Welcome to the first edition of Small-Scale Sunday where small-scale developers get one actionable tip on acquisition, financing, design, construction, or operations.
This is really interesting, thank you. What's the timeline on when you can start lowering or eliminating the debt service and investor payments so that you do make more of an ROI on this. Five years? Twenty?
Great question. So there are a couple ways for me to earn out here.
1) I'm investing equity—basically, my GC fee (5% of construction costs) is mostly getting rolled into equity. I am technically then also an investor and receive a portion of the investor payments
2) By year 5, cash flows will be higher (due to rent raises and becoming operationally stable). At this point, my developer promote will start to kick in (a few thousand dollars per year)
At the end of the day, though, this isn't a grand slam investment. It's more of a single (to keep with the baseball analogy). I'm not getting rich from this by any means. But the knowledge gained along the way will pave the road for more successful projects in the future. Sorta like a graduate school investment without the student debt (and with the opportunity to at least make a little money).
This is really interesting, thank you. What's the timeline on when you can start lowering or eliminating the debt service and investor payments so that you do make more of an ROI on this. Five years? Twenty?
Great question. So there are a couple ways for me to earn out here.
1) I'm investing equity—basically, my GC fee (5% of construction costs) is mostly getting rolled into equity. I am technically then also an investor and receive a portion of the investor payments
2) By year 5, cash flows will be higher (due to rent raises and becoming operationally stable). At this point, my developer promote will start to kick in (a few thousand dollars per year)
At the end of the day, though, this isn't a grand slam investment. It's more of a single (to keep with the baseball analogy). I'm not getting rich from this by any means. But the knowledge gained along the way will pave the road for more successful projects in the future. Sorta like a graduate school investment without the student debt (and with the opportunity to at least make a little money).