Gavin Laird

Proverbs 13:4

[Chris Ramsey | SMB and R.E. @ChrisRamsey60]

My friend grew up dirt poor.

A couple years ago bought a 5 million dollar lake house, now looking at 10m houses to upgrade.

Tech? Finance? Nope

Landscaping and plowing company.

His big break came from winning the bid on all the landscaping of a large apartment complex.

He had to take out a 400k loan just for materials.

He was the perfect example of “if you want things done right you have to do it yourself” but eventually he hired 2 managers paying them both 200k each a year and in doing so his business doubled.

American dream!

[Pulte @pulte]

We just allowed for Fannie and Freddie to provide FINANCING on "single-wide" FACTORY BUILT HOMES!

[Multifamily Madness @MultifamilyMad]

100% bonus depreciation baby!

It’s done. Signed and executed.

What does this mean?

Instead of waiting 27.5 years to depreciation an apartment building, you can take a large majority of it up front in year 1!

Why do this?

You can use the depreciation as a paper loss against your passive income (stocks, real estate cashflow, etc.) lowering your taxable income, allowing to keep more cash in your pocket and pay less taxes and doing it much faster with 100% bonus deprecation.

BUT

If you are a QREP (qualified real estate professional) you can use this paper loss against your earned income, not just passive income.

Note a few things: this is state dependent as some states do not recognize 100% bonus deprecation. So if you’re in a state like NY like myself, they do not recognize it, I can only use it primarily against my Federal tax bill.

In addition to this, your tax bill doesn’t just disappear. You are kicking the can down the road. Once you sell, if you don’t 1031 then you will owe the tax back in deprecation recapture (and will still owe it if you stop 1031 exchanging).

Why take advantage of 100% bonus depreciation if you have to pay it back? Velocity of money. Do you want the money today or years from today? I’ll take it now so I have more money in my pocket to buy more property today to grow the portfolio!

100% bonus deprecation being back also may spur up more buying activity!

[Oliver Burdick @oliverburdick]

The Holy Bible:

- 1500 years
- 66 books
- 42 authors
- 0 contradictions
- 63779 cross-references

Incredible.

[KyleMatthewsCEO @kylematthewsceo]

5 things You Should Know Before Starting a Self-Funded Company:

1.) Work Life Balance is a Myth.

There is ZERO work life balance in the first five years. Founder Mode is not just a concept, it is a requirement. You work incredibly long hours & weekends. If you have a family make sure they understand what they are signing up for as much if not more than what you are signing up for, and most important, why.

2.) There is No Job Beneath You.

At some point you will informally do every single job at the company. Paper in the printer. Water the plants in the office. Pitch guy. Lease negotiator. CEO, CFO, COO, CIO, CTO...all of it. You have to be willing and enthusiastic about all of it. Ingenuity and the ability to jump from one task to another is also key. Recommend possessing clinical levels of ADD, so don't medicate that away.

3.) Cash is King.

If you want to go nuclear, you cannot distribute cash to yourself. You must reinvest all profit either back into the business and/or to build a massive cash position. Reinvesting profit back into the business accelerates growth, and you must have a massive war chest not only to survive downturns, but to accelerate growth in downturns. It's not that most people don't believe in Buffett's "be greedy when others are fearful" mantra, its that they either don't have the cash to be greedy in downturns because they spent it or swept it, or if they do, they don't have the courage to act on it.

4.) The Culture of a Company is the Shadow of the CEO.

The culture of a company will act as a mirror that reflects who you are. If you want your company to be the hardest working company, you must be the hardest worker. If you want people at the company to treat their teammates at the company with dignity, you must treat everyone with dignity. If you want to have ingenuity at every level of the company, you must possess ingenuity. Work ethic, principles, morals, energy, it all will be a perfect reflection of you. The mission statement or principles of the CEO matter much more than the mission statement or principles of the company.

5.) Nobody will Care More than You.

You have to lead from the front. There is no "do as I say, not as I do". Never expect anyone else to care more than you do, so whatever your level of "caring" about the success of the company is, that is the ceiling, everyone else's will fall some degree below that.

[JWaller7 @Waller7J]

We still doing this guys?

[Preston Holland 🛩️ @preston_holland]

THERE IT IS!

100% bonus coming back. My business is about to be busy.

[Tristan Tate @TateTheTalisman]

Ricky, Julian and Bubbles for the new leadership of Canada.

[PrivateEquityGuy (Mikk Markus) @PrivatEquityGuy]

There are gentlemen in private equity who've 10x-ed their LPs' money, and then there is a very small group of GPs who've managed to grow their investors money 100x.

These stories are rarely discussed publicly, but can be found in the right books.

Here's one I suggest reading:

[Russell Brand @rustyrockets]

Jesus is Lord.

[Multifamily Madness @MultifamilyMad]

Give me back my freaking 100% bonus depreciation Don.

[The Real Estate God @TheRealEstateG6]

HOW PRIVATE EQUITY FIRMS ANALYZE DEALS:

Most important metrics:

1. Stabilized cap rate (yield):

Since we focus on value add, the entry cap doesn’t matter, as long as we can service our debt

The stabilized yield matters because it shows the intrinsic cash flow of the deal

The stabilized yield is the stabilized (post-renovation) NOI divided by all the costs in the deal

Very simple calculation (see below for an example) but very important

We typically need to get to at least a 150 bp spread between the stabilized yield and the market cap rate for a deal to pencil (ex if market cap rate is 5%, need a minimum 6.5% stabilized yield)

For example, buy for an in-place 4 cap, increase revenue to get to a 6.5, sell for a 5 cap. If you buy for $10MM with an NOI of $400k, put in $2MM in renovations and bump the NOI to $780k, you stabilize at a 6.5 yield ($780k/$12MM)

Property is then worth $15.6MM ($780k/5% market cap), for a profit of $3.6MM

Speed matters as well (quicker the better for IRR)

Stabilized yield is a more important metric than IRR because it displays the intrinsic value of the cash flow

Whereas IRR is a bet on the state of the capital markets (debt financing available) at sale as well as cap rates at sale, which basically makes it a total guess

2. Basis (you can show us any IRR you want and we’ll toss the deal if the basis is bad)

What does this mean? It means that you want to look at comps and make sure that in any deal you buy, you’re paying less than the market average

For example, multifamily is valued per unit

So if you take 10 comps and the average price is $100k/unit, you want to be buying for well under that number

Otherwise (barring the real estate being markedly better), you’re not getting a good deal, you’re simply paying “market”

Furthermore that means, in order to sell for a profit, the next buyer will actually have to pay you “above market”. Which is a dangerous bet to make - you’re essentially betting on a “greater fool”, which brings us to the next metric

3. Exit basis: This is heavily tied to #2 - you don’t want to invest in deals where the projected exit basis is significantly above current the market basis

For example, if the current market basis is $100k/unit, you’d want to buy for $60k/unit and pencil a sale at $80k/unit

That gives you a lot of breathing room and allows the next buyer to make money as well

Know this is all easier said than done, but this is how disciplined underwriting works

4. Unlevered vs levered returns (IRR):

This is just a gut check to make sure that our leverage isn’t out of control

Basically you want to check to make sure that the levered returns aren’t drastically different than the levered returns

Otherwise you don’t have a good deal, you just have a lot of leverage

5. Equity Multiple:

Only check this to make sure that they’ll be enough profit for the deal to be worth it (no point in 20% IRR and 1.2x EM - waste of time)

6. Cash-on-cash:

A lot of amateur investors emphasize cash on cash returns but it’s a far less important metric than stabilized yield because it’s reliant on the debt capital markets at any point in time, which isn’t intrinsic to the property

So it’s “downstream” of the yield

It’s also less important for quick flips (which is predominantly what PE firms do) because a lot of units turn over during the stabilization process, which results in choppier revenue for those years

We essentially ignore this metric and expect cashflow to be very low during the hold period (unless we’re working with a specific LP who wants to optimize for cashflow)

Often even have to make (planned) capital calls and have earn-outs built into debt covenants to inject more capital for a value-add aspect of a deal (ex. tenant buildout)

7. Components of NOI:

Then you look at the cash flow itself

What are the components of the rev? What are the components of the expenses? What risks could cause major fluctuations in either one? Are you willing to accept these risks?

How do these risks compare to other deals?

You want to make sure you going into each deal with eyes wide open

There’re risks to every deal (that’s unavoidable) but you want to make sure the deal makes sense on a risk-adjusted basis

And you want to make sure there are downside mitigants and multiple exit options

Lastly, this isn’t really a metric, but the most important part of our analysis is whether the deal is actually viable on a risk-adjusted basis and whether the property is actually good real estate

Investing in only *great* RE has allowed us to outperform

// If you want to make real money in real estate but don't know where to start

Apply below to the Acquisitions Bootcamp to work with me to find a profitable deal that fits your needs //

[RYAN GARCIA @RyanGarcia]

Fuck the Olympics boycott it for the disrespect of Jesus Christ

[Tristan Tate @TateTheTalisman]

Voting for the bulletproof outlaw.

[Andrew Tate @Cobratate]

Imagine shooting a man with your last bullet and he stands there UNFAZED.

[athena (Loves Wrestling) @ludgoat]

Many Men Donald Trump edit is about to go hard as fuck i can't even lie

[Miguel | Kingdom Living @Miguel_Thorpe]

@Cobratate Highest levels of T:

1. Read the Bible
2. Pray to God
3. Glorify God
4. Eat meat
5. Weight lift
6. Avoid porn
7. Become Christ-like

[Michael Moreno @HealthcareREguy]

Acquisitions Associate:
Best case- $150k/yr
Worst case - $150k/yr

Broker:
Best case - $10M/yr
Worst case - $0/yr

Developer:
Best case: $25M/yr
Worst case: negative $25M/yr

This business compensates you for the level of risk you're willing to take on. You decide how much.

[Multifamily Madness @MultifamilyMad]

When I show 2 girls at the bar my multifamily portfolio with all fixed debt below 4%

[JWaller7 @Waller7J]

Celebrate with your team.

You’re reminding your team that you’re constantly winning is a viral energy.

This energy compounds, people become addicted to it.