All Forum Posts by: Evan Polaski

@Druce Asah

Run you own numbers like you would any other deal.  The only number I look at from a wholesaler is their asking price, and even that is simply to determine if I am even in the ballpark.

Two things to remember:

1. Wholesalers allegiance to you is over as soon as you buy the house.
2. They do not know the quality of your rehabs, which can greatly impact potential ARVs.

I view wholesalers as another lead source, like the MLS or any direct marketing you do. Just like I would not buy a house off the MLS without running my own rehab estimate and ARVs, I wouldn't, and don't, assume the wholesaler knows anything about my business.

@Denise Supplee, I find the benefits of active investing is creating something and the relationships you can build.  

My wife and I flip homes: with that is more on the "creating something" side.  Whether it is the satisfying carpentry jobs I will take on, or for my wife, executing on her design vision.

For my day jobs in syndications, while I am not directly creating in the same way I am when I build something at a house, I am creating relationships with people and ideally, helping them achieve their financial goals.  I am creating opportunity for them.

To me, I would not say I "enjoy" passive investing.  I enjoy the results from passive investing for family trips, time with friends.  Given I enjoy active investing part: hunting for good assets, determining a business plan, etc, I enjoy those similar parts of passive investing.  But without having some level of control in the outcome, it is not as enjoyable, overall.  As such, it is a tool I use to keep money working for me.

@Diane Perry

I will mirror Russell.  No, you don't need an agent for any real estate transaction.  But, if you have never done one, I would at least have someone that can hold your hand a bit.  That could be a good real estate attorney that is more transaction oriented.  Your lender, if you are using one, will likely have their own requirements, too.

In my experiences, most buyers are self represented in commercial transactions, but the lower price of the property, the more you start to get into both seller's agents that are not as versed in commercial properties, and along with that buyers who don't know what they don't know.

If you are going to bring in your own agent, I would certainly ask the seller if they are paying buyers commissions.  I would assume they are, since they are asking for you to have your agent submit the requisite docs.

@Dylan Brown, while I don't know the tax code and laws, I will chime in that I know of several prominent syndicators that allocate losses in a manner similar to their carry, i.e. 70/30 carry on profits also equates to 30% right to depreciation losses.  And while I am not privy to the discussions with legal counsel, I have seen this type of structure outlined in sub docs that are prepared by large, marble floor law firms.  Presumably, but maybe this is my own naiveté, these same groups have their tax attorneys reviewing and opining on the policy prior to issuing docs.

From the GP perspective, I would argue that there are cash losses possible beyond their co-invest, specifically a loan default that triggers personal guarantees back to the GPs.

But more practically, I view this as another lack of alignment of interest (or at least the optics thereof).  This outsized weighting of depreciation losses CAN create another incentive for a GP to buy an okay deal versus a great deal. I mean, how else are they going to keep all of that 3% acquisition fee, if they can't also take a lot of depreciation to offset it?

@Shawn Benteti, there are several factors at play here.

Financial modeling, without strong market insights, is not a competitive advantage. 

Asset management without knowing the ins and outs of property management is not a competitive advantage.

To attract capital, when starting out, your goal is certainly to highlight your strengths, but it is also to cast a wide net and first get people to know you, then like you, then trust you.  This is being yourself, amplifying your strengths, and generally sharing insights that you have learned, or continue to see in the market.  

Then, as JD points out, once you start building a track record, the conversations will change a bit.  People will still be investing in YOU first and foremost, but it becomes a little bit less about your vision and the opportunities, like the first few deals, and more diving into what you have done and how new opportunities align with what you have done.

@Kyle Vogeler, as you well know, portfolio growth comes with major capital needs.  So joint venture partnerships or syndication type investments, is typically the best way.

JVs require the other partners to be active; talk to an attorney as to what that level of involvement needs to be.  

Syndications are entirely passive for your investors.  

Alternative routes, utilizing equity in your existing portfolio to buy other properties.  Potentially finding "alternative" lenders, i.e. hard money or private, that will lend at higher levels than traditional lenders to minimize money out of pocket. I have a friend that has a private lender "line of credit" (not sure what collateral he pledged behind it), but it works as has acquisition line, so he can pay it down through refi's or operating cash to build back his capacity without really needing any equity out of pocket.

@Spencer Holland, Nate hit on it.  Dollar for decibels, I think the double drywall method on downstairs is one of the best/cheapest/least noticeable options.  I have this done in my own house in a few areas (around laundry room, since it is near bedrooms and we consistently run laundry at night, between master bed and master bath, in guest room in basement under kitchen/dining area).

Of course, this depends on what, if any, other renovations are needed, and what you want to live with.  I.e. true hardwoods are typically considered nicer than floating floors or carpet, and, in some areas, can obtain a premium in either rents or sale.  So would you want to install carpet to quiet the downstairs unit, when you need to live with the carpet and/or it may hurt your resale value to a certain level?

@Kyle Vogeler, my first question is: what are you looking to grow?  Your portfolio size? Your experience? Presumably, the main one most people are concerned with is their bank account.

Most people assume that all three of these are connected, and I would say generally in good markets, they are.  But, as you can see in the syndicator review thread, if your primary goal was the grow portfolio size in 2021, there is a good chance your bank account is shrinking quickly in 2025.

Now, directly to your points:
Portfolios require capital to grow.  So partner with a financial partner, where you can "leverage" their capital with any of your own, and bank debt to buy more properties.

Experience: this can certainly be done by buying more of your own properties and learning first hand.  It could mean finding a mentor, either for hire or free.  As you note, this same person could be a partner, but from personal experience, I am willing to talk with/teach people about things I know, but that doesn't mean I would invest with them

Bank Account: make good investments.  Understand the risks and mitigate them, whether for your personal investments or using partner money.

To gain interest in your projects is both the hardest and most time consuming part.  It is a lot of networking, building a following, sharing your learnings, successes and failures.  There are capital raisers for hire out there, and depending on the amount of money you are trying to bring in, they can be very costly, but they can also help you get going. 

@Isaac Pyle, I guess I am generally echoing the other commenters: while there will never be a perfect time to invest in real estate (and generally today is better than tomorrow), I always try to encourage people to be a fairly stable financial footing before doing anything.

It is a bit like the traditional financial advisors priorities:
1. Emergency fund with 6-12 months of living costs saved
2. Pay off all high interest debt (no point buying a house that makes you 12% on a great deal, when you are paying 18% to a credit card company).
3. Investments: real estate, stocks, etc.

Given the typical physician salary, once out of residence, you will have a lot of options build a portfolio in a few years.  In the meantime, learn what you can, or even try to get a job in the space (if that is something that appeals to you).  I would also be looking at deals, because you might find a fourplex, for instance, that makes sense, even if you end up selling in a couple years, but be patient.  You can also buy the dip now on the S&P and may realize that buying stocks can be just as profitable as, if not more than, real estate.

And being analytically minded, just know that you will need to get out of your own way.  There are a lot of overpriced deals out there, but you will also never buy a deal if you are waiting for that perfect property.

To a certain extent, this is like asking: If I buy Apple shares, is it a stock or a tech?

My point stocks and real estate are apples and oranges.  Stocks are an avenue of ownership.  Real estate is a asset class. 

I understand the question you are trying to pose, but for education purposes a REIT is a tax structure. You can have publicly traded REITs (most people's view of REITs), you can have non-traded REITs, you can have partnership REITs, you can have a private REIT, etc.

More directly to your point: public REITs have a high correlation to the broader stock market, so if you are trying to build an investment portfolio that has non-correlated and lower correlated holdings, then public REITs are typically not going to provide that diversification in any meaningful way.