Does anyone ever read IHB anymore?

[usctrojancpa]

Larry is a smart guy, but the Vegas fund is a loss leader.

I may not be his number 1 fan but he is intelligent and had the gutts to go against the herd.  That being said, Vegas and Orange County are nothing alike so you he better know his way out there or he might step in some poop.

 

[IndieDev]

Larry is a smart guy, but the Vegas fund is a loss leader.

I may not be his number 1 fan but he is intelligent and had the gutts to go against the herd.  That being said, Vegas and Orange County are nothing alike so you he better know his way out there or he might step in some poop.

Yeah, he deserves respect.

But am I wrong or off? You have experience with the LV market. I did a cursory check of the numbers in LV about a month ago, and the margins for either fund option (flip or rent) don't look appealing to me. Maybe I'm missing something.

 

[usctrojancpa]

Larry is a smart guy, but the Vegas fund is a loss leader.

I may not be his number 1 fan but he is intelligent and had the gutts to go against the herd.  That being said, Vegas and Orange County are nothing alike so you he better know his way out there or he might step in some poop.

Yeah, he deserves respect.

But am I wrong or off? You have experience with the LV market. I did a cursory check of the numbers in LV about a month ago, and the margins for either fund option (flip or rent) don't look appealing to me. Maybe I'm missing something.

Well, I own 2 rentals in Vegas and the home that my dad lives in.  I'm upside down on the rentals but have positive cash flow so I'm not too worried.  I would think the returns should be higher too because there's more risk with Vegas real estate both in flipping and renting (not sure what if he is charging some kind of built in fee/s or profit for himself).  You have to be very careful of where the home is located in the Vegas Valley and to who you rent it out to.  It's a hit or miss out in Vegas...kinda like playing craps.

 

[Liar Loan]

Larry is a smart guy, but the Vegas fund is a loss leader.

I may not be his number 1 fan but he is intelligent and had the gutts to go against the herd.  That being said, Vegas and Orange County are nothing alike so you he better know his way out there or he might step in some poop.

Yeah, he deserves respect.

But am I wrong or off? You have experience with the LV market. I did a cursory check of the numbers in LV about a month ago, and the margins for either fund option (flip or rent) don't look appealing to me. Maybe I'm missing something.

What are the margins?  I'm not planning to invest.  Just curious.

 

[irvinehomeowner]

What makes LV a better cash-flow investment area than some of the OC fringes or even the IE? The gaming industry?

 

[rkp]

I was just wondering if he plans to stay active on the first since his posts seem to indicate he's moving into the cash flow investments via renting out the homes instead of flipping them.

my understanding is that both will be active.  SF1 feeds SF2 but i can be wrong.  not sure on the returns though. 

How confident are you that he understands the Las Vegas market?

i think well enough now.  its not hard to become very knowledgeable on an area and he has spent a ton of time physically there and studying the market.  to me, the investment was both in LV and larry.  i think he will work his butt off to do right and i expected some learning curves but the last few houses he has turned has done better.  i think the $25K i invested might be up 10% now.  its not amazing but i dont think thats bad either.

I did a cursory check of the numbers in LV about a month ago, and the margins for either fund option (flip or rent) don't look appealing to me. Maybe I'm missing something.

the initial numbers quoted for the flip fund had better returns than the actual.  some of the recent properties are getting closer to the projections.  completely agree on the flip fund.  it doesnt make sense to get less than 10%.  however owning a rental outright with a prop management in place seems to net over 10% so i think thats the better route. 

What makes LV a better cash-flow investment area than some of the OC fringes or even the IE? The gaming industry?

math ->  rent/property cost.  for OC fringes, i dont think you can get close to the CAP rates of LV.  i think IE offers great returns as well and should definitely be considered. 

 

[usctrojancpa]

What makes LV a better cash-flow investment area than some of the OC fringes or even the IE? The gaming industry?

Lower priced homes....it's all an analytical exercise. 

 

[usctrojancpa]

I was just wondering if he plans to stay active on the first since his posts seem to indicate he's moving into the cash flow investments via renting out the homes instead of flipping them.

my understanding is that both will be active.  SF1 feeds SF2 but i can be wrong.  not sure on the returns though. 

How confident are you that he understands the Las Vegas market?

i think well enough now.  its not hard to become very knowledgeable on an area and he has spent a ton of time physically there and studying the market.  to me, the investment was both in LV and larry.  i think he will work his butt off to do right and i expected some learning curves but the last few houses he has turned has done better.  i think the $25K i invested might be up 10% now.  its not amazing but i dont think thats bad either.

I did a cursory check of the numbers in LV about a month ago, and the margins for either fund option (flip or rent) don't look appealing to me. Maybe I'm missing something.

the initial numbers quoted for the flip fund had better returns than the actual.  some of the recent properties are getting closer to the projections.  completely agree on the flip fund.  it doesnt make sense to get less than 10%.  however owning a rental outright with a prop management in place seems to net over 10% so i think thats the better route. 

What makes LV a better cash-flow investment area than some of the OC fringes or even the IE? The gaming industry?

math ->  rent/property cost.  for OC fringes, i dont think you can get close to the CAP rates of LV.  i think IE offers great returns as well and should definitely be considered. 

What's Larry cut of the profit?

 

[rkp]

What's Larry cut of the profit?

i believe its 50% - i need to read through the docs but pretty sure that was the case.  i have looked at many offerings and have invested in other private businesses and 50% seems to be the norm.  it felt high to me but then again i am not doing the work.  have others invested in things like this?  what is the typical setup?

 

[usctrojancpa]

What's Larry cut of the profit?

i believe its 50% - i need to read through the docs but pretty sure that was the case.  i have looked at many offerings and have invested in other private businesses and 50% seems to be the norm.  it felt high to me but then again i am not doing the work.  have others invested in things like this?  what is the typical setup?

It does seem a bit high assuming he doesn't have any of his capital at risk.  I was thinking closer to 1/4 or 1/3 of the profits for his work.  Are these funds in the form of an LLC with distributions made regularly?

 

[LAtoOC]

The standard in the alternative space is the 2/20. 2% management fee and 20% performance fee. Some of the superstar managers charge up to 3/50 (RenTec, SAC, etc).

It is quite common that these funds have a "hurdle rate" so if Larry's margin is less than 8%, he collects no fees. If he is really getting 50% of each sale's profits with no clawback/hurdle, he has a great fund setup for himself.

There is a famous joke/book:
"An out-of-town visitor was being shown the wonders of New York City. When they arrived at the Battery, the guide who was conducting the tour pointed out the handsome yachts in the harbor. "Those are the yachts of the brokers and bankers," he said. "But where are the customers' yachts?" came the innocent reply. Cue raucous laughter. Of course there were no customers' yachts; their money had helped pay for the bankers' vessels."

 

[usctrojancpa]

The standard in the alternative space is the 2/20. 2% management fee and 20% performance fee. Some of the superstar managers charge up to 3/50 (RenTec, SAC, etc).

It is quite common that these funds have a "hurdle rate" so if Larry's margin is less than 8%, he collects no fees. If he is really getting 50% of each sale's profits with no clawback/hurdle, he has a great fund setup for himself.

There is a famous joke/book:
"An out-of-town visitor was being shown the wonders of New York City. When they arrived at the Battery, the guide who was conducting the tour pointed out the handsome yachts in the harbor. "Those are the yachts of the brokers and bankers," he said. "But where are the customers' yachts?" came the innocent reply. Cue raucous laughter. Of course there were no customers' yachts; their money had helped pay for the bankers' vessels."

Great points, if I were to create something like what Larry did I'd have some kind of hurdle rate and then create a tiered profit structure...similar to the federal tax table where the higher the % gain the more cut I would get.  I think this structure would better align Larry's incentives to those of his investors. 

 

[rkp]

The standard in the alternative space is the 2/20. 2% management fee and 20% performance fee. Some of the superstar managers charge up to 3/50 (RenTec, SAC, etc).

It is quite common that these funds have a "hurdle rate" so if Larry's margin is less than 8%, he collects no fees. If he is really getting 50% of each sale's profits with no clawback/hurdle, he has a great fund setup for himself.

There is a famous joke/book:
"An out-of-town visitor was being shown the wonders of New York City. When they arrived at the Battery, the guide who was conducting the tour pointed out the handsome yachts in the harbor. "Those are the yachts of the brokers and bankers," he said. "But where are the customers' yachts?" came the innocent reply. Cue raucous laughter. Of course there were no customers' yachts; their money had helped pay for the bankers' vessels."

i need to look closely at larry's docs but i know i have been getting ripped off in the other funds i have invested in!  what you say makes a ton of sense. 

even though i have been burned, i still like the idea of investing in a small venture.  there is something very appealing to being at the ground floor.  i might also be jaded by my father-in-law.  he came to the US in the late 70s and many indians were starting hotels and other small businesses.  friends would help in each others businesses with investments.  out of the 10 or so he made in the late 80s and early 90s, over half failed and he lost every thing, a few made money and 2 were rock stars.  there is one of them where he invested $10K to be 1/10 owner and through out 2000-2005, the profit sharing was over $100K a year!

any way, i am always on the look out for these private investments.  is there a website or clearinghouse where you can find more? 

 

[usctrojancpa]

The standard in the alternative space is the 2/20. 2% management fee and 20% performance fee. Some of the superstar managers charge up to 3/50 (RenTec, SAC, etc).

It is quite common that these funds have a "hurdle rate" so if Larry's margin is less than 8%, he collects no fees. If he is really getting 50% of each sale's profits with no clawback/hurdle, he has a great fund setup for himself.

There is a famous joke/book:
"An out-of-town visitor was being shown the wonders of New York City. When they arrived at the Battery, the guide who was conducting the tour pointed out the handsome yachts in the harbor. "Those are the yachts of the brokers and bankers," he said. "But where are the customers' yachts?" came the innocent reply. Cue raucous laughter. Of course there were no customers' yachts; their money had helped pay for the bankers' vessels."

i need to look closely at larry's docs but i know i have been getting ripped off in the other funds i have invested in!  what you say makes a ton of sense. 

even though i have been burned, i still like the idea of investing in a small venture.  there is something very appealing to being at the ground floor.  i might also be jaded by my father-in-law.  he came to the US in the late 70s and many indians were starting hotels and other small businesses.  friends would help in each others businesses with investments.  out of the 10 or so he made in the late 80s and early 90s, over half failed and he lost every thing, a few made money and 2 were rock stars.  there is one of them where he invested $10K to be 1/10 owner and through out 2000-2005, the profit sharing was over $100K a year!

any way, i am always on the look out for these private investments.  is there a website or clearinghouse where you can find more? 

I've actually been toying around with the idea of putting together a small hedge fund that trades options.  I had a 50%+ return last year and this year I'm up a bit over 30%.  I figured I'd need to show at least 3+ years of documented profits before people would think I was for real.  The plan would be to trade my money along with other people's money in an LLC trading account.  Still not sure if doing something like that is more trouble than it's worth and just continue to trade on my own.

 

[rkp]

The standard in the alternative space is the 2/20. 2% management fee and 20% performance fee. Some of the superstar managers charge up to 3/50 (RenTec, SAC, etc).

It is quite common that these funds have a "hurdle rate" so if Larry's margin is less than 8%, he collects no fees. If he is really getting 50% of each sale's profits with no clawback/hurdle, he has a great fund setup for himself.

There is a famous joke/book:
"An out-of-town visitor was being shown the wonders of New York City. When they arrived at the Battery, the guide who was conducting the tour pointed out the handsome yachts in the harbor. "Those are the yachts of the brokers and bankers," he said. "But where are the customers' yachts?" came the innocent reply. Cue raucous laughter. Of course there were no customers' yachts; their money had helped pay for the bankers' vessels."

i need to look closely at larry's docs but i know i have been getting ripped off in the other funds i have invested in!  what you say makes a ton of sense. 

even though i have been burned, i still like the idea of investing in a small venture.  there is something very appealing to being at the ground floor.  i might also be jaded by my father-in-law.  he came to the US in the late 70s and many indians were starting hotels and other small businesses.  friends would help in each others businesses with investments.  out of the 10 or so he made in the late 80s and early 90s, over half failed and he lost every thing, a few made money and 2 were rock stars.  there is one of them where he invested $10K to be 1/10 owner and through out 2000-2005, the profit sharing was over $100K a year!

any way, i am always on the look out for these private investments.  is there a website or clearinghouse where you can find more? 

I've actually been toying around with the idea of putting together a small hedge fund that trades options.  I had a 50%+ return last year and this year I'm a bit over 30%.  I figured I'd need to show at least 3+ years of documented profits before people would think I was for real.  The plan would be to trade my money along with other people's money in an LLC trading account.  Still not sure if doing something like that is more trouble than it's worth and just continue to trade on my own.

what kind of $$$ would you want to raise?

 

[irvinehomeowner]

I like rkp... he'll invest in you if he believes in what you are doing.

Too bad I don't have any good Ponzi... err... investment ideas.

@rkp: I don't remember if you mentioned it, but do you have an investment broker?

 

[rkp]

no investment broker and yes, i must sound a bit naive.  as much as i havent made gains in my 401K, i have done ok in other areas.  i can sniff a crappy deal pretty well.

with larry, i didnt really see the risk on the initial investment.  i might not gain much with him but i didnt think i would lose much if anything at all.  while it hasnt done spectacular, it is up.

 

[usctrojancpa]

The standard in the alternative space is the 2/20. 2% management fee and 20% performance fee. Some of the superstar managers charge up to 3/50 (RenTec, SAC, etc).

It is quite common that these funds have a "hurdle rate" so if Larry's margin is less than 8%, he collects no fees. If he is really getting 50% of each sale's profits with no clawback/hurdle, he has a great fund setup for himself.

There is a famous joke/book:
"An out-of-town visitor was being shown the wonders of New York City. When they arrived at the Battery, the guide who was conducting the tour pointed out the handsome yachts in the harbor. "Those are the yachts of the brokers and bankers," he said. "But where are the customers' yachts?" came the innocent reply. Cue raucous laughter. Of course there were no customers' yachts; their money had helped pay for the bankers' vessels."

i need to look closely at larry's docs but i know i have been getting ripped off in the other funds i have invested in!  what you say makes a ton of sense. 

even though i have been burned, i still like the idea of investing in a small venture.  there is something very appealing to being at the ground floor.  i might also be jaded by my father-in-law.  he came to the US in the late 70s and many indians were starting hotels and other small businesses.  friends would help in each others businesses with investments.  out of the 10 or so he made in the late 80s and early 90s, over half failed and he lost every thing, a few made money and 2 were rock stars.  there is one of them where he invested $10K to be 1/10 owner and through out 2000-2005, the profit sharing was over $100K a year!

any way, i am always on the look out for these private investments.  is there a website or clearinghouse where you can find more? 

I've actually been toying around with the idea of putting together a small hedge fund that trades options.  I had a 50%+ return last year and this year I'm a bit over 30%.  I figured I'd need to show at least 3+ years of documented profits before people would think I was for real.  The plan would be to trade my money along with other people's money in an LLC trading account.  Still not sure if doing something like that is more trouble than it's worth and just continue to trade on my own.

what kind of $$$ would you want to raise?

I haven't even thought that far.  I trade with $100k-$150k of my own capital....once I get over $150k I withdrawl funds and put it towards my downpayment funds.

 

[usctrojancpa]

I like rkp... he'll invest in you if he believes in what you are doing.

Too bad I don't have any good Ponzi... err... investment ideas.

@rkp: I don't remember if you mentioned it, but do you have an investment broker?

Unlike Ponzi schemes which PROMISE unrealistic guaranteed returns I'll go ahead and state that my trading is somewhat risky and there's no guarantee of gains.  That being said, with risk comes reward.

 

[irvinehomeowner]

@rkp:

Don't get me wrong... I admire the fact that you can save enough to build up your 401k and still have money to invest... but I also remember you saying that you were looking for some help with investments.

Your story about your Pa-In-Law has me wondering if that's the reason you prefer to look for non-market investments rather than just using a stock broker.

We should start a 3CWG home building business and compete with TIC... hehe.