PassivePockets: The Passive Real Estate Investing Show

Latest Episodes:

120. Passive Investing Masterclass - Part 2 Jun 11, 2023

Show notes

It's the final week of our three-week Back-to-Basics program, and we're excited to bring you part two of our exclusive Masterclass on passive investing. In partnership with Tribevest and their Chief Storyteller, Julian McClurkin, we're here to share everything you need to know about building wealth through passive investing. Last week, we discussed the basics of passive investing, including what is a syndication, the pros and cons of passive syndications, and the crucial topic of how to choose a sponsor.

About Julian McClurkin

Julian McClurkin has literally traveled the world throughout his professional basketball career supporting and entertaining families and communities. Leveraging his engagement and relationship-building skills, Julian now joins Vision Realty, having built a diverse portfolio in real estate sales, investing, and renovations.

Here are some power takeaways from today’s conversation:

[07:11] The safest class to invest in

[09:48] How to pick a syndicator

[15:41] How to choose a deal you want to invest in

[17:30] How to analyze a deal

[23:28] The process of investing in a syndication

[26:39] What to do during the syndication process

[31:44] How tribes work and why they work

[40:27] The process of forming a tribe

Episode Highlights:

[07:11] What is the Safest Class to Invest In?

A common phrase you often hear is that everyone needs a place to live, right? So investing in multifamily apartments or mobile homes where there's always a demand for housing might seem like the safest option. However, it's important to remember that all of these are tangible assets, not just pieces of paper. Real estate and most of these assets generally carry less risk than other types of investments, but that doesn't mean there's no risk involved. For instance, resort investing, retail, and office space immediately after the pandemic may be riskier, while assisted living facilities may require waiting for demographic changes to make them profitable. It's crucial to conduct thorough research and invest in what you're comfortable with. Start there and then slowly branch out as you gain more knowledge and experience.

[09:48] How to Pick a Syndicator

When selecting a syndicator, it's crucial to align your investment strategy with the asset class you choose. If you're aiming for significant tax write-offs, investing in ATMs might be a good option, while others may not yield the same benefits. As you gain more knowledge and experience in the syndication space, you'll discover various asset classes that you didn't know about before, enabling you to select the right one for your current strategy. Always figure out what you're looking for and diversify your portfolio accordingly, but don't diversify for the sake of it. Ensure that you have a sound strategy in place for accumulating your assets and how they all work together to achieve your goals.

[17:30] Metrics to Look For When Evaluating a Deal

To analyze a deal, you need to ensure that you have the right sponsor, asset class, and market. These are the crucial aspects that can make or break an investment. At Left Field Investors, we've created a deal analyzer tool that considers 30 different metrics and turns green if the deal meets our parameters or red if it doesn't. Red flags don't necessarily mean you should avoid the deal, but they do generate questions that you should bring up with the sponsor. This is another way to assess their responsiveness and ability to provide detailed answers, which can indicate how well they will handle the investment. For example, if you get five red flags, contact the sponsor and ask questions. Pay attention to their response time and level of detail. A good sponsor will give you detailed answers and be responsive, which can help build trust and confidence in the deal. By focusing on the metrics of the deal analyzer and checking on the sponsor, you can effectively vet the deal and make an informed investment decision.

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:

https://www.tribevest.com/partners/lf

IS43 - LFI Spotlight With Peter Leung Jun 07, 2023

Show notes

Today, my guest was Peter Leung. Peter shared his story, which started early on by migrating to the US from China and being homeless for a short period of time. Peter became very focused and motivated by this, and it sparked his journey to the success he has today. He now consults with college students to educate them on traditional financing and alternative investing, with a focus on value investing. Listen in to hear his advice about how important it is to have cash flow, not just cash.

If you enjoyed the podcast and would like to subscribe to our mailers, please use this link to get on our mailing list: https://leftfieldinvestors.com/subscribe/.

To see the full show notes and transcript, click here.

Our sponsor, Tribevest provides the easiest way to form, fund, and manage your Investor Tribe with people you know, like, and trust. Tribevest is the Investor Tribe management platform of choice for Jim Pfeifer and the Left Field Investors’ Community.

Tribevest is a strategic partner and sponsor of Passive Investing from Left Field.

119. Passive Investing Masterclass - Part 1 Jun 04, 2023

Show notes

In today's episode, we re-release our exclusive masterclass on building wealth through passive real estate investing. In partnership with Tribevest and their Chief Storyteller, Julian McClurkin, we covered passive investing in real estate.

This episode is a must-listen for anyone who wants to understand more about passive investing in real estate syndications. We delve into the basics of real estate syndications, the pros and cons of passive syndications, and most importantly, how to pick a sponsor. Whether you're a beginner investor or an experienced one, this episode will serve as an excellent refresher for you.

About Julian McClurkin

Julian McClurkin has literally traveled the world throughout his professional basketball career as a Harlem Globetrotter, supporting and entertaining families and communities. Leveraging his engagement and relationship-building skills, Julian now joins Vision Realty, having built a diverse portfolio in real estate sales, investing, and renovations.

Here are some power takeaways from today’s conversation:

[07:47] Why it would be better to invest in real estate than index funds

[10:20] Ways to spread the risk of investing

[15:13] Types of investors who qualify for syndication

[22:26] The process of investing in syndication

[26:27] Passive Syndications: pros and cons

[28:38] The tax benefits of syndication

[36:10] What the velocity of money means

[40:37] What “full cycle” means for investors

Episode Highlights:

[07:47] Real Estate Investing vs. Index Funds

Investing offers various options, one of which is index funds that can give good returns over time with minimal effort. However, investing in real estate provides steady cash flow via rental income and can force appreciation by improving the property, which is not possible with index funds. Real estate investors can benefit from the syndication operator who handles the process, allowing them to enjoy the perks of their investment. On the other hand, index funds bet on the value of paper assets and do not offer cash flow or dividends as in real estate investments.

[22:26] The Process of Investing in Syndication

Investing in syndication involves upfront due diligence, including vetting the sponsor and analyzing the deal using tools like a sponsor screener and deal analyzer. Once you've invested, you'll receive documents like a private placement memorandum and subscription agreements to sign. You then send the wire and wait for cash flow, receiving monthly or quarterly distribution checks and reports to keep track of the property's performance.

[26:27] Passive Syndications: Pros and Cons

Passive syndications have major advantages, such as the ability for investors to benefit from the experience and expertise of a syndicator, who acts as a sponsor or manager for the investment, allowing them to invest in larger deals. Syndicators may also use tax advantages such as cost segregation and bonus depreciation, which can help investors reduce their tax burden. However, passive syndications also have downsides, including the lack of control investors have over the asset and the lack of liquidity, which can tie up capital for several years without the option of selling the investment, making it challenging for investors who need access to their funds in the short term.

[28:38] The Tax Benefits of Syndication

When investing and making money, taxes are the biggest factor working against you. However, investing in real estate allows you to reduce, defer, or even eliminate almost all of the tax burden as the tax code is written to benefit real estate investors. Depreciation can be used to offset almost all of your passive gains, which means that if you invest in syndication correctly, you won't have to pay tax on any of the cash flows you receive, and it will be deferred, with recapture happening later. By investing in more syndications, your tax bill will go down significantly.

Resources Mentioned:

https://www.tribevest.com/partners/lf

IS42 - LFI Spotlight With Kyle Collette May 31, 2023

Show notes

Kyle Collette joined me this week on the LFI Spotlight to share his journey into the passive investing world. He shared several good pieces of advice for other investors to utilize in their process. Listen in to see how he has navigated the active investing world and has migrated into the passive.

If you enjoyed the podcast and would like to subscribe to our mailers, please use this link to get on our mailing list: https://leftfieldinvestors.com/subscribe/.

To see the full show notes and transcript, click here.

Tribevest is a strategic partner and sponsor of Passive Investing from Left Field.

118. Passive Investing 101: Understanding Bonus Depreciation, Cash-On-Cash Return & More May 28, 2023

Show notes

In today's episode, which was originally released in November 2021, we feature Dan Bartholomew, a financial advisor and friend of Jim Pfeifer, who was new to passive investing in syndications. After listening to the podcast for a couple of months, he had accumulated a list of questions for Jim, which led to this informative episode where each question was discussed in detail. This is the perfect episode for those just starting out in passive investing and struggling to comprehend some of the common terms used in the LFI community. This episode is often used as a resource for new investors. This episode is being republished because all the topics discussed are still relevant today. So sit back, relax, and enjoy this throwback episode from 2021!

Here are some power takeaways from today’s conversation:

The difference between bonus depreciation and cost segregation
Cash-on-cash return vs. IRR return
How to screen out the metrics you don’t like
Understanding the different types of deals
Class A vs. Class B
Why a triple-net lease makes sense
Selling a property or holding it

Episode Highlights:

[06:48] Bonus Depreciation vs. Cost Segregation

Cost segregation and bonus depreciation are both tax strategies that allow for accelerated depreciation of assets. Cost segregation involves conducting a study on a property to identify personal property separate from real property. This allows for the separate components to be depreciated over five, seven, or ten years, rather than the typical 27.5-year straight-line depreciation for residential properties and 39 years for commercial properties. On the other hand, bonus depreciation is a provision in the 2017 Tax Cuts and Jobs Act that allows for a 100% depreciation deduction in year one for assets that could only be depreciated at 50% or lower percentages. While this provides a large tax deduction in year one, it also leads to depreciation recapture when the asset is sold. This means that the deferred depreciation is added back to the gain from the sale and taxed at a higher rate of 25%. However, reinvesting the proceeds in a new syndication can offset the recapture and the tax deferral can continue, similar to a 1031 exchange.

[12:28] Cash-on-Cash Return vs. IRR Return

The cash-on-cash return for ATMs is 25%, which is higher than the typical 6-12% for most syndications. However, it's important to note that ATMs are different from other assets because they don't have any returns at the end as the asset depreciates and isn't sold like an apartment complex. Cash on cash return is calculated by dividing the annual cash flow by the capital invested, while the Internal Rate of Return (IRR) takes into account the time value of money and looks at the total return on investment over time. In typical real estate deals, the IRR is higher because the annual returns are compounded over the life of the investment and there are sales proceeds that contribute to the return of capital. However, with ATMs, there is very little return on capital and virtually no sales proceeds, which is why the cash-on-cash return may be higher than the IRR. Overall, ATMs are an outlier in terms of their unique characteristics compared to other assets.

[34:48] Navigating Investment Priorities and Tax Advantages in Real Estate Syndications

Syndicators often prioritize either cashflow or appreciation in their deals, although it's common to have elements of both. It's worth noting that some syndicators utilize tax advantages such as cost segregation and bonus depreciation while others do not, so it's important to ask about this when evaluating an investment opportunity. While taxes shouldn't be the sole reason for investing, it's vital to speak with the sponsor to determine whether the investment is geared towards cashflow or appreciation. Typically, if the pro forma shows a smaller early-year cash-on-cash return with a larger gain projected in the future, it's an indication that the investment is focused on appreciation

IS41 - LFI Spotlight With Eric Hertica May 24, 2023

Show notes

This week’s guest was Infielder Eric Hertica. Eric has worn a few hats on his journey to passive investing but is excited to have found a community to network with and get educated on the space. Eric had some good advice for those that are looking at syndications and hopes to continue to diversify in the syndication space. Check out the recording!

If you enjoyed the podcast and would like to subscribe to our mailers, please use this link to get on our mailing list: https://leftfieldinvestors.com/subscribe/.

To see the full show notes and transcript, click here.

Tribevest is a strategic partner and sponsor of Passive Investing from Left Field.

117. Balancing Risk and Reward: Key Takeaways from Shelly Hod Moyal's Discussion on Angel Investing May 21, 2023

Show notes

Building a successful startup takes more than just a great product idea and a talented team. It also requires careful management of resources, effective decision-making, and a thorough understanding of the market and competition.

In this episode, Shelly Hod Moyal shares her insights on venture capital and investing strategies, addressing key concepts like managing dilution and diversification, balancing personal investing requirements with potential returns, and determining whether a deal is a good deal.

Learn how to maximize returns and manage risks in venture capital investing with expert advice from Shelly Hod Moyal, co-founder and co-CEO of iAngels.

About Our Guest

Shelly Hod Moyal is a finance and investing expert, having built her career on Wall St. prior to co-founding iAngels. As the co-CEO, she works with global investors to invest in some of Israel’s best startups. As a GP and Kellogg MBA alumna, Shelly holds numerous board positions and is actively involved in bringing value to iAngels portfolio companies. Living in Tel Aviv, Shelly and her husband have 4 children, and as a passionate art aficionado, Shelly is a member of Yedidim at Bat Sheva and Tel Aviv Museum of Art, as well as Laniado Hospital

Here are some power takeaways from today’s conversation:

Defining venture capital
Managing dilution and diversification
Balancing personal investing requirements with potential returns
Determining allocation to a down round
Discerning if a deal is a good deal
Offsetting the write-offs

Episode Highlights:

[08:43] What is Venture Capital and How It Works

As an investor, investing in different rounds of a company involves taking different risks and potentially earning different returns. The earlier the round, the more risk and potential for high reward there is. Dilution is a common issue that requires reinvestment to maintain ownership percentage. Venture capital investments are illiquid and require a long-term mindset that entails holding onto the investment until the company goes public or gets acquired to receive returns. To protect ownership percentage, anti-dilution provisions can be negotiated.

[12:38] Managing Dilution and Diversification in Venture Capital Investing

Venture capital investing requires a careful consideration of dilution and diversification to minimize risk and maximize returns. Each round of funding dilutes your percentage of ownership by approximately 25-30%, and investing in individual companies carries a high failure rate. Building a diversified portfolio and keeping funds available for follow-on investments can help manage these risks. It's important to remain defensive in situations where you need to protect your investments and to invest in around 20 companies to reduce risk.

[18:21] Balancing Personal Investing Requirements With Potential Returns

Investors may agree with the value of a company but choose not to invest based on their personal investing requirements, risk tolerance, and potential for returns. It's common for angel investors to stop investing when the valuation becomes too high or if they are already heavily invested in a particular opportunity. Ultimately, the decision to continue investing in a venture capital opportunity requires weighing the potential risks and returns against your investment goals.

Resources Mentioned:

https://www.iangels.com/

IS40 - LFI Website Improvements Spotlight May 17, 2023

Show notes

This week, Infielder Pat Wills joined me on the podcast to share some highlights of the website improvements that we have implemented. Listen in to learn about all of the enhancements that have been made to LeftFieldInvestors.com. There have been improvements to the forum, more flexibility for users, and lots of improvements to the structure which will allow the community to continue to grow without the need of overhauling our site again for a while. We are very excited about these improvements.

If you enjoyed the podcast and would like to subscribe to our mailers, please use this link to get on our mailing list: https://leftfieldinvestors.com/subscribe/.

To see the full show notes and transcript, click here.

Tribevest is a strategic partner and sponsor of Passive Investing from Left Field.

116. From Whiskey To Watches: Investing In Collectables With Rich Vinhais May 14, 2023

Show notes

Collections aren't just for show and tell: they can investment as well as a passion project. The collector's community is rapidly growing, and now might be the time to leverage the market potential to turn your hobby into a smart investment strategy. In today’s episode, Jim Pfeifer interviews Rich Vinhais, CEO of WAX Insurance Services, a company specializing in the collection and protection of rare items. As the collector's community expands and becomes more main stream, Rich offers valuable insight on how to turn a collectors passion into an investment strategy. He delves into the unique world of collecting and how it is becoming an investment space that differs from traditional passive investing. Tune in now and learn all about the collectors’ community and how you can get involved!

To see the full show notes and transcript, click here.

Tribevest is a strategic partner and sponsor of Passive Investing from Left Field.

Love the show? Subscribe, rate, review & share! https://leftfieldinvestors.com/podcast/

IS39 - Ryan Stieg On The LFI Spotlight May 10, 2023

Show notes

This week on the LFI Spotlight, I was joined by fellow LFI Founder Ryan Stieg. Ryan shared his journey from being in the insurance business to an accidental landlord. Ryan talked about getting involved in Turnkey real estate investing and them migrating to the syndication space eventually. He gave good advice around taking action and networking. Check out the rest of the episode!

If you enjoyed the podcast and would like to subscribe to our mailers, please use this link to get on our mailing list: https://leftfieldinvestors.com/subscribe/.

To see the full show notes and transcript, click here.

Tribevest is a strategic partner and sponsor of Passive Investing from Left Field.

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