Frank Scappaticci
@FrankScapp
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Operate over $20MM of Self Storage. Lender, Army veteran. Partner at Gray Line Investments
Pelham, NY
Joined January 2014
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Pinned Tweet
My wife and I selected our family values yesterday. Going to post it somewhere visible in our house. Our main goal is to have children who are good ppl and have agency. We selected:
Kindess
Integrity
Growth
Optimism
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@legends_dad1
If we create this much friction for teachers to run an orderly classroom we will not have orderly classrooms
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My family lost a ton of money when I was 7 years old. We moved from a mansion on Long Island's gold coast to a regular neighborhood. We weren't poor, but sliding backwards was very psychologically challenging for the adults in my family
All I remember thinking when we moved was…
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I got a letter from the IRS saying we owe $2k in taxes. No explanation. Got the letter Monday. Payment due today
It takes 7 days to get a PIN to make payment once you request and its a 15% penalty for being late
Impossible to avoid this fee. What kind of grift is this?
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Most underrated job is air traffic control. The schedule is a little wonky, but they make solid money ($175k+ in NY), don't have homework, and get forced retirement at 56. College not required. Very high job security.
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@legends_dad1
I’m going to mute this thread but to be clear, I do view teachers as authority figures within the confines of the school. So we just fundamentally do not agree. That’s fine.
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We got quoted $30-50k for insurance premium for a Florida property yesterday. Triple what it would cost 2-3 years ago. Our broker said some owners are canceling their INS and just taking the risk
WTF?!
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I am an LP in a friend's syndication and the communication is abysmal but they crush the results
Got 1x update this year and its basically -
"hey we sold half the portfolio and all our basis is covered. Last half all profits baby.
sent from my iPhone"
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What is a product rich people spend a lot of money on that was originally intended to be sold to working class people?
Ill go first:
Lobster
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Random thought of day: Buy old shipping container. Convert to self -storage. Drop it on the acre of land we bought right next to our facility that we also will use for RV storage. These can cost under 5k to buy.
#retwit
#RealEstate
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Baby entrepreneur: I want all my friends to quit their jobs and follow their dreams
Teenage entrepreneur: My friends are scared, they dont have the guts to do what I do
Mature entrepreneur: Most people are happy simply going to work and raising a family and thats good too
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The tone you set in your house is really powerful. Upon the birth of our 2nd child my wife and I made a serious effort to improve our life. Fast forward a couple years and my wife is about to be promoted to COO of a $100mil top line company and we own about 20mil in storage (1/2)
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@TyronMcDaniel
@TheNBACentral
It’s not the right matchup. You need a real center to guard shaq. Not draymond
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Going to a real estate conference today. I have a hypothesis that the most successful people will all be wearing jeans. The amateurs will wear their most expensive suit. I’ll be wearing a tuxedo.
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I was recently asked how I mustered up the courage to quit my W-2.
What I want to believe: I have massive risk tolerance
What is likely the truth: My wife is a high earner and tolerates endless real estate conversations
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I am a 34 year old husband and father. I quit my W-2 to work in real estate with my teammates
@johnplumstead
and
@AdamPeteParsons
. We buy and operate self storage and single family homes. This is all very ordinary stuff. But how I got here is pretty wild. A thread:
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Broker: I am about to lose the listing, been 3 months with no offers yet.
Us: Here is our offer
Broker: Oh wow we received 4 additional offers over the weekend. Please submit your best and final ASAP
Us: Sorry, but you are lying
Broker: Ok Ill get back to you ASAP
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Bout to close on a cash out refi at 85% LTV and 4.15% interest. 20 year loan, no balloon
I do not know how this is even possible but I am thankful for local credit unions
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My dad was a strong man. People looked up to him, he was physically fit, handsome, smart. He built many houses. Many of our friends lived in them. We were wealthy.
The early 1990s recession came and we suffered bankruptcy and loss of life.
Even the best of us can struggle. It…
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At some point in the near future we are going to get the best un-levered yields that some of us will see for the rest of our careers.
When framed this way, you realize how exciting this time is.
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had a great chat with another real estate investor. He has 40 million dollars of RE under contract and he is the only person in his acquisition shop and the only person raising money. And hes going to close.
Not everyone NEEDs to scale. it is a voluntary activity
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@zillowgonewild
@billyjoel
After selling this he’ll be trading in his Chevy for a Cadillac-ac-ac-ac-ac-ac
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Our team closed on our final self storage acquisition of the year yesterday. 33k sq ft at a price of $1.7mil, in the great state of Missouri. Some notes on this deal (1/n)
@johnplumstead
@AdamPeteParsons
#retwit
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@moseskagan
My father ran a real estate business that went bankrupt when I was 5 yrs old. He passed when I was 7. Family worked through litigation until I went to college. Went from a mansion to a 1400 sq ft home by time I was 14. Very motivated to replant the flag
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We just closed on the sale of our first storage facility and it was a big win for Gray Line and our investors. 93% total ROI in 15 months. Not every deal produces returns this high and so quickly, so let’s take a look at how it all came together. Here we go (1/n)
#retwit
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Got a landscaping quote this week and got this surprisingly professional doc. It has descriptions of all the different flowers and a nice little depiction of what it will eventually look like
How much money does this business owner make by taking this extra step?
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Our first storage deal was a listing about to expire. Was on Loopnet. We offered $300k below list price and locked it up. Changed the course of my professional life.
There are so many aged listings right now. Take your shot
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In 1981 almost 40% of home transactions involved seller financing per NAR. Avg mortgage rate was 18%.
We are currently around 7%. At what point do we see a move to seller financing?
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@fasc1nate
Salmon: plans wholesome cross country trip with it's family
Whoosh Innovations: Your dad will be in Mexico in 8 seconds
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We just locked up our first storage facility. 1.4 mil purchase price. 70% occupancy with potential to increase prices. Hoping to bring to 90% occupancy with fully price units.
@sweatystartup
thanks for the inspiration. Time to raise money.
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12 yrs ago today I deployed to Afghanistan. 23 yrs old and I ran a base in the middle of nowhere. 3 hr drive from nearest friendly unit
Very large battle space for a platoon to manage and our impact was minimal. This is not an uncommon story. Incredible how decentralized it was
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Deal Breakdown
We bought a 70,000 sq ft+, 381 unit facility in Lawton, OK in February of this year. Here is a break down of the purchase, what we liked about the deal, and how we have turned it around (1/n)
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Just had a call with a experienced LP who is in a deal with a few sponsors I personally know. Not on
#retwit
They are falling behind projections and are under communicating. LP pissed
Gentle reminder to GPs. Don't overthink it, just send out the update. Silence is a killer
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2023 Marriage goal: 4x date nights per quarter but for one of them, we have to sleep out. Could be hotel, airbnb, whatever. But we are taking a full night away
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Met a guy who started a REPE business 7 years ago w/ two other guys. Have over $900mil in AUM now. All STNL leaseback. Gave us a few capital raising tips:
1. Regarding family offices - be prepared for a lot of "No's." But if you stick around, do good deals, and ask the same…
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bought a failed bed and breakfast about 4 months ago and converted it to a Air BNB
4 units
214k purchase price
projected gross rents north of 6k
Knew a STR manager that operated in this city amongst 6 other cities. Sounded like a slam dunk
Fully furnished
it failed. (continued)
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There are a lot bigger fish to fry in real estate than a GP increasing their fee .5%. there are real estate gurus asking people to take out credit cards to pay for training. We have other GPs charging 10% in total fees and are soliciting $5k investments from retail investors
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I have never once seen or heard of a real estate agent attempt to introduce a creative financing option in a deal
Why is it that our licensed brokers can only pull two levers which are price and repairs?
This applies to single family housing
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@chasesfish
@moseskagan
@WillManidis
Show me a dishonest business and I’ll show you a business that sucks at making money
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cant tell if this makes me hate them or respect them even more
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I was recently asked how I mustered up the courage to quit my W-2.
What I want to believe: I have massive risk tolerance
What is likely the truth: My wife is a high earner and tolerates endless real estate conversations
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My daughter is in the process of setting up her lemonade stand for this weekend.
How do we make this the most badass lemonade stand to ever exist?
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@RobertJSalvador
@MarioNawfal
The laws that prevent sex trafficking are broader than what most ppl think. If you run a scheme to manipulate others, trick them to move, and restrict them fiscally, that can be illegal in some states. Unsure bout Romania. Either way this behavior is awful
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The changes we made boil down to this:
-wake up earlier to read or exercise
-4x date nights a quarter
-Sit down 1x a week on our couch and deliberatly talk about our goals and how we are doing
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In terms of compensation and money invested, my wife and I are having a great year. But since I left the security of my W-2 I still sometimes feel like one day this will all blow up.
In other news, last week in Cape Cod my wife wanted a $50 lobster roll and I projectile vomited
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A quick breakdown of our most recent storage acquisition.
Purchased over 20,000 sq ft of storage in Crowley, TX which is a suburb of Ft Worth for $1.95mm. Current ownership is only earning $13-$14k a month. We believe that number can be closer to $23k a month. (1/n)
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"The global population of ultra-high net worth individuals (UHNWIs) grew by 46,000 to a record of 218,200. The report notes that UHNWIs benefited from a surge in the value of financial assets last year"
I am amazed there are > 140k Americans worth over $50mil
credit
@VisualCap
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I cant say enough for how much my wife has accomplished the last few years. She's been promoted like 7 times in the midst of giving birth to two great kids. She also supported our family when I quit my W2 and started a company with
@johnplumstead
@katepacescap
is the GOAT
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Business idea from today: Buy prop mgmt company near military base. Slowly acquire single family housing from tired landlord customers. Rehab and rent out homes. Make portfolio 20% STR. Reasons why I like military markets for this to follow.
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Wife is on the road. Its just me and my two daughters this week. Time to build a fort and show them what warfare is all about
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Storage deal number 4 closed. Time to enjoy the weekend. We’ll send a recap of the numbers out next week.
Congrats
@johnplumstead
and
@AdamPeteParsons
!!
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My STR manager just raised their property management fee 5% citing "rising material costs."
Material costs get billed against the property each month already. The causation here doesn't check out.
The truth:
He miscalculated his company OPEX and I need to pay for that now
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Our first storage deal hit stabilized revenue target last month. It is just over 30,000 sq feet in Lawton, OK. When we originally underwrote it, it was pulling in 13k of monthly revenue. Here is a thread about our first deal
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Just found out the town I live in has a big swinger community and the biggest party they have all year is also a fundraiser for the local library.
The suburbs are absolutely WILD
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I’m watching 4 girls between the ages of 2-5 today and none of them slept last night. gotta tire them out.
If anyone has a list, I got 40 hours of free cold callers, one time only
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@Dennis_Porter_
I know so many people that wire large amounts of money from their bank on a consistent basis. Somehow, someway, the funds arrive. Every. Single. Time. never seen a deal not close because of a bank.
probably cause its regulated and banks have liquidity requirements
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@sweatystartup
Step 1: Start landscaping company near hedgie
Step 2: Gain him as a client
Step 3: Oil up your entire body
Step 4: Personally cut their grass, shirtless
Step 5: She is yours
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@eltorodk
@sweatystartup
Of that 88% how many avoided student loan payments due to wealthy parents? How many received help on their first down payment? I’m as capitalist as anyone but that 88% number is ludicrous. It’s an ego stroking stat
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We bought a 6 home portfolio last year for $360k in OK. Dirt cheap. Put some work into them (about $120k) while collecting rent on the occupied homes. Sold one for $122k and just got other 5 appraised at $513k. Full cash out plus profits
Tired landlords are great leads
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After 6 months of little to no activity we have 3 transactions in motion and we feel really good about all of them. Stay tuned fam
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A lot of vets hold on to that guilt. They return from deployment and struggle to feel good about their contribution. Or maybe, they believe their involvement was a net negative
I hope they realize they did their best. We need a standing Army, and they answered the call. Salute
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A lot of deals pencil if you can raise rents 20%+, add tenant insurance, and move some of the labor offshore.
Our strategy: Buy deals that cashflow on longterm debt without doing those things
Then do those things
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I went to speak to a couple classes at my old high school to celebrate Veterans Day. Very positive experience.
One kid asked me: "what do you do for work now?"
I told him I work in CRE.
his response:
"O man, I heard commercial real estate is dead"
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I talk to a retired GP every month or two. The one thing he kicks himself for when looking back on his career:
"Should have been willing to spend more for great locations"
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@capmktroy
1. sleep schedule is everything. Most important thing is getting kids on a routine within the 4-6 month mark.
2. get one of those things that go in the babies butt that gets rid of gas
3. go out for a date night at least once before the 3 month mark
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@moseskagan
My gut tells me that this is not the actual implementation you want, but by making this point you force people to zoom out
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My wife and I have been doing funny Christmas cards for a while. Usually based off a movie or show we like. We just dropped them in the mail. Here are some of the best Xmass cards of all time (1/4)
#ChristmasCard
#deckthehalls
#buygiftsandputitinstorage
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@gas_biz
Respectfully, I think a lot of parents assume what worked for them will work for their kids and it’s not always true. A high energy, physically strong kid is likely to thrive in sports. I also promise you that collegiate sports is more challenging than 99% of adult jobs
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Our most recent acquisition just hit $38k in topline revenue this month. Purchased for $3.75mm and it was generating $28k when we purchased. Occupancy was very high but there were almost 100 delinquent units out of 381. Here is how we are turning it around (1/n):
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Update on first storage deal: occupancy up to 87% from 70%. Some of that is blind luck. On track to reduce staff and automate customer onboarding in first 30 days.
Lesson learned: most this work can be done in 2 weeks or less if you are prepared.
#retwit
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Today my two young children opened up a 20x pack of tortillas and proceeded to take exactly one bite out of every single tortilla
Some people just want to watch the world burn
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A really big challenge in our business right now:
Two partners with tons of energy with not enough deals to expend that energy
I may take up MMA fighting
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Just got off the phone with a retired GP who spent the last 5 years selling their remaining assets. His biggest regret:
"Should have been willing to spend more for great locations"
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Is there an app where golfers can network with each other?
You can see what industry ppl work in. Where they play or are members ?
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Closed on our 11th storage purchase. We have sold 2x so our portfolio stands at 9x.
1.2 mil PP
Going in cap - 6.7
Price per sq ft - $54
Year 3 projected stabilized cap - 10.7
Loan - 6.5%, 60% LTV, 3 yr balloon
#retwit
(1/2)
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Completed the raise for SS facility
#4
today and my partner
@johnplumstead
is touring our next 3 acquisitions this week.
Absolutely in the honeymoon phase of our new business. I am sure there will be some choppy waters ahead but you got to enjoy the good times while they last
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@daltenwfox
@RebeccaforWA
Nobody would take the risk of guaranteeing debt and having no surety of income for that amount of money. No sense in owning businesses if upside is not present
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We bought 2x facilities in Pensacola, FL at a going in 6-cap with the intention of bringing it up to a 9 cap. Sounds simple enough.
Our plan was to Increase collections efforts, remove bad tenants, re-look pricing, be good marketers
But the first couple months were tough (1/n)
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After some thought and schedule de-conflicting
@johnplumstead
and I have decided to make the trek to
@REconveneLA
Very excited to meet some of my twitter pals and make some new friends also. Pumped!
@moseskagan
thank you for putting this together!
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I've been super quiet on Twitter this month. Been heads down and focused on managing our first storage facility. Want to share some thoughts/learnings from a first time operator... a thread.
#retwit
1. You can have your customer database ready day the day you close.
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2022 Goal update:
$20 mil AUM in storage - on track
4x date nights a quarter - on track
10% body fat - not even close
Just joined a CrossFit gym
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Current term sheet:
6.5% fixed 5 yrs
20 year am
60% LTV
prepay - 3-2-1
This actually doesn't look bad. Also, I have Stockholm Syndrome
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Off-market deals. They are talked about a ton. They aren't easy to get and even harder to get consistently. The primary ways buyers find off-market deals are:
1. Direct to Seller marketing (DTS)
2. Relationships – brokers
This thread is focused on DTS. Lets dive in (1/n)
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Random musings from the acquisitions rabbit hole:
- tertiary storage pricing is moving. We are offering $40-$50 a sq ft on things that traded at $75 a sq ft last year and we are making it to best and final
- We love Tampa, but pricing there remains resilient. Deals still are not…
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Reminder to anyone thinking about starting a small business:
Don’t worry about LLCs, taxes, legal, etc.. at the start.
Just execute the core function of whatever it is you want to do.
Sell the product, find the deal, raise the money
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Underwriting assumptions we have recently changed for our storage deals
Occupancy: 90% down to 80-85%
YoY rent growth: capping at 2%
Exit cap: 6.5 to 7
We also are seeking slightly lower leverage.
What else should we be doing?
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Update on our latest closing:
Purchased 381 units in Lawton, OK for $3.75 mm. It is about 40% climate controlled. Biggest opportunities for improvement are delinquency and rate increases. The old owner did auction around 35 units the week of closing, which is a lot (1/n)
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@PFF
Williams a better tackle breaker but Taylor wins the breakaway run potential. Guy can go 50+ at any time
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Scheduled to close on a deal today, loan info:
6.5%
60% LTV against a 1.2mil PP
25 yr am
3 yr note
We closed on a similar deal almost exactly a year ago at:
70% LTV
4.25%
25 yr am
no balloon
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