June 14, 2023
Core Markets Series: Dallas-Fort Worth
MLG Capital’s direct acquisition strategy for multifamily real estate focuses on our core markets throughout the Midwest and Sunbelt regions. In our TX operations, our current portfolio includes 8,900 total apartment units across 3 MSA’s (as of 6/5/2023) – Dallas-Fort Worth, Houston, and San Antonio. A primary target for our direct acquisition strategy has been the Dallas-Fort Worth metroplex, dating back to 1988 when MLG first acquired in this market. MLG’s current portfolio includes 12 multifamily properties located in the Dallas-Fort Worth region, totaling over 3,700 apartment units. Each one of these properties is managed by Valiant Residential, our subsidiary management company that is based out of Dallas who manages over 19,000 units (as of 6/5/2023) in the Dallas-Fort Worth market and shares an office with MLG’s Dallas team. Real estate in this area has thrived due to its diverse economy, robust population growth, and geographical advantage. Due to these factors, we believe this market will continue to flourish for years to come. Highly Active Transaction Market Dallas-Fort Worth has established itself as a powerhouse in the multifamily sector of the real estate world, achieving remarkable transaction volume and sales figures. According to a report by Multi-Housing News, the Dallas-Fort...
May 18, 2023
The MAD Initiative: War Memorial Center
Milwaukee County War Memorial, Inc. is the newest addition to our organization partnerships for the MAD Initiative. The War Memorial Organization is focused on and committed to their mission: “Honor the Dead. Serve the Living.” The Milwaukee County War Memorial supports over 50,000 Veterans on an annual basis. Some of the different ways they support these veterans include programs that spread awareness about suicide among veterans, provide support for mental health care among veterans, informational sessions on new Acts being implemented, and workshops to grow and heal with other veterans. The Milwaukee County War Memorial was originally dedicated on Veteran’s Day in 1957. In 1974, 17 years later, it was declared a Landmark in Milwaukee. The beautiful War Memorial Center located right on Lake Michigan was designed by architect Eero Saarinen. Mr. Saarinen has a long resume of outstanding work, but his most well-known work includes the St. Louis Gateway Arch, New York’s JFK Airport, and Washington, D.C.’s Dulles International Airport. The War Memorial Center has become a staple of downtown Milwaukee located right next to other museums that are popular and educational attractions in Wisconsin. With support from the community, the Milwaukee County War Memorial can accomplish great things....
April 19, 2023
Core Markets Series: Atlanta
At MLG, we pursue direct and joint venture acquisitions throughout the Southeast region, focusing our efforts in Georgia, Tennessee, and Alabama. The Southeastern states are some of the fastest growing in the country, as the region has outpaced the United States in population growth by roughly 40% the past 50 years.1 One of our primary target markets within this region is the Atlanta Metropolitan Statistical Area (MSA). Atlanta is an attractive market, boasting a strong job market, access to quality higher education, major employers, and continued growth over the last two decades. Our portfolio currently consists of investments in 5 properties across the Atlanta MSA. There are 4 main reasons why we like the Southeast region and specifically the Atlanta MSA: High population concentration and continued projected population growth Stability of the labor market and low unemployment Strong economy and job growth Access to a more liquid investment High Population Concentration and Continued Projected Growth Atlanta is ranked the 8th largest MSA in the United States and currently has a population of over 6.1 million people.2 This accounts for more than half of the state of Georgia’s residents. From 2015 to 2020, the Atlanta MSA ranked 3rd in net population...
April 11, 2023
Understanding the K-1: A Guide for Real Estate Investors
As an investor in a diversified private real estate fund, you have likely come across the term “K-1” and have wondered both what it is and what it means to you. The K-1 is an important tax form that every investor in a partnership, including a real estate investment fund like the series of MLG Private Funds, receives annually, and is a very important document needed for filing your taxes. Let’s break down what a K-1 is, and more importantly, how this document can impact real estate investors personal tax filings. What is a K-1? A K-1 is a tax form that is used to report a partner’s (investors) share of the income, deductions, credits, and other allocable items of a partnership. It is required to be filed by every partnership (including a real estate investment fund) with the Internal Revenue Service (IRS) and provided to each partner (investor) annually. The K-1 reports the investor’s annual share of the partnership’s taxable income and is used to prepare the investor’s individual tax return What information is included on a K-1? A K-1 form typically includes the following information (see an example 2022 K1 from the IRS): Your tax basis calculation...
March 21, 2023
Core Markets Series: Midwest
The Midwest, as defined by the Bureau of Labor Statistics, is comprised of 12 states (IL, IN, IA, KS, MI, MN, MO, NE, ND, OH, SD, WI), over 68 million people, and is the backbone of American production. The Midwest is built on a deep history of agriculture, manufacturing, and mining industries that continue to fuel growth and have paved the way for advancements in tech, medical, and logistical innovation today. When we look at commercial real estate, the Midwest presents an opportunity to acquire quality properties, in a market with a significant percentage of individual and regional owners and strong rent-to-income ratios, often at higher cap rates than other regions. Its centrality and robust industries fuel stable job and wage growth and predictable population trends, all of which are critical to income growth and reducing the risk of supply imbalance. MLG’s corporate headquarters in Brookfield, WI positions us well to take advantage of these strengths and acquire quality real estate in the Midwest. Below are some of the reasons we like investing in commercial real estate in the Midwest: Individual and Regional Owners: The Midwest, seemingly more so than other regions, has numerous individual and regional owners of real...
March 1, 2023
How to Prepare for Tax Season: 2022 Edition
It’s that time again, tax season is upon us! At MLG Capital, we understand the benefits that taxes, specifically as they relate to real estate investment, can provide for us and for our investors. It’s important to us that our investors understand these benefits and how they may be able to use them to their advantage! This article provides a 2022 Tax outline roadmap for real estate investors to better equip themselves for a successful tax filing year now and for years to come. Tax Estimates: Throughout the 2022 tax year, you may have had tax estimates distributed to you or your financial professional (or both). As a passive investor, this will be a key starting point in understanding what your tax exposure looks like for 2022. For current MLG investors, you should have received tax estimated on December 31st, 2022. The information provided in this blog is subject to and does not alter any investment agreement with MLG. Capital Gain and Loss: As a real estate investor, 1231 capital gains from property sales are usually one of the bigger highlights from the reporting year. 1231Capital Gains are generated from depreciable property and real property used in a business...
February 15, 2023
Valuation Reporting: What Should I Know as an Investor in Private Real Estate?
You’ve made the decision to make an investment in a private real estate offering, congrats! Now, you’re in receipt of quarterly distributions to your bank account along with all the various reporting that measures your investments’ performance. In this article, we’ll highlight some of the most commonly used valuations metrics to help you understand both what they mean and how you can use them to assess your investments’ performance. NAV (Net Asset Value): In real estate investing, NAV is calculated as the estimated value of all assets in a fund (less liabilities) divided by the number of shares or units. It is used to determine the market value of the fund. The fund’s investments in real estate are classified as Level 3 investments, meaning valuations are derived from other valuation methodologies, including pricing models, discounted cash flow models and similar techniques. It is not based on market, exchange, dealer, or broker-traded transactions. Because of this, the NAV of an illiquid investment, like private real estate, is only an estimate of the current market value and may be subject to change. Valuation: NAV is used to determine the value of a private real estate fund, which is important for both the...
October 21, 2022
Asking the Right Questions about Cap Rates
If you’ve ever spoken with a commercial real estate sponsor, you’ve probably heard a lot of chatter about cap rates. By technical definition, cap rate is the net operating income (revenues minus expenses) of a property divided by the purchase price. For those more familiar with the stock world, a cap rate is essentially the inverse of a PE ratio – 5% cap rate would be equivalent to a paying 20 times earnings for a stock. In theory, real estate investors should be interested in buying at high cap rates and selling at low cap rates. Metrics like cap rates help investors answer the question: “How much am I willing to pay for the operating income provided by this asset?” To answer that question, here are two important follow-up questions investors should also be asking: How consistent and/or perpetual is the operating income going to be? Is there an opportunity to grow the operating income? And if so, how much is it going to cost? All too often, investors get hyper focused on a cap rate but fail to ask the follow up questions above. Consider a couple examples: Example 1: An investor is considering investing in two single tenant retail buildings....
October 4, 2022
The MAD Initiative: St. Augustine Preparatory Academy
The Making a Difference (MAD) Initiative was established to bridge the gap between our business strategy and our philanthropic goals. The concept was originally tested with a limited number of investors in benefit of Lifesong for Orphans, of which our CEO, Tim Wallen, serves on the board of. Since 2017, the MAD Initiative has generated over $120,000 to Lifesong and we decided to expand our efforts to benefit organizations in our local community. Our additional six organization partners are faith-based and/or focus on youth education and were selected based on our employee engagement within them. St. Augustine Preparatory Academy (Aug Prep) is a K4-12 nondenominational Christian school with a mission to develop their students to be leaders known by their strength, character, courage, intellect, impactful contributions, and their faith. Aug Prep was founded by the Ramirez family, who committed to investing in high-quality education on the southside of Milwaukee. Launched in 2017 with 590 students, Aug Prep has grown to serve more than 1,500 students today, with waitlists in almost every grade. Currently, 96% of Aug Prep students are Hispanic or black, coming from 42 zip codes across the City of Milwaukee. 87% come from low-income backgrounds and 99% are eligible for...
September 14, 2022
Operators, Allocators and Why We’re Both
When it comes to real estate, there are a variety of ways that an investor can participate; most times, it’s through the lens of passive investing, or active investing. When it comes to real estate firms, you’ll find that there are similarities. Some may focus on allocation of funds (an allocator) and other on active day-to-day management (an operator), known as property management. Both strategies are essential to the success of an acquisition. That’s why, at MLG, we’ve chosen to do both. What is an Operator? Real estate operators are companies that engage in the day-to-day management of their properties. This can include leasing, maintenance, and renovations, among other tasks. Operators offer a unique perspective on property performance and local trends, while staying in-tune with their residents’ specific demands or desires. This may help inform some of the decisions being made on where funds need to be allocated to retain current tenants or attract new ones. This article from Tim P. Wallen is a great example of how understanding the wants and needs of a local market’s residents can help an operator make financial gain through a value-add strategy. Because of their market knowledge (whether locally, regionally, or nationally), the expertise of...
