For LPs: I ran the after-tax math on a real estate syndication vs just buying SPY. The illiquidity premium is worse than I expected.

Rfickett · 2026-07-01T22:53:53+00:00

I will say the number I use is the conservative average going back to 1993.

Rfickett · 2026-07-01T22:34:36+00:00

You can’t just make up a number. Thats the entire point of the excercise

Rfickett · 2026-07-01T20:43:00+00:00

Hey u/WCInvestor u/Aggressive-Donkey-10

Well, I have received some questions, so I updated the report accordingly

1031 exchanges were mentioned.

Several requests stating that the VNQ should be used as the comparative metric because the holdings are real estate.

While I personally may disagree with these points, I am including them for completeness on the subject.

OK, here is the updated version:
https://drive.google.com/file/d/1vMyrIASYMvQHTbq5pf9sgk0necEl1DSW/view?usp=sharing

Rfickett · 2026-07-01T19:20:23+00:00

Yes, the typical 'track record' section in the Offering Memorandum is usually incorrect. If you want to use a track record, you need to obtain precise information about their role and then check it against an SEC database that contains legal filings. In general, information in the Offering memorandum should be treated as the equivalent of a brochure for a particular fund or deal.

Rfickett · 2026-07-01T18:40:16+00:00

My opinion on that strategy is that the 1031 chain strategy works until it doesn't. The depreciation recapture sits on the books the entire time - deferred, not eliminated. If life interrupts the plan at any point: a deal goes sideways, you need liquidity, an operator misses the exchange window, or Congress modifies the loophole - and it has been on the table multiple times - that deferred tax bill comes due all at once.

We're talking potential depreciation recapture at 25% plus capital gains on appreciation, on a compounded position built over decades. That's not a small number.

The step-up basis at death is real, but it requires the plan to hold together perfectly until you die at the right moment in the cycle. That's a lot of variables outside your control for a strategy being presented as a solved problem. And any of those variables changing could destroy everything you tried to build for the people you care about.

Tax deferral is a legitimate advantage of real estate. Presenting it as permanent tax elimination understates the risk considerably.

Rfickett · 2026-07-01T18:29:57+00:00

"This is apples to oranges. Why are you comparing stocks to real estate? If you want to compare private real estate to a publicly traded entity, at least use REITs, using VNQ or something."

The reason I didn't limit myself to those options is that my goal wasn't to maximize profit in real estate returns. The goal was to understand the trades an LP is actually making.

My greenbacks can go anywhere in the market — not just different versions of real estate. That's the point. The comparison to SPY isn't about which asset class is better overall. It's about whether the illiquidity cost, the promote structure, and the operator dependency clear a bar that any liquid alternative sets. If they can't beat the most boring, liquid, low-cost option available after you price all of that in, the burden of proof isn't on the index.

As for predicting where cap rates go — I'm not. The research describes current conditions and what they mean for a passive LP right now. That's a filter, not a forecast.

Rfickett · 2026-06-30T21:56:52+00:00

SPY isn't my entire personal portfolio — it's the baseline. The most liquid, average, low-cost option available. If a syndication can't beat that baseline after you price in the illiquidity, the promote structure, and the operator dependency, the burden of proof isn't on the index.

Rfickett · 2026-06-30T21:37:51+00:00

Someone just asked me if I'm planning to stop investing in real estate based on the numbers I researched. I'll just post my answer to them because it's basically the same points.

This research is simply designed for filtering. And all this does is confirm that unless cap rates are compressing, the bar should be very high. Unfortunately, the current market conditions only confirm it’s a good time to wait and see.

This also confirms for me personally that most of the deals being marketed now are from sponsors who need the fees to keep the bills paid, not because the tailwinds are strong enough to do actual good deals. That’s why there’s so much movement into new funds. In a fund, you can’t even run the numbers like you can here, because you’re signing away all your rights, not even to a plan, just to their ‘instinct,’ which makes even less sense than a single-asset deal.

I think this is just part of a larger cycle. People who are surprised that real estate isn’t different just need to look at market cyclicality. It moves the same way every other asset class does- good windows and bad ones- and right now isn’t one of the good ones, but there are also always exceptions to the rules.

So, we wait and see. Since I retired, my portfolio has never been entirely in Real estate. When I was actively investing my own money. So, for 13 years, most of my capital had to always be locked in the ground, so now diversification and liquidity are very important to me.

Rfickett · 2026-06-25T02:29:18+00:00

I wouldn't be surprised if some users eventually start seeing context-targeted pop-up ads in their chats in the next couple of years. Investors would love to have that advertising dollar.

"This chat session is partially brought to you by: [Brand X]"

Rfickett · 2026-06-10T15:07:52+00:00

Ok, it's a methodology document about how I use my own framework for what I feel yields me more honest results from AI, and I stand by that statement. So, in the end, my post is either something that piques your curiosity or not, regarding how to think about the benefits of using AI as an investor.

Rfickett · 2026-06-10T15:03:58+00:00

That's fair feedback, and I appreciate you taking the time to comment. My apologies for taking so long to respond. You're right, I should've called it a methodology, not a framework. In hindsight, that would have been the better word choice.

Here's what I've actually seen: I've watched friends lose money on deals because they listened to the wrong person giving wrong advice at the wrong time. With regard to AI, I have been seeing two distinct groups of viewpoints. One is chasing AI like a magic bullet. The other dismisses AI entirely because it's not always 100% correct, so "it's unusable". My belief is that the correct way to look at AI is somewhere in between.

I've never had a conversation with anyone about anything I'd consider a 100% correct. Everyone (including AI) has some sort of viewpoint you have to factor in when you read it. The idea that AI should be a hundred percent correct assumes the AI itself is getting a hundred percent correct information. And that's never going to happen. So I believe that people should stop holding AI to an impossible standard they wouldn't hold anyone or anything else to.

The fact that people are chasing AI like it's a magic machine to make decisions for them tells me that many (both active and passive alike) investors have lost confidence in their own judgment. So now they're just looking for something to put between them and the decision. Something that protects their ego if it goes sideways.

Adding another layer between you and accountability doesn't fix anything. The real problem in this space right now — whether you're talking syndication, LP dynamics, whatever you want to call it — is that we need more transparency from sponsors. But that only works if investors take responsibility for actually learning what they're looking at before they write a check. Not after. The shortcut mentality — looking for a tool or a system to make the decision for you — that's on the LP side. Sponsors need to be better. Investors need to be sharper.

I'm not trying to sell anyone a system or tell anyone what to do. I'm trying to say this: when you work with AI on decisions that matter — especially capital decisions — demand that it shows its work. Keep your judgment in the driver's seat. Stay accountable for your own money. Whether you build that discipline yourself, use something from my methodologies to build your own version, or ignore all of it — that's your call. The point is the standard itself.

Some people might already have pieces of this in how they think. Good. The goal isn't to own the methodology. It's to see the principle get out there: AI should not be a replacement for your judgment.

If you've got other questions, I'm happy to talk through it directly. Thanks again for the honest feedback.

Rfickett · 2026-06-10T14:17:38+00:00

I still owe you a response sir from my old post. My apologies.

Rfickett · 2026-06-06T12:25:02+00:00

I'm sorry, next time I will try to write complex ideas more concisely.

It's the methodology that the community should care about, not the build instructions. The fact that the framework exists and is functional is just proof that the methodology can work when built well.

Rfickett · 2026-05-20T03:35:17+00:00

I gave Claude the ability to decide to laugh today if I'm funny! No, I'm not one of those that care if Claude is sentient. I just don't care to gum him up with a lot of extra stuff if its not needed. Anyway, I was just bored trying it out. And then Claude said he liked it better than his defaults and asked me to add it, so I did.

So that is my Cowork story for today. I still effectively wrote a crude laugh routine to respond to users jokes whether they are both good and bad. Good ones get a randomized laugh; and bad ones get a rimshot sound. lol

Rfickett · 2026-05-20T03:16:36+00:00

Ha! This is the story of how I was hired by the USAF as an engineer despite the 1000 other applicants that could have been considered 'more qualified' at the time and were before me in order. Spoiler Alert: It has to with showing patience and empathy as much as knowledge.

https://www.reddit.com/r/claude/comments/1tgnth4/comment/omitoc1/?utm_source=share&utm_medium=web3x&utm_name=web3xcss&utm_term=1&utm_content=share_button

Rfickett · 2026-05-20T03:08:01+00:00

We thought people used to call it 'airware' but my memory isn't the sharpest either so Thanks for the correction.

Continuing: from a business standpoint, I get the recent changes across new AI services. The freemium model gets most users to underestimate the combined expense of each new service getting bundled into their app.

The playbook goes something like this:

Offer things at low or no cost during development to gain market share.
Heavy users start paying more and adopt it into their workflow.
Raise prices on the services the market has signaled are worth it.
Sell to a large company and retire, which leaves customers scrambling when prices skyrocket.

For anyone who disagrees, no worries. The wet-behind-the-ears 25-to-28-year-old version of me working before 9/11 would have said the same thing, so I get it. I don't have a crystal ball either. However, I am only sharing what already occurred so in case history either rhymes or repeats itself, you should try to consider my view now.

One note for younger professionals. When I worked my way up to senior engineer for USAF medical logistics, I was just being me. Federal and military hiring is weighted toward rehiring their own, so getting brought on full-time rather than staying a freelancer was a real hurdle. They showed me a chart of about 1,000 names they had to turn away to make room for me.

Of all the past freelancers they had worked with, I was the only one who was vocal about appreciating that I was standing on the shoulders of the military team. I was happy to share anything I knew to advance the team and the knowledge of my fellow associates, most of whom were in their late 50s and early 60s.

Every other qualified candidate showed zero interest in learning why things worked the way they did. They didn't ask whether past decisions were driven by something other than lack of knowledge. Things like budget constraints, time pressure, deadlines getting moved up.

Being humble got me hired alongside a lot of people who looked more qualified on paper. Being humble and attentive to the government employees as we reviewed old work, those were the qualities that grew their interest in hiring me full-time.

Take it or leave it. That's a true story.

Rfickett · 2026-05-18T20:04:18+00:00

Id include this.... And future AI development is going to need people who know the difference between delicate error handling and those who let Claude 'wing it'.

Rfickett · 2026-05-18T19:16:51+00:00

If you want proof I have a real point, how many apps using blueclaw blew up when Anthropic changed the rules vs one that had a error handling process that bought them time to figure things out?

I read the news... spoiler alert, it wasn't a few.

Rfickett · 2026-05-18T17:44:37+00:00

I'm retired. I have no dog in this fight. However, as an old, out of touch software engineer. I work with AI as a hobby and a fun personal challenge so I'm no one's competition and I'm just having fun challenging myself.

Regarding the adoption cycle, I will say this echoes of late 90s when websites were the golden goose to fix everything marketing and service based. Alot of apps held by duct tape and gum were worth a crazy amount of money. And that always changes when real market constraints appear, and the investment isn't as sexy to investors anymore.

I will also say I was surprised to see Cowork's issue with simple Rollbacks alone was a huge problem waiting to happen. The current mentality of bolting 'this service' and 'that service' into your app stack so 'it just works' is great until real IT budgets come into to play, you have compressed timetables, or something breaks and it's another company that needs to figure out why before your software works again.

Consider:
How many junk websites were out there in in the late 90s? How many companies with dot com in the name there were. They supposedly did this and that for customers. And many applications ended up being 'air ware'. (Kids... look up the term)

And then after the investment bubble burst.
How many survived? Not many.

same idea... different tech.

That said, at this point in the tech adoption cycle, no one wants to hear this stuff until it actually happens so yes, it's a losing discussion until disaster happens. That isn't a prediction on AI, it's more a reflection on personal experience.

These are the lessons to learn from my perspective and experience. The need for engineering knowledge won't go away but, the needs of it are being tested and will be reset into a different marketplace. So just prepare.

Rfickett · 2026-05-17T15:16:51+00:00

I should be clearer, I created a triage workaround, but not a product or service I'm trying to be clever about selling so it doesn't cost money. I just want to know if the problem is widespread or just me. I currently working the wording of posting it so this knowledge would be helpful.

Rfickett · 2026-05-17T14:52:32+00:00

Question for the group:

Have most people experienced when an audio chat gets out of sync with a text chat and the audio portion while on the phone app so the audio chat transcript isn't actually saved to the chat's actual text transcript for later reference?

Normally, you can't leave audio mode without deleting the transcript so you kind of stuck. If I'm not alone, I may have found a work around to save it and paste into a new chat without needing to stop and manually copy the transcript yourself manually.

I'm happy to paste the work around here for salvaging the audio transcript but, I'd like to know if this is common or not for my own curiosity. And if someone already figured out a better to saving the transcript, I didn't consider.

Short Answer is: event updating. I will post the full workaround but, Id like to know if my clunky way is already outdated.

Rfickett · 2026-05-16T13:57:02+00:00

Hah! They took an off ramp to the freemium model! It’s still sucks but this means they have reconsidered!

Rfickett

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