Discuss Latest WCI Blog Post: Where to Save $100K for Private Real Estate – Podcast #198

[The White Coat Investor]

If investing in private real estate is right for you, where do you park your money in the meantime? Also talking financial habits for med students, deep risk of devastation, and lots more.

The post Where to Save $100K for Private Real Estate – Podcast #198 appeared first on The White Coat Investor - Investing & Personal Finance for Doctors.



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[runfast00]

DLP sounds like a good company. I'm thinking about a 100k investment in their real estate fund.

An investment for me would represent <8% of net worth and would also be consistent with my written investment plan. I own real estate directly through an LLC. In addition I have a small investment in VNQ.

However, I have two questions for those that have invested with DLP in the past.
1) I have heard nothing but positive experiences with DLP, does anyone have any negative experiences to share? I would believe a positive: negative ratio for comments of 9:1 or 9.5:1. But there is part of me that is suspicious if I only hear positive remarks.

2) Has anyone had an experience investing DLP within their self directed 401K? I have a self-directed 401k through mysolo401k and I am weighing investing in taxable account vs i401k account. Anything I am missing.

[uteomfs]

"The better real estate investments, at least the passive ones, are the private real estate funds."

This is the first sentence in the article. If I'm not mistaken (I believe I can find the chart), but Public REITS have outperformed Private REITS over the long term.

Additionally, you can currently buy Public REITS at quite a discount to NAV, in the private market it seems we are paying a premium.

Lot's to consider with this. These crowdfunding platforms have allowed alot of Novice investors to hook up with a lot of Novice syndicators. I have a feeling this isn't going to end real well.

[The White Coat Investor]

DLP sounds like a good company. I'm thinking about a 100k investment in their real estate fund.

An investment for me would represent <8% of net worth and would also be consistent with my written investment plan. I own real estate directly through an LLC. In addition I have a small investment in VNQ.

However, I have two questions for those that have invested with DLP in the past.
1) I have heard nothing but positive experiences with DLP, does anyone have any negative experiences to share? I would believe a positive: negative ratio for comments of 9:1 or 9.5:1. But there is part of me that is suspicious if I only hear positive remarks.

2) Has anyone had an experience investing DLP within their self directed 401K? I have a self-directed 401k through mysolo401k and I am weighing investing in taxable account vs i401k account. Anything I am missing.

I wouldn't look for negative comments that are specific to DLP. They've had a great run but it's only been 7-15 years (depending on how you count). I would consider the negatives of the entire asset class and investment structure to be more important. But you're right, not many negatives out there. I don't think I've heard one. Would you like to find some advertisers with more negative press? That's pretty easy to do actually.

If you're going to do the Lending Fund, your SD401k is a good place. I'd stick the housing fund in taxable.

[Tangler]

I enjoyed the podcast. DLP sounds almost too good to be true. Double digit returns. never had losses (or not yet if I heard correctly).

I worry that there might be something I am missing here or some hidden risk. I might invest, if my wife gets on board but she has been skeptical of these types of investments.

Anyway, thanks for the info!

[Romberg45]

I enjoyed the podcast. DLP sounds almost too good to be true. Double digit returns. never had losses (or not yet if I heard correctly).

I worry that there might be something I am missing here or some hidden risk. I might invest, if my wife gets on board but she has been skeptical of these types of investments.

Anyway, thanks for the info!

I listened to the podcast today too, and I had some major red flags going up when I heard that. The CEO made it sound like a risk free 10-12% per year investment, which is something that made me pause.

[MedSchoolDad]

I listened to the podcast over the weekend (Sat), and clicked on the WCI link to DLP. I quickly got an email from Michael Krawchuk at DLP that included links to:

DLP Equity Housing Fund
DLP Debt Lending Fund
DLP Secure Accreditation Link

I'm used to researching stocks/etfs/mutual funds, so I spent a fair amount of time reviewing the data from the Housing Fund, and compared it to public information on the properties in the fund. After a couple of hours of reading, comparing, and trying to run a risk analysis, I have come to the conclusion that I need to learn more about private investing and real estate investing in general.

Even though I’m not going to invest right now, I want to publicly thank DLP for sending the detailed information and WCI for introducing me to an area I should learn more.

[The White Coat Investor]

I listened to the podcast today too, and I had some major red flags going up when I heard that. The CEO made it sound like a risk free 10-12% per year investment, which is something that made me pause.

It's definitely NOT risk-free. The risk has not shown up in the past, but it's not risk-free.

I think Larry Swedroe said if you see something with a higher yield it is because the risk is higher, whether you can see the risk or not,.

Aside from manager/company/scam/fraud risk, the main risk with these investments is that your debt fund becomes an equity fund. Your loans are only backed by the properties, not the FDIC or the Treasury Department. These aren't treasury bonds or CDs. If the properties drop 30-50% in value, the borrowers start mailing in the keys to the lenders. So the lender better be capable of handling those properties (including upgrades or even building if it is a ground up project) until the market improves in a year or ten.

[PHANTASOS]

For the person worried about his widow's taxes once he dies: don't forget to have her file an estate tax return to preserve the spouse estate tax exclusion “portability.” Even if it doesn't matter when you die, it might be relevant by the time she dies (her estate could grow, the estate tax exemption could shrink, etc.)

[CFEonline]

2) Has anyone had an experience investing DLP within their self directed 401K? I have a self-directed 401k through mysolo401k and I am weighing investing in taxable account vs i401k account. Anything I am missing.

I'm curious about investing through a custom i401k with checkbook control as well.