Time for some proper due diligence/ independent auditing in our communities

[knowitall]

As @ExGingi has said in the past: "it's the tail waving the dog"

Yeah, that’s a common saying in the investment world “Don’t let the tax tail wag the investment dog”.

[yomo]

As @ExGingi has said in the past: "it's the tail wagging the dog"

Where did he say this? Another thread about these syndicators?

[yawn]

Who is P? Adeirei Hatorah P? Or someone else?
Adeirei will be the bust of the century when it gets unraveled

No not who I was reffering to. But I guess that was a fair point I disagreed with earlier about not using initials. It also led me to make a phone call to confirm that SK wasn't someone I knew. Problem is that I'm not comfortable divulging names where I only have 3rd hand knowledge

[Yehudaa]

Where did he say this? Another thread about these syndicators?

No. I mean that when one has an ever growing tax DEFERRAL it becomes harder to make a move that will cause actual taxation, which could lead to skewed investment decisions (the tax tail wagging the dog).

[yoohoo]

Everyone is so focused on the fraud/scams, that few are paying attention to the millions of dollars that have been lost or will soon be lost in syndications. Many operators bet against the Fed, by taking short term floating debt, betting rates wouldn’t rise more than 1-2%. (Even while futures were showing 2-3% increases, I saw a few operators underwrite less than 1% increases!)

As these rate caps burn off, and these balloon payments become due, many will be forced to bring new equity to the table to refinance, AKA diluting investors. Some will be salvageable by diluting investors, others won’t be as “fortunate”.

Add rising expenses such as insurance costs or tax reassessments to the mix, and the picture isn’t pretty.

I hate to be Dr. Doom, but the sooner investors (and mosdos) accept this reality, the better off they’ll be.

Barring something big breaking, and forcing the Fed to lower rates a few hundred bps, there’s no exit door for many of these “deals”.

we focus on scams because that’s more sensational than then regular run of the mill business that went south. Maybe bad luck, maybe bad due diligence may be to big a risk but not fraud.

[Fish Tank]

Makes sense. I think one shul mate gave 15M

Innitials? 

[Euclid]

A Lakewood guy who sat in jail about 8 years ago for RE fraud, just pled guilty to health care fraud. Some people are just sociopaths.

[knowitall]

It’s crazy.

Can we go 2 weeks without another story?

.

We made it 3 weeks!
I guess that's an improvement

[Euclid]

.

We made it 3 weeks!
I guess that's an improvement

Nah there was a story last week, though he wasnt scamming people from the frum community

[S209]

A Lakewood guy who sat in jail about 8 years ago for RE fraud, just pled guilty to health care fraud. Some people are just sociopaths.

Previously a co-conspirator of Eli Weinstein. Maybe sitting a year and a day for fraud and seeing EW come out so soon makes you lose your fear of prison. Or maybe he’s innocent and they like to target people who have been convicted of crimes in the past. 🤷‍♂️

[dealfinder11]

https://podcasts.apple.com/us/podcast/halacha-headlines/id1048703487?i=1000618869246

[chevron]

http://frumscams.blogspot.com/?m=1

https://www.mywesternwall.net/category/judaism/torah/rabbi-eli-teitelbaum-torah/dont-be-tricked

He was talking about this for many years. Sadly nobody listens

[liosac]

A Lakewood guy who sat in jail about 8 years ago for RE fraud, just pled guilty to health care fraud. Some people are just sociopaths.

There’s another lesson that our community fails to learn over and over again from Dwek and others; that someone who the gov has the goods on can be very incentivized to cooperate ….

[zale]

There’s another lesson that our community fails to learn over and over again from Dwek and others; that someone who the gov has the goods on can be very incentivized to cooperate ….

You are pointing at the symptoms, not the cause.

The cause is “I need a big designer house, a big house upstate, and a fancy car”. ואידך פירושא הוא

[knowitall]

https://podcasts.apple.com/us/podcast/halacha-headlines/id1048703487?i=1000618869246

He makes it sound as if you need to be nuts to ever invest in any RE deal.
It’s obviously a very nuanced conversation.
I’ve been very vocal about the risks of syndications, and I gave my blessing on very few deals in the last couple years.  I disagree with David. I think they do have a place in a typical middle class families portfolio, if you do your due diligence and confirm:

The sponsor is extremely ehrliche.
The sponsor has experience with this specific business plan.
You understand all the underwriting, and agree the assumptions are realistic.
You go through the operating agreement, and you think it’s a fair structure.

If you invest in multiple syndications, diversify between different syndicators, different geographies, different sub-classes of RE, different types of deals.

[Euclid]

if you do your due diligence and confirm:

The sponsor is extremely ehrliche.
The sponsor has experience with this specific business plan.
You understand all the underwriting, and agree the assumptions are realistic.
You go through the operating agreement, and you think it’s a fair structure.

If you invest in multiple syndications, diversify between different syndicators, different geographies, different sub-classes of RE, different types of deals.

Do you think this is realistic for someone with eg $100k to invest? Also the time spent doing this (unless they don't have a monetary value on their time) probably offsets whatever advantage this would have over eg simply putting it in an index fund

[knowitall]

Do you think this is realistic for someone with eg $100k to invest? Also the time spent doing this (unless they don't have a monetary value on their time) probably offsets whatever advantage this would have over eg simply putting it in an index fund

If you only have 100k to invest, you don't belong in syndications.

Did you mean if someone has 600k, and wants to put 100k in syndications?

[yoohoo]

He makes it sound as if you need to be nuts to ever invest in any RE deal.
It’s obviously a very nuanced conversation.
I’ve been very vocal about the risks of syndications, and I gave my blessing on very few deals in the last couple years.  I disagree with David. I think they do have a place in a typical middle class families portfolio, if you do your due diligence and confirm:

The sponsor is extremely ehrliche.
The sponsor has experience with this specific business plan.
You understand all the underwriting, and agree the assumptions are realistic.
You go through the operating agreement, and you think it’s a fair structure.

If you invest in multiple syndications, diversify between different syndicators, different geographies, different sub-classes of RE, different types of deals.

i believe he touched on the fact that the syndicators dont have patience for people asking questions and move along and will get the $ elsewhere....leading to the FOMO.

[Euclid]

If you only have 100k to invest, you don't belong in syndications.

Did you mean if someone has 600k, and wants to put 100k in syndications?

I think you need to quantify what you mean by "middle class".

But also yes - what's the minimum you think is required to make the time and effort put into due diligence worth it?

[knowitall]

i believe he touched on the fact that the syndicators don't have patience for people asking questions and move along and will get the $ elsewhere....leading to the FOMO.

That depends on investor appetite. 18 months ago, when valuations were sky high, and everyone wanted to invest in as many deals as possible, (because they saw how much was made from 2020-2021) syndicators didn't want to deal with "PITA investors". Now that raising capital is like pulling teeth, I imagine they will have a lot more patience for investor's DD.