All Forum Posts by: Brandon Craig

Clearly this is not an experienced investor sponsoring the deal as an experienced investor would show a 15-20% return and if returns were higher lower expectations which lower risk and if they got more they look like heroes. Starting at 43% is close to criminal / fraudulent and not something any experienced investor would ever show.

I’m Confused, where are you getting them 86% and 43% numbers?

Its 50/50 GP and LP

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Quote from @Michael Vinson:

Do they have the land, permits, zoning, etc. locked up for the new builds? I live and invest in Granbury and many STR's in the city of Granbury have been shot down in zoning lately. Too many "not in my backyard" locals are protesting zoning changes and city council has adopted new (stricter) zoning and permitting requirements. Granbury is also very protective of its bed and breakfasts. I do not know if a commercial multi-family zoning designation allows for unhosted B&Bs. If not in the city, and not in the ETJ, then it's a lot easier, provided you can get water (probably need to drill water wells so thats a separate ground water district) and sanitation (some sort of onsite sewage treatment). There is lots of development going on; however, there have been many moratoriums on new builds in the NE side of the city due to sewage treatment. TCEQ has approved the new facility I believe, but I'd want to know if that has any affect on the investment.

This deal is actually in Missouri

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Quote from @Jim Pellerin:

Quote from @Brandon Craig:

Quote from @Will Barnard:

Quote from @John Teachout:

So unless the property management is going to be done by the deal sponsors, they're not delineating what amount is going to which... The more details that come out about the structure of this syndication the hokier it sounds to me. You seem to be committed to moving forward with it so all I can suggest is to bring this thread back to life in a few years and let everyone know what happened.

I agree with this. 10% fee, even considering PM fees in it appears to be high and neither is specified as to how much goes to each. If they are doing a 2% and 8%, then the sponsor management fee is double the norm. There have been quite a number of red flags and warnings in this thread and many of your responses tend to be, "but what about this and this is why that is" leading me to believe you have already made up your mind that moving forward is a good idea so I wont try and change your mind but again, warn you that some things in this syndication are outside the norm and the promised rates of return (STR's in the package included) are abnormally high leading me to believe that the investors will have a much higher chance of disappointment than satisfaction. A syndication should be well focused and this particular offering is all over the board. If you like the idea of investing in a syndication with STR's, then find one that focuses on that and has a good track record. If you like the apartment syndication process, then go with that. Combining so many strategies into one syndication offering is rarely a great idea.

Thanks for your response.

I think assumptions are easy to make due to this being all text, but my mind is absolutely not made up which is why I am posting.

i raised the concerns with my sponsors around the high IRR and fees and other points you all made and she countered with the air bnb component being the reason. I simply came back to you all with the rebuttal.

And what's their track record again? How many deals have they done to substantiate such a return?

They have 4 other syndications that are 100+ unit apartments and both own 10 or so air bnbs in Granbury TX.

they sent over the pre forma for those apartments deals. What does a track record entail exactly?

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Quote from @Will Barnard:

Quote from @John Teachout:

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Quote from @John Teachout:

Quote from @Brandon Craig:

Quote from @Will Barnard:

Quote from @Brandon Craig:

Quote from @Chris Seveney:

@Brandon Craig

If they have a 40% annual return in their PPM and offering info run for the hills. If that was the case and they delivered that return they could raise $1 trillion as who wouldn’t want a 40% return….

Also find out how much of their own $ they have invested in the deal. What is the flow of funds - who gets paid first and what are the management fees

What are the lock up period

We put together a 20 question questionnaire to ask your syndicator. Let me know if you want a question

They have 0 in the deal it’s all investors 50/50 GM/LP

investors first.
2% acquisition fee
10% asset management fee
1% capital transaction fee
10% preferred return to LPs

Year 2 refi+NOI shows 121% COC and year 7 155% on sale. In between years are 5-8%

I was very skeptical when reading your initial post and a few follow ups. After reading this last post, I now know my skepticism was highly warranted. 10% management fee? I would love to get that high of a fee. 50%/50% split? I would love to get that much as a sponsor! NO skin in the game for the sponsor? Not a good answer. The truth is, those numbers and terms are just not going to work. Proceed with extreme caution on this one or better yet, run. While it may work out, it sounds like a real long shot especially with the splits and fees as they are!

And isn’t 10% normal for someone to manage a property?

10 percent to manage a property is typical but not to manage a fund or syndication. Most syndications have a management company in place but that is not related to their asset management fees...

They said property management is wrapped in the 10% asset management fee.

Because 6 air bnbs are in included in the deal with a 16 unit apartment, the fee is higher than normal.

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Hi All,

I am soon to invest in my first syndication deal, and they are under LLC.

Does having my own LLC provide any benefits as an LP investor? Or just I just go in as an individual?

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Quote from @Brandon Craig:

Quote from @Colton Hahn:

Quote from @Brandon Craig:

Quote from @Will Barnard:

Quote from @Brandon Craig:

Quote from @Chris Seveney:

@Brandon Craig

Also find out how much of their own $ they have invested in the deal. What is the flow of funds - who gets paid first and what are the management fees

What are the lock up period

We put together a 20 question questionnaire to ask your syndicator. Let me know if you want a question

And isn’t 10% normal for someone to manage a property?

From our research industry average is around 1%. We charge maximum of 1% depending on the deal.

10% is INSANE.

There are 6 air bnbs (3 duplex) they are building using the money from selling 12 SFH in the deal.

the deal includes this and a 16 plex.

They said that is why the fee is 10%.
that is also why the IRR and return is so high, 6 air bnbs bumps it up.

does that change things in the sketchiness?

Also they confirmed they have skin in the game. They paid the close on first phase of the deal, 16 SFH, earnest and legal fees

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Quote from @Colton Hahn:

Quote from @Brandon Craig:

Quote from @Will Barnard:

Quote from @Brandon Craig:

Quote from @Chris Seveney:

@Brandon Craig

Also find out how much of their own $ they have invested in the deal. What is the flow of funds - who gets paid first and what are the management fees

What are the lock up period

We put together a 20 question questionnaire to ask your syndicator. Let me know if you want a question

And isn’t 10% normal for someone to manage a property?

From our research industry average is around 1%. We charge maximum of 1% depending on the deal.

10% is INSANE.

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Quote from @Will Barnard:

Quote from @Brandon Craig:

Quote from @Chris Seveney:

@Brandon Craig

Also find out how much of their own $ they have invested in the deal. What is the flow of funds - who gets paid first and what are the management fees

What are the lock up period

We put together a 20 question questionnaire to ask your syndicator. Let me know if you want a question

And isn’t 10% normal for someone to manage a property?

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Quote from @Will Barnard:

Quote from @Brandon Craig:

Quote from @Chris Seveney:

@Brandon Craig

Also find out how much of their own $ they have invested in the deal. What is the flow of funds - who gets paid first and what are the management fees

What are the lock up period

We put together a 20 question questionnaire to ask your syndicator. Let me know if you want a question

Sponsors fall under General partner with the management folks that find and manage the deal and asset right?

then the investors like myself are limited partner?

so The investors and I are splitting the 50% based on how much we contribute

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All Forum Posts by: Brandon Craig

Brandon Craig has started 11 posts and replied 51 times.

Post: First Syndication Deal

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Post: Syndication LP, do I need an LLC?

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