MTNL Develeopment: How to determine post stabilized strategy?

Question

A.

How does one determine the best strategy once we’re fully leased up:

1. Hold 2. Cash-out-refi and hold 3. Sell

4. Other

B.

Not sure if I should create a fund of investors to increase my CoC, or just fund it myself.  This development is in a hot area, that also happens to be an Opportunity Zone

Appreciate your advice if you can spare the time. Thanks!

Greg Dickerson · Answer

@Josh Cochran it really all depends on the numbers, your goals and your cash position.

If you can pull out all of your cash through a refinance and hold on to the asset and generate have positive cash flow that can make sense.

If you can sell and generate a significant profit tom reinvest in another deal or two that would make a lot of sense as well.

The opportunity zone would be a capital raise play. If you or your potential investors have a gain they would like to reduce and defer that is a good strategy and the profit earned on the gain after a 10 year hold is tax free.

You can sell and reinvest all of the profits into more projects and start the process all over so that’s where the real power of the opportunity zone comes in to play.

Josh Cochran · Answer

Greg, thank you for your concise and organized expertise!If you'd like to dive in deeper, read below.  I'm an open book!1. Numbers

+ CoC return on the development is looking like 10.5%-14.5% once stabilized

+ Owner equity required: $1.2-1.3MM (My contractor would like to contribute their 7% construction fee + equity to get to 25% owner)

+ I purchased the land outright $600k value

.

2. Goals

+ Develop relatively-passive long term wealth

+ Gain experience to replicate deal

+ Create 2 additional streams of cash flow: NNN & Developer

+ This development will be another location for our my primary income stream a dental group partnership in which I am the sole "managing" partner

.

3. My Cash Position

+ Capital I have available to deploy - $700k+ ($600k of this has recent LT capital gains, so I am considering setting up the Opportunity Zone)