All Forum Posts by: Mark S.

@Nick Brimmerq, I don’t think these two necessarily do weekly budgeting, but Set for Life by Scott Trench  is a great foundational outline.  I Will Teach You To Be Rich by Ramit Sethi is a little more granular and practical. I think both books would definitely add value, especially when getting started.  

Crestcore in Memphis, TN does a great couple episode podcast series evaluating and describing different zipcodes in Memphis.  Definitely worth a listen (and recommend taking notes).  

@Kerry Baird, yes, I did. 3.75% fixed for 30-years at 70% LTV. Pulled 100%+ of my cash out.

They all sound pretty bad to me.  I work with two PMs in Memphis and both contracts are better than these from what I remember.

One is a turnkey outfit and the other has gone through change of ownership, so I believe some of their terms have changed but I’m “grandfathered” in to the “old” contract.  

Interesting model.  Just watched the 17 minute video which appears to have been recorded in 2020 (website updated to reflect 2021).  Essentially a lease option program where you guys get about 23% of non-refundable tenant-resident fee.  Investor buys home with pre-determined sale price to tenant-resident (ultimate home owner) with targeted purchase of 6 months to 3 years.  Front end lease option money, after 23% fee, goes to investor.  Rent (which is seemingly slightly higher than market due to deal type) goes to investor (who holds the mortgage) and creates some monthly cash flow.  Then within a super short time frame, investor must sell the home at contractually agreed upon price to tenant-resident who then becomes homeowner.  Since lease option fee appears to be somewhat close to the buy/sell spread, the investor doesn’t really make much on the back end (they effectively get their money back and keep the upfront lease option fee).  What am I missing?

A few questions come to mind:

1. 1.) When you say you help facilitate this process, is there a separate fee for that (like, acting as buyer’s agent for a %)?
2. 2.) You say no PM needed due to tenant type and how much care they generally have for “their” property,  but if something goes wrong, who deals with tenant - you guys or investor?
3. 3.) Who pays closing costs on these deals?  It seems like those would add up quickly if the investor is only owning the home for 6 months to 3 years.  

I know you’re probably going to encourage me to book a call, however, I am traveling this week and I also think these would be common questions that others may have, so posting responses here would probably benefit everyone.

@Amy Raye Rogers, I agree with a lot of what @Joe Splitrock said above except I would look at Southwest instead.  Southwest now flies to Hawaii as well. Based on what you said, you should easily be able to earn the Southwest Companion Pass.  There was an excellent podcast on almost exactly this yesterday on ChooseFI.  They’ve done their own podcasts on this as well, but this time they had a guest.  She was fantastic and pretty much recommends what I would.  I went to her website afterwards and saw she charges people like $1,300 for what seems to be much of the content she discussed on the episode.  If people actually pay this, perhaps I found a new side hustle.  lol.  

If you have questions or would like to discuss, feel free to PM me.  We haven’t paid for a flight in probably 3+ years since we started doing this.  No upsell here.  Although, if you wanted to use my referral link (which is free) to sign up for the card which would kick me back a few points (at no reduction of your bonus points earned), I would happily agree.  ;-)

Either way, sounds like you have a lot of rewards and free travel coming your way.  Cheers. 

@Lane Kawaoka, we can talk about scarcity vs abundant mindset all day long - I'm sure that helps with whatever coaching you're selling.  That's not the point of the post.  No one is asking for a 99/1 split with no fees.  The point of the post was regarding a couple of items that simply seemed a bit "off" and cause for concern.  It's one thing to be upfront with investors about deal structure and fees and another to simply hide it inside a PPM or OA hoping investors are too lazy to notice.  I have reason to believe that in one of the two cases above that's what's going on.  

If your "professional" barber that you've received several haircuts from all of a sudden put their hand in your pocket for some extra tip money all the while you've already paid them fairly out of the other pocket and claims that they've decided to change things up and them reaching into your other pocket is disclosed on the backside of their haircut price menu in size 2 font at the bottom right-hand corner, you'd probably find a new barber - whether they're "professional" or not.

 Thanks, Chris.  Makes sense. 

 Looking for helpful comments, not sarcasm.  Thanks for playing.

Been evaluating several syndication opportunities lately and I've noticed a few things I've not seen before in this space (and even with the same operators).  I'm not going to call anyone out, but here are two main things I've run into which seem like total BS to me.  Let's see if you agree:

1.) Syndicator "Admin" Fee Changed from Flat % to Waterfall-type Split:  One group I have been dealing with historically did not charge an admin fee at all. Then they started charging a 0.50% annual admin fee. NOW, they have changed it so that after an investor receives a targeted IRR, that the investor's split changes and they take a % of the split. This is IN ADDITION TO an Asset Management Fee (and acquisition fee, etc.). I personally think this is complete BS and they're getting greedy to put it mildly.

EXAMPLE: 10% preferred return, then 50/50 split between investor/syndicator. Syndicator is essentially raising money for operating sponsor, so a middleman so-to-speak. After investor gets 10% IRR, there's an 80/20 split between investor and syndicator. So, basically, after an investor gets a 10% IRR, the split goes from 50/50 to effectively 40/10/50 (where the 10% - which is 20% of the investor's 50% - goes to syndicator raising money).

2.) Not Knowing Final % Split Until Deal Fully Funded: Another group I've been in talks with essentially cannot tell you upfront what the split will be between investors / sponsor.  There is typically a range, depending on how much money is raised.  They'll issue a certain number of A units, B units, etc.  They have a targeted amount of $ to raise.  They have a stated minimum and maximum (which can change the split).  In a recent offering, I think it ranged somewhere from 31% to 49% to investors, depending on how much $ was raised and how many Class A units were purchased by investors.  This seems backwards to me as previous deals I've invested in always state a definitive percentage upfront (70/30, 80/20, etc.).   The only thing this particular group declares upfront is a preferred return, if any.  Other than that, split is TBD.  I want to know what my split is going to be going into the deal and I also want it to be way higher than 50% in most cases.  It seems like this particular group's best case split scenario is 50% to investors (on top of a preferred return).

Is anyone else seeing these shenanigans with all the cheap money looking for a home out there or are my expectations just way out of line right now?  Really interested to hear people's thoughts.  I think the above two examples are very unfair to limited partner investors and I am shocked that these syndicators seem to have a relatively easy time raising money from likely unknowing "investors."