All Forum Posts by: Steeve Breton

Paul D. Good advice from experience folks here. Definitely do not try to syndicate on your own. More importantly, it isn’t necessary if you are starting small, which I highly recommend. House hacking a triplex or a quad would be a great way to set your financial foundation and an excellent way to get your start in multifamily. You can take private loans from friends and family without syndicating. I’ve done this a few times and paid 5% interest. With today’s interest rates maybe 6%. Alternatively you can partner with one or two of your friends and family and consider their contribution to be Equity. For an equity position you’ll need to understand what type of return they desire and run the numbers accordingly.

@Paul OBryan Seek a real estate attorney to help you and your friends determine the best structure based on your plans. They'll ask a lot of questions that have not yet been asked here. They can explain the differences between going with a JV vs. LLC vs. TIC and pros/cons of each.

I like the LLC b/c TICs can be an issue when one of you wants out, gets divorced, or files bankruptcy. It can put the TIC in jeopardy. Also, financing is often difficult under a TIC with several members (b/c banks know about my first point on TICs).

LLCs also provide liability protection that a JV or TIC will not. If someone gets hurt on the property and sues, I believe you're all jointly liable and they can come after all of your assets. With the LLC your liability is capped at your interest in the LLC.

The downside to the LLC is that you have to file the annual fees/tax, which in some states is only $100 or $200, but in California it's $800!

As you can see, there are so many options.  Please consult with professionals on this.  It will be money well spent.  .... I am not an attorney or CPA and in this case you should probably seek the advice of both.

You do not need to be accredited as a sponsor of a 506C.

It may be best to not use the word syndication in this case. That will just confuse things. This does not meet the SEC’s definition of a security. I believe all you would need is a simple LLC and operating agreement. You do not need to seek a securities attorney who specializes in real estate syndication. Having an attorney who is well-versed in real estate operating agreements would be very helpful. They can help you think of scenarios to ensure you’re getting everything on paper before purchasing the property. It wouldn’t hurt to consult a real estate attorney and CPA regarding the pros and cons of setting this up as a trust of some sort.

For my local multifamily portfolio get >= 15% CoC. That's after all expenses, assuming 10% vacancy, and $500 per unit in repairs per year. After landlording for about 5 years I stopped buying. For the past 5 years I've been earning the same 15% return in syndications and not having to lift a finger... also not getting the additional return from mortgage pay-down but still making more money than most make in the stock market and getting all the tax benefits of real estate.

@Percy N. summed it up well.  Basically the same tax advantages

@Matthew McNeil All depends on your 5 or 10 year goals. I'm guessing your at the early stages of your investment career. If so, then you are likely looking to buy a several more properties in the next few years. If that is the case, and if you are clear on that goal, then focusing on acquisition is the obvious answer. Purchase another quality asset and put long term, low interest rate, debt on it. If you aren't certain that you want to grow your portfolio, then maybe look to invest in something more passive such as a syndication. Depending on where you live and where you're buying SFH, you may get a better risk adjusted return. That's what I ended up doing after purchasing my first small multifamily properties. I just didn't see the point in scaling my personal portfolio when I could invest passivly in quality assets sponsored by others.

@Sherwin Gonzales In response to your comment: "10k-20k in lawyer fees is a lot of money for new investors and that money could go into the down payment of the deal"

To clarify, the attorney fees and other closing costs are all refunded to the sponsor at the closing.  You should be including these in your capital raise.  That said, you still need to come up with all of this "risk capital" up front and you are at risk of losing any $ you pay for appraisals, rate locks, attorneys, etc. if you don't end up closing.  That's one of the many risks we take as deal sponsors.

@Chad Cudworth  I'm not familiar with the program structure/cost.  What do you get for the $5k?  Will you have access to video training that covers multifamily & syndication soup to nuts?  Does that include comprehensive deal analysis software/spreadsheet?  Does it include periodic group coaching calls?  Would you have access to a closed Facebook or Slack group where you can accelerate your learning, bounce deals off of fellow students & coaches, etc.  If all of this is included then $5k is reasonable.  

Michael Blank and Rod Khleif have similar programs but they do not guarantee a sponsor... which is of no concern.  As @Grant Rothenburger and others have stated, if you find this rare bird of a deal, and you've been networking, you'll have no problem finding a sponsor to help you take it down.  The main concern for a sponsor is that you have been properly trained, are ethical/principled, and have the strong work ethic needed to make the deal a success.

Love this thread. I'm currently investing a sizable SD Roth IRA in Syndications and a few Notes here and there. All passive. Would love to find a way for it to pay me personally without "Self Dealing".

@Josh Collins I'm no expert but still seems like Self Dealing if your IRA is invested in a Corp that you draw a salary from. Maybe you can "get away with it" but if the IRS sniffs it out they'll likely say you're personally benefiting from an investment made by your IRA. Then your IRA is disolved, you pay all your back taxes and a heavy fine to boot. Not worth it IMHO.

@Matthew PowellI'd talk to @Dmitriy Fomichenko or @Brian Eastman about setting up a Solo 401k?