Learn About Investing in Commercial Real Estate

For the last several years you've heard many operator/investors, including myself, bemoan the very competitive seller's market we were living in (across asset classes). Well, you may have heard that things are changing...

We recently exited two of our smaller multifamily properties with extraordinary returns, and acquired two self storage properties. Read on to get more details on our recent portfolio activity.

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We are under contract on a 228-unit self storage property in Greenville SC. After navigating a challenging market in 2021 we have finally found an opportunity that represents a sufficient value for our investors.

We have some exciting news from inside the Flywheel - we successfully closed on our first commercial short-term rental investment property! We now have a few months of operational experience under our belt with this new property type and would love to let you know what our experience has been to date.

It's no secret that we're in a very hot market right now. The abundance of capital flooding into the system from COVID-related economic stimulus, combined with very low interest rates, has resulted in real estate being one of the few places where non-zero yield is achievable. And that is driving prices higher and higher. For value investors like ourselves this makes it very difficult to find properties that match our buying criteria. So, do we stay in a holding pattern and try to wait the market out or do we adjust our strategy?

Given that I see my job as educating you, not selling you, I want to push back on something I'm seeing a lot in our industry today – the constant trumpeting of overly optimistic return projections as the reason to invest in real estate...

You may have noticed things are looking a little different around here lately. I'm excited to share with you some updates from the Flywheel, starting with our new branding and site...

I want to do something different with this newsletter than our previous format. I want to provide more value to you as a real estate investor than a standard newsletter and give you insight you won't find from other operators. I'll be doing this in a "Letter from the Founder" format this month. Please let me know if you think I'm on the right track?

Thank you for following along with Flywheel Equity, the multifamily investment company focusing on central NC. We want to start this month's newsletter by re-confirming our investment thesis. You should, after all, know what we are looking to acquire and why. Our thesis is that affordable housing in medium density secondary markets is at a premium. That the floor of this market is rising faster than the ceiling on luxury rentals.

I'm excited to announce that Flywheel Equity is growing! Austin Sine is our new Director of Acquisitions and will be responsible for identifying and securing new multifamily investment opportunities. Austin is a proven commodity given his work landing Morris Manor and is already hard at work identifying your next opportunity. Austin is an experienced commercial real estate broker having worked with national retail brands assisting in their site selection analysis, deal sourcing, and negotiations. Welcome, Austin!

Flywheel is excited to announce the acquisition of Morris Manor in Greensboro NC! This 51-unit property represents our largest property to date and will be a complete repositioning with tons of forced appreciation and a three to five year exit.

It has been a hot summer for us here at Flywheel Equity - we have another property under contract! This newsletter is our opportunity to share our excitement for multifamily investing by giving you some insights into how Flywheel is making progress on this new acquisition, how our other properties are outperforming expectations, the general state of multifamily, and more. Enjoy!

This month's newsletter contains some exciting announcements, many of which focus around the new educational resources we've created. I am very proud of these projects and I hope you will find them valuable. As always, this issue will also delve into how current Flywheel investments are being managed, performance indicators I use to monitor the success of my investments, and the general state of multifamily. Enjoy!

Thank you for your interest in Flywheel Equity. Whether you are new to multifamily real estate or an experienced investor, I'm sure you'll enjoy the following look behind the curtains. It has been an eventful month, to say the least. This month's issue includes details on Flywheel's newest acquisition, an update on existing investments, and how COVID-19 has changed our underwriting process.

We appreciate your interest in multifamily real estate, and Flywheel Equity specifically. I'm using this newsletter as a way to give you some insight into how Flywheel is managing existing investments, our progress on new opportunities, and the general state of multifamily. Enjoy!

Underwriting commercial real estate deals is something most equity groups do hundreds, if not thousands, of times per year. Yet the tools to support this process are often home-grown and not shared. The Self Storage Deal Analyzer is a freely available, cloud-based, spreadsheet for equity groups that invest in self storage facilities.

One of the most important decisions with agency debt is the type of prepayment penalty to choose as it can materially affect your ability to sell the asset. What are the different prepayment structures and how do you choose?

Broker relationships are a frequent dilemma for many new investors. How do you approach a broker? How do you prove you're a real investor? How do you keep their interest if you're not actively closing? How do you get their attention with no past experience? I asked all of these questions when hunting my first deal and want to share what I learned.

As a real estate investor, both active and passive, it's important you understand the cap rate. It's a term you'll hear a lot and in a lot of different contexts. It can be misleading, so let's dig in deeper to fully understand it.

Podcasts are a great way to learn about any topic, multifamily investing included. They've been central both my learning process and in getting access to several investment opportunities. After scouring for as many MFH podcasts as I could find, and listening to thousands of hours of content, here is my list of multifamily podcasts worth a listen.