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What I’ve learned after I FAILED to get in multiple deals as a passive investor

Today is a little bit special. Instead of sharing useful contents from others, I want to share with you what I’ve learned after I failed to get in multiple syndication deals as a passive investor.


I noticed syndication deal flow went up significantly, and those deals were oversubscribed quickly. I failed to get in multiple syndication deals. Some deals were over-sold within 24 hours. Last week, I finished my deal analysis within ONE day. I signed the PPM and right before I wired the money, they told me it’s over-subscribed. I can’t believe how hot the market is!

Potential reasons

These are purely my guess, please take it with a grain of salt.

  1. People are worried about inflation risk, as the central bank is printing money like no tomorrow. Real assets such as real estate is one way to hedge inflation risk.

  2. People are worried about the volatility of the stock market, especially around election date. Therefore, they want to reduce equity exposure in their portfolio and invest more in real assets.

  3. Maybe some people just trust the syndicators and don’t verify the numbers and investment themes themselves.

  4. Or maybe simply because I only focus on reputable syndicators and their deals are good.

My reflection on how to make quick and prudent investment decisions

On one hand, making an investment decision purely based on what syndicators tell you puts your capital at risk. I can’t tell you how many times I found that they only tell you part of the story, the things they don’t tell you are the scary part. On the other hand, a thorough but time-consuming analysis is also useless, as the good deals are gone before you make a decision. The key is to make a PRUDENT investment decision in a TIMELY manner. 

I reduced my analysis time from several days to one day and I am still improving the process. These are what I’ve learned:

Have all the fundamental data at your fingertip

I have a 20-year history of fundamental data such as population growth, GDP, job growth, household income, home value and rent data at nation-wide/MSA/state/county/city/zip code/neighborhood levels. Since the deals come from anywhere in the country, I can easily pull all the data without looking for data on the fly.

Identify the key factors to pass/fail the deals

Not all factors are created equally. Spend your time on the critical factors that will break the deal.

Perform stress tests on the identified key factors

No one has a crystal ball. Don’t calculate IRR under one scenario. Come up with multiple scenarios and see how IRR changes. See whether you are comfortable with the range of IRRs under different scenarios.

Make the final judgment call with a probability mindset

Numbers won’t make the decision FOR you, they make your decision easier, but they are NOT the replacement of your judgment call. When you have 10 different IRRs in 10 different scenarios, which number should you rely on to make the final decision? Try to assign probabilities to various scenarios. Don’t be scared by the IRR in the worst case scenario, if you think its probability is extremely low. Be aware of its impact on IRR and its probability, then make a final decision.

I strongly believe all these can be done in an “assembly line” manner to help us to make quick and sound investment decisions. What are your observations and thoughts about the current investment environment? Hope we can all grab good investment opportunities and steer away from the speculative ones!

Invest with Confidence.


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