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Blog

Shannon Robnett Industries’ Blog About Business
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Shannon Robnett Industries (SRI) doesn’t just have a personal and financial stake in syndicating real estate deals in Boise, Idaho.  Shannon Robnett is building the future of his home town and investing in his back yard.  Because as you know Real estate success is only one sign of economic health, so the healthier businesses are overall, the more robust the economy is overall, improving the odds we have for success in real estate. It is one big cycle.
This is why SRI takes the time to maintain a blog about business. Our entries discuss some strategies we and our clients can employ to keep Boise’s economy--and our businesses--as strong as possible.

MoneyShow Virtual Expo: The Boise Growth Fund


Did you miss Shannon's MoneyShow Presentation?  Don't worry, we've got you covered!

In case you were not able to make it, below is the recorded version.

Shannon shared insider tools and tactics that have proven themselves to be an effective and profitable year in and year out. He also shares about the solution he is creating to allow investors the opportunity to quickly create passive income regularly without the headache or stress.


Tune in and find out how his solution can work for you.




Equity Multiple VS Internal Rate of Return

 In syndication deals, sponsors have metrics. This confuses the potential investors as it is hard to comprehend what every one of the numbers means and how it identifies with their investment strategy. 


Two often used metrics to measure potential returns are equity multiple (EM) and internal rate of return (IRR).  Investors use IRR to compare several deals and would pick the one with higher IRR.  However, this is not always true.



Equity Multiple


Equity multiple estimates the total returns from an investment. including cash flows from distributions, the initial investment (principle) and also any gains from appreciation of the property.  It is the ratio of this total over the original investment.  However, notice that there is no consideration for the element of time.  So a deal with an equity multiple of two only tells the investor that the sponsors have projected a “doubling” of the investor’s money.  However, over what period of time?



Here’s the formula for calculating an equity multiple:


Equity Multiple = Total Distributions / Total Equity Invested (principle)



Example 1:


An investor invested $1,000,000 in a deal.  The sponsor has distributed annual returns of $200,000 to the investor over a 5 year period.


$200,000 x 5 years + $1 million investment / $1 million total equity invested = 2.0x


In this example, an investor receives an equity multiple of 2.0.  In other words, for every $1 invested in the property the investor gets back $2. (An equity multiple greater than 1.0 means you receive more cash back than invested, while an equity multiple below 1.0 means less money is returned than what was originally invested.)


Example 2:


An investor invested $1,000,000 in a deal.  The sponsor has distributed annual returns of $100,000 to the investor over a 10 year period.


$100,000 x 10 years + $1 million investment / $1 million total equity invested = 2.0x


The equity multiple for both of the above examples is 2x, however as you can clearly see the hold period for example 2 is twice that of example one.   So an investor should not compare two different deals just based on equity multiples as two deals with the same equity multiple can have very different hold periods.  This is where the use of IRR becomes important.


Internal Rate of Return

The IRR calculation considers the time value of money (TVM) while the equity multiple calculation doesn’t. However, equity multiple reports the total cash return of an investment while the internal rate of return measures average cash return over a hold period, taking into consideration that the value of money depreciates over time.



A property with a high IRR may return more money to investors faster, but not necessarily more money overall. Here is an example:



In the above example the initial investment by the investor was $200,000. The total returns are $300,000 (including the initial investment of $200,000). The IRR for this deal is 18% and the equity multiple is 1.5x


Notice that the sponsor returned $100,000 back as distributions in year one which makes the IRR inflated.



In this second example we use the same initial investment of $200,000. However the distribution improves over time.  Notice that because in the IRR calculations the money earned today is weighted more than money earned tomorrow or the day after tomorrow the IRR for this particular deal is 11%.  However, the equity multiple for this deal still remains at 1.5x because the total returns haven’t changed between the two deals. So, IRR can be manipulated by timing the cash flows 


Based on the examples given, investment decisions should be based not only on one metric but all.


Check out our real estate deals to invest on as a passive partner.








Real Estate Development | Multifamily Construction and Syndication

 



In this video, Shannon Robnett talks about his 40 years of experience as a builder, developer, realtor, and multifamily syndicator.

Aaron is a private money lender and real estate agent in Austin, Texas who helps real estate investors, builders, and developers leverage their money to get higher returns on their deals. 

He also help buyers buy homes in the Austin area. He post videos relating to the following topics: 

• Real estate investment 

• New construction • Spec homes 

• Fix/flips 

• Finance 

Connect with Aaron Trevino:

Facebook Group

Instagram

Youtube

Email


Boise Ground Up Construction Multifamily Investor Returns with Shannon Robnett

"They realize that they don’t want to hold that for five to seven years, because it marginally improves from there. But the main value like you said before we started the show, the original value add was the ground up development, putting the sticks and stones together, creating the value by putting the tenant in and creating that cash flow. And liquidating at that point as soon as you can, because the sooner you can get your your 25% return, the better that looks because if it takes you eight months to do it, versus 12 months to do it versus 16 months to do it, you’re still getting a 25% return but your IRR or your return for the year is substantially affected by the duration of time." - Shannon Robnett



Click & Listen: https://traffic.libsyn.com/secure/commercialrealestatepronetwork/Boise_Ground_Up_Construction_Multifamily_Investor_Returns_with_Shannon_Robnett_-_CRE_PN_291.mp3?stats-code=Boise Ground Up Construction Multifami

 

APT Capital Group - Ground Up Development with Shannon Robnett

 

Few deals can promise the high returns that you can get from ground-up development. Today we bring in ground-up expert Shannon Robnett to discuss this asset class. With 40 years in real estate and having completed over 200 million dollars in construction projects, we open our conversation with Shannon by touching on his career highlights. After sharing why ground ups can be such valuable investments, Shannon dispels the myth that ground ups are always risky, especially when compared with multi-family risks. We chat about how having a reputable and experienced team mitigates most ground-up risks before diving into common challenges that ground ups. Reflecting on how the pandemic has led to huge population shifts, we talk about why now is one of the best times to get into ground-up. Near the end of the episode, Shannon gives listeners his insights into how he picks his projects, the importance of understanding your market, what real estate tool he can’t live without, and the main takeaways from his biggest real estate mistake. Tune in to learn more about lucrative ground-up investing.




Key Points From This Episode:
Introducing seasoned investor and ground-up expert, Shannon Robnett.
Shannon shares details about his extensive real estate experience.
Comparing the multi-family risks versus ground-up risks.
What makes ground up such an excellent asset class. How you can reduce risk when making ground-up investments.
Why now is a better time than ever to get into ground-up investing.
Exploring the challenges that many ground-ups face. How ground-up beginners often make mistakes with their timeline.
The importance of knowing your market when making deals.
Hear Shannon’s advice on getting into ground-up. Insights into how Shannon picks his market and develops different asset classes.
How Shannon grows his business by picking the best possible people for the job.
The top real estate tool that Shannon can’t live without.
Shannon shares the main takeaways from his biggest investing mistake.

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For today’s show notes, including audio and links to all the resources mentioned, visit www.aptcapitalgroup.com/podcasts.
To get access to our free Passive Investors Guide and monthly newsletters sign up at www.aptcapitalgroup.com.
To find out more about partnering or investing in a multifamily deal email info@aptcapitalgroup.com.

5 Talents Podcast - $200M in Construction Projects; How to Get Started with Real Estate Syndication

 


Real estate runs in Shannon Robnett’s blood. He belongs in a family involved in real estate--5 generations now--and continues to pay it forward in the last 40 years, focusing on the multifamily and industrial spaces as a developer. 

His decade’s worth of experience in real estate led him to participate in over $200 million in construction projects including fire and police stations, schools, and industrial and mini storages. He didn’t do all this by himself, and that’s what he’s going to talk about today. 

Let's listen to Shannon to know how to get started in real estate syndication! 

[00:01 - 06:14] Opening Segment

  • Let’s get to know Shannon Robnett
    • 5 generations in the real estate 
  • College is an option, not a be-all, and end-all
[06:15 - 17:06] The Ultimate Value-Add 
  • We talk about the “ultimate value-add” in real estate 
  • What you should do if you want to bring a value-add
  • Shannon wants you to remember this real estate advice 
[17:07 - 30:23] A Community of Multifamily Syndicators 
  • Shannon talks about his approach in real estate 
  • He gives interesting insights about real estate partnerships 
    • Don’t focus on everything
  • Shannon’s tips to start investing in real estate 
[30:24 - 40:44] Success in Real Estate
  • The belief that you can succeed in real estate
  • Connect with Shannon! Links below
  • Shannon shares 2 books you should read!
[40:45 - 44:35] Closing Segment
  • Final words from Shanon and me


Our Expanded Social Media Presence
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In addition to our blog, Shannon Robnett Industries is active on:

Asset 7

A home base for all things SRI, including an  e-calendar to  book discussions about ground up real estate syndication.
Asset 3

Robnett’s Real Estate Rundow: An audio version of many of our YouTube videos. Ideal to listen to in your car or otherwise on-the-go.
Asset 1

A series of videos that frequently include interviews with our favorite financial experts.
If you have questions about Shannon Robnett Industries’ role in the local real estate investment industry or would like to suggest topics for this blog, contact us or call 208-405-6176 today. We would love to hear what our community members have to say and the type of financial advice you find most useful. We care about Boise and surrounding cities because we live and work here. We’d love to help you make investments that make you happy to live and work here, too.
Contact Us Today