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HOT TOPIC Under Contract on 98 units in Phoenix!

JustAskBenWhy

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Psyched about this one. I think I can create tons of value. Underwrites to mid-14% IRR.

Took about 5 months of placing offers. But I love this one. Wish me luck!
 

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Envision

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Any more details on your deal?

What value do you think can be created?

What are your thoughts on buying property at this stage in the market cycle?

Hope things are going well for you @Sauce !
 
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JustAskBenWhy

JustAskBenWhy

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Any more details on your deal?

What value do you think can be created?

What are your thoughts on buying property at this stage in the market cycle?

Hope things are going well for you @Sauce !
Well, I think I can add 35% value in 3 years. And my thoughts are - I am buying.

You know, everyone always talks about the market cycle. People don't understand that the market cycle is only half of the game - money cycle is the other half.

When property could be bought for pennies on the dollar, no one lent. Very few had cash to deploy. So - everyone was bitching and moaning that there are so many good deals and no money. Today, there is so much money and appetite, so everyone is bitching - we are too late in the cycle...You guys can't be pleased :)

I like good product in up cycle, and I like good product in down cycle. So long as there is value to be created, I am all about it.
 
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MJ DeMarco

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Whereabouts in Phoenix? General cross-streets?

Congrats and good luck!
 
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JustAskBenWhy

JustAskBenWhy

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CareCPA

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So no info at all? No purchase price, rent to price ratio, financing details (investors vs institutional)?
What's your value-add play, renovations? Something else?
 
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JustAskBenWhy

JustAskBenWhy

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So no info at all? No purchase price, rent to price ratio, financing details (investors vs institutional)?
What's your value-add play, renovations? Something else?
Not in a public forum. The SEC is kinda touchy that way, with this being a Reg D. Message me for details if you'd like.
 

CareCPA

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Not in a public forum. The SEC is kinda touchy that way, with this being a Reg D. Message me for details if you'd like.
I guess I'm just curious what you're hoping to accomplish in this thread if you can't share any information.
 
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JustAskBenWhy

JustAskBenWhy

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I guess I'm just curious what you're hoping to accomplish in this thread if you can't share any information.
Well, let me see if I can guide you in how this works.

The intelligent way to do marketing for is to be present when someone needs what you've got to offer. That's in contrast to plastering yourself over every billboard like wet noodle on the wall - only Ford can afford to do that.

So - here I am. I do what I do. If you'd like to know more - I think you can figure out where and how to find me. This way I am happy, you are happy, and the SEC is ecstatic...lol
 

CareCPA

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Well, let me see if I can guide you in how this works.

The intelligent way to do marketing for is to be present when someone needs what you've got to offer. That's in contrast to plastering yourself over every billboard like wet noodle on the wall - only Ford can afford to do that.

So - here I am. I do what I do. If you'd like to know more - I think you can figure out where and how to find me. This way I am happy, you are happy, and the SEC is ecstatic...lol
Ah, ok, so purely a marketing ploy.
I thought maybe you were going to bring in some knowledge the rest of us could use and/or learn from, instead of just inviting us to invest with you.
 

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JustAskBenWhy

JustAskBenWhy

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Ah, ok, so purely a marketing ploy.
I thought maybe you were going to bring in some knowledge the rest of us could use and/or learn from, instead of just inviting us to invest with you.
Tou-che' - for knowledge you pay.
 

Kak

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Well, I think I can add 35% value in 3 years. And my thoughts are - I am buying.

You know, everyone always talks about the market cycle. People don't understand that the market cycle is only half of the game - money cycle is the other half.

When property could be bought for pennies on the dollar, no one lent. Very few had cash to deploy. So - everyone was bitching and moaning that there are so many good deals and no money. Today, there is so much money and appetite, so everyone is bitching - we are too late in the cycle...You guys can't be pleased :)

I like good product in up cycle, and I like good product in down cycle. So long as there is value to be created, I am all about it.
Congrats on your deal. Rep to you.

Can you raise the rents based on comps?
 

CareCPA

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Tou-che' - for knowledge you pay.
Hopefully this knowledge is free...
Is Reg D just for accredited investors? Are you doing any non-accredited capital raises?
 
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JustAskBenWhy

JustAskBenWhy

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Hopefully this knowledge is free...
Is Reg D just for accredited investors? Are you doing any non-accredited capital raises?
Reg D 506c is for accredited people only, and allows wide advertising options. This raise is under $4M so we are doing 506b, which allows 35 sophisticated investors.
 
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JustAskBenWhy

JustAskBenWhy

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MJ DeMarco

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@JustAskBenWhy -- you can't use this forum to solicit for investors, it's against the rules.

If that's the purpose of this thread, I have to delete it. Please make it educational, or the thread goes.
 
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JustAskBenWhy

JustAskBenWhy

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@JustAskBenWhy -- you can't use this forum to solicit for investors, it's against the rules.

If that's the purpose of this thread, I have to delete it. Please make it educational, or the thread goes.
MJ - understood. Do what you have to do. I am not about to (nor is it even possible) teach multifamily syndication on this forum.

Those who follow the thread, if it stays up, will get updates as those become available. I am not releasing specific numbers, investment parameters, or projected returns on this thread, though. For this you'll have to reach out privately.

I guess, the lesson here is this:

As a real estate investor, I try to always have more than one exit. And as an entrepreneur, whenever I do anything I try to have more than one reason and accomplish more than one objective.

That said, this is just an exciting time for me. It's big growth for me as an entrepreneur. It's also culmination of 5 months of very, very intense work. If anyone wants to be happy for me - please, I'll take it. This is one reason for the thread. Another is that obviously as things progress, I'll share bits and pieces. Finally, if any of this sounds interesting, ans someone wants to reach out for more details - why not? More than one objective...

Does this work? If not, I understand if you need to remove this thread, MJ. Just calling a spade and spade.
 
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JustAskBenWhy

JustAskBenWhy

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So - I am privy to a lot of exaggerated hoop-lah about real estate. In actuality, all of this is actually very challenging.

Just in financial terms, what we had to do on this deal was to offer a 6-figure EMD, and no finance contingency. Additionally, the bank good faith deposit is $50,000 to begin the loan app, and attorney fee is $15,000.

Add this together, and what this means is that we are hot into this thing almost $200,000 - if it doesn't close for any reason, this money is lost.

Now, I don't know about you, but I am not sure how anyone can be debonair about this. Think about what it takes to go hard on this much money - think about how much DD would have had to be done even before we were under contract for us to get comfortable around this. Furthermore, think of the established relationships necessary to even attempt to do this type of DD...?

There is nothing debonair about this. There is nothing easy about this. And this is definitely not something a new investor can or should do!
 

Kelley McEachern

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Hi Ben, Just subscribed on your site and looking to start down this Real Estate path. Looking forward to learning and executing in my area of the US.
 
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JustAskBenWhy

JustAskBenWhy

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Hi Ben, Just subscribed on your site and looking to start down this Real Estate path. Looking forward to learning and executing in my area of the US.
It's my pleasure to help, Kelley. Good luck, and feel free to reach out.
 

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Kelley McEachern

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It's my pleasure to help, Kelley. Good luck, and feel free to reach out.
Will do, just picked up House Hacking (kindle version). time to read while waiting for your site downloads, Thank you.
 
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JustAskBenWhy

JustAskBenWhy

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Will do, just picked up House Hacking (kindle version). time to read while waiting for your site downloads, Thank you.
Let me know if there is a delay with the downloads. Happens once in a while. Truth be know, it's time to revamp JustAskBenWhy.com but there is never time...
 
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JustAskBenWhy

JustAskBenWhy

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Just came back from the meeting with the PM. This, by the way, should be taught as lesson number 2:
  1. Number 1 is - know how to underwrite properly.
  2. 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 AZ is their home-base. We met with the regional manager who'll have our asset, as well as the guy responsible for purchasing of materials and procuring bids for work.

We met to button up our CapEx. The project calls for well over $1M in reno costs, and, as they say - you're off by an inch, you're off by a mile...

When coming out of the elevator, we bumped into the mortgage broker and the banker who flew out of NY to DD this deal. As part of their DD, they met with the PM.

When people ask me how to manage a duplex in another State, I quite literally have no idea what to say.
 

WJK

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Just came back from the meeting with the PM. This, by the way, should be taught as lesson number 2:
  1. Number 1 is - know how to underwrite properly.
  2. 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 AZ is their home-base. We met with the regional manager who'll have our asset, as well as the guy responsible for purchasing of materials and procuring bids for work.

We met to button up our CapEx. The project calls for well over $1M in reno costs, and, as they say - you're off by an inch, you're off by a mile...

When coming out of the elevator, we bumped into the mortgage broker and the banker who flew out of NY to DD this deal. As part of their DD, they met with the PM.

When people ask me how to manage a duplex in another State, I quite literally have no idea what to say.
As you know well, the MFR market is set to take off. The tax changes, which will be more well known in April, are going to change the landscape of the residential RE market and the American dream. Congratulations.
 
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JustAskBenWhy

JustAskBenWhy

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As you know well, the MFR market is set to take off. The tax changes, which will be more well known in April, are going to change the landscape of the residential RE market and the American dream. Congratulations.
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 market, therefore, is not rational. However, perhaps it is actually the case of the market knowing something that/'s causing this bullishness...?

The absolute gift real estate investors received in this tax law is expensing of the CapEx. In a deal like this, where in the first 2 years $1.3M is being deployed into CapEx, which is then able to be expensed and carried - this is no joke. Combined with cost seg. and the rest of the passive loss benefits, the shelters are astronomical relative to other investments.

That's a long way of saying - I agree :)
 

WJK

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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 market, therefore, is not rational. However, perhaps it is actually the case of the market knowing something that/'s causing this bullishness...?
The absolute gift real estate investors received in this tax law is expensing of the CapEx. In a deal like this, where in the first 2 years $1.3M is being deployed into CapEx, which is then able to be expensed and carried - this is no joke. Combined with cost seg. and the rest of the passive loss benefits, the shelters are astronomical relative to other investments.

That's a long way of saying - I agree :)
Rentals and home ownership are going to go toe to toe under these new tax changes. In the short term, it will be cheaper to rent.
MFR (multi-family residential) will be the first to see a price bump. When it's saturated, then it will move to SFRs (single family residential) for the 2/1 and 3/2, FHA/GI Special type.
The upper end of the SFR market is questionable. Sales in some parts of the US are already slowing down. Those houses won't attract investors -- too big and expensive to rent and operate. The conversion to renters will cannibalize a lot of their usual home-owner buyer pools.
And this change to more rentals will dampen appreciation in the overall SFR market.
In the meantime, you're right. RE is a lot more attractive with the immediate tax advantages. This is going to create a large new group and class of investors. They'll be drawn to the passive income and tax shelter aspects. 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.
 
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JustAskBenWhy

JustAskBenWhy

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"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 investors, is not sophisticdated enough to get in for tax reasons. They are there for CF. The passive investors in larger syndicdations are there a lot more for tax reasons, and they are not likely to leave...
 

WJK

Gold Contributor
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"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 investors, is not sophisticdated enough to get in for tax reasons. They are there for CF. The passive investors in larger syndicdations are there a lot more for tax reasons, and they are not likely to leave...
Therein is the rub... you're right. The larger deals and properties are not for small investors. People who have the money to invest will go for the tax benefits -- especially business owners who aren't as limited to take advantage of those benefits. But, the small investors will try to play the game with the big boys and quickly get their wing trimmed.
I am saying this influx of renters will create a lower and mid-level market. That movement will bring out the marginal investors who think they can get rich quick. Those investors will create a "shake-out" market when they actually are faced with the hard day-to-day truths.
(I have known a few people with money who followed these hapless investors around to pick up the windfall deals. And, yes, the money guys did quicky make pretty good profits.)
We saw a mini version of this type of market in LA at the end of the 1970s, the mid to late 1980s and the first part of the 2000s. Everybody wanted to invest with OPM (other people's money) and get on the bandwagon. It ended badly for them as a group in each one of those cycles.
The basics have never really changed.
 
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