Alex Birch, co-founder of Veritas Equity Partners, recounts his personal real estate investing history prior to managing syndicated multifamily funds.
Prediction Not checkable as stated
Pandemic-era Sunbelt syndications face underwater debts and forced cash-in refinances
“Where we're sitting right now is a lot of those purchases, 20, 20, 21, 22, their debts come and do and they're underwater. Like they're going to have to do what's called a cash in refinance. Which is a capital call to their investor base, which is not good.”
Insight
Short-term rental revenue premiums are eliminated by high turnover and management costs
“The Delta just isn't really there for like the management burden that it creates, you know, so you can look at a unit and say, Hey, we're going to get two grand a month in rent for this two bed, one bath. And we could get three grand or 3500 bucks a month if w…”
Assertion Not checkable as stated
Veritas audited historical returns average an unusually high 30% to 31% annually
“Like our historical average is stupid high. It's like 30, 31% a year. When we go back and audit our deals, it's really high.”
Insight
Floating-rate debt is the primary way real estate investors lose everything
“The only way to really lose your shirt in this game is bad debt strategy, you know, getting into something that's too variable or too floating or assuming that rates are going to come down or whatever, and then buying deals with those assumptions.”
Insight
Executing a 1031 exchange in a syndication requires unanimous limited partner participation
“There's a little more nuance when you have like a syndication, you know, with an investor base, if we have 15 LPs in a deal all 15, basically, the whole group needs to go to the next deal.”
Insight
Real estate investors should execute deals at 80% certainty on fundamentals
“The biggest lesson, I guess, that I had is once you're about 80% sure, you know, just go, you know, like just go do it. Like it's, you're never going to feel a hundred percent on anything. It's not going to be perfect. But as long as you're doing the fundament…”