All Forum Posts by: Bryan Hancock

I looked up the definition of a controlled group and found this:

https://www.law.cornell.edu/cfr/text/26/1.1563-1

I think we'd be considered a 'brother-sister' control group under this definition.  

Larry Wu is a good option.  If you do a simple Google search with 'Austin' and 'structural engineer' with his name you'll find him.

I found a post on White Coat Investor about using multiple 401(k)s via a SoloK or some combination thereof with an employer 401(k) to allow one to defer more than $132k (I'm married) into retirement vehicles.  I'd link to it, but I think that may be against the rules.  If you Google 'White Coat Investor' and 'multiple 401k rules' you'll probably find it.

If one were to have a development business, hard money business, and some form of consulting business these would all, in theory, be separate and not subject to being labeled a controlled group.  My understanding is that up to 25% of the earnings from each business could be eligible for tax deferral to exceed the $66k/individual or $132k total annual contribution limit.  So one would need to make 4 X $132k == $528k per business line to be eligible to exceed this limit per business.

Does this seem correct?  Has anyone done this or seen someone else do it?  

Why is it that anytime something bad happens, there is fraud, or some other nefarious situation that there is a renewed call for the gov-mint to protect LPs from being able to take additional risk in search of additional reward from their investments?  The JOBS Act didn't change the definition of an accredited investor and people who invest are big boys and girls that should either do THEIR OWN diligence or find people to help them to vet opportunities properly.  

Escrow agents are not a panacea either.  At some point a closing will happen for the securities offering and you have to trust the operator to operate the project.  The more senior sponsors are unlikely to want to have funds doled out in tranches for their offerings and thus the funds will reside in an operating account.  One can ask about policies, procedures, auditing, who is doing their accounting, or any manner of things to attempt to thwart the downside risk.  Fundamentally many of the issuers are smaller though and there is a reason that the returns being offered are higher than what one would receive from a more liquid securities market.  More return is directly correlated with some type of other risk; be it liquidity risk, execution risk, or many other risks.  

There is no such thing as a free lunch.  Those calling for the government to protect investors from being able to place their capital where they see fit should direct their energy elsewhere.  If LPs don't know what they're doing they should either make a lot smaller bets, hire competent individuals to help them, or do both.  

Yes...for sure.  Taking time to place money has a cost while the money is not in use.  

There is a local company that has a pipeline with gap lending needs from borrowers on seconds, but I think sitting around and waiting to place capital is probably sub-optimal even if I can get premium yields.

Having access to liquidity helps some, but I understand this is harder for fund managers to offer.  Hornet Capital locally apparently has a 'no lock-up' period on their fund, which may be from some customizable fund structure.  I'm setting up a meeting with the fund's principal to discuss on Monday.  They just attracted away their senior underwriter from Stallion, which bodes well for the veracity of things.  

I realize others on here have their own funds so please DM me if you'd like to chat.  I really want to stay focus on central Texas-based funds if possible.  

Who do you recommend right now that is doing solid loans that is taking investment dollars?  I'm open to short-term debt funds or first deed trust investments.  If the latter my preference would be to loan on projects near Austin since we're organized to take these projects back if needed.  

I see that Ian has Fund That Flip (now Upright) as his best of breed on his ranking site and I am also investigating Sterling locally.  Who else have you had success with recently?  My preference would be to tie up funds for 2 or fewer years if possible, but longer-term investments may work if there is enough additional risk-adjusted yield to justify the lack of liquidity.  

It's been a while since I did a rate/term refinance for a SFR that we'll hold for investment. I spoke to someone today who specializes in BRRR refinance loans with a scenario where one of our controlled entities will do a hard money loan to another one of our entities for a rehab. We'll then renovate/rehab and rent it out after we refinance to get our cash out.

I was told that 75% ARV is what lender's appetite is for this type of loan if we're using a conventional loan right now. Accurate? Are there other options with a shorter term possibly? Or are there other options with a higher LTV and reasonable rates/terms?

We'd prefer a low loan constant with low rates, but I'd like to know of the other options if they're available. Anyone have recent experience with this type of loan product to give me the lay of the land?

Which company do you recommend for a virtual assistant right now?  We have some pretty simple data entry work that I'd like to have someone work on for 10-20 hours a week consistently for about a year.  My kids are currently helping, but we really need someone consistently doing this to achieve our goals in the time frame we have.  

Where is the best place to go to get a resource like this?

I need to hire a VA or someone to do some rote data entry work for about a month. Who do you recommend for such a thing?

The preferred return is only one component of a syndicated offering.  As others have mentioned the overall return that is offered in a fund will depend on a number of things. Some of the big variables are the product type and thus the likelihood of risk manifesting. Risk is either positive or negative and can be borne out by the likely dispersion of returns. A ground-up hotel development that depends on successful operations and skillful management should offer higher returns than a NNN lease product. Funds that blend these various product types will offer different returns in line with the perceived (or actual) risk associated with the underlying.

Another major variable is the skill and track record of the management of the sponsoring entity that controls the asset.  As sponsors mature in their journey the return and deal structure they offer to attract capital to their projects generally decreases.  This is a typical supply/demand phenomenon, but it also is generally a function of their prowess in being able to market the opportunity properly and thus have the right conversations with suitable investors in sufficient quantity.  

The trick (game?) as an investor is to find sponsors who are good bets that afford good returns without bearing a disproportionate amount of risk.  When in doubt have a bias toward a longer track record, lower minimums to try someone out, and less-risky product types.  The quickest way to double your money is to fold it over and stuff it back in your pocket.