All Forum Posts by: Micah Haworth

@Ken M.

Totally agree with your take — especially the point that affordability, not just rates, is what’s driving this freeze in the market.

From the commercial side, we’re seeing a similar dynamic play out, just with different numbers. Cap rates and interest rates have flipped. For anyone unfamiliar: commercial property values are driven by cap rates, which represent the return you’d get if you bought the property with no debt.

So for example: a property with $100K in Net Operating Income (NOI) at a 5% cap is worth $2M.

That made sense when interest rates were 3–4%. You could borrow cheap and earn the spread. But today I’m underwriting multifamily deals where the cap rate is 5–6% and the loan interest rate is 7–8%.

That means you're borrowing at a higher rate than the asset's unleveraged return — which destroys cash flow and makes traditional financing unworkable. Just like your example with FHA loans, the math simply doesn't support the current prices.

What I’m seeing now is a growing disconnect: sellers still want 2021 prices, but buyers are operating in 2024 realities — where financing constraints have changed everything.

But here’s the opportunity: just like you said, deals still get done, they just require more creativity. I’m seeing more success with relationship-driven deals, seller financing, and off-market plays where value can be added or structure can close the gap.

It’s not easy — but that means fewer people are willing to do the work. Let’s be the ones that do. This is the season where real operators rise to the top.

@Cameron Richard

Congrats on the first deal! Even if its not a home run its good to get in the game. Everything you are going to learn on this one is going more than make up for waiting for the “Right Deal”.

Though that low money down looks pretty attractive! great job. I’m from Iowa too. So let’s connect!

@Cameron Richard

Congrats on the first deal! Even if its not a home run its good to get in the game. Everything you are going to learn on this one is going more than make up for waiting for the “Right Deal”.

Though that low money down looks pretty attractive! great job. I’m from Iowa too. So let’s connect!

 Thanks Jaylin! 

 Thanks Noah! It's not easy but you can get it done. The best way is to work with people smarter than you!

Investment Info:

Other commercial investment investment.

Purchase price: $3,500,000

I syndicated a 61-unit Hotel. We raise 1.2M to take it down. I put in none of my own money, and after paying the investors and partners it makes me $3000 a month.

What made you interested in investing in this type of deal?

High Cashflow and great partners

How did you find this deal and how did you negotiate it?

I had a partner bring the deal to me asking me to help them syndicate it. He had gotten it from a Marcus and Millichap Broker. It was on the market for a while listed for around 3.75M and we got it for 3.5M. After an inspection, we ended up getting them to cover the cost of replacing the roof.

How did you finance this deal?

Normal Real Estate loan and an SBA loan. The AmericInn Franchise also gave us a small renovation loan to help cover the required repairs.

How did you add value to the deal?

The owner lived in the property and ran it with her parents. They did not maintain professional standards and did a lot of DIY maintenance. This led the property to get run down and now has an average of 2.9-star reviews. They didn't do any marketing and ended up with a 13% occupancy efficiency compared to the market (this is equivalent to over 350k of lost revenue). We are updating all the units and have already hired professional staff and an experienced GM to increase performance to market.

What was the outcome?

We just closed on it so I will keep you posted. But in the first 10 days we Grossed about 50k!

Lessons learned? Challenges?

We need to have a better contract with specific requirements for documents that we require for DD to begin. As well as a penalty if the seller is the cause of extending the close date. We had those issues with our seller on this one and each week she pushed back closing she collected 20k+ in revenue.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

We did, but I would not recommend them at this point.

I'm a Michael Blank Student and have had a great experience thus far. You don't get 1 on 1 time to Michael but I meet Bi weekly with my mentor. All of his mentors have 300+ units and are very experienced. Michael is open to partnering with students with deals that match his criteria (20M+). You also get access to the Deal Maker Mastermind group and I am constantly connecting with other students. Many students do end up working together in one way or another. 
I'd recommend the group but don't know much about some of the other programs so not much to compare it too!

Here is a Due Diligence Checklist that I use! I find it very helpful to remember all the details.

If they didn't have the Financial Information ready it can take some time to get the reports put together. I'd check in every two days, and just ask how long it would take. Them having a PM is a good sign that you could get some solid information but no guarantee. Focus on getting a Rent Roll and utility bills, everything else you could find on public records and get quotes on (PM, Lawn, Snow, Cleaning, Etc). 

Are you a GP as well? if so is your role a capital raiser in this situation?