All Forum Posts by: Chris Hoffmann

#1....don't just look at one group.....there are 100s or 1000s of groups.   One thing I see is that people go to one presentation and kind of hone in on that 1 group, when there are lots of options out there and often much better returns.

#2....Personally I don't like funds....I'd look at single asset deals.  Funds are often better for the sponsor than the investor in my opinion.  Gives them less risk of raising funds, especially in this environment when it is much more difficult for most sponsors to raise money.   

#3 Investing in funds often means you don't really know where the assets are going to be.  I did see one fund recently where the assets had already been identified, but I want to know where those assets are and also the performance of the asset.  Investing in a fund, you're really going in blind in most cases.   Remember also that the sponsor has an incentive to spend that money...they're normally getting a fee for the purchase like 1% maybe.  So instead of selling you on the performance of a specific property and you deciding if that is the right deal for you, once they have your money, they could be motivated to spend it, even if the asset as not as good as you expected.

#4 In a fund you also don't really know what financing will be used on the property.  Single asset you do.  One fund I saw recently said something like, well we usually have this kind of capital stack, but it's been tough raising money...so we may use pref equity if we don't raise the goal.   That will cut your returns.   Probably no one using bridge debt today, but if they can or will do it, that could also cut your returns.

Personally I do not like that you're trying to pull money from HELOC to invest. If you're looking at multifamily then in today's world I think most people would be looking at somewhere around 15% IRR target, and 8.5 on the HELOC. For that spread and risk, you might be better off putting it in index funds or maybe even in just high yield savings...probably can get 4.5% in high yield savings with almost zero risk. Fund or single asset, these can be super risky investments. Thats why your PPM says several times throughout the document that you can loose your ENTIRE investment....so invest what you can afford to loose. Personally I would not do that with your home equity. I think most financial advisors would tell you the same. I'm sure Dave Ramsey would tell you not to do that.

There are people who have already been 100% wiped out this year and there will be plenty more that get wiped out during the rest of the year and all of 2024.  That means not only no return, but also their investment is 100% gone.   So be super careful who you hand over your money to.  The next 2-3 years will also likely be a place where they prove true that saying....past performance is not indicative of future success, or whatever that phrase is.