We Passed on This Deal 😬

Hey there,

Last year this deal came across our desk….

It was the right size for us, 100+ units

It was the right unit mix, 1-bds & 2-bds

It was priced reasonably

We Passed

Why?

Location.

Having the product but in the wrong location is a huge issue. Think of supply & demand, too much supply relative to demand, and it’s hard to have pricing power. Additionally, who is your tenant demographic? Will they treat the place well, pay on time, not call staff nonstop about dumb things, etc.

This is why Nate and I say “not all real estate is the same”. 

In this case, we believed the location would make it difficult to operate. Since it wasn’t in the most desirable area we weren’t confident in the demand for the units (both in the short term and long term). We also were suspicious of the tenant profile.

The hard part was that this property would have put us closer to our unit count goal!… on paper, the math worked!..

Yet, we suck to our guns.

Passing on deals that “might pencil” in the current market environment is a difficult but mandatory part of the job. Just because the property works on paper doesn’t mean it will work in reality.

I’m glad we passed on this deal.

Now, as you can see, the new owners are offering MAJOR concessions.

No security deposit? Over 50% off the first month's rent?? Free first month’s rent???And multiple paid ads to boot.

Sometimes the best thing to do is say PASS… its hard, people will get upset that you said no… and they have!… but we’re not about to buy a property we don’t have conviction in!

Looks like it may have paid off…

Questions always welcome!

Nate & Steven
Rust Belt Capital, LLC

www.rustbeltcapital.com

_Disclosure:
Rust Belt Capital, LLC is not a Registered Investment Advisor. Investing involves risk, including loss of principal. Past performance does not guarantee or indicate future results. Any historical returns, expected returns, or probability projections may not reflect actual future performance. While the data we use from third parties is believed to be reliable, we cannot ensure the accuracy or completeness of data provided by investors or other third parties. Rust Belt Capital, LLC does not provide tax advice and does not represent in any manner that any outcomes described herein will result in any particular tax consequence. This is not an offer to buy or sell any security. Offers to sell, or solicitations of offers to buy, any security can only be made through official offering documents that contain important information about investment objectives, risks, fees, and expenses. Prospective investors should consult with a tax, investment, or legal adviser before making any investment decision. Distributions or profitable investments cannot and are not guaranteed. Not intended to be tax advice and should not be solely relied upon to make an investment decision.