This morning, my investors received 99.5% returns* on their money. I came just $27,664 short of doubling my clients’ money, on equity investments of over $5.5 million. Needless to say, that’s huge!
How’d I do it? Simple, really! “Buy low, sell high.”
What does that mean, you ask?
Well! I bought when valuations were low, then sold at the top to investors who believe record high prices will go on forever.
I took advantage of what’s called “cap rate compression.” You buy at a high cap rate and sell at a low one. If you do, you don’t need to improve your property’s performance at all. Because later investors pay more for the same $1 of profit than you did.
Now cap rates are below their long-term average, meaning that prices are above normal. As the night follows the day, cap rates will decompress, meaning that they will move up to their long-term averages. When they go up, investors will once again pay less for that same $1 of profit.
This means that, just to stay even, today’s property buyers have to dramatically increase the profits on the property. It’s like running to stand still! Those who can’t run fast enough will go backwards and lose money — they may even lose 100% of their and their investors’ money in foreclosure.
I hate to tell you this, but if you’re buying now, this is the situation you’re in. The market winds aren’t in your back like they were at mine; they’re in your face! The good news is that the winds will be at your back again, sooner than most people think.
The investors who are prepared for that day — and only those investors — are going to make all kinds of amazing profits!
Those investors know:
- How to get brokers to pay attention to you and show you good deals, when we’ve just had a correction and they trust no one.
- How to underwrite deals properly, so you actually make money.
- How to perform due diligence properly so you don’t buy a money-pit.
- How to get investors into your deals and how to get banks to finance the rest, when all the capital sources are scared after a crash – even though that’s the absolute best time to be buying.
These are all things you learn in my Multifamily Launchpad program! Plus, you’ll have near-daily access to me personally for advice, counsel, and readying your wheelhouse for the marketing winds of change! Multifamily Launchpad is closed to new members until Fall 2019, but if you’d like to join the Waitlist and get notified when it opens again, just sign up here: www.mflwaitlist.com.
~P.S. If you would like to join my investor platform and take part when we start buying deals again, fill out our investor intake form here. https://twobridgesmgmt.com/multifamily-real-estate…
*Obviously, we cannot and do not promise 99.5% returns or any returns at all. Past performance is not indicative of future performance. These investments involve risk, including the risk of losing your entire investment. Consult your lawyer and investment advisor before participating in any real estate investment.
Why I Doubled My Investors’ Money, and Why You Probably Won’t
by Jonathan Twombly
Last Updated: July 15, 2019