🎙 Passive Cash Flow Podcast EP.180 | Unlocking Wealth in Northern NJ: A Quick Guide!
Looking to unlock wealth through real estate? People’s Capital Group (PCG) helps investors build and preserve wealth by focusing on multifamily and mixed-use buildings in northern New Jersey. Every opportunity is put through a rigorous, institutional-level underwriting and due diligence process to ensure its potential. PCG’s vertically integrated business model, with an in-house management company, gives them unparalleled control.
To unlock wealth through real estate, PCG employs several key strategies:
• Buy properties at discounted prices, taking advantage of compressed cap rates.
• Source off-market deals that aren’t publicly listed, getting access through a strong network of brokers, attorneys, and wholesalers.
• Focus on properties in underserved areas where they can acquire more real estate for the dollar.
• Reposition properties by renovating units and increasing rents to fair market value, thereby creating a more desirable asset.
• Use a refinance strategy to return capital to investors within 3 to 4 years of the initial investment.
• Aim to provide investors with a significant return on investment through cash flow, returned capital, and profit from the sale of the property.
🧠 Topics Covered:
00:00 – Introduction & Company Overview
03:27 – PCG’s Portfolio and Performance
07:13 – Investment Strategy & Sourcing Off-Market Deals
15:24 – Transaction History and Lessons Learned
25:05 – The Strength of the New Jersey Market
32:53 – Case Studies of Past Projects
51:51 – The Next Investment Opportunity in Hackensack
58:20 – Why You Should Act Fast to Invest
01:02:18 – Q&A Session and Final Remarks
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⚠️ Disclaimer:
This is not a solicitation for funds, tax advice, or legal advice. This is not intended to be, and must not be construed to be in any form or manner a solicitation of investment funds or a securities offering. Peoples Capital Group LLC is NOT a United States Securities Dealer or Broker nor U. S. Investment Adviser is a Consultant/service provider and makes no warranties or representations as to the listener or viewer. All due diligence is the responsibility of the investor.
Transcript:
00:00:32:21 – 00:01:03:04
Speaker 1
All right, ladies and gentlemen, my name is Aaron Frank Nieto. Thank you so much for joining us this evening. I see more people are jumping on. Great to see here tonight. Seth Martinez, my business partner, and I will be speaking about Pcgg projects, our current projects here in northern new Jersey, and will, speak about how we’ve been helping people build and preserve their wealth in northern new Jersey for over a decade now.
00:01:03:04 – 00:01:27:05
Speaker 1
Those projects are going why we choose to reposition multifamily housing for private investors in, this state where a lot of other syndicators do not choose to invest. So we’ll dig into our projects today and tonight, we’ll speak for about 45 minutes if you have any questions. As we go along, I encourage you to put them in the chat here.
00:01:27:07 – 00:01:48:08
Speaker 1
And, if you have any technical difficulties as well, I encourage you to put this in the chat. As well as we get started here, we have a, interesting, group here. I’m curious who, here, is from New Jersey or what parts of the country are you from? Put in the chat here. Where you’re from.
00:01:48:08 – 00:02:10:21
Speaker 1
I see some, familiar names here and some new ones as well. We have investors all throughout the, country. Although about 75% of investors tend to be in the tri state area or have some relationship to new Jersey. Maybe you grew up here, maybe you went to school here, put put in the chat where you’re from or you know, where you’re living now.
00:02:10:23 – 00:02:29:05
Speaker 1
And, we have a great, list here of, different people all around the country here on the chat. So let’s get into it here. If you have any questions, put those in the Q and A, I’m going to answer all questions at the end. All right.
00:02:29:07 – 00:02:58:18
Speaker 1
Quick disclaimer this is not a solicitation for funds tax advice or legal advice, but we’ll explain how we reposition apartment buildings for our passive investors here in northern new Jersey. We’re going to go over the executive summary of our company, People’s Capital Group overview. Our investment thesis and pipeline. We’ll cover some case studies, and then we’ll dig into our real estate portfolio, our current projects, and what you touch at the end on our next investment opportunity, which is coming up very shortly.
00:02:58:20 – 00:03:27:10
Speaker 1
So we’ll talk briefly about that as well. So since 2013, People’s Capital Group has been helping investors build and preserve their wealth through bespoke real estate investment opportunities. Located in northern Jersey, we focus on multifamily and mixed use buildings. Mixed use means there’s a store front and apartments above it. We, and Marty and I have done about 279 transactions in new Jersey together.
00:03:27:12 – 00:03:55:21
Speaker 1
About 83% of our investors reinvest after liquidity events. We buy an 83% retention rate, about 100 private investors, high net worth individuals and family offices that invest with us, here in northern new Jersey. So, quick snapshot here. We, start our company in 2013. We have about 39 million in assets under management right now. We do buy and sell properties we normally sell every five years or so.
00:03:55:23 – 00:04:15:22
Speaker 1
Some properties we, aim to refinance in perpetuity. But a lot of them, we plan to sell, about 98% of our transactions since inception have been a New Jersey’s a very jersey focused. We have couple deals here and there in the tri state area, but for the most part, mostly Jersey focused here, about 191 apartments right now under management.
00:04:15:22 – 00:04:40:00
Speaker 1
We manage them in own in-house management company. So we are vertically integrated real estate investment firm. We do all of our management in-house here. People’s capital Group, we’re actually located in Summerville, new Jersey, right here on main AV. So come check us out. Let’s grab some lunch together. We’ve been, Seth and I, both in real estate, combined about 30 years, helping people build and preserve their wealth in real estate.
00:04:40:02 – 00:05:11:00
Speaker 1
Both of us, for about 15 years each. We have 12 members on our team. We’ve completed about 11 syndications a syndications where you pool capital together and buy an apartment building. Or a larger piece of real estate. And we’ve raised about $18.6 million, in our careers together. Seth and I, we’ve returned about $8.4 million of capital to investors with about, 32 properties here, unit count of about 191 units.
00:05:11:02 – 00:05:26:05
Speaker 1
You know what, Seth? I’m going to let you, jump in here on this slide since you’re on the operations in the management end and you focus on, keeping these properties occupied, that’s a strong occupancy rate. You’re Seth Martinez, my business partner.
00:05:26:07 – 00:05:28:11
Speaker 2
All right. Thank you. Eric. Yes.
00:05:28:13 – 00:05:30:10
Speaker 1
So over the course of.
00:05:30:10 – 00:05:59:17
Speaker 2
The last 12 years, as we’ve built this company in large part with our investors, we have built a, portfolio of about $40 million in real estate currently holding. Sarah mentioned. And about half of that is with our investors as we help them build and grow their wealth together with us. And, we’ve also bought and sold, as Aaron touched on, it’s not included in the portfolio over, approximately $60 million.
00:05:59:17 – 00:06:31:17
Speaker 2
Other additional real estate, that is no longer owned by us. And we continually analyze, you know, the least, performing real estate in the portfolio and turn over those units and those properties and move the company’s funds, as well as the investors funds, into better real estate opportunities and better locations. So, yeah, this is a snapshot of the, the portfolio at, 191 units, 99% occupancy rate, as Aaron mentioned, as well.
00:06:31:17 – 00:07:00:13
Speaker 2
And, you know, we have our own management company that we’ve cultivated and built since 2015, and that really helps us maintain maximum control over the properties, the cash flows and extract maximum value over from the assets that a lot of our competitors can’t do because they outsource the management. But we have it in-house, so we are really trying to make things, as we say better, faster, more efficient in every aspect of the business.
00:07:00:15 – 00:07:13:18
Speaker 2
As each year comes and goes, we want to get better at better. And having, management in-house helps us, execute in that part of the business. So I’ll hand it back to you, Eric.
00:07:13:20 – 00:07:35:15
Speaker 1
Thank you. Seth. Yeah, you can see here the average cost per year, 131,000 and, exit average exit, price are 226. We create a nice delta there between, where we come in, where we exit. All right, so, a little bit about our strategy here. We operate within the underserved part of multifamily in new Jersey.
00:07:35:19 – 00:07:54:20
Speaker 1
So we do buy in a lot of inner city areas. We can get more real estate for your dollar. We see cap rates have compressed right now. So we’re able to buy properties for discounted prices. We’re currently buying properties around, six caps or so or just, just kind of prices compared to what they would have been, a couple of years ago.
00:07:54:22 – 00:08:14:06
Speaker 1
So real estate is on sale, which we love to, we love to say right now. So, we tend to buy about 50 to 100 unit buildings at this time. Kind of too small for the larger institutional groups, but too big for your average mom and pop investors. So that’s the sweet spot that we like to strike in with our acquisitions.
00:08:14:08 – 00:08:34:02
Speaker 1
We have been doing this, as we said, a long time. So we have a network of brokers, attorneys, wholesalers, developers, owners to get access to off market deals. The deals we buy, no one else sees on the market. They’re not sitting on Luke Net or the Multiple Listing Service or the internet. They are off market deals. You get a phone call from a broker, you know very well, he says.
00:08:34:02 – 00:08:58:04
Speaker 1
I have a deal coming up. Here’s the best price. Here’s the details. We go out and see it. We, underwrite the deal with our in-depth, institutional level underwriting team, and we submit an Loi, effectively, quickly. And, the brokers know we close well, but they also know we need a good price. So, we get off market deals that way, vertically integrated, as we stated with the in-house management companies.
00:08:58:10 – 00:09:32:21
Speaker 1
And we really underwrite deals and operate deals, focus with our investors first. So when we conduct our due diligence, when we conduct our underwriting, we’re thinking at all times, what is the best way to protect our investors? What’s the best way to get the highest return for our investors? How should we structure the deal with debt and equity to get the best return on investment for our investors without, but also with, limiting the risk, you know, without sacrificing, you know, performance for, risks.
00:09:32:21 – 00:09:56:22
Speaker 1
So we try to really always focus with our investor first approach on our deals here. And, we have three main goals when we’re looking at an opportunity, for our investors, we always look at the preservation of capital. Rule number one, don’t lose money, right? We rigorously stress test and vet each deal. What happens if the economy, goes into recession?
00:09:56:24 – 00:10:20:09
Speaker 1
What happens if interest rates go up? What happens if prices, go down? What happens if rents stop growing? Okay. All these assumptions, right? You have to stress test these deals before you buy them to preserve our investors capital. We also do a cost segregation study and maximize the tax benefits of the real estate to preserve investors capital as well.
00:10:20:11 – 00:10:51:02
Speaker 1
Return of capital. So we have multiple times during the investment, we want to return investors capital. That might be through a refinance, which generally takes place 3 to 4 years into the investment. And then of course, the sale as well. Also the return on investment, a lot of that profit is realized at the sale. So combination of cash flow, return of capital from the refinance and profit from the sale of the property is how we execute that return on investment.
00:10:51:04 – 00:11:14:23
Speaker 1
A lot of our opportunities right now, we’re targeting internal rate of return as internal rate of returns to investors. A net IRR, around 19 or 20%. So we target very aggressive returns on well-priced value add opportunities here in northern new Jersey. And that allows us to ideally achieve those higher than average target returns to our investors.
00:11:15:00 – 00:11:22:23
Speaker 1
Seth, why don’t I toss it back to you here for this, for these next two slides so you can jump in, start.
00:11:23:00 – 00:11:52:19
Speaker 2
Yeah. So, why people’s capital group? Well, you know, in short, it’s we help people invest in real estate who don’t have confidence or the experience quite frankly, the time to invest on your own. And, you know, we bring 12 years of experience, with transactions and, each transaction, we learn something new, over 300 transactions into, you know, combined, and, we have a good philosophy of constantly getting better.
00:11:52:19 – 00:12:14:19
Speaker 2
We’re never satisfied. And there’s always room to, improve and there’s always the next deal. So you never really want to say. Okay. Satisfied? The day you find that you satisfied, business is the time pretty much to hang up the lease. But there’s always the next deal. So, and there’s always ways to improve. So, good transaction history.
00:12:14:21 – 00:12:41:13
Speaker 2
We help the people who, are qualified to invest and who just don’t have the time or the expertise or the willingness to invest alone. And we build wealth the time. So, we’ve helped over 100 different, individuals and groups build their wealth in real estate by working with us. We’re also vertically integrated. As I said earlier, we have the management in-house, and, we can extract maximum value and move quickly.
00:12:41:13 – 00:13:10:14
Speaker 2
We don’t have to put a call into a company and hope they react to the call. We can, you know, have a meeting on site. There’s an issue and address a problem right away. And, also monitor the results very quickly. So being vertically integrated also with the contractor is kind of all the way from Aaron and Seth all the way through to the janitors and making sure everything is done at a high level, high level quality discipline and attention to detail.
00:13:10:16 – 00:13:33:09
Speaker 2
I’m always looking to improve things and, also just yeah, just to wrap it up, you know, 12 years in the business, with our sights set on the next, you know, the next decade. And we want to make our company better in every way in the next decade. And, bring to our clients and our investors with us.
00:13:33:11 – 00:13:52:11
Speaker 2
Okay. Yeah. And the, you know, the track record again, goes back 12 years with each deal, with each opportunity, whether big or small, you know, single family, two family, all the way up to 40 or 50 plus units. We always want to, you know, apply what we learned from the prior deals and make the next deals, you know, that much better.
00:13:52:13 – 00:14:14:11
Speaker 2
So we have an 8.6% average, increase of the rent every year. And, having the in-house management helps us get the rents up, talk to the tenants. Each tenant kind of has to be called sometimes differently. They all have personalities, but the key is to gain their respect. They don’t. We don’t want to be their friend, but we want to have their respect.
00:14:14:11 – 00:14:37:15
Speaker 2
And, give them the value that they’re looking for in exchange, get the rents to where we need them to be. And, we have a 15.1 average annualized cash on cash return for our investors. You can kind of compare that, obviously, to the savings markets today, the money market throughout 3 or 4 or 5%. But, so we’re definitely outpacing those.
00:14:37:17 – 00:14:58:15
Speaker 2
And even the stocks, you know, kind of volatile to be as low as negative five or up to 15 to 20%. But with the real estate where we’re giving our investors sort of the peace of mind and less volatility compared to the stock market and, yet completed Syndications, we have 11 of them. Aaron is creating a new one right now.
00:14:58:15 – 00:15:24:09
Speaker 2
So this will be number 12. And, we’re excited about that. And then 83% of the reinvestment, rate for the investors. So very, very good rate. And well, we don’t always have the ability to invest. We do give sort of a first come, first serve to the existing investors. But, you know, as we grow, we hope to have more opportunities for everybody.
00:15:24:11 – 00:15:45:00
Speaker 1
All right. Thanks, Seth. I’ll jump back in here. So, by the way, in our chat, I noticed everyone was writing to, Seth and I, if you, in the chat, when you response, put the message to everyone you can see, when you write something, you can say to it, the it’s set.
00:15:45:00 – 00:16:28:00
Speaker 1
So it’s going to go to host and panelist. But if you could switch that to everyone, we can actually have a fully integrated chat here instead of just messaging, Seth and I, which is, always enjoyed, but, I’m curious, in the chat here, if you’re, pcgg. Investor if you invest with PCG or, in other groups here in new Jersey, put here in the chat if you’ve invested, in new Jersey or if you’ve invested with PCG, I’m curious how many, new Jersey real estate investors we have here and how many, pcgg investors we have here as well in the, presentation.
00:16:28:05 – 00:16:50:10
Speaker 1
So put that in the chat there and, you can address it to everyone. So, we are, able to engage their. So, this is a little background of our transaction history. You could see we used to do a lot of transactions kind of quantity over quality. Seth and I, in 2018, we, you know, did 66 transactions, a lot of wholesales, picks and flips and so on.
00:16:50:10 – 00:17:12:13
Speaker 1
That was a great time to be, wholesaling auction properties and so on. But then around 2019, we realized, we really want to do quality over quantity, start raising capital on a large scale and buying larger opportunities. So we focused on that starting in 2019. And you can see our amount of transactions dropped with the size of our transactions grew.
00:17:12:15 – 00:17:32:21
Speaker 1
So that was one of the main things we focused on over the last, eight years or so here, really. And to, alter our, our business model to pivot, as we saw the market dry up on the wholesale and fix and flip side and the rental market, become a much more attractive place to be involved in.
00:17:32:23 – 00:17:54:13
Speaker 1
So we’ve been focused on, syndicating assets since 2019 here, People’s capital Group, here’s how we sourced deals. We’ll start with over 100 deals review. We’ll do a back of the napkin review. As I say, I have a kind of a basic spreadsheet. By the way, if you want to copy that spreadsheet, you can email us, and we’ll get that out to you, tomorrow.
00:17:54:14 – 00:18:14:12
Speaker 1
Out of 100 plus deals, we’ll look at about 30. That will put it in a series underwriting with our institutional level underwriting team and, will really run them through the ringer. It’s an extremely in-depth Excel file. If you’ve ever seen our underwriting, it’s extremely in-depth. And also, if you want to review our underwriting, you can shoot us an email.
00:18:14:12 – 00:18:35:23
Speaker 1
We’re extremely transparent. We’ll share that underwriting spreadsheet with you on our most recent offering. Here. You’ll see how in-depth we go, on these, institutional level, models. Out of those 30 deals, we go with, series underwriting will submit about 10 to 20 letters of intent or offers out of, about 20 offers, about one gets accepted.
00:18:36:00 – 00:18:58:05
Speaker 1
So it’s really, you know, we’ll we’ll start with over sometimes up to 200 deals just to buy one. At that point, we engage subject matter experts for deeper due diligence to test out the mechanicals and the roof and the physical issues, the property, environmental. We create a data room, for our investors with, the offering documents and the full due diligence set.
00:18:58:07 – 00:19:20:18
Speaker 1
We have a subscription agreement generally ready within about 30 days of putting the property on a contract. And then investors have a period of time to complete the, docs and the investment process, which is all done right through our investor portal. After closing, we do quarterly cash distributions when cash flow is available for distribution, monthly and quarterly updates.
00:19:20:18 – 00:19:45:24
Speaker 1
I try to put a lot of updates into our, a lot of information into our monthly updates, with quarterly financials as well, balance sheet, profit and loss statement, distribution statement that goes out to our investors. And annual K-1 tax forms. This is also all uploaded to our investor portal for each investor. So you can access all this information at any time, but it’s also emailed to you except for the annual K-1.
00:19:45:24 – 00:20:07:08
Speaker 1
We just upload that and send you an email because that has, sensitive information. Here’s our team here at People’s Capital Group. That’s me and Seth there at the top, or 5050 owners. Seth primarily in charge of operations. As we say, making sure the trains, run on time. I’m more on the equity side and, marketing and branding.
00:20:07:10 – 00:20:28:14
Speaker 1
We are, underwriter. Matthew Corsini is, used to actually work with UBS. He’s a really sharp guy. And again, if you want a glimpse of those models that we put together with him, they’re extremely in-depth institutional level underwriting, for our deals there. We have a lean, mean team here on the marketing end.
00:20:28:19 – 00:20:50:20
Speaker 1
Maybe you’ve got a call from Muhammad Ghazi. He goes by Patrick often. So you probably got a call from Patrick. If you’re on our team or on our list, there have investors. Chris Ugur does our video and podcast editing with about 180 plus podcast episodes. You can find them on People’s Capital Group, dot com or Spotify or iTunes or YouTube.
00:20:50:22 – 00:21:18:04
Speaker 1
We come out with a new podcast every two weeks. And Omega does our IT and website design. Mohammed does our image and social media creation. Lina Delgado heads our property management. She is incredible. Lina is very hard working. She’s been in property management for a long time. She manages our contractors and our leasing staff, and she’s extremely skilled and making sure that, these properties perform as targeted.
00:21:18:06 – 00:21:42:03
Speaker 1
Diego works under her. He’s kind of our boots on the ground. He’s going to the section eight offices, the permitting offices, DCA, and, working hard to kind of out in the field, with our contractors and projects. Melanie does lease renewals and rent collections. Dana. Sergeant, he’s our bookkeeper. She makes sure those ACH deposits go out on time, that those, quarterly financials are done properly.
00:21:42:06 – 00:22:08:00
Speaker 1
And Robert Garelick is our CPA that works with us. He does the K-1 1099 tax guidance, tax filing. Make sure those key ones go out to our investors. Before March 15th, we have about eight general contractors, two plumbers, two electricians, one Hvac, specialist and exterminator and carpentry specialist. That’s not even all of them that that’s just the majority of the guys we keep really extremely busy.
00:22:08:00 – 00:22:30:24
Speaker 1
We have a number of other service providers as well. But that makes up our team here, People’s Capital Group. And that’s how we, improve those assets to, make sure we achieve our targets or come close to it for our passive investors. Seth, why don’t you touch your on on our years of experience here, and then we’ll jump into, our properties next.
00:22:31:01 – 00:22:50:24
Speaker 2
Yeah, sure. Yeah. So we, Aaron and I started doing business together in 2013. He was my realtor, and, saw me buying some properties that we kind of realized we had the same, goals, to acquire wealth, build wealth, real estate, and then, we realized, you know, that even has its own limitations when you start using your own money.
00:22:50:24 – 00:23:21:18
Speaker 2
So we realized, let’s start with, finding others that have a like minded goal to build wealth in real estate. And that’s how we started building relationships with our investors. And over the last ten plus years, we’ve sort of, delegated our roles in two distinct areas. So sort of that you were saying earlier, Aaron’s the, investor relations, fundraising, and sort of a conciliatory to a lot of our clients, investors and confidant, and, we want to build good relationships with our investors.
00:23:21:18 – 00:23:57:22
Speaker 2
And, a lot of our investors call Aaron, before they make a financial decision. And get these thoughts on time. So, we want to we want to fill that role and, provide sound guidance and be a true friend myself, as well. And, you know, Aaron also does, a lot of both branding, podcasts where we tell and, host of the New Orient to say, semiannual, meetup and also podcasts, passive cash flow podcasts on YouTube, and the like.
00:23:57:22 – 00:24:22:13
Speaker 2
So a lot going on there. And we want to add a lot of value to the market and help people achieve their real estate goals. So that’s really, what Aaron does more than me, more on the back end with the operations and, making sure the trains run on time, as I say, and trying to find ways to become the company better, faster, more efficient and learn from our competitors that, you know, the saying goes, it’s better to learn.
00:24:22:15 – 00:24:43:03
Speaker 2
You know, it’s going to be, to learn from the self your own mistakes. But it’s better to learn somebody else’s mistakes. Thank them. Stay all together. So, I’m always looking for ways to improve everything. And, so that’s kind of where I’ve come in. And, we’re excited about the future.
00:24:43:05 – 00:25:05:02
Speaker 1
All right. Great. Thanks a lot, Seth. All right, we’ll jump into, next, chapter here. So an investment thesis in our pipeline. So, just a couple more slides here on why we choose new Jersey. You know, I talk to investors all the time, and they say, well, I invest in, you know, Texas, North Carolina and, the smile states, the southeast.
00:25:05:02 – 00:25:24:11
Speaker 1
And, why why would you invest in North Jersey? It’s not an investor friendly city. And we actually, have multiple reasons here. First of all, the landlord tenant laws change city by city. So if you know how to navigate each city’s red tape, you actually can do quite well in North Jersey. There’s also an inherent need for housing here.
00:25:24:11 – 00:25:46:02
Speaker 1
There’s a shortage of, housing in this area. Also, the tax advantages here with higher price property, we can do a cost segregation study and take more advantage of the tax benefits. Capital appreciation. We see some of the best capital appreciation here in North Jersey. If you’re within an hour in New York City, it’s a pretty sure bet.
00:25:46:02 – 00:26:20:16
Speaker 1
Over time, the value of your asset will continue to grow. A history has shown that, series supply and demand balance. There is not enough housing for all the people that want to live here in northern new Jersey, especially if you have an hour commute into Manhattan or less. You know, hard assets. Real estate historically outperforms inflation by about 5%, favorable demographic trends it was actually awarded here in new Jersey is one of the most desirable place to live and work with major metros, to the east, New York City and West Philadelphia as well.
00:26:20:18 – 00:26:55:14
Speaker 1
And favorable market pricing. You know, we can find more affordable opportunities here in inner city areas in northern new Jersey, such as Newark, new Jersey, such as Passaic, new Jersey, or Paterson, or our next deal in Hackensack, new Jersey that we’re buying. So we see, more opportunities in still high demand cities, but inner city areas where you can buy, such as vintage housing, outdated old or real estate, you can get for a great price, improve the asset, give you the amenities tenants are looking for, and create a more desirable asset that creates stronger, revenue for our investors.
00:26:55:16 – 00:27:13:23
Speaker 1
Also, the cost to, rent versus own is is ridiculous right now. You can see here on this chart, it’s just skyrocketed since the pandemic. This is really no secret. If you’ve been following, you know, real estate, economic news, the price of, home mortgage payment, you know, prices of homes have just continued to go up here in North Jersey.
00:27:14:03 – 00:27:30:10
Speaker 1
It’s really expensive to buy a single family home here. Rent prices have grown, but they haven’t grown at the rate that single family home prices have grown. So what we see is a generation of renters, people. Let’s say, you know what? Forget it. It makes no financial sense to own a home. I can’t even afford to own a home.
00:27:30:12 – 00:27:49:04
Speaker 1
And if I want to live in an area that I feel safe, I’m going to have to rent. So we see a lot more high quality renters with good jobs and good incomes, good credit scores, wanting to live in rental units for a long period of time. And that can be great for landlords. So since early 2022, it’s been more affordable to rent than own.
00:27:49:04 – 00:28:14:11
Speaker 1
Here in new Jersey. You can see these are new Jersey statistics. And it is it actually switched over around the end of 21 here early 22, it became more affordable to, rent than own here in new Jersey. And that continues to be the case. And the trend, a few more things about new Jersey, because, you know, we take it personally when investors say, well, you know, New Jersey’s a dying state, everyone’s moving to Florida, everyone’s moving to North Carolina.
00:28:14:13 – 00:28:38:09
Speaker 1
Actually, they, the statistics show quite different. What we’re seeing is there is a net, migration into new Jersey. A lot of people have moved out of New York City looking for more space and more affordable housing. A lot of people enjoy the great schools here the nightlife, the Jersey shore, the mountains. You can go skiing and you can go to the shore in the same day.
00:28:38:13 – 00:29:04:16
Speaker 1
You can go, party in Hoboken or enjoy, a quiet afternoon in the country, an hour apart from each other here in North Jersey. So it is a really, you know, safe neighborhoods, great schools, great employment. Our inventory is not keeping up with the demand. We are short about, here you can see the net absorption is 19,637 units per year.
00:29:04:18 – 00:29:28:20
Speaker 1
But our households are only going up about, I’m sorry. We only have about 16,000 units coming to market. Okay, so we have a difference of about 3000 units here every year. So we’re we’re short about 3000 apartments here in new Jersey. We’re absorbing 3000 more apartments per year than we’re building. And you might be driving around thinking, are you kidding me?
00:29:28:20 – 00:29:53:14
Speaker 1
There’s a development going on everywhere. And there is there’s a lot of development going on. It’s slowing down. Housing starts have really slowed down. So I think next year and the year after, you’re going to see a lag in new inventory coming to market, which ideally will actually push prices even higher on rentals and houses. But, you know, what we saw was a big influx of inventory hitting the market, but it really is not even enough here in North Jersey.
00:29:53:16 – 00:30:20:03
Speaker 1
The effect of rent is up 3% year over year. Occupancy is 96.8%, one of the highest occupancy levels in the country. Employment’s up as well. Households are up. So we’re a growing state here in North Jersey, a great, state to be invested in. And, that is one of the reasons we choose to, allow our investors to invest in these North Jersey opportunities and help our investors build wealth here.
00:30:20:05 – 00:30:43:02
Speaker 1
This talks about greater home ownership cost as well. You can see the, annual homeownership rate in new Jersey here has dropped from a peak of 70% in 2005, down to 62%, about 63% now in 2024. And we’re actually below the national homeownership right here in new Jersey because it is so expensive to own a home.
00:30:43:02 – 00:31:02:21
Speaker 1
It’s one of the most expensive markets. So when the price of a home is so high, and you’re way below the national homeownership rate, that means those will still need a place to live. And those individuals are renting. So we see a, significant demand for rental here. And finally, the, the supply here. We are not one of the highest supply markets.
00:31:02:21 – 00:31:22:20
Speaker 1
This is because it is hard to develop in new Jersey. There is a lot of red tape, especially in a lot of the inner city areas. You know, it’s kind of a you gotta know someone to get something done type of thing in new Jersey a lot of times. And, that means less real estate comes to market, less developments get the green light.
00:31:22:22 – 00:31:50:06
Speaker 1
Therefore we are less likely of seeing an oversupply. You know, look at here, Austin, 7.3% of the market is new supply. You know Charlotte Nashville, Phoenix. There are some markets that have struggled with oversupply in the last couple years and they are absorbing it. But it’s going to be some time till they absorb that oversupply. Here in North Jersey we are not in one of these markets that’s seen oversupply.
00:31:50:10 – 00:32:11:04
Speaker 1
And quite frankly, the red tape, you know, it’s a bit of a double edged sword because hey, it slows down development. Therefore it slows down supply. Therefore keeps your property prices strong. And that’s one of the things we like about the new Jersey market. This slide shows that it is number three, North Jersey here on the 2024 U.S. rental markets list.
00:32:11:04 – 00:32:37:23
Speaker 1
This is from Rent cafe.com. We, have, you know, we’re number three. Miami, Florida is the most competitive, suburban of Chicago second. But we actually ranked number three here in North Jersey, you know, with, 95.2% occupied apartments, prospective renters, nine per unit, lease renewal rate, 71%. You know, why not renew your lease?
00:32:37:23 – 00:32:53:19
Speaker 1
You’re not really going to save money moving elsewhere. So new Jersey here, as you can see on the map, is number three out of the top ten. So we rank very highly as one of the top U.S. rental markets. All right. Let’s get into the meat and potatoes here. We’re going to talk about some of the deals we have going on right now here.
00:32:53:19 – 00:33:17:10
Speaker 1
People’s capital Group. Here is an 11 unit in Paterson New Jersey. We purchased this in July of 2022. And I’m sorry, in June of 2020. And we refinanced it in July of 2022. So we were targeting about five years to refinance. We were able to achieve a refinance, in about a little over two years.
00:33:17:12 – 00:33:46:10
Speaker 1
And, we bought it for 965. We put about 270 into it, and it appraised for 1.85 million. So we were able to get our investors, an annualized cash and cash return of, over 25% on that investment. And, that was a great, win for our investors that got, about half of their investment capital back, from that investment in about a two year period.
00:33:46:12 – 00:34:06:12
Speaker 1
Okay. That’s a nice, tax deferred liquidity event. Our initial target was 10.6%. You can see we’ve far outperformed on this, project here. And now. We’ve recently hired, Keller Williams to sell this property. We’ve kind of squeezed the juice out of that, if you will. We renovated many of the units. We’ve increased the rents to, fair market rent.
00:34:06:12 – 00:34:27:01
Speaker 1
We’ve, operated the building efficiently over the last four years. And, we generally lock in rates for about five years. So, we want to, now, at this point, look to sell the asset and get our investors a final payout on it. So we have listed it recently with Keller Williams. We expect to get about 2.2 million, 2.1 million for this asset.
00:34:27:03 – 00:34:48:17
Speaker 1
With our projections there overall, investors should expect about a 20% annualized cash on cash return on this investment over about a five year period. And that would be, far better above, target here, beating our initial targets by almost 100% or so on this investment. So that’s our goal with this 11 mixed use asset here in Paterson, new Jersey.
00:34:48:17 – 00:35:04:19
Speaker 1
If you want to buy it, let us know. We’ll be it’s on the market. What’s up? I think it is on the market. You have to check. It might be on might be listing on loop. Net or not, they might be doing, like internal marketing to their buyers list first. So, let us know if you want to reposition the 11 unit in, Paterson, new Jersey.
00:35:04:21 – 00:35:33:12
Speaker 1
Here’s a six unit building in, Passaic, new Jersey. We bought this in, June of 2020. We held it, initially we were going to refinance over five years. We refinanced three years in, March of 2022. There. And, then we, we bought this for 450. We put about 65 into it in the initial round, for the renovation, we refinance appraisal came in at $730,000.
00:35:33:12 – 00:35:53:11
Speaker 1
So we really boosted that value. The property I think we bought at a great price as well. We got it from a, direct mail campaign, which is a great way to source properties. And, we achieved about a 13.9% annualized cash and cash return to investors from the refinance. We initially target around 11 on this deal.
00:35:53:14 – 00:36:20:05
Speaker 1
So we over, achieved our target there on this, refinance to our investors. And then we went to sell the property a couple of years later. We held on to it in total for about 5.6 years. Similar idea here. You know, we reposition the asset, we renovate the units, we increase the revenue on the building. We create efficient operating systems for, and we try to create the most value we can for our investors and create a nice place to live for our tenants.
00:36:20:07 – 00:36:42:15
Speaker 1
Happy tenant equals a happy investor. You’ve probably heard me say that before if you follow my webinars. So, and that’s the truth. You know, that’s one of my favorite thing just to say it. It really is. It all starts the happy tenant, you know, good ten and a happy tenant. They pay their rent on time and, they agree to fair rental increases and they don’t, cause problems of the property or destroy the units either.
00:36:42:15 – 00:37:05:07
Speaker 1
So, you know, a happy tenant equals a happy investor. So we ended up putting a little more into this property, about $230,000 over the life of the investment. But we sold it for 990, and we achieved, just above the initial target, a 11.7 annualized cash cash return to investors. We initially targeted around 11 on this property. So, and I don’t think we sold at the best time either.
00:37:05:07 – 00:37:19:22
Speaker 1
You know, it was time to sell the building, but we sold it August of 2024. Hey, it was not a great market to sell to. So, you know, probably it’s it’s, you know, you always say, oh, I should have sold two years ago. The market was better, but, you know, it is what it is. We did fine on this.
00:37:19:22 – 00:37:38:06
Speaker 1
Our investors did fine on this. And, and you move on. So that’s, that’s is how some deals go. But we did we did absolutely fine. It is hard to time the market. Of course, you never know what tomorrow holds. Here’s some additional exits and acquisitions. So right now we’re working on a 21 unit in Bayonne, new Jersey.
00:37:38:08 – 00:37:57:15
Speaker 1
Now, we’ve had some challenges with this property. There’s no doubt about it. First of all, we did buy it probably at the height of the market. We, were buying it when prices were very high about two and a half years ago or so. February 2023. We’re around a four and a half cap or so where the properties are now going around six caps in those markets.
00:37:57:15 – 00:38:21:11
Speaker 1
So that’s one of the challenges. You know, market cycles come and go. And we do plan to exit this property in a better market cycle. It’s not time to exit it yet. But that’s one of the challenges with this asset. Secondly, we’ve been installing, many splits in this building. We completed our mini split installation. We converted the old, heating system over to separate heating systems throughout the building.
00:38:21:13 – 00:38:43:08
Speaker 1
But we, were initially told by the city we didn’t need permits. Then halfway through, they said, well, actually, you do need permits. And then we had to get architectural drawings done and load calculations and upgrade the electric to the building and upgrade, meters. So we ran into some challenges, some delays there. The biggest issue really was that, we had seven units vacant at that time.
00:38:43:08 – 00:39:02:23
Speaker 1
And the city said, you know, you have to put a pause on renovating those seven vacant units while you get these many split permits closed out, which made absolutely no sense. But the town was a little difficult to work with. And, they’d say, okay, now you got to give us this. And we would get that item requested, and then we would go, oh, what I need, we need this.
00:39:02:23 – 00:39:19:10
Speaker 1
And then they. So it was a piecemeal request where every month they’d ask for something new and we’d run out and get it. And architectural drawings, load calculations, new electric meters. And then I’d say, okay, good work. Now you need to go with this. So it was kind of this, chasing our tail with the city. We finally got it done.
00:39:19:10 – 00:39:45:10
Speaker 1
We installed all 21, many splits. We saved $21,000 in heating costs by moving the heating off our books. Now, the units to also have air conditioning instead of using window units, as you could see in the pictures there. Now, they all have nice, air conditioning throughout with energy efficient many splits throughout the building. So we’ve made it a nicer building, a more of a class B feel with air conditioning throughout.
00:39:45:12 – 00:40:03:19
Speaker 1
We’ve saved $21,000 on heating costs. We finished animating all those seven units. We got those units leased up, and, we do expect to start distributing cash flow. I’ll be a probably about six months late on this asset, but we do expect to start distributing cash flow hopefully by the end of the year or so on this building to investors.
00:40:03:21 – 00:40:31:02
Speaker 1
And they will aim to, refinance, ideally next year or the year after, or possibly just sell the asset, depending on where the market is. The initial strategy with this building was to refinance in perpetuity. Chances are we’re going to go with, plan B on this building, which is to sell the asset as cap rates, ideally compress into the future as markets do cycle, we expect the markets to cycle back to a bit of a seller’s market at some point in the future, will then, sell the asset.
00:40:31:04 – 00:41:00:18
Speaker 1
And, we should be able to achieve target returns to investors here. We’ve increased the rent by 16.6% on this building. We’ve turned over 12 units. We had a huge contingency. We, estimated a large, buffer for renovation funds. We also estimated a lot more than it actually cost to remove the oil tank. So because of that, we had a very large, extra capitalized renovation budget for this building in Bayonne.
00:41:00:23 – 00:41:22:21
Speaker 1
And that allowed us to have all the funds to do these renovations. And that’s why we underwrite conservatively, because you never know what you’re going to run into with, bureaucrats and townships or challenges or vacant units and permits and so on. And those are the challenges of repositioning apartment buildings, especially here in North Jersey. And, you know, so we learn from every experience as well.
00:41:22:24 – 00:41:40:24
Speaker 1
You know, looking back, we probably wouldn’t have done the many splits knowing how much work it was. With the permitting and so on and, how difficult the town would be. So we learn something from every single experience. But again, the building is really nicely repositioned at this point. It is stabilized. It’s fully occupied. It’s making a great income.
00:41:41:01 – 00:41:58:05
Speaker 1
And, we should be able to achieve our target returns here, in the coming years, for this, property in down new Jersey. There’s the property in Summer Street. We, in Paterson, we’re selling there. We increased train about 52% on that building over the life of the investment that is, for sale on the market.
00:41:58:05 – 00:42:14:18
Speaker 1
Now, it’s just about to hit the market. You. And here’s a 25 unit we bought and sold Paulsboro, new Jersey. This is actually the first apartment building Seth and I ever did together. And, boy, did we, take our licks on this when we learned, you know, we had to develop our own management company, we ended up firing two for a management company.
00:42:14:20 – 00:42:36:05
Speaker 1
Developing our own. We sold for a nice right around investor target returns. We were talking about an annualized cash and cash got 8.4% to investors. So we learned a lot from it. And that was our start there. We, sold that in 2016 and then never looked back. So we learned so much from every building we do, every project we do.
00:42:36:06 – 00:42:56:10
Speaker 1
We’re always getting better, and we’re always explaining to our investors how we’re solving these problems as they come along. Because one thing’s for sure, you’re going to run into snags whenever you reposition apartment buildings or doing any type of project in any industry. And, whenever we run into those problems, we come to our investors with solutions instead of problems.
00:42:56:16 – 00:43:18:00
Speaker 1
So they learn a lot, actually, from our monthly updates, by explaining how we’re fixing the problems we’re running into. And as we stabilize the asset, you tend to have a lot less problems as well. Here’s a building we just bought in Passaic, new Jersey. This building, we’ve distributed over $42,000 to investors already. We’ve owned it for, just, about six months here.
00:43:18:00 – 00:43:44:02
Speaker 1
Not even we bought at the very end of December. Now it’s early June, so a little over five months. We own this. We we’ve hit both, distributions here to investors one right after we bought the property. Another one, after, Q Q2 on or Q one actually on the building. So, this building here, we have a target refinance, of about 81% return of capital after year three.
00:43:44:04 – 00:44:09:18
Speaker 1
We have a target. Cash and cash post stabilization. Once we’re stabilized, we reposition the asset. We hope to achieve about a 9.7% cash and cash return and then refinance the asset. Build your well bought for 7.6 million, which we’ll put about, almost about $1.1 million. Show property how owning real, to the family off the share class target annualized IRR 20.3% in real estate.
00:44:09:20 – 00:44:32:22
Speaker 1
And we only work with target annualized, class B share cash and cash return quality of 9.2%. Group 42 units in, Passaic, new Jersey. Right here by that, downtown area. Target about A2X equity multiple on this. And we plan to refinance three months and then, three, three years and, and then sell it, five years into the project.
00:44:32:24 – 00:44:53:10
Speaker 1
Here’s this Bay owned property. I just, touched on it as well. Our target returns to investors are about 12% annualized cash and cash return. We do think of the long run will be able to achieve that on this asset. Our renovation budget $622,000 on this property. We plan to renovate and lease about 75% of the units to fair market value.
00:44:53:12 – 00:45:12:18
Speaker 1
We’ve already done, a little over, 50% of the units. So we’re almost there. I think we’ve done 12 at a 21 now, so maybe 60% of the property or so. So we’re almost to our goal here of, repositioning this asset. We want to increase the total rent by 34%. Rent rolls up about 16.6% since acquisition.
00:45:12:24 – 00:45:32:00
Speaker 1
And we’ve completed the separate Hvac installations here. The mini splits on that building. Here’s, 105 Marion Street in Paterson, new Jersey. This building is also on the mark we, just listed with Brca2 yet. Now, this is going to be more of like a bit of a pocket listing. You know, they say loop nets is where deals go to die.
00:45:32:01 – 00:45:49:03
Speaker 1
So you don’t want to necessarily when you go to sell your commercial buildings listed on loop net. Right. That’s like the commercial real estate MLS because anything on a loop that we don’t look at, if it’s sitting on the internet, it’s probably not a good deal. Any good investor worth their weight is going to be looking for off market pocket deals for investors.
00:45:49:03 – 00:46:06:23
Speaker 1
So what a group like Brca2. Yeah. Does one of the largest commercial brokers in the country. They have a list of like 10,000 buyers that buy real estate in new Jersey here. So they market it out to their investors. We’re going to be looking to sell this around $4.5 million. But is marking it out right now internally to their network.
00:46:07:03 – 00:46:35:01
Speaker 1
This is 25 fracture condos out of a 31 condo, unit building. This is actually an old factory that was repositioned, repurposed into, really nice condos, like high ceilings, nice, furnishings throughout. And, we, plan to refinance this after five years. But you know what? We’re just going to sell it because, quite frankly, interest rates where they’re being where they are, right now is not it doesn’t pencil out that well on a refinance.
00:46:35:01 – 00:46:53:24
Speaker 1
So we’re better off selling the asset. So our goal is to always get the tiger returns to investors. We’ve increased the rent 26.2% on this building. We’ll look to sell this building. And investors should achieve about a 14% annualized cash and cash on this deal. Once we sell the building. We have struggled with cash flow on this building.
00:46:53:24 – 00:47:14:05
Speaker 1
We target about a 2% annualized cash flow. Some years we were able to distribute cash flow. Other years we weren’t. I think our renovation budget was a little light on this. We ended up putting more than $60,000 into the building, through. And that’s where a lot of the cash flow went on this building. So, we’ll be able to achieve targeted returns, through the sale of this asset.
00:47:14:07 – 00:47:34:15
Speaker 1
But I’d say cash flow is one of the challenges we faced on this building. Because, again, the renovation budget was a little light. And, hey, that’s how you learn this business. We bought this in 2020, and, you know, underestimated, even though it was a stabilized, renovated building. How much money really needs to hold in the reserves, for renovations as tenants move out and so on.
00:47:34:17 – 00:47:52:06
Speaker 1
And, that’s part of the learning process with buildings. And every single project we do, we get better and we learn and we improve the experience for our investors and ideally, the returns for them as well. So fear not, as we sell this asset, we should be able to achieve about a 14% annualized, cash in cash return to investors.
00:47:52:06 – 00:48:12:19
Speaker 1
We initially targeted a 12, so we should be able to surpass our initial targets on that one as well. Here’s another one. Rahway, new Jersey. This is, a beautiful location. Really nice property as well. This is down the street from the Rahway train station. And I’ll tell you, if you haven’t looked at Rahway, check it out.
00:48:12:19 – 00:48:31:23
Speaker 1
Rahway is an up and coming star here in new Jersey. You have this downtown area, where there’s a nightlife now, there’s art centers and so on. You can go down there and catch a live show and music. It’s it’s really quite charming. We we bought this for, 2.75 million. This was a boarding house when we bought it.
00:48:32:00 – 00:48:51:11
Speaker 1
And we are just about done repurposing it into a apartment building. Now, as far as the actual physical building and the management of it, it’s an apartment building. The legal zoning of it is taking a little longer than we’d like, but that should be done over the next few months. So we renovated these units as tenants, moved out.
00:48:51:11 – 00:49:13:05
Speaker 1
We leased them up. We increased the revenue on this building by 67% on this building. So over the last, four years or so, we bought this in December of 2021. We’ll look to refinance this building next year. Ideally, rates come down a little bit. Even so, we’ll refinance by the end of next year. We have a ton of equity in this building.
00:49:13:10 – 00:49:34:19
Speaker 1
It is producing cash flow to investors. We’re targeting an annualized 12% annual, cash in cash return to investors with this building, including cash flow and refinance, we should be able to achieve that number, through the refinance. Our original plan was to increase rent roll by about 30% or so. We’ve far surpassed that on this building.
00:49:34:21 – 00:49:59:11
Speaker 1
We’re very close to now converting this legally to an apartment building. And the reason we’re doing that is because an apartment building is more desirable than a boarding house. First of all, the valuation of apartment buildings is greater. It’s appraised at a, a better cap rate, a lower Capri, a better metric to give you a higher, valuation on the building, an apartment building over a boarding house.
00:49:59:13 – 00:50:30:14
Speaker 1
Also, when it comes to lenders, a lot of lenders don’t like boarding houses. They really like apartment buildings. So as we can convert this not only physically and managerial wise to an apartment building, but also zoning wise, legally to an apartment building. We increase the value of this asset in a very strong manner. So, that allows us to build value for our investors, in this building, increase the value of the building, through changing the zoning and just not your just your usual repositioning as well, which, of course, we’ve executed on this building also.
00:50:30:14 – 00:50:52:15
Speaker 1
So that’s a great value add strategy, take a boardinghouse, convert it to an apartment building is a lot of work though. A lot of work. It’s not for the faint at heart, that’s for sure. Here’s our, transition, transaction heatmap. So, just showing kind of where we’ve done a lot of deals in new Jersey here. You know, Seth and I, we made our first million for our investors in Newark, new Jersey.
00:50:52:17 – 00:51:12:17
Speaker 1
Newark’s a great city. We continue to invest in Newark. In fact, we might be taking down about 145 units between two buildings in Newark, new Jersey, in the coming months. So keep an eye out for that one. We’re getting very close on them. We’ve done about 200 transactions in Essex County alone. About 279 new Jersey since 2013.
00:51:12:22 – 00:51:33:23
Speaker 1
We transacted in 11 of New Jersey’s 21 counties. You can see we really do focus more on the northern new Jersey market there. And, you know, also eastern kind of areas as well, close to New York City there, Essex, Passaic, Morris, Union. We’ve done some in Middlesex and, you know, northern Warren and Sussex County as well.
00:51:34:00 – 00:51:51:20
Speaker 1
I’m surprised we actually haven’t done more in Hudson County. It’s a very expensive area. You know, we look for a lot of value in our deals. And Hudson County is one of those more expensive, markets. So, we, we focus more on the more affordable markets like Essex, Passaic and, Union County. All right, so let’s touch base.
00:51:51:24 – 00:52:19:20
Speaker 1
Finally here on what we’re doing next. So here, People’s Capital Group, we try to acquire 1 to 2 apartment buildings a year. Again, we’ll look at hundreds of deals to bring our investors one opportunity. This is our next opportunity here at People’s Capital Group. This is 78 units in Hackensack, new Jersey. You can see there to the left is the, Hackensack, Medical Center, Hackensack University Medical Center, part of the Meridian Health Group.
00:52:19:23 – 00:52:50:08
Speaker 1
It’s actually voted the number one hospital by US news, for, like, the last five years. Huge hospital. Really? One of the is the best hospital, by many standards in the, state. And we literally border that hospitals directly behind this asset, these two, 39 unit buildings making 78 units in total. From where we’re standing here, taking this picture behind us is the high school.
00:52:50:10 – 00:53:10:20
Speaker 1
So this building is literally sandwiched between the number one hospital in the state and the high school. You can see here on this map, that, here you can see there’s the Beach Street property, 265 to 75 Beach Street in Hackensack, new Jersey. Here’s the Hackensack, University Hospital, which takes up this block. And this block.
00:53:11:00 – 00:53:31:01
Speaker 1
Huge complex. You may have been there, probably for the wrong reasons. It is a hospital, after all. A lot of people I talked to some of the family offices and investment groups investing in this know it because they’ve taken parents and family members there. And, that’s unfortunate, but it is one of the best hospitals or the best hospital in the state.
00:53:31:01 – 00:53:52:21
Speaker 1
So, you know, if you need a hospital, that’s a good one to go to. And then, of course, on across the street from us here, really adjacent to the building is the Hackensack High School. So great location for, high earners in the in the medical industry and families alike. Here’s Beach Street in, in relation to Manhattan.
00:53:52:23 – 00:54:16:24
Speaker 1
Of course, it’s a 12 minute drive to, Manhattan. Here, take a bus in about 28 minutes. You can take a train about 38 minutes. Newark Airport is about a 24 minute drive as well. So, Hackensack, you know, really one of the more desirable, locations in new Jersey? It is in Bergen County, new Jersey. Bergen County, new Jersey is one of the most desirable counties in, new Jersey.
00:54:17:01 – 00:54:35:13
Speaker 1
And one of the highest priced counties in new Jersey as well. So just a great county to be owning in. And here’s why we love this deal. Here’s why we lock this up completely off market direct to us. No other bidders in the room. That’s how you buy real estate for a great price. Location, location, location, directly near the number one hospital, as I saying.
00:54:35:13 – 00:54:57:21
Speaker 1
And across in the high school. We love the location. Limited inventory with strong rental growth. You know, North Jersey in general, as we were showing in some of the earlier slides, has a limited amount of housing. Hackensack falls right into that category as well. So a housing shortage throughout new Jersey, but also an affordable housing shortage, and, I don’t know, certainly mean like low income housing.
00:54:57:21 – 00:55:21:15
Speaker 1
I mean, like housing that is decently, affordably priced. Now, you know, what we see in areas like Hackensack and Bergen County and northern new Jersey areas is you have, a lot of real estate that’s class A real estate, you know, new development coming on the market. And this is very expensive real estate. We often underprice those assets by 30 or 40%.
00:55:21:17 – 00:55:45:23
Speaker 1
Now, when you get into our renovated units, we have quartz countertops. We’re going to put washers and dryers in the units. We’re going to put recessed lighting, fresh flooring and make these units really pop, really be a nice high end unit. So when you’re in the unit itself, it’ll feel almost like a Class-A building, but you’ll be able to rent these units for a fraction of what class eight buildings have.
00:55:46:00 – 00:56:08:14
Speaker 1
Now, we’re never going to really compete with class A. We don’t have a pool or a gym or a spa, but instead of paying, you know, 3100 for a one bedroom, you can rent ours for 2300. So if you make 80,000 to $120,000 a year, this is an ideal property for you. Especially work at the hospital or the high school or somewhere, even in the city.
00:56:08:16 – 00:56:30:05
Speaker 1
So that’s the type of demographic we focus on. We’re buying this for a great price. With the significant value add, we’ll put about $2.1 million into this asset to reposition it over the first three years. And, we expect about an 83% of investors, capital return upon the refinance at month 36. We’re using smart leverage for this.
00:56:30:11 – 00:56:58:09
Speaker 1
We’re utilizing bridge debt, which gives us about 85% loan to cost. That gives us about 70% of the purchase price. And 100% of the renovation cost. We also are going to be utilizing something called Preferred equity. Preferred equity is an option that we work closely with specific investment groups that we have a good relationship with that are able to invest, asking simply for a high preferred rate of return, but no actual, equity ownership.
00:56:58:09 – 00:57:20:19
Speaker 1
They have equity ownership until they are, exited at the refinance. The bottom line is this allows investors to maximize the return on investment. And that’s how we achieve these, target returns of 1,920% plus on these opportunities. We also see a serious, difference as the earlier slides are showing the rent to own Delta in New Jersey.
00:57:20:21 – 00:57:42:14
Speaker 1
And the really country in general is ridiculous. But especially here in North Jersey, it’s so much more affordable rent than own. And, because of that, we expect a very strong demand for our units here. Rents are 50% below market value. Building is a strong in bones, you know, but units are just outdated. You can see here in the pictures, they’re not terrible.
00:57:42:14 – 00:58:00:10
Speaker 1
It’s it’s 95% occupied building, but it’s just outdated. So we need to bring the units up to, the standards that tenants are looking for. We’re not separating out the heat on this building. We’re going to stay with the current heat. We’re just going to renovate the units interior wise, a little bit in the common area as well.
00:58:00:12 – 00:58:20:22
Speaker 1
Increase the revenue on the building by that 50% difference or so over the first, three years. As we reposition the asset, refinance for a large liquidity event to investors and then sell at the, into year five. We are going to be doing a webinar for this opportunity, probably June 18th at 6:30 p.m..
00:58:20:22 – 00:58:50:08
Speaker 1
But here’s the deal. I wouldn’t wait until June 18th because we already put this out to specific investors in our network. These are ultra high net worth individuals, family offices and investment groups. These are very savvy investors that underwrite deals on an institutional level and write generally minimum checks of $3 million. What we found was they love the deal.
00:58:50:10 – 00:59:12:01
Speaker 1
They love the location. They love the value add strategy, they love the numbers on it and the structure of the deal as well. And they like our past performance here, People’s Capital Group and our in-house, vertically integrated business model that allows us to keep tight control of these assets and achieve targets time and time again for our investors.
00:59:12:03 – 00:59:40:00
Speaker 1
Because of that, they wrote sizable checks. We filled up most the capital stack before we even sent out an email to our 5000 investor list. That means there’s only 11% left of this capital stack. So we’ve raised 89% of the capital already on this deal without hitting send on an email. That means probably by June 18th. The reason I say probably we’ll do a webinar is because we might not even do the webinar.
00:59:40:04 – 00:59:59:21
Speaker 1
We might not even blast this out to our network. We might just finish raising the capital with a few more phone calls over the next two weeks. So that’s why it’s important to schedule a call with a team member over the next few days, because this one’s going to fill up pretty quick. Again, 89% of the capital has been raised.
00:59:59:23 – 01:00:23:10
Speaker 1
We’re targeting solid IRR on this great location, beautiful building, with a strong track record in this area here in northern new Jersey. So we’re going to execute, very well for our investors on this opportunity. So if you want to learn more about this building, it is for accredited investors owning. All right. So a credit investor means you’ve a net worth of $1 million, not including your primary residence.
01:00:23:12 – 01:00:50:24
Speaker 1
That can include the real estate, other real estate investments, stocks, bonds, IRA or a net worth, or a income of $200,000, pretax individually or $300,000, including your spouse. That’s an accredited investor. So this building is limited to accredited investors. By the way, we do have available investments for non accredited investors. So if you’re not accredited you can schedule call as well.
01:00:50:24 – 01:01:12:22
Speaker 1
But we can only talk to you about the opportunities for non accredited investors. This is for accredited investors only. The minimum investment amount is $50,000. And again without sending out an email we’ve raised 89% of the capital. So this one’s going to fill up very quickly. There’s a good chance we just cancel the webinar in two weeks. And this one’s all done.
01:01:12:24 – 01:01:34:06
Speaker 1
So after this webinar we’ll see. I know, Patrick schedules filling up with calls here just from, a couple, kind of direct emails earlier in the week to specific investors. And, there’s a link here on the, on the, PowerPoint that you can click to schedule a call with a member of our team.
01:01:34:08 – 01:01:54:08
Speaker 1
But what I’ll do is I’ll also put that link here in the chat. And, you can go ahead and click that link and schedule call with, Patrick, a member of our team. See if you do qualify for this investment and hopefully you can get in before all the spots fill up. So go ahead and click that link.
01:01:54:08 – 01:02:18:02
Speaker 1
Now you can schedule right on Calendly for the next few days. And we’ll go to our questions here. It looks like there is an issue with the chat. So, that’s why we couldn’t see anyone in the chat. The chat wasn’t working. Okay. So, that’s why the chat, we weren’t getting much responses, so everyone on the Q&A here, the chat wasn’t working.
01:02:18:02 – 01:02:38:10
Speaker 1
I don’t know why. We’ll have to correct that in zoom. A little technical difficulty there. Randy asked which counties? I think we covered that round. Randy. You know, the northern new Jersey counties we invest in. Gary, thanks for writing in there. Glad to hear from you. I by the way, Gary, I use that, thermos you sent me, all the time.
01:02:38:12 – 01:02:57:22
Speaker 1
I it’s a great, thermos. It’s great for exercise. I put my protein powder in there. I shake it up every morning. I love that thing. It’s huge. You could put a lot of, you know, make a big protein shake, which I can drink, like, all morning. So, Gary, thank you so much for that gift. One of our favorite investors, out of Texas there.
01:02:57:24 – 01:03:18:10
Speaker 1
And, sends great gifts. Sends great gifts. What a guy. What a guy. Nice, nice guy. He sent an airplane to my son. Hey. Got that? That airplane. He loves that thing. That thing. It’s great. So thank you so much, Gary. We appreciate you. We appreciate your investment, your trust. And, we have some, sizable, checks coming your way on those investments.
01:03:18:10 – 01:03:43:08
Speaker 1
So, so, we’ll talk shortly on that. Here’s another individual saying the chat was disabled. And, yeah. Go ahead. You can ask your questions now. You can, you know, ask questions anytime during any presentations. I can always answer them at the end. Randy, where are we from? So, Randy, I actually live in, Basking Ridge myself.
01:03:43:08 – 01:04:07:22
Speaker 1
Seth lives in Clinton. I have a three year old son. Seth has, two children, a little boy and a little girl. And another one on the way, like, any day now. So, that’s why Seth’s working from home. There. And, he’s, happily married as well. So we’re both a family man. Seth and I, we both live in new Jersey.
01:04:07:24 – 01:04:31:12
Speaker 1
The county, so I guess, well, Clinton, new Jersey is, is, What’s that? That would be Hunting County, I believe. Yeah. I think I think it’s or it’s Morris County, I guess the Clintons and Morris County. And then I live in, Morris County, technically, and in Long Hill Township, so, so, yeah, not too far from Somerville here.
01:04:31:12 – 01:04:54:01
Speaker 1
Seth and I both live about 20 minutes from the office here in Summerville. We’re right at 92 East Main Street. And, it’s a great place to grab lunch. We encourage you to come to the office here. We can schedule time. You can email us. So schedule call Patrick. And then if you’re qualified investors, sometimes investors like to come to the office, actually see our brick and mortar operation here.
01:04:54:03 – 01:05:11:02
Speaker 1
We can also go walk out to, the properties as well. If you’re considering an investment here. People’s capital group, sometimes I’ll put together a group of, 3 or 4 investors, and we’ll go out to some of the properties we’re looking to acquire, or end properties we currently own. And our repositioning kind of give a little tour of our assets.
01:05:11:02 – 01:05:34:06
Speaker 1
That’s always fun. And, Yes. Randy. So we well, we we live about, parallel with Newark. We’re like, right down route 78. So Newark’s like over in, like, eastern Jersey. We’re over in, like western Jersey, a little more like suburbia. Jersey. You know, I, I live in like, Basking Ridge area. It’s it’s a little more rural.
01:05:34:06 – 01:05:58:21
Speaker 1
Yeah. And, Seth is kind of a more rural area, too, you know, by suburban new Jersey. A good place to raise your family there. And, I, you know, I grew up in North Jersey. I went to Rowan University. I actually recently wrote and taught a course called, Real Estate Entrepreneurship, at, Rowan University, where I also graduated as an entrepreneur major in 2009.
01:05:59:01 – 01:06:20:15
Speaker 1
Tough market to graduate into. And, so I graduated 2009. And then I actually, taught a course about a year and a half ago. I just did it for one semester. It was a lot more work than I thought, writing and teaching a course, but it was really a great honor to, you know, and when you write and teach a course about what you do, you learn it so much better.
01:06:20:15 – 01:06:44:16
Speaker 1
It was an amazing experience. So real estate entrepreneurship, great. Course. Now Rowan has a course. I told him I couldn’t teach it every semester. It was just way too much work. And, but now they have the course, and hopefully they can find someone who’s more available to teach the course. I don’t know how great a college professor I was, but I probably, you know, could have, engaged the class more.
01:06:44:16 – 01:07:00:20
Speaker 1
I think, you know, you learn so much when you when you teach a college course. I think if I did it again, I would engage the class more with more, like, fun activities and stuff. Oh, your wife went there. Okay. That’s great. Yeah. It’s great. It’s a good school. She made her way back when it was called Glassboro State.
01:07:00:21 – 01:07:22:17
Speaker 1
They’ve really improved it since then. When? The last time you. You were down a Rowan University. But it’s a much nicer school. They have this whole, like, downtown area now. They have, hotel there at Barnes and Noble. I remember when I was there. Oh, boy, you would have to, like, walk the ladies home from the party, because you didn’t know what was going to happen on the walk home.
01:07:22:19 – 01:07:41:11
Speaker 1
Through, like, frat row, they would call it. It was. It was not the same school it is today. It’s a much nicer school. So I was happy to see that. And, Rowan’s really improved as a school. I think it’s a great school. Good. You know. Good, good. Return on investment, I’d say, because the degree is not that much compared to what you see here.
01:07:41:11 – 01:08:00:24
Speaker 1
Private schools around, you know, like Seton Hall or something like that. So, anyway, that was, my, my days of rowing there, really enjoyed them. Was honor to go back and write and teach a course. And, yes, much cleaner now. Absolutely. Randi, I agree, I agree. All right, ladies and gentlemen. So that’s it for me tonight.
01:08:01:05 – 01:08:23:19
Speaker 1
We had an hour allocated for our presentation. We’re running a little bit over. I put the link in the chat to, schedule a call with, Patrick, their member of our team. He can talk to you about your investment goals, see if they align with what we do here. People’s capital group, see if you do qualify for this investment and if there’s any spots left, when you speak with him.
01:08:23:19 – 01:08:39:10
Speaker 1
So click that link. It’s in the chat. Hopefully you were able to see that. And I don’t know if there an issue with just writing in the chat or with seeing the chat. Hopefully you can see that there. If you have any other questions, you could email us. You can reply to our email that comes from Info People’s Capital group.com.
01:08:39:11 – 01:09:01:17
Speaker 1
And we’ll be sending out more information. We do a monthly masterclass for investors and we do, bi weekly podcast. And we have our in-person event coming up June 25th in Somerset, new Jersey. If you haven’t gotten your ticket for that, email us and we’ll see you the link to get the ticket to our in-person event in Somerset, new Jersey, coming up June 25th.
01:09:01:17 – 01:09:19:19
Speaker 1
We expect about 70 investors or so at that building that I think we have over 70 tickets sold right now to that event. So that’s coming up June 25th in Somerset, new Jersey. And, you should have gotten an email about that already. If you haven’t, you’ll get one before the event. You can sign up them as well.
01:09:19:21 – 01:09:20:23
Speaker 1
Thanks a lot. Have a good night.
