Wired money to BAM & Open Door Capital

[Bobby Shell]

I made the leap finally this last week and wired money to 2 syndication companies and started investing in our first 2 funds. 

1. Barrat Assat Management - Indianapolis Indiana (B+, B++, A- multifamily ) - I am fond of this area because it is a logistics hub, Amazon is building a new center here and there are lots of great jobs. 

2. Open door Capital - Brandon Turners Mobile Home Park Fund - I wanted to secure an investment in mobile home parks because of many of the obvious reasons that we have all learned about (buy from mom and pop, increase rents, meter water, lots of room to increase NOI, less cap ex, rent the lot & the owner owns the mobile home, etc)

**** I have done due dilligence for over a year on MANY (15+) syndicators and are still doing due dilligence because I plan to invest with more. My goal is to get into 1 new syndication a year, and Lord willing 2 if we can afford it. It was easy to live with a fear mindset in times like these but I trusted the process and am excited to be entering the multifamily, MHP, and commercial world!

I am happy to answer any Q and share my experience with other investors to help them or add value in any way!

[Account Closed]

Originally posted by @Steve Vaughan:

I can see being attracted to passive fund investing living in an extremely expensive market.  

I can see the advantages of passive investing as a long-time DIY self-manager.

I always wondered about leverage in these.  Say you invest $100k. If I do that in direct ownership RE, I can conceivably purchase $500k worth of RE.  Does your $100k stake translate into more equity because the fund is getting financing? With 9verhead and fees, I wouldn't expect 5:1, but maybe 3 to 1 when your % is figured out?

Commercial financing scares me.  Are your funds using agency debt or are their loans callable and /or expire after a few years?

I understand why you sought these asset classes, but did you find these sponsors superior to others in the same class?  Barrett I believe has been around a while.  Have either of these sponsors weathered a storm or recession before?  

Thank you for any insight and for starting this thread👍

You ask why would someone take $100K and put into a syndicate rather than buy a 500K property. I can think of many reasons

1. No liability or debt other than the investment itself. No need for reserves

2. No need to manage it. Totally passive. The GP provides the expertise.

3. A different asset class. A 200 unit apartment is a different beast than a fourplex.

Of course you give up control and liquidity so vetting the sponsor is the most important thing here which the OP seems to have done.