All Forum Posts by: Adam Robinson

@mike dymski

If you spend the time up front to vet and identify top sponsors, investing into their fund provides all the diversity of asset classes and geography you need. 

In each FUND you hypothetically invest into 20-30 individual LLC assets. Origin Investments targets some of the best growing secondary markets, love their market selection philosophy.

Targeting low downside value-add deals with long term debt, with a firm with a very good track record in good and bad cycles, is by far the best way to invest any sum.

So assume 20 individual assets within a fund, 2-3 sponsors = 40-60 individual deals.. of course some will perform better than others, and these are NOT cross collateralized debt, so no systemic risk of the portfolio.

There is a reason US Private real estate is the single best asset class in the world, the returns risk profile is unmatched. Private Real Estate, NOT REITS, are best asset classes you can invest in

This is how the wealthy invest, instead of finding 40-60 individual deals, even on "crowd funding" they park their money into well diversified funds with a great theme. The theme of the fund is your personal "bet" on the next 10 years. 

For example i would go heavy into a self-storage and mobile home park fund right now. www.cashflowconections.com offers some great opportunities there.

I have no affiliation with any of these firms i mention, just admire them.

Even with $300k to invest, i would put 100k into 3 different sponsor funds. It will allow you to learn about the various asset classes, get experience in passive ownership and your returns over next 10 years will trounce the flash crash, high frequency, computer controlled casino they call the stock market. lol the CAPE ratio of the SP 500 is ABSURD! If you are not very familiar with CAPE Ratio, stop what you are doing now and dig into this.

Too much AUM in Index funds will cause all sorts of issues for stocks soon. Just wait... bubbly....

Simple. 

Find 2-3 very highly regarded (research them EXTENSIVELY and meet them) private equity real estate firms such as www.origininvestments.com that have a fund, and invest into their diversified private fund. I also like www.cashflowconnections.com Hunter Thompson is smart and well diversified into asset classes I like a lot for the next 10 years, Self-Storage, Mobile Home Parks and Value-add apartments on the more affordable side, NOT CLASS A.

Gaw Capital is also a firm i have directed some of my private clients to review, if you want international diversity.

You need some geographic and asset class diversity, and this structure is hard to beat, you could go with 1 firm, but i feel putting the hypothetical $3.5mm into 2-3 top notch, recession surviving firms is best. make sure they have been through a recession.

With good operators, you should be pushing high teens IRRs fairly safely. this is VERY PASSIVE and IMHO a fairly safe way to go.

I tell anyone who will listen this is where i would park my money if i wanted passive cashflow and some upside potential. 

Also, make sure the operators are taking out long term debt on deals, another critical factor to allow them not to get pinched in these downturns. As that fact alone has cause more sinking ships than a bad deal or operations.. the financing is critical piece here.

Some thoughts on Storage as we own some and are putting some ground up 3 and 4 story infill deals together currently:

• There is consolidation going on with larger groups strategically buying off some of the "mom n pops" with that, these large owners have VERY professional management.

• Storage has become an Internet search and SEO game more and more, and the big REITs have armies of analysts that spend all their time managing the search marketing efforts.

• If you are going to invest in a deal, I strongly recommend you get a larger management company, large regional firm at minimum to manage the property and internet marketing efforts.

• Locations is very important, you should be very convenient near other retail uses, BUT you do NOT have to be MAIN and MAIN due to most customers initially finding their facility through mobile and internet searches.

• There are plenty of areas overbuilt, but also plenty of under supplied areas, the critical analysis is within that 3 mile radius.

• @Terry Campbell and @David Thompson make great points and I would recommend investing a small amount as a passive investor in a syndication that has a good track record. the learning experience you will get is priceless, since storage is quite different from SFR flipping etc, I would make sure you are well educated and putting 50k into a syndicated deal will educate you faster than anything.

• Banks won't finance a deal without a 3rd party feasibility study, and they usually calculate the Sqft / person in the area, to make sure its at a certain level.

• its a great asset class to own, you just don't have the headaches of some other asset classes.

This question depends greatly on the person and their experience with various real estate related uses of those funds:

• If you are like @Matt Weaver and very actively doing deals in your market, thats easy, go with your gut on some of your best options. And I agree eventually people end up at Multifamily when they can.
• For many people, and I assume this is more the angle of this Question, who are not very active in flipping or investing, I would steer clear of the stock market entirely... ITS A SUPER COMPUTER CONTROLLED CASINO and the odds are WORSE than Vegas! PHDs with high frequency bots cause ridiculous events to happen, and you ain't seen nothing yet as far as flash crashes.
• Agree with @David Thompson but take it even further, I would find a platform (like Origin Investments or RealOP Investments) or several syndicators that are leaders in their asset class and geography, and I would parcel out the lump sum into the MINIMUM investments (i.e. $50,000 usually) into different asset classes and geographies.

You could potentially have $300k spread into 6 solid investments all over the nation or internationally.

Using Syndication, you are already WAY, WAY ahead of the game, your risk adjusted returns are just amazing with a great syndicator, I'm still shocked people plow so much into Index Funds..

Spend some time digging deep into the best syndicators, and then try to meet with them in person or have multiple calls.

Parceling that lump sum into multiple syndicators also starts a relationship clock, and exposes you to MULTIPLE deals to learn. You will learn SO MUCH valuable knowledge. 

Quite honestly, the knowledge you would gain by being in a self storage or Mobile Home park or Apartment Value-add deal for instance, and gaining experience owning and seeing operations of that asset is so unbelievably valuable.

All this also sets you up to ramp up your education and with experience investing in these deals, and seeing the operations and reports, will launch you into possibly finding your own deals in these asset classes.

This is an Exponential Business, its not fair at all, the ones who have experience get more brokers calling them get more syndicators reaching out, get more loans from banks.

Deploying this lump sum into multiple deals super charges your learning and trajectory.

I feel so bad for all the people in this terrible natural disaster. i hope for nothing but the best from all the people going through this, i cannot imagine how hard it is.

There will be some major ripple effects from this storm, effects that might finally be taken more seriously, as Katrina and Sandy were other warning signs. 

Coastal Areas are getting riskier, and insurance companies will start to feel the heat and something will need to change. How much more of the nations money should be spent on "rebuilding" in areas that are at such enormous risk for further future destruction?

its understood that people want to live near the coast and water etc, but its going to increasingly become uninsurable. already we are seeing way more flooding in coastal areas in Southeast US, and the sea level is ONLY going to rise further.

I've debated in my mind many times about taking some coastal regions entirely off my investable markets criteria due to massive problems with the insurance markets in the coming 10-20 years.

Houston... We have a problem.

The government will end up having to step in to "bail" people out, with no flood insurance, as there will be such an outcry of people's financial lives being destroyed by this natural disaster. 

Its sad and I feel very bad for all the people still weathering this storm and hope everyone is okay.

But this event will spur some very serious ramifications for all property owners with exposure in some of the lower lying coastal regions. 

I think this whole topic is very important, and though technology has done amazing things for us, its also isolated us.

It is so unbelievably important to meet people in person, break bread with them, get to know them, see if you have things in common to build a relationship over.

Business cards are just the tip of this face to face iceberg, they are not as important, but what they represent and all the big events and meetings i've attended, they are still relevant.

It's easy to just fire off an email or text nowadays.. face to face BUILDS relationships!

When's the last time someone reached out to you to invite you to coffee or lunch?

Heck, one time i was setting up a lunch with a very wealthy partner we had on deals, and one of my coworkers said what is this the 1960's.. i guess referring to mad men and one of their "lunch" breaks..

I think to get ahead, you need to be more MAD MEN like in your networking and relationship building.

For god sakes, find the top 4-5 brokers in your region and niche, and BUY THEM LUNCH ASAP. introduce yourself, try to find ANYTHING you might have shared interest.. Football, sports, hobbies, golf, tennis, pretty much most people love excuses to talk nonbusiness things here and there.

We are living in amazing times, it never ceases to amaze me that we are SO CONNECTED nowadays, I can almost reach anyone at anytime with social media. This is AMAZING.

Any article I stumble upon talking about some investor or developer, I can usually track them down very easily and reach out, and the kicker.. usually interact them them pretty quickly.

All this is to say that when it's easier to connect with people, there are more superficial connections, and the VALUE of these face to face meetings is a lot higher nowadays because of the noise and ease of people being able to reach out to anyone at anytime.

Business cards are still relevant, and focus on meeting people in person it will boost your career and investing success.

Bingo! 

You know you're in a crazy market, when you are wrangling hard with sellers over how much percentage of the "upside" they deserve.. 

There's so many groups chasing the "value-add" deals, so that's the reality. 

Supply and demand.. trickles down into everything about real estate...

Now too much demand from buyers of value-add for the low supply..

Yes, as for pretty much EVERY asset class, there are areas overbuilt. overall self storage is more popular than ever, so you do need to dig deep into analyzing existing sqft within 1-2-3 miles of an asset you want to acquire or develop.

I've driven around with City leaders that hate approving self storage and even went as far as to tell me how when they approved certain sites for it during leaner times, how they regretted it.. so SS has a stigma like MHP with municipalities, where they try to outlaw it.

I'm amazed at some of the Urban areas with good density that have Zero or hardly any decent self storage facilities. Areas where they are building awesome mid-rise multifamily all over, and yet have NOTHING. these are the urban areas im targeting for ground up or warehouse conversion projects.

I have a self storage specialized architect I work with, and we are looking at self storage with apartments or hotel wrapping it, since the huge costs of Urban SS is you have to make it look like a HIP office building pretty much to get government approval.

Shared elevators etc, with separate doors to go to Storage and Units, even a perk for Apartment Units to have storage that close.

The good thing about SS is that its mostly mom-n-pop owners, they own 1 or 2. they self manage, and usually not well.

Bring in Extra Space or Cubesmart as a 3rd party manager, and usually you can boost rental revenue up like 15% very quickly.

This right here above is brilliant.. if you cut through a lot of crap and stop wasting time, this is as concise advice i've seen on here in long time. 

The only other tip i would recommend is to hustle hard to find someone who is doing this and utilize them for partnerships so they can bring most of the equity and networth requirements for loans for your deals. Identify them, ask them what they need help on in their business, work hard with them, by any means necessary forge a relationship.

Multi-Family Millions is pretty much the only blueprint you need, and making sure you select a market that allows for decent forced appreciation, so spend a little time analyzing the most important metrics for market selection. mainly job growth and not in a crazy low cap rate city.

These Cities are 80 / 20 of the best cities to invest in the next 10 years: 18 Hour cities

• Austin
• Charlotte
• Nashville
• Raleigh Durham, NC
• Charleston, SC
• Phoenix
• Dallas
• Reno
• Orlando
• Atlanta
• Denver
• Portland
• Salt Lake City

Just pick ones closer to you, or move there, and then dive deep into submarkets and "up and coming" areas with hipsters etc.

I'm of the opinion that this time is a little different, regarding home loans have been much tougher to obtain and there are not nearly the subprime mortgages as we had before. 

we will probably see a more traditional recession, slight slowing of economy the next downturn.

The fact that so many subprime loans brought down the economy, give money to anyone who breathes, is NOT being repeated bodes well.

But markets where the house prices are just so high compared to the wages.. there will be some downward correction.

Always look at the median income to house price ratio.. some areas are extreme and are ridiculous.. 

bottom line, some areas are in a bubble, some are not, emerging tech hubs will be most insulated, such as Raleigh Durham, NC, Austin, Denver, Dallas, Portland, Charlotte, Charleston, SC, Nashville, Salt Lake City.