All Forum Posts by: David Thompson

Hi Kusum,

Given that you are wanting to look out of state, I think a serious look at syndication would be something to consider. Here you let the experts in their respective niche create the value and you are a limited partner investing with them so they can do these deals. You typically get monthly or quarterly payouts, preferred returns in the 8% range, CoC 8-10% and IRRs in the 16% to 20% range over say a 3-5 year hold period. Typical target is a 2x multiple to double your investment in 5 years.

I would consider reviewing some of the top commercial real estate niches that have strong histories and are expected to continue to perform well due to changing demographics, supply / demand, affordable housing, renter nation concepts, etc.   I have several blogs on the topic in BP but simply, you want to invest w/sponsor operators that have solid experiences in both up and down markets and niches that have performed well in up and down cycles.  

That limits our focus to 3 particular niches we like now:  

1) Large value add apartments 

2) Self Storage

3) Manufactured Home Parks

You may want to consider putting some funds across these 3 niches in different markets to diversify your risk further and not just put all this money in one or two ideas.  Min. are typically $50K to $100K  so you could really spread your assets around with some of the top operators who only focus on their niche.

Here's a couple articles on Syndication FAQs, vetting deal sponsors and why I like investing in apts to review.  More than happy to share ideas w/you or answer any questions you have about the articles or this area.  You have a lot of options and you want to find folks here that are willing to take the time to educate you and have experiences in these areas.

Whichever niche you choose, its about 3 things:  

1) Strong Market (population / job growth > natl avgs)

2) Deal (conservatively underwritten / modeled)

3) Experienced operator (solid track record of success - thru a full cycle is ideal)

https://www.biggerpockets.com/blogs/9145/65780-syn...

https://www.biggerpockets.com/blogs/9145/53820-why...

https://www.biggerpockets.com/blogs/9145/53959-vet...

Hi Jon,

Since you are in Austin, let's grab a coffee. A lot of good ideas to explore. You've had your hand at active opportunities. Maybe you look at syndication. Start out w/some passive plays and w/intention, see if that drives you to want to be more active in CRE investing or simply continue to diversify passively into a pool of attractive niches, sponsors and geographies and do some other active things on the side you enjoy. Three niches I like right now (value add MF, self storage and manufactured home parks) and why.

https://www.biggerpockets.com/blogs/9145/70861-top...

https://www.biggerpockets.com/blogs/9145/53820-why...

https://www.biggerpockets.com/blogs/9145/62927-6-r...

Karen,

My expert contact in this space corrected me saying anything at $500K and above could work.  Also noting this change in tax law that has been a boon for his business is:

Any buildings purchased new or already built from October 2017 to today qualifies for 100% Bonus Depreciation in the first year. This dramatically increases the economic benefit for the investor. 

Hi Chase,

25 FAQs on syndication may help you understand this area more.

https://www.biggerpockets.com/blogs/9145/65780-syn...

Hi Virender,

Your profile and your post don't match up.  You profile mentions flipping and wholesaling focus.  Your post mentions buy n hold.  I'm assuming you are changing strategies and don't want two jobs (like SW engineer by day/ flipper or wholesaler by night / weekends?).  Living in Seattle in high tech you may be an accredited investor and not sure what you can now do.  If you are, syndication in buy n hold MF apartments, self storage and manufactured home parks may be of interest.  It's quite passive, but with intention you can learn about these investments and team w/experts who all they do is their niche (acquire / manage as the GP) and you invest as the limited partner to help them fund their deals.  Returns can be quite attractive and best yet, you can diversify by geography, different niches and different sponsors.

Couple blogs on MF apt syndication and why we like value add large apartments in strong growth markets / submarkets.

https://www.biggerpockets.com/blogs/9145/65780-syn...

https://www.biggerpockets.com/blogs/9145/53820-why...

Hi Andy

Please reach out so we can share ideas on what's available in this space currently.  Here's a couple of blogs on why I like the niche and hence syndication in this space.

https://www.biggerpockets.com/blogs/9145/70861-top...

https://www.biggerpockets.com/blogs/9145/54155-sel...

Karen,

I had heard about $1m is where it makes sense.  Here's an article for other folks wanting to learn a bit more about the topic.

https://www.biggerpockets.com/blogs/9145/70451-acc...

Hi Rome,

It's very feasible.  It's always a good way to start as a limited partner to learn more about syndication and how it works as a passive investor.  With intention, you can earn and learn more about this area.  Over time you can approach syndicates if you have a particular skill and can add value to the relationship.  I've done that. If I can be of any help on your journey let me know.  Here's a couple of blogs on my path that may help.

https://www.biggerpockets.com/blogs/9145/61278-wor...

https://www.biggerpockets.com/blogs/9145/67627-rai...

Hi Lillian,

Understand your challenge but you are in the right spot on BP and attending local meetups, etc to expose yourself to new relationships and opportunities.  Being in Dallas is of course a fertile ground.  I was there just last week for the Real Estate guys syndication conference for instance, a great place to meet other syndicates and see who's working on what.  I'm in Dallas today as well as we look at properties in the area as we continue to find opportunities for our investors there.  

Brandon,

You have one niche and one market strategy.  Will it work at all times ?  I would think being flexible and developing other opportunities that are working, different niches, markets and even teams w/experience may be just in order.  When I find myself swimming up stream, I look for opportunities that are emerging elsewhere.  I don't have to give up on what I like completely, maybe pause, re-evaluate and learn some new things if you want to be active. Maybe take some chips and develop relationships w/other folks that are experts and let them make you money for awhile in other markets / niches and strategies.  

I was talking w/a very experienced MF syndicator this morning and I know him very well.  He is in the top 5% for sure in regarding to returns on investor capital last 10 years.  He has 5 markets (MSAs) he invests in and it was interesting listening to him talk about each market and what's cooling down and what's warming up, what's better now in a more defensive position versus aggressive positions.  What was interesting is he's in the same niche but he's playing different markets...and it wasn't just the local economy,  but local conditions like aggressive taxing authorities taking a bite out of what is healthy revenues.