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

[Afrages6]

Exactly!
20% annual returns don't exist unless you take on significant risk/leverage.

Our community doesn't get what risk means.

I agree with OP, we have terrible "investing" habits. We often do little to no DD, especially on RE deals.

Though now that many are underwater, I am hopeful that some people will learn their lesson.

Exactly. Investing in real estate is not for everyone. Gparency now has this feature where they match investors who want to put in as little as 25k with GPs for their deals through a google form with little to no DD. I don’t think investing in these syndicated deals with huge promotes for the sponsors should be so easy for everyone.

[knowitall]

Exactly. Investing in real estate is not for everyone. Gparency now has this feature where they match investors who want to put in as little as 25k with GPs for their deals through a google form with little to no DD. I don’t think investing in these syndicated deals with huge promotes for the sponsors should be so easy for everyone.

Few investors writing 200k checks really understand cap rate decompression, economic occupancy, DSCR, tax reassessments, etc.

Even fewer 25k check writers know what’s really under the hood.

Regarding fees, it’s not just promotes. There’s usually an acq fee of 1-2%, which is really 4-8% of your capital that the sponsor earns regardless of the deal’s performance. Add management fees, refi fees, exit fees, etc.

[Something Fishy]

Few investors writing 200k checks really understand cap rate decompression, economic occupancy, DSCR, tax reassessments, etc.

Even fewer 25k check writers know what’s really under the hood.

Regarding fees, it’s not just promotes. There’s usually an acq fee of 1-2%, which is really 4-8% of your capital that the sponsor earns regardless of the deal’s performance. Add management fees, refi fees, exit fees, etc.

I don't understand a word of this.

Please send me the link to invest asap, thanks.

[knowitall]

I don't understand a word of this.

Please send me the link to invest asap, thanks.

Sure, Would you like the link for the 35% IRR deal or the 45% IRR?

[yungermanchik]

I don't understand a word of this.

Please send me the link to invest asap, thanks.

It's not for you.
There's *NOTHING FISHY* about this at all.

[Mordyk]

Few investors writing 200k checks really understand cap rate decompression, economic occupancy, DSCR, tax reassessments, etc.

Even fewer 25k check writers know what’s really under the hood.

Regarding fees, it’s not just promotes. There’s usually an acq fee of 1-2%, which is really 4-8% of your capital that the sponsor earns regardless of the deal’s performance. Add management fees, refi fees, exit fees, etc.

Last portion boggles my mind and I see it daily.

[JMHO]

Exactly!
20% annual returns don't exist unless you take on significant risk/leverage.

Our community doesn't get what risk means.

Few investors writing 200k checks really understand cap rate decompression, economic occupancy, DSCR, tax reassessments, etc.

Even fewer 25k check writers know what’s really under the hood.

Regarding fees, it’s not just promotes. There’s usually an acq fee of 1-2%, which is really 4-8% of your capital that the sponsor earns regardless of the deal’s performance. Add management fees, refi fees, exit fees, etc.

How many people in our community have been successful and made lots of money without understanding all the risk and fine print? Yes, when things blow up it's very bad to many but our crazy system and community does work in different ways sometimes...

[Euclid]

How many people in our community have been successful and made lots of money without understanding all the risk and fine print?

It's mind boggling.

[knowitall]

How many people in our community have been successful and made lots of money without understanding all the risk and fine print? Yes, when things blow up it's very bad to many but our crazy system and community does work in different ways sometimes...

A rising tide lifts all boats.
You could have shot a dart at any multifamily property in 2020 and you would have done well, even if you were a subpar operator.
Many assumed that because the 2020 deal did well, there was no need to do any DD on the 2022 deal.

[Afrages6]

A rising tide lifts all boats.
You could have shot a dart at any multifamily property in 2020 and you would have done well, even if you were a subpar operator.
Many assumed that because the 2020 deal did well, there was no need to do any DD on the 2022 deal.

And people also blowing through their 2020-2021 profits and now having nothing left when they aren’t making money in 2022-23

[aygart]

And people also blowing through their 2020-2021 profits and now having nothing left when they aren’t making money in 2022-23

The bigger concern may be what happens with all of those who made long-term commitments based on the temporary changes from COVID (such as the resi RE broker and the million mortgage officers) and who made lifestyle changes (such as silver, jewelry, and watches, and talk to any leasing guy) that may not be sustainable when things go back to normal. Another question is what happens with all of those who it trickled down to when that ends.

[EliJelly]

And people also blowing through their 2020-2021 profits and now having nothing left when they aren’t making money in 2022-23

If it's falling apart in 2023 then it wasn't good in 2020-21 either, but with so much free money back then many were oblivious.

[chevron]

I've been worried for a year and still reluctantly grow my business bh.

I'm worried for every dollar I spend, I have friends berate me to spend more on myself and im very cautious.

You have to have over 100mm in actual assets to net 20% annually .

08-09 is still fresh on my mind and I remind myself daily to be frugal. It's not always easy but it keeps me grounded

[Afrages6]

Wow. So accurate. I know many stories of high fliers who didn’t put a cent away are now dealing with real issues.

[knowitall]

[dealfinder11]

great episode. I would recommend starting from the 46-minute mark for the more substantive part of the podcast.

I have a lot of thoughts on what was discussed and think Kahn definitely made some great points and offered so sound advice. Specifically his due diligence and allocation pointers, as well as provided valuable context to the tax benefits associated with real estate. I also thought that Goldfien did a great job of pushing back on a number of items.

There was one particular point made by Kahn that seemed a little off. Kahn was arguing that the liquidity in the stock market was a bad thing because people can make emotional decisions and pull out when the market is down. I understand the point, but arguing an illiquid investment is inherently safer because in some cases it can protect a bad investor from making poor decisions has so many flaws.

 

[gubevo18]

I don't understand a word of this.

Please send me the link to invest asap, thanks.

Reminds me of this Bardak episode

[zh cohen]

Kahn was arguing that the liquidity in the stock market was a bad thing because people can make emotional decisions and pull out when the market is down.

The flip side of this argument is a guy who was trying to convince me to buy ETFs instead of mutual funds because if the market is crashing you can sell ETFs right away but mutual funds sell based on the price when the market closes.

[dealfinder11]

https://www.wsj.com/articles/a-housing-bust-comes-for-thousands-of-small-time-investors-3934beb3?st=69ru3zdz40oki4a&reflink=share_mobilewebshare

[aygart]

Hearing rumors about a real estate guy who just skipped town.