The Distress Window: Buying 20–40% Below Replacement Cost (And How Jai Executes in 23 Days)
Written by– Jai Thompson Training Article
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🧭 INTRO
Jai Thompson manages a private equity platform deploying $13–18 million per quarter across multiple real estate asset classes.
His model is asset-based, escrow-directed, and execution-driven, allowing closings in 23 days or less with certainty and clean title flow.
He acquires across:
• Luxury estates
• Multifamily communities
• Hospitality & hotels
• Mixed-use & destination assets
Capital is structured. Teams are built in. Disbursements are escrow-controlled.
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🔥 WHAT “BELOW REPLACEMENT COST” REALLY MEANS
👉 Replacement Cost = what it costs to build the same property TODAY
Example (3rd-grade math):
• Build cost per unit = $200,000
• 150 units
👉 150 × 200,000 = $30,000,000
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Distress Pricing (Grant’s Point)
If debt is maturing + seller is stuck:
👉 Deal hits market at:
• 30% below → $21,000,000
• 40% below → $18,000,000
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💡 WHY THIS HAPPENS
Because of debt pressure:
• Loan matures
• New rate is higher
• DSCR fails
• Bank reduces loan
👉 Seller must:
• Bring cash ❌
• Refinance worse ❌
• Sell ✅
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🧠 HOW JAI PLAYS THIS (85/45/24 ON DISTRESS)
Example Deal (150 Units)
FMV (replacement): $30M
Distress price: $21M
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Step 1 — Offer (85%)
👉 $21M × 0.85 = $17.85M
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Step 2 — Recorded Price (45%)
👉 $21M × 0.45 = $9.45M
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Step 3 — Lender (24%)
👉 $21M × 0.24 = $5.04M
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Seller Legacy Payoff
👉 $17.85M − $5.04M = $12.81M
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💰 INCOME (REAL SIMPLE)
• Avg rent = $1,500
• Units = 150
👉 150 × 1,500 = $225,000/month
👉 $225,000 × 12 = $2,700,000/year
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Expenses (50%)
👉 $2.7M × 0.5 = $1.35M
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NOI
👉 $2.7M − $1.35M = $1.35M
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Debt (10% IO)
👉 $5.04M × 10% = $504,000
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DSCR
👉 $1.35M ÷ $504K = 2.67x
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Debt Yield
👉 $1.35M ÷ $5.04M = 26.7%
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✔ Strong
✔ Financeable
✔ Safe
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🧠 WHAT YOU ARE LOOKING FOR (CRITERIA)
🎯 DEAL FILTER
Look for:
1. Debt Pressure
• Loan maturity in 3–12 months
• Floating rate debt
• Bridge loans
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2. Pricing Clues
• “Unpriced” listing
• “Call for guidance”
• “Motivated seller”
• “Value-add opportunity”
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3. Performance Gaps
• Low rents vs market
• High vacancy
• Poor management
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4. Broker Language (THIS IS GOLD)
If they say:
• “Needs recapitalization”
• “Refinance challenge”
• “Ownership exploring options”
👉 That’s your deal
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📲 CREXI / LOOPNET INTRO MESSAGE (SHORT)
Version 1 (Under 400 chars)
Looking for multifamily with maturing debt or recap needs. We structure asset-based acquisitions with escrow-controlled disbursements and can close in 23 days. Prefer opportunities trading below replacement cost with clear NOI upside. Can move quickly with lender alignment.
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📧 BROKER OUTREACH EMAIL
Subject: Off-Market / Debt Maturity Opportunities
Hey [Broker Name],
I’m actively acquiring multifamily assets where debt is maturing or refinancing is a challenge.
We focus on deals trading below replacement cost where ownership needs a clean, certain exit.
Our model is asset-based and escrow-directed, allowing us to close in 23 days with full alignment between lender, title, and seller.
If you have anything with:
• Loan maturity
• Recap needs
• Pricing pressure
I can move quickly and structure around it.
– Jai Thompson
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💬 TEXT TO BROKER
Hey [Name], quick one — I’m targeting multifamily with maturing debt or recap pressure, ideally below replacement cost. If you’ve got anything like that, I can move fast and structure a clean close.
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🏦 LENDER INTRO EMAIL
Subject: Multifamily Deal – Strong DSCR / High Yield
Hey [Lender],
I’m underwriting a multifamily acquisition below replacement cost with strong in-place cash flow.
Quick numbers:
• NOI: $1.35M
• Loan: $5.04M
• IO Payment: $504K
• DSCR: 2.67x
• Debt Yield: 26.7%
Conservative leverage, strong coverage, and clean structure.
Looking for IO execution with flexibility.
Let me know terms you’d be comfortable with.
– Jai
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🏢 TITLE COMPANY EMAIL
Subject: New Transaction – Structured Disbursement Deal
Hello,
We’re opening escrow on a multifamily acquisition with title-directed disbursements.
All funds will flow through escrow with a structured breakdown from the recorded price.
No outside cash — full transparency and alignment.
We will provide disbursement summary and closing timeline.
Target close: 23 days
– Jai Thompson
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🔁 ROLE PLAY (JAI vs BROKER – 10 TURNS)
Broker (Carson): What are you looking for exactly?
Jai: Assets where debt is maturing or ownership is feeling refinance pressure.
Broker: Pricing expectations?
Jai: Deals trading below replacement cost with real income.
Broker: Why below replacement?
Jai: That’s where the risk is lowest and upside is built in day one.
Broker: How fast can you move?
Jai: 23 days once we align on numbers.
Broker: What makes you different?
Jai: We structure the deal around the asset, not personal credit.
Broker: What about lender risk?
Jai: DSCR above 2.5 and high debt yield — lender is protected.
Broker: What about seller certainty?
Jai: Escrow-controlled disbursements. No confusion. Clean execution.
Broker: What size?
Jai: 100+ units preferred, but will look at smaller if pricing is right.
Broker: Send proof?
Jai: I’ll send the Certainty Kit and structure summary.
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📊 USE CASE 1 – 200 UNIT DEAL
• Replacement cost = $40M
• Distress price = $28M
👉 You enter at:
• Offer: $23.8M
• Recorded: $12.6M
• Loan: $6.7M
👉 NOI: $2M
• DSCR ≈ 3.0
• Yield ≈ 30%
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🏨 USE CASE 2 – HOTEL (100 KEYS)
• Build cost = $250K/key
👉 100 × 250K = $25M
Distress price = $16M
👉 You control:
• Offer: $13.6M
• Recorded: $7.2M
• Loan: $3.8M
👉 NOI: $1.2M
• DSCR = 3.15
• Yield = 31%
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💎 FINAL GAME PLAN
👉 You are NOT chasing listings
👉 You are targeting PROBLEMS
Your lane:
• Maturing debt
• Refinance pain
• Below replacement cost
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⚖️ SIMPLE TRUTH
Most buyers:
❌ Compete on price
You:
✅ Solve pressure
✅ Control structure
✅ Protect downside
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🔥 FINAL LINE
This is the window:
👉 Debt is breaking deals
👉 Institutions are waiting
👉 Brokers need solutions
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Structure over sacrifice. Stewardship over struggle. Every deal builds legacy.