All Forum Posts by: Alan M.

You should 100% pay off student debt and credit card debt first. Those are both horrible kinds of debt to carry around. Paying them off will increase your cash flows for future investing AND remove risk. You're also likely to get far better rates on debt if you're existing debt burden is low/less.

I'm in exactly the same boat, except my money is sitting in equity in properties ($3.1M in equity on $4.4M of investment property, another $1.1M in equity on my primary residence. And I'm basically thinking the same thing. Can't beat the returns of syndications if you're looking for passive income. I'll be tapping into it via leverage, but not borrowing past the cash flow from the properties.

But I wouldn't bank on the exit at the end of 5 years. To @Todd Dexheimer's point, the exit is a big piece of your math, and if the timing isn't right to exit, you don't want to be banking on the exit. Smart syndicators won't be forced to sell because of the way they've structured the deal. So, don't spend the money from the exit until you have it... aka live below your means and everything on top will be gravy.

Also, if you have $500k in cash now, I wouldn't worry about staggering the investments. In reality, if you invest in 5 different deals (presumably across multiple syndicators) and you do them all at the exact same time, you'll probably exit at least 3-4 of them in different years. And that's a good thing...you don't want 5 deals all exiting at the same time, your tax hit would be absurd. 

I'm an accredited investor in the market to meet 3-4 syndicators for residential MF buildings and go into 2-3 deals with each of them, presumably at about $50k-$100k investments per deal.  I've found a few that are active in the forums here on BP, but would like to meet a few others, as I can't imagine all the reputable ones are the same ones who are active on BP.

I'm not interested in first time syndicators...I don't have that type of risk appetite. I'd prefer someone who's done a few deals, including exits, has been at it a while, and, above all, is honest.

Referrals much appreciated!

@Noi K. Thanks for jumping in.

I think I'm settling into using a fixed term loan, maybe about $1M, to fund a large multi family and to buy into some syndication deals. The CF from the syndication deals and the Brownstone would cover the debt payments on a $1M loan, and I'd still have a good amount of equity and positive cash flow coming in on top. I really just want to use any cash flow to acquire more assets that will cash flow in the future, so this fits into that model - and then can wash/rinse/repeat from there and do the same again in 3-4 years.

The advantage of borrowing against the Brownstone is that it's a residential loan, not commercial, so could have a 30 year term on it (i.e. very very fixed). I'd only use the HELOCs to cover short term things that would be immediately paid down by CF. 

@Thomas S. Once again, I never said my goal was to maximize the potential income. The goal was to conservatively tap into the equity. Is there anything wrong with that goal? I have and will have plenty of money. I don't need to maximize the amount of income I get from these properties to be happy, I just don't want to sit on them. Big difference.

@Thomas S.

Well let’s see, I have a million dollars to play with. How about offering something constructive for what I am investing instead of criticizing what I am not?

Yeah, refinance, take some cash out, and go do another one. 

Thanks, @Ivan Barratt - I agree on the fixed rates/terms on long-term investments....so long with long. The only situation where I would use the HELOC for a downpayment is with significant cash flow coming in (as I currently have) and paying down the HELOC rapdily.

The other thing about the HELOCs is that they're unlikely to be called...the LTV, even with the HELOCs, will be around 50%, so very little risk the banks call the HELOCs because of valuation drops.

@Thomas S. As I stated, I just inherited one of the properties...I'm not speculating, I'm holding onto the property I grew up in. Sure, it's sentimental, but I'm not selling it and I'm trying to understand how best to use the equity I have, short of selling it.

Also, the Brownstone will cash flow about $10,000 a month once I get the 3rd unit rented out.

I would make the decision regardless of how you feel about the market. Those that try to time the market generally get destroyed...dollar cost average going in, stay in.