Really great breakdown of the returns. I have invested in 5 apartment syndications as an LP. Love it and selling all my active investments! in one of your videos could you explain the difference between ROI and IRR?? I have seen different sponsors use one or the other.
Do you also get back your 100K? If so, you put in 100K and get back 188K within 5 years...can that be right? I'm becoming an LP for the first time, trying to learn more about syndications so I can graduate to bigger unit numbers, but I'm having trouble understanding AAR and what the total number an investor will (likely) walk away with after 5 years, if they put in 50K or 100K. Thank you.
you get 188k at the end of 5 years. but you are prone to taxes on your 88k. Depending on your tax situation, the amount you owe to IRS differs. Texas state has a limit of 80k. For example if your passive income is less than 80 k, you will not be taxed in Texas. Also you can do 1033 exchange so that you can differ your taxes and snowball your investment. Lets say you dont touch your money, you can keep on doubling your money every 5-7 years depending on the investment
How difficult would it be to get 8% quarterly. I’ve heard others say with their strategy, similar to yours, value add, 3-5 year hold they give limited partners 8% guaranteed, do you imagine this comes out from the managing partners’ end quite often?
If you have 4 investors in your syndication with each contributing different amounts, how do you determine their percentages of the monthly cashflow distribution?
Seth you haven't confirmed whether or not the total you are saying is a possibility in this example is 188k. Multiple people have asked for this confirmation so please confirm. Thank you great video.
It would be confusing to add everything this isn’t a video for experts. The fees matter but aren’t as relevant as the actual cashflow. Assuming it’s a real deal, I don’t care what the fees are if they are aligned with positive performance first
Cap rates compress when you increase income i.e. raise rents through property improvements along with adding other sources of income such as covered parking, concierge trash pickup etc. At the same time you are driving efficiencies and reducing operating expenses. This increases the overall NOI on the property further compressing the cap rates. The Value Add Strategy is pretty powerful!
@@joedanza NO, increases NOI does not change cap rates, it increases value. That is the VALUE part of value add. The formula is V=i/r $1,000,000=$100,000/10% The 10% comes from cap rate comps from closed sales of similar properties. If I increase my NOI by $10,000 then $1,100,000=$110,000/10% That is the value add.
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Thanks for sharing, I just found you about 3 weeks ago and I think your content is awesome!!! Must share you are under rated!!!
Question - do you also get your principal back? It wasn’t explicitly stated
Yes!
Really great breakdown of the returns. I have invested in 5 apartment syndications as an LP. Love it and selling all my active investments! in one of your videos could you explain the difference between ROI and IRR?? I have seen different sponsors use one or the other.
Where did you invest?
Every time I click on your videos I get so much information!
At the end of year 5 you get the CoC of $9500, $47,000 is dispostion proceeds, and our initial $100,000k investment back?
Yeah it’s where you retain equity as does the sponsor. Aligned interest all the way, though sponsors have different methods
Very helpful! Thanks! Do you have videos on vetting syndications? Also, do you have a group/tribe where you discuss vetted syndication opportunities?
did you forget to show the sum? i.e i hope you meant to say the investor get 100k back plus 47k sales revenue plus 41k coc right? not just 41+47?
I had same question. A net sheet illustrating this would be 🔥
Where do you find these syndication deals?
Do you also get back your 100K? If so, you put in 100K and get back 188K within 5 years...can that be right? I'm becoming an LP for the first time, trying to learn more about syndications so I can graduate to bigger unit numbers, but I'm having trouble understanding AAR and what the total number an investor will (likely) walk away with after 5 years, if they put in 50K or 100K. Thank you.
you get 188k at the end of 5 years. but you are prone to taxes on your 88k. Depending on your tax situation, the amount you owe to IRS differs. Texas state has a limit of 80k. For example if your passive income is less than 80 k, you will not be taxed in Texas. Also you can do 1033 exchange so that you can differ your taxes and snowball your investment. Lets say you dont touch your money, you can keep on doubling your money every 5-7 years depending on the investment
You only pay taxes on the $47K. You already paid taxes on the yearly cash flow. Your investment is not taxed when you pull it out.
How difficult would it be to get 8% quarterly. I’ve heard others say with their strategy, similar to yours, value add, 3-5 year hold they give limited partners 8% guaranteed, do you imagine this comes out from the managing partners’ end quite often?
So on year 1 to figure out the monthly dividend, are you just dividing 7010 by 12?
If you have 4 investors in your syndication with each contributing different amounts, how do you determine their percentages of the monthly cashflow distribution?
Great question
Just do the math, simple.
Seth you haven't confirmed whether or not the total you are saying is a possibility in this example is 188k. Multiple people have asked for this confirmation so please confirm. Thank you great video.
Yes. A 1.89x multiple returns the invested capital plus 89%. So if 100k was invested, it's the 100k plus 89k.
@@SethFergusonhow soon are you profitable
What about management fess and any other expenses?
It would be confusing to add everything this isn’t a video for experts. The fees matter but aren’t as relevant as the actual cashflow. Assuming it’s a real deal, I don’t care what the fees are if they are aligned with positive performance first
What makes you think anything you do to the property is going to compress cap rates?
Cap rates compress when you increase income i.e. raise rents through property improvements along with adding other sources of income such as covered parking, concierge trash pickup etc. At the same time you are driving efficiencies and reducing operating expenses. This increases the overall NOI on the property further compressing the cap rates. The Value Add Strategy is pretty powerful!
@@joedanza NO, increases NOI does not change cap rates, it increases value. That is the VALUE part of value add. The formula is V=i/r $1,000,000=$100,000/10% The 10% comes from cap rate comps from closed sales of similar properties. If I increase my NOI by $10,000 then $1,100,000=$110,000/10% That is the value add.
@@walina-ej4xrwhen you increase noi your relative income to property value is higher. Therefore the cap rate decreases.
I'm a accredited investor, fairly new do you think we should have LLC and if so why? I invest with my son who is doing syndication.
Great question. I've been wondering the same thing. I guess I need to contact a tax advisor.
Hey what’s your Instagram? I want to connect with you asap!
@@annieceward2346 what’s your Instagram? Would love to connect with you and see how we can do some deals together.
How did you get the $46,320 number?
Sale proceeds