All Forum Posts by: E. C. "Stony" Stonebraker

Best Ever (Joe Fairless)

Multifamily Investor Network (Dan Handford)

Multifamily Mastery 6 (Jake & Gino)

RaiseFest (Hunter Thompson)

These are some of the bigger names, but there are many more that others can add.   There are also some for more experienced and larger investors including the IMN Middle Market Multifamily Forum.

@Sandra H., many people don't think of the two way liability of real estate investing and Taylor is correct. As an LP investor, your liability is limited to your original investment. Forming an LLC protects your LP investments from a liability that happens to you or on your personal property. You can elect to have it disregarded which means the K-1s flow through the LLC straight to your personal tax return just as if the LLC does not exist. For more on this topic, check out Anderson Business Advisors at www.AndersonAdvisors.com and on YouTube.  Be sure to consult an attorney experienced in real estate investing.

I am not an attorney, but I hope this helps.

@Andrew Schafer, the reason commercial multifamily properties are owned by companies is partly because multifamily ownership is a business, not a part-time avocation, but primarily for liability reasons.  You don't want to own real estate investments in your own name because a claim against one property then exposes all your properties plus your personal liability.  Or the alternative, which many people don't think of...if you or your family unfortunately causes a lawsuit to be filed, the personal suit can go after all properties owned in a personal name.

It's good that you have friends who are willing to invest with you. Are they going to be doing work on the property, too? If not, then you are raising capital for a security which is governed by the SEC and you will have to register for a securities exemption with a syndication using an SEC attorney. That requires filing for a 506b or 506c exemption. If they are doing work on the property, then you may need to form a JV. An attorney experienced in commercial real estate can help. And be sure to ask about asset protection for your properties.

I am not an attorney, accountant or financial advisor so I am just offering information to ask of professionals to be sure you are successful in your investment.

Please consider joining up with an experienced investor in your town that you trust and learn with your partner's help.  Have them guide you for a small percentage of the deal or, better yet, have an experienced partner provide part of the equity as well as advice and guidance.  

I admire your willingness to move ahead on ownership and that is absolutely the best way to learn, but not by yourself and not without professional advice.  The basics of commercial real estate investing are deceivingly simple.  Investing in commercial real estate is fun, rewarding, a lot more work than most people realize and has a ton more details that you don't learn about until you actively acquire, operate and dispose of properties yourself.  

As many say about it, it is a team sport and you need a team of professionals who are experienced in commercial real estate themselves to guide you along.  Look for them in your community or nearby.  Find an attorney, accountant, real estate broker, lending broker, and property manager who are experienced in commercial real estate and who are willing to help you get started.  Lots of professionals are willing to help you get started hoping that you will become a long time client.  Good luck!

2-4 unit multifamily is still residential so the MLS should have them listed which real estate agents can access. There is no equivalent to Zillow for commercial multifamily. There are some subscription sites which are usually fairly expensive, especially for someone looking for a low cost equivalent. CoStar, Crexi, RockVal, Moody's, REIS, etc. are some of those. Maybe someone who deals in residential multifamily knows better than I do. Good luck.

@Frederick William, you'd be better of finding a sponsor you trust and investing in 2-4 or more multifamily syndications, in my opinion.  This is not a business you just go in and know how to manage a property manager, besides, a PM for a property the size you can buy in CA will probably charge you more than the property nets.

Search online for syndicators who professionally manage multifamily properties, but do your due diligence on them to be sure anyone you invest with is experienced, structures their deals fairly and and has references you can check.  If you have the time and want to become more active, you can always do that once you get a little experience.

Multifamily properties are the best risk adjusted asset class according to studies and the Sharpe ratio.  So you are right to put your cash to work.  I'd even say most people ought to allocate a reasonable percentage of your overall investment portfolio into real estate, but it is best to study first and get some background in the field.

@Daniel Zapata, I don't know or invest in CA so I don't know how agents work there.  I also only deal in larger multifamily (150+) so my advice might not apply to you.

I can tell you that in the southeast Sunbelt where we invest, no one I know uses buyer-side brokers/agents.  Only sellers use brokers/agents.  

I would suggest you consider finding an experienced partner to work with so you can learn more about the larger properties you are considering.  That would also help you qualify for a larger property and grow your investing portfolio more quickly.

@Marc Warren, Brian is a solid guy in this business and worth listening to.  You are correct that the deals are not nearly as lucrative as before 2020.  The market has been on fire the last decade or so but now, with higher interest rates, returns are not what they were and many sellers have not adjusted to the slowing market, but believe their properties should get higher prices which aren't justified in this market.

You are correct.  That is why I didn't say forming an entity makes you eligible for a Solo 401k.  You have to have a legitimate business that can sponsor a Solo 401k.  But it is a normal step to do so.  And as others have said here, there are other real estate related investments one can make with DS IRAs without incurring the UBIT/UDFI issues.  As always, be sure to check with professionals who know this business and aren't just looking to sell something.

I agree that many, if not most, of the SDIRA discussions do not include any info about the UBIT requirement and 990T filings. One alternative is to form an entity which will sponsor a solo 401k and roll over IRA funds into the solo 401k. That eliminates the UBIT obligation, allows much larger contributions, and has numerous other advantages. There are pros and cons to this, but it offers a way to invest in real estate and other alternative asset classes. Be sure to speak with CPAs and attorneys who are experienced real estate investors themselves. It will nearly always be better to get professional advice before you invest and find out what mistakes you've made based on advice from the internet.