Ep 106 - 48 Unit - Structuring Investor Returns

Hey, everybody. Flip and Danny here, founders of the Freedom Real Estate Group family of companies. And welcome to another episode of our podcast, which is called Freedom Through Passive Income.

That's right.

Welcome to another episode. And this episode is entitled Our 48 Unit Structuring Investor Returns.

Yeah. So just last was it Wednesday? We did 48 unit creating the business plan. And so today we're doing Structuring Investor returns. And like we've told you many times, we're not only trying to teach and educate, but anytime that we can apply it to a case study and something that we're working on right now, we're going to do that. So that way you can see it in action.

Right. Time in the field.

And so that's what we're doing today, and that's what we did Wednesday as well. We just want to talk through. We were, you and I. Well, I have spent a ton of time with our underwriter, Ken, and I have a full new appreciation for underwriting in general. I can do a little bit of underwriting, but when it comes to a larger apartment buildings, I would prefer somebody with a lot more skills, a lot more experience, a lot more knowledge to have my back. And that's how we've done everything in business, right? We have a lot, a lot of knowledge, but we're not the experts. And so when something comes up, in order to protect us and the people around us and whoever we're teaming with, we always bring in the expert. So I view Ken as the expert, and so on the phone with him, and every single time, can I record this? And so I recorded all of these. And so the other day I said, hey, Flip, I've got two recordings from Ken. Can you please watch them? Because now you and I are going to get together and we'll discuss everything that I went over with Ken, and we're going to discuss what the investor returns are. Now, let me say this. This is not an offering. This is not a solicitation. We're not going to even go into the exact returns that we discussed the other day because a lot of the deals that we do are 506B's. Buddy, do you want to tell everybody what a 506B is and why we don't talk about these things?

506B?

Yes.

And that's why I kept saying, buddy, because we say that to remind people like me on what that means. And that's an offering. That is you have to know them. You know, there has to be a relationship. Excuse me. There has to be a Relationship already established prior to the mentioning of this investment.

Yes, exactly right. So that's why we're not going to talk about the returns here, because you may be watching this and we might not know you yet. I don't know you, and therefore we can't share the info with you. So this is a hint or a tip or a gold nugget, whatever you want to call it. Go to our website.

Come over here to our website@freedomcapitalinvestments.com and make sure you join our investor club.

Thank you. Give me some. Good job, Flipper. All right. Yeah. Because if we do know you, then you're gonna get to see this deal. And when this episode airs, it is before closing. Now, by the time this episode airs, we might have raised all the money already because there's just not a. This is a 48 unit. So we'll probably be raising around a little over a million dollars, but we can raise that in a snap of a finger. So you want to get in our investor club list so that as we get more deals, you're one of the people that's in line, because C.J. and Carrie are just like, hey, I've got like a million two over here. Hey, I've got a few million over here. And they're just waiting for the deals because we are working and lining them up and being able to. Anyways, the point is join the investor club. Get to know them so that sometimes this deal may not go out to our list at all. It may. C.J. and Carrie may very well bring in the investor that they already know are ready and waiting for the deal, and we're just going to fund it, and we're going to have to wait for a deal to come up when we do want to send it to the list so that we can, you know, raise more money. And you would only know about that if you actually talk to us. So back to the regularly scheduled programming. We're going to talk about the structuring, the investor returns, but we're not going to give you details. That's why we went off on a tangent there for a second. So you ended up watching the videos. Right. Okay. So at the end of those videos, I know it was a lot to take in, and you were watching a video, so it was kind of small. And I think you said, like, you had put it on one of your big screens.

Yeah, I put it on my big screen, but then the numbers are fuzzy, so.

And what was even funnier was your joke about, I was looking at that screen, watching this video. Then I looked at the time, forgetting that it's recording your screen. Back when you were on the phone.

With Ken, which was the morning prior.

Yes. And so I was like, wow, it's.

Only 10:30 in the morning. That's pretty awesome. And then I realized, oh, no, it's 1:30 in the afternoon.

Just the funny things that happened. Anyway, so what we did is we talked about it. We talked about what Ken and I went through and what KE kind of said, hey, what about this? What about this? What if you change this number? What does it look like? Do you want to do this? And ultimately we are trying to figure out how do we structure this so that the investors that join us can get a good return. And sometimes we're going to create different classes. And what that means is some of our investors, they don't want distributions. They're there for the tax benefits. They're investing with us for tax benefits. They like the returns, it's fine, but they're really there for the tax benefits. And they would rather not have the distributions to have to even file taxes. They would rather just wait and get them later, even accrue all the way to the end. So they don't have distributions to put on their tax returns. So there's different variables of different investors. And we're trying to meet all of those needs. So Flip and I ultimately just had a conversation back and forth, just saying, okay, what if we do this? And does this make sense for the deal? Can the deal afford it if we want to do distributions? Because we're going to be doing a blitz, really, on this one. And so there's not going to be a ton of cash flow, although a lot of the units are going to be right there up to market rent immediately. But we're basing everything off on like 70% occupancy, so that we have 14 units at any given time to be able to be running through. So we decided, right, we made a decision on what it would look like, actually brainstorm like a couple different classes. But that's what it took. That was the process that we had to go through in order to figure out what it was that we were going to do. And then next step is tomorrow. Now I'm going to talk to the investor relations team and just say, here's what we talked about. This is what we think that we're going to do. Do you have any feedback or any other ide. And once that's done, then it goes to Flip. Because right now, flip what Are you working on?

I'm working on the om. Om?

What's an om? Offering memorandum. I went like, I saw his eyes. If you're watching the video, you saw his eyes, too. He's like, what does that stand for again? I know. It's an om. It's an om.

I keep telling people, they say, what are you doing? I'm like, I'm working on the om.

And it's called so many different things. Right. A pitch deck, an offering memorandum. I've heard two or three. PowerPoint presentation. Yeah. So anyway, that's kind of the process that happens when we're trying to make these decisions in order to present something to our investor base. So I thought it would be interesting and educational for everybody to learn how that works.

Yeah. And at the end of the day, we just kept it simple.

Oh, we always keep it simple.

That's right. But for those of you that are actually watching this video and not just listening, make sure you go back to the part when Danny said, yay and she gave me a high five. Because right now we are going through the beginning stages of our health and fitness plan.

This is funny.

Right now. I've had a couple days of what they would call arm exercises. I would do the air quotes, but I can't. And so make sure you go back to that point when Daily gives me a high five and try to look in my face to see the pain of me trying to lift my arm just to give her a high five. So anyway, we like to keep these as short and sweet as possible. We hope that you enjoyed this episode and the humor. Yeah. Make sure, if you are watching on YouTube, make sure you subscribe to our channel. So make sure you're joining our groups on Facebook and LinkedIn, but most importantly, right down here in the bottom, our website, freedomcapitalinvestments.com make sure you're joining our investor club. Because this episode, you definitely found out why it's important to join the investor club, but I think that's it. Yeah, we always end all of our episodes with Invest Smart, Live, Happy. Bye, everybody. Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax, legal, real estate, financial, or business professional for individualized advice. Opinions and information on this show are not guaranteed. All investment strategies have the potential for profit or loss, y'.

All. It.