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  1. JustAskBenWhy

    Progress Report on 98-Unit Apartment Community

    An update on Silver Tree, which is now Canyon 35. We closed on this community on August 17th. The purchase price was $8.15M; Reno Budget of $1.4M. Exterior Reno The painting has been completed aside for the doors. We are waiting on the signage package which includes numbering for the unit...
  2. JustAskBenWhy

    HOT TOPIC Under Contract on 98 units in Phoenix!

    This is very interesting. It's logical that there should be a correlation but there obviously hasn't been. I don't expect it return in the immediate future, but eventually, it should regulate...
  3. JustAskBenWhy

    HOT TOPIC Under Contract on 98 units in Phoenix!

    Totally hahaha... It's interesting how illogical folks can get at times lead by the hype :) Priceless!
  4. JustAskBenWhy

    HOT TOPIC Under Contract on 98 units in Phoenix!

    haha a whole lot, and they are all moving out of places that look like that place in your picture with a bunch of cold, white stuff, which turns into sleet, which rusts cars... Oy Vey
  5. JustAskBenWhy

    HOT TOPIC Under Contract on 98 units in Phoenix!

    Well, guys - wholesale reno about to begin next week. The exterior bids came in low by a good margin, but the interior reno will be tight. Naturally, some unforeseen issues are coming up...it's a good thing we are well capitalized!
  6. JustAskBenWhy

    HOT TOPIC Under Contract on 98 units in Phoenix!

    A bit of an update: After 2 weeks of ownership, the lease-ups are slow. It's 105 outside. And we are not spending any $$ on marketing, so it's just street traffic for now. The lease-ups we are getting, though, are at a very significant premium to in-place and this is before the reno. 1x1 got...
  7. JustAskBenWhy

    HOT TOPIC Under Contract on 98 units in Phoenix!

    Should be closing this week. Only about 173 things have to happen in order for us to actually close, but should be this week. Wish me luck!
  8. JustAskBenWhy

    HOT TOPIC Under Contract on 98 units in Phoenix!

    So, if the market is inefficient, we've got a problem. We must, as investors, have a clear view of exit before we get in. Preferably several exits. What this inevitably means is that somehow we must establish with some degree of certainty our exit valuation. In an efficient market this would be...
  9. JustAskBenWhy

    HOT TOPIC Under Contract on 98 units in Phoenix!

    Sort of. Cap Rate is a market metric. Essentially it measures risk appetite in a given marketplace. And when I say efficient, I am referring to the efficient market hypothesis which stipulates that all participants in a marketplace are rational and base decisions upon an equally available set of...
  10. JustAskBenWhy

    HOT TOPIC Under Contract on 98 units in Phoenix!

    So, they way I teach is by asking questions. Here we go: What is the presumed relationship between the interest rates and the cap rates in an efficient market? Go
  11. JustAskBenWhy

    HOT TOPIC Under Contract on 98 units in Phoenix!

    Received today a proposed budget for Y1 from the PM. They are higher than us on the income, and lower than us on the OpEx. Thus, higher on the NOI by about a 5% margin. Additionally, because of the CapEx we are doing up-front, they think we need about 50% of CapEx reserves out of the CF on an...
  12. JustAskBenWhy

    HOT TOPIC Under Contract on 98 units in Phoenix!

    Here's a lesson: Everyone always thinks that the only way to get a deal is to find a less sophisticated owner. And, in some ways, this is true. However, for the same reason that the building is not operating at capacity (because the owner is unsophisticated), the financials will look like hell...
  13. JustAskBenWhy

    HOT TOPIC Under Contract on 98 units in Phoenix!

    Today But now they have a reason to do some research :) I am not in the business of spelling things out. I see teaching as a process of triggering thought and curiosity, and developing in folks an ability to read between the lines. The rest is up to them...
  14. JustAskBenWhy

    HOT TOPIC Under Contract on 98 units in Phoenix!

    I don't buy into any of that argument too much. The "get rich quick" idiots have been around this game for as long as I can remember. They were getting burnt in good cycles and in bad. What people don't understand is that the money is in the delta, and you have to underwrite the delta...
  15. JustAskBenWhy

    HOT TOPIC Under Contract on 98 units in Phoenix!

    "Whether they stay in the rental RE market is also questionable. It's not a business for wimps or lazy people. But, overall these changes have created the business opportunity of our lifetime." Well, I slightly disagree with the above statement. Anyone who views REI as a job, i.e. small...
  16. JustAskBenWhy

    HOT TOPIC Under Contract on 98 units in Phoenix!

    This is a bit of a separate conversation, but in a rational market it is assumed that the cap rates should inflate in tandem with interest rates going up. We are not seeing this - the interest rates have been going up, yet the cap rates have been compressing. It's somewhat easy to say that the...
  17. JustAskBenWhy

    HOT TOPIC Under Contract on 98 units in Phoenix!

    Just came back from the meeting with the PM. This, by the way, should be taught as lesson number 2: Number 1 is - know how to underwrite properly. Number 2 - know how to buy something that attracts a PM who can actually execute what you underwrote lol Ours manages 21,000 units in 5 States, but...
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