PassivePockets: The Passive Real Estate Investing Show

Latest Episodes:

148. Jeremy Roll on Real Estate Investment Strategies and Risks Dec 24, 2023

Show notes

Welcome to an extraordinary episode of Passive Investing from Left Field! If you attended the meetup in Left Field, this is your second chance to hear this informative episode, and if you didn't, well, you're in luck. Guest Jeremy Roll and Jim Pfeifer tackle the essentials of passive real estate investing. They delve deep into the importance of meticulous due diligence and the critical role of investment documents. Jeremy discusses the state of market investments for the next decade, his current investment strategies, and what LP investors should focus on. This episode is packed with insights for the discerning passive investor seeking stability and growth in their investments.

About Jeremy Roll

Jeremy started investing in real estate and businesses in 2002 and left the corporate world in 2007 to become a full-time passive cash flow investor. He is currently an investor in more than 60 opportunities across more than $1 Billion worth of real estate and business assets. As Founder and President of Roll Investment Group, Jeremy manages a group of over 1,500 investors who seek passive/managed cash-flowing investments in real estate and businesses. Jeremy is also the co-founder of For Investors By Investors (FIBI), a non-profit organization that was launched in 2007 to facilitate networking and learning among real estate investors in a strict no sales pitch environment. FIBI is now the largest group of public real estate investor meetings in California with over 30,000 members. Jeremy has an MBA from The Wharton School and is an Advisor for Realty Mogul, the largest real estate crowdfunding website in the US. Jeremy welcomes e-mails (jroll@rollinvestments.com) to network with or help other investors and to discuss real estate or business investments of any size.

Here are some power takeaways from today’s conversation:

00:07 Meet Jeremy Roll

01:31 Tribevest

00:51 Insights into Market Trends

03:38 Examination of Jeremy's Market Concerns for the Next 6 to 12 Months

05:58 Factors Influencing Jeremy's Return to Investment

07:56 Analysis of Defensive and Offensive Asset Classes

10:13 Exploration of ATM Investments

13:15 Negotiating Operational Agreement Changes with Operators

15:15 Importance of Reviewing Deal Documents Prior to Execution

18:20 Conducting Background Checks in Collaborative Ventures

20:14 Reflection on Past Deal Challenges

22:55 Understanding the Significance of Private Placement Memorandum (PPM)

24:43 Pros and Cons of ATM Investments

26:14 Future Projections for Multifamily Deals

28:15 Speculation on Banks' Approaches to Loans and Property Foreclosures

29:12 Identifying Promising Asset Classes for the Coming Years

31:15 Navigation of Capital Calls in Investments

This show is for entertainment purposes only. Nothing said on the show should be considered financial advice. Before making any decisions, consult a professional. This show is copyrighted by Passive Investing from Left Field and Left Field Investors. Written permissions must be granted before syndication or rebroadcasting.

Resources Mentioned:

Email: jroll@rollinvestments.com

Avoiding Rookie Errors as a Left Field Investor: 20 Lessons Learned From 14 Years of Passive Investing in Private Syndicationsby Steve Suh

Podcast Recommendations:

Motley Fool Money

The Walker Webcast

Advertising Partners:

Left Field Investors - BEC

Spartan Investment Group

Vyzer

147. Ryan Gibson on Navigating the Ever-Changing Self-Storage Market Dec 17, 2023

Show notes

Join us on the latest episode of Passive Investing from Left Field, as we dive deep into the world of commercial real estate investing with special guest Ryan Gibson, co-founder of Spartan Investment Group. Ryan, formerly an airline pilot turned real estate mogul, shares the turbulent journey of transitioning into the self-storage industry and the strategies that propelled him to success. Discover the exciting opportunities and hurdles of syndicated investments, the significance of transparent investor communication, and innovative ideas for generating passive income.

About Ryan Gibson

Ryan Gibson is a co-founder of Spartan Investment Group and a former airline pilot who made a successful pivot to real estate investing, focusing on self-storage. His entrepreneurial spirit was evident early on when he provided affordable housing for pilots through organized crash pads. Today, his expertise and leadership have contributed to the growth and resilience of his company amidst market fluctuations and financing challenges. Ryan also hosts the Passive Income for Pilots podcast, sharing valuable insights on building passive income. With a strong emphasis on managing investor expectations and capital preservation, his strategic approach to investment, particularly in ground-up development and value-added projects, has made Ryan a recognized voice in the passive investing community.

Here are some power takeaways from today’s conversation:

00:00 The Best Ever Conference

01:31 Tribevest Ad

02:03 Coming Up

02:22 Intro

02:40 Welcome to the show

03:43 Ryan’s journey into real estate investing

07:45 What are pilot crash pads

10:36 How he got his start in real estate investing

11:50 Where is the market at right now

15:36 Disruption is good for self-storage

19:20 Who Is buying from who

21:21 Viking Ad

22:08 Rise 48 Ad

22:37Tyler Longview's portfolio

25:56 How he handles challenges

26:49 Buying multiple properties

32:43 Investor expectations

38:29 Types of development

43:57 Recommended podcast

44:41 Contact

45:03 Aspen Fund Ad

45:46 Vyzer Ad

46:31 Guest Overview

49:52 Outro

50:18 Disclaimer

Episode Highlights:

1. Ryan Gibson, co-founder of Spartan Investment Group and former airline pilot, shares his journey from pilot crash pads to successful self-storage real estate investing and hosting a podcast for high-earning professionals.

2. The episode covers Ryan's experiences with the challenges of financing and selling properties in a fluctuating market and his strategic approach to overcoming those challenges including transparent communication with investors and prioritizing capital preservation.

3. Ryan discusses the intricacies of deal structuring and the benefits of ground-up development in the self-storage industry, highlighting how they manage risks and expectations as detailed in the Private Placement Memorandum.

4. Industry insights reveal that self-storage thrives on disruption and that the market conditions currently favor development projects, amidst issues such as decreased demand due to a slowdown in home sales and moves.

5. The significance of the self-storage market is emphasized with the business still being strong and attractive to investors, despite some portfolios facing struggles.

Resources Mentioned:

Contact The Guest:
LinkedIn
Instagram
Facebook
YouTube

Avoiding Rookie Errors as a Left Field Investor: 20 Lessons Learned From 14 Years of Passive Investing in Private Syndicationsby Steve Suh

Podcast Recommendations:

Motley Fool Money

The Walker Webcast

All In Podcast

Advertising Partners:

Left Field Investors - BEC

Spartan Investment Group

Vyzer

146. Inside the Lucrative World of Laundromats With Sam Wilson Dec 10, 2023

Show notes

Tune in to this episode where we talk with guest Sam Wilson to discuss the profitable world of laundromat investing. Sam recounts his journey from real estate flips to niche investments like laundromats, explaining the cash flow benefits and community impact. Learn how laundromats offer recession-resistant income streams, and listen to Sam's expert tactics for standing out in a traditional industry. Also, hear firsthand about Sam's successful transition away from parking assets. This episode is a must-listen for those interested in diversifying their investment portfolios with alternative, cash-flowing real estate assets. !

About Sam Wilson

Sam, Founder of Bricken Investment Group, hosts a top-rated commercial real estate podcast, with 40K+ monthly downloads and 800 episodes. As an investor for over a decade, he has focused on laundry facilities, aiming to diversify and provide stable returns for himself and his investors. Sam, based in Memphis, TN, holds a business finance degree and a real estate license, emphasizing non-traditional investments for predictable returns.

Here are some power takeaways from today’s conversation:

00:00 The Best Ever Conference

01:31 Tribevest

02:21 Coming Up

02:18 Intro

02:39 Welcome To The Show

03:24 How Sam got Started in Real Estate Investing

04:35 The Evolution of His Real Estate Journey

07:38 How He Timed the Market

10:00 How he Approaches LPs

12:54 His Previous Investments

13:51 Why Laundromats? Why Now?

17:28 Is Multi-Family Affecting Laundromats?

18:31 Aspen Fund

19:15 Rise48

19:49 Can You Expand The Laundromat Market?

21:17 Are Laundromats Similar to Car Washes?

23:09 How Do Laundromats Depreciate?

24:52 The Other Aspects of the Laundromat Business

26:58 Working with Short-Term Rentals

28:14 How LPs Can Invest

31:29 How to Evaluate a Laundromat Operator

33:27 What Metrics should we be Looking at?

34:42 What Does His Competition Look Like?

38:24 www.ellieslaundry.com

38:49 A Great Podcast he Listens to

40:26 Contact Sam

40:56 Thank You For Watching

41:05 Viking Multi-Family

41:43 Steve Suh's Book

42:31 Guest Overview

45:56 Outro

46:21 Disclaimer

Resources Mentioned:

Bricken Investment Group - https://brickeninvestmentgroup.com/

Email: Sam@brickeninvestmentgroup.com

Avoiding Rookie Errors as a Left Field Investor: 20 Lessons Learned From 14 Years of Passive Investing in Private Syndicationsby Steve Suh - https://www.leftfieldinvestors.com/books/

Podcast Recommendations:

Motley Fool Money - https://www.fool.com/podcasts/motley-fool-money/

The Walker Webcast - https://www.walkerdunlop.com/webcasts/

Advertising Partners:

Left Field Investors - BEC - https://www.leftfieldinvestors.com/bec/

Tribevest - https://www.tribevest.com/

Rise48 - https://rise48.com/

Aspen Funds - https://aspenfunds.us/

GSP REI - https://gsprei.com/

Spartan Investment Group - https://spartan-investors.com/

Vyzer - https://vyzer.co/

145. How Midloch Finds Value Through Partnerships with Andy Sinclair Dec 03, 2023

Show notes

Want to take a look into an alternative model for investing in commercial real estate?In this episode, we’re joined by Andy Sinclair, CEO and Principal of Midloch Investment Partners, to talk about their unique approach to investing in the Midwest market. Andy explains Midloch's strategy of partnering with local operators through joint ventures, co-GP positions, and preferred equity investments. Learn how they evaluate investment opportunities and vet potential operator partners, and how they find value-add opportunities.

About Andy Sinclair

Andy Sinclair, CEO of Midloch Investment Partners, brings over 16 years of experience in commercial real estate. He focuses on Midwest investments, particularly in multifamily and industrial/warehouses through JV partnerships and preferred equity.

Here are some power takeaways from today’s conversation:

[04:31] Andy’s journey to becoming an operator

[08:11] The difference between joint ventures, co-GP positions, and preferred equity investments

[11:24] What is an anchor investor?

[17:26] How LPs can benefit from Midloch

[23:19] Midloch's contrarian approach in the smile states

[39:44] Reacting to adversity: the true measure of an investor

Episode Highlights:

[08:11] The Difference Between Joint Ventures, Co-Gp Positions, and Preferred Equity Investments

Joint venture (JV) equity: Midloch brings capital to the deal and acts as the anchor investor/majority shareholder. As a real estate operator, they also provide resources to help the property perform better.
Co-GP investments: Similar to a JV where Midloch owns the majority stake, but they maintain sole voting rights and control over major decisions like an operator would.
Preferred equity: A hybrid investment that is not fully equity or debt. Investors get a preferential dividend like interest payments and a capped annual return, usually around 15%. They are senior to common equity in terms of risk. This fills the "gap financing" need between senior debt and common equity.

[11:24] What is an Anchor Investor?

An anchor investor is the majority shareholder in a real estate deal, usually owning anywhere from 51% to 95% of the total equity investment. As the anchor investor, they provide the bulk of the capital for the project/property and take on more risk than smaller investors. They have significant control and voting rights over major decisions since they have the largest financial stake in the outcome of the investment.

[17:26] How LPs can Benefit from Midloch

Diversification - As LPs in Midloch's funds, they get a small pro rata slice of each deal, providing a diversified portfolio across property types, markets, and investment structures.
Better deal terms - As the anchor investor on deals, Midloch is able to negotiate better terms like lower management fees, preferred returns, and promote splits than operators could get on their own. These benefits pass to LPs.
Resources and governance - Midloch brings additional resources to deals beyond just capital, like relationships, expertise, and oversight/governance. This helps reduce risk for LPs.
Stable returns - Midloch aims to produce stable, lower-risk returns through value-add strategies rather than relying solely on appreciation or high-risk moves.

Resources Mentioned:

Midloch Investment Partners

Email: andy@midloch.com

Avoiding Rookie Errors as a Left Field Investor: 20 Lessons Learned From 14 Years of Passive Investing in Private Syndicationsby Steve Suh

Podcast Recommendations:

Motley Fool Money

The Walker Webcast

Advertising Partners:

Left Field Investors - BEC

Spartan Investment Group

Vyzer

144. Focusing on Operations: Jered Sturm's Approach to Value Creation Nov 26, 2023

Show notes

Discover the secrets of multifamily investing with SNS Capital Group's Jered Sturm. Gain valuable insights into their hands-on approach to property management and increasing NOI. Jered also shares tips for passive investors on evaluating sponsors and navigating economic changes.

About Jered Sturm

Jered Sturm is the CEO and co-founder of SNS Capital Group, a multifamily owner, operator, and syndicator focused on the Cincinnati, Ohio market. Over the past 16 years, Jered and SNS Capital Group have acquired over 1,300 multifamily units in Cincinnati through syndication and value-add investing in distressed properties.

Here are some power takeaways from today’s conversation:

[04:36] Real estate investing journey from maintenance tech to multifamily syndicator

[08:57] Understanding the core competencies of syndication sponsors

[13:30] How to figure out the sponsor’s core competency

[15:24] What it means to be a good operator

[18:28] The pros and cons of being in on Emarket and one asset class

[19:48] The importance of effective quality property management

[21:03] The concept of forced value

[27:13] Handling poor management issues

[33:47] Investment strategies and debt management

Episode Highlights:

[08:57] Understanding a Sponsor's Core Competency: Keys to Evaluating a Syndication Firm's True Strengths

When evaluating a syndication sponsor, it's important to understand their core competencies - what they are truly best at. Some key things discussed in this episode include:

Operations vs sales/marketing - The sponsor's background can provide clues. For example, experience in property management vs capital raising firms.
Track record of performance - Has the sponsor proven success creating value through their claimed core competency over multiple deals and market cycles?
Culture and people - Are employees happy and retained long-term, indicating a strong operational culture? Google reviews can provide insights.
Debt strategy - How the sponsor finances deals reveals their risk tolerance and ability to weather downturns. Fixed-rate debt provides more predictable cash flows.
Market focus - Narrow geographic and asset class focus allows deep local expertise but lacks diversification.

The best way for passive investors to evaluate a sponsor's core competency is by verifying their claims - speaking to previous investors, reviewing property performance, and ensuring philosophies align. This due diligence helps identify sponsors truly skilled in value creation versus those relying on sales/marketing abilities.

[15:25] What Makes a Good Operator

A good multifamily operator has a proven ability to maximize property performance through hands-on management focused on tenant satisfaction, continuous expense optimization, and value-added renovations. They leverage deep local market expertise, a results-oriented culture, and data-driven methods to consistently drive occupancy, rents and NOI higher than industry peers. This hands-on, performance-focused approach is demonstrated through a track record of acquiring distressed assets and creating significant forced appreciation through superior property management and operational efficiencies.

Resources Mentioned:

www.snscapitalgroup.com

Avoiding Rookie Errors as a Left Field Investor: 20 Lessons Learned From 14 Years of Passive Investing in Private Syndicationsby Steve Suh

Use this for book links: https://www.leftfieldinvestors.com/books/

Podcast Recommendations:

Huberman Lab Podcast

Advertising Partners:

Left Field Investors - BEC

143. The Power of Cash Flow Investing with Charles Carillo Nov 19, 2023

Show notes

Wondering why you should avoid investing in D-class properties? Charles Carillo explains the challenges and risks associated with these properties. From ongoing tenant issues to higher maintenance costs, D-class properties require intensive management. Plus, Charles explains why you need to prioritize cash flowing properties that maintain their value even during market fluctuations. It's all about weathering the storm!

About Charles Carillo

Charles Carillo, the managing partner of Harborside Partners, is an experienced real estate investor with a $200 million investment track record. Inspired by his father's involvement in multifamily properties, Charles began investing himself in 2006 and has since grown his portfolio with multifamily and mixed-use properties. He also hosts The Global Investors podcast, where he interviews other real estate professionals.

Here are some power takeaways from today’s conversation:

[04:17] Charles’ real estate investing journey

[07:36] What you need to know when dealing with D-class properties

[11:00] Real estate investing strategies and dealing with market changes

[16:39] Adapting debt structures

[20:01] What makes cash flow in real estate so desirable

[32:41] Capital calls in real estate investing

[35:42] Evaluating real estate syndicators

Episode Highlights:

[07:36] Why Avoid Investing in D-Class Properties

When dealing with D-class properties, expect ongoing tenant issues, higher maintenance costs, and declining neighborhoods. Financing can be difficult, and intensive management is required. Long-term appreciation may be limited in these areas. To mitigate potential risks, it is crucial to invest in higher-quality properties and adopt a conservative approach to financing. By doing so, investors can navigate these challenges and make sound investment decisions.

[20:01] The Power of Cash Flow From Real Estate

Cash flow from real estate is highly desirable for several reasons. Firstly, it ensures the self-sufficiency and resilience of properties, enabling them to withstand economic downturns. Additionally, cash flow provides a consistent income stream, appealing to investors seeking reliable returns. Furthermore, properties with positive cash flow can be held long-term, benefiting from appreciation over time and generating capital gains. Moreover, cash flowing deals are less risky than those relying solely on appreciation, as tenant income provides greater security. Lastly, cash flow affords operators the flexibility to sell based on market conditions, maximizing sale proceeds.

Resources Mentioned:

Harborside Partners

Global Investors podcast

LinkedIn: @charlescarillo

Use this for book links: https://www.leftfieldinvestors.com/books/

Podcast Recommendations:

Macro Voices Podcast

Advertising Partners:

Left Field Investors - BEC

Tribevest

GSP REI

Spartan Investment Group

Rise48

Aspen Funds

142. The Importance of Asset Management with Gary Lipsky Nov 12, 2023

Show notes

If you're interested in learning from experienced operators, this is an episode you'll want to listen to. Multifamily syndicator Gary Lipsky provides a lot of practical advice for both passive investors and those looking to syndicate deals. Having done over $250 million in real estate deals, Gary shares great insights into asset management, a critical but often overlooked part of deal performance. Gary discusses how he actively manages his properties to hit financial targets and extract maximum value.

About Gary Lipsky

Gary Lipsky, president of Break of Day Capital, has successfully completed over $250 million in real estate transactions as a multifamily syndicator. Starting in 2002 with his family's first house, which he turned into a rental property when they moved, Gary gradually ventured into single-family rentals before transitioning to real estate full-time in 2016. With a focus on value-add multifamily deals in Phoenix and Tucson, he averages around four deals per year, including his first syndicated deal, a 42-unit apartment complex in Tucson, Arizona.

Here are some power takeaways from today’s conversation:

[06:54] Gary’s real estate investing journey

[11:03] Defining roles: asset managers versus operators

[15:55] The challenges of asset management

[18:56] How LPs (Limited partners) should evaluate their asset management approach

[33:42] How strategic investments in Tucson yielded remarkable returns

[40:33] Real estate investing with a focus on asset management

Episode Highlights:

[15:55] The Challenges of Asset Management

In the realm of asset management, the landscape has become increasingly challenging. With loan covenants becoming stricter than ever, it is crucial to have a comprehensive understanding of aspects like earnouts and penalties. The reporting process for loan covenants has also become more time-consuming, demanding significant resources. Failing to execute the business plan can lead to complications such as cash calls or capital calls, putting the overall performance at risk. It is crucial to allocate resources effectively and ensure adherence to loan covenants to maintain a high level of success in asset management.

[19:04] How LPs Should Evaluate Deals

Here are some key things Limited Partners (LPs) should do to properly evaluate deals:

Ask who specifically is the asset manager and if they can be part of the interview process. The asset manager is critical for deal performance.
Inquire about the asset manager's typical day-to-day responsibilities and the number of properties they oversee. Fewer is better.
Request to see the dashboard of Key Performance Indicators (KPIs) that are tracked and how often the sponsor checks in on them.
Find out how frequently the asset manager communicates with property management and visits each property in person. More contact is better.
Ask what questions the sponsor asks property management during check-ins to ensure they are executing the business plan.
Determine how transparent the sponsor is about sharing actual property performance versus budgets. Any variations should be explained.
Thoroughly vet the sponsor's communication approach, especially during challenges, to ensure they are responsive.

Resources Mentioned:

Break of Day Capital

Real Estate Investor Podcast

Podcast Recommendations:

Driven By Insight

Avoiding Rookie Errors as a Left Field Investor: 20 Lessons Learned From 14 Years of Passive Investing in Private Syndicationsby Steve Suh

Advertising Partners:

141. Designing Your Lifestyle Through Passive Real Estate Investing with Brian Davis Nov 05, 2023

Show notes

Explore how designing your finances to match your desired lifestyle can open doors to new adventures. In today’s episode, Brian Davis, founder of SparkRental, shares how living abroad with his family inspired a location-independent lifestyle supported by passive real estate investments. Learn about Brian's process for vetting sponsors and deals as a community, and how syndications have allowed him the freedom to pursue entrepreneurial opportunities while diversifying his portfolio.

About Brian Davis

Brian Davis is a seasoned real estate investor, finance expert, and the founder of SparkRental. With over two decades of experience in the real estate and finance industries, Brian brings a wealth of knowledge to the table. Brian advocates for creating a lifestyle aligned with personal priorities and utilizing passive real estate investments to support a location-independent way of living.

Here are some power takeaways from today’s conversation:

[04:17] Brian’s real estate investing journey

[10:47] How location independence affects your investing

[15:07] Brian’s real estate investing club

[26:15] Tips for vetting sponsors

[34:30] Investment club due diligence process

[40:27] Designing a lifestyle based on your family’s needs and what you want to do

Episode Highlights:

[10:47] How Location Independence Affects Investing

Living abroad and pursuing a location-independent lifestyle can significantly impact your real estate investing approach. It may push you towards passive investment options, make active investing in rental properties more challenging, inspire financial restructuring, motivate diversification across asset classes and geographies, provide more freedom to take risks and allow for higher investment returns to support a location-independent lifestyle without relying on W-2 income.

[15:07] How the Real Estate Investing Club Works

Brian's real estate investing club is a unique community where members collaborate to vet deals. They charge a flat membership fee instead of taking a portion of invested funds or selling securities. Club members receive tailored investment opportunities via email and can join video calls with sponsors. With a minimum investment of $5,000 per person, they pool resources to meet syndication thresholds. This approach fosters informed decision-making and enables investors to contribute smaller amounts collectively. To streamline the process, Brian and his partner create separate LLCs for each member participating in a specific deal, simplifying communication and decision-making with sponsors.
[26:15] Tips for Vetting Sponsors
Thoroughly research a sponsor's track record, including past deal performance, number of completed deals, and their longevity in the business. Consider their experience across different market cycles and ask about their views on current risks and how they mitigate them. Evaluate the thoughtfulness of their answers. Inquire about their underwriting process and assumptions, analyzing deals for reasonable and conservative exit cap rates and rent growth projections. If possible, speak to past investors or ask for referrals to check their reputation.

Resources Mentioned:

SparkRental

Podcast Recommendations:

For business podcasts and online business:

Mind Your Business Podcast with James Wedmore

For real estate investing podcasts:

The Conscious Investor with Julie Holly

How to Scale Commercial Real Estate with Sam Wilson

For political podcasts:

Left, Right & Center by KCRW (NPR station)

Advertising Partners:

140. Insights into Self-Storage from an Industry Veteran - An Interview with Jacob Vanderslice Oct 29, 2023

Show notes

Explore the changing landscape of storage rents, financial considerations when investing, and the benefits of single asset syndication and funds for LPs. Get ready for a deep dive into the self-storage sector with an experienced investor with Jacob Vanderslice, co-founder of Van West Partners.

About Jacob Vanderslice

Jacob Vanderslice is the co-founder of VanWest Partners, which focuses on commercial real estate, including adaptive reuse retail and multifamily properties. Since 2015, they have specialized in self-storage acquisitions and development, with Jacob leading the investor relations team and leveraging his 15+ years of experience in investing and operating self-storage facilities.

Here are some power takeaways from today’s conversation:

[06:21] Self-storage performance during economic uncertainty

[13:18] Considerations for acquisition or development decisions

[26:07] Consider your financial goals when investing in storage and other fund vehicles

[27:55] Why analysis for storage is complicated

[29:07] The changing landscape of storage rents

[31:56] The pros and cons of the fund to the LP

Episode Highlights:

[26:07] Consider Your Financial Goals When Investing in Storage or Other Private Fund Vehicles

When investing in storage or other private fund vehicles, consider your financial goals. Quick exits for high IRR and low multiples may be appealing, but relying on short-term exits in the current market conditions requires caution. The past trends of compressing cap rates, rising rents, and low cost of capital may not be sustainable. Instead, focus on long-term cash flow, depreciation benefits, and potential capital appreciation. Seize opportunities without banking on immediate sales and be prepared for a longer investment horizon.

[29:07] The Changing Landscape of Storage Rents: A Cautionary Tale

When evaluating storage investments, it's important to be cautious about relying on historical rental rates. Traditionally, investors would analyze T12 rental data, but with evolving consumer demand, this approach is no longer reliable. Acquisitions are now based on more recent data and current market conditions. For example, in Lakeland, Florida, there has been a softening in the market, leading to anticipated rent decreases. It's crucial to access up-to-date information and adjust expectations as historical benchmarks may not reflect the current landscape of storage rents.

[32:56] Exploring the Pros and Cons of Single Asset Syndication and Funds for LPs

Single asset syndication provides control and focus for investors who prefer choosing specific deals and markets. However, if an investment underperforms, there are no other sources of value creation to offset the negative performance. Funds, on the other hand, offer geographic and cash flow diversification through multiple properties, balancing out underperforming investments with successful ones. LPs have limited say in deal selection and market decisions in funds and may face challenges such as filing multiple state tax returns. While single asset syndication allows for precise deal selection, it carries higher risk. LPs should consider their preferences and risk tolerance when deciding between these investment options.

Resources Mentioned:

VanWest Partners

Email: jacob@vanwestpartners.com

Use this for book links: https://www.leftfieldinvestors.com/books/

Avoiding Rookie Errors as a Left Field Investor: 20 Lessons Learned From 14 Years of Passive Investing in Private Syndicationsby Steve Suh

Advertising Partners:

139. Investing in Uncertain Times with Eric Sussman Oct 22, 2023

Show notes

Learn practical ways to analyze deals and business plans during volatile times. In this episode, real estate investment expert Eric Sussman joins us as we cover a wide range of topics including the current state of the economy, inflation, interest rates, distressed assets, and evaluating sponsors. Eric's engaging commentary and wealth of experience offer valuable lessons for both new and experienced passive investors.

About Eric Sussman

Eric Sussman is a founding partner of Clear Capital, a real estate investment firm with over 25 years of experience. Eric has deep knowledge of commercial real estate across multiple property types and markets. He publishes a highly informative quarterly newsletter sharing his insights on macroeconomic trends and their impact on real estate.

Here are some power takeaways from today’s conversation:

[04:06] Eric’s career path

[07:40] Economic uncertainty and its impact on markets

[11:11] The debt market

[17:28] US dollar's global dominance and potential challengers

[23:46] Distressed real estate

[26:31] The importance of investing with experienced sponsors

[29:38] Evaluating sponsors' experience in real estate investing

[32:07] Banking crisis, capital calls, and sponsor responsibilities

[37:51] Investing in multifamily real estate

Episode Highlights:

[11:11] The Debt Market

Eric provides insight into challenges in the debt market. He notes rising interest rates have caused losses for banks on fixed-rate loans and treasuries. Variable rate loans are also affected as borrowers face higher rates upon reset. Banks have higher funding costs from increased deposit rates. Lending activity has declined significantly. Some banks may face further difficulties depending on their loan portfolio composition between fixed and floating-rate loans. This uncertainty in the debt market is impacting real estate transaction volumes and refinancing opportunities as lenders take a more cautious approach during this period of rate volatility and unknown economic impacts.

[23:46] What is Distressed Real Estate?

Eric explains that the term "distressed" doesn't have a fixed definition, but it generally refers to situations where cash flow is insufficient to cover debt levels. Even performing assets could become distressed if they were sold or refinanced today due to rising interest rates. Lenders assess each situation individually based on factors like the sponsor, business plan execution, and guarantor strength, so they are unlikely to own all multifamily properties.

[26:31] The Importance of Evaluating Sponsors

Investing with experienced sponsors who have a personal stake in the game is crucial for success. Clear Capital firmly believes in this philosophy. As investors, it's essential to consider the expertise and financial commitment of our sponsors. According to Eric, by aligning their capital with the sponsors, they minimize uncertainty and increase the likelihood of successful execution. Therefore, keep a close eye on our chosen sponsors and ensure they deliver on their promises.

Resources Mentioned:

Clear Capital

Connect with Eric Sussman on LinkedIn

Avoiding Rookie Errors as a Left Field Investor: 20 Lessons Learned From 14 Years of Passive Investing in Private Syndicationsby Steve Suh

Advertising Partners: