All Forum Posts by: Mike Holman

The bolder part feels like a good process for making a decision. The only wrinkle I'd add is that IF my financial exercise above is accurate and I decide the timeframe to achieve my passive income goal is too long, then perhaps I'd need to re-evaluate my time investment of the BRRR or Turnkey options (with an eye towards finding ways to invest more time in order to do those instead of Syndication).

Is there a dynamic calculator for Syndication returns out there? I'd like to check an exercise I just tried. I wanted to see how long it would take me to be passively generating my income ($150k for this exercise) using Syndication. I made the following assumptions:

1) $50K annual investment from W2 job. 2) 8% annual CoC return (cash flow distribution), less 20% tax rate. 3) 5 year hold for each investment with 50% return at the end of each investment, less 20% tax rate.

In this exercise, ALL proceeds (distributions, profits upon sale) were reinvested in addition to the annual $50k annual investment. I'm showing it would take 18 years to replace my current income. I feel like something has to be wrong in my calculations. 

 Thanks for the reply Travis. Happy to connect about Detroit. I can already see learning/researching markets being a pain point for an overanalyzer like myself.

 Hi Paul, I’m only looking to bring $75k to the table right now, not $750k. Or did you mean find 3 others w $75k and combine to bring forward $300k as a down payment? Id need to find (and vet) 3 other investors with $75k in that case.

Yes, I see what you’re saying about the BP demos.

Hello, wanted to quickly introduce myself. 

I'm Mike, married with two young kids living west of Minneapolis and I turn 40 this year. My wife and I both work and have contributed enough to our retirement funds that we'd be considered accredited investors. We plan to continue our current contribution rates and not direct our retirement funds towards RE, but I would like to use some of my leftover funds to generate passive income with the ultimate goal of matching my W2 income in the next 10-15 years. In order to start that journey, I've set the goal of 2023 being the year that I purchase my first investment property. I have $75k saved up currently and plan to have an additional $75k available throughout the year. 

Given my current life-stage (and frankly energy level) I'm looking at something on the lower-end of the involvement spectrum. I realize nothing comes free, but I'm also not looking for a second job. As a result, I think I should focus on either Syndications or Turnkey properties, although I haven't completely ruled out BRRRR, with the understanding this would be more time-consuming than the other two. I've spoken with one OOS Turnkey provider and one Syndication sponsor, and need to research out to more.

For my situation, I see the pros/cons of each as:

Syndication - PROS: Least amount of work. More product options. CONS: Least amount of control. Good returns, but limited ceiling (not sure I could reach my goal on this alone). Illiquid.

Turnkey - PROS: Mostly passive. Good returns, higher ceiling than Syndication. Ownership of tangible asset. More liquid than Syndication. Ability to finance. CONS: More work than Syndication. Significant profit paid to Turnkey company. All the risks that come with homeownership/landlording. 

BRRRR - PROS: Highest potential returns with other pros similar to Turnkey. Most amount of control. CONS: Most amount of work, especially on the upfront (instead of finding one good Sponsor or one good Turnkey company I'd need to find one good realtor, one good GC, one good lender, one good property manager...). All the risks that come with homeownership/landlording.

Here are a couple of the threads I've read discussing turnkey v syndication (the top one has an even better pros/cons list):

https://www.biggerpockets.com/...

https://www.biggerpockets.com/...

https://www.biggerpockets.com/... 

Normally, I would just go with Syndication as the "safer" and least time consuming option, but since my wife and I are ahead of schedule on our retirement savings with no plans to adjust our contribution rates, I'm inclined to consider a "riskier" option that offers higher potential returns. 

One thing I have noticed as I've perused the forums, I don't see nearly as many recommendations for Syndications as I do for Turnkey companies. Am I just looking in the wrong places?

Thanks,

Mike