All Forum Posts by: Amit M.

I'll reinforce previous poster's recommendation against aging an ADU, especially to a SFH. ADU was the biggest hype last decade and a huge disappointment for many, especially in CA.
1- big pain in the a$$ to get approved and then built. 
2- super expensive in CA.
3- often it reduces the value of the main home on resale, because most people want a normal private home and not some white elephant with a weird back cottage or no garage due to ADU.  

TLDR:

CA
legislative
fail
————-
3words

Hi, @Solomon Rosenberg a question for you: did you participate in any of the capital calls?

Regarding my initial question on capital calls, my reading of said tea leaves says that 80-90% of capital calls in this current cycle will fail.

LP’s out there: think things through carefully before agreeing to capital calls!

 Create 2nd BP account and post anonymously;)

@Jay Hinrichs regarding your point #8, what is interesting going forward is seeing how capital calls play out. What percent of GPs making capital calls will actually manage to minimize losses vs GPs that end up loosing all that money too for the LPs? 

Unfortunately LPs, in addition to being in bad deals are also deciding on capital calls. Personally I think more often than not it will be throwing out good money after bad, but seeing which capital call end up saving the day and which won’t will be interesting. 

Another good question is if the syndication failure rate will be lower or higher than during the Great Recession of 2008-2010. Of course we didn’t have as active of a BP, social media, etc. scene back then. But flipping SFHs was out of control during that time and got a lot of media attention. I think syndications were less known to the general public back then compared to this cycle  

Some interesting post-mortem analysis to be had for sure; I’m just relieved that I’m sitting on the outside looking at all this. But it’s times like this that create valuable investing lessons to be had nevertheless. 

It’s great for legacy investors. Much more challenging for newbies. 

The issue imo with DSTs is that you’re buying into a market where a lot of commercial RE is presently priced high, and some is going down in value too.

You should do a thorough analysis of the tax impact. 
1- definitely try to time sales into two separate tax years

2- I’m unclear why you expect 30% cap gain hit. Keep in mind: For the 2024 tax year, individual filers won't pay any capital gains tax if their total taxable income is $47,025 or less. The rate jumps to 15 percent on capital gains, if their income is $47,026 to $518,900. Above that income level the rate climbs to 20 percent.

But ultimately it’s  personal decision, loaded with plus and minuses. 
let us know what you decide to do!

As 1980’s legend blues guitarist Robert Cary aptly crows…the forecast calls for pain.

I say (objectively) name the syndicators! How else can people know about their winning *and losing* projects? Matter of fact a downturn in the market is a good time to do so. Someone should compile a list of losing projects and sponsors, so their complete track record can be measured. (An entrepreneur could possibly monetize this information, as it’s valuable for future syndication investors ;)

2 observations after reading this thread:

1- lack of transparency on individual sponsors is a major issue. They all like to tout their killer deals, yet it’s usually hard to hear about their losers.

2- syndications (good and bad ones) tend to make easy money during up markets, get a lot of publicity and consequently many investors. And when the music stops it’s usually crickets, as many LPs are embarrassed to admit the losses and the syndicators prefer a hush hush environment (which is why some LPs don’t want to name them.)

Personally I have always found syndications too risky, especially given that I have zero control, other than reading their disclosures and trusting in their accuracy. So if you’re going to invest in them, at least try to get in at the first half of an up market cycle. Of course that’s hard to determine, but I think buying in from 2015-2019 was certainly better than in 2020-2022. And that determination wasn’t so hard to make, even back in 2020-2022 when we knew interest rates would rise, multifam were getting flipped left and right, and cap rates were insanely low.

TLDR: in the real estate game ya gotta know when to hold ‘em, and when to fold ‘em :)

Good luck everyone.