Underwriting in the context of commercial real estate simply means researching all the extenuating factors of an investment and mitigating its risks by allocating resources appropriately. In English: Doing your homework… Learning everything you can, leaving no stone unturned, and figuring out what the cash flows will look like based on the available evidence.
Continue reading “Underwriting 101”
When we talk about the ABCs of multi-family real estate, we are really defining the property classes of the assets, or describing the characteristics of a potential real estate investment. The Classes are A, B, and C, and help classify a property based on geographic area, physical condition, and tenant and surrounding demographic characteristics. Each class implies different levels of risk, reward, challenge and value. When reviewing syndication offerings, these are often referred to as class A, class B, class C and even class D.
Continue reading “There are Different Classes of Multi-Family Real Estate – What are the ABCs?”
Investing in multifamily syndications has long been accepted as a stable, recession-resistant investment. Great wealth has been created with commercial real estate like apartments. On the flip side, great losses have been experienced as well. As all investments carry inherent risk, the benefits and disadvantages should be weighed and considered.
Continue reading “14 Pros and Cons of Investing in Multifamily Syndications”
They say that analyzing real estate investments is all about location, location, location. But what makes a location a location. With this article, I hope to impress upon you the absolute importance of vetting the neighborhood wherever you might have an opportunity to invest in a multifamily project as a passive investor. The syndicators can do a lot with a property, but not much can be done to the surrounding area. If that area is a relatively bad one, say like what I call a war zone, even the best syndicators will have trouble turning a property around and making it make money for you. Identifying demographic patterns is all about trends that increase the likelihood of success – or doom a project from the start. After all, a multifamily venture is all about maximizing the quantity of units rented yet at the highest rent per unit.
Continue reading “7 Smart Hacks For Analyzing Real Estate Investments – Using Data to Verify Profit Potential”
Passive real estate investment income characteristically comes from income streams that are fairly automated. The investment you make, whether it is in stocks, mutual funds or the real estate market, entitles you to an ownership stake that pays distributions, dividends or other classifications of income on a regular basis. Further, you usually do not have any management responsibility for that investment, as that role is taken on by others.
Continue reading “What is Passive Real Estate Investing?”
Now it is time to put on your detective hat to find syndicators. All syndicators in the United States are compelled to file their offerings with the Securities and Exchange Commission (SEC). This filing is a Notice of Sale of Unregistered Securities. Looking for these types of filings gives you a starting point for finding syndicators who have experience syndicating at least one project.
Continue reading “Finding Sponsors by Looking at SEC Filings – a Tutorial to Find Syndicators”
You have invested in an apartment syndication that was supposed to make money hand over fist. The operators promised you an 8% preferred return quarterly on your $100,000 investment. Things were going well for the first few quarters, but then you noticed that your quarterly distribution became dismal… Nothing like what was “promised” to you in the shiny brochure.
Continue reading “Secret Shopping – The Key to Watching Over Your Investments”
So, you’re looking for places to invest, and looking at multifamily syndication investment opportunities all over the United States. But where do you begin? There are always going to be opportunities everywhere, but how do you move the odds of success in your favor. I think one of the best ways is to focus only on investments where population growth is very healthy. Growth in population creates demand for housing and helps keep rents maximized.
Continue reading “Population Growth and Migration – What Does This Mean for Your Investment?”
This is a hotly debated subject. How hard should your portfolio flex for real estate? Many traditional investment advisors, especially the ones that work with hedge and mutual funds, will tell you 5%-15% should be your maximum real estate exposure with the rest of your investments in public markets (stocks, bonds, ETFs and mutual funds). I will always question this advice and reconcile where that advice is coming from, as there is quite a lot of bias in the investment community. Fidelity, for example, doesn’t list real estate as part of an investment diversification strategy in their many investment ideas articles. Blindly following traditional rules of thumb can leave the investor more exposed to unnecessary risk.
Continue reading “How Much Real Estate Should be in Your Investment Portfolio?”
One of the coolest things about using a Roth IRA for investing in multifamily commercial real estate is that you do not pay any taxes on any gains. This can be especially advantageous if your syndication investments are doubling in value every 5 to 8 years. On the contrary, using a regular self-directed IRA to invest in a syndication allows the investment to grow on a tax-deferred basis, but a Roth IRA can provide the potential for tax-free growth. The downside is that there are certain restrictions regarding taking proceeds (distributions) out of the Roth IRA. Using a Roth IRA for your real estate investments can be ideal, so let’s take a brief look, shall we?
Continue reading “Good and Bad News on Using a Roth IRA to Invest in Real Estate”