All Forum Posts by: Jason Powell

@Matt Skinner Good point. My definition of financial freedom includes time as the primary measuring stick. A 21% IRR is stellar, and ample enough for me to never have the desire to personally manage units myself again. Maybe some flips or turnarounds when I had the time and particular itch.

@Luke Miller True, I like what you say about the passive AND widely available aspect. I don't understand why this isn't talked about more. And frankly, I don't see why so many people go buy low end homes and self manage if these returns are available passively and reasonably reliable over the long term.

Everyone's responses have been quite eye-opening.

@Todd Dexheimer Thanks! I'd be very happy with a 15% IRR and 7-10% COC. If that's reasonable to expect even when entering deals in a hot market such as today, I'm quite happy with that given the passive nature.

Also, do you all have input on what the minimum investment is typically for a seasoned syndicator with deep experience and track record? I would imagine those folks would want a higher minimum than newbies...?

Thanks everyone for all the responses. Lot's of great points brought up.  @Kevin Dean I'm a big believer in backing out the value of one's time from self-managed deals to find the true investment return. Seems like a must if trying to compare apples-to-apples with a syndication.

@Account Closed Wise input. Thanks! To me, the syndicator is far more important that the deal, as I don't believe in my ability to perform adequate due diligence on the deals anyway (different markets, size of deal, etc that I have no experience with). Speaking of lack on control on when to sell, do you know, if one receives a check back due to sale of a property, would one be able to 1031 that back into another syndicated deal or private personal deal?

I'm wanting to enter a more restful season of life after sprinting hard that last few years. Syndications, in theory, sound like a very attractive option to me. I get how they work, but I wanted to ask you:

1) Do average syndications with seasoned syndicators tend to outperform the average person trying to be a landlord on their own? My biggest mental hurdle is whether the fees a syndicator (rightfully) charges makes it so that passive investors only net marginal returns. Also I'm wondering if syndicators take a bunch of mediocre deals in hit markets like this just to keep their own deal flow and revenue going. 

2) any specific recommendations? I'd love to hear from those who have used syndication model long term. I realize that most of the deals in the last 8 years have all probably been great due to huge market tailwinds. 

The passiveness and quality of life aspects of syndications sound great. I guess I'm trying to quantify how delayed one's "financial freedom" target might be if they use this model as opposed to being very active by themself. 

@Kenny Fiorito  Well as far as I understand, the "Portland Police" are about to become the "Oregon Police" this year. The Portland rules are being spread to the entire state if current legislature gets through, which I'm being told is a 99% chance of happening.

@Nick Giulioni @Cody L. @Jeremiah Mon

How are all you guys investing out of state in more LL friendly states? I like the thought of this, and am considering syndications. I'd get a more passive approach, but I feel like lose control over my tax situation upon sale and likely get a lower return due to the fees/profit split involved in syndications. I also wonder if syndicators are only going for great deals these days in a tough buyers market, or if they are regularly buying subpar deals just to keep money flowing and make an income for themselves. I don't think I'm of the mindset to buy a ton of SFH through a turnkey provider of low priced homes. Honestly though this is an area I need to expand my mind and learn to give up some control and trust.

@Cameron Riley  I don't own any rental houses, just a small handful of multifamily. The price points up here are much different than where you're at.  15% long term cap gains plus Oregon at 9%. Plus depreciation recapture at 25% fed and 9% state for me. That's someone nobody likes talking about on BP because everyone wants to pretend they will 1031 until they die.

Add the cap gains and depreciation recapture together, and all it takes is a little north of $1m in equity to get taxed 250k when you sell. 

@Charles Han Don't get discouraged by this. Jay is correct about rules being different for both owner occ. and I believe there is an exception to all these shenanigans if a landlord owns 4 units or less (verify). And you'll "get lucky" too with enough time, although it'll probably take longer than the numbers I indicated due to my entry being in the midst of the RE market just getting out of the pits. It's time IN the market, not timING the market that makes you wealthy over time though. One leg up you can have is finding a great off market deal if you're so inclined. My first one was full priced off the MLS, so it was genuinely luck of market timing. My future deals all had $100k equity the day I signed the paperwork though. That's what I'd focus on in your shoes.

@Jeff S.  I agree with the screening being by far my #1 concern. It's slowly turning into a government run "private" business with nobody risking anything but the landlords. That's why I'm really giving this a lot of thought and value everyone's opinions here. I fear working my tail off to build a mini rental empire here and then having the State change the rules on me when I'm so deeply entrenched into cap gains and deprecated properties.

I don't know what the next national "downturn" will look like, but I've been feeling like it will have a bigger social impact than past downturns have due to a rise in populism, and animosity between the haves and have-nots as you put it. I do believe that's gotten a lot worse across the country. The "evil top 0.1%" seems to now be targeted at the top 10% by the protesters.