All Forum Posts by: Mark Robertson

Looking for feedback on the relaunch of CrowdDD.  We now only let accredited investors that have actual investment experience with a real estate sponsor  rate and review that sponsor.  Our goal is to have  a sortable database where investors can see fellow investors experiences and feedback on the sponsors that they may consider investing alongside.

The most import criteria in finding a successful investment is finding an experienced sponsor with a track record. Once we get some traction, we should have a user generated database that will let investors discover sponsors they can trust.

@Arpan Patel  wanted to clarify what you wrote about RealtyShares:

"3) Invest in Realty shares where you are relying on people you don't know to safeguard your capital and hedge you risk for a passive return and very little time. The opportunity is defined, there are no other advantages such as tax deference or depreciation, and it relies on two parties you are not familiar with - namely the underwriters of RealtyShares and the investor who they deem lending worthy with your funds. However it takes the least time and you can always do your own research on a property they suggest because they provide you with the information you need to make a decision for yourself."

RealtyShares like many of the other Crowdfunding sites offers equity investments that do have the full advantage of tax deference and depreciation. They are simple online syndication.  I've invested in close to 100 crowdfunding deals and my average cash on cash return is 10%, the projected IRR is about 20%. Of the 4 deals that have gone full cycle, my IRR is 25%. My taxable income has been about 50% of my distributions. (about 50% tax deferred.) The long term capital gain will be taxed at 20% and the depreciation recapture at 25%.   All much better than 39% at the top bracket.

I would concur about digging into the fees. My RE investment discussion group is compiling a spreadsheet of different sponsor and their fees for deals on Crowdfunding  platforms over the last year or so.  It takes a lot of digging and number crunching.  Bottom line is how much of the assets return does the sponsor take each year.  Before the promote, the range is 1.56% per year to 5% per year just in acquisition, loan fees, asset management fees etc...

After the promote on an asset that grosses an assumed 25% IRR, the sponsor take ranges from a high 9.45% to as little as 1.55% per year. We still have a lot more data to compile. We will eventually have fee ranges and median fees for each asset class so we can better evaluate future deals.

The market prices in the future expectations.  Once Trump was elected the expectations of the future growth and inflation turned on a dime.  That is why interest rates rose and the Libor rates have risen almost everyday since the election.  The expectations of Trump's policy is being baked into current interest rates and the stock market.

@Rob Cee to your point it is interesting to see where investor put there money. As I mentioned I did have a 1031 windfall this year and invested half of it in 31031 TIC's. I have to bite the bullet and pay tax on the other half, but have been investing it over the past 6 months.

The key for me is to diversify and wait for the right opportunity.  I still have some left, but here is where some of it went (outside the typical investment box...its late in the cycle to invest in a typical deal):

1. A ground up Micor Hospital syndicate with cash on cash over 15% after construction

2. Invested in  Multifamily Fund right before it closed and half its assets had built in profits form 2014 and 2015

3. Invested in a DST vulture fund that rescues bad DST deals form 2006-2008 (10 year term loans coming due now) ...15% preferred and IRR projected over 30%

4. Mobile Home park fund that is looking to announce if they can go public or get bought by a private equity group by year end.

5, A Syndicate fund that buys distressed mortgages at deep discounts and sales them off to students of its "school".  Cash on cash is over 12%

Researched and rejected over 50 investments during that period.

@Leslie Pappas  Oh my, where do I begin with your response?....

Yes I know DST's are syndications. (I too have an MBA and CPA, but thats not why I know it) A DST is a syndication with extra fees layered all over it. Crowdfunding is online syndication. When I called you out, I said a DST only potential use would be with 1031 exchange money to defer taxes. I stand by that statement. I did a 1031 this year and looked at over 100 DST investments and the fees were huge and the returns forecasted returns were low. I ended up doing 3 TIC's with no sales commissions. My cash on cash in year 1 is over 10% (and grows yearly) and projected IRR's over 20%. None of the DST's I saw came close to that. Debt is under 70% by the way.

As you pointed out TIC's and DST can be very helpful in a 1031 exchange. Here is your quote:

"They want a “hands-off” investment alternative. They don’t want to pay capital gains taxes, and wish to perform a 1031 exchange to solve that issue. DSTs (and TICs in some cases) offer them a viable option."

The above is true (However, I have never seen a DST that could compare to a good syndicate because of the 5-10% commission that is paid to a salesperson like you). HOWEVER, YOU POST ABOUT THE BENEFITS OF DST TO PEOPLE THAT NEVER MENTION 1031 OR SELLING AN ASSET AND WANTING TO AVOID CAPITAL GAINS.  YOU POST THE SAME GENERIC POST TO ANYONE THAT SAYS THEY HAVE MONEY TO INVEST.

If your post were in response to people asking about 1031 exchange it would be helpful.  The problem is you SPAM to any post from an investor with money.  A DST is not something anyone should consider unless they are doing a 1031.  A syndication YES, but thats not what you hawk. You very well could be a leading authority in 1031 exchanges.  This thread had nothing to do with 1031 and recommending it is egregious.  Stick to 1031 threads! I find it interesting that my previous post in this thread has 18 votes & counting.

I only mentioned REIT's as a way to get exposure to real estate because that is one of the few options non accredited investors have (Fundrise and Realty Mogul have eReits for non accredited). I don't invest in REIT's.

DST's are horrible investments..they are full of fees that only benefit the person selling it and the sponsor. The only potential exception is if you have 1031 money to invest. @Leslie Pappas should be ashamed for pushing this dreadful investment to anyone on BP that says "I have XXX dollars" and want to invest it in real Esate.  Search her post, she adds no value to other discussions beside her self serving post.  My new life's ambition is to troll these self serving post and warn investors off of DST's.  Syndicates, crowdfunding, Reit's, and hard money lending are much better ways to get exposure to real estate

I just pulled up the projected IRR's from the 14 equity deals I invested in 2016, and the range does vary widely from project to project: Average is 22.5%, median is 20%.

@Lane Kawaoka Most deals are estimated at 5 years and that is the expected IRR for that period. However, it could be shorter or longer depending on market conditions. I just got paid on an "5 year" MF deal with MLG that had a 15% projected IRR on a 5 year hold. They sold it in under 2 years for a 30% IRR over 2 years. The payout was about 1.6x. I've had one year deals take two years and I suspect some of the 5 years deals may go out 8+.

Each deal is different and the PPM and offering information will spell out the expected duration.  However, its a illiquid investment ,so don't invest if you have to have it back in x years.... timing is not guaranteed. 

@Lane Kawaoka Your understanding is way off. Crowdfunding sites and investors do not invest with sponsors without significant track records. Successful sponsors use CF sites to increase their reach and add new sponsors to their network. IRR's on equity deals range form 15% to 30%+. Average is about 20%