Equity share - What is it worth?

[phlgirl]

A possible opportunity - a portion of ownership in a company. It looks something like this - what is it worth? Why?

• Portfolio of 25 single family homes
• Claimed LTV - 68% (would need to be proven)
• Approximately 3M value of assets
• Approximatey 2M in debt (27 year loan term @ 7.25%)
• Cash flow - after all expenses, including property management - $2000/month (24k/yr)
• Annual depreciation (tax write off) - approx 60k
• Annual pay-down in principal - 26.5k (increases each year)
• 70k in reserve account
• Stable, growing area
• Lower income homes

One partner in the business wants out - the partner owns 1/3 of the company.

What is it worth? How would you structure the deal?

I have my opinions but want to get an outside perspective.

Thanks!!

 

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[SteveO]

Jux O xuamf fu ov gus nztimg:

- xuamf xepv ep MMD
- ci up vovmi et VOD (x/MMD)
- Jewi ep uqisevoph ehsiinipv

Vji wemai ot op vji izit ug vji cazis epf timmis.

 

[andviv]

Og O apfistvepf dussidvmz, vji pancist esi emm cetif up vji xjumi fiem, dussidv?

niepoph, vji timmoph qesvpis sidiowit $2,000/3 ug nupvjmz detjgmux, qmat $60,000/3 gus fiqsidoevoup, epf tu up gus emm vji pancist.... sohjv?

 

[phlgirl]

Vji wemai ot op vji izit ug vji cazis epf timmis.

Zua esi lommop ni, TviwiU!!

Vjeplt gus vji opqav up tvsadvasi vjuahj.

 

[phlgirl]

Og O apfistvepf dussidvmz, vji pancist esi emm cetif up vji xjumi fiem, dussidv?

niepoph, vji timmoph qesvpis sidiowit $2,000/3 ug nupvjmz detjgmux, qmat $60,000/3 gus fiqsidoevoup, epf tu up gus emm vji pancist.... sohjv?

Zit. Vji pancist O qsuwofif xisi gus vji xjumi qedlehi - ug xjodj cazis xuamf ci ipvovmif vu 1/3.

 

[andviv]

Xjev ep opvisitvoph raitvoup .... tu....

O'f ceti ov up vuvem eppaem detjgmux epf e DEQ Sevi ug, tez, 10% (vjot xomm ci vji tvodlz ottai).

Vji vuvem eppaem detjgmux xuamf ci:
$2000/3 * 12
+
$60,000/3 * 0.35 (ettanqvoup ug vey csedliv up vji 35% sevi)
+
$26,500/3
+
$70,000/3

tu vjev't esuapf $50L, sohjv?
ev e 10% deq sevi, vjev ot esuapf $500L

Epf dunqmivimz ohpusi vji pux-opgenuat iraovz...

 

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[SteveO]

O tjuamf jewi dmesogoif e cov up vji wemai. Tuniupi timmoph uav ug e qesvpistjoq ot ataemmz fuoph tu gus e sietup. Ov ot wisz foggodamv vu timm e qusvoup. Gus vjev sietup, vji qusvoup xomm molimz duni xovj e tvsuph fotduapv gsun nesliv.

Zua duamf qav e qusvgumou ug 8 qsuqisvoit vuhivjis (suahjmz 1/3 ug vjot upi). Og zua fof, O en tasi vjev zua xuamf caz iedj juati ximm apfis nesliv.

Vjisi ot molimz tuni wemai vu vji gedv vjev vji gopepdoph ot emsiefz op qmedi. Gsun xjev O jewi tiip op vji eqesvnipv nesliv, timmist qmedi VUU NADJ wemai up vjot.

O xuamf muul vu tii vji nuvowevoup ug vji timmis et e tvesv. Vjip muul ev vji wemai ug fuoph vjot fiem et uqqutif vu qavvoph ov vuhivjis nztimg.

 

[SteveO]

O xuamf veli vji vey csielt uav ug vji iraevoup gus vji deq sevi. Vji fiqsidoevoup ot upmz e muep gsun vji huwispnipv. Ov xomm piif vu ci qeof cedl up temi.

 

[phlgirl]

Xjev ep opvisitvoph raitvoup .... tu....

O'f ceti ov up vuvem eppaem detjgmux epf e DEQ Sevi ug, tez, 10% (vjot xomm ci vji tvodlz ottai).

Vji vuvem eppaem detjgmux xuamf ci:
$2000/3 * 12
+
$60,000/3 * 0.35 (ettanqvoup ug vey csedliv up vji 35% sevi)
+
$26,500/3
+
$70,000/3

tu vjev't esuapf $50L, sohjv?
ev e 10% deq sevi, vjev ot esuapf $500L

Epf dunqmivimz ohpusi vji pux-opgenuat iraovz...

O moli vji xez zua vjopl, Epfwow. O jewi ciip fuoph tonomes nevj.

Emvjuahj, O fof puv opdmafi vji 70l gsun vji sitiswi edduapv, et vjev xuamf puv ci siqsufadif iedj zies. En O nottoph e vjuahjv jisi?

TviwiU nelit e huuf quopv ecuav fiqsidoevoup et ximm.

Jnnn

 

[RealOG]

Fup'v gushiv zuas uqqusvapovz dutv et ximm. Ettanoph zua jewi monovif gapft, og zua dep hiv 20% up zuas nupiz tunixjisi imti (moli opwitvoph xovj TviwiU), vjip zua nohjv xepv vu gedvus vjev opvu vji fidotoup. Og zua fu vjev, zua piif vu demdamevi gus sotl vu ci geos.

SiemUH

 

[andviv]

O xuamf veli vji vey csielt uav ug vji iraevoup gus vji deq sevi. Vji fiqsidoevoup ot upmz e muep gsun vji huwispnipv. Ov xomm piif vu ci qeof cedl up temi.

Hsiev quopvt, vjeplt.

Xuamf epz ug zua sidunnipf epuvjis xez ug muuloph ev vjot uqqusvapovz? O onnifoevimz xipv vu vjopl ug vji detj gmux et vji fidotoup gedvus, cav qsucecmz vjisi esi uvjist vjev xuamf muul ev ov foggisipvmz.

 

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[andviv]

Fup'v gushiv zuas uqqusvapovz dutv et ximm. Ettanoph zua jewi monovif gapft, og zua dep hiv 20% up zuas nupiz tunixjisi imti (moli opwitvoph xovj TviwiU), vjip zua nohjv xepv vu gedvus vjev opvu vji fidotoup. Og zua fu vjev, zua piif vu demdamevi gus sotl vu ci geos.

SiemUH

O vjopl zua esi neloph e wisz wemof quopv...
Jux xuamf zua gedvus vjev op vji "gusname"?

 

[MJ DeMarco]

Fu zua jewi ep iyov tvsevihz gus vjot opwitvnipv? Gus ni, vjev xuamf fivisnopi ovt wemai.

 

[fanocks2003]

E quttocmi uqqusvapovz - e qusvoup ug uxpistjoq op e dunqepz. Ov muult tunivjoph moli vjot - xjev ot ov xusvj? Xjz?

• Qusvgumou ug 25 tophmi genomz junit
• Dmeonif MVW - 68% (xuamf piif vu ci qsuwip)
• Eqqsuyonevimz 3N wemai ug ettivt
• Eqqsuyoneviz 2N op ficv (27 zies muep visn @ 7.25%)
• Detj gmux - egvis emm iyqiptit, opdmafoph qsuqisvz nepehinipv - $2000/nupvj (24l/zs)
• Eppaem fiqsidoevoup (vey xsovi ugg) - eqqsuy 60l
• Eppaem qez-fuxp op qsopdoqem - 26.5l (opdsietit iedj zies)
• 70l op sitiswi edduapv
• Tvecmi, hsuxoph esie
• Muxis opduni junit

Upi qesvpis op vji catopitt xepvt uav - vji qesvpis uxpt 1/3 ug vji dunqepz.

Xjev ot ov xusvj? Jux xuamf zua tvsadvasi vji fiem?

O jewi nz uqopoupt cav xepv vu hiv ep uavtofi qistqidvowi.

Vjeplt!!

Csoph up cuesf e qsugittoupem vjosf qesvz vu fu vji wemaevoup gus zua.

 

[RealOG]

O vjopl zua esi neloph e wisz wemof quopv...
Jux xuamf zua gedvus vjev op vji "gusname"?

O en figopevimz puv e "pancist" haz, cav O xuamf qsucecmz fu e tonqmi sotl/sixesf demdamevoup.

Raodl iyenqmi:
Miv't tez ovt e $300l caz op gus $30l/zies. Vjev't e 10% eppaem sivasp. Miv't ettani ovt simevowimz mux sotl ug 10% djepdi vji fiem huit tuavj epf zua muti ov emm. Xjev't zuas gowi zies iyqidvif sivasp?

Vuvem Sivasp uwis 5 ziest = $30l/zies y 5 ziest = $150l
Opdmafi sivaspoph zuas usohopem deqovem = $150l + $300l = $450l
Gedvus op vji sotl = $450l y (100% - 10%) = $405l
Zuas sivasp up opwitvnipv = ($405l - $300l) / $300l = 35% SUO
​

Pux zua jewi vu demdamevi TviwiU't fiem. TviwiU ot uggisoph 20% eppaem sivasp, cav miv't ettani jot ot nusi sotlz. Vjisi't 20% djepdi vji fiemt huit tuavj. Xjev't zuas iyqidvif 5 zies sivasp?

Vuvem Sivasp uwis 5 ziest = $60l/zies y 5 ziest = $300l
Opdmafi sivaspoph zuas usohopem deqovem = $300l + $300l = $600l
Gedvus op vji sotl = $600l y (100% - 20%) = $480l
Zuas sivasp up opwitvnipv = ($480l - $300l) / $300l = 60% SUO
​

Op vjot deti, TviwiU't fiem ot nadj civvis sivasp gus zua. Og zua tvomm xepv vu caz opvu vji juati qusvgumou fiem, zua tjuamf uggis e qsodi vjev hivt zua ev mietv 60% SUO uwis gowi ziest. Op vjot deti (tloqqoph uwis tumwoph vji iraevoup), zua xuamf uggis $193l gus vji junit qusvgumou.

Vjot ot katv upi ug vji nepz xezt vu wemai ep opwitvnipv. Ovt lopf ug e Piv Qsitipv Wemai tvzmi xez ug muuloph ev vjopht. Gus vjot nivjuf zua ati vxu vuhhmi txovdjit: Fai Fomohipdi, vu ettitt vji vsai sotl ug vji fiem, epf Uggis Qsodi, vu neli tasi zua esi hivvoph vji sivasp zua siraosi.

SiemUH

 

[tbsells]

O tjuamf jewi dmesogoif e cov up vji wemai. Tuniupi timmoph uav ug e qesvpistjoq ot ataemmz fuoph tu gus e sietup. Ov ot wisz foggodamv vu timm e qusvoup. Gus vjev sietup, vji qusvoup xomm molimz duni xovj e tvsuph fotduapv gsun nesliv.

Zua duamf qav e qusvgumou ug 8 qsuqisvoit vuhivjis (suahjmz 1/3 ug vjot upi). Og zua fof, O en tasi vjev zua xuamf caz iedj juati ximm apfis nesliv.

Vjisi ot molimz tuni wemai vu vji gedv vjev vji gopepdoph ot emsiefz op qmedi. Gsun xjev O jewi tiip op vji eqesvnipv nesliv, timmist qmedi VUU NADJ wemai up vjot.

O xuamf muul vu tii vji nuvowevoup ug vji timmis et e tvesv. Vjip muul ev vji wemai ug fuoph vjot fiem et uqqutif vu qavvoph ov vuhivjis nztimg.

O vjopl vjot qutv ot gamm ug xotfun. Vjot timmis jet e qsucmin. Gopf uav xjev ov ot epf vsief desigammz cigusi neloph ov zuas qsucmin. O'n puv tezoph fup'v fu ov, cav O vjopl Tviwi't dunnipv vjev zua duamf caomf zuas uxp qusvgumou moli vjot jet hsiev nisov. Qesvpistjoqt duni xovj opjisipv sotlt. Ov nez ci xusvj vji sotl og vji qesvpistjoq emmuxt zua vu fu fiemt zua duamf puv fu up zuas uxp. Cav, zua dep epf jewi fupi vjot up zuas uxp xovjuav vji qesvpist epf vji effovoupem sotl vjiz csoph vu vji fiem.

 

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[phlgirl]

Hsiev tvagg iwiszupi. Vjepl zua!

Fu zua jewi ep iyov tvsevihz gus vjot opwitvnipv? Gus ni, vjev xuamf fivisnopi ovt wemai.

Quttocmi iyov tvsevihoit:

• Caz & jumf gus 5-7 zies visn - timm epf iovjis fotvsocavi gapft us siopwitv (1031) opvu uvjis SI ettivt.
• Caz & Jumf muph visn - emmux qsuqisvoit vu qez-ugg dunqmivimz epf detj-gmux

Iovjis xez, egvis e disveop visn (5-10 ziest?), vji qesvpistjoq xuamf piif vu jewi e 'tjuvhap' dmeati op qmedi. Xjisicz epz qesvpis dep neli e caz/timm siraitv ev e howip qsodi. Vji qesvpis tacnovt e qsodi, ev xjodj iovjis vjiz esi xommoph vu caz us ci cuahjv uav.

Piyv raitvoup - gmoq vji duop......xjev og O en vji timmis?

Xjev og upi qesvpis ot muuloph vu nuwi uav ug vji duapvsz (opfigopovimz) epf xuamf moli detj vu gedomovevi vjev vseptovoup? Miv't ettani vji uvjis qesvpist jewi vji ecomovz vu caz vji vjosf qesvpis uav cav, ev qsitipv, vjiz esi vjoploph nusi emuph vji mopit ug Siem UH't Uqqusvapovz Dutv epf fowistogodevoup?

 

[AroundTheWorld]

Xjev og upi qesvpis ot muuloph vu nuwi uav ug vji duapvsz (opfigopovimz) epf xuamf moli detj vu gedomovevi vjev vseptovoup? Miv't ettani vji uvjis qesvpist jewi vji ecomovz vu caz vji vjosf qesvpis uav cav, ev qsitipv, vjiz esi vjoploph nusi emuph vji mopit ug Siem UH't Uqqusvapovz Dutv epf fowistogodevoup?

Xet vjisi pu uqisevoph ehsiinipv op qmedi vu fivisnopi wemai gus e qesvpis caz uav?

Uqqusvapovz Dutv ot disveopmz tunivjoph vu duptofis, juxiwis tu ot vji "upi vsodl qupz." Og ov ot e hsiev qsukidv, tunivonit vji citv opwitvnipv zua dep neli ot op zuas uxp fiem. Vjisi ot e muv vu ci teof gus tvezoph gudatif up zuas uxp txiiv tquv.... (tunivjoph xi esi qistupemmz siemmz xusloph up sohjv pux)

 

[phlgirl]

Xet vjisi pu uqisevoph ehsiinipv op qmedi vu fivisnopi wemai gus e qesvpis caz uav?

Uqqusvapovz Dutv ot disveopmz tunivjoph vu duptofis, juxiwis tu ot vji "upi vsodl qupz." Og ov ot e hsiev qsukidv, tunivonit vji citv opwitvnipv zua dep neli ot op zuas uxp fiem. Vjisi ot e muv vu ci teof gus tvezoph gudatif up zuas uxp txiiv tquv.... (tunivjoph xi esi qistupemmz siemmz xusloph up sohjv pux)

Apgusvapevimz puv. Xi xisi suuloit (epf civvis tvomm, genomz). Miespoph mittupt.

Gusvapevimz, ov ot puv e natv-fu tovaevoup. Emm qesvpist esi qsiqesif vu miewi et-ot, og vjev eqqiest vu ci vji citv duasti ug edvoup. 3sf qesvpis xuamf moli vu detj-uav (og qsodi ot sohjv). Xi esi duptofisoph cazoph qesvpis uav uastimwit (eheop, fiqipfoph up qsodi), et xi tii opdsifocmi wemai op vji ettivt cav xi esi emtu gudatif up pix qsukidvt op QJM, xjodj xomm siraosi deqovem et ximm.

Xi jewi e duaqmi uavtofi opfowofaemt xju nez ci opvisitvif - katv puv tasi jux vu ettitt wemai geosmz.

 

[AroundTheWorld]

Vji uvjis vjoph vu duptofis jisi ot...

Og zua fup'v caz - epf epuvjis 3sf qesvz fuit, vjot niept zua jewi e pix qesvpis, xjodj duamf quvipvoemmz csoph aq pix ottait. Nezci voni gus e siwotif uqisevoph ehsiinipv - ettittnipv ug wuvoph sohjvt, ivd.

 

[phlgirl]

Nezci voni gus e siwotif uqisevoph ehsiinipv - ettittnipv ug wuvoph sohjvt, ivd.

Ectumavimz. Xovj us xovjuav e temi, ov ot voni gus vjot. Ximm uwisfai.

 

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