15 yr corp exec turned lifestyle entrepreneur | Real Estate: Self-Storage | Nearshore Hiring: @Hire_LATAM | Life: Kids, Bikes, Travel
Durango, CO
Joined December 2021
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Refi'd my paid-off house in late '21 and cashed out $500k at 2.9%.
YOLO'd $450k into the down payment on a $1.85m crappy self-storage property at a 5% cap rate. Felt pretty risky at the time.
Just sold it for $2.7m at an 8.1% cap rate.
As my wife says, I have a way of forcing appreciation.
Reverse 1031 exchanged into something less crappy.
That makes 14 buys, 4 sales (all exchanged up), and 1 JV in the last 5.5 yrs. 3 of the sales, 4 of the buys, and the JV all in the last 5 months.
I'm going to take a nap.
This has been the wettest September I can remember in the last couple+ decades in the Southwest. Radar has looked something like this for what seems like 3/4s of the month.
Rivers are running higher than they did at peak spring runoff. Landscape is greener than any point this summer.
Would have been nice to have earlier in the year, but we’ll take it. If this pattern keeps up, the winter will be one for the books.
I rarely wear spandex on a mtn bike, but when I do, it usually accompanies a race plate.
Santa Fe, I didn't realize you had such game.
Until this week, every storage deal I've done with my own money. Standard structure: I bring down payment and bank (or seller) finances the rest.
Just broke the mold and did a joint venture with an existing owner. They weren't interested in selling, but knew their asset wasn't producing near its potential.
Property is in my best market, in a great location, 5 miles from one of my locations, 10 miles from another. With the add, I'll control ~60% of market inventory, with three evenly spaced dots on the map.
My team takes over all ops and management and gets paid 5% of gross revenue. Owner and I agreed to a current fair market value based on current performance. I get 30% of appreciation above that number if/when property is sold.
We agreed to a preferred return against that FMV. Owner gets 100% of cash flow up to that number. I get 65% of everything above (I think you guys call that promote). The promote hurdle is much lower than a standard LP would agree to, but it'll be a huge increase in cash flow for the owner, if achieved.
The property needs some love. Mostly operationally, some physically. Owner is pre-funding a capex account and we've agreed to further fund the account with a % of ongoing net income.
Lots of ops improvement potential. ~60% occupied in a market that's at ~90-95%, lots of bad debt and no lien enforcement, no website, in-person rentals only during very limited business hours, phones not always (often?) answered, current prices reflect current customer experience (low, low).
Owner gets to fully step away from ops, while enjoying (hopefully) dramatically increased cash flow and forced appreciation of their asset.
I get a stake in the upside, without contributing capital or taking on new debt. I also get to add revenue base to further spread the cost of my property management biz (existing capacity can handle). I add further control of my best market.
Time will tell, but I think it'll be a win, win. Gotta go put on my puffy vest and go into work as a PE bro this morning.
Let's see if ReTwit still has its magic.
I'm trying to do some financing gymnastics and wondering if I'm missing anything. Here's the deal:
- Under contract to sell a property in early October for $2.7m. Bought in March '22 for $1.85m. Current balance of seller-carried note is $1.25m at 4.5%, 26 yr am, balloons March '32. 2% prepayment penalty expires next March.
- Note carrier (call him Bob) had no interest in exploring creative solutions to avoid payoff until he got the request for payoff statement from title, ran it by his CPA, and did the math on his tax bill.
- Bob now wants me to pay off ~$600k at close of sale and delay remaining ~$650k until Jan (spreading between 2 tax years).
- Bob is offering to waive prepayment penalties and all interest between close and final payoff.
- Claude and Grok tell me that the IRS will consider note paid in full if terms are changed to that degree with full payoff recognized in 2026 tax year
I've proposed:
- $300k prepayment made to Bob at close as allowed by current note (and Bob still waives prepayment penalty)
- Bob releases lien on sold property
- Bob immediately files second liens behind my bank on two other properties. Combined bank loan balance of $950k. Props valued at ~$2m at 8% cap rate. $490k of that just adjusted to 7.4%, remaining $460k set to adjust to that or higher in Jan.
- My bank is nice and said okay to the second liens as long as they aren't there longer than two weeks
- $950k in extra proceeds comes to me at close amd is used to immediately pay off first liens, sliding his seconds into firsts
- Note terms, borrower, and guarantor remain unchanged, now secured by two different properties
- Bob gets taxed on the $300k early payoff, but defers taxes on the rest over the next 5.5 years.
-Claude and Grok say this should be okay.
Bob doesn't like it. Bob wants $600k now and $650k in the new year. I'd be okay with upping the $300k in my offer to $600k, but I don't think the IRS will let Bob get the other $650k in Jan without paying the price he's trying to avoid.
How do I talk him into taking my sweet deal? Anything I'm missing?
Should have mentioned. Just like Bob, I don't like paying capital gains or depreciation recapture.
This sale is the relinquished arm of a reverse 1031 exchange. I closed the replacement arm in June. The money I fronted for that down payment matches almost perfectly the net proceeds (after full debt payoff) coming from this sale.
Kinda jealous of my friends who just go to work, come home, and don't worry about interest rates rn.
Mourning my first SBA loan adjust today. Really enjoyed that 5 years at 3.9%.
New rate = 7.4%
On the bright side, I’m prob saving .25% if it adjusted a month later.
Opened my computer this morning and it didn’t work right, so I decided to become the 9th fastest in the WORLD to ride a mountain bike on a 5 mile section of singletrack in Southwest Colorado, since I couldn’t work anyway. 🤣
My 11 yr old daughter has officially entered the chasing boys part of life. (2nd rider in this video, chasing a 13 yr old boy down trails in the French Alps). Watch out! 😳
My F-150 PowerBoost hybrid has more horsepower, torque, and fuel efficiency than my previous V8 trucks.
But another cool feature is that it’s an electric generator on wheels. Apparently it can power my house too.
I have a good deal of commercial debt at 6.625-6.75%. Why shouldn't I use excess cash to pay that down instead of putting it into my X Money account earning 6%?
