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Investing

M51 investments in the real estate industry: three things we are doing right now

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Ori Dayan

24.06.2019

For more than half a century, investing in real estate has been a popular discipline that has grown into its own. Nowadays a common investment vehicle that’s not as glamorous as it looks, real estate investing is an excellent opportunity to diversify entrepreneurial-minded operations and build wealth in the long run.

While there are all sorts of investments in real estate, we focus on those that socially matter for us. Our goal is to create a portfolio that will be accessible to small investors and generate high yields from low-risk level investments.

The method

What’s interesting about this is the method we use. We have AI-powered technology focused on real estate that automatically does due diligence when it comes to risk and ROI equation in real estate. Such use is not yet common in the real estate field, which allows us to gain a competitive advantage in our decision-making ability in terms of assets and their prices when compared to the rest of the market.

This is important because the global real estate industry is somewhat stuck in time when it comes to technological advances. It’s very much like it was in the 50’s as very few things are changing. Through the advanced application of big data and AI, we are able to quickly analyze investment opportunities. The system we built processes a huge amount of information regarding ongoing transactions in the market and creates a pricing model for any asset we are eyeing based on specific parameters.

So, if a project passes that ‘test’, we invest (a little rhyme for you) – it’s that simple. It just so happens we recently invested in three projects and we want to tell you a little bit about them. Just a quick note: these are all the result of technology verifying opportunities for us, not us getting to these conclusions.  

New York City

The United States is one of our most important markets and The Big Apple is almost an inevitable part of it. There are actually a couple of projects in prime locations that we are investing in.

First, we are a part of a joint venture that’s building a seven-story, approximately 82.000 square feet residential project for rent on 4452 Broadway in Washington Heights along with HAP Investments, a full-service real estate development company headquartered in New York City.

a seven-story, approximately 82.000 square feet residential project for rent on 4452 Broadway in Washington Heights

There will be about 11.500 sf of commercial space, as well as parking on the basement level. The residential part will consist of 61 studio apartments, 29 one-room apartments, 28 two-room apartments, and 11 three-room apartments. 30% of the units will be affordable housing, which will grant the project various tax benefits that will increase the net operating cash flow (NOI).

a seven-story, approximately 82.000 square feet residential project for rent on 4452 Broadway in Washington Heights

Unlike most of our real estate investments (as you’re about to read), this is something that we are doing from scratch. That includes buying the land, coming up with the architectural solution, the demolition of the existing building that was in bad shape (because NYC is packed with old buildings) and are expecting the construction to begin in a few months. The project is supposed to be completed in the summer of 2021.

We have a similar investment in the upper east side of New York City that’s a smaller scale project and in its early stages. With development led by Nexus Building Development Group and Immobiliare Capital, a development project located on the 324 E 93rd Street will turn a lot size of 2500 sf into six residential sellable units lodged in 10,170 sf.

Designed by Issac & Stern Architects, this is will be a high-end condominium which will include amenities such as a doorman, elevator, private storage space, gym, and a common roof terrace. We are still sorting out the paperwork on this one but as with our initial NYC investment, the construction should begin in a few months. Project length is 3.5 years and it will look like this:

a high-end condominium which will include amenities such as a doorman, elevator, private storage space, gym, and a common roof terrace

Las Vegas

By all means, Las Vegas is a different kind of investment than New York City because it revolves around real estate flipping: the process of buying, renovating, and selling properties for profit. These are usually old places that have been either neglected or have downright deteriorated.

Unlike NYC, our entire operation is solely our own doing and is ready to go from the moment we fixate on a property. We’ve partnered up with Precision Assets, a local real estate investment company that specializes in short term BVS model of residential property. The entire flipping process is short term and generally lasts about five to six months (as opposed to the more standard one or two-year development), with a 50% cash-on-cash yield.

So, why Las Vegas? Is it a kind of gamble we’re doing (pun intended)?

For the past couple of years, Las Vegas is experiencing a constant influx of people moving there, particularly from California where high taxes and cost of living are becoming too much to handle. Job growth is on the rise while the unemployment rate dropped 0.3% in 2018.

On its own, The Gambling Capital of the World is perceived as an easy place to live with a very  temperate environment. One huge plus is the lack of state income tax (that’s right, 0% as opposed to California’s 7% to 13.3%) which certainly helps. Add to the fact that the Oakland Raiders from the NFL are slated to move to Las Vegas in 2020 or so and you get a huge demand for housing.

An increasing number of people wanting to live in Las Vegas means the basic supply and demand equation is at full force. There are lots of opportunities because housing in Nevada hasn’t been blooming since 2008, which is where flipping comes into play.

That is why we are aiming at underdeveloped housing that needs a certain amount of repair and fixing before resell. The houses themselves are underpriced and seeing as this is going to be a rapidly rising market, you can see why we saw Las Vegas as an opportunity to invest.

Because of the said developments, there’s an added reassurance in the case that flipping doesn’t work (for whatever unforeseen reason) as we are fairly certain that the housing market will eventually drive up the prices. That’s an example of low risk/high yield we mentioned at the beginning of this post.

Tel Aviv – Brown Florentine

Sticking to our neighborhood this time, we are investing in the latest project from Brown Hotels.

Probably the easiest way to describe Brown Hotels would be to say it’s a Tel Aviv-based design hotel brand. That might sound like your regular, everyday hotel chain but Brown Hotels is anything but. This is a collection of boutique hotels in Israel and Croatia that ooze with style and authenticity, each with its own little something in that ever so charming way.

Still, being a comfy and cozy hotel is one thing and being business-worthy is another. The growth of the chic hotel brand segment is one of the more evident in the real estate industry and we wanted to be a part of that. So, when the opportunity to invest in one of Brown Hotels’ latest projects – Brown Florentine, named after the neighborhood it’s in – came up, we pounced.

Land in the MOMA project in south Tel Aviv will be a setting for a new boutique hotel. To be precise, this will be a 190-room hotel on the complex that will consist of two 18-story residential towers and two seven-story boutique buildings. The hotel will include a restaurant, bar, club, swimming pool, spa and fitness room that will be open to the rest of the project’s residents, while Brown Hotel will offer additional services to the buyers.

Compared to the previous investments, this is the most straightforward investment for us at the moment. What else can we say except one thing: we’re excited to be a part of this ever-evolving group of boutique hotels.

That would be it for now. We are just heating up with real estate so expect more related news and if you have something interesting for us, let us know!

Image credits:

https:// hap-ny.com/project/hap-seven/

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