Eddie Austin, a serial entrepreneur, visionary, & CEO of JE Capital. Eddie has had numerous role models, mentors, and business experiences helped him understand the importance of recognizing profit opportunities in changing markets. He has developed a bold vision for a new type of real estate company which will use changes in the multifamily real estate market, and an innovative capital structure to drive profitability and aggressive growth. Eddie’s focus is to build companies with better values. With this drive, he is building companies that give back and offer great returns to investors. Eddie believes in doing the things that give you chills through hard work, excitement, and interactions. All while studying the growing real estate market in different areas of the country and discovering new ways to build a better real estate investment company.
Episode Highlights Here:
Pierce
doing awesome, man. Super excited. So Eddie, let’s hop right into this man. Usually I like to do things like background and all that kind of stuff. But we got so much content today that I think we should just hop right into it. And we’ll get to the story a little bit later. So yeah, absolutely. The IRS is the main topic for today, right? The difference between people going into single syndication assets versus funds. Right. There’s a lot of stuff in the market going on right now. Let’s talk about them. Let’s define each of them. And then let’s go through the differences. Yeah, you know, lastly, let’s
Eddie
First let’s start with what’s going on in the market right now. You know, we’ve got the banks, you know, we got run on banks, we got tons of money in the street because of these banks and everything going on right now. And that’s more the reason why, you know, anytime there’s a problem, we need a solution. Well, that solution, in my opinion, as a real estate fund, a you know, something that kind of looks like a bank kind of resembles a bank, and because you’re gonna put money in it, and we’re gonna go out here and we’re going to put that into multiple assets in multifamily. Now you can have fun with multifamily industrial space warehouse space. I mean, I’ve even heard of people doing funds for cryptocurrencies now.
Pierce
Sure, sure. So, just so just so we’re clear, right. Let’s define the difference between a fund and just a single asset syndication?
Eddie
Sure. Yeah. So the syndication is a single property entity. So if you’re going to do if you identify a piece of property, you’re going to say you’ve got a 300 unit class B, property in Dallas, Texas, you’ve identified that piece of property, you’re going to contact your lawyers, you’re gonna get an opera agreement, subscription package, and a PPM a private placement memorandum. And you’re going to have that tied to that single piece of property, you’re going to raise money for that asset. And you’re going to close one asset, that’s it, that’s all you can do is just one asset through a syndication, I kind of call it kind of like Bridger Pennington calls, it is a hamster wheel, you know, it’s a ton of work, or, for one piece of property, we’re going to just do all this work, we’re going to contact her lawyers, it’s going to cost us 1520 grand, and all that money spent, you’ve got a ton of risk involved, because it’s one piece of property, it’s not diversified. There’s a big responsibility on you, the guy that sponsored the deal. And with that, here we go, you know, we’re relying on us closing, being able to raise all this equity, close this opportunity. If we don’t do that, because we’re starting from scratch, then you could lose your relationship with your broker being non diversified, you could have some trouble with your investors, you know, if you’re dinged on cash flow on your value, add strategy, you know, you’re you’re not diversified multiple assets. So yeah, syndication is one piece of property, one address and one opportunity, those documents are just for that piece of property and your only reason for that piece of property.
Pierce
Yep. So the difference just to simplify that, right, summarize it is, when you’re doing a syndication, you’re pulling a bunch of people, friends, family, you know, other investors money together by a single asset, usually it’s a bigger asset, you’re putting usually 3530, maybe 40% equity, and the rest of it, you’re putting debt. And, you know, your returns are directly correlated causally correlated with that asset and how well that asset performs. So if that asset tanks, your investment tanks absolutely can convert. Conversely, the fund right allows you to diversify, because you’re putting it in, right, you’re getting a typically a set return, depending upon how the fund is structured, right and equity fund versus a debt fund and so on and so forth. Right. Right. I think for this particular purpose, we’re talking about a debt fund my my off there,
Eddie
no, so you’d be an equity fund. So for instance, my funds are usually an 8%, preferred return and 73 already on the waterfall are carried interest to the investor. So we’re sitting beside senior debt. So we’re raising that money, exactly like a syndication, we’re raising money to put in the 30 to 45% down, and then we sit next to senior debt and then all cash flow the property rolls back in at 8% level. And 70% lion’s share back to my investors.
Pierce
Sure. So then in the fun world, right, there’s, there’s two different types of funds, then it sounds like we have the funds. Yep. For this purpose, right, just simplify things, right, we have equity funds on one side, where you actually can take part in ownership of the asset as well. And then you have debt funds, where people just loan basically you put money in and they’re getting a set pref 8% 9% 10% 12%, whatever it is, right? On a pretty, you know, annual recurring basis where we met, you know, best ever conference a few years ago, and then, you know, reconvene back up a few months ago, you know, one of the, one of the companies was basically guaranteeing, you know, just on a debt fund base backed by the good faith, the company and all the other, you know, assets. And so you can kind of, you can have some more security. So, funds are a great way because it allows you to diversify between different assets and, and within the fund, so you’re not just tied directly to that one asset.
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About Eddie Austin
Eddie Austin, a visionary serial entrepreneur and the CEO of JE Austin Extraordinary Capital Coaching Program. Drawing from diverse role models, mentors, and business experiences, Eddie recognizes the essence of identifying profit opportunities in evolving markets. Fueled by a bold vision, he envisions a groundbreaking real estate company leveraging changes in the multifamily real estate market and an innovative capital structure for robust profitability and aggressive growth.
Eddie’s commitment extends beyond financial success; he’s driven to build companies with superior values, offering both returns to investors and a positive impact on communities. With an ethos centered on hard work, excitement, and meaningful interactions, Eddie is now channeling his expertise into the JE Austin coaching program. After eight years of intensive study and strategic planning, Eddie and Jennifer are proud to unveil their inaugural real estate investment fund, marking a significant milestone in their journey to redefine excellence in real estate investment.
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