How It Works
When you invest passively through real estate syndications (group investments), you don’t have to deal with any tenants, toilets, or termites. You get all the benefits of investing in real estate (cash flow, equity, and tax benefits) without the time commitments needed to be a landlord.
Follow our four step process described below, and start making a positive change in your life today.
Join the Cobiant Investor Network™
Apply to join our FREE investor network.
As a member we will help you:
Define the level of monthly income required for you to live a lifestyle that works for you and your family; some refer to this as your “rat race” number.
Define your minimum requirements for a comfortable retirement.
Determine what it will take for you to reach your cash flow and retirement goals.
Work with you to make it happen!
Additionally, FREE personal agility coaching is available for all of our members.
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Connect With Us
After you have been accepted as a member of our network you will receive a welcome email that will include a link to setup a call with our Director of Investor Relations. He will personally welcome you to our family, brief you on our process, answer questions and serve as your single point of contact going forward. After, you will begin to receive regular updates from us via email. If you ever have additional questions or concerns, you are always welcome to setup a call with us via your provided link.
Once we have both decided that investing together is a good fit, we will begin to share our passive investing opportunities with you. You can then freely pick and choose which, if any, you would like to invest in as well as the amount. We want you to feel comfortable with the entire process and will work with you to make the right decision on the investment opportunities that are the best fit for you. After you invest with us, we will partner together for years, so it important that we really get to know each another on the front end. We are highly dedicated to building a strong, trustworthy relationship with each of our investors.
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Invest With Us
Once you become a member of our investor network you will have the opportunity to invest alongside us. Typically, the minimum investment is $50,000. Therefore, you can invest any amount at or above $50,000, usually in increments of $5,000.
Did you know that you can invest in real estate syndications with money that is in your 401(k)? You would need to first roll those funds over into what is known as a self-directed IRA account. Setting up a self-directed IRA is pretty straight forward.
Our process is probably best described by using an example. Let’s say we have found an amazing investment opportunity, have done a great job negotiating with the seller and they are willing to sell their apartment complex for $8,000,000. We need $2,000,000 for the down payment and $1,000,000 for renovations to improve the property. All together we need $3,000,000.
We, the sponsor team, decide to form a syndication and bring the opportunity to our investors. We put $50,000 into the deal, you put in $100,000, another investor puts in $75,000 and so forth and so on until we reach $3,000,000. Everyone that puts money into the deal would be the passive investors. We, the sponsor team, would be the active investors because we will continue to have an active role in managing the project. In this example, since we also put money into the deal, we would not only be active investors (as the sponsor team) but also passive investors just like you. Another bonus, because the loan is well over a million dollars, we were able to secure a non-recourse loan. By the way, we typically secure non-recourse loans for our syndications.
The sponsor team will then work with our attorney to create an LLC. You and the other passive investors, along with the members of the sponsor team, will all join the newly created LLC. The sponsor team members will be listed as General Partners while the Passive Investors would be included as Limited Partners for the LLC.
Additionally, the sponsor team will engage a syndication attorney to create a private placement memorandum that defines how the investors are tied to the investment, the risks involved, etc.
Because the LLC is a pass-through entity you will get the benefits of direct ownership in the real estate asset. This is far superior to investing in a Real Estate Investment Trust (REIT). When you put money into a REIT you don’t have any ownership in a property whatsoever. Investing in a syndication has nothing to do with REITs; that is a source of confusion for some.
After we close on the deal it will be the responsibility of the sponsor team (i.e. our Asset Manager) to work with the Property Manager, as well as the renovation team, to manage and improve the property. You as a passive investor don’t have to deal with any of the hassles of being a landlord. You simply cash checks.
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As a passive investor you will collect regular cash flow distributions while also building for retirement. What kind of returns can you expect? Well as you can imagine, they will vary based on the particular investment opportunity.
Let’s use an example to provide a general benchmark as to what you can expect. Assume you have decided to invest $100,000 in a real estate syndication to purchase an apartment complex with:
a projected 5-year hold
annual cash flow returns of 10 percent
a 2.2X equity multiple
average annual return of 24%
With a projected annual cash flow of 10 percent, you should expect to get 10 percent of your original investment back each year. That means you would receive $10,000/year or about $833/month. Over the 5-year period that comes out to $50,000 in total cash flow returns.
Then there is profit from the sale of the property in year five. With an equity multiple of 2.2X you are projected to more than double your investment (220 percent to be exact) over the course of the 5-year hold time (i.e. when you add up the cash flow plus the profit from the sale).
Therefore, by the end of the 5-year hold period you would have received your original $100,000 back, plus $50,000 in cash flow during that time, plus $70,000 in profits from the sale of the property for a total of $120,000 in profit. Your original $100,000 would have turned into $220,000 over the course of 5 years. Another way to look at it would be to take your $120,000 in profit and divide it by the 5-year holding period giving you $24,000/year or an average yearly return of 24%.
The regular cash flow can serve to support you or at least augment your monthly income from your current job as you transition to your new career. With enough investments you could choose to completely step away from your old career. Finally, the $70,000 you receive at disposition can be reinvested into your retirement portfolio, whether into another syndication, stocks, bonds or other.
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Frequently Asked Questions
What is the difference between a Story and a Task?Various agile frameworks, and agile software solutions, aren’t always consistent on the Story/Task/Subtask hierarchy. This can certainly lead to some confusion. Within the context of the Cobiant Personal Agility Framework™... A Story uses words to describe an objective that (if met) would be effective in reaching a goal. It is written in a format that succinctly captures the "who", "what" and "why" of a request. A Story focuses on the user as the subject of interest and are value centric. While Stories are about definition, tasks are about implementation. Tasks answer “how” the Story will be completed, should be outcome oriented and are typically sized so that they require no more than a day or so to complete. Our framework doesn’t use Subtasks.
What is context switching and why should it be avoided?Context switching (a.k.a. multitasking), depending on the number of activities you juggle at once, can consume up to 80% of your productivity. While the immediate cost of context switching may seem small, the compounded impact can be enormous. This concept applies to any sized body of work.
What is a WIP limit and why does it matter?While context switching kills productivity, there is power in sustained attention. Work in Progress (WIP) limits are used to define a maximum amount of work that can be executed at one time (i.e. in parallel). If followed, WIP limits are a great way to improve overall productivity.
How does your personal agility framework define a body of work?As you would find with traditional and scaled agile solutions, the Cobiant Personal Agility Framework™ includes Epics, Stories and Tasks. But in an effort to simplify the framework and design it to work better at a personal level, our definitions and the way we use them are slightly different. An Epic describes a measurable goal. It represents a large body of work that can be broken down into a number of objectives called Stories. Epics should always align with your personal Vision. A Story describes an objective, requirement or small project written from your personal perspective that usually contributes to the completion of an Epic. Stories briefly describe what you want to do and why you want to do it. A Story should be written in a way that will help you estimate the work needed to complete the objective. A Task is the smallest decomposed step required to complete a Story. Tasks should be outcome oriented and since they describe an action they often begin with a verb.
Does your Personal Agility Framework provide sizing guidelines?Agile is a framework not a methodology. Agile purest would suggest sizing should be completely up to the team, or in this case, the individual. With that being said, most of our audience is new to these concepts and as such probably would appreciate a starting point. Therefore, our recommendation for starting out is as follows: Several tasks could be required to complete a Story and should be sized small enough that you could complete one or more each day. A Story should be sized so that it takes no longer than a week or two to complete. Typically, you would never commit to more than a few Stories over the course of a single week. Epics should be sized much larger with the expectation that no more than two or three would be completed each quarter. As you gain more experience with the framework you should feel free to stretch and shrink these as needed for your particular situation.
What is the 80/20 rule?The 80/20 rule (a.k.a. Pareto Analysis) is a technique used to narrow down the number of actions that produce the most significant overall effect. The 80/20 rule leverages the principle that 20 percent of time and effort spent usually produces 80 percent of the desired output. The message here is that you should focus your effort only on activities that produce the greatest value. For example, don’t waste time surfing the internet or messaging friends unless it truly helps you meet your goals.
What does it mean to split Stories, and should I do it?"If you find that some of your Stories would produce a lot of value but are prioritized lower in your backlog because they are large, you may consider splitting them into two or more smaller Stories. After, try reprioritizing your backlog of Stories and you may find at least one of them ranks higher. This is a great exercise to help you to remain focused on the most important portion of your original Story first. Later, as you add more and more Stories to your backlog, the portion of the original, larger Story (now captured in a smaller Story) might not be important enough to complete after all. If you follow our prioritization rules you will naturally prioritize your smaller, higher value Stories at the top of your backlog. In turn, you will work/complete your higher value objectives first.
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"Life On YOUR Terms"
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