The Opportunity is Coming in Commercial Real Estate (How to Take Advantage)

The multifamilyHey everyone. Welcome to the BiggerPockets podcast. I’m Dave Meyer. There has been, and I do not use this word lightly, but there has been a legitimate crash in commercial real estate over the last couple of years. We all know that office space is tanking, but this is happening in other asset classes too. Like multifamily. It’s lost a lot of value since the pandemic and it’s generally just been pretty hard out there. But real estate usually moves in cycles, things go down, they hit a bottom and then they start to go back up again. And personally, I think we might see a really unique and pretty exciting buying opportunity in the coming years for multifamily and commercial real estate as a whole. So today on the show we’re talking about how to potentially spot the bottom of the market so you’re getting maximum value and how to take advantage of these opportunities even if you’re not in a position to go buy a massive apartment building all by yourself like most of us are.Joining me for this conversation are Jim Pfeifer and Paul Shannon who hosts the Passive Pockets podcast and are both hugely experienced commercial real estate investors. And just to clarify before we jump in, I’m going to use the term commercial real estate and multifamily real estate interchangeably throughout this episode. Commercial real estate does actually refer to all sorts of things like retail space, industrial, but because the BiggerPockets community in general is mostly interested in multifamily when it comes to commercial, I’m going to be using both of those terms interchangeably. Just a heads up, let’s jump into the show. Jim Paul, welcome to the BiggerPockets Podcast. Thank you both for being here. Thanks for having us.Excited to be here, Dave.Yeah, let’s get our little BiggerPockets podcast host crossover event underway. Let’s just start with introductions since our audience might not know the both of you. So Jim, let’s start with you.Yeah, I’m Jim Pifer. I worked for Passive Pockets. I’m one of the podcast and I got my start in investing in 2008, so I was an active real estate investor, some small multifamily, some single family turnkeys, but I realized I was not a good asset manager, and so I discovered this thing called Real estate Syndications, where you effectively hire an asset manager and they do all the work for you. All you need to do is a lot of work upfront to analyze the deal, vet the sponsor, and then you give them your money and they run the show. And I just found that that’s kind of where my strength lied. And so I started a community called Left Field Investors. It eventually became passive pockets and now I’m a full-time investor as a limited partner in syndications. Awesome. What about you, Paul?I’m in Indianapolis, Indiana. I’m the co-host now of the Passive Pockets podcast. I got my start in real estate buying a duplex, worked my way into flipping single family homes, doing burr investing, got into small multifamily and then worked my way into, I call it mid-size, so like 40 unit buildings. But during that time I also found passive investing and was really interested in it because it diversified away from me as an operator myself and to other sponsors who had expertise that maybe I didn’t into different asset classes that I didn’t have expertise in and to different geographies that had different characteristics than where I’m at in the Midwest. So have enjoyed kind of the benefits of being both an active and passive investor. Today I’ve invested in about 40 deals from a passive standpoint. We also launched about a year and a half ago our fund, invest Wise Collective. So now we help other passive investors get into deals that they otherwise wouldn’t be able to get into via high minimum investments, for example. Or we try to negotiate better terms with sponsors and raise money for their deals and then pass those better terms along to our investors through our fund.Awesome. Great. Well, it’s a pleasure to have both of you here to talk about the state of multifamily. We’re going to get into syndications in all of that, but let’s just lay the scene here because in my analysis, definitely not as expert as both of you we’re in an interesting part of the cycle for commercial real estate and multifamily, and I’d love to get your takes on that, but maybe you could just help fill in the last few years for our audience here, Paul, and tell us a little bit about where we are, at least in your view in the commercial real estate market.Yeah, I mean we really have to back up to the pandemic to understand what’s happening today. And if you remember, as we were all kind of shuttered in our homes and businesses were closed, it necessitated the federal government and the Federal Reserve really to step in to sort of rescue the economy. And they did that through unprecedented monetary and fiscal stimulus. This all led to eventually inflation. And you’ve got a situation now where those that acquired in that era, 20 21, 20 22, did so using floating rate debt, they bought at the peak of the market expense growth has caught up now since we had such inflation, things like property taxes, insurance are a lot more expensive. Interest rates have gone up considerably. The federal funds rate has gone up by 500 basis points in about 18 months it took to reach that. So all these factors essentially have led to a situation where proformas have not been hit, and now there’s this debt maturity wall where a lot of these deals either need to be sold or refinanced and they’re just not worth as much as they used to be. So there’s a problem basically, and there hasn’t manifested in the form of distress. A lot of lenders have sort of extended and pretended, and we’re going to see in 2025 if we see that wall of distress.Would you call it a crash? Because as cap rates have expanded and operating incomes have stagnated at best in some cases, from my analysis, we’ve seen prices drop 15, 20% multifamily on a nationalized basis. Would you consider it a crash? I know that’s kind of an arbitrary word, but Jim, how would you describe this just to people who might not be as intimately familiar with the details here?Yeah, I think it’s where you’re sitting, whether it’s a crash or not, I think it’s asset dependent almost because if you are someone that did deals on the floating rate debt, the bridge loans, then yeah, I think it’s a crash because a lot of people lost all the equity in those deals for investors. We had capital calls, pause distributions, things like that, and very few deals going full cycle. But if you have long-term debt or fixed debt, then I think there’s time to get through it. Sure, yeah, that makesSense. And honestly, I’ve been surprised by the lack of public distress at multifamily. You hear about it if you’re in the industry as we are that people are struggling, but I don’t think it’s as obvious to people that prices in commercial for the deals that are transacting are often at lower valuations than they were just a couple of years ago. So I’m curious one, Paul, why do you think it’s taken so long for this distress to start sort of working its way through the system and two, is there any hope or line of sight on a bottom here where things might start to grow again soon?Yeah, so I think that a lot of the distress is in a certain segment of the market. It’s that 1970s, 1980s vintage value add that was acquired with floating rate debt. So it’s a specific type of borrower and I don’t think it’s going to be making top of the Wall Street Journal newsAnd will there be opportunities for LPs to capitalize on that distress that’s yet to be seen? I think why it hasn’t materialized as much is because lenders have been willing to extend loan terms where maybe it was a three year loan initially and they realize that their borrowers are underwater and they don’t want to take back the property. They remember 2008 and what had to go down at that period, and they don’t want to be property owners, so they’re willing to, let’s say, give that borrower another 12 months to figure out what to do. And I think this year will be the year where it’s like, okay, if you haven’t figured it out at this point, we can’t pretend anymore. We’ve got to figure out something here. If you can’t refinance, we’re just going to force you to sell basically, and you’re going to have to absorb those losses and let’s clean the slate.Now the second part of your question was are we seeing a bottom? Yes, I think I don’t have a crystal ball per se, but is now a good time to enter into the market? I think so. I mean, if you can find deals that cash flow, I’m always a fixed rate debt guy because that’s just one variable that you don’t have to worry about over the course of your hold period. If you can acquire with fixed rate debt, if you can get into a growing market and have that upshot potential, then I think it could be a good deal, especially because there’s such a housing crisis in this country too. I think the long-term thesis for multifamily is strong and now there’s a lot of yellow lights. It’s not like the green lights are all flashing, go, go, go. But I think eventually things will clear and now could be a good time to get in a good basis.I’m glad to hear you say that. I mean, I just kind of see it the same way. So I am glad to hear some of my thoughts about this at least confirmed, but I am always skeptical, particularly in the residential market about trying to quote time the market. It’s very, very difficult to do, but I am always tempted to do it with commercial because it just works in more, I think, defined cycles than the residential market does and there’s a lot more institutional money and these types of things, and so I think it’s, tempting is the right word, it’s more tempting to try and tire in the market. Jim, how do you feel about that? You look at a lot of deals. Are you starting to feel like better deals are showing up on your desk?Yes, I’m seeing more deals, but as an investor, people are cautious unless there’s something remarkable about the deal. A lot of people are hands off, is it assumable, fixed, low interest rate debt, then that’s a story or tax abatements where you’re getting equity right out of the gates. Those are the deals that I’m looking for now because I’m just not certain. And so there’s a lot of hesitance, but you are seeing more deals. But some of them are just the same as they’ve always been because people are looking at well bridge debt now maybe we get back into that because they’re expecting interest rates to go down and that’s when a time when maybe bridge debt is okay, but I’m still pretty cautious overall.Alright, well, I want to talk more about the types of deals that you’re seeing and thinking about doing, but first we got to take a break and as we go to break, I want to quickly remind everyone about something we’re doing here at BiggerPockets called Momentum at 2025. If you haven’t heard about this yet, something super cool. We’re doing it for the first time. It’s our eight week virtual investing summit starts February 11th, and anyone who signs up for it is going to get direct access to 18 expert investors to mastermind groups accountability. And Jim, I understand that you’re going to be one of our experts speaking there. What are you talking about at Momentum? I’m going to be talking about syndications and the limited partner experience. I do invest in syndications. We’ll talk about that more, but I’m always trying to learn more, so definitely going to be attending that one. If you all want to attend and grab your spot at Momentum 2025, go to biggerpockets.com/summit 25. We’ll be right back. Hey everyone, welcome back to the BiggerPockets podcast. I’m here with Jim Piper and Paul Shannon talking about potential opportunities in the multifamily space and syndication investing. When we left off, we were talking, Jim, you mentioned that you were still cautious, but you thought that there might be some good deals. Paul, are you viewing it the same way? Are you seeing an uptick in opportunity right now?I do see that there’s better deals showing up in my inbox from a passive investing standpoint. I wouldn’t say the same locally in my market from an active perspective, but I think there’s good deals across the country. It’s just a matter of uncovering ’em and there’s good deals in every part of the market cycle. It’s just finding those operators in those markets that have sort of what I call an unfair advantage where they have maybe economies of scale where they can get labor and materials for cheaper than their competition can, or they can get access to deals before they hit the market, before they go out on a broker’s listing or they have in-house property management and operations that are just buttoned up to a T. Those are all things that can give sponsors a competitive advantage as far as timing the market. If you compare real estate to the s and p 500 and the stock market, you certainly don’t see a lot of people having success timing the s and p 500.I think with real estate particularly maybe commercial real estate because things move so slowly, you can potentially time the market better, but I’m not necessarily looking to hit the bottom or time the top. It’s more of, hey, are there tailwinds or are there headwinds? Is the environment conducive from a macro standpoint to invest now where mistakes can happen and issues can come up and the sponsor’s plan and things still go right, or does everything have to go and if one thing goes wrong, like the federal funds rate going up and impacting borrowing costs on a floating right debt deal, does that destroy the entire deal? Those are the things I try to stay away from. So I want to get, they say, don’t fight the fed, don’t fight the macro when it comes to investing in commercial real estate and stay the course that way. And I think you’ll do fine.Good advice. I want to shift the conversation a little bit because I am honestly trying to keep a little bit of dry powder for what I think is going to be some good opportunity in multifamily. Let’s talk about if other people feel the same way and you should do your own analysis, of course. How can people get into this because it can be daunting to go from residential to commercial real estate, especially if you’ve only operated smaller properties and now you’re talking about bigger properties. Jim, you’ve made that transition. So tell us a little bit about how you recommend people think about that.And I think if you’re switching from being a single family operator to looking into multifamily, I think you hire asset managers and go through syndications. That’s what I did because I believe that if you don’t have an advantage, meaning a market better than anyone else in that market or you know how to swing a hammer and save costs there, then being an active investor is difficult If you’re just a regular person with a W2, that’s why I do syndications. But there’s a lot that you need to do, and that’s why I think a community is so important. And what I tell people, it doesn’t have to be passive pockets, although that’s a fantastic community, but surrounding yourselves with other people that know operators and no deals and no markets is super helpful because this is a different type of investing. These are syndications, right? They are long-term illiquid investments that are completely out of your control.Now, if you have a single family home and it’s an investment and something happens in your life where you need capital, you can sell that tomorrow. Now you might have to take a big haircut, but you can get out of it and get some of your capital back. In the syndication, you can’t. So you really need to understand how do you partner with the right operator. That’s the biggest step you need to make. Figure out how to find quality operators and some of the things that you need to look at now, I think, and there’s some people that push back on me on this, I think the next few years it’s going to be easier than ever to analyze and vet an operator because we just went through some really difficult times for operators. So you can see what happened, how did they make it through these difficult times, what did they learn?What are they going to do different? So it’s always been about the operator, but it’s more critical now if they had a capital call five years ago. That was one of our questions. First questions for an operator. Have you ever had a capital call and if they said, yes, it was nice meeting you, goodbye, right? Well, now that answer’s going to be different. It’s going to be okay. What happened? How did you communicate it? Did you effectively communicate it and did you have a plan and come through it? That’s okay. I’m okay with people having struggles. I understand I lost some money investing in some of these deals because of the bridge debt issue, so I understand that people went through that, but how did you get through it? Those are some of the questions. So if I’m an investor, I really want to focus on the operator and make sure that they know what they’re doing, that they came through this and they had a plan, and they have a plan going forward.Just for anyone who doesn’t know what the term syndication means, it’s basically just a deal structure where multiple investors pool their equity together to purchase large assets. So just as an example, let’s just say you wanted to buy a 50 unit property. It costs $10 million. Most people don’t have enough, even for a down payment on that. And so people put together, you grab a couple dozen investors to each put in sizable amounts of money. Usually the minimum is 50,000 or a hundred thousand dollars to get into these types of deals. But you pull your money together and you give it to essentially an operator. Usually the operator is sort of presenting these deals to investors, and one class of investor, the operator or the GP is a general partner, does all of the work. Essentially, they are managing tenants, they are making decisions about the asset.They decide when to sell, they decide what kind of debt to get. And as an investor, you can be what’s known as an LP or a limited partner, which is basically you write a check and then you hope it goes well. And so I think, as Jim was saying, the work as an LP is to do a lot of upfront due diligence because once you write that check, you really have very little control of the outcome of your investment. And that’s a very big change for a lot of people who just buy multifamily investments or single family investments. So this is a whole other world of investing that feels to me at least, or did when I started investing just to be a bit different than the normal stuff we talk about here on this podcast. And Jim, you mentioned passive pockets. It’s a community for syndications. Can you just talk a little bit about what you talk about on that show?Yeah, yeah. And it is more than a show. It’s a community similar to how BiggerPockets is a podcast and a community. So is passive pockets, but we are focused on limited partner investors who want to create financial freedom, just like BiggerPockets people do. But instead of swinging hammers, we’re analyzing the operators who are the asset managers. And the purpose of the community is to help everybody learn together and grow. So we do things like Paul and I do a deal review series where we interview operators, they have a deal, they present the deal, we ask ’em a bunch of questions, we ask ’em the tough questions, and then afterwards we say goodbye to the operator and then we discuss it on our own and kind of tell people, Hey, this is what we see. And so you can just learn how to ask the questions.We also have sponsor reviews, so you can go and if a, b, C sponsors of interest, you can go on our website and hopefully there’s enough reviews. You can see, oh, they got four stars, five stars, and get some information about ’em. And one of the favorite things is there’s a forum just like at the BiggerPockets forum where you can ask questions and talk to actual investors. And it’s just a great way to learn and grow because think about it, this is a long-term deal. It used to be maybe you get your capital back in three or five years, now it’s going to be five, seven, or 10 years. Well, you can’t just throw 50 grand at it and say, okay, I’m going to wait 10 years and decide if I’m going to make my second investment. So what you do is you talk to other people who have invested with that operator and get feedback, what did you like about ’em? What didn’t you like? And that way you can use other people, you have a shortcut because other people have made mistakes, other people have made money, and you can learn from them. And so that’s why the power of community in this type of investing is so critical.WellSaid. I totally agree. And it’s always sort of been an insider sport previously, I think.Yes,I didn’t get into it for the first few years. I didn’t know anyone who was doing it. And without a community, it could beSuper intimidating. It is, absolutely. And my first entrance into it is I went to a seminar because I wanted to learn about this, and I made some really bad choices because I just assumed everybody there knew what they were talking about and were great operators and I started investing with them. But you need to do more due diligence than that. And then I went to podcast University and started listening to podcasts, and that’s a great way to find operators, but then you don’t know if they’re a good operator or a great podcaster. And so now I don’t invest with a new operator unless they’re recommended to be by somebody in my community who I know and trust who’s already invested with that operator. I still do all the due diligence, but you’re a hundred steps ahead because somebody has already invested with them. So wires are scary, right? You got to send a wire, the wire’s going to arrive, the communications and things like that. So I just can’t overstate how important it is to learn from others, especially in this type of investing.Well, we’ve talked about due diligence quite a few times, and I want to dig into what that really means and what the upside is here. Why should people embark on this new branch of real estate investing? But first, we do have to take a quick break, so we’ll be right back. All right, we’re back on the BiggerPockets podcast talking about multifamily opportunities and syndication investing with Paul Shannon and Jim Pifer. Paul, we’ve talked a little bit about due diligence, and I kind of want to just dig in if you can give us the ABCs here because it is probably intuitive to most people, vet the people that you’re going to partner with. But in my experience at least, it’s kind of interviewing someone with a job. Of course you should interview people, but there’s kind of a skill that you need to learn to really get under the hood and figure out who you’re going to be doing business with. So I’m sure you talk about this in length in the podcast, but can you give us sort of a high level overview of how you actually logistically do quality due diligence?Yeah. Well, you alluded to it, Dave. I think the most important thing is the sponsor is the operator. And we use those words kind of interchangeably, knowing who you’re investing with. Are their personal values aligned with yours? Are they good people? Do they have a criminal background? You can do criminal background checks. You can vet these people via word of mouth. You can talk to other people in communities like passive pockets and see if they’ve invested with the folks that you’re interested in. So that’s all part of it. You have to kind of vet that person. And sometimes it takes a while to get to know somebody, so you have to take a chance at some point. You never truly know somebody, I don’t think until things go poorly. So ideally it never happens. But I think really it starts with knowing that they can execute the business plan, that they’re a fiduciary of the capital that you’ve entrusted them with. They’re a good person overall, and they’re going to honor their commitment to you to do the best they can with their capital. So assuming that you get by that point and you can trust that individual and you have enough references to validate that, then it’s on to actually evaluating the deal itself. And we could go down a real rabbit hole there, but I think that the more times that you evaluate these deals, the more pitch decks you look at,The more underwriting files you see, the more deals in general, you just evaluate. You start to create this sort of memory bank in your head, and you start to understand what a good deal looks like and what a bad deal looks like. So just like you do a back of the napkin analysis on the evaluation of a single family home, before you move into a more technical analysis and really get into the weeds, you want to just fly by and exclude and look for a reason to say no right off the bat. And you can usually do that in that pitch deck and say, oh, okay, this guy is, let’s just use an egregious example. He’s projecting 10% rent growth, or he’s got an exit cap assumption that’s 2%, or something like that. Okay, this isn’t interesting at all. To me, this is an unrealistic assumption.Let’s just get this one out the door. But then as far as taking it to that next level, there’s a level of financial acumen that needs to be built up over time to really understand the actual market that you’re investing in. Are the projections realistic? What are the equivalent financial ratios that you need to be evaluating to make sure that this is in line with your risk tolerance, et cetera, et cetera. And it just comes from reps, Brian Burke’s book The Hands-Off Investor. I think that’s a fantastic place for listeners to start as far as getting kind of the bones of the structure of how that might look.I use a tool, it’s a multifamily deal analyzer that we have at passive pockets. And basically you can take the pitch deck and just dump the financials in this spreadsheet. And a lot of the information we got was from Brian’s book, the Metrics, and it basically just turns red or green, whether those metrics fit with the averages. And it doesn’t tell you this is a good deal or bad deal, but as Paul said, the repetitions, you do 10 of those and throw all that info into the deal analyzer 10 times. You’re going to know, oh, here’s the things that are interesting to me. Here’s things that I should ask questions about. And that’s what you want. You want to get to a point where you have questions to ask the operator. Because one of the most important things to me when evaluating an operator is communication, because again, these are out of your control long term.So what I do is I test the operator and ask ’em a bunch of questions, and I want to see are they going to get back to me in a reasonable amount of time and with quality answers. And then when they respond, even if I don’t have any more questions, I reply and ask ’em more questions. I want to see are they going to handle it when I’m a little bit of a pain in the butt, right? I have some more questions. You got to test them. That’s a critical part of it. Then I’ll say one more thing. Paul said, you got to check the operator. They good person with the values match yours, but also you are in a business with this person, with this company. You’re a limited partner, but you’re part of their company. I recommend you don’t invest with people that you don’t like no matter how good their deal is. I totally agree, because if something goes wrong or something goes well, you’re not going to want to call ’em up and be like having a conversation. You don’t like them. So do business with people that you like and can tolerateGood advice.I think that’s such good advice. I have the same policy about investing in different markets. I want to invest in markets I don’t like going to. It’s the same kind of thing. You should make your investing comfortable for you. Obviously there’s still risk, but on a personal level, you should do that. And you said something, Paul, I wanted to add on to, I am an optimist when it comes to residential real estate. I go into every house, I’m like, there’s a way to make this work. And there’s usually not, but I’m always going in there. I can make this work. I am such a skeptic when it comes to syndication investing. Every deal I look at, I’m like, there’s no way this is going to work. And then occasionally people can convince me that it’s going to, and I’ve just always found that it’s better to be really skeptical about operators that you’re potentially working with, and if they can woo you, they’ve really earned your money. But I think you got to pass on a lot of deals, especially in the beginning before you really find good ones.Stay that way, Dave. Never change because that is going to keep you out of a lot of trouble for sure. I’m always looking to kind of tear apart what is it that I don’t see? What is it that I don’t know what’s being kept from me? And maybe it’s nothing, but I want to go in with that skeptic’s eye and really analyze and know what I’m getting myself involved in,Especially because these are all salespeople too, right? Nothing wrong with that, but they’re trying to sell you on this deal. When you call ’em up and talk to ’em, it’s the best deal they’ve ever seen, right? Because they want your capital. And that doesn’t mean they’re dishonest. They’re excited about the deal, presumably because they bought it. But going in trying to find a reason to say no is absolutely the best approach, and Paul’s really good at that. I’m trying to get better at it.And there’s always more people who want your money if there’s no rush. I think once you get into this, you’ll see that there’s an abundance of deals.SoDon’t feel like one deal is precious. You should just take your time and feel comfortable, especially on the first few.Yeah, I had one guy, MC Lacher is a guy that I’ve been on his podcast a couple times. He’s been on ours. He came, I don’t know if he came up with it, but instead of fomo, fear of Missing Out, he coined the phrase Joy of Missing out jomo. And that’s what I try to look at. Okay, I just saw five deals. I’m going to be happy to pass on all of them because there’s always the next best deal is coming down the line.I’ve had some jomo the last few years. When I look, see or hear people in deals that I pass on, I’m like, oh, I don’t have a perfect track record, don’t get me wrong. But being a skeptic the last few years has been beneficial. So let’s wind down here, but just talking about the benefits. So Jim, you mentioned sort of being passive, but there are downsides, the lack of liquidity, you’re entering a new business. So Paul, let’s start with you. What makes it worth it to you to invest in syndications? And perhaps you can tell us a little bit about what type of investor you think is well suited for this type of investing.Sure. So what type of investor? It’s probably somebody who sees the value in real estate but doesn’t want to pick up the hammer, so to speak, doesn’t want to deal with tenants and toilets, doesn’t want to have property management responsibility, doesn’t want to trust the property manager in their town. And this is a way to kind of do it and create that passive income and reap the benefits of real estate without that direct active involvement. So there’s an acronym that I really like that summarizes what real estate’s all about. It’s ideal. So I is for income, D is depreciation, E is for equity buildup, A is for appreciation, and L is for leverage. So using money, basically that’s borrowed to buy something that’s bigger than you could otherwise afford. And I think you could take that last piece, leverage and leverage the sponsor, their skillsets, their business, what they’ve gone through to grow to the point where they’re able to acquire a hundred plus unit apartment building, for example.So if you can leverage that person’s expertise, not just leverage capital, you can get yourself into some deals that you otherwise wouldn’t be able to get into. And I think that’s probably the biggest benefit. But as I mentioned at the top of the show, for my personal portfolio and for others that are looking to diversify, this is a great strategy to do it in real estate because it’s not that easy to diversify in real estate in this way. You can get into different markets that you don’t have expertise in. You can get exposure to different areas of the country that are experiencing different economic or population booms. Again, you can leverage that sponsor and you can leverage the ability to get into different asset classes. I don’t know how to operate, let’s say an industrial facility or a retail strip center or a mobile home park, but these are all things that you can invest in as a limited partner. Without that specific expertise as an operator, you leverage other people’s skills.Yeah, I think diversification is probably the number one exciting thing about this type of investing because as Paul said, by market, by operator, by asset class, and you can just get a real breadth of investment and you’re still in real estate. And the other upside is Paul mentioned you’re effectively hiring an asset manager. This is their profession. This is what they do all day, so they’re going to be better at it than you probably, especially if you’re going into an asset class. Nothing about right? There’s car washes, there’s RV parks. I mean, there’s everything. And as far as the downsides, you mentioned it, Dave, one of the things that I did not think about enough is liquidity, right? Because I just kind of went all in and then I realized, oh yeah, I need to save some cash in case there’s other opportunities or emergencies.And so I think liquidity is something to think about. And also to be honest, this isn’t something that you can’t get in it by house hacking or wholesaling. You need capital. And you mentioned it, $50,000 is typically the minimum. If you’re part of a community, oftentimes you can get into deals for 25,000, but you’re not going much lower than that unless you do some different types of things. So you have to have capital, and you have to understand that you need to protect liquidity because once you invest in this deal, you could get your capital back in two years or 10, and it’s completely out of your control.I agree with you. I’ve used it for diversification and to open up skill sets. I don’t have, I think sometimes when I tell people I invest in syndications or more passively, I get pushback. They’re like, I don’t want to pay someone else for something. Like you have lower returns. And I just don’t think that’s true, because I’m not going to rehab a 50 unit building myself. I can’t even rehab a five unit building myself. So I hire people to do that. And so I’m just going to hire people to expose me to these bigger opportunities because I’d rather get, pay someone 2% management fee to get these huge opportunities for equity gains that you can get in these markets. And I encourage people to think of it that way. You might be given up a little bit, but you’re paying, as Jim just said, you’re paying an expert to help guide your investing. And oftentimes that can lead to much bigger profits because it’s run really efficiently and you’re going to get exposed to opportunities you wouldn’t otherwise. Well, that’s what we got today. Thank you both so much for being here. Jim. If people want to learn more about passive pockets and syndication investing, where should they do that?Go to passive pockets.com. You can sign up for a seven day free trial. Check out the community, check out the tools, the resources, the forum, all of it completely free. If you love it, stay on if you don’t, seven day free trial. But passive pockets.com. All right. Well, Paul and Jim, thank you both for being here. Thanks forHaving us.Thank you, Dave.And thank you all so much for listening. We’ll see you for another episode of the BiggerPockets podcast in just a few days.