All Forum Posts by: Michael Bishop

@Alex Schumer congratulations on your success to date! I, and many others, think that getting into the commercial space is a great way to accumulate serious wealth. Not sure what size MF you're interested, but there are absolutely ways to get in to large deals that would otherwise be very difficult to secure a loan for on your own - i.e. syndication. If you are interested in this passive space, I recommend doing your research, here are a few blogs to get you going:

https://www.biggerpockets.com/blogs/10191/68640-wh...

https://www.biggerpockets.com/blogs/10191/66365-8-...

Best of luck, and happy to connect and discuss if that'd be helpful to you.

You mentioned student loan debt burden - I know this will differ by person and that some prefer to get rid of the debt all together as soon as possible, but my opinion is that it makes the most financial sense to invest that money instead IF you can find an investment with better returns than whatever your student loan interest is.

As some have said, I agree with the recommendation to look at passive opportunities. From what society tells us (since I don't know from personal experience), your day job will keep you very busy and thus actively managing a portfolio will be pretty difficult. Some things to consider - syndication (MF, SS, MHP, etc), crowd funding, turnkey, etc as others have mentioned.

Best of luck and don't catch the analysis paralysis bug!

Not a Minnesotan, but a huge Vikings fan! Are you looking to get involved actively or passively? Local meet-ups as well as BP is an awesome starting point. Happy to connect and chat!

All, BP is going through and deleting meet-up information posted in non meet-up threads. I posted our meet-up details but it has been deleted along with another entire thread dedicated to the subject. Please PM your email address if you're interested.

I agree with everything that @Todd Dexheimer and @Ivan Barratt have said!

@Aaron K. - in terms of selling at a loss, I think that is a lot more likely with SFH than it is with commercial MF. Three primary reasons for this belief:

1. Mortgage defaults on MFHs during the 2008-2009 crash were just fractions of those on SFHs. Freddie Mac delinquency rates on SFHs peaked at 4% in 2009, while MF delinquency rates peaked at roughly .4%.

2. Conservatively underwriting (which should ALWAYS be practiced) can, and does, identify deals with break even points at occupancy rates WAY below the worst occupancy rates of the downturn. AKA with the right team, you can make money even in a market crash.

3. 150+ units is a heck of a lot better than 1 unit to get you through a down turn. 15 vacancies in a MFH still equates to a 90% occupancy rate while just one vacancy with a SFH equates to 0% occupancy (obviously, right?). Economies of scale!

@Rama Krishna, if you couldn't tell, my vote is syndication! Particularly if you're looking at long distance investments; syndication is passive by nature while owning SFHs will either (1) require a lot more sweat equity or (2) eat away at your returns by having to hire a property manager.

Hope this was at least a bit beneficial to you, and I'm happy to discuss further. Best of luck.

@Mike Dymski thanks for the heads up on the 121 gain exclusion.

Also thanks for the words of encouragement, I look forward to a busy and successful 2018!

@Brian Burke, great post. I love reading the goals that all of you "heavy hitters" have set for yourself this upcoming year, it really is an inspiration. I've got a few goals set for myself as of now, but all are subject to review and change as we move in to the new year:

1. Participate in 6 commercial syndication deals - MFHs, MHPs and Self Storage

2. Work with @Matthew Teifke to create and run the best Austin REI meet-up with at least 50 members by year end (we've already got a solid 30+ people who've expressed interest)

3. Put out at least 24 blogs

4. Create some sort of beneficial content (other than blogs) for my blog followers - leaning toward a short book

5. Start a REI podcast

6. Finally turn my primary residence into a rental

@Kevin Yi I may have missed something, but I think it's worth specifying - are you looking to 1031 into your first deal, or 1031 your proceeds from deal one into deal two and so forth? As many have mentioned above, 1031ing in may prove difficult, but there is potential to 1031 from deal to deal.

Some great advice above from some experienced players in the syndication space, but here are some of my blogs that offer my take on the niche if interested:

https://www.biggerpockets.com/blogs/10191/68640-wh...

https://www.biggerpockets.com/blogs/10191/66365-8-...

@Mackal Smith I like the idea and like @Scott Trench, I think it's a great thing that you're helping your daughter with her loans. I've got another option to consider - apartment syndication. 

You could easily turn $50K into $100K (or $100K into $200K) as A 2.0x equity multiple is not uncommon with value-add commercial multi-family syndication. Here's an example: assume you invest $100K as a limited partner. It's not uncommon to see 8% preferred (can also be seen as "minimum") annualized return so you're looking at $667/month that you can put toward your daughters loans. Another common occurrence with value-add syndication is an equity event midway through the hold, in which case you would receive a good chuck of your initial investment back while maintaining your position; let's say you get $30K back in year two which you can also put toward your daughters loans. Jump to the end of year 5 (five year hold is common). You've paid $30K + $8K/year for 5 years = $70K total toward your daughters loans, and now comes the sale of the property. At sale let's assume you make $60K profit plus the return of the rest of your original investment, i.e. $70K, which means a total of $130K at sale. Pay $30K toward her loans which at this point pays them off and you're still left with your initial $100K.

2.0x equity multiple is not guaranteed, but it is absolutely achievable. Also something to keep in mind is capital gains tax at time of sale. Regardless, I think this is absolutely a viable option for what you're looking to achieve. Below are some blogs I've written about syndication if you're interested, and I'd be happy to discuss further so please feel free to reach out:

https://www.biggerpockets.com/blogs/10191/68640-wh...

https://www.biggerpockets.com/blogs/10191/66365-8-...

I agree with @Hernell D., anybody who thinks that Bitcoin is anything more than a gamble at this point is out of their mind. People are buying Bitcoin emotionally, because prices are sky rocketing, without fully understanding it. My opinion is that the block-chain is here to stay, and that Bitcoin will be the failure that leads to the block-chains true rise.

Real estate has centuries of proven performance, Bitcoin hasn't even been around a decade (and is A LOT more volatile in that decade that real estate has EVER been). Personally, I would recommend that, if you must get in to the cryptocurrency space, (1) don't invest anything you're not fully prepared to lose and (2) understand what you're buying and lean toward investing in the block chain rather than Bitcoin (i.e. Ethereum, which has a practical business application in that it provides a platform to build decentralized applications, which is THE GOLD MINE BEHIND BLOCK CHAIN, as opposed to Bitcoin which is simply a currency).

All that said, that's just my opinion (strongly based on my work experience and research) and the future could prove me dead wrong.