All Forum Posts by: Evan Polaski

@Francis Bernadel, for what it is worth, I generally align with Dan H that the OOS investing is often grossly under-risked.  I,e. most people think it is a surefire win, and while it can certainly be, it is definitely trading some risks (the concentration of putting all eggs in a single basket in any HCL location), with the risks of not knowing almost anything about the area you are investing in.  

In my limited experiences, I have heard far more horror stories about people buying OOS than I have from local investors.  

One common error I see with OOS investors is they don't factor in any regular trips, even once or twice per year, to their cashflow projections.  And along those lines, unlike househacking in the city, where you have no travel expense, or even an actual investment property locally, where you swing by on your way home from work, you are either giving up weekend time with your girlfriend/family/friends, or using vacation time that is more opportunity cost, beyond the flight, hotel, rental car and meals out.

@Stan Koper, full disclosure: my wife is a designer, so I am partially biased.

But, if you think you are good enough, then it is likely not worth the expense.  While there are always great designers that are reasonably priced, generally I think you get what you pay for. And full service design from a capable designer, that will actually help take work off your plate does not come cheap.

Second, short term rentals are NOT the same as typical interior design. There are some similarities, but the use of space, what will "stop the scroll", and really the overall design needs to be approached from your guests desires, not the designer or your own. I guess this could be a case to hire, as well. But, remember success in STRs is all marketing. Part of the marketing is having that attention grabbing, instagram-able vignette as your cover photo. If you can create that, both for Airbnb/VRBO, as well as start building your own business IG following, you will be leaps and bounds better than the typical STR owner that simply tries to make a little extra money from grandma's cottage, with the mismatched living room set, and old oak cabinets.

@Tony Sanders: I am assuming you want to be a syndicator and build out a syndication platform.  

You essentially need three "main" categories covered:
1. Capital markets: this would cover both debt and equity
2. Acquisitions: actually sourcing deals to buy
3. Asset Management: the hardest, often most overlooked, part... actually delivering what you set out to do.

Now, as it pertains to syndication, specifically, you are seeing so many posts because there are a lot of good marketers that got into syndication.  They heard from all the gurus (and often became gurus themselves) that effectively say "build your team" and you will be successful.  The problem with that approach is without requisite knowledge, you have no idea if the team you are building is actually any good.  And often times the "teams" are built by partners who are all similarly lacking in experience banding together.  

Now, success is a relative term.  I will say the most "successful" syndicators, at least by best insights and ability to mitigate losses come from OPERATORS first.  They are property managers, that grow into community managers, that grow into portfolio managers, etc.  They come from ground level operations first and foremost.  From my limited experiences, these are groups that you never really hear about.  They let their successes speak for themselves, first and foremost.  And often times, it takes these groups over a decade of grinding before they raise "big money".  But, they know long term success comes from continued focus on operations, and showing up everyday.  These groups are often led by people that put in their time learning at other companies FIRST.  These are not the "roofer turned syndicator" or "realtor turned syndicator".  They spent years in corporate America learning the business.

If success is defined as raising as much capital as possible, quickly, you need to be a marketer first.  And that is where you are seeing all the posts on BP and LinkedIn talking about passive income and lifestyle freedom and "look at me, I run real estate deals and just spent the summer in Bora Bora, you could be like me if you invest in real estate too."  This type of messaging (at least used to) gets people's attention and brings in money.  This often can create quick successes.  But those, as we are seeing, are almost entirely driven by market timing.  They get their name out there and scale quickly, they are incentivized more by fee generation than actual performance.  While I know nothing is absolute, this type of syndicator was able to raise significant money in 2021 and while they made themselves tons of money in that era, their investors are answering for it now (not to say the investors are innocent, either).  

If I were you, I would spend a lot of time focusing on learning the business.  Not some weekend mindset course, but actually working in it.  Some of the best partnerships come from those connections, because it allows you to build your team with people that are also willing to put in work to become masters of their craft.

Totally get where you’re coming from. AI posts can feel generic for a few reasons:

1. They often lack firsthand experience or market nuance,

2. They overuse polished phrasing that doesn’t match how real investors talk, and

3. They tend to recycle common talking points without adding new perspective.

Threads like this are way more valuable when people share real-world insights—what’s actually worked (or not) for them on the ground. Thanks for calling it out...

Oh wait, I used ChatGPT to write that response.  But there is a woman from one of the more commonly referenced turnkey groups on these forums that is seemingly just copying a post into ChatGPT and posting the response.  Formatting is one of the bigger giveaways to me.

@Sebastian Clutch, Appfolio is NOT a CRM.  I know the Appfolio sales team, as well as Juniper Square, and all the other investor portals try to talk up how they are a CRM, but they simply are not.

Salesforce is your most powerful CRM, and likely overkill for 99% of situations
Hubspot is a great option, and depending on contact list size is fairly affordable
GoHighLevel is another one that is becoming more popular, but I have never used directly.

There are a ton out there, and I am biased to Hubspot, because it is the one I have the most experience with, but the general contact record tracking, customization, ability to build dashboards, etc are all great in Hubspot and adequate to track contacts that may fall into various buckets: i.e. you can build your broker lists, your investor lists, your tenant lists, track your calls to each, setup up custom email campaigns for each separately, etc.

@Arthur Schwartz, what Ned said.

There are reasons people would borrow at a higher interest rate than the going-in cap rate.

But both theoretically, and practically, if your interest expense is higher than your NOI, you then you are losing money. While, you might be cash flowing, as Brandon noted, your return will be LESS than if you simply bought cash.

I.e. 6% going in cap, NOI stays flat for your entire hold. Borrowing interest only at 7%

If you buy cash, you will earn 6% on your capital invested.
If you buy 50% LTV, you earn 5% on your invested equity.
If you buy 80% LTV, you earn 2% on your invested equity.
If you buy 20% LTV, you earn 5.75% on your invested equity

The math is pretty simple: if it costs your more to borrow than your current yield, you are diluting your returns by having ANY debt on the property, even if you are cashflow positive.

There might be real world reasons why you would buy a deal with negative leverage, but from a purely financial standpoint, you are always hurting your cash flow by borrowing at a rate higher than your in-place cap rate.

@Stuart Udis, while I can't speak for the specific ads you mention, the short answer is yes they work.  

That being said, it depends on the goal.  If the goal is to fund this deal, today: it is likely not effective.  But if the goal is to grow your database, so you can continue to build brand awareness, then it is highly effective.  And over time, the person that gets added to the email list today, may invest in 6 months, and grow to the $1mm investor in 2-3 yrs.

While I believe a lot of this is deceptive and not my style, I also know that most people won't remember the ad, anyways.  So, as long as it gets someone to fill out a form, it worked.  And from there, it becomes the conversations and follow-up, anyways.

Then again, you and I are not the target audience for these investments, so presumably they would not work for us anyways.  

@Joey Wilson, I would not classify this as a scam, but we are talking a bit semantics here.

As you noted, and others echoed, creating content can create a lot of trust.  Raising investor capital is done on trust.  But, the great content creators do not make for good investment managers, as you learned.  In fact, the best operators/investment managers, are often NOT good marketers.  They continue to play in the "who you know" space because they understand:
1. Their results will continue to attract the capital they need
2. When money is flowing in is often when the most money will be lost
3. They are too busy OPERATING, and don't have bandwidth to market
4. Not all attention is good attention.  As many groups are seeing here: when you raise money from trust built on online forums, those same investors will also call you out on online forums.

But to you point, I don't think ODC is a scam.  I think they got out over their skis for several reasons, but they did not go out with the intent of losing/taking your money.  

@Jeff Goldenberg, for better or worse, I would say MOST syndications offer exactly what you are looking for. Hop on a free trial of Passive Pockets and you will likely find over a dozen in about 5 minutes.  Join GP-LP Match email list and get emailed deals nearly daily (depending on how restrictive you make the criteria).

Things that I would look out for:
1. Make sure the cash flow projections are actually coming from operations and not just financially engineering a return (read: over raising to fund the first couple year distributions). While this helps cash flow, it dilutes back end returns.
2. Is the cash flow being produced by artificially buying down an interest rate cap?  I see some sponsors touting "6% yr 1 cash flow" and 3.5% fixed* (for three years) interest rate.  In reality, they just bought a deep in the money rate cap that cost them several million dollars to prepay their interest expense.  
3. Ask how depreciation is allocated.  There are many sponsors that will siphon off, say, 30% of the depreciation for the GP, and then share the remainder pro-rata with the LPs.  This dilutes your available losses.  Of those that do this, some are fairly explicit in their Sub docs that this is happening.  Others are will express it as "GP owns 30% of the asset", which will align with their carried interest over the pref.  And while they do have a pref outlined in their waterfall, this statement can be sent to the accountants to, again, allow for an disproportionate allocation of depreciation to the GP, relative to the equity invested from the GP.

@John Friendas

A lot of this depends on what your contract says, where they are with their current work, what it will cost to bring in someone else, etc.  It is almost always cheaper to try to get your current guys to finish their piece versus bring someone else in midway.  

As such, I have found having a conversation with them, understanding why it is taking so long, and potentially offering a bonus (if needed) to get done in a certain amount of time.  I.e. someone working for $60/hr, if you tell them you will pay them an EXTRA $2k if they finish by a certain, realistic, date, it may help motivate them.  

This is one of the issues with hiring someone hourly.  They are actually motivated to work slower.  When I am doing rehabs, it is project based: i.e. replumb this whole property for $15k.  If they finish in a day, week or year, they get $15k.  You can still occasionally end up with some slow workers, but over the years, I feel like the better contractors often bid this way.