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The Capital Stack

Portfolio Property Update Part III (JV Special)

We will wrap up our first quarterly update of 2023 by featuring three JV deals that we are apart of. 

The Raintree Condos

The

Raintree Condos

are making significant progress after lengthy permit delays and a lot of time spent waiting on the City of Austin. We are finally full steam ahead. Myself and three other partners are planning to launch sales on this project in April. Reading the panic headlines of the market crashing in Austin is not fun, but we still feel very good about our cost basis and what our projected sales are on this project. Nearby sales comps are supporting us, but there’s no way to predict an outcome until we get a few units on the open market. We have presold three units at entry level pricing which is actually $110k less than our current projected sales prices. In a recent newsletter we featured David Toupin from Toupin Holdings. During his interview he talked about the importance of “buying right”. We are confident we did "buy right" when purchasing the Raintree Condos and aren't overly concerned with timing the market perfectly. You can read the full interview with David here 

https://sheffercapital.com/blog/qa-with-toupin-holdings/

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Cambridge Apartments Rebranded to The Heritage ApartmentsWhat was previously The Cambridge Apartments will now be The Heritage Apartments. We wanted the buildings new name to reflect its historic age and be catchy enough to grab attention in the small city of Ferndale.Because of the age of this buildings we had to remove a ton of old lead pipes, do some asbestos remediation, and bring in sprinklers for a lot of the building. These renovations add extra cost and time but is to be expected when you’re gutting a 1940’s apartment building. One of the four partners on this project has vast experience in construction management and has been spearheading the renovation portion of this project. We are about 90 days out from having actual residents move into this property.The Heritage apartments include 12 residential units and 2 retail spaces. When we purchased the property the 2 retails spaces were rented for $1200 each. We had planned to increase rent to $1600. The individual operating a shoe store in one of the two spaces decided to leave. We have since leased their space for $2,500. We were very happy to achieve a $1,300 rent increase. The new tenant is using the space and store front to operate her invitation design business which we feel compliments the property very well. For any retail geeks out there, we leased the space for $35/sf!! This is the same that retail in downtown LA will go for. Incredible result. The other tenant, a hair salon, did sign a renewal at $1,600 and they’re continuing to operate their business as normal.

Salado Texas Airport Hangers

The vacant lots we purchased at an airport in Salado Texas have turned into a land play. What started as a fun idea to build a “hangar home” has morphed into “we could make 1.5-3X on our land basis without doing any work”. At this point that route seems a bit more enticing. Myself, along with two other partners, bought three lots at this airport in 2021, we paid cash, $55k each, for a total of $165,000. The airport is now almost fully sold out, the runway is paved, the taxiway is getting paved soon, and there’s at least one hangar (someone else’s) that’s partially built. Most recently the lots were selling for $85-$115k. Assuming we sell our lots for $100k each, we will have achieved an 81% return in what will likely end up being a 2-year period. We achieved this return by investing in a piece of dirt with money that would otherwise be sitting in a bank or stock market. Because this isn’t a wheelhouse deal for us, we didn’t raise any investor cash. It's just a fun side project with myself and two friends who live in Texas. We’ll see what ends up happening, but at the moment that’s where it stands.

Newsletter Growth: Road to 5,000

Current Count: 2,209+20 in the past week!

We are looking to grow our newsletter subscriber list. Currently we have 2,209 subscribers and the goal is 5,000. Since last weeks newsletter we have added 20 new subscribers. Lets keep it going! If everyone gets 3 people to sign up we beat the goal and will have something new to reach for. If you can get 3 people to sign up, I am happy to consult or answer any questions for 30 minutes on whatever you may be working on, or interested in. If you hate the idea of talking to me for 30 minutes but enjoy the newsletter, then just share it out of the kindness of your heart! Either way, the sharing is greatly appreciated!*Have the new subscribers put your name or email in the "How You Found Us" section.** We have reached out via email to set up phone consults with all the subscribers whose names have been mentioned in the "How You Found Us" section. If we happened to miss your name, please send us a email and we will get you added to the schedule right away. * 

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Major Market News

Austin Texas Real Estate Market 2023

According to Insiders Business Instagram post on Jan 25th of 2023 "home prices have been falling since June of 2022" and the trend is expected to continue in 2023. The full article on insiderbusiness.com lists Austin, TX as one of several cities to "see drops of more then 25%". This article as well as others are the "panic headlines" we mentioned earlier in this newsletter. Because we purchased what are now the Raintree Condos for the right price, included conservative sale prices in our underwriting, and did not rely solely on timing the market, we remain confident in our cost basis. Link To Post Here: https://www.instagram.com/p/Cn2yV2thU-I/

Tips and Tricks

Tips: Get involved in a JV Deal 

JV stands for joint venture and in simple terms is a partnership between investors. We have been fortunate to be a part of several JV deals and enjoy pooling resources and knowledge with other like-minded individuals. Joint Ventures create opportunities that otherwise may not exist. Personally, we know it would be much harder for us to invest in Texas while living in Michigan without our partners who are local to Texas and have boots on the ground every day. 

Thank you for reading and for your interest in Sheffer Capital. We look forward to having you follow along. Feel free to reach out anytime with questions and connect with us further using the button below. 

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DisclaimerNothing in this communication shall be construed as an offer for investment in Sheffer Capital, LLC (the “Company”). Solicitations for investments by the Company will only be made through a Published Investment Opportunity in the Company's investor portal provided by the Company to potential investors for such purpose.

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