PassivePockets: The Passive Real Estate Investing Show

In today's episode, which was originally released in November 2021, we feature Dan Bartholomew, a financial advisor and friend of Jim Pfeifer, who was new to passive investing in syndications. After listening to the podcast for a couple of months, he had accumulated a list of questions for Jim, which led to this informative episode where each question was discussed in detail. This is the perfect episode for those just starting out in passive investing and struggling to comprehend some of the common terms used in the LFI community. This episode is often used as a resource for new investors. This episode is being republished because all the topics discussed are still relevant today. So sit back, relax, and enjoy this throwback episode from 2021!Here are some power takeaways from today’s conversation: The difference between bonus depreciation and cost segregation Cash-on-cash return vs. IRR return How to screen out the metrics you don’t like Understanding the different types of deals Class A vs. Class B Why a triple-net lease makes sense Selling a property or holding it Episode Highlights:[06:48] Bonus Depreciation vs. Cost SegregationCost segregation and bonus depreciation are both tax strategies that allow for accelerated depreciation of assets. Cost segregation involves conducting a study on a property to identify personal property separate from real property. This allows for the separate components to be depreciated over five, seven, or ten years, rather than the typical 27.5-year straight-line depreciation for residential properties and 39 years for commercial properties. On the other hand, bonus depreciation is a provision in the 2017 Tax Cuts and Jobs Act that allows for a 100% depreciation deduction in year one for assets that could only be depreciated at 50% or lower percentages. While this provides a large tax deduction in year one, it also leads to depreciation recapture when the asset is sold. This means that the deferred depreciation is added back to the gain from the sale and taxed at a higher rate of 25%. However, reinvesting the proceeds in a new syndication can offset the recapture and the tax deferral can continue, similar to a 1031 exchange.[12:28] Cash-on-Cash Return vs. IRR ReturnThe cash-on-cash return for ATMs is 25%, which is higher than the typical 6-12% for most syndications. However, it's important to note that ATMs are different from other assets because they don't have any returns at the end as the asset depreciates and isn't sold like an apartment complex. Cash on cash return is calculated by dividing the annual cash flow by the capital invested, while the Internal Rate of Return (IRR) takes into account the time value of money and looks at the total return on investment over time. In typical real estate deals, the IRR is higher because the annual returns are compounded over the life of the investment and there are sales proceeds that contribute to the return of capital. However, with ATMs, there is very little return on capital and virtually no sales proceeds, which is why the cash-on-cash return may be higher than the IRR. Overall, ATMs are an outlier in terms of their unique characteristics compared to other assets.[34:48] Navigating Investment Priorities and Tax Advantages in Real Estate SyndicationsSyndicators often prioritize either cashflow or appreciation in their deals, although it's common to have elements of both. It's worth noting that some syndicators utilize tax advantages such as cost segregation and bonus depreciation while others do not, so it's important to ask about this when evaluating an investment opportunity. While taxes shouldn't be the sole reason for investing, it's vital to speak with the sponsor to determine whether the investment is geared towards cashflow or appreciation. Typically, if the pro forma shows a smaller early-year cash-on-cash return with a larger gain projected in the future, it's an indication that the investment is focused on appreciation

This week’s guest was Infielder Eric Hertica. Eric has worn a few hats on his journey to passive investing but is excited to have found a community to network with and get educated on the space. Eric had some good advice for those that are looking at syndications and hopes to continue to diversify in the syndication space. Check out the recording! If you enjoyed the podcast and would like to subscribe to our mailers, please use this link to get on our mailing list: https://leftfieldinvestors.com/subscribe/.To see the full show notes and transcript, click here. Our sponsor, Tribevest provides the easiest way to form, fund, and manage your Investor Tribe with people you know, like, and trust. Tribevest is the Investor Tribe management platform of choice for Jim Pfeifer and the Left Field Investors’ Community.Tribevest is a strategic partner and sponsor of Passive Investing from Left Field.

Building a successful startup takes more than just a great product idea and a talented team. It also requires careful management of resources, effective decision-making, and a thorough understanding of the market and competition. In this episode, Shelly Hod Moyal shares her insights on venture capital and investing strategies, addressing key concepts like managing dilution and diversification, balancing personal investing requirements with potential returns, and determining whether a deal is a good deal. Learn how to maximize returns and manage risks in venture capital investing with expert advice from Shelly Hod Moyal, co-founder and co-CEO of iAngels.About Our GuestShelly Hod Moyal is a finance and investing expert, having built her career on Wall St. prior to co-founding iAngels. As the co-CEO, she works with global investors to invest in some of Israel’s best startups. As a GP and Kellogg MBA alumna, Shelly holds numerous board positions and is actively involved in bringing value to iAngels portfolio companies. Living in Tel Aviv, Shelly and her husband have 4 children, and as a passionate art aficionado, Shelly is a member of Yedidim at Bat Sheva and Tel Aviv Museum of Art, as well as Laniado HospitalHere are some power takeaways from today’s conversation: Defining venture capital  Managing dilution and diversification Balancing personal investing requirements with potential returns Determining allocation  to a down round Discerning if a deal is a good deal Offsetting the write-offs Episode Highlights:[08:43] What is Venture Capital and How It WorksAs an investor, investing in different rounds of a company involves taking different risks and potentially earning different returns. The earlier the round, the more risk and potential for high reward there is. Dilution is a common issue that requires reinvestment to maintain ownership percentage. Venture capital investments are illiquid and require a long-term mindset that entails holding onto the investment until the company goes public or gets acquired to receive returns. To protect ownership percentage, anti-dilution provisions can be negotiated.[12:38] Managing Dilution and Diversification in Venture Capital InvestingVenture capital investing requires a careful consideration of dilution and diversification to minimize risk and maximize returns. Each round of funding dilutes your percentage of ownership by approximately 25-30%, and investing in individual companies carries a high failure rate. Building a diversified portfolio and keeping funds available for follow-on investments can help manage these risks. It's important to remain defensive in situations where you need to protect your investments and to invest in around 20 companies to reduce risk.[18:21] Balancing Personal Investing Requirements With Potential ReturnsInvestors may agree with the value of a company but choose not to invest based on their personal investing requirements, risk tolerance, and potential for returns. It's common for angel investors to stop investing when the valuation becomes too high or if they are already heavily invested in a particular opportunity. Ultimately, the decision to continue investing in a venture capital opportunity requires weighing the potential risks and returns against your investment goals. Resources Mentioned:https://www.iangels.com/

This week, Infielder Pat Wills joined me on the podcast to share some highlights of the website improvements that we have implemented. Listen in to learn about all of the enhancements that have been made to LeftFieldInvestors.com. There have been improvements to the forum, more flexibility for users, and lots of improvements to the structure which will allow the community to continue to grow without the need of overhauling our site again for a while. We are very excited about these improvements. If you enjoyed the podcast and would like to subscribe to our mailers, please use this link to get on our mailing list: https://leftfieldinvestors.com/subscribe/.To see the full show notes and transcript, click here. Our sponsor, Tribevest provides the easiest way to form, fund, and manage your Investor Tribe with people you know, like, and trust. Tribevest is the Investor Tribe management platform of choice for Jim Pfeifer and the Left Field Investors’ Community.Tribevest is a strategic partner and sponsor of Passive Investing from Left Field.

Collections aren't just for show and tell: they can investment as well as a passion project. The collector's community is rapidly growing, and now might be the time to leverage the market potential to turn your hobby into a smart investment strategy. In today’s episode, Jim Pfeifer interviews Rich Vinhais, CEO of WAX Insurance Services, a company specializing in the collection and protection of rare items. As the collector's community expands and becomes more main stream, Rich offers valuable insight on how to turn a collectors passion into an investment strategy. He delves into the unique world of collecting and how it is becoming an investment space that differs from traditional passive investing. Tune in now and learn all about the collectors’ community and how you can get involved!  To see the full show notes and transcript, click here.Our sponsor, Tribevest provides the easiest way to form, fund, and manage your Investor Tribe with people you know, like, and trust. Tribevest is the Investor Tribe management platform of choice for Jim Pfeifer and the Left Field Investors’ Community.Tribevest is a strategic partner and sponsor of Passive Investing from Left Field.Love the show? Subscribe, rate, review & share! https://leftfieldinvestors.com/podcast/

This week on the LFI Spotlight, I was joined by fellow LFI Founder Ryan Stieg. Ryan shared his journey from being in the insurance business to an accidental landlord. Ryan talked about getting involved in Turnkey real estate investing and them migrating to the syndication space eventually. He gave good advice around taking action and networking. Check out the rest of the episode! If you enjoyed the podcast and would like to subscribe to our mailers, please use this link to get on our mailing list: https://leftfieldinvestors.com/subscribe/.To see the full show notes and transcript, click here. Our sponsor, Tribevest provides the easiest way to form, fund, and manage your Investor Tribe with people you know, like, and trust. Tribevest is the Investor Tribe management platform of choice for Jim Pfeifer and the Left Field Investors’ Community.Tribevest is a strategic partner and sponsor of Passive Investing from Left Field.

Success is not found in comfort, but in the boldness to pursue your passion. In this episode,  J Scott shares his journey from flipping houses through apartment syndication. He shares how he and his wife left the corporate world and jumped in to flipping houses and how they built their business from there. Along the way, J wrote The Book on Flipping Houses which has sold over 350,000 copies worldwide and he recently released his latest book, Real Estate by the Numbers. In this episode, he offers valuable insights into the strategies and lessons he has learned along the way, including always being open to new opportunities and diversifying your investments. Tune in to this episode to learn from J’s expertise and experience in the world of real estate.To see the full show notes and transcript, click here. Our sponsor, Tribevest provides the easiest way to form, fund, and manage your Investor Tribe with people you know, like, and trust. Tribevest is the Investor Tribe management platform of choice for Jim Pfeifer and the Left Field Investors’ Community.Tribevest is a strategic partner and sponsor of Passive Investing from Left Field.Love the show? Subscribe, rate, review & share! https://leftfieldinvestors.com/podcast/

This week’s episode features a spotlight on Tribevest, one of LFI’s Preferred Partners. Tribevest is a collaborative, group investment platform that enables friends and family to organize as an investor group, pool money, and manage joint investments. Brittany Barchalk, the Head of Marketing at Tribevest, joined us to talk about enhancements they’ve developed with their product this year.  First, the Open Tribe concept was rolled out earlier this year which allows for a Tribe to be formed by the community but managed by the team at Tribevest instead of one of the community members. This is a great asset so that all the participants in the Tribe can remain passive as it pertains to the Tribe itself. Additionally, Brittany shares the roll out of a new product the Tribevest Wallet. This allows for much easier fund transfers for those that are in multiple Tribes and should reduce the number of wires needed with investment through those Tribes. Lastly, Brittany mentioned a new enhancement that will be coming to the community soon called Pro-Tribe. More details to come on this as the development finalizes. If you would like to connect with Brittany, you can reach her at brittany@tribevest.com or you can find anyone on the team at their website https://www.tribevest.com/. If you enjoyed the podcast and would like to subscribe to our mailers, please use this link to get on our mailing list: https://leftfieldinvestors.com/subscribe/.To see the full show notes and transcript, click here. Our sponsor, Tribevest provides the easiest way to form, fund, and manage your Investor Tribe with people you know, like, and trust. Tribevest is the Investor Tribe management platform of choice for Jim Pfeifer and the Left Field Investors’ Community.Tribevest is a strategic partner and sponsor of Passive Investing from Left Field.

The world of investing is so vast that choosing an asset class can be a challenge in itself, especially when you’re considering becoming a passive investor. But if you are a fan of investing in an emerging asset class, then you should consider short-term rentals. In this episode, Jim Pfeifer interviews Sief Khafagi, the Co-founder of Techvestor—a company that helps people passively invest in short-term rentals. Merging tech in the business, Sief introduces an easier path for people to invest in this asset with a focus on higher cash flow and achieving lifestyle by design. He shares with us the origin story of Techvestor, how they build their portfolio, and how their processes are set up for investors. He then dives deep into why investors should consider investing in short-term rentals and how to do it effectively in a passive way along with different properties. In an ever-changing market, you need an asset class that is durable. Don’t miss out on this conversation to find out why short-term rentals can be that for you!To see the full show notes and transcript, click here.Our sponsor, Tribevest provides the easiest way to form, fund, and manage your Investor Tribe with people you know, like, and trust. Tribevest is the Investor Tribe management platform of choice for Jim Pfeifer and the Left Field Investors’ Community.Tribevest is a strategic partner and sponsor of Passive Investing from Left Field.Love the show? Subscribe, rate, review & share! https://leftfieldinvestors.com/podcast/

Episode 37 of the LFI Spot Light features Infielder Mike Abramowitz. Mike's journey includes working in several entrepreneur businesses and getting to a point where he coaches struggling entrepreneurs to a better structured business. Mike is developing his passive wealth to help support his ventures and has some good tips for those that are developing their wealth as well. If you enjoyed the podcast and would like to subscribe to our mailers, please use this link to get on our mailing list: https://leftfieldinvestors.com/subscribe/.