All Forum Posts by: Lane Kawaoka

Sounds like you've got a lot on your plate. Passive investing might be the route for you. 

I'd suggest investing directly with the operator. Especially after seeing so many people get burned recently with deals plummeting 10-20% due to market appreciation due to cap rates/interest rates. It's clear there's a difference between genuine operators and those just out to raise capital.

Be wary of third-party brokers. When things go south, they often vanish without any accountability. They're not the ones left holding the bag or being the loan guarantors.

At the end of the day, there are many marketers who simply get paid to raise capital. Stay informed and choose wisely!

Would you be open to coming on podcasts? Cant solict but would be interested in learning more.

When I had rentals/turnkeys I use Rav Wilson.

Then I sold them all and went into syndications

Accredited investors only

email [email protected]

Correction this is in Orlando just south of MCO

Accredited investors only

email [email protected]

@Troy Baack Back in 2012, I dipped my toes into turnkey investing with a property in Birmingham, Alabama. Bby 2015, I had 11 of these properties under my belt. 

Honestly, turnkey investing is a solid starting point, especially if you're not an accredited investor. The BRRRR strategy it's just... too much effort, too much risk. And if you're sitting on a net worth over half a mil or earning above $150k annually, it might not be the best use of your time.

Now, not all turnkey properties are created equal. Always opt for a third-party property management company and find your own tenant. Every time I let the turnkey provider choose a tenant, it was a disaster. They're just looking to fill the space, not necessarily with quality tenants.

In terms of markets, I'd steer clear of primary ones. While I've had luck in places like Birmingham, Atlanta, and Indianapolis, they've become pricier. I'd be wary of places like Detroit and Baltimore. It's definitely trickier to navigate turnkey investing now than it was in 2015. As for sourcing properties, there are some big names out there. But remember, they might charge you a premium (10-20k over what the property is actually worth). If you're looking to save a bit, maybe find a smaller house flipper. It's a balance of risk and reward.

For newbie turnkey investors, it might make sense to pay a bit more for a smoother experience. But be cautious about overpaying. If you're banking on property appreciation without adding value, you need to get it at the right price. That's partly why I've shifted my focus to apartments.

Just taking the other side of the coin here although we do cost seg our apartments:

Thinking of selling within the next 5 years? Maybe hold off on that cost segregation.

Can't use the losses? Remember to plan 5 years ahead and also look back 5 years for taxes. If your income isn't high enough or you're limited with your PALs or limited suspended passive activity loss, it might not be the best move.

If you're not saving at least 2X the cost of the study (I'm talking about cash savings, not just depreciation), then it might not be worth it.

Be cautious with 1031 exchanges. There are a couple of ways to calculate the depreciation to carryover. And speaking of 1031 exchanges, make sure the federal 1031 doesn't land you with hefty state taxes on the state 1031. Just a heads up, many states have their own rules for depreciation and personal property eligibility.

Ever thought about if the 179 expensing method might be a better fit? Especially with its limitations.

10k units 2.1B in assets... I'll kick things off with our story. It really sheds light on where we're at with deals today. When we first dipped our toes into the syndication real estate waters, we were buying these, let's say, "less than glamorous" properties. Think 50 units, barely big enough to have a property manager's office. Sometimes there wasn't even an office for the PM - ee'd use one property as a hub for a few in the area.

They weren't big enough to have a full-time handyman. But hey, that's all we could afford and manage at the time. We were limited by our networks and our ability to get loans. We were the ones guaranteeing those loans after all and the Key Principal team needs to have the net worth greater than or equal to the loan. That's why you see newbies teaming up and having multiple general partners. Most can't raise funds unless they're borrowing from family. That's how we started too.

But, working with class C properties? Man, it's tough. I remember this 168-unit property we had in Fort Worth. Even when things were going well, we had about 20% of tenants not paying month after month. But as time went on, we got smarter and our network grew. Around 2020, we started tapping into class B properties, bigger than 200 units. That was also the year we surpassed a billion in assets under ownership. Big milestone for us and a big sticking point for a lot of syndicators who go to GP syndication school!

We eventually stepped back from the day-to-day management. No more weekly calls with property managers for me. We hired pros for that - those who worked for PE firms on the ops side. But even with class B assets, there are challenges. The pandemic and eviction moratoriums didn't help. We then shifted our focus to more deals and I started looking for reliable operators to invest as an LP too for my IRA stuff. It's hard to sift through the "fake it till you make it" crowd.

We noticed many experienced players moving to more institutional asset classes or diving into property development.We started developing in 2020. Our edge? We're operators. So, if we build an apartment, we can run it. Take our 200-unit in Huntsville as an example. We started in 2020, finished in late 2022, and despite market shifts (lumber 4x), we managed to complete the build and refinanced and leased it up instead of selling it unoccupied cause the market was not prime for a sale at the time - most developers would be distressed sellers cause they are not operators.  Today, it's over 90% occupied.

But with inflation and rising costs, especially in insurance and taxes, it's been challenging. Interest rates play a huge role in our decisions. That's why we've paused on multi-family value-adds and shifted our focus to developments. It's a different ball game, every approach has its pros and cons. Larger properties? They come with their own set of challenges. But they also offer stability and a chance to build robust systems. On the flip side, when things go south, the impact is more $$$ignificant and we have always prided on financially backing the asset through tough times but with a bigger asset its a bigger amount that might be needed.

Anyway, that's our journey so far. Would love to hear your thoughts and experiences!

welcome!