All Forum Posts by: Greg Scott

Many syndications are RegD 506(c) which would require you to be an accredited investor.

There are fewer RegD 506(b) syndications and those allow you to be accredited or sophisiticated.  However, the SEC has no formal definition of "sophisticated". Therefore it is up to the syndicator or the group you are investing with to decide if they think you are "sophisticated".  

Frankly, if you don't understand these deals, you probably shouldn't be getting into them because there are plenty of bad ones out there that have gone to zero.  You should be able to identify the good ones and the good operators and have an understanding about how these deals are underwritten.  It is in your best interest to get some education if you don't know.

On the other hand, I have run across people who have invested in syndications and they have a hard time spelling real estate, and they clearly are not sophisticated investors.  They have gotten into deals.  I don't know if the ones they got into were any good, though.

If you have been curious how people have achieved financial freedom through buy & hold real estate, you will want to attend this event. We have every day people presenting case studies on the amazing returns they are getting with buy & hold residential real estate.

Normally, you must be a member of Lifestyles Unlimited (or a friend of a member) to attend. However, I will be the MC for this event, and since I am also active on BP, I can have you added to the attendee list as my guest.

You should know that there are about 100 active Lifestyles Unlimited members in the Indianapolis area. This group gets together regularly to discuss real estate investing. If nothing else, come to meet some local investors.

PLEASE DM ME IF YOU WANT TO COME.

Learn how to start changing your life!

I hope to see you there.

If you have been curious how people have achieved financial freedom through buy & hold real estate, you will want to attend this event. We have two great couples presenting case studies on the amazing returns they are getting with buy & hold residential real estate.

Normally, you must be a member of Lifestyles Unlimited (or a friend of a member) to attend. However, I will be the MC for this event, and since I am also active on BP, I can have you added to the attendee list as my guest.

You should know that there are about 100 active Lifestyles Unlimited members in the Indianapolis area. This group gets together regularly to discuss real estate investing. If nothing else, come to meet some local investors.

PLEASE DM ME IF YOU WANT TO COME.

What is being presented?

Single Family - A couple from Lafayette, IN has bought 11 single family rentals in under 2 years. They have completely transformed their finances in a short period of time and the can finally see a path to a comfortable retirement.

Multifamily - A couple from Metro Detroit bought a 32-unit apartment. In under 18 months they delivered a 30% return to their investors and now are looking for a much bigger property.

Learn how to start changing your life!

I hope to see you there.

My wife an I have a will and trust created by an attorney that does a lot of estate planning work. Our trusts are written such that any of our personal assets are automatically swept into the Trust upon our death. That would include the LLC that we own together.

If these were set up incorrectly, it could have been very expensive for our heirs to fix it later.  I'd recommend hiring someone qualified.

My SEC attorney has always told me have the LLC where the property is or where you live.

If you create in MT, you should still be registering in TN and have a registered agent in TN.  Both have a cost to them and ongoing fees.  Choosing a state because the filing fees are cheap is a bad idea.

Interesting article. The first anecdote reminded me of a true story.

I know an apartment owner that lost a lawsuit.  They had cameras all over, but a woman got assaulted in one of the few blind spots on the property.  Without proving that the blind spot was the reason she got assaulted, the lawyers argued that the cameras implied he was providing security.  After the lawsuit, his solution was to remove the cameras entirely!  

We install surveillance cameras in our clubhouses and pool areas, but we have zero "security cameras" on our property. 

I recommend you check out Lifestyles Unlimited.  The organization has been around for 35 years, so clearly they are doing something right.

They have a huge group of members in San Diego.  Many of them came up for the class I taught in Anahiem earlier this year.  I know a lot of them well.  Some of them have also invested with us.  That same class is being taught the August 2 weekend (not me sadly).  Most of our San Diego members are investing passively in apartments across the US.

You can sign up for the basic, 1-year membership to attend the upcoming class at givemetotalfreedom.com

Small apartments can often be found on the MLS because those owners aren't really in the game.

FWIW, BP uses the term "Small Multifamily" for 2-4 units and anything 5 units or higher BP calls "Large Multifamily" because they are commercial apartments.  I prefer using "plexes" for duplexes, triplexes and quads because they are all valued using Comps.  I like "small multi" for apartments 50 units or less because they operate very differently than larger ones.

Having the data in another country would prevent the US government from forcing you to wipe the data.  However, it would not prevent someone from suing the landlord.

I love the idea and intent, but in a world where the government is sealing eviction records, anyone associated with that system would come under attack.

If you have tenants move out, you will have vacancy.  You said $7,000 per month rent for four tenants.  If you kick three out, and it takes you a month to get a new tenant in, that right there is another $5,250 of negative cash flow.  ($7k/4*3=$5250)

You are also going to have to turn those units.  Paint and carpet alone is probably going to run you about $3K per unit, so about $9K.  Now we are up to $14,250.  I'll ignore turnover in future years, but you should have a contingency for that too.

If were OK keeping rates way below market, it is easier to keep it 100% full.  If you are going to try to keep rents at or near market, you will have turnover.  If you assume ONLY 5% vacancy every year, that is ($7k*12*.05=$4,200 per year)  FWIW, I never said 5 years. Let's just look at 3 years and ignore the first year since we've already accounted for that.  $4,200*2=$8,200  To be safe, you would really want to use a higher vacancy factor.

And, remember, you were already going to lose $315 per month at market rates, which is $3,780 per year or $11,340 total.

By my calculation the total negative cashflow in the first three years is closer to $5,250+$9,000+8,200+$11,340=$33,790.  So, to hold this property, you had better have at least another $35K in the bank today an expect to feed it to the property over the next three years.  

You did not say if you had accounted for any of this in your numbers so I assumed you had not. This is why I do not like this deal.