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Dear Friends,

My Condo Has Been a Second Job Since 2023. When I bought my beachfront condo, I thought I understood the risks. I knew short-term rentals could be unpredictable. I knew there would be good tenants and bad tenants. I knew things would break. I knew there would be cleaning issues, maintenance, slower rental periods, and the normal headaches that come with owning an investment property.

What I did not know was how quickly an investment could go from producing income to consuming cash, time, attention, and peace of mind.

Since 2023, my condo has felt like a second job. A job I hate. The only problem is that for more than two years, that second job has not paid me a penny. IT HAS COST ME.

The Investment Was Working

We purchased the condo in 2020 for $225,000. It was almost 1,400 square feet, oceanfront, and on the first floor. When the sea grapes were cut back you could get a view of the ocean.

We bought it during COVID because we wanted a beach property we could enjoy and get away to. At the same time, it worked as an investment.

The HOA required a 30-day minimum rental which made the rental business more difficult than a traditional short-term Airbnb property, but from 2020 through the first half of 2023 we really did not have a major problem finding renters.

We had some great tenants. We had some tenants that were not so great. That was expected. Things broke occasionally. That was to be expected too.

We found a great cleaning crew and, for the most part, the problems that came with operating the property were problems we could manage.

Financially, the property was doing well. During peak season, we could rent the unit for roughly $5,000 to $6,500 a month and during the slower months we typically rented the unit from $3,000 to $4,500 a month. Then the value started climbing.

At its height in 2021, the condo appraised for approximately $605,000. Remember we bought it for $225,000. Our original investment goal was to make about 30%. At $605,000, we had not just hit the goal, we had blown through it. We had won but we did not sell.

We Had The Conversation

Selling was something we considered, we talked about it. By that point, we had moved to a beach town ourselves, so the original reason for buying the property had changed too.

Our beach dreamed had already been fulfilled. We did not need the condo in the same manner anymore, but the Airbnb rental income was still good. The property had gone up significantly in value and we thought:

Why sell it?

Let’s just keep riding it out. It is probably going to go up in value. Looking back, that was a major mistake. We got greedy and lazy. That is not easy to say, but it’s true. We had set an investment goal, we reached it, but we moved the goal post because the investment was doing so well we wanted more.

That decision became one of the biggest investment lessons I have ever learned.

Then Things Started Changing

Towards the middle half of 2023 the economics and management around the property started to change. New Management arrived and with it a 33% increase on the HOA maintenance fees.

At the same time, Airbnb was changing its policies and service fees in ways that did not favor the host and created more work for us to stand out and operate the property. They made managing the property much harder.

It took more management to optimize our listing making sure it was position correctly and operating in the way it needed to. We also had additional property management expenses.

Then the special assessments started and once they started things seemed to spiral. There was another assessment in 2024, but even then, I did not expect what came next.

The Day That Everything Changed

In August of 2024, exactly two years ago the building was deemed unsafe. Everyone was evacuated. That was the exact moment I realized this was no longer the investment I thought I owned.

My first thought was simple:

There goes my revenue stream. The property immediately stopped being an income producing asset and became a cost center and it became another job.

Except this job was now about mitigating risks, protecting the investment, dealing with the association, and trying to figure what the next steps would be.

I realized very quickly that I needed legal counsel. I retained an attorney to help me navigate the process. That alone should tell you how much the investment changed. I had gone from managing Airbnb reservations to managing legal risk.

Owning the Condo Did Not Mean Controlling It

One of the biggest frustrations was how little control I actually had. I was basically at the mercy of the condo association. It took nearly a year to settle on a path to repair the buildings. There was constant back and forth. There were discussions about construction law and FEMA rules. There were multiple estimates for repairs.

At one point, the repair proposal being discussed was $9.3 million. The plan that was eventually selected was $4.3 million. That is a massive difference.

Meanwhile, the owners could not use their units. We could not rent them, we could not generate income, but we still had expenses.

The building repair eventually resulted in another special assessment for more than $67,000 per unit.

At one point, I thought the cleanest solution would be to sell the entire property to a developer and make the headache go away, but this is where the HOA governance becomes very real. Certain decisions required 100% agreement.

Think About That

When do you ever get 100% agreement from people on anything? It is not realistic. So, the next option was to repair the buildings and try to get through it as quickly and cheaply as possible.

I Had To Keep Putting Money Into It

At that point, I had several choices, none of them particularly good.

1. I did not want my credit ruined.

2. I also believed that if the buildings were repaired and the property became usable again, there would still be value in the condo

3. I did not expect the value to return to 2021 numbers, but I do think a reasonable value of somewhere between $300,000 and $350,000 range could eventually be attainable

4. So, I made the decision to keep funding the property

I was able to use my HELOC to pay the assessments. Think about that situation for a minute. I was borrowing against an asset that was generating no income so that I could continue paying for the asset.

That is very different from the investment I thought I owned.

More Than Two Years Without Rental Income

The building was finally approved as safe again in July of 2026. By then, I had gone two years without being able to generate rental income from the property.

On the low end, I estimate I lost roughly $33,000 per year in gross rental revenue.

On the higher end its closer to $42,000 a per year.

Multiply that by two years and the lost rental revenue is somewhere between $66,000 and $84,000 and that is only the lost revenue. It does not include out of pocket costs.

The Numbers Get Ugly Fast

So far, I estimate that I paid roughly $85,000 in special assessments maybe more. Then I had additional spend of another $8,000 for a new HVAC unit which they broke when the association was moving it.

After finally getting access back to the condo, I found plumbing issues and a leak which I never had before. This leak led to mold, which I am now currently dealing with. The mold damage could be as much as $25,000.

That puts the special assessments and major out of pocket costs at approximately $118,000. Then add another $66,000 to $84,000 in lost gross rental revenue and you are talking about an economic impact between $184,00 and $202,000.

And that still doesnt include everything like:

• Attorney Fees

• HELOC Interest Payments

• HOA Maintenance Cost

• Insurance Cost

• Travel Cost

• My Time

• And my mental health

The Cost That Does Not Show Up on the Spreadsheet

This experience has affected me beyond money. I used to love going to this condo. I proposed to my wife there. Now I hate going there. I don’t want anything to do with the place, the neighbors, or the situation around it.

I live two hours away. Now I have to plan trips to just go work on the unit, meet contractors, deal with the insurance company, deal with the HOA, speak with the attorney, and handle the next latest problem.

It is a lot.

That is why I say the condo has become a second job.

Real estate investors spend a lot of time talking about cash flow, appreciation, cap rates, leverage, and return on investment.

We do not spend enough time talking about the value of our time.

Or Stress.

Or Mental Energy.

An investment can cost you more than money.

This one did.

I Will Never Buy Into an HOA Again

This experience has permanently changed the way I look at condos and HOAs. I will never buy another condo. I will never purchase another property with an HOA.

For me it’s not worth it. You can own the unit and still have very little control over the investment.

• You are dependent on the financial health of the association and how they manage the property.

• You are dependent on decisions by other owners.

• You are dependent on the board.

• You are dependent on whatever voting requirements are written into the documents.

• You may be dependent on 100% agreement to move forward on certain decisions.

• And if you can’t get everyone to agree you may be stuck.

If I were choosing between spending more money on a single-family home that was slightly farther away from the beach and buying another condo inside an HOA I would spend more on the single-family home. Think about it $225,000 + another $202,000 in cost not to mention the monthly HOA costs would put me at a single-family home of roughly $427,000 and I control the investment with no HOA approval needed. Sure, it’s a little more upfront but in my opinion well worth it.

CONTROL IS THE SINGLE MOST VALUABLE THING YOU CAN HAVE IN AN INVESTMENT

What Would I Tell Anyone Considering A Beach Condo

If you are thinking about buying a condo on the beach, especially one inside and HOA, be very careful.

• Do not only look at the unit.

• Do not only look at the rental projections.

• You need to understand the association.

• You need to know who your neighbors are.

• What is the financial condition of the HOA?

• How much money does the HOA have in reserves?

• What special assessments have already been levied?

• What is the process to levy special assessments?

• Are there additional assessments being discussed?

• What major maintenance has been deferred?

• Has the building completed the inspections and requirements applicable in its city and state, and they pass them or fix what needed to be fixed?

• How does the association make decision?

• What requires a majority vote?

• What requires a supermajority?

• What requires unanimous approval?

Those questions matter more than the countertops, flooring, ocean view, or bathrooms because you're not just buying a property, you're giving away control and buying into the financial decisions and governance of an association.

The Biggest Lesson Was Not the HOA

As frustrating as the HOA has been, that is not the biggest lesson I learned.

The two biggest lessons I learned are the following and both I could have controlled and done better.

1. When you are buying a condo, you're giving away control so really know who the association is and how they make decisions.

2. When you hit your investment goals sell and recoup your capital and proceeds.

I should have sold in 2021 when the property appraised at $605,000. We had accomplished exactly what we originally set out to accomplish. We had another property in a beach town, and we really didn’t need the beach condo. The plans had changed. I should have taken the win.

Instead, I convinced myself that because the property was cash flowing and because values had been rising, I should keep holding it. The conditions changed.

After the Surfside collapse in Miami, the environment around condo ownership changed significantly from my perspective as an owner. By 2024, when I tried to sell, the condo was being valued between $405,000 to $450,000. I had it on the market approximately a month then the buildings were deemed unsafe.

At that point, I did not have the same choices anymore. I had no choice but to ride out the storm as best I could.

What Happens Next

I am still working through this. The building has been approved safe again, but I still have a ton of work left to do. I have to deal with the mold remediation and other work to finish the inside of the condo and get it back to how it was.

My hope is to have the property ready to be rented again by January 2027. At this point I am thinking differently about the rental strategy too. Similar long-term rentals in the area are going for roughly $2,000 to $3,000 per month.

My current thinking is to get the unit fixed, rent it long term for a year or two, continue paying down the mortgage, and eventually sell when the value gets closer to $300,000 to $350,000.

I am not waiting for $605,000 again. I am not trying to squeeze every last possible dollar out of the property. I am trying to get a reasonable exit.

Sometimes that is what investing becomes. Preserver the capital you can, manage the risk, get through the problem, and live to invest another day.

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1. Who am I?

   I have been in Information Technology for over 25 years at various roles from Systems Engineering to Director lever positions. I have also been in real estate since 2019 focusing on fix and flips and in 2023 we shifted our focus to commercial real estate investing. I have acquired 246 units and continue to pursue real estate investments. I also have a Technology Firm helping companies incorporate technology, build systems integrations, and solve complex business problems. An example of this was our Multifamily Deal Evaluator application that was built with an operator, syndicator, and investor perspective so that anyone can learn to underwrite, analyze, and evaluate deals. If you are interested in the tool, you can check it out at KeptDo MFA PRO.

3. If you like to learn more about what we do to help small and mid-size businesses get more customers, make each customer worth more, and spend less to service them please visit Del Val Investment Group.

4. Outside of my family, my dog, and my Miami Hurricanes my passion is business, technology, and real estate. We are always looking to purchase businesses that have a unique niche and serve our vision of solving real world business problems with technology and we are always looking for JV real estate opportunities we can operate or invest in as joint partners.

   If you would like to reach out or learn more about my background, feel free to connect with me on the following platforms.

1. Manny Del Val | CEO and Founder Del Val Investment Group

   Personal LinkedIn | Business LinkedIn | Facebook | Email

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Dear Friends,

There is a tendency in business when something is taking too long to immediately look for more resources. Add another person, buy another piece of software, bring in a consultant, and recently Use AI. Sometimes one of those things is the answer, but before you add anything to a process, I believe you need to understand the process itself.

The Lesson

This article goes through the lesson that I learned during my time at Citrix Managed Services, when the team and I helped reduce our customer onboarding process from 14 weeks to 10 weeks.

• We didn’t do it by telling people to work harder.

• We didn’t add a massive team.

• We didn’t discover some magical AI sauce that solved our problem.

• We started asking the right questions.

  ---

What Was Taking 14 Weeks

When a customer signed a contract with Citrix Managed Services, there was a significant amount of work required before we could fully manage their environment.

• We needed to establish ticketing systems and monitoring.

• We needed accounts for our team inside the customer environment.

• We needed to understand historical ticketing trends and reoccurring problems the clients were already experiencing.

• We needed SOPs around Change Management, Device Monitoring, Patch Management, Image Management, Server Reboots, and Maintenance Windows.

• We needed to agreements on RACI matrix and escalations.

• We needed communication plans and escalation matrices.

• We needed internal resources assigned and customer points of contact established.

Fourteen weeks had become the accepted timeline, but leadership knew it was too long. The Director of Citrix Managed Services challenged us to improve it. I was a Service Delivery Manager at the time, but process improvement was something I had always been interested in. I had Six Sigma certification, project management training, and years of experience doing similar work at Forthright Technology Partners.

Map What is Actually Happening

We started meeting with different service owners.

• What did their team need?

• How long did their portion of the onboarding take?

  What information did they depend on?

  When were they currently receiving that information?

  We also reviewed previous onboardings.

  What had gone well?

  What had gone badly?

  Where had things broken down?

  Then we started questioning everything.

  Does this step really have to happen here?

  What happens downstream if we move it?

  What dependencies would break?

  Could this work happen at the same time as something else?

  Could we gather this information earlier?

That exercise uncovered something that seems obvious now. It wasn’t obvious when everyone was living inside the process.

We Found the Bottleneck

Monitoring was one of the longest components of the entire onboarding process. It could take four to six weeks to complete. Yet, under the existing process, we weren’t seriously addressing monitoring requirements until approximately week eight.

Think about that → One of the longest lead time activities in the entire process was being started late in the process.

We also found that we were waiting until the customer kickoff before requesting information we already knew we were going to need.

That meant we were often two weeks into an onboarding before meaningful pre-work had ever begun.

So, We Changed the Sequence

One of the biggest changes was getting permission to begin gathering requirements before the final contract was signed. That initially made leadership uncomfortable, and understandably so. Their concern was simple: What if we do all this work and the customer never signs? Rather than arguing that the risk did not matter, I asked a different question.

Of all the deals that had made it through legal and were in the redlining process, how many had ultimately failed to close? The answer was → None

Historical risk was extremely low. We also established a boundary. We would gather information and prepare, but we would not install anything or make changes to either environment until the contract was executed.

That allowed us to start asking questions one or two weeks earlier. Things like:

• Who would the customer contacts be?

• Who needed access to our ticketing environment?

• What ticketing platform did they use?

• How would integration work?

• Could they provide their SOPs?

• How many devices did they have?

• Could they provide the device list that would eventually need monitoring?

• Internally, we could begin assigning the account team and preparing resources.

Now, instead of signing the contract and then beginning to figure out what we needed, we could arrive at Day 1 ready to work.

Eventually, we were entering customer kickoff with roughly 90% of what we needed to begin onboarding already identified or collected.

We Stopped Treating Everything as Sequential

The second major change was parallelization. Many businesses unintentionally build workflows that say:

• Finish A.

• Then start B.

• Finish B.

• Then start C.

But A, B, and C may not actually depend on one another. We started grouping workstreams that could happen simultaneously.

For example, discussions around change management could happen in parallel with work on the communication and RACI matrices.

We began asking:

What really has to wait?

That question alone can expose enormous amounts of wasted time.

Fourteen Became Twelve. Then Ten.

The first couple of onboardings under the redesigned process came down from roughly 14 weeks to around 12.

That was progress. We kept learning. We kept adjusting.

By approximately the fourth onboarding, we had the process down to around 10 weeks.

Monitoring, which had sometimes taken as long as six weeks, was routinely being installed and configured in approximately two or three weeks because we had gathered the information earlier.

Grouping process agreements and addressing them earlier helped remove roughly another week.

But the real benefit wasn’t simply four weeks on a calendar.

• It was time to value.

• Customers began realizing the benefit of the service earlier.

• Citrix could begin realizing revenue sooner.

• The organization had greater capacity to bring additional clients onboard.

• Customer satisfaction improved.

• And internally, morale improved because there was less rework and less chaos.

  ---

Process Improvement Is Also a People Problem

Of course, not everyone immediately embraced changing the process.

People rarely do. Whenever you change the way, someone works, you are asking them to give up something familiar.

My approach with the service owners was to explain what was in it for them. This is going to reduce your rework. It is going to make your part of the process easier. It is going to take less time and that means you will have more capacity for the other things you need to accomplish.

I have learned that people need to understand why you are changing something, but they also need to understand how the change benefits them.

That is how you get people on your side.

What Business Owners Can Take from This

The first mistake I see business owners make when a process is slow is assuming that more people equal more speed.

It doesn’t.

You can add five people to a bad workflow and simply create a more expensive form of chaos. The same thing is beginning to happen with AI. There is a belief that AI is some type of plug-and-play efficiency pill. Connect AI to the business and suddenly everything gets faster.

It doesn’t work that way.

If you automate a bad process, you may simply make the bad process happen faster. Before you add people, technology, or AI, take the time to understand the workflow. If I were looking at a slow process inside a business today, I would start here.

1. Identify what you believe is slow.

• Then confirm it with the people actually doing the work.

• Leadership perception and operational reality are not always the same thing.

2. Map every step.

• Build the flowchart.

• Include decision points.

• Include handoffs.

• Include dependencies.

• And especially include the time gaps between steps.

• Often, the biggest problem isn’t how long people spend doing the work.

• It is how long the work sits waiting for something else to happen.

3. Talk to the people doing the job.

• This may be the most important step.

• The people doing the work every day usually know where the problems are.

• Listen to them.

4. Find the bottleneck.

Once you find it, don’t immediately try to fix it.

• First ask why it is the bottleneck.

• Then ask:

  • What happens if we do this earlier?

  • Does this step need to exist?

  • Could we do it differently?

  • Should it be moved forward?

  • Should it move backward?

  • Can it happen in parallel with another activity?

  • Is there duplication elsewhere in the process?

  • And finally:

  • Is the real constraint the process, the available resources, or a legacy system? Those are very different problems, and they require very different solutions.

    ---

Always Ask Why

Citrix was eventually purchased by private equity, and our department was ultimately laid off. I obviously did not control that outcome but this project became an important point in my career because it reinforced something I still practice today, personally and professionally.

1. Ask why.

2. Why are we doing it this way?

3. Is this actually the best way to do it?

4. What would happen if we changed it?

5. What are we waiting for?

6. What do the people doing the work think?

Over my 25-year career in IT, I have learned that continuous improvement isn’t usually about having some enormous breakthrough. Very often, it starts by being willing to question something everyone else has accepted as normal.

It also reinforced something else for me.

1. The people matter.

2. Getting onboarding from 14 weeks to 10 wasn’t something I accomplished alone.

3. It was something a team accomplished.

4. It was validation that, through hard work and partnerships with the right people, we could accomplish something that hadn’t been done before.

Challenges are challenges. What matters is how you approach them and who you surround yourself with to execute against them.

My business philosophy has always been:

Do What You Say You Are Going To Do.

• I made promises to leadership.

• I made promises to clients.

• I made promises to my peers.

• And we delivered together.

Because business is a team sport. You are only as good as the people you surround yourself with and when it comes to improving time to value, I keep coming back to the same lesson:

Ask the right questions and understand the workflow.

Before you add more people. Before you buy more technology and definitely before you throw AI at the problem.

If you found this of any value, I humbly ask that you subscribe and share to let others know. Thank You.

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Contact Information

Who am I?

I have been in Information Technology for over 25 years at various roles from Systems Engineering to Director level positions. I have also been in real estate since 2019 focusing on fix and flips and in 2023 we shifted our focus to commercial real estate investing. I have acquired 246 units and continue to pursue real estate investments. I also have a Technology Firm helping companies incorporate technology, build systems integrations, and solve complex business problems. An example of this was our Multifamily Deal Evaluator application that was built with an operator, syndicator, and investor perspective so that anyone can learn to underwrite, analyze, and evaluate deals. If you are interested in the tool, you can check it out at KeptDo MFA PRO. If you like to learn more about what we do for small and mid-size business and our approach to processes and incorporation of technology, please visit our site Del Val Investment Group.

Outside of my family, my dog, and my Miami Hurricanes my passion is business, technology, and real estate. We are always looking to purchase businesses that have a unique niche and serve our vision of solving real world business problems with technology and we are always looking for JV real estate opportunities we can operate or invest in as joint partners.

If you would like to reach out or learn more about my background, feel free to connect with me on the following platforms.

Manny Del Val | CEO and Founder Del Val Investment Group

Personal LinkedIn | Business LinkedIn | Facebook | Email

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Dear Friends,

The seller showed you $600,000 of seller’s discretionary earnings. The lender approved the transaction. The model showed comfortable debt coverage. Six months after closing, you are borrowing money to make payroll.

The above is too common from what I have read and spoken to first time business owners. The so-called gurus make it seem like you buy a laundromat and you're going to be printing money. IT IS NOT THAT SIMPLE

The Number Brokers Sell

Most sub-$5 million acquisitions are introduced through a clean headline: revenue, SDE, asking price, and perhaps an implied multiple. Those figures are useful, but they are not the economics the buyer will live on after closing. SDE is designed to show the financial benefit available to one working owner before the buyer’s capital structure, compensation plan, tax position, and reinvestment needs are imposed on the company.

That distinction matters because a business can be profitable on the seller’s terms and financially fragile on the buyer’s terms. The seller may perform three jobs, accept irregular compensation, defer equipment replacement, use family labor, or carry unusually low insurance coverage. The buyer inherits the work, the deferred costs, and the financing not merely the historical profit.

You really need to dig deeper into how the business is making money, what are the sources of revenue, when are those revenues being realized and what obligations and contracts does the business have that they must honor.

Debt Coverage Is Not Free Cash Flow

Lender underwriting answers an important but narrow question: is there enough historical and projected cash flow to repay the proposed debt under the lender’s standards?

This just focuses on can you service the debt under the lender’s terms. This has no place in determining what your return would be or how quickly will you be getting the return you are looking for. This also does not look into maintaining adequate liquidity, how are you going to fund growth, or survive a downside case.

A buyer should calculate cash after senior debt, seller-note payments, replacement labor, buyer compensation, taxes, recurring capital expenditures, and normalized working capital.

Then the model should be run at base, moderate-downside, and severe-downside levels. A transaction that barely works in the base case is not an acquisition thesis. It is a request for perfect execution.

I am guilty of this myself. I looked at deals where revenue was attractive the SDE was substantial, but when I looked deeper, I noticed that when I started adding compensation, taxes, expenditures, funding growth, and working capital I was nowhere near my needed returns.

Modeling what the numbers look like with a 10% downfall a 20% downfall and a 30% downfall and seeing if they even cover your minimum DSCR requirements is crucial. Understanding what that downfall % will save you many sleepless nights.

The Working-Capital Trap

Working capital is where many otherwise sound acquisitions become painful. Payroll may be due every two weeks while customers pay in 45 or 60 days. Some businesses have great months with incredible revenue followed by 2 or 3 months of negative cash flow.

Inventory may need to be purchased before seasonal revenue arrives. A growing company can report higher profit while consuming more cash because receivables and inventory are expanding faster than payables.

The purchase agreement must define the working-capital target, included current assets and liabilities, treatment of cash, aging standards, and the closing adjustment mechanism.

The buyer should also maintain a post-close liquidity reserve separate from the required equity injection. The money needed to close is not the same as the money needed to operate.

This in my opinion is the single hardest thing to estimate and the biggest risk at being successful in your first year. Understanding the month-to-month liquidity needs of the business is crucial. Don’t close on a deal and don’t spend money on attorneys, CPAs, or Quality of Earnings professionals until you have a good grasp of this concept and you dig deep as to what that cash conversion life cycle looks like.

The First-Year Expense Nobody Models

The first year often includes recruiting, technology cleanup, legal work, accounting support, insurance adjustments, customer-retention efforts, equipment repair, and overdue process documentation. These expenses may be nonrecurring, but they are still real cash requirements. Calling them ‘one-time’ does not make them free.

A disciplined buyer builds a 12-month transition budget before the LOI becomes binding. The model should identify which investments are mandatory, which can be staged, and which depend on performance. This forces the buyer to distinguish between operational survival, necessary modernization, and optional growth spending.

The Buyer-Survival Test

Before submitting an LOI, calculate five figures:

1. Normalized cash flow after replacement labor

2. Annual debt service

3. Minimum working-capital requirement

4. First-year transition costs

5. The lowest acceptable cash reserve.

Then determine how much revenue or gross profit can decline before the company breaches its liquidity floor or debt-service requirements.

The objective is not to make every acquisition look unattractive. It is to know what must be true for the investment to work and what protections are required if those assumptions fail. A lower price, larger seller note, performance-based payment, stronger working-capital delivery, or longer transition may turn a fragile deal into a financeable one.

Takeaway

Do not just simply look at Revenue, Multiple, SDE, EBITDA, DSCR, and ask whether the business can afford the purchase price but ask whether the post-close company can afford the buyer, the debt, the transition cost, funding growth and create a twelve months of reality plan identifying which investments are mandatory, which can be staged, and which are based on performance.

Education

I do believe 100% in getting yourself educated and surrounding yourself with the right people that can help you along in your business acquisition journey. That being said I can only speak for myself and what I have done to get educated.

1. YouTube, I consumed at a lot of content from Walker Deibel

2. YouTube, I consumed more content from Cody Sanchez

3. Podcast, My opinion the single best podcast out there on acquisitions Acquiring Minds

4. Books: Buy then Build, HBR Guide to Buying Small Business, Mainstreet Millionaire

5. Accelerator: I joined Acquisition Lab as part of Cohort 66; this is a great program the run one of the biggest search funds in the space have a 1-month intensive daily office hours with investors a weekly search forum. It is truly a great program and community to bounce ideas, get your deal team, and help you along your journey. The people in that community are truly vetted. You have some of the best businesspeople available with years of experience in industry you might want to buy in. I had several conversations with people in the Accounting Space, Software Space, E-Commerce, and also shared my expertise of having 12 years in Managed Services. It truly is a community you can lean on.

6. Be careful: Don’t fall for guru’s that are selling you the no money down buy a business and have old curriculum and not a proven method. I fell for this early and luckily, I was able to get my money back. If their education material hasn’t been updated since Covid, or they are just doing video sessions with no real community or office hours or they start you at a base plan and then ask for upgrades. Those are all signs. I can only speak from my personal experience; check out the Acquisition Lab it is run by the guy who wrote the book Buy then Build on small to middle market acquisitions.

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   Contact Information

   Who am I?

   I have been in Information Technology for over 25 years at various roles from Systems Engineering to Director lever positions. I have also been in real estate since 2019 focusing on fix and flips and in 2023 we shifted our focus to commercial real estate investing. I have acquired 246 units and continue to pursue real estate investments. I also have a Technology Firm helping companies incorporate technology, build systems integrations, and solve complex business problems with technology solutions. An example of this was our Multifamily Deal Evaluator application that was built with an operator, syndicator, and investor perspective so that anyone can learn to underwrite, analyze, and evaluate deals. If you are interested in the tool, you can check it out at KeptDo MFA PRO. If you like to learn more about what we do with technology, please visit our site Del Val Investment Group.

   Outside of my family, my dog, and my Miami Hurricanes my passion is business, technology, and real estate. We are always looking to purchase businesses that have a unique niche and serve our vision of solving real world business problems with technology and we are always looking for JV real estate opportunities we can operate or invest in as joint partners.

   If you would like to reach out or learn more about my background, feel free to connect with me on the following platforms.

   

   Manny Del Val | CEO and Founder Del Val Investment Group

   Personal LinkedIn | Business LinkedIn | Facebook | Email

   Leave a comment

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The Deal

The company was a technology related business, with my technology background and over 12 years in IT Manage Services and understanding recurring revenue model I felt I had a good grasp on how to move the business forward into a recurring revenue model from what they were doing today.

The deal structure was a 60% majority stock purchase at a $1.5M valuation, SBA 7(a). Then digging deeper into the deal and into diligence three things surfaced:

• Key Man Risk

• Client Concentration

• Lumpy Revenue

Based on that and my conversation with my SBA Broker we had to find a way to mitigate risk and have the business be financeable via the SBA 7(a) program. Here were the parameters that had to be met.

You might ask what these risks are all about let me explain.

• Key Man Risk - This company was run by 2 people there was no team. No sales team, no operations team. Just two guys to their credit executing on a very successful business with super high gross margins. What attracted me to it in the first place.

• Client Concentration - This is when the source of revenue for a company comes from a specific client. In this case one client was 49% of the revenue.

• Lumpy Revenue - This is when the monthly revenue is not consistent you can have a month where the company brings in 500K and 6 months of negative revenue. On a yearly P&L it looks great, but when you break it down monthly it’s a problem. You see a company is not run yearly there are monthly obligations that you need to account for and if the revenue is not there, that’s a problem.

  ---

The Proposed Resolution

1. Founders to stay post-acquisition for 3 years minimum: This was to mitigate the key man risk and the plan was for me to use my experience to help build an operations and sales team moving the founders into a CTO and CRO role respectively. I had estimated an 18-month trajectory to build those teams out. The founders agreed on this one from the beginning

2. Valuation was dropped to $1.5M and a 200K seller note was created with a 2yr standby: This was addressing the fact that the top 3 clients were 75% of the business and they only had 16% recurring revenues, so it addressed the client concentration risk.

3. Founders agreed to this as well

4. Treat the company as if it closed on Sept 1st

5. Bonus compensation for the founders must stop as of Sept 1st and be revaluated based on the agreed upon compensation plan.

6. Founders’ salary cut to the agreed compensation level starting Sept 1st.

7. Escrow account with a forgivable note equal to the 1st years SBA payment to ensure the SBA loan would be paid in the event revenues were not at the guaranteed level.

8. Working Capital equal to 3 months of expenses to be set aside at closing.

9. These last 4 where the areas of contention and were meant to address the lumpy revenue challenges.

   ---

Here is my thought process and what the SBA told me.

Because of the lumpiness of the revenue and the client concentration it was going to be hard to finance this business. They needed to ensure that there were enough reserves in place in the event of a catastrophic failure. That is why they asked for working capital reserve and to have the business treated as it closed on Sept 1st.

I was trying to put together something that was a win/win for all parties. I had to protect my interest but at the same time I wanted to ensure the founders were compensated for any deal they closed prior to closing and I made sure to put that in the compensation plan. I also created the plan in a way that if the target revenues were met, they would be making what they were making today from a salary perspective and if they pushed themselves to 50% growth, they would be highly rewarded. My plan put no cap on compensation, and I also had them sharing equity at their given equity percentages.

I though the comprise was fair, but I can understand the seller’s situation. They are asked to have their company fundamentally change without it closing. They would essentially give control of how the company’s revenue would be processed, when they can take their bonuses, and how much they are getting paid. It is a lot to ask but they would be getting a nice chunk of cash up front and have 40% of future earnings and equity in the company.

What I learned

Closing a deal is HARD. Even when you have good people on both sides who are legitimately trying to make the deal work. I have nothing but the best things to say about the sellers. They are hardworking, flexible, smart, and genuinely good human beings. Nothing but the best for them.

Things can look great on paper when you're looking at a business with 83% gross margins you get excited but dig deeper what does it look like on a monthly basis. Is there revenue coming all in one month or in a couple of months and is that month floating operations for the year.

The SBA is very strict and it’s getting stricter by the minute. It is going to get harder to make a deal work not easier. New provisioning supposedly is meant to protect first time buyers, but in my opinion, it’s making it harder for buyers and for Americans to have the American dream.

Due Diligence is crucial and having a good SBA broker that you can work with and run things with is a key member of your team. I talked to 2 brokers and a lender in this process. Originally, I liked the lender the best, but they went with a hard tactic of having me sign right as they gave me the term sheets without really understanding the structure of the deal. They also mentioned things that I later found out did not really work like that such as collateral on your home if its less than 25%. The policy they had was specific to their bank not the SBA.

The second broker is very good and super knowledgeable but also strict and you have to sign an exclusivity contract with turned me off from the start.

The third broker is my guy, he answered all my emails, explained everything to me, gave me ideas of how things might work, and explain the challenges that will come with the SBA and also with the deal and the risk that I was assuming and helped me find ways to mitigate it. I will be using this man on all my future deals.

What Is Working Now

• I have a better understanding of the business buying process.

• I have an SBA Broker on my team that I will be using.

• I am SBA prequalified for up to $3 million acquisition.

• I have access to investors as part of my business accelerator program.

• I met a Quality of Earnings provider that I liked that could be a potential addition

• My sister is my attorney, she gives me initial guidance, but when things get serious, I will bring an attorney who is an expert in these types of business transactions.

• I have created a Deal Analysis GPT that will allow me to model deals and understand risks much better and much faster and give deals a score so not to pursue anything that doesn’t meet my threshold.

• Having my SBA Broker in place and my Deal Evaluators will help me make quicker decisions and move faster.

  ---

Conclusion

The system worked as it should. Risk was mitigated and in the end the risk was too much to assume for me and the sellers decided it was better for them to keep their business.

This in my book is a win, I learned so much through this process that I can take with me on to the next deal evaluation. The education you learn is something no one can take away from you. The sellers are amazing people with a solid business that I hope nothing for the best for them. If I can ever help them in any way I would love to.

I am the type of person that values relationships, good human beings doing good things, hard honest work, giving back, and doing the right things. I build an entire 25-year career on one simple principle “Do What You Say You Are Going To Do”. Lately I have found that this concept has become more and more difficult for people to follow. In the end business is about people, processes, and product.

Call To Action

Comment or message me:

With the deal you are looking at right now what’s making you hesitate. I read every comment.

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Contact Information

1. Who am I?

   I have been in Information Technology for over 25 years at various roles from Systems Engineering to Director lever positions. I have also been in real estate since 2019 focusing on fix and flips and in 2023 we shifted our focus to commercial real estate investing. I have acquired 246 units and continue to pursue real estate investments. I also have a Technology Firm helping companies incorporate technology, build systems integrations, and solve complex business problems with technology solutions. An example of this was our Multifamily Deal Evaluator application that was built with an operator, syndicator, and investor perspective so that anyone can learn to underwrite, analyze, and evaluate deals. If you are interested in the tool, you can check it out at

2. KeptDo MFA PRO.

3. If you like to learn more about what we do to help small and mid-size businesses with their processes and technology, please visit our site

4. Del Val Investment Group.

   Outside of my family, my dog, and my Miami Hurricanes my passion is business, technology, and real estate. We are always looking to purchase businesses that have a unique niche and serve our vision of solving real world business problems with technology and we are always looking for JV real estate opportunities we can operate or invest in as joint partners.

   If you would like to reach out or learn more about my background, feel free to connect with me on the following platforms.

1. Manny Del Val | CEO and Founder Del Val Investment Group

   Personal LinkedIn | Business LinkedIn | Facebook | Email

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This deal went from 92% occupancy at closing to 54% occupancy.

I personally researched the market and underwrote the deal multiple times. I spent over a year just listening to the sponsor on various podcasts and social media platforms to get a feel for who they were as people.

Before I wired any money, I needed to meet them face to face and see what they were all about. I had been burnt before by so-called “Real Estate Gurus,” so I went to a mastermind they were hosting. I got to meet them, I got to understand their investment thesis, and I was able to look them in the eyes and tell what kind of people they were.

The Deal

• 216 units, Class A

• Projected 5% cash-on-cash returns

• 18% IRR

• 2.2x equity multiple over a 10-year hold

• Strong market: Ford was building the largest EV battery manufacturing plant in the world

• Anticipated population growth of 4% year over year for the next 5 years

• 8,000+ overall new jobs

• Millions in new construction for a new hospital wing

• Millions more for a distillery and brewery

What I Accepted

I researched the market myself, verified the legitimacy of what the sponsor was saying, and I actually underwrote the deal at better returns. I created my own market analysis model and my own underwriting model. Everything I saw suggested the returns would be closer to 7% cash-on-cash and a 3x multiple if all things went as planned — and if things took a downturn, I had 4% cash-on-cash and a 2x multiple over a 10-year hold.

Wiring the Money

The last thing I needed to know was whether the sponsors were putting their own money in the deal. They put in over $2 million of their own cash, and I saw that their family was also investing in the deal. If the family was investing, they must believe in this deal.

I looked over the market again, looked over the numbers one more time, and decided to tap into my retirement account — and instead of investing the minimum $100K, I doubled it. I put $200K of my own money in because I believed in the team, I believed in the research, and I believed in the property.

I believed so much that I started talking about it to family, friends, and everyone I knew, and as a member of the sponsor’s educational academy I was given the opportunity to raise money for the deal. I put my $200K in before asking anyone for a dime. Two $100K wires followed — one from a jiu-jitsu training partner, one from a fellow MBA colleague. They saw what I was doing and followed my work.

It was truly humbling, and a great honor, that they would trust me with their money — that they believed enough in my judgment and work ethic to follow me into this deal. It was also a great responsibility.

What Broke

Then the election changed the political landscape — and with it, the EV mandates.

The plant anchoring this market had been producing EV batteries since 2025. In December 2025, Ford and its partner announced the plant would close in February 2026, laying off roughly 1,500 workers, after declining EV sales and changes to U.S. tax credit policy.

There is a next chapter: Ford has since confirmed it will retool the site for energy-storage battery production under its new energy business — an announced $2 billion investment targeting production by late 2027, with about 2,100 full-time jobs. Good news. But a deal underwritten in 2023 doesn’t get to wait for 2027.

This was the line item no rent roll could have foreseen: political shifts, tax-credit changes, and employer concentration risk landing at the same time. I had checked the other employers. I had seen the additional money coming into the area. My underwriting was correct — the rents, the expenses, the debt all held up. What was incomplete was my map of what could break from outside the model.

What an Underperforming Deal Correctly Looks Like

• Reserves held

• No capital call

• Partial distributions continued

• ~$150K in annual savings after a tax reassessment

• Refinance still ahead

• The sponsor is projecting 80% occupancy by the end of August

The sponsorship team has worked very hard, and they were smart to hold reserves in the event something unexpected happened. They also locked in a very good, fixed interest rate, which helps substantially. Their work ethic, and the relationships they’ve built over the past year, have helped bring occupancy back to respectable levels.

I have seen great sponsors — and I have friends who invested with other sponsorship teams and lost everything. It’s very important that you know who you’re putting your money with, and that you educate yourself on the process.

What I Check First Now

The first thing I do now, whenever a sponsor approaches me, is ask one simple question:

• What is your break-even occupancy?

Then I ask these follow-up questions:

• What does your business plan look like if occupancy drops to 50%?

• How long can you maintain 50% occupancy before a capital call?

• How much in reserves are you planning to hold?

• What is your plan to bring occupancy back to 80% or more?

• Can you provide me with the rent roll, T12, and OM, and let me underwrite the deal myself?

If they are not willing to give you the financials, or if they don’t have good answers to the questions above — walk away. The first rule of investing is preserving your capital. If they give you the financials and have good answers, then really evaluate the market. Ask yourself:

• Who are the employers?

• What percentage of local employment does any one employer represent?

• What is the concentration risk?

• How is the population growing?

• What is the crime rate like?

There is much more to look at, but that is a very good start — a real foundation on the deal.

Remember always: “You can underwrite a deal correctly and still get blindsided, because the thing that breaks aren’t in the model.”

Contact Information

Who am I?

I have been in Information Technology for over 25 years at various roles from Systems Engineering to Director lever positions. I have also been in real estate since 2019 focusing on fix and flips and in 2023 we shifted our focus to commercial real estate investing. I have acquired 246 units and continue to pursue real estate investments. I also have a Technology Firm helping companies incorporate technology, build systems integrations, and solve complex business problems with technology solutions. An example of this was our Multifamily Deal Evaluator application that was built with an operator, syndicator, and investor perspective so that anyone can learn to underwrite, analyze, and evaluate deals. If you are interested in the tool, you can check it out at KeptDo MFA PRO. If you like to learn more about what we do with technology, please visit our site Del Val Investment Group.

Outside of my family, my dog, and my Miami Hurricanes my passion is business, technology, and real estate. We are always looking to purchase businesses that have a unique niche and serve our vision of solving real world business problems with technology and we are always looking for real estate opportunities we can operate or invest in as joint partners that we can bring to our investors.

If you would like to reach out or learn more about my background, feel free to connect with me on the following platforms.

Manny Del Val | CEO and Founder Del Val Investment Group

Personal LinkedIn | Business LinkedIn | Facebook | Email

Leave a comment

Subscribe now

Dear Friends,

Most buyers spend entirely too much time proving that a deal could work when the better first question is whether the deal has already given you a reason to stop.

I am not suggesting that a serious acquisition can be evaluated in ten minutes.

It cannot.

But many opportunities contain flaws that should be identified before you invest hours rebuilding financials, debating the perfect multiple, or scheduling another broker call.

I myself am subject to this. I to have looked at various business and spend hours on what seemed to be a good deal to find out financials were not has first thought.

Being able to know what a good deal isn’t matters a lot in 2026. Buyers are more educated than ever with acquisitions accelerators like the one I am a member off Acquisition Labs teaching more and more people how to buy a business credible buyers are competing for the same high-quality companies.

Axial reported that 2,635 new buyside members joined its platform in 2025, a 36% year-over-year increase. BizBuySell’s current data also reflects a market where stronger service businesses are attracting higher prices and buyers are emphasizing value over sheer transaction volume. [1][2]

Your advantage is not the ability to analyze every deal.

It is the ability to eliminate weak deals faster and preserve attention for the few that deserve conviction.

After some discussion and reflection and my own pitch to the search forum I came across with these realizations to find out if the business you're looking for is worth digging deeper

The 7 Critical Questions to Ask Yourself

Test 1: Is the revenue concentrated?

Do not stop at the largest customer’s percentage of revenue.

Ask:

• What percentage of gross profit does that customer represent?

• Is the relationship contractual, recurring, or based on the owner’s personal connection?

• Does one industry account for most customers?

• Does one referral source generate most new business?

A company can look diversified by customer count and still be concentrated by economics or lead source.

Test 2: Is the owner actually the operating system?

Look for signs that the seller personally controls:

• Sales

• Pricing

• Hiring

• Customer escalation

• Vendor relationships

• Technical knowledge

• Quality control

• Financial reporting

If the owner leaves and the company lose its judgment, relationships, and decision authority, you are not buying a management-run business.

You are buying a job plus a rebuilding project.

Test 3: Does profit convert to cash?

Advertised SDE and adjusted EBITDA are not the same as free cash flow.

Ask how much cash is absorbed by:

• Accounts receivable

• Inventory

• Equipment replacement

• Seasonal working capital

• Customer deposits

• Deferred maintenance

• Debt service

A business can report strong earnings and still require the buyer to contribute cash repeatedly.

Working-capital analysis is not a closing detail. It is part of the purchase price and the survival plan.

Test 4: Is the revenue truly recurring?

Many sellers describe revenue as recurring because the same customers return.

That is not always recurring revenue.

Distinguish among:

• Contracted recurring revenue

• Subscription revenue

• Repeat revenue

• Project revenue from repeat customers

• Revenue that must be resold every month

The more frequently revenue must be recreated, the greater the sales and execution risk.

Test 5: Are margins stable?

Five years of revenue growth can hide two years of margin compression.

Review:

• Gross margin by year

• Gross margin by customer or service line

• Labor efficiency

• Material costs

• Discounting

• Warranty or rework

• Owner-performed labor

Revenue growth that produces less cash is not automatically a success story.

Test 6: What does it cost to replace the seller?

If the seller earns $250,000 but performs the work of a CEO, sales director, estimator, and operations manager, adding back the entire compensation can materially overstate buyer cash flow.

Estimate the market cost of the functions that must continue.

Then determine whether you will perform those functions yourself or hire them.

Your labor is not free merely because you own the company.

Test 7: Does the downside still cover the debt?

A base-case model should not be the only model.

Run at least one immediate downside case:

• Revenue declines 10%

• Gross margin falls three points

• Largest customer leaves

• Collections slow by fifteen days

• Seller transition ends early

Then calculate what remains after:

• Buyer salary

• Operating expenses

• Capital expenditures

• Working capital

• Debt service

• Required reserves

If a modest setback creates a cash deficit, the deal is priced and structured for perfection.

A simple scoring method

Score each test:

• 0: Fatal or not understood

• 1: Material risk requiring diligence or structure

• 2: Acceptable with evidence

• A deal scoring below 9 out of 14 should not receive full underwriting until the major issues are resolved.

• A deal with a zero in customer concentration, owner dependency, cash conversion, or downside debt coverage may deserve an immediate pass.

The score is not a valuation model. It is an attention-allocation system.

The real value of a fast “no”

A fast rejection does three things:

1. Preserves time for stronger opportunities.

2. Reduces the chance that sunk costs create emotional commitment.

3. Forces the buyer to define risk standards before negotiating price.

The best acquisition entrepreneurs are the people who know which risks can be diligence, which can be structured, and which should simply be avoided.

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Contact Information

Who am I?

I have been in Information Technology for over 25 years at various roles from Systems Engineering to Director lever positions. I have also been in real estate since 2019 focusing on fix and flips and in 2023 we shifted our focus to commercial real estate investing. I have acquired 246 units and continue to pursue real estate investments. I also have a Technology Firm helping companies incorporate technology, build systems integrations, and solve complex business problems with technology solutions. An example of this was our Multifamily Deal Evaluator application that was built with an operator, syndicator, and investor perspective so that anyone can learn to underwrite, analyze, and evaluate deals. If you are interested in the tool, you can check it out at KeptDo MFA PRO. If you like to learn more about what we do with technology, please visit our site Del Val Investment Group.

Outside of my family, my dog, and my Miami Hurricanes my passion is business, technology, and real estate. We are always looking to purchase businesses that have a unique niche and serve our vision of solving real world business problems with technology and we are always looking for real estate opportunities we can operate or invest in as joint partners that we can bring to our investors.

If you would like to reach out or learn more about my background, feel free to connect with me on the following platforms.

Manny Del Val | CEO and Founder Del Val Investment Group

Personal LinkedIn | Business LinkedIn | Facebook | Email

Leave a comment

Subscribe now

Dear Friends,

After a lot of reflection, I made the decision to step away from Level 7 and focus my time, energy, and experience in a direction that feels more aligned with where I can create the most impact.

Level 7 was an important chapter for me. I learned a lot, built meaningful relationships, and gained valuable experience in the multifamily investment space, but over time, I realized that my greatest value is not in trying to be everything to everyone. My greatest value is in building, improving, solving, and helping businesses operate better.

That realization has led me into this next chapter.

I am now focused on smaller joint venture partnerships in the multifamily space with strategic operators, while also actively looking to invest in or acquire a business that already has established operations and sales. My goal is to find the right business where I can bring my experience, leadership, and passion for technology to help it grow.

Over the past 25+ years, I have built a career across business, information technology, managed services, project management, real estate, and operations. I have spent more than 12 years in managed services, 7 years in project management, and decades helping businesses use technology to become more efficient, more scalable, and more profitable.

I have also flipped five single-family homes and am currently invested in 247 multifamily units.

But when I look back, the common thread has always been simple:

• Do what you say you are going to do. Mean what you say.

• Always look for ways to create real value.

That is the foundation I have built my career on.

My Realization

What I have come to realize is that I truly enjoy building solutions for business systems. Whether that is applications, systems, managing a project, connecting networks, or building AI, the underlying current is how can I add value to help optimize business operations.

I enjoy finding inefficiencies, understanding operational pain points, and creating solutions that allow a company to do more with less friction.

• Sometimes that means using AI.

• Sometimes it means improving a process.

• Sometimes it means connecting systems that were never properly connected.

• Sometimes it simply means sitting down with a business owner and asking better questions.

  • What is slowing you down?

  • What keeps you up at night?

  • Where are you losing time, money, or opportunity?

  • What part of the business feels harder than it should?

    ---

What’s Next

For me, this next chapter is not about selling someone on a service. Yes, I want to build and grow profitable businesses. But that is not the only thing that drives me.

What really motivates me is understanding what issues business owners and operators have and how I can do a small part to solve that issue. Because most of the time, the problem one owner is dealing with is not unique to them. If I can help solve that issue for one business, there is a good chance I can help solve it for many others.

That is where things get exciting for me.

I believe technology, AI, and smart business systems can dramatically improve how companies operate. I believe they can reduce stress, increase revenue, give owners more clarity, and help teams spend less time fighting fires and more time doing meaningful work.

And I believe that when you help businesses operate better, you are also helping people live better.

That is what gets me up in the morning.

I have always believed that if you do good work, treat people right, and focus on solving real problems, the money will sort itself out. That does not mean money is not important. It is. Businesses need to make money. Investors need returns. Owners need profit.

But money should be the result of value created, not the only reason for showing up.

So, this is where I am today.

• I am looking for smaller, strategic JV opportunities in multifamily where relationships, execution, and trust matter.

• I am helping businesses with their technology needs by understanding their pain points and delivering solutions that add value and solve their needs.

• I am also looking for a business to invest in or acquire — ideally one with established operations, existing sales, and room for growth through better systems, stronger technology, improved processes, AI adoption, and operational leadership.

The right business does not need to be perfect. In fact, it probably will not be. But it should have a real foundation, real customers, and real potential.

My background allows me to step in and help with technology, operations, project execution, managed services, process improvement, AI strategy, and business growth. More importantly, I know how to listen, identify problems, and work with people to build practical solutions.

I am not interested in hype.

I am interested in real businesses, real problems, real people, and real results.

• So, if you are a business owner thinking about succession, growth, operational challenges, or what your next chapter might look like, I would welcome a conversation.

• If you are a multifamily operator looking for a smaller JV partner who values trust, execution, and long-term thinking, I would welcome that conversation too.

• And if you are simply trying to figure out how AI, automation, or better systems could help your business, I am always happy to talk.

You do not have to hire me. You do not have to sell me anything.

I would genuinely like to understand what is keeping you up at night.

Because solving those problems is where I believe the real opportunity lives.

For business. For people. And, in some small way, for society.

• Do what you say you are going to do.

• Mean what you say.

• Create value.

That is the plan for this next chapter.

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Contact Information

Who am I:

I have been in Information Technology for over 25 years at various roles from Systems Engineering to Director lever positions. I have also been in real estate since 2019 focusing on fix and flips and in 2023 we shifted our focus to commercial real estate investing. I have acquired 246 units and continue to pursue real estate investments. I also own a Technology Firm helping companies incorporate technology, build systems integrations, and solve complex business problems with technology solutions. An example of this was our Multifamily Deal Evaluator application that was built with an operator, syndicator, and investor perspective so that anyone can learn to underwrite, analyze, and evaluate deals. If you are interested in the tool, you can check it out at KeptDo MFA PRO. If you like to learn more about what we do with technology, please visit our site Del Val Investment Group.

Outside of my family, my dog, and my Miami Hurricanes my passion is business, technology, and real estate. We are always looking to purchase businesses that have a unique niche and serve our vision of solving real world business problems with technology and we are always looking for real estate opportunities we can operate or invest in as joint partners.

If you would like to reach out or learn more about my background, feel free to connect with me on the following platforms.

Manny Del Val | CEO and Founder Del Val Investment Group

Personal LinkedIn | Business LinkedIn | Facebook | Email

Leave a comment

Subscribe now

Dear Friends,

Buyers often treat seller financing as evidence that the seller believes in the business.

Sometimes it is.

Sometimes it is a practical way to close a financing gap, defer taxes, preserve price, or compete with other offers.

And sometimes it is simply a fixed purchase-price obligation that the buyer must pay regardless of whether the customers stay, the seller transitions effectively, or the post-close economics resemble the story told during the sale process.

The presence of a seller note does not establish alignment.

The terms establish alignment.

Deferred payment is not automatically shared risk

Assume a seller agrees to finance $300,000 of a $2 million acquisition.

The note begins amortizing immediately, carries a market interest rate, is personally guaranteed by the buyer, and remains fully payable even if the company’s largest customer leaves thirty days after closing.

The seller is receiving money later.

But what operating risk is the seller retaining?

Very little.

Now consider a different structure. The seller note remains on standby for a defined period, is subordinated to senior debt, and includes carefully negotiated rights that allow certain indemnification claims or agreed post-close adjustments to offset amounts owed. The seller also has specific transition obligations and retains meaningful exposure to the company’s ability to generate cash.

That structure may create more alignment.

The distinction is economic, not emotional.

Why sellers finance transactions

Seller financing can arise for several legitimate reasons.

1. A valuation gap

The seller believes the company deserves a higher price than the buyer or lender supports. A note can preserve headline value while spreading payment over time.

2. A financing gap

The senior lender may not fund the entire purchase price. Seller financing can complete the capital stack.

3. Buyer liquidity

The buyer may need to preserve cash for working capital, capital expenditures, or a post-close reserve.

4. Tax and timing considerations

Depending on the transaction and professional advice, receiving proceeds over time may fit the seller’s financial planning.

5. Competitive positioning

A buyer may offer seller financing as part of a structure that improves certainty of closing or total economics.

6. Genuine confidence

A seller may truly believe the business will continue performing and may accept deferred payment because of that confidence.

The mistake is assuming that the last explanation applies automatically.

Read the terms, not the narrative

A buyer should evaluate at least eight seller-note provisions.

1. Payment commencement

Does principal begin immediately, after a short interest-only period, or after a full standby period?

The timing affects liquidity during the most vulnerable part of ownership.

2. Amortization and maturity

A long amortization period can reduce scheduled payments, while a short maturity can create a large balloon. The note may appear affordable during years one and two but become a refinancing problem later.

3. Interest rate

The rate affects total purchase cost and cash flow. A low rate can be valuable, but it should not distract from an excessive principal amount.

4. Subordination

Senior lenders typically require control over payment priority and remedies. The seller note must fit the senior lender’s requirements and the complete debt structure.

For SBA-financed acquisitions, the permitted treatment of seller debt can depend on current program rules, lender interpretation, and the specific transaction. Buyers should confirm structure with the lender before treating seller financing as eligible equity or assuming a particular payment schedule.

5. Security and guarantees

Is the note unsecured, secured by business assets, or supported by personal guarantees? The answer determines how much risk is truly retained by the seller.

6. Default remedies

What happens when the buyer misses a payment? Can the seller accelerate the note, exercise control rights, or pursue collateral?

The remedy package matters as much as the interest rate.

7. Setoff rights

Can verified indemnification claims, working-capital adjustments, or breaches of representations reduce amounts owed under the note?

Without negotiated setoff rights, the buyer may be required to continue paying the seller while separately pursuing a claim.

8. Transition obligations

Does the seller have defined responsibilities, hours, customer introductions, training requirements, or knowledge-transfer deliverables?

A vague promise to “help as needed” is difficult to enforce and almost impossible to measure.

Seller note and contingent consideration solve different problems

Fixed seller notes address timing and financing.

Contingent consideration addresses uncertainty about performance or a specific future event.

Those structures should not be confused.

If the disagreement concerns whether customers will remain after the founder exits, a fixed note may defer the payment but not allocate the customer-retention risk.

A carefully drafted contingent payment based on revenue, gross profit, customer retention, or another objective metric may better match the risk.

But contingent structures have their own problems:

• The buyer controls operations after closing.

• The seller may dispute business decisions that affect the metric.

• Accounting definitions can be manipulated or misunderstood.

• Revenue can grow while profit falls.

• Gross profit can be affected by allocation methods.

• Earnout disputes are common when the agreement is imprecise.

The principle is simple: Match the structure to the uncertainty.

If the risk is financing, use financing.

If the risk is future performance, consider a performance-linked mechanism with professional advice.

If the risk is a representation or undisclosed liability, address it through diligence, representations, escrow, holdback, insurance, or indemnification—not through vague optimism.

Seller financing can make an overpriced deal look affordable

A buyer may focus on the monthly payment and overlook the total purchase price.

Suppose a company is worth $1.5 million based on sustainable cash flow, but the parties agree to $1.9 million because $400,000 is financed by the seller.

The seller note makes the transaction easier to fund.

It does not make the extra $400,000 disappear.

Deferred purchase price remains purchase price.

The buyer still bears:

• Interest expense

• Balloon risk

• Refinancing risk

• Lower post-close cash flow

• Reduced flexibility during a downturn

• Potential conflict with the seller if the business struggles

A bad price paid slowly is still a bad price.

A better seller-financing decision tree

Before accepting or proposing seller financing, answer five questions.

1. What problem are we solving?

Is the issue valuation, lender proceeds, buyer liquidity, transition risk, or uncertainty about future performance?

2. Is the risk measurable?

Can the parties define the event or metric objectively?

3. Who controls the outcome?

A seller should not be paid based on a metric entirely controlled by the buyer without appropriate protections. A buyer should not guarantee payment for a risk created by the seller’s undisclosed or unfulfilled obligations.

4. What happens in the downside case?

Model the note under a revenue decline, margin compression, customer loss, or delayed integration.

5. Does the structure preserve operating liquidity?

The business must be able to fund payroll, vendors, taxes, capital expenditures, and growth. A transaction that sends every available dollar to lenders and the seller is structurally fragile.

Alignment must be visible in the documents

A seller’s willingness to accept deferred payment can be meaningful.

But buyers should resist turning it into a character judgment or a substitute for diligence.

Confidence is not a term sheet.

Alignment is visible in:

• Payment priority

• Timing

• Security

• Guarantees

• Setoff rights

• Transition requirements

• Exposure to business performance

• Remedies when obligations are not fulfilled

When those provisions are balanced and connected to the real transaction risks, seller financing can be a powerful tool.

When they are not, the buyer may simply be paying the same price later—with interest and fewer options.

Call To Action:

Which seller-financing term tells you the most about whether the seller is genuinely sharing risk?

Educational disclaimer: Transaction structures can have legal, tax, accounting, and lending consequences. This article is educational only. Engage qualified counsel, tax advisers, accountants, and the applicable lender before agreeing to terms.

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Who am I?

I have been in Information Technology for over 25 years at various roles from Systems Engineering to Director lever positions. I have also been in real estate since 2019 focusing on fix and flips and in 2023 we shifted our focus to commercial real estate investing. I have acquired 246 units and continue to pursue real estate investments. I also have a Technology Firm helping companies incorporate technology, build systems integrations, and solve complex business problems with technology solutions. An example of this was our Multifamily Deal Evaluator application that was built with an operator, syndicator, and investor perspective so that anyone can learn to underwrite, analyze, and evaluate deals. If you are interested in the tool, you can check it out at KeptDo MFA PRO. If you like to learn more about what we do with technology, please visit our site Del Val Investment Group.

Outside of my family, my dog, and my Miami Hurricanes my passion is business, technology, and real estate. We are always looking to purchase businesses that have a unique niche and serve our vision of solving real world business problems with technology and we are always looking for real estate opportunities we can operate or invest in as joint partners that we can bring to our investors.

If you would like to reach out or learn more about my background, feel free to connect with me on the following platforms.

Manny Del Val | CEO and Founder Del Val Investment Group

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Dear Friends,

Two companies can report the same revenue, the same adjusted EBITDA, and the same growth rate—and still deserve completely different valuations.

Company A has a management team, signed customer agreements, documented procedures, a functioning CRM, delegated pricing authority, and a repeatable sales process.

Company B has a talented founder whose phone contains the customer list, whose memory contains the operating system, and whose personal credibility closes every important sale.

On paper, both companies may produce $750,000 of adjusted EBITDA.

In reality, only one may be transferring $750,000 of earnings to the buyer.

The other may be transferring a collection of assets, employees, and customer relationships that must be reconstructed after the seller leaves.

This is why buyers should stop thinking only in terms of EBITDA multiples and start thinking in terms of transferable earnings.

The number is not the business

Financial diligence matters. A quality-of-earnings analysis can help determine whether reported earnings are recurring, correctly stated, and supported by the underlying accounting records. Working-capital and debt-like-item analyses can also materially change the final purchase economics.

But even a technically sound quality-of-earnings report does not answer every operating question.

It may validate that the company historically earned $750,000.

It cannot, by itself, prove that the company will continue earning $750,000 after the person who created the customer relationships, solved the unusual problems, approved every price exception, and calmed every important employee is gone.

That requires operational diligence.

Transferability is the bridge between historical earnings and buyer-owned earnings.

The five forms of seller dependency

Most buyers recognize obvious owner dependence. The seller works seventy hours a week, personally handles sales, or signs every check. The more dangerous dependencies are often less visible.

1. Revenue dependency

The seller may not be listed as the salesperson, but customers may still view the relationship as personal.

Ask:

• Which customers call the owner directly?

• Who negotiates renewals?

• Who resolves pricing disputes?

• Which accounts have never interacted meaningfully with another leader?

• Are contracts assignable, and do customers have change-of-control rights?

A customer relationship is not transferable merely because the customer has paid the company for years.

2. Knowledge dependency

Many owner-operated businesses function through unwritten judgment.

The owner knows which jobs to avoid, which vendor can solve an emergency, which employee can handle a difficult customer, and when an estimate contains hidden risk.

This knowledge may never appear in a procedure manual because the owner does not experience it as a process. It feels like common sense developed over twenty years.

To the buyer, it is undocumented intellectual property.

3. Decision dependency

A company may have managers, but they may lack actual authority.

If every discount, hire, purchase, customer exception, and vendor decision requires owner approval, management exists in title more than in function.

The buyer is not acquiring a self-running management system. The buyer is acquiring a queue of decisions waiting for a replacement owner.

4. Employee dependency

Key employees may be loyal to the seller rather than committed to the institution.

Compensation arrangements may be informal. Career paths may not exist. Important people may stay only because the seller has repeatedly promised something that was never documented.

The acquisition can trigger uncertainty even when the buyer intends to preserve the team.

5. Vendor and credential dependency

Licenses, certifications, bonding capacity, supplier terms, referral relationships, and purchasing discounts may depend on the seller personally.

A company can lose margin or even its ability to operate when those items do not transfer cleanly

Customer concentration is only one type of concentration

Buyers correctly focus on customer concentration, but concentration can appear anywhere the company has a single point of failure.

Examples include:

• One estimator produces nearly every profitable quote.

• One office manager understands billing and collections.

• One technician holds a required license.

• One supplier provides a specialized material.

• One lead source generates most new customers.

• One founder maintains all system passwords.

• One spreadsheet contains the real operating data.

A company can have a diversified customer base and still have extreme operating concentration.

The practical question is not merely, “What percentage does the largest customer represent?”

It is: What single loss would most quickly reduce cash flow, and how difficult would it be to replace?

Build a transferability score

A transferability score should evaluate the systems that allow performance to continue without the seller.

Score each category from one to five.

Revenue

• Is revenue recurring, contracted, repeat, or constantly resold?

• Are customer relationships institutional or personal?

• Is pipeline data visible?

• Can sales performance be reproduced by someone other than the owner?

Operations

• Are core procedures documented?

• Are quality standards measurable?

• Are exceptions tracked?

• Can work continue when one key person is absent?

People

• Is there management depth?

• Are compensation and responsibilities documented?

• Are retention risks understood?

• Can managers make decisions without the owner?

Technology and data

• Does the company use systems of record?

• Are customer’s, financials, and operating data complete and accessible?

• Are passwords, licenses, and integrations controlled by the company?

• Can the buyer see performance without manually reconstructing it?

Vendors and compliance

• Are key relationships documented?

• Do required licenses transfer or remain valid?

• Are supplier terms market-based?

• Are there alternative sources for critical inputs?

Adjust earnings before debating the multiple

Buyers often negotiate whether a business deserves a four-times or five-times multiple.

That debate can be premature.

First determine the earnings base to which the multiple should apply.

Assume a company reports $800,000 of adjusted EBITDA. During operational diligence, you identify the following:

• Replacement sales leadership: $140,000

• Additional operations manager: $110,000

• Lost gross profit from likely customer attrition: $90,000

• Required technology and process investment: $60,000 annually for the first two years

The buyer is not acquiring $800,000 of immediately transferable EBITDA.

The buyer may be acquiring approximately $400,000 to $500,000 of post-transition earnings, plus an opportunity to rebuild toward the historical number.

That difference should affect:

• Purchase price

• Seller financing

• Transition length

• Working-capital reserve

• Employment agreements

• Retention incentives

• Representations and indemnification

• The buyer’s willingness to proceed

Ask questions the CIM cannot answer

A confidential information memorandum usually describes the company at its best.

Operational diligence should search for what stops, slows, or becomes uncertain when the owner is absent.

Ask:

• What did not get done during the owner’s last vacation?

• Which customers insist on speaking with the owner?

• Who can quote a large job without approval?

• Who can hire or terminate an employee?

• Which process exists only in someone’s head?

• Which system would fail if one employee left tomorrow?

• What information does the owner review every morning?

• Which decisions are delayed when the owner is unavailable?

• What has the seller attempted to delegate unsuccessfully?

The quality of the answers matters. So does the speed with which the company can produce evidence.

A business that claims to be systematized but cannot show reports, procedures, authority matrices, contracts, or performance dashboards is not yet systematized.

Price the company you will own

The seller is entitled to describe what was built. The buyer must price what will transfer.

That does not mean punishing founders for being important. Many excellent small businesses were built through extraordinary founder effort.

It means recognizing that a buyer cannot pay a premium for an operating capability that disappears at closing.

The cleanest acquisitions convert personal goodwill into institutional capability before the transaction:

• Customer relationships are shared.

• Leadership authority is real.

• Processes are documented.

• Data is visible.

• Key employees are retained.

• Vendor and license dependencies are addressed.

• The seller’s knowledge is transferred through a structured plan.

When those conditions exist, the buyer is not simply purchasing a history of earnings.

The buyer is purchasing a business that can continue producing them.

That is what deserves the multiple.

Call To Action:

What is the most dangerous form of owner dependency you have encountered in a small business?

Educational disclaimer: This article is for educational purposes only and is not legal, tax, accounting, or investment advice.

If you found this article valuable or educational consider subscribing the newsletter and sharing it with friends.

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Contact Information

Who am I?

I have been in Information Technology for over 25 years at various roles from Systems Engineering to Director lever positions. I have also been in real estate since 2019 focusing on fix and flips and in 2023 we shifted our focus to commercial real estate investing. I have acquired 246 units and continue to pursue real estate investments. I also have a Technology Firm helping companies incorporate technology, build systems integrations, and solve complex business problems with technology solutions. An example of this was our Multifamily Deal Evaluator application that was built with an operator, syndicator, and investor perspective so that anyone can learn to underwrite, analyze, and evaluate deals. If you are interested in the tool, you can check it out at KeptDo MFA PRO. If you like to learn more about what we do with technology, please visit our site Del Val Investment Group.

Outside of my family, my dog, and my Miami Hurricanes my passion is business, technology, and real estate. We are always looking to purchase businesses that have a unique niche and serve our vision of solving real world business problems with technology and we are always looking for real estate opportunities we can operate or invest in as joint partners that we can bring to our investors.

If you would like to reach out or learn more about my background, feel free to connect with me on the following platforms.

Manny Del Val | CEO and Founder Del Val Investment Group

Personal LinkedIn | Business LinkedIn | Facebook | Email

Leave a comment

Subscribe now

Dear Friends,

A lender can approve your acquisition and still leave you holding a business that cannot support your salary, its debt, its working-capital needs, and the first unexpected problem after closing.

That is not a contradiction. It is a reminder that the lender and the buyer are answering two different questions.

The lender is asking: Does this transaction fit the credit box, and is there a reasonable path to repayment?

The buyer must ask: Is this a durable, transferable business that can pay me appropriately, survive a realistic downside case, and justify the personal and financial risk I am taking.

Those are not the same test.

The SBA 7(a) program remains one of the most powerful financing tools available to acquisition entrepreneurs. A standard 7(a) loan can be as large as $5 million. In July 2026, the SBA also announced that eligible borrowers may combine 7(a) and 504 financing for up to $10 million in cumulative SBA-backed financing. That increases access to capital. It does not reduce the need for disciplined buyer underwriting. [1][2]

A deal can be financeable and still be a bad acquisition.

Who Am I & Why Listen to Me?

So, who am I and why should you listen to me. I am Manny Del Val, been working in IT for over 25 years. I work for an IVY League Medical College as a Senior Manager, I also have my own technology consulting business, and I am a real estate investor with 246 doors, but most importantly I am a real person who has built business, been laid off, been successful, and worked hard for everything I got. I am passionate about a lot of things but outside of my family, my dog, and my Miami Hurricanes there is nothing I am more passionate about than business, technology, and commercial multifamily real estate. These news articles are away from me to connect and hopefully provide value, prevent you from making a mistake, educate you on something and inspire you to go out there and take control.

The bank is not your investment committee

A lender evaluates historical financial performance, repayment capacity, borrower qualifications, collateral where applicable, the transaction structure, and compliance with lending requirements. A good lender will challenge assumptions and may identify major weaknesses.

But the lender is not responsible for deciding whether the business fits your life, your capabilities, your risk tolerance, or your long-term strategy.

The lender does not have to operate the company after the seller leaves.

The lender does not have to explain to your spouse why the business needs another $150,000 of working capital.

The lender does not have to replace the salesperson who owned the customer relationships, rebuild a broken estimating process, or discover that the seller was working seventy hours a week to produce the advertised cash flow.

You do.

That is why financing approval should be treated as one diligence result, not as the final investment decision.

Where do you Start?

Start with cash flow you can actually keep. Many small-business opportunities are presented using Seller’s Discretionary Earnings, or SDE. SDE can be useful, especially for owner-operated companies, but it is not automatically the amount available to the buyer.

A buyer should rebuild the cash-flow waterfall from the ground up:

1. Begin with reported operating profit.

2. Validate every proposed add-back.

3. Remove truly nonrecurring expenses only when evidence supports the adjustment.

4. Subtract a market-rate salary for the work that must be performed after closing.

5. Subtract recurring capital expenditures.

6. Account for working-capital investment.

7. Subtract annual debt service.

8. Maintain a realistic operating reserve.

9. Then determine what remains for owner distributions and reinvestment.

This is where an apparently attractive business often changes shape.

For Example: Consider a company marketed at $600,000 of SDE.

The broker package includes $100,000 of add-backs. During diligence, you determine that only $55,000 is defensible. The seller handles sales, pricing, and customer escalations, so you budget $130,000 for a commercial manager or executive-level operator. The company has historically underinvested in equipment, requiring $45,000 of annual maintenance capital. Debt service is $250,000. You also need at least $75,000 of annual cash retention until liquidity is stabilized.

The calculation becomes:

• Advertised SDE: $600,000

• Unsupported add-backs removed: ($45,000)

• Replacement management: ($130,000)

• Maintenance capital expenditures: ($45,000)

• Debt service: ($250,000)

• Required cash retention: ($75,000)

• Remaining pre-tax cash flow: $55,000

The bank may still see a financeable transaction because its underwriting definitions, adjustments, guarantor strength, or collateral position support the loan.

You should see a business with almost no room for error.

Stress the business, not only the loan

A common acquisition model asks whether the historical earnings cover scheduled debt service. A buyer-grade model asks what happens when the historical performance does not repeat perfectly.

At minimum, test four downside events.

1. The largest customer leaves

Customer concentration is not merely a percentage on a spreadsheet. It is a cash-flow event.

If the largest customer represents 18% of revenue but 28% of gross profit, the effect is more severe than the revenue percentage suggests. Ask whether the corresponding labor and overhead can be removed quickly or whether most costs remain.

2. Gross margin falls

A two- or three-point reduction in gross margin can erase a significant portion of debt-service cushion in a labor-intensive or materials-heavy business.

Model wage increases, supplier repricing, discounting, and warranty work. Do not assume that all revenue dollars have equal economic value.

3. Collections slow

A profitable business can become a liquidity problem when customers pay in sixty days and vendors or employees must be paid in fifteen.

Working-capital analysis is a core part of financial diligence because the normal level delivered at closing can materially affect the economics for both buyer and seller.

4. The seller becomes unavailable

Transition agreements are important, but buyers should not build a survival plan around a seller’s continued enthusiasm.

Model the company as though the seller becomes less available than expected. Which relationships, approvals, passwords, pricing decisions, vendor terms, and undocumented processes immediately become vulnerable?

The personal guarantee changes the risk calculation

Acquisition entrepreneurs are often drawn to SBA financing because it can reduce the equity check required at closing. That capital efficiency is real.

But a low buyer injection does not mean the buyer’s downside is limited to the amount invested.

The risk can include:

• The personal guarantee

• Lost salary during a turnaround

• Additional working-capital contributions

• Legal and professional costs

• Opportunity cost

• Personal reputation

• Stress on family and health

A deal requiring $150,000 at closing may create exposure far beyond $150,000.

That does not make SBA financing inappropriate. It means the buyer should demand enough return, liquidity, and downside protection to justify the broader risk.

Build a buyer approval test

Before submitting a final offer, define the conditions under which you approve the acquisition.

A disciplined buyer approval test may include:

• Minimum debt-service coverage in the base case

• Minimum debt-service coverage after a defined revenue or margin decline

• Maximum customer and vendor concentration

• Minimum post-close liquidity

• Maximum dependence on the seller

• Required management depth

• Required recurring or repeat revenue

• Maximum maintenance capital expenditure

• Minimum cash compensation for the buyer

• Specific walk-away conditions

The numbers should reflect the business and your circumstances. There is no universal threshold that makes every deal safe.

The point is to set the rules before deal momentum, sunk costs, and emotional attachment make discipline harder.

Bankable is not the same as buyable

The most dangerous sentence in acquisition underwriting may be: “The lender is comfortable with it.”

The lender’s comfort matters. It is not a substitute for yours.

The lender is underwriting repayment.

You are underwriting repayment, operations, leadership, personal risk, family impact, future growth, and the possibility that the business you buy is materially different from the business the seller operated.

Use the bank’s approval as a valuable data point.

Then conduct the harder analysis yourself.

Because the lender can approve the loan.

Only you can approve the life that comes with it.

Practical Buyer Checklist: Bankable vs. Buyable

Before moving forward, answer these questions in writing:

• What is sustainable cash flow after replacing the seller’s labor?

• Which add-backs have documentary support?

• How much working capital is required during a normal month and a bad month?

• What happens to cash flow if revenue falls 10%?

• What happens if gross margin falls three points?

• Which customer, employee, or supplier loss creates an immediate crisis?

• How much personal liquidity remains after closing?

• Can the business support debt service, a proper salary, reserves, and reinvestment?

• What specific fact would cause me to walk away?

Engagement Call to Action: What is the minimum downside scenario a business must survive before you would personally guarantee the acquisition debt?

Educational disclaimer: This article is for educational purposes only and is not legal, tax, accounting, lending, or investment advice. Buyers should consult qualified professional advisers and their lender regarding the facts of a specific transaction.

Contact Information

If you would like to connect with me or learn more about how Del Val Investment Group helps solve real business problems using technology, please reach out on the platforms below.

Manny Del Val | CEO and Founder Del Val Investment Group

Personal LinkedIn | Business LinkedIn | Facebook | Email

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Dear Friends,

The easiest story to tell about Anthropic’s Fable 5 shutdown is that Washington saved the world from a dangerous AI model.

That may also be the laziest story.

The harder, more uncomfortable version is this: the U.S. government may have restricted one of the most useful defensive cybersecurity tools available to legitimate researchers, while attackers simply keep using other models, open-source tools, stolen exploits, botnets, and human operators.

That is the real security question behind the Fable 5 and Mythos 5 fight.

Not “Can AI find vulnerabilities?”

Of course it can.

The question is: who gets to use that capability first — defenders or attackers?

Here is what we know

Anthropic launched Claude Fable 5 and Claude Mythos 5 on June 9, 2026. Fable 5 was described as a Mythos-class model made “safe for general use,” while Mythos 5 was the same underlying model with safeguards lifted in some areas for a smaller group of cyber defenders and infrastructure providers through Project Glasswing. Anthropic said the models had strong software engineering and cybersecurity capabilities, with Mythos 5 positioned as especially powerful for defensive work. Anthropic

Three days later, Anthropic said it would suspend access to both models after receiving a U.S. government export-control directive requiring it to block foreign nationals from accessing Fable 5 and Mythos 5. Reuters reported that the order cited national security concerns and that Anthropic said it had not been given specific details of the concern. Reuters

WIRED reported Anthropic’s explanation: the government believed it had become aware of a method of bypassing, or jailbreaking, Fable 5’s safeguards. Anthropic said it reviewed a demonstration involving previously known, minor vulnerabilities and argued that other publicly available models could find similar issues without the same bypass. Wired

That distinction matters.

A model that can discover previously unknown, high-impact vulnerabilities at scale is one policy problem.

A model that can be coaxed into identifying known or minor software flaws — a capability already available elsewhere — is a very different policy problem.

And if Anthropic’s account is right, the government may not have stopped a unique threat. It may have interrupted a defensive workflow.

What Actually Happened, in Plain English

Fable 5 was the public, guarded version of Anthropic’s more powerful Mythos-class model. Mythos 5 was the less-restricted version for approved users, including security teams and infrastructure providers.

The basic policy design was familiar: broad access to the safer model, narrow access to the sharper tool.

Then the government stepped in.

According to Reuters, the U.S. Commerce Department issued an export-control directive to suspend access to the models by foreign nationals. Anthropic said the practical result was that it had to disable Fable 5 and Mythos 5 for all customers to ensure compliance.

The Verge reported that the directive applied to “any foreign national” inside or outside the U.S., including foreign-national Anthropic employees, and that Anthropic concluded the only workable path was to disable the products entirely while negotiating with officials.

The stated concern, based on Anthropic’s public account, was a jailbreak. The disputed question is whether that jailbreak exposed a genuinely new danger or merely showed that Fable 5 could do what many frontier models already do: help inspect code for flaws.

That is where the cybersecurity community erupted.

An open letter from security professionals, published under the FreeFable banner, asked U.S. officials to lift the export-control directives and adopt an “open, scientific and transparent process” for AI risk assessments. The letter acknowledged the obvious: AI is making it easier to find software flaws and write exploits. It also acknowledged that Anthropic’s Mythos-class models are good at that work. But its central claim was sharper: these models are not uniquely good at it, and many defenders already use other foundation and open-source models for audits and red-teaming Free Fable

That is not a pro-AI talking point. It is a threat-modeling argument.

Security is not about whether a tool can be misused. Almost every serious security tool can be misused. Port scanners, fuzzers, exploit frameworks, reverse-engineering suites, endpoint telemetry, phishing simulation platforms — all can help defenders or attackers depending on who is holding them.

The policy question is not “Could this be dangerous?”

The policy question is “Does restricting this tool reduce total risk?”

The Security Argument Nobody Wants to Say Out Loud

The security argument nobody wants to say out loud is that vulnerability discovery is no longer scarce.

For years, the bottleneck in cyber offense and defense was expert labor. You needed people who could read code, reason through weird edge cases, chain bugs, understand memory corruption, build tooling, and test hypotheses without getting lost.

AI does not eliminate that bottleneck. But it compresses it.

The FreeFable letter argues that giving AI to coders and security teams is essential so they can find and fix flaws in newly written and legacy code faster than adversaries. It also warns that pulling the best capabilities away from defenders while adversaries continue advancing is dangerous. Free Fable

Reuters reported a similar argument from signatories: the curbs could limit the cybersecurity industry’s ability to find and fix software flaws at a time when other AI tools are making exploitation easier. Reuters also quoted Joshua Saxe, CTO of Abundant Security, saying Mythos may be the best model right now for finding security bugs, but only as an incremental advance over other already available models.

That is the key policy tension.

If Fable 5 and Mythos 5 were a one-of-one capability, locking them down might buy time.

But if they are an incremental improvement in a field where alternatives already exist, the restriction may mostly hurt the people who follow rules: enterprises, researchers, startups, auditors, infrastructure providers, and government-adjacent defenders.

Attackers do not need Anthropic’s blessing.

They can use other frontier models. They can use open-weight systems. They can scaffold weaker models with tools. They can combine LLMs with fuzzers, static analyzers, leaked credentials, phishing kits, and malware-as-a-service markets.

That does not mean governments should do nothing. It means they need to regulate the actual risk system, not perform theater around a single branded model.

There is emerging research pointing in this direction. One recent arXiv position paper argues that AI security policy should target systems rather than models, because software vulnerability discovery and safety bypasses can be reproduced cheaply with scaffolds, multi-agent workflows, and commodity hardware. The important enabler is often not the raw model alone, but the surrounding system: tools, memory, agents, exploit harnesses, and workflows. Arxiv

Another recent cybersecurity benchmark paper found that general frontier models remain imperfect in security tasks, with false positives and low black-box vulnerability coverage, while structured methodology and domain-specialized agents can matter more than scale alone. That supports a more nuanced view: “frontier AI” is not a magic exploit machine, but AI-powered security systems are becoming increasingly capable when paired with the right workflow. Arxiv

This is exactly why blunt access restrictions can fail.

They focus on the model.

The battlefield is the system.

Why This Could Backfire

The strongest version of the government’s case is not stupid.

National security officials have legitimate reasons to worry about frontier AI accelerating cyber operations. A model that helps discover vulnerabilities, write exploit code, or automate reconnaissance could be valuable to criminals, sanctioned actors, and hostile intelligence services.

Export controls exist because some technologies really do matter strategically.

But the Fable 5/Mythos 5 case appears to sit in a messy middle zone.

According to Anthropic, the demonstrated issue involved a narrow, non-universal jailbreak and a small number of previously known, minor vulnerabilities, with similar capabilities available from other public models. WIRED reported that Anthropic argued the jailbreak would not make an attacker meaningfully more dangerous than they would be with another AI model.

The Verge reported that the dispute also involves export controls, foreign access, possible China-related concerns reported elsewhere, Amazon red-team findings, and the broader question of whether Fable 5’s risks were meaningfully different from competitors’ models.

So, what happens if the government overreacts?

1. First, defenders lose access to a tool they were beginning to integrate into vulnerability discovery and remediation workflows.

2. Second, companies learn that deploying advanced defensive AI can create political risk.

3. Third, non-U.S. customers start hedging against American AI platforms.

4. Fourth, adversaries keep moving.

That last point is the most important.

If attackers can get comparable capability elsewhere, then restricting one U.S. model does not eliminate the threat. It changes who has reliable access.

The policy risk is asymmetry: compliant defenders slow down, while noncompliant attackers adapt.

That is how security policy backfires. It punishes the side with procurement departments, legal counsel, cloud contracts, and audit trails.

What Is Really Being Regulated?

The Fable 5 fight is being framed as a model-safety dispute. But it may be about something bigger.

Governments may be trying to regulate four things at once.

1. First, model capability: how good an AI system is at finding bugs, reasoning through code, and operating autonomously.

2. Second, cyber labor: who gets access to machine-speed security analysis that previously required scarce human experts.

3. Third, export controls: whether advanced AI should be treated like a strategic technology whose use by foreign nationals can be restricted.

4. Fourth, geopolitical AI power: whether U.S. labs should be allowed to sell or provide cutting-edge capabilities globally when those capabilities might also help adversaries.

Those are real issues. They deserve serious governance.

But serious governance requires evidence, transparency, and consistent standards.

If the standard is “a model can help identify vulnerabilities,” then much of the frontier AI market is implicated.

If the standard is “a jailbreak exists,” then the government will be chasing an endless queue of bypasses.

If the standard is “foreign nationals might use it,” then modern AI companies will face a compliance nightmare, because engineering, research, cloud operations, and customer bases are global.

And if the standard is “this model sounds too scary,” then policy becomes vibes with subpoena power.

What Happens Next

There are several possible paths.

1. The first is a negotiated carve-out. Anthropic and the government could agree on a more controlled access program, stronger customer screening, monitoring, logging, or restrictions on specific high-risk workflows.

2. The second is a broader precedent. If Fable 5 and Mythos 5 stay restricted, other labs may face similar scrutiny for comparable models. The Verge reported that OpenAI, Google, and Microsoft have comparable products with similar claims about effectiveness and risk, raising the possibility that a rule aimed at Anthropic could spread across the frontier AI industry.

3. The third is fragmentation. Enterprises, governments, and security teams outside the U.S. may decide that American AI platforms are politically unreliable and seek domestic, open-weight, or non-U.S. alternatives.

4. The fourth is policy maturity. The government could use this episode to build a transparent, technically credible process for evaluating AI cyber risk — one that distinguishes between capability, access, deployment context, logging, user identity, and actual misuse evidence.

That is the outcome defenders should want. Because the alternative is crude model-by-model panic.

And panic is not a strategy.

The Bottom Line

The Fable 5 shutdown may eventually prove justified. Maybe the government has classified evidence we cannot see. Maybe officials know something that would change the public debate.

But based on public reporting, the evidence currently available suggests a more complicated story: the government restricted Anthropic’s most advanced models over a disputed jailbreak concern, while cybersecurity professionals warned that the move could weaken defenders and fail to meaningfully slow attackers.

That should make everyone uncomfortable.

Not because AI models are harmless, but because they are powerful.

And powerful defensive tools are exactly what security teams need when the offense is scaling.

The real danger may not be that Fable 5 was too capable.

The real danger may be that we are entering an era where governments restrict defensive AI faster than they can build a coherent cyber strategy.

So here is the question:

Are we making the internet safer by limiting tools like Fable 5 — or are we just making sure the most rule-bound defenders fight with one hand tied behind their back?

I want to hear from security engineers, founders, policy people, and skeptics: where should the line be?

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Manny Del Val | CEO and Founder Del Val Investment Group | Level 7 Capital

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Dear Friends,

The shutdown of Anthropic’s Fable 5 and Mythos 5 models may be remembered as the moment AI regulation moved from theory to direct government intervention.

On June 12, 2026, Anthropic announced that it would suspend access to its most advanced AI models, Claude Fable 5 and Claude Mythos 5, after receiving a U.S. government export-control directive.

This was not a normal product rollback. It was not a customer outage. It was not a voluntary safety pause.

According to Anthropic, the U.S. government ordered the company to suspend access to Fable 5 and Mythos 5 for any foreign national, whether inside or outside the United States, including foreign-national Anthropic employees. Anthropic said the practical effect was that it had to disable the models for all customers to ensure compliance. Other Anthropic models were not affected.

That is the headline.

But the real story is much bigger: the U.S. government appears to be testing a new kind of AI control — not just regulating chips, data centers, or exports of hardware, but directly restricting access to frontier AI models themselves.

What Happened?

Anthropic launched Claude Fable 5 on June 9, 2026, describing it as a “Mythos-class” model made safe for general use. The company said Fable 5 was its most capable generally available model yet, especially strong in software engineering, knowledge work, vision, scientific research, and long, complex tasks. Anthropic also acknowledged that a model this capable carried real risk, especially in cybersecurity, so it added safeguards that would route some risky requests to a less capable model.

Just three days later, Anthropic said the U.S. government issued an export-control directive.

The government’s concern, according to Anthropic, was that officials believed there was a way to bypass — or “jailbreak” — Fable 5’s safeguards and use it to identify software vulnerabilities. Anthropic says it reviewed a demonstration involving “a small number” of previously known, minor vulnerabilities and argued that other publicly available models could also find similar issues without a bypass.

Reuters later reported that Amazon CEO Andy Jassy was among tech leaders who raised concerns with senior Trump administration officials about security risks in Anthropic’s advanced models. Reuters also reported that the U.S. government cited the risk of jailbreaking Fable 5 to identify software vulnerabilities.

Business Insider reported that senior White House officials held urgent calls with Anthropic CEO Dario Amodei before the export controls were imposed. According to that report, officials were not persuaded by Anthropic’s argument that the bypass was narrow rather than a universal jailbreak.

The Government’s Position

The government’s argument is straightforward:

A model with frontier-level cyber capabilities cannot be treated like normal software.

From the government’s perspective, if Fable 5 or Mythos 5 can help users identify vulnerabilities, then access becomes a national security issue. The concern is not just what one researcher can do with the model. The concern is what hostile governments, cybercriminal groups, or unauthorized foreign users could do at scale.

The U.S. appears to be saying:

A frontier model is not just a product.
It is strategic infrastructure.
And if the government believes it can be misused, it may intervene before the damage happens.

This also explains why the order reportedly targeted foreign nationals. Export controls traditionally deal with sensitive technology crossing borders. In this case, the “export” is access to the model itself.

That is a major shift. For years, U.S. AI export controls focused mostly on chips and the tools needed to build AI systems. This action moves closer to controlling access to the model layer directly.

Anthropic’s Position

Anthropic’s response is also clear:

The government acted too broadly, too quickly, and without enough technical evidence.

Anthropic said it supports the idea that the government should be able to block unsafe AI deployments, but only through a process that is transparent, fair, clear, and grounded in technical facts. The company argued that this directive did not meet that standard.

Anthropic also made several technical claims:

First, it says Fable 5 had strong safeguards, and that some users had even complained the safeguards were too broad.

Second, it says Fable 5 was red-teamed for thousands of hours by Anthropic, the U.S. government, the U.K. AI Security Institute, third parties, and internal teams.

Third, it says no tester had found a universal jailbreak capable of broadly bypassing the model’s safeguards.

Fourth, it argues that perfect jailbreak resistance is probably not possible for any frontier model today.

Anthropic’s core point is that if a narrow, non-universal jailbreak is enough to recall a frontier model, then nearly every major AI company could face the same standard. In Anthropic’s words, applying this standard across the industry could “essentially halt all new model deployments for all frontier model providers.”

Timeline: Step by Step

June 9, 2026 — Anthropic launches Claude Fable 5

Anthropic announces Fable 5 as a generally available “Mythos-class” model with advanced capabilities and added safeguards.

June 12, 2026 — U.S. government issues export-control directive

Anthropic says it receives the directive at 5:21 p.m. ET, ordering it to suspend access to Fable 5 and Mythos 5 by any foreign national.

June 12, 2026 — Anthropic disables the models globally

Because the order applied to foreign nationals inside and outside the U.S., including some employees, Anthropic says the only practical way to comply was to disable the models for all customers.

June 13, 2026 — Reuters reports Amazon raised concerns

Reuters reports that Amazon CEO Andy Jassy was among tech leaders who raised concerns to senior Trump administration officials about the models’ security risks.

June 14, 2026 — Reporting shows deeper White House involvement

Business Insider reports that senior officials held multiple calls with Anthropic CEO Dario Amodei before the export-control action, with officials arguing Anthropic was not moving urgently enough. Anthropic disputed parts of that characterization.

My Position

Here is my position.

The government was right to treat frontier AI models as a national security issue. But it was wrong to handle this through an opaque emergency-style action without clear public technical standards. There was no clear indication that there was any jailbreak and anthropic clearly stated in their release notes that it did build safe guards.

I understand that if a model materially improves cyber-offensive capability, the government cannot simply wait for market forces to sort it out. The risk is real. AI models that help identify vulnerabilities can help defenders, but they can also help attackers.

At the same time, Anthropic has a strong point: no AI model is perfectly jailbreak-proof. If the standard becomes “any narrow bypass means shutdown,” then frontier AI deployment becomes nearly impossible and AI development stops.

This intrusion by the government is deeply concerning as they now have the power to remove publicly available LLM models from leading AI private companies like AI. How is this different than GPT 5.5 and is the government picking winners and losers.

How could this affect upcoming IPOs by Anthropic if the government can simply step in and remove their latest development model. Seems to me this is a huge risk when evaluating their upcoming IPO.

The better standard should be:

Does the model create a meaningful risk that can technically be proven and is not a hypothetical?

Can the risky capability be accessed broadly, repeatedly, and cheaply?

Did the company ignore known issues or fail to mitigate them?

Is the government applying the same standard across all major AI labs?

Was the company given a clear technical disclosure and a defined remediation path?

Based on the public record so far, the government may have had legitimate concerns. But the process appears too vague for an action this consequential.

Is This the Beginning of AI Regulation?

Not exactly.

AI regulation has already begun. Governments have been working on AI rules, chip export controls, safety evaluations, and national security frameworks for years.

But this may be the beginning of something more important:

Direct government control over frontier model deployment.

That is different.

This is not just about who can buy chips.
It is not just about privacy policies.
It is not just about copyright lawsuits.
It is not just about voluntary safety pledges.

This is the government saying:
“We may decide whether your most powerful model can be used, who can use it, and whether it stays online.”

That is a new phase.

The big question now is whether this becomes a one-off national security dispute or the template for future AI oversight.

My guess: this is the start of a broader pattern.

Frontier AI companies are no longer just software companies. They are becoming strategic infrastructure companies. And once a technology becomes strategic infrastructure, governments do not stay hands-off for long.

Final Thought

The Anthropic Fable 5 shutdown is not just a story about one model.

It is a preview of the next AI battlefield:

Innovation vs. control.
Open access vs. national security.
Company-led safety vs. government-enforced safety.
Global AI markets vs. sovereign AI power.

And whether you agree with the government or Anthropic, one thing is clear:

The era of “launch first, regulate later” is ending.

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Manny Del Val | CEO and Founder Del Val Investment Group | Level 7 Capital

| Personal LinkedIn | Business LinkedIn | Facebook | Email | Level 7

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Dear Friends,

Three years ago, I was sitting at my desk at 11 p.m. — my most productive hour — staring at a broker package. Then another. Then a third. Each one in a different format. Different rent roll layout, different T-12 structure, different everything.

Before I could analyze a single deal, I had to spend hours just cleaning the files so they were usable. Then build the model. Then rebuild it when something changed. Then pull it all back together to submit an LOI and show investors what their returns would actually look like.

Multiply that across a pipeline, and the math gets ugly: most of my time wasn’t spent evaluating deals. It was spent wrangling them.

And through that process, one thing became very clear:

The industry still has major operational problems. As operators, we experienced this firsthand. That challenge ultimately became the catalyst for something much bigger.

I want to tell you what we did about that. But first, some news.

Today, I’m excited to officially share the next chapter of our journey.

A New Chapter for Level 7 Investors

As part of this evolution, I have transitioned from CFO/CIO into the role of CEO of Level 7 Investors. It's a moment I don't take lightly — and it comes with a deliberate decision about where we're headed.

This transition reflects more than a title change. It represents a strategic shift in how we are positioning the company for long-term growth, operational scalability, acquisitions, and stronger investor engagement.

We've reshaped the company into Level 7 Capital, built to be leaner and sharper, Over the past year, we’ve taken a hard look at how we operate, where we create the most value, and how we can build a more efficient organization for the future.

As a result, we’ve streamlined our structure around four core priorities:

• Acquisitions

• Capital Raising

• Investor Relationships

• Operational Efficiency

around the three things that actually move the needle: acquisitions, capital raising, and investor relationships. Less friction. Faster decisions. A structure designed so that when a strong deal appears, we can move on it — and so the investors who partner with us always know exactly where they stand.

That clarity is the whole point. It's how I think trust gets built — not with promises, but with transparency you can see.

We believe the next generation of real estate operators will be those who combine disciplined underwriting, operational excellence, and technology-driven execution.

The problem that became a product.

While growing as operators, we realized something else:

The underwriting process across the multifamily industry is still incredibly fragmented.

Data lives everywhere.

• Offering Memorandums arrive as PDFs.

• Rent rolls arrive in inconsistent Excel formats.

• T12s vary from broker to broker.

• Market research is scattered across platforms.

• LOI preparation requires manual compilation.

• Investor return models require repetitive adjustments and formatting.

For operators evaluating dozens — or hundreds — of deals, this creates massive friction. So instead of continuing to fight the process, I decided to build a solution.

By combining over 25 years of IT experience with AI, automation, and real-world multifamily operating experience, we developed the Multifamily Deal Analyzer Pro through our technology company, KeptDo.

Built By an Operator, For Operators

I didn’t build it as a software company guessing at what operators need. I built it as an operator solving my own problem, on my own deals, with everything in one place:

It was built from real operational pain.

The platform was designed specifically to help multifamily operators and investors:

• Organize and structure broker packages faster

• Streamline underwriting workflows

• Reduce repetitive manual work

• Analyze markets and property performance more efficiently

• Prepare LOIs with better speed and consistency

• Present investor return projections more clearly

• Improve acquisition decision-making

Everything that used to live across a dozen spreadsheets and a long night now lives in one tool. The hours I was losing to formatting, I get back for the work that actually matters finding and closing good deals.

This is not about replacing operators.

It’s about helping operators move faster, stay organized, reduce friction, and focus more time on strategic decision-making.

We believe AI and automation will become a meaningful competitive advantage in commercial real estate over the next decade. And we intend to be part of that evolution.

Why This Matters

The multifamily industry is changing.

• Deals are harder to find.

• Capital is more selective.

• Margins for error are smaller.

• Operational efficiency matters more than ever.

The firms that adapt fastest will have a significant advantage.

Our goal is to continue building systems, partnerships, and technology that help us operate more intelligently while continuing to create value for investors and partners.

This next chapter is about building a more scalable, more efficient, and more forward-looking organization.

And we’re just getting started.

This is the part where I ask you to do one thing.

This is the part where I ask you to do one thing.

See it for yourself at keptdo.com.

I have walkthrough videos and screenshots, but I’d rather you see it for yourself.

For a limited time, I am letting 15 additional users test the full product for 30 days completely free with no credit card sign up.

This is limited to 15 users when that fills up its done. If you want to test the product, contact me my information is below.

And if you’ve been thinking about investing alongside us as Level 7 Investors and Level 7 Capital step into this next chapter — reply to this email or reach out directly. The door is open, and I read every message.

Contact Information

If you like to connect with me or learn more about Level 7 feel free to reach out me on the below platforms.

Manny Del Val | CEO Level 7 Investors | Level 7 Capital

| LinkedIn | Facebook | Email

Looking Ahead

I’m incredibly grateful for everyone who has supported us along this journey — investors, partners, operators, brokers, mentors, and friends.

We’re building something designed for the future of multifamily investing and operations.

And I truly believe the best is still ahead.

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Dear Friends,

At Level 7, we are building for the long term.

While the market continues to shift, capital remains cautious, and great deals require deeper analysis than ever before, our team has been focused on one thing: creating a smarter, faster, and more disciplined investment platform.

Over the past several months, we have been working behind the scenes on major upgrades across the company. These updates are designed to help us move faster, make better decisions, strengthen investor communication, and position Level 7 for disciplined growth.

And we wanted to give our investors, partners, brokers, and broader community a sneak peek into what we have been building.

AI Is Becoming a Core Part of How We Analyze Deals

One of the biggest initiatives currently underway at Level 7 is our investment into AI-powered systems.

We are building a Deal Analyzer app designed to help us analyze markets and investment opportunities in minutes instead of hours or days.

This is a major step forward for our acquisitions process.

Traditionally, reviewing a deal requires pulling market data, analyzing rent comps, reviewing expenses, testing assumptions, modeling debt, calculating returns, comparing scenarios, and determining whether the opportunity fits our investment criteria.

That process can be time-consuming.

Our goal is to use AI and automation to compress that timeline dramatically.

The Deal Analyzer app is being built to help our team:

• Review deals faster

• Analyze markets more efficiently

• Compare investment opportunities more clearly

• Identify risks earlier

• Make decisions with greater speed and confidence

• Focus our time on the deals that truly deserve deeper underwriting

This does not replace disciplined underwriting. It enhances it.

AI helps us move faster, but our investment philosophy remains the same: conservative assumptions, strong fundamentals, and investor-first decision-making.

Introducing Greg Widelski, Chief Revenue Officer at Level 7

We are also excited to introduce Greg Widelski as Chief Revenue Officer at Level 7.

Greg’s role will be focused on helping Level 7 grow revenue, strengthen relationships, expand strategic partnerships, and support our investor and broker outreach efforts.

As we continue building the infrastructure for scale, having strong leadership around revenue, communication, and growth is critical.

Greg brings additional firepower to the Level 7 team at exactly the right time.

His addition reflects where we are headed: a more structured, more scalable, and more relationship-driven investment company.

We Are Upgrading Our Digital Infrastructure

In addition to the AI work, we are also revamping the Level 7 website.

Our goal is to better align the website with who we are, where we are going, and how we serve our investors.

The new site will be built to communicate our mission more clearly, present our investment strategy more professionally, and create a stronger experience for investors, brokers, and partners who want to learn more about Level 7.

We are also converting our systems over to Go High Level CRM.

This move will allow us to improve communication, organize relationships more effectively, automate key parts of our investor and broker follow-up, and create a more consistent experience for everyone who interacts with our company.

These are not just cosmetic upgrades.

They are foundational improvements that support growth.

While We Build, We Are Still Executing

Even with all of these major initiatives happening behind the scenes, our core business has not slowed down.

We are still actively:

• Underwriting deals

• Talking to brokers

• Reviewing markets

• Enhancing our business plan

• Speaking with investors

• Improving our systems

• Studying market trends

• Consuming as much relevant information as possible

We believe this is what disciplined operators do.

They build infrastructure while continuing to execute.

They improve systems while staying active in the market.

They prepare for future opportunities while staying grounded in today’s numbers.

April Deal Flow: What We Reviewed

April was a very active month for Level 7.

We saw approximately 1,000 deals.

Of those 1,000 opportunities, around 200 deals were assets we had some level of interest in based on our initial review.

From there, about 20 deals moved into second-level underwriting.

Out of those, 3 deals reached the pre-LOI stage.

However, we ultimately did not submit LOIs because our valuations did not align with the brokers’ valuations. The gap was simply too wide.

That is part of our process.

• We are not interested in forcing deals to work.

• We are not interested in chasing inflated pricing.

• And we are not willing to stretch assumptions just to win an acquisition.

If the numbers do not support the deal, we move on.

Our Underwriting Philosophy

At Level 7, we underwrite conservatively.

Every deal we review must be tested across multiple scenarios, including:

• Worst-case scenario

• Base-case scenario

• Best-case scenario

We believe this approach gives us a more complete view of risk and return.

Every opportunity must meet our minimum investment KPIs before we move forward.

Our current minimum targets are:

• 5% Cash-on-Cash Return

• 10% Internal Rate of Return

• 1.85x Equity Multiple

• 10-year hold period

If a deal does not meet those parameters, we will not invest.

Our commitment to our investors is simple:

First, protect their capital. Second, grow their capital.

That order matters.

We believe strong returns begin with disciplined risk management. Protecting downside risk is not just part of our strategy. It is the foundation of our strategy.

Our Current Buy Box

Level 7 is actively looking for multifamily opportunities that fit the following criteria:

• 12 to 100 units

• Class A, B, or C properties

• Located in Class A or B areas

• Built newer than 1986

• Within a 45-minute drive of a major metropolitan city

We are focused on properties where we can apply disciplined underwriting, operational improvements, and long-term business planning to create value.

We are not looking for every deal. We are looking for the right deals.

Message to Brokers

To our broker partners: we are actively looking.

Our team has deployed millions in the last quarter, and we are looking to purchase 3 to 5 deals over the next 12 to 18 months.

If you have opportunities that fit our buy box, we want to hear from you.

We move quickly, but we do not move recklessly.

We value clear communication, realistic pricing, and brokers who understand that long-term relationships matter.

If a deal fits our criteria, we will review it seriously and respond professionally.

Final Thoughts

Level 7 is growing.

We are building AI tools, strengthening our acquisition process, upgrading our website, implementing a new CRM, expanding our leadership team, talking to investors, working with brokers, and continuing to underwrite opportunities every week.

The market is challenging, but we believe challenge creates opportunity for disciplined buyers.

We are not trying to be the loudest company in the room.

We are focused on becoming one of the most prepared.

And as we continue building, we look forward to sharing more of the journey with you.

Contact Information

If you like to connect with me or learn more about Level 7 Investors feel free to reach out me on the below platforms.

Manny Del Val | CFO/CIO Level 7 Investors | Level 7 Investors | LinkedIn | Facebook

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Dear Friends,

The confusing statement that is actually true, some of the most disciplined investors we work with care deeply about cash flow.

They just don’t chase it.

Because they understand something most investors don’t:

Taxes determine real returns—not headline yields.

---

The Misunderstanding Around Passive Losses

Depreciation is often treated like a perk.

It isn’t.

It’s a structural advantage when used correctly—and a wasted opportunity when misunderstood.

Paper losses don’t mean economic losses. They mean tax efficiency.

How Multifamily Changes the Tax Equation

Multifamily allows investors to:

• Accelerate depreciation

• Offset passive income

• Preserve capital longer

• Reinvest pre-tax dollars

This isn’t aggressive. It’s intentional.

But it only works when:

• Assets are structured properly

• Time horizons are respected

• Operators understand the full lifecycle

  ---

Why This Matters in Today’s Environment

As incomes rise and tax burdens increase, after-tax returns matter more than ever.

• Cash flow without tax strategy leaks.
  Growth without planning surprises.
  Distributions without structure disappoint.

  ---

Our Philosophy on Tax Strategy

We don’t sell tax magic.

We build:

• Conservative projections

• Long-term planning

• Transparent assumptions

Tax benefits are a feature—not the thesis.

For Investors Evaluating Deals

Ask:

• How long is the hold?

• How is depreciation modeled?

• What happens at exit?

If those answers aren’t clear, the risk isn’t either.

For Operators Leaving Value Untouched

If tax strategy isn’t discussed early, it’s usually implemented late—or not at all.

That costs real money.

How We Align Interests

We invest alongside our partners.
We plan conservatively.
We communicate early.

That’s how trust survives cycles.

Call To Action

If you are like our approach and want to learn more about what we do, and our investment thesis Join our Investor Circle

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If you like to connect with me or learn more about Level 7 Investors feel free to reach out me on the below platforms.

Manny Del Val | CFO Level 7 Investors | Level 7 Investors | LinkedIn | Facebook

May Preview

Next month, we’ll explore why some operators quietly outperform across cycles—and why asset management, not acquisitions, is the real moat.

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Dear Friends,

The Dangerous Assumption that most investors assume NOI growth comes from rent growth. That’s convenient but it’s also fragile. Rent growth is market dependent. NOI growth is operator dependent. Understanding that distinction is what separates durable portfolios from volatile ones.

Why Rent Growth Is the Weakest Lever

Rent growth:

• Is externally controlled

• Faces political pressure

• Slows before expenses do

• Disappears fastest in stress

Yet many deals rely on it almost exclusively.

That’s not strategy. That’s hope.

How NOI Is Actually Built

NOI grows when operators control:

• Expense ratios

• Turnover velocity

• Ancillary income

• Operational efficiency

• Capital deployment timing

These are repeatable, even when markets soften.

Ancillary Income Done Correctly

Ancillary income isn’t about gimmicks.

It’s about:

• Solving real tenant needs

• Improving retention

• Creating margin without friction

When executed properly, ancillary businesses:

• Smooth cash flow

• Offset expense inflation

• Increase asset resilience

When executed poorly, they distract teams and dilute focus.

This is why we are selective.

Why This Approach Isn’t for Every Asset

Our model works best when:

• The asset is operationally stable

• The tenant base supports services

• Management execution is disciplined

It does not work in:

• Severely distressed assets

• High-crime, unstable locations

• Properties needing wholesale rescue

Knowing when not to apply a strategy is part of integrity.

Practical Investor Insight

Ask this question:

“If rent growth stopped tomorrow, how would this deal perform?”

If the answer isn’t clear, neither is the risk.

For Operators Seeking Relief

If NOI feels stuck despite rent increases, it’s usually because:

• Expenses are unmanaged

• Turnover is underestimated

• Revenue diversity is missing

These are solvable—but only with intention.

How We Think About Alignment

We do not chase maximum returns.

We pursue predictable, repeatable performance.

That’s how trust compounds. That’s how portfolios last.

Call To Action

If you want an honest view of whether ancillary income or operational optimization makes sense for your asset, we’re happy to review it—no obligation, no pitch.

Book a Call or

If you are like our approach and want to learn more about what we do, and our investment thesis Join our Investor Circle

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Contact Information

If you like to connect with me or learn more about Level 7 Investors feel free to reach out me on the below platforms.

Manny Del Val | CFO Level 7 Investors | Level 7 Investors | LinkedIn | Facebook

April Preview

Next month, we’ll dive into tax strategy, depreciation, and why paper losses are one of the most misunderstood advantages in multifamily investing.

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Dear Friends,

The Failure No One Talks About

Most multifamily deals don’t blow up on day one. They close, they stabilize, they distribute briefly. Then something subtle happens: Expenses drift, Turnover rises. Capex creeps, Cash flow tightens.

And suddenly, a deal that “underwrote fine” feels heavier every quarter.

This isn’t bad luck.

It’s first-cycle failure, and it’s far more common than most investors realize.

The Myth of a Good Buy

Investors are taught that buying right solves everything.

• Price matters.

• Basis matters.

• But operations decide outcomes.

A mediocre purchase with disciplined execution will outperform a “great deal” with weak asset management every time.

The first 24 months determine:

• Whether NOI expands or stagnates

• Whether leverage works for you or against you

• Whether investors gain confidence or start asking uncomfortable questions

  ---

Where Deals Actually Break

In our experience, early failures cluster around five areas:

1. Expense Blindness
   Operators assume historical ratios will hold. They don’t.

2. Turnover Underestimation
   Vacancy is modeled. Turnover cost is ignored.

3. Capex Without ROI Discipline
   Renovations without rent logic destroy returns.

4. Operational Drift
   No cadence. No accountability. No feedback loop.

5. Static Thinking
   Assets are treated as fixed instead of adaptable.

None of these alone are dramatic. All of them compound.

How We Underwrite the First 24 Months Differently

We do not underwrite year-one perfection.

We underwrite:

• Stress

• Friction

• Delay

• Human error

We looked at the worst-case scenarios and determine if that meets the minimum KPI metrics we are comfortable with for Cash on Cash, IRR, and Equity multiple. Then we look at the risks and how we can mitigate that, and that is not all then we stress test our risk mitigation strategies.

Then we build systems that absorbs all of this data.

That means:

• Conservative early distributions

• Aggressive expense controls

• Clear asset-management KPIs

• Multiple revenue levers beyond rent

This is not pessimism. It’s professionalism.

For Passive Investors: What to Look For

When reviewing a deal, ask:

• What operational systems are already in place?

• How does the operator manage expenses in real time?

• What happens if rent growth pauses?

If those answers are vague, so is the downside protection.

For Operators Feeling Pressure

If year one feels harder than expected, that doesn’t mean the deal was wrong.

It usually means the operating layer wasn’t built deep enough.

This is where strategic asset management—not more acquisitions—creates relief.

Our Philosophy, Clearly Stated

We believe:

• Downside protection creates long-term upside

• Discipline beats optimism

• Operators should earn trust before earning growth

• Our Values are Truth, Trust, Transparency, Teamwork, and Traction

We invest alongside our partners.
We manage like owners.
We build for durability.

Call To Action

If you own or operate an asset and want an honest, operator-level review of where value is leaking—or where it could be created—we offer free asset assessments.

Even clarity alone can change outcomes.

Subscribe if you want the next layer.

Contact Information

If you like to connect with me or learn more about Level 7 Investors feel free to reach out me on the below platforms.

Manny Del Val | CFO Level 7 Investors | Level 7 Investors | LinkedIn | Facebook

March Preview

Next month, we’ll unpack how sophisticated operators create NOI growth without relying on rent increases—and why that matters more than ever.

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I want to be clear upfront.

Multifamily investing isn’t for everyone. This isn’t for people looking to:

• Flip houses on weekends

• Self-manage tenants

• Chase quick wins

For years, that’s exactly what I did with single-family space.

And instead of freedom, I got:

• Vacancies that stressed me out and diluted my returns

• Constantly working and fixing things and dealing with contractors

• A “passive” investment that felt like another full-time job

Everything changed when I moved into multifamily syndications in 2024.

Once I aligned with the right team, and educated myself on how multifamily works, what to look for, what are the risks, and how do the financials work things started to fall into place.

• Passively invested in a 30-unit Luxury Townhomes in Tennessee

• Passively and Co-GP in a 216 Unit Luxury Apartment Complex in Kentucky

• Formed Level 7 Investors to Invest, Manage, and Operate these multifamily assets and have others invest alongside us

My only regret?
Waiting almost a decade because I thought it was “too complex” and “I needed a ton of money”

I actually spent more money doing fix and flips than on my first $25K multifamily investment.

If you’re a high-earning professional who:
✔️ Values passive income overactive hustle
✔️ Aligns with a team that values truth, trust, transparency, teamwork, and traction
✔️ Is Interested in educating yourself on downside protection, wealth, and taxes

Then multifamily may be worth your time.

If not, this probably isn’t for you — and that’s okay.

But if it is, let’s talk. Book A Call

A short 20-minute conversation can help you decide whether our next deal aligns with your goals.

👉 Reply to this email or Join Our Investor Circle

Thank You,

Manny Del Val |Level 7 CFO

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Dear Friends,

The Lie Most Investors Aren’t Told

Multifamily is often sold as “passive.” That’s half true. And fully dangerous.

Multifamily is passive for investors only when operations are professional, intentional, and aligned. Otherwise, it’s just delayed stress.

Why This Matters Now

In low-rate environments, bad operations hide. In disciplined markets, they surface.

Today’s environment exposes:

• Lazy underwriting

• Shallow asset management

• Operators who never built systems

This is where real opportunity quietly appears.

Multifamily Is a Business First

Every property is a small operating company:

• Revenue

• Expenses

• Customer experience

• Retention

• Brand perception

Treat it like a spreadsheet, and you’ll get spreadsheet results. Treat it like a business, and you unlock leverage.

Our Philosophy

We invest alongside our partners. We protect downside first. We don’t chase hype.
We optimize what already works. We won’t sacrifice our core values the 5Ts to chase a buck.

• Truth

• Trust

• Transparency

• Teamwork

• Traction

And when it makes sense, we integrate ancillary operating businesses that:

• Increase NOI

• Stabilize cash flow

• Improve tenant experience

Not because it sounds clever. Because it’s measurable.

Who This Is (and Isn’t) For

This is not:

• Distress flipping

• Short-term speculation

• Miracle turnarounds

This is:

• Long-term capital preservation

• Predictable income

• Durable wealth

Practical Investor Lens

Before investing, ask:

• How is NOI protected?

• What happens if rent growth stalls?

• What levers exist beyond rent?

If those answers aren’t clear, neither is the risk.

How We Help Operators

1. We offer free asset assessments for owners and operators—whether or not we ever partner.

2. We try to provide Clarity as that alone is valuable.

3. We can work with you to improve the NOI by implementing our business plan (asset has to fit certain requirements)

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Subscribe if you want the rest of this year-long breakdown.

Contact Information

If you like to connect with me or learn more about Level 7 Investors feel free to reach out on the below platforms.

Manny Del Val | CFO Level 7 Investors | Level 7 Investors | LinkedIn | Facebook

February Preview

Next month: Why great deals still fail—and how disciplined operators avoid the first-year traps.

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I created my blog posts, videos, and educational content after spending more than a decade struggling to build wealth through fix and flips.

At the time, I thought I was doing everything right and all though the returns where good I was burnt out constantly hustling.

In reality, I was:

• Trying to manage contractors and fix their mistakes

• Constantly on the phone with brokers and wholesalers to find the next flip

• Subject to market instability which I had no control over

Looking back over 10+ years in real estate, the best decision I ever made was transitioning into passive commercial multifamily investing.

Multifamily syndications removed most of the friction:

• No day-to-day management

• No tenant calls

• No operational headaches

My responsibility became straightforward: find a team I trust, analyze the deal, verify the numbers—and let the system work. I needed to educate myself and understand how it all worked.

Today I can say I own 246 Units, 30 as completely passive and 216 as a passive and Co GP investor. After taking the time to invest in other people’s deals and learning the game a group of us passive investors got together and started our company Level 7 Investors in 2024 with a simple concept of providing free education in the space and our core beliefs of Truth, Trust, Transparency, Teamwork, and Traction (5Ts). We believe in doing things a little different and always doing what we say we will do. That is why we created this company to have those that align with our values invest with us on solid opportunities so that you can stop doing fix and flips and worrying about your next flip and just focus on working with people you trust, that will educate you, bring you good opportunities, and provide you a solid return.

Don’t continue to wait and ask what if?

I know if you are like me, you could be having a Fear of complexity, self-doubt, and a lack of education. All of this kept me from the strongest investments of my career.

Don’t let that happen to you. Join our Investor Circle get educated reach out and schedule at time to talk to us Book A Call

If you’re reading this and wondering whether multifamily is “too advanced” or “something for later,” learn from my mistake.

Start now.

To your success,
Manny Del Val | Level 7 CFO

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