Ask for the ppm. That should tell you the details. Perhaps also ask for past trades. It seems like you prefer hands so likely a pass for you.
I don’t know anything about the company. I do know how these guys get paid. It’s heads you lose, tails they win.
Meh, they want you to be a LP in something. The GPs make all the money, promise you nice returns. Sometimes you get returns in the teens and sometimes you don't.
I just invest locally and make a great living doing that.
Homebuyer’s remorse: Thousands of Americans are canceling signed contracts — what you need to know before you back out of a purchase
As the housing market cools, more buyers are “taking their time and exploring their options.”
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anon_0k9zlfz6lz9oy
Guest
I personally have not heard of them. I can tell you in the syndicate world right now cash flow is lower than it was 5 years ago. 5 years ago it was 9% cash on cash during hold period all day. We distributed 12% annually on one of our most recent deals we sold.
Now with more buyers and way fewer sellers + higher prices its more like 5-6% average cash on cash during operations. 16-20% average annualized returns overall is what should be targeted overall.
Market is more normal now, the days of deals like the one below are gone now.
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anon_0k9zlfz6lz9oy
Guest
Ive invested over $5mm as an LP in syndicates. Saying the GP’s make all the money is just factually not true.
In fact, the 90%+ of deals have one of these two structures:
1) 7% preferred return to LP’s and then anything above 7% then gets split 70LP/30GP. In other words, the GP’s wont make a penny at time of sale if they cant produce at minimum a 7% IRR for the LP’s.
2) straight 80LP/20GP split. Where cash flow during the hold period and appreciation recognized at time of sale are simply split 80% to LP’s (passive investors) and 20% to GP’s (general partners)
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anon_0k9zlfz6lz9oy
Guest
@Knight Shift I agree with @imoapie here but wanna preface it with this. If you read a ppm cover to cover youll never invest in a deal ever haha. PPM’s job is to cover the GP’s ass and lay out every single risk known to man going as far as talking about natural disasters and even nuclear events.
Here is what I do personally to vet out GP’s before throwing money in one of their deals. Ive placed $1,400,000 in the past year as an LP into syndicates so I’m talking from experience here.
1) what was the most recent deal you did?
2) how is it doing? (Most will always say great)
3) can i get a copy of your webinar you did for your investors when you were raising equity for the deal complete with your projections?
4) can you please send me your most recent monthly report you sent out to investors on that deal complete with financials? (Any decent GP should be sending out monthly reports with a summary complete with financials).
^ the above will tell you whether someones legit or full of shit
Thank you for all of the great info. As I noted in my original post, we may be best served to stay in our lane with being landlords. Unless I know the person running the syndicate or know the market well, personally, I am leery of these things--maybe not justified, but we like to stay in our comfort zone after getting burned on non-real estate investments (crappy hedge fund) in the past.
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anon_0k9zlfz6lz9oy
Guest
It's a blur. 9:30AM burbon puts one on the path to confusion. But yes I actually do remember now. I was postgame.
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The GPs make far more money than the LPs in most cases. You wouldn't be working so hard on your syndicates if it wasn't true. I have never invested as an LP for that reason. Tie up all my money as an LP and I can beat those returns? Most people can't and don't understand REI which is why it's attractive to some but lets not pretend like GPs aren't making bank and they should, they're taking a bigger risk.
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anon_0k9zlfz6lz9oy
Guest
Saying gp’s make more money than lp’s is like saying the suns gonna rise tomorrow, no shit sherlock. LP’s still on average historically make between 16-18% annualized returns in multi-family syndicates (they’ve obviously made alot more recently but that was the exception not the norm). If the posture is, “i wont invest in a syndicate because gp’s make money”. I mean thats just childish and then i guess no one would ever invest with a financial advisor or hedge fund either because they take a carried interest effectively as well. If there is in fact better alternative investments available then thats a different story and totally rational.
Your position that GP’s make all the money and LP’s dont is just factually inaccurate. Its proper to set the record straight. You said it yourself, youre talking out of your ass considering youve never touched a syndicate.
And you can make more as an LP in a syndicate than owning a 2-4 family in NJ, all while doing no work. If i could make more money in 2-4 family then id be throwing my money there, its just not a good alternative to being an LP in syndicates hence why I have $5mm strictly as an LP in syndicates.
Self managing a 2-4 family is BRUTAL and wouldnt wish it on my worst enemy. If you hire a property manager on a 2-4 family there goes your cashflow. Property managers make all the money on 2-4 family, its why you work so hard on your property management business. Owners sit back and hope they dont have a unit empty on a 2 family and have 50% vacancy or even worse a shit tenant that takes months and months to evict while the state of NJ laughs at you.
Id be willing to stack my returns as an LP in syndicates side by side vs your 2-4 familys and see the results. Both did well past few years but syndicates crushed all while doing no work as an LP, deals im a GP on, different story. Alot of work and ton of headaches but worthwhile.
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anon_0k9zlfz6lz9oy
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Employment has been strong. The housing correct might not happen if this continues.
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anon_0k9zlfz6lz9oy
Guest
Inventory is just too low and its not rising. Theres no reason to believe it will rise to any significant level either
Not busting but is inventory low or normalized?
It’s funny but as things start to get somewhat rational but rates still crazy…people are starting to realize that getting a profit on their house doesn’t help them when they are on the other side and have to pay more and usually at double their current rate…
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anon_0k9zlfz6lz9oy
Guest
I do have to say- you don’t see the for sale on lawns like we were. For a couple of years, it looked like election month most of the time.
Not looking to buy but I do keep my eye on a few neighborhoods just in case. There are sone large desirable developments where there isn’t a single house for sale.
OTOH, down in Marco Island, FL presently, and there seems to be a lot of properties for sale and ridiculous prices. Lots of open houses too. Our friends who have a place here said that during the peak, there were no open houses, because houses were flying off the market as soon as they were listed.
House 2 doors down from us was listed exactly 3 months ago. Hot neighborhood in a fairly hot town. Very nice home, large property, pool, updated kitchen, etc. Still no sale. A little overpriced, but not too high, IMO. Some people missed the train to Mars and our counting their lucky stars of getting prices from 6-12 months ago. Not happening.
House 2 doors down from us was listed exactly 3 months ago. Hot neighborhood in a fairly hot town. Very nice home, large property, pool, updated kitchen, etc. Still no sale. A little overpriced, but not too high, IMO. Some people missed the train to Mars and our counting their lucky stars of getting prices from 6-12 months ago. Not happening.
It's funny- I live in what many call the most desirable neighborhood in Franklin Lakes- Urban Farms. A handful or real mansions, 18k sq foot+ and a ton on mini's- 7k sq ft. Mostly an older established neighborhood. The past couple of years- for sale signs everywhere and houses sell in weeks with no open houses and well over asking. House next to me was on for 1.45 and sold for 1.9 with no open house.
But now, just a couple of homes for sale and they just are not moving.
We have been renting since the pandemic started, right after we sold our house. Hate wasting the money(rent) but also just can't bring ourselves to over spend and pay those 6-7% rates.
That could be it too. Also, for higher income people (maybe I am off on this), the mortgage deduction and itemization on taxes is not what it used to be.
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anon_0k9zlfz6lz9oy
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Interestint. Been seeing marco island on a lot of charts. It has the 3rd highest yoy price appreciation of any market in the country https://www.cnbc.com/2023/02/13/us-...pJsHFjkYZU4leALoO-E6U6-41pH_69CRnOvHiYfosLfC8
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anon_0k9zlfz6lz9oy
Guest
Yeah- it sucks...you are now limited on property tax write offs, which almost everyone in norther nj exceeds. Then you have the millionaire tax that kicks in on many homes as well.
Something I have seen to notice in the past 6 months. It feels like a number of sellers have not realized yet that the market has changed. Back when everyone was leaving NYC- they would buy anything at any price. And even homes in the 1.5 mil and up, owners were not even bothering to fix them up and they woud still go over asking and fast.
We have a house down the road that is on the market for 1.5 and they have been sitting for at least 6 months. I laugh with my wife on how it may be the duck taped broken master bedroom window in front of the house.
Imagine selling a home for 1.5 mil and you dont even bother to fix a window that would be the first thing a buyer sees. lol
Some of the prices here are absolutely insane. Saw a couple of houses sold in early-mid 2022, asking price is 30% higher. As far as I can tell,they were not fixer upper flips. Ridiculous. House next door to where we are at is a knock down, took on water during Ian, started out asking $850K, now at $799, been listed since 6/2022, not budging on price. Silly.
A house sold around the corner from where we are staying sold for $540,000 on in September 2021, now valued at close to $900K. A lot around the corner from that house is listed for $599,000. And building costs post-Ian are insanely high, between $250-300/square foot.
That house down the street sounds like the one down the street from me. For sellers, it all comes down to whether they are testing the market to see if they get any action or do they really want to OR NEED TO sell. For the one down the street from me, get the impression that they are in no hurry.
Good god. During the feeding frenzy even a fresh coat of paint in the key high visibility rooms could have netted you a significant ROI
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anon_0k9zlfz6lz9oy
Guest
Heres the thing that sucks man. If someone is a first time homebuyer i dont think people realize how much mommy and daddy money they are competing against. Buyers are putting in offers on $750,000 homes (which is basically a start home in alot of burbs in north jersey) with a $500K gift from their parents.
Every boomer by 2030 will be at least 65 years of age. When they start dying and leaving behind money to their kids its going to be an incredible wealth transfer, the likes of which weve never quite seen before. On the flip side it could perhaps help the housing inventory equation if 3 kids inheriting the house opt to sell it.
Unique/unprecedented times
Good point. But for many just grinding out a daily existence, life is hard. Case in point. Visited friends in another area not very far from Marco Island. Homeowner insurance is more than $4,000/year and that does not include flood insurance. Let's say conservatively, flood insurance is another $2,000/year. That's $500/month to insurance.
At the house we are staying at, the insurance premium offered was $7,500/year with a $15,000 deductible. They don't have a mortgage (purchased home with cash), and they rolled the dice. They won with Ian. But the way they look at it (and I agree), they are ahead of the game. Chances of something larger than Ian causing more than $100K in damage are minimal.
The lower income folks are forced to have expensive insurance, while the rich get richer. Yeah, I know, cry me a river, world's smallest violin memes insert here.
Something like half of homeowners in Florida lack homeowner's insurance because the rates are sky high and the state has done absolutely nothing to help them. That's a very state specific problem. In NJ homeowners isn't too bad.
It started in 2020. Plus you have the boomers' kids, the millennials, starting to hit their earnings stride. I know multiple people that have traded up jobs and/or homes as a result. A few jobs more than once.
People want to act like it's some crazy external factor but it's actually increasing wage and wealth transfer. The boomers and millennials are the biggest generations in history and thus the effect.
It's absolutely correct.
You can only deduct up to 10k. Singles get an auto deduction of 12k. But of course in this area, prop tax + state income + mortgage interest is going to crush that. And for couples, 24k.
This is why in Hudson County for singles and at the top of the market in some parts of NJ the prices didn't surge the way they did in the middle in a lot of suburbs. Costing a lot of people money.
The risk tables for insurers are much worse in Florida, which will drive up the premiums. However, agree the government could do something, perhaps in the form of assistance to lower income people or lower the required insurance needed as the principal is paid off on a mortgage. The wealthier self-insured people are not helping by self-insuring. There do not appear to be any easy answers.
It makes sense. If you are in a $1M home with a $700k mortgage at 3.25% and you bought 5 yrs ago—Let’s say it is worth $1.3 now. Would you sell your house to buy a $1.5M home to take out a mortgage for $865K at 6.25%?
F no!
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anon_0k9zlfz6lz9oy
Guest
Yup. I touched on that here. I do a weekly newsletter and put this one together quickly
I will respectfully disagree. Think the Fed will do their job by over correcting. employment market will tank and sentiment will follow. People will be forced to sell due to unemployment or relocation.
Interesting . What is the feeling on mortgage rates short term (next 5 years ) and that impact ?
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anon_0k9zlfz6lz9oy
Guest
Fair. Im just not so sure the employment market will tank enough to see a huge increase in supply. Were still 46% below 2019 levels which were 4 decade lows at that time.
Reality is with an average LTV of 42% + an average mortgage rate of 3.47% nationwide, most of these people have such low downpayments that if they sold theyd likely have to take on a significantly higher monthly payment whether they go off and rent or purchase. We’ll see.
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