All Forum Posts by: Ben Leybovich

$300 I'm all good with :) 

In the beginning of my career, I used to think the same way, and on the first couple of syndications, I pegged asset management fees to revenue. However, then reality happened and caused me to rethink this approach. 

This asset management fee pays for what? For asset management, which means it basically pays for operations overhead, salaries, software, etc. 

Well, when things are running well, no one cares. But, when things turn sideways, you realize in a hurry that you wish you had more budget to hire more people, better people, more software, etc. When the revenue comes down, the last thing you want to be is hamstrung on the money you can throw at the issue. This is very similar to having reserves.

Granted, WhiteHaven may well be one of the more expensive sponsors out there. But, what we do is hard and very dynamic, and I wouldn't do it without being able to make plenty of money for myself and have plenty more for operations. I pay my office staff well, and I pay my construction guys more than most, which is why things run like they should and investors make money, which is the whole point.

Who knows. @Scott Trench - help me out. Is it luck? What is the one thing?

 @Brian Burke - is this basically the way we have to meet now? You could just fly over to Phoenix, you know. Airport next to my house.

Paul, most that is known about real estate is either wrong or misunderstood. It's why guys like us make all the money :)

How about if we turn this argument a bit on its' side and say that if someone has the time to teach you they are probably not worth learning from...Does this change your thinking at all?

In the last 1.5 years we've exited a number of positions. The average hold period was 25 months, with the longest being 36 months. The average increase in revenue was 47% and ranged from 27% to 77% depending on where in the renovation cycle we sold. The average IRR to partners after all fees and promote was 35% and ranged from 25% to 50%, and the average multiple 1.8x.

Each asset was purchased at 3 Cap or below, and each was sold at a higher Cap Rate by a good margin. 

The benefit of a low cap rate in a value-add situation is the larger lever. If I send $30,000 per unit to lift revenue $650/month and this lift is capitalized at 3 cap, the resulting valuation is $260,000. But, if the same lift is capitalized at 6 cap, the value derivative is $130,000. The math is pretty simple.

I just want to self-promote. Is that OK, Joe :)

Think of it this way. 97% of everything you need to know is right here. Free. And the other 3% you won't find anywhere because that's the stuff you need to figure out for yourself :)

If you were to get in trouble, would you want trouble x4 or trouble x10?

The question is not whether you can, but whether you should...