All Forum Posts by: Badri Malynur

@Spencer Gray Nice summary, one question I often get from investors who are more familiar with single family investing is that prices have already gone up so much and they think real estate prices are about to crash, as you know there is some amount of education involved in describing how multifamily investing is different.   Having said that the biggest problems I see with syndication deals for the average investor is the minimum required for each deal, even if one deal goes south then the gains from all the other deals get wiped out. 

If you had $50K to invest would you invest in one stock or build a diversified portfolio of 10 stocks. The problem with investing in syndication deals is that it requires a fairly large capital commitment to build a diversified portfolio. With a minimum investment of $25K- $50K per deal, you need at least $300K to build a diversified portfolio that spans multiple states and asset classes. I believe the solution to this is a customizable fund that allows you choose individual deals but invest a smaller amount per deal. 

@John Sayer  @Duke Giardano 

Thank you for your comments. i think customizable funds address many of the problems you mention. These are funds that are wrappers around individual syndication deals, these are not blind pool funds, investors can vet each deal and decide how much they want to invest in each deal and they still get a single K-1.  You get the best of both worlds

@Chris Levarek  I am not sure I completely understand your comment on having different shares for different opportunities. Are you saying that you will have a separate class of shares for each syndication deal you do and investors can choose specific deals?

@Logan Hartle, a customizable fund blends the best of both worlds, where investors can pick and choose specific deals and also the amount they want to invest in the fund. They would still get a single K-1 and can reinvest any cash distributions and exits back in the fund. 

I wanted to  get people's experience with real estate funds. As  a sponsor/syndicator/real estate entrepreneur  have you ever thought of creating a fund?  If so why and if not why not?

Here are the problems I see with funds today and would welcome your comments/feedback.

Funds have always provided a “one size fits all” diversification model for investors. With no ability to select the investments inside the fund, investors have always felt handcuffed investing in blind pools with no ability to create portfolios that meet their needs.

Similarly, the traditional fund model also limits sponsor flexibility. Sponsors are limited to marketing & capital raising at a fund level instead of deal level. Sponsors cannot customize the fees based on investors and there is no ability to fractionalize the individual investments.

I believe the future of the industry is customizable funds.