BC ECONOMY
Saved by @SteveeRogerr

On Sep 3rd 2020 we closed on a 120k sf glove factory built in 1890 in a small NY town.

Has 45k sf of self storage inside and had $14k a month of net operating income at closing.

Let's breakdown this deal.

A THREAD on creating $2 million out of thin air in 18 months...

👇👇

 First saw the property on Loopnet in mid 2018. I ignored it. Who wants to try to operate a business in an old factory in a dying NY town.

A few months later I reached out. Broker sent me financials. They were good. $24k a month in revenue and $10k in expenses.
So I visited the property. It was old. Needed a new roof. Full time manager. Only accessible to customers 9am-5pm M-S. No autopay. A lot of folks paying 1/2 market rent.

I loved everything about it.
But I knew they were going to have trouble selling this thing no matter the profitability, so on July 1 2018 I made a low offer. $750k + seller pays for new $250k roof + $20k in environmental work.

Countered at asking price + $100k credit towards roof.

I ignored the response.
Broker called me back mid September of 2018. Make another offer, he urged.

I knew it was a good biz so I got more aggressive - $1MM + seller pays for roof / environmental.

Declined. Countered with $1.2MM but they'd give me a new roof and do the environmental.
The next day I offered them their price, but said they'd need to hold $300k of paper in the form of a second mortgage. 5% rate, 20 yr term.

They agreed and we signed a deal.

More on seller financing here:

https://t.co/qsEQRJ4E1l
I convinced my bank to loan me 67.5% LTV at 3.5% with 12 mo interest only.

They replaced roof. Did environmental. A few other things that came up in inspection.

It had $168k in NOI so appraisal came back at $1.85MM.

My bank: $950k
Sellers: $300k
Purchase price: $1.2MM
On closing day we remembered the property had a house on it. There is a tunnel right into the 2nd floor of the factory from the upstairs dormer. Needs $75k worth of work to be livable. Likely not worth it.
Changes we made right away:

New security system ($12k)
Automatic / wifi overhead doors ($5k)
12 hr / 7 day access
No office (keeping manager on team though)
Rent increase to get customers up to market rate
The manager who was working 50 hours a week from the office on site went remote (work from home nearby) on October 15th as soon as the automated doors and security system were finished.

She now answers phones and does admin for 3 other facilities in addition to this one.
Things have been going well to say the least.

In October we increased revenue from $24.8k in September to $30k. November and December were just shy of $30k as well.

Occupancy is up. Economic occupancy is WAY up.
And from an expense perspective we've leaned out and we took the expenses from $10k to $8.5k.

Marketing: $1k
Payroll (1/4 of manager pay): $1k
Utilities / Software / Mis: $1.25k
Snow removal / Lawn: $750
Supplies: $500
Maintenance: $1k
Management fee: 1.5k
Taxes / Ins: $1.5k
So now we have $30k in revenue and $8.5k in expenses for $21.5k in net operating income.

On an annualized basis thats $258k in net operating income.
Then what? Sell it? How much will someone pay for it?

Let me tell you why I don't care how much someone will pay.

If I sell it I'll have about $3.5MM in capital gains. 25% of that will go to uncle sam. And I'll be left trying to figure out what to do with the remaining 2.5MM.
And I don't need to sell it to realize 80% of that gain while keeping a money-making asset and not having to redeploy any capital or give a chunk to the government.

Here's how:
At the 18 month mark we plan to be around $40k a month in rev (after expansion) on $9k in exp for an NOI figure around $370k.

Then we'll go back to our bank and get the thing reappraised. We expect it to be valued at about $4.5MM.

The bank will lend 75% of that value to us.
As long as our monthly operating income covers the debt by 1.5x or more, we'll lever up, taking $3.375MM in new loans on the building.

After $1.25MM goes to clear seller financing and original loan, we'll have $2.125MM in cash go into our checking accounts.

And the best part...
We still own the building and its $150k a year in cashflow.
We paid no taxes.

In the sell scenario: We trade our building for $2.5MM cash.
In the ReFi scenario: We keep our building and get $2.125MM cash.

I'll take #2 all day. And thats our plan with every building we buy!
If you'd like to understand the dynamics of real estate deals like this and see more deal examples. Sign up for my email newsletter:

https://t.co/ofRGWDCaNx

More from Nick Huber

Nick Huber
Nick Huber
@sweatystartup
I got serious about Twitter on April 12th 2020.

Since that day:

I've raised $5MM and met with over 200 future investors in my real estate deals.

I've done $75k worth of consulting.

And I've met mentors and friends I'll carry with me for life.

What worked for me 👇👇👇

First of all I tried the mainstream advice and built my own blog, podcast, email list, YouTube. Spent 2 years. 500k downloads. Some success.

Got more value out of Twitter in 30 days.

If raising money or in business THIS is the platform.

Okay let’s go:

1. Stay on topic.

The most valuable folks here are here to learn. They curate their feed. They want business and to LEARN.

No fantasy football. No gifs. No pop culture. No one liner jokes.

Be an expert at what you do. Stay on brand.

2. No politics.

At all. Ever. It’s a great way to piss off (and say goodbye) to 1/2 the folks here.

Not everybody feels the way you do and the smartest folks don’t want your opinion. Nothing good comes of it. So avoid it.

3. Be incredibly open

Nobody will steal your ideas. Yes it’s uncomfortable and yes you’ll get challenged.

I shared my profit and loss statements on here. It led to discussions with many brilliant folks in the DMs and several folks who wanted to partner reaching out.
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Nick Huber
Nick Huber
@sweatystartup
We've used "seller financing" on two self storage deals in the past year.

And it raised our cash on cash return by 20%+.

And lowered the amount of capital we needed by $500k.

Here's a THREAD about a deal of mine and how this magical debt structure can work.

👇👇

My method is simple. In the late stages of negotiation I submit two offers:

One at a lower price.

And one at the exact price the seller wants but with him holding back 10-20% of the purchase price in the form of a 2nd mortgage (with a second position to your bank loan).

Contrary to popular belief seller financing rarely includes the seller holding back 70-80% and acting as your bank.

Two reasons:

#1 most have some debt on the property.

#2 most want most of their money now.

Have you heard the saying:

"you name the price and i'll name the terms?"

This is a case of that situation exactly.

Lets paint a picture here:

Last week I was negotiating with a seller on a property in a small western PA town.

Not many interested buyers so I knew I had some leverage.

His asking price was $4.5MM. I wanted to pay $4.2M.

After a week or two and a lot of back and forth I found his lowest number.
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Nick Huber
Nick Huber
@sweatystartup
I've been serious about personal development for 10+ years.

But not just reading...

I've put the concepts to work - we sold our business for 7 figures and built a real estate portfolio worth $100 million +.

Here are a few of my top takeaways:

20% of your customers will produce 80% of your profit.

20% of your customers will also produce 80% of your headache.

The sooner you learn THESE AREN'T THE SAME CUSTOMERS the sooner you can grow, scale AND experience less stress.

99% of people network all wrong.

With their hand out.

Help me. Do this for me. Introduce me. Me me me me!

It’s not about you!

The way to network well:

Get good at something. Put in the work. Add value everywhere you go. Then watch your network explode.

The 4 quadrants of time management concept changed my life.

Urgent + important is where stressed out owners spend their time.

Not urgent + important is where you add long term value to your company and your life. Its also the easiest area to push to the back-burner and ignore.

3 keys to hiring and managing great employees:

#1 Raise your prices (so you can afford them)

#2 Simplify the job so average employees can thrive (and killer employees can crush it)

#3 Give them praise in public (it means just as much as money)
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Nick Huber
Nick Huber
@sweatystartup
How to get smarter very fast:

Interact with smart people here on Twitter who have different world-views than you do.

And let them change your mind on something.

Here are the 30 people you should follow (along with my favorite tweet from each)👇👇

Twitter can be terrible if you follow negative people.

It can also be more valuable than a college degree if you follow (and network with) the right people.

You get to look right into their brain and read a daily narrative of HOW they think.

Ok lets go:

#1: @ShaanVP

You know he's all about venture capital based entrepreneurship. I'm about small (non-sexy) business. We disagree on a lot of stuff.

But he's done it and he's won. Bonus follow: @theSamParr (@myfirstmilpod podcast


#2: @fortworthchris

He is where I want to be in 15 years. Has built a massive real estate private equity firm from the ground up. Super grounded with what the way he does business and his podcast @theFORTpodcast is top


#3: @Julian

I'm a scattered thinker and procrastinator.

Julian is a master of clear thinking and simple but effective writing. A world class example of content marketing and
ALL , LIFE
Nick Huber
Nick Huber
@sweatystartup
THREAD:

I've been very serious about personal development for 10+ years.

But not just reading...

I've been putting the principles to work as I've grown and sold my business (7 figure exit) and built a real estate portfolio worth $20MM+.

Here are a few of my top takeaways:

20% of your customers will produce 80% of your profit.

20% of your customers will also produce 80% of your headache.

The sooner you learn THESE AREN'T THE SAME CUSTOMERS the sooner you can grow, scale AND experience less stress.

The 4 quadrants of time management concept changed my life.

Urgent + important is where stressed out owners spend their time.

Not urgent + important is where you add long term value to your company and your life. Its also the easiest area to push to the back-burner and ignore.

3 keys to hiring and managing great employees:

#1 Raise your prices (so you can afford them)

#2 Simplify the job so average employees can thrive (and killer employees can crush it)

#3 Give them praise in public (it means just as much as money)

Execution > Idea

Ideas are a dime a dozen.

Folks who are willing to do the work are a bit more rare.

Folks with the chops to execute well are extremely rare. And they are the true winners when it comes to entrepreneurship.
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Cancel the Dementiacrats - Stu Cvrk
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Michael Pettis
@michaelxpettis
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This is a really tough problem to resolve, especially if the massive increase in inflows from the trade and financial accounts are sustained, as I expect they will be well into 2021.

Clearly the PBoC would like to see the RMB gradually...

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strengthen. This would keep financial markets stable and promote rebalancing, but the RMB has already strengthened a lot, and this puts unwanted pressure on exporters and “international circulation”.

Although PBoC reserves have been flat, other state-controlled Chinese...

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4/10

Beijing seems also to be trying other measures to slow the rise. The regulators are relaxing capital controls on outflows. In mid October the PBoC cut to zero the reserve requirement ratio for banks doing FX forward trading. This requirement was created in 2018 to reduce...

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downward pressure on the RMB. In late October it suspended the counter-cyclical factor in RMB fixing, which was introduced in 2017 also to reduce downward currency pressure. But in both cases while the RMB dropped a few pips on the news, it quickly resumed its upward climb.
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@RichardJMurphy
I keep hearing people complain that the ‘mainstream media’ does not understand economics and that we’re talked down to as if everything must be explained as if the economy is a household. In this thread I explain all you (and they) need to know. Economics in one thread then....

Very few people seem to understand how money is created. Mainly that’s because when they’re told it seems so simple that they can’t believe something that’s so important that we’re willing to pay a lot to get it is created so easily. This thread explains how money is created.

What this thread also explains is that if we understand money we can completely reimagine how the economy really works, which is the pathway to rebuilding from the mess we are in. Which makes this a pretty big deal. I make no apology for its length as a result.

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Sean Casten
@SeanCasten
Expect to see a lot more stories like this. But let's also use this to have a more sophisticated conversation about why the rising tide of cheaper, cleaner energy - like all prior energy transitions - doesn't necessarily lift all boats. Brief thread:

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4/ The fact that there will be economic gains in other sectors doesn't imply that a 55 year old who planned to work for another 10 years can simply take a correspondence course in thin film deposition and move to the solar industry.
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Jonathan Athow
Jonathan Athow
@jathers_ONS
Today’s GDP release, and in particular how the economy has adapted, a thread.👇

After 6 months of growth, the economy started shrinking again in November as tighter restrictions were in place. (Though there were variations across Wales, England, Scotland and Northern Ireland.) (1/n)

The economy shrank by 2.6% in November. In normal times this would be a significant downturn, but it is much smaller than the falls seen with the first restrictions in the spring: April GDP fell by around 20%. In that sense it is good news. But why the smaller fall? (2/n)


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The name swastika comes from Sanskrit (Devanagari: स्वस्तिक, pronounced: swastik) &denotes “conducive to wellbeing or auspicious”.
The word Swastik has a definite etymological origin in Sanskrit. It is derived from the roots su – meaning “well or auspicious” & as meaning “being”.


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Scholars believe word’s origin in Vedas,known as Swasti mantra;

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The Swastika represents the living creation in the whole Cosmos.


Hindu astronomers divide the ecliptic circle of cosmos in 27 divisions called https://t.co/sLeuV1R2eQ this manner a cross forms in 4 directions in the celestial sky. At centre of this cross is Dhruva(Polestar). In a line from Dhruva, the stars known as Saptarishi can be observed.
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• If BNF is in a range then strangles
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