Month: January 2025

Trump proposed providing Federal Land for development of homes to address the housing shortage. Surely, this utopia will be named after Trump. I assume this will also provide streamlined zoning to allow record speed in constructing houses and the necessary infrastructure. But then the problem all real estate developers & investors face:

Who Will Buy these Houses? Why Move to Trump’s City?

To solve this issue, I propose a 5 year Federal Income Tax Amnesty on the 1st Million in income for residents who agree to establish residency in Trump’s City AND agree to remain a resident for 10 years. This would incentivize people to move and remain after the tax-free period expires. Here are the options for the location(s) of Trump’s city:

Since you read the subject line & are now reading this, I’m guessing you may have thought, “Wow, I can move INSIDE the US and find a tax haven?” If fact, a policy like this, on maybe 25,000 acres, might allow for 50,000 residents.

This would create a land grab along the lines of the opening of the frontier in 1889. There would need to be a lottery, and perhaps income bracket quotas which could be filled strategically so as not to create a federal housing project along the lines of Cabrini Green over time. Far better to have a wide range of incomes to give the city a solid foundation for future desirability & innovation.

Truth be told, much of this land is not really buildable, so I’m not sure how realistic this whole plan is. Anyway, I’m done dreaming about US tax policy. Having written several large checks for 2024 taxes, and watching bonus depreciation waning to just 40% this year, I am anxiously awaiting the expected tax code updates from our newly elected President…

This week I took my dad over to Palm Beach to visit the Henry Flagler Museum. I have been there 4 times now-and I am inspired every time I go. Henry Flagler was the legal mind behind Rockefeller & Standard Oil (Exxon-Mobil).

He invested his fortune developing the Florida East Coast railroad-and cities along it’s route including St. Augustine, Palm Beach, Daytona Beach, & Miami, Florida. Without Flagler, Florida’s economic power may not exist. Henry Flagler believed, as I do, it is better to invest in helping the man help himself, rather than giving a handout. This was his view on developing Florida-provide the catalyst for economic organic growth.

PRO TIP: Before visiting the Henry Flagler Museum, read The Last Train to Paradise to grasp the rich history of real estate development in Florida.

In the car on the way back home I asked my dad, “What would it take to alleviate the US housing shortage using Federal land? How could you jump start a new city without an economic engine such as a port or logistics cluster?  What would bring people to Trump’s federal housing projects?” The answer sparked this idea:

I’ll be in Orlando Jan 31-Feb 2 at this Commercial Academy Mastermind Event. Want to meet me there?

Register Here

Here’s Why I Attend:

• Network: There are more than 100 Commercial Real Estate investors attending-most seek JV Partners who can bring them deals.
• Knowledge: There will be 9 presentations of recent & active projects. There is no other place to get this level of “behind the scenes” details-most CRE investors are highly secretive and NEVER share any of their strategy. I may be one of the 9, I’ll keep you posted. 
• Deal Flow: I own a shopping center, several storage facilities, 2 mobile home parks, and some flex industrial – all deals which discovered at these events.
• Orlando, FL: I love the warm weather this time of year in Florida!!

Register Here

Here’s today’s agenda:

• For Sale – 33 Real Estate Investor Deals 
• For Sale – 3 Warehouse Deals
• Self Storage Investment – 22%-30% IRR Target
• Meet me in Orlando on Jan 31?
• A Major Blind Spot in (CRE)Commercial Real Estate Underwriting

First Time Reading?  Sign Up Here

Doing a Deal with Diamond Equity

Quick shout out to Rick Panlilio & Stacie Kidwell Sandoval for referring a few deals over this week. APPRECIATE YOU BOTH!

Here’s What I’m Buying:

• Small Bay Industrial 20K sq. ft+
• Industrial or Flex Warehouse 20,000 – 250,000 Sq. Ft.
• Industrial 8,500 Sq. Ft+ on 3+ Acres
• Retail Strip or Shopping Center 10,000-250,000 Sq. Ft.
• Prefer value-add: either low rents OR vacancy, or both
• Prefer that you either Own, or are Direct to the Owner

Allocation Closing this Friday, January 24, 2025

Last chance to invest in this Self Storage Deal.  If you’d like to invest, or review the investment presentation you can reply to this email or Schedule a Call 

A Major Blind Spot in CRE Underwriting

Underwriting commercial real estate deals is where the money is made or lost. Underwriting is deciding the price and/or terms you are willing to pay for the risks involved in buying/owning the property. Honestly, I prefer “napkin” underwriting, where I am scribbling the current rents, current expenses, potential rents, capital improvements, etc. on a scrap of paper already full of other notes inhabiting my desk.

Honestly, my desk is always cluttered with 6-12 sheets of notes from my interactions on the phone/zoom daily. I ALWAYS take notes on EVERY call I schedule, no matter the other parties skill level, wealth level, or even my own expectations from that meeting. And I’m always surprised to glean a jewel of wisdom from EVERY call/meeting I join.

This week, with one of my partners in our Commercial Brokerage, Henry Eisenstein, we underwrote two deals live, on video. We will both publish these in a few weeks on our YouTube channels. The Major Blind Spot we highlighted on these examples was the insurance cost. These costs have gone WAY up & that’s assuming you can even find an insurer to “buy” the risk (meaning write the policy)

Insurance Cost is a MAJOR Risk in the Future Profitablity of CRE

When I bought my first 3 large apartment buildings, I didn’t even pay attention to that line item for insurance. I simply moved ahead with the deal and got lucky-that I was able to find insurance for the same cost, or less, than the Seller was paying. I underwrote the deal using the insurance costs provided by the seller and believed them.

Now, many sellers have older policies with lower insured amounts. Once you buy at the new, much higher value, you’ll also be wise to buy insurance at that higher amount. This costs more. Not only that, many of the commercial sellers in today’s marketplace DO NOT EVEN CARRY INSURANCE!! In fact, this IS THE REASON THEY’RE SELLING NOW. 

To be clear, now is NOT the best time to sell commercial real estate because the interest rates are so high. If the rates were to drop, more deals will close at slightly better prices. However, if a seller owns a $2M-$10M property with NO insurance, perhaps NOW IS THE BEST TIME TO SELL.

Why do these Sellers Have NO INSURANCE?

Right now, on the heels of inflation, hurricanes, & wildfires, insurers are paying out large claims. In the process of evaluating the risk they hold (policies they wrote, which they may have to payout), they are either dramatically raising insurance rates (I’ve seen 150%-300% increases issued to renew) OR simply dropping the property altogether, leaving the owner with no option but to go uninsured. Terrible situation for that seller.

I’ve also seen a deal where the Seller made a $500K claim for wind damage and was dropped the following year. I offered $8M on the deal, he wanted $11M. I may have paid more, but when I called my insurance broker to quote the policy, we could not find a single company willing to issue the policy at a price that would make the deal work.

The Insurance Cost is Deducted from Your NOI, Reducing the Value of Your Property

The cost of insurance is an expense, which reduces your NOI & ultimately the actual value of your property. For example, if you’re using an 8% cap rate to value your deal and your insurance cost is $35,000/year HIGHER than you expected, or paid the prior year, that reduces your value by $437,500. If this happens again next year, and the year after that, you might be $1.3M less valuable than you projected. I don’t know about you, but I’m not excited by losing $1.3M in value…

KEY TAKEAWAY: If you’re buying a commercial property, ask for the “loss run history” for the property as part of your DD package. This shows all the claims made. If there are recent claims, you may have trouble finding insurance at all, and certainly not at reasonable rates.

ANOTHER KEY TAKEAWAY: ALWAYS shop your insurance very early in the contract cycle. Confirm your insurance cost assumptions before your DD expires. Your deal may not actually be a deal you should close on…

U.S. flags at half mast because former President Jimmy Carter passed.

37,000 acres & 12,000 structures burned, & 11 dead so far. Still, these fires in California rage on. I’m praying for rain. And for everyone affected to get through this.

I got to Florida for the Winter this week and saw the destruction wreaked by the two hurricanes that swept through a few months ago. There is a lot of work to be done. Compared to last year, this place is a bit of a ghost town. Nearly empty restaurants-for those that are open-and a lot less traffic than usual.

Let’s just take a moment of silence this week for those facing these challenges (or any other catastrophic challenge not listed here).

Commercial properties are going to be worth less because of these disasters. Insurance costs are sure to rise yet again, eating further into the NOI of any property NOT on triple net leases, leaving lower valuations in the wake.

Here’s today’s agenda:

• For Sale – 34 Real Estate Investor Deals 
• For Sale – 4 Warehouse Deals (One, in IL, is Off Market)
• Self Storage Investment – 22%-30% IRR Target
• Meet me in Orlando on Jan 31?

First Time Reading?  Sign Up Here

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.
• Industrial 8,500 Sq. Ft+ on 3+ Acres
• Prefer value-add: either low rents OR vacancy, or both
• Prefer that you either Own, or are Direct to the Owner

Storage Development Deal – Open Allocation closing Jan 2025
Want to Co-Invest with Me?

This is a picture taken outside of the Wilkes Barre, PA storage development project. We are building a similar project in Lawrenceville, GA and breaking ground in Jan 2025. We have about 1/3 of the $4M allocation available for investment. You can watch the Investor Presentation with Fernando Angelucci & I here. (reply to this email for the access code) 

NOTE-I have an apartment building currently under contract and awaiting closing. Once that closes, the cash from that deal goes straight into this deal, and the allocation will be closed.

Interested in Investing? Or have further questions?  Schedule a Call 

I’ll be in Orlando Jan 31-Feb 2 at this Diamond Inner Circle – Commercial Academy Event. Want to meet me there?

Register Here

Here’s Why I Attend:

• Network: There are more than 100 Commercial Real Estate investors attending-most seek JV Partners who can bring them deals.
• Knowledge: There will be 9 presentations of recent & active projects. There is no other place to get this level of “behind the scenes” details-most CRE investors are highly secretive and NEVER share any of their strategy. I may be one of the 9, I’ll keep you posted. 
• Deal Flow: I own a shopping center, several storage facilities, 2 mobile home parks, and some flex industrial – all deals which discovered at these events.
• Orlando, FL: I love the warm weather this time of year in Florida!!

Register Here

Good Morning my Wise, Constant Reader!

Here’s today’s agenda:

• For Sale – 36 Real Estate Investor Deals 
• For Sale – 4 Warehouse Deals (One, in IL, is Off Market)
• Self Storage Investment – 22%-30% IRR Target
• Meet me in Orlando on Jan 31?

First Time Reading?  Sign Up Here

2025 RE Predictions
2024 Wins & 2024 Losses

2024 Wins

• I got married this year!!
  • Without my wife, Caity, I would not be in this place I am today, both personally & professionally.
• My daughter, Keeley, graduated college with a Criminal Justice degree. 
  • I dropped out of Villanova University in my 2nd year. I am impressed at her ability to stick with it & make it look so easy!!  Congratulations Keeley!!
• We got a new dog! 
  • Charlie was one of our wedding gifts.  “Thank you Aunt Kristin & Uncle Brian, we LOVE Charlie!!”  – Me & Caity
• We wrapped 2024 closing 259 deals. 
• We have 104 deals in inventory with projected profit of $7M+.  
  • This figure does not include any commercial real estate deals. This is the strongest inventory we’ve ever had in January. January normally reflects the slowdown which begins Nov 1st & runs through January 2. Now it’s raining leads & many deals will follow.
  • We are going to double the Gross Profit in 2025 and need a few good Deal Makers to join our team. It is NOT an easy job, and NOT easy money, but an intelligent & hard worker can expect to earn $200K+/year. The upper end of the yearly income achieved by someone on our team now is  just under $500K/year. Careers.DiamondEquity.com

2024 Losses

• Grandmom Breslin passed at 94 years old.
  • Just before Thanksgiving, my dad’s mother passed away peacefully, in her sleep, and her own bed. My dad retired in 2024 to care for her instead of sending her to a long term care facility.
  • On the day she died, Diamond Equity closed our highest grossing profit deal (high six figures) I like to imagine she played some role in that behind the scenes, in the afterlife we contemplate at times like this.
• A Few Bad Deals. We are 2 very sticky rehab projects we’ve owned now for 2-3 years.
  • Risk is Real with High Volume House Flipping 2 days before closing with our owner occupant buyer, the gas company shut off the gas. This wasn’t for non-payment, but a sudden requirement on their behalf that we install a new gas line. Coordinating that new line with them took 6 months alone-very frustrating. I’ll omit the dozen other roadblocks we faced on these 2 deals for now.
  • We will sell them both this year and face the reckoning… When you do a few hundred deals, every so often one will turn sour. The cure?  DO MANY DEALS!! Offset those losses & make them inconsequential by racking up 6 & 7 figures worth in profits!

2025 Predictions

• Commercial Deal Flow will be abundant this year. 
  • Flat rents across most asset classes & higher interest rates for longer will cause more sellers to exit. This will produce transaction volume & quality deals.
• Tax Code – Bonus Depreciation.
  • Everyone expects Trump to reinstate the Bonus Depreciation tax benefits. When this occurs, Buyers become MUCH MORE MOTIVATED to transact, as they receive large tax deferrals for doing so. This will spur development and large scale syndication activity in the $1M-$10M price range. This segment has been EXTREMELY challenging as the current Bonus Depreciation tax break has been sunsetting (60% in 2024, 40% in 2025-unless changed back to 100%).
• Residential Deal Flow will increase this year. (See the inventory increasing in the chart below)
  • More inventory = less price appreciation. As homes aren’t going up 10% per year, those sellers become less emotionally attached and more willing to sell. This current era, a Buyer’s Market behaving like a Seller’s market, is coming to a close. Prices will hold this year, but I wouldn’t build in 5-10% appreciation anytime soon.

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.
• Industrial 8,500 Sq. Ft+ on 3+ Acres
• Prefer value-add: either low rents OR vacancy, or both
• Prefer that you either Own, or are Direct to the Owner

Storage Development Deal – Open Allocation closing Jan 2025
Want to Co-Invest with Me?

This is a picture taken outside of the Wilkes Barre, PA storage development project. We are building a similar project in Lawrenceville, GA and breaking ground in Jan 2025. We have about 1/3 of the $4M allocation available for investment. You can watch the Investor Presentation with Fernando Angelucci & I here. (reply to this email for the access code) 

NOTE-I have an apartment building currently under contract and awaiting closing. Once that closes, the cash from that deal goes straight into this deal, and the allocation will be closed.

Interested in Investing? Or have further questions?  Schedule a Call

I’ll be in Orlando Jan 31-Feb 2 at this Diamond Inner Circle – Commercial Academy Event. Want to meet me there?

Register Here

Here’s Why I Attend:

• Network: There are more than 100 Commercial Real Estate investors attending-most seek JV Partners who can bring them deals.
• Knowledge: There will be 9 presentations of recent & active projects. There is no other place to get this level of “behind the scenes” details-most CRE investors are highly secretive and NEVER share any of their strategy. I may be one of the 9, I’ll keep you posted. 
• Deal Flow: I own a shopping center, several storage facilities, 2 mobile home parks, and some flex industrial – all deals which discovered at these events.
• Orlando, FL: I love the warm weather this time of year in Florida!!

Register Here

Happy Holidays fellow Real Estate Investor!

With the New Year just days away, everyone I know is already thinking about next year. I’ve found that asking the right questions as I plan helps produce the most desired result. Here are a few I ask as I evaluate my own goals & plans:

1. What is the #1 skill I have now which produces the most results? Can I expand this further? 80/20 rule, 80% of results come from 20% of our actions. IDENTIFY the 20% most impactful actions
2. What are some things I do, which cost time, that produce little, or even no results? Can I say “No” to these things next year to growth my results in other areas? 80/20 rule again. This time, I’m cutting out some of the 80% of actions which only produce 20% of the results
3. What will life be like a year from now if I recreate certain areas of my life around my current/future goals?  This is a visualization, with eyes closed, SEEING myself living life one year in the future
4. For any goal on my list, am I willing to pay the price to achieve it? Every goal has a set of actions, beliefs, and time/money investment required to achieve. It is important to understand the cost up front, when setting the goal and deciding whether or not you actually want to do/believe/pay to live out that goal

My goal for 2025 is to double the gross profit of our company. That means either every Ac Mgr on the team will also double their income (already avg $150K/year+ each)  OR we have to hire a few great Deal Maker’s to help carry the load. I’m sure we will have a combination of those 2 scenarios in reality.

The cost to achieve this goal is more & better leads for the team to work. Using the 80/20 framework, we are focusing our lead gen machine at the 20% of lead sources which have created 80% of our results. We’ve our own AI model to do this and, because of our 250 deals per year and industry leading data structure, we have an industry leading data set with which to train the AI model. These are the Glengarry leads!!

Want to work these with us in 2025?  For details on joining Diamond Equity please go to careers.diamondequity.com 

Here’s today’s agenda:

• For Sale – 36 Real Estate Investor Deals 
• Self Storage Investment – 22%-30% IRR Target
• Meet me in Orlando on Jan 31?

First Time Reading?  Sign Up Here

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

Storage Development Deal – Open Allocation closing Jan 2025
Want to Co-Invest with Me?

This is a picture taken yesterday outside of the Wilkes Barre, PA storage development project. We are building a similar project in Lawrenceville, GA and breaking ground in Jan 2025. We have about 1/3 of the $4M allocation available for investment. You can watch the Investor Presentation with Fernando Angelucci & I here. (reply to this email for the access code) 

Due to Diamond Equity’s office operating in the Atlanta Region for the past 8 years, we have had a front row seat on the explosive, yet sustainable growth present in the Lawrenceville, GA market. We also have experience in large scale residential sub-division development in the region.

The terrain of Georgia creates a perfect storm for long term Self Storage demand. Due to the rocky, hilly terrain found in the Atlanta region, many houses must be built on slab-which means there is a large portion of new home inventory which does NOT offer a basement. No storage in the home creates the need for professionally managed storage space.

This facility will be built on Lawrenceville Highway, with full frontage. From the data sourced from my other facilities, we know that more than 50% of storage tenants come from road signage. Lawrenceville, GA is tough to get development approvals, which we have. This creates a barrier to future competition-and another reason we moved forward on this project.

Interested in Investing? Or have futher questions?  Schedule a Call 

I’ll be in Orlando Jan 31-Feb 2 at this Diamond Inner Circle – Commercial Academy Event. Want to meet me there?

Register Here

Here’s Why I Attend:

• Network: There will be more than 100 Commercial Real Estate investors attending-most seeking JV Partners who can bring them deals.
• Knowledge: There will be 9 presentations of recent & active projects. There is no other place to get this level of “behind the scenes” details-most CRE investors are highly secretive and NEVER share any of their strategy.
• Deal Flow: I own a shopping center, several storage facilities, 2 mobile home parks, and some flex industrial – all deals which discovered at these events.
• Orlando, FL: I love the warm weather this time of year in Florida!!

Register Here