Author Topic: Commercial Real Estate  (Read 2230 times)

Fallenour

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Commercial Real Estate
« on: December 18, 2014, 10:51:46 AM »
Does anyone have any experience in this?

As of late, I have began working with landlord associations and groups to find landlords to buy houses with as pure rental properties, with deeds with third parties, with a split percent purchase on properties. Works pretty simple, we find houses, we meet, we vote, we buy or pass, we have local Property management companies take care of the house, we collect paychecks.

We want out of a house, reverse process, we see losses or we want out, we vote, we sell, cash out, crash out, or buyout the property shares from the exiteer (not official term, just what I call them).

I would love to do something like this on commercial real estate, but the costs of the properties start at at least 1.5-2.5M and only go up from there.

Does anyone know of a group they could recommend that I could talk to? I really don't want to "put all my eggs in one basket" so to speak when it comes to commercial properties. They have exceptional Net ROI, but they also have substantially higher everything else.

Any advice would be greatly appreciated.

Poorman

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Re: Commercial Real Estate
« Reply #1 on: December 18, 2014, 03:14:55 PM »
There are syndicators and crowd funding sites that do this type of thing, but I don't know about a land lord association type of structure.  Usually the people that get into this are accredited investors because that opens up the full range of opportunities available.  If you aren't accredited, many operators don't want to deal with you, because the burdens of reporting to the SEC make it not worth their while.

I've talked to these guys at my local REIA and they will take unaccredited investors, but you still have to pass their in-house criteria to invest:

https://www.shopoff.com/index.php

There are many other syndicators that offer similar opportunities, but you have to seek them out.  They aren't allowed to advertise.

Alternately, there are various crowd funding options, but Realty Mogul seems to be one of the top players.  They will only take accredited investors, but it's expected that the SEC will eventually change their rules to make it easier for non-accredited investors to get involved in these types of deals.

https://www.realtymogul.com/

Fallenour

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Re: Commercial Real Estate
« Reply #2 on: December 19, 2014, 05:44:18 AM »
There are syndicators and crowd funding sites that do this type of thing, but I don't know about a land lord association type of structure.  Usually the people that get into this are accredited investors because that opens up the full range of opportunities available.  If you aren't accredited, many operators don't want to deal with you, because the burdens of reporting to the SEC make it not worth their while.

I've talked to these guys at my local REIA and they will take unaccredited investors, but you still have to pass their in-house criteria to invest:

https://www.shopoff.com/index.php

There are many other syndicators that offer similar opportunities, but you have to seek them out.  They aren't allowed to advertise.

Alternately, there are various crowd funding options, but Realty Mogul seems to be one of the top players.  They will only take accredited investors, but it's expected that the SEC will eventually change their rules to make it easier for non-accredited investors to get involved in these types of deals.

https://www.realtymogul.com/

I appreciate the help. To add to this, I also found this site:

prodigynetwork.com

I have set up a meeting with them to see what they have to offer as well.

What I can tell from all of these, realitymogul is the only one that allows you the opportunity to buy up the entire loan, and ACTUALLY OWN the property itself.

However, ive noticed that will all other instances, if you dont choose to buy the entire loan, that they place the company in an llc owned by a parent of parent scheme.

I personally, dont trust a structure like this, but at the same time, its not exactly "a cake walk" entering into the commerical space.

Personally, from what I can tell from the structuring so far, prodigy has better property choices, realitymogul plays the markets game more so than anything else, targeting a wide spread of property types, and the shopoff, well I didnt see many properties there I found enticing.

My biggest concerns so far from all three are none of them have actually posted a data set on the realizations of investments, or a scatter chart on overall performance as a whole. This draws a lot of concern from me, as most people with over 10M in funding would normally do this, and they have yet to do so.

I have also noticed that with realitymogul, they put heavy emphasis on the amounts, but no emphasis on the profits, which leads me to believe they are trying to prop themselves up, and make themselves appear more successfully than they might actually be.

I have still yet to receive any form of data sheets on overall asset listing, their values, times of holding, and profit percentages.

In the few instances I have seen anything relative to this, it was from a handful of historical properties sold, of which no hard factual data was provided, and the "claimed" profits were only 9%, which could be achieved by S & P performance on regular index funds.

So far I must I'm not impressed, but the potential might be buried under a bit of dirt. I'll let you guys know what I find.

Poorman

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Re: Commercial Real Estate
« Reply #3 on: December 19, 2014, 12:38:55 PM »
Realty Mogul is fairly new so they may not have enough deals that have seasoned to show what the returns are.  If I remember right, the average holding time is about 5 years, so typically you would expect a 9% 'dividend' over that time, and then when the property is liquidated you would received your share of the capital gains, raising your overall IRR.  I agree that 9% by itself isn't very compelling when you consider having your funds locked up for 5 years in a non-liquid investment.
« Last Edit: December 19, 2014, 01:05:03 PM by Poorman »