First Real Estate Syndication – Mobile Home Park in Colorado

A lot of people would think I’m crazy to invest $50,000 in a mobile home park I’ve never been to, located over 1,000 miles away from where I live, with a team of people I’ve never met in person, at the height of the COVID-19 pandemic.

And they might be right.

More Than Money

However, I think I will look back on this decision and see it as an excellent one that greatly contributed to wealth generation for my wife and I. But that is just one way in which it will benefit us. This is my first foray into the real estate syndication world, and thus far, I have a seemingly insatiable desire to learn as much as I can about the process. In the real estate context, a syndication is a method of investing in which multiple investors pool money together to purchase an asset. This is commonly used for assets like apartment complexes, self-storage facilities, and mobile home parks. I’m listening to syndication podcasts and reading articles every day. I’m having conversations with individuals in my mastermind about it and consuming as much as I can on the topic. So even if the deal doesn’t work out as well as I think it will, I am GUARANTEED to learn a great deal from the process.  

I had a conversation a few weeks ago with a gentleman in my mastermind group who has much more syndication experience than I do – which isn’t saying much! He said the sponsors (the team of individuals who are doing the actual work in the syndication) will send out quarterly statements with information on how the property is performing. He said that just by reading this information, I will be ahead of most investors. Apparently, not only do most investors not read these documents, most don’t even open this email. This is baffling to me. Wouldn’t you want to know how your investment is performing? Then again, people throw lots of money at the stock market and have no idea about the companies or funds in which they invest.

Invest in People, Not Deals

One thing I’ve learned so far is when you invest in a syndication, you’re not investing in the deal, you’re investing in the people doing the deal. The numbers make sense, and I wouldn’t do it if they didn’t, but the team and their actions and character will likely determine the success or failure of the venture. I found out about the opportunity through Stu. I have purchased two turnkey properties through his company and both have been great experiences. I trust Stu and David (his business partner) completely, so when Stu sent me an email about the mobile home park, I knew this would be a good opportunity even before I read the specifics. Literally the day before I received his email, I was reflecting on how much money I had saved during deployment and wondered “what am I going to do with all this cash?” Stu’s email seems serendipitous in retrospect.

Stu and David are only two of the people on the syndication’s team though. I asked Stu how he knew the others on the team and if he trusts them. He said he has known the lead sponsor – Byron – for over 3 years and trusts him completely. If Stu trusts him then I do too, but I still felt like I had more work to do before I wired the money.

Due Diligence

As part of my personal due diligence process, I reached out to Byron – the “Chief Vision Officer” who is overseeing the syndication. I had a number of questions for him, and not only did he respond within a few hours, the responses were excellent and significantly increased my confidence. I also read his bio which mentions his experience as an attorney, business owner, and the work he has done in other real estate syndications. A key element of his bio that jumped out at me was his 24 years of service as an Army officer. Though this alone is not indicative of someone who will manage a syndication well, it does indicate to me that he can be trusted, he has integrity, and he will work hard to accomplish a task. Prior military service – especially over two decades worth – speaks a lot about someone’s character, in my opinion. After reviewing his biography and reading his thorough email response, I decided I would wire the $50,000 and commit to the deal as an investor.

These early steps and due diligence just reinforce what I have heard about the importance of relationships and networking. Your net worth is determined by your network. I feel thankful I have developed such a network around me to help me as I begin this journey, and I will continue to grow my network regularly – to help myself and to help others.

Look out for my quarterly updates on my first syndication deal. Thanks for reading and please let me know your thoughts in the comments section below.

3 Reasons Turnkey Properties are Great for Military Investors

It was only a few years ago that I started to learn about real estate. I listened to the Bigger Pockets podcast regularly (I still do), and I still reference Bigger Pockets books when I have questions about real estate fundamentals such as managing properties or finding tenants. One of these books in particular was integral in my “lightbulb” moment: “Long Distance Real Estate Investing” by David Greene. The most significant takeaway for me was that I don’t have to live in the same place I purchase real estate. Around the time I finished this book, I listened to a Bigger Pockets episode featuring a guy named Stu that also worked in Naval Aviation who was the co-owner of a turnkey real estate company called Storehouse 3:10 Ventures. I didn’t know much about turnkey, but Stu certainly did and he seemed like a good dude so I reached out to him. Fast forward three years, and I own two properties purchased through Stu’s company, and I’m an investor in a mobile home park syndication partially sponsored by Stu and David his business partner.

Many service members recognize the value in real estate as a wealth-building tool, but don’t have the experience or knowledge to get started. The turnkey real estate investing model is perfect for these individuals. I have purchased two homes using this model, and I’m on a waiting list to buy a third in a few months.

You may not always decide where you live, but you can decide where you invest!

What is Turnkey?

Turnkey real estate providers purchase homes, rehabilitate them, and sell the homes to investors. Sometimes these companies also provide property management – these are usually called full-service turnkey providers. When done correctly, this is a win for all involved: it provides a cash-flowing property from day one to the investor, it puts money in the pocket of the turnkey provider, and it provides a newly rehabilitated home to the tenant.

Let’s take a look at 3 reasons why turnkey is a great option for military investors.

  1. Location – Invest Where the Numbers Make Sense

Military folks move a lot – usually every 2-3 years – to locations that aren’t always conducive to long-term real estate purchases. Sometimes the numbers just don’t make sense! When I moved to San Diego in 2018, the type of home I wanted to buy would have rented for less than the mortgage payment, so I didn’t buy a home and chose to rent instead. This is common in high cost of living markets (HCOL) with military bases like Hawaii, San Diego, and Washington, D.C. However, you can purchase turnkey rental properties from anywhere in the world. I purchased two rental properties in Milwaukee, Wisconsin from San Diego – having never set foot in the state of Wisconsin. A friend of mine is on a waiting list to buy a turnkey property, and he and his family are about to move to Japan! Not everyone will be comfortable doing this, but it just shows what is possible if you have a team with people you trust.

2. Price – Turnkey Properties Typically Cost Less than the Average Home

The average home price in the U.S. is typically around $200,000. You can buy a turnkey property for as low as $75,000 depending on factors like location, size, number of bedrooms, etc. You can also obtain a conventional, 30-year fixed rate home loan with 20% down (plus closing costs). That means you can acquire a cash-flowing real estate asset for around $15,000. This makes it a (relatively) affordable real estate investment, which most money-conscious military members should be more than capable of saving towards. It may take some time, but it will be money well spent, and you have much more control over this asset than money in your TSP or IRA. Also, many service members go on deployments to combat zones. This is a fantastic way to save a large amount of money since your expenses will likely be very low, and there’s the added benefit of combat pay, hazardous duty pay, imminent danger pay, sea pay, etc.

3. Simplicity – Turnkey is a Simple, Low-Stress Way to Get Started in Real Estate

When you mention ‘real estate investing’ most people think about home flipping because of all the HGTV shows. Flipping homes for profit is a lot of work, even if you aren’t performing the improvements yourself. You have to identify properties with numbers that make sense, then you have to build a team! You need to find a reliable general contractor, a proactive real estate agent, and money lenders that believe you will provide them a return while also making the project worth your own time and money. Turnkey providers have this system in place already so you can continue your day job in the military weaving that red, white, and blue blanket of freedom for Americans and others around the world. Also, you will learn a great deal about real estate investing by owning a turnkey property, including due diligence when purchasing a property, basic bookkeeping, and interacting with your property manager about tenants, property repairs, and more! Most real estate investors start out in the ‘single family home’ asset class because it is relatively simple and easy to grasp for beginners. Turnkey can be a fantastic gateway to the highly lucrative world of real estate.

Trust is the Key

A crucial element in investing in turnkey properties is ensuring that you completely trust the team you send your hard-earned money to. There are many sub-par turnkey providers out there just looking to make a quick buck. Many investors have lost a lot of money to unethical or incompetent turnkey companies, so make sure you research the company, get references, thoroughly read the purchase agreement, inspections, and appraisals, and do not hesitate to back out of the deal if something doesn’t seem right.

BONUS – You Can’t Use your VA Loan to Purchase a Turnkey Property

Since the Veterans Administration requires you to live in a home you purchase using the VA home loan, you can’t use your VA home loan to purchase a turnkey property. This means you need some cash saved up for a down payment, and you need pretty good credit. But don’t worry if you don’t have either of those yet, just continue to spend less than you earn, pay your bills on time, and your personal balance sheet will quickly start to improve!