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May 23, 2024 | read

98. From Single Asset Syndications to a Blind Pool Fund with Dual City Investments

Ben Isley

In this episode, we’re joined by Keith Nelson and Michael Migliaccio, co-founders of Dual City Investments, a real estate investment company that runs a fund of assets primarily for friends and family. In today’s episode, we discuss how Keith and Mike started Dual City, how they went from single asset syndications to a fund structure, the different asset classes in their fund, their response to the COVID-19 crisis, and much more.

Keith and Michael began their careers as colleagues in the law and justice field. They were both interested in real estate as a business and are both very entrepreneurial-minded. Eventually, they pooled their savings and brought in a couple close friends and family members as investors to purchase their first property.

Why Switch from Single Asset Syndications to a Fund Model?

As the business grew and the team added more and more single asset syndications, there always remained a couple deals that remained painful, either requiring extra capital or extra attention. For the most part things remained solid, but Keith and Mike were looking to remove the headache from some of those more stressful and demanding deals. The first purpose was to reduce stress, but they have realized many other benefits from the model, such as the ease of diversification and better, clearer cash flow. With a single investment, investors could expose themselves to several different asset classes and properties. The fund concept offers a “basket” of diversification.

Current Holdings

The funds currently manages a mix of multifamily properties, self-storage locations, a triple-net office, a boutique hotel, and some improved single-family home lots. Interestingly enough, the hotel is doing fine so far during this crisis. There are very few rooms, the units have full kitchens, and it’s in a remote location, offering a getaway from the city.

Advantages/Disadvantages to the Fund

Diversification and cross cash flow, as previously mentioned, are the biggest advantages. There is a more flexible period of time to raise capital. This can also be a disadvantage, because some investors like to know exactly where their money will be invested, and want to know the assets and types of assets that will be acquired before they invest. This was especially difficult at the beginning, where the track record for returns was still young. As the history of returns improves in depth, this conversation becomes easier.

Keith’s Opinion on the Market

As a broker, Keith sees many deals come across his desk every day. From the management side, education on all the available government assistance is necessary, both for individuals (potentially unemployment), and the SBA loans. From an opportunistic standpoint, Keith thinks our recovery may be much slower than some are expecting. Much of the current effort is preparing for the worst case scenario going forward. Survival is the first priority, and finding some additional great opportunities is a bonus.

Learn more about Dual City Investments: https://www.dualcityinvestments.com/