Matthew MacFarland and Amanda Han are regular CPA and not full -time real estate investors.Matthew Macfarland and Amanda Han’s consent
CPP Amanda Han and Matthew MacFarland lost about $ 50,000 for a failed real estate deal.
They invested in real estate syndication by proper decent inspection.
This did not deter them from these transactions, which can generate passive income, but they are approaching them differently.
CPP Amanda Han and Matthew MacFarland has been working with real estate investors for many years to help them save taxes.
However, working with investors and actually investing in very different, as accountants have learned a difficult path.
The couple in California created an impressive real estate portfolio, which includes rental and syndication transactions, not their CPA day jobs. However, in early real estate career, a mistake cost them about $ 100,000 in pension savings.
“I think each of us lost as $ 50,000 in 401 (K),” MacFarland told Business Insider about a failed agreement they had invested in 2008.
“We are very common in the human industry in terms of self-directed IRA and use your retirement accounts, so it happened that we used our pension accounts to invest in a syndicated real estate agreement,” he explained. “From retrospectively, time was horrible.”
It wasn’t just a bad time. Han and MacFarland – A critical step: due diligence.
Real-Estate syndication is a way to combine your capital group and acquire one property owned by the “syndicator”. When the investor contributes to capital, their role in the transaction becomes completely passive, as the syndicator is responsible for finding a transaction, operation of the operation and, finally, the return to investors.
The nature of these transactions is a great investor with more money than time, but you are very confident in the syndicator and depending on their expertise. You invest both in the transaction and the person managing it. And while a good syndicator can turn a mediocre asset successful, bad can ruin a great opportunity – or drain your pension savings in the case of Han and MacFarland.
They met a syndicator through a colleague and “we trusted that he knew what he was doing,” MacFarland said. Looking back, they would have spent much more time for the inspection process.
Simple first step when checking syndicators are to enter their first and last name into Google along with keywords such as “fraud”, “complaints” or “sec” You can also talk to investors who have previously worked with them and ask about their experience.
“You may find a lot of things you didn’t know about something,” Han said.
Han and MacFarland are invested in a number of syndications that allow them to have larger real estate that they cannot buy separately. They have apartments, apartments and mobile home parks between 16 passive syndicating transactions.
Another transfer is the distributions, which are payments that investors earn from the income received from the assets. Usually, investors get paid every quarter or monthly through the transaction life, but it all depends on how the agreement is concluded.
“It’s like running a gamut. You see many different things,” MacFarland explained. “However, a typical cash flow agreement, you expect to start quarterly distributions after the first year. However, some are in such a way that they are valuable and that the stabilization of property will take two to three years.”
With experience in both active and passive real estate investments, “I don’t think there is one that is necessarily better than the other,” Han said. “It just depends on your resources: do you have more time or have you have more money?”
It also depends on your strengths and weaknesses.
“We have customers who make their own rent and they are doing very well. They create a much greater return than any syndication could give,” she said.
In the current phase of Han and MacFarland, passive real estate investments make more sense.
“When we started the first time, we were poor in cash and were really looking for real estate where we could add forced evaluation to rehabilitation and improve them,” Han said. “But now we are in the stage where we have young children and it only takes a lot of time.”
If a proper lease arrangement was to take place, they would still jump on it, but “more of our resources are now for passive investments in larger transactions,” she added. “Because the restriction for us now is not that great funding. It’s more of a time.”
In addition, they acknowledge that their main strength is still a tax strategy.
“We are really good at tax strategists – this is our specialty – and we know that there are people who invest real estate that are much better than us, so it makes sense to use their competence,” MacFarland said, adding: “We’re doing proper diligence now.”
