Month: October 2018

What Price to Pay For An Investment? – EP.15

Summary

Today we’re going to talk about how to figure out how much to pay for an asset. When you’re buying an asset, price is the most important variable you’ll be looking at — probably not the only variable — but definitely the most important!

Arguably, you should be spending 90% of your time answering the question: what is this asset worth? So today Brad and I cover — from real estate to private equity — how to know how much to pay and which factors you should consider.

Listen in to learn how to appropriately price assets!

Key Takeaways:

[:13] Our topic of discussion today: how much to pay for an asset.

[1:52] Brad walks us through how much to pay for an asset in the real estate world.

[4:58] A real estate example for figuring out how much to pay for an office property.

[9:03] How the exit price factors in to how much you’ll pay.

[11:17] How much to pay for an asset in the private equity world.

[15:04] Summarizing our key takeaways.

Mentioned in this Episode:

IRR

Cap rate

Unlevered vs levered

Warren Buffett

What is an Accredited Investor? – EP. 14

Summary

Today we’re talking about accredited investors. To become an accredited investor you have to meet the SCC’s income and net worth requirements (such as needing to have $200k of income in the last 2 years if you’re single, $300k if you’re married, or $1 million in net worth not including your home.)

So why would you want to become an accredited investor? Or how? And if you became an accredited investor, what opportunities open up to you? How do you verify that you’re accredited? Brad and I answer all these questions this episode — as well as giving you an update on the latest changes the government has made in regards to accredited investors!

Key Takeaways:

[:12] About our topic today: accredited investors.

[:26] Brad’s experience dealing with accredited investors.

[4:02] What is an accredited investor?

[8:15] Why does it matter that you’re an accredited investor? What opens up to you?

[10:42] How to become an accredited investor.

[12:20] All the ways to verify that you’re accredited.

[14:57] The latest update on what the government thinks about accredited investors.

Mentioned in this Episode:

Blackstone

The Carlyle Group

SCC

Jor Law at Verify Investor (Linkedin)

Verify Investor

Financial Industry Regulatory Authority (FINRA)

What is Preferred Equity? – EP. 13

Subtitle

What Preferred Equity is, How It Differs from Common Equity, and Why It is Used

Summary

Today’s episode is all about preferred equity — so we’re going to try and keep it light and fun.

Firstly, we talk about what equity is and how preferred equity differs from it — then, we get into common reasons for using preferred equity in a real estate or private equity deal. We also give some examples of the differences between it and common equity and explain why, more and more, we’re seeing preferred equity in deals.

Preferred equity may not be sexy — but it can be sexy when the payments are coming to you.

Key Takeaways:

[:13] About our topic today: preferred equity.

[:55] What is equity?

[1:40] The two types of capital: debt and equity.

[2:29] An example of common equity in a real estate project.

[3:49] What is preferred equity?

[4:30] An example of preferred equity in a real estate project.

[6:42] Why do we typically see preferred equity in deals?

[8:00] Another reason for preferred equity.

[9:16] Expect to see preferred equity in your future deals and do more research on the topic!

Mentioned in this Episode:

Capital Stack

Preferred Equity

Broker Deals VS. Off-Market Deals – EP. 11

Broker deals and off-market deals are night and day. Everybody thinks that an off-market deal is the holy grail and that you’ll score a way better price. At least that’s what most people think — but it’s not necessarily true. So today, we’re going to go through the key differences between broker deals and off-market deals and break everything down so that you can make an informed decision as a buyer or investor.

Key Takeaways:

[:14] The difference between broker deals and off-market deals.

[1:02] What is a broker deal?

[1:44] What is an off-market deal?

[2:24] The difference between the processes on a broker deal vs. an off-market deal.

[5:05] The difference between a broker and banker.

[6:00] How many sellers go to brokers? And why?

[7:40] The process of narrowing down the buyers.

[9:18] Are buyer interviews held?

[9:47] The process for an off-market deal.

[10:50] Likelihood of closing between an off-market deal and broker deal.

[12:34] The quality of the deals on an off-market deal vs. a broker deal.

[13:40] How long it takes to close an off-market deal vs. a broker deal.

[15:42] The valuable role of a broker.

[20:48] The range of prices in an off-market deal vs. a broker deal.

[25:44] Wrapping up our thoughts on off-market deals and broker deals.

 

Mentioned in this Episode:

Freakonomics Podcast