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All Forum Posts by: DongHui Patel

DongHui Patel has started 30 posts and replied 94 times.

Originally posted by @Nick B.:

@Charles Seaman, they can charge what they want but I find this fee to be unfair. 

I agree these fees are unfair and greedy. 

Originally posted by @Russell Brazil:

Inflation is running at 6.2%.

If we were all able to make money borrowing at 6% in a 2% inflation rate, why do you think you wont be able to make money borrowing at 4% with a 6% inflation rate?

So you think inflation will continue at 6.2% every year for the unforeseeable future? THats quite a assumption. 

Logically this is no more than 1-2 years. Look at all historical numbers here. If it goes beyond that we have much bigger problems. 

These are 5-7 year investments. So again, the problem remains, in 5 years what do we do? 

Originally posted by @Charles Seaman:

@DongHui Patel The fees that you listed are normal for most syndication deals.  Are you investing through a fund or in an individual offering?  The fund admin fee isn't as typical for individual offerings, but it's very common for funds.  Many operators are doing 70/30 splits currently and the waterfall seems reasonable too.

 WHat about a catch up provision in the waterfall? Is that normal? 

Also is it normal to be senior to return of capital to a /b investors?

  • Acquisition fee 2.95% of purchase price of asset
  • Disposition fee 1% of sale price of asset
  • Asset management fee: 1% of equity raised
  • Fund admin fee: .25% of equity raise

Their waterfall is 70/30 split until 13% IRR then 50/50

Struggling here - the NOI is forecasted to whatever the syndication wants to proforma it at. So anybody can make it grow to whatever they want it to. Realistically there are other factors which influence this (like interest rates, which obviously cannot go any lower). Holding all else equal to hit a 75% growth on a 5 year exit ASSUMES 12% annualized top line (GPR) increase annually (assuming no optimization on costs, bad debt, vacancy). Seems very aggressive.

So the only way these make financial sense is if the NOI is showing 75% growth at exit?

Syndication attorney looking to draft agreement- recommendations

Who are the biggest law firms in this small industry of lawyers who help write up agreements for syndications ($100M+ Equity input)

Syndicates are paying at 3% cap for properties, they are paying interest on the property at 4ish % including buying caps etc.

For cash flows- if your debt is at 4.5% and your cap is at 3%, youre negatively leveraged. So coupons are not going to come to fruition. 

Once the interest rates go up, how is this sustainable for disposition? 

Interest rates go way up, you cant really exit with a good profit?

Someone prove me wrong?

Hello, I am investing in a syndicate and as part of my due diligence I am looking for some costar info from the 2 properties - can anyone ping me if they have COSTAR access in that market?