#3 - The SPV

Hello, GPs, LPs and JVs,

Today’s post was going to be about our analysis of the DC market and how we have systematically collected data from 2021 through 2024 (YoY) to build our case and thesis for developing a single family rental portfolio for our first offering. While that is extremely important, we decided to pivot and provide a little insight into our solution for short term investments, and why it matters.

During this past week I had the opportunity to visit with some fellow fund managers and talk shop about our plans for multi family investing in 2025. We discussed things like how our firms would find and structure deals, how we would offer these deals to our investors, the numbers (IRR, Preferred Return) and ultimately raising the capital and collaborating with each other. Before I go any further, I want to make sure you understand our definition of multi family. When we discuss our businesses and things like syndication and funds, we do so with the intention of operating in the economy of scale. In a nutshell, that means bigger is better.

I will use myself as an example. I began investing in real estate with no license, no credentials, no experience and no team. I bootstrapped every deal that I did out of my own pocket and learned many valuable lessons along the way through my successes and failures as an investor. It has taken me 25 years to learn that if I want go fast, I go alone, BUT, if I want to go far, I go with a TEAM. That goes for the strategy behind our investments as well. When we launch later this year, our firm (SEVILLE Capital Partners dba SEVILLE Capital) will be a middle market investment firm that offers institutional grade investment opportunities to our investors. In the DC Metro area, there are a lot of people who claim the title of real estate investor. 99% of these people operate outside of the economy of scale and therefore, are no competition to us.

Our definition of multi family is not the duplex or quadplex in the city. Our definition of a multi family building is at least 40 units and above. Remember, our goal is to be operating in the economy of scale where our ability to use leverage is not based on a personal credit score, as opposed to how well an asset is producing (cash flow). We are moving away from investment strategies that involve recourse lending, into strategies that involve non-recourse lending. With that said, most of the commercial investment firms who offer institutional quality investments ONLY offer these opportunities to accredited investors, which are defined by our good friends at the SEC as:

1. Net worth over $1 million, excluding primary residence (individually or with spouse or partner)
2. Income over $200,000 (individually) or $300,000 (with spouse or partner) in each of the prior two years, and reasonably expects the same for the current year

There are a lot of people who do not fit this criteria, and it is not confined to a particular demographic, race, or geography. We briefly touched on this in our first post citing the differences between the public and private markets, and why this definition is so important for people who are interested in growing their wealth outside of the public markets. That is why we created our SPV (Special Purpose Vehicle) for short term investments.

In an nutshell, the Short Term SPV was created by us as a way to diversify our activities by offering short term, syndicated investment opportunities to investors who are looking to grow their cash NOW. These opportunities are available to both accredited and non accredited investors, and typically close out in less than 1 year and, offer a risk adjusted return with a lower financial commitment than some of the SFR and multi family offerings we will be sponsoring. From our internal analysis and general conversations, there is a huge demand for these types of investments to be offered at scale and using a commercial methodology so we answered the call. Our hope is that our LPs will enjoy the flexibility of different types of offerings and will choose to stay with us long term as we grow and mature as a firm. More to come……..

• We have completed the content for our thesis and pitch deck and could not be happier. We are closing in on a finished product and will be ready to share that soon.

• We have identified a web developer that will be working with us to develop our online presence and website.

• We are developing our real estate focused media brand “THE SYNDICATE”, which deals with accessing and investing in the private markets from the minority perspective. In a world where being able to reach people where they are is critical for business development, we have decided to deploy multiple channels with our message of investing and wealth creation. Exciting times indeed !!!!!

• We begin drafting the private placement memorandum next month. That takes us one step closer to being “open for business”.

In closing, we would like to reiterate our dedication to bringing our LPs a quality opportunity via a first class platform. We are taking our time to ensure that our web presences, IVM platform and tech stack are all top notch. In our next post we will dive back into our analysis of the DC Metro market and the uniqueness of the opportunity to invest.

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For general inquiries please contact us: [email protected] 

v/r,
Michael Gillespie
SEVILLE Capital Partners