All Forum Posts by: Account Closed

Hey Andy - Having land in Austin is a prime opportunity. I just bought a 300 unit multifamily in Austin. 

To answer your 3 questions: My general recommendation would be to 1) Hold onto the land as long as possible or 2) Identify a partnership oppty with a developer where you limit your downside and maximize your equity upside.

You're sitting on gold and you got to take advantage of it! I wouldn't do a 1031 exchange into a multifamily deal --> You'll be selling your land for top dollar but also paying top dollar for Austin multifamily. I'm not sure if you've owned/managed multifamily, but if not, it may not be a risk worth taking based on your age and goal of providing a living situation for your daughter.

The question I would ask if I were in your shoes to come to an answer would be:

"Do I already have the funds/liquidity to provide for my daughter for her situation for X # of years?" X would be the amount of years that you'd like to make sure you've provided her money for. If so, then I would hold onto my land and I would just park that money I have saved for her in CD's getting 3% a year and be happy knowing that I will be able take care of her. For example, if you believe you have expenses saved up for her for the next 70 years then I would park 20 years of expenses in CD's and put the other 50 years into an S&P500 ETF.

If not, then I would determine how many years of expenses you have for her situation and then determine which investment oppty and timing provides you the additional years of expenses that you'd like to cover for her. For example, lets say you want to cover her expenses for the next 70 years, but you have 5 years saved up. And by selling this land you can generate those add'l 65 years you could sell the land now, guaranteeing that you have provided the runway for your daughter for life.

Hopefully this framework helps, it's hard to provide more detailed guidance without knowing the answers to those questions. And as a (almost) new dad to a daughter I can definitely empathize with how you are thinking!

Hey @Brian Geiger - Cap rates are one metric that you can use to evaluate a deal. The formula is that Cap Rates = NOI / Sales Price. Using this equation, you can determine a potential purchase price, sales price, or Cap rate depending on which variables you know in that equation and if you are a seller or buyer.

In short, Cap rates will show you 

1) The price you pay for a property
2) Your unlevered return (e.g paying 100% cash)
3) A way to compare price of diff properties

If you're buying a deal, you're also going to want to understand Cash on Cash, Equity Multiple, and other financial metrics because that's your projection on what is the true return that you will receive on your investment. Operationally, you want to understand the business plan, the market, the team that is executing the business plan, and all the other various factors that you would use to identify any investment. 

I wrote a post on Cap rates that may be helpful for you to understand this a little more deeply. I hope it's helpful: https://www.rohunjauhar.com/po...

Investment Info:

Large multi-family (5+ units) commercial investment investment in Orlando.

Purchase price: $52,000,000
Cash invested: $16,000,000

Bentley at Maitland is a 324-unit Class B property located in beautiful Orange County in Orlando, FL. This property was owned by the previous owner for 5 years and allowed my partners and I the opportunity to find an asset that had rents at 8% below market, only 10% of units needed to be renovated, and the previous owner was not very efficient on their costs. This property provides 9% cash flow per year at time of acquisition and is part of our portfolio strategy of value-add properties.

What made you interested in investing in this type of deal?

- Class B property in Class B+ location with 8% below-market rents
- Previous owner mis-managed the property by running costs too high
- Value add: Renovate 10% of units, Install smart home packages, Implement valet trash, Install kayak dock on lake, Upgrade clubhouse and on-site gym

How did you find this deal and how did you negotiate it?

Found deal through trusted broker relationships in Central Florida

How did you add value to the deal?

Renovate 10% of units, Install smart home packages, Implement valet trash, Install kayak dock on lake, Upgrade clubhouse and on-site gym

What was the outcome?

17% IRR