where missing completely on the properties from mid 2021 on. Good lesson on what not to do in rising interest rate environment.
Kevin
Thank you so much for your thorough, thoughtful, precise, and honest response. It is much appreciated.
Quote from @Kevin Hoover:
My experience with them was good until it wasn't.. Invested in 6 deals - my results below.
A. Villas De Azul -Sept 2020
B. Onnix LV -October 2020
C. Presiodio North - Dec 2020
D. Somerset LIX - Feb 2-21
E. The Carling on Frankford Sept 2021
F. Heather Ridge Nover 2021As of October 2023:
A,B,C: Each paid out at least once around 10% total . As of October 23 still seems to be cash flowing.
D: Paid 3% total - As of October 23 still seems to be just so cash flowing.
E: Capitol call of 10% .. They are hoping to sell for a 50% loss of original investor money rather than 80% with no capital call
F: Complete loss .. just sold wiping out 98% of investor money..
Looking back they are simply a proxy for interest rates.. Everything was floating rate loans. As long as interest trended down they looked brilliant.. I followed them several years before investing..
I had asked about interest rates and they said they bought caps. Stupid me for not realizing it was only for 1-2 years which is essentially floating rate updated annually or every 2 years.
My Dad farmed thru the 1980's and still mutters how interest rates went high and higher.. never do anything floating. I knew better and alas I am paying for it.
Truly the tide went out and their clothes where missing completely on the properties from mid 2021 on. Good lesson on what not to do in rising interest rate environment.
Thanks @Kevin Hoover for the detailed response.
I ended up investing in 3 deals with Western Wealth Capital in 2021. 1 is underwater and they couldnt raise sufficient funds for capital call. So that one is most likely a complete write off. The other ones are into their Funds and from this experience, i dont have much hope to recover the initial capital. My investments with Western Wealth were the most risky ones in my entire Portfolio and that's the reason i was trying to find more info.
I am now keeping away from funds that are leveraged so high and chasing yields that are too good to be true. Infact, I personally dont like the model where the property needs to be exited in 4-6 years to be able to realize PnL for all parties involved. I will stick to the Buy and Hold strategy for now and diversify in other asset classes besides MFR syndications. Maybe I will change my mind in a few years but for now, the wounds are too fresh.