All Forum Posts by: Aaron W.

@Aries Larkin What kind of properties are you looking for?  We just closed on a 200 unit apartment complex there.

@Jalen Ping You'll most likely need to bring on a partner who can fulfill this requirement. By brining this partner on, you'll give up some equity on the deal, but at least you have a deal. If you do go down the partnership route, ensure it is all documented and in writing. 

Best of luck!

Agreed! One of the biggest differences between a REIT and syndication is the tax benefits the investor receives.

With a REIT, you receive dividends which are taxable unless you have losses you can apply. You'd have to take the step to sell off investment losses then claim them on your tax returns.

With a syndication, you also have taxable passive income, but if the operator is doing things right, you will receive depreciation benefits which can offset most if not all of your distributed cash flow. If the operator does a cost segregation and takes the bonus depreciation, then you should see even more upfront depreciation. As a passive investor, you will have to do little to no work to claim this benefit. Just ensure the sponsor/GP/operator you are working with has this built into their plan.

@Michael Ansley There is no one right way to do a partnership. It just needs to appear fair by both parties. If your partner is willing to accept your proposal of a "fair" deal, then that is a deal.  Definitely get this partnership written up by an attorney once it is agreed upon.

Best of luck!

@Justin Thompson There is a fine line between raising capital and joint ventures where the partner brings in capital. One is watched closely by the SEC and the other is not. One way to avoid any SEC scrutiny is to ensure the people you raise money from has some type of role in the real estate acquisition. It doesn't have to be a lot, but a substantive role is needed.

Best of luck!

@Andrew D Hansen You'll definitely want to consult a CPA about this question. 

From my experience, you will pay depreciation recapture tax regardless of whether or not you took the deprecation while you owned the rental. It is typically taxed as ordinary income up to 25%.

Best of luck!

Just have the contingencies in place and line up your inspectors and contractors.

The lender usually estimates 3%-5% of the loan for closing costs. It looks like they may be using the estimated value as the baseline for the closing cost calculation. These are just estimates and you won't know the actual amount until just before closing.

@Monica Ponton Ensure you have a due diligence contingency in there to give you time to walk and inspect the property. If there is something you don't like, then you can always walk away.

I know past performance does not predict future results; however, real estate has always appreciated over the long term. What you may overpay on now may affect your cash flows in the short term, but in the grand scheme of things usually turns out to just be a blip on your overall returns. Look at this investment as something more than just a couple of years, unless you are planning to flip this property.

Best of luck!

@Justin Goodin Syndications are a great way to invest in real estate if you don't have time to be active or don't want to spend time doing it. Not only do you get decent returns, you are also an owner of the property which means you get tax benefits from the depreciation which will offset the taxes on cash flow. Bottom line, you will pay little to no taxes on your cash flow.

You must, however, vet the sponsor. There are many ways to manipulate the numbers to make returns look rosy. You should feel comfortable working with the sponsor and they must be willing to openly communicate with you about the deal and the investments. Things will not always go well while investing in real estate and a syndication is no different. The sponsor should be communicating the good and the bad, while explaining what they are doing to mitigate the negatives.