All Forum Posts by: Jacob Morris

that 6-10% is cash flow. LP still holds equity we get at the sale of the deal. typically im getting anywhere from 15-20% IRR on most the deals i invest in

So I can answer this from the investors side and what I have seen and been offered over the last 4 years. If you want to be competitive against everyone else.... Most syndications we see a 70/30 split. 70% of the equity goes to all the investors "LP" raising the money, 30% to the "GP" managing the deal. Individual equity is based on the amount you bring. Typically there is a 6-10% preferred return (We get the first 6-10%) of the cash flow AFTER all expenses are paid of course. Some operators do a waterfall return after that pref has been made everything on top of that is split however you set it up. I have seen some where they waterfall 50/50 after the pref. I have seen some waterfall 70/30 until the investors hit xx then 100% goes to the GP. That's up to you to get creative. Then, If its a JV deal all the above potentially goes out the window and you can structure however you want and get people to agree to it.

@Greg Dickerson  we 100% agree with you!  

@Spencer Gray  thank you for your detailed response. You’re basically summarizing what we have been discussing over the last month.  What made you make the switch from solo investing in syndications to bringing on family and friends? What are a few red flags that you look out for when doing your due diligence on deals? What are some things that you find valuable when looking at syndications?  I’m sure several people would love to read about your experience and what you look for in “good deals “

This might end up being a long post and hoping for some interesting conversation....... here is the bottom line.... Do you think we can build a strong portfolio with just syndication deals being a limited partner.

So lets get started. My wife and I are both active duty and moving every 3-ish years. We are 30 and 28 years old. No Debt. We are trying to get our hands involved in a little bit of everything to see what we want to focus on once we get back from Korea and in the states. We have done one syndication deal so far. Have an offer accepted on a flip that we are partnering with. Have another offer accepted on a duplex that we are partnering with. Alot of moving parts for us as a new investors. The buy and hold and the syndication have simliar ROI around 16-20% (technically the buy& hold return should be infinate after the BRRRR is complete). The flip has a much higher ROI but more risk. We are also hoping to go back to school when we get back in the states. wife-CRNA school. Me- MHA/MBA program.

Back to the original question: Do you guys think it is possible to create a large amount of wealth from just Syndication deals? My thoughts: Very passive.... I mean very much so as a limit partner investor in a syndication.

Pro/cons of syndications (just my thoughts please comment about yours)

Pro: very passive allowing you to focus on creating more income or other objectives such as going back to school/ fixed rate of return/ equity at time of sale/ % of initial investment back within a few years at refinance. Turn around and reinvest into a new syndication. no liability

Con: not in control of anything that is done with the property. money is tied up for up to 10 years and might get a lower then desired % amount at refinance 2-3 years in. Not able to leverage your money.

Pro/cons of buy and hold residential 1-4 units ( again just out thoughts please talk about yours)

pro: LEVERAGE. more control of how property is ran. potential infinate return on investment if the BRRRR is good enough.

con: value probably would fluctuate more than apartment complexs. turnover hurts NOI more. Liability. repairs hurt NOI more.

so....what are your thoughts about building a decent retirement through syndications?

Know anyone who lives off the income just from syndications? I hope this will turn into a decent conversation. 

Thank you for all the replies and different opinions. What I find most interesting is all the different paths that are mentioned and different ways to approach this. Just to update we are planning to start  by partnering with a flipper to get more exerience and knowledge of rehabs and looking at RE from that angle. We plan to continue to re invest the principle from those deals over and over  to only lock up a small amount of money and keep open to investing options back in the states that might happen while we are over here in korea enjoying what the army throws at us next. 

What is the best way to find an experienced parter to work with? We are currently LP in a large syndication but want to explore partnering with people on smaller deals so we can actual learn more. The only thing we can bring to the table is capital. We are currently stationed in South Korea with the Army and wont be back for a minute so there really isnt much value other then saved capital. What is the best way to start looking for partners? We are debating doing another syndication and locking the money up for 12-18 months, but also want to learn more and be able to jump into small multifamily once we get back. 

Heloc, portfolio loans? I don’t have experience with these but something to look into

Welcome! good luck finding your next deal. You are already miles ahead of many people on this site like myself who are still in the researching phase but are close to sending in their first offer.

@Andrew Fidler pm’d you

I did my research on google and yelp. Most company’s have a 2 or 3 star rating with the exception of the company with one review and 5 stars probably posted by someone in their office