Ep 40 - 384 Units Case Study: Our First Syndication

Hey, everybody. Flip and Danny here, founders of the Freedom Real Estate Group family of companies. And welcome to another episode of our.

Podcast called Freedom Through Passive Income.

That's right. Today's episode is called Our 3 the 384 Units Case Study, which was down in Daytona Beach, Florida. And this is our first syndication. Yes, our very first one.

I know. We were little babies.

Yes. So we always talk about who, not how.

Yes.

And it was, Gosh, this would have been October of 2019, so just a little over two years ago. Actually, it's gonna be three years at the end of this year. That's so crazy. But we went, we joined a Mastermind almost three years ago, and the mastermind was called Seven Figure Flipping. And they were doing a Mastermind event for a couple days and then that was leading into an event called Flip Hacking Live. If you've never been to Flip Hacking Live, I strongly recommend it. It's an amazing event. You'll love, love, love it. But so this, this was all when this happened. And we were at this event in San Diego, California, and that's where we happened to meet the gentleman, Stephen, that said kind of, you know, hey, you guys are good at private money. Hey, you want to come join us? And so, you know, and we always talk about surrounding yourself with the right people, the same, same like minded people. And we knew instantly, you know, integrity, you know, you could just. It just. It oozed off of him. Yes, it still does. It's not like it was past dance. It's still, you know, and his transparency and his authenticity, it was, I mean, you could tell right away. And actually, I challenge you to find someone in 7ff that doesn't have those three qualities. It's an amazing group, but. And this leads up to the most important thing is the power of masterminds. And actually, that was our first. That was our. I can't believe that. Because we're in like, what, 40 now?

Yeah, we had tons of coaches before, but we never did a Mastermind.

We didn't join a Mastermind. And I remember, you know, sitting down the very first day at the Mastermind and two people sat down next to us and they immediately started handing each other their information. Not like their address or email address. No, like how they do stuff. And I was just like, whoa, that's crazy. So. But when we did this, our network just literally blew up.

Yes.

It was just amazing. And just the people that we talk to on a daily basis still from that group originally, you know, over two years ago, it's just an amazing group. All right, everybody, if you're watching on LinkedIn or Facebook or YouTube, this is your chance right now. Now you see the like button right here and you see the heart button right there. This is your chance in the video to these buttons. Make sure you hit that heart button. Make sure you hit that like button if you like what you're subscribed seeing and if you enjoy what you're watching. But this is your chance right now at Oaksburg.

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Yeah. So again.

Yeah. So like you said, we Met Stephen in 2019. He ended up being who we worked with on this very first syndication. And the reason that we partnered with him was because we met him, we knew that he had these types of values and he knew, you know, what we were doing in business and that we could contribute and add value to this property. So let's talk about the property. So it's a 384 unit apartment complex, institutional grade apartment complex. That's important. We're going to talk about that. In Daytona Beach, Florida, we partnered with not only Steven, but an institutional operator. That's important. Lloyd Jones. He has been in the business for 40 years. I think he has close to a billion dollars over assets. And to be an institutional operator in the first place, you usually have to have 500 million in assets under management. And you're typically borrowing money from Wall street, from pension funds, insurance funds, things like that. So that's kind of how you classify. And that's why it's a big word, institutional. When you hear those words, it's a big deal with a lot of experience and a lot of, you know, great people that are on board that can tackle these types of things.

So he's one of the big boys.

Yes, he's one of the big boys. And so it was really awesome for Stephen to have this conversation with me, start talking about the deal and letting me know that not only was he doing it, but who he partnered with on the operational side. Because OPER operationals or operations and multifamily deals, anything really in the commercial space, I'm going to say it's critical. Like that's the thing we're going to talk about in an episode, like things that you should be talking about and asking when you're investing in a syndication. And really you want to know who the operator is and what their experience and track record is. That is key to the entire picture because they're the ones with the boots on the ground, they're managing everything. And we've seen deals that were not ours go down. And that's why we talk about in the 56 unit that people like investing with us, because they saw us firsthand, take a deal in two weeks, due diligence, bought it, closed on it over a year. Nightmare horror stories of what happened. But we did not give up. We kept on going. And that's the type of people that you want to work with. So knowing that the operator had this kind of experience, knowing that we were partnering with Stephen was amazing. And that's why we jumped in. That's why it was our very first. Even though that was a huge deal to be your very first deal in the syndication world. So it was a $42 million deal. That was the purchase price and that's going to come up in just a second because that's really cool story too. It was in Daytona Beach, Florida. It was a recapitalization of an asset as opposed to an acquisition. And what that means is that Lloyd Jones already owned it. He owned it for 18 months. So what he was doing was partnering up with people like us so that he could take his, I think it was like 10 million out and invest it into another deal. We were replacing that 10 million. We actually ended up raising, I think it was $12.2 million because I think we added some capitalization to that and we were covering closing costs. And then we ended up partnering on the deal with, with Lloyd Jones. So it was a win for him, it was a win for us. At the time that we purchased it, it was 97% occupied, 100% pre leased. So that means that the, the few that were vacant at the time it was already leased, they were just waiting to move in. There was a $30 million loan that stayed in place. The project, our anticipation is we're going to hold it for five to seven years. It was a strong cash flowing asset when we purchased it. And the cool thing and why I said at the time we purchased it at $42 million. That during the course of the time, from the time we got under contract and the time we actually closed, there was an increase in the noi. So the net operating income, that's that forced appreciation piece. Right. In order to force appreciation on a commercial asset, you want to decrease the expenses or increase the. So that happened over the time we had it under contract till we closed. In that time frame, the value went up 7 to $10 million.

That's crazy.

That is crazy. So in that type of situation, typically the seller, which is Lloyd Jones, would be renegotiating. Right. Hey, guys, you bought it for 42 million. That's what we agreed on. But since you got it under contract and that's going to be increased the NOI. And it's 7 to $10 million more in value right now. So, you know, let's talk about that. He didn't do that. And so the integrity of a partner, you know, to allow that big, huge increase and not come back and renegotiate the contract was really, really huge. So it was just another added benefit. I'm really proud to have partnered with Lloyd Jones and Steven on that project.

Yeah. So actually, and what's funny is I always tell Danny, stay in your lane. You know, and at that point, when we were at Flip Hacking Live and we met Steven and our lane was Turnkey Properties.

Yes.

There was no other lane. That was the lane. And we'd been in that lane for many years. And that was the lane. Well, now we're sitting there going, well, what, what, what is our niche? What, what is. What is it that we enjoy? What, you know, just. Do we like doing this? Is this the lifestyle we want? You know, does it help our investors? Does it help our team? And after we went through and we actually sat down and thought about wow, which is what just happened. It actually checked all the boxes. And I always think of this as the. I'm gonna date myself here that you just put your peanut butter in my chocolate. Reese's peanut butter. Yeah.

Thank you very much.

I think. Dating myself. But anyway, so I checked all the boxes and we're like, well, this one, you know, we already have five companies, so this one, boop. Six. Company number six. And. And here we are with Freedom Capital Investments and a podcast going every day for a full year.

Woohoo. That's how I roll.

Thank you, Steven.

You love me.

Thank you, Stephen.

Yeah, thanks, Steven.

Appreciate it.

I'm saying it sincerely.

So anyway, this one went a little long and I do apologize about that. I think I got wordy.

It was totally me.

Yeah. But anyway, if you're watching on YouTube, make sure you make sure you're subscribed to our channel. If you're on Facebook, join our Group Again, that's facebook.comgroups freedom through passive income and on LinkedIn. It's just a private group, but it doesn't have the cool URL, so type.

Into the search bar Freedom Through Passive Income he's always trying to trick me.

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