Episodes

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

Real Estate Diligence 101: Avoid Financial Disaster – EP.10

The Basics of Real Estate Due Diligence — From the Title to Closing

Summary

You find a real estate property you like, you sign it, you wrap up the deal under LOI, sign the purchase agreement, and then you get into diligence — which is what we’re going to be talking about on today’s show.

Diligence is that 30-60 day period after you sign the purchase agreement and before you get into the official closing documents. In this episode, we highlight everything that happens during that period, such as; the title, zoning analysis, building permits, surveying the property, environmental analysis, the appraisal, deeper market research, property condition report, financial due diligence, and the lease review.

This is real estate due diligence 101!

Key Takeaways:

[:13] About today’s episode.

[:48] How long it takes to go through the entire diligence process.

[1:34] Issues that can arise, starting with the title and title insurance.

[5:50] What is zoning analysis? Why is it important?

[6:50] Where are you completing the title, title insurance, zoning analysis, and building permits?

[9:18] About the survey portion of the property and its purpose.

[12:00] What information does the surveyor give you on the property?

[13:53] What is involved in the environmental analysis?

[19:22] All about the appraisal; how much it is, who requires it, and how it can kill deals.

[22:40] Some of the deeper market research that is done to make sure that you’re getting a reasonable value for the property.

[23:45] Can this deeper market research also lead to killing deals?

[24:34] What happens during the property condition report.

[28:04] The process of financial due diligence.

[32:25] All about the lease review.

A Deeper Look at Private Equity – EP.09

Summary

Today, we take a deeper dive into looking at private equity. Private equity is Grayson’s world — so we switch the script and I ask him all of the questions I have about private equity.

We discuss how private equity can help grow businesses, get debt to help your returns, the high risk/high return nature of private equity, precise strategies, what to look for when you’re investing, how to know how much to invest, and more!

Key Takeaways:

[:13] About today’s episode.

[:44] An overview about private equity, how Grayson defines it, and what sort of businesses he goes after.

[2:29] How do you grow the company with private equity?

[4:04] Are there any precise strategies that focus on particular markets in private equity firms?

[4:48] Who are the big private equity firms?

[5:30] Do smaller private equity firms do one-off deals in addition to funds (similarly to real estate)?

[6:28] Why does private equity have higher return (and in turn, a higher risk)?

[7:59] Can you get debt in private equity?

[9:12] High leverage, big buyout vs. the smaller deals.

[10:40] Multiple expansion and why it’s so great.

[12:41] What to look for when you’re investing in private equity.

[17:44] How do you know how much to invest?

[19:09] How do you pay a multiple on revenue?

[23:40] In an auction process on a deal, what would the variability between lowest bid and top bid be?

[24:50] A real world example of a private equity deal.

[29:06] What about exits? How do you make the most money in these deals?

Mentioned in this Episode:

KKR

Blackstone

Apollo

The Carlyle Group

Fortress

EBITDA 

A Peak Behind The Glass Curtain – EP.08

Behind-the-Scenes of a Real Estate Private Equity Firm

Today we’re going to talk about what goes on behind the glass curtain — what it actually looks like inside of a real estate private equity firm.

We go over the different types of teams within the firm, the importance of each of their roles, as well as their hierarchy; the two types of private equity funds; how these firms make money through the different types of fees they charge; and the general atmosphere and physical environment of the firms.

Tune in as we pull back the curtain on real estate private equity firms!

Key Takeaways:

[:13] About our topic for today: behind-the-scenes of the goings-on of a real estate private equity firm.

[1:09] The general atmosphere and physical environment of a real estate private equity firm.

[3:30] The teams that work inside the office and their roles. Firstly, the acquisition team and the hierarchy of the roles (the managing directors, directors, vice presidents, associates, and analysts.)

[11:59] The asset managing team’s role.

[12:58] The other teams in the office and the roles within them: the accounting team and the investor relations team.

[16:00] The difference between the two types of private equity funds.

[20:00] How these firms make money (through the acquisition fee, asset management fee, the disposition fee, and more).

[24:27] The biggest, most important fee of them all: ‘the promote.’

 

We Love Real Estate, You Should Too – EP. 07

Summary

We’re talking real estate today. Brad walks us through the ins and outs of finding a good deal in real estate — covering the basics and then diving deep further into the episode.

Everybody should have some real estate exposure outside of their current residency. You don’t want to think of your home as a real estate investment so you should get out there and look at some real estate deals!

This episode we discuss the three main reasons why real estate is a worthwhile asset class to be looking at, what cap rate is and why it’s an important determining factor when looking to invest, how to measure the risk of return, and when you should ultimately decide to “pull the trigger” in a deal.

Key Takeaways:

[:27] Why we’re talking real estate today and the three reasons why it’s a worthwhile asset class.

[7:17] As a sponsor, how do you know you’ve found a good real estate deal? What do you look for?

[8:25] Clarifying what ‘cap rate’ is and what it indicates.

[10:50] What other metrics does a sponsor look at when trying to find a good deal?

[14:13] The different real estate strategies and the opportunities you’ll see as a passive investor.

[15:42] How do you know how much you want to pay for something? And the right way to consider cap rate in a deal.

[19:03] How to decide when to ‘pull the trigger’?

[21:05] The most important but toughest aspect about looking at an investment: Figuring out what your annualized return on a deal will be and how certain you are that you’ll get that.

[22:20] Considering cap rate and measuring the risk of the return.

[23:40] Ultimately, it comes down what your annualized return is going to be and how risky it is.

[24:52] How to think about growth in real estate.