In a rapidly evolving real estate market, savvy investors are seeking fresh, innovative ways to maximize returns while minimizing risks. One of the most transformative strategies emerging today is real estate syndication, and at the forefront of this revolution is Craig McGrouther, a young yet highly experienced capital markets expert at Lone Star Capital. With his dynamic approach to private equity, multifamily acquisitions, and syndications, Craig is changing the landscape of real estate investing.
On a recent episode of The Most Dwanderful Real Estate Podcast Ever, hosted by real estate veteran Dwan Bent-Twyford, Craig shared insights on his journey from residential real estate in Silicon Valley to raising capital for large-scale multifamily apartment acquisitions. “We’re in a unique space where we bridge the gap between institutional investors and everyday individuals looking to enter real estate,” Craig explained. His firm, Lone Star Capital, manages over half a billion dollars in assets, specializing in multifamily properties with purchase prices ranging between $30 to $50 million.
Real Estate Syndication Demystified
For many, the term “syndication” evokes thoughts of high-net-worth individuals or institutions with deep pockets. However, Craig is keen to dispel that myth. As he points out, syndication offers opportunities not just for the wealthy but for smaller investors looking to diversify their portfolios. “Syndication essentially pools money together,” Craig said. “You don’t need to be a millionaire to get involved—investors can come in with as little as $50,000.”
Craig broke down the basics of syndication: investors collectively buy into a large property, like an apartment complex, and share in the profits through rental income and property appreciation. This form of direct investment often yields higher returns compared to traditional stock market investments. “You get a fractional interest in the property without the intermediaries, which leads to more creative and higher returns,” Craig added.
1. Accredited vs. Sophisticated Investors
Craig emphasized that there are two primary structures in real estate syndications: 506(b) and 506(c). A 506(c) syndication is for accredited investors—those with a net worth of $1 million or more, excluding their primary residence. These individuals typically have assets like brokerage accounts or investments in other ventures, such as cryptocurrency or real estate.
On the other hand, 506(b) syndications cater to sophisticated investors with whom the firm has a pre-existing relationship. These individuals may not meet the criteria for accreditation but can still invest if they possess the financial knowledge to understand the risks. “With 506(b), we aim to create an opportunity for someone who might not have a million-dollar net worth but wants to invest $50,000,” Craig explained. “We foster these relationships and open the door for them to participate in large-scale opportunities.”
2. Monthly Returns and Transparent Reporting
One of the most appealing aspects of Lone Star Capital’s syndication model is its transparency and consistent returns. Craig shared that investors typically receive monthly checks from the cash flow generated by the property. “We provide regular monthly distributions, reporting, and quarterly updates, ensuring investors are always in the loop,” he noted. Whether someone is writing a $50,000 check or a $10 million check, the firm prides itself on offering the same level of communication and care to all investors.
3. Real Estate as a Hedge Against Economic Uncertainty
With millions of baby boomers sitting on cash, unsure of how to generate returns in a volatile stock market, real estate syndication offers a compelling alternative. Craig emphasized the security and stability real estate investments provide. “Real estate is tangible,” he said. “People are looking for safe havens for their money, and multifamily properties, in particular, have shown resilience through various economic cycles.”
As Dwan Bent-Twyford pointed out during the interview, many investors, particularly those unfamiliar with the intricacies of syndication, might feel intimidated by the process. However, through Craig’s expertise and guidance, it becomes clear that syndication is an accessible, viable option for those looking to grow their wealth without the day-to-day hassles of managing property. “There’s a significant demographic that wants to park their money somewhere safe without dealing with the headache of direct property management,” Craig remarked.
4. Revolutionizing the Investment Landscape
At just 29, Craig McGrouther is leading a new wave of investment strategies that democratize real estate, making it more accessible to a broader range of investors. His work at Lone Star Capital exemplifies how the intersection of innovation, transparency, and relationship-building can revolutionize the way people invest in real estate.
By breaking down barriers and educating potential investors about the benefits of syndication, Craig is paving the way for a future where anyone with the right mindset and a willingness to learn can participate in large-scale real estate opportunities. “It’s all about people before profits,” Dwan concluded, echoing the motto of her podcast and emphasizing the impact of Craig’s work in helping investors succeed while building meaningful relationships along the way.
Real Estate as a Wealth Generator
Craig picked up on Dwan’s point, explaining the difference between traditional investments and real estate syndications. Referring to a Tony Robbins quote, he illustrated how investing $1 million in the stock market 35 years ago could have grown to $26 million. However, investing the same amount in private equity could have ballooned to over $100 million in the same timeframe. This contrast demonstrates the profound benefits of syndications, where direct ownership offers unique advantages.
Syndications, Craig explained, allow investors to achieve 5-7% cash-on-cash returns, with the added lift on the back end. He pointed out that compounding interest is a key factor in wealth accumulation and emphasized that diversifying into real estate syndication offers a smoother, more efficient way to achieve financial growth. With direct ownership, investors can experience the benefits of time, money, and compounding interest in a more creative manner.
The Tax Benefits of Real Estate and Energy
Craig further elaborated on the tax advantages of investing in real estate. He mentioned that the government provides incentives for investors who supply energy or shelter. While oil and gas offer the highest depreciation benefits, real estate comes in a close second, allowing investors to leverage deductions and achieve outsized returns. He encouraged listeners to educate themselves on the tax code to maximize these opportunities.
Dwan and Craig both agreed that real estate has consistently been the top asset class for new millionaires, as noted by Forbes. Year after year, real estate continues to be a reliable source of wealth creation, providing housing and shelter—a necessity that never goes out of demand. Craig noted that even with the economic challenges and rising interest rates, real estate remains a resilient investment vehicle.
Hedge Funds and the Real Estate Market
A key issue Craig touched on is the growing role of hedge funds in the housing market. He cited a statistic from Unusual Whales on Twitter, showing that it’s now 80% harder to buy a home than it was just four years ago. Hedge funds have entered the market and absorbed a significant portion of housing inventory, creating what he called “ghost inventory.” This shift has transformed homes into commodities rather than places for the average family to own, making it increasingly difficult for regular buyers to enter the market.
Craig shared his own experience, explaining how he recently sold his home and bought a new one. While his mortgage payment is now higher, he views the current market as an opportunity. As interest rates eventually decrease, Craig plans to refinance, leveraging his position in an interest-rate-sensitive industry. This strategy highlights the importance of timing in real estate and understanding market fluctuations to maximize returns.
Inflation and Real Estate as a Hedge
Inflation, Craig explained, is another key reason why real estate remains an attractive investment. He mentioned that costs will only rise in the future—whether it’s construction expenses, wages, or rents. By investing in real estate now, investors hedge against inflation and ensure that their assets will appreciate over time. Craig emphasized that while there may be uncertainty about rent increases, the cost of building new properties will undoubtedly go up, making existing real estate even more valuable.
He reinforced the idea that, unlike other sectors like retail or office spaces, where trends such as remote work and e-commerce have taken over, people will always need housing. This constant demand makes real estate an enduring investment, as automation cannot replace the need for shelter.
Historical Low Interest Rates and Refinancing
As Dwan and Craig reminisced about the historically low interest rates of the past few years, they discussed how homeowners were able to refinance their properties and secure ultra-low rates. Dwan shared her experience of refinancing her Colorado home at a 2.6% interest rate, a move that allowed her to free up capital for other ventures. Craig highlighted a similar story where a friend secured a 2.6% interest rate with just 3% down, turning a small initial investment into substantial equity gains.
The consensus between Dwan and Craig was that opportunities like this may not come around again anytime soon. However, they both believe that real estate still offers a pathway to wealth, especially for those who can weather the fluctuations in the market and capitalize on favorable conditions when they arise.
The Enduring Appeal of Real Estate
In closing, Craig emphasized that real estate’s enduring value lies in its necessity—people will always need a place to live. Unlike other sectors that can be outsourced or automated, the demand for housing is constant. He advised listeners to take advantage of the current market conditions, secure their investments, and let time and inflation work in their favor.
Dwan echoed Craig’s sentiments, underscoring the importance of staying informed, investing wisely, and understanding the unique benefits of real estate syndication and equity. Together, their insights provide a roadmap for anyone looking to revolutionize their approach to real estate investing and secure long-term financial growth.
The Importance of a Solid Routine
Craig began by sharing his love for working out, describing how it serves as the perfect start to his day. He emphasized the importance of setting the tone early on, explaining how morning workouts boost his energy and prepare him to be productive. While many fitness gurus stress the need to wake up at the crack of dawn, Craig made it clear that it’s not about following someone else’s routine. Instead, he believes in doing what works best for each individual.
For him, early mornings are the ideal time to tackle his cardio sessions and gym workouts. “I like to wake up at 6:15 a.m., roll out of bed, and get straight on the treadmill. It sets up my day and gives me the energy to be productive,” he said. While Craig enjoys his mornings, he stressed that finding what works best for you is key to being effective.
The Power of Urgency
In every industry, especially in real estate, time is of the essence. Craig highlighted the significance of acting with urgency in both personal and professional spheres. According to him, procrastination can be the biggest enemy to success. “I think urgency is a very high indicator of someone’s success,” Craig noted, encouraging listeners to take action rather than delay.
As someone responsible for handling investor capital, Craig understands the importance of getting things done promptly and efficiently. He emphasized that time is always slipping away, and in the service business, it’s crucial to move quickly and stay ahead. His advice? Set goals, be impactful, and make things happen.
Big Goals on the Horizon
When asked about the biggest goal he’s working on right now, Craig didn’t hesitate. His firm is on a mission to reach $1 billion in assets under management. Currently sitting at around $600 million, this ambitious target is one of the primary focuses for Craig and his team.
While the journey to that milestone could take a couple of years, depending on market conditions, Craig remains optimistic and focused. He’s always on the lookout for more investors to join him on this exciting journey. For anyone interested in learning more about real estate syndication and potentially investing, Craig is open to connecting and sharing valuable insights.
The Power of Collaboration
Craig’s approach to real estate is not only rooted in his own success but in helping others succeed as well. He and Dwan discussed the value of collaboration and how important it is to share knowledge within the industry. Dwan, who has been investing for nearly 35 years, wholeheartedly agrees with this philosophy. She often refers people interested in syndication to Craig, understanding the importance of playing to each other’s strengths.
Craig’s goal of reaching $1 billion in assets is an invitation for others to be part of something bigger. His enthusiasm, expertise, and drive make him the perfect partner for investors looking to expand their portfolios through syndication.
A Word of Wisdom: Urgency
As the conversation wrapped up, Craig left the audience with a single word to focus on for the week: urgency. He encouraged everyone to approach life and business with a sense of purpose and immediacy. “Time’s always slipping away. If you want to get ahead in life, you can’t afford to be out to lunch,” he emphasized. By acting with urgency, Craig believes you can achieve far more than you ever thought possible.
Final Thoughts
Real estate syndication is revolutionizing how people invest in property. Craig McGrouther is leading that charge by helping investors pool resources and gain access to larger, more lucrative investments. His disciplined approach, combined with a passion for transparency and investor success, makes him a standout leader in the field.
If you’re interested in learning more about real estate syndication, equity investment, or simply looking for guidance on how to get started, you can visit our website, Dwanderful, or book a consultation call to discuss your real estate goals with us. Together, we can help you unlock the potential of real estate to build lasting wealth.
By embracing syndication and working with experts like Craig, you can start taking significant steps toward financial freedom through real estate.
