Today is an incredibly big day! Grayson may be closing on a huge deal tonight. It’s been a long time coming but it’s finally happening! He quit his last job about 3+ years ago and since then he’s been looking to buy a business and has gone through about 5000 different companies, sorted through many different websites, and talked to lots of different owners — but it was all worth it, because he’s finally found one that he loves and is super excited about. He’s completed all of the purchase agreement documents and soon… all will be finalized!

So today’s episode is going to provide as a recap for what Grayson has been up to for the last couple of years. Hopefully it will serve as both inspiration — but also as a cautionary tale for those of you who want to get out there and buy your own deal! Today we’re going to be sharing the good, the bad, and the ugly. So tune in to learn some of the ins and outs of buying your first deal!

Key Takeaways:

[:11] All about today’s episode!

[3:18] So what is Grayson buying?!

[6:33] How Grayson and his partner found this deal.

[7:58] What does the transition look like after purchasing this deal?

[10:34] What Grayson learned from being an investor!

[15:30] The importance of balancing investing and operations.

[19:03] What’s next for the podcast? Topics we’ll be focusing on in future episodes.

[20:58] Opening it up to you! What would you like to hear from us next? Email us!

Mentioned in this Episode:

Performio.co

[email protected]

[email protected] 

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et’s say you find yourself in the fortunate position to have a wonderful asset that you’ve operated for a number of years — whether it’s real estate or an operating business — and you’re ready to sell it. And now, you’re faced with the decision of how to actually sell it. Do you hire a banker or a broker? And if so, how do you go about finding a good one? 

Today we’re answering both of these questions and filling you in on all of the juicy details of hiring a broker! 

Key Takeaways:

[:11] About today’s episode.

[:48] Should you hire a banker or a broker? And what is the difference between the two?

[6:02] Why don’t people hire a banker or a broker?

[8:49] How much does a decent banker or broker cost?

[11:51] How to find and identify a good broker!

Mentioned in this Episode:

Broker

Lehman formula

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After 2 ½ years of looking for a software business to buy with my partner, I think we’re finally getting towards the end! And at the end of the due diligence process when you’re going to buy a company… you’ve got to sign a purchase agreement. This purchase agreement is the big contract; it’s the document that lays out all the final terms and conditions. And when it’s signed, the money is wired — and it’s official: you own the company.

So because this is all so timely for us, today we’re going to be talking all about purchase agreements! In fact, we’ll be going through the actual 57-page document I received for this software business to explain each section to give you all an idea of what to expect when it comes to negotiating your first purchase and sale agreement!

Key Takeaways:

[:11] About today’s episode on purchase agreements!

[2:22] We begin looking at the 57-page purchase agreement word doc, starting with an overview of the table of contents and section 1, the glossary.

[5:09] Reviewing section 2: the purchase and sale of parent shares.

[9:40] Reviewing the following three sections that cover representations and warranties — first up, those concerning the company.

[16:30] Next up, we take a look at the sections covering representations and warranties of the sellers.

[17:55] Taking a look at the representations and warranties concerning the buyer.

[18:58] Reviewing the section that covers the additional agreements.

[19:52] Checking out section 7: identification and related matters.

[23:03] Wrapping up the podcast with some final points about purchase and sale agreements!

[24:54] What should you be focusing on when negotiating these documents?

[28:14] Thanks for tuning in!

Mentioned in this Episode:

Purchase and Sale Agreement

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Today is going to be our all-encompassing, definitive episode all about on cap rates! What are they? How they are used? What’s the whole deal here? Tune in to find out!

We discuss how they relate to interest rates, what they indicate, what they’re useful for, what they’re used for on a day-to-day basis in real estate investing, and how you should be thinking about cap rates if you’re thinking about getting into the real estate investing world. We also give several examples of how to find the cap rate!

Key Takeaways:

[:11] About today’s episode.

[1:01] What is a cap rate?

[2:59] A quick example of how to find the cap rate and what it indicates.

[4:51] How cap rates relate to interest rates.

[7:52] What cap rates come down to and what’s important to remember.

[10:51] The useful thing about cap rates!

[11:29] How those in real estate use cap rates on a day-to-day basis.

[14:24] A range of where cap rates fall now.

[16:27] How you should be thinking about cap rates if you’re thinking about getting into the real estate investing world.

Mentioned in this Episode:

Cap Rate

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In this episode we’re going to be talking about investor relations — i.e. staying in touch with your investors and maintaining good relationships with them. 

Investors are people too, y’know! Just like your friends or spouse, they want to be kept in the loop and know what’s going on. They’ve given you money to go out and do a job… But they don’t want to just give you the money and be left in the dark; they want to know what’s going on!

Tune in to learn more about what goes into a typical investor update, how often you should send one out, and the many benefits that come with it!

Key Takeaways:

[:20] What is investor relations?

[1:10] The hard part about investor relations.

[3:32] What is in a typical investor update? And how often should you send them out? How long are they?

[12:50] Should you reach out to your investors outside of the formal updates?

[15:22] Summarizing our key points about investor relations!

Mentioned in this Episode:

Investor Relations

Howard Marks

Warren Buffett

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Today’s episode is all about taxes! Specifically, we’re going to be talking about K-1s. A K-1 is a tax form that you get from private investment (typically an LLC.) on an investment you’ve made. This is the tax form you’re going to get yearly from that sponsor so you can pay your taxes on that income.

If you’re ever going to be making investments in alternative assets, most likely you’re going to be getting a K-1. Be sure to tune in to get all the basis on what exactly a K-1 is, how they work, the key pieces of information within them, their benefits, and our tips!

Key Takeaways:

[:12] About today’s episode!

[:48] What is a K-1?

[3:54] The key pieces of information in the K-1; covering box 1 and 2 of the K-1. 

[10:21] Discussing box 19 of the K-1: the distribution (the actual cash flow you receive that year from your investment.)

[13:07] Discussing box L: the partner’s capital account analysis (which keeps track of your basis in the investment.)

[14:53] Working through an example to illustrate how a K-1 works.

[15:26] When do you get a K-1? How should investors investing in alternative assets be thinking about K-1s? And are they a huge headache or are they pretty straight forward? 

[16:44] Our tip for if you’re receiving many K-1s.

[18:41] The bottom line of K-1s!

[19:12] How to go about doing your K-1s.

Mentioned in this Episode:

K-1

Pass-Through Entity

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Productivity and how you get things done on a day-to-day basis is an ever-present issue for most everyone — including those in investing and alternative investing. There’s lots to do on a daily basis and you’ve got lots to juggle, so we want to help you make sure that you’re focusing on the right things to truly maximize your productivity!

Tune in to learn more about how to prioritize the right tasks, manage your calendar and emails, maximize your productivity, and how to accomplish all your goals during your work day.

Key Takeaways:

[:12] About today’s discussion.

[1:47] Mind, body, and wellness — how to get your mind and body in check to maximise your productivity.

[5:55] How we prioritize throughout the day.

[10:16] Getting stuff done — our tips, tricks, and tools for accomplishing your goals during the day.

[18:00] How to manage your calendar and emails.

[24:15] Where we think we can most improve productivity-wise during our work days.

[26:30] Email us your favorite productivity tips and we’ll read them out on a future episode!

Mentioned in this Episode:

Getting Things Done (David Allen)

[email protected]

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We’ve talked about finding deals, sourcing deals, putting a pitch deck together, raising money, and all that stuff — but we haven’t yet talked about how to go about raising debt for a real estate project.

So today, we’re going to outline how to get debt from the more conventional (or traditional) sources. We’ll be covering: seller financing, regional banks, agencies that are representing Fannie and Freddie, and large commercial mortgage-backed security loans.

Pull up a chair and join us for this real estate-centered conversation on raising debt!

Key Takeaways:

[:12] Reading our favorite funny review from the last couple of weeks!

[1:45] About today’s episode.

[2:25] The first step to raising debt for a real estate project: obtaining a loan.

[8:11] If you’re just looking to borrow money for a deal, how much should you care about the structure of the loan?

[10:16] What information is a balance sheet lender or regional lender going to need to know in order to make a decision about whether or not they’re going to lend you money?

[14:24] So which loan should you take — an agency loan or a CMBS?

[18:18] How do you know if you’re getting a CMBS loan? And what do these types of lenders look like?

[19:32] How big does a deal have to be to qualify for a CMBS loan?

[20:05] Where do the big costs come in with a CMBS loan?

[21:31] Summarizing the four sources of debt mentioned in this week’s episode and giving some final, additional pieces of information.

[23:04] In conclusion: our take on what the best options are.

Mentioned in this Episode:

Balance Sheet Lender

Fannie Mae and Freddie Mac

Bellwether

CMBS

CDO

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We’re getting technical today — so fasten your seatbelts, buckle up, take an extra sip of coffee and get ready for today’s show. 

We’re going to be diving into the topic of the three most important investment metric:; NPV (Net Present Value), IRR (Internal Rate of Return), and MOIC (Multiple on Invested Capital.) These metrics are incredibly valuable because, at the end of the day, these are the measures that help investors know how much money they’re going to get back in their pockets after investing in your deal. We hope you’ll join us today to learn about these three important metrics!

Key Takeaways:

[:12] About today’s topic!

[:41] What do NPV, IRR, and MOIC stand for?

[1:54] What is NPV? What does it indicate?

[5:48] What is IRR? How does NPV and IRR compare?

[9:08] What is MOIC? What does it indicate? 

[10:11] Key takeaways of IRR, NPV, and MOIC — and what investors are looking for.

Mentioned in this Episode:

NPV

IRR

MOIC

Excel

XIRR

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We’ve talked about sourcing and analyzing deals — but, we’ve yet to really get into the details of what goes into the pitch deck. The pitch deck is the document you’re going to send out to your investors to let them know about the deal, market it to them, and give them the opportunity to make a decision.

So today we’re going to talk about when you’re going to go out and buy a business, what should be in your deal deck. Brad also plays the role of a potential investor, and gives his take on each section in terms of what he would want to see to feel confident in investing. 

Key Takeaways:

[:12] About today’s topic.

[:50] Where to start with creating your pitch deck.

[1:33] The first pieces of information you should include in your pitch deck.

[4:22] How to provide an effective overview of your business in the pitch deck. And what investors are looking for.

[8:26] The next section you should include in your pitch deck: an industry overview and a look at the market.

[10:07] The meat of your deck: the financial analysis section. And the key metrics investors look at. And the key scenarios you should include in your deck.

[15:00] The next section: a summary of key opportunities and risks.

[18:08] The last section: the post-acquisition plan.

[22:09] Summarizing our key points.

Mentioned in this Episode:

Word

Powerpoint

Keynote

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This week on the show, we’ve invite on a real estate expert: Moses Kagan! Moses is a partner of Adaptive Realty — a property management company in Los Angeles.

Adaptive Realty has a unique strategy with apartment buildings; instead of simply buying buildings and repainting and upgrading appliances, they do huge, wholesale renovations. They vacate all the tenants and completely redesign the properties. This enables them to double the rent whereas most apartment value ad folks incrementally increase the rent 20-30% after renovations. 

It’s a very unique strategy, and in this episode, we’re going to get into all of the juicy details on how Moses has pulled this strategy off. We talk about how he originally fell into the industry 10 years ago, how he survived the early lean years of being a real estate entrepreneur, the mistakes he’s made along the way (including selling way too early for his first few deals), and finally, his graduation from short-term funds to more long-term permanent equity vehicles (where he can renovate the properties and hold them indefinitely).

Today’s episode was incredibly insightful and we hope you have as much fun listening to it as we had recording it!

Key Takeaways:

[:11] About this week’s episode with Moses Kagan.

[1:10] Welcoming Moses to the podcast!

[1:41] Moses explains what they do at his company, Adaptive Realty.

[4:55] Moses tells the story of how he got started (before starting Adaptive Realty) and some of his early experiences in buying real estate.

[22:02] How Moses originally got funding, and how they got people to leave the apartment so they could renovate.

[23:52] How they renovated the buildings to beat out the competition.

[25:25] Moses talks about the possible percentage increase for rent in these renovated apartments.

[26:52] Moses explains their second apartment deal, whether or not they were making money at this point in time, and how they made that second deal.

[29:05] Their strategy over the next couple of years for buying buildings

[29:19] Moses talks about what they did after having to liquidate all their buildings, starting back at “square one.”

[34:19] The steps Moses took when trying to rebuild: starting a blog, discovering that the best deals were the fixer-uppers, and ultimately, the creation of Adaptive Realty.

[44:09] After raising their first fund, Moses explains his next steps.

[48:37] What Moses recommends to anyone who is starting out in this business.

[49:24] How Moses and his partner continued to build Adaptive Realty.

[55:15] Moses discusses some of the challenges with their business model and the way their business has grown.

[1:00:22] Moses speaks about their progress towards more permanent equity.

[1:02:20] Moses’ advice to those new in this business.

[1:06:15] Where to find Moses online.

Mentioned in this Episode:

Adaptive Realty

Moses Kagan (LinkedIn)

Moses Kagan’s Blog

The Alternative Investor EP.38 — “We Talk to a Guy Who Bought a Business with an SBA Loan”

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