All Forum Posts by: Leslie Pappas

Hi Jason, if you want to purchase another rental property(s) and actively manage it, a 1031 may be a great solution for them. If you don't want to manage another property, you can do a 1031 and invest in a DST, becoming a passive investor. They are hands-off, institutional grade real estate investments, and they allow you the option to diversify into offerings in markets across the country.

Welcome Aaron, sounds like you are doing pretty well with taking all the right steps. This site is great for networking and getting a ton of real estate information. Best of luck!

A very good source of local analysis is rereport.com.

Quote from @Grant Gilbert:

Hello, thanks in advance for any input or advice. 

I am new to syndication and am looking at joining a GP team as an underwriter. 

I am wondering what things I should do or ask before joining? They have given me a bit of their background, experience, and some previous deals the KP has completed a full cycle on. They also gave me some information on their buy box and strategy. 

Is there anything i should be doing before onboarding?

Hi Grant, some things that might be helpful to learn more about the firm/team:
- If/why they target a certain asset class
- Have there been any problems with liquidity in past deals?
- What percentage of deals have gone full cycle?
- Financing information on previous deals, is it all IO, amortizing, blend of both? What is the source of financing? 
- What goal is it serving for investors? Is this a perpetual income play? Tax advantaged income play? Is this targeting growth?

Quote from @Scott Trench:

"Good" in the context of losing, to me, looks like this:

 Sponsor honestly appraises the situation, and provides a blunt assessment of where they made a bad bet, failed in due diligence, operated poorly, or were totally irresponsible with leverage and timing. Sponsor realistically and honestly susses out this from market challenges, which of course are real.

Sponsor tells investors that they are committed to operating their current business and stewarding investor capital. Sponsor recommits full-time attention to their job, which is to oversee the tens of millions, hundreds of millions, and/or billions of Assets they deploy. 

Sponsor is regularly seen on-site at every property in their portfolio, regardless of personal cost. They raised the big bucks, and things aren't going well. Are they going to be on vacation? Are they going to start up the next fun side project or fund? Or are they going to go to work?

I'm in a deal that's gone south as an LP. My sponsor is doing "Good" in the context of losing.

We all knew what we were getting into. We knew the bet. He executed it. It's his full-time job. It's all he does. He lives within an easy drive of every property in the portfolio. 

Doesn't change that I am getting flushed on the deal. But, I may/will invest with him again. He operated it well. Executed the plan, keeps the units occupied. Just supply and interest rates crushed us. I expect many investors will not be happy, but they also won't publicly roast him for fleecing them.

Other sponsors aren't doing "good" in the context of losing. They will get roasted. 

Some deserve it. 

Yes, good post. 

There are many qualified Sponsors to consider. In my firm, we underwrite the Sponsor as a company in addition to their individual offerings. It is entirely possible that a Sponsor can be approved, but an individual offering may not.

This industry, like all real estate, has its ups and downs. Those that tend to have a bad experience, is typically tied to poor Sponsor selection or offering selection. It's vitally important to know who you are working with, and have the history of the players involved. I see former players from the 2000's coming back to the industry under different business names, and some of their prior work was less than stellar. It's important to have the advice and perspective of an industry old-timer, in my opinion.

Quote from @Christopher Bierman-Gwinn:

Should my wife and I buy our first investment property in Mount Shasta, CA or Columbus, OH. 

We live in San Francisco, CA and we both work in the trades and have a couple of connections with trades people in Shasta. 

Thank you!

 Hi Christopher, if you are open to investing out-of-state, there plenty of other opportunities elsewhere, my clients are involved in institutional grade properties across the country. My recommendation is to choose cities in safe and economically diversified areas with above-average income and population growth. It can also be safer to diversify your investment properties across the country. There is still good money to be made in AZ, FL, GA, TX and other states, however, picking the right submarkets is key.

A very good source of local analysis is rereport.com

Quote from @Alberto Cioni:

Soon I will sell my 1.3M rental propriety and I'm looking to 1031 into a DST. One of the biggest complaints with DSTs is the high cost/fees associated with them. A big part seems to be the broker commission (8-12% from what I have seen). Is it possible for an investor to work directly with a DST sponsor and "save" some/all of the commission that would have been paid to a broker? It's a pretty big chunk for the amount I'm looking to invest.

Any suggestions would be appreciated.

The fees are built in so they do not impact the equity you are earning off of. Which is different if you are buying into a fund where they take it off the top. The benefit of working with a quality rep is that not all sponsors are created equal. There are many qualified Sponsors to consider. In my firm, we underwrite the Sponsor as a company in addition to their individual offerings. It's vitally important to know who you are working with, and have the history of the players involved. I see former players from the 2000's coming back to the industry under different business names, and some of their prior work was less than stellar. It's important to have the advice and perspective of an industry old-timer, in my opinion.

Quote from @Kenny Hoang:

Hi everyone! Newbie here to the real estate investing world, but really eager to get my feet wet.

I currently live in San Jose, but am deciding to move to a cheaper location where I can get my first property. As much as I would like to stay around my hometown, houses here are not cheap. I am thinking about moving out to Sacramento, as I see some duplex’s around 500-700k range.

I'm planning on house hacking my first property, which would be a multifamily, and build a portfolio of multi-families within the Sacramento area. Planning to buy a new property every 1-2 years and repeating the house hacking strategy until I have enough capital/experience to start the BRRR strategy.

For the investors that are in Sacramento/Bay Area, I would love to hear about your stories of how you first got into real estate investing. As you can tell, this is a very big step for me and is quite nerve racking trying to make my first purchase as smooth as possible. I would appreciate any tips/advice/books that you can provide me to help jumpstart my real estate journey!

Hi Kenny,  I live in Silicon Valley, and I specialize in real estate. I can tell you what people here have done to set themselves up for retirement. There are two types of investors here:

1. Buy or inherit and hold for a long time, then cash out and redeploy equity into potentially higher cash flowing properties or other investments.

2. Buy or inherit and hold all their lives while working the properties for income.

I've seen teachers, firemen, software engineers and all sorts of people utilize both strategies successfully. One way or another, however, the investors must work to pay down loans, increase rents and decrease expenses wherever possible. One way or another, they are building their net worth.

Building net worth is how you may possibly retire with fewer worries. If your retirement utterly depends on having adequate cash flow from your properties, any downturns will cripple you. AND you must maintain adequate reserves to take care of the disasters that may happen.

So my advice- build your equity.

Most of my clients fall into the first group above. If you are or become an accredited investor, you can make straight cash investments into funds, which are small portfolios of properties.

Best of luck!

Hi Lonnie, I live in Silicon Valley, and I specialize in real estate. I can tell you what people here have done to set themselves up for retirement. There are two types of investors here:

1. Buy or inherit and hold for a long time, then cash out and redeploy equity into potentially higher cash flowing properties or other investments.

2. Buy or inherit and hold all their lives while working the properties for income.

I've seen teachers, firemen, software engineers and all sorts of people utilize both strategies successfully. One way or another, however, the investors must work to pay down loans, increase rents and decrease expenses wherever possible. One way or another, they are building their net worth.

Building net worth is how you may possibly retire with fewer worries. If your retirement utterly depends on having adequate cash flow from your properties, any downturns will cripple you. AND you must maintain adequate reserves to take care of the disasters that may happen.

So my advice- build your equity.

Most of my clients fall into the first group above. If you are or become an accredited investor, you can make straight cash investments into funds, which are small portfolios of properties.

Best of luck!

Welcome Stefano, sounds like you are doing pretty well with taking all the right steps. This site is great for networking and getting a ton of real estate information. Best of luck!

Hi Daniel,

I live in Silicon Valley, and I specialize in real estate. I can tell you what people here have done to set themselves up for retirement. There are two types of investors here:

1. Buy or inherit and hold for a long time, then cash out and redeploy equity into potentially higher cash flowing properties or other investments.

2. Buy or inherit and hold all their lives while working the properties for income.

I've seen teachers, firemen, software engineers and all sorts of people utilize both strategies successfully. One way or another, however, the investors must work to pay down loans, increase rents and decrease expenses wherever possible. One way or another, they are building their net worth.

Building net worth is how you may possibly retire with fewer worries. If your retirement utterly depends on having adequate cash flow from your properties, any downturns will cripple you. AND you must maintain adequate reserves to take care of the disasters that may happen.

So my advice- build your equity.

Most of my clients fall into the first group above. If you are or become an accredited investor, you can make straight cash investments into funds, which are small portfolios of properties.

Best of luck!