Folks, it's 2000 (or 2008) all over again.

[Ubermensch]

I have made a lot of money repositioning properties. It is a great way to go.

My biggest concern is the current high demand and the number of players in the game that are driving the pricing.

Right.

Like any opportunity, the "target market" would be a subsection of the overall market.

I would not approach "Wall Street," institutional owners with my concept.

I would approach Main Street owners - private and individual owners who own mid-sized portfolios.

The guy with a few office buildings between 50,000 square feet and 600,000 square feet? I want to talk to him.

Why not just use the brightest, smartest brokers and identify the properties that would be a good fit?

All-electric buildings.

Distressed properties in PACE eligible states where the electricity prices are astronomical.

There is some ability to generate income though upgrades and, by your plan, reduce expenses.

I have case studies demonstrating the savings.

It's not just theory.

It's real dollar savings driven to the bottom line.

I wouldn't be talking about using my own money otherwise.

Especially something that may take years to come to fruition.

The projects can be knocked out quickly. Some, within a matter of mere weeks.

The End Game depends on your ability to potentially source buyers for the future upgraded property.

 

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[SteveO]

Eh... I don't know. I don't think a three year hold is necessary. That strikes me as an overly bearish assessment.

However, changing energy levels equals changing Net Operating Income levels.

When a building owner lowers his energy consumption by 30%, his energy bill drops.

He profits more on the building.

He and his shareholders take more home when it's time for disbursements.

First let me say that you are putting some incredible thought into this and have laid out a great plan. Your initial goals appear to start BIG. I like that. But with a process like this, there will be a lot of learning. Once you have gone though it, you will see it in an entirely different light. The second, third and fourth deals will seem very different with many tweaks along the way.

I have been in these negotiations. If you don't have a full year of operating history with the upgraded numbers, most of these sophisticated buyers will not go for it. If there are less than two years, the buyer will likely want a discount for that time. Two years is the norm to get the old numbers off the books. That means at least 2.5 years plus the time to sell.

 

[SteveO]

Right.

Like any opportunity, the "target market" would be a subsection of the overall market.

I would not approach "Wall Street," institutional owners with my concept.

I would approach Main Street owners - private and individual owners who own mid-sized portfolios.

The guy with a few office buildings between 50,000 square feet and 600,000 square feet? I want to talk to him.

Why not just use the brightest, smartest brokers and identify the properties that would be a good fit?

Hahaha... I think you will find the opposite to be true. The biggest operations are not near as diligent as the private owners.

The brokers that appear to be the brightest and smartest are usually just the best salespeople. I don't listen to their opinions due to the nature of their job.

Don't get me wrong. I am not trying to talk you out of any path. I am simply pointing out my experiences. I have bought and sold properties greater than 10M and have a pretty strong sense of the dynamics.

I do like your hunger though and hope you kick a$$ with it.

 

[Ubermensch]

First let me say that you are putting some incredible thought into this and have laid out a great plan.

"Plan All the Way to the end."

The ending is everything.

I've found in my career that if a concept works in the commercial sector, it will have natural parallels in the residential market.

The commercial market, with the sheer size of the transactions, yields extraordinary high paydays, under the right scenarios and conditions.

Your initial goals appear to start BIG. I like that. But with a process like this, there will be a lot of learning.

It took me 1,000 days.

I first heard about PACE in 2013.

I have learned a lot.

My initial goal was to start BIG.

Today, I am closing the largest PACE deals in the country, with companies like CleanFund.

Check them out: www.cleanfund.com

Joe Euphrat is one of their Managing Directors. He's my guy.

I plan to do $100M total business with him this year.

Once you have gone though it, you will see it in an entirely different light. The second, third and fourth deals will seem very different with many tweaks along the way.

I'm finally at the END of the process.

The lights are installed.

The energy bills have been lowered.

The property value has been obtained.

The building is ready to be sold.

I have been in these negotiations. If you don't have a full year of operating history with the upgraded numbers, most of these sophisticated buyers will not go for it. If there are less than two years, the buyer will likely want a discount for that time. Two years is the norm to get the old numbers off the books. That means at least 2.5 years plus the time to sell.

Very insightful.

It has, indeed, been around 2.5 years since I began working on PACE, and only now are the first deals closing.

If you're willing to sign a non-disclosure, I'll discuss the details of my client, which is the ideal case study for the business plan we've been discussing.

 

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[SteveO]

Very insightful.

It has, indeed, been around 2.5 years since I began working on PACE, and only now are the first deals closing.

If you're willing to sign a non-disclosure, I'll discuss the details of my client, which is the ideal case study for the business plan we've been discussing.

Well that sounds like great timing because now is a great time to sell.

I would love to see the numbers after the sale concludes. Let me know when it is complete and I will pm you my email.

As for the original conversation on this thread, I personally would not start a project at this time. Too many potential downside variables for my taste.

 

[Ubermensch]

Well that sounds like great timing because now is a great time to sell.

I would love to see the numbers after the sale concludes. Let me know when it is complete and I will pm you my email.

It's already done.

Closed.

@Ubermensch Always Be Closing.

 

[Chitown]

but the valuation methodology out there, and the risk pricing folks are pursuing is to me more than aggressive, presuming upside of future revenue streams that is difficult for me to get on-board with...

@JustAskBenWhy,

Stuyvesant Town/Peter Cooper Village, anyone?

 

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[Victor999]

If you have at least $200k liquid cash saved up, you have some good options.

Totally agree with you, cash is KING anytime !!

 

[Chitown]

t's already done.

Closed.

@Ubermensch Always Be Closing.

@Ubermensch,

Sounds like a great strategy. Congratulations!

 

[Kallin Trotman]

I agree, I predict we will see crashes around the world this year. The US never recovered from 2008, it has been propped up by the fed and they have very few cards left to play.

I believe it is still about 6 months away and we may see strong rallies up until then (even after the bad start to this year). I also believe sometime around the US election has high chances.

Position yourself right and it will be profitable. Opportunities.

 

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[Ubermensch]

At 11:10am, you posted that "The building is ready to be sold."

At 11:27am, you posted that "It's already done. Closed."

Did the closing take place in that 17 minute period?

Context.

I was referring to the PACE project financing.

@Ubermensch,

Sounds like a great strategy. Congratulations!

Indeed, now that the owner has reaped the benefits, time to start doing this myself, with my own capital and potentially OPM.

 

[Ezio]

http://www.zerohedge.com/news/2016-01-21/recession-signs-2008-now

 

[Ezio]

Good article about China.
http://www.zerohedge.com/news/2016-...utcome-major-yuan-devaluation-would-be-disast

 

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[MKHB]

First, I appreciate the recommendation, and not saying it's not a good one. But, I can't figure out this math (and I'm familiar with PACE)....

You purchase a property for $20M. You spend some amount (let's say $500K financed with PACE) to make the property more energy efficient. Then you sell the property for $23.5M (the $23M sale price and the $500K financed upgrades paid through the tax bill).

I'm very familiar with adding value to properties (I've written books on the topic), and for a $500K investment in energy upgrades to generate $3.5M in additional equity (i.e., 7:1 value to cost) isn't realistic in my experience.

You're in Ohio?

Why not put PACE projects to work.

Poof.

Side-lined investor money flies into projects that result in 10% - 35% IRR's.

PACE is the best thing in real estate right now since land.

PACE - stands for Property Assess Clean Energy

PACE - is growing throughout the nation.

PACE - is often the topic of conversation at the White House.

PACE - allows both commercial and residential property owners to upgrade their homes with energy efficiency type upgrades. Dozens of initiatives - from LED lighting to HVAC to solar and renewable technology, controls, window film, roofing upgrades... - apply.

PACE - stands for Property Assess Clean Energy. The amortization lengths are 15 - 30 years, depending on the region (32 states are currently PACE eligible, with more on the way).

PACE - is structured as a tax assessment on the property.

Therefore, it is not like traditional debt financing.

The financing, in essence, stays with the property after the sale.

So, you take a $20,000,000 office building.

Increase its value to $23,000,000.

15% increase.

Take 3 - 9 months to do with, with a PACE project.

Depending on your lease structure with the tenants, you can pass back the costs to them.

Sell the property for $23,000,000.

That's for both residential and commercial.

Ubes, you're pretty close.

Here are the real numbers to your grand plan.

You will notice that without having to should the carry costs and the acq. and disposition costs the NPV of completing these these improvements
is significant.

Therefore, it would be better approached as a performance contract, vs. an asset play. Unless you have a revolver from Wells or B of A you would be better off playing sponsor with a institutional JV partner on a contingency basis.

MK

 

[MJ DeMarco]

I think this is the third one in so many weeks...

http://www.businessinsider.com/orange-capital-closing-letter-to-investors-2016-2

Liquidity is becoming a reoccurring theme.

 

[Bellini]

Have any of you read the book "AFTERSHOCK" by Robert and David Wiedemer?

I bought it back in 2011 when it came out and while it's not the most well written book, it is informative. The authors basically remind people that they correctly predicted the 2008 recession even though no one would listen, and are calling for a major 'aftershock' for around 2016. (Which they say will be far worse than the first one) They also give basic recommendations about what to avoid and what to do financially.

Robert Kiyosaki has also been telling people for about 30 years (in books, videos, lectures, etc) that there would likely be a major devastating recession starting around 2016. He got that from his father, who told him that the baby-boomers would start retiring around then / now, and that the social security deficit would start a domino effect.

Obviously if that happens that is only one of many things that would probably be happening simultaneously. Couple that with the results from QE and the myriad of other travesties and yeah, there is likely something bad brewing.

I don't know a lot about economics, but I have a feeling that currently we are being 'propped up' and might be so for a while, which could possibly delay said '2016 recession' for a few years.

I do, however, have a bad feeling about 2018.

I hope I'm wrong. I hope they are wrong.

Best we can do is be prepared.

 

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[Rawr]

F*ck, i need to A)make more $ asap. and b) find a biz that if not at least buoyant then profitable in the recession. I suspect fictions books might be anyway, but still.

 

[Greyson F]

F*ck, i need to A)make more $ asap. and b) find a biz that if not at least buoyant then profitable in the recession. I suspect fictions books might be anyway, but still.

"Are you suffering from deep poverty? Go on an adventure for only $2.99! *Disclaimer: must also have Kindle*"

 

[Tiger TT]

Best we can do is be prepared.

How?

Is building a fastlane business enough? Or is there
some other specific things that we need to do to
be prepared?

 

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[Bellini]

How?

Is building a fastlane business enough? Or is there
some other specific things that we need to do to
be prepared?

I think building a fastlane business is a good idea no matter what but you might want to consider if your business is something that can weather a recession fairly well. Just something to keep in the back of your mind.

Same goes for a slowlane job. During the 2008 recession people were getting layed off left and right and couldn't find other jobs which was scary. I would think having a basic, needed skill or trade would be very helpful during tough times.

As far as preparation, I am still learning myself. I would suggest reading the book Aftershock or other books that talk about it. I know some of the gurus say get out of stocks if you are in them because they will plummet. They say hard assets, commodities, precious metals are the best places to be if the dollar crashes. * I am not giving advice, just quoting what others have said.

There seems to be a scale with people concerning how far they go to prepare, being anything from investment adjustments to all-out physical 'preppers' (storing food, water, supplies, gardening, etc) Each person's situation is unique. We don't need to live in fear but perhaps just make some adjustments. It doesn't hurt to be prepared, even if nothing happens.

 

[Superwoman]

SO.....a good time to have a cash position?

We're thinking of selling our current house now, renting, and seeing where property values are in six months. @Red ?

We are also looking at selling our home, (for other reasons than listed here), and our Canadian investment property. Would love to sell my mountain property, but that ain't happening.

 

[Superwoman]

How To {NOT} Get Screwed by Your Real Estate Agent

(But sorry, there's no tax advice in there, LOL)

I just bought your book!

 

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[Superwoman]

I live in a city that is driven by oil and gas, in a province that pretty much solely relies on it. I saw the writing on the wall and sold my place in November 2014. Been renting and watching since then, and glad I have. Houses in the price range I had are not moving. I have a friend in the neighborhood and my old neighbour have both tried selling their places (way nicer than mine was, listed for the same price as mine was) and they have gotten zero interest from buyers.

I went for a bike ride with the ex grumptycat/rich kid in the fall and we counted the number of houses for sale along a lake-front street. Literally 1/3rd of them were for sale. Of course it all depends on where you live, but we are about to get hammered. Prices have not fallen yet, and people think they won't ever (real estate always goes up!), but nothing is selling.... something has to give.

Which province? I have a vacation place in BC.

 

[MJ DeMarco]

GPRO has tanked, never quite understood how that company could go public since wearable cameras aren't consumable. When the stock was trading in the 70's I was left scratching my head. Today it's a single digit stock, no more head scratching.

Today it's LNKD in's turn, reporting poor earning performance. Stock is down 38%, or a whopping 78 points.

Kinda feels very DEJA VU with some of the tech stocks getting hit hard. If I stock market smelled, it'd be starting to percolate a stink that was last smelled in 2000.

 

[Guest3722A]

EBAY was a fun one to watch tank a couple weeks ago.

 

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[Mineralogic]

GPRO has tanked, never quite understood how that company could go public since wearable cameras aren't consumable. When the stock was trading in the 70's I was left scratching my head. Today it's a single digit stock, no more head scratching.

Today it's LNKD in's turn, reporting poor earning performance. Stock is down 38%, or a whopping 78 points.

Kinda feels very DEJA VU with some of the tech stocks getting hit hard. If I stock market smelled, it'd be starting to percolate a stink that was last smelled in 2000.

what is sad is LINKED IN /LNKD is still worth 25 billion???? LOL. so 20 billion wiped out over nite and still extremely overvalued

 

[Red]

I just bought your book!

Sweet! Let me know if anything needs clarification -I'm going to be revising it soon & now I have a bit of a market of readers who are helping me fine tune things.

 

[MyronGainz]

GPRO has tanked, never quite understood how that company could go public since wearable cameras aren't consumable. When the stock was trading in the 70's I was left scratching my head. Today it's a single digit stock, no more head scratching.

Today it's LNKD in's turn, reporting poor earning performance. Stock is down 38%, or a whopping 78 points.

Kinda feels very DEJA VU with some of the tech stocks getting hit hard. If I stock market smelled, it'd be starting to percolate a stink that was last smelled in 2000.

I don't understand your first line... could you please clarify?

 

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[million$$$smile]

I would think having a basic, needed skill or trade would be very helpful during tough times.

Maybe buy 'picks and shovels'. Usually large government contracts are approved and signed a year or two in advance of breaking ground. In times of recession, LARGE construction projects continue. Tools are popular in and out of swings in the economy due to the fact that many that wouldn't be a DIY become one. If your familiar with this market, it might be something to look into in your area.

Also, I believe if anyone had an idea for a good natural product that would deter mosquitos, (ie Zika) I believe it might be the something that would be FB marketable soon...

In times of recession, one can still build a business.

 

[MJ DeMarco]

I don't understand your first line... could you please clarify?

On October 7 Go Pro hit 98.00. Today its 9.98.

A business built on "one-and-done" is hard to sustain, especially when you now need to appease shareholders over customers.

In other words, if someone buys a GoPro they might be indeed be a customer but they aren't ordering every month.