All Forum Posts by: Adrian Clapp

Make sure you review the surrounding area and watch out for the RE "doom loop" 

https://www.wsj.com/real-estate/commercial/doom-loop-st-loui...

I've invested in 20 syndication deals over the past three years. I've had one recent multifamily deal in Florida exit with a 32% IRR and one hotel deal in Atlanta refinance and return 110% of the original invested capital through dividends and the refinance and the hotel continues to make regular 16% distributions. That's the good news.

Many other projects have reduced or suspended planned CF distributions and I've also had a few capital calls in which I did participate since the business case still made sense (the MF in Florida had a capital call to finish construction and get through stabilization and it still returned the 32% IRR).

I expect almost all of the deals to be OK, just later exits than originally projected.

I am very concerned about one project and have already written it off in my head.  If I receive anything back, I'm considering it a win.

I've learned a lot about investing RE syndication deals over the past three years and have refined my criteria for investing.  I plan to continue to invest in a mix of both RE syndication and our own rental properties going forward depending on what makes the most sense and offers the best returns.

Quote from @Zach Edelman:

How does a new investor get involved with the regulations? I agree it's great to temper supply and balance the overall market, but it also is somewhat sad that investors that now want to get in the game will likely have a way more difficult time doing so than in the past. The growth of STRs as an asset class is directly correlated with the amount of people that own and operate STRs. With ownership being diminished due to regulations, while those that got in before the regulations are left with limited competition and high upside, what about the investors that want to get in? 

Local/Regional STR owner associations as well as AirBnb and VRBO often lobby for common sense regulations.

Quote from @Andrew Steffens:

Quote from @Adrian Clapp:

Quote from @Andrew Steffens:

Quote from @Adrian Clapp:

Quote from @Andrew Steffens:

Luckily the State of Florida restricts municipalities ability to restrict STR's since 2011 so one less thing for us to worry about here.

However, I do agree the "bust" is mostly over (depending on market) as we are up 15% YoY on our existing portfolio, but I would stop short of calling it a boom!

That's what STR owners in Arizona thought too.  Funny how things can change when party STRs move in next door to wealthy people.

 Well, the state would need to repeal their law and give power back to the municipalities.  The 2024 legislative session just ended with nothing.  At least the process here will be harder than just a city council getting together and banning it overnight on a whim.

Arizona used to have the same state laws protecting STR in place state-wide.  Then in 2022 they changed it to allow local cities to regulate.  And some of the regulations are so onerous that they are almost a ban.

https://roiproperties.com/what-you-need-to-know-about-arizon...

 Yikes!

Here come the STR regulations for Florida.  They'll start with reasonable regulations and then increase the regulations to make it impossible to operate your business successfully. 

 https://floridapolitics.com/archives/664278-lawmakers-pass-s...

Quote from @Andrew Steffens:

Quote from @Adrian Clapp:

Quote from @Andrew Steffens:

Luckily the State of Florida restricts municipalities ability to restrict STR's since 2011 so one less thing for us to worry about here.

However, I do agree the "bust" is mostly over (depending on market) as we are up 15% YoY on our existing portfolio, but I would stop short of calling it a boom!

That's what STR owners in Arizona thought too.  Funny how things can change when party STRs move in next door to wealthy people.

 Well, the state would need to repeal their law and give power back to the municipalities.  The 2024 legislative session just ended with nothing.  At least the process here will be harder than just a city council getting together and banning it overnight on a whim.

Arizona used to have the same state laws protecting STR in place state-wide.  Then in 2022 they changed it to allow local cities to regulate.  And some of the regulations are so onerous that they are almost a ban.

https://roiproperties.com/what-you-need-to-know-about-arizon...

Quote from @Andrew Steffens:

Luckily the State of Florida restricts municipalities ability to restrict STR's since 2011 so one less thing for us to worry about here.

However, I do agree the "bust" is mostly over (depending on market) as we are up 15% YoY on our existing portfolio, but I would stop short of calling it a boom!

That's what STR owners in Arizona thought too.  Funny how things can change when party STRs move in next door to wealthy people.

Ivy Zelman. She nailed what is happening in the RE market right now and it would be very interesting to hear what she thinks is going to happen next!

Biden rolls out 'Renters Bill of Rights' as lawmakers push for federal rent control lawsIn the face of , President Joe Biden is the White House is calling a "Renters Bill of Rights" in an effort to improve rent affordability and protections for tenants.

Hi @Allan C.,

I do use a separate bank account for all RE syndication distributions which is great to see the overall RE Syndication "big picture". However, because the distributions all start at different times due to when investment started, when the first distribution was due, and then when the distributions were different than expected it just gets complicated across 20 different investments.

75% of my RE Syndication investments have been through CrowdStreet and they do track the distributions, etc. but they don't compare actual to what was originally projected by the Sponsor.  And then there is the other investments outside of CS that are not tracked in the portal. I'd just like to see everything in one place, actual vs. original projection.

I've really only been investing in RE syndications for a couple of years now so maybe I will "trust the process" more in a few years, but for now, I'd like to know which projects are on track and which might be in trouble.

Maybe one of the main issues is that Sponsors are great at providing quarterly reports but they do not seem to project forward for the next year or full cycle as things change- especially regarding what future distributions and what the exit might look like and when.

I appreciate the reminder to focus on the big picture.  So far most of the syndications I'm in seem to be on track with two exceeding expectations significantly and one or two at risk of not meeting projections.