Jason M.
Level 3: Rising VoiceReviews by Jason M.
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A Large Company with an Impressive Background
MLG has a pretty strong reputation, a pretty deep bench, a lot of experience, a very good track record, and a low minimum to invest in a fund ($50k). They typically have about 88-95% multifamily, but also sometimes include an industrial or a flex property they like. I don't fault them for diversifying a bit. They have enough heads in the game to not commit any significant unforced errors in their non-MF acquisitions. It's a very big outfit, and they do use a lot of JV relationships--FWIW. I gave them 4/5 stars for "strength of leadership" because so far two of my investor relations contacts (the ones assigned to me) have left the company in like three years. Not a great sign. I did put a fair amount of money with them starting in 2020 and so far they are paying more or less as expected... The second reason for a 4-star review is that the returns for one of the funds I am in is not going fantastically. There is still time, and in fact that tuned down the returns and are recycling capital from sales as a way to boost final profits for the investors. Reasons include too much Class C+/B- representation in the fund, and buying at the top of the market. They have used a bit of floating rate debt + rate caps as well. However, obviously a chunk of the blame is simply the way the whole market has been in the past few years. I have hope of a 10% IRR in the weaker fund, and maybe 14% for the better fund. They do seem chastened by the issues they face with the weaker of the two fund, and have dedicated themselves to fixed rate debt and less "workforce housing" as they call it. I will add that they are not one of these "markety", slick young buck-led operators who concentrated on the Sun Belt using variable rate financing--like one or two others I have invested with. So no capital calls, no paused distributions. Have I seen falling NAVs since inception? In one of the funds yes for sure, in the other they are about even. Overall, they are a solid outfit from what I can tell. Probably have 1,000 employees and four main offices. I am not sure I love Fund VII--they literally don't post an IRR expectation and the hold time can be as long as 12 years. I believe the not posting an IRR prediction has something to do with the fact that they are somewhat SEC-regulated now--I didn't follow that whole thing closely. But I would look into that if I were going to put money on Fund VII. If I eventually get out with a combined 12.5% IRR, I would probably want to change my rating to 5/5 stars.
One of My Workhorses for Sure
Legacy Capital has been one of my workhorses in the last five years, for sure. ESPECIALLY while my multifamily equity investments were under stress (or totally out to sea with no wind). This is a debt fund, and what they do is lend on fixes and flips in the Western US, mostly around Seattle. They also do some other types of lending. I'm comfortable with the LTV, the success rate, and the communication for sure. I like being a small part of fixing up houses and doing other positive things with money. Where the rubber meets the road, I am delighted that they have never missed a periodic distribution. I have needed this income in the last five years, and they have come through for me. I let one note I have with them mature, and they did indeed wire me the principal as they said they would. If and when I request the rest of my capital be returned (though I have no intention of doing so in the foreseeable future since this investment is totally working for me), if it is indeed returned I will be 100% convinced that putting money here was a great idea.
I Like Them Despite Trouble with the Fund I'm In
The MF fund I am in is having trouble. The causes are complex, due mostly to the significant headwinds that all MF from the last decade now faces. I'm not getting distributions near where I'd like. The good news is that it is largely due to no fault of their own. In hindsight, variable rate financing and rate caps ended up costing a lot of money and I'm not sure if I prefer a syndicator who chooses that route--though obviously in a different macro-economic environment, I think they would have sold all the assets in the fund in like 2023-2024 and I would be having pina coladas on a beach right now. The fact is that much of my MF portfolio is ailing, and many LPs know what this is like because they are experiencing the same exact situation. C'est la vie. Though I have had some moments where I questioned much about multifamily investing in the last five or six years, I have never questioned their ability, their integrity, or their honesty. In fact, I think they are working hard to manage the assets and the properties well enough that eventually when a sale is possible for a non-negative amount, they will jump on it. As he says in his book (paraphrasing here) unfortunate things happen in MF investing, but it is the integrity, the hard work, and the ethics of the sponsor that matter as much or more than any other factor when it comes to earning profit for investors in a timely fashion. Or when it comes to not losing LP capital. Will I make the IRR I was hoping for? No. Am I happy with virtually ANY of the MF I bought in the 2020 era? No. Would I invest with them again? I just did, in their Healthcare Fund. I probably came away from this era feeling that fixed rate, agency debt is advantageous--but the CEO Brian Burke makes a cogent and compelling argument that in most normal cycles (this is not one of them), variable rate financing + rate caps allows a certain nimbleness that fixed debt does not. I think one can get a really good idea about what Praxis is all about by looking into videos, podcasts, and forums online, and if one does I bet they will come to believe that Praxis is a unique and trustworthy company based on the evidence that is out there.