An All Cash Real Estate Investment Model

Buy properties all cash, rennovate with cash, re-lease at higher rates, refinance to return as much investoru money as possible, and hold indefinately.

The Playbook from Moses Kagan

1. Buy a building all-cash
2. Gut renovate (usually also w cash)
3. Re-lease at new, higher rents
4. Refinance to return as much investor money as we can (without over-levering & risking losing the building)
5. Hold the building, with our partners, indefinitely

The aim is to get investors’ money back (via the refi which typically takes 1-2 years after acquisition) as quickly as possible. Thereafter, from their perspective:

1. Deal is substantially de-risked
2. Opportunity cost of holding forever is substantially diminished
3. Building becomes an atm they got for “free”

From the organizer's perspective:

1. Refi loans are non-recourse, so we’re not holding the bag in a true disaster scenario
2. Takes yrs to clear the accrued pref, return the last bit of investor $, and get into our carry (where we start taking 30% of cashflow)
3. That’s ok; be patient

Recently, have added a new “core” model:

1. Buy brand new or thoroughly renovated building in great area
2. Use very moderate leverage, w long-term fixed rate
3. Hold with our investor partners, indefinitely
4. Refinance opportunistically to return money to investors as prudent

Check out Moses's blog

Interesting podcast to listen to that I don't have the time for right now.