All Forum Posts by: Kelly McClellan

Quote from @Evan Polaski:

@Kelly McClellan, Jim can't mention is because of self promotion rules on these forums, but check out his Left Field Investors group.  I believe there are fees to truly join, but listen to his publicly available podcasts and YouTube channel content for a good idea of the expertise he and his group bring.  

There are many factors to consider, but with you living off your earnings, I would imagine consistency/frequency of distributions (which gets into risk of assets) and hold period would be big ones.

Many groups on these forums are 3-5 yr holders and operate in the value-add space.  I know some (not necessarily on these forums) that don't make their first distribution for about 12 months to build up reserves.  Others will fund reserves in the equity raise, but then start distributions much sooner.  Some pay quarterly, others monthly.  Some have historically been all over the place with their distribution amounts, and others pay out a consistent amount each month with annual reconciliations based on actuals.

The initial journey can be daunting, as you will spend a lot of time on the phone vetting different groups, and a lot of time on the computer trying to discover new ones.  As noted, this is where groups like Left Field can provide significant value. And once you have groups you would consider investing in, then you need to match goals, risk profile, hold periods, etc.

I have already begun the process of reaching out to Jim and Leftfield. 

I appreciate the info you have offered. You are right, consistent income is one of my goals. This is why I am starting slowly. with just one property at a time to “feel” things out. Beyond the loss of income, I am just as concerned about loss of capital. So there is a lot to consider as I make this move!

I appreciate your input. 

Quote from @Remington Lyman:

Quote from @Kelly McClellan:

Good morning BP members.

I am actively seeking to make connections with those who have successfully transitioned from active ownership to more passive real estate investing. I have been on an information bender as I am about a week from closing the sale of a property we have held for over 20 years.

I am specifically looking to connect RT with others in the Columbus, Ohio area. I am also more than happy to connect with others that can add more information from their own experiences also.

There is so much noise in this passive, LP, syndication space that it is challenging to find a clear voice!

We have a moderate sized portfolio of single, two, three and 4 unit properties that we have been 100% active with for many years. We make our income entirely from our RE holdings and they represent a large portion of our retirement plans also. We have experience with 1031s, including 1031 DST deals that we have entered into.

I am now trying to educate myself regarding using syndication deals and the paper losses that come with them to help offset gains as a possible alternative to deferral via 1031. We are in our mid 50s and looking to find a little more time to enjoy. While we don’t plan to sell all of our properties at the moment we, plan on taking a more strategic tack to identify those that meet our goals over the next several years.

I would appreciate the help, folks! I think I nearly made my account’s head explode when I came at her with my needs. She still hasn’t recovered! Oh, yeah, I am actively seeking a new accountant in the central Ohio area that can speak this language!

Hope to hear from you all!

Kelly

I can send you some accountant referrals in Columbus, Ohio.

 Thanks! I am looking!!!

Quote from @Jim Pfeifer:

I was an active investor and completely transitioned into passive real estate syndication investing. I live in Columbus, Ohio - and have a great accountant who taught me what he calls the "Lazy 1031" strategy. Basically, I sold all of my active real estate - single family and multifamily and invested much of the capital into syndications. The syndications did cost segregation and used bonus depreciation to deliver me large paper losses that offset the gains from the properties I sold. I did not pay tax on my gains and I didn't have to do anything complicated like a 1031 Exchange or a DST. The only thing I had to do was make sure I had enough paper loss to offset all of the gains and had to make sure it was done in the same calendar year.

I continue to use the strategy - when deals go full cycle, I invest in a new syndication.  It's called the Golden Hamster Wheel - instead of 1031 until you die, you just continue reinvesting and defer the tax.  I have been doing this for several years and I don't pay tax on my real estate gains.

You mentioned the challenge of finding a clear voice through the noise - it is difficult to find quality operators in the syndication space.  Many of the best have plenty of capital so they don't advertise.  Many operators are great podcasts and are very well known, but how do you know if they are quality operators or quality marketers?  These are incredibly illiquid, long-term investments that are completely out of your control.  Once you make the investment, there is nothing you can do but watch and wait.  This makes it even more critical that you find quality operators to do that.  When I first started, I mainly found operators through listening to podcasts.  I was exposed to some great operators - and plenty who are not so great.  This is a hard way to find business partners. Now, I leverage my Community - I don't invest in a new operator unless they are recommended to me by someone I know, like and trust and that person is part of my Community and has invested with the operator.  I still do the same due diligence on the operator, but I am starting from a much better position - a position of trust.  It has made a huge difference in the success of my investments.  I strongly believe you need a Community - just like you came to BP for help with active investing, it makes sense to find a specific Community (or several!) that focuses on real estate syndication investing.  

We are both in Columbus - so let me know if you would like to connect!

 Jim. 

I appreciate the comment. I would definitely like to connect RT here in Columbus. If you are willing to share your knowledge and experience, I would be grateful for the education!

I will reach out with a PM with my contact info. Let’s talk soon!

Best, Kelly

@Sam Wilson

Hey Sam. I am looking for some insight as I am just now investigating syndicators. Would love to chat sometime.

I sent you a probate connect request.

Thank

Kelly

@Louis Young

So far so good. But I will say that the distributions are not fantastic. I feel good about the sponsors I am with and the asset class and locations so I anticipate the investments will be fine. I am just looking to unlock a bit more cash flow while preserving the capital/equity.

I have done one deal with Cantor Fitzgerald (multi family Texas) and one with Capital Square (manufactured housing Florida).

I chose to work with a fiduciary vs a broker dealer and I was pleased with that arrangement. I felt the fiduciary responsibility offered a bit more downside protection.

So far all of my distributions have been as expected. (Just under a 4.5% average between the two days investments). I feel I can nearly double that distribution outside the DST. I do feel my equity is relatively safe and I didn't have to concern myself with the tax liabilities this time around. The taxes will eventually come to roost, but by the time I roll out I'd these investments I am hopeful for more upreit opportunities as a possible final resting place. It really just depends on the market opportunities when they get to disposition.

There is a bit of a learning curve as I acquaint myself with this new strategy!

@Taylor L.

Thanks for the reply.

I am aware of the possibility of a TIC position into a syndication. I like the idea in concept, and there are a couple challenges also. One of the biggest concerns I have is committing so much equity to one syndication deal. Especially because I have yet to develop any track record with any group or groups. Another problem is that I am just on the cusp of bringing forward enough money into the deal to warranty the trouble and expense of the TIC. I am finding that 500K is the minimum and most won't even consider it until 1M. I would need to ad capital to even make the 500k mark on the deal I am selling.

I have also done some reading on the deferred sales trust but would have much to learn about that vehicle. It is also my understanding that it might be a bit questionable in the eyes of the IRS. I would certainly need the advice and professional assistance of an expert regarding this strategy.

@Arn Cenedella

I would like to connect. I am in a similar situation as you were when you made this post. I will reach out privately to connect and would appreciate the opportunity to speak to you.

Best

Kelly

Good morning BP members.

I am actively seeking to make connections with those who have successfully transitioned from active ownership to more passive real estate investing. I have been on an information bender as I am about a week from closing the sale of a property we have held for over 20 years.

I am specifically looking to connect RT with others in the Columbus, Ohio area. I am also more than happy to connect with others that can add more information from their own experiences also.

There is so much noise in this passive, LP, syndication space that it is challenging to find a clear voice!

We have a moderate sized portfolio of single, two, three and 4 unit properties that we have been 100% active with for many years. We make our income entirely from our RE holdings and they represent a large portion of our retirement plans also. We have experience with 1031s, including 1031 DST deals that we have entered into.

I am now trying to educate myself regarding using syndication deals and the paper losses that come with them to help offset gains as a possible alternative to deferral via 1031. We are in our mid 50s and looking to find a little more time to enjoy. While we don’t plan to sell all of our properties at the moment we, plan on taking a more strategic tack to identify those that meet our goals over the next several years.

I would appreciate the help, folks! I think I nearly made my account’s head explode when I came at her with my needs. She still hasn’t recovered! Oh, yeah, I am actively seeking a new accountant in the central Ohio area that can speak this language!

Hope to hear from you all!

Kelly

Quote from @Nick B.:

Originally posted by @Alex Scott:

LP

I am an LP in 15 deals. If you have any specific questions, I'll be happy to answer. 

Originally posted by @Albert Wright:

I am in the process of closing a 1031 DST transaction with a "flat fee" broker. Instead of paying a percentage (load) of the total investment, they accept a reasonable fee for their services and credited the load back into my DST investment. I will be happy to share if anyone is interested.

 Albert. I would like to discuss your experience with this broker. I appreciate any insight you might have to share. 

Thanks!

Kelly McClellan