All Forum Posts by: Josh Walker

A friend of mine recently (2 months ago) changed jobs which required him to move from Colorado to Oklahoma.  He was leasing a house in CO and the lease extends through May 2021.  He realizes that he's generally on the hook for the lease payments until the landlord rents his house to a new tenant.  However, there seem to be a few extenuating circumstances.  

- Via the leasing agent, my friend was told that there have been qualified renters that the landlord has turned down.  This was verbal. This would go against the landlord making a good faith effort to rent his house, but my friend does not have this in writing. 

- The AC went out shortly after (maybe right before) they moved out and the landlord has refused to fix it which has led to showings of the house at 90 degrees.  From what I have researched, if he has notified the landlord in writing and this went unfixed for 5 days he may be in the clear.  Can anyone add some clarity to this?

- Does anyone have any additional thoughts/insight that may be beneficial to my friend in this situation?

Thanks for your help BP!

It's been hit on already, but it can't be emphasized enough ... there is no such thing as a good deal with a bad sponsor.  Anyone can create a proforma that looks good.  The biggest part of any syndication is making sure that you are investing with a sponsor who is a good human being who knows what they are doing.  I have personally invested in just shy of 40 separate syndications and this advice would have helped tremendously early on.  

There are definitely some numbers to pay attention to, a lot of which have already been mentioned.  I would find out if the sponsor plans to perform a cost segregation to take advantage of bonus depreciation as this can have a significant impact on your taxes.  I would make sure that the exit cap rate is not lower than the purchasing cap rate as this can artificially boost the projected returns.  

I have a short document that I put together that covers a few things I've learned over time.  I love talking about sydications with those interested.  Shoot me a DM if you want to discuss more.  

@YiBing T. - I would recast after a large principal pay down.  This should only cost a few hundred dollars and should improve your cash flow.  Should be a very quick payout. 

@Mike Smith - as your specific questions have been addressed, one thing that I will add is that there are 2 things that I have found beneficial to investors in syndications. 

1. Determine if you are okay with being 100% hands off.  If you are not, syndications can become miserable for both you and the sponsor.  LP's questioning the sponsor on the cost of paint, landscaping etc. will never end well.  This leads to #2 ...

2. More important than any number in the proforma is the character and quality of the sponsor.  We vet syndications in this order

- Character of the sponsor, track record/knowledge of the sponsor, market, deal

There is no such thing as a good deal with a bad sponsor.  I have personally invested in almost 40 separate deals and this has held up throughout all of them.  I have a document that we put together that goes through a lot of the things that I wish I knew when I started investing in syndications.  I'm happy to send it your way if you like.  Also, don't hesitate to reach out if you want to discuss further.  I love talking syndications with those who are interested.  I hope this helps and I wish you luck!  

@Jack Stryc - as has been mentioned already, I would definitely look into Self Directed IRA's. It is a very painless process and it allows you to invest directly into real estate from the IRA. We invest in real estate syndications and roughly 1/2 of what we have invested has been through SDIRA's.

@Marija Sparano - I would highly recommend eQRP.  If you invest in a syndication that uses leverage (which the vast majority of real estate syndications do) your SDIRA can become subject to the UBIT tax.  This tax can be very large.  They way eQRP sets theirs up completely avoids this tax.  

@Jeff Pearson - it has been said a couple of times within this thread, but I would definitely consider passively investing in syndications.  I have personally invested in almost 40 separate deals. It has been a great option for me to work toward replacing my W2 income with passive income while still working.  Shoot me a DM if you would like to discuss further. I wish you luck!

@Matt Camilliere - it depends on where you are in your financial journey.

I am a huge fan of cash flow. Strong day 1 cash flow can greatly de-risk an investment. This also creates more financial safety overall if you run into unexpected financial difficulties. I see cash flow as the foundation that must be established before you focus on appreciation. There is a place for appreciation in a portfolio, however, having it as the main metric in a deal adds a lot of risk.

Also - while difficult, you can find both. I believe that it is worth the hunt to find opportunities that can provide both.

That’s a long winded way of saying ... a bird in the hand ...

@Graham Richard Anderson - I love MHP's!  MHP's can provide excellent cash flow, lots of upside and great depreciation.  I have yet to actively invest in a MHP, but have invested in multiple MHP syndications with excellent sponsors.  One day I would love to invest actively if the right deal comes along.  

As far as research and learning more about it, the greatest free resource I have come across is Kevin Bump's MHP podcast.  Start at episode 1 and listen to them all - it's great.  He also offers an MHP 'school' which I have gone through and it is also excellent.  Investing passively is also a great way to learn more about the process and you can follow the actual path of an investment without having to make the decisions.  

Happy to discuss further if you like.  Just shoot me a DM.  I hope this helps and I wish you luck!

@Dave E. - @Jaysen Medhurst nailed it ... there is no such thing as a good deal with a bad sponsor.  Vet the heck out of them and get to know them personally.  

There is no disadvantage to being at or near the minimum investment.  You could even view this as a potential advantage as you are aligning your $75k with others' larger investments.  That being said - people throw good money at bad deals every day.  

I've personally invested in almost 40 separate deals and love discussing syndications with anyone wanting to learn more about them.  I would focus on defining your goals.  Cash flow? Long term wealth? (can be both) Higher risk with higher upside? Etc.  

Certain asset types lend themselves to these in different ways.  You also want to take a hard look at the market and how stable it is.  After all of that ... dig into the deal. 

If you want to discuss further shot me a PM.  I wish you luck!