Name: Unlock Capital for Miami Real Estate Deals
Uploaded: 2025-10-22T17:21:06.314Z
Duration: 1 h 8 min 34 s
Description: Unlock Capital for Miami Real Estate Deals

Transcript for "Unlock Capital for Miami Real Estate Deals": Good afternoon everyone and welcome to today's webinar. I'm Lucas Lechuga, owner and founder of MiamiCondoInvestments.com and the Condo Hunter mobile app. Thank you for joining us whether you're tuning in live or catching a replay later, we're glad to have you with us. For those who may be new to my webinars, I've been in the Miami real estate market for over twenty years, specializing in luxury and pre construction condo sales. Through both my website and mobile app, my goal has always been to connect buyers, investors, and agents with accurate timely information about Miami's rapidly evolving kind of logic. And today's topic fits right into that mission. Over the next sixty minutes, we're going to explore how developers, brokers, and realtors can raise capital more effectively whether for acquisitions, new projects, or joint ventures. It's an increasingly relevant topic as Miami continues to attract both domestic and international investment. I'm thrilled to be joined today by Jay Roberts, founder and CEO of Prosper Group, a Miami based real estate investment and development firm with a $2,600,000,000 pipeline spanning Brickell, Miami River, North Bay Village in Tampa. Jay has an an extensive background in real estate investment banking, having worked on landmark IPOs like Paramount Group and MGM Growth Properties. And his firm today specializes in raising equity, structuring joint ventures and delivering branded residential and hospitality projects. So with that, let's dive right in. Jay, thank you for joining us. I'll hand things over to you to kick off today's discussion. Thank you, Lucas. It's a pleasure to be here. Welcome, everyone. I'm really glad, to participate in in in this webinar today. Whether you've been in real estate for, twenty years or you're just getting into into the game, this session is really, designed at sixty minutes, to educate the community, our real estate community about raising capital and what I've learned over the last ten years. I've gone from real estate investment banking to and having never raised capital for my own deals to now raising hundreds of millions of dollars for real estate projects. And and then in investment banking, we raised billions of dollars for public and and private REITs. So we have a a presentation today. I'm gonna I'm gonna put this up here. Oh, Jay, before you begin, I wanted to let everyone know that there that Jay will be fielding questions. So if you have any questions, you'll see to the right of the chat, there's a q and a section. You can drop your questions there and then he'll be fielding them. Great. Thank thanks, Luca. So I I've simplified this into a five step process and really what we do in in raising capital. For for the audience today, there are no asks, from my end as as we go through this. This is really an educational, give to to you and and sharing my knowledge about raising capital, from investment banking institutional, on the institutional side on Wall Street, to startups, to real estate development deals. If you're looking to raise your first 100,000 for a real estate deal, hopefully, this helps you, or you're looking to raise tens of millions of dollars, or hundreds of millions of dollars, for larger development projects. Quick disclaimer, this this is not, investment advice. This is for educational purposes. Before you invest or or raise any money, you should certainly consult with attorneys, your your financial advisors, and and other people out there. So as as Lucas mentioned, my background, I I worked in investment banking, so real estate investment banking at Bank of America Merrill Lynch, on Wall Street. So what we did there is we did mergers and acquisitions and IPOs for publicly traded real estate companies. So on on the capital market side, if a if a public company, real estate company like AvalonBay wanted to buy another publicly traded company or a private company, we would advise them on that. In 02/2016, we led the MGM growth properties IPO and and that was, carving out the real estate assets from the gaming assets, was a was a multi billion dollar IPO, largest REIT IPO that year. So so this experience comes from raising capital on Wall Street and for institutions to you can also take this and apply this to raising capital for a single family build that that you wanna do, or a multifamily deal, or a condo project that that we're working on and and that, you know, other developers are are working on here in the market. I went to business school in New York. I got my MBA at NYU Stern. I grew up in LA and and I I did my undergrad at UC Santa Barbara. I've been working in real estate for twenty years now. Just quick quick update on our pipeline. Prosper Group, we currently have four active projects in in predevelopment or sales. We have a site on the river, Brickell River. We own an acre in North Bay Village with with partners. We're currently selling, Hotel Ora in Downtown Tampa. We've exceeded 200,000,000 in sales this year. And then we have a site for development at 1040 South Miami Avenue in the heart of Brickell right across from the Flatiron. As as I've thought about what what people wanna learn and what people wanna know and and and what I get questions about all the time, in these deals, So in in doing development deals and and what I've learned is that finding good land is very important. We all use the same land use attorneys. We use the same architects. We use the same contractors and we pretty much use the same brokerages. Now the quality of your site is very important. Okay? But the thing that all of our development deals and real estate deals have in common is that you need capital to fund your project. And it's kind of a no brainer, but it's it's the most important aspect to a deal is the ability to raise capital. And I I get asked a lot by brokers who wanna go to the next level, what does it take to be a developer or I wanna be a developer. Your ability to raise capital will determine how fast you can scale, how quickly you can you can generate returns and and build wealth for yourself. So raising capital, in my opinion, is the most powerful skill you can develop as an entrepreneur. When you can do this, you can fund your own projects, you can fund real estate investments, you can fund development, you can fund your startup. K? Also, raising capital is very hard. Okay? This is we're we're gonna go through forty forty slides here in in in an hour. And and hopefully, you learn a lot and and this gives you a glimpse into what the process is like, but I I I will not sugarcoat it. Raising capital is hard and it's hard for everyone, even people with with a long term track record. So it's a process. It's a muscle that you build and you develop, but it can be done. It can be learned. Cash is the fuel of all businesses, all developments. For this community here, the real estate community, you know, sometimes you see projects going faster or you see projects going slower. The the reason is is is capital. That that's that's the ultimate reason, like, why a project gets started, why it's slow. The developer or the sponsor needs to raise capital or they need to close their construction. Why do we raise capital? So currently, people there's there's different ways of of building wealth and and making money. You either trade your time for money and you get paid an hourly wage or you become an owner. Okay? And you you build equity. And raising capital helps you build equity and generate ownership in a deal. So when I when I look at something, I'm not trading my time. You're you know, you don't wanna trade your time for money. You want to build equity, which helps you ultimately build well. Why do we raise capital? We raise capital and other companies raise capital to scale faster and to build wealth, to scale faster and to build wealth. You might have a $100,000 for a project. You might have a million dollars for a project. You could have a $100,000,000 for a project. You can only take that so far. And by raising capital, outside capital, you can leverage that. And in development and investments as a sponsor, you have something called a promote. So by by doing the heavy lifting and putting a deal together, you put your own capital in. I put my own capital in. Developers and and sponsors put their capital in. But by doing the work, then there's a promote on the outside capital, and it helps you go faster and do bigger projects. Who is this presentation for? Really, aspiring developers, brokers, realtors putting deals together, wanting to understand how the capital raising process works, lawyers, bankers, architects, lenders. I get, you know, questions about how how to structure deals from from many different people in the real estate industry, other investors who just wanna learn more, and and really anyone looking to build wealth through real estate. Let's talk about who raises capital. So we we know all of these companies. Blackstone, KKR, Carlyle, Citadel, Amazon, AvalonBay, which is a is a publicly traded public storage, Cardone Capital, Sequoia, Coca Cola. Why am I showing you this? When you're building a big business at every level from start up, from buying your first single family lot, all the way to being a publicly traded company or a private equity firm that has a trillion dollars in assets under management like Blackstone, Everybody is raising capital. The reason that Steve Schwarzman is so wealthy is because of his ability to raise capital, do good deals, and continue that positive loop, that positive feedback loop. Tesla, Elon Musk, he had to raise capital when he started Tesla. Jeff Bezos had to raise capital when he started Amazon. So he was a start up. Now Amazon is is a multi trillion dollar company. Grant Cardone, he's created a playbook when there wasn't a playbook for crowd funding and real estate, and he's he's now become a billionaire. Okay? And then you have publicly traded companies and I included related here because related companies is raising money. So learning this skill will help take you from whatever level you're at to new heights. That's why it's very important. So I've broken this down into a five step process. In reality, there's gonna be hundreds of little steps every day along the process that that you need to do. But this is to help frame it in in a in a simple process for you to understand. K. And and I had to go through this process and I go through this process each new deal, each new investment, each new project. I go through the same process myself. Number one, step one is to find a deal. Number two is to underwrite your deal. Three is to secure your debt, which goes in line with your underwriting. Four is preparing your investor package, the materials. And then step five is going out and raising the capital. And you need each one of these steps to build on each other to be successful. So finding finding a deal. K? This is the most important aspect when you get started. The quality of your deal the quality of your deal and and Lucas and I, we're we're talking beforehand about brands, and we were talking about different projects that that are happening. We're talking about the growth on Miami River. So what I like to do, and and some of you may know this is, I like deals on the water. Why? Because owners and buyers like to live on the water. You can charge a premium on the water. It holds its value. It's it's more rare to be on the water. So doing the upfront and and water is hard hard to come by. Doing the upfront work of buying an off market deal is is is critical or or getting better deals, you you buy off market rather than listed. And what I my the advice that I give to the audience is if you're looking to raise capital, you're looking to invest in your first project, you want to expand beyond being a realtor, a broker, you know, really just someone starting out in real estate is do the work upfront to determine what kind of deal you wanna do and raise your standards on the quality of the deal that you're doing. K? The pros are looking at hundreds of deals. We're looking at a lot of deals. I get sent deals and I appreciate it every single day, and I say no to most of them. And then that one special deal, that special lot catches my attention, and that's the one that I'm going for. There's many types of deals. So for those of you listening, you might be looking to get into development. You might be a broker for development land sites. There's existing. There's also existing assets. So there's apartments. There's hotels, office, self storage, car washes, data center, industrial. You could you could be buying existing assets. So raising capital applies up and down the, the asset classes of of real estate, and also, in the life cycle of real estate, from development to existing assets. And there's different there's there's there's different parameters and there's different considerations in in in all the different asset class classes that you're buying and investing and raising money for. One of the first steps that I recommend is determining which neighborhood you want to do a deal in. Which neighborhood? So you wanna be selective about the the neighborhoods that you're choosing. You, would you live there? These are consideration. Is there other developments happening? The land that I bought in North Bay Village, I saw that the continuum, Bruce Eichner bought the lot directly next door. He has a, you know continuum has a very successful South Beach project. That was a vote of confidence. Related had bought a site on the tip in North Bay Village. That was more confidence. Sunbeam was approved for more square footage than is in Brickell City Center in North Bay Village. So you want to be where development and where the puck is going. You wanna be in the line of development. It's it's a balancing act of not being too early where people or you can't charge the prices that you want. And then being late where the land owners and the land is already priced up to market level, and you're not getting paid for the value creation that you're making. Are there other desirable landmarks or amenities? Are you in on a corner? Are you by the Design District if you're living in Miami? Are you by Fifth Avenue if you're in New York? So what is it that's special about this deal? And it's you want your deals to be exciting, and I like to say it's a no brainer. It's a no brainer. And and mindset mindset is very important when raising capital. You wanna develop a positive mindset. You did the work upfront to pick a really good deal. K? There's $22,000,000,000,000 in cash in in the money supply in The United States. So there's a lot of money out there. K? This capital needs a place to go. It's either sitting in the bank, it's invested, or it's it's going into real estate deals, crypto, other assets. Deals need capital and capital needs good deals. Capital will go to the best projects. So I'll I'll I'll just recap here on selecting your deal. The quality of your deal is the first step in determining whether or not you'll be able to raise money. If you are in a poor location, it's not that exciting. It's gonna be very challenging to raise capital. We have to think about where investors are putting their money. And we're living in an age where never before has there been so much information available at an instant to investors and so many options and investment opportunities pulling on people's capital. With AI and WhatsApp, Instagram, Facebook, text message, email, you have opportunities every single day. So what is gonna set your deal apart from crypto or the next start up that made 10 x for this investor or Blackstone's fund? Like, why are they gonna give you money, us money, me money over the next the next opportunity or keep it in keep it in their their bank account. So you you you really I I I can't stress this enough. The quality of the deals that you do, that you select will will determine how easy, hard, or the success, or failure in raising capital for that project. Of course, there are also market conditions, so you can have a great site. But there are, interest rates are going up. There's geopolitical macro factors that may be, keeping a little on the sidelines. But when when when investors are investing, you wanna be positioned, with the with with the very best deal that you can have. Okay. Step two. So underwriting your deal. You you've done your homework. You've determined the neighborhood. You found a deal. It was either off market or it's listed. Now you need to know your numbers. K? You need to know how much money you're gonna make. Investors wanna know at the end of the day how much money they're gonna give you and how much money you're gonna they're gonna make and how much money you're gonna make. Okay. So you need to know the numbers. Jay, just to interject here quickly before you move on with number two. That's the number one, and I don't know if you're gonna touch upon this later, but what standards are you looking at when you're looking at deals? Because but you're right. You're you do look at hundreds of deals a day and, you know, I DM'd you personally and and I forwarded you some deals. And, you know, right away you'd get back to me and say, you know what? I already saw that one or no. The numbers don't make sense, which I really appreciate that. So I think in order for you to see even more deals that do make sense to you or at least are close Mhmm. I mean, agent and personally the agents that are in this room would like to know, like, what numbers are you looking at? Like, what number you you must have some kind of threshold that where you're saying, okay, it must meet this standard. So what are those standards in order for a deal to make sense to you? That's that's an excellent excellent question. So there and and it's not a straightforward answer. And you're the audience probably isn't going to like this answer. But on the development side, and I'll I'll talk about developments, is you need to have a good land use attorney. We need an architect. We need good relationships with brokers to understand sales comps. We need relationships with lenders and a general sense of of what equity and investment market looks like. So when when someone sends me a deal in a in a certain neighborhood, one, you know, location wise is is is the first filter. Do I like this location? Is this location better than the next location or is this an inferior location? So as a sponsor, I want to try to have a superior location so that when I go to sell, more more residents, you know, more buyers want, you know, more agents wanna sell my project, more lenders wanna lend on my land, more and more investors wanna wanna be involved. So location is is first, the the quality of the location. K. Then the density in what you can build. And so having a relationship with the land use attorney and it takes time to educate yourself on what the density is in North Bay Village, what the density is in Bay Harbor, what the density is in Brickell, what the density is in Miami Beach. So so being able to apply that knowledge, being able to get on a call with the land use attorney and saying, hey, I'm looking at this deal. If if you find it interesting, what can I build? If you advance to the next process, you'll get a zoning memo. So it'll it'll tell you based on the the county or the city, this is this is what you can build. Then as a developer, you need relationships with architects. So then an architect will design something for you, that fits within the density. You need to know the price of the land, of course. And then you need to be able to underwrite and build a financial model. You also need sales comps. So what can I sell for? And all of these are assumptions that go into underwriting your deal. So it's a it's a lot. There's a lot of of processes and information that you need to know and and manage and learn. It can be learned. You know, most of the developers that that we see, they, you know, there was a point where they were beginners. I was a beginner, at at one point and, you know, I didn't know as much about the Miami market. I moved here in 2020 and have have learned, you know, really started learning in in '22 and '23, the Miami market. So hope does that does that answer your question? A little bit. But that it actually, well, I was hoping to maybe deep dive more into and then, like, profits and numbers and Returns and, like, what what kind of, profit margin you would need in order for to make a project viable? Yes. So we're solving for we're looking for at least a 30% profit margin. At least a 30% profit margin. So to be able to to to do the the work over five years to take the risk that that ultimately need to take to manage all of the processes and challenges and hurdles and headaches, over that time for development. We're looking for a 30% profit margin. Ideally, the the development, has a three at least a three x equity multiple. So we put in 20,000,000, we get back 60,000,000. You put in 10, you get back 30. You put in a 100, you get back 300,000,000. Usually mid twenties, 20% IRR for development deals. Okay. And another question that came to mind is, you know, they say without risk, there's no reward or the bigger the risk, the bigger the reward. And you were talking about land use. In what cases do you take a look at and I guess this probably goes back to maybe networking and and who you trust. But if you take a look at a piece of land and somebody tells you, okay, that zone for this type of use. But I've heard they may be open to changing the zoning. Does that ever come to to play in your mind? I don't know why. Cases of the zoning changes and all of a sudden that that sellable square footage or the price that you could sell that that lot for, price per square foot basis jumps astronomically. Yes. So if if if there's a path to do that, live local is is an example where you can increase the density, of of what you can build on the land. So if if there's a viable path, if there's a proven path, I'll look into it and and I'll I'll pursue that. If it is a question mark and you have to go to a vote and you may have people in the community who are, you know, anti development, anti developer, anti identity, then it's it's a risk that there's just there's just other deals out there that you could spend your time on and aren't gonna have as much friction. Yeah. Okay. Great. Great question. So under underwriting a deal, obviously, price, density, we we touched on, hard and soft cost. You also on on the development side, you you wanna have relationships with with GCs, with contractors, whether you're building a tower, a high rise, and, you know, you need to talk to Moss or Coastal or Moriarty or GT McDonald, or you're building a single family home or you're building a duplex in, you know, local, neighborhood contractors, you're gonna wanna have relationships with them to put into your underwriting, to put into your financial model, so that you know what your costs are and and what your profit margin is. Financing, lenders, develop relationships with lenders. What I've learned and what I've utilized is building relationships with brokers and realtors is is been one of the the, huge advantage. Because you guys you guys are out talking to investors. You're talking to the market. You're talking to buyers on a daily basis. And I can talk to 10 people or I can talk to 10 brokers who talk to 10 people. Now we have access to a 100 people. So I develop relationships with brokers, like yourself, Lucas, you know, others that are on this call and who are on the call for the webinar. And brokers are a great source of information. So and and and the reason I'm saying that is they know lenders. They wanna help you get their your deal done. And it's it's a it's a great it's a great career because if you work hard, your success is determined by how how hard and how successful you are as a broker. So I just wanna put that out there for those of you on here raising capital. It's paramount to develop relationships with brokers and be likable and be someone that they wanna help and share and give information to. On the underwriting side, obviously square footage, if you're buying existing assets, what's the NOI, what's the net operating income? Sales comps are are really important on on the condo side, on the home side, and on the commercial side. So Blackstone just bought East Hotel for 300,000,000. There's 352 hotel rooms. They paid about 852,000 per key. So knowing the sales comps, if I'm gonna build a hotel in Brickell and in five years I wanna exit and I'm making assumptions in my exit value, am I on par with 850,000? Am I way below or my way way above? So knowing sales comps and knowing that information is important. Cap rates, hopefully, cap rates are going down, which means interest values will be going up. Rates have gone up over the last three years because interest rates have gone up. Rent growth, profit margins, payback periods on the investor side, IRRs, equity multiples, and then, cash on cash returns. So we like to on the development side, it it's you can underwrite a deal pretty quickly. If you know the density or you know the square footage you can build, you know the land cost, I know my hard costs. And if if I know the sales that I'm assuming on the on the exit, I can I can write this out on a on a piece of paper, on a napkin, proverbial napkin? Of course, we're gonna build a financial model with a lot of inputs and assumptions that go into that cash flows and calculating exact returns, but you should be able to do a development deal on a napkin, or on a piece of paper. It it should be pretty simple and, to determine whether or not it's gonna, pencil. And that's the first litmus test. Financial terminology, some of you may be experts on here, some of you already may be developers, and we also have beginners on here, but you're underwriting your pro form a, your financial model, and your budget. What I found with beginners is this is where people get hung up. They may not have have worked in finance or worked in Wall Street or capital markets. It's it's really important. You need your numbers. You need you need clear numbers, clear answers, clear inputs and outputs, when raising capital. So this is a key step. All the steps are key. You you you really have to focus and master each step, in in the capital raising process. There are services you can you can you can pay to build you underwriting, pro form a models. So if if you don't have experience working in private equity, or building financial models, you can you can go higher and the cost is going down, people to help you build those models. But, it's really, really critical and paramount to have a pro form a and a budget. K. Step three, securing your debt. You need your debt because you need to know what the capital stack is gonna look like, and you need need to know what the interest payments are gonna look like. In developments, it's about 60% loan to cost. You wanna start building relationships with lenders, traditional banks, private equity lenders, bridge lenders, hard money lenders. There's a lot out there. If you're in the real estate industry, you can ask around, you can talk to your friends, you can talk to other brokers. But go meet them. Go have coffee and get a sense for what the terms are, for your investments, for your projects, because you're gonna need this, to input into your into your underwriting. So the the capital stack, you know, finance people know this, non finance people. This is this is the capital required to either acquire an existing project or in development. One thing that's not in here for Florida, is would be buyer deposits or we we have the advantage in Florida that we can use buyer deposits towards hard cost in in construction. But first, you're at the bottom, you're gonna have your senior debt, which is the most safe. They're gonna provide the majority of of the capital for your project. So we're focused on raising money for investors, but it's also important to have good relationships with lenders. And you have mezzanine debt, so it'd be higher rate, little more risky, preferred equity, you're going up the capital stack now, and then common equity, which is what we're interested in raising here on this webinar, and that's sponsor and investor equity. That's the highest return with the most risk. Okay. Here's here's another important step. So you selected your deal, you've underwritten your deal, you like it, you feel good about it, you've talked to lenders, you know, you feel good about your numbers, your your debt quotes. Okay? Now you need investor materials. Okay? So so it's important to build relationships with lawyers, with land use attorneys, with real estate contract attorneys, and corporate attorneys. So there's a lot of documents that you're gonna need. You're gonna need purchase and sale agreements, so you need lawyers for that, and you need someone to draft partnership agreements, subscription agreements, review your offering memorandums, your risk factors, disclosures, and ultimately your subscription agreements. This might sound like a lot, but it's getting easier and easier to find this information online at a low cost. So so I recommend finding mentors, other developers or people doing what you wanna do and ask them to help guide you. You know, ChatGPT, Grok, Claude, all these different different, AI services now can can help guide you on on, you know, what you need in in in your documents, and they can draft terms for you. So it's it's it's really advantageous. You need investor documents. You need professional investor documents. I've seen people that, you know, say, look. I have a deal. You know? Do you trust me? You know, here's here's what I'm gonna give you. But investors, they want clarity. They wanna see that you have a professional program put together. You need an investor deck, an offering memorandum. Risk factors. There's risks in every deal, so it's really important to disclose the risks. You you wanna disclose early and often the risks because there's always risk, and then how you plan to mitigate that. And that helps you as an investor, as a developer, improve the quality of the deals that you're doing. And then subscription agreements, is what the investors, you know, the entity that they're investing in, the amounts, and and really the terms of of the investment. So here, build good relationships with with contract attorneys, investment attorneys, real estate attorneys, and they will help you in this process. You you you need a deck. You need a presentation. People, investors, they just like seeing and going through materials just to see that you've thought about it. Any questions? Yeah. So we do have a number of questions here. A few of the questions touch upon are there they were asking about, your equity stack, which you've already, covered. Here, I'm not sure this one here. I think you covered most of this, but Yes. Hi. Hi, Luis. Thank you for this question. Excellent question. So when when acquiring a large development site, how do you typically structure the capital stack? For example, what percentage of equity do you put in upfront? How do you finance the remaining portion of your bridge loan and prefer that for your other insurance? Structuring structuring your contract is is is is more advanced on the capital raising side, but structuring your your purchase and sale agreement is very important that you give yourself enough time. There are different levers that I like to use to help win deals and and sign, highly sought after pieces of land. So there's, of course, the purchase price. But there's other levers that owners want to see, sellers want to see, that's your deposit and and time to close. And if it's if it's a big development site, you wanna give yourself enough time to close, you wanna give yourself enough time to develop the program. So in in all, you know, most sellers, they want the highest price and close the fastest. But that's not always the case in these in these large developments. So a tool that you can use or a lever that you can pull with a structure deal is I do my homework upfront on developments. So before I go into contract, if I'm pursuing a site, I talk with my land use attorney, I talk with my architect, I build a massing study, I build a financial model, I talk to brokers. So I have a very clear sense. I do my DD, I get my I do my environmental reports, and we're I'm very buttoned up when I go to submit an offer. I'm not I don't put out offers on properties I don't wanna buy. I don't tie things up for the sake of tying it up and try to figure it out during DD. Highly sought after sites, the sellers are not gonna give you that time. So what I will do, and not everyone will do this, is I'll go hard on day one, and I'll release the money. So when I sign a contract look. I'm committed to the deal. I'm committing financial money to the deal, and I'm giving the seller a benefit. And in negotiation, you wanna you know, it's a give and take. So if you offer a million dollars, $2,000,000, 500,000, a 100,000 to someone, that's real money that's going into their pocket. So that is a tool that you can use. So I will put my own money in. We have investors that come in on predevelopment. It looks very different, than common equity because usually, late stage investors, larger check writers, they wanna see the project is more fully baked and approved and advanced. So it is a process. You you you can't do loans when you first put it under contract, but you can close with land loans when you acquire the project, and that's, in today's market, $50.50 to 60%, of the land's value, appraised value, contract value, for bridge loans, land loans on on the deal. Okay. We have a few more questions. What's your target return on cost? Your re return on cost so on developments, we're looking for 30. 30% developer margin. On multifamily, it it really depends if you're building garden style or you're building high rise, so different risk profiles, different timelines, your return on costs that I'm seeing projects, land that I own, we have, you know, developers that we're that we're selling to. They're looking in the high sixes for for multifamily return on cost. And as as interest rates have gone gone up, cap rates have gone up. So return on cost for those of you listening, some of you may know this. It's it's if I if I build a project, so let's say it cost me a 100,000,000 to build the project and, and and then I go to lease it out, again, this is for multifamily, or cash flowing assets. And my return on cost is six and a half percent, so I'm getting 6 and a half million of cash flow. The that you want to be above there's a risk premium there's a risk premium. So you want that risk premium to be higher than if you could buy an existing asset. If you could buy an existing asset that's generating a 6% cap rate, you wouldn't develop it because the development you're only gonna generate six and a half percent. So 50 basis points more. So the return on costs have been changing over the last three years as rates have been going up. But what I've seen recently in garden style deals in Central Florida, is high sixes. Okay. Here's another question. What percentage of debt is required upfront before an investor proposal? It's required upfront before an investor proposal. I think I think they may maybe I'm wrong, but, do you have to secure that senior debt and the mezzanine loan before you start pitching it to investors? It it it all depends on where you are in the development life cycle. So, yeah, investors, they they they they want a higher return for more risk. They want less risk. It's important to have debt quotes and term sheets and indications of interest that lenders will lend on your project if investors coming in, so that ties into your underwriting. You know, again, for for closing on development deals in Miami, fifty fifty to 60% you can get a land loan, on on your on your site. Okay. Here's a question from Diego that I think a lot of people here in this this webinar probably have the same question. Congratulations on your Miami River property, great location with multi and standard rising and firing on house cylinders. What are your plans for that site? Great question, Diego. So we I can I can share this? I just signed a a development partner, last week in in London, and we are approved to to build a 158 units. And we're working on an ultra ultra luxury brand. But but the project, it it's coming together. We we feel that the timing is is is good with Standard and Lofty having just closed a $513,000,000 construction loan led by Carlyle. Hersner just bought an asset around the corner from us who owns one and only India Atlantis in Dubai, and they're they they're launching a CIRO branded tower. We have Faena across the river. We're across the street or steps away from Brickell City Center. So one of the last sites on the river. Yeah. We're we're developing it. We're developing it. So we're funded and, and advancing every day. So that will be a branded development? Yes. Okay. And how much longer do you think it will be for that announcement until you announce it publicly? The the partnership announcement is is going up today. The the brand probably early early next year. Okay. Fair enough. Here's another question. See oh, another one from Louise. While capital is tied up across multiple developments, how do you manage to cover your firm's general and administrative expenses? Do you allocate developer fees or asset management fees across projects or raise separate working capital to sustain operations? It's a good question. So in in developments, when you're capitalized, you develop you generate development fees, and overhead reimbursements, for office expenses. And you you make sure that you're not doing too many projects and allocating, capital to, to too many projects. So you wanna make sure that you you do have cash flow, and we do we do have development fees that, they get paid on a monthly basis. Okay. Let's see what else we have here. Okay. Here's another one. I've been wanting to take out large projects in the 50 to a 100 unit range, but my financials aren't currently strong enough to qualify on my own. What would you recommend in this situation? I'd consider partnering with financial sponsor to strengthen strengthen the balance sheet and loan guarantees, but I'm curious what's a fair and typical compensation structure for a financial sponsor in these kinds of development deals? Andy, good good question. Good question. And and I haven't touched on this, but I will now. As you're growing in your development or investment career, there's a process of building your track record, your credibility, and your experience and and your financial capabilities. You are able to leverage by creating creating partnerships with other experienced developers, investors. You're able to to bat above your weight class and you leverage their experience and their track record. So if you're just starting out or you're looking to go to the next level, building building high quality relationships with other developers, with other sponsors, with other investors is is is very advantageous. In terms of structuring the deal, it's one of my favorite parts of of investing in development is is structuring deals. There's it's a give and take. And if if someone else is providing value, I call this the value exchange. If someone else is providing a lot of value, they should be compensated for it. So, as we grow in our careers, and and in our experience, if someone else has that that value or is contributing that value, you compensate them. And there's there's different ways to do that through higher fees, promote, additional fees, splits. So yeah. I mean, that that that's for another another day or another another call, but, definitely partnering up with others to, to help you go to the next level. Okay. And here's another from Enrique. What is your perspective on microbus units, specifically in the Miami, Wynwood, Norte corridors? I I I think there's a place for them. I you know, I think there's a place for them. It's it's become very expensive to live in Miami. We we we just were named the highest or most expensive restaurants, in the country, replacing New York. Not not an award that we wanna win. So it's very expensive to live here in Miami. So so so renting, a micro unit when maybe, you know, someone someone couldn't, you know, afford to to rent a a a full bedroom, I believe in it. I believe in it, and I think it's a good thing for developers and and for, you know, others who who like that way of living and and can live in a nice place like Wynwood, with a lot of activity, restaurants, and and nightlife and things happening. So, I haven't personally looked to develop them, so I I I don't know in detail the the the numbers, the supply and demand. But but generally, I I I think it's a it's a good concept. And one of the big reasons is because your requirement is water. Needs to be on water. One of them. Yeah. Yeah. It's it's a big one. Okay. Here's a question from Scott. What is the feedback from investors based on the scale of units already under construction and basic economics with prices so high? Is it sustainable to run so much lower than a mortgage for similar products? How do you overcome this? What is the feedback from investors based on there's there's quite a bit of supply coming online. Miami has the benefit as as we all know. Florida and Texas hugely benefited, post COVID and for a number of reasons and, you know, how the states are run and lifestyle and and whatnot, how people wanna work and live, after after COVID with technology and and and just different factors. So Florida has had the highest or second highest population growth, in in the country. It's had the highest wealth migration here, of of wealthy people and affluent people moving to Miami and South Florida, West Palm Beach. There are ebbs and flows in the market. So some projects will get built, some projects won't get built. We live in a in a operate in a free market economy, where supply and demand and pricing dictates, if projects get capitalized, if they don't get capitalized, if they get bought and sold, so if if the project's successful. So this goes back to number one. Step one, selecting the right deal, because there's there's a lot of deals in Brickell, there's a lot of deals in Wynwood, there's a lot of deals in, or there's a number of deals in Edgewater, Midtown, downtown. So you wanna you wanna aim to have the best deal, the best program, the best offering, the best unit mix that you can so that, hopefully, you are on the successful side, of of developing. And, yes, we do get that question, from investors. Prices, interest rates, everything affects, geopolitical factors, everything affects investor perceptions. Okay. And here's one of them, Spencer. What's the best way you have found to find the least to raise capital from once you've tapped your personal network? How do you get new leads in the pipeline? And I I think I know what your answer's gonna be because you're very you think outside the box and, that's I think that's why you're you have to stick push with social media. Yeah. Yeah. So friends and so let's let let's this is a good segue into the last step, which is going out and raising the capital. Six minutes. Thank you all for for for sticking with it here for fifty four minutes and listening to me, and and, Lucas, let's go into raising capital. And, Spencer, hopefully, I'll answer your your question here. So can you see yeah. There we go. So where do you find investors? Where do you find investors? For those of you I mentioned it earlier, but I had never raised capital before. I do not come from a family, a wealthy family, and I had to learn from really the hard way of of figuring it out along the way in raising capital. There's a reason that when when you do a deal, they they say, you know, we're doing our friends and family round. We're doing our friends and family round. So the reason that you start with your friends and family first is that they know you the best, they've known you the longest, they trust you. It's not just a a financial investment. Of course, they wanna make money. But, Spencer, they might say, hey, I want I wanna back you. I believe in Spencer, or I believe in Lucas, or I believe in Andy. And they'll back you. So that's the first place to start to to raise money. The second the second resource are brokers. Again, brokers are in the market talk their job is to talk to people with money. Their whole job is to qualify people who wanna buy and sell real estate. So talking to brokers, developing good relationships with brokers, is is is an important step. And then as as Lucas mentioned, social media today is very powerful in getting your message out and being visible to thousands and millions of people, and so the opportunities then find you. You know, we're in a crowded market. Real estate, there's there's a lot of people. There's thousands and thousands of agents and, you know, industry professionals across the country in in Miami. So social media is an advantage if if you have that visibility. It's something to to definitely leverage. That's a whole another webinar to talk about, for another day. You know, maybe we can do that one day. But, what I would say is first, leverage your network and then talk to brokers, to set up meetings and, and go from there. Okay. We'll take one more question. We have a lot of questions here, so that's great. Okay. This has to do more about the returns so that he could touch upon this from Jack. When structuring a deal, say it's a $1,000,000 total, we need to come in for $200,000 with the investor the investor has to come in with 200,000 and you get the rest of the 800,000 from a lender and say ARV will be 1.6 mil. How much should you give back to the investor that put in the $202,100,000? Mhmm. I've seen deals, Jack, that there there's different ways to do it. So there's there's the traditional ninety ten GPLP model, which isn't as as, it it can be applied, but it's it's the the goalposts have have moved over the years. Usually and and and this is a signal is investors wanna see the sponsor and developer putting in their own capital. It's a it's a signal. It's just it's something that you're gonna it's it's a question you are gonna get asked when you go out to raise capital. So be prepared for that question. So putting in your own capital, showing a commitment there. I have seen structures and it it just depends on your relationship with the investors, your track record, out of your career experience, and the confidence that people have in you as a professional to deliver and to execute. Is a fifty fifty, the investor puts in 200,000 and they would get, you know, 50% of the profits, maybe more. If in this scenario, sounds like the sponsor is not putting in any capital, so maybe, you you know, you give the, the investor 70%. It's worth your time. You collect some fees along the way to to get started. But at at the very minimum, 50%, for more. And it just it depends, like, if this is a single family build, what's the timeline? Is this a two year process, eighteen month process? How quickly are they gonna turn their money, what is the multiple, what's the IRR, what's the risk. So again, structuring is a is a whole another topic that that we can dive into, for a whole hour or longer. Quickly Two more slides, right? Yeah. You have more you have like five more slides? Yeah. This this will be quick. So so retail investors, friends and family, individuals, crowd funding, ten thirty one investors. And then on the institutional side, we have REITs, publicly traded real estate investment trusts. They have to put out money. The private equity funds, the black sums of the world. We have pension funds, hedge funds, large family offices, we all know them. Sovereign wealth funds, insurance companies, endowments. Okay. So just things I wanna I wanna leave you guys with and give to you. Raising capital is a process. In all in all businesses, it takes it takes longer, than you think. This is a process. You have to you cannot neglect any step in the process. If you don't find the right deal, it doesn't matter that you do the next four steps. If you don't underwrite it, it doesn't matter that you found the right deal. And if you don't have the debt lined up, like, you can't buy the deal. If you don't have your documents ready, it doesn't matter if you have the best deal, if you have the underwriting, and you have the debt, no one's gonna invest in your deal. So this is a process. You have to follow the process. Everyone follows the process, who's successful, and it's gonna it's gonna take time. So you have to have that belief and conviction. The more people you meet, real estate is a is a is a contact sport, you know, it's it's the old saying, go out and meet people, qualified people, and and it's amazing what happens when when you meet and surround yourself with with high quality people. More people you meet, it's a numbers game. K. And someone taught me this, a senior investor taught me this, and they always said the process always takes longer than you think. So on your contracts, on your purchase and sale agreements, give yourself enough time. We know we know people don't move fast, and people don't move fast, especially when they're giving you money. So it's it it takes time, and especially if you're just beginning, you need to bucket enough time to build the momentum, to get into a deal. And maybe maybe it's not raising money for your own deal to start. Maybe you're you're helping someone else raise money for their deal. But just know that it's gonna take time, like anything. And then, wrap it up and then we'll take some some more questions. Do's and don'ts, do your homework, of course. Follow-up with people. People are very busy. Be be diligent and follow-up if, you know, as long as they they haven't told you, like, no, like, don't, you know, like, be respectful, but follow-up is is is important. A lot of people don't follow-up. So just follow-up with people. Don't take it personally if they don't get back to you. Everyone's busy, and everyone's timing is is different on on things. Energy, being excited, but be be realistic. Sell the experience of your team. Again, if you're, looking to go to the next level, you you wanna build a strong team, of of professionals to help you execute. Be transparent. So this is this is important that I see people make this mistake. And when I was first starting out, you know, you think your information is so so, you know, confidential and and people are gonna take your information. If you're asking someone for money, you need to share your information with them. The more transparent you are, the more you share your model, your documents, your presentation, your backup, the more trust and keep that process moving faster. Being open with investors builds that trust. So be transparent all throughout the process, be generous with your terms, you know, if if you're asking too much, that that kills investments. Be fast. Be be really responsive. Money like speed. Always be respectful and professional. And then use mentors to guide you. So don't don't oversell. You you know, use data to support what you're talking about. Don't take it personal if someone doesn't invest. Even if it's your best friend, your family member, someone who you you you were sure they were gonna invest because you have a relationship with them. Oftentimes, they don't. So do not take it personal and leave the door open. Leave the door open, because they may come around in the future. Don't be sketchy. So that kinda ties in with be transparent, share your information. And and and you're gonna be told no way, way, way, way more often, and you just have to keep pushing through. You have to persevere. You have to be determined. And and go till you get the outcome that you want. Never give up. Never, never give up. And, everyone hears a lot of no's. Everybody everybody hears a lot of no's. It's just part of the process. And that that is it. Thank you. Okay. Well, let's you have time for a few more questions? Yeah. Okay. Let's, here's one from from William. What is your opinion of the current state of the multifamily market in Miami Dade? If it's a nine inning game, what inning would you say we're in? I don't have a crystal ball, but I, you know, I do know there's there's been a lot of supply, built in in Miami Dade. There's a lot of people here and and more supply is good for renters. It lowers the cost of of housing. So so contrary to to sometimes what what public officials believe in, you know, developing more is bad. Actually, more supply lowers the cost of living. So if you're a renter, it you know, it's it's good that there there's more supply. If you're a developer, you know, maybe not so good because, you you know, rents aren't as high. But the market, you you can't time the market. You just have to you have to pick good deals and commit to them and and have good partners. So I I don't know which inning we're in, on the on the multifamily side. But, yeah, I think if you if you pick a good deal, you know you know what the risks are, yeah, you can be successful. Out of curiosity, how long ago did you identify the Miami Riverside? A year ago. Just over a year. And someone called me about it. Okay. And actually through social media. Oh, there you go. Yeah. There's a few other questions about, so here's one from Benjamin. It's pretty similar to a few of the few of the other questions. What's been the most effective way of connecting with new capital private investors, family offices, or institutional groups? The the best way for everyone on the call to connect with Capital Private Event is to have the best deal or one of the best deals. When you have a great deal, people come to you. So I keep saying this, the higher quality deal that you have, people are gonna seek you out. So hopefully, that makes sense. It does. Yep. Like you that's how that's how you started off this webinar where it's like you really need to have a great site, and that's what it boils down to or have a great deal. Yeah. And then that's that's probably at least half the work. Yeah. Yeah. Yeah. There's a lot more, but that's that's just the party started. Makes it easier. Much easier. Okay. So I'll end it with this last question, which I'll answer here. It's, can we get access to a slideshow or recording of the event? Yes. The answer is yes. This will become an on demand webinar which will be housed on my website and the mobile app, the kind of virtual mobile app. So if you if you were unable to attend the entire duration of this webinar, you can watch it on demand. I believe it'll be available later today. I would say for sure by tomorrow and, there's also upcoming webinars. So I have one next week, October 29 with Colin McMahon of Milo. He'll be discussing crypto backed mortgages. That's if you don't know about the go back mortgages and what Milo is offering, I really suggest you you, attend next week. Register the registration page is on my website and you can go to my miamicondoinvestments.com/webinars or download the condo metro mobile app and the registration page is there as well. So it's I stole. That's a wrap. Right. Well, Jay, thank you thank you for for being here. I really appreciate your time, and I'm sure everybody learned a lot as as much as I did. Thank you, Lucas, and and thank you all for for joining. Thank you, everyone.