Here’s today’s agenda:
- For Sale – 33 Real Estate Investor Deals
- Delusional Optimism
- Podcast on Earning $50M+ on a Single Deal
First Time Reading? Sign Up Here
Doing a Deal with Diamond Equity
This week’s shout out goes to Rick Panlilio (Condo De-Conversion Specialist) for introducing me to Jamie Brandenburg of The Real Equity Group. Jamie and his team are brokers and operators of Industrial real estate in Tennessee. As you probably already know-I love industrial real estate and I’m bullish on Tennessee long term.
Jamie made an offer on this deal I have below, but also referred me to his contractor-who we will likely hire to complete the renovation on this one-assuming it doesn’t sell before that. Thx Rick! Thx Jamie! You’re both rock stars!
Another shout out goes to YOU-my weekly Jewels of Wisdom email newsletter reader. There are over 11,000 each week who open & read this email, of 25,000 or so on the list. I appreciate your interest in Diamond Equity & my weekly newsletter. Thank you!
Writing this isn’t about the numbers though-it is about the one on one connections created when we find a way to do some business-like Jamie & Rick above.
Here’s How You & I Might Work Together:
- You buy a profitable deal from me to run yourself. 33 Available Now
- I pay you 10% interest & 2 points to fund my rehab deal. www.FundRehabDeals.com
- We partner on a larger, longer time syndication deal.
- I invest my cash in syndications.
- 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.
- 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 203 E Trigg Avenue, Memphis, TN 38106
- 30,658 Sq. Ft. on 8.94 Acre Industrial Lot
- Up to 40″ Ceiling Height
- Seller may Consider Seller Financing
- Railroad Spur (dormant)
- Offering Memorandum
- For details, contact Henry Webb at 901-526-3100
- Price $985,000
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
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.
- I had to say out loud, “I’ll do it, I’ll invest my money.”
- 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.
- 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.