Scott Mitchell, MBA, MSBA

Case Study: Desert Ridge Investments ✨ Client Background: ✨ Desert Ridge Investments is a trailblazer in low and moderate-income houisng real estate development that was founded in 2008 and is based in the heart of Salt Lake City. ✨ The Challenge: ✨ The primary goal was to bring their vision to life before the first stone was ever laid. They needed high-quality renderings that not only helped finalize design elements (especially exterior color selections), but also excited stakeholders and future residents about the potential of the new development. ✨ Why CDK? ✨ Having collaborated before, Desert Ridge said they chose to work with us CDK because of our unmatched responsiveness and commitment to quality. Our previous projects together laid a foundation of trust and established a workflow that could meet tight deadlines seamlessly for them. ✨ The Solution: ✨ We helped to facilitate exterior color decisions by producing 8 different versions of the front elevation with different color applications for them to drill down on the final selections. Our interactive approach allowed for real-time feedback and iterations, ensuring the renderings we produced were aligned with Desert Ridge's vision. ✨ Client Feedback: ✨ Desert Ridge rated their satisfaction with the final products as a perfect 10. The visuals we created helped them not just meet, but exceed expectations, helping to visualize the future of their project vividly. Their testament: “By using CDK renderings, we were able to bring our building to life, setting clear expectations of the final product for our stakeholders.” ✨ Looking Forward: ✨ The success of this project has not only reinforced our relationship but set the stage for future collaborations. As Desert Ridge Investments continues to innovate in the real estate space, CDK Renderings will be right there alongside them, turning blueprints into visual tools. ✨ Acknowledgments: ✨ A huge thanks to Desert Ridge Investments for trusting us with their vision. Stories like these are what drive us at CDK Renderings to keep pushing the envelope in architectural visualization. #RealEstateDevelopment #ClientSuccess #ArchitecturalVisualization #ProjectHighlight #3DRenderingServices #Multifamily

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"Productivity" is overhyped. Do this instead: 1) Value your time 2) Pick something you love 3) Get started working on it 4) Learn more as you go 5) Do not quit 6) What would you add to this list? Read: Science-based approaches to productivity: https://lnkd.in/eYfPmcaU -- Enjoy this? Follow me Trey Wheeler for more, and join my free weekly newsletter to Crush Your Real Estate Career (link in bio)

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So..... There were a record number of new multifamily developments going on last few years and there are some markets where a lot of new apartments ("supply") was going to hit and we expected occupancy rates to fall. Here's the funny thing, they barely moved, and there are reports in many markets where the # of these new units that are rented ("absorbed") have hit record highs. Maybe we do really have a shortage of housing and apartments in places people want to live still.... ? (Hint: We've had decades of underbuilding, zoning constraints, and more that makes building hard and expensive in many parts of the country PLUS a record number of folks leaving the trades and a lack of new folks coming up the ladder). 5-6% Vacancy in a large apartment community is LOW and happens normally through the course of regular move outs, renovations and repairs of the units (keeping them off the market for a few weeks or a month), etc. If it is less than this it is an extremely tight renters market. More than this, and there is some wiggle room and likelihood of rent concessions or a slow down in rent increases. With interest rates in the 8-14% for new construction, the number of new apartment starts has dropped by about 50% and there is a lot of land and projects idling now which will just tighten things back up next year... ...and so the cycle repeats. Now is still a good time to invest in residential real estate and multifamily. Yes, there is some distress for those caught earlier in the cycle of interest rate hikes and will need to sell and/or take a reduction. However, that also translates to buying opportunity for groups like us and others now. The prices may fluctuate based on the total picture of the lending and renting economy, but the underlying value and stability in apartment communities remains. Source: Realpage May 2024 Data Update (https://lnkd.in/eSxJUTvA) --- My name is Dave Weinstock and I’m the principal and founder of DW Capital. We help working professionals create passive income and build wealth by investing in commercial real estate. Click the “🔔” to follow me for information on real estate and passive investing.

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ALIENS & AVATARS! As the Founder of a PropTech Brokerage, I've seen this movie over and over and over again. A company that raises tens of millions or even hundreds of millions of dollars, and then they shut down operations after many pivots as they burned through a ton of cash in the pursuit of figuring it out. Over the last 3 to 4 years, in the real estate industry, it literally feels like I was in a Final Destination movie, and our company was the target to kill. Making it through COVID was brutal for many startups, including our promising company. Then, inflation goes up, interest rates go up, people stop buying and selling with the hope that interest rates will go back down, then the entire real estate industry goes under attack about commissions, who pays them, and who no longer is obligated to pay. And, the Real Estate Industry lost that battle, with the National Association of Realtors and many Brokerages eventually settling outside of court to minimize the impact. Now, the entire real estate industry is basically forced to become Consumer-Centric, which is what we've believed and built since 2008. The company below, raised over $23M. And, as of a week ago, they now are shutting down their business. However, our company, has methodically grown and is currently scaling throughout the country. We've knocked on many investor doors presenting our company in the pursuit of raising a $3M to $5M Seed Round. During our journey, we've worked closely and directly with the biggest tech brands in the world: IBM, Google, and Amazon. Two of which, included us in their prestigious tech accelerators and provided us with tech credits and a small investment. The real estate industry has noted me as a TOP 250 Leaders and Influencers in the entire industry. Most of these "would-be" real estate startup founders that lose all of their investors' money, barely have experience in an industry that's heavily regulated and requires leadership who knows and understands the blind spots and intricacies of this business. I can't help but wonder if the game that I'm playing in the Proptech space, has an avatar in mind when it comes to investing. As the CEO/Founder of our company, my resume is literally impeccable. Yet, it seems like instead of focusing on the company, our collective resumes, and growth the focus is on things that "SHOULD NOT" matter! And therefore, I believe that's why many these venture investors get it wrong, way more than they get it right... Their startup avatar that they routinely fund looks just like them, and anything outside(alien) of that construct, gets little to no consideration. And if they do consider an alien, it's merely an exercise, just to say they did it... I challenge the game, to focus on what matters! In spite of popular belief, you just might minimize your bad bets if you sincerely consider more aliens... by Bobby Bryant #vc #venturecapital #startups #proptech #equality #ai https://lnkd.in/gzgMiYdg

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So you're looking to invest as a limited partner in a multifamily syndication... But before you sign on the dotted line, make sure you ask these key questions: 1. What is the track record of the sponsor? 2. What is the business plan for the property? 3. What is the projected cash-on-cash return? 4. What is the projected hold period? 5. What is the sponsor's decision-making process? 6. What is the level of communication you can expect? 7. What are the estimated expenses? Don't be afraid to get nitty-gritty with the details. These questions will not only help you gain clarity on the deal, but also get a better sense of the sponsor's experience and expertise. After all, when it comes to your hard-earned money, it pays to do your due diligence. #realestateinvesting #wealthtips #wealthmindset #multifamilyinvesting #apartmentinvesting You can now access exclusive institutional-grade private alternative investments managed by a team of proven experts ➡️ https://lnkd.in/egPhgeZp

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Let's talk yield in the context of CRE. Yield on cost (YOC) is popular metric to assess a property's cash flow (NOI) relative to its acquisition/development cost. It is a metric that looks at the property itself, NOT the capital stack, i.e. no debt service factors into the equation. However, it still makes sense to compare NOI to both the unlevered (without finance costs) AND levered (with finance costs) basis of a project. For instance, if a $10 million acquisition is financed with 60% debt, the total project budget might become $11 million after fees and interest on debt are factored in to the cost basis. In this example, $1 million in debt-related expenses must be incurred before the project is cash-flow-stabilized. If the property produces $800K in NOI the first year, the unlevered YOC would be 8%, but the levered YOC would be ~7.3%. It seems odd and a bit ironic, but the levered YOC is what will define whether we are positively or negatively leveraged. Even though our YOC is a measurement that excludes the impact of debt from the **numerator**, the fact is our project cost (the denominator) involves debt-related expenses, for which equity and debt need to be raised to pay for. So that's levered versus unlevered YOC. Now, what about TRENDED versus UNTRENDED yield? For development deals in particular, there may be a significant gap between (1) today's rents, opex, and resulting NOI, and (2) operating forecasts two or three years from now. Market growth and inflation (or the dreaded opposite) drive this differential. In today's environment where many markets are seeing rent DECREASES (albeit after record increases during the covid years) while operating expenses such as insurance are going up, conservative lenders are demanding sponsors treat untrended rents and opex as proxies for stabilized operations. (It doesn't help matters that DSCR and LTV ratios are tightening too.) Untrended NOI produces lower debt service, and therefore qualifies for less debt than a Trended YOC would, even at the same DSCR lender threshold. This means projects have to raise more equity than previous, which desensitizes yield on equity (YOE, or cash-on-cash) to improvements in project operating performance (because the equity denominator is larger), i.e. less leverage produces less upside. Therefore, even if YOC isn't technically being affected by today's tougher lending environment, YOE very much is. Even if a developer expects his investors to earn an X% trended yield three years from now, the fact that a lender is using UNTRENDED NOI to drive their willingness to lend means real (trended) YOE will be muted in the positively leveraged out-years. Just a few musings that I hope have yielded (😉) some interest. #CRE #commecialrealestate #realestatefinance #realestatedevelopment

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The R&D Tax Credit offers up to 10 cents in benefit for every qualifying dollar identified in a study, and many software developers qualify for the full benefit. Their significant salaries can result in a commensurately substantial Credit. #randdcredit #softwaredevelopment

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What I thought I needed to know going into CRE vs. what I actually needed to know are WILDLY different What I thought I needed to know: 💡 Cap Rates 💡 Excel Modeling 💡 Negotiation Tactics 💡 Lease vs. Own Analysis 💡 Macroeconomic Trends (these still come in handy) What I actually needed to know: 🏠 Roofing ♨ How HVAC systems work 🔌 What "3-Phase" electricity is 👨‍⚖️ Literally everything about contract law 🗺 Zoning Laws (and who is on the board) To say you learn something new in this business every day is inaccurate. You learn at least 5 new things per day if you're moving slow. What did I leave off the list?

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It is easy to get lost in the numbers when it comes to selling your business, but it is important to remember that the numbers only tell one side of the story. Both buying and selling a business come with significant mental and emotional ramifications. Why is this so critical to understand? Sellers who are not emotionally ready might subconsciously take steps to interfere with the sales process. Typically, sellers have invested a great deal of time and effort into their business, and as a result, they may simply not be truly ready to sell. Before the day comes to put your business up for sale, pause and reflect on whether you are 100% onboard. https://lnkd.in/g4kUUeCf

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Affordable Housing is Real. Announcing the S2 Duplex models starting at $379,100 per building (2 units). Utilizing the new Middle Housing Laws recently enacted in Spokane, WA., we can now build duplexes on properties with existing homes or build two duplex buildings on one lot. The S2 Duplex models are designed for 50' x 120' lots. By applying a condominium overlay, we can separate the individual units and sell condos directly. With the added cost of the condominium overlay, we can sell individual condominiums starting at $198,000*. Under an FHA loan, that is $6,930 down, $3,465 MIP, and a monthly mortgage payment of $1,307 +-. NOTE: we are actively looking for construction lenders with better rates...

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In Fully Funded, we focus a TON on real estate, but we are now seeing more and more members focus on buying businesses. This is a great example of Matt locking up a company at LESS than a 1x multiple on EBITA. In real estate, assets will trade anywhere from 10-25x their net operating income, similar in structure to an EBITA multiple for a company. As an investor, are you only investing in real estate? What are your thoughts on investing in businesses? Sam Mahmood Chris Wirthlin Chris Larsen Ben Fraser Rob Beardsley Ian Djuric Dylan Marma, CCIM

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A follow on thought to Jay's excellent note (as always) below. The filtering effect of residents moving up from lower quality apartments (C's) to (B's) and (A's) is happening but we also see a lot of these getting done with significant incentives - one to two months free rent and gift cards etc. While that puts 'heads in beds', the question is what happens upon renewal and do you have residents that can not afford the renewal that will not have incentives. A bit of a trade off for cash flow today versus potential turns or credit issues later. Pick your poison. "In the highest-supplied areas, we're seeing higher-income renters move up from Class B and C units, which in turn has led to bigger rent cuts in those segments in order to backfill those units. Improving affordability = widening demand funnel"

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Home affordability continues to become a fleeting dream for prospective buyers. According to a new report from ATTOM, home affordability is out of the question on typical homes in 80% of the 589 counties in the U.S.. Standard lending guidelines suggest that the cost of home ownership shouldn’t surpass 28% of the annual wage. However, the report showed that this cost increased to 35.1% of income, the highest level since the year 2007. The national median home price increased to a new high of $360,00, an increase of 7.3% quarterly, and in just under half of the counties, home prices rose fasters than weekly annualized wages in Q2 2024. https://hubs.li/Q02FX6nb0 Interested in learning more about Club Capital? Join our preferred investor club to get access to our latest investment opportunities and our education blogs and podcasts. https://hubs.li/Q02FXrc80 #Affordability #AffordableHousing #CostToOwn #Multifamily #InvestmentStrategies #CREInvestments

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1031 Exchange - the holy grail of tax savings for real estate investment. But...what if you have partners? What if they don't to do a 1031 with you, are you sunk? No! There are a few different ways to execute a transaction in which one group of partners exits the deal, and another group of partners rolls their equity tax free into another property. These paths have their own significant pitfalls including not insubstantial legal and accounting support costs, triggers with mortgages, management and lease agreements, etc, and in order to properly execute all of these ducks need to be in a row. So what are the options? 1) Boring route - 1031 the property into the new property, then shortly thereafter do a cash out refinance in order to redeem the old members. The buy out can trigger a basis step up for the remaining members. The cons - having to do the financing 2x, meaning more fees. You also need enough equity in the new property to do the cash out refinance to effectuate the buy out. The pros - less legal fees, no worries about your existing mortgage, lease agreements, etc. 2) The complicated route - drop and swap and their many potential iterations. What this comes down to is initially distributing tenants in common interests to the exiting partners, the property is then sold, including their TIC interests. Each TIC can decide whether to 1031 exchange or just exit. The cons...complexity. In order to have a respected TIC, this may require revisiting of mortgages, management agreements, leases, etc, and can result in much more complex tax reporting, and also substantial legal fees to execute all these transfers. The pros...lets you do your 1031 exchange. 3) Another complicated and specific scenario...a Partnership Installment Note transaction. This involves buying out members for an installment note with at least one payment in a future period, and paying off this note as component of the exchange. The cons here is that it is tying additional debt to the partnership property, which can mess with the economics of the 1031 exchange, so the numbers have to support the deal. It also has those partners being bought out having to wait to receive all their proceeds. Pros...you avoid the complexities of the drop and swap messing with your existing agreements and other related timing issues, and you get to do your 1031 exchange. So you can do it, does it mean you should? Consider the level of complexity and additional fees that will be incurred in the scope of how much tax is being deferred - it is only a tax deferral, so additional exchange fees effectively become more "interest" you are paying to defer that tax bill. So talk to your tax advisor! You may have options are you are looking to close out that partnership but already have your eyes on the next deal. #realestatesyndicate #realestateinvestment #taxstrategy

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95% of CRE Brokers Do Not Understand Leverage... Almost all of them think they do, but in my opinion - most are missing out on the most important type of Leverage. "But I work with Bankers every day and there's debt on almost every deal I do!?" This is not the type of Leverage I'm talking about. There's 4 types of Leverage that can be broken down into 4 C's: Capital, Code, Content, and Collaboration. The Collaboration part has probably been the number 1 growth factor for my business. Collaboration allows Leverage on your Time. In my opinion, the key to the "game" of business is to continually trade up for more Leverage on Your Time. At first, you have to do the $10/hr tasks. But once you're making $50/hr, you can hire someone for $10/hr. And then when you're making $200/hr, you can hire someone for $50/hr to do the tasks you shouldn't be doing. After that, you continue to gain more leverage on your time, and execute the tasks that are the most influential to your business, and that you genuinely enjoy doing. So, if you're a CRE Broker and are not using Leverage in your business... I would recommend you start thinking about it. And if you want to know how I structured this Leverage to scale to $1.4M in Gross Commissions in a Single Year - Just reply to this post or DM me. No sales pitch - just happy to help however I can.

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Holman's proptech maxim #1: Maintenance is a people problem and a logistics problem. Not a digital problem. Maintenance is a people problem. Tensions are high. Fixing physical products in a unit (as opposed to being able to send them back to the manufacturer) is really hard. This kind of work is rarely given the respect it needs (how hard it is to fix a dishwasher? Very hard) Vendors make mistakes. Vendors track muddy footprints in the apartment because they had a long day at a previous job site and are exhausted as they fit one more job in as a favor to the manager. Residents catch most mistakes after work, when they are tired, dealing with their kids, and want to relax. Simple repairs become tense standoffs for a myriad of very human reasons. Not to mention the incentive tension between the owner, the manager, the resident, and the vendor. The owner wants to spend as little money as possible. The manager wants the job down quickly so they can move on to the next 100 tickets. The vendor wants to maximize $$$ / hour and overall stress. The resident wants the job down quickly AND perfectly because shit they are paying all this money in rent. Maintenance is a logistics problem Coordinating in-house staff, residents, and outside vendors with clear communication is fing hard. Small missteps or poor communication lead to significant delays. Someone gets confused. Someone doesn't show up. Someone shows up but the resident won't let them in because they have a big meeting that day. Vendors get delayed at previous jobs. The repair requires a different piece, which has to be ordered. Paints can't be matched, leading to bad aesthetics and angry residents. It breaks again because the issue was misdiagnosed. No one is communicating minor updates to the resident because no one has time, and the radio silence pisses residents. Most maintenance apps don't respect the underlying complexity of even simple repairs. Most maintenance apps add notifications, vendor tracking, notes, and other incremental improvements that are, at best, solving a small subset of the problems that don't move the needle meaningfully over the base packages offered by most property management systems. But if we, as prop-tech builders, directly address the human side of the equation with empathy and understanding (preferably from having done it ourselves), we can start to move the needle.

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Misvaluing an industrial property can cost you millions. Steal my secret to quickly calculate value ⤵ 1) Establish building size 2) Multiply by "market rent" 3) Divide by Cap rate (bank debt + ~1.5%) This is a great way to check value on the "back of the napkin". If you really want to know what a building is worth... Ask a Broker. Then buy industrial real estate.

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A $1.4 trillion debt cliff is looming in the commercial market, but here’s the scoop: only $100 billion of that affects apartment properties—just 3-4% of the market. This means there will be discounts but no market crash in multifamily, unlike office space. Multifamily will remain strong, and we’re expecting an upswing by early 2025.Now’s the perfect time to explore opportunities and get ahead. Want to learn how to make the most of this? Drop me a message to chat about your next steps! #RealEstate #Investment #Multifamily #Opportunity Listen to my podcast interview, Harder Working Money, where we discuss entrepreneurship, investments, real estate, and tax strategies for business owners. https://lnkd.in/eTBFYnjW You can invest in my real estate deals! Go to https://lnkd.in/gk5C5Hqy Business owners, my social media channels are the perfect place to learn more about how I invest my extra business income into hard assets (apartments, self-storage, oil/gas wells) that produce cash flow and tax savings. (Links in Bio) @brian_oneill_investor #propertyinvestment #investoknow #investormindset #businessmindset #investorguide #diversification #EntrepreneurTips #BusinessStrategy #entrepreneur #businessowner #selfemployed #realestateinvestor #investments #wealthymindset #multifamilyinvesting #apartmentinvestinng #financepodcast #realestatepodcast

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