Month: December 2024

Happy Sunday!!

As we are all now settling down for the Holidays during these final weeks of 2024, many of us are planning our goals for 2025. One of the guys on our team here currently has $1.3 Million in profit working it’s way through renovation, sale, & closing across 12 deals. Most of this will close in 2025-but I assure you he’s aiming much higher than that for 2025.

I share this not to brag, but hopefully to inspire! I hope the other 22 people who share his role & title (Acquisition Manager) read this and contemplate what’s possible for themselves in 2025. Or perhaps you read this and also are inspired as you plan your 2025. Or, even better for you, you see that number and remember setting & achieving goals like this in years past-and will blow way past that again in 2025, without question.

The fundamentals in commercial & residential real estate support our strong 2025: lower interest rates, still record-high pricing, and mostly tight inventory that’s expected to let up some this year. This will break the logjam and allow us real estate investors & professionals to get back to our strong volume again.

Here at Diamond Equity, we have the reasonable expectation to double our business in 2025 due to improvements in every facet of our business. The major issue we will have is being understaffed-especially in Acquisition Managers.

To handle the increase in volume, we are looking for Acquisition Managers in each of our offices: Atlanta, GA (Roswell office), Phila, PA (Folsom office), & Chicago, IL (Chicago/Schaumburg office-we’ve moving soon). If you want to join us for 2025, reply with your resume & why you believe you’re a great deal maker.

Also, if you’re already crushing your business, and have no interest in joining the team, I’ll ask a favor:  If you know someone with a strong ability to sell & close deals, would you mind making an email introduction to me personally? My email is [email protected]

*Real Estate experience is not necessarily a plus here. Our current team members who joined with construction/roofing sales, car sales, or other high ticket sales experience actually perform much faster than people with only real estate experience. Our most profitable deal was closed by a former car salesman in the high 6 figures.

Here’s today’s agenda:

• For Sale – 44 Real Estate Investor Deals 
• Rehabbed Warehouse-Flex Space For Sale $425,000 ($56K NOI)
• How to Tell if Someone is a Successful Deal Maker

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Doing a Deal with Diamond Equity

Here’s What I’m Buying:

• Retail Strip or Shopping Center 10,000-250,000 Sq. Ft.
• Industrial or Flex Warehouse 20,000 – 250,000 Sq. Ft.
• Must be value-add, either low rents OR vacancy, or both

For Sale 3147 Louis Sherman Dr,, Steger,  Illinois

• 3,950 Sq. Ft Warehouse + Office
• 6,500 Sq. Ft. Fenced, Paved Yard
• Taxes Approx $9,420/Year (2024)
• Insurance approx $2,600/Year
• Recently Rehabbed
• Tenant Ready to Sign at $5,750/month MG
• Projected $69,000 Gross, $56,980 NOI
• M1 Zoning (map) See pg. 57 for uses allowed
• Buy it Now Price $425,000 (Value with signed lease: $670K @  8.5% cap)

This warehouse has been completely updated and ready to move in. Perfect for contractors, storage, certain auto repair, warehousing etc. This place would be ideal to store a car collection, boats, jet skis, etc.

This week you have the chance to buy a nearly-turn key warehouse deal. We are very close to accepting a lease for $5,750/month, or $56,980 NOI. Once this lease is signed, the value at an 8.5% cap rate will be $670,000.

Buy this all cash, sign the lease, and refinance $469,000 cash back out at 70% LTV. At 7.25% int. and a 25 year amortization schedule, you’ll have all of your cash back (inc closing costs & a check for $20K or so) and about $500/month cash flow. Not bad for NO money in the deal and NO rehab necessary. Your deal gets even better if rates drop or the market provides a lower cap rate.

One thing here: once we sign the lease, the price goes up to $500,000. You can buy now for $425,000 because you’re accepting the vacant property risk and you earn the reward ($670K value). Once this lease is signed, that vacancy risk is removed, and so is some of that reward!

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I’ll be in Orlando at this Commercial Academy Event
You Can Register Here

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Successful People Like My…

Successful people like my text messages. Let me explain. I send a successful Deal Maker a text and they almost immediately “like” the text. Or send me a reply quickly. Successful Deal Makers “like” the text to acknowledge what I’ve sent-it’s like a read confirmation, but with more attention provided. I KNOW they’ve seen what I sent.

On the other side, people who procrastinate, don’t pay attention to their phone, don’t do anything. Maybe I get a reply, maybe not.  No “like”, no acknowledgement. Probably no action on their part.

Successful People are ALWAYS Testing You

That reply, that “like” of my text is a actually a small test! SUCCESSFUL PEOPLE ARE TESTING YOU based on their speed of reply. I’ve hired contractors, brokers, loan officers, inspection companies, & even Acquisition Managers based, in part, on their responsiveness.

Believe it or not, some people are simply not responsive. Perhaps they simply turn off their phone at 5:00-or all weekend-because they have more important priorities than being responsive. It’s ok if they have other priorities and care more about their quiet time my business, but if I’m going to layout sums of MY cash in your direction, I honestly want you to care highly about MY business. 

I see it like this: if I’m hiring a broker to sell one of my commercial properties, and they don’t reply to my text, will they reply to the inbound text from our buyer?

If I hire a mortgage broker to procure a loan, and they don’t reply to my text in a timely manner, will they delay underwriting with that same procrastination? Will the delay put my (sometimes 5 or 6 figure) EMD in jeopardy later when requesting an extension because their delay caused a delay in funding?  Will they cost me that deal & the EMD if that seller doesn’t agree to extend?

We are in the real estate business. There are large sums of money at risk at all levels of this business and at every stage of every deal. There times when a call on a Sunday afternoon, or 7:30p on a Friday wins you the deal. Or a text during those same times keeps your deal alive. Even Steve Schwarzman talked about several deals made on a Sunday in his book, “What it Takes.”

I am not saying you must be on-call all the time, life happens and there are legitimate reasons for a slower reply. The trouble begins when the slower reply become the habit, and then eventually no reply happens. This “no-reply” is absolutely unacceptable. Better to reply quickly than be labeled as a “no-reply” kind of person.

Perhaps there are successful people out there who turn their phone off at 5 and don’t care to be bothered at certain times. Perhaps they’ve earned that right by earning an 8 or 9 figure portfolio and don’t need to be responsive anymore. Real Estate is tricky because for many, this is the end goal: Get Rich & take it easy.

Well, this isn’t me, and it is not how the team at Diamond Equity has already closed 245 deals this year. I personally enjoy the game-the business of transforming the Earth, one deal at a time, one parcel at a time. This is my lifestyle, my hobby, even my purpose.

We have a small allocation remaining here. The minimum investment would be $50K and open to accredited investors only.

Here’s today’s agenda:

• For Sale – 42 Real Estate Investor Deals 
• 6  Warehouse Deals for sale: www.DEICommercial.com
• Blackstone’s $39 Billion Deal with Sam Zell
• The REI Diamonds Show podcast has come to a Close…

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Doing a Deal with Diamond Equity

This week’s shout out goes to Rich Lauletta for presenting an Off Market Retail deal this week. This was off market, which is ideal, but is 93% occupied and most rents are at market-so there isn’t much value to add here. This is a good deal for a 1031 buyer or even a Retail Fund seeking stable product. I’m looking for more upside/risk in a deal-like 20%-30% vacancy or more, or rents which haven’t been brought to market in more than 4-5 years

Here’s How You & I Make Some Money Together:

1. You buy a profitable deal from me to run yourself. 42 Available Now
2. I pay you 10% interest & 2 points to fund my rehab deal.  www.FundRehabDeals.com
3. We partner on a larger, longer time syndication deal.
   1. I invest my cash in syndications and am always looking for great operators.
   2. I operate syndications where you might invest. There is a small Self Storage Development allocation remaining. Target IRR 22.6%-30.6%. Reply to this email for the Investor Presentation.
4. You find me an Industrial or Retail value-add deal 40,000 sq. ft or larger located 4 hours drive from either Atlanta, Philadelphia, or Chicago, where our physical offices are located. Email me the details.

For Sale 5522 W. Division St., Chicago, IL 60651

• 8,800 Sq. Ft. Warehouse
  • 12″ Clear Ceiling Height
  • Vacant & Cleaned Out-Move Ready
  • For lease $8,800/month MG
  • More Photos Here
  • Contact Oscar at 708-970-5983
• Price $649,000 Now $549,000 

6 Warehouse Deals for Sale:  www.DEICommercial.com

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Kiavi offers Hard Money Loans Starting at 9.64%
Volume Flippers may Obtain $1M+ Lines of Credit
Get $350 Credit on Your First Loan – Begin Here
Sign up Now, even if you’re not ready to borrow & lock in your $350 credit

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Blackstone Wholesaled $19 Billion of their $39 Billion Purchase from Sam Zell

Chicago native Sam Zell (d. 2023) was arguably one of the greatest real estate investors of his time. In 2006, right at the peak of the market, he exited Equity Office Properties (EOP) to Blackstone for $39 Billion. A great deal for Sam.

Blackstone is arguably the greatest real estate investment firm of our current time, you might recognize them as Invitation Homes – HUGE buyers & owners of single family homes.

On the day Blackstone closed the deal with Sam Zell, they immediately sold more than $19 Billion worth of the portfolio. THE SAME DAY. Many, if not all, were assignment of contract deals. Sam Zell even knew what they were doing-he was happy enough getting his price (as most sellers should be right now, at the record high pricing mostly still found in the market).

For the full story, I suggest listening listening to Chapter 19 of Stephen Schwarzman’s (Blackstone Founder) “What it Takes” audiobook on audible. This is an incredible look behind the scenes of both the most prolific real estate firm in the world AND a tour through the economic downturns which occurred during our career. Shout out to Ian Wallach for referring this one to me last week.

For extra credit, you might also check out Sam Zell’s “Am I Being too Subtle” for his side of the story in this deal-and the same walk through the history of his prolific career AND the historical context of the market cycles.

The R.E.I. Diamonds Show has come to a Close for 2024

The REI Diamonds Show, my podcast, has come to a Close… for 2024. The season is over. I appreciate your time in tuning in over the years.  Keep your eyes out-the next episodes will be released in Q1 2025.  For now, I’ve personally backed off to get the Diamond Equity Machine supercharged going into 2025.

December & January are a slower time in real estate. There is simply lower transaction volume. I’ve historically used this time to think, plan, & program our business model for the coming Spring market. I am doing this again and my goal is to double our business.

You might do the same if you’re a flipper-by buying as many deals as you can find right now. Renovate while they’re slow and sell into the busy season, which I predict will begin in March and run through July 15. This is when retail buyers will be out in force and prices will hit their peak. Have Faith, buy now, & be ready to reap the harvest you deserve.

 

 

Delusional Optimism

Last week I wrote an article titled “How to Turn $100K into $3.2M. It was an example of the power of compounding and there wasn’t a single catch-THERE WERE TWO! First, you had to patiently live, wait, & invest over the 25 year time period. Second, each of the 5 year deals had to successfully double your money each time.  To be honest, this is probably Delusional Optimism…let me explain.

Delusional Optimism is different than Realistic Optimism. And also different from evaluating Risk (pessimism, if things go wrong).  All are critical to successful investing. Delusional Optimism is counting the “Luck factor” in a deal. You can count on it, you shouldn’t expect it, but you should be aware of it going into a deal. If there is none, is the risk still worth it?? Maybe-but this is deal dependent.

Before I make an investment, I ask myself, “If things go well, and we get lucky, how much upside might be in this deal?” Delusional-because I cannot get lucky every time. But if I’m risking my money, I need to see some “luck” if I’m going to take the risk. I do every deal “hoping” for a superior outcome. Here’s an example:

My First Passive Syndication Deal – Las Vegas
My “Delusional Optimism” as a Passive Investor

The first time I invested passively in a syndication, my Las Vegas Shopping center, (currently listed at $17.9M) there were 3 major moments of commitment. These were heavy moments, as I decided to move forward at each step.

1. I had to say out loud, “I’ll do it, I’ll invest my money.”
2. I had to then sign the subscription docs. I remember having second thoughts at this moment. Should I sign? Should I do this deal? Is this the right thing to do? I decided, yes, it was, and I signed the docs.
3. Wiring the money was the biggest & final step. I had some hesitation here too, but after just a moment, I sent the money.

That was it. That was all the work I did on my 1st syndication deal. No more emails, no phone calls, no decisions, & no further checks out of my pocket. It was quiet for about 14 months, receiving only my quarterly updates. Now that the distributions have started, I’m glad I made the deal. But this is still reasonably good, not yet hitting the level of my Delusional Optimism.

My Delusional Optimism – Getting Lucky in Las Vegas

My realistic optimism on the Las Vegas Shopping center deal is that I receive my money back and maybe 8%-12% IRR. My Delusional Optimism is that we get lucky, sell the deal around that $17M+ listing price, and my passive investment will generate about 1.8X the initial amount-in less than 3 years, or a 26% IRR.

Delusional Optimism – Flipping a Single Family House

You build a fix & flip deal on a $40K profit spread. You hit the Spring market perfectly at about March 17 and you get 3 offers in the first 3 days. (Right now would the perfect time to buy that flip for the Spring Exit) You call highest & best and the resulting contract & closing nets a $65K profit. That $25K is the result of luck. If this were evaluated on the way into the deal, the $25K represents my Delusional Optimism in the deal. I’m hoping for this every time. I’m counting on the $40K-Reasonable Optimism.

Underwriting Deals with Delusional Optimism

I NEVER write down the Delusional Optimism expectations-it’s only in my head. It is important to never build a deal solely on Delusional Optimism. Far better to be conservative and create deal structures and forecasts on realistic optimism with a careful eye on the risks of a deal.

My final takeaway here is to do deals with 2 levels of Optimism & one level of Pessimism. Reasonable optimism that you’ll hit an acceptable profit target and Delusional Optimism that counts on luck to deliver an outsize return.

Here’s today’s agenda:

• For Sale – 31 Real Estate Investor Deals 
• How to Turn $100K into $3.2M
• Georgia Self Storage Development
• Podcast on Building a Portfolio of Mortgage Notes

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How to Turn $100K into $3.2M

First, let me begin by stating that I am not an attorney and not an accountant-this is NOT legal or investing advice. This is my own experience and the way I view my own retirement and investment philosophy. My goal is to turn every $100K investment into $3.2M by the end of my investing career. I’ll call this 25 years.

Syndication deals are partnerships where money can be placed by Limited Partners and the day to day activity of that partnership is run by General Partners. At this stage of my career, I prefer these investments over the actual ownership of rental property because I can keep my focus on my main business, Diamond Equity, which is where I derive my income & investment capital.

I Need to Win 5 Times to Reach My Goal

I choose deals where I am expecting to double my money in 5 years or less. Here’s how the math works if I can win 5 times in 5 syndications over 25 years:

The Math, if the Investment is Made in a Self Directed IRA;

• Deal 1, invest $100,000 and receive $200,000 in return
• Deal 2, invest $200,000 and receive $400,000 in return
• Deal 3, invest $400,000 and receive $800,000 in return
• Deal 4, invest $800,000 and receive $1,600,000 in return
• Deal 5, invest $1,600,000 and receive $3,200,000 in return

The Math, if my Investment is made after paying 20% long term capital gains on each profit, assuming  no tax code change, over my 5 deal, 25 year time horizon:

• Deal 1, invest $100,000 and receive $200,000 in return
• Deal 2, invest $180,000 and receive $324,000 in return
• Deal 3, invest $324,000 and receive $583,200 in return
• Deal 4, invest $583,200 and receive $1,049,760 in return
• Deal 5, invest $1,889,568 and receive $1,889,568 in return

Most of my personal syndication investments are done in the latter example, where I am paying tax at each profit event. Not optimal, but I didn’t come into the real estate business from another career – owning an IRA from a previous employer. If you want to learn more about self directed IRA’s, check out this podcast I recorded with Damion Lupo.

Yes, this plan assumes optimal performance across 5 deals. Challenging, maybe, but not impossible. I keep about 1/3 of my portfolio in real estate owned, 1/3 in syndication deals like this, and 1/3 in cash which I lend in short term Private Mortgage Investment Opportunities.

Below you’ll find details for my most recent syndication deal where I am investing my cash & also acting as a general partner. This means I am actively managing this project with Fernando and the construction team. If you’re interested in investing in this deal alongside me & Fernando, please reply to this email and I’ll send over the replay of the Investor Presentation we did a week or so back.

Wreaths of LUV – Order Yours today & Support Chicago’s Youth

These Holiday “Wreaths of LUV” are hand-crafted by the paid interns at the LUV Institute. Every year I order a few dozen and have them shipped to my friends & family all over the U.S. Order yours here.

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Kiavi offers Hard Money Loans Starting at 9.64%
Volume Flippers may Obtain $1M+ Lines of Credit
Get $350 Credit on Your First Loan – Begin Here
Sign up Now, even if you’re not ready to borrow & lock in your $350 credit

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Accredited Investors – Just over $1M Remaining for this Raise
Lawrenceville, GA – 87,068 Sq. Ft. 3 Story Storage Facility
Reply to this if You’re Interested in Investing

I am building this facility with my partner Fernando Angelucci and his team at SSSE. Fernando has a background in engineering and has closed 53 Self Storage deals across 24 states with more than $230M in value. This project will be his 3rd Class A facility being built ground up. You can view his 2nd Class A facility-nearly completed here (located in Wilkes Barre, PA)

This current project is projected to run for 3 years, to allow 9-12 months for construction followed by 24 months to stabilize (rent), then sell the project. The buyer for the completed project will likely be one of the publicly traded Storage REITs.

Sometimes these REITs buy projects at CO (certificate of occupancy) and complete stabilization on their own. If this were to occur at a favorable price, this project may return capital much earlier than the projected 3 years. This would be good, but may or may not occur.

We already have the full $4M capital committed for this deal, but are opening up just under half of the deal from our own portion to accredited investors in our network.

I’m personally doing this deal for this reason: 

1. This deal is heavily in favors the investor/limited partners and offers superior potential returns than my 4.51% money market accounts.
   1. 80% of the profits go to the Limited Partners (The $4M capital raise)
   2. 20% of the profits go to the General Partners (who build the deal, guarantee the loan, and co-invest)

As a general partner, sharing a very small portion of that 20% with our team, this deal would not be worth my time. We construct deals like this as a place to multiply our own capital by investing our cash on the LP side of the deal. That’s why 80% of the profit goes to those partners-because it is the same people running the deal on both sides. These are the type of syndications I look for-where the general partners are running the deal to keep their money working-not simply to generate management fees for themselves.