All Forum Posts by: Account Closed

@Yonah Weiss for his expertise in the cost seg & bonus depreciation space!

Excited to introduce you to my audience next week!

@John Corey

We’re in agreement & on the same page.

@John Corey

The phrase earlier was 'active JV'.

Agreed "Active JV requires the investors have be an active member of the management team. They are not passively investing with the expectation of profit."

That’s a syndication.

@Account Closed

With the right mindset adversity can be a foundation for massive success!

Your father and my grandfather, among countless others, are examples of this.

Thank you for sharing.

Perhaps your father is the perfect person to JV with. You two certainly know the ropes.

Dino

@Account Closed 

I’ve closed several syndications and I’m happy to share my experience and answer your questions related to expectations vs. reality.

Great job having excellent credit!

While it’s possible to syndicate this, the legal fees related to syndicating a $400K, 6 door, building are likely not worth it. A PPM can go from 8-20K depending on multiple factors and the complexity of the syndication.

If you don’t have the $100K (likely need more for reserves and deferred maint. your lender will tell you the specific requirements) to go it alone but the deal is really good (great cash flow, the ability to add value, in a great/emerging market, off-market, etc…) you can likely find a partner to join you. You have the deal, they have the money, and together you actively operate it sharing cash flow and profit.

So, the reality of a syndication is low BUT an active joint venture (JV) may be great route. If your analysis is sound and you were able to give the Limited Partners (LPs) a 10% cash on cash return - the returns will be more favorable for you and your JV partner.

As for syndication… in my experience Equity Investors, or passive LPs, would/will like to see “skin in the game” and have you invest alongside them.

This deal isn’t right for syndication (too small in size), IMHO, and while it’s great that you have excellent credit you’ll also need a track record before you can be the lead operator and carry the fiduciary responsibility that comes with syndication (I’m surprised you feel comfortable with that role having zero experience), handle all the day-to-day operations, and make major business decisions. If I may encourage you, I recommend working your way up. You are young (that’s an advantage) and you have a long runway ahead of you in this industry (multifamily syndication).

I’d learn the business as much as you can (mentor/s, books, podcasts, blogs, conferences, etc…), find the piece of the syndication puzzle that you’re great at, or align best with, and team up with a group of existing operators. Add value to their existing operation as this will give you experience and get you into the syndication space. From there - play the long game and have 30-40 year goggles on (don’t look to get rich quick or make moves too fast), make smart moves, enjoy the journey, and build a massive cash flowing portfolio. Do this and I’m certain, one day, you’ll be the lead operator. For now, focus on learning from the best in the industry, enjoy the process, and have patience. You can do it!

I know this may not be the answer you wanted, however; I hope it’s been helpful and you connect with me in 30 years and say “I did it”!

Sincerely-

Dino

Welcome Bryan! 

I love the realistic long-game plan of 10yrs too!

Don't hesitate to reach out we're here to support you!

Enjoy the process it's an exciting one!

Dino

@Samantha A.

Knowing that you'd love to start BIG - If I were starting off in your shoes...

I'd go with a 506(b) syndication in the B & C Class Multifamily space - here are few reasons why.

I like making my money sweat for me at a rate that far outpaces inflation!

I realize it's smarter to have my money working for me, even while I'm asleep, than it is to trade my time for money.

If I am going to trade my time for money, and I DO that too, the main objective, aside from helping others and filling needs, is to bring in more money so that I can put it to work too!

Passively co-owning an apartment building or… buildings allows you to plug into an existing operation and expect a consistent quality return that requires little to no involvement!

Side Note: Now that's the way to properly diversify too!  Take your 125K and go all in on an opportunity you LOVE or split it in half and get into 2 opportunities you like.  Regarding passing on a better opportunity I'll quote Zig Zigglar who once said  "If you wait until all the lights are green before you leave home, you'll never get started on your trip to the top."    

Back to our program... I say “little to no involvement” because well… it’s true nothing is truly 100% passive but this is pretty darn close… once you believe in the asset class as THE choice investment, it’s going to take time to find a team of operators that you trust and get to know. That’s natural - it’s human nature. Once you find your team… you have to look at what they’re serving up so that when they find a deal they’re working on and it gets you juiced - you’re ready to take action and partner with them!

Don’t worry they’re going to do all the work from here on out…

Plugging into an experienced team of operators that have analyzed a market, found a true opportunity, and manage a best in class professional 3rd party property management company - frees you up.

Furthermore, their asset management efforts will assure your asset/business is running optimally and meeting expectations of the business plan.

IMHO, Property Management is the backbone of a multifamily investment.

It's been said that Property Management can make or break the investment.

Always make sure your team of Operators have done their due diligence, selected a stellar Property Management company, and manage the managers!

Once you have identified a team that you know, or get to know - and trust - your involvement will truly be passive.

Leverage a quality, and proven, teams’ experience.

Let your co-owner partners run the business so that you can spend your time elsewhere, doing what you love whether that’s volunteering, making more money, traveling, having experiences, being with loved ones - you name it… all while your money multiplies and your team works for you.

Now on to the Tax benefits:

A great way to shelter income as an owner, partner, or limited partner of a cash flowing multifamily (apartment community syndication) asset is to utilize cost segregation in the 1st year of ownership. 

This allows you to, legally, accelerate the depreciation of the asset over 5, 7, & 15 years vs. straight 27.5 years.

Furthermore, if you claim 100% bonus depreciation, in the 1st year of ownership, the income sheltering effect is dramatically increased by the tax savings. You can 100% bonus depreciate any component with a useful life of < 20 years. (This means you can immediately depreciate it by 100% vs. spreading it out over 27.5 years.

Generally speaking, when you combine bonus depreciation and a cost segregation study, on a multifamily asset, you can immediately expense 25-30% of the entire asset in the 1st year!

This means your K-1 will show a loss even though you are cash flow positive! 

I hope you found this information helpful.

Don't hesitate to reach out-

Dino

@Jingwen Dunford

@Jingwen Dunford

Once they completely Understand how much value and what a great opportunity you are bringing them they shouldn’t have any problems with it.

I’ve had limited partners tell me some of the best deals they’ve ever been a part of were the deals that charged the highest amount of fees.

Many partners want the general partners to be paid for their work and like setting up “When you win we all win-structures”. Some people get nervous if they see the General partners giving up too much in order to make a deal work.

You’re correct though if the limited partners don’t feel aligned you won’t be able to do any deals.

The truth of the matter is there’s a ton of uncompensated work that goes in to a syndication and you should be paid.

Think about the following:

-The amount of time and energy it took to analyze enough deals to finally find a true opportunity

-You are qualifying for the loan, providing the risk capital, Liquidity, and a track record

-You’ve built essential relationships with Comercial Brokers and property management companies

-You’ve negotiated the opportunity at a price that works

-You’ve performed the paper and physical due diligence

-You’ve built relationships that took time to establish in regards to their other equity partners

-The General partners are going to create value and increase the NOI and ultimately the value of the property

-You provide a phenomenal alternative investment that has a very unique tax benefits

&

-You carry all the weight and fiduciary responsibilities

I hope this helps you make a strong case and your limited partners walk away with a sense of appreciation verses turned off.

Dino

@Nicholas Cook

We don’t develop BUT we syndicate multifamily for 5-10yr hold while we add value & capture upside.

A confused mind says “no” so we keep things simple so everyone understands.

A 70/30 to 85/15 split is our standard model with the larger number going to our (LP) equity partners. Everything is split accordingly from cash flow to equity & profit.

Other items:

1-3% acquisition fee (split by GP team - there’s a ton of work that goes into these syndications)

1-1.5% asset management fee (this gets paid to our asset manager/s) has been standard as well

We actually like giving LPs Equity and a when we win you win structure is favored by many.

Hopefully this helps you consider things and provides another syndication team’s view & split structure.

Dino

@Jordan Lucas

Scenic route over the past 5 years.

Wholesaling, Partnering on Flips, and Private Money lending for 3 years

2 years of Multifamily Syndication.

Best Advice I can offer is to enjoy the journey and align yourself with an existing team of operators and tell them, specifically, how you can add value to their operation.  Take the marathon approach and add value while gaining experience.

Hope this helps-

Dino