Investing In Ground Up Multifamily, With Origin Investments

In this webinar, Michael Episcope discusses Origin’s Growth Fund IV as well as the outlook for multifamily investments.

Interested In Learning More About This Opportunity?

You can visit the official Multifamily Investor Partner Page for the Origin Growth Fund IV to:

  • Learn more about Origin’s strategy;
  • Learn key details about fund projects;
  • Request more information from the fund sponsor.

Webinar Highlights

  • An overview of Origin’s unique structure and history as a family office;
  • The objectives of Growth Fund IV, which targets a 1.7x to 1.8x multiple over a four year investment horizon;
  • The reasons for focusing this fund exclusively on multifamily, ground-up development;
  • How peak home buying habits among millennials are driving a housing shortage in the U.S.;
  • Distortions in the “value add” market now, and why Origin focuses on ground up construction;
  • A review of the seed deals for Growth Fund IV, many of which were locked in at lower prices last year;
  • How Origin’s optional hold period gives investors optionality in the fund;
  • Live Q&A with webinar attendees.

Origin Growth Fund IV

Origin Growth Fund IV will be a diversified portfolio of Class A multifamily ground up developments with high growth potential, targeting a total net annual IRR of 14-16%. The fund will participate as both a limited partner and a co-general partner in projects across the southwest and southeast U.S.

Learn More About Origin

Webinar Transcript

Jimmy: Our first Fund Issuer fund partner presenting today is Origin Investments. And we have joining us today, Michael Episcope.

Michael: All right. Welcome, everybody. Thank you very much. My name is Michael Episcope, co-CEO, co-founder of Origin Investments. And we help high-net-worth individuals grow their wealth and generate tax-efficient, passive income streams through multi-family real estate. And I’m gonna go over Growth Fund IV today. We actually operate four different funds. This is our latest fund. This is a series of growth funds that really date back all the way to 2011. So we’re super excited about this fund. It has some really unique characteristics and, I think, you know, that take advantage of what’s happening in the market today. Let me jump in. I’m not gonna go over this quickly, but this is definitely an abbreviated presentation. Normally, you know, this could take an hour. And so, what I’ve done is just pared the slides down to leave this open for Q&A. So hopefully my timing is right, and we can open this up at the end and I can answer some of your questions.

So the first thing I always start with is, why Origin? And there’s really three reasons that we boil it down to. And it’s alignment, it’s track record, and it’s team, right? And they’re all sort of interconnected in some way, shape or form. Origin has been around for 15 years. And this company was started by David and me. David is also co-CEO, co-founder of Origin Investments. And in the beginning, it was more like a family office. We wanted to grow our own capital. We wanted to invest in real estate. We wanted to produce income and just invest in great deals. And we decided to build it at that time. The world was very different than what you see today. And in some ways, we were forced to build it.

So what we say is that we create funds we want to invest in, and then we do. And Growth Fund IV is no different. I’m super excited to be investing my own personal capital in this fund. I know my partner is as well. And that’s really how we treat not only funds, but every single deal. And there’s a big advantage of being a large investor and the investment manager is that you’re sitting on both sides of the table and representing, you know, the interest of the investment manager and the investor. And we just believe that in order for things to…everybody needs to be aligned throughout the system in order for things to go really, really well.

So over the years, since 2015, I’m proud to say David and I have invested more than $65 million of personal capital alongside investors. And that makes us the largest investors at Origin by far. And we have, you know, today more than 2,500 investment partners that really span from high-net-worth, ultra-high-net-worth, family offices, and then our fastest-growing segment is the RAA segment. And we represent clients of more than 50 registered investment advisors today.

Being aligned, though, it really shaped a lot of the decisions we made throughout the years. And I think that manifested itself in our track record. And our track record, as you see in front of you, we’re ranked as a top decile manager by Preqin, that is a third-party rating agency. And that’s really for the consistency we’ve had across all of our funds. We’ve generated a 2.1x multiple on invested equity and a 24% gross IRR across our realized opportunities. And what you’ll see me present are projections and projections are what it says there, they’re projections, right? And so, you have to look at sort of the reality of what we’ve done and then what we’ve actually projected because what we like to say is that we’ve been wrong a lot in our projections, but we’ve been wrong to the correct side.

Our strategy, it’s simple. We buy high-quality real estate, we add value, we underwrite conservatively and we don’t guarantee loans, right? It’s about keeping people wealthy, building wealth, it’s not about taking an oversized risk in anything we do. Now, the track record is really backwards looking. And the question is always, can you repeat this? And part of that is market-driven data. And the other part is a firm-driven and the team. And certainly, my partner and I have been a constant at the firm since 2007. Today, we have 35 team members growing to 40. And our senior team members have been with us for more than 10-plus years. So the people who are largely responsible for our past track record and creating the strategy and sort of that brain trust of Origin, the senior leaders, they’re still here. And those are the ones who will be at the helm of this fund and all of our other funds as well. And I should also note when it comes, you know, back to sort of alignment, our team’s compensation is heavily back weighted towards performance. So we are all aligned in this together. We all want the same outcome.

So here is the overview of the fund. This is again, Growth Fund IV. This is our fourth high-growth fund. And in this fund, we are targeting a 14% to 16% net IRR and a 1.7% to 1.8% multiple uninvested capital. And that is over a four-year period. So I’ll get into that in a little bit, but it’s really the shortest dated fund that you will find in the market. And the difference between this and our previous funds is that this is 100% ground-up development. The previous funds were a mix of value add, this is also 100% multi-family, we have done office, we’ve done retail, we’ve done a little bit of everything in the past, the world was very different in sort of that, you know, ’08, ’09, ’10, ’11. But today, we are multifamily experts. The fund will be geographically diversified across, call it 10 to 12, 10 to 14 assets.

And we invest in Sunbelt markets primarily in low-tax, business-friendly states in cities with populations of right around 1 million-plus. So definitely institutional markets when you think about that, because liquidity is really important in population growth. And we’ve seen sort of this centralization more urbanization happening over the last 10, 20, 30 years, and that’s not going to slow down. And I don’t mean urbanization in the sense that, you know, everybody’s moving downtown. I mean that more and more people are congregating around major cities and the rural and the excerpts are just…you know, those populations are coming into the suburban and urban areas.

We are targeting a $250 million raise. Our first closing will be on March 31st. And we already have a significant pipeline of deals lined up that I’m gonna go over here just in a few slides. So the very first slide here is really…I wanna answer two questions. Why multifamily and why ground-up development? Because those are, I think, the most important questions if you’re looking at an investment. The first is easy, supply and demand fundamentals and there is a housing shortage in this country and you don’t have to look very far to know this. It’s on every headline out there what’s happening. No matter what market you’re in in this country, you’ve seen housing prices and rental prices increase. And, from a fundamental perspective, we’re delivering around 300,000 housing units per year, and demand is exceeding 500,000 units.

And you have millennials, right, which is this largest demographic in the history of the United States, about 84 million people strong, and they are at the peak home-buying age. I think for years, people were saying, “Oh, millennials are gonna rent. They’re not gonna buy, this and that.” We’ve never believed that, we just always believed that they were gonna push that out. And you’ve seen that. So historically you might have seen people buying in their, you know, the mid-20s, you know, or late 20s and stuff. And the millennials, this generation is now entering that peak age where they’re getting married, they’re having kids, they’re moving to larger home formats. And that is really creating stress on the system. So big, big undersupply of housing in the market due to that demographic rolling through and becoming that, kind of, peak home-buying age. And we’ve seen this in all the markets, especially in ours, in the Sunbelt markets, we’ve seen rental prices going up on average more than 15% over the last year. And in some cases, in Tampa, in Phoenix, they’ve gone up north of 20%. And Real Page, which is a data provider in the multi-family space, they see another 5% to 10% of rental increase is on the horizon for 2022 and many of the Sunbelt markets that we’re in.

The other point I wanna make here is why ground up, right? Because how do you enter the market to capture the most upside while also protecting the downside? And those are the conversations we have internally all the time. And the answer is development. This is where the highest risk-adjusted returns can be generated today. The value-added space has gotten too competitive and we have the ability to play in value add. This is traditionally where we’ve played. We just can’t make sense out of it because we are seeing 15-year-old properties trading at or above replacement costs. There’s a distortion in the system today because there’s so much capital and so little product out there that, you know, ultimately the fundamentals do control the market and they come back to reign and bring things back together in sort of a normalcy.

So when we’re looking at where we wanna play and what we wanna be, and we’d much rather be in a brand new property at $280,000 per unit than a property that’s 15 years old, 20 years old at $280,000 to $300,000 a unit. And that’s really what development is a lot. So if you think about the development margin that we’re trying to capture, what we’re looking at, and this is where the real profits come in is creating that value early on. But in development, when we’re looking at the spread between the cost to build and where properties are trading, that’s your development margin or your return on cost. So for example, if new properties, properties that are 2, 3 years old are trading for $350,000 or $360,000 per unit, and we can build for $280,000, we’re capturing that $70,000 spread.

And there’s a really…like if we’re comparing that to value add, and we’re looking at that, and we’re saying, look in the value add, you’re gonna be into this thing for $300,00 and you have to sell for $350,000, $360,000 in 4, 5 years to make your return, it doesn’t really make sense to us. So in many ways, we see ground-up development as less risky than actually going into value add because if prices come down from, let’s say that $350,000 per unit, and they come down to $300,000 per unit, well, in ground-up construction, you’re just making less money because your basis is $280,000. If you’re in a 20-year-old product and your basis is $300,000 per unit and prices come down…and by the way, if prices come down and you’re in a 20-year-old product, chances are they’re gonna come down far more than $50,000 in a project of that age. So that’s really, you know, to us, this is the best place that, you know, we see to actually make returns today. And it’s something that…you know, as we sort of look at the overall market, it’s the only place where we wanna play today.

So let me go over a couple of seed deals and there’s three deals I’m gonna go over sort of at a very high level just to give you sort of a flavor of, you know, how the fund is shaping up and what it’s going to look like. And most of these seed deals, there’s five of them in total, they’re gonna be closing between Q1 and Q2. And one of the themes that’s really important to understand is that all of these deals were tied up last year. And land prices are up over 30% in many cases. And so when you’re investing in this fund, you get the benefit of buying into last year’s prices today.

And so this first one that you’re looking at, this is Preserve at Star Ranch, this is a deal that I’m super excited about. This is one of the five seed deals. And it’s what we refer to as horizontal multifamily. It’s a 310-unit complex. It sits just north of Austin in sort of the greater Austin metropolitan area in a neighboring suburb. And Austin is…you know, I don’t have to, you know, really go too far into that, but it’s one of the fastest-growing markets in the United States. And it isn’t showing any signs of a slowdown. It has everything that, you know, people are looking for. It’s got that lifestyle, that cool, hip vibe, you’ve got plenty of jobs down there. So in this sort of work from home new environment, it’s where a lot of people are choosing to go.

And horizontal multifamily, this is one of the hottest asset classes in all of the entire market. And the reason is is that a millennial who can’t buy, they still want the single-family homeownership feel. And that’s exactly what a community like this offers. These are 310 single-family homes, but the difference is this isn’t a single-family rental strategy. This is a purpose-built community. It has common areas. It’s got centralized leasing. So it is purpose-built so very different than, you know what you might see in like a scattered single-family rental strategy. And this was put under contract last year, like all of our other deals, we do have a GMP in place. So, you know, a lot of the cost escalations that you’re looking at today have been mitigated through that GMP that’s in place.

And I should also note, like, we get this question all the time about construction prices and what’s happening. And I can only tell you that rental prices are far exceeding…the growth in rental prices are far exceeding what’s going on on the construction price increasing. So to us, like what we’re still seeing is a healthy margin because even if a property, you know, costs you let’s call it $30,000 more per unit to build today than it did a year-and-a-half ago, might have cost you $250,000 a year-and-a-half ago, today it’s $280,000. But the price that these properties are selling for is $40,000, $50,000, even $60,000 more than it was a year-and-a-half ago. So that spread is still largely intact.

The next deal I’m gonna talk about really quickly is Haven at Apache. And this is a more traditional 186-unit wrap-style apartment located in Tempe. It’s another example of a market that we’re located in, and Tempe is really what I would consider the best submarket in the entire Phoenix area. You have ASU, Arizona State University as an anchor, it’s home to numerous fortune 500 companies. It’s one of the highest income demographic markets in the area. And that’s really important because when you’re building class A properties, you’re looking for that high-income demographic, not because we wanna charge the highest rents today, but because in order for us to continue to get rental increases in the future, we need the demographic that is gonna be making a lot of income and they’re gonna be getting raises and they’re going to be getting…they’re gonna be able to afford higher rents in the future.

This is a…let me see, the next one I’m gonna talk about is Solace at the Ranch and Solace is a 374-unit apartment complex located just northwest, or actually, it’s northeast of Colorado Springs. And we are actually one of the largest developers in the Springs today. This is our fourth development in the last, kind of, two to three years. We’ve done a couple in the downtown, this is a little northeast of there. But there’s really nothing not to love about this market. It benefits from its proximity to Denver. It’s about an hour south. This project is about 45 minutes as the crow flies to the Denver area. So it’s very commutable even to the Denver area from here.

If you know anything about Denver, Denver has been an amazing growth story, but with growth comes all the challenges of a city. So you have a lot of congestion, a lot of traffic, things like that. And you’ve seen this massive migration move to the south, to the Colorado Springs area. And this is a lifestyle market and located directly on the front range. And when we were in COVID, this was one of the only markets to have experienced positive rent growth during that April, May, June period. So, it really speaks to the strength of this market and that has not slowed down this entire time. So really, it’s everything you look for in an up-and-coming city and one that we’re super excited about.

Our other two projects that I’m not gonna go over into depth right here are in Nashville and Dallas, and they’re equally as exciting. Those are in our decks. So if you wanna learn more after this, you can go to and download those. We have around $80 million in required equity between these seed deals and have a pipeline that’s equally as large. So I do see this fund, you know, when I talk about 10 to 14 deals, it’s likely that the money will be put out in this fund in about, I would call it, 12 to 18 months.

So this is the optional hold period, a very unique feature of this particular fund. Again, it’s the shortest dated fund you will find in the market at four years, but that is the initial term. And this optional hold period, what this means is that if you want to stay in for cashflow, after we’ve built value, after we’ve gone through the development phase, you can do that. And we did this for a couple of reasons and the main one being that real wealth is created by buying great assets, building value in holding for the long term. And in real estate, in order to maximize wealth creation you have to take advantage of depreciation, tax-free refinancing, and avoiding taxes from a sale. And those are the keys to building wealth. And in a buy, fix, and sell model, you can’t do that.

And what we’ve learned over the years is that great real estate, it just shouldn’t be sold. I mean, all these deals like in Fund I, and Fund II, and Fund III, they come back to us years later and they’re 30%, 40%, 50% higher, and deals we sold in 2015, even though we did really, really well, the people who bought it after us did even better. So, you know, the reality is you’ve added value to your investment. You’ve protected your basis. So why not just stay in and benefit from tax-free cashflow? And what this structure also means is that there is no fund tail. You can sell all, some, or none of your position when you want. And anybody who has been in private equity and been in a fund tail, sometimes funds can last 10, 11, 12 years. And that’s the other thing that we wanted to eliminate here is giving people of the option of staying in, you know, either 100%, getting out all at once, maximizing your IRR and moving on, or doing something like a half-and-half situation. So, truly unique. And we did it because we wanna help people make smarter investment decisions so they can build more wealth. And this is really how we want to invest our money as well. We were kind of tired of ringing the register, paying the taxman, having cash drag issues. And it just wasn’t the smart way to do business.

So Summary of Terms is the last thing I’m gonna go over. Hopefully, we’ll have time for a couple of questions here, I think we will. There is a $50,000 minimum investment in this fund. There is a 1.5% annual management fee, a 15% performance fee above an 8% preferred return. And that is subject to a catch-up. So you can think about that as we get 15% of the profits so long as we do our job and meet our returns. If we don’t generate at least an 8% return, we get no performance fee whatsoever. There is an acquisition fee on this fund for each deal of 50 basis points, but there is no committed fee on this fund. So, you only pay an annual management fee on capital that’s invested. So the acquisition fee really shifts that risk from the investor to us. So in the event we were only to invest, you know, 70% or 80% of the fund, you wouldn’t be paying on at money as is. And that’s pretty traditional in close-ended funds that you’re paying on your entire commitment, but not in this particular fund. So a lot of things to love here.

That is the end of my presentation. So, Jimmy, we can open this up for Q&A. And I guess the last thing I’ll just talk about here is my call to action, which is if you wanna learn more, go to You can go right to our website, download our deck for Growth Fund IV any of our other funds, or you can reach out to us by email at [email protected] So, thank you.

Jimmy: Don’t forget the call to action there, Michael, that’s the most important part, right?

Michael: Yeah.

Jimmy: We do have quite a few questions, and we’ve got another 10 minutes or so to see if we can get as many of these answered as possible. If we don’t get to your question, we’ll try to get it forwarded to Michael and his team. But Michael, I’m just gonna go through these in order. They’re all great questions here. Anonymous attendee asks, does the fund accept 1031s?

Michael: No, no. You know, we’ve never found a way for a fund. This isn’t a Delaware statutory trust, so it doesn’t accept 1031. And I would just say that if you have a 1031, we’ve talked about this, our qualified opportunity zone fund would be great for that.

Jimmy: Yep. Agreed there. A lot of the benefits of the 1031s but a little bit of differences there too. A little more flexibility in some ways. What is the timeline between locking in a price and closed? Michael, based on your comments about buying at last year’s prices, it seems like this can be six months or more, is that right? Is Origin doing diligence during that period?

Michael: Absolutely. Yeah. You know, it depends on what you’re talking about, but if you’re talking about construction prices, those are usually in the due diligence period, about three months out when you’re getting your construction drawings down and you’re going out to subs and all that. But land pricing, we’ve got some deals that the land pricing goes back well over a year because those, you know, go under contract, and then there’s an entire due diligence period on the ground to get the project designed, developed, go through due diligence, there might be entitlements required. So, you know, we’ve entered into deals before that the land was acquired a year-and-a-half, even two years ago. So that’s the advantage. And so land pricing is obviously the first thing you’re going to lock in, and then you have to get your construction drawings and lock in all your subs in the guaranteed maximum price contracts.

Jimmy: Yep. That makes sense. Another question asks, will your fund use debt, and if so, how much?

Michael: Absolutely. Yes, 75% leverage in this particular fund.

Jimmy: Yep.

Michael: Yeah. And Jimmy, I wanna say one thing about that is that, you know, when you consider debt, especially in a ground-up construction, you also have to consider, you know, both the loan to cost and the loan to value. And the reason why we’re comfortable with this is because when we’re looking at our margin on these deals, and we’ll make the math very simple, but if we’re doing a $100 million project and we enter into it with $75 million of debt, if we do our job and the project is worth $130 million by the time we deliver it in 2-and-a-half to 3 years, the loan to value at that time actually declines to about 55%. And then what we will do is refinance the deal at about 65%. So when we talk about that optional hold period, it will be at that two-to-one debt ratio.

And one thing I failed to mention in the optional hold period is that all of the fees, they reset to more of a core plus profile. So your annual asset management fee comes down by 25 basis points. Your period interest goes from 15% to 10%. And it honestly becomes a brand new fund. And, you know, the fees are commensurate with, sort of, the amount of work it takes internally because certainly a much bigger team is required to do the development phase than, sort of, that core plus management phase.

Jimmy: Sure. Yeah, that makes sense. Another question coming in here, at one point you or your slides said co-GP plus JV equity, what do you mean by that exactly?

Micahel: So we invest in multiple parts of the capital structure, but really co-GP, so a lot of our deals are joint ventures, some deals we actually do direct, but what we do is we will go…we have a lot of existing partners and we will go in very early into the development process with what we call GP capital, right, general partner capital. And so for that, there’s a couple advantages of. First of all, that’s higher-margin capital. So typically, the sponsor in a deal is going to get a disproportionate share of the profits in the deal. But when we come in early, we participate in those.

But more importantly, the co-GP, what it does, those dollars, they give us a pipeline of investments, a first look off-market opportunities. And when you have repeat partners who you’re partnering with very early in the stage and you’re helping with the land takedown and you’re helping with the design and the development and getting to know the property, we can de-risk it over that entire period. And it’s an option when we’re the co-GP. We don’t have to be the LP, but we can be. And so in general, you know, in something like that, it’s a big advantage of this particular fund.

Jimmy: Right. Turning now to your preserve project in Austin. Question about that one, what is your projected project cost per unit for that project?

Michael: I don’t have that offhand, you know, I have to say like I have sort of deal merge between all of these different deals. You know, we’re looking at, you know, probably four different deals a week. I can get that to you though on a project-by-project basis.

Jimmy: Sure. let’s see. Another question is asking, why is the time period so short? Is it about four years?

Michael: Yeah, four years. When you think about development, it’s really…So the time period, first of all, I’m not including the one year of capital raising, right? So the one year of capital raising is almost a free look, but we have so many seed deals right now, $80 million that are gonna close. And this fund, we’re either gonna close it when we hit our cap of $250 million or 1 year from the initial close, right? So then the four years starts at the end of the final closing, but four years, when you think about maximizing your IRR, it’s really about three to four years into a period of the development.

So when we put this fund together, there’s really no reason to extend it out to 5, 6, 7 years. Now, in the fine print of the PPM, we do have the ability to extend that initial term by one year. So if we need it for any reason, we can, but I don’t anticipate that because when people wanna get out at the end of four years, we will sell a deal, right? And by that time, we know that we’ll have at least four to five deals that’ll be up and stabilized. So if we have some that are, you know, still in lease-up, those are deals that we will hold and continue to hold throughout that optional hold period.

Jimmy: Okay. Here’s a question from Andy. Andy asks…It’s a two-part question actually, I’ll just ask you the first one first. He’s got a completely separate question next. How have the first three Origin growth funds performed?

Michael: First three, top decile, top decile, top quartile in terms of overall returns relative to other managers. Above a 2x, above a 2x in terms of overall returns. So Fund I, I’ll take you there. So Fund I was a 2.1 net multiple on that fund and it was north of a 20% IRR. Fund II was the same thing, north of a 20% IRR. Fund III is still…we’re harvesting that fund, that will turn out to be about a 1.6x net multiple and about a 12% to 13% net IRR to investors. That was, call it, a 16, 17 vintage in that particular fund. But that one, you know, was top quartile in terms of how it performed relative to other managers.

Jimmy: Very good. Pretty good performance, I gotta say. The second part of Andy’s question, or Andy’s second question is, are LPs able to stay invested indefinitely?

Michael: Yes. Indefinitely is a long time, so we don’t know. We always have the option to wind the fund down, but I don’t see why we would. You know, even if we have one deal in the fund, we can continue to operate it like that because you have to understand that as more and more people wanna liquidate, the way that we get people out is by selling assets. So when we have this fund early on, it might be 12 to 14 assets, and then getting people out will require either 1 or 2 things, refinancing of equity out of the deal, or selling of assets. So indefinitely is a long period. I’m not gonna say that, but for a very long time.

Jimmy: Yep. Understood. Let’s see. Question here from anonymous asks, what do you vision for cashout refis for the various projects in Fund IV?

Michael: Generally, we’re…I mean, at a minimum…I mean, obviously, it depends on ends on the deal. We’ve taken out…I’ll just give you half pass. Like anywhere between, you know, 50% to, you know, more than 100% of our equity in a deal depending on the market. In this particular fund, we’re looking at 30% to 40%, that’s what we’re underwriting, right? And again, when we underwrite in our projections, we put things out there that we believe that we can and stand behind and actually perform. We obviously wanna do better than that. So it could, you know, fall more along historical lines.

You know, when we look at the run-up and what’s happened over the last couple of years, I believe that there’s still a lot of margin in development. I don’t know though that we’re gonna see this same gap that we’ve seen where we’re gonna build for $280,000 and we’re gonna be selling deals for, you know, $500,000 or that they’re gonna be worth $500,000. It could happen. But we’re gonna refinance whatever that, kind of, two-to-one debt-to-equity ratio is and resize them at the time they’re stabilized.

Jimmy: Sounds good. We got time for a few more questions here. We have got a lot of great questions in the Q&A here. If we don’t get to your question, I’m sorry, you can try to get it to Michael by emailing his team. What was that email address again, Michael?

Michael: [email protected] Or you can just email me, I’m [email protected] and I’ll either answer your question or, you know, send you in the right direction.

Jimmy: Okay. Sounds good. Thank you, Michael. But we’ll try to get to a couple more here live before I cut you loose. Danny asks, what’s the estimate for 2022 and 2023 K-1 loss assuming $100,000 investment to simplify?

Michael: Wow, that is a very technical…

Jimmy: He’s asking about accelerated depreciation in development years.

Michael: So you can’t depreciate a property until you’ve actually stabilized it and it comes down. So you will have K-1 losses. What that estimate is right now, I can’t begin to tell you. But you won’t have gains, but in real estate, until you bring that property online, depreciation doesn’t start, but we will absolutely be using accelerated depreciation once those properties are stabilized.

Jimmy: Let’s see. Asking about some of the numbers now, your cash on cash, your IRR projections, the other key projections that you had in your deck, Michael, are those after fees?

Michael: Those are all after fees. Everything’s net, yes.

Jimmy: All after fees. All net. Okay, good. Let’s see. We’ll do another…we got another minute or two here.

Michael: Jimmy, we’ve never had so much time for questions. I think I, you know, abbreviated the presentation, which is great.

Jimmy: No, this is good. Yeah. And the question keep rolling in. So we’ll get to as many of them as we can here. So this anonymous attendee asks, this may have been answered already, but are there specific states that you like to invest in with this fund?

Michael: So, yes, we’re in the Southeast, I mean, you know, when I say tax-friendly states, so you’re looking at places like Nashville, like Texas, Florida. We’re expanding actually into Nevada, Salt Lake City. The biggest driver for us really in today’s market, in any market, is looking at this intersection of where you have high growth and where you have affordability. And affordability is one of the main drivers that we look for because if you’re going into these markets right now that don’t have high growth, that don’t have, you know, the job drivers you need and aren’t affordable, your investment returns are going to be extremely muted. So we are constantly evaluating and expanding our markets. We used to invest in Chicago, no longer. I think the reasons are obvious for that, but everything we’re doing is sort of the Sunbelt markets. And if you think about the smile across the United States, that’s what we’re focusing on.

Jimmy: Awesome. Michael, thank you for joining us today. Our time has run out, but really appreciate your participation and partnership on this event today. Thank you so much.

Michael: Jimmy, always a pleasure. Thank you for having me.