Syndication marketplace?
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Syndication marketplace? (by MikeA [TX]) Jan 12, 2021 8:13 PM
       Syndication marketplace? (by Deanna [TX]) Jan 12, 2021 9:36 PM
       Syndication marketplace? (by MMIT [VA]) Jan 13, 2021 9:09 AM
       Syndication marketplace? (by Robert J [CA]) Jan 13, 2021 5:14 PM

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Syndication marketplace? (by MikeA [TX]) Posted on: Jan 12, 2021 8:13 PM

Anyone have any experience using Crowdstreet or one of the other on-line syndication platforms for commercial real estate investing? Would you be willing to share your experiences using them?

Much like some others here, I'm selling off a few properties and looking for a more hand's off approach to park some assets. As I do more research, these platforms keep showing up on the radar.

Syndication marketplace? (by Deanna [TX]) Posted on: Jan 12, 2021 9:36 PM

So, those things are going to fall under real estate crowdfunding, which was legalized in 2012. Knowing that, you'll know that none of them has more than an 8-year track record at most-- so that limits the number of economic swings that they've had the opportunity to weather.

The people who are allowed to invest in real estate crowdfunding fall under two categories: accredited investors and non accredited investors.

To be an accredited investor, you must have shown an annual income of $200k ($300k if married filing jointly) for the last two years, and have the expectation of the same or a greater income this year. Or, you need to show a net worth exceeding $1M. Those sorts of people have more flexibility/greater investment opportunities. The non accredited investors have fewer opportunities and are more limited in what they're allowed to do.

Within real estate crowdfunding, you often have two different ways of investing in their projects: either invest in their debt, or invest in their equity.

If you choose to invest in equity, you become a shareholder in a property. You get a share of the income it generates (minus fees), and if it gets sold, you get your cut of the profits. The plus is that there's no cap on your returns, plus other things, like being able to take your share of deductions on your taxes, and the fees are generally lower, blah blah blah. The risk, of course, is the usual risk that comes with the territory of owning real estate directly. If it doesn't live up to expectations-- if it has prolonged vacancy-- etc, etc, etc. You're not the first-in-line for being paid back. And in general, your money is tied up for a longer period of time (3 years? 5 years? 10 years?) than if you were investing in debt (3 months? 6 months? 1 year?).

If you choose to invest in debt, then that's a different kind of project. Since you're acting as a lender, you get a fixed rate of return on your investment dollars. Since it's usually associated with development projects that are being flipped to investors, and you're financing the development, you usually get paid off in a short period of time. (Presuming the development is completed and flipped as planned.) There's also higher fees than with the equity type of investment, and those come off the top before you get your payment. The risk is lower, so the return is lower. And if they pay you back ahead of schedule-- you lose out on a lot of payments you were counting on.

As people have gained more experience with this, I've noticed that they recommend looking at what the cost of entry is. Suppose they need $1M for their project, so they get 10 equity investors who each put up $100K. That's solid. But suppose someone is tired of their $100K being tied up in a project that's only earning x%, and they have a better investment opportunity. Suppose the rules require you to keep your funds in place for 5 years before you're able to withdraw them without penalty, and the 5 years is up. Suppose five people pull their $100K out... and the company needs to come up with $500K to pay them back. But they don't want to sell their building. So the way they get that $500K is to open up to new investors... but it's easier for them to get 50 people at $10K each. Or 100 people at $5k each. So having a low threshold for investment is a sign that people with the big dollars are pulling out of projects, and they're scrambling to fill the void with smaller potato investors.

I don't know if it's true, but that was my understanding, and it made sense.

Syndication marketplace? (by MMIT [VA]) Posted on: Jan 13, 2021 9:09 AM

If you are interested in a truly passive real estate investment, investing in a real estate syndication deal might work for you.

I suggest you look at life bridge capital dot com.

Whitney and his team are offering some very good passive deals.

Good luck!


Syndication marketplace? (by Robert J [CA]) Posted on: Jan 13, 2021 5:14 PM

It's like a toss of a coin. You can get hooked up with a really good Syndication Company or a bad one. My family and I invested in 16 different syndications over the past 40 years.

A few that were with a small company with a proven track record, that was also a management company putting their own money into it and going to be the "general Partner" owning 20% -- was great!

Almost all of the others sucked, unless you got out early.

Why? Because they would re-finance the property to death taking out all of the equity. Then when the market dropped and rents fell, it was loosing money and went belly up!

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