Tundra

Good riddance, Gary

@investingbff Some people have big families and need/want a traditional big wedding People change rarely, but traditions are even harder to change

Instead of having a wedding, some of my friends have chosen to tie the knot at the city hall and redirect the funds towards - $$$ diamond ring - luxury honeymoon - condo downpayment - Hermes handbag What else have you seen? Is a wedding important to you?

@TheRealEstateG6 This is why sellers are still keeping their prices high unfortunately 😔

Let's start off by diving into the numbers: The buyer is purchasing the property for $6.2MM ($119k/key), which represents a ~7% cap rate on the in-place income. This is a pretty good incoming yield at face value, especially when you take into account the fact that the rents are roughly 10% below market But there are issues with the cashflow as well. The first is the property taxes. Once the property taxes are reassessed at full market value, the tax increase ($65k) essentially wipes out the rental increase ($77k) The second is the well water testing, which is suboptimal (means the property is on well water instead of city water, which isn't great) and more expensive. This is a big reason why the NOI margin (at 60%) is below the market NOI margin of approximately 65% This lackluster cashflow also flows down to the stabilized yield, which (at 7.17%) is essentially the same as it was at acquisition. So you're doing all that work to push rents to market (underwriting assumes that the renovations are funded through cashflow) and you end up with the same yield you started with. Not great. The market cap rate is roughly 7% (the exit cap rate is listed at 7.5% because I always build a buffer into my underwriting) so you're pretty much stabilizing at market which means your profits are going to be minimal (unless you get lucky with rent growth or with cap rate compression) Really not a lot of meat on this deal from a numerical perspective - but is there any other reason why you'd want to pay up for this deal? The Physical Property Tour: During the bidding process I toured the property. My goal with a tour is twofold 1. Is there any hidden capex that's going to cost me a lot of money? 2. Is this property great real estate that I'd want to pay up for? The property was wholly unimpressive. The driveway was a disaster, there were leaks in the corridors and the bedroom count was overstated in a few units So not only was it not good real estate, but the property also likely required some capex dollars as well, which has to come out of the purchase price The Negotiation: Now that I knew the numbers weren't great and the real estate wasn't great, I had to decide what to offer for the property I wanted to get to at least a 8.5% stabilized yield on a deal like this, which resulted in a purchase price of $5.4MM So the maximum I would've paid for this deal was $5.4MM. Which is the bid I submitted a few months ago when the deal was on the market. Obviously I lost the deal, as the eventual buyer came in at $6.2MM Why was the buyer willing to pay $800k more? I have a few guesses: 1. The buyer didn't understand the reassessed taxes 2. They received IO debt allowing them to produce some cash in the short term and focused on cashflow over stabilized yield (big mistake) 3. They were underwriting massive rent growth (which may or may not happen) 4. They’ll try to reposition the asset as a student rental (highly doubt this will work for multiple reasons) Overall, a very mediocre deal that happens all too often. The buyer probably won't lose money but they're not going to make much money either

An extremely thin deal just closed in my market. The buyer paid $6.2MM (52-unit deal, $119k/key) They overpaid (my bid was substantially lower than the sale price) Here's why and here's what I'd pay for it:

@homeservguy Sq ftg? Seems high!!

@DallasAptGP @shawngorham What’s the impact of bonus depreciation decreasing y/y on the effectiveness of cost seg going fwd?

@shawngorham Really asset and capital structure dependent Remember that your ability to do a cost seg and bonus depreciation does not go away If you place a building in service 2023 then you can wait until a year when you have big income (or like fundamentals better) but still get 80%

Look - I am not the sharpest tool in the shed But completing a cost seg without regard to recapture might come back to haunt some Also, curious… if a GP does a cost seg, passes out depreciation and the asset goes back the bank, what happens? Any recourse?

@shawngorham Wdym “without regard to recapture”?

@antonia_mdprjct Stunning 💪

Weekly update. This week has been a whirlwind. Final paint walkthrough today/tomorrow. Finish electrical & plumbing is 99% done. Second wave of millwork shop drawings is underway.

@constantraise well deserved

@StealthQE4 Spoken like a true non-home owner (talking about him not you @StealthQE4) housing market has been at an ATH every 10 years for the last 150 years waiting on the sidelines is what's gotten a lot of people in trouble with housing over the past 10 years

Few people understand this. Blackstone doesn’t buy at the top. They wait for cheaper prices.

@mu2myoc @lex_node

When you sign the engagement letter vs when you get the legal bill.

@WeddelExp @innoc_bystander Agree

Deleted a post because it was lacking nuance that bothered people, so I’ll rephrase. If you have a family, or planning to, be extremely careful about working for a boss or a firm that explicitly has no interest in those things. Not true 100% of the time, but risk/reward sucks.

@innoc_bystander No need to take back the original post

@rohindhar @Fire5280 Why wouldn’t people do this This is a massive reason to buy STRs

@Fire5280 No presumably doing all the work but making the tax loss the primary consideration.

Have heard rumors of hoards of doctors getting into short term rental investing to use the “STR loophole” of using depreciation to offset their income. Any truth to this?

I had a manager like this once She was 35+ and single, she wore long Indian robes to the office despite her being a 6’4” white woman cuz she got recently had spent time working in India Everyone thought she was very “woke” (a good term at the time), except me, I thought she was bat shit insane ~ she was ~

@gefull Very, very true

@Tundra_Explorer Name of the game is NIL money. Yes, Prime is entertaining BUT how much am I (recruit) getting to come there? That is the new world order in college sports.

@ConorBronsdon Such an amazing game

@Tundra_Explorer Epic start to the new regime, PAC 12 will be crazy competitive in its final year.

@CUBuffsFootball @CUBuffs 😤😤😤😤

WE BELIEVED.

@CUBuffs @CUBuffsFootball @CUBuffsRalphie I’m a Buffalo now

@larry0x Hard not to believe in God when you think about it like this

@Tundra_Explorer It seems like so. We are just one copy in an infinite multiverse that repeats in infinite cycles

If time is infinite, then any event, however small the likelihood, will eventually happen