So, Hey guys, as you know, the way to raise money,
the way to get money from lenders,
the way to get money from investors is to create massive value for
everyone.
So what I'm going to do is I'm going to walk you through a deal that we're doing
right now.
This is a business plan that we're going to put out this week to our accredited
investors. And this is how you present a deal.
And this is how you make everybody money.
And this is how becomes a win-win for everyone.
So we originally found a 264 unit building in Texas and
in this building had two floors and we have also right next door was a building
that was 384 units. This building was listed.
This building we were pursuing had been under rented,
and we had a massive value add opportunity. In other words,
we had to spend some money inside of the units and we can grow the rents.
This deal fell out of escrow, right when we were negotiating this one.
So we started to negotiate this one right here.
Now this is literally right next door to each other.
And this is a fence that is shared literally a wood fence, right in between.
So combine this as 648 units.
And so I was very excited cause I had done this before.
So what happens when you combine two buildings,
then what happens is you combine the operations and you
don't need two managers. You don't need two big maintenance supervisors.
There's a lot of things like marketing and all that kind of stuff that you could
combine, including insurance. Now,
obviously you need insurance for both properties.
The combination of combining these save massive amount of money.
The second thing was is that there were things that we could add.
So in both of these properties,
they had washer and dryer rooms. In other words, they had washer, dryer,
hookups. They had the water, they have the vents and all that stuff.
And they actually had designated rooms,
but they didn't have washers and dryers that people were going down to the
laundry rooms. And so I saw that as we can add the washers.
The dryer and the vent, and then of course the washer to go and everything.
So we send them by the sets and then we'll get $40 or $50 per unit.
The third one was that there was a renovation opportunity. In other words,
what happens a lot of times is units are upgraded and the rents might
be higher right next door or across the hall, then another one.
And so you start to see these big differences in rents.
So there was about 50% of the units in this property that could be upgraded
significantly so we could upgrade the units.
So this is what I would call three ways to generate massive value.
So this is why we got so aggressive in buying these properties because we knew
that we could force equity. Okay. So now let's take a look at the math.
So what we did is we came back and we said, okay, to the management company,
if we take down this fence and we combine the operations,
how much is that going be?
And our management company told us that they thought that they could save about
$220,000.
Now the details are in the business plan and they're going to come out on
Thursday to those of you that are accredited,
but you could see the combination of these two assets.
And we're talking about millions of dollars to run these properties.
We're going to save about $220,000.
So with respect to the washers and dryers that we could add that we,
we knew that we could add to about 550 units.
Now these washers and dryers are going to be expensive.
They're going to be about a thousand dollars per unit.
So we're going to spend $550,000,
but we're also going to get about $40 a month in
rent. And so we know that that's an investment,
but it's going to be paid back in about a two year timeframe.
Not all of the units had washer, dryer hookups.
So that's why we're only able to do 550 of them out of the 648.
And then the renovation we had found that about half had been done.
So we had about 324 units,
and we found that we could generate rent of about an additional $135
a month. Now, obviously this is going to cost money,
but this is how you add value.
We're going to save at least $220,000 between the two properties.
We're going to get a nice little increase by giving each resident their own
washer and dryer. And so them having to run down the laundry room,
which will add to the rent.
And the last thing of course is we're going to update the remaining 324
units. The cool part about that is a lot of the units are already upgraded.
So we already know that we have about $135 on the
unrenovated units.
All we got to do is spend some money on the ones that are un-renovated and bring
them up to the market on the existing ones that are there.
So this will all be summarized in the business plan so we can show our investors
how we're creating value. So let's summarize this the first one, of course,
we're going to combine the operations like we just talked about,
and the management company has determined that we're going to save about
$220,000 in the operating expenses that is going to grow the net
operating income or the NOI.
The second one is we're going to add the washers and dryers. Now, as I said,
this is about 550 units at about $40 a month,
times 12.
So that's about $264,000 in NOI growth.
So that is obviously good. That's a value add.
So the last one is to renovate the remaining 324 units,
which is going to generate us at an average of $135, a unit about
$524,880. So what does that mean? That means that our projection,
by the end of year three,
is that we're going to be able to grow the net operating income by a little over
a million dollars. And this is a massive value add.
And this is why I got excited about the deal.
So if you take the capitalization rate,
which is about 5% in this particular market that puts this,
you take the 1 million divided at the 5% that puts this at about a
$20 million value add. So when we buy this building,
you're actually gonna see this value add that's going to happen over the next
two or three years as we roll this stuff out.
And this property is going to be worth an estimated,
a $20 million more than we're paying for it today.
That's how you create massive value for yourself and for your investor.
And this is how you raise capital. You're forcing equity.
You're showing them how their money can make more money through good sound
investing just like this. So guys,
this is a real life deal that I'm working on right now.
I thought it'd be fun to show you kind of the economics behind it all,
why I'm excited about it. And obviously if you want to take a look at it,
you have to be accredited.
You have to follow the process on the website on the MC Company's website,
there'll be a link below and you can take a look at the whole business plan,
and then we can get on the phone and discuss it. One-on-one.