How to Get Higher Returns with Real Estate Syndication | Ep. 263

Intro/Outro: You know what it is? That’s right. It’s time to talk money with your money nerd and financial coach. Now tighten those purse strings and open those ears. It’s the money talk with Tiff podcast.

Tiffany Grant: Hey everyone. I’m excited because I have Stephanie Walter on the line. Now, Stephanie’s here to talk to us about something I’ve never talked about on the podcast.

Before, and that’s real estate syndication. Now I know a lot of you all are interested in real estate, so I’m interested in talking to her about this new type of investing. So, Hey, Stephanie, how are you?

Stephanie Walter: I’m great. Thank you so much for

Tiffany Grant: having me. Thank you so much for coming on. Um, so let’s just hop right into it.

What is real estate syndication?

Stephanie Walter: Real estate syndication is simply like a group of people that decide to buy a piece of real estate together. And, uh, it’s usually a bigger piece of real estate than any of them could do on their own. Uh, so I, I found out. Myself about this concept in 2016. And I just love the whole idea, the whole concept.

So essentially there are professional, you find a professional team with a track record that runs the deal or finds the deal, uh, does all the due diligence and underwriting and presents it to their investors. And then the investors come on as limited partners. Um, and. I don’t know how they come up with, with the particular names, but the limited partners provide the investments and the, and then they don’t have any responsibilities at all.

When it comes to managing the property, uh, the professional team reports to back to the investors every month along with With us anyways, it’s a, it’s a monthly, a distribution payment that you get every month. So usually the returns are much better than, um, anything like a REIT. A lot of times people compare this to a REIT, um, but the returns are usually between 15 and 20 percent a year.

Tiffany Grant: Very cool. So when it comes. to real estate syndication, now that we have a baseline, how do they find these people? Or do you all come together as like friends or how does this work? Does the company like seek out people? How do you get in? Well, this is

Stephanie Walter: interesting because in this, the way of doing things changed dramatically in 2012 prior to 2012.

If you wanted to get into a syndication, you had to have a prior. Would have had to have a prior documented relationship with someone. So I could only show these deals to my friends and family, um, which really led to this only being utilized by the very wealthy people say in a country club type of setting is what I usually say.

But in 2012, the jobs act was passed. Uh, in the Obama administration and basically a side effect, I’m not sure that they intended it to do this, but, uh, what they did is they allowed for crowdfunding, which is what we would call this. And therefore it released us to go out and talk to the general public, like, uh, You know, on your podcast today about this type of investing.

And so it’s become much more widely known, uh, since 2012, but it’s been around for hundreds of years, this type of investing. Very cool. So how

Tiffany Grant: does one qualify or do you have to qualify for something like this? Like if we had somebody that was listening right now and was like, Oh, I want to get on, on this, how would they go about doing it?

Well, there’s, for

Stephanie Walter: us, there are, these are where we, not all, but most of us, um, we communicate with the FCC and be sure that we’re compliant with the FCC. And, um, So in order to do that, we file what’s called a 506 C, which doesn’t mean anything to anyone other than we need to have accredited investors in our deals with an accredited investor is someone that has a net worth of a million dollars or and or they can qualify based on income for a single person that’s 200, 000 or for a married couple that’s 300, 000.

Um, there are other people that provide a different type of this type of investment called a 506B and in, in those particular, um, Um, you know, those particular deals, you don’t have to be accredited, but, um, usually, you know, you, you can kind of look around.

Tiffany Grant: Gotcha. Gotcha. Okay. So in order to get into real estate syndication, at least in you all’s group, you have to be an accredited investor.

And we kind of went over what those qualifications look like. And so if someone was like, okay, I haven’t made the accredited investor status yet. That’s How, what are some ways that you can, you know, recommend to kind of get there?

Stephanie Walter: Well, they could definitely qualify for a 506B and usually some of those people that provide those, um, you know, you always have to do due diligence, but those are really, you know, getting those same type of returns, 15, 20 percent returns every year, um, will get you there pretty quickly.

Tiffany Grant: Gotcha. Gotcha. Now, let me just go ahead and preface by saying, well, not really preface. I should have said this first, but this is not investing advice. This is for informational and entertainment purposes only. So, you know, don’t go out and be like, well, Tiffany and Stephanie said, no, no, no, no, no, no. Um, we’re just trying to open your mind to some different ways that you can invest that most people don’t talk about.

So. Now that we know about real estate syndication, um, and you know, some of the things that are associated with it, are there any, like, have you ever had an issue with a syndication before? Or are there any things that we should be aware of?

Stephanie Walter: Yes, I’m for sure. Just I mean, in this day and age, I mean, for years, probably from 2010 to 2020, a multifamily and will interest rates were historically low.

And everything was just going gangbusters. Um, then we hit a little thing called COVID and that was, uh, that definitely some people had issues as far as, um, baby being in the wrong, uh, market. Uh, if they had invested, let’s say they had invested in multifamily, well, in certain states, uh, across America, the states, you know, the governments were saying you didn’t have to pay your rent and then they weren’t able to get back out at work.

Um, so that could be a pretty, um, devastating thing for someone that’s running a multifamily. Um, you know, investment and for us, we, we invested really heavily in florida. That’s just where my partner is, was located. And that’s just where we’ve managed to do most of our investing. So multifamily in florida wasn’t affected nearly, um, as bad as in some other states.

Um, so it’s really important to. Uh, you know, have a group of people that can show you their track record of success. So for us, we’ve done 12 deals and, um, you know, we have, haven’t had any issues. Um, You know, of not paying our investors or giving them less than what we said we would. Um, but that, that is definitely a concern of, uh, investing in single fam or in, in multifamily properties, just the same as you really want to, you know, get to know the group, be sure that they have a lot of experience and that’s, that’s huge.

And also a lot of experience in the market. That they’re talking to you about, um, because the markets right now we’re finding are, you know, fairly important, you know, there’s a lot of growth. We, we always do a real deep dive. Thank goodness for the internet. Um, but you can, you can search everything, even you as an investor.

Like if you look up, say Tallahassee, Florida, you can go into Wikipedia. It’ll show you. You know, the demographics in the area, it’ll show you the, um, the growth, uh, it’ll show you the industries, um, that are, you know, like there, it’s important that you’re investing in a. In a city that’s growing and has many different industries, like Tallahassee has universities, hospitals, it’s a gov.

It’s the capital of Florida. So there’s all the government employees. So it’s, it’s important that say the city isn’t leaning on just one type of industry and also that there’s projected growth population growth, which in Florida is kind of a no brainer right now because. They’re growing all over the place.

I love

Tiffany Grant: that. I love that. And that’s definitely some things that I never thought about before. Um, you know, looking at what type of you know, companies or things are investing in a city before you invest in it yourself. Um, and you know, just thinking about cause I’m in Greensboro, North Carolina and we have a lot of manufacturing plants coming so like Toyota, Um, boom, supersonic, just, uh, opened and everything.

And so I’m looking and I’m like, okay, it’s a lot of different industries, but they’re all in manufacturing. So, you know, we are a college town. We have a bunch of colleges here, but apparently manufacturing is a big thing. But I’m also like, what else?

Stephanie Walter: You know, what else? Yeah, no, it’s it’s great. You can learn so much from the Internet.

It’s crazy. I mean, you can just pretty much look up. I mean, anytime we’re looking at a new market, we deep dive. And then we also actually, if you call the city, they’re incredibly helpful. Uh, it’s called the economic development department. And you call them and you just be like, Hey, who’s, are there any things that you guys have planned?

Like, are there any new companies moving here? Or they’ll even talk to you about, are they doing any infrastructure there? Any parks? Are they, you know, are there just really what’s going on in that particular city? So, and they’re usually, they love to talk to you. So, wow. I

Tiffany Grant: never, I never, wow. I never knew that.

I never knew, you know, that you could call a city and say, well, what y’all got coming up?

Stephanie Walter: Yeah. And it’s super helpful because you don’t want to invest in a place that, you know, does it. Have the growth, you know, the future growth and I, I think North Carolina, I don’t know much about Greensboro, but I know that North Carolina always comes up as a definite positive growth state, but you know, you got to look at all the, all the cities.

Tiffany Grant: Right, right. And I can definitely see that because a lot of, um, people from up north usually come down here. Um, I mean, I did, you know, when I was younger, so I can definitely see a lot of growth and the cost of living is really low too. So that attracts a lot of people. Um, so I’m going to do some research in my local area and see, you know, what I can come up with.

Stephanie Walter: It’s fun. I, I, I, it’s one of my favorite parts of my job. Nice,

Tiffany Grant: nice. So, um, with that being said, I know you have a book that is coming out. Um, so can you tell us a little bit about it?

Stephanie Walter: Yeah, it’s called Shattering Money Myths. And, uh, I wrote it, um, Because my, my primary job is I raise money for big, these big commercial syndications.

And as such, I work with normal people. Um, but I also work with very, very wealthy people. And I, by working with them over the last few years, I saw, you know, and noticed that they do things differently with their money than what I was doing with my money. And I kind of, it took a while because. You know, it’s not that apparent.

And eventually I kind of figured out some of the things they were doing. And I changed my mindset and my focus and removed my money around similar to, to what they were doing with their money. And as such, I was able to replace my, I was in my prior life, an insurance agent, and I was able to sell that business in 2021 and essentially.

I guess retire, but, um, I, I’m so passionate about, you know, telling people about these, you know, shattering these myths that we believe about money to empower people to take control of their money and to have a, have a better life. And so I wrote that this book as a result of it, Oh, last year. I love

Tiffany Grant: that.

I love that. So just to give the audience a little sneak preview, not everything, but what are a couple of the money myths that you learned that you talk about in the book?

Stephanie Walter: Uh, I think some really good money myths are, uh, are just surrounding the mindset about money that wealthy people have. They tend to look at their money as, um, Utilization is the word I use.

So they think of it, they think of their money as an employee of theirs. Like, what are you doing for me right now? Type of thing. Um, so they’re constantly, you know, knowing what their money is doing and wanting the money to do their investing in tangible. Intangible realists are in not only real estate, but in just tangible things like businesses, um, real estate, things that don’t necessarily go up and down like the stock market where you don’t have any control.

Um, and that’s different than the way that most of us look at money, which is accumulation, which is, we just. We’re the squirrel working to get that money saved in our 401k. And, um, but if you ask anyone about their 401k, they. Largely don’t know what they’re invested in for one. Or, uh, I think I, uh, that might be in my book that 92 percent of people that have a 401k think they’re not being charged any fees.

And quite often these fees are really significant. So I talk a lot about. Not necessarily, you know, getting rid of the 401k, but moving your money around into something that will have much less fees and therefore could probably save you 10 years of working. So, you know, just, just stuff like

Tiffany Grant: that. Nice, nice.

Well, you definitely have our mouths watering now. So, so if people were interested in finding out more about you or the book or even about how they should start looking at money as an employee, where could they find

Stephanie Walter: you? They can go to my website, which is, uh,

www. airbaywealtherbewealth. com. And, um, I’m giving the, I’m, the book just came out and I’m, um, for the podcast that I go on, I’m offering free copies of it. So either free downloads or free, um. physical books. Um, if you go there and, and that’s where you can connect with me. Um, you can schedule a time to talk or, or anything like that.

Nice.

Tiffany Grant: Awesome. So what I will do is I’ll have a giveaway for this book. So if you are listening, um, to this episode, uh, make sure that you’re checking the show notes. So that way you can enter the giveaway. If. This sounds interesting to you. And I’ll also have all of the other information that Stephanie, um, shared with us just now with how to reach her on in the podcast show notes as well.

So if you’re cooking, um, you know, listening and doing something else, check the show notes. You don’t have to write it down. It’s all there. So thank you so much, Stephanie, for coming on the show today. Oh,

Stephanie Walter: thank you so much for having me. I appreciate

Tiffany Grant: it. All right. Have a good one.

Stephanie Walter: Bye. All right. Bye.

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