All Forum Posts by: Carlos Ptriawan

Thanks Thuy. Jason is excellent agent :)

Too bad nobody would like to come up with the real number. The question is great but no one dig deeper to the number. To answer the question even more, we need to characterize good MF Syndication which for me at least:
- their actual number in the past is better than their projected proforma
- their skin of the game is high
- good waterfall
- high IRR and twice of the return of investment can be achieved within 4 years when the average is 6 years.

What's lacking actually we don't have MF Syndication Portfolio Ranking/Analyzer compare to its peers (I've seen one but only from one sponsor).  If we have that data as a comparison, we cay say perhaps, YES the TOP 20% Syndicators beat the Single Family/MF Investments, but the rest of the syndicators are just following the market dynamics/mediocre.

What I'm saying is that it's easy to buy a rising stock when the whole market is up, but finding a syndicator that performs like Tesla/Amazon  is very hard.

Actually it's great idea if you live in one of the unit. Almost living for free. PS: You could rent out the illegal one with Airbnb or Airbnb Arbitrage. I guess that's in Oakland.

Great answer from John and Daniel. If they were survived during 2008, they're good. Also, I think MF is more like an "appreciation" game rather than cash flow business where they make the most money usually after selling the asset which is actually semi speculative and very dependent on the macroeconomic condition, including wage growth.

So not just you're investing on the Managers/GP, but you also need to feel bullish to the economy until the asset is sold. I think it's important to see a cap rate trend and where your investment would be.

If you invest directly, the macroeconomic level is not the first priority because you can create your own game and scenario for the future.

Here's what I found: in reality, not all MF syndication work out especially if you're late in the game. Many MF Syndication deal is also not in favour of Investor (eg: skin of the game/waterfall/fees etc). You need to vet the sponsor extremely carefully and that's only if you understand what they're talking about and trust them (this is the hard part). Also, the process of doing DD to MF Syndication is much more difficult than DD for regular RE deals.

And most importantly, for RE, it's under your own control and name. I'm reading Investors complaining every day regarding MF Syndication.

For me, if you're accredited anyway, I prefer Alternative Investment outside RE other than MF Syndication if you're looking for better return. It's possible to reach 20-30% IRR for uncorrelated non-RE assets. I'd rather invest to Funds of Funds that invest on uncorrelated assets.

The very nature of successful good Investors is that they're very creative and think differently than the other people. So the question is why you should care :)

I told you, from Investment perspective, investing in Real Estate is the most easiest to do and understand, there're many other complicated Investment out there.

$433k/unit in east bay is equal to a 3-4% cap rate. This is a normal fourplex price in south bay/east bay.
I suggest if you go ahead with this deal is to build another unit (ADU) or do some value add. It wouldn't be easy. Although whoever is selling you the MF, he/she will be very happy :-)

Your biggest risk is actually not from the low rent-to-value ratio but if there's a sudden economic crash or meltdown like in 2008, where bay area house price is heavily reduced and end up at foreclosure. 

Also, don't expect Bay area price to still rise rapidly, in fact, higher price homes already having lower bid and the rent can't catch the price. This is a very simple mathematic formula.

Good Input from Guy.

This is what I learned personally for my OOS Journey (same advice I got from my mentor):
- always visit the site or neighborhood...never trust 100% on the data
- talk with the local agent/PM that's expert on the area.
- double verify the neighborhood status, for example, a B class in one metro maybe considered C in another metro.
- when turnkey is available, I personally only consider when a tenant is already in place.
- enjoy the local food
- in a desirable market, verify the sales comp carefully as many sellers are selling above the high price
- go with the agent that would like to do more for you (many doesn't want to even visit the property before you put an offer :)

I can assure you many people would like to take advantage of OOS investor,that's the warning from my local turnkey company.. :)

In term of RISK, here's the RISK of Buying OOS:
- Valuation Risk, you are buying more than it's worthed.
- Neighborhood Risk, they advertised you it's B neighborhood while it's C. The expected rent is $800 while the neighbor is only paying half of that. You stuck as baggage holder of bad investment.
- Financing Risk, get bad Interest from the banks.
- House Risk and Rehab, Roof/leaks issues are everywhere, rehab are not done properly.
- Tenant Risk, the tenant is not screened correctly or there's no tenant available
- Property Management Risk, the PM is marking up the repair


Also, I notice a house rehabbed has different quality even from the same turnkey provider. 

Some MHP Operators: Gelt,Saratoga,Elevation. That's what I remember on top of my head.

For DD, It's better to work together with the old-time investor that already invested with them, rather than asking them a bunch of questions. Realistically at the end of the bull market cycle like today, I will expect min 6 years investment and that's if we're lucky. Start asking if their appraisal value is better than their proforma. Work with the one that delivers conservative number, but deliver more in return.

Realistically many syndicators are underperformed and not meeting their proforma these days due to various reasons: lower vacancy, higher competition (including self-storage) and currently it's near the end of the bullish economic cycle where it's easier to sell (than buy) the assets. Many private investors seem looking for non-RE investments or investment that's recession-proof.