A real estate investor by the name of Dallas Liam posted on Twitter today how he has been a long-term owner and operator of private prisons for over a decade. Dallas states that private prisons are the greatest real estate investment vehicle to build independent wealth.
I've owned and operated private prisons for over two decades. Private prisons are the single greatest real estate investment vehicle around. Here is what I have learned.Trident Fund LP April 2021 Performance Update
Trident Fund LP performance update for the month ended April 30, 2021. Q1 2021 hedge fund letters, conferences and more The Trident Fund LP returned +2.0 percent in April, and the fund is +2.4 percent net for 2021. Despite political and economic headwinds, the Trident Risk Regime model added more “risk-on” by adding exposure to Read More
— Dallas Liam (@prisoninvestor1) April 29, 2021
Private Prisons: The Single Greatest Real Estate Investment Vehicle
In the rather heated Twitter thread Dallas says,” I’ve owned and operated private prisons for over two decades. Private prisons are the single greatest real estate investment vehicle around. Here is what I have learned.”
Dallas later breaks down a deal where he turned a small $7.5 million into a cool $150 million in just four years.
“Owning a private prison gives an investor a recurring and predictable stream of high margin revenue. The government contracts are long-term in nature and very lucrative. I have managed to make over $35k per prisoner annually. Let’s breakdown a deal.”
According to Dallas he purchased the Eagle Pass facility for only $25,000 per bed with a 25% down payment.
“I purchased the Eagle Pass Facility in 2008. Total cost was $30 million with 25% down ($7.5 million). The facility has 1,200 beds implying a cost per bed of only $25,000 (building a new prison is in excess of $150k per bed).”
A Perpetual Contract With The United States Marshall Services
To reduce his risks he entered into a perpetual contract with the United States Marshall Services for $20 million per year with a 5% escalator.
“I entered into a perpetual contract with the United States Marshall Services at $20 million per year with 5% escalators per year. In the first year we generated $5 million in free cash flow, a 67% cash on cash return.”
To juice up his investment returns Dallas began to lobby with a judge who was hard on crime. This 3xed his investment.
“To increase my cash flow I spent a significant amount of money on lobbying efforts to win a judge who was hard on crime. This paid off by the end of year two. To pay me back the judge sent most young men (higher margin than older men) to my facility. Cash flow went up 3x.”
In a quick four years Dallas turned a $5 million cash flow operation into a $15 million operation and flipped the prison for $150 million.
“By year four cash flows were $15 million at 95% occupancy. To maximize my investment I started to market the facility to outside investors. Halfway through year four we sold the facility to private equity for 10x cash flow or $150 million. In four years I turned $7.5 million into a clean $150 million. I took this money and reinvested it into other prisons across southern states. Today I manage an investment portfolio of over $1.5 billion in prison real estate.”
How To Run A Prison Successfully
Later in the thread Dallas provide tips for investors on how to run a prison successfully
- Get financing from individual investors
- Focus on states “hard on crime”
- Prisoners = money. You need crime to profit
- You can use prisoners to generate ancillary revenues at dirt cheap wages (incredibly high margin)
- Become best friends with judges
According to Dallas private prisons are on of the best investment vehicles out there to build independent wealth
“Private prisons are one of the most overlooked and undervalued real estate vehicles out there. With a little sweat equity and American entrepreneurship you can become extremely wealthy through this passive investment. Shoot me a follow if you want to learn more about investing”
This post first appeared on The Stonk Market