Tilden Moschetti: Alright, so
you think it might be time to re

enter the atmosphere? Exit this
syndication, and pay off your

investors, get them all happy
and satisfied and bring them

into your next deal. But how do
you decide whether or not it

really is time to exit? I mean,
the reality is, you're never

going to know if you made the
best possible call on time. But

you know, you did a good job. So
how do you really figure out is

this time? And how do you make a
case for the investor so that

they understand that decision on
whether it is time to exit or

not?

So when it's time to sell Now,
part of it is going to be you're

going to be making this decision
based on your knowledge as an

expert and the syndicator.
Right, you're going to be

deciding whether you think it
makes sense or not. All along,

you've been keeping track of the
property, you've been watching,

you've been managing the asset,
you may or may not have been

managing the property as a
property manager, but you've

been looking into it and you've
been doing everything that you

need to do. You also have been
looking at the market and the

external market to see where you
think it fits in in that market.

And whether or not it makes
sense to you, you know, just

intuitively does it feel like
it's time to sell. The other

piece of it that may or may not
control it is things like, Well,

I have a loan coming due may or
may not influence that decision.

Right. And when you put this in
this deal together, in the very

beginning, you had told the
investors that you were

anticipating a hold period of
some number of years. So maybe

it was five years, maybe it was
seven years, I've even done 18

years at deals still going on.
But there's some number of years

that you've put together this,
this deal. Now, you've got a so

you've got multiple things going
on, because you want to be

consistent with what you told
the investors, but at the same

time you have a duty to convey
information to them, you told

them this hold period was just
the anticipated. And depending

on market conditions, it may be
longer or shorter. So you have a

general idea. So let's go to an
actual calculation about how you

would decide. And that will also
inform us on how we need to have

a communication with our
investors in order to do that.

Alright, let's go ahead and get
started. There we go. Alright,

so I just put some simple
numbers together to do just a

very, very simple deal. So that
way it made sense. So right now,

in year five, our NOI is
$180,000. Our financing on our

first five years was at four and
a half percent. And our loan to

value was 50%. So that made it
that over the course for the

year that we were paying $83,000
in finance costs, leaving us a

cash flow at year five of
$96,625 that you actually see

down here, in this part of the
calculation, what I did is I

built a T bar, right, so I built
cash flows. And this is

accumulating an noi at about 2%
per year, I just wanted to do

something kind of simple, I just
made up numbers that were

somewhere around 2% to make it
interesting. So just 2% a year

increases there. Now, we've got
an anticipated sale at a six cap

for $3 million, we have to pay
our loan back. So our

distributions is 1.7 million
that goes back to the investors.

And then we now have an IRR of
12.69%. Now I probably wouldn't

do this deal, but maybe it was
super safe deal. I don't know.

So, but the idea is just to show
us how the numbers look, in

order to make this deal I
probably wouldn't have done at

the outset if I thought I was
gonna get to a point six, nine.

But sometimes you'll do a
syndication and you will get

less than than you are
anticipating anyway. So we do a

T bar to a point six 9%. So what
if instead of selling at year

five, we just refight it. I
mean, our principal has reduced

right we now have a loan payoff
amount from 1.25 to 1.01. So

we've had, I'm sorry, one point
1.0. I'm sorry 1.1. So we've

decreased that that amount by
approximately 20 $5,000 I mean,

$250,000, we've paid down on
that loan, no 150,000 hours. And

so where are we at in this
portion. So now if we refight it

our new, let's say, we could get
a loan at 4%. And the numbers

here aren't important. This is
just an example to show you how

I go about thinking about it. So
at 4%, so that also five year

loan, which means that we've got
a financing cost of about

$69,000. And then, so our
cashflow on this year is just is

now more because our, our pay it
back down is down considerably.

And we're making a lot more
money in the deal. So now we're

making $110,000 in cash flow
year for distribution,

that's reflected down below. So
now, in our sales price, I

increased the rent or I
increased our noi this time

saying, okay, for we are doing
it at about 2%. Let me increase

it at 3%. So at 3%, it's
increasing our new price at a

six cap, say we could still get
a six cap, that's what we'd

anticipate is 3.5 million. All
right, well, our cost of sale

is, is higher, because you know,
it's worth more, our loan

payment is considerably less,
because we paid down the

principal. Soon now we have $2.4
million to distribute. So that's

up very considerably, isn't it?
I mean, that's up three. That's

up 70 $700,000, a little bit
less than $700,000 in or in to

pay back our people. So this is
a no brainer, right? Well, let's

do the math and figure out if it
is a no brainer, whether or not

maybe this holding that doesn't
make a lot of sense, because we

already told the investors it
was going to be a five year

hold. And so I gotta go through
kind of an extra step, if I'm

going to be saying, well, we
really should hold this property

for another five years. Is it
worth it to them at that rate,

so here's how we do that. So
first, we set the, we set the

negative number here, we did the
buy in, right, so we put, we put

in, we bought the property for
two and a two and a half million

dollars. And it was the
financing was a 50% loan to

value. So here we are using this
amount in order to do our

buying. Now, why is that?
Because here's the amount that

we were distributing up. And I
actually made a mistake there,

it's not that amount. So this is
actually going to be even worse,

or maybe it won't be worse
equals. Okay. Alright, so now

it's a little bit better. And
then we'll have to make the

decision. So now see what
happened there, I was using this

amount, this amount has the
amount from our cash flow and

our distribution, I just put an
equal sign. And so I made a

little typo there. So that can
happen. And that's why we always

check our work. And so the buy
in here is, well, in exchange

for not selling the property,
you know, I'm basically buying

the property for this amount
that I would distribute it for.

Now I've got my distributions,
as we talked about and how it

happens, and then our sales
price and then plus our

distribution amount. Now this we
have an estimated IRR of 13.43%

So 13.4% So but we have to hold
this property for another five

years. So do I think that it is
in the best interest to get

that, you know, is is it worth
my money to buy an investment

for five years and get an IRR
13.4%? Well, you know your

investors better sometimes
they're just happy to keep going

and staying with you some time
because now they're going to

have to make a decision, they're
going to have to pay taxes on

that money, probably.

Maybe it's more worth it for
them to just stay in a little

longer and get that increased
IRR. You know now they're going

to be making 13.4% on their
money. Now why is it 13.4

Because again, we're basing it
on is if you are selling you are

trading the money that you would
have in order to stay in the

deal. So that's why so in this
case, I don't know you'd know

your investors better if they
were just generally kind of

unhappy with the amount that
they were getting. Then it's

time to cut bait and run and be
done with it. But if they are

interested in staying on maybe
it's something that if they're

really happy with the 12.6%,
while they're going to be

happier with a 13%, and unless
some of them have very severe

liquidity issues that they need
to get some cash, maybe they're

just happy staying in it. But
that's the process that we go

through when we're analyzing
whether it's a good time to sell

or a bad time to sell. It's also
the same process we look at

whether it's time to make at
create a capital event, like

selling off the cell tower, and
seeing how would those cash

flows play out? Is it giving
them more money in a good way or

not. And then we also have to be
thinking about it in the

framework of taxes because your
investors are going to be paying

taxes, unless it's in some sort
of tax protected account, like a

self directed IRA. So that is
the process that we go through

to make those determinations.
Now, say that you decide, okay,

it is time to sell I want to
sell. That's what we talked

about in the next module is when
it's time to sell, probably, you

will decide to do a vote. Now
you may not decide to do a vote

if you designed your your
documents that way you don't

need to, but at some point, you
probably are going to need to do

a vote anyway. And this next
module is going to go through

the process of exactly how we do
voting