The LSCRE Podcast

For those that know me, you know I'm a huge fan of Howard Marks.

He writes really thoughtful quarterly memos about investing principles and current events. He's on the conservative side which is one of the reasons his firm Oaktree Capital, which specializes in credit, has been so successful over the years. However, being more aggressive and pursuing growth has paid off for many investors in the last two decades, calling into question the principles of value investing.

Listen in to hear more about value vs growth.

Learn more about LSCRE:
www.lscre.com

You might buy a property with a million dollars NOI, day one, but your business plan of renovations, increasing occupancy, other income, might push that NOI to actually double. 

And that is great! But the scary thing is, is that may lead to an increase in property taxes.

Learn more about LSCRE:
www.lscre.com

What is promote crystallization? 

It's a provision in a joint venture agreement whereby the sponsor can capitalize on the value created that would correspond to their promote if the partnership were to sell.

Learn more about LSCRE:
www.lscre.com

Learn more about LSCRE:
www.lscre.com

Today I've got a fun topic, we're talking about what is not in offering memorandums, but you still must know. So what if you're not familiar with offering memorandum, it's something that a broker, a sales broker puts together to market and sell a property on behalf of a seller.

So, the offer, the purpose of the offering memorandum is to have as much detailed information for buyers to review so that they can evaluate the opportunity. So, offering memorandums are great. They're really well done. Broker teams have graphic designers on staff, analysts on staff to really put together the property information, the financial information and the sub market and market information,  qualitative and quantitative.

But, there's some key things that are almost always left out,  yet are super important for you as the buyer, when you're evaluating an opportunity. So, what are they? Number one, the biggest one by far and the easiest one is “PRICING GUIDANCE” or the “WHISPER PRICE”. So, the pricing guidance is rarely in the offering memorandum because they don't want to actually put it out there on paper what the seller or, you know, what the strike price is. And there's a good reason for that, and there's multiple reasons for that. One of the reasons being the, if the price is on paper, it helps the County, the property tax assessors know what value the property is likely to be purchased at. And I actually just recorded a video a couple minutes ago, talking about property tax underwriting and how  the County specifically in Texas markets assesses property taxes. So, this is one way. One reason why brokers don't want to put the pricing guidance. 

Learn more about LSCRE:
www.lscre.com

Learn more about LSCRE:
www.lscre.com

Learn more about LSCRE:
www.lscre.com

Learn more about LSCRE:
www.lscre.com

Learn more about LSCRE:
www.lscre.com

Learn more about LSCRE:
www.lscre.com