How to Underwrite a $50 Million Dollar Real Estate Deal

in dtube •  7 years ago 


Earth is one of the best investments that you can make. If it has a building attached to it that produces cash, even better. In real estate you can invest in old, value-add, and new. I usually don’t invest in new but it’s a good time to do it when the price of old and value-add is going up. I’m working on a $50,000,000 deal right now and I’ll tell you that if you cannot underwrite a deal like this, you have no business investing in a $50,000 deal. Don’t let the numbers and the process confuse you—stick around and become an expert at this game. Learn your market and get around people that are doing what you want to do. Never trust the pro forma and get accurate numbers for the trailing 12 and trailing 3. When you’re trying to get wealthy, don’t cut corners! Learn to play a professional game by looking at bigger deals. The bigger the property the better—you’ll always get a premium when you scale out. If you collect cash flow over an extended period of time—appreciation is bound to happen. Market corrections will also happen. When they do, it’s the little deals that will get whacked. In 2007 and 2008, it wasn’t the big deals that stopped producing income. It was the small deals. My huge deals continued to pay me every month. Look at your exit strategy before you invest in any deal. Understand that when you are putting more money down, it acts like a debt paydown. On small deals, on the other hand, the deposit is not enough to act as a debt paydown. For my deal, I already know who will be my buyer when I sell it and my expected return. It’s a good strategy to pay yourself a value-add when you exceed your projects returns. For example, I’m expecting a 6% return on my deal and will pay myself 35% of the amount that exceeds that 6% return. I don’t need the money so if you’re writing up your agreement with other partners, you could ask for 50% value add. When it comes to real estate investing, I like to say— “Stick and stay. It’s bound to pay.”


▶️ DTube
▶️ IPFS
Authors get paid when people like you upvote their post.
If you enjoyed what you read here, create your account today and start earning FREE STEEM!
Sort Order:  

@grantcardone Really interesting opportunities you have with Cardone Capital. I pray one day I will be able to invest my crypto into real estate, I am doing my research still and trying to learn as much as I can about the space. I am also trying to think about what possible applications Steem and the blockchain could have for real estate related investing and marketing. My passions are computers, trading/investing and tech related stuff but I have always had an interest in real estate. I am going to invest more of my time into learning as much as I can from you over the coming years.

Most of my life I have studied how the wealthy have amassed tremendous fortunes. I saw how many wealthy families— the railroad titans, oil barons, steel magnates, farmers, ranchers, car dealers and real estate moguls had accumulated real estate over time while earning income in the process. There are many indications that multi-family apartment investments will continue to be great:

-75 million Baby Boomers are headed into retirement
-Many of today’s apartment complexes may be converted to retirement communities in the future
-Many millennials aren’t buying homes
-It’s getting more expensive to build new apartment units

There are over 45 trillion dollars in retirement accounts in the US retirement accounts. Apartments are safe vehicles for those retiring who desire control of their retirement dollars and want to be responsible for those retirement dollars. Apartments, bought at the right price, in the right location will provide positive cash flow, appreciation, and peace of mind. Much more to come in my upcoming Real Estate Booklet

Very true I too believe multi-family apartment investments are a very smart move and the way of the future. The demand for apartments is only going to increase as cities grow into megacitys and city life becomes more common for the average person. I am a Millennial and personally I would rather put my money in a multi-family apartment investment vs tying all my money up in a single home. Although it would be great to own a nice home one day and call it my own..."Rent where you live, own what you can rent" is something I think I agree with at this point in my life and am beginning to understand. Looking forward to the Real Estate Booklet brother @grantcardone

True, I agree with this fact;

"Rent where you live, own what you can rent"

I hope to get a place of mine soon also

I love real estate simply because the interest rate now is so attractive. I'm looking to build capital to be able to one day own an apartment complex.

Great post, I couldn't agree more. Paying yourself a value-add is an interesting approach that I usually do not take, but I'm going to research it right now and figure out the best way to do it based on what I just read.

Thanks for putting out all of this great content, it really is priceless!

You are right @grantcardone. You have to believe in yourself and have an exit strategy. “Stick and stay. It’s bound to pay.”

OMG! This is SUCH an AMAZING post! Thank you for sharing! I gave you a vote!!

@grantcardone I have always liked the idea of real estate. Seriously. But I do not know much about how the industry run. When i tried to read up on real estate investment, the terms made it confusing for me.

Is there a video course you can recommend for me or a book that can guide me. At least i will appreciate gathering the knowledge now until when i have accumulated enough fund to dive into the business. Any assistence? Or what do you advice sir?

Yeah I really think that too, to run an investment on estate,but no link on how to invest.

cardonecapital.com , I'll also be releasing a real estate book soon

Just go to get to that 100,000 figure first and then go all in?

Not everyone gets to lay their hands on those big deals that pay over time

Hey Grant! This post is very accurate. I'm a baby flipper (On my third property) and am slowly learning the ways of flipping. But I grew up in this world. I was always around construction and "Daddy's little helper" so I have a solid foundation and intuition. This was a good refresher though.

Very cool to see you on Steemit Grant. I have followed you since you were on the Bigger Pockets Podcast. I used to write for them. I'd love to have you on the InvestFourMore podcast sometime. Only a few thousand downloads an episode, but all real estate guys. Keep up the good work!