Critical Aspects of Limited Partnerships for Smarter Passive Investing with Aleksey Chernobelskiy


As passive real estate investors, it’s easy to get caught up in the allure of high returns and flashy deals. However, as Aleksey Chernobelskiy, a leading advisor for limited partners (LPs), warns, “Investments are complex, and dumbing them down to a single variable is a big mistake.”

Chernobelskiy, who has managed a $10 billion commercial real estate portfolio and now advises over 3,000 investors, offers invaluable insights into the world of syndication deals. In this episode of the Passive Investing from Left Field podcast, he shares his expertise on avoiding common pitfalls and becoming an active participant, even in passive investments.

Chernobelskiy’s Journey and Expertise

Chernobelskiy’s journey, from growing up in Russia to becoming a leading advisor in the real estate sector, is a testament to his depth of knowledge and commitment to empowering passive investors. By sharing his insights and experiences, he aims to help LPs make informed decisions and navigate the complex world of syndication deals.

“I didn’t see anyone operating in the space,” says Chernobelskiy, explaining his motivation for launching his advisory business. “After a few Google searches, I was like, well, you know, I think I can help. And so I launched, and here we are.”

Chernobelskiy’s background includes a quadruple major in Finance, Mathematics, Economics, and Accounting from the University of Arizona, as well as experience managing STORE Capital‘s $10 billion commercial real estate portfolio and overseeing the firm’s underwriting team.

This diverse experience has given Chernobelskiy a unique perspective on the real estate investment landscape, which he now shares with the LPs he advises. By providing weekly articles to over 3,500 investors on his Substack, Chernobelskiy aims to empower LPs to make more informed decisions and navigate the complexities of syndication deals.

The Importance of Proper Vetting

One of Chernobelskiy’s key pieces of advice is to thoroughly vet syndication deals before committing your capital. Contrary to the prevalent notion that passive investing is straightforward, Chernobelskiy cautions that many people have jumped into syndications without understanding the risks involved, ultimately “gambling” with their money.

“I think a lot of people who got into syndications over the past few years shouldn’t have,” says Chernobelskiy. “And that is not a comment on deals going bad or the state of the market. I just don’t think it was a wise idea.” He explains that while many people are drawn to the potential for high returns, the reality is that syndications can be complex, with a multitude of variables that need to be carefully considered.

Chernobelskiy stresses the importance of not simply looking at a single metric, such as the internal rate of return (IRR), when evaluating a deal. “It’s a massive mistake to filter deals based on IRR,” he says, “for the same exact reason” as focusing on a single variable. Instead, he encourages investors to take a more holistic approach, considering factors like the general partner’s (GP) track record, the proposed capital structure, and the alignment of interests between the GP and the LP.

“Investments are complex,” Chernobelskiy reiterates, “and dumbing them down to meeting or not meeting a single variable is a big mistake.” He believes that this oversimplification can lead to investors making decisions that are more akin to gambling than sound investing.

Being an Active Participant

While passive investing may seem hands-off, Chernobelskiy stresses the importance of remaining an active participant in your investments. He argues that the best passive investments “always start in a very active manner.” This means understanding the complexities of the deal, the alignment of interests between GPs and LPs, and being prepared to hold the general partners accountable if needed.

“Anyone who sort of discounts that, I think to be candid, I think they’re just gambling,” says Chernobelskiy. “And when you gamble, sometimes everything works out and you might 2x or 3x, and sometimes you lose all your money.”

Chernobelskiy emphasizes that as an LP, you are setting yourself up for risk by committing capital to a deal, and you have little to no say in what happens after the fact. “You need to be compensated for taking on the risk and funding the majority of the equity stack,” he says. This means actively ensuring that the deal structure is aligned with your interests as an investor.

One example Chernobelskiy provides is the scenario of a GP who is struggling to sell a property at a loss. In this situation, the LP may be “desperate to get their money out” and willing to accept a significant loss. However, the GP may be reluctant to sell at a loss due to the potential impact on their business and reputation. Chernobelskiy believes that in these cases, it is crucial for the LP to engage with the GP and hold them accountable, ensuring that decisions are made in the best interest of the investors.

Return On vs. Return Of Capital

Chernobelskiy delves into the critical difference between return on capital and return of capital structures, which can significantly impact the performance of your investments. He firmly believes that LPs should prioritize getting their capital back before the general partner is able to collect their promote, as this ensures a more balanced alignment of interests.

“There should almost never be the case when a GP is sitting inside of their promote before you’ve made your money back,” says Chernobelskiy. “And the reason why that’s important is if the deal goes sideways, the GP could be collecting part of their promote, and you haven’t made your money back. That is a very off-balance alignment of interests that an LP should not sign up for.”

Chernobelskiy explains that in a standard waterfall, the first step is the preferred return (pref), followed by the return of capital, and then the promote. He believes that skipping the return of capital step is a major red flag that LPs should be vigilant about.

Navigating Changing Market Conditions

In the current economic climate, Chernobelskiy emphasizes the need for LPs to set realistic expectations and understand the potential risks. He advises against blindly chasing high returns, urging investors to focus on sound investment principles that can withstand shifting market conditions.

“My advice wouldn’t change, regardless of what macroeconomics are in place,” says Chernobelskiy. “What changes is investor sentiment and emotions. Those are very separate, in my opinion, from what is sort of like a healthy investment principle.”

Chernobelskiy cautions that some LPs may take the approach of “well, I’m already in here, so it is what it is, whatever happens happens.” However, he believes that for LPs who have a significant amount of capital invested or a deep understanding of syndications and real estate, it’s important to remain engaged and hold the GPs accountable.

“A healthy GP should keep themselves accountable,” he says. “What tends to happen when GP interests and LP interests start to diverge in distress situations is they need someone else to keep them accountable.”

Chernobelskiy provides an example of a scenario where the GP is reluctant to sell a property at a loss, even if the LP is requesting it, due to the potential impact on the GP’s business and reputation. In such cases, he believes that the LP has a responsibility to step in and ensure that decisions are being made in the best interest of the investors.

Whether you’re a seasoned investor or just starting your passive investing journey, this episode is a must-listen. Chernobelskiy’s practical advice and unwavering focus on aligning interests between GPs and LPs can help you avoid costly mistakes and maximize your returns in the long run.

By taking a more holistic approach, understanding the nuances of deal structures, and being an active participant in your investments, you can position yourself for long-term success in the world of syndication deals.

So, don’t be afraid to ask the tough questions and dig deeper into the deals you’re considering. Your future self will thank you for the time and effort invested in properly vetting and understanding your passive real estate investments.

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This article is for educational purposes only and is not to be relied upon as the basis for entering into any transaction or advisory relationship or making any investment decision. All investments involve the risk of loss, including the loss of principal. Past performance, and any performance results reflected in this article, is not an indication of future results.

Chris Franckhauser

Vice President of Strategy & Growth, Advisory Partner

Chris Franckhauser, Vice President of Strategy & Growth, Advisory Partner for Left Field Investors, has been involved in real estate since 2008. He started with one single-family fix and flip, and he was hooked. He then scaled, completing five more over a brief period. While he enjoyed the journey and the financial tailwinds that came with each completed project, being an active investor with a W2 at the time, became too much to manage with a young and growing family. Seeing this was not easily scalable or sustainable long term, he searched for alternative ideas on where to invest. He explored other passive income streams but kept coming back to his two passions; real estate and time with his family. He discovered syndications after reconnecting with a former colleague and LFI Founder. He joined Left Field Investors in 2023 and has quickly immersed himself into the community and as a key member of our team.  

Chris earned a B.S. from The Ohio State University. After years in healthcare technology and medical devices, from startups to Fortune 15 companies, Chris shifted his efforts to consulting and owning a small apparel business when he is not working with LFI (Left Field Investors) or on his personal passive investments. A few years ago, Chris and his family left the cold life in Ohio for lake life in the Carolinas. Chris lives in Tega Cay, South Carolina with his wife and two kids. In his free time, he enjoys exploring all the things the Carolinas offer, from the beaches to the mountains and everywhere in between, volunteering at the school, coaching his kids’ sports teams and cheering on the Buckeyes from afar.  

Chris knows investing is a team sport. Being a strategic thinker and analytical by nature, the ability to collaborate with like-minded individuals in the Left Field Community and other communities is invaluable.  

Jim Pfeifer

President, Chief Executive Officer, Founder

Jim Pfeifer is one of the founders of Left Field Investors and the host of the Passive Investing from Left Field podcast. Left Field Investors is a group dedicated to educating and assisting like-minded investors negotiate the nuances of the passive investing landscape and world of syndications. Jim is a former financial advisor who became frustrated with the one-path-fits-all approach of the standard financial services industry. Jim now concentrates on investing in real assets that produce cash flow and is committed to sharing his knowledge with others who are interested in learning a different way to grow wealth.

Jim not only advises and helps people get started in passive real estate syndications, he also invests alongside them in small groups to allow for diversification among multiple investments and syndication sponsors. Jim believes the most important factor in a successful syndication is finding a sponsor that he knows, likes and trusts.

He has invested in over 100 passive syndications including apartments, mobile homes, self-storage, private lending and notes, ATM’s, commercial and industrial triple net leases, assisted living facilities and international coffee farms and cacao producers. Jim is constantly looking for new investment ideas that match his philosophy of real assets producing cash flow as well as looking for new sponsors with whom he can build quality, long-term relationships. Jim earned a degree in Finance & Marketing from the University of Oregon and a Master’s in Business Education from The Ohio State University. He has worked as a reinsurance underwriter, high school finance teacher, financial advisor and now works exclusively as a full-time passive investor. Jim lives in Dublin, Ohio with his wife, three kids and two dogs. In his free time, he loves to ski, play Ultimate frisbee and cheer on the Buckeyes.

Jim earned a degree in Finance & Marketing from the University of Oregon and a Master’s in Business Education from The Ohio State University. He has worked as a reinsurance underwriter, high school finance teacher, financial advisor and now works exclusively as a full-time passive investor. Jim lives in Dublin, Ohio with his wife, three kids and two dogs. In his free time, he loves to ski, play Ultimate frisbee and cheer on the Buckeyes.

Chad Ackerman

Chief Operating Officer, Founder

Chad is the Founder & Chief Operating Officer of Left Field Investors and the host of the LFI Spotlight podcast. Chad was in banking most of his career with a focus on data analytics, but in March of 2023 he left his W2 to become LFI’s second full time employee.

Chad always had a passion for real estate, so his analytics skills translated well into the deal analyzer side of the business. Through his training, education and networking Chad was able to align his passive investing to compliment his involvement with LFI while allowing him to grow his wealth and take steps towards financial freedom. He has appreciated the help he’s received from others along his journey which is why he is excited to host the LFI Spotlight podcast and share the experience of other investors and industry experts to assist those that are looking for education for their own journey.

Chad has a Bachelor’s Degree in Business with a Minor in Real Estate from the University of Cincinnati. He is working to educate his two teenagers in the passive investing world. In his spare time he likes to golf, kayak, and check out the local brewery scene.

Ryan Steig

Chief Financial Officer, Founder

Ryan Stieg started down the path of passive investing like many of us did, after he picked up a little purple book called Rich Dad, Poor Dad. The problem was that he did that in college and didn’t take action to start investing passively until many years later when that itch to invest passively crept back up.

Ryan became an accidental landlord after moving from Phoenix back to Montana in 2007, a rental he kept until 2016 when he started investing more intentionally. Since 2016, Ryan has focused (or should we say lack thereof) on all different kinds of investing, always returning to real estate and business as his mainstay. Ryan has a small portfolio of one-to-three-unit rentals across four different markets in the US. He has also invested in over fifty real estate syndication investments individually or with an investment group or tribe. Working to diversify in multiple asset classes, Ryan invests in multi-family, note funds, NNN industrial, retail, office, self-storage, online businesses, start-ups, and several other asset classes that further cement his self-diagnosis of “shiny object syndrome”.

However, with all of those reaches over the years, Ryan still believes in the long-term success and tenets of passive, cash-flow-focused investing with proven syndicators and shared knowledge in investing.

When he’s not working with LFI or on his personal passive investments, he recently opened a new Club Pilates franchise studio after an insurance career. Outside of that, he can be found with his wife watching whatever sport one of their two boys is involved in during that particular season.

Steve Suh

Chief Content Officer, Founder

Steve Suh, one of the founders of Left Field Investors and its Chief Content Officer, has been involved with real estate and alternative assets since 2005. Like many, he saw his net worth plummet during the two major stock market crashes in the early 2000s. Since then, he vowed to find other ways to invest his money. Reading Rich Dad, Poor Dad gave Steve the impetus to learn about real estate investing. He first became a landlord after purchasing his office condo. He then invested passively as a limited partner in oil and gas drilling syndications but quickly learned the importance of scrutinizing sponsors when he stopped getting returns after only a few months. Steve came back to real estate by buying a few small residential rentals. Seeing that this was not easily scalable, he searched for alternative ideas. After listening to hundreds of podcasts and attending numerous real estate investing meetings, he determined that passively investing in real estate syndications was the best avenue to get great, risk-adjusted returns. He has invested in dozens of syndications involving apartment buildings, self-storage facilities, resort properties, ATMs, Bitcoin mining funds, car washes, a coffee farm, and even a Broadway show.

When Steve is not vetting commercial real estate syndications in the evenings, he is stomping out eye diseases and improving vision during the day as an ophthalmologist. He enjoys playing in his tennis and pickleball leagues and rooting for his Buckeyes and Steelers football teams. In the past several years, he took up running and has completed three full marathons, including the New York City Marathon. He is always on a quest to find great pizza, BBQ brisket, and bourbon. He enjoys traveling with his wife and their three adult kids. They usually go on a medical mission trip once a year to southern Mexico to provide eye surgeries and glasses to the residents. Steve has enjoyed being a part of Left Field Investors to help others learn about the merits of passive, real asset investments.

Sean Donnelly

Chief Culture Officer, Founder

Sean holds a W2 job in the finance sector and began his real estate investing journey shortly after earning his MBA. Unfortunately, it could not have begun at a worse time … anyone remember 2007 … but even the recession provided worthy lessons. Sean stayed in the game continuing to find his place, progressing from flipping to owning single and multi-family rentals to now funding opportunities through syndications. While Sean is still heavily invested in the equities market and holds a small portfolio of rentals, he strongly believes passive investing is the best way to offset the cyclical nature of traditional investment vehicles as well as avoid the headaches of direct property ownership. Through consistent cash flow, long term yield and available tax benefits, the diversification offered with passive investing brings a welcomed balance to an otherwise turbulent investing scheme. What Sean likes most about the syndication space is that the investment opportunities are not “one size fits all” and the community of investors genuinely want to help.

He earned a B.S. in Finance from Iowa State University in 1995 and a MBA from Otterbein University in 2007. Sean has lived in eight states but has called Ohio home for the last 20+.  When not attending his children’s various school/sporting events, Sean can be found running, golfing, shooting or fly-fishing.

Patrick Wills

Chief Information Officer, Advisory Partner

An active real estate investor since 2017, Patrick Wills’ investing journey began like many others – after reading the “purple book” by Robert Kiyosaki. Patrick started with single family rentals, and while they performed well, he quickly realized their inability to scale efficiently while remaining passive. He discovered syndications via podcasts and local meetups and never looked back. He joined Left Field Investors in 2022 as a member and has quickly become an integral part of the team as Vice President of Technology.

An I.T. Systems Engineer by trade, he experienced the limitations of traditional Wall Street investing firsthand in his career and knew there had to be a better way to truly have financial freedom.

Unfortunately, that better way is inaccessible to those who need it most. His mission is to make alternative investments accessible to everyone who seeks to take control of their financial future and to pursue their passions in life.

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