Anyone ever do or hear of deals where you get all your equity back in the initial years?
Met an older dude who has no partners. Its just him and his family in a tertiary market. He was telling me they mainly find deals where they can get their initial invest equity aka downpayment out quickly and continue to keep their properties. He mentioned one such deal where they bought a tiny strip center that had some extra land on a good intersection. They basically subdivided the extra parcel and were able to get it ground leased to a Chipotle. They ended up selling the ground lease and the profits from that covered their initial downpayment. All of this was done in two years since buying it. So by logic his strip center ended up being "free". In short they only do unique deals like this. Theyve only done a handful of deals and since its all personal money, they are patient capital. He also lives frugally. Always thought this was cool. Anyone do anything similar or know of other deals?
Example A: Smaller developer I know who plays in the RFP space. Gets land for essentially nothing from some township and agrees that the development will include XYZ requirements the town is looking for. Project still pencils enough to get paid out equity with the construction loan proceeds.
Example B: Jeff Sutton back in the day. He’d sign the contract for a vacant building and have a long-term lease with a credit worthy tenant lined up before the closing. He’d walk away from the closing table taking equity out of the deal.
Example C: UHNWI does deals with relationship lender at 100% LTV/LTC. This is full recourse debt and usually a small percentage of their total net worth.
Note: Some of these are dated examples and may no longer be as applicable. I can vouch for Example C still being viable.
Example B is viable. But you will generally see it in STNL retail or other vacant retail deals.
Sequi qui optio molestiae accusantium in deserunt ducimus sunt. Voluptatum itaque necessitatibus corporis enim reiciendis. Voluptates consectetur et saepe et et rem. Laudantium sed et ullam sapiente dignissimos aperiam est.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...