Need Ownership

[BoardingDoc]

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Speaking of ownership. I'm trying to pick which commercial real estate i will put my next 25k in. Split between

Explore Our Online Commercial Real Estate Portal

And

Explore Our Online Commercial Real Estate Portal

Decisions decisions -_-

Both is not the correct answer because im also putting 25k in ashcroft capital fund and 50k in BAM capital in the next 2-3 months. Essentially running out of liquidity.

Any suggestions from anyone?

Both links are behind a login wall for whatever website this is.

 

[HemorrhagicShock]

Speaking of ownership. I'm trying to pick which commercial real estate i will put my next 25k in. Split between

Explore Our Online Commercial Real Estate Portal

And

Explore Our Online Commercial Real Estate Portal

Decisions decisions -_-

Both is not the correct answer because im also putting 25k in ashcroft capital fund and 50k in BAM capital in the next 2-3 months. Essentially running out of liquidity.

Any suggestions from anyone?

How did you find Ashcroft and BAM capital as options in which to invest?

I have plenty of cash laying around but am having difficulty figuring out where to start when it comes to vetting a variety of crowdfunded/sourced investments like the ones you're getting into (real estate etc)

 

[cyanide12345678]

Both links are behind a login wall for whatever website this is.

It's crowdstreet. Oh well... Guess they don't like showing their real estate deals without logging in

 

[cyanide12345678]

How did you find Ashcroft and BAM capital as options in which to invest?

I have plenty of cash laying around but am having difficulty figuring out where to start when it comes to vetting a variety of crowdfunded/sourced investments like the ones you're getting into (real estate etc)

They seem to have a fairly good reputation in the biggerpockets community which is the largest real estate online community.

Ashcroft and Bam headed by Joe fearless and ivan barratt have been in the business for a while, have good reputations, fund based approach so the capital is spread across 5-7 deals. They both operate conservatively with cash flowing deals that can be held in market down turns and not sold at bad times. Neither has had loss of investor capital so far. Bam is going to be local to me in Indy after i move as well. Ashcroft has 1.2 billion AUM and BAM manages 450 million of real estate. So better experience than I'll ever have personally 😛 Ashcroft fees are higher, with a less desirable waterfall split. Bam has a very fair split.

Other than those two, somedays i think of open door capital as well. That's a fund that primarily invests in trailor parks. It was started by Brandon turner, author of some huge books in real estate and the host of the largest real estate podcast - bigger pockets podcast. But their fund is only 2-3 years old with about 50-100 million assets under management.

Edit: you could also consider BREIT - Blackstone private equity investments. The mother of all funds, something like 50+ billion in assets under management in their real estate fund, but returns similar to reits around 10-13 percent. So then there may be no point of not just owning a public reit instead like VNQ. Ivans fund target is around 15-18 percent return. Ashcroft is expecting around 13-17% returns. Their numbers look fairly reasonable and realistic

 

[emergentmd]

I am involved in 5 Ashcroft ventures. They have a good reputation and have done a good job IMO.

 

[sylvanthus]

I think this is the thing that many Type A people miss:

If you have enough money, you don't have to stop doing things and just sit around and watch Three's Company reruns. You should just stop doing the things that put you at risk of losing your money.

Instead, maybe you should start doing other things that don't involve losing money, or maybe even don't involve money at all.

I have about 500 things I want to do in life. No one's ever gonna pay me to do them. I just want to do them. So, that's why I want to FIRE.

How dare you diss Three’s company.

 

[gutonc]

It's crowdstreet. Oh well... Guess they don't like showing their real estate deals without logging in

I was hoping to see the listing as well.

I’d be hesitant to invest in commercial RE in this environment. Unless it’s retail. Office real estate is looking like a bloodbath for the foreseeable future.

I guess if you’re looking real long term, it might be different. But I don’t see the corporate office market bouncing back anytime soon.

 

[cyanide12345678]

I was hoping to see the listing as well.

I’d be hesitant to invest in commercial RE in this environment. Unless it’s retail. Office real estate is looking like a bloodbath for the foreseeable future.

I guess if you’re looking real long term, it might be different. But I don’t see the corporate office market bouncing back anytime soon.

It's a free account. Pretty easy to create. One listing is multi family - Washington DC, navy yard, 197 units, new construction for a very good cost basis, builder/sponsor is a 40 year old company with 5 billion assets under management. Walking distance from capitol hill as well as DC soccer and baseball stadiums. Most importantly, the complex is 10 minutes from the new amazon hq2 that is under construction, essentially across the river. The train station for public transport is also walking distance. Their cost basis will likely be $365k per unit, which is decently below current market rates. This investment probably will be fully subscribed in 3-4 days. The investment opened yesterday, by the end of the day they had 10 million already raised, crowdstreet investors have been allotted $15M of shares which will likely be gone soon.

The other is a mixed use property in miami- next to University of miami. Really attractive cost basis, sponsor is very experienced. The hotel is finished and just ramping up. They have a retail first floor, 240 ish key hotel and 200 ish unit apartment complex. The apartments they were able to get 99% occupancy within 8 months of opening and have a 50 people deep waiting list, so are going to start increasing rents. The hotel is thesis miami, 4 star, built end of 2020, starting to increase occupany which is up to 50 percent last month. Target is 78 percent 2023 which is average for comparable hotels and they plan on simultaneously increasing nightly rents. The hotel has 20,000 sqft of retail space, waiting to be leased out. The sponsor is damn confident in the success of the deal and put in 17 million of their own dollars as investors, they will have about 18 or so percent of total equity. This is a huge project, the complex is being purchased for $242M with plans to sell around 300M once the hotel, restaurants, and garage areas fully reach their potential. There's also 3 high end restaurants being run by a top 20 chef in the country. Two of these restaurants are up and running, third one is starting soon. Their competitive advantage is that they are a stone throw away from the University of miami. It's an interesting investment - a little bit of everything, retail, hotel, multi family, 3 restaurants.

 

[cyanide12345678]

I am involved in 5 Ashcroft ventures. They have a good reputation and have done a good job IMO.

Good to hear. They have a really good reputation. I'm pretty sure I'm putting 25k in their fund, which is their minimum.

Tell me more about their returns:

Any bad deals? Any issues with getting at least the preferred return? How's the communication and update reports?

Anything else you would say about them as an investor.

 

[Apollyon]

It's a free account. Pretty easy to create. One listing is multi family - Washington DC, navy yard, 197 units, new construction for a very good cost basis, builder/sponsor is a 40 year old company with 5 billion assets under management. Walking distance from capitol hill, their soccer and baseball stadium and 10 minutes from the new amazon hq2 that is under construction, essentially across the river. 10 minutes car ride and 15 minute train ride - which is also walking distance. Their cost basis will likely be $365k per unit, which is decently below current market rates. This investment probably will be fully subscribed in 3-4 days. The investment opened yesterday, by the end of the day they had 10 million already raised, crowdstreet investors have been allotted $15M of shares which will likely be gone soon.

The other is a mixed use property in miami- next to Miami University. Really attractive cost basis, sponsor is very experienced. The hotel is finished and just ramping up. They have a retail first floor, 240 ish key hotel and 200 ish unit apartment complex. The apartments they were able to fill 99% occupancy within 8 months and have a 50 people deep waiting list, so are going to start increasing rents. The hotel is thesis miami, 4 star, built end of 2020, starting to increase occupany which is up to 50 percent last month. Target is 78 percent 2023 which is average for comparable hotels. Their competitive advantage they have is they are a stone throw away from the University of miami

Just for clarity, "Miami University" is in Oxford, Ohio. The University of Miami, which you mention later, is the one in Miami, FL. It's just a matter of precision. I mean, otherwise, usually, you are quite on the mark. That's what made this surprising, to me.

 

[Mad Jack]

Absolutely I don't mind clarifying. And thank you for the "career superstardom" complement. It actually means a lot coming from you.

As far as my financial situation, as soon as I graduated residency I took the biggest sign on bonus I could find with a very high $/hour, and moved to BFE. I went to medical school with a partial scholarship, lived very much within my means, and attribute a lot of hard work and sacrifice to getting where I am financially.

I do love the actual practice of EM, as I suspect many of you all do as well. I practice in a very high acuity hospital and love seeing this rare disease or doing that crazy cool resuscitation. It's the BS that comes with it like sepsis measures, patient satisfaction, MIPS, justifying everything, going from covid heroes to zeros etc. Maybe I am burnt out. Maybe I need more resilience training. Maybe I need to see a therapist.

When our new CMG took over not too long ago, they ramped everything up to the max. They hound us, cut our pay, and honestly treat us like garbage. Several of the doctors who were my friends are quitting, or have been fired. I guess I hate the CMG and the hospital an incredible amount for letting us suffer. I also hate the admin work, but am worried if I resign I will have a big target on my back. If I didn't have a permanent home here with an established network of friends locally, I would possibly consider leaving although the local market is saturated.

I am already starting to cut back from work. I used to work 180 hrs per month of average without blinking an eye and feeling great. With these new changes, I dread every shift. I just hate the thought of the opportunity cost, especially while our pay is still relatively high. I suspect within 3 years the market will tank. I look at these owners of FSEDs and UCs with envy for having the balls to take a risk and control their own destiny. As I was reflecting on my situation this morning, I realize I can now also take a risk from a position of financial strength. So I wanted to branch out so I have "something else" so that if something happens to my job, I can fall back on something else. I see that people with ownership at least have that sense of satisfaction and that control.

I'm sorry for my rant. It was somewhat therapeutic to type that out and I appreciate you reading this. Either way, I'm looking for an opportunity to branch out and try something new.

Keep raking in the money while it's good. At the rate you're saving, you could step back from medicine within a few short years entirely and just live off of the interest on your investments, so long as you're willing to dial back the lifestyle. Hell, right now even based on the 4% rule you could generate a 70k yearly income, taxed at capital gains rates which are minimal. While that isn't extravogant, you'll never starve or be homeless, and could live a middle class lifestyle in most of the US while never working another day in your life. A bit more saving and a little time and your investments could support double that. Once you've got your **** you money, your destiny is your own so long as you don't blow it. Then it's not a question of desperation, but rather one of what do you *want* to do.

 

[cyanide12345678]

Just for clarity, "Miami University" is in Oxford, Ohio. The University of Miami, which you mention later, is the one in Miami, FL. It's just a matter of precision. I mean, otherwise, usually, you are quite on the mark. That's what made this surprising, to me.

Thanks for pointing that out. I had no idea the Ohio school even existed. I fixed my post.

 

[emergentmd]

Good to hear. They have a really good reputation. I'm pretty sure I'm putting 25k in their fund, which is their minimum.

Tell me more about their returns:

Any bad deals? Any issues with getting at least the preferred return? How's the communication and update reports?

Anything else you would say about them as an investor.

All of my ventures have been in specific properties and not funds with min of 50k.

1/5 deals has refinanced. 3/5 expected return and renovations. 1/5 depressed returns but not significant. I believe they will make the 1/5 while when profit increase but again a min amount. Covid hurt business with eviction restrictions.

I did a venture through one of their partners so I get monthly updates from him. Also answers questions quickly, good communication.

a passive investment where u typically get 6-8% Return with potential to 2-3x your money on 5-7 yrs.

I haven’t completed a cycle yet but plan on doing a 1031 into other ventures if we close a venture.

If real numbers match projections, my 300k in 5 yrs will be 900k, 2.7M in 10, 8M in 15. We will see.

 

[GassYous]

I was hoping to see the listing as well.

I’d be hesitant to invest in commercial RE in this environment. Unless it’s retail. Office real estate is looking like a bloodbath for the foreseeable future.

I guess if you’re looking real long term, it might be different. But I don’t see the corporate office market bouncing back anytime soon.

That's the time to invest, not when the nurses and secretaries are constantly talking about it.

 

[emergentmd]

That's the time to invest, not when the nurses and secretaries are constantly talking about it.

Correct. Buy low.

 

[plasma.]

All of my ventures have been in specific properties and not funds with min of 50k.

1/5 deals has refinanced. 3/5 expected return and renovations. 1/5 depressed returns but not significant. I believe they will make the 1/5 while when profit increase but again a min amount. Covid hurt business with eviction restrictions.

I did a venture through one of their partners so I get monthly updates from him. Also answers questions quickly, good communication.

a passive investment where u typically get 6-8% Return with potential to 2-3x your money on 5-7 yrs.

I haven’t completed a cycle yet but plan on doing a 1031 into other ventures if we close a venture.

If real numbers match projections, my 300k in 5 yrs will be 900k, 2.7M in 10, 8M in 15. We will see.

Hi emergentmd, could you expand on the last sentence a little bit? Seems really interesting!

Basically you're investing an initial 300k then reinvesting the initial investment and the profits overtime for those returns? I would be interested in getting more information about this if your contact is willing.

Thanks

 

[emergentmd]

Hi emergentmd, could you expand on the last sentence a little bit? Seems really interesting!

Basically you're investing an initial 300k then reinvesting the initial investment and the profits overtime for those returns? I would be interested in getting more information about this if your contact is willing.

Thanks

My numbers are alittle off. My typical investments were 5-7 yr hold with multiples of 2.8x. So 2.5x on avg 6 yrs. 300K in 6 yrs would be 750K. 750K in 6 yrs 1.875M. In 6 yrs 4.68M. So 18 yrs 4.68M.

You would do a 1031 into new properties to avoid any taxes on each closed property.

 

[plasma.]

My numbers are alittle off. My typical investments were 5-7 yr hold with multiples of 2.8x. So 2.5x on avg 6 yrs. 300K in 6 yrs would be 750K. 750K in 6 yrs 1.875M. In 6 yrs 4.68M. So 18 yrs 4.68M.

You would do a 1031 into new properties to avoid any taxes on each closed property.

Still really good, well done man! Will look more into this to diversify.

 

[ERRES2288]

I thought it was difficult to do 1031 exchange on the syndication deals from one to the next as most don’t offer it. Am I wrong about that?

 

[Mbekweni]

Be careful about syndication deals on two fronts.

1) Sponsor. Probably the most important. They are running the deal and bringing the expertise. Anybody can write out a pro forma promising 18% IRR but not everyone can deliver.
2) Exit strategy. This is mainly about taxes. Right now you can take a completed deal and roll the profits into a new deal. Most will use accelerated depreciation to shelter your prior proffits and it's super easy and about as good as a 1031 exchange. However accelerated depreciation will begin to phase out between 2023-2027 I think, making deals that complete during and after that time exit with higher taxes and a much higher "tax drag" on your returns. Most sponsors I've run into don't do 1031 exchanges. They have 99 investors in the deal and the paperwork and hassle involved in that would be horrendous. As such, if you don't shelter the income by rolling it into a new deal with pass through depreciation to shelter it you'll end up paying depreciation recapture tax (25%) on your prior payouts and capital gains tax (20%) on the appreciation of the property (assuming you are still working and have doctor income and tax brackets). Depending on where you live you'll then pay state tax on top of that. That takes your IRR of 15-18% and brings it down to 10-12% or so. Still good, but not what is advertised and may not be worth the lack of liquidity.

Also, real estate has been on a tear lately, but I try and diversify with my investments, and do no more than 35% real estate. I also agree that people will always need somewhere to live, but it's a bit like buying into QQQ now with the run in tech. Both have a lot going for them but who knows about the future.

 

[jhmmd]

Be careful about syndication deals on two fronts.

1) Sponsor. Probably the most important. They are running the deal and bringing the expertise. Anybody can write out a pro forma promising 18% IRR but not everyone can deliver.
2) Exit strategy. This is mainly about taxes. Right now you can take a completed deal and roll the profits into a new deal. Most will use accelerated depreciation to shelter your prior proffits and it's super easy and about as good as a 1031 exchange. However accelerated depreciation will begin to phase out between 2023-2027 I think, making deals that complete during and after that time exit with higher taxes and a much higher "tax drag" on your returns. Most sponsors I've run into don't do 1031 exchanges. They have 99 investors in the deal and the paperwork and hassle involved in that would be horrendous. As such, if you don't shelter the income by rolling it into a new deal with pass through depreciation to shelter it you'll end up paying depreciation recapture tax (25%) on your prior payouts and capital gains tax (20%) on the appreciation of the property (assuming you are still working and have doctor income and tax brackets). Depending on where you live you'll then pay state tax on top of that. That takes your IRR of 15-18% and brings it down to 10% of so. Still good, but not what is advertised.

Also, real estate has been on a tear lately, but I try and diversify with my investments, and do no more than 35% real estate. I also agree that people will always need somewhere to live, but it's a bit like buying into QQQ now with the run in tech. Both have a lot going for them but who knows about the future.

35% is a bit risky but to each her own
I would say invest no more than 10% in real estate

 

[Mbekweni]

35% is a bit risky but to each her own
I would say invest no more than 10% in real estate

If this was a few properties then sure, but I have funds in about 25 properties now so less individual deal risk. Quite a bit of overlap with just a few sponsors though. Large scale events like eviction moratorium where people don't actually pay, huge natural disasters wiping out houses in a geographic area without insurance etc could sure hurt. However with the diversification I think it will have no more risk than stock market but be an asset that may have a bit less volatility. Most importantly, I think real estate is an excellent inflation hedge. I use a bit of leverage with my stock market investing and the thing that will kill that strategy is runaway inflation where costs of borrowing exceed the alpha generated by the extra leverage. Holding some real estate helps balance out that risk.

 

[jhmmd]

If this was a few properties then sure, but I have funds in about 25 properties now so less individual deal risk. Quite a bit of overlap with just a few sponsors though. Large scale events like eviction moratorium where people don't actually pay, huge natural disasters wiping out houses in a geographic area without insurance etc could sure hurt. However with the diversification I think it will have no more risk than stock market but be an asset that may have a bit less volatility. Most importantly, I think real estate is an excellent inflation hedge. I use a bit of leverage with my stock market investing and the thing that will kill that strategy is runaway inflation where costs of borrowing exceed the alpha generated by the extra leverage. Holding some real estate helps balance out that risk.

All the more reason to be more conservative

 

[cyanide12345678]

35% is a bit risky but to each her own
I would say invest no more than 10% in real estate

Yale has 20 percent. I think their multi billion dollar endowment fund is led by some people who know a thing or two about asset allocation.

 

[jhmmd]

Yale has 20 percent. I think their multi billion dollar endowment fund is led by some people who know a thing or two about asset allocation.

Like I said, to each his own