Masters Underwriting Deals & Acquisitions, Mar 18th, 2025

Summary

In the video, Massive Capital delves into an insightful discussion on various aspects of underwriting real estate deals, particularly focusing on acquisitions and sales strategies. The conversation touches on individual property reviews, underwriting techniques, and market analysis. Key points include the evaluation of property conditions, rental rates, and financing details, crucial for making informed investment decisions.

Highlights

• Discussing property deals in Arkansas with a broker. 🏠
• Emphasizing the role of market rents and underwriting reviews. 📊
• Exploring a dual-property sale in Reno. 🏘️
• Analyzing small-cap acquisitions in Texas. 🤠
• Evaluating mixed-use properties for investment in North Carolina. 🌲

Key Takeaways

• Understanding property rundown is crucial before acquisition. 🏢
• Budgeting for unforeseen repairs is key to maintaining property value. 🔧
• Market analysis can unearth promising opportunities. 📈
• Loan assumptions play a significant role in the financial structuring of deals. 💰
• Developing a flexible investment strategy helps to navigate market volatilities. 📊

Overview

The video kicks off with an engaging conversation about property acquisitions in different states. The team discusses their interactions with brokers and real estate agents to better understand market conditions and pricing. It's fascinating how they weigh the pros and cons of various properties, considering aspects like rental yields, property taxes, and the scope for refurbishment.

We then dive deeper into the intricacies of underwriting, especially in understanding property value through meticulous analysis. The discourse covers budget allocations for potential repairs, maintaining market competitiveness, and strategizing to capitalize on rental markets. Each expert's viewpoint offers a unique perspective, highlighting the collaborative effort necessary in real estate acquisitions.

Finally, the team dissects specific deals, from small unit acquisitions in Texas to expansive properties in North Carolina, emphasizing tailored strategies for varying scales of investment. The collaborative brainstorming sessions reflect the intricate decision-making process behind every acquisition, undoubtedly inspiring for those keen on entering the real estate market.

Chapters

• 00:00 - 01:00: Introduction and Updates The chapter opens with a friendly morning exchange among colleagues. One of the members, Sanj, discusses recent progress concerning a land transaction in Arkansas. They have engaged with a broker and are advancing through initial procedures. Gratitude is expressed to the team for their ongoing support, and a commitment is made to keep them informed on future developments.
• 05:00 - 29:40: Discussion on Properties in Reno The chapter titled 'Discussion on Properties in Reno' is about a group preparing to review and potentially take action on real estate properties in Reno. The speaker mentions needing real professionals to step in soon and highlights the ever-changing nature of property discussions. They briefly mention waiting for others to join and casually note making a protein shake during the wait.
• 31:00 - 53:00: Discussion on Property in Humble, Texas The chapter titled 'Discussion on Property in Humble, Texas' begins with a casual conversation among participants. They discuss snacks they have, specifically highlighting dried seaweed. There is no direct mention of property in Humble, Texas in the provided text. It's likely the actual discussion begins later or is not included in the transcript.
• 56:00 - 68:00: Discussion on Various Real Estate Deals This chapter revolves around a casual discussion among participants about bulk purchasing habits, specifically referencing a personal experience with buying a large pack of snacks from Costco. The speaker humorously recounts their surprise at quickly finishing the snacks, which were intended to last a month but were consumed in just eight days due to eating multiple snacks per day. The anecdote underscores challenges with self-control and portion management.
• 66:00 - 67:00: Conclusion This chapter appears to involve a disruption in a meeting or call, where someone named Andrea needs to be muted. It seems like there are technical difficulties, as the speaker is trying to mute Andrea but lacks the necessary rights to do so. The transcript suggests a focus on handling technical issues during a remote interaction.

Masters Underwriting Deals & Acquisitions, Mar 18th, 2025 Transcription

• 00:00 - 00:30 right and early hey Julie John Mr Curley good morning good morning veteran good morning good morning oh sanj about that land in Arkansas I got in touch with a broker and they're getting me going on the first steps and an outline and stuff so moving forward on that thanks thanks for all your help I'll keep you updated nice
• 00:30 - 01:00 yeah yeah reach out anytime uh you're ready to review more or something conrete is there I'll need the real pros to step in pretty [Music] [Laughter] soon yeah we'll see we'll see what we can do always there's always something new on these things by the way all right we'll give couple more minutes for everybody to join and I'm making my little protein shake
• 01:00 - 01:30 here all right I'll turn on the camera too and here's my drink I got one I got one better for you I got one better than that I got gimme gimme um seaweed dried seaweed that I'm EA oh I love those I love those yeah
• 01:30 - 02:00 Costco have like a big pack of like 30 of those um I I got those and I was like okay I should be set for a month and then next thing I know I'm done with those in like eight days eating like three a day so I was like Ah that's not good but yeah stud
• 02:00 - 02:30 c269 hey Andrea would you mind muting yourself give me one second I'm gonna I think I can I don't have the admin rights I'm trying to mute it hold on no problem no problem we know how
• 02:30 - 03:00 hard that is to find sometime these things um guys I'm going to get out and come back in I think that will allow me to be have admin rights to do these things give me one
• 03:00 - 03:30 okay I think this should be better um all right guys today is the underwriting who has who has something we need to review
• 03:30 - 04:00 or go through this now everybody is muted if not uh I'm going to start with this here I'm going to start cleaning this actually let me look at this
• 04:00 - 04:30 initial underwriting review okay who's got something here Industrial Park okay that's the one that team is underwriting they are close I don't think anybody from that team is here stage at 1955
• 04:30 - 05:00 yeah that's our SJ we're not quite ready with that one yet okay so they ask okay so if that is the market rent with that okay so this one this one definitely oh you know what this is the deta okay I meant to go in this okay
• 05:00 - 05:30 hey Rob yeah go ahead Rob if you want me to look at I I've underwritten uh prop another property in Reno you want to review that I would love to yeah go ahead this is uh two properties combined together they're being sold as as one you could split them up if you wanted to but the uh the seller uh was asking a lot more money
• 05:30 - 06:00 recently and uh has now found another property that he would like to get into so he wants to sell both of these properties as a package they're literally sharing a property line let me bring up the first om here why is it not showing here is it a multif family or story yeah these are this is two uh is the screen showing now
• 06:00 - 06:30 yes we can see your screen okay this was a uh hotel that was converted to studio apartments it's essentially fully occupied and stabilized uh it's it's very near downtown Reno it's minutes away from the ballpark in in downtown Reno and all the casinos where there's you know lots of people that need uh good rent rates
• 06:30 - 07:00 because they're you know busing tables in the casinos and things like that or or you know running table games um this was built in 97 and it's and this particular property right here is 51 units and they're they're tiny I mean they're under 300 Square ft they were hotel rooms
• 07:00 - 07:30 um I believe this property has 10 units that have like rent controls and the offset is there appears to be no property taxes zero property taxes so I don't know how much that complicates things okay what did do you have any details on that no I will be making a call today or tomorrow back to the the broker to find
• 07:30 - 08:00 out um you know how what are the rates locked at on which units um what really is the deal on the uh taxes is it is it this property and the neighboring one is it just this one I don't have that detail just yet okay all right I'm going to stop sharing on this one and go to the neighboring property it touches a prop it touches the property line so there they're side by
• 08:00 - 08:30 side uh this build this property is much older um this property is 75 years old it's 23 units it was also one of a very early uh motel in in Reno there's two two bedrooms or two one-bedrooms and
• 08:30 - 09:00 um 21 Studios give me one second here also also fully rented so I don't know how much the one bedroom goes for but the studios go for 9 900 on this property 950 on the other one
• 09:00 - 09:30 it's definitely an older building his original asking price was 3.2 it's now 1.9 so it's like 86,000 a door something like that fully fully rented that's a drastic cut yeah it's a huge cut I I saw this months ago and didn't even do an under ring on it because his price was so high
• 09:30 - 10:00 and and the broker called me back uh yeah the broker called me back uh late last week middle of last week so here's the two properties side by side right here this is definitely a little bit rougher part of Reno um I just did a brand new build about two three blocks away where we did
• 10:00 - 10:30 84 we did 84 units in a new four-story uh walkup and and we did all the we did all the cabinets in that and this is this is AC's ballpark just right across the river from it so it's it's walking distance from lots of jobs so in my underwriting I've combined the two properties together and my
• 10:30 - 11:00 underwriting the the current asking price for both properties is 5355 I've got this written at here let me share it sorry so 49 Park Street and 512 uh East
• 11:00 - 11:30 2 Street 5.35 five is the current asking price for the two properties combined um I ran the numbers at 4.85 price per unit's 95,000 um can definitely be stabilized debt no question about that we've got it at 6.75 uh it can be a little lower now I
• 11:30 - 12:00 think you can use six and a half uh 25 or 30 year 30 year it'll be stabilized yeah okay I haven't I haven't touched the equity shares or splits at all that's fine that's good um refi cap rate I guess can go down too then or we don't know obviously
• 12:00 - 12:30 not not really doing a refi so it doesn't really matter there okay um sale yeah that's the one I would look at from uh whatever the co-star has I felt I felt 7.5 was very safe probably good yeah that's probably good let's look at the p&l strange it's very strange to have no
• 12:30 - 13:00 taxes and it could and it's probably only on one of the properties I doubt that it's on both properties yeah yeah okay so that is whoa a similar property that I did yeah not quite as big uh not probably a split between years the one that we underwrote that was built in 74 which is South Reno this is more North Reno was 35,000 a
• 13:00 - 13:30 year wow this one is like rent is like 373 that's really really hard Market supports that where's the rest 373 row N or year one uh e E9
• 13:30 - 14:00 975 uh yeah so two two goes down because they're they're tiny the units are under 300 square feet yeah yeah yeah yeah it runs it runs the average but these These are the actuals the the the 950 is the legit actual of their current rent yeah okay so yeah it's just because the units are te but you think it can be increased still
• 14:00 - 14:30 sneak and hunch that depending on what the taxes come out at this might run really nice even without an increase but yes they could easily bump you know $50 to $100 okay I I'm a little I mean I'm concerned about you know a property built in 1951 yeah I mean some sometimes older are are really good okay built a lot better as long as the aspis and those type of stuff is not not a problem
• 14:30 - 15:00 they're fully rented and they're tiny so any kind of I mean I would just be concerned about the electrical and and and how are you you know it appears that each unit's just heated and cooled from a window mounted unit they're so small Al no Central I don't think there's anything Central no okay and and and the property built in 96 definitely has window units yeah so insurance is really low is that the right
• 15:00 - 15:30 Insurance yeah our insurance is not like your guys's really it's this low it's pretty low like this low that's like that's the insurance on my two single family home I'm sorry I'm sorry I'm sorry you live in Texas it's not my fault what what what are we gonna have here we don't have floods earthquakes are mild where we live they barely do any damage we just don't have your guys' kind of insurance
• 15:30 - 16:00 okay we can we can easily we can easily double this up though it's not that big of a deal actually I wouldn't do it here though I'll do it just change the 15% number yeah oh yeah don't don't change there yeah just change the 15% to like bigger yeah percentage wise yeah that's so just just get a code before finalizing right just just to be just to be sure there
• 16:00 - 16:30 but yeah if insurance is that low wow okay do you have the water sewer this uh Property Management so they're paying quite a lot you you you think you have a property management company that will be willing to do at three and a half [Music] perc of course it's it's so close to where we
• 16:30 - 17:00 live I can definitely I can definitely tidy up that number make a couple phone calls no problem okay okay repair maintenance is good by the way Water and Sewer I have pretty high um because I don't think anything is split I don't I don't think there's any rubs in place at all and if it if they were former motels I assume that the property was paying for everything
• 17:00 - 17:30 they're not individ there's no way they're individually metered NOP no they won't yeah so you can build back or you know whatever if the rents are so high the the clientel maybe all bills paid and that's it so so the column A is the actuals for both proper
• 17:30 - 18:00 right that is for both properties combined Rob we can't hear you in case you're speaking I'm can you hear me now yeah yeah I can hear you now yes okay I don't know what
• 18:00 - 18:30 happened there the colum is combined for both properties right it's correct okay so so typically you will have some Contract Services like pest control your uh Landscaping exterior those type of things right
• 18:30 - 19:00 okay your screen went away it's just there it is it's back now so so you'll have something for Contract Services and combine between the both properties what is the total number of doors 74 74 okay so 74 doors you know at least like 1500 2,000 a month so 24,000 I would budget for Contract Services
• 19:00 - 19:30 okay just between so this one here is actual right that's fine so let's see pnl if it shows up there okay it dides okay so p a landscaping that's Contract Services and then you're going to have some payroll so originally in 46,000 they may have bundle the Fe and payroll and
• 19:30 - 20:00 everything else so for 72 units you need at least one inside one outside so or you know so those two people will at least be 90 to 100,000 annual uh or on a smaller property like this a lot of the times what comes out better is you have a higher Property Management fees like U you can typically
• 20:00 - 20:30 in most markets you can find a managing company that will charge like six or seven 7% and then you don't have to pay for a payroll separately and repair maintenance turns you have yeah there you go so that that's the setup they may have had before um but that's something to explore a little bit usually on smaller property this this setup tends to be more cost
• 20:30 - 21:00 effective than having a property management company and the onsite Personnel what is okay so these are individually window window units right ac across both properties I I just stacked both of their items in the water and sewer H okay that's the utilities right right
• 21:00 - 21:30 yeah yeah now AC AC's is a whole always a separate thing uh utilities are utilities but AC's uh repair maintenance of 36,000 you know on a 72 units one is really old one is little newer you're going to have few Replacements a year right so even if 10% 7 AC's uh I just got a Cote for a 510 AC yesterday
• 21:30 - 22:00 for like 8500 AC's just have gotten so expensive so anyway so uh you know 36,000 is like n or 10 AC's in a year and that 36,000 is gone so all this to say I would budget some extra money somewhere for those AC Replacements that will happen and
• 22:00 - 22:30 okay probably put in Contract Services I'm would you like to see yeah so I don't know maybe 50,000 there a year so that's like 4,000 a month if you have an in-house guy replacing then that's a little yes yeah I I still can get over that insurance how low that insurance is uh
• 22:30 - 23:00 and insurance being low on it yeah yeah like the the risk must be really low there but that's good no this this is good you got decent um vacancy concessions um you can probably start looking at other income opportunities so you know as you go through the visit and questionnaire and all those things I look for opportunities to
• 23:00 - 23:30 adding adding the uh other incomes is there a washer dryer laundry on on site I don't think so no okay go ahead yeah look look at when you visit look at places like a room or something that you can convert into a laundry room when you have 72
• 23:30 - 24:00 families they're going to need to do laundry so that's like a laundromat opportunity with a captured audience so look for that and if you find something then budget that in capex and add some income on the residential uh other residential income 16 in here not yeah so for capex is there's really nothing it's just a barebone
• 24:00 - 24:30 right yeah fully occupied now so okay yeah as you visit you'll find out if you need anything or not but I would say how how is Plumbing in that area like older buildings have Plumbing issues and then that's a whole disaster and super expensive or not so much one of my concerns with a building built
• 24:30 - 25:00 in 51 I mean it's it's coming up on 75 years old and it's probably in the it's probably in the concrete because they they did similar to California they've poured monolithic slabs and then built on a slab so it's almost certainly sitting on a slab Okay so uh get a plumber right get a plumber to
• 25:00 - 25:30 get out and assess it is Plumbing is always a big deal okay with that what does the dashboard look killed it I know we added some expenses is there uh seven cap you can let's do a
• 25:30 - 26:00 seven cap exit let's see what that looks like see see the basic here is 95 a door purchase and your rents are 950 a door right so that's like a older building yeah low lower that to four and a half
• 26:00 - 26:30 and see what that does on this price what do you want lower to four and a half oh the price price yeah that didn't even do anything change it to force
• 26:30 - 27:00 that start to show some returns at least now it's a 78 door so go back to pnl so okay so they're operating at 546,000 gross income a year right now right row row 17 and year one there's a $10,000
• 27:00 - 27:30 increase year two there's another 15 $166,000 increase not a lot so that that's the thing right like you have yeah have you have 979 a door in rent on average right year one right on top of that you have vacancy and concessions and stuff and no other
• 27:30 - 28:00 income so there is no way this deal would work at 95 a door they so small they shouldn't be 95 a door his asking price even though he's dramatically dropped his price his price is still too high still too high I I think so that 7877 a door is where it start to make sense a little bit you know the contract Services you know get some Assessments in the market for AC and stuff but maybe we over budgeted
• 28:00 - 28:30 this 50,000 a year on Contract Services right but right but it doesn't take much on the expense side to swing it in our favor dramatically yeah yeah because just such a small small budget right $250,000 for $72 right yeah so so yeah I mean I wouldn't I would go in That 70s per door range range if we get something you get something in that
• 28:30 - 29:00 range then yes 95 a door definitely is going to be too high in my opinion yeah yeah good good good review okay so you want to follow up and come back with this Rob abolutely yeah we'll do okay sounds good
• 29:00 - 29:30 John yes sir hey you have a question go ahead I do so we met a a gentleman that has some some land it's I Frontage wants to develop and so we're considering doing some like showroom industrial flex and I wanted to kind of get an idea do you know rule of thumb like cost to build price per square foot that we can use to kind of napkin that
• 29:30 - 30:00 out yeah so excluding the site development and utility work the rule of thumb we've been using is about $120 a square foot that's the pure construction with ti oh with ti with ti yeah so you'll always need some TI there
• 30:00 - 30:30 yeah you separ yeah because you could build a shell you know a little bit less quite a bit less the 120 130 is what we've been using for industrial and the site development and utilities kind of varies by project to project right so this is the i1 frontage maybe utilities is not a whole lot and uh utilities are there um there's no
• 30:30 - 31:00 retention needed the the adjacent took care of that so it's been looked at um okay so that that's not a problem it's just guesstimating the the cost to see if it you know if it pencils out yeah I'd use 130 just use 130 for napkin and we can take a look okay um with that including TI how much are you typically including for a flex Bas on TI like8 $10 a square foot or no probably like a 20
• 31:00 - 31:30 $25 square foot per Flex dang okay so you know you'll still have that little um whatever partition whatever they want to do usually not a lot like on the trip net retail it's a $40 to $50 square foot for TI that we budget okay and this one 20 to 25 should be more than sufficient okay and that's included in the 13 130 yes gotta that's perfect thank you
• 31:30 - 32:00 good hey Alo hey good morning sanay and everyone good morning hey um so yeah let me go through very quickly like I got this deal yesterday only and I'm today I'm going to see this this is on the way from Dallas to Houston in Umble Umble is like you know just like AOS skirts of Houston belt weight 59 so this is very small not in the um massive by buying cred is 30 30 units so but I like it and
• 32:00 - 32:30 I'm going to go there so let me go through very quickly and uh and wanted to get your opinion and I can talk someone in our group to to you know to go with it so um share can we see the operating om yes yes we can see okay very good so this is from Marcus mil Milich and the guy Andrew Nash I worked with him for another de long time back so I talked to him and he was very he
• 32:30 - 33:00 explained me everything so this is 32 units next to the school there's a school I will show you later and this is 86 built and re re rehab or you know they spend a lot of money in 2022 and 2023 and uh uh this has assumable loan which is little confusing to me 4.95% is good fixed rate for next two years after that the maturity days is 91 2032 so I
• 33:00 - 33:30 asked him what does it mean can we refinance after 27 without any penalty he said yes so after 27 it would be open with a current rate of something even he was 99% sure so I told him to get back on that one so this thing I want to talk to you sanj this thing and uh um very quick then I'm going to go to the synthesis looks nice uh apartment and everything is fully occupied right now now I think one unit they said they working on it but it will be it will be
• 33:30 - 34:00 fine and uh I wanted to show you one more thing here uh okay now this pretty pretty small there's nothing much in here so let me go to the um to the screen where I'm going to show you the synthesis can you see the synthesis now no we're still seeing om okay so let me go the asking price on this uh $125 a door and uh enter screen let me go there
• 34:00 - 34:30 share can you see now yes yes you can see it now okay so sanj the asking price is4 Millions $125,000 a door and I'm underwriting with 3.7 3.8 easy and uh 25% down I'm putting here all this and um let me show you the uh makes so the current trend is $ 1320
• 34:30 - 35:00 right now and definitely there's a scope to go it's a two- bedroom 100% is two bedroom one bathroom units and very close to 59 very close to uh this uh um the um the airport uh this inter intercontinental airport so it's pretty good nicely located and here I underwrite this one with $1 1320 right now and then 5% 1 because I saw nearby apartment going for 1.3 $1.3
• 35:00 - 35:30 per square feet for two bedroom one bathroom is pretty common in Houston neat and clean not too big not too small uh apartments and U next to the school the good thing is I'm going to show you the picture it is next to the elementary school just walking distance from elementary so he was mentioning me some of the teachers are there this and that you can do you know explore all this so sanj here it is right now 12.4 uh I mean he said the three tenants were giving some hard times they they they kicked them out so it took you know it went
• 35:30 - 36:00 down for last 12 months showing bad concessions but it's not too bad I mean as for the T12 but I'm keeping 10 and N and8 um all this and um the real estate taxes I'm keeping same with the right now it is 2.6 million is your it's SS value last year was 3.1 before the 2.4 and all that showing here so this one I'm showing as per our buying price multiply by 85 should be 80
• 36:00 - 36:30 but I'm just conservative side I'm keeping 85% of the buying price tax value is that fair enough San or you want me to 8 here uh no 85 is good at least 85 yeah okay okay and the insurance is I'm he he G the code for the same price but I'm keeping 10% more which is 12003 the roof is new so with the $1300 per door I fair enough for that area there's no contact
• 36:30 - 37:00 service trash removal is there I'm keeping exactly same I'm not changing any of this number and the okay here we can play I don't think we really need a personnal here because it say 32 units I can I mean easily can maintain virtu remotely and whatever you know the way it is so do you want me to take out this or what we should do here San I mean I can take it out but just wanted to do it I just wanted to discuss with you yeah yeah if you take this out I would increase the the percentage
• 37:00 - 37:30 percentage of the 7% at least seven at least yeah yeah you might be able to find somebody for six but yeah yeah yeah I mean honestly speaking I can take care I mean you know I'm I'm no W to nothing so I'm fine I mean you know I have contacts here all around Houston I can tell anybody can be there in one hour I can guarantee that yes anyway yeah but keeping this money you know whoever okay and uh I check everything it is
• 37:30 - 38:00 coming exactly same as for the t2 and very quickly here s I'm sorry I'm just moving here this is not a flood zone if you look at this this is the picture this is 59 this is not in flood zone as per Justice map it is showing income in the range of 70,000 I believe or maybe a little bit more 70,000 this is okay really good that's really good this is ranking Road this is a some business complex this is this apartment and this is school here
• 38:00 - 38:30 Elementary School okay this some CDI something okay so yeah income is fine and this is our Hispanic population here showing um this is the one ranking road so basically it's like mix 38% Hispanic and I think I had one more picture but basically 30 30% uh you know it's a mix it's like all right so let me go back here um okay so this is the thing Sanjay and it's
• 38:30 - 39:00 it's coming pretty good like you know if you look at the cash flow if I go back to dashboard capex what is for capex capex I didn't keep much because he said they everything I'm going to go today I appointment 11 o'clock there he said he can show the unit from outside because everything is occupied and it's pretty early to go there without any notice and um so I keep I keep standard s like some that's okay that's okay that's good $2,500 year sorry Al Rolo just quick comment yes R
• 39:00 - 39:30 um I think um I spoke with Andrew the broker for this property yesterday he gave me a call um the 30 you're right these are 32 units yes 31 are basically you are right you right 31 is two bedroom one one is half and half so you are right so my point is if you want to put some capex you know to reconvert the leasing office back to a two one that's it got it no
• 39:30 - 40:00 thanks for that so basically San it's a 32 units 31 units two bedroom one bathroom one unit they divided in half to make it leing office one you know one room and one room they they give it for rent for half of the rent so I 100% agree with you but I just kept it I just did it last night and the writing all this time so let it go like that but thank you for in case you want to put other don't know $5,000 after this I'm going to talk to you okay after call I'm going to call you sounds good yeah to talk about it
• 40:00 - 40:30 yeah that's good that's good yeah you you have you have 120 130 for cap so that's yes yeah yeah so I keep here basic like the standard you know 4,4 let's look at the dashboard now okay let's go back to dashboard and uh okay sorry so as per Andrew they have a offer of three again they they may lie uh God knows but they said they offer 3.8 and the uh and up or around 3.8 but they
• 40:30 - 41:00 want somebody close to 4 million you they always say that yeah so yeah so what is the loan amount is the loan amount 2. yeah loan amount is exactly 2575 I mean if you look at this loan is 285 yes exactly same 285 okay 2.85 yes um this is a 86 and 23 the six cap is but it's probably okay uh they keep
• 41:00 - 41:30 San cap if you look at they keep 6.8 cap I mean the I saw that yeah yeah yeah yeah I saw that on the OM was 6.8 yeah yeah you got it yes yes yes so Capital raise is very high it's 1.3 for this little bitty deal right but why 1.3 uh I don't see because of the down payment 50 I think actually you right 950,000 the you know the the basic one and then
• 41:30 - 42:00 your closing cost rehab yeah everything else adds a little okay yeah yeah yeah but I mean this works you're buying it at 118 here even if you go to 3.9 you can go I mean start with 3.8 but yeah yeah yeah yeah but you can go up a little bit I think right how does it work the financial Play Because here it says 25% down 5% and after interest only zero but should we add the refi because that's 2027 right the yeah years later
• 42:00 - 42:30 REI will probably work will enhance this further yes yeah yeah yeah yeah and and San question to you like here I keep zero interest only months because we are if we take it it's assumable loan so it is fair enough or I should change here no whatever they have if they have interest only left use that here if they don't then yeah then no interest so okay and I ask good sorry go ahead yeah no sorry I was going to say so now that you
• 42:30 - 43:00 changed the purchase price your loan amount went up oh yeah yeah right so just make sure you know the loan amount and change this to loan amount to be fixed to whatever the amount the actual principal balance left is got it got it and then the down payment is calculated from purchase price minus the down payment yes correct yes so just that changes sometimes on these loan assumptions your principal is
• 43:00 - 43:30 fixed instead of your percentage leverage that is fixed right got it yeah if if we add the refi I'm not sure it gets better to be honest because the rate would be a little higher right uh yeah you want to try refi yeah yeah s let's do that because I just very quickly I did so I'm really sorry uh let me do it quickly here so uh let's go here refi uh years so I yeah there it is here two three or sorry two
• 43:30 - 44:00 year because it has to be two years okay and five and a half yeah see it does go up returns mainly because mainly because of higher look at the proceeds loan is 3.6 million which which is at a 6.75 cap so that is very very attractive right right um since their interest rate is not like 3% something
• 44:00 - 44:30 that low refi will definitely make sense you know buy it stabilize it and increase the noi a little bit and then then just uh yeah yeah refi and keep it or whatever you know it's not too expanded so should I put here s 6.0 or 5.5 is 535 yeah you can put 6% just to be safe I think it be the low six by then but yeah yeah two years yeah I agree okay and anything else I have to change
• 44:30 - 45:00 here if I exit should I change to five what should I do I think I think this is good this is good okay okay so I I think this one works at 3.8 3.9 that range it works yeah yeah yeah go go with sorry Rudy guys no sorry I'm with my phone but I think the loan balance on top of my head if you look quickly on the om I think was 2.95 no or 2.85 maybe yeah it's it's
• 45:00 - 45:30 not going to make a huge difference I believe I just keep it to reduce The Dumping yeah it's between you what you saying 2.8 2.9 is around 2.8 87 and precisely it is 4.9 if you really want to go with their om so yeah look look look let's let's look at the principal amount usually that will make a big difference because every $100,000 in higher principal means you need that much less AC okay okay let me go there
• 45:30 - 46:00 so it has down down down yeah it has a double here 2.95 right 4.95 no 2.95 sorry the rate 4.95 okay yeah yeah yeah and the current bance is 2.95 so which is very close I believe 2.95 yeah so I'll look do this uh change the loan amount to 2.95 okay okay let me do that can I
• 46:00 - 46:30 should I change here yeah yeah just change it change it actually yeah hard hard f it okay and change the down payment calculation to purchase price minus got loan yeah purchase price minus the loan and now change the leverage the down payment percent to uh sell I4 no no scroll up
• 46:30 - 47:00 I I4 yeah change I4 I4 okay to um G yeah G5 G5 divided by oh sorry okay isal to yeah G5 divided by the purchase price oh okay okay I know okay now you have the true Leverage 23% now now when you change the purchase price your loan amount stays the same
• 47:00 - 47:30 what you're taking over I got it I you know perfect Mak sense yeah so this this is this is cleaner and look now your down payment your Equity rise goes down a little bit yep yep yep yeah 1.36 to 1.31 yeah yeah yeah so take take out refi for a second okay so let me take out the refi from no uh here two right there yeah two yeah it's
• 47:30 - 48:00 21.59 IR 2.39 acity multiple cash flow is good go back to p&l let me look at the pnl for a second sure so this is 3.85 offer here so scroll down let's look at the cash yeah yeah are you are you going to work for free or are you gonna some cash L right uh I think it should be 3% is a very yeah so this one this this one fulfills the 7% yeah even yeah yeah this works this
• 48:00 - 48:30 yeah this has a lot of cash a plenty of cash even even some cash flow to uh after meeting the 7% there is some left still yeah yeah so and if you refy um should I change to refy yeah it it'll be even better so yeah you can you can look yeah let's go back to with yeah either way okay so
• 48:30 - 49:00 yeah with the refi twoe refi let's go to pnl yeah go full speed on this this is a good one can we check a couple of things sorry just the the refi exit and the closing cost just making sure we in exit Okay so we're saying we're selling this property at 6.1 million which means 19 190 a door wow that's not cheap okay
• 49:00 - 49:30 that's very expensive yeah in five years right so that's uh that's uh 190 minus 120 70,000 over 120 that's a 60% increase yeah it's too high I mean we cannot do that no it's not I mean 150 160 is fine but 19 180 you can miate this just putting maybe at at least 6.5
• 49:30 - 50:00 exit cap so this going to reduce maybe if if you want to be more conservative right right no that's what my plan to yeah the one I i32 right yeah I think I'll take six we are getting 6.75 so let's say 6.75 just you know too bad so 6.5 is better yeah it's still still not bad yeah six and a half and now the how much will be the exit per door okay let go
• 50:00 - 50:30 here still 175 okay that's that's where that feels more reasonable 170 yeah 170 17 is more reasonable and uh yeah go back go back to dashboard okay and scroll to the bottom left okay and nothing think is coming okay sorry yeah scroll down a little bit so this one is sale we're purchasing at1 $9 sare foot oh sorry go up yeah and then sale is at
• 50:30 - 51:00 $160 s yep which is still still quite a bit below the new construction yeah right so yeah yeah and rent sales dollar per square fot is $143 which is very reasonable too so yeah this this this is lot reasonable now with 6 and a half cap exit yeah then six yeah yeah can can we do just the
• 51:00 - 51:30 last check of the closing cost and just making sure we took into account the refinance cost I didn't touch it again I did just last night only very quickly and uh I just didn't okay um that should be good youve got 100,000 there that's good yeah yeah exit closing maybe even less right what do you think 3.5 yeah you don't want to do too small there who knows what the market be like
• 51:30 - 52:00 so little buffer there you can refi 70,000 is good yeah yeah yeah so it should be like you know fairly it's a very small deal I Know M doesn't want to participate the small days but you know we let's let's do something together that's my my yeah I'm interested a lot yeah yeah I'm going to talk to you after this call that for my plan anyways now this is this is good Al let P thank P this full speed okay I'm going to go there next 1 hour or so and take
• 52:00 - 52:30 some picture we'll share with you guys in going to yeah and a deal like this as a starter is not a bad one just the biggest thing you want to make sure is repair maintenance issues there are not a lot because that will consume you as long as it's a clean property small small properties are okay yeah if you look at the the repair cost um I increased a little bit more like $400 $500 range so even if you make $500 is
• 52:30 - 53:00 not going to make a huge difference 435 yeah no so cost is cost your time that gets sucked into it is the bigger deal right right so uh you just want to make sure it's a clean property and you don't want to get stuck in I agree agree yeah yeah yeah I'm going to get some more idea today you know yeah the the broker was saying you know they the current owner bought it at the peak of the market in
• 53:00 - 53:30 20222 and so yeah they're getting a haircut on this um just FYI you know I think they paid I don't know four and a half or something we we can definitely check that oh yeah okay yeah yeah I mean he said it's I think somewhere outside syndication but some days somebody boots on the ground and he used to visit once in a while something like that but not very clear on that but yeah thanks for me that the owner is moving to Canada that's the main reason the main GP is moving to
• 53:30 - 54:00 Canada Canada okay and they said well they just want to get get off the deal and even if it's a haircut it is what it is got it got it so anything else you want to see San and to make it make it a little bit more U you know um I should say adjustment here yeah no no this is good this is good just uh look look for repair and the capex those things and capex okay I'll keep in my mind that thing and uh because they mentioned most of the units are new in AC units 2022 so
• 54:00 - 54:30 I don't think you know there's the most most of the units are are new so that is the main expense and the roof yeah apart from that is like $400 $500 is fine so all right cool okay good job good job on that that's good good good yeah sure sure Dy yeah let let me go uh uh let me go there today and then we'll we'll be uh discussing the next meeting we'll check on that one thank you sounds good sounds
• 54:30 - 55:00 good okay uh who else anybody else have anything and and and and if no one is there s one more thing to share with everyone uh there's a deal as Town Center something in in uh from Gray in condro uh Condominiums man amazing he they PR so much yesterday I talked to Abrahim he's saying $150,000
• 55:00 - 55:30 per door 1987 built I said just just you know archive it doesn't make any sense so um 150 a door okay yeah even if it's a brand new build it doesn't make sense Ian a little high unless the wrench are yeah yeah so it was under my name I
• 55:30 - 56:00 think I already archived that I believe so just sharing with you guys there was a deal came I talked to him and the his associate told me $140,000 door he told me50 but send your offer send your offer I said I will send definitely I will send yeah yeah that's good all right thank you yeah thanks okay good job Al thank you thank you sure thank you s okay let me go through a few of these um lockart Farms existing in
• 56:00 - 56:30 lockart let me see any of the a we are always low on Austin anybody yeah I don't know that is that is a location wise it's good okay so we don't have this is it Austin San or this is some other City because it was close to San maros
• 56:30 - 57:00 so what is the city lockart lockart here okay okay thank you Lord it's it's a becoming a suburb of Austin I think okay okay cool this one may be good to look um what year is this uh we're missing the year even at a six cap 56 16 16 or 120
• 57:00 - 57:30 okay okay anybody from Austin you guys want to this would be a good one to look at I think what is the asking price 16 million 16 uh we we don't we don't have the asking here yet um broker must not have responded or replied to this yet so you can assign to me if no one is no one no one take her I can take it lockart has good barbecue I'm sorry lockart has a famous barbecue place really yeah yeah yeah and
• 57:30 - 58:00 it's path that people travel between Austin and is Austin and what's sorry Julie Austin to which which route it is on the way to I think houst Houston Houston no I I've been to many many times I think you're right oh okay okay okay okay I mean my son in UT Austin so I've been there every other month oh okay I got it now okay okay okay got it yeah pretty good traffic
• 58:00 - 58:30 there too some people live out in lockart and cam to Austin for work but it's a pretty long drive yeah I will check on this send to me yeah any just FYI there's um Alex Barnes left the question on the chat oh there's a question let me see um 82 unit with 9200 square foot retail mix
• 58:30 - 59:00 use at 26.2 [Music] million uh morville North Carolina okay uh okay so let's take a look so 82 units so let's let's do some napkin math the 9200 retail I'm just going to put some value
• 59:00 - 59:30 to it 250 that's 2.3 so I'm going to deduct that from this uh so that's uh 26 2.3 so 262 whoops 262 minus 2.3 uh 239 for the 82 unit so that's that's almost like 300 a door 300,000 a door for those units even
• 59:30 - 60:00 if I put a little bit higher on the retail you know it's going to be two two above 250,000 a door um do Tiffany do you know average rents there no this is Alex's thing I was just bringing up because I know you don't check the chat very often yeah yeah no no oh oh sorry oh yeah thanks Tiffany Alex oh yeah I didn't didn't even see
• 60:00 - 60:30 yes um Market Market Ren on the on the on the uh apartments or 1500 a door okay so, 1500 door time 82 time 12 times you said the uh operating expense ratio is32 so we will do this is 68 as the noi so that is our n noi and if I do a
• 60:30 - 61:00 six cap what year built is this oh 2023 oh for 23 build Opex should be lower than that um okay so let me just do five right this is just we're just playing it comes in at about 20 at a five cap and that's and that analysis is just based on your 82 units right so you would include also the 9200
• 61:00 - 61:30 square foot of retail at 32 32 square foot right now yeah yeah so if you if I include this another three million on this gets us to 23 million total maybe 24 million total so so I would say you know generally moreville North Carolina let me look up this yeah it's Lake Norman that's uh basically 30 minutes north of Charlotte
• 61:30 - 62:00 my my parents live south of there I grew up in the area Okay so this is a Charlotte suburb okay yeah it's is it growing in that direction or which direction where your cursor is in the in the red space that huge body of water is Lake Norman it's a man-made lake largest in North Carolina and morville is home of a big big healthc care um big healthc care up and then also Lowe's Home Improvement that I used to work for their corporate offices
• 62:00 - 62:30 in moresville yeah yeah so so it it seems like they're pricing it very competitively um it comes close maybe there's other income and other stuff that will really bump up the value a little bit more and the that expense ratio I think I think for a new build like that in there can be even lower than 30 too um I've seen it very well in the 20s
• 62:30 - 63:00 high 20s okay uh especially if these are triple net leases here that makes it even more attractive so I think it's worth a look uh the only thing to keep in mind is you know it'll be hard to get to that 18 20% irr return on this this with the five cap this would be something like a u um you know lower lower IR so Equity
• 63:00 - 63:30 would be tough on this of those lower IRS okay and the $25 million deal you're going to need at least 700 million if not more but you might we might be able to get some press on this so all in to say it's a challenging very competitively priced deal but definitely worth doing detail underwriting and at it okay all right thank you for the feedback yeah
• 63:30 - 64:00 yeah good good I like we like really like North Carolina by the way uh especially you know they have a on top of all the other favorable thing they'll have almost like a zero Corp tax by 2030 okay lock at Farm I'll look assign but anybody from Austin also want to look please tag team uh I love on this this Dallas one this one came back um we
• 64:00 - 64:30 were looking at this last year before this was um with the broker now um they were asking 60 we were at around 51 not sure what they're asking now um I'm going to ask uh make sure we have I really like this
• 64:30 - 65:00 location okay so we will review this any Dallas folks want to look at this I would say this is a good exercise we have a loan assumption on this potential so there is that um okay this is a green portfolio we're not doing any new construction in
• 65:00 - 65:30 Greenville three portfolio Okay so these are the three Greenville Greenville just doesn't have the high enough okay okay so this is the green R also Road and another Dallas one here let's see what is
• 65:30 - 66:00 this okay another broker deal yeah we'll see once we get the whisper price on this well we can oh this is the new development okay so we're not doing a new development for and these are residential okay there are a few here um that are
• 66:00 - 66:30 not assigned to anybody so feel free to look if anybody's looking for the new deals uh to practice or underwrite five pip has 10 so guys we'll stop here any other the last questions or anything anybody need help with if not we'll stop here thank you guys good job few couple good deals see you tomorrow bye thanks andj
• 66:30 - 67:00 bye thank you