{"id":32852,"date":"2015-10-30T11:13:06","date_gmt":"2015-10-30T15:13:06","guid":{"rendered":"http:\/\/www.technologyinvestor.com\/?p=32852"},"modified":"2015-10-30T11:13:06","modified_gmt":"2015-10-30T15:13:06","slug":"residential-syndications-have-charms","status":"publish","type":"post","link":"https:\/\/www.technologyinvestor.com\/?p=32852","title":{"rendered":"Residential syndications have charms"},"content":{"rendered":"

“My financial adviser doesn’t produce this stuff.”<\/p>\n

I heard that from several investors sitting in on the two meetings this week on residential real estate syndications.<\/p>\n

Their syndications, which are in the sunbelt states and Texas, pay regular 7% to 9% dividends and much more when they’re sold, or re-financed. They’re individual property syndications.<\/p>\n

They’re not funds — I hate funds. Funds are like buying a pig in the poke. Some good properties. Some not so good. Too much urgency to fill the fund. Too many “filler”\u00a0 properties they might not buy as standalone. That “logic” goes for all funds — private equity, leveraged buyout, etc.<\/p>\n

There’s a nice tailwind behind investing in residential renting:<\/p>\n

+ Echo boomers (18-34 year old children of baby boomers making households.<\/p>\n

+ High student debt means less money to buy houses.<\/p>\n

+ Huge boom in non-traditional households — i.e. LGBT.<\/p>\n

+ Huge labor mobility as the youngens travel seeking work. My kids are everywhere, except with their daddy. And all their friends are everywhere also. Not with their daddies and mommies. Good for renting them apartments. Good for airlines. Good for Apple’s FaceTime. Bad for grandparents who exist to babysit, but can’t babysit thin air.<\/p>\n

There’s serious investment work here. These syndicators eye 100+ properties to buy one. They improve the places with fancy kitchens, nice clubhouses, higher rents and better borrowings.<\/p>\n

The two syndicators I saw this week: Waypoint Residential. Click here<\/strong><\/a>. And Beachwold Properties. Click here.<\/a><\/strong> Go to their web sites. Check them out. I have money with both. I’m happy with both. Don’t listen to me, please. Do your own due diligence.<\/p>\n

They’re hyping October as “big gains” in stock markets.<\/strong><\/span> Take it in context. Here’s the S&P500 for the year, so far:<\/p>\n

\"S&P500YTD2\"<\/a><\/p>\n

I don’t know why it went down so dramatically. And I don’t know why it went up so dramatically.<\/p>\n

The October rebound means the S&P is now up 1.5% this year.<\/p>\n

Buying an index fund, sticking with it and closing your eyes to all the headlines means your nestegg would have stayed intact.<\/p>\n

If you had tried be clever and bet on some hot stocks you would not be in great shape:<\/p>\n

\"PandoraYTD\"<\/a> \"VRXYTD\"<\/a><\/p>\n

Yet, had you simply stuck with a bunch of hyper-popular, hot (overpriced) stocks you’d have done well. Examples:<\/p>\n

\"GOOGLYTD\"<\/a> \"AMZNYTD\"<\/a> \"PricelineYTD\"<\/a><\/p>\n

Or you could stick with a couple of my favorites:<\/p>\n

\"NIKEYTD2\"<\/a> \"HDYTD\"<\/a><\/p>\n

There are some lessons.<\/p>\n

+ Panic is bad. Don’t freak out as often as I do.<\/p>\n

+ Stop losses work, but sometimes you get a big bounce and you get hurt. On balance, big drops mean big disasters and should be sold instantly — e.g. Pandora and Valeant.<\/p>\n

+ To repeat, disasters like Pandora and Valeant are best to get away from the minute they happen. They’re Cockroach Stocks. Remember them?<\/p>\n

+ The big hedge fund mavens can be wrong. Really wrong. This year was a banner year for hedge fund closures. A lot of hedge funds own this year’s big disasters, like Valeant.<\/p>\n

+ When in doubt, diversify out of stocks into real estate. (See above.)<\/p>\n

+ Sometimes it pays to your grit your teeth, turn off bubblevision (CNBC, etc.), and play tennis.<\/p>\n

+ Never, ever, ever accept stock tips from your friends. My “friends” have happily provided me with my biggest losses of this year. Their explanation? “Sh*t happens. It is the way it is.” Thank you friends for your profound philosophy.<\/p>\n

+ Don’t believe that gold is a great hedge. It’s been totally awful this year — uncorrelated to anything, except going down.<\/p>\n

\"SGOLThisYear\"<\/a><\/p>\n

You can now raise equity capital for your growing company on a crowdfunding Internet site. <\/strong><\/span>But it won’t be cheap money. Founder Rod Turner of Manhattan Street Capital came to visit and told me they’re now open for investors and for companies to invest in. Their web site is here.<\/a><\/strong> You won’t find any companies to invest in, yet. But it is open to accredited and “mainstreet” (non-accredited) investors. They will charge their companies 8% cash and 8% in warrants — which, to my brain, is very expensive. For that money they do a little due diligence and help the company with advisors. They’re looking for “mid-sized companies and select start-ups raising $2 – $50 million using Reg A+.”<\/p>\n

RegA+ is the new SEC rules for raising money via crowdfunding for mainstreet investors. It’s a new form of gambling.<\/p>\n

Personally I’m off investing money in private companies. I’m too old. I can’t afford to wait forever for a “liquidity event.”\u00a0 Most entrepreneurs would prefer to keep their company — not sell it and not go public. Too many value the job that my or your money provided them.<\/p>\n

Favorite, silly images:<\/strong><\/span><\/p>\n

\"Tresspass\"<\/a><\/p>\n

\"Toothbrush\"<\/a><\/p>\n

Thoughts for the weekend<\/strong><\/span><\/p>\n

+ First, get your facts right. Then distort them at your leisure. — Mark Twain<\/p>\n

+ When I was a boy I was told that anybody could become President; I’m beginning to believe it. — Clarence Darrow<\/p>\n

+ Politicians are people who, when they see light at the end of the tunnel, go out and buy some more tunnel. — John Quinton<\/p>\n

\"HarryNewton\"<\/a><\/p>\n

Harry Newton who wonders if anyone has discovered the secret of staying awake during presidential “debates.” They’ll make a fortune.<\/p>\n

P.S. Watch out for fake emails from Ben Carson peddling books and drugs. This one is fake.<\/p>\n

\"BenCarsonsAmerica\"<\/a><\/p>\n