Spotlight Episode: Risk Mitigation Strategies: Insights from Ryan Stieg


Navigating Deals Gone Wrong: Hard Lessons for Passive Investors

Uncover insider perspectives on syndication investing pitfalls from Ryan Stieg, CFO and Co-Founder of the Left Field Investors Community. He joins host, Chad Ackerman, to transparently detail an early high-referral offering that ultimately failed despite initial positives. Ryan reflects on communication gaps, due diligence shortcomings, and the importance of portfolio diversification when assessing setbacks. Read on for a thoughtful exchange on precautions passive investors must consider when evaluating private real estate sponsors.

The Pitfalls of a Referred Opportunity

Ryan Stieg’s real estate syndication journey traces back to a specific investment referred through trusted contacts. 

The well-regarded operator offered two structures: 

1) Turnkey rental properties fully managed by their team

2) A liquid private debt fund collateralized by their assets

The flexible options and strong background checked key boxes for Ryan’s criteria.

He began regularly contributing capital to the debt fund option. For over a year, the fund performed reliably, delivering consistent interest payments and timely investor liquidity upon redemption requests. Thus, there were no glaring red flags emerging from the tidy operations and communications.

However, following broader market shifts from mid-2022, various concerns crept into view. The frequency of portfolio updates from sponsor representatives started notably declining. When Ryan eventually submitted a redemption request, delays and excuses prevented processing. Before long, communications halted entirely amidst revelations of severe financial and operational distress.

In retrospect, earlier cracks previewed foundations proving unsound all along. Still the lack of transparency meant issues evaded detection. Once a cascading crisis erupted, massive over-leveraging, property deterioration, and mismanagement showed an enterprise lacking proper controls and oversight. Yet again, passive investors suffered from placing too much trust in sponsors failing to safeguard resources.

Scrutinizing Leverage Risks and Organizational Strength

Given most real estate investments utilize debt financing on assets to boost returns, assessing leverage risks ranks among the most vital due diligence areas. What levels of borrowing are comfortable for a sponsor’s risk appetite? Does their track record show prudent use of leverage? What economic conditions could upend their strategy?

According to Ryan, probing financial structures and modeling stress scenarios helps gauge risks from the start. If particular offerings seem overly reliant on debt or thin margins to achieve projected returns, elevated vulnerabilities likely loom. Also confirm if operating agreements permit higher leverage than disclosed.

Beyond leverage, evaluating overall business enterprise strength acts as another key underwriting step. Well-run organizations exhibit cohesion and alignment across functions. Thus warning signs like internal team conflicts or proceeds mingling cloud entity separations. Reputable sponsors welcome transparency.

Additionally communication flows and protocols demonstrate priorities. Sponsors leading investors through turbulence withstand long-term partnerships. Unfortunately hindsight unveiled weaknesses in operations and oversight too late for remediation once capital infusion needs snowballed.

Mitigating Risk Through Diversification

Ryan notes even the most prudent due diligence gets tested by unpredictable events. Opaque operations impede exit abilities absent proper disclosures. Still passive investors can mitigate risks by spreading capital across multiple investments.

Concentrations within single sponsor offerings or narrow strategies magnify downside exposures. Ryan advises diversifying across locations, asset classes, and operators as the foremost protective step. This way poor results from one deal avoid massively rippling through a broader portfolio.

Ideally building allocations following portfolio theory principles helps stabilize volatility too. Combining lower-correlation assets allows gains from more successful ones offsetting underperformers. Unfortunately, lack of diversification left fewer options once the referred debt fund spiraled.

Signposts to Monitor as Investments Evolve

Even diversified private equity investments warrant ongoing monitoring for changes potentially impacting returns. But absent proactive disclosures, investors operate informally to better understand underlying holdings.

According to Ryan, alterations in communication regularity and depth act as early warning signposts on sponsored deals. Timeliness in replying to information requests also matters greatly, especially involving capital planning insights.

Once operational hiccups arise, reputable sponsors redouble transparency rather than permitting uncertainties to silently compound. They openly review emerging challenges alongside mitigating actions in the works. Whereas extended periods without substantive portfolio updates typically foreshadow bigger issues brewing.

Ultimately investors need to examine red flags, push sponsors on opaque developments, and extract themselves from deteriorating situations before it’s too late. But misplaced trust and inaction on early clues unfortunately enable losses compounding.

Key Takeaways for Avoiding Investment Pitfalls

Ryan Stieg highlighted several lessons from his referenced deal gone awry:

  • Thoroughly assess how leverage gets utilized in capital structures to understand risk exposures
  • Review operating agreements and stress test worst-case scenarios that could unfold
  • Portfolio diversification represents the foremost protective step for passive investors
  • Ongoing communication represents a crucial sponsorship duty, especially amidst turbulence
  • Unexplained delays responding to information requests or discussing issues may signal troubles

By spotlighting precautions investors must consider when selecting partners, this discussion examined syndication investing hazards beyond returns and legal provisions alone. Evaluating human dynamics around transparency and integrity also steers outcomes as unforeseeable events inevitably test working relationships.

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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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