All Forum Posts by: Paul Azad

aren't apartment rents down 8% yr over yr in Austin? and with record new class A multi-family coming online now and 2025 in Austin/Dallas/Houston, perhaps focusing on multi-family would be most lucrative for you, which you already have personal experience in, over next few years then you can acquire really good value deals as prices will likely come down quite a bit, ie more supply/higher 10 yr etc. 

    I know folks who bought strip malls and multi-tenant retail in 90s for 5-10 cents on the dollar at auction from Resolution Trust Corp after Savings and Loan crises in Texas, We are now going through similar deleveraging event after super frothy period in Multi-Family due to 0% fed funds x 20 yrs and many properties bought at 3-3.5 cap rates, especially in austin/dallas/H-town. 

PS Henry of Occam died a penniless monk in the 1300s, he should have bought the Nunnery next to the Monastery and converted it to condos :)

Gen Z and Millennials call cars "Whips" and Gen -Xers like me will remember the song by DEVO, so how about "Whip it Good" with whip in a racy font :)  Ok don't roast me, just a thought 

Quote from @Ke Nan Wang:

Seems like you've already made up your mind and no one is gonna change your mind. Anytime someone brings up a reason you will counter it with your own logic and actually push yourself further and further away from where it seems like the place you want to go. Just accept the fact that real estate could not be for you and your wife, and that's okay. 

Everyone has their our ways of building wealth. Not saying one method is the best one for everyone. Usually the one asset you know the best, is the best asset for you. I have a plumber who made $700k net last year between him and his father, they put all that money either in a high yield savings account or put it back to their business. Compare my plumber to another "hot shot" developer I know who ended up over extending himself and filed bankruptcy, maybe the plumbers are doing better than that fast growing developer...  

Personally I invest in stocks, mutual funds, moneys in high yield savings account, dabbled in digital currency and but primarily real estate. I know real estate the best and I think it's the best way to build wealth so real estate is my top choice.  It's not passive but I enjoy working in it because it's something I'm good at. Find the investment asset you are good at and just invest in that one. If you aren't willing to learn that investment asset, then you can either:

1. find someone you trust to help you invest into that asset

2. put money in low/no risk investment assets and just accept the low return

3. blindly go into an investment asset and basically gamble. You can win or you can lose. The pitfall you want to avoid in this scenario is that, even if you have some success, ask yourself if the success was due to luck or your skill. This is what I did with my stocks portfolio. In the beginning I was buying the companies I believed in, everyone knows buy low sell high but nobody really know where is the low and high. Sometimes you get lucky and you thought you were genius at picking the right stocks and then later you get unlucky and lose it all. At the end of the day, in the long run, without studying the stock market and the knowledge like Warren Buffet, most people ended up not beating the market and might as well just put the money in SP500 index funds. If you don't know real estate, this would be the same for  you if you just want to invest, not wanting to do the work nor learn nor wanting to do option 1. 

excellent post Ke Nan, couldn't agree more, and Chris, if y'all are working full time, then may be most efficient to maximize your W2 earnings as you are, then plough the savings into Real Estate syndications to get many of the same tax benefits you would get from direct real estate ownership but without all the time investment of dealing with tenants/toilets/and termites etc. This has been my approach.
      The syndications can give you tax-deferred monthly/quarterly distributions due to the GP doing a cost segregation analysis and applying the massive yearly depreciation (on building/parking lot/roof/HVAC etc) against the yearly income. In most of the 35 or so deals i've been in, i've had little to no taxable distributions until year 7-8 on our typical 10-year hold period, so a 10% cash on cash return is an effective 13.33% for example when you compare to other taxable returns if at 25% bracket, 
       The syndication next can roll the sale proceeds into another larger investment, like-kind, 1031 exchange and not have to pay any long-term capital gains taxes, about 20-23.8% nor any depreciation recapture tax about 25%. Thus, the investment grows like it's sitting in a roth 401k/IRA
       Then when you die, your heir gets a step-up in basis, thus eliminating all the prior capital gains over decades, but only up to 13.6 mil this year :(
              Debt Funds (like mortgage note investing) can also be very lucrative but I don't know/understand the tax savings/issues in that class yet, still learning :)
              Equity REIT investing can give you great siloed real estate exposure in 11 major asset class sub-types, but don't offer the direct tax benefits as direct RE ownership does above, as the REIT gets those benefits when it transacts and as a corporation passes those benefits secondarily/indirectly onwards to us investors as high dividends and gradual stock price appreciation. Equity REITs (not mortgage REITS) are truly great though and have returned 1.5-2.0% more than SP500 over last 20/25/50 years in multiple retrospective studies, and are a great value purchase right now due to being beaten down by fast FED rate rise last 2 yrs, however to get best tax benefits, buy them only within a tax advantaged account like 401k/IRA etc as the big dividends are taxed very high at earned income rates.
Good luck, wishing you and wife all the best on your investing journey :) 
              ps don't ever keep cash at a bank, park in your brokerage account and buy USFR, a wisdom tree ETF, pays 5.39% interest, holds only 8 week US treasury floating rate notes, so you don't need to worry about FDIC or SPIC insurance as only way US govt doesn't pay is if we get nuked, then you won't much care about cash yields, just non-radioactive water.

Quote from @Brandon Gidicsin:

Hi All: 

I wanted to share a deal I am working on. Myself and a few partners (GP Team) have identified a medical office building that checks most of the boxes. I know its not a super popular asset class. We have some equity lined up before going under contact, but figured I'd make a post and see if this would be of interest to the community. Happy to share more details. I did not want to make this super lengthy. 

Just to share a few details: Located in NY (not NYC), $3M raise, 506-C offering for accredited investors. 

My email is [email protected] 

Hi Brandon, would love to know more details. How much gross leasable area, how many offices, current vacancy rate, age of building, any proximity to hospital or surgical center, what type of loan product for first lien, variable rate/fixed rate, the terms etc ie SOFR + what spread etc, current NOI, cost per square foot, replacement cost per sq ft, and any and all details you can share, I assume HENRY Capital compensation will be similar to your Fund 1, with 8% preferred and 80/20 split? Thanks

Don't know anything about them but per my calculations they are taking 27.2% of the capital appreciation on the New Braunfels deal at the end per their projections which seem optimistic in this oversupplied environment, (Austin MSA with largest new multi-family projects coming out this year in the country ,8% of total existing stock and already seeing rent rate declines of near 10%in the city so far) and they are taking a big chunk of the monthly cash on cash as the preferred payouts for their 3 different classes are well below the projected cash on cash total. (They concentrate/force the equity into their class B shares 13/18 million so they get 72% of the future capital appreciation at the higher 30% cut,
versus 5/18mil at the lower 20% rate) They also seem to be overpaying in this downward trending multi-family environment. Also, per their numbers they are buying for 37 mil, debt 24 mil, equity 20 mil, 44mil minus 37 price = 7 million in closing costs, which is 35% of the total equity, RE commissions of say 4% total 1.5 mil so they are taking 5.5 million in fees up front as well minus the inspections/loan fees etc. They appear to be really soaking their unsophisticated investors, my guess they focus on doctors, and it's a risky place and time to be buying too. good luck

i just watched a few of his YouTube videos and, please check out at least his recent 

Investor Questions in Office Hours - March 2024

video where he answers a number of questions, and at 41 minutes he discusses his syndication structure as strictly 506C, not 506B, which means that he may only take accredited investors and this type of 506C election has a lot of mandated SEC paperwork, too. So if you go to EGDAR online or main SEC site you may be able to find out more details about what's going on with the fund. He mentions also in this video that he is researching seriously venture capital funds, which he then immediately describes as "buying alt-coins and other cryptos with 20x returns" but most investments would also lose money, similar to venture capital investing into tech companies. In another more recent video he mentions that he doesn't own a home and he rents, so it frees up investing capital. This may not be unreasonable for a real estate investor to do but since he lives in Hawaii with the highest long term property value appreciation in the western hemisphere, just something to think about? 

He doesn't strike me as having sufficient concern regarding risk mitigation? but i only watched 4-5 videos so please look into it more thoroughly, once he started talking "infinite banking" i was done.

if you want Zero risk then park in your brokerage account and buy USFR, a wisdom tree ETF, pays 5.39% interest, holds 8 week UT treasury floating rate notes only, so you don't need to worry about FDIC or SPIC insurance as only way US govt doesn't pay is if we get nuked, then you won't much care about Yield

if you ok with mild risk, I put my emergency funds cash into a group of different BDCs i like, these are business development companies (mini-banks) that make loans to small to medium size companies. Last year my largest holding FDUS, paid 13.6% dividend and stock also went up 8-9 %, as long as 10 yr flat to rising they make money on their large net interest margin spreads.

if you ok with moderate risk, pick good REITS, as a group VNQ they beat sp500 last 20 and 50 yrs by about 1.5-2.0%, and they beat private real estate investors by 2-4% in academic studies as well, that's an average, that doesn't mean REITS outperform the excellent investors here at BP :)

Or take out a margin loan and YOLO Bitcoin, no don't do that!

you are not alone nor dumb, i read an American study that 40% of home flippers lose or only break even on their projects. please talk to an attorney with bankruptcy and real estate experience before filing as could have long term complications. Good Luck 

Hi Matan, great you are thinking about investing at this early stage of your career, you are ahead of 90% of doctors, who historically are not the savviest of investors. Read the "Four pillars of Investing" by Dr William Bernstein, retired Neurologist or listen to it, will give a great overall framework to plug in your investing journey/plan. 

Why private Real Estate? Is it that you want direct control? did Bob Kiyosaki open your eyes, OU, to assets - things that cash flow, and liabilities - things that don't

Investing in single family fix/flips, or long-term rentals is quite challenging even if in your neighborhood but especially long distance. Many people don't make a profit, obviously odds of success get better with experience/good team, etc.

consider until you have more time to commit to instead look at buying publicly traded equity REITs, not mortgage REITS, they are tricky

get subscription to Seeking Alpha and follow Brad Thomas, Jussi Askola and many others research/writing to start with

REITS have beaten the SP500 last 50 yrs, by a lot, 13% to 11% just in last 20 yrs too, and they have taken a temporary beating due to sudden rise in 10 yr rates and hence CAP rates, but their underlying rent roles have only gone up. Many REITs now 20-40% below their NAV, Net Asset Value. So, buying good quality REITs now is like buying MAG 7 stocks in March 2020 or March 2009. The purchase decision only requires online thorough research, then try to buy in a 401k/ira so you don't have to pay taxes on the Dividends which can be large. Trail each purchase w a 10% downside stop loss limit order if you're not confident in the REIT, then continue your research on private real estate, and when you have the capital/team in place/knowledge of the local real estate market put it to work then, no rush.

Be very careful w private real estate syndications, some great ones, some really not great ones, and takes years of investing experience/understanding debt/property management/taxation rules etc before you should safely go that route, but then they can be awesome as they give high yields w passivity, the Holy Grail of RE investing :)

you are on the right path, and RE far less complicated than the Krebs Cycle too :)

consider undergraduate accounting degree, with Real Estate minor, this will give you foundation for anything in CRE, or even for investment banking, then fine tune with graduate school, hard to go back to school once out and earning with monthly expenses/family etc

also, so many online community college classes now available very cheap if you want to explore topics in depth

best wishes and remember success is found in the small overlap of what you enjoy doing, what you are good at doing and what can pay the rent :)