If you're interested in learning from experienced operators, this is an episode you'll want to listen to. Multifamily syndicator Gary Lipsky provides a lot of practical advice for both passive investors and those looking to syndicate deals. Having done over $250 million in real estate deals, Gary shares great insights into asset management, a critical but often overlooked part of deal performance. Gary discusses how he actively manages his properties to hit financial targets and extract maximum value.
About Gary Lipsky
Gary Lipsky, president of Break of Day Capital, has successfully completed over $250 million in real estate transactions as a multifamily syndicator. Starting in 2002 with his family's first house, which he turned into a rental property when they moved, Gary gradually ventured into single-family rentals before transitioning to real estate full-time in 2016. With a focus on value-add multifamily deals in Phoenix and Tucson, he averages around four deals per year, including his first syndicated deal, a 42-unit apartment complex in Tucson, Arizona.
Here are some power takeaways from today’s conversation:
[06:54] Gary’s real estate investing journey
[11:03] Defining roles: asset managers versus operators
[15:55] The challenges of asset management
[18:56] How LPs (Limited partners) should evaluate their asset management approach
[33:42] How strategic investments in Tucson yielded remarkable returns
[40:33] Real estate investing with a focus on asset management
Episode Highlights:
[15:55] The Challenges of Asset Management
In the realm of asset management, the landscape has become increasingly challenging. With loan covenants becoming stricter than ever, it is crucial to have a comprehensive understanding of aspects like earnouts and penalties. The reporting process for loan covenants has also become more time-consuming, demanding significant resources. Failing to execute the business plan can lead to complications such as cash calls or capital calls, putting the overall performance at risk. It is crucial to allocate resources effectively and ensure adherence to loan covenants to maintain a high level of success in asset management.
[19:04] How LPs Should Evaluate Deals
Here are some key things Limited Partners (LPs) should do to properly evaluate deals:
Ask who specifically is the asset manager and if they can be part of the interview process. The asset manager is critical for deal performance.
Inquire about the asset manager's typical day-to-day responsibilities and the number of properties they oversee. Fewer is better.
Request to see the dashboard of Key Performance Indicators (KPIs) that are tracked and how often the sponsor checks in on them.
Find out how frequently the asset manager communicates with property management and visits each property in person. More contact is better.
Ask what questions the sponsor asks property management during check-ins to ensure they are executing the business plan.
Determine how transparent the sponsor is about sharing actual property performance versus budgets. Any variations should be explained.
Thoroughly vet the sponsor's communication approach, especially during challenges, to ensure they are responsive.
This show is for entertainment purposes only. Nothing said on the show should be considered financial advice. Before making any decisions, consult a professional. This show is copyrighted by Passive Investing from Left Field and Left Field Investors. Written permissions must be granted before syndication or rebroadcasting.
Resources Mentioned:
Break of Day Capital
Real Estate Investor Podcast
Podcast Recommendations:
Driven By Insight
Avoiding Rookie Errors as a Left Field Investor: 20 Lessons Learned From 14 Years of Passive Investing in Private Syndications by Steve Suh
Advertising Partners:
Tribevest
Rise48
Aspen Funds
GSP REI
Vyzer
142. The Importance of Asset Management with Gary Lipsky | PassivePockets: The Passive Real Estate Investing Show podcast - Listen or read transcript on Metacast
