Latest / Go Big with Gib Podcast / Ep 62. Health Wealth Capital Update

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Ep 62. Health Wealth Capital Update · Go Big with Gib Podcast

• 0:00
  Speaker 1: Welcome to the Go Big With Gibb podcast, where we talk to professionals, business owners and entrepreneurs about their big wins.
• 0:06
  Speaker 1: Hey guys, gibb Irons here and welcome to this episode of Go Big With Gibb.
• 0:18
  Speaker 1: It's great to have everybody here.
• 0:20
  Speaker 1: Thank you for joining us today.
• 0:21
  Speaker 1: Today I want to give you an update on Health Wealth Capital and I want to talk about the progress that we've made since we started raising for this fund back in November of 2024.
• 0:34
  Speaker 1: First of all, I'd like to share I'm very pleased to report that we have already raised $4 million.
• 0:40
  Speaker 1: We're recording here today, in February of 2025, and we began this raise in November of 2024, and we've already raised $4 million.
• 0:49
  Speaker 1: So right now, we're averaging about $4 million raised every four months and we're getting ready to start our next raise to get us to a total of $8 million raised.
• 1:01
  Speaker 1: Let me talk a little bit through the deal with you.
• 1:04
  Speaker 1: For those of you that may not be familiar with it, irons Equity, my real estate investment firm, decided to partner with Health Wealth Capital back in October of 2024.
• 1:14
  Speaker 1: We actually physically launched the raise in November of 2024, and we raised through the months of November, december, january and up until about a week ago.
• 1:25
  Speaker 1: I'm really excited to say that the first four properties are going to close.
• 1:29
  Speaker 1: We've got two closings occurring next week, which is the last week of February, and we've got two closings that are set to occur during the first week of March.
• 1:38
  Speaker 1: So we will have acquired the first four buildings by March the 7th.
• 1:43
  Speaker 1: And in other exciting news we've also got seven additional properties under LOI, which means a letter of intent.
• 1:51
  Speaker 1: That means that we're working on negotiating a PSA, a purchase sale agreement, for those seven properties.
• 1:58
  Speaker 1: So right now the current plan is to have 11 properties, 11 medical real estate offices, in Fund 1.
• 2:07
  Speaker 1: As I said before, we're closing on the first four, you know, just within the next couple of weeks.
• 2:12
  Speaker 1: I want to go back and talk a little bit about the deal from a more macro level.
• 2:17
  Speaker 1: The total portfolio value now of all 11 medical real estate offices is $12.3 million.
• 2:24
  Speaker 1: The weighted average entry cap is 8.2%, which is in line with our pro forma.
• 2:31
  Speaker 1: We said we wanna get all of these properties and we wanna purchase them at an eight cap.
• 2:35
  Speaker 1: As far as the forecasted returns these seven new properties that we're going to acquire the returns are identical to the previous deals.
• 2:44
  Speaker 1: But let me go over that real quick.
• 2:46
  Speaker 1: For those of you that may not be familiar, our projected returns we're projecting an 8% to 10% cash on cash return.
• 2:53
  Speaker 1: Our base case IRR is 20%.
• 2:56
  Speaker 1: If we're able to sell to a REIT or convert to a REIT, then we could exceed our projections and potentially achieve as high as like a 25% to 35% IRR.
• 3:08
  Speaker 1: We're projecting a 2x equity multiple, but we could even potentially hit a 3x equity multiple, especially given the pace that we've began the process at.
• 3:17
  Speaker 1: The total equity required for the first 11 properties is $8 million.
• 3:21
  Speaker 1: As I stated previously, we've already raised $4 million and we've got $4 million left to raise.
• 3:27
  Speaker 1: We're getting ready to launch our very next raise, effective immediately, and we're hoping to complete that raise in 90 days.
• 3:36
  Speaker 1: So today is February 21st of 2025 and we hope to raise the second $4 million tranche within the next 90 days.
• 3:45
  Speaker 1: Let's talk a little bit more about the first four buildings.
• 3:48
  Speaker 1: So the first four buildings we've got one building located in Springfield, illinois.
• 3:53
  Speaker 1: We've got a second building in Tucson, arizona.
• 3:56
  Speaker 1: The third building is in Philadelphia, pennsylvania, and the fourth building is in Kansas City, missouri.
• 4:02
  Speaker 1: These are great markets that we're super excited about and I'll be able to share more with you about the seven properties that we have under LOI within the next few weeks, but these properties all fit our minimum requirements in terms of our projected returns.
• 4:18
  Speaker 1: We've got a couple of them that are really exciting that could actually perform better than the first four that we purchased, but as far as acquisitions go, we're getting about 15 to 20 leads every week.
• 4:31
  Speaker 1: Out of those 15 to 20 leads, we're actually underwriting two to three of those properties every single week.
• 4:37
  Speaker 1: The good news is that at this pace, we may be able to accelerate the timeline of the deal and exit sooner than the five-year projected hold.
• 4:46
  Speaker 1: This episode of Go Big with Gibb is brought to you by Irons Equity.
• 4:50
  Speaker 1: At Irons Equity, we specialize in helping investors like you create long-term generational wealth and save money on taxes through recession-resistant real estate investments that create passive income for you and your family.
• 5:03
  Speaker 1: If you want to secure your financial future, go to investwithgibbcom to schedule a 30-minute introductory meeting with me, gibb Irons Again, that's InvestWithGibbcom.
• 5:13
  Speaker 1: I do want to talk a little bit about the debt structure.
• 5:21
  Speaker 1: It's an interesting time in the debt market.
• 5:23
  Speaker 1: Interest rates were a little bit lower prior to the election and they've actually gone up a little bit since then.
• 5:28
  Speaker 1: So for that reason and in anticipation of a potential interest rate decrease, what we have done is we've gone with a floating rate loan and it's going to be a floating or variable rate for 18 months, but we have the ability to call the interest rate and lock in an interest rate that same day.
• 5:49
  Speaker 1: So at any point, if rates drop into the sixes, for example, we could go ahead and lock in a fixed interest rate at that time.
• 5:58
  Speaker 1: So it's a really interesting debt product where we're variable for up to 18 months but have the ability to convert to a fixed at any time within that 18 month period.
• 6:08
  Speaker 1: We're going to do interest only for 12 months and we had originally underwritten the deal as if we were going to have a fully amortized loan from the very beginning.
• 6:17
  Speaker 1: So what that does, by having interest only during the first 12 months, it significantly increases our cash flow, which is another benefit to our investors.
• 6:25
  Speaker 1: Now, for those of you that don't remember, we're doing 65% loan to value on these properties, which is a very low leverage type of a deal which tends to be a more conservative approach.
• 6:36
  Speaker 1: However, on a couple of the properties we've been able to negotiate a 67.5% loan to value.
• 6:43
  Speaker 1: So just that extra 2.5% boost returns a little bit higher and increases our internal rate of return Current market conditions.
• 6:51
  Speaker 1: The interest rate will be SOFR plus 2.75.
• 6:55
  Speaker 1: So we're looking at like a 7% interest rate, maybe 7.1%, as the initial starting interest rate.
• 7:02
  Speaker 1: Again, if we can lock in an interest rate in the sixes, we would be thrilled.
• 7:07
  Speaker 1: I also wanted to share.
• 7:08
  Speaker 1: We are now accepting 1031 exchange money and so for those of you that have a really big exit coming up, you're going to have, you know, over $500,000 of capital to redeploy.
• 7:20
  Speaker 1: If you're looking to do a 1031 exchange, reach out to me.
• 7:23
  Speaker 1: Typically, we want to have a minimum investment of $500,000 to maybe $750,000 to do a 1031 exchange, just because of the legal fees and expenses.
• 7:34
  Speaker 1: But this could be a great way for those of you that have a big exit to 1031 your funds into a medical real estate asset and participate in the fund economics, and so this is a very meticulous type of thing that we're doing and you have to be very meticulous and skilled and have the attorneys draw up all the necessary paperwork.
• 7:57
  Speaker 1: But you can 1031 your funds into our medical real estate fund now and enjoy the diversification and the economics associated with having 11 properties.
• 8:07
  Speaker 1: But we would just have you as a tenant in common in one of the specific buildings to satisfy all the tax laws.
• 8:14
  Speaker 1: Look, guys, if you've already invested with me on the medical real estate fund, this update is for you to hear what we're doing and just to hear the excitement of everything we've got going on.
• 8:25
  Speaker 1: But if you have not already invested with us on the medical real estate fund, reach out to me.
• 8:30
  Speaker 1: As I stated before, we're going to raise an additional $4 million to bring the total raise to $8 million.
• 8:35
  Speaker 1: You would be investing in 11 medical real estate offices, and that's some really good diversification.
• 8:43
  Speaker 1: This deal offers excellent cash flow, a ton of downside protection in terms of we've got private equity-back backed dental practices and medical practices.
• 8:52
  Speaker 1: If the medical tenant can't pay their rent.
• 8:55
  Speaker 1: We've got private equity companies that are signing guarantees that are there to provide rent in the event that that takes place.
• 9:02
  Speaker 1: I think that, out the gate, the fund is doing much better than we ever expected.
• 9:07
  Speaker 1: The potential upside is that we are able to get to $10 to $15 million in net operating income earlier than the projected five-year hold, and if we could do that in three years, this deal really could be a home run for all of us.
• 9:22
  Speaker 1: So thanks again for joining us today.
• 9:24
  Speaker 1: It's always great to have you.
• 9:25
  Speaker 1: I look forward to seeing you next time.
• 9:27
  Speaker 1: Thank you for listening to this episode of Go Big with Gibb.
• 9:33
  Speaker 1: If you haven't already go, follow us on social media at Gibb Irons.
• 9:37
  Speaker 1: We'll see you next time.