All Forum Posts by: Helen C.

@Kiran Shilamkar
With the amount of seed capital you have, you could allocate some to SFRs to start (maybe 1-2), while learning about syndication by networking on/off forum and in-person in REI meetings on investing in commercial deals, as suggested by some already.

You can educate yourself on syndication by watching and learning from some CRE crowdfunding platforms and/or industry sites. Check out a few free sources I suggested in this post:
https://www.biggerpockets.com/forums/32/topics/778471-commercial-real-estate-investing-courses

Note that I am NOT endorsing any particular platform, nor sponsors/operators that use them.  Many good ones have their own investor base and don't need to source retail capital there.  But take advantage of the free content offered online.  Watch the webinars, read through the deal docs and ask questions.  

Most syndications are structured in ways that tax and leverage benefits flow through to the 
passive investors, assuming you are investing as equity limited partners.

As in the case of investing in SFRs, if you are not real estate professional (a tax election when filing your return, not license-based), being equity limited partners you won't be able to offset passive losses against your earned income.  But you are allowed to carry those losses forward to offset future passive income.   

And as in the case of investing in SFRs - where you paying premium/retail dollar at buy - being equity limited partners you are paying fees and giving up portion of excess return to the active investors/general partners putting together the syndications and overseeing the implementation of the day-to-day. 

And as in the case of investing in SFRs - where you have to pick the turnkey providers, select markets, properties sometimes PMs if it's not handled in-house -  being equity limited partners you have to select the syndicators/sponsors, understand their due diligence, investing approach & strategies vis-a-vis the real estate cycle along with deal structures, among other considerations.   

While you are learning, you could also allocate a portion of your funds to park on the debt side, as private lender, to fix & flippers or hard money loan funds.  Your money tends to be tied up shorter, (generally speaking of course.)  

Most courses I have seen are heavily tilted to apartment/MF syndication, with a few on SS, and land flip. Some additional FREE educational resources I can suggest are:

1) Crowd funding platforms that focus on CRE investing -e.g. (Crowdstreet - https://www.crowdstreet.com/resources/) It offers some helpful educational pieces on its resource pages, as do most other similar platforms. I recall CS has a pdf that goes over metrics: cap rate, CoC, IRR, Equity Multiple, ROI, etc.. Accounts are free to set up and you can browse offerings (even for educational purposes). Pick the asset categories that interest you and read/view the materials and see how the operators present their sectors, investment thesis, trends and strategies.

2) NARIET (https://www.reit.com/investing ) It's a trade group for REITs and offers industry trends and landscape for major REIT sectors. E.g. for SS, you can further drill down to CubeSmart, ExtraSpace or Public's investors pages and look at the industry & performance stats. 

3) Public disclosure docs of CMBS offerings (Commercial Mortgage-Backed Securities) The cashflow to bondholders are derived from those of the collateral (the assets) in the pool. Here’s a link to WFCMT 2019-C53 prospectus supplement: https://sec.report/Document/0001539497-19-001921/n1827_424b2-x16.htm
This particular collateral pool has a mix of Office (~26%), retail (~20%), Self-Storage (~11.6%), hotel (~10.9%), land (~8.%), manufactured housing (~7.4%), mixed-use (6.8%), industry (5%), and MF (~4%). For starter, just focus on the Risk Factor section (e.g this one starts on p.66 for Office, and ends with Condo in the low 80s, only 20+ pages so not that bad.) Disclosure docs are drafted by attorneys with the sole intent and purpose of disclosing all materials that reasonable investors would need to know prior to investing in CMBS so they are comprehensive, hence educational for learning the inherent risks in operating the various assets.

@David Esteban

You are paying premium for SFRs, no argument about that. But even in other passive routes, there are traps/pitfalls to look out for.

Regardless, you should start by formulating your own investment criteria (e.g. level of return you are looking, your risk appetite, holding period, your source of funds/cost of capital, are you looking for cashflow or appreciation, or both, do you want to be active v. passive - you sound like a passive to me). Good/bad investment is relative so explore a few options, get a sense of what major RE categories offer and pick one or two to start that suit your criteria the most. There are other passive options:

Loan/debt: you loan against single property or against a pool of property (as in a private loan fund). You are the bank/lender. Generally, returns are in high single to low double-digit, pre-tax, assuming using a max 60-65% LTV. If a fund uses no leverage, returns would be even lower. Your capital can be tied-up for as little as 6m to a year and you could start redeeming thereafter; some require several months heads-up for partial redemption.

Equity: you are JV partner investing in a single asset with, say, a fix & flipper, or invest as a limited partner (LP) in a syndication with a sponsor on an apartment building in Tampa, for example. Or invest as a LP in a real estate PE fund that consists of multiple assets. e.g. several apartments, or self-storage (SS) facilities, or across a kitchen sink of office, SS, hotel in different market, to diversify. Returns on private syndications are mostly projected at mid to high teens these days, 5-7 year hold; cash-on-cash, if any, is all over the place, and depends on business plans and financing.

Lots of contributors to BP blogs offer opportunities named above.  By no means I endorse them but you could start educating yourself by learning from the free educational content they put out (e.g. blogposts, podcasts, youtube videos). Welcome to the club! 

Hmm..given time is of the essence here, can you explore other listing services? 
https://moneyinc.com/the-top-five-ibuyers-in-the-real-estate-industry/

I was also going to suggest, as a potential interim solution to help you and your partner on the carrying cost, is to explore short term rental.  At quick glance the going rate on neighboring properties don't look too promising, and the turnover costs and the hassle of posting & marketing, could be a downside.  

@Ryan Wright

Some additional options you can consider, if they are applicable to your personal & financial situation: 
1) re-shuffle your portfolio allocation e.g. reallocate from securities (stock, bonds) to RE
2) borrow from your 401K (consider the tax implication of repay loan using after-tax dollar + need to repay loan in full within a short period if you part way with your employer or are terminated)
3) borrow from your cash value life insurance policy 
4) tap into equities from your primary or rental properties
5) good old fashion credit card - I still get some 0% APR promotions for at least 15-18 months from some companies. Very careful here. I won't recommend this unless the investment is of short-duration and collateralized in senior most position. Also be mindful that drawing down a credit line, depending on your credit utilization, can negatively impact your FICO so if you need your score for some other borrowing, then don't fully drawn down.

As with all things, you should weigh the risk/return of your intended investment, your costs of funds, duration match your assets & liabilities appropriately and fully understand the tax implications, if any, so that earning a risk-adjusted excess return is worth your while.    

HI - Has anyone used AHI Properties as PM before? It came recommended to me.  Supposedly it operates in both Birmingham and Huntsville areas.  Appreciate any feedback.  Thank you.

Similar to Kyle, I am looking for a good PM in Montgomery market.  Has anyone used any of the PMs shown in the map below and can provide feedback, good and bad?   Welcome other recommendation but please disclose any relationship or potential conflict of interest.

Originally posted by @Peter Sik:

Hi! I'm currently in contract on a property in Montgomery, AL. I'm hoping to get an amazing property management team on board to get the property stabilized. I found there are so many PM available but reading their words in webs do not do me any good. I want to hear real people experience. Any leads would be greatly appreciated.

Originally posted by @Peter Sik:

Hi! I'm currently in contract on a property in Montgomery, AL. I'm hoping to get an amazing property management team on board to get the property stabilized. I found there are so many PM available but reading their words in webs do not do me any good. I want to hear real people experience. Any leads would be greatly appreciated.

Hi @Loren Thomas and anyone who cares to jump in, I am a beginning investor and need your help on my situation below. Both are SFR:

#1 - I just got off the phone with my home inspector on a SFR for which I signed a contract to buy. The property was built in the 60s and I was told that the electric wiring is aluminium, not copper. I read from this thread earlier that this is a negative. What are all available remedies and related costs, approximately? Inspector said there are ~30 outlets in the house. Is this something I can ask the Seller to fix or adjust the purchase price on? Should I even mention this to the insurer?

#2 - on a different SFR in another state, the home inspector tested some of the outlets and turned out they are not grounded. When I mentioned this to the Seller, Seller said the electric panel has grounding feature (I might not have the right terminology); hence each individual outlet needs not be. There's no risk of tenants being electrocuted. Is this BS or valid? Is there an easy fix?

Thanks! 

Helen

I recently came across a website - http://www.homeadvisor.com/

that covers many services and cities.  Simply name the type of jobs you need, and your area, and it will give you several service providers, you can request quotes, or have them contact you, read reviews, etc.  I am using it for finding home inspectors and have received calls within seconds. 

@Jason A. and anyone else in the know, I am in a similar boat, in need of an independent, trustworthy home inspector.  Welcome any recommendation.  Thank you.