What Would I Do With $25 Million In Equity

ANSWER: Build A Cash-flow Machine...

I had a new partner ask me the other day, "What Would You Do With $25,000,000 In Equity".

I said "Dave, that is an excellent question and the answer is I would execute on the past 5 years of research we have done to create a diverse cash-generating, tax advantaged portfolio with income from at least 10 different sources that are not correlated to the markets or each other" .

This is what a $25,000,000 Custom Private Equity portfolio would look like in 2016/2017:

1) Invest for 50% ownership in 5 institutional style self storage facilities  on sites we have researched, analyzed and selected in South Houston, Dallas and Austin for $8.5 million.  Today there is an unusual disconnect in this asset class that makes it exceptionally attractive, many times posting 50% gains. I would reinvest income from this program until I had a minimum of 15 properties, then I would consider selling in year 5 to 7.  If the market was not right for a sale, I would hold the properties and continue to pocket the cash-flow, building other properties and diversifying into other first tier markets.

2) Invest equity to buy a 100 unit apartment complex that is 100% occupied with a waiting list since full renovation in 2005 (75% leverage) ($2.5 million).  Average rent is about $1.35/sq.ft. This is the premier highrise apartment complex in the marketplace. After maintenance, profits from this property would be earmarked for the venture program described below.

3) The Hispanic marketplace in Texas is exploding, doubling in size about every 10 years and accelerating.  Our research shows that this is a very underserved marketplace in many areas.  The entertainment/supply services sector for this market segment is struggling to keep up and people who are supplying this market niche are making extreme profits.  I would build a regional Mercado (Mexican Market) for new products with a 10 acre area for a flea market attached.  The Mercado would contain a nice entertainment venue. The investment would be ($1,000,000) with 75% leverage. Beer sales and Quincinera rentals alone would return a nice IRR.

4) We are seeing a once in a 30 year oppportunity to purchase oil and gas assets  that produce nice income at $30 oil and $2 gas.  I would use $10,000,000 to seed a distressed oil and gas income fund  to purchase oil and gas income properties from financially distressed sellers.   A portion of profits would be used to build the portfolio for sale in 5-7 years.

5) I would put $2.0 million to work in a venture capital fund with the Angel Networks in Texas and participate in medical equipment and robotic product development.  

6) I would keep $2,000,000 in reserve for working and development capital beginning to plan and execute the building of a 60 acre solar farm located in West Texas.

As a long term investment, I would use some of the income from these programs to purchase and hold in a land bank, select parcels of raw land in the Trinity Grove redevelopment area of Dallas , located one mile west of the Central Business District of Dallas, Texas, and the Houston Medical Center complex located 2 miles south of the CBD in Houston.  Both of these areas are accelerating in development with considerable low risk investment opportunities available and are ripe for the picking.  Target returns on this program would be 5x in 10-12 years.

We are open to new programs and ideas continuously.  Give me a call to discuss.

Remember:

Diversity and Cash-flow are the keys to success

in the Private markets.

Opportunities Are Coming Our Way

My newest whitepaper is a highlight of what an equity investors portfolio would look like if s/he had been partnering with us since the mid-1980's with a view of some of the ongoing programs we have available today.

We are open to new programs and ideas continuously.  

Thanks for reading,

Paul Anthony Thomas, Principal

Custom Private Equity

Abilene, Texas

 (c) Copyright 2016 - Paul Anthony Thomas, Abilene, Texas