Investing in CRE in an Equity Fund with Jeff Greenberg

Jeff Greenberg, MBA, has over forty years of management, staff supervision, development, and training experience. He has proposed, implemented, and managed budgets in the millions of dollars for government agencies, as well as private and public organizations. Jeff has been investing in multifamily and student housing assets in emerging markets since 2007. Jeff is responsible for all aspects of project management, including underwriting, acquisitions, investor relations, contract negotiations, business system development, business management, and asset management.

Relationships were the foundation of his business – relationships with brokers, lenders, property managers, attorneys, accountants, and investors. They take pride in their ability to communicate, build cooperative relationships, and deliver on their promise to provide quality housing to tenants while providing strong returns to investors.

Episode Highlights Here:

Jeff Greenberg:

The only value adds we had was one increased rent, which didn’t go over very well. Two, do rubs, which build back to the utility company.

Pierce York:

Tell us a little bit about your business plan, and your exit strategies.

Jeff Greenberg:

Well, that deal first of all was too small, really to syndicate. Because there wasn’t a lot of meat on the table. Not only that, this property was built in 2007. We bought it in 2010, it was a three-year-old building, it was 100% occupied. It was in a pretty much no or slow growth market. So, there weren’t a lot of upsides. We didn’t really understand the value-added back then. The only value adds we had was one increased rent, which didn’t go over very well. Two, do rubs, which building back the utilities, which didn’t go over very well. So we had a really difficult time, increasing the value of the property. When four and a half years came around, we said, this was supposed to be a five-year deal, the loan comes due in another half a year. So he said, we’re gonna start selling it. But in order to one, pay the broker, the broker’s fee, and have a little bit of money to give to investors, we had a certain price, we drew a line in the sand. We said this is the price that we needed to get. We actually extended the loan and didn’t sell the property until year six, because we couldn’t get that price. So we finally got the price. Investors did okay. We made a little bit of money in our pocket change. Other than that, it was a very good seminar that we had. It was a good lesson, we still have some of those investors with us. But we made very little money out of it. It was an education.

Pierce York:

Interesting, so you got that good tuition payment out of the way and actually capitalized a little bit?

Jeff Greenberg:

No, it was. I mean, we got our lessons, and it didn’t cost us anything, as long as you don’t count how many hours we put into it. But money-wise, we made a little bit of change, but not much.

Pierce York:

Okay. So then, how did the second deal go?

Jeff Greenberg:

The second deal was practically the total opposite, we got an off-market deal from networking. In fact, it was the same broker that found us the deal, and this one was a really important one because this was both of these deals were from a relationship. It was a relationship with the same broker. So when we’re talking about our network, this broker was trying to expand into Houston. He actually did a cold call, met the owner of the property, who the property he went on was actually 150 units, and asked if the seller would sell that one. He said, No, but I have another one. So we went to the 62-unit property. My broker negotiated with him and got a price. He called me up and he said, you’ve got to put this thing under contract. He said this is the price. Here’s the deal. Within a day, we were under contract. But he ticked off a lot of other people that could have gotten the deal done a lot faster than I was able to. But he gave it to me. We had a California connection. He was originally from San Jose and then moved out to Texas. We had established a relationship. So he liked he, I guess he liked me, because he sent the deal to me first, before he sent it to these other people that could have closed a lot faster and didn’t have to raise money for it. So that deal we held for three years. We made a 120% return for our investors in three years. That’s a 40% annualized return. So that was a great deal. Obviously, the compressing cap rate helped us out but we increased occupancy. We increased rents. We did a couple of other value add things and that was a fabulous deal. Everybody made lots of money on that one interesting.