How to Scale Commercial Real Estate

Sam Wilson

About

Remove the guesswork from real estate investing and establish a clear path for consistent returns. Here, building wealth is straightforward and fun. 

 

Discover how commercial real estate investors from all over the world got where they are today, how you too can generate truly passive, tax-efficient income, and confidently invest in real estate, even in the face of risks and unknowns.

 

Real estate has made more people wealthy than any other form of investment. However, it can come with a steep learning curve and high risks if you don’t know what you’re doing. 

 

If you are a business owner who dabbles in real estate and wants to grow your portfolio or expand your network, you are in the right place. 

 

Welcome to How To Scale Commercial Real Estate. On the show, we expose the most important, needle-moving real estate investment strategies, leading you to maximize your returns. This is your friendly guide to getting past the roadblocks of investing in real estate so you can sail smoothly toward creating the financial and time freedom you’ve been wishing for.

 

The best minds in real estate give you the tips and tricks to scale your real estate investment portfolio. Listen to industry professionals as they reveal insider secrets that helped them acquire multimillion-dollar assets in a strategic way. 

 

Hear details about the most crucial and painful mistakes they made in real estate so you know what to avoid and how to plan carefully throughout your real estate investing journey. 

 

Learn about leverage, real estate metrics that matter, and gain valuable resources, connections, and tips that will shift your mindset toward an immediately more prosperous, passive income-generating path.

 

Discover how investors build high-performing teams and find the best deals and then implement their advice to build your own robust real estate portfolio. Your host, Sam Wilson, is passionate about helping you fully grasp real estate fundamentals and know what to look for in any real estate deal, whether residential, commercial, short-term or syndication. 

 

Real estate syndications are group investments in large commercial assets where you can invest your money passively, alongside dozens of others (including Sam!) and earn reliable passive income through distributions and equity. 

 

Sam Wilson is an active investor in self-storage, multi-family apartments, RV parks, and single-family homes, bringing vast industry knowledge from a diverse background to the show. 

 

Unlike other established real estate investors, Sam is in the middle of his own growth journey. He invites you to rise alongside him and his team members as, with each conversation, he’s learning too!

 

Sam is the Founder of Bricken Investment Group, where he helps clients find commercial real estate syndication investments that align with their investing and lifestyle goals. Likewise, this podcast guides listeners through real estate’s steep learning curve to mitigate the risks.

 

If you want to be a successful real estate investor without necessarily becoming a landlord, you need real estate syndication investments in your life. Growing and diversifying your portfolio and high-worth network boils down to making the right investing decisions and surrounding yourself with a like-minded, growth-pursuing community. It starts right here.

 

Jump into the discussion of How To Scale Commercial Real Estate with Sam Wilson at https://brickeninvestmentgroup.com/podcast/. Together, we'll achieve life-changing growth and invest in commercial real estate assets ripe with strong fundamentals, leading to the financial and time freedom we’ve been dreaming of.

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969 episodes

Balancing a Demanding W2 Position While Creating a High Momentum Investing Business

You don’t have to quit your day job to become an investor.   This is what Andrew Schutsky lives by. He is the founder of Redline Equity, LLC and has built 15 years of real estate expertise while enjoying a career as a CIO of a medical technology company. He talks about how he got into multifamily real estate and how they are remaining competitive in the current market, and how he’s able to be successful in both real estate and his W2.    [00:01 - 14:55]  1100+ UNITS AND GROWING  __ __ __ __ __ __   [14:56 - 19:11] WORKING A FULL-TIME JOB AND INVESTING IN REAL ESTATE __ __   [19:12 - 20:42] CLOSING SEGMENT __ __ __ __ __ __ TWEETABLE QUOTES   Andrew Schutsky Andrew Schutsky -----------------------------------------------------------------------------   Connect with Andrew at the Redline Equity website and check out their podcast, blog, and their FREE 8+ part learning series.   CONNECT WITH ME:   I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns.     Facebook https://www.facebook.com/HowtoscaleCRE/   LinkedIn   Like, subscribe, and leave us a review on Apple Podcasts, Spotify, Google Podcasts, or whatever platform you listen on.  Thank you for tuning in!   Email me → sam@brickeninvestmentgroup.com Want to read the full show notes of the episode? Check it out below:   [00:00:00] ANDREW SCHUTSKY: We're in a couple of submarkets that we know really, really well. We own and operate assets in those markets like Greenville, South Carolina, for example, we got another one locked up right now and we know there's certain things that we go after, and it's very infrequent in today's times that you'll win a deal or we will even get close in the top of the best end funnel with just rent increases. So we're looking at a bucket called other income. Those listing may do very well in this bucket, but that seems to be the differentiating factor for us.  [00:00:38] SAM WILSON: Andrew Schutsky is a passionate multifamily real estate investor who balances ownership in 1100 plus units with a full-time job as a CIO of a medical device company along with also being a family man. Andrew, welcome to the show.  [00:00:50] ANDREW SCHUTSKY: Thanks so much, brother. It's a pleasure to be here.  [00:00:52] SAM WILSON: Hey man. Pleasure is mine. There are three questions I ask every guest who comes on the show: in 90 seconds or less, can you tell me where did you start? Where are you now? And how did you get there? [00:00:59] ANDREW SCHUTSKY: Yeah, absolutely. So real estate journey for me has begun back in 2007 and I started before anybody called this house hacking I'm using my air quotes, so they can't see the video. My first home was on the road 50 weeks a year, doing the consulting thing, learned a lot, quickly realized I wasn't utilizing my whole house at the time, put an ad on Craigslist with my wife at the time, or I guess like my fiancée, at the time found really creepy, but it was my entryway into learning what, you know, a house could, is not just a place to live in. It's a source of income. And from there I thought my journey was going to be great. I know I don't want to work for 20, 30 years. I got to start planting some seeds. So I thought I was going to do a series of single-family houses, you know, regardless of having, you know, that, that great bonus or stock structure coming up year after year, you run out of money pretty quickly. About a decade later, I found short-term rentals. I still do those and I enjoy them, but same constraints. Regardless, even with one or two really good W2-based incomes or other sources of income, you can only go so fast, fast forward to 2019, found a 60-something page thread on BiggerPockets. You may have heard of that site before around multifamily. It was actually a local guy syndicating, read his story, he was a CPA before and it opened my mind to this whole new world of possibilities, which I can't believe it took me that long to find it. It's almost embarrassing to admit. And from there I kind of went full tilt. You know, 30, 40 books digest every podcast I could listen to nagged anybody who had listened to my questions and joined a mastermind program, got a mentor, went all in, really, and just started to dial in on honing different crafts and just crafting new skills.  [00:02:30] SAM WILSON: That is really cool, Andrew. I love that. So you've been long multifamily since 2019. [00:02:36] ANDREW SCHUTSKY: Correct. [00:02:37] SAM WILSON: That's awesome. Okay. Very, very cool. Tell me what, when you say on the, on the short term rental side, you said that that was a tougher business for you to scale just because it was kind of, it was kind of like just a glorified version of a single-family rental.  Is that what I was hearing there? [00:02:50] ANDREW SCHUTSKY: Yeah. I, I think what lured me to it is originally we wanted a house at the beach and we're like, okay, the only way we can make sense of this at the time, right? We had one young. And another one on the way. My wife's like, you're absolutely insane. We can't buy a property. I'm like, what if we could make it generate cash? So that was my foray into that. And I'm like, Hey, you know, the pros and cons, there are the pros are you're dealing with happy people. They're on vacation. You're getting paid in advance. There's no such thing as an eviction in that world. But the big con is as houses became, at least in our area and the Northeast in the Jersey side, became very, very expensive. So your down payments and your closing costs could be well over a quarter million dollars. So, you know, unless you're fortunate to already have a running start and have, you know, seven figures to play with and invest, really hard to get beyond the first 2, 3, 4 properties that way, right, within, you know, especially in your early thirties, like we were at the time. [00:03:38] SAM WILSON: Right. Yeah, absolutely. Tell us, what are you guys finding in the multifamily space right now? We're recording this on July 12th, 2022. So this will probably go live sometime mid-August of this year, but tell me, what are you guys finding in the multifamily space right now? That's making sense for you.  [00:03:55] ANDREW SCHUTSKY: We're in the Southeast generally Carolinas, Georgia, and even a little bit of the Midwest. Now we've got one property in Louisville. And still, you know, despite rising interest rates, despite all the chaos and the economy, there's a lot of demand still for multifamily. A lot of, you know, institutional and private equity are looking for a stable asset you know, hard, tangible assets to cash flow with tax advantages. And there's still tons of demand for multifamily. With that said, things do seem to be tilting just a little bit in favor of the buyer. You're seeing, you know, maybe not 25, 30 offers, but maybe 5. For the first time ever, I think 30 days ago, I saw the first price adjustment downward or guidance pricing came down. that was kind of actually relieving. You don't want to see terrible things happen in the economy, but also the silver lining of that is you get a little relief and you're not having to go. And it's not a blood bath as much as it was, you know, 60 days ago now. [00:04:48] SAM WILSON: What do you think is driving that? Like, I mean, is that just because projected rents are coming down? Is that just be, I mean, why is that happening?  [00:04:56] ANDREW SCHUTSKY: Well, I think we were, you know, in a weird time the past year seeing double-digit rent growth, especially the Southeast and Texas, and even, you know, the entire Sunbelt really, and it's not sustainable, right? I mean, we know income's not keeping up with that. So you start to see, you know, CoStar and others backing down their rent projections. There's no longer, you know, 9%, 10%, or 12% forecasted in every market. Maybe some markets selectively. Sure. But you look at that's starting to stabilize and starting to tail off. And you also look at the drastic rise in interest rates, you know, both in bridged and fixed rate debt. The cost of capital is much higher, right? So people start to get a little nervous. What happens, you know, therefore, you know, us and others, and a lot of other syndicators are starting to be a little bit more conservative with their exit cap projections. So that in turn is going to soften your offers a little bit.  [00:05:42] SAM WILSON: Right. Yeah, absolutely. And that's something that, I guess, let me ask you that as a nuance question on an exit cap projection, are you guys underwriting refinances anywhere in your deals, right now?  [00:05:53] ANDREW SCHUTSKY: Never have, and probably never will, unless there's a very unique circumstance to do so. [00:05:57] SAM WILSON: Got it. I like that answer. That's something that we commonly see in deals where it's like, Hey, you know, we're going to refinance, especially a couple of years ago when we felt like things were more predictable, like, okay, we're going to refinance three to five years from now or whatever it is. So, yeah, that answers the question. You're just not doing it.  [00:06:13] ANDREW SCHUTSKY: I know it's a, it sounds like a clear-cut answer and it is. I just it's not my philosophy. It's not any of my partner's philosophy to count on that, right? I don't have a crystal ball. I mean, I love to say, yeah, interest rates are going to be 1% higher at the end of the year, but you really don't know that. It'd be great. We always look at that as a scenario. What does that look like? But I never will make that our primary business case. I look at it like I'm investing a hundred percent of my own cash to buy a property. Just like if my investors are in or not, I look at it as like, I want to be as certain as I can be, right, and I know I can't predict interest rates. No one can, right, so I don't want to count on that as a variable.  [00:06:45] SAM WILSON: Right, that was going to be my question was how are you compensating, especially right now for the complete unknown of where in the world or interest rate going. That's how you figure it out or how you build that in you just don't. [00:06:56] ANDREW SCHUTSKY: And I'm being, I may be in the minority here, but I'm a big fan of fixed-rate debt. I know it does hurt cash flow. I know there's prepayment involved in, in years, you know, one and two, and it may inhibit your ability to exit early. But I really like that. Maybe I'm a little bit of old school and you know, I'm a little bit of old soul that way. I like that stability, my investors like that stability. So whenever possible, and it doesn't completely crush the deal. I, I really like, especially in today's times the fixed rate product.  [00:07:20] SAM WILSON: While we're on this topic. Tell me about this. How are you guys underwriting deals and getting 'em to make sense right now? Like, what's your guys' unique proposition when you guys acquire an asset?  [00:07:32] ANDREW SCHUTSKY: Well, I will tell you there's no magic bullet and there's still the majority of the deals that don't make a lot of sense, but. The few that do we’re in a couple of submarkets that we know really, really well. We own and operate assets in those markets like Greenville, South Carolina, for example, we got another one locked up right now and we know there's certain things that we go after. And it's very infrequent in today's times that you'll win a deal or we'll even get close in the top of the best end funnel with just rent increases. So we're looking at a bucket called other income. Those listing may do very well in this bucket, but that seems to be the differentiating factor for us. If we're, you know, even close, remotely close, we start at looking at things like valet trash, cable and internet packages. And again, there's small things, but when you collectively add them up, it could be 50, a hundred dollars a month. And that can be the difference between winning or losing a deal. So again, that other income bucket has been a huge factor. Things like tax abatements and looking, working with the township or, you know, especially affordable housing. There's some things at play there. So you got to really know the submarkets to know if they're viable or not. And I always look, you know, of course. It's as competent as we are looking to have, you know, one or two of our property managers also verify, yeah, this makes sense. We've been planting this out. It's been proven elsewhere. So it can't just be a guess. It has to be submarket knowledge we apply to win that deal.  [00:08:44] SAM WILSON: Breakdown valet trash for me. I don't even know what that means.  [00:08:47] ANDREW SCHUTSKY: Yeah. It's actually not commonly known. I learned it from another partner that implemented it on dozens of properties and it's basically they'll come and pick up your trash at the door and bring it out for you. It sounds simple, but it could be $20, $25 a month, but that might be the difference between winning and losing. And it's almost always received very well at properties from what we've seen.  [00:09:07] SAM WILSON: And it's amazing to me what people are willing to pay for. 25 bucks a month. Okay. So you're telling me I don't have to walk my trash out and, and again, it depends on, I guess you're in the Southeast, so it's not even like it's, you know, three feet of snow because I guarantee, my wife and I would probably be stroking the 25 bucks a month. It's like, okay, it's zero outside. So yes, only $25, but in the Southeast, it's not, like, but people pay for it.  [00:09:33] ANDREW SCHUTSKY: Well, especially if you look at it, like some of the workforce housing we're in, these guys work a really long day, maybe second or third shift are exhausted. They're like, you know what, it's just not worth the hassle. Maybe you've got two or three young kids at the house. Just one of those things like, wow, this is something that, you know, is a small burden on you, but Hey, I'm exhausted. I don't want to spend time, I don't enjoy walking down three, four flights of stairs waiting for the elevator. Hey, you know, it doesn't work for everybody. We've had a lot of success with it.  [00:09:59] SAM WILSON: And that is an almost expense free, like, value add, like it's not even capital. There's no CapEx in it.  [00:10:08] ANDREW SCHUTSKY: No, a lot of times you can get the maintenance crew that's already on in-house to do that.  [00:10:12] SAM WILSON: Right, right. I love stuff like that. Anyway, that you can add value to a property without incurring, you know, more cost to do so, I mean, that just pads the bottom line right away. That's what we're doing right now in the RV resort space where it's like, we can add dynamic pricing and online booking for, I mean, it costs us a little bit, but not much. There's no infrastructure. We're not, you know, repaving drive aisles and adding sites and everything else. It's like, this is really very simple. And yet it changes the performance of a property dramatically. So I love stuff like that. Tell me about the bundle when you said bundled internet TV, things like that.   [00:10:48] ANDREW SCHUTSKY: Yeah, a lot of times we'll look to, and this is, I think probably more commonly known, this isn't such a, you know, well-kept secret, but you can go and get a larger bulk agreement with a service provider, like an Xfinity or whoever is happens to be in your area and negotiate, hey, I would like to buy a hundred packages at $35 a month. Tenants on their own might buy it for $70 a month. We sell it for 55 to 60, again, 10, 20, 30 bucks here and there adds up, right? So it just, again, it's, it's a win-win for the tenant and for us, like we get a little bit of the commission there and the bulk, you know, economies of scale and the tenant saves money, you know, versus the individual packages. [00:11:22] SAM WILSON: Right, right. Have you seen those, which we've done it at one of our properties, and there's another episode here on this podcast where I interview the company that actually handles this, but where the utility company via mostly the internet company, internet and TV will pay you as the property owner for the right to be on your property. Have you seen that? [00:11:42] ANDREW SCHUTSKY: We've underwritten deals that that was the case. We don't own any and operate already now, but yes, absolutely have seen that in the past. The same with even renting, renting space on the top of the building for a cell phone tower, like that can be common or something. Seriously. I mean, that can be a huge money maker.  [00:11:57] SAM WILSON: Sometimes the cell towers are worth more than the building.  [00:11:59] ANDREW SCHUTSKY: Correct.  [00:12:00] SAM WILSON: When you, when you look at those leases yeah, you don't realize, and again, we've had, you know, I've had Meir Waldman come on the show here, who is, you know, kind of the cell tower lease guy. And we talked all about that. It was like, oh my gosh, like there's more money in the cell tower lease than there is in the sale of the building. This is madness. So that's absolutely interesting. Tell me the last comment you made though said you guys are working on our tax abatements. How are you guys figuring it out? This is why I need you to correct me. When I look at a property, I go, okay, there's a, you know, multifamily property, like certainly there's no tax abatements. There's nothing left there. I mean, that's all been extracted long ago when this was built and, you know, brought online. Tell me why I'm wrong.  [00:12:38] ANDREW SCHUTSKY: It depends on the position of the property. A lot of times you're absolutely right. There's not much there. And if there is anything there, usually the broker will pick up the phone. If it's an unmarked property, they'll put it and they'll count on it and the underwriting, the projections that's already factored in, but the true gems are where you work with the township and it could be, you know, either the building already itself as a business already qualifies for this, or maybe as you slightly reposition it, Hey, it's not affordable, now it's affordable housing or based on that distinction, you may now qualify for a new exemption or a tax abatement. So something to look into, talk with that local township, as you get to know a submarket more and more as you start to buy more properties, you may copy and paste from one or the other and apply the same strategy. But if you're brand new to the market, it's worth exploring, 'cause that can save you thousands, hundreds of thousands of dollars over the course of your whole period.  [00:13:22] SAM WILSON: Right, right. Yeah. What I hear you saying is if you could reclassify a property potentially from one to the next. The township may be hard up for, like you said, foreclosed housing below, you know, that's priced 70% of whatever the adjusted median income is. [00:13:36] ANDREW SCHUTSKY: Yes.  [00:13:36] SAM WILSON: Cool. [00:13:37] ANDREW SCHUTSKY: Or, or, I mean, something we've looked at too is maybe you can designate a portion of it as commercial space. Like you have, you know, a coffee store. We even looked at doing an arcade in a building where you have a percent, it has to be a commercial occupied. And then you now qualify for new exemption or 'cause it brings new jobs to the area. So again, some of these may be a stretch, but it's worth exploring.  [00:13:57] SAM WILSON: Oh, for sure. Is there a consultant that you guys work with to help you kind of explore that? Or is this something just you've self-educated on?  [00:14:03] ANDREW SCHUTSKY: This has been a lot of self-education between my partners and I, and a lot of them have been educating me actually. So I'm kind of the student in this scenario, just applying what we've learned.  [00:14:12] SAM WILSON: Man. That's awesome. Thank you for taking the time to break down just some really simple ways. I mean, again, 'cause right now, especially in the multifamily market, people are desperate to find ways to add value to these assets. Like how do we make this make sense? And you've just given us three relatively simple. I say simple 'cause tax abatement still confuses the heck out of me, but you know, relatively simple ways to look at these and go there's there, there may be another way to take this deal down and have it make sense other than just get into a bidding war. [00:14:43] ANDREW SCHUTSKY: I mean, in summer you got to be creative these days, right? Unless you're wildly optimistic with your projections most likely to win, you're going to have to either accept lower returns or be really creative as to come up with a higher return, so bottom line.  [00:14:55] SAM WILSON:  Let's shift gears here and talk about your full-time job 'cause you currently work a full-time job as a CIO of a medical device company. What are your plans there?  [00:15:06] ANDREW SCHUTSKY: Yeah, so I guess first and foremost, I really enjoy what I do. I know I'm probably in the minority of the guests you have on the show who have a kind of counter on calendar crossing out days, marking the time where they can do this full time. But for me, I actually got, I got a lot of pleasure and enjoyment of my job. I get to travel a lot to cool places. And most importantly, I have a lot of flexibility at work from home when I'm not traveling. So I'm not having to get up at 4:55 AM every day. And if I do, it's so I can spend some time working on my business. So I find there's a lot of good parallels, you know, for example, I work in the technology realm. I love bringing technology through investment portals and websites and marketing and funnels to the investing business. And I love the stuff I learned in investing around just being that critical ROI calculation that you know, that business acumen. I love bringing that to my day job 'cause we look at, you know, managing millions of dollars in budgets and looking at what if I put a dollar in, what do I get back? So I love bringing that acumen and I think it's what sets me apart from a lot of my peers and my competition in the day job, bringing that, you know, proprietor, you know, business owner, entrepreneur mindset back to my day job. So they, they kind of work together really well. [00:16:12] SAM WILSON: That's really, really cool. Tell me, I guess when you look at the technology inside of what you guys are doing in medical sales, what are some things that are lacking in the commercial real estate space? You're like, man, this is a really cool way I can innovate over here in commercial real estate.  [00:16:24] ANDREW SCHUTSKY: There's still a lot. I mean, number one, when you look at structuring a deal and marketing a deal and just running all the intricacies and administrative parts of bringing in investors and marketing and then even the day-to-day operations and property management, there's a lot still pen and paper or email back and forth. So I look at things like automation of campaigns, you know, connecting people through, like, it's basically cutting out the manual task. I think that's really awesome. Whether it's the upfront part of like winning a deal and doing DocuSign, you'd be surprised how infrequently that stuff is leveraged, where I bring value to a team by saying, Hey, why aren't we using this? Or why are we do, why are we spending all the time doing this? We're highly paid professionals. We ship, this is a $50-a-month product. We could be saving hours a time. I love just doing simple things like that, like connecting Zappier, for example, to link a Google form back to my active campaign, to automatically create contacts and distribution lists. Just one simple example of what I think that's things are often overlooked.  [00:17:18] SAM WILSON: Right. Yeah. It's funny. I'm, I'm always torn maybe 'cause I can barely use email, right? Like I am, you and I are, are completely opposite ends of the spectrum. Like I suck at using things tech related. [00:17:29] ANDREW SCHUTSKY: All good. [00:17:29] SAM WILSON: Lots of help, but I get torn because sometimes like, okay, I do this task and I can get it done really quickly. Just doing it and, you know, trying to figure out how to make the tech work for me becomes more cumbersome than just getting it done. And it's like... [00:17:44] ANDREW SCHUTSKY: I think it's important on every team to have a guy or a gal that really understands how to make that less stressful for the rest of the team, right, 'cause without that, like you said, it's just so much easier to throw in the towel and it can be so overwhelming to people who don't have those reps in. So I've been doing this first since I've been four or five years old, where I grew up with like one of the first computers. So it was in my DNA, but I totally recognize for most people it's not. They don't want it to be, and that's completely fine. And actually that's a great value, you know, driver for me that I can help bring to the team.  [00:18:14] SAM WILSON: Absolutely. Absolutely. And last question here for you is let's talk a little bit about the team. How have you effectively scaled your team while working a full-time job? [00:18:22] ANDREW SCHUTSKY: Yeah, so for me, you know, it was a little bit of trial and error in the beginning, right, wanting to do everything, jump in and, and find my own deals and underwrite them, myself, and marketing myself. And I, I just found that wasn't effective. It was a quick way to burn out. So I've kind of dialed in. Let me just focus on, for the next year or two, becoming really good at one thing. Right now that happens to be investor relations, raising capital, you know, building decks and doing due diligence. Like I'm not going out. I'm actually stopped going to try to find my own deals. New market partners that I trust, I've got a few deals under my belt now. I knew who I trust. I know what I want out of a deal. I know what I don't want to be doing. I don't know what I'm not good at. Let me focus on what I'm good at. And then maybe a couple of years from now, I'll revisit and start to expand that repertoire. And maybe there comes a time where I'm doing this, you know, 40, 50, 60 hours a week on my own, and maybe I will still go back to the broker thing, but for now, just dialing in on what I'm good at and just continue to work that path.  [00:19:11] SAM WILSON: Man, that's fantastic. Andrew, thank you for taking the time to come on this show today. I certainly appreciate it. I've learned a heck of a lot from you, you know, talking about really easy ways to add income and value to properties that are maybe a little bit off the beaten path. We talked about your transition, you know, from house hacking into short-term rentals, and then finally discovering multifamily in 2019. And you also shared with us, you know, why you love your job. I think it's really cool that you're like, Hey man, I love what I do and I'm going to continue doing it, and maybe someday I'll transition out. That's not the comment, like you said that you or I probably hear very often where it's like... [00:19:42] ANDREW SCHUTSKY: That's right.  [00:19:43] SAM WILSON: I just kind of like what I'm doing. So if it ain't broke, don't fix it. So absolutely, and then you know, talking about the tech stack and what it means to bring technology to a deal. I think you've shared with us some really cool things today, and I certainly appreciate it. If our listeners want to get in touch with you or learn more about you, what is the best way to do that?  [00:19:59] ANDREW SCHUTSKY: Best way to go straight to our website, everything funnels through there, contact, we've got the podcast in there. It's investwithredline.com. Company is Redline Equity. We've got blogs and we've got, more importantly, a free 8-part investing course. Go check it out, sign up, and follow us.  [00:20:13] SAM WILSON: Awesome. Andrew, thank you again. Certainly appreciate it.  [00:20:15] ANDREW SCHUTSKY: No problem, brother. Great talking to you.

20m
Aug 13
Do's and Don'ts of Insurance Claims

Andy Gurczak is a private insurance adjuster and the Founder of AllCity Adjusting. Andy has more than 10 years of experience. He helps and represents others with their insurance claims and advocates for them. So with no further ado, let’s dive in and listen as Andy shares how he works in the field.    00:00 - 05:26] OPENING SEGMENT __ __ __   [05:26 - 10:40] AGENTS ADVISE PROPERTY OWNERS ON HOW TO COMBAT INSURANCE COMPANIES __ __   [10:40 - 16:47] HOW TO PREPARE FOR AN INSURANCE CLAIM __ __ __       [16:48 - 19:24] CLOSING SEGMENT __ __ __     TWEETABLE QUOTES “All the policy is written for the consumer, right? So it's not supposed to be written as an attorney is supposed to interpret it. It's supposed to be easy to read, but they're never easy to read. They're so complicated.” - Andy Gurczak ----------------------------------------------------------------------------- CONNECT WITH ANDY BY CALLING 708 655 4186     CONNECT WITH ME:   I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns.      Facebook https://www.facebook.com/HowtoscaleCRE/   LinkedIn   Like, subscribe, and leave us a review on Apple Podcasts, Spotify, Google Podcasts, or whatever platform you listen on. Thank you for tuning in!   Email me → sam@brickeninvestmentgroup.com [00:00:00] ANDY GURCZAK: A lot of people wanna be in a hurry. And the agents say, well, I got a guy that's gonna, help you out. He's a, contractor and the adjuster's got a guy and everyone's got a guy and everyone wants to push you to move the claim and keep going, and get it done because the quicker they can settle it, they know it's underpaid the quicker they can close out the claim. [00:00:17] ANDY GURCZAK: It's more when it comes to the residential claims, I think a lot of those people with families, they just wanna be back in the house. [00:00:23] ANDY GURCZAK: And then at the end they're like, wow, well, we don't even have enough money to fix our house. Well, you were in such a hurry. You just let them do anything. And now you're out of money.  [00:00:30]  [00:00:42] SAM WILSON: Andy Gurczak is a public adjuster, recovering investors, tons of money, Andy, welcome to the show. Thanks for having me, Sam. Hey man. The pleasure's mine. There are three questions. I ask every guest who comes in the show in 90 seconds or less. Can you tell me, where did you start? Where are you now? And how did you get. [00:00:58] ANDY GURCZAK: started in construction sales fell into adjusting, meeting someone that was already a PA learning the ropes. Since then we've we opened honestly adjusting and it's been like this on my own about over 10 years now.  [00:01:11] SAM WILSON: Okay. Absolutely awesome. What is just for our listeners? So they understand. [00:01:16] SAM WILSON: What or who is a public adjuster?  [00:01:19] ANDY GURCZAK: Yeah. Easy terms cuz public adjusting, I guess it's when people think public, it's kind of not a turn that everyone knows. I would just easily say it's a private adjuster. It's an adjuster you hire that represents you and your insurance claim and advocates for you. [00:01:32] ANDY GURCZAK: Not he's he doesn't work for the insurance company. He's not hired by any insurance company parties. He's only there to represent.  [00:01:39] SAM WILSON: Is there. And maybe this will be, one of the, one of the things that we were gonna largely focus on in this episode is the dos and don'ts of insurance claims. And I guess, and if we're gonna cover this later, tell me, but is there a right time to get a public adjuster involved? [00:01:55] SAM WILSON: And is there a wrong time to get a public adjuster involved?  [00:01:58] ANDY GURCZAK: I would, we would advise the quicker the better. So for our commercial clients, they call us as soon as something happens, then we file the claim and we do everything for them. They're all hands off. So the only thing they know is once the claim is settled, the amounts and that's it. [00:02:13] ANDY GURCZAK: Got  [00:02:14] SAM WILSON: it. Okay. Okay. Let's dig right in then let's get into the meat of this, which is the dos and don'ts of insurance claims. Can you just break that  [00:02:22] ANDY GURCZAK: down for us? Yeah. Dues, if I'm gonna give you your client tips on the dues of claims, when you're filing claim know when you're actually calling yourself to set their reserve side, to actually tell 'em that it's a large claim don't meaning when you're calling the claim, they'll usually. [00:02:39] ANDY GURCZAK: How much damage there is cuz they wanna set a reserve for that claim and amount. And what happens is if the Reserve's low and the claim's actually a large claim then to actually go and estimate and negotiate over those limits or the reserves they saved, it goes through like three, four managers. And it's just a long process. [00:02:57] ANDY GURCZAK: And it's a very tedious, that's usually a lot of our new clients when they call us, is that process when they call us a little bit too late our reserves were set low. Instead of a hundred thousand dollars claim, now we're at a $300,000 claim and you're going through this whole process of getting, that, that money approved or that claim approved. [00:03:13] SAM WILSON: So you're saying on the back end at the insurance company, you call in, you say, Hey man, we had a fire in one of our units and I don't know, you're kind of running off the back of a napkin math. You look at it and you say, by the time we get the fire damage remediated and whatever, now water damage to the property and maybe a hundred grand. [00:03:32] SAM WILSON: And your estimate was way off, but that's what you told. The insurance company said a hundred grand. And so they're sitting on their back end going, okay, we'll tag a hundred thousand dollars in the reserve account for, Sam's claim. And now you're saying that causes problems. When you go back and say, actually, no, sorry guys, we're gonna need about 300 grand, a hundred percent. [00:03:50] SAM WILSON: Correct. That's really interesting. That's really interesting. I mean, it seems like an insurance claim would be, and obviously I'm wrong, but it just it's, it is what it is, but that's not the  [00:04:00] ANDY GURCZAK: case. No they have certain amount of reserves they have to put in when there's a claim filed. When that amount is low, like I said, it hurts your claim going forward. [00:04:09] ANDY GURCZAK: So if you're calling a claim and it's a fire, just might as well just say it's a total loss. Even if it's not exaggerate the damage, say it's more damage set, those reserves higher. And that way and then, adjusters also insurance adjusters have incentives to stay under the reserve. [00:04:22] ANDY GURCZAK: There's bonuses and their stuff when they say under the reserves. So it's a haul, it's a, it's an entire process. They have it's entire game. They have. So you wanna get off to the right foot. So not only is it, when you call in sending the reserves high enough, but also saying the right stuff. [00:04:38] ANDY GURCZAK: So a lot of people, they jeopardize their claims by how they call them in meaning they'll call and. We had a leak in the basement. Well, they might take that, write it down. Then you might get a call a day later saying, Hey, your claim's denied because we don't cover leaks. That's over time. [00:04:53] ANDY GURCZAK: Leaks are not covered. Well, you said it was a leak, but tactically, it was a pipe burst, which a pipe burst is covered. Right.  [00:04:59] SAM WILSON: Gotcha. So it, I mean, it seems like there's a lot of gaming involved in this where it's like, I mean it, should it be that way or is there a better, is there a better way to do this or would you see, do we see a brighter future in this industry? [00:05:13] SAM WILSON: Or is this just, no, you gotta learn play  [00:05:15] ANDY GURCZAK: game. It's only going the wrong way. And the reason is for the local, the staff adjusters all the more experienced adjusters are leaving and they're bringing all these, they call 'em cat adjusters or out of state adjusters. They're bringing those in and just more inexperienced adjusters that never handle the claim, but all they know is they get a piece of paper and say, these are our guidelines. [00:05:34] ANDY GURCZAK: We don't pay for this. We pay for this. Right. So then when we come in and we're meeting with these adjusters you're talking about someone that just finished college, that's got a laptop and saying, okay, well, I don't pay for this and we can't do this. And this is not covered. They have no clue what. [00:05:48] ANDY GURCZAK: Most of the time, what they're talking about,  [00:05:50] SAM WILSON: How do you combat that? Like what do you guys do in that process that maybe the, us as just average Joe property owner, just simply wouldn't understand.  [00:05:59] ANDY GURCZAK: Yeah. With the experience we have in construction estimating we're always our company, especially something that's huge on our end is knowledge and learning as we go forward is taking more seminars and learning and actually knowing how to combat insurance companies negotiate it, having the right tools to do. [00:06:18] ANDY GURCZAK: So, if you, cuz you just can't tell the insurance, Hey, you need to pay for this or you need to do that. Like you have to support everything. So providing those supportive documents is huge. Gotcha.  [00:06:28] SAM WILSON: That makes a lot of sense. So one of the first things you said here on the due side is on a large claim, just say it's a total loss. [00:06:35] SAM WILSON: The second thing is to identify actually what happened, not a pipe leak, it was a pipe burst. And then of course getting accurate estimates. There. Are there any other dues on the front end that you say, man, this is something that people absolutely should be doing.  [00:06:48] ANDY GURCZAK: Yeah. Mitigate the damage, meaning actually have someone on your team that if you have a fire, they board up the windows. [00:06:54] ANDY GURCZAK: If you have a water loss, they extract the water. If you don't mitigate they can deny your claim, that's in your policy. So knowing your policy. And actually knowing what's in there, there's a section called duties. After loss, that's the first thing you should know. That's the first thing we get when we would get the policy from an insurance company. [00:07:12] ANDY GURCZAK: The first thing we read is the duties after loss, because there's so many things you have to do to actually make sure your loss is covered.  [00:07:19] SAM WILSON: That's really a really good advice. That's not a section of the. Of any insurance policy I think I've ever read is what are the,  [00:07:27] ANDY GURCZAK: no, I don't think anyone's ever read any  [00:07:28] SAM WILSON: of their policy. [00:07:30] SAM WILSON: Actually. I've read a fair amount of it. Cause I kind of nerd out on that stuff. It's like, oh, okay. but I still didn't know that page existed. Like, so clearly I haven't, and that's  [00:07:37] ANDY GURCZAK: the most important page. There's usually like 10 bullet points. And it says all the things now they'll pay a claim, even if you don't perform some of the duties. [00:07:45] ANDY GURCZAK: But at the end, if it was they, if it went to litigation or it keeps going further in negotiation stuff, they can say, well, you never filed the proof of loss. You never mitigated there's other stuff you didn't do. You didn't, we have claims with commercial properties where let's say it was vacant, or it was under construction. [00:08:00] ANDY GURCZAK: They denied it saying you didn't you heat the property. They can deny the claim, right? You didn't maintain heat in the. Right, right. But then there's a clause that technically we can overturn that saying, well, if you're, if the property's under construction, then it, the claim is covered. So just knowing the policy, knowing the duties after loss would highly re a good agent, should be able to explain all that to you. [00:08:23] SAM WILSON: Right. Right. And that was gonna be, my next question was at what point in time is this the responsibility of the agent selling you the policy to help educate you and say, okay, here's what you should be doing. And then at what point in time is it where you say, all right, you're playing for the insurance team and I'm gonna have to go find my own, private  [00:08:42] ANDY GURCZAK: adjuster. [00:08:43] ANDY GURCZAK: Correct. And a lot of the leads we get, or a lot of referrals we get are actually from insurance agents especially on the commercial. Because they don't really know the policies. They're pretty comprehensive policies there go there's co-insurance clauses, there's all these clauses and exclusions. [00:08:58] ANDY GURCZAK: They sell these policies. It's hard to find a good commercial agent, but if you are gonna start investing to commercial highly recommend that you do diligence, find an agent that can actually tell you, look, well, this is the business I have. I, storage ly is I have this 20 unit, these are all the people and make sure there's coverage for everything. [00:09:15] SAM WILSON: Yeah. And how do you, I guess, and that's something probably when you work through with our insurance agent is finding them to say, Hey, these are the 25 scenarios. This is what we need coverage for. So that's really, really fascinating. Thanks for sharing the due side. [00:09:28] SAM WILSON: What are the don'ts  [00:09:29] ANDY GURCZAK: What are the don'ts? Let's see here. Don't don't be in a hurry is my number. A lot of people wanna be in a hurry. And the agents say, well, I got a guy that's gonna, help you out. He's a, contractor and the adjuster's got a guy and everyone's got a guy and everyone wants to push you to move the claim and keep going, and get it done because the quicker they can settle it, they know it's underpaid the quicker they can close out the claim. [00:09:51] ANDY GURCZAK: That's the number one thing, don't be in a hurry. Our commercial clients are our favorite because they're usually are more, Hey, I'm not in a hurry. I have my own contractors. I'm, let's get it settled. It's more when it comes to the residential claims, I think a lot of those people with families, they just wanna be back in the house. [00:10:08] ANDY GURCZAK: And then at the end they're like, wow, well, we don't even have enough money to fix our house. Well, you were in such a hurry. You just let them do anything. And now you're out of money.  [00:10:15] SAM WILSON: that's really, really sound advice. So don't be in a hurry. What else you have after that? I guess, are there things we should, and shouldn't say, are there people that we are there documents we shouldn't sign? [00:10:26] SAM WILSON: Are there anything along those lines where you say, and maybe that's part of the, don't be in a hurry thing? Is there just something we should categorically avoid?  [00:10:33] ANDY GURCZAK: Yeah, I think just saying the wrong stuff in terms of don't be in a hurry, don't start calling. And because the insurance company, when they, when you call the claim, when you're speaking with them, they'll ask you a hundred questions and they'll record everything. [00:10:48] ANDY GURCZAK: And then if you say the wrong thing, then. We get called and say, well, there's this whole trace of, we have to go back and like, look, go through a whole story of what happened in the last three months. Well, you started out with telling them that this happened and that's what got the claim delayed, Deni delayed and now technically denied. [00:11:05] ANDY GURCZAK: So no one what to say, and actually maybe consulting someone a PA or an attorney when you have a claim to make sure you present it to an insurance as well  [00:11:13] SAM WILSON: Give me a case study and they come to mind where you say, Hey, this is what happened. This is how we could, how we helped something  [00:11:21] ANDY GURCZAK: like that. was another investor, actually, your area of Memphis, he had a 16 unit building. [00:11:27] ANDY GURCZAK: His claim was denied called us was referred by one of his XG students. One of his listeners his claim was denied because they said it was sewer backup and his claim wasn't covered technically. And there's a big tip for all your listeners. If they ever a claim where it's sewer backup and they don't have sewer backup limit. [00:11:42] ANDY GURCZAK: Well, sewer backup is sewer that backs up from usually the sewers, like the streets or, overflows or something. Most of the time it's called it's called a soft clog, meaning something actually gets clogged in the pipe. That's why the pipe overflows. Okay. That's covered under your main limit. [00:11:59] ANDY GURCZAK: So that loss, for example, that case study, that loss was denied. Cuz two of the units got damaged. I think we finished at 70,000, so he had zero denied after months of fighting with them. And then we ended up finishing a claim at 70,000.  [00:12:11] SAM WILSON: Wow. And what did you call that? A soft clog versus a sewer box soft. [00:12:16] ANDY GURCZAK: Yes. So the two, no, two different things. Soft clog and sewer backup, two different things.  [00:12:20] SAM WILSON: That's again, it goes back to just the nuance of this where it's like, we, I feel I'm not the sharpest knife in the drawer. I freely admit that, but it's like, there's it just, there's so much nuance to this. That's like, this should seem seemingly be more straightforward where it's like, there is sewage. [00:12:36] SAM WILSON: In our building, but how that sewage got there or what caused that sewage to get there is the difference between $0 from the insurance company and $70,000 from the insurance company. And how do we as commercial real estate investors educate ourselves on that? I mean, cuz again, you said these policies are hyper nuanced, right? [00:12:57] SAM WILSON: What should I be doing to make sure that I understand this on the front? So,  [00:13:02] first  [00:13:02] ANDY GURCZAK: of all, the policy is written for the consumer, right? So it's not supposed to be written as an attorney is supposed to interpret it. It's supposed to be easy to read, but they're never easy to read. They're so complicated. [00:13:13] ANDY GURCZAK: Even when we go to read them, we're, we're looking 'em up and we have definitions. Cause they're very confusing. Yeah. So, so they're not written in your favor. Also, the adjuster is supposed to have eye for coverage. They it's what they used to call an eye for coverage. They technically were always stopped that, they had an eye for coverage, meaning they want, they should always look to cover your lumps. [00:13:33] ANDY GURCZAK: But once insurance companies took the, took in the McKinsey model and I don't wanna get into this whole Allstate McKinsey thing, but they accepted this model McKinsey model of how they handle claims. Now, most claims are denied. They're never looking to cover. Instead, they're more looking, okay, what's this. [00:13:50] ANDY GURCZAK: Or how can we deny this instead of how can we cover it? That's every claim how we see going now is it's. How can we deny it instead of how can we cover it? Then we have to come in and look at, okay. That pipe there was leaking. Well, was it leaking over time? Did something hit it, did it how to burst. You just have to find the real culprit to see and then to see if there's coverage in the policy for it. [00:14:12] SAM WILSON: that is absolutely correct. And then that's, and that's one of the things, I guess, that as business owners, as real estate investors, that's really frustrating in this space is, and again, I was signing a policy here for our renewal on a commercial building and I just started reading through it and I got halfway through. [00:14:27] SAM WILSON: I'm just like, I don't understand what I'm reading anymore. Like, I don't know, this is I,  [00:14:32] ANDY GURCZAK: they get fine. I mean, they get those commercial. That's why I say, four unit lasts the residential, those policies, just, they're, I dunno 60 pages, those commercial ones. I mean, they get thick, those binders get thick. [00:14:42] ANDY GURCZAK: I mean, there's a lot in them,  [00:14:43] SAM WILSON: a lot in them. And by the time I feel like it's a, it's a spider web of like, You know if this, then that, but that then, and by the time it's all done, it's like, I don't know. This is a ball of, exclusions and things that are covered that I can't even begin to remember. [00:14:56] SAM WILSON: So I guess  [00:14:57] ANDY GURCZAK: your point, when you say education learning or where can you, there's really, it's hard because everything's so skew. If you go online and say, do I need a public adjuster or should I hire a PA you'll find half articles. Yes, all good. And then half bad. And those bad ones are all written by insurance companies. [00:15:11] ANDY GURCZAK: No one even tells you that you can hire a PA. A lot of people don't know there's actually a private adjuster. You can hire to look over your claim and you don't even have to hire us. You can just literally have us look over your claim to see. It was, I went to one yesterday was a fire. It was a friend that called looked over the claim. [00:15:25] ANDY GURCZAK: I'm like, there's a couple of things missing, but I'll give you the tips and advice. What you tell 'em to get it paid. There's nothing else for us to do. I'm just saying it doesn't hurt to call because the good PAs and the ones that , are very knowledgeable, don't look over a claim like our firm doesn't take on a claim unless we look over and make sure we can bring value to it. [00:15:40] ANDY GURCZAK: So I can't bring value to Sam then there's, then there's no need for us, or I'm not gonna waste your time or you're gonna waste Neil waste each other's time.  [00:15:48] SAM WILSON: Absolutely. And that brings back us to the last question. And maybe this is , Too granular, too personal to have on a podcast question, but I guess I gotta ask it, how do you guys get paid in this process? [00:15:59] ANDY GURCZAK: Yeah, PA usually charges between 10 to, 10, 20, 20 5% depending. We cover 12 states. So we've just taken the model of 10% across the board. When we do commercial en large, we have a scale that drops down the percentage from 10 to after a million dollars. It's 5% we cap it, , for like really large claims for our larger clients  [00:16:19] ANDY GURCZAK: but that's our firm. Again, everyone does it a little bit differently. , we do a flat 10% and like I said, when we do the large claims, then we have a scale that kind of goes down based on if the claim is to reach a certain  [00:16:30] SAM WILSON: amount. Right? [00:16:31] SAM WILSON: No, I love that. That's great. Last question for you here, Andy. [00:16:35] SAM WILSON: If someone were to come work with your firm? What makes them a great client for you guys that you say, man, that's somebody I really wanna work with.  [00:16:41] ANDY GURCZAK: Someone that trusts us, someone that when I talk to says, Andy, I just want you to handle that claim. Just settle it, handle everything for me. [00:16:50] ANDY GURCZAK: Just let me know when we're done here. Let me know the amounts. That's the best client, the client that is the client. That's worried about the percentage upfront, what they have to pay or what's our. Those clients right away. I can tell you then let's not work together because the value I bring to you, literally, we can charge over 50% on each claim and you'd still be better off if you didn't hire us. [00:17:11] ANDY GURCZAK: Right.  [00:17:11] SAM WILSON: That's the. I love that. And that, that, that's a fair and honest reply. And I appreciate that. Cuz everybody has in their own industry, whether you're a broker, whether you're a buyer, a seller, there's like people you wanna work with. And then there's people you're like, Hey, this just isn't a good fit in a good fit for us. [00:17:26] SAM WILSON: So certainly appreciate your transparency and commercial  [00:17:29] ANDY GURCZAK: clients. Like you saying, you guys invest in commercial and your listeners are our favorite. Because they usually have their own team of contractors and roofers all their whole team. So when we come on their team, we're just in charge of getting their claims, paid fully, making sure they have all the money, then they get their own guys. [00:17:45] ANDY GURCZAK: They're not having the insurance company take all their money and do their work. Right. So it works out in, it works out in their favor.  [00:17:53] SAM WILSON: That's awesome. Andy, thank you for coming on the show today and taking the time to break down what a public adjuster or private adjuster is, how you guys work. [00:18:02] SAM WILSON: What, how you guys get paid, what to do, the right things to do the wrong things to do. And really, I guess bringing a little clarity perhaps and saying that, the industry is just pretty confusing as it is, and there's probably not gonna change any time in the future, but at least you've given us some, some tips and tricks on how to navigate, how to navigate those murky waters. [00:18:20] SAM WILSON: So I certainly appreciate it. If I, if our listeners wanna get in touch with you or learn more about you, what is the best  [00:18:25] ANDY GURCZAK: way to do that? The best way for your listeners. What I'll do is I'll leave you my, my personal cell phone. If any of your listeners wanna call me or text me I'll leave in my cell phone. [00:18:34] ANDY GURCZAK: That way that's the quickest way they can save that number in their phone book. Cause again, you might never need me. Or you might have two claims in a year, so, if they want to save my phone number, it's seven oh eight six five five four one eight six seven oh eight six five five four one eight six. [00:18:48] ANDY GURCZAK: And that's literally my cell phone. They call me, text me. They have any questions I'm more than happy. I'm very open to helping people, so  [00:18:54] SAM WILSON: that's awesome. Andy, thank you again for coming on today. I certainly appreciate it.  [00:18:59] ANDY GURCZAK: Appreciate it.  

19m
Aug 12
Self-Storage: The Best Investment For an Inflationary Environment

Joining us today to discuss the opportunities in self-storage during the current market conditions is Kris Benson. He is the Chief Investment Officer of Reliant Real Estate Management, a company that offers institutional quality self-storage investments to accredited investors. He digs deep into why self-storage is still an incredible asset to invest in and offers strategies on how to squeeze NOI out of properties. He also touches on what it takes to be a sophisticated operator in the space, the work they are doing in boat and RV storage, and the importance of return on equity.     [00:01 - 12:35] SELF STORAGE INVESTING INSIGHTS __ __ __ __ __ __ [12:36 - 19:12] BUSINESS GROWTH AND RETURN ON EQUITY  __ __ [19:13 - 20:28] CLOSING SEGMENT __ __ __ __ __ __ TWEETABLE QUOTES   Kris Benson Kris Benson Kris Benson -----------------------------------------------------------------------------   Connect with Kris through the Reliant Real Estate Management https://www.reliant-mgmt.com/ website and KrisBenson.com.   CONNECT WITH ME:   I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns.     Facebook https://www.facebook.com/HowtoscaleCRE/   LinkedIn   Like, subscribe, and leave us a review on Apple Podcasts, Spotify, Google Podcasts, or whatever platform you listen on.  Thank you for tuning in!   Email me → sam@brickeninvestmentgroup.com Want to read the full show notes of the episode? Check it out below: [00:00:00] KRIS BENSON: What I would say you should measure us on is, well, what happened to NOI during that period? Did we grow that? And that's what you can hold us accountable to, but cap rates and valuations, who knows, that's all made up, right? So we can't control that. But what we can control is if we can squeeze NOI out of something, we're doing our job and then the market's going to do what it's going to do. [00:00:32] SAM WILSON: Kris Benson is the CIO at Reliant Real Estate Management. They are a top 30 vertically integrated self-storage operator. Kris and his Reliant team have transacted on over $1 billion in self-storage in the past five years, Kris, welcome to the show.  [00:00:47] KRIS BENSON: Hey, Sam. Pleasure. Appreciate you taking the time.  [00:00:49] SAM WILSON: Hey man. Thank you for coming on. Certainly appreciate it. There are three questions I ask every guest who comes on the show" in 90 seconds or less can you tell me where did you start? Where are you now? And how did you get there?  [00:00:59] KRIS BENSON: Those three questions take longer than 90 seconds to answer. Is that okay?  [00:01:03] SAM WILSON: Do your best. [00:01:05] KRIS BENSON: Where I started, probably very similarly to a lot of people who get involved in real estate. I owned some duplexes in the town that I lived in and very quickly realized that that was going to be very challenging to scale. And essentially I hated everything about it. It was not really the work, it was more, the people like it was just soul-sucking. It, it always, there was always problems. No one was ever happy. So ultimately I heard in a podcast or read, I wish I could credit who said it to me, but basically it was big deals and small deals are the same amount of work. You just make less money and small deals. And so we started to scale into some larger multifamily we've ended up building a 64 unit apartment complex. And for me, Sam, that's where kind of the light bulbs went off where I was like, ah, this is how you make money in real estate. And, and it was figuring out how to do it at scale. [00:01:54] KRIS BENSON: And I'm going to fast forward a lot of the story, but how we got to where we are now is about six years ago, I was convinced cap rates and multifamily couldn't possibly get any more compressed than where they were at that moment. Whoops. I was off by quite a few years, so I started looking for other asset classes to invest in. And that brought me to two really interesting niche classes, mobile home parks and storage, and kind of fell in love with the metrics behind storage. So was an investor of Reliant, which is where I am now first. And then the founder of Reliant, Todd Allen, and I kind of formed a partnership and we've been scaling ever since. So it's, it's been a fun ride.  [00:02:33] SAM WILSON: Yeah, that's interesting. Your crystal ball was definitely broken when it comes to where multifamily has gone. I was talking to a friend of mine the other day. They said in 2016, they were underwriting a deal and they couldn't bring themselves to pay 14 million for it. And then, just traded hands, what did he say, 45 million here just a couple of months ago. And he's just like, I don't even understand this. This is crazy. So, but you know, aside from that, I don't want to go down that rabbit hole necessarily and talk about why it's where it is, but you found a niche in self-storage. Tell me a little bit about what you guys are seeing as far as opportunity goes right now in the self-storage space.  [00:03:08] KRIS BENSON: Yeah, for sure. I mean, what I would say, Sam, is Reliant is a value add shop. So generally we're buying existing assets and adding something to them to force appreciation. So we're just, our goal is always to grow NOI and usually, our plan is expansion. So we're adding square footage and then getting those units leased up. And generally, that's where we're getting our NOI growth. We do some other things, you know, especially if we're taking over kind of a mom and pop owned facility, there's usually some low hanging fruit there as far as, you know, rental rate increases and having things like U-Haul truck rental and tenant insurance and those kinds of things as well, where we can add some ancillary income. But I would say, look, the market in self-storage in the last three years has been pretty incredible. We've seen a significant compression in cap rates. So values have gone through the roof. And what's interesting, Sam, is we stand here today, it's the middle of June, interest rates are rising, but we haven't seen cap rates come up. Values are not changing yet.  [00:04:06] KRIS BENSON: And I think, you know, a motivator behind that is there's still a lot of capital chasing deals from an institutional level. There's a lot of money still trying to get into the asset class. I had to call this morning with a group. They just funded a group that is starting up and looking for some expansion capital, and they had 13 term sheets. And this group is coming to us saying, Hey, these guys are still looking for a place to place money, do you want to talk about it? So there's still a lot of capital chasing this asset class for the reasons that, you know, we fell in love with it. There's, there's a lot of recession resiliency there, at least in the last two economic cycles. And I think, you know, institutional capital is trying to find deployment in that space.  [00:04:46] SAM WILSON: Yeah. I mean, certainly, I don't know any asset class where capital just isn't chasing yield. I mean, it's looking for it wherever it can find it. So, you know, it's no, obviously no surprise that it's gone into self-storage, but let me ask you this. I understand the, and we think we well covered it on this show, the recession benefits of self-storage, but yet I think in every, every crisis, it brings out unique opportunities to acquire. Are there people who are misaligning their portfolios or taking on debt in the wrong way, or just setting themselves up for failure in the self-storage asset class in particular if we go into a recession?  [00:05:25] KRIS BENSON: We hope so. Time will tell, Sam, right? I, I agree. Usually, the best buying opportunities are, are going to be in when there's blood in the streets, right? We'll find out is there's been a huge glut of self-storage development in the last five years, right, so a lot of people, when you make money in an asset class, People are going to show up and say, oh, I can do that, right? So there's been a lot of merchant builders who are not self-storage operators, they just are developers. They can develop a storage facility and they hope, Hey, I'm the backend. I'm going to sell this to one of the REITs or a publicly traded company. It's going to turn out just fine. And, and they've been right for a long time. The interesting part's going to be, look, if I did a ground-up development three years ago, I was probably underrating sub 4% debt on my construction loans, right? In my model, I was saying, all right, it's going to build be a year plus to build, it's going to take me a year or two to lease this thing up. And then I got to go get perm financing. The question's going to be, what did they underwrite that permanent financing at interest rate wise, right? And if they needed it to be a four and a half to make their project work, Well, they're going to come into a market where it's five plus, right? And that's where we could see some pain, right? Is the sea of old deals where they're coming to market and saying, all right, I got to go get perm financing. And the lender's looking at them saying, yeah. At five and a half, or you can buy down your note, you got to come up and, you know, come up with a big chunk of cash to buy down the proceeds. So, Sam, I think, you know, for those operators that may not be well capitalized, there may be some opportunities there where deals that either banks are taking or banks are starting shop 'cause they know, Hey, we're going to get this thing back. So, you know, I think time will tell. The other part of this is there's a lot of people in the space who, you know, are not sophisticated operators and when things get tight, you know, again, it probably comes down to bad debt or too aggressive on the debt side. But when you're not a sophisticated operator, it's harder to make things work when, you know, the revenue side gets a little bit tighter.  [00:07:24] SAM WILSON: What are some things, when you say that word sophisticated, what are some things that come to mind that you would say would make someone a sophisticated operator?  [00:07:31] KRIS BENSON: Yeah, that's a fair question. [00:07:32] KRIS BENSON: I mean, there's a lot to that, right? And I think it depends on what you're thinking about, but, well, let's start with just kind of the digital marketing side, right? And, and how you're attracting customers. I think in the world, we live in, Sam, today, even in the smaller markets, the secondary and tertiary markets. We generally like to operate in the smaller markets 'cause we have a competitive advantage there, right? Our digital ads, Google AdWords, SEO, those types of things. Generally, mom and pop operators have a website, but they're not really doing anything else, right? And when I say mom and pop, it's not derogatory. You know, people who own less than five facilities kind of fall in that category, right? And it's, it's not good or bad. It just is the, how they attract customers. Do they have, I'd say a big thing in the last 24 months has been touchless leasing, right? So the ability for a customer to rent online, get access to their unit, get their lock and never go in the office, sign their lease. Everything is done online that's since COVID has been a huge push, I would say probably 30 to 40% of our leases. They never walk into our facilities. That's another one.  [00:08:39] KRIS BENSON: And then I, I would say this one is probably going to be most important moving forward is kind of a dynamic pricing algorithm where you're matching prices day to day, based on occupancy and trying to squeeze out revenue based on, you know, Hey, we, we may have five to seven types of units in a particular facility and each one is being priced based on that type of units occupancy, right? So if 10 by tens are full, that price is going to go up. If five by tens are, you know, empty, that price is going to go down and that's shifting every day comparatively to what's happening in the rest of the market. So just kind of a snapshot.  [00:09:17] SAM WILSON: No, I love that. And that, that brings, you know, a few things out that maybe I hadn't thought about. And we're certainly seeing that on the dynamic pricing side, on the RV resorts. You know, it's something where again, you know, mostly mom and pop owned and it's like, well, we know that you know, it's, you know, $69 a night, $79 a night, whatever it is. And that's been what they've been saying for a decade 'cause it's easy to remember. But it's also parable for business. Like, wait, no, I mean, it's July 4th. You should not be 79. You should be $179 a night. Like, whatever it is, again, I'm making up numbers here, but that, that whole dynamic pricing capacity is something that, you know, it's overlooked, I think in a lot of industries and we've seen that of course come around in Airbnb. We've seen that the airlines, the hotels have had it forever and it's like, why don't we have this applied across, you know, all of our real estate asset classes? So do you think that will take off? You know, and there's just a, there's a random stray thought here so forgive me. I mean, we don't, we haven't seen that in the multifamily space yet. [00:10:12] KRIS BENSON: The dynamic pricing.? [00:10:13] SAM WILSON: Yeah. Have you seen that anywhere?  [00:10:15] KRIS BENSON: Yeah, it exists for sure, especially some of the larger operating platforms. That's where I first got introduced to it is that pricing is changing in the market almost daily, based on unit type. The difference is, Sam, with, with multifamily specifically, right? The big boys report. So there's, you know, like the Yardi and the CoStar are getting that data, so that everybody can have the benefit of having that data, right? And in storage, there's a couple of groups trying, Radius+ is one, where they're trying to create this momentum where operators are reporting this information in so we can all benefit from. But it's definitely not to the level of like a multifamily and, and part of it's just because the market is much smaller than multifamily. So software companies are looking, Hey, where do we invest dollars to build a platform? Storage is a smaller addressable market than multifamily, right? So, you know, I think part of it is who's making investments into the space and storage has come a long way from where it was 10 years ago, for sure in the sophistication and, you know, the technology that's supporting it, but it's still not kind of the maturity level, I would say, of like a multifamily or an office, right? You know, some of the core four, when you think about the major real estate asset classes, but, yeah, I would say that that pricing algorithm tool is, is super helpful when you think about how to squeeze NOI, right?  [00:11:39] KRIS BENSON: And Sam, in the world, you and I live in, that's how we should be judged by investors, right? You know, I mean, so if you have been a, an operator of almost any asset class for the last five years, You should have made money unless you're really, you know, really screwed it up, you should have made money. And that could have been just cap rate compression. You could have done nothing. And you still should have made money. What I would say you should measure us on is, well, what happened to NOI during that period? Did we grow that? That's what you can hold us accountable to, but cap rates and valuations, who knows, that's all made up, right? So we can't control that, but what we can control is. If we can squeeze NOI out of something, we're doing our job and then the market's going to do what it's going to do.  [00:12:24] SAM WILSON: Right. Absolutely. Absolutely. Tell me about this. You guys, I mean, you, you own some regular, just standard self-storage. When I say that, I'm thinking like you said, 5 by 10, 10 by 10, whatever, 10 by 20 units. Do you guys have your hands in any other type of storage?  [00:12:39] KRIS BENSON: Like wine storage or like that type of stuff? Or boat and RV? [00:12:43] SAM WILSON: Yeah. Any of those. I hadn't thought about wine storage, but yeah. I mean, I guess obviously you own boat and RV storage as well, is that right? [00:12:49] KRIS BENSON: Yep. We do. We have some boat and RV-specific facilities where that's, you know, that's all they do. And then, we also have some storage facilities with traditional climate, you know, non climate controlled units, like the garages that we have parking on. Sometimes it's, you know, covered parking where you got the steel beams, corrugated metal roofs, and trickle chargers, and you can park in there. We kind of have a mix of both. It really depends on the market that we're in. You know, where we found the most success, obviously in the boat and RV parking is somewhere around a lake or recreational area. Generally, people want to park the boats and RVs there. So, yeah. You know, it, it's very market specific if we're, you know, in downtown Atlanta and does a boat and RV parking place do well? Probably not. [00:13:32] SAM WILSON: Probably not. Or conversely, an RV parking place in downtown Atlanta might do great just in the sense that where else are they going to park it? Like you can't park it in your street, you know, in the, in the neighborhood, your HOAs forbid it. So it's going to be where, where else you going to put an RV if you own one? Yeah, that's interesting. I know we talked about that a little bit off air as to like, what happens to all of these assets, you know, if we have a recession in the gas prices? You know, gas prices keep going up, we go into a recession. What happens to boat and RV storage? Where does that go? I don't know.  [00:14:02] KRIS BENSON: Yeah, it's going to be interesting. Last night I was cooking dinner actually, and I had the David Muir, Nightly News, ABC or CBS. I don't know what, what channel it is, but he was talking about Biden, you know, potentially proposing the idea of a gas tax holiday. And I was like, oh, that's probably a good idea right now. And then they're like, that will save on average 18 cents a gallon. I was like, perfect. That should make a huge impact in most people's lives. They fill up 10 gallons. I get a dollar 80 back. Thanks, federal government. I guess I don't know how you kind of think about that and be like, that's how we're going to fix this.  [00:14:34] SAM WILSON: Right, right. Let's not think about the fact that three times more expensive to fill up this year than it was last year. Let's think about saving 18 cents a gallon. Yeah, absolutely. Man, it'll be interesting to see how that shakes out. It was a conversation we talked about again before we hit record on this, where you were talking about return on equity. I thought that was an interesting point where you were talking to a seller and the sellers, you know, you basically were able to present to them this idea that, Hey, you can hold this asset for a decade. But what's your equity doing for you? Can you break that down for us? 'Cause I really like that thought process.  [00:15:05] KRIS BENSON: Yeah, for sure. I mean, look, I'm a huge believer, Sam, that real estate, anything you buy today, in 20 years is going to be a good deal, right? So I'm 42. Anything, anything that I had purchased when I was 22 today, it's worth more money. [00:15:19] SAM WILSON: Sure. [00:15:19] KRIS BENSON: Unquestionably, right? So you know, when I think about with, that's kind of on my original invested equity, I may have an incredible return on that when and if I have a liquidation event, right? So let's say I hold it for 20 years, but if three years in, the equity in the deal has doubled or tripled or quadrupled or whatever the specific situation you and I were talking about is a gentleman who built a boat and RV parking facility. And he had 10xed, essentially his equity by building the facility and filling it up in two years. And so what I think about from the investing side in that is, okay, so you have X amount of equity. What's your return on the equity that you currently have? Not what he wrote the check for, right, he wrote the check for 250 grand when he built it. Now he's got 2.5 million in it, and when you look at your cash flows, not on 250 grand, it's your cash flows divided by 2.5 million. His return on equity is terrible and not terrible, but there are other opportunities for you out there. And so I think that's how we look at a lot of our deals with our investors is when we get to that point where there's equity in the deals, is it time to liquidate or refinance and pull that equity out because our investor's money has built that equity too. We, Reliant, with our equity in the don't want it sitting there not earning. And you as an investor with Reliant, if you've doubled your equity, you don't want that sitting in there getting a 2%, 3%, especially in this inflationary environment, right? So I think it's always just a balance of you got to look at, all right, what can I do with this money if I pull it out, and if I'm going and buying boats and RVs? Probably not a great investment, but if I could pull that money out and go reinvest and churn it again, you know, that's where we start to get that compounding effect on the investment side of things. [00:17:11] SAM WILSON: Yeah. And I think that's, that doesn't bode well with the Dave Ramsey school of thought, but I think there are differences there, obviously between what he talks. Like you said, you know, Hey, if you're going to pull out this equity and go buy a boat just for kicks and giggles, then you're just buying another highly depreciating asset and paying probably too much for it. And that's a bad move. And, and I think that's always a personal decision too. Like, you know, sometimes there's a return on equity and then there's a return on peace of mind. That's like, okay, well, which one, which one is it? Maybe this guy's super happy. He's like, I don't care, man. I own a facility free and clear and I get paid for it every year and I don't have to think about it. So ROPM, return on peace of mind. You don't know, but I do like that idea.  [00:17:48] KRIS BENSON: You trademark that, Sam. RO... [00:17:50] SAM WILSON: PM, return on peace of mind. And so I think that's always interesting is we survey our own portfolios and go, okay, what's it look like to extract maximum value and maximum return out of this, and do it in a way that is meaningful and also, you know, protects us from downside risk. Are you guys doing any development right now?  [00:18:07] KRIS BENSON: Yeah. You're saying from a ground-up standpoint.? [00:18:09] SAM WILSON: Yep.  [00:18:10] KRIS BENSON: Yeah, we're not what I would consider a developer, meaning, Hey, we can do 10 projects a year. We just don't have the team to support it. We are in the midst of, well, two active developments. Third, that's kind of going through an approval process right now, and hopefully, we'll have shovels in the ground before the end of the summer. So a little bit. Generally, we're usually about one a year, but what I would say is there's going to be value in development right now. And there has been, but we feel like there's kind of an interesting space right now, just from a return on stabilized yield. Like, what you're going to get once this thing is built and the prices per square foot that are being paid for basically empty buildings and the replacement cost against it, you know, there's a Delta there and an opportunity for sure. [00:18:53] SAM WILSON: Right, right. Yeah. It's really interesting. And that's what we're seeing a lot, even, especially in the multifamily space. I hear a lot, have a lot of people come on the show and say, they'll say, Hey, you know, it's cheaper for us to build than it is to buy existing and then, and then do a value add, like we can just turn around and just push shovel on the ground and start ground up and have a better product for less money. Like, well, that's really interesting. [00:19:11] KRIS BENSON: For sure.  [00:19:12] SAM WILSON: Fantastic. Kris, I've really enjoyed this. Thanks for taking the time today to break down the self-storage market for us, what you guys are buying, how you've bought it. I love the clarification there around what a sophisticated operation or operator could look like, you know, and, and kind of giving some quick ideas on, you know, when you see a mom and pop operator, the things that it could be very, very easily improved. Yeah. Certainly appreciate that. Thanks for taking the time to share your story and just give us insight on what opportunities you see out there in the market. If our listeners want to get in touch with you or learn more about you, what is the best way to do that? [00:19:42] KRIS BENSON: Yeah, I think probably our website's best, reliant-mgmt.com, which is the abbreviation of management, or if you just Google Reliant Real Estate Management, you're going to find us, you can find our current investment opportunities, contact us, get in touch with our team, and learn a little bit more about the team and track record here. [00:19:59] SAM WILSON: Awesome, Kris, thank you again, certainly appreciate your time.  [00:20:02] KRIS BENSON: My pleasure. Thanks, Sam. 

20m
Aug 11
How to Leverage The Brokerage Community to Scale Your Real Estate Business

As the leader of Jacksonville commercial real estate firm Prime Realty, Tyler Saldutti has seen his company grow exponentially as the market has rebounded. In the past 18 months, Prime Realty has more than doubled its staff to meet client demand. Tyler is a fourth-generation real estate entrepreneur and, before starting Prime Realty, was a top producer working for a global commercial real estate firm. He has consulted real estate owners and users from a wide range of industries and built a reputation for finding the best real estate solutions through creative deal structures and a project approach to each assignment.    Let’s hear from Tyler as he shares tips on how his company works and how to leverage the brokerage Community to scale your real estate business.    [00:00 - 07:00] PRIME REALTY: WE DO LOW VOLUME, HIGH QUALITY   __ __ __   [07:01 - 13:51] BOUTIQUE REAL ESTATE FIRM USES EXCLUSIVE RELATIONSHIPS AND NIMBLE MARKETING TO CLOSE MORE PROJECTS   __ __   [13:52 - 20:46] REAL ESTATE BROKER SOURCED AND ASSISTED WITH EVERY ACQUISITION   __ __     [20:47 - 24:50] CLOSING SEGMENT __ __ __         TWEETABLE QUOTES “Finding those exclusive relationships, meaning you may invest in property all over the country, but you may have somebody in Chicago that knows the industrial market there and You're dealing with them whenever you're in Chicago and dealing with the industrial market, that's going to be the only person you're going to work with.” - Tyler Saldutti ---------------------------------------------------------------------------- CONNECT WITH TYLER visit their website at https://primerealtyinc.com/ Or call 9043730578     CONNECT WITH ME:   I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns.      Facebook https://www.facebook.com/HowtoscaleCRE/   LinkedIn   Like, subscribe, and leave us a review on Apple Podcasts, Spotify, Google Podcasts, or whatever platform you listen on. Thank you for tuning in!   Email me → sam@brickeninvestmentgroup.com   Want to read the full show notes of the episode? Check it out below: [00:00:38] SAM WILSON: Tyler Saldutti is the founder of Prime Realty in Jacksonville, Florida, where he is overseeing the funding acquisition development management and leasing of over 2000 retail office, industrial multifamily properties throughout Florida and Georgia. [00:00:52] TYLER SALDUTTI: Tyler. Welcome to the show. Thanks for  [00:00:54] SAM WILSON: having me. Hey man, the pleasure's mine and 90 seconds or less. Can you tell me, where did you start? Where are you now? And how did you get there?  [00:01:00] TYLER SALDUTTI: I started in New Jersey working construction, growing up, my father and uncles. And that was how I saw real estate. It was the physical production of space and there's something that's just very rewarding about seeing the. [00:01:16] TYLER SALDUTTI: The result of your labor growing up outside Manhattan. So many industries are dollars and cents. And something about seeing your end product got my blood in 2008, I started Prime Realty. We're a commercial real estate firm here in Jacksonville, Florida. And now we're the leading or premier boutique brokerage doing over 250 transactions. [00:01:37] TYLER SALDUTTI: Like you were.  [00:01:37] SAM WILSON: That is really cool. I love that. So when you were in the construction business, were you guys general contractors? Were you guys the owners developing the project? What  [00:01:48] TYLER SALDUTTI: was your role in that? Well, you may have picked up from the last name, style duty. I'm a Italian American from Jersey. [00:01:54] TYLER SALDUTTI: So you. Know, I had family members in all sorts of trades. Electricians, like I said, my father is a general contractor. I member working for an uncle that was a site works contractor. So, it was, exercise of getting to see a little bit of everything. Like I said, mostly from the. [00:02:12] TYLER SALDUTTI: Property improvement or construction side spending weekends winter breaks off of sports. Mostly it was in the summers working in the different trades. So, this way, as my career progressed, I have this vision and understanding of what's behind all the numbers and spreadsheets and what it takes to construct and develop and manage. [00:02:35] TYLER SALDUTTI: Manage office, industrial retail and multifamily property. So you see all the different colored logos. We have that. That's what that's all about. Those are our four main food groups and how we divide and conquer and commercial real estate.  [00:02:50] SAM WILSON: How did you make the jump from working in the trades? [00:02:53] SAM WILSON: Working as a GC to, I know I should go start a brokerage. That kind of seems a little disconnected  [00:02:59] TYLER SALDUTTI: there. Sure. After growing up in New Jersey, I traded commodities in south Florida, a very business development, intense environment. You might picture a large bullpen of financial advisors making. [00:03:18] TYLER SALDUTTI: Business calls and developing new relationships in the dozens of conversations today, sometimes hundreds from there, I worked for a small business consulting firm in London and really developed, my two passions are helping people build wealth through real estate investment and supporting entrepreneurs. [00:03:40] TYLER SALDUTTI: And. Working for mostly medium size companies in London and consulting, a lot of it was geared towards their marketing systems and operations. You developed an appreciation for that small and medium sized business owner that as you help them get results kind of back to you can, there's a transparency and, a visual when you help a business that. [00:04:06] TYLER SALDUTTI: Versus maybe a, the, when we consult bigger firms and bigger organizations maybe it's not as clear there. So all of that to say that the boutique operation, that services a lot of family offices or family groups, small businesses is where I've found my life and my passion and it's been a good fit ever since. [00:04:31] SAM WILSON: So let's talk about your brokerage then. So you launch a brokerage in Florida, you say, Hey, we're gonna do commercial brokerage in 2008. The timing seems a little rough. Tell me tell me how you guys made your way through that period. And kind of what, I guess, what lessons  [00:04:48] TYLER SALDUTTI: you learned along the way? [00:04:49] TYLER SALDUTTI: Well, 2008 was the great recession and it was very there was a lot of Turmo. And the economy at that time, I was working for the largest commercial real estate brokerage in the world doing investment sales, which meant I got to touch multiple different property types. And, you, I saw, I had to reinvent myself into more leasing and management in addition to the investment sales. [00:05:17] TYLER SALDUTTI: And it's what people needed at the time they needed. Their building's full so that they could cover their debt service. They needed property management that was finding ways to be more efficient and save money. And again, coming back into that from having a very deep understanding of the investment side, the ownership side, balancing that with the leasing and the management There was we did, I didn't complete a sale transaction for over a year after starting Prime. [00:05:52] TYLER SALDUTTI: So, we saw that there was a need for a boutique approach. We saw that. The quantity over quality of work model was not gonna work. In other words, 2007, you could put a sign in front of a property. Somebody's gonna call you. You're gonna get a transaction done. Let me tell you, in 2008 times were tough and you built a lot of good habits. [00:06:14] TYLER SALDUTTI: And this firm was built on those habits. So when things are let's say more normal we're really, hitting on all cylinders because we've been built with a very proactive and project oriented approach that truly is effective in the most difficult of times. Which. Which it, which was a very difficult process to do. [00:06:37] TYLER SALDUTTI: Right. But boy hasn't served us well ever since. So  [00:06:41] SAM WILSON: I'm really curious when you say the need for a boutique approach and the other phrase you said there was, you built a lot of good habits. What are the things that come to mind when you say that? Because obviously not being a broker on this side, I don't, can you paint a picture there for us that you said, Hey, here's the problem I saw? [00:06:58] SAM WILSON: And this is kind of how we decided we're gonna do  [00:07:00] TYLER SALDUTTI: it differently. Sure. So we turned the quantity over quality equation on its head, if you're at a big firm, you're gonna have different overhead, you're gonna have a corporate office that you're feeding constantly. And your business model is built to make that corporation money. [00:07:20] TYLER SALDUTTI: And it's very successful and you might need to have three dozen listings in order to, effectively close half of those transactions. And it works for the broker, right? And the broker makes money and the agent makes money. But it's high volume. Low quality, you're fitting everything into a system that has to be somewhat effective for a variety of different projects. [00:07:49] TYLER SALDUTTI: Right? You can't be nimble when you're big. You can't be custom when you're big. And the boutique approach is the opposite. So, we've got our systems, we test and measure. We've got all the same technology, all the same marketing platforms. All the gizmos that the big firms have, technology's been a great equalizer amongst all firms, but we do low volume, high quality. [00:08:13] TYLER SALDUTTI: So project approached with the unique business plan for each project. The critical non-essentials whether we're working with a buyer or a seller, a tenant or a landlord, we. Get to have a curiosity and get to know their business more so than you can if you're in a high volume business. So, it's the customization you can do. [00:08:37] TYLER SALDUTTI: It's the expertise you can develop and then it's just being proactive. So if we're on the marketing side, we, if we're working on maybe 20 deals instead, 40, it's not rocket science. It's picking up the phone. If you're trying to find a space where a dental practice, you're calling all the dentists in town, and you can do that on a boutique approach and be more pro project oriented. [00:09:00] TYLER SALDUTTI: We close, darn near a hundred percent of the projects we take on. And at a bigger high quantity firm you're doing between 30 and 50% closing. And that's a lifestyle. 50 to 70% of your clients being frustrated with, Hey, how come I don't hear from, Hey, what's going on? I don't see what you're doing. [00:09:20] TYLER SALDUTTI: And when you have lower quantities, you're able to do that kinda work. Got it. It's more enjoyable.  [00:09:26] SAM WILSON: No, that, that makes a lot of sense. Thank you for taking the time to, to clarify that, cuz that again, not being in your business, I go that, just needed some more deeper understanding of that. [00:09:37] SAM WILSON: So that's really cool. Thank you for sharing that with us. Tell me about this. The broker and call, let's say the broker and buyer and broker and seller relationships are they're unique and have their own, nuances to 'em. What are some things or some tips that you would give that you would say, Hey, here's the way that you should be effectively leveraging your broker relationships? [00:09:57] TYLER SALDUTTI: Well, there's three things that I think. Investor or just real estate entrepreneur should keep in mind when trying to leverage the brokerage community to help them build their business. And the first is to really work hard, to build those relationships in an exclusive manner. And it's always important to date before you get married. [00:10:25] TYLER SALDUTTI: As you're trying to engage a brokerage community, you can work with somebody quite a bit before. You're really like I said committing to them in any sense, but a commitment. It should be the end goal on both sides. The brokerage community is an E what you kill industry. They were not able to pay our bills, support our families. [00:10:50] TYLER SALDUTTI: Unless we get results. And so we have to be very disciplined at what we commit our time to. And we, as you can imagine in a market like today in 2022, there's a lot of buyers, right? So how do you as the buyer distinguish yourself and try to build that exclusive relationship, it goes both ways. We're the, broker's looking for an exclusive relat. [00:11:18] TYLER SALDUTTI: And the buyer wants to be the first one to get the call when a new, exciting opportunity becomes available. So, I don't think anybody ever expects a exclusive relationship. That's not logical, meaning, you're not gonna have one phone conversation with someone and say, gosh, you're the only broker I'm ever going to use on every deal I ever do. [00:11:39] TYLER SALDUTTI: But finding those exclusive relationships, meaning you may have somebody. And you may invest in property all over the country, but you may have somebody in Chicago that knows the industrial market there that you through. You're dealing with them whenever you're in Chicago and industrial market, that's gonna be the only person you're going to work with and so on and so forth. [00:12:05] TYLER SALDUTTI: So, that's the first. Main goal I'd say for any investor owner, entrepreneur is to try to build these exclusive relationships and they can be one, it can be one person, one that does and quarterbacks all your deals, but it can also be a, a group that you formed together. [00:12:23] TYLER SALDUTTI: The second thing is. I'd say don't get sucked into a crony system. So again, having been in corporate commercial real estate world, there is a crony system in a national platform that, a customer that works with X, Y, Z company. And that company has offices all over the country. You don't want to be dealing with somebody that just has the same logo on their business card because Hey everybody, you know what a nice logo, right? [00:12:56] TYLER SALDUTTI: If you're going into multiple markets and the way that we approach it, and most independent firms approach it you're able to be nimble and partner with the right brokers or agents in that market. In other words, no firm has the. Agent or broker in every single submarket in every single property type in every single market. [00:13:17] TYLER SALDUTTI: So you may find when you're in Boise that the CBR E broker on the west side of town for multifamily is the best and that's their niche. And you might find. It's the cushioning Wakefield broker. And you might find it's another independent firm. So I would say don't get sucked into a crony system that doesn't serve you and your goals don't align with you and your broker that way. [00:13:43] TYLER SALDUTTI: And the third I would just say is follow up and stay in touch. Like any good relationship. I can't tell you. I've been blessed to build a small real estate portfolio. There has been a real estate broker that has sourced and assisted with every acquisition I've made. And I can't tell you how many opportunities come from staying in touch with the brokerage community and the experts and the specialists. [00:14:06] TYLER SALDUTTI: And and they're given property types and marketplaces. And submarkets whether that's a phone call a few times a year with a lunch, And, I make a point to, to go to that lunch once a year, make a point to play around at golf or whatever it is. That you enjoy with that person and hopefully the broker's doing the same, but but if you are disciplined and scheduled about it, you'd be amazed by how much those once a quarter, once a month, touching base calls will lead to, to really profitable acquisitions. [00:14:38] SAM WILSON: I love that. Thank you for taking the time to break down those three really valuable points there. I wanna circle back to the first one. However, when you said to build relationships that are exclusive, my question is this, how do you know when a broker is someone who is worth building that exclusive relationship with  [00:14:57] TYLER SALDUTTI: they've made you, they've made you a lot of money, a broker. [00:15:01] TYLER SALDUTTI: Should be your most valuable tool in your toolbox? I've often been said throughout the years that the brokerage community is the grease that keeps the gears of the economy going, a broker's role, the way they're compensated and the value they add is different than everybody else in that transaction, whether it's the seller. [00:15:27] TYLER SALDUTTI: And their goal to maximize their sale price, the buyer, their goal, to limit the maybe limit the purchase price and achieve the highest returns or limit municipality. That's gotta help you with the zoning or the contractor. That's gotta do the property improvement. So the attorney that's gotta assess the risk. [00:15:46] TYLER SALDUTTI: Everybody has their role but even that entrepreneur that's importance is finding the value maximizing return and being creative. They are not playing the role and motivated to keep the transactions moving forward. Right. And bringing people together and finding ways the broker has got to achieve everybody's goal right. [00:16:13] TYLER SALDUTTI: In order for there to be a successful transaction. And so, how do you know when you've found that? Well, you've made a lot of money. That's truly it. I mean, the foundation of any broker relationship is, made, saved. Or achieved a great return on investment and at Prime Realty, we work with both sides. [00:16:34] TYLER SALDUTTI: So, making a lot of money on the buy side is obviously different than making a lot of money on the sell side. But you're looking for someone that's got that deep, specific niche specialization. You're looking for someone that's collaborative, right? That's not trying to force you into their, oh, don't worry. [00:16:54] TYLER SALDUTTI: I know all the buyers in the market, we're just gonna, market this off market. Don't worry about it. And so you're looking for somebody that. Goals or aligning with yours or being collaborative. They've got that specialty and they've proven to you that they're they're able to make you a lot of money. [00:17:10] SAM WILSON: I love that answer. That's great. I've got one final question here for you and this'll come off as harsh or as snarky. So I apologize in advance, but I guess we don't ever look at the broker brokers. PROFOR. Like they're all packaged up. They're put across and they're part of the shiny brochure. And the first thing we do is totally ignore 'em. [00:17:30] SAM WILSON: Why is that? Why is that the case? Well,  [00:17:34] TYLER SALDUTTI: Gosh, I know those brokers that you're talking about, and I know those packets you're talking about and I'm fighting a good fight here at Prime. For that, not to be the case. But I also believe everyone's doing the right thing in starting from scratch. [00:17:55] TYLER SALDUTTI: Right? So you take your, you take your secondary sources of information, but you verify and I would say. If I look at a property with three different buyers, there's going to be three different ways that they look at that. So it makes sense that everybody starts from a blank spreadsheet, ideally, truly a blank spreadsheet and takes everything I've been saying about a project approach and customization, and does that for each property. [00:18:30] TYLER SALDUTTI: So I, I think the idea that. Any marketing offering memorandum or any one spreadsheet is gonna be adequate in deciphering what an individual or an organization's unique business plan is for that property. That doesn't make sense. And, I don't think you understand our industry. if that. The way you approach it. [00:18:59] TYLER SALDUTTI: Well, well, here's my spreadsheet. It's a template and I, and I put this and this is how we, doing that is just as wrong as like you're saying, trying to take the offering memorandum and say, well, this is how this is this, if that's how that property was gonna perform. [00:19:13] TYLER SALDUTTI: The only thing anyone can tell you about their offering memorandum is the property will perform. Not to what I have in my offering. thatAnd right. This is a an estimated summary of what you might expect with the business plan that we've come up with. Right. and so I think it's more important to be able, like we touched on before, understand what's behind those numbers as you help your buyers. [00:19:41] TYLER SALDUTTI: evaluate an opportunity that nobody's spreadsheet can tell you what their unique resources are to add value. And then what their ability to access capital. So, nobody nobody's putting out offering memorandums. They might have some consumable debt assumptions, but. One of the, two criteria that nobody can do is what are your unique resources to add value, and what's your ability to acquire funding for it. [00:20:12] TYLER SALDUTTI: So what, you're, what you're able to source interest rate amortization fix time period, versus what I'm able to source. Is different and it's always gonna be difference between investor a, B, C, and D. So, I think everybody's doing the right thing by taking the summary analysis from the offering memorandums and then getting rolling their sleeves up and, and doing the work on their end to build the B the successful business plan that, that a good investment should include. [00:20:41] SAM WILSON: Tyler. Thank you so much for coming on the show today. I certainly appreciate it learned an absolute ton from you. If our listeners wanna get in touch with you or learn more about you, what is the best way to do that? Our  [00:20:51] TYLER SALDUTTI: website is PrimeRealtyInc.com Like incorporated.com and you can reach us there. [00:20:57] TYLER SALDUTTI: We're easy to find here in Jacksonville, Florida Prime Realty, Inc. 9 0 4 3 7 3 0 5 7 8. And that's my direct. Awesome. Tyler. Thank you  [00:21:08] SAM WILSON: again. Certainly appreciate it.   

21m
Aug 10
Engineering Financial Freedom

Instead of letting it sit in the bank, Deepa Akula put her hard-earned money to work through real estate. Now, she is the founder of Vinside Capital and is a GP for over 1000 apartment units and an LP for over 1300 units. She is grateful for the opportunity to be a full-time real investor, which gives her the freedom to travel the world and spend time with family. Today, Deepa joins us to talk about her investing journey, how she created passive cash flow to cover their daily expenses, and how she is using her engineering background to her advantage.   [00:01 - 11:06] FROM ENGINEER TO INVESTOR __ __ __ __ __ __ [11:07 - 17:48] BUILDING MEANINGFUL PASSIVE INCOME __ __ __ __ [17:49 - 19:47] CLOSING SEGMENT __ __ __ __ __ __ TWEETABLE QUOTES   Deepa Akula Deepa Akula -----------------------------------------------------------------------------   Connect with Deepa on the Vinside Capital https://vinsidecapital.com/ website and follow her LinkedIn.   RESOURCE MENTIONED: __ __ CONNECT WITH ME:   I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns.     Facebook https://www.facebook.com/HowtoscaleCRE/   LinkedIn   Like, subscribe, and leave us a review on Apple Podcasts, Spotify, Google Podcasts, or whatever platform you listen on.  Thank you for tuning in!   Email me → sam@brickeninvestmentgroup.com Want to read the full show notes of the episode? Check it out below:   [00:00:00] DEEPA AKULA: I had learned about inflation, just very reading books. And I thought, you know, it's not a good thing that we are hoarding cash, but we did not know. We didn't want to hurry and invest in something that we didn't understand either. So in, in the time when I was doing the research and trying to get a proof of concept by investing as a limited partner, we had built up some savings. And once it looked like it was going to work, we kind of invested fast.  [00:00:39] SAM WILSON: Deepa Akula is an LP and GP in over a thousand apartment units in Texas, Florida, and Arizona. She's also a former head of engineering turned full-time real estate investor. Deepa, welcome to the show.  [00:00:50] DEEPA AKULA: Thank you. I'm so honored to be here, Sam.  [00:00:52] SAM WILSON: Absolutely. Hey, the pleasure is mine, especially. I don't normally get guests calling from, I guess, you're halfway around the world. Where are you right now?  [00:01:02] DEEPA AKULA: I'm in India right now, visiting my parents in Hyderabad. [00:01:05] SAM WILSON: That's awesome. Very, very cool. It's 9: 30 here in Memphis, Tennessee. So that puts you at roughly 8:30 there?  [00:01:12] DEEPA AKULA: It's 8:06, yeah. It's 8:06 PM.  [00:01:15] SAM WILSON: Well, soon enough, soon enough you can tell me what tomorrow is like. That'll be absolutely great. I'm looking forward to jumping in here today. There are three questions I ask every guest who comes to the show: in 90 seconds or less, can you tell me where did you start? Where are you now? And how did you get there?  [00:01:27] SAM WILSON: Yeah, sure.  [00:01:28] DEEPA AKULA: So I started as an LP. I'm a mechanical aerospace engineer by training. And I was looking to place my capital and started as an LP. And now I still do engineering on the side, but I'm a GP and an LP. And once I invested, I had proof of concept, and once the worth proof of concept, we started investing more and more. And now we have enough passive income to just cover our daily bills. So we are financially free and it gives me the freedom to travel the world and spend some time with family. And also look for deals at the same time. I'm working. This is not a vacation, but freedom of place too. So, yeah. [00:02:08] SAM WILSON: That is fantastic. I wonder there's so many things there I wanted to dig into. What is a space engineer?  [00:02:17] DEEPA AKULA: It's mechanical and aerospace engineering. So Boeing paid for my masters and I worked on the materials for the outside, for the skin of the aircraft on friction stir building. So, yeah, Boeing was looking into using different alloys, different element alloys and it was research. So I was one of the research assistants and that's what I did. I'm a mechanical engineer, got a bachelor's in mechanical engineering, master's in mechanical engineer, space engineering. [00:02:46] SAM WILSON: That's awesome. I love it. Even those words, I probably couldn't even spell those words. So, you know, I look at people like you and I'm like, oh my gosh, she is way smarter than I am.  [00:02:55] DEEPA AKULA: Oh, you're too kind.  [00:02:57] SAM WILSON: No, no, that's really, really cool. I absolutely love it. I love to fly. I'm a pilot as well. And so I'm grateful for all the work for that you guys do. And I oftentimes look at it and I'm like, I have no idea how this thing works.  [00:03:08] DEEPA AKULA: A lot of work goes into it. Every life's important. So a lot of work goes into it.  [00:03:13] SAM WILSON: A lot of work goes into it, so I'm grateful. Thank you. I think that's absolutely cool. What was your tipping point? What was the thing when you're like, okay, hey, cool. I am a mechanical engineer. I'm an aerospace engineer. I got to do something else. Was there a light bulb moment? Tell me about that.  [00:03:29] DEEPA AKULA: Yeah, so it was pretty gradual. And me and my husband, we moved to Seattle and were making good money. And so I was starting to think about investments. So I just had to place our capital somewhere and I was looking into different investment vehicles and I'm an avid reader. So I stumbled onto syndications. And I did not know anybody that was doing syndications at that time. And looked into it and through a random connection, found a general partner and invested in her deal. And once I started to see the distributions come in quarterly distributions, then I had proof of concept that, oh, well so this is real. And it can work. And we started to invest more and more, and it was pretty gradual. And the light bulb moment was really, there was not one, but I got laid off during the pandemic. And I was like, okay, this is my chance to not have a W2 and work for myself. And that's when, I was a GP already, but I chose not to get another job in engineering and do real estate full-time.  [00:04:35] SAM WILSON: Wow. That's a big, big jump. I mean, tell me, I guess, so you said, Hey, you, you figured out, you know, okay, I became a GP. What was the timeline between when you first heard about syndications until you put, or excuse me, an LP until you put your first money in a deal?  [00:04:48] DEEPA AKULA: Oh, when I first put up a single penny, it was about three years. I had analysis paralysis big time. So I actually knew how, how to underwrite a deal before I invested as an LP. So that's the kind of work I did just because I did not know anybody that was doing it at that time, and I did not want to lose $50,000 just by investing because I read in some book. So I took a three-day course, a bootcamp through RE Mentor. And it was just a three-day bootcamp and that was all the education I got in person, but everything else was just reading books. I might have read hundreds of books in those three years and had enough confidence to put my first $50,000 in 2019.  [00:05:35] SAM WILSON: That's wild. So you felt like you had a full understanding of how to underwrite a deal before you ever put your money and how did you practice that?  [00:05:44] DEEPA AKULA: So just on random deals on CoStar. Just random deals. So, yeah, and I had a loose mentor who was just looking at those numbers because, you know, if you underwrite in a vacuum, you really don't know if it's good or bad, you know. If you really don't know how to estimate taxes or when the taxes are assessed and different states do it differently, so if you're in a vacuum and just working and not having anybody check it, it's a big no-no. So I had a gentleman that was kind enough to kind of guide me and he's a loose mentor. If you'd ask him, Hey, were you Deepa's mentor? He's like, no,. But I really did not pay for mentorship. I loosely have ties with people that I kind of come in contact with and just ping them and learn. And I used to underwrite single-family homes too. That's kind of how I got interested. I really dislike shopping, like any kind of shopping, but real estate. I'm all about it. So, I'm not in shopping about clothes or anything else, but real estate, I would just underwrite the deal of their deal. So that's kind of how I was like, you know, I should really do what I like. to decompress for a living, then I would really not feel like I'm working. And even without knowing, even when I was in school, I would just randomly look at single-family house in the areas. And I was like, oh, it's pretty simple, the math is. So yeah, that's kind of how I started and learned. And there's a little bit more to multifamily. And, you know, just there's so much resources out there. I would just attend multiple webinars to learn and practice.  [00:07:25] SAM WILSON: When you say so many resources out there, I mean, either you're an Excel guru, which wouldn't surprise me, or you borrowed somebody else's model out of the gate because there are a lot of nuances to it. How did you build your first or what did you use as a resource for your first underwriting model?  [00:07:42] DEEPA AKULA: So the very first one was Michael Lang's model. And I had bought it for fun years ago and I was modeling it. And, you know, I am pretty good at Excel because I was, when I was head of engineering, I was building these templates for my engineers to work in. So they're kind of like sandboxes and to make it foolproof because if something goes wrong, these structures are out there. We are driving under it, their houses under it, so, let me take a step back. I was designing overhead structures there, maybe about 10,000 structures that me or my team designed are in service right now in the US and Canada. So I was designing the spreadsheets in which my engineers would design the structures. So I love tinkering with Excel and I saw Michael's model and then made some additions to it to just make it my own.  [00:08:38] SAM WILSON: You made some additions, you mean you poured gasoline on a fire. It was like, oh, okay. Yeah, this is okay. But I'm an aerospace engineer and I can do a lot better than this. So, you know, if I can push, I'd love to see your model but I'm sure it would make all the rest of us jealous. That's really, really cool. And you said something here that I don't think I've ever heard on this show, which is you said that I did it for fun. Like, underwriting is work for most of us, you realize that, right?  [00:09:06] DEEPA AKULA: I understand. I understand. But, you know, as engineers numbers is our thing and, you know, you feel like you have more control. You change one number and you have control to like change all the numbers on the sheet. So just playing with different numbers is more fun. And more than that, I used to code in VBA. So coding in VBA was more fun. So I would just code and create buttons and everything and try to make it more fun and easy and I'm trying to hide the code behind it and make it easy. So building it was more fun. And the more formulas I write and debugging is a lot more fun to me. So that's what I, all my formula would, like, have to wrap and then debugging would be like, oh, where, where did it go wrong? Why is it not working? So, yeah. That’s what I did to de-stress. [00:09:54] SAM WILSON: That's amazing. Wow. Some of us go to the gym. Some of us do yoga. Some of us have bad habits. You, on the other hand, underwrite multifamily deals. That's a unique skillset. What would you say is the number one thing that you learned when doing that? [00:10:10] DEEPA AKULA: Number one thing while creating the model or underwriting? [00:10:13] SAM WILSON: Underwriting.  [00:10:14] DEEPA AKULA: Underwriting, the number one thing is not to trust proformas when you receive them. The seller might have expenses that they're putting on a corporate level that we are not seeing on the property level. So just knowing the numbers and at least having an idea of what it's going to cost per door.  And that just comes from practice. You know, it's catch-22, you just do it, learn it and then keep doing it and get to learn more.  [00:10:42] SAM WILSON: Absolutely. Yeah, at times I wonder why commercial brokers, which, I mean, I have my real estate license. Do I do commercial brokerage? Not necessarily, but why do they even put the proformas out there? Because most of us are just like, I'm not even like paying.  [00:10:58] DEEPA AKULA: Yeah. We just have to underwrite from scratch.  [00:11:00] SAM WILSON: It really is true. So yeah. That's really, really interesting. Yeah. I like that. Don't trust the proforma. Let's talk a little bit about passive income to cover your bills. I thought that was an interesting statement you had made, it takes a lot of investments. This is my thesis. It takes a lot of investments to create any sort of meaningful, passive income. I think passive income is great, but even if let's suggest, say that we're, you know, we put 50 grand in a deal and it's whatever, a eight cap, I don't know. I'm making up numbers here, but let's say it throws off, you know, 700 bucks every quarter. I mean, that doesn't really put a dent in the income to cover bills category. Now, how did you do that? Like what did it take to get that income stream built up? You know, we've all hit the equity multiple. I believe most of us have hit an equity multiple in a deal we've passively invested at some point, and those are great pay days. But not until the exit do we normally catch enough money to go, okay, this is meaningful.  [00:11:55] DEEPA AKULA: Right. Right. So me as head of engineering, I'm a licensed professional civil structural engineer. I'm a self-taught civil structural engineer. And as head of engineering, I was making meaningful money. And my husband is in information technology. He's in, it works for wild Disney and pretty simple, like I said, I do not enjoy shopping. So we had good, good savings. And we were hoarding cash. Like I said, as we were starting to earn money through our W2s, it was just sitting in the bank and we didn't spend it anywhere. We're just trying to look for a meaningful vehicle for us to invest in. And by the time I did all my research and started to invest. It was about three years of research went from 2016 to 2019. There was a lot of research and studying and talking to people. And that's when we started investing as an LP. But once we saw the distributions coming in, we kind of really escalated and put in big amounts, big chunks enough to cover our, like, and I'm not even counting the exits. This is just quarterly distributions that I'm talking about. It's enough to cover our expenses.  [00:13:05] SAM WILSON: That's really cool. I love I love that and yeah, it does take some capital upfront, I think, in order to attract that initial, you know, nut where you're like, oh, okay, , this is now doing something that that I appreciate.  [00:13:17] DEEPA AKULA: Right. And it was out of necessity. I had learned about inflation, just by reading books. And I thought, you know, it's not a good thing that we are hoarding cash, but we did not know. We didn't want to hurry and invest in something that we didn't understand either. So in the time when I was doing the research and trying to get a proof of concept by investing as a limited partner, we had built up some savings, and once it looked like it was going to work, we kind of invested fast. [00:13:46] SAM WILSON: That's awesome. [00:13:47] DEEPA AKULA: With multiple deals. [00:13:48] SAM WILSON: You've moved into the code GP space. What's that transition been like and how did that happen?  [00:13:54] DEEPA AKULA: Right. Yeah, no, no. I love it. Thank you for the question. So I was an LP in a couple of deals before I got a call to be a co-GP. And as an LP, I would read the PPM the whole way. Some of them were 80 pages, the other one was 200 pages. And I would read the whole thing a few times and catch some mistakes in it and call the GP and say, Hey, you need to get a better lawyer or the legal person need to like, they're calling a something, two different things in two different places. And I was like, is it the same thing? And they were like, you read the whole thing? I'm like, yeah. And that you know, inadvertently, it told them that I'm a details person. And I would just ask a lot of questions and just from my questions and the fact that they knew I was catching their lawyer's mistakes in the PPM, they were like, okay, so she knows. And when the time came for them, just me and my husband both are engineers. And most of her friends were like, Hey, how are you guys getting this distributions? And we were doing 506B deal. and I wanted to introduce my friends to the GPS, but they couldn't really take their investments because they did not know them. So they were like, okay, Deepa, do you want to raise capital and be on this deal? I was like, really well, I was like when, and they go right now. So it was just out of the blue call saying, Hey, we have a deal on the contract. And I trust this person. I had invested my money with them. So I didn't really have to do any due diligence on the person, on the group. I did some due diligence on the project itself and it looked pretty good. And that's how I got my foot in the door for a co-GP position.  [00:15:41] SAM WILSON: That is really cool. I love the fact that you said you read the documents, you know, end to end. I know in my first limited partner's deals, I did the same thing. If it was a repeat investment with the same sponsor, maybe I wasn't as meticulous, but certainly, read line for line. And it's a laborious process. I think it took me like four hours to get through the 200 pages, 'cause you're just like, I need this to be on like napkin sized, this just need, this is what you're going to do, this is what I'm going to do. And this is how we wrap this up. Okay, except 200 pages later because that's the world we live in. And so yeah, it kind of shocked the sponsor as well. They're like, wow. Like, this is a really detailed question. I have a public confession here to make in that I just recently didn't read through the entire stack of my deal deck or of my documents. And it was probably the most embarrassing thing as a general partner I've ever done in that I got the documents back. I read through them high level. It was a new attorney group for us. And I said, man, everything seems to be in order. And I was the receiving call of the investor like you going, Hey, there's some conflicting pieces of information here. I turned inward like, oh no, like I'm hot now, just like my body temperature goes up thinking about it. I'm like I have done this so many times and I have never had that call from an investor. I wanted to crawl on a hole. [00:17:02] SAM WILSON: So note to self: one, read all the documents if you're an LP, and two, read all the documents if you're a GP. That's the rule I think that Deepa is teaching us here and that's yeah, that's just a, you know, that's a hard lesson learned both ways. So, you know, thank you certainly for sharing that, what does the future look like for you? [00:17:19] DEEPA AKULA: Thank you for that question because I am actively trying to not build myself another high-stress job. So, it's tough. It's tough to not work as much now that this is my first summer without a job. I am trying to say no to more deals than I say yes to. And I'd like to do at least one deal every quarter, and that would be a good pace for me. And want to do that for the foreseeable future.  [00:17:48] SAM WILSON: That's awesome. Very, very cool. Deepa. I loved your journey here in real estate. I loved how you started off just learning for three years. I think one of the fun facts you gave me was that you read a book. What was it? The barking up the wrong tree or barking up the right tree. I can't remember. You said you read it five times.  [00:18:05] DEEPA AKULA: Barking Up the Wrong Tree by Eric Barker.  [00:18:08] SAM WILSON: Yeah, you said you read that over and over and over until you finally graphed it in detail. As an engineer, I'm not shocked, knowing that you're an engineer, I'm not shocked that your attention to detail is the way it is, but the really cool story on how you've transitioned from an aerospace engineer into now full-time real estate, clearly taking a measured approach to life and getting what you want out of it, which is why you're out of the country doing this podcast at, you know, late in the evening now the other side of the world with me. So certainly appreciate that. And love your story of coming in as an LP first and doing a lot of deals as an LP, and then joined the general partnership side. So very, very cool. If our listeners want to get in touch with you or learn more about you, what is the best way to do that?  [00:18:49] DEEPA AKULA: LinkedIn would be the best place to reach out to me. My LinkedIn profile has my full name, so it's Deepa Reddy Akula. And another place is vinsidecapital.com is my website. So those are the two places to get a hold of me. [00:19:05] SAM WILSON: And what, what's the name of the website again?  [00:19:08] DEEPA AKULA: Vinside, V I N S I D E, vinsidecapital.com.  [00:19:13] SAM WILSON: Got it. We'll absolutely make sure we put that all in the show notes. Deepa, thank you so much for coming on today. I certainly appreciate it.  [00:19:19] DEEPA AKULA: Thank you so much. It was such a pleasure. Thanks, Sam.  

19m
Aug 09
How To Attract Capital Like A Boss With Podcasting

Welcome back! Our guest today is Matthew Baltzell. Mathew formerly hosted Real Estate Journeys with over 114 episodes, a Top 400 Business Podcast, and is a real estate investor with a portfolio of 743 units. Matthew, currently works as an Asset Manager at Boardwalk Wealth, a private equity company based in Dallas, Texas which specializes in acquiring large multi-family apartments.   Fun Fact: Matthew is a coffee sommelier and loves a good Americano.   [00:00 - 06:34] OPENING SEGMENT __ __   [06:34 - 12:59] NOW IS THE TIME TO START PODCASTING __ __ __ __     [12:59 - 19:10] HOW TO MAKE YOUR FIRST IMPRESSION ON A PODCAST AS A SUCCESSFUL GUEST __ __       [19:11 - 24:50] CLOSING SEGMENT __ __ __         TWEETABLE QUOTES     ---------------------------------------------------------------------------- CONNECT WITH MATTHEW  visit their website www.elitepodcastsbookings.com Enter the PROMO CODE “SAM” and get a 25% DISCOUNT for the first month of their service.     CONNECT WITH ME:   I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns.      Facebook https://www.facebook.com/HowtoscaleCRE/   LinkedIn   Like, subscribe, and leave us a review on Apple Podcasts, Spotify, Google Podcasts, or whatever platform you listen on. Thank you for tuning in!   Email me → sam@brickeninvestmentgroup.com   Want to read the full show notes of the episode? Check it out below: [00:00:40] SAM WILSON:Matthew bald sell is the CEO and founder of elite podcast bookings, which helps real estate investors attract more capital and deal flow through podcasting. Matthew, welcome to the show, Sam. Pleasure to be here, man. The pleasure's mine, there are three questions. [00:00:53] SAM WILSON: I ask every guest who comes in the show in 90 seconds or less. You tell me, where did you start? Where are you now? And how did you get there?  [00:00:58] MATTHEW BALTZELL: Yeah. So where did I start? I originally started in single family homes fast forward, about 10 years after that 2000 or eight years after that 2016, I left the United States failed, attempt to move to Germany. [00:01:10] MATTHEW BALTZELL: Wound up in Thailand, got married, fell in love, had a kid got involved in commercial real estate. And now I'm currently here. What was the other part of the question? Start? How did I get there? Yeah, so I I started investing. All right. Basically I started a bigger pockets meetup group. And from there I was able to connect, getting involved in a private equity firm. [00:01:32] MATTHEW BALTZELL: Asset management started a podcast. One thing led to another, and now I created a elite podcast booking to help real estate investors attract more capital deal flow, et cetera.  [00:01:41] SAM WILSON: That is, I love the journey. Like there's a lot of moving pieces there. And I like the fact that you said, Hey, there was a failed attempt at what was it failed attempt at moving to Germany. [00:01:50] MATTHEW BALTZELL: Yeah. Failed attempt for sure.  [00:01:52] SAM WILSON: What do you think your secret is? I mean, that's a lot of like, go left turn, right? Uhoh this didn't work, but that did, but how did you keep on, like what was it that kept you moving forward?  [00:02:01] MATTHEW BALTZELL: You hear people talk about like, I don't know, they're north star, you're basically your gut. [00:02:05] MATTHEW BALTZELL: Right? Right. So if your gut says, like, you know something about this property, I really like, right. You can't put your finger on it, but you know, like you can make this work, right. You can always make something work. And for me, like, I kind of just let my gut dictate. Right. So I knew that I wanted to live in abroad and I wanted to go, I thought I wanted to live in Germany. [00:02:26] MATTHEW BALTZELL: And then, just scratching that itch is like, if I'm not, if I don't scratch that itch, I don't know what's gonna become of it. Right. And like I said earlier, I got involved in private equity while I'm abroad. So, you would think if you live in Denver, Colorado, and you wanted to get a job in private equity, maybe you would go to like a bigger pockets meetup, or you'd go to your local meetup, et cetera. [00:02:46] MATTHEW BALTZELL: And you'd kind of get your foot in that way. It doesn't necessarily make sense to move halfway around the world to Thailand, to back channel your way into commercial real estate. And so, doing that, pushing myself. Kind of leading myself to, always doing what I kind of wanted to do if I'm interested in something that I go after it, and I don't necessarily know what stems from it. [00:03:04] MATTHEW BALTZELL: And I think a lot of people fear that of the unknown. Right. So when you fear something of the unknown, you just could become reserved. It's like, Hey, Sam, I wanna buy you a cup of coffee and I want you to walk me through this deal the whole time. So I feel safe and maybe we can make a little bit money, but I'm kind of too scared to do it on my own. [00:03:22] MATTHEW BALTZELL: Right? Right. People are afraid to venture out from their comfort zone, but when you step farther out on the curve, that's where you make the biggest leaps and find the most success within, your personal self your finances, relationships, et C.  [00:03:35] SAM WILSON: Talk to me about the jump from commercial real estate. [00:03:37] SAM WILSON: So you're involved in a PE firm, which I think is hysterical. Like you said, who moves halfway around the world to go get into a PE firm. That's probably buying real estate here in the United States. I'm guessing. Yes.  [00:03:47] MATTHEW BALTZELL: Yeah. So I. I created. So I was trying to reverse engineering. This was back in 2000 in 18 ish, like the beginning of 2018, everybody was talking about multi-family. [00:03:56] MATTHEW BALTZELL: I was thinking of my next move. And I was like, okay, I wanna get involved in multi-family. How do I start? So I was trying to think outside the box and I started a meetup, through bigger pockets, right? So it was like six to eight members. And one of the pers one person that. Everybody else was back in the United States, by the way. [00:04:12] MATTHEW BALTZELL: And one person that didn't join was like, Hey, I want to I'm following your progress. I wanna introduce you to somebody, which was the main principle of the private equity firm. That was just starting off. I started doing some underwriting. I started doing basically some advertisements, et cetera, basically leading with value. [00:04:29] MATTHEW BALTZELL: Wasn't asking for anything in return. One thing LEDs to another, it was like, Hey, why don't we put you on the website? Hey da, da, da. And I'm like, so I'm working here. Okay. Like, alright. And so I got my foot in that way, started helping out with asset management and, it's just like, there's no difference if you're in Denver, Colorado, or Texas. [00:04:46] MATTHEW BALTZELL: If you can show up to the meetings on time, look at the, financials, show up to the meetings, make sure projects are on time. I mean, that's all really, it is. So there's really no difference. So you're living in California. Investing in New York or you're living in Thailand and you're still acquiring properties in Atlanta, Georgia, and Florida, et cetera. [00:05:03] SAM WILSON: Right, right. That's cool. I love that. When did you figure out that you were onto something with podcasting?  [00:05:08] MATTHEW BALTZELL: Yeah. So my original podcast that I had was it's called real estate journeys. It had about 114 episodes. And what I saw from podcasting then is one, it was a great networking tool. From my, just from my own show, I met some really cool people within the real estate industry that I still talk to this day over social media. [00:05:29] MATTHEW BALTZELL: and it was just a great way to network. And then I saw people trying to pitch to get on my show, trying to get people onto other, or myself going onto other shows. And I kind of just saw this like, process of basically being kind of fragmented, right. People are trying to attract more deals or trying to do more podcasting, et cetera. [00:05:46] MATTHEW BALTZELL: I mean, you look, or you look at Joe FRAs, right. He had the longest running single day podcast and then Whitney, so is like, okay, like I'm gonna do the exact same thing and now he's blowing up. And then everybody starts trying to. duplicate that process. But what you see is, yeah, there you go. You're point to yourself. [00:06:02] MATTHEW BALTZELL: People can't see that, but what you see is the people that have the most consistency over time they have the most success right. And then you always have muddied waters in the beginning, whether it's the first couple episodes, the average podcast, doesn't make it past 13 episodes. [00:06:15] MATTHEW BALTZELL: Wow. So if you continue to basically network like you're doing right now, you have a platform and over time, when you go to put out a deal, You've already developed your network and you can raise 1, 2, 3, 4, 5 million now for a deal, as opposed to like, oh, now I have a deal. Now I'm gonna go on podcast. Now I'm gonna post on link, LinkedIn, you should be doing all these things before they even start. [00:06:40] MATTHEW BALTZELL: The time to start working out is two years before you have a heart attack. Not when you have a heart attack, the time to tell somebody you loved them is today, not when they're dead. You know what I'm saying? Right.  [00:06:50] SAM WILSON: Absolutely. Absolutely. No, I love that. And I think that's one of the things that people who don't podcast, probably don't see as a benefit is just the networking side of it. [00:06:58] SAM WILSON: I mean, it's been for me the single fastest way I've grown, my network is by podcasting. This is, again I'm copy and paste. There's no or, success leaves clues. So. I'm following Whitney, I'm following Joe and running a daily show. And it's like, okay, that's 365 new guests a year. [00:07:14] SAM WILSON: It's like, okay, this is really cool. Like I am learning and building. And again, like you said, I think that's something that people overlook. When, if they're if they're looking to start a podcast or looking to get into it, That's gonna be your primary benefit outta the gate is building your network and not necessarily, going out and while you do raise more money, I think that's the primary benefit you get is just building your network. [00:07:32] SAM WILSON: And that should be it.  [00:07:33] MATTHEW BALTZELL: Yeah, for sure. And I think people make the mistake of like, Let's say you have a daily podcast or you do have a daily podcast or I, Joe fearless has a daily podcast and people think like, oh, who am I? Who am I to raise capital? Or who am I to have a podcast? Nobody's gonna wanna listen to me. [00:07:48] MATTHEW BALTZELL: Right. Right. But you are an individual, right? Yes. It might be a copycat. A copy and paste method. Like everybody's having a podcast, but I wanna hear what you have to say about the market. I want to hear what you have to say about networking. I wanna hear what you have to say. So there's thousands of capital razors. [00:08:05] MATTHEW BALTZELL: You can go with whoever you want. Right? Who do you like know and trust and people that have consistency, especially with the digital footprint. You're more likely to like no one trust them as opposed to somebody that's just starting their podcasts, something that's just starting to blog someone. That's just starting the newsletter, et cetera, et C. [00:08:20] SAM WILSON: Absolutely. Absolutely. So you launched a podcast company, you saw holes in the industry, you saw it was fragmented and you said, you know what? I think I can help real estate investors solve problem X, what is the problem you are solving?  [00:08:33] MATTHEW BALTZELL: Yeah, so like I was, we're touching on briefly, right? So there's analog and then there's digital. [00:08:38] MATTHEW BALTZELL: So the analog is basically the old school way. Right? Real estate is like traditionally like a good old boys club is the slow moving part, shake cans, kiss babies, go to conferences. How can you do that? Right. You can maybe go to Dallas. You could go to so many, there was C, right. But now as everything was digital, You go on one podcast, you have 365. [00:08:59] MATTHEW BALTZELL: What? 365 episodes. Maybe you don't have 'em on the weekends. Let's say you have 300 episodes per year. Right? Right. And let's say your average downloads is a thousand. We'll just make that up. You have 300,000 listens downloads of people listening to you, right. That's astronomical. Right? So if somebody is going on two podcast, episodes of wi a. [00:09:21] MATTHEW BALTZELL: Right. And we'll just say that the average podcast has a thousand downloads are going on two podcasts, 2000 downloads a month, 24,000 downloads a year you've already got your message across the 24,000 people. And American express says it takes seven different touchpoints for people to take action. [00:09:39] MATTHEW BALTZELL: So as much as I like you, this is the first time you and I are talking, right. You can present me with a deal with a two X equity, multiple under red it within five years. Six to eight per et cetera, et cetera. And I can be like, like that seems pretty reasonable for the market, but why am I gonna invest with you as opposed to Joe FARs? [00:09:56] MATTHEW BALTZELL: Right. I've never spoken with Joe far, but I've spoken to you. Maybe. I like you, maybe I don't, but maybe after I hear you, the third, fourth, fifth, sixth, seventh time. That's when you see results, that's when the lagging indicator comes. That's when you go to the gym, that's when you don't have the heart attack. [00:10:10] MATTHEW BALTZELL: Right. But the people that just come in, right. And they try and do one rep and they tear their muscles and it's like, okay this podcasted thing. It wasn't for me. But the people that state, but the people that consistently are out there podcasting. They know, and they realize the value of being on podcasts. [00:10:27] MATTHEW BALTZELL: And that's where we come in. One I've been on, I've been on a bunch of podcasts. I've leveraged my network. I had 114 podcast episodes. And so we helped real estate investors leverage our, my, our platform to help get on other industry, leading platforms, such as your podcast. And then it is just very synergistic. [00:10:45] MATTHEW BALTZELL: Hopefully they raise more money, raise more capital, attract, more deal flow, et cetera. and That's where we come in  [00:10:51] SAM WILSON: that, yeah, that's really cool. I like that. And I think certainly I don't, at this point, don't handle my own bookings anymore. It's something where I've got a team member that takes care of getting everybody lined up and booked. [00:11:01] SAM WILSON: So, but I'm pretty sure you guys have sent some people our way, which I've certainly. Yeah, for sure. Always. Absolutely. Thank you again for that. absolutely, man. I know it's a great, it's a win-win and people. I think people overlook that. Like I know when the first podcast I went on two or three years ago as a guest. [00:11:16] SAM WILSON: It went back to that, probably the self doubt questions. Like why do I, why does anybody wanna have me on a podcast? Like, I'm just a guy doing deals. So is everybody else like, there's a lot of those things that, that I think people don't expect that they would make a great guest and, or yeah, for sure. [00:11:29] SAM WILSON: And, or they're so busy that they would make a phenomenal guest, but don't have time to go out and actually figure out how to go get on the shows cuz it's just like I got other things going on and figuring out which shows to get on is a a piece of work. Tell me about this. What do you say makes a great guest when someone comes on a podcast, do you guys do any sort of coaching or any sort of like, Hey, when you get on here's some things that be, preparing here's how to Accu adequately prepare for a show. [00:11:51] MATTHEW BALTZELL: Yeah. So one of the, one of the biggest mistakes, I'll just start off with one of the biggest mistakes is when people go on a show, right. And they get to the end of the show and they say, Sam might say, Hey, Matthew, thanks dragon on what's the best place to find best place to find you, et cetera, et cetera. [00:12:06] MATTHEW BALTZELL: Right? Most people say, oh, Sam, thanks for having me. I'm available on LinkedIn. I'm also available at Matthew xyz.com and I also have a free ebook. And here's my phone number and reach out to me and I love to talk real estate. It's like, okay, the person that listens to a podcast, it's a very intimate experience. [00:12:25] MATTHEW BALTZELL: They listen to the whole thing all the way you typically through. It's not like a song, you just jump in the middle. Right, right. And so it's like, you got to the end, you almost want the reward. And it's like, okay, what's going to incentivize me to stop listening to this podcast. And what'd he say, he used to go to Instagram, LinkedIn. [00:12:42] MATTHEW BALTZELL: Here's his email and he likes to talk real estate. Okay. So we encourage people to practice a clear and concise call to action, right. Something that has some scarcity. So you could say, Hey, for the first two people to go to my website or first two first two real estate investors to go to my website and click on the pro click. [00:12:59] MATTHEW BALTZELL: And we're register a call with me and into the promo code. Sam will receive. 25% off my coaching program or something like that. Right. Right now, when they enter the promo code, Sam, where they came from. So if you 1500 people, et cetera, et cetera, entered it, then all of a sudden you're like, wow, I was on Sam's podcast. [00:13:17] MATTHEW BALTZELL: And now we got a hundred leads from Sam's podcast. Now, you know where they're coming from. And the people that are listening to that are like, oh, there's only. They're only giving away this promotion to two people. I better get home as fast as possible because this episode just released at five o'clock from work and I'm driving home and I'm gonna go over this website and I'm gonna enter my information. [00:13:36] MATTHEW BALTZELL: But if you just say, Hey, I'll talk to you when I talk to you, maybe I'll see you next year at the bigger pockets. A conference it's like, right. Okay. Whatever. So yeah, I would say that's one of the biggest mistakes that typically not only real estate investors make going on podcasts, but a lot of people that make going on podcasts. [00:13:53] MATTHEW BALTZELL: And then the second thing I would say is like, know what you want to talk about. Right. And so whether whatever that topic is, feel somewhat comfortable with it and practice it over. Right. And when you are going on your first couple podcasts, you, no, you're not gonna be great. You're gonna muddle through it. [00:14:10] MATTHEW BALTZELL: You hosted your podcast, you have a bunch of episodes. I'm sure it's painful to listen to the first 20 podcast episodes, as opposed to where you are now. Right? You're more, you're better at conversation. You were talking, we were talking earlier, like I was talking to an investor, BA Bing, BA boom. [00:14:24] MATTHEW BALTZELL: You picked up the mic and here we are talking right. A year ago. You probably would've prepped like an hour for an interview. Like, oh my God, like, what is this person? It's insane. Right. Right. So. I mean, people should practice. Right. And realize that it's not gonna come necessarily, oh, some people are better at it than others, but you know, with more practice you become a better podcast guest and myself included. [00:14:45] MATTHEW BALTZELL: Right. I just started recently going on the podcast in circuit talking about this business, I've been on other podcasts talking about, earlier, like. A year and a half ago talking about, real estate investment side, but it just takes time. And, people shouldn't beat themselves up, cuz everybody has an interesting story and people want to hear about your story, not just regurgitated information about. [00:15:05] MATTHEW BALTZELL: Blah, blah, blah, blah,  [00:15:05] SAM WILSON: blah. right. I love that. Yeah. The idea of getting your reps in is you just have to do it, get your reps in, make your mistakes. If you're listening to this and go, gosh, we've never been on a show. Come on this one, if you're an experienced and, or on your way to an experienced commercial real estate investor, come on this show. [00:15:20] SAM WILSON: It's one of those things where it's less intimidating probably than what people think. But yeah, you're absolutely right. I look back on my first 20, 30, 50 episodes and I'm like Oh, like, are those still out there on the internet? They are CRI, but it's the way it is, man. It's just the way.  [00:15:33] MATTHEW BALTZELL: Yeah. [00:15:34] MATTHEW BALTZELL: But it, but that's the beauty of it, too. Cuz if you think about it, right, I mean, How easy is it to look at anything online, kind of, and semi duplicate it, right? You can you can Photoshop a photo. You can copy and paste a resume. But to say that you have, let's say 200 podcast episodes. [00:15:52] MATTHEW BALTZELL: Like people concede the progression, they look, they can just jump to of 50, hear your intro and was like, ding, ding, ding, ding. And you're like, oh, Church bells, like what's going on. and then now you have a clear, concise mic. You have better audio, you have better visual. You're more natural. You're a better speaker. [00:16:10] MATTHEW BALTZELL: And these things people wanna see progression, right? People wanna be on the upward spiral of the tornado. They don't wanna be on a plane that's going crashing and burning. Right? Like how often do you see in the headlines when something bad happens? Everybody just piles on, but when somebody's going up and up, they're like, oh yeah, like I was on Sam's podcast, like episode 55, like now there's 300. [00:16:29] MATTHEW BALTZELL: Yeah. He's doing great. Oh man. They wanna be a part of greatness,  [00:16:32] SAM WILSON: Absolutely. Absolutely. No, man, I think that's absolutely great. Tell me what else. So you guys help people kind of, figure out how they wanna present themselves via podcast. You guys help people get book. [00:16:42] SAM WILSON: On other shows, what are some other things that you see people doing, maybe that they're doing the right doing correctly, you say, Hey man here's some things I see some of the best podcast guests doing, what are those  [00:16:52] MATTHEW BALTZELL: things? Yeah. So I would say the people that are do that are the best podcast, guests are like modern day that have good audio and have good visuals. [00:17:03] MATTHEW BALTZELL: And you'd be surprised like. Like you have a good microphone. I can see that I have a quality microphone. It definitely helps. Right, right. You don't want to hear like the echo chamber of like, somebody's down the hall in the closet. You sound very like, oh, this man's very soothing. He's in my ear. Then you ask me a course, like, oh, how are you doing? [00:17:20] MATTHEW BALTZELL: Oh, good. Right. And so people that are. Having good audio, having good video audio. Yeah. Good audio and good video. Like that's something that's very very good to have. Especially now, like in today's modern world, your first representation of possibly seeing me or possibly seeing you is gonna be like, oh cool. [00:17:39] MATTHEW BALTZELL: He has some books over there in the corner. Like maybe I, maybe we were late. I can't necessarily see those, but he has about 10 in the left hand corner. You have your logo in the upper left hand corner. You have. Your brand on your shirt, like, okay, this guy looks serious, but if you had a greeny camera and bad audio, it's like, I'm out. [00:17:58] MATTHEW BALTZELL: I don't necessarily, he could be a good guy. I don't know. Maybe do I wanna invest? I don't know. He can't even buy a good microphone. We'll make some things. He can handle a hundred thousand dollars of my money.  [00:18:06] SAM WILSON: Ouch. There it is. There it is. I like that. I like the directness here. You're absolutely correct. [00:18:11] SAM WILSON: You're absolutely correct. And that's something that, that I've had to and again, we're just talking here, but I've had to ask a couple of guests. Hey, let's reschedule. Let's reschedule when you can get your camera or your mic or something, set up correctly because I've recorded episodes before in the past where I've allowed people to use sub quality or mics or cameras and things like that. [00:18:30] SAM WILSON: And then I get done with it. I'm like, gosh, that was a 30 minute waste of my time. Cuz. it just wasn't as good as it could be. And it's not even, I mean, gosh, you can get a decent setup for under a few hundred bucks, if you're yeah, just a, an amateur podcast guest, I mean a decent setup, a few hundred dollars. [00:18:45] SAM WILSON: I mean, mine, of course, I've got a lot more money than maybe but I do this daily, so that's a different. But it's your business  [00:18:51] MATTHEW BALTZELL: for sure. Yeah, absolutely. Absolutely. That's the thing you should, you, you should be, didn't like your business, right? Right. I mean, think about it. If you were in the conference and you went up to somebody and they shook your hand and they had like, not a firm handshake and it was kind of limp and they. [00:19:01] MATTHEW BALTZELL: Shook your watch and you're initially you're automatically thinking like, well, that was kinda weird. Does it mean you're not gonna like that person? Does it mean you're not gonna have a good relationship? No, but you're already starting off on the back foot. Right. And if somebody's coming to you and you're having a thousand downloads per episode, and you're having 300 episodes a year, you. [00:19:16] MATTHEW BALTZELL: You wanna put the best foot forward and have a good representation or you're trying to raise capital, et cetera. Do you want have a grainy website? Do you want to have a broken down non-professional copy written newsletter? No. These are things that you don't want to have. You wanna have these buttoned up be this guy's a, an experienced sponsor who can handle capital and he can raise the deals and track deal flow, et cetera. [00:19:36] SAM WILSON: Right man. That's cool. That's absolutely cool. What do you like, like talk, talk me through the process when somebody comes on board with you, can you kind of break that down? Just so our guess that idea of what it is exactly that you guys do and how the process works. Yeah.  [00:19:49] MATTHEW BALTZELL: So somebody would typically we'd schedule a sales call and, or not sales call, but we just basically have a conversation, right. [00:19:54] MATTHEW BALTZELL: To see where you're at within your real estate investing. Journey. Right. And so typically, we work with capital razor sponsors. And then we see, where you're trying to go from there. What is your goal necessarily? Are you trying to raise $1 million? Are you trying to raise $500,000? [00:20:10] MATTHEW BALTZELL: Are you trying to track more deals? And so we kind of figure it out from there. And then we construct a plan to determine if podcasting is going to be a good avenue for you to help promote your message. So if you're like, Hey, I want to do 15 deals or two deals next year. It's like, okay, like maybe that's possible. [00:20:29] MATTHEW BALTZELL: How many deals have you done so far? And then if it's from there, it's like, okay, these are the podcasts we typically work with. I think we can get you this many impressions across the board over. X Y Z amount of time, if you're trying to go, if you think it's this episode, we're recording in July 5th. [00:20:48] MATTHEW BALTZELL: Right? So if you're listening to this episode and you think you're gonna have a deal under contract end of October, early November, now's a good time to start promoting that message or, Hey, I'm traveling all summer. I'm not gonna be able to do this. Okay. Like maybe that's not gonna work out. [00:21:04] MATTHEW BALTZELL: So then once you decide to come on board, from there, we basically looked at your marketing material. How experienced are you as a marketer? What are you using as a lead capture page help? You can construct your funnel. And then from there, we do a little bit of coaching as well to basically help you develop that and then link you up with the proper podcast that we see fit and then help you push out your material. [00:21:26] MATTHEW BALTZELL: And then another thing we're working on, but we haven't released it is as far as the. Basically segmenting up your video and everything that you are when you go on a podcast and having that be micro content. So you can continuously, if let's say you were doing two podcast episodes a month and you have one, one hour long video, or one 30 minute video, you could break that up into three or four pieces plus the full 30 minute piece. [00:21:49] MATTHEW BALTZELL: And now you have your newsletter. Now you post one piece of content on LinkedIn, and then now you're able to. Post three or four times weekly with your podcast, with your newsletter, with one pod or with one promotion or something on separately on, on LinkedIn. Now, all of a sudden, you're starting to say people's top of mind. [00:22:07] MATTHEW BALTZELL: Now you have more content and it's especially, you don't have to generate the content. Right? People think like I gotta make content today. Like, oh my God, what do I do? It's like, go on a podcast, have somebody break it up for you. It's.  [00:22:18] SAM WILSON: Right. And that's and that's all from one episode. I think that's the cool part is that you've taken one episode, you've pulled out, 20, again, pieces of micro content and said, okay. [00:22:26] SAM WILSON: And again, for the busy professional, you having somebody like you come in and kind of handle that suite of services a to Z, cuz there's a lot to think about that you just mentioned in there. Yeah. Everything from what shows should you be on how to prepare for and building, building your funnels building, okay. So what's the call to actions? How are we gonna republish this content? There's a lot of moving pieces involved with podcasting and with being a good podcast guest and also even, from the host side is getting getting our guests to res. So even from, it's really great having guests come on the show, but if our guests aren't taking the stuff that we're giving them and then marketing it to their audience, it's kind of not completely wasted cuz obviously we pump it out on our end, but man, you won't get nearly the traction out of it. [00:23:07] SAM WILSON: So we even on this side are working really hard to get our guests, to use the content that we're providing. So that's really cool. What you guys  [00:23:13] MATTHEW BALTZELL: do understandable. Yeah,  [00:23:14] SAM WILSON: for sure. Matthew I've really enjoyed having you come on the show today. Talk about podcasting. What's that? I was  [00:23:21] MATTHEW BALTZELL: just gonna say, I enjoyed your style. [00:23:23] MATTHEW BALTZELL: I liked it a lot. And it was a pleasure being here. Thank you for  [00:23:25] SAM WILSON: having me. Absolutely, man. I mean, and you gave some great, we haven't really done an episode like this that just talks about what it means to be a good podcast guest. What does it mean to come on a show and be absolutely prepared to to knock it outta the park? [00:23:37] SAM WILSON: And so you've given our listeners, I think some really cool things to think about. As it pertains to, one, one ha being good podcast guest, and also what it takes, to actually use the stuff that we create and get the most mileage out of it. So, thanks for doing that. [00:23:48] SAM WILSON: Certainly appreciate it. If our listeners wanna get in touch with you and learn more about you, what is the best way to do that?  [00:23:53] MATTHEW BALTZELL: Yeah, so you can go to elite podcast, bookings.com and you can click on the homepage in the upper right hand corner. You can schedule a call and if you enter the promo code, Sam, we will give you 25% off your first, our first month's service. [00:24:06] MATTHEW BALTZELL: There we go. That's what it's first month's service. Now I butchered it. Huh? See, there we go. Butcher  [00:24:10] SAM WILSON: before I started. Yeah. What were you saying about getting your call to action? Right? I'm just kidding you, man. Yeah, there we go there.  [00:24:16] MATTHEW BALTZELL: Yeah, no, there we go. See it's. I gotta practice,  [00:24:19] MATTHEW BALTZELL: gotta practice it every single time. [00:24:21] SAM WILSON: Absolutely. Matthew, thanks for coming on the show. Certainly appreciate it.  [00:24:25] MATTHEW BALTZELL: Cheers. Thank you. [00:00:40] SAM WILSON:Matthew bald sell is the CEO and founder of elite podcast bookings, which helps real estate investors attract more capital and deal flow through podcasting. Matthew, welcome to the show, Sam. Pleasure to be here, man. The pleasure's mine, there are three questions. [00:00:53] SAM WILSON: I ask every guest who comes in the show in 90 seconds or less. You tell me, where did you start? Where are you now? And how did you get there?  [00:00:58] MATTHEW BALTZELL: Yeah. So where did I start? I originally started in single family homes fast forward, about 10 years after that 2000 or eight years after that 2016, I left the United States failed, attempt to move to Germany. [00:01:10] MATTHEW BALTZELL: Wound up in Thailand, got married, fell in love, had a kid got involved in commercial real estate. And now I'm currently here. What was the other part of the question? Start? How did I get there? Yeah, so I I started investing. All right. Basically I started a bigger pockets meetup group. And from there I was able to connect, getting involved in a private equity firm. [00:01:32] MATTHEW BALTZELL: Asset management started a podcast. One thing led to another, and now I created a elite podcast booking to help real estate investors attract more capital deal flow, et cetera.  [00:01:41] SAM WILSON: That is, I love the journey. Like there's a lot of moving pieces there. And I like the fact that you said, Hey, there was a failed attempt at what was it failed attempt at moving to Germany. [00:01:50] MATTHEW BALTZELL: Yeah. Failed attempt for sure.  [00:01:52] SAM WILSON: What do you think your secret is? I mean, that's a lot of like, go left turn, right? Uhoh this didn't work, but that did, but how did you keep on, like what was it that kept you moving forward?  [00:02:01] MATTHEW BALTZELL: You hear people talk about like, I don't know, they're north star, you're basically your gut. [00:02:05] MATTHEW BALTZELL: Right? Right. So if your gut says, like, you know something about this property, I really like, right. You can't put your finger on it, but you know, like you can make this work, right. You can always make something work. And for me, like, I kind of just let my gut dictate. Right. So I knew that I wanted to live in abroad and I wanted to go, I thought I wanted to live in Germany. [00:02:26] MATTHEW BALTZELL: And then, just scratching that itch is like, if I'm not, if I don't scratch that itch, I don't know what's gonna become of it. Right. And like I said earlier, I got involved in private equity while I'm abroad. So, you would think if you live in Denver, Colorado, and you wanted to get a job in private equity, maybe you would go to like a bigger pockets meetup, or you'd go to your local meetup, et cetera. [00:02:46] MATTHEW BALTZELL: And you'd kind of get your foot in that way. It doesn't necessarily make sense to move halfway around the world to Thailand, to back channel your way into commercial real estate. And so, doing that, pushing myself. Kind of leading myself to, always doing what I kind of wanted to do if I'm interested in something that I go after it, and I don't necessarily know what stems from it. [00:03:04] MATTHEW BALTZELL: And I think a lot of people fear that of the unknown. Right. So when you fear something of the unknown, you just could become reserved. It's like, Hey, Sam, I wanna buy you a cup of coffee and I want you to walk me through this deal the whole time. So I feel safe and maybe we can make a little bit money, but I'm kind of too scared to do it on my own. [00:03:22] MATTHEW BALTZELL: Right? Right. People are afraid to venture out from their comfort zone, but when you step farther out on the curve, that's where you make the biggest leaps and find the most success within, your personal self your finances, relationships, et C.  [00:03:35] SAM WILSON: Talk to me about the jump from commercial real estate. [00:03:37] SAM WILSON: So you're involved in a PE firm, which I think is hysterical. Like you said, who moves halfway around the world to go get into a PE firm. That's probably buying real estate here in the United States. I'm guessing. Yes.  [00:03:47] MATTHEW BALTZELL: Yeah. So I. I created. So I was trying to reverse engineering. This was back in 2000 in 18 ish, like the beginning of 2018, everybody was talking about multi-family. [00:03:56] MATTHEW BALTZELL: I was thinking of my next move. And I was like, okay, I wanna get involved in multi-family. How do I start? So I was trying to think outside the box and I started a meetup, through bigger pockets, right? So it was like six to eight members. And one of the pers one person that. Everybody else was back in the United States, by the way. [00:04:12] MATTHEW BALTZELL: And one person that didn't join was like, Hey, I want to I'm following your progress. I wanna introduce you to somebody, which was the main principle of the private equity firm. That was just starting off. I started doing some underwriting. I started doing basically some advertisements, et cetera, basically leading with value. [00:04:29] MATTHEW BALTZELL: Wasn't asking for anything in return. One thing LEDs to another, it was like, Hey, why don't we put you on the website? Hey da, da, da. And I'm like, so I'm working here. Okay. Like, alright. And so I got my foot in that way, started helping out with asset management and, it's just like, there's no difference if you're in Denver, Colorado, or Texas. [00:04:46] MATTHEW BALTZELL: If you can show up to the meetings on time, look at the, financials, show up to the meetings, make sure projects are on time. I mean, that's all really, it is. So there's really no difference. So you're living in California. Investing in New York or you're living in Thailand and you're still acquiring properties in Atlanta, Georgia, and Florida, et cetera. [00:05:03] SAM WILSON: Right, right. That's cool. I love that. When did you figure out that you were onto something with podcasting?  [00:05:08] MATTHEW BALTZELL: Yeah. So my original podcast that I had was it's called real estate journeys. It had about 114 episodes. And what I saw from podcasting then is one, it was a great networking tool. From my, just from my own show, I met some really cool people within the real estate industry that I still talk to this day over social media. [00:05:29] MATTHEW BALTZELL: and it was just a great way to network. And then I saw people trying to pitch to get on my show, trying to get people onto other, or myself going onto other shows. And I kind of just saw this like, process of basically being kind of fragmented, right. People are trying to attract more deals or trying to do more podcasting, et cetera. [00:05:46] MATTHEW BALTZELL: I mean, you look, or you look at Joe FRAs, right. He had the longest running single day podcast and then Whitney, so is like, okay, like I'm gonna do the exact same thing and now he's blowing up. And then everybody starts trying to. duplicate that process. But what you see is, yeah, there you go. You're point to yourself. [00:06:02] MATTHEW BALTZELL: People can't see that, but what you see is the people that have the most consistency over time they have the most success right. And then you always have muddied waters in the beginning, whether it's the first couple episodes, the average podcast, doesn't make it past 13 episodes. [00:06:15] MATTHEW BALTZELL: Wow. So if you continue to basically network like you're doing right now, you have a platform and over time, when you go to put out a deal, You've already developed your network and you can raise 1, 2, 3, 4, 5 million now for a deal, as opposed to like, oh, now I have a deal. Now I'm gonna go on podcast. Now I'm gonna post on link, LinkedIn, you should be doing all these things before they even start. [00:06:40] MATTHEW BALTZELL: The time to start working out is two years before you have a heart attack. Not when you have a heart attack, the time to tell somebody you loved them is today, not when they're dead. You know what I'm saying? Right.  [00:06:50] SAM WILSON: Absolutely. Absolutely. No, I love that. And I think that's one of the things that people who don't podcast, probably don't see as a benefit is just the networking side of it. [00:06:58] SAM WILSON: I mean, it's been for me the single fastest way I've grown, my network is by podcasting. This is, again I'm copy and paste. There's no or, success leaves clues. So. I'm following Whitney, I'm following Joe and running a daily show. And it's like, okay, that's 365 new guests a year. [00:07:14] SAM WILSON: It's like, okay, this is really cool. Like I am learning and building. And again, like you said, I think that's something that people overlook. When, if they're if they're looking to start a podcast or looking to get into it, That's gonna be your primary benefit outta the gate is building your network and not necessarily, going out and while you do raise more money, I think that's the primary benefit you get is just building your network. [00:07:32] SAM WILSON: And that should be it.  [00:07:33] MATTHEW BALTZELL: Yeah, for sure. And I think people make the mistake of like, Let's say you have a daily podcast or you do have a daily podcast or I, Joe fearless has a daily podcast and people think like, oh, who am I? Who am I to raise capital? Or who am I to have a podcast? Nobody's gonna wanna listen to me. [00:07:48] MATTHEW BALTZELL: Right. Right. But you are an individual, right? Yes. It might be a copycat. A copy and paste method. Like everybody's having a podcast, but I wanna hear what you have to say about the market. I want to hear what you have to say about networking. I wanna hear what you have to say. So there's thousands of capital razors. [00:08:05] MATTHEW BALTZELL: You can go with whoever you want. Right? Who do you like know and trust and people that have consistency, especially with the digital footprint. You're more likely to like no one trust them as opposed to somebody that's just starting their podcasts, something that's just starting to blog someone. That's just starting the newsletter, et cetera, et C. [00:08:20] SAM WILSON: Absolutely. Absolutely. So you launched a podcast company, you saw holes in the industry, you saw it was fragmented and you said, you know what? I think I can help real estate investors solve problem X, what is the problem you are solving?  [00:08:33] MATTHEW BALTZELL: Yeah, so like I was, we're touching on briefly, right? So there's analog and then there's digital. [00:08:38] MATTHEW BALTZELL: So the analog is basically the old school way. Right? Real estate is like traditionally like a good old boys club is the slow moving part, shake cans, kiss babies, go to conferences. How can you do that? Right. You can maybe go to Dallas. You could go to so many, there was C, right. But now as everything was digital, You go on one podcast, you have 365. [00:08:59] MATTHEW BALTZELL: What? 365 episodes. Maybe you don't have 'em on the weekends. Let's say you have 300 episodes per year. Right? Right. And let's say your average downloads is a thousand. We'll just make that up. You have 300,000 listens downloads of people listening to you, right. That's astronomical. Right? So if somebody is going on two podcast, episodes of wi a. [00:09:21] MATTHEW BALTZELL: Right. And we'll just say that the average podcast has a thousand downloads are going on two podcasts, 2000 downloads a month, 24,000 downloads a year you've already got your message across the 24,000 people. And American express says it takes seven different touchpoints for people to take action. [00:09:39] MATTHEW BALTZELL: So as much as I like you, this is the first time you and I are talking, right. You can present me with a deal with a two X equity, multiple under red it within five years. Six to eight per et cetera, et cetera. And I can be like, like that seems pretty reasonable for the market, but why am I gonna invest with you as opposed to Joe FARs? [00:09:56] MATTHEW BALTZELL: Right. I've never spoken with Joe far, but I've spoken to you. Maybe. I like you, maybe I don't, but maybe after I hear you, the third, fourth, fifth, sixth, seventh time. That's when you see results, that's when the lagging indicator comes. That's when you go to the gym, that's when you don't have the heart attack. [00:10:10] MATTHEW BALTZELL: Right. But the people that just come in, right. And they try and do one rep and they tear their muscles and it's like, okay this podcasted thing. It wasn't for me. But the people that state, but the people that consistently are out there podcasting. They know, and they realize the value of being on podcasts. [00:10:27] MATTHEW BALTZELL: And that's where we come in. One I've been on, I've been on a bunch of podcasts. I've leveraged my network. I had 114 podcast episodes. And so we helped real estate investors leverage our, my, our platform to help get on other industry, leading platforms, such as your podcast. And then it is just very synergistic. [00:10:45] MATTHEW BALTZELL: Hopefully they raise more money, raise more capital, attract, more deal flow, et cetera. and That's where we come in  [00:10:51] SAM WILSON: that, yeah, that's really cool. I like that. And I think certainly I don't, at this point, don't handle my own bookings anymore. It's something where I've got a team member that takes care of getting everybody lined up and booked. [00:11:01] SAM WILSON: So, but I'm pretty sure you guys have sent some people our way, which I've certainly. Yeah, for sure. Always. Absolutely. Thank you again for that. absolutely, man. I know it's a great, it's a win-win and people. I think people overlook that. Like I know when the first podcast I went on two or three years ago as a guest. [00:11:16] SAM WILSON: It went back to that, probably the self doubt questions. Like why do I, why does anybody wanna have me on a podcast? Like, I'm just a guy doing deals. So is everybody else like, there's a lot of those things that, that I think people don't expect that they would make a great guest and, or yeah, for sure. [00:11:29] SAM WILSON: And, or they're so busy that they would make a phenomenal guest, but don't have time to go out and actually figure out how to go get on the shows cuz it's just like I got other things going on and figuring out which shows to get on is a a piece of work. Tell me about this. What do you say makes a great guest when someone comes on a podcast, do you guys do any sort of coaching or any sort of like, Hey, when you get on here's some things that be, preparing here's how to Accu adequately prepare for a show. [00:11:51] MATTHEW BALTZELL: Yeah. So one of the, one of the biggest mistakes, I'll just start off with one of the biggest mistakes is when people go on a show, right. And they get to the end of the show and they say, Sam might say, Hey, Matthew, thanks dragon on what's the best place to find best place to find you, et cetera, et cetera. [00:12:06] MATTHEW BALTZELL: Right? Most people say, oh, Sam, thanks for having me. I'm available on LinkedIn. I'm also available at Matthew xyz.com and I also have a free ebook. And here's my phone number and reach out to me and I love to talk real estate. It's like, okay, the person that listens to a podcast, it's a very intimate experience. [00:12:25] MATTHEW BALTZELL: They listen to the whole thing all the way you typically through. It's not like a song, you just jump in the middle. Right, right. And so it's like, you got to the end, you almost want the reward. And it's like, okay, what's going to incentivize me to stop listening to this podcast. And what'd he say, he used to go to Instagram, LinkedIn. [00:12:42] MATTHEW BALTZELL: Here's his email and he likes to talk real estate. Okay. So we encourage people to practice a clear and concise call to action, right. Something that has some scarcity. So you could say, Hey, for the first two people to go to my website or first two first two real estate investors to go to my website and click on the pro click. [00:12:59] MATTHEW BALTZELL: And we're register a call with me and into the promo code. Sam will receive. 25% off my coaching program or something like that. Right. Right now, when they enter the promo code, Sam, where they came from. So if you 1500 people, et cetera, et cetera, entered it, then all of a sudden you're like, wow, I was on Sam's podcast. [00:13:17] MATTHEW BALTZELL: And now we got a hundred leads from Sam's podcast. Now, you know where they're coming from. And the people that are listening to that are like, oh, there's only. They're only giving away this promotion to two people. I better get home as fast as possible because this episode just released at five o'clock from work and I'm driving home and I'm gonna go over this website and I'm gonna enter my information. [00:13:36] MATTHEW BALTZELL: But if you just say, Hey, I'll talk to you when I talk to you, maybe I'll see you next year at the bigger pockets. A conference it's like, right. Okay. Whatever. So yeah, I would say that's one of the biggest mistakes that typically not only real estate investors make going on podcasts, but a lot of people that make going on podcasts. [00:13:53] MATTHEW BALTZELL: And then the second thing I would say is like, know what you want to talk about. Right. And so whether whatever that topic is, feel somewhat comfortable with it and practice it over. Right. And when you are going on your first couple podcasts, you, no, you're not gonna be great. You're gonna muddle through it. [00:14:10] MATTHEW BALTZELL: You hosted your podcast, you have a bunch of episodes. I'm sure it's painful to listen to the first 20 podcast episodes, as opposed to where you are now. Right? You're more, you're better at conversation. You were talking, we were talking earlier, like I was talking to an investor, BA Bing, BA boom. [00:14:24] MATTHEW BALTZELL: You picked up the mic and here we are talking right. A year ago. You probably would've prepped like an hour for an interview. Like, oh my God, like, what is this person? It's insane. Right. Right. So. I mean, people should practice. Right. And realize that it's not gonna come necessarily, oh, some people are better at it than others, but you know, with more practice you become a better podcast guest and myself included. [00:14:45] MATTHEW BALTZELL: Right. I just started recently going on the podcast in circuit talking about this business, I've been on other podcasts talking about, earlier, like. A year and a half ago talking about, real estate investment side, but it just takes time. And, people shouldn't beat themselves up, cuz everybody has an interesting story and people want to hear about your story, not just regurgitated information about. [00:15:05] MATTHEW BALTZELL: Blah, blah, blah, blah,  [00:15:05] SAM WILSON: blah. right. I love that. Yeah. The idea of getting your reps in is you just have to do it, get your reps in, make your mistakes. If you're listening to this and go, gosh, we've never been on a show. Come on this one, if you're an experienced and, or on your way to an experienced commercial real estate investor, come on this show. [00:15:20] SAM WILSON: It's one of those things where it's less intimidating probably than what people think. But yeah, you're absolutely right. I look back on my first 20, 30, 50 episodes and I'm like Oh, like, are those still out there on the internet? They are CRI, but it's the way it is, man. It's just the way.  [00:15:33] MATTHEW BALTZELL: Yeah. [00:15:34] MATTHEW BALTZELL: But it, but that's the beauty of it, too. Cuz if you think about it, right, I mean, How easy is it to look at anything online, kind of, and semi duplicate it, right? You can you can Photoshop a photo. You can copy and paste a resume. But to say that you have, let's say 200 podcast episodes. [00:15:52] MATTHEW BALTZELL: Like people concede the progression, they look, they can just jump to of 50, hear your intro and was like, ding, ding, ding, ding. And you're like, oh, Church bells, like what's going on. and then now you have a clear, concise mic. You have better audio, you have better visual. You're more natural. You're a better speaker. [00:16:10] MATTHEW BALTZELL: And these things people wanna see progression, right? People wanna be on the upward spiral of the tornado. They don't wanna be on a plane that's going crashing and burning. Right? Like how often do you see in the headlines when something bad happens? Everybody just piles on, but when somebody's going up and up, they're like, oh yeah, like I was on Sam's podcast, like episode 55, like now there's 300. [00:16:29] MATTHEW BALTZELL: Yeah. He's doing great. Oh man. They wanna be a part of greatness,  [00:16:32] SAM WILSON: Absolutely. Absolutely. No, man, I think that's absolutely great. Tell me what else. So you guys help people kind of, figure out how they wanna present themselves via podcast. You guys help people get book. [00:16:42] SAM WILSON: On other shows, what are some other things that you see people doing, maybe that they're doing the right doing correctly, you say, Hey man here's some things I see some of the best podcast guests doing, what are those  [00:16:52] MATTHEW BALTZELL: things? Yeah. So I would say the people that are do that are the best podcast, guests are like modern day that have good audio and have good visuals. [00:17:03] MATTHEW BALTZELL: And you'd be surprised like. Like you have a good microphone. I can see that I have a quality microphone. It definitely helps. Right, right. You don't want to hear like the echo chamber of like, somebody's down the hall in the closet. You sound very like, oh, this man's very soothing. He's in my ear. Then you ask me a course, like, oh, how are you doing? [00:17:20] MATTHEW BALTZELL: Oh, good. Right. And so people that are. Having good audio, having good video audio. Yeah. Good audio and good video. Like that's something that's very very good to have. Especially now, like in today's modern world, your first representation of possibly seeing me or possibly seeing you is gonna be like, oh cool. [00:17:39] MATTHEW BALTZELL: He has some books over there in the corner. Like maybe I, maybe we were late. I can't necessarily see those, but he has about 10 in the left hand corner. You have your logo in the upper left hand corner. You have. Your brand on your shirt, like, okay, this guy looks serious, but if you had a greeny camera and bad audio, it's like, I'm out. [00:17:58] MATTHEW BALTZELL: I don't necessarily, he could be a good guy. I don't know. Maybe do I wanna invest? I don't know. He can't even buy a good microphone. We'll make some things. He can handle a hundred thousand dollars of my money.  [00:18:06] SAM WILSON: Ouch. There it is. There it is. I like that. I like the directness here. You're absolutely correct. [00:18:11] SAM WILSON: You're absolutely correct. And that's something that, that I've had to and again, we're just talking here, but I've had to ask a couple of guests. Hey, let's reschedule. Let's reschedule when you can get your camera or your mic or something, set up correctly because I've recorded episodes before in the past where I've allowed people to use sub quality or mics or cameras and things like that. [00:18:30] SAM WILSON: And then I get done with it. I'm like, gosh, that was a 30 minute waste of my time. Cuz. it just wasn't as good as it could be. And it's not even, I mean, gosh, you can get a decent setup for under a few hundred bucks, if you're yeah, just a, an amateur podcast guest, I mean a decent setup, a few hundred dollars. [00:18:45] SAM WILSON: I mean, mine, of course, I've got a lot more money than maybe but I do this daily, so that's a different. But it's your business  [00:18:51] MATTHEW BALTZELL: for sure. Yeah, absolutely. Absolutely. That's the thing you should, you, you should be, didn't like your business, right? Right. I mean, think about it. If you were in the conference and you went up to somebody and they shook your hand and they had like, not a firm handshake and it was kind of limp and they. [00:19:01] MATTHEW BALTZELL: Shook your watch and you're initially you're automatically thinking like, well, that was kinda weird. Does it mean you're not gonna like that person? Does it mean you're not gonna have a good relationship? No, but you're already starting off on the back foot. Right. And if somebody's coming to you and you're having a thousand downloads per episode, and you're having 300 episodes a year, you. [00:19:16] MATTHEW BALTZELL: You wanna put the best foot forward and have a good representation or you're trying to raise capital, et cetera. Do you want have a grainy website? Do you want to have a broken down non-professional copy written newsletter? No. These are things that you don't want to have. You wanna have these buttoned up be this guy's a, an experienced sponsor who can handle capital and he can raise the deals and track deal flow, et cetera. [00:19:36] SAM WILSON: Right man. That's cool. That's absolutely cool. What do you like, like talk, talk me through the process when somebody comes on board with you, can you kind of break that down? Just so our guess that idea of what it is exactly that you guys do and how the process works. Yeah.  [00:19:49] MATTHEW BALTZELL: So somebody would typically we'd schedule a sales call and, or not sales call, but we just basically have a conversation, right. [00:19:54] MATTHEW BALTZELL: To see where you're at within your real estate investing. Journey. Right. And so typically, we work with capital razor sponsors. And then we see, where you're trying to go from there. What is your goal necessarily? Are you trying to raise $1 million? Are you trying to raise $500,000? [00:20:10] MATTHEW BALTZELL: Are you trying to track more deals? And so we kind of figure it out from there. And then we construct a plan to determine if podcasting is going to be a good avenue for you to help promote your message. So if you're like, Hey, I want to do 15 deals or two deals next year. It's like, okay, like maybe that's possible. [00:20:29] MATTHEW BALTZELL: How many deals have you done so far? And then if it's from there, it's like, okay, these are the podcasts we typically work with. I think we can get you this many impressions across the board over. X Y Z amount of time, if you're trying to go, if you think it's this episode, we're recording in July 5th. [00:20:48] MATTHEW BALTZELL: Right? So if you're listening to this episode and you think you're gonna have a deal under contract end of October, early November, now's a good time to start promoting that message or, Hey, I'm traveling all summer. I'm not gonna be able to do this. Okay. Like maybe that's not gonna work out. [00:21:04] MATTHEW BALTZELL: So then once you decide to come on board, from there, we basically looked at your marketing material. How experienced are you as a marketer? What are you using as a lead capture page help? You can construct your funnel. And then from there, we do a little bit of coaching as well to basically help you develop that and then link you up with the proper podcast that we see fit and then help you push out your material. [00:21:26] MATTHEW BALTZELL: And then another thing we're working on, but we haven't released it is as far as the. Basically segmenting up your video and everything that you are when you go on a podcast and having that be micro content. So you can continuously, if let's say you were doing two podcast episodes a month and you have one, one hour long video, or one 30 minute video, you could break that up into three or four pieces plus the full 30 minute piece. [00:21:49] MATTHEW BALTZELL: And now you have your newsletter. Now you post one piece of content on LinkedIn, and then now you're able to. Post three or four times weekly with your podcast, with your newsletter, with one pod or with one promotion or something on separately on, on LinkedIn. Now, all of a sudden, you're starting to say people's top of mind. [00:22:07] MATTHEW BALTZELL: Now you have more content and it's especially, you don't have to generate the content. Right? People think like I gotta make content today. Like, oh my God, what do I do? It's like, go on a podcast, have somebody break it up for you. It's.  [00:22:18] SAM WILSON: Right. And that's and that's all from one episode. I think that's the cool part is that you've taken one episode, you've pulled out, 20, again, pieces of micro content and said, okay. [00:22:26] SAM WILSON: And again, for the busy professional, you having somebody like you come in and kind of handle that suite of services a to Z, cuz there's a lot to think about that you just mentioned in there. Yeah. Everything from what shows should you be on how to prepare for and building, building your funnels building, okay. So what's the call to actions? How are we gonna republish this content? There's a lot of moving pieces involved with podcasting and with being a good podcast guest and also even, from the host side is getting getting our guests to res. So even from, it's really great having guests come on the show, but if our guests aren't taking the stuff that we're giving them and then marketing it to their audience, it's kind of not completely wasted cuz obviously we pump it out on our end, but man, you won't get nearly the traction out of it. [00:23:07] SAM WILSON: So we even on this side are working really hard to get our guests, to use the content that we're providing. So that's really cool. What you guys  [00:23:13] MATTHEW BALTZELL: do understandable. Yeah,  [00:23:14] SAM WILSON: for sure. Matthew I've really enjoyed having you come on the show today. Talk about podcasting. What's that? I was  [00:23:21] MATTHEW BALTZELL: just gonna say, I enjoyed your style. [00:23:23] MATTHEW BALTZELL: I liked it a lot. And it was a pleasure being here. Thank you for  [00:23:25] SAM WILSON: having me. Absolutely, man. I mean, and you gave some great, we haven't really done an episode like this that just talks about what it means to be a good podcast guest. What does it mean to come on a show and be absolutely prepared to to knock it outta the park? [00:23:37] SAM WILSON: And so you've given our listeners, I think some really cool things to think about. As it pertains to, one, one ha being good podcast guest, and also what it takes, to actually use the stuff that we create and get the most mileage out of it. So, thanks for doing that. [00:23:48] SAM WILSON: Certainly appreciate it. If our listeners wanna get in touch with you and learn more about you, what is the best way to do that?  [00:23:53] MATTHEW BALTZELL: Yeah, so you can go to elite podcast, bookings.com and you can click on the homepage in the upper right hand corner. You can schedule a call and if you enter the promo code, Sam, we will give you 25% off your first, our first month's service. [00:24:06] MATTHEW BALTZELL: There we go. That's what it's first month's service. Now I butchered it. Huh? See, there we go. Butcher  [00:24:10] SAM WILSON: before I started. Yeah. What were you saying about getting your call to action? Right? I'm just kidding you, man. Yeah, there we go there.  [00:24:16] MATTHEW BALTZELL: Yeah, no, there we go. See it's. I gotta practice,  [00:24:19] MATTHEW BALTZELL: gotta practice it every single time. [00:24:21] SAM WILSON: Absolutely. Matthew, thanks for coming on the show. Certainly appreciate it.  [00:24:25] MATTHEW BALTZELL: Cheers. Thank you.

24m
Aug 08
Note Investing and Business Success

What does it take to have long-lasting success?   Today, we welcome Dave Van Horn to share important lessons he learned during the course of his 30+ year career. He started out as an agent and has been involved in residential and commercial real estate as a licensed Pennsylvania realtor, investor, title company partner, and commercial fundraiser. Networking is key for those looking to start or scale a commercial real estate business as well as being comfortable in going after bigger deals. He also gives emphasis on being trustworthy and authentic in building meaningful relationships with colleagues and clients. Serving as the President and CEO of PPR Note Co., Dave talks about what we need to know about non-performing loans and offers his perspective on the constantly changing market. [00:01 - 04:25] 30+ YEARS OF EXPERTISE __ __ __ __   [04:26 - 09:21] WHAT WE NEED TO KNOW ABOUT NON-PERFORMING LOANS __ __ __ __   [09:22 - 20:58] LESSONS THROUGHOUT HIS CAREER __ __ __ __ __ __   [20:59 - 21:58] CLOSING SEGMENT __ __ __ __ __ __ TWEETABLE QUOTES   Dave Van Horn Dave Van Horn Dave Van Horn -----------------------------------------------------------------------------   Connect with Dave through the PPR Note Co. https://pprnoteco.com/ website, and find him on BiggerPockets and LinkedIn.   RESOURCE MENTIONED: __ __ CONNECT WITH ME:   I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns.     Facebook https://www.facebook.com/HowtoscaleCRE/   LinkedIn   Like, subscribe, and leave us a review on Apple Podcasts, Spotify, Google Podcasts, or whatever platform you listen on.  Thank you for tuning in!   Email me → sam@brickeninvestmentgroup.com Want to read the full show notes of the episode? Check it out below:   [00:00:00] DAVE VAN HORN: And I just think it's being authentic and being yourself and being real and, and being kind and being human and all these things that people talk about today. But it's, it's quite simple, really, it's are you a trustworthy person? Do you go above and beyond even when the chips are down? I mean, I've had deals that went south, but I did every, you know, I did everything under the sun to try to save those deals or hire attorneys at my own expense and try to, you know, do everything I can. And I think people know that.  [00:00:41] SAM WILSON: Since 2007, Dave Vanhorn has served as president and CEO of PPR Note Co. It's a holding company that manages several real estate and mortgage investment funds. Dave, welcome to the show.  [00:00:52] DAVE VAN HORN: Hey, how you doing Sam?  [00:00:53] SAM WILSON: I'm great, sir. And yourself? [00:00:55] DAVE VAN HORN: I never had a bad day.  [00:00:57] SAM WILSON: Wow. That's awesome. I love the positivity there, man. I don't hear that very often. I need, I need more of you in my life. I've never had a bad day. Tell me this, Dave, there are three questions. I ask every guest who comes to the show: in 90 seconds or less, can you tell me where did you start? Where are you now? And how did you get there?  [00:01:13] DAVE VAN HORN: Where did I start? Well, I'm in Philadelphia. I've been here my whole life. So I guess I started and ended here. I started as an agent back in '86, '87 was I first, licensed. And then I bought my first rental property, which was a duplex that I built some commercial garages on. And I bought that in 1989. So that's where I started. And then I had gotten up to about 40, I had about 40 rentals. I was also, years ago, I've been investing like 35 years. So a lot of things happened in 35 years, but I was I had been a contractor, so I was a contractor for 22 years. So I was a realtor, a property manager. I owned a title company, you know, a lot of different things I did over the years, but I had accumulated quite a few properties. And then I managed a lot of properties for other investors as well. And that's pretty much it, but, you know, I just kept scaling that and then eventually got into raising capital and was started out raising capital for commercial real estate, and then started raising capital for notes. That's how I met my partner. I used to run a real estate event, pre-meet up, pre-all the technology you see today. It was really simple. We sat down, had a meal, got to know each other. That was, and you could bring your deals. That was how simple the meeting was. But the meeting actually grew from 12 people out of lunch. Over a six-year period, ended up being in five states, six cities from Baltimore to New York. And we had 8,000 people in our database. So it grew quite rapidly, this little, have a meal and talk about real estate thing. So that's kind of how that network actually became in a way my bank, you know, how I raised capital for other folks' deals, how I raised capital for myself and even PPR today, if you think about it, we're the, you know, we're kind of our own bank, so to speak with our private equity, right?  [00:03:00] SAM WILSON: Tell me about what does PPR do today for the listeners that may not already be familiar with you?  [00:03:07] DAVE VAN HORN: Well, we started out doing, believe it or not, we started out doing delinquent second mortgages, and we started as investors. So it was somewhat of an accidental business. In fact, we used to have a short sale company and that was the main business and that went out of business and the note company took off. So who knows, right? And then we went from junior liens, as we kept raising more and more capital and growing, we went into first mortgages and then, you know, have morphed into commercial notes as well. And now back into commercial real estate again, so the company's grown and diversified quite a bit, although we're relatively new to commercial real estate recently, I guess the last year and a half, two years, you know, we first started getting into short term business loans, commercial loans, construction loans, bridge loans. We actually aggregate those up. We buy them. We have an affiliate that does hard money lending and has an REO platform online that sells REO properties. And then we, you know, we also finance that stuff as well. So that's just some of the things we do. And a lot of that we do to regulate capital, but still, the majority of our business is in the non-performing loans space. We do like the commercial real estate though, because it gives us tax advantages, depreciation, things to offset the carried interest from our bulk of the business, in the loan side of the, of our company, you know.  [00:04:26] SAM WILSON: You said the bulk of your business is nonperforming loans? [00:04:30] DAVE VAN HORN: Yes. I think last year we did about 325 million nonperforming loans. [00:04:34] SAM WILSON: And what's your strategy there? Get them to be reperforming loans and then sell those off or just reperforming and then hold them?  [00:04:41] DAVE VAN HORN: Well there’s a couple of strategies, but no, you know, we have a JV partner, we acquire a lot of assets. They have a trade desk in New York, so we can access their desk and acquire assets. It's kind of like dollar cost averaging as you purchase. So it's kind of like this, we hurry up and purchase assets and aggregate them over time and get them, you know, reperforming in a lot of cases, and then we do go to securitization. So it's a kind of a race to securitization, so to speak. And that usually takes like 15 to 18 months. And then once we securitize, which is another way of saying refinancing a pool of mortgages down to a lower rate, we kind of derisk our portfolio by doing that. Then we're often running to, you know, wind down that fund. It takes about, I guess 33 to 36 months is the typical timeframe there. And then you can turn around and you do it again. You know, you go out and you aggregate more assets. And we use a combination of our private equity with some institutional capital. That lowers our cost of capital by, you know, marrying the two together.  [00:05:40] SAM WILSON: Right. Yeah, absolutely, absolutely. Do you see any risks or, I guess, any stormy weather on the horizon in the non-performing loan space? [00:05:49] DAVE VAN HORN: Oh, absolutely. So I'll give you an example. In the first quarter of this year, we didn't purchase any NPLs, but although last week we just purchased 73 million. So but that was intentional because of the market fluctuations and waiting for some things to settle down. But what we're seeing now is some things are loosening out right now. And you got to realize the last, gosh, 5 or 10 years almost, it's been an upmarket, so right. No prices are in direct correlation to real estate values. So the margins were actually thin. And then we tend to take off the most when it's a down market. So it's funny, some people are like, well, what happens if there's a recession? Normally that's beneficial for us because that increases, you know, the foreclosures, things like that. But usually the biggest economic indicator for us is unemployment. The thing that's strange right now where, you know, we may see what we call a technical review session, where you have two-quarters of negative GDP. Meanwhile, unemployment's still low, you know, so it's, never happened before. So that's what's different. Now if unemployment was high, yeah, we would probably be high five in a little bit and go in this, you know, not that we wish bad luck on anybody, but it's just the nature of that business. What'll happen in a down market is assets, just get, you know, cheaper pricing, wider margins. That's really what it means. We can make money in any market. What happens is your exits shift. You know, the way you exit your deals, the way you work your deals. Perfect example of that is deed in lieu. Usually, these are one to four family residential properties nationwide, right? So a deed in lieu is a good technique for an exit in an up market. It's not a good technique in a down market, right, does that make sense? Yeah. Cause you wouldn't have enough equity to, take the deed in lieu, right? So you could see how exits shift. That's just an easy example of that. And then when pricing shifts or the loan of value and, and the equity that's back in these assets shift the way you do your workout agreements, or, you know, what do you call it, loan modifications. They could vary, you know, so you just make adjustments, just like anything else in real estate, right? And, you know, you can make money in all markets. It's just you have to shift your strategy, right?  [00:07:59] SAM WILSON: Yeah, absolutely, absolutely. I would imagine a lot of people, processes, procedures, you know, building the team around handling nonperforming loans has, has probably been a work of art. Can you talk about that a little bit?  [00:08:13] DAVE VAN HORN: Yeah, it's funny you say that 'cause for many years we were asset managers. We used to do a lot of that in-house and there is a lot of compliance, but today we outsource a lot of that. So we're primarily capital allocators, more so than asset managers. And our JV partners on the West Coast actually have, you know, they have under a hundred people, but you're right. If we did all that in-house, at some point we would be a large firm like that. Whereas today, we're at like 27 people and we have considerable AUM, where like, we're just under hair, under 600 million under management. Now we recycle a lot of our money though. So it's a little different than if I said I was in multifamily and I had, you know, a billion dollars worth of property, usually that's with leverage or, but in our case, a lot of that private equity keeps moving and keeps turning. So it's a, it's a little bit different than that, where it's, you know, I bought an asset and parked the money, you know? [00:09:05] SAM WILSON: Right, right. Completely understand. As you rewind your 30, what'd you say? 35-year real estate...  [00:09:12] DAVE VAN HORN: And growing, yeah. [00:09:13] SAM WILSON: 35?  [00:09:14] DAVE VAN HORN: 30 something. I can't count that far back.  [00:09:18] SAM WILSON: Says the numbers guy in real estate. I can't count that far back. Tell me this, Dave, what's one mistake that you can look back on that you said, man, I wish I hadn't done that, that you could help our listeners avoid?  [00:09:30] DAVE VAN HORN: Wish I hadn't done that. Well, a lot of it is knowing who you're doing business with is definitely one 'cause we've had all had scenarios that didn't work out or lost money or whatever, bad partner. But I think really, I think the opportunity thing would be about leverage, about utilizing leverage sooner. And you know, even in, you know, I have a lot of coaches and mentors and, and that's one of the things that's a common theme with some of the coaches and mentors I've had where they'll ask the same question, which is what's the one thing that you could leverage that'll catapult you or your business in the next six to 12 months, you know, and that's an interesting question that I paid a lot of money to have asked of me. But it was good money, but the question sometimes would stay the same, and you go back with my coach six months later and he is asking me the same question, but things change, right? I could leverage technology. I could leverage people. I could leverage a lot of things, a JV partner. I could leverage capital. And that number one thing will shift for people based on where they're at with their business or their personal life. Oh, your personal life could be something else. What's the one thing, it's almost like the book, The One Thing, what's the one thing that I can do such that you know, everything else becomes easier or unnecessary that, you know, who's it, Gary Keller, right? So, you know, it's a great point. Great book. The other thing is, what's the one thing, what's the one goal, and by that, I mean, you know, I was a very ADHD type guy where I had shiny object syndrome, like a lot of real estate investors and control freak, and you know, all those things. But a friend of mine used to say this, you know, there's one goal in life and that is to get as much passive income as quickly as possible, by retirement age at the latest, and to have much, as much tax-deferred or tax-free as you can. It's an interesting goal, right? it doesn't really reflect your passion or what you're good at, but it does kind of sum it all up in a way because that's where we're all trying to get to with, you know, financial freedom or whatever that is, to get freedom of time, to get freedom to be able to go where you want when you want with who you want 'cause ultimately that's probably the bigger success. Now that could be different things for different people, but you get the idea. [00:11:50] SAM WILSON: Gotcha. So if I hear you correctly, are you saying that maybe earlier on you would've defined, I guess the one thing that you said, Hey, if I paid more attention earlier on to this, this is what will move my business forward. And then also the other thing I'm hearing is that, Hey, earlier on I would've said, look, I'm going to really hyper-focus on creating as much passive income as I can. Does that sound about right?  [00:12:09] DAVE VAN HORN: Yes. And not 21 things, right? That's why, and then the other thing is, like, being willing to have utilized more leverage sooner. Like, I'll give you an example of that was I used to sell 75, 80 homes a year when I was a RE/MAX agent to fellow real estate investors.  [00:12:26] SAM WILSON: Right.  [00:12:27] DAVE VAN HORN: And looking back, I go, well, that was dumb. I had the capital. I had the hard money lenders. I was like reluctant to use hard money ' cause I thought it was too expensive. In reality, what did it cost me to give away 75, 80 deals? I was focused on the wrong thing. I'm focused on commission. I'm not focused on increasing building wealth or cash flow. Like, I was focused on commission. Think about that. That's ridiculous almost. And most people can't find 75, 80 deals. I'm selling 'em to other people and I'm going, why? I'm not thinking about I could have bought all of 'em. I should have been buying 75, 80 houses a year myself. That's a perfect example of me, like, can't see the forest from the trees kind of thing. It was all right in front of me. I had all the resources 'cause we don't, what's that saying? What Tony Robbins used say, we don't lack resources, we lack, you know...  [00:13:20] SAM WILSON: Creativity. [00:13:21] DAVE VAN HORN: Yeah, it was all right there in front of me. And, you know, sometimes we just don't see that, you know. [00:13:28] SAM WILSON: It's funny you say that. I'm not quite to the same extent as painful of a lesson, but I go back to when I started in real estate in all the houses I flipped. I mean, dozens and dozens and dozens. It's like, why did I not just hold those again? Like, here I am 10 years later, I'm like, I'm an idiot. I should have just bought 'em and held 'em I was buying 'em right. Same idea. Same exact idea. Yeah, that's great. Thank you for sharing that. I certainly appreciate that. Tell me this. You know, what's one thing you feel like you've done really well? Something when you said, man, this has been a key to success that I feel like other people should be implementing.  [00:14:00] DAVE VAN HORN: For me, you know, I was always a sales guy, and it was, you know, my unique ability is the ability to raise a lot of capital, a lot of equity very quickly, you know. Like, I've had cases where I raised 30 million in a month, you know, which is significant, right? And a lot of people can't really do that. But a lot of that, where that comes from, I think is probably from trust over a long period of time. So you're able to, you know, be able to connect with people, you know, you're authentic. It's just like having a, a large network, but it's more than having a large network, right? 'Cause you could buy a network, but if you have an organic network. And the other thing is like, the more you give, the more you get, for sure. And I just think it's being authentic and being yourself and being real, and, and being kind and being human,and all these things that people talk about today. But it's, it's quite simple, really, it's, are you a trustworthy person? Do you go above and beyond even when the chips are down? I mean, I've had deals that went south. But I did every, you know, I did everything under the sun to try to save those deals or hire attorneys at my own expense and try to, you know, do everything I can. And I think people know that. They know that I'm going to treat their capital like it's my own, or I'm going to go above and beyond to make sure everything's above board and can have a favorable outcome. Now things can happen. But I think a lot of it's how you handle it and how you communicate and things like that. [00:15:29] SAM WILSON: Excellent. Excellent. Appreciate that. Tell me this. When you look to the future and you say, Hey, in five years, this is where I want my companies to be, this is where I want to be. What does that look like?  [00:15:40] DAVE VAN HORN: Well, I, I might be retired in five years. Now, retirement's a funny word. I don't see me stopping like in the traditional sense, let's leave it that. But now, I think my company, well, we already know. We already have a 10-year vision and things like that. In five years, we'll be at about 3 billion under management. We'll probably be at around a billion in private equity. And then hopefully we can build a lot of good as well along the way. So, you know, we do a lot of things to try to impact the community, whether it's affordable housing type things and, other programs that we're working on. So, hopefully, we will be able to give back more and, take care of our, all the stakeholders, our staff, our investors, and help others build wealth, really. It's that whole share, build, and preserve wealth concept.  [00:16:26] SAM WILSON: Right. No, I like that. I like that. Dave, here's a question for you. When it comes to scaling or starting out or somebody that's saying, Hey, look, you know, in the name of the show is How to Scale Commercial Real Estate. So the idea, you know, is that somebody's going, I really want to grow into commercial assets. What's one piece of advice you would give to somebody if they said, Hey, I'm ready to go large. How do I do it? And they came to you. What would you say?  [00:16:48] DAVE VAN HORN: Well, for one is you got to learn what you're doing to a point. So one of the things I did was I shadowed other people doing it. So when I first started raising capital, I actually went to work for a company in New Jersey and they hired me to help raise capital. But I learned a lot from them about not only raising capital, but commercial real estate, 'cause that was what the money was being used for. So you don't necessarily have to do everything yourself. You can shadow or mentor with someone who's already doing it, which makes a lot more sense than trying to go out and be the trailblazer or the first person with arrows in your back, so to speak. Success leaves clues. You can learn a lot from people that are really successful at doing it. And if it's an area that you're not familiar with build a team that is. I know the one outfit that I worked for, they were doing mobile home parks and they had never done 'em before. And they were doing storage as well. But they brought a crackerjack team together. You know, they had people on their board. I mean, the one guy was a, a mobile home developer for the last 35 years, you know, that, kind of thing. Same way with their attorney and their accountant were well versed in these areas, right? So they brought in experts. They also had a management company that was, you know, around forever. They also had a commercial broker who just specialized in mobile home parks in the Midwest. You know, it was like, they didn't just go, oh, well, we don't know what we're doing and we're going to wing it, you know? It was, yeah, it was a lot more than that. They went out and built a team that did, even though they didn't necessarily have all the skills, but most of these are commercial real estate especially, it's a team sport. You're not going to be good at everything anyway. And if you think you are, that's another problem, I think. We all like to think we're great at everything, but I know I'm not, right? I know I'm not an excellent underwriter. Does that mean I don't know anything about commercial real estate? No, I absolutely do. But there's people that like to sit in Excel all day and play around. That's not me, right? But it, that guy that's playing with Excel probably can't raise the capital either. It's a team sport just like property management, that's its own thing, right? Just like construction management, that's its own thing. 'Cause, you know, I've built a lot of stuff. And when I was a contractor, a lot of our customers had four to 600 units and we used to do the monthly turnovers, right, so I do have a strong sense of what that takes to turn over X number of units each month and things like that. So they're all different skill sets. They're all different things. And it is a team sport. It's just figure out what you're good at and bringing the folks that are good at the other parts. You know, some people are great at operations, right? Some people are great at managing people. Just because, you know, not all leaders are managers, right?  [00:19:23] SAM WILSON: Yeah, like you said, you know, build the team around, you find the people that are really good at, you know, what it is that you're not, and build them around you. Yeah, that's critical. You mentioned a lot of things I'm not good at, underwriting, man. That's a tough one. I don't know, like, I'm just not great at it. So that's really, really cool. Dave, I thank you for coming on the show today. Is there any last piece of advice you'd like to share here with the listeners before we sign off?  [00:19:45] DAVE VAN HORN: Piece of advice? Don't be afraid to get started. But I think a lot of it has to do with your, you know, it's always the same things. It's the sources of deals. It's the capital. It's the people, right? So it's networking. I think all those things help put the elements together and don't be afraid to do it. I mean, commercial is just bigger numbers, right? You know, I'm very comfortable doing commercial deals. It doesn't even phase me. I know a lot of people get nervous at that, but I think there's actually some advantages to it. The larger the loans get. You know, I was telling some of the people on my team that were newer, they were a little rambunctious about, you know, Hey, we're getting into commercial, it's bigger deals. But I go, Hey, guys, there's a professional appraisal done. There's a bank that's doing a lot more due diligence than us on this asset 'cause they wouldn't want to do that loan otherwise, right? So there's, there's other parties that can help out in some of these areas that give you a better comfort level. So that, you know, we don't have to be, like you said, experts in everything. There's other people that are coming along for the ride with us, whether it's our real estate broker, our lender, our, you know, title company, all these different things. They're there. If it was that crazy, they wouldn't do the loan, right? To a point, right?  [00:20:59] SAM WILSON: That's awesome. Thank you, Dave, for sharing, certainly appreciate coming on the podcast today. It was an honor and privilege to have you on here. If our listeners want to get in touch with you or your PPR Note Co., what is the best way to do that?  [00:21:10] DAVE VAN HORN: Probably the best way is pprnoteco.com. You could definitely sign up. We have all kinds of resources on there and definitely reach out to me. I'm also on BiggerPockets and LinkedIn. I have a distressed mortgage group on LinkedIn. You can seek me out there. On BiggerPockets, we answer a lot of questions in the forum. So anytime somebody has something, we're glad to help out, you know?  [00:21:29] SAM WILSON: Awesome. Dave, thank you so much. Certainly appreciate it.  [00:21:32] DAVE VAN HORN: My pleasure. 

21m
Aug 07
Fixing and Flipping Properties While Being Halfway Around The World

Welcome back! Today’s guest is Alicia Jarrett, Alicia is an experienced leadership expert helping women in business and real estate educators to increase their performance, and inspire growth and accountability using proven rock-solid methods. Alicia has been a strong female business owner and entrepreneur for almost 15 years, helping leaders of all levels to maximize their performance and increase their potential.    [00:00 - 06:29] HOW TO DO BUSINESS FROM ANYWHERE IN THE WORLD WITH REAL ESTATE INVESTING SUCCESS __ __   [06:29 - 13:01] REMOTELY SCALING YOUR REAL ESTATE BUSINESS __ __ __ __   [13:01 - 19:28] REAL ESTATE MARKETING TIPS FROM SUPERCHARGED OFFERS __ __     [19:29 - 24:09] CLOSING SEGMENT __ __ __         TWEETABLE QUOTES ---------------------------------------------------------------------------- CONNECT WITH ALICIA visit their website www.superchargedoffers.com You may email her at alicia@superchargedoffers.com  or call her team through (888) 538-5478     CONNECT WITH ME:   Facebook https://www.facebook.com/HowtoscaleCRE/   LinkedIn   Like, subscribe, and leave us a review on Apple Podcasts, Spotify, Google Podcasts, or whatever platform you listen on. Thank you for tuning in!   Email me → sam@brickeninvestmentgroup.com   Want to read the full show notes of the episode? Check it out below: [00:00:00] ALICIA JARRETT: a lot of people are like, well, I have to do business in the state that I'm in, or I know I have to be able to go and see the properties. [00:00:05] ALICIA JARRETT: No, you don't. You can do business from anywhere in the world. We have done deals on ski slopes in France, on yachts and Croatia. And all the way here from Australia. So you do not need to be in the same location as your deals, as long as you know what you're doing, how to run your due diligence, how to have boots on the ground when you need it. [00:00:23] ALICIA JARRETT: And making sure that you've got the right people on your team. Other than that, You don't need to be anywhere near your deals as long as the deal stacks up and the numbers stack up. You're all good.  [00:00:43] SAM WILSON: Alicia Jarrett is a global real estate investor based in Australia who conducts her deals in the us. She co-owns multiple businesses, including global citizens holding L Scouts, supercharged offers and Wilder for women in business. Alicia, welcome  [00:00:57] ALICIA JARRETT: to the show. Thank you so much, Sam. Great to be here. Pleasure's mind all the way from all the way from the future. [00:01:03] SAM WILSON: Absolutely. Yes, you are coming from the future. That's funny. I hadn't heard that before. Yeah, I know. it's June 29th for you.  [00:01:09] ALICIA JARRETT: I would assume it sure is. Yeah. Yeah. June 29th, 6:00 AM. And tomorrow's looking pretty good for you, Sam. I can tell you that much.  [00:01:16] SAM WILSON: Great. Great. What's the stock market doing? [00:01:18] SAM WILSON: I guess it's not open yet. Shoot. open to find out where I should place my bets tomorrow. Yeah. It's only June 28th for me. It is a pleasure to have you on the show. There are three questions I ask every guest who comes to the show in 90 seconds or less. Can you tell me, where did you start? Where are you now? [00:01:32] SAM WILSON: And how did you get there?  [00:01:34] ALICIA JARRETT: Yep. Where did we start? We started doing so we are based in Australia as people can probably tell them from my accent. We started doing some houses way back in like 20 years ago here in Australia, just to get some investment properties up and running. But then when we wanted to take that full time, we ended up going into the us. [00:01:50] ALICIA JARRETT: We did some fix and flips with houses. We then went into vacant land, which is now our asset class that we do. Where are we now? We are now doing multiple vacant land deals per month. We've got a team of three full time customer service people in that business. We now have our own real estate marketing business based in the us because. [00:02:08] ALICIA JARRETT: We saw that there was a huge gap in the market of how people know how to do good marketing. That's got 14 people in it and we're about to launch a new app called enable letters.com. So, yeah, we've grown a lot in five years, Z .  [00:02:20] SAM WILSON: So, so say that. What was the last business that you're involved in? [00:02:23] ALICIA JARRETT: The last one we're about to launch a new app it's coming watch this space. It's called neighbor letters.com and we're launching a  [00:02:30] SAM WILSON: neighbor letters. Yep. Got it. Okay. Sorry. I'm hard. Not only am my heart of hearing. I'm not very bright. So forgive me. So neighbor  [00:02:37] ALICIA JARRETT: letters is the Aussie accent is a thick one. [00:02:40] SAM WILSON: it's all good neighbor letters. So what is that?  [00:02:44] ALICIA JARRETT: So that is an app where a lot of real estate investors, when they get a property under contract or they wanna sell that direct to market or they wanna just send out any types of coms to people in an area where they have properties. A lot of people send out neighbor letters, but the process to do that is very very onerous. [00:03:01] ALICIA JARRETT: You've gotta go and, find out who are your neighbors are and download. And cleanse that list and put that into a mail merge and get that sent to a print house. And a lot of the times it's small print runs which a lot of print companies won't do. So a lot of times people print it themselves and then they have to take it to the post office. [00:03:16] ALICIA JARRETT: We're building a service where you can actually, and in like six clicks or less and in about six seconds, get your neighbor letters all sent out. So we're really big on, on data. What's the point of enabler letters is when you've got a property. So regardless of what property that is, maybe it's vacant land or a house or any other kind of asset class, sometimes your best buyers are people that already live in the area. [00:03:37] ALICIA JARRETT: Right. They know the area well, right. The neighbors. The people surrounding the property and particularly for info, lots as well, like a lot of different real estate investors. If they've got an info lot with vacant land, the first people they'll reach out to is the people on that street or the people surrounding that house because they know the area better than anyone. [00:03:55] ALICIA JARRETT: And if you can put the right offer in front of them, a lot of the time people in the area are like, yep. I want that  [00:04:02] SAM WILSON: I? Absolutely. Yeah. I'm proved that you're AB the house I'm standing in was my neighbor's. And I, oh, there you go. I was like, and there's my next office. Great. Okay, cool. And I would what we call it here in Memphis is securing your borders. [00:04:14] SAM WILSON: It's yeah, it's exactly right. Like, and I wanna own my whole neighborhood if I could.  [00:04:20] ALICIA JARRETT: Yep. Correct. It's like a monopoly board.  [00:04:22] SAM WILSON: yeah, a hundred percent. I, yeah, if I can not control the wrong word, but I guess it's probably exactly what I mean. So why not just come out and say it, but if I can control who living next to me and I get to pick my neighbors by all means  [00:04:33] ALICIA JARRETT: I plan on doing so and someone doesn't build a McMansion right. [00:04:36] ALICIA JARRETT: Next. To you that, that is an IO. Like, you get control over that. Right. So, yeah. Yeah. Maybe's where it's at. That's AB you know that's coming. We can talk about that on a whole nother podcast.  [00:04:46] SAM WILSON: no, right. I know. I'm sorry. I got distracted by it. It was like, oh, that's really fascinating. Haven't heard of that. [00:04:51] SAM WILSON: Forgive me. The point of our conversation here today is really to find out how you have scaled your companies, especially being halfway around the world. I mean yep. And having a vacant land, investing business, doing fix and flips, I can. I've only done one fix and flip where I never saw the property in person. [00:05:09] SAM WILSON: Like how in the world did you do that?  [00:05:12] ALICIA JARRETT: Yeah. Good question. I'm gonna start before I answer that. I'm just gonna start by dispelling a myth here if that's okay, Sam, because we speak to real estate investors all day long in our marketing business. And a lot of people are like, well, I have to do business in the state that I'm in, or I know I have to be able to go and see the properties. [00:05:28] ALICIA JARRETT: No, you don't. You can do business from anywhere in the world. We have done deals on ski slopes in France, on yachts and Croatia. And all the way here from Australia. So you do not need to be in the same location as your deals, as long as you know what you're doing, how to run your due diligence, how to have boots on the ground when you need it. [00:05:46] ALICIA JARRETT: And making sure that you've got the right people on your team. Other than that, You don't need to be anywhere near your deals as long as the deal stacks up and the numbers stack up. You're all good. So how did we scale? I guess where we started Sam, if I can go back to the beginning, cuz I just mentioned their boots on the ground. [00:06:00] ALICIA JARRETT: So when we first started doing business in the us, we spent a fair amount of time in the us. Every couple of months we were over there. Meeting with realtors, title companies, going, checking out areas getting to know the lay of the land and putting the right people in place to, to be able to then step away and have the right people there. [00:06:19] ALICIA JARRETT: So number one, get the right people on your team. Get the right boots on the ground. Once we did that, we were then able to do pretty much everything remotely. And if there's one thing, Sam. Unfortunately, Covid been one of the worst things in history we've seen, but one of the good things that has come out of it is that a lot of people have gotten used to working remotely now. [00:06:38] ALICIA JARRETT: And even down to our title companies and some of the counties that we work with, they've all gotten very sophisticated. Let's say not too sophisticated, but they've all gotten better in kind of doing things, without having to be there in person. So when we scaled, I think the thing. [00:06:55] ALICIA JARRETT: The miss about scaling. A lot of people go, we gotta scale by adding more people. And doing more of the same scaling is not about necessarily adding people to your business. Like that just adds more cost scaling really at the end of the day is looking at how do you. What's the process in systems. [00:07:14] ALICIA JARRETT: And how do you do business and how do you do more of that without necessarily adding more cost? And that's all about efficiency? So sometimes I hear people go, I wanna scale my business. And the first thing that they say, Sam is, I'm gonna go and hire a VA. I'm like, that's not scaling. That's just managing people. [00:07:31] ALICIA JARRETT: so, it's it's an interesting approach that people think about when they hear the word scale.  [00:07:36] SAM WILSON: You said, you came here to the states, which, I mean, God bless you. Flying back and forth from Australia is not a short hop. But you came back and forth quite a bit in the early days to kind of establish your, your industry partners, your title companies, your lenders and everybody else maybe early on boots on the ground would sound like it would be a challenging piece of the equation or piece of the puzzle. [00:07:56] SAM WILSON: To solve. How did  [00:07:57] 615AUDIO1805131727: you  [00:07:58] ALICIA JARRETT: overcome that easiest puzzle to solve? So we actually started that remotely. We just got on the phone to people from Australia and we said, Hey, we're real estate investors. We're gonna be investing first of all in Florida. We're looking first of all for realtors to be on our team. [00:08:12] ALICIA JARRETT: So that we've got some Intel about different areas in Florida. And we just got on the phone to different realtors and said, this is what we're doing. We're planning on coming over. Are you the kind of realtor that's interested in working with an investor? That's got some interesting strategies we wanna put into play. [00:08:28] ALICIA JARRETT: Most realtors. This is going back five years ago. I think the story would be different now, but most realtors didn't even bother returning our phone calls. Ones that did we still do business with today? And one in particular has been on our team since day one. He, his name's Michael Cassidy and he's amazing. [00:08:44] ALICIA JARRETT: And he went out and helped us buy our first few properties and one of the first fix and flips we did, we actually went over and did like demo day together. Because we wanted to get to know our contracting team and all of that. And he's been with us since day one. We now JV with him on a number of deals and through that, and here's the thing. [00:09:00] ALICIA JARRETT: Once you get the first person in place, the easiest question then becomes, okay, so we're working with you and this is working well. Who do you know? Who's some title companies that you've worked with that, that you trust. Who's some probate attorneys that, that you've worked with, that you trust. who's some real estate attorneys you've worked with that you trust. [00:09:19] ALICIA JARRETT: And the list goes on. So we got introduced to quite a few people because of that existing relationship. And that's the same in pretty much if I think about the multiples now of people that we work with, a lot of, it's not what, it's who, you know, And are you willing to ask for an introduction? [00:09:34] SAM WILSON: that's a great point. That's a great point. And that's, you're leveraging their Rolodex. I mean, it's like, yeah. Yeah.  [00:09:40] ALICIA JARRETT: Who do you, and that it's, what's good for you is good for them. It's kind of that I use the word ecology. It's good for you. It's good for me. And it's good for the greater good. [00:09:47] ALICIA JARRETT: and if we can approach business with that lens that, Hey, if you help me, I'll bring you more deals. And that has happened. So in our team, if I think about our title company, our realtors, our probate attorneys, I've introduced them now to. Hundreds of real estate investors as a result of just me having a network with them. [00:10:04] ALICIA JARRETT: So right. What goes around, comes around  [00:10:06] SAM WILSON: Sam that's absolutely right. Absolutely. Right. That's really cool. I love hearing that. That's possible. How did you guys not end up. I mean, the old phrase that there's a reason, like, there's the word con and contractor, like, how did you not end up, with a bad contractor along the way, or maybe you did, like, that was that well, we did  [00:10:24] ALICIA JARRETT: at our last house. [00:10:25] ALICIA JARRETT: This is why we changed asset classes. Our last house that we did, it was at that time as well, Sam. Everybody wanted to get into single family homes and do fix and flips. And I'm gonna blame HGT for that. Everyone wanted to be the next chip and Joanna Gaines and no, all good, all wonderful. [00:10:41] ALICIA JARRETT: But that was at the time when getting contractors and keeping them was getting really tough because people were just paying through the roof for, good resources. Yep. Finding good off market deals was getting really tough. And the last house that we did. Our contract team and our head contractor didn't do the right things. [00:10:58] ALICIA JARRETT: And we started to see some cracks forming in, in the business. And we started to see some cracks forming in our strategy as well. And it was like, okay, now's the time to go time out. Let's revisit our strategy. Let's look at where this asset class is going. Cuz all real estate goes in cycles. We know. [00:11:14] ALICIA JARRETT: And let's look at what might be an easier asset class. And that's when we started vacant land about four and a half years ago now. So we haven't looked back vacant land. Don't really need contractors. Sam. It's so easy. right.  [00:11:26] SAM WILSON: Yeah, absolutely. Absolutely. That's that's brilliant. I love the transition. [00:11:30] SAM WILSON: That's about the same time. It's funny. That's the same time I got out of single family housing as well. I was doing tons of fix and flip at that point and it was just like, wait, there's. Competition's increasing margins are getting squeezed. Contractors are harder to come by. It just it just kept  [00:11:45] ALICIA JARRETT: ING all those things, right? [00:11:46] ALICIA JARRETT: Yeah. We were the same.  [00:11:48] SAM WILSON: Yeah. I said I'm I'm done really in this and which I, by and large. I done any single family did this house, but that's that again? This is my now my market I guess, I guess it doesn't really count. Tell me about this. You guys moved into vacant land. I've had a few people come on and really talk to us about their vacant land investing and kind of what the nuances of vacant land. [00:12:08] SAM WILSON: That's really cool. Do you guys take a different spin? On vacant land maybe than what some of I've talked to some people who come out and they do rural vacant land. What do you guys do in the  [00:12:18] ALICIA JARRETT: vacant land space? Yep. We do it all. So I'll never say no to a deal because again, if the numbers add up and there's a, there's the appropriate exit strategy for that deal, we will do it. [00:12:26] ALICIA JARRETT: So we do info lots. We do acreage. We do rural. We do commercial. We'll do any kind of vacant land because where there's a seller. There's often, always a buyer. Right. And so we don't, we haven't really narrowed our strategy down except this year we are, we're definitely this year going after a small to medium acreage. [00:12:44] ALICIA JARRETT: That's just on the perimeter of some the cities that, that we operate in so that we can subdivide and do some forced appreciation on those as well. But we still do lots. We still do farmland we do it all. And it's a thing, I guess, we, five years ago we started to do business in Florida. [00:13:01] ALICIA JARRETT: Interestingly enough, Sam, we still stay in Florida. We haven't had the need to go out right into other states and do business yet. And the reason is because we've now built up a reputation. We've got a buyer list that is huge. We've got realtors. We've got this network now. So if we get a deal. [00:13:18] ALICIA JARRETT: If we wanna do the deal, we've got the right people in place and often we've got buyers in place and some of our buyers are also builders and developers. But if we don't wanna do that deal, I've still got a network that I can pass that contract onto. So we really don't. We really don't say no too much which makes me think maybe we should be getting a bit more targeted with our deals, but where you've got sellers and buyers, the deals be done. [00:13:40] ALICIA JARRETT: Right.  [00:13:41] SAM WILSON: right. Right. What does vacant land do in a recession  [00:13:45] ALICIA JARRETT: yeah it's interesting. And if, I think back to, after 2008 and what happened there now, we, weren't obviously doing business in the us at that point, but you know, you go back in history and every time a recession happens, the same kind of cycle still happens. [00:13:59] ALICIA JARRETT: So first of all, I think a lot of people hear the word recession freak out a little bit. It's like, well, okay what does this mean? Right. We don't because. It's happened so many times in history. It's like, the same stuff goes on in a recession. More people wanna liquidate. So you end up with more people that have their cash tied up in an asset. [00:14:17] ALICIA JARRETT: Maybe that asset is vacant land. And all of a sudden they're in a position of, I wanna liquidate that, get my cash out as soon as I can and put my cash into something else. Great. That means you've got more sellers on the market. People tend to freak out and go. Yeah, but no, one's gonna buy in a recess. [00:14:32] ALICIA JARRETT: Yeah, they do. They just tend to buy low. So you have a lot of land bankers that will buy in recession times. You have a lot of investors that know that markets go in cycles, and they'll say, I'm gonna hold this for five years and then see what happens. A lot of builders and developers still wanna make money in that time. [00:14:47] ALICIA JARRETT: So they'll buy and hold and wait for the right opportunity to then build in those areas. There's still exit strategies, that are there. I think the only thing in a recession is you need to adjust, where you are doing. So if you are buying here and selling here in normal times at a recession that might do this, so you're still buying and selling, but it might just not be at the same levels as to what you might be. [00:15:09] ALICIA JARRETT: So, that doesn't scare us,  [00:15:11] SAM WILSON: right? No, I love it. Absolutely love it. Tell me about supercharged offers. What is yeah.  [00:15:16] ALICIA JARRETT: It's something I'm very passionate about. So one of the things we recognize Sam early on, when we first got into real estate investing, we went and did all the courses and went to these education seminars that told us how to do deals in the us. [00:15:28] ALICIA JARRETT: And same thing happens every time they say, go and download a list, put some mail together, send out some direct mail and wait for the phone to ring. And we did that, but that's what everyone else is doing. Right. Right. That's kind of like the. 1 0, 1 stuff. Right. And so my partner, Matt and I and we still, we, we noticed very early on this inconsistency in our business, because if we weren't mailing all the time, our business started to have gaps in it. [00:15:53] ALICIA JARRETT: And we see this time and time again in every real estate group. It's like, people have this roller coaster effective. Oh, we've got a good month. Cuz we did some mailings and we got a bad month cuz nothing's closing. And we just thought, how do we wanna run our business? If we were to really think about running. [00:16:07] ALICIA JARRETT: As a business, not just as a hobby. So supercharged offers was simply born out of a need for. To do our own marketing in the way that we choose. And that's making sure that we have a consistent pipeline of deals always happening. So supercharged offers it, we didn't mean for it to become a business, but now we've got customers in over 12 countries all doing deals in the us more than 80 customers that we're working with and we love it. [00:16:31] ALICIA JARRETT: So we're basically managing the acquisitions marketing for. And here's what I wanna come back to Sam. A lot of people get into real estate investing cuz they're good at doing deals. They're good at speaking to sellers, they're good at speaking to buyers and they're good at doing a deal. They're not so good at managing data. [00:16:47] ALICIA JARRETT: Building websites, doing online ads, making sure their direct mail is consistent. All of that. So supercharge offers does the end to end and I call it the book end. So at one end, you still need to do your research to tell us which areas you wanna go. The other end, when the lead comes through to you, you still need to close that, lead everything in the middle, from your branding, your logo, your website, your content, your online ads, your social media, your data, your direct mail, everything we manage for you. [00:17:16] ALICIA JARRETT: So it's a huge time saver to a lot of real estate investors out there. We do all asset classes and everything's very data driven. We've invested really heavily in data in our company, Sam and and we know that data drives everyth. There's gotta be good data and it's gotta be managed  [00:17:29] SAM WILSON: well that is really cool. [00:17:32] SAM WILSON: And that's, that is your real estate marketing company is supercharge correct? Offered. Okay. Okay. And do you also do that on the commercial real estate  [00:17:39] ALICIA JARRETT: side? Yeah, we do it for any asset class. We've got people that do self storage, mobile home parks vacant land, single family homes. We can do commercial. [00:17:49] ALICIA JARRETT: We've got someone that's actually doing airs strips so for people that have their own planes and they've got air parks that they can go and park to like living on a golf course, but there's an airstrip instead. So we, we, as long as there's data, we can manage your marketing. [00:18:02] ALICIA JARRETT: That's really, and we've got database for everyth.  [00:18:05] SAM WILSON: Right. Yeah, absolutely. Absolutely. Yeah. I love the idea of a, of an air park. That's that's pretty fun. why not just taxi out and take off. That's good times. So tell me what are some common problems? I know you said there that, people aren't very good at marketing, but there has to be, there has to be some common problems or common things that people are doing incorrectly or doing poorly that you said, look, I can just help you solve it now. [00:18:27] SAM WILSON: And I can do it fast.  [00:18:28] ALICIA JARRETT: Yeah. Yep. One of the biggest things I think is inconsistency. You see people, they're all trying to build businesses, or a lot of them are actually just creating another job for themselves instead of building a business know, they wanna leave their current job and start their own company. [00:18:42] ALICIA JARRETT: All of this stuff, all these great dreams, but inconsistency is the biggest killer Sam. And so you see people that get started. They'll send out some marketing they'll do a couple of mailings and then they wait for deals to come in and then they've got some deals. So they're spending all their time and energy working those deals. [00:18:58] ALICIA JARRETT: And by the time they turn around and get their return on investment, which is often months, they then turn back to their pipeline and it's empty. And so one of the biggest killers in this business, no matter what asset class you're in is inconsistency. And I see it every day. Every day and it really then just comes back to time, and I, I often say to, to a lot of people in our in our customer base, working that, that old, it's an old say now, but are you working on your business or in your business? And a lot of them are still working in it. They're in the minutiae, they're in the detail. They're trying to do everything themselves. [00:19:30] ALICIA JARRETT: And it's like, you don't have to do it all yourself. If you find the right people to partner with, be okay to let go of control of some things, as long as those things are done well, and spend your time and energy on the stuff that makes you money,  [00:19:43] SAM WILSON: right? Yeah. No, I think that's great. Especially as you're starting out, it's it's one of those things, I guess, once you get to a certain size, you could probably start bringing on team members. [00:19:52] SAM WILSON: That can then handle that stuff in house, but yep. If it's one, two, or maybe even three of you and you're launching, it's like, oh, this is, there's a lot of moving pieces here and yeah. Yeah, that can  [00:20:04] ALICIA JARRETT: be absolutely. And if I can add to that Sam, like we I did everything in the beginning as did my partner, Matt. [00:20:09] ALICIA JARRETT: We were both in there learning it, all, doing it all. And because I have a certain rule in our business that we wanna outsource something. Or, hire a team member unless we've done that thing ourselves, otherwise, how do we know what good looks like? Right. And how do we then set that person up to train them, measure them, all of that. [00:20:27] ALICIA JARRETT: So, you've gotta get in there and do it first to begin with, but there comes a point in time that you need to let goal of certain things to then create more space, to do more deals or, add more elements to your business to make it.  [00:20:38] SAM WILSON: Yep. Absolutely. I'm gonna throw this term out there for you. [00:20:42] SAM WILSON: And then in the last few minutes we have left. When I say global resources, what does that  [00:20:46] ALICIA JARRETT: mean? Yeah, global resources for me, it means if I can actually just, if we could imagine that word global resources, I'm gonna cross out the word global and just put resources as long as you have the right people in the right jobs, doing the right things. [00:21:00] ALICIA JARRETT: It really doesn't matter where they're based. We've got people all over the world. We literally have team members in Asia, Serbia, Bangladesh, Australia, us Yeah, that's across five countries, right? and as long as we've got the right people in the right jobs, doing the right things, as I said, it really doesn't matter where they're based. [00:21:17] ALICIA JARRETT: It matters about how you set them up for success and systems and processes. These days can allow to do that super easy. How you set up your CRM, how you manage task flow, how you allocate work, how you measure results, all of that. You. You can do from your lounge room in your underwear, if you want. [00:21:36] ALICIA JARRETT: right. you don't have to be in the same place as where your resources are. And I, we've got an amazing team and they've all gotten to know each other really well. And it's great. They don't have to be in the same place.  [00:21:47] SAM WILSON: Right. No, that's absolutely fantastic. I mean, it's one of those things that, and it's one of the part of our, one of the businesses I'm involved in right now is that you need somebody with that gifting though, to kind of take all of those. [00:21:58] SAM WILSON: What did you call it? Not resources but take all those processes and procedures. And get it implemented. And that's one thing, in my skill set, I don't have that. I just don't have it. I'm not an operator. It's like, I suck at that. And so you gotta find other team members that go, I gotta, I got a buddy that's joining us, that it just geeks out on it. [00:22:15] SAM WILSON: He's like, dude, this is, I mean, he's like, man, I got charts and spreadsheets. And like, it's just his thing. I'm like,  [00:22:20] ALICIA JARRETT: yep. That's own it. That's my partner, Matt. He's his background is in it transition transformation. So he is all. Automation systems processes. And so we've really been able to systematize our business, right. [00:22:32] ALICIA JARRETT: He now is implementing systems and processes for other people because people see how we are running our business. Like my land business, I probably work on probably an hour a day. Right. Because the rest of it is systematized. Our team knows what they need to do at every point in time. And it's super crazy. [00:22:46] SAM WILSON: That's fantastic. Alicia, thank you for taking the time to come on this show today. Thank you, Sam. Absolutely. Guess pull back the curtain on your multiple businesses, how you guys have grown. 'em the way that you've partnered up with the right people and got the right seats on the bus showed us that you can buy and invest in even fix and flip real estate from halfway around the world right here in the us. [00:23:06] SAM WILSON: Absolutely fantastic. I love it. If our listeners wanna get in touch with you, what is the best way to do that?  [00:23:11] ALICIA JARRETT: Yeah, they can drop me an email direct. So it's, Alicia, which is spelled a L I C I a, no one ever gets that. Right. at supercharged offers.com. They can call my team on (888) 538-5478 or just jump onto supercharged offers.com and they can download a free ebook that can download a free business growth plan to help them with their business strategy. [00:23:34] ALICIA JARRETT: They can get in touch with me anyway, or just look me up on.  [00:23:37] SAM WILSON: Fantastic. We'll make sure we include all of those there in the show notes. And certainly again, appreciate you coming on. Thank you, Alicia. Thanks Sam.   

24m
Aug 06
Commercial Real Estate Financing Solutions

In this episode, we talk to Ari Shpanya, co-founder and CEO at LoanBase, the leading online platform for commercial real estate lending. He discusses the story behind the company and how they are making it easier for investors to find the financing they need. He also offers valuable insights on the current market, specifically on the lending environment, and breaks down best practices to become a better borrower.     [00:01 - 07:04] LOANS MADE EASIER __ __ __ __ __ __   [07:05 - 17:11] NAVIGATING THE CURRENT MARKET __ __ __ __ __ __ __ __   [17:12 - 18:13] CLOSING SEGMENT __ __ __ __ __ __ TWEETABLE QUOTES   Ari Shpanya   Ari Shpanya   -----------------------------------------------------------------------------   Connect with Ari through LoanBase.com https://www.loanbase.com/!   CONNECT WITH ME:   I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns.     Facebook https://www.facebook.com/HowtoscaleCRE/   LinkedIn   Like, subscribe, and leave us a review on Apple Podcasts, Spotify, Google Podcasts, or whatever platform you listen on.  Thank you for tuning in!   Email me → sam@brickeninvestmentgroup.com Want to read the full show notes of the episode? Check it out below:   [00:00:00] ARI SHPANYA: I just couldn't wrap my head around the fact that I had to research for three or four months to find the best lender. So you have to pick up the phone, you have to call one broker to another broker. You need to call too many banks, local banks, regional banks, credit unions, and so on, and try to compare everything and decide what's the best for you. And I just wished I had something that I can just go and put all the filters I want to and get the kind of a simple order or arrangement of which banks I should work with.  [00:00:42] SAM WILSON: Ari Shpanya is the co-founder and CEO of LoanBase. Ari, welcome to the show.  [00:00:47] ARI SHPANYA: Thank you for having me, Sam.  [00:00:49] SAM WILSON: The pleasure is mine. There are three questions I ask every guest who comes in the show: in 90 seconds or less, can you tell me where did you start? Where are you now? And how did you get there? [00:00:57] ARI SHPANYA: Okay. I started by buying a single-family home. I lived there while I was attending actually a program at Stanford. And then I remodeled it by myself. And from there, there was one more and one more. And that's how you get to multifamily, I guess. But it's always about humble beginnings and I think I'm still, kind of, at the beginning of it.  [00:01:19] SAM WILSON: Interesting. What do you do now at LoanBase? [00:01:23] ARI SHPANYA: Oh, on a high level, LoanBase is a KAYAK or Expedia for commercial real estate loans and investment properties. We help investors and borrowers to find the best loan for their needs by searching in a very easy and seamless way. Just like you shop for flights on SkyScanner or KAYAK or Expedia.  [00:01:44] SAM WILSON: That is really interesting. I guess, tell me, how did you know or what hole did you see in the market where you said, man, this is something I need to create? And then I guess, we'll start there. Let's ask that question first. So I'm not asking you too many all at once.  [00:01:58] ARI SHPANYA: Yeah, I remember a couple of years ago, that was a few months after COVID hit, I needed to refinance a couple of properties in San Francisco, multifamily, it was a 10 million loan for both of them. And I just couldn't wrap my head around the fact that I had to research for three or four months to find the best lender. So you have to pick up the phone, you have to call one broker to another broker. You need to call too many banks, local banks, regional banks, credit unions, and so on, and put all these little notes and, you know, comments, and then try to compare everything and decide what's the best for you. And I just wished I had something that I can just go and put all the filters I want to and get the kind of a simple order or arrangement of which banks I should work with. And the same was for the process of underwriting and, and during underwriting, and during that process with the bank, it was like, it was like pulling a teeth, right? That was really two, three months. And you feel like you are being asked for so many documents and everything goes by email. So it was really horrendous. So, yeah, I remember actually finding out by the broker that the broker is actually making another yield spread on my deal. So, not only did you pay a broker fee, you're actually paying someone a fee to give you a deal that is better for them rather than better for you. And I was really upset. So I remember calling the broker and telling them, listen, this is not okay. This is not for here's what I going to do. I'm going to start a new company and putting you out of business. So yeah, a joke aside, that's kind of what happened and you know, it was a result of a real pain of four months process that should be less than a week.  [00:03:39] SAM WILSON: Right, man. Yeah, I, I love stories that start that way 'cause it's like, you know what, you just, you saw problem. You said, I, I can solve this in a more efficient manner. How do you stay in front? So you, you guys aggregate, you know, like you said, you're the KAYAK for loans, so, I mean, you know, I, I can understand it from the airlines perspective where it's like, Hey, you know what, here's our flights that are available and they can probably integrate their data or they do integrate their data some way such that it can be displayed on KAYAK. But how do you guys stay in front of what each lender is offering, the terms they're looking for, the money they have to lend? I mean, that's got to be constantly, especially right now, moving target. How do you guys stay in front of that?  [00:04:18] ARI SHPANYA: Correct. So there are three ways that we do that. First is we have banks that are partners, so we get their rate cards and rate sheets and essentially we scan them and we do what's called auto parsing. So we scan the rate cards and that is being imported to our database. We also talk with the banks to verify that. So that's part of data integrity. And some banks, some lenders, we, we also have a direct integration, so that's another way to get the data. When the rates are changing, we also have some proprietary algorithms that essentially are looking into the fed rate, the treasury, and calculating based on the rate fluctuation. So if the fed rate is increasing today, obviously the banks will follow. There is a difference between regional banks and national banks and debt funds. So some banks are more less receptive or less sensitive to any kind of change in a, in the fed rates, 'cause they were lending off their balance sheet, but most shops and so on, they will be in line with that change. So, we add that spread or that change to their rates. And that's what we present to the consumer at the end of the day or to the borrower.  [00:05:37] SAM WILSON: Tell me about building your company. I mean, okay, so you got this great idea. You figured out how to integrate the rates from the lenders. And now you said, all right, the next thing I need is clients. I mean, you need somebody to come to you and work with LoanBase. What was that process? 'Cause we talk a lot of it on the show of scaling your business, scaling, you know, real estate. What was the process for you for scaling LoanBase?  [00:05:59] ARI SHPANYA: Yeah, it's a good question. Initially, we're relatively a new business. We've been around for the last 18 months, out of that probably 12 months in beta. So it's really important to have to nail down your product to give a good experience to your first customers. So we’re still in this kind of stage, we're still working mostly based on referrals. We get friends, clients that refer other clients. Obviously, we do get some new clients by paid search or by anything of like, content or articles out there, or, but at the end of the day, I really think that if your product is good, then product-led growth is the best thing because then it becomes viral or at least one happy borrower can tell their colleague. I'm sure that you have a lot of people you work with, so if you are happy with a certain product or a certain technique, then you're definitely going to share it with others. And that's the best type of marketing I think in our industry and in general.  [00:07:02] SAM WILSON: Got it. No, I think that's really, really cool. Tell me your general feeling. I mean, this is you're involved in the financial markets. How should borrowers be protecting themselves? What steps should they be taking right now? I guess just give me a kind of holistic view, if you will, on where we are and then what people should be doing.  [00:07:22] ARI SHPANYA: Yeah, it's interesting that you ask, Sam. I've just seen today one of the latest surveys and very thorough research reports. And it seems like there is a consensus among the US consumers that this is one of the worst times to, to buy a home, or at least that's, you know, as opposed to, to last year, We can really see that decline. And obviously, with combination of increasing interest rates, it's really something that might be alarming. So we are potentially heading to recession. Obviously, the fed is going to try to make sure that we are not going to hit there, but in terms of interest rates, we are seeing in our industry, right? We are seeing the interest rate going up. We see that across the entire markets, including secondary markets. So right now, if you are a real estate entrepreneur, and you are getting a hard money loan for it can be a rehab, construction, bridge, entitlement, land title, and you name it, you used to get it for seven and a half, maybe six, maybe even four and a half. If you had a good relationship with your local bank. Now it's close to ten and ten and a half. So it's really not sustainable. Debt service coverage ratio is just completely being destroyed if I may say. And that will create, in my opinion, more defaults because if you are in a project already, you know, that's fine, but it will be very hard to get that takeout loan. [00:08:53] ARI SHPANYA: And if you are starting a new project, then all the lenders are essentially underwriting to new guidelines. And new guidelines mean that there are no more takeout loans at four and a half. I'm putting aside the relationship discount and so on, but most debt shops are underwriting to, you know, an interest rate of six and a quarter. So that means you really need to have a very profitable project. I think we're going to see a lot of foreclosures. I think we're going to see a lot of projects going to default. That's going to create more opportunities. Cap rates, we see that that is being pressured. So this is the end of the cycle, just like 2008, so, there, there are, you know, winners and losers. So, I think it's a good time to, to have your war chest and be ready for you know, for gobbling up some, some inventory that will be distressed. And if you are an investor, you do want to be very cognizant and conservative, definitely not over-leverage. Always go on a, like, I would say 65 to 70% LTC, like leverage, not over-leverage yourself, better to have more equity in the deal. This is not the time to optimize for your profit. This is the time to optimize for your reputation and your deal to survive.  [00:10:09] SAM WILSON: That is really interesting, you know, what you say there. I think that that's sound advice. It is not time to optimize for profit. That's absolutely great. Tell me about this: you think the foreclosures will be on the rise because if people are mid-project and like you said, they need to take out a loan or they need to, you know, they need to recapitalize, they are not going to be able to refinance at the rates that maybe they underwrote to. Is that what you're saying?  [00:10:31] ARI SHPANYA: Yeah, exactly. I mean, look, the inflation when, when the inflation is going up, right? So you have a certain pressure there, you have an interest rate that's going up. At the end of the day, that creates some pressure on a cap rate. So we, we see cap rates that are going up as a result, we see on a, on a higher interest rate, we see a debt service ratio that is really hard to reach. So we see that, you know, usually banks will need 1.25 at least, but a project that used to be 1.35 is all of a sudden below one, which means it cannot serve its debt. So in that case, it does create that pressure, and some entrepreneurs, they may you know, they, they may end up in, in default or they may need to, bring more collateral and so on. You know, I remember something that happened to me as a real estate investor in the past and present. During COVID, I had to bring more liquidity to the deal 'cause at the end of the day, with this space, you really want to make sure that you have no single bad apple. You always need to have an impeccable track record because your record is everything. And you need to make sure that no deal goes bad. That's why you, you want to go low leverage, that's when you CR you want to have the interest reserves, but I definitely think that there's going to be a lot of opportunities with these assets that are just not, yeah, a lot of single-family homes that going to drop in value. A lot of other asset class that's going to come down in value and when they cannot serve the debt, then that might create an opportunity for other buyers or, you know, so that's kind of where we are.  [00:12:20] SAM WILSON: The term conservative underwriting is something that is thrown around all the time in our industry. Like, well, we always underwrite, you know, super conservatively, which to me, it's like, You know, when you ask somebody, how are you doing? They're like, oh, I'm great. It really doesn't mean much. It's like, okay. Yeah, sure. You write it conservatively. When I say, conservative underwriting, what should people be doing if they are projecting a cap rate and exit? Like, how can they do that conservatively? Like what, what should people be plugging into their, into their charts in order to say, hey, you know what, I think we've, we've really been hyper-conservative in our underwriting when, when establishing our cap rate and exit. [00:12:59] ARI SHPANYA: Yeah. That's a good question from what I see with our lenders or, you know, we have visibility to thousands of lenders, so I can tell you that conservative underwriting starts with conservative rent projections, for instance. So let's say in multifamily, let's say we're in wherever in LA or we're in San Francisco where, you know, we, we are looking into market brands that we have to take to account and let's say assume 80% of the current market rate, right? So we want to be conservative on the market rate. We want to be conservative about the vacancy. So we want to be conservative about the cost, the other costs, like the cost to manage a property. That's one aspect. Then you want to be conservative about the cap rate, so let's say if you're in, I don't know, let's say if you're in LA then it will be, used to be four and a half cap, and now you're going to underwrite to five and a half, for instance. So that's another thing. And then a third layer would be the debt service coverage ratio. So it's actually, you can increase that. So rather than a 1.2, you can go to 1.3. And the last thing I would say is, is take into account the interest rate that could be in a year from now, and that's not necessarily a lower rate. So you have to be, you know, hoping for the best and planning for the worst, essentially. So that's, how I look into proformas of other lenders, and I just see that everyone is definitely doing that and everyone is also reducing their LTV or LTC, so lower loan to value. Used to be 80%. It dropped to 70%. LTC used to be loan to cost, 90% now we see it at 80% max. And I see now what's called interest reserve. So 12 months of the interest reserve holdback, okay? So that's money that you bring front to the deal, especially on the construction deals or rehab deals. So all of these are essential steps that lenders are taking in order to make sure that you bring the project to the finish line 'cause no one wants to get stuck. With a construction project, right?  [00:15:21] SAM WILSON: No, certainly not, certainly not. What is a practical piece of advice that you would give to somebody that's looking to, let's say they come to your platform, but what's one thing that they should be doing as a borrower that would set themselves apart and make getting approval on their loans easier? [00:15:38] ARI SHPANYA: Well, the thing about real estate investing is it's kind of has the compounding effect, right? So the better borrower you are, the better track record you have, the better access you have to rates, the better access you have to capital, the better access you have to investors and, and inventory, and so on. I would really say it's important for borrowers to focus on their having, like, their experience with five properties, five assets completed. So that's something that every real estate investor, every real estate borrower should have under their belt. And once you have this experience, again, it relates to what we talked in the past. It's okay that you didn't turn a huge profit. You know, it's really important to establish your credibility and your experience. And even if you made a, you know, a 15% IRR, 25% IRR, it doesn't matter. Even if your LPs made more money than you, that's totally fine. As long as you have these four or five projects in terms of experience on your belt and then you’re golden because that's what you need. You need that four or five buildings in terms of experience, assets, you want to have above a certain credit score, which is not an issue. And you want to have a certain net liquidity, which is also something that, you know, you want to set aside something and never be over-leveraged. So these are the three golden rules or the rules of thumb that I would say for getting a loan today or getting financed. And I would say that's a key here. [00:17:11] SAM WILSON: Fantastic. All right. Thank you for taking the time to come on the show today. It really gives us your view on where we are in the market cycle, what's going on in the market, and then really telling us, you know, how to be prepared as a borrower when we come to, you know, come and talk to the lenders and also, just, you know, telling us about LoanBase and why you started it, the problem you saw in the marketplace, and then how you creatively solved it. I think that's really, really cool. Certainly appreciate it. If our listeners want to get in touch with you or learn more about you, what is the best way to do that?  [00:17:38] ARI SHPANYA: LoanBase.com  [00:17:40] SAM WILSON: LoanBased.com. Fantastic. We'll make sure we put that there in the show notes. Ari, thank you again for coming on today. I certainly appreciate it.  [00:17:47] ARI SHPANYA: Thank you, Sam. It's been a pleasure. 

18m
Aug 05
Accepting The Abundance Mindset

Leslie Awasom is the Director of Operations and Co-founder of XSITE Capital Investment LLC. Leslie bought his first investment property in 2017 and transitioned to multifamily investing in 2019. Leslie and the XSITE Capital team host a rapidly growing multifamily-focused meetup in Maryland. They provide resources and add value to individuals interested in growing their wealth and changing their financial future.   Leslie is a trained Nurse Anesthetist and entrepreneur who lives in Hanover, Maryland. He is a husband, father of two beautiful girls, and a son, and loves to spend his spare time reading and flying drones.   [00:00 - 05:15] OPENING SEGMENT   __ __   [05:15 - 10:34] ACCEPTING THE ABUNDANCE MINDSET: NOT LOSING WHEN YOU PROVIDE VALUE TO OTHERS.   __ __     [10:35 - 15:55] UNDERWRITING DEALS    __ __     [15:56 - 18:28] CLOSING SEGMENT __ __ __         TWEETABLE QUOTES ---------------------------------------------------------------------------- CONNECT WITH LESLIE  visit their website at xsitecapital.com       CONNECT WITH ME:   Facebook https://www.facebook.com/HowtoscaleCRE/   LinkedIn   Like, subscribe, and leave us a review on Apple Podcasts, Spotify, Google Podcasts, or whatever platform you listen on. Thank you for tuning in!   Email me → sam@brickeninvestmentgroup.com Want to read the full show notes of the episode? Check it out below:   [00:00:00] Leslie Awasom: some of the tools that we use project, we kind of dial it down a little bit. And we like to go into every deal, having enough cushion. Within the deal, such that if something goes wrong, we still fall within our numbers or even better.  [00:00:12]  [00:00:24] Sam Wilsons: Leslie. Awasom is the director of operations and co-founder of X site capital investment LLC. He manages the company operations market and data analysis, cash flow and budget. Leslie, welcome to the show.  [00:00:36] Leslie Awasom: Hey, thanks Sam. Thank you so  [00:00:37] Sam Wilsons: much for having me. Hey man. The pleasure's mine, there are three questions. I ask every guest who comes on the show in 90 seconds or less. [00:00:43] Sam Wilsons: Can you tell me, where did you start? Where are you now? And how did you get there?  [00:00:46] Leslie Awasom: Yeah, absolutely. I started in real estate in 2017 after coming across one of Robert Kiyosaki book, second chance at your money in your life and just got interested in real estate and building um, more like a solid financial future for myself. [00:01:00] Leslie Awasom: Then along the way, discovered multifamily investing came in contact with my two amazing partners. We found that exec capital investment to focusing on multifamily investing in 2019. And we've been growing ever since. It's been an amazing journey for us, our company and our investors. [00:01:15] Leslie Awasom: Currently sitting on 125 million of assets under management it's growing investor community and have great, a great food that we've been able to help grow the minds of over 1500 people so far. And is that number, it keeps growing every day,  [00:01:29] Sam Wilsons: man. That's fantastic. When you say you've been helpful or grateful to grow the minds of 1500 people, what does that mean? [00:01:37] Leslie Awasom: So we have a monthly educational event. We provide a lot of educational content. We host every Tuesday evening on the writing class where we teach people interested in multi-family how to own the, write these properties, or how to evaluate these deals for themselves as investors. [00:01:51] Leslie Awasom: And we also have like monthly educational events where we bring in experts in the country from other aspects and finance and real estate to teach members of our community. And we provide a lot of educational content via email to our list as well. So, it's just something that we really enjoy doing and that's something that's part of our call mission. [00:02:08] Leslie Awasom: Gotcha,  [00:02:08] Sam Wilsons: man. That's really cool. So you guys have scaled to 125 million in assets, under management, and I guess that's five years that's pretty great. Did you have any investing history in real estate before you went into multifamily?  [00:02:20] Leslie Awasom: So we actually went into multifamily in 2019 Sam. [00:02:23] Leslie Awasom: So, so we scaled that in about two, in about three years. Yeah. Prior to that, we individually had experience in single family investing. Our CEO had some a long track record of investing in like, startups and angel investing and real estate as well. And I did some real estate and all the third partner had a financial service business. [00:02:42] Leslie Awasom: So that's the background we came into when we informed our.  [00:02:45] Sam Wilsons: Gotcha. That's really cool. Tell me what are some things you know, that you think about, I guess, in this now three year journey in multifamily? Like what are some things that you feel like you've done really well that other people should emulate? [00:02:58] Leslie Awasom: I think one thing we've done really well is it's like really. How was the right word really absorbing or like, really accepting the abundance mindset, right. Really adopting that philosophy of an abundance mindset and really understanding that we do not lose anything by providing value to others. [00:03:15] Leslie Awasom: And actually it's actually like kind. To some extent it's selfish mindset because the more you give to other people, you actually get way more in return. So that's something that has worked really well for us that we've done really well. We give a lot of our time and we give a lot more to members of our community. [00:03:30] Leslie Awasom: And because of that, our community has grown tremendously. We've also done a really good job at finding the right assets that, that keep our investors safe. Being very conservative and our, on the writing. That's one thing that we are very proud of how conservative we are on the deal that we bring to market so that our investors are safe when they come to invest with us. [00:03:50] Sam Wilsons: What are some things, when you say, the more you give the more it comes back to you, but like when you say that, what are, what would you say would be a standard, some something that you'd, or ordinarily have thought, man, I'm not gonna do that. I'm not gonna, I'm not gonna share that information or I'm not gonna give that. [00:04:04] Sam Wilsons: What are some things that come to mind that you feel like, Hey, you know what? We decided to be really liberal with this and share it as much as we can.  [00:04:10] Leslie Awasom: It's just for example, we have a lot of people that come to our platform that are looking to start their own, our multifamily company as well. [00:04:17] Leslie Awasom: Ordinarily some other person will look at this as some kind of competition. I'm not gonna show them exactly how we do stuff. We don't, however, whatever you want to learn, we show it to you, whatever resources we took to get over there, we share with. So is that another thing is like, for example, like the underwriting class we do, we've been doing that every Tuesday night going on to about a year now. [00:04:35] Leslie Awasom: It's something that take, and it's not something that we charge anybody for. And so, even people that are coming on board that are learning and going and doing this on their own as well, We really enjoyed doing it. And but, because we are given that much, we've met some really amazing partners that see that and value that. [00:04:51] Leslie Awasom: And that also share that kind of an energy. And they've also helped in our growth significantly.  [00:04:56] Sam Wilsons: Got it. That's really cool. What are some things maybe that if you could do it over, if you went back and said, man, let's rewind three years, something that would make maybe speed things up that would maybe save some heartache. [00:05:07] Sam Wilsons: What's something that you feel like was not, we'll called a mistake, but something that, that you said, man, I don't wanna repeat that.  [00:05:13] Leslie Awasom: I probably should have brought in a third partner, our CEO, Dr. Juda only much earlier than we did because bring in a what now our third partner, Dr. Juda only he came along in the process a little bit later. [00:05:24] Leslie Awasom: The company initially started with Tenny and I. We probably would've brought him in early because he just came in and just made like the final leg of the tripod and just brought in this amazing energy and and intelligence and integrity and tenacity that has really pushed us forward. [00:05:41] Leslie Awasom: So that's probably one thing I would've done differently, otherwise, everything else I'll keep it the same. My journey might not have been the fastest. we had some failures and struggles along the way, but it was it was perfect. It was perfectly designed to put us to where we are today. [00:05:55] Leslie Awasom: That's great.  [00:05:55]  [00:05:55] Sam Wilsons: Let me ask you this. Lastly, you said you brought your third partner on and it's all worked out. Great. What did you guys realize that you were missing? Like, what was it you're like, gosh, we just need a third person in this, to really make this thing. [00:06:08] Sam Wilsons: Hum. What were the components that were missing in, in, in that you guys realize you need to bring somebody on? What was that?  [00:06:14] Leslie Awasom: So we needed that somebody that had that vision that could keep us like aligned and focused in , on who we are the company we're trying to build and the community that we're trying to build. [00:06:24] Leslie Awasom: Because initially well, we just got really excited about the possibilities that multifamily presents for. For ourselves and members of our community. And we just went out running we didn't really have like a true identity as a company and focusing on what was really key to us. So we needed that person that had that kind of that, leadership aura, if that's the best way I could describe it. [00:06:45] Leslie Awasom: And Dr. Oney is, was a perfect person. And we are grateful that he came on board when he did.  [00:06:50] Sam Wilsons: That's that's really cool. And are you guys solely focused on acquiring multifamily? Yes. Right now what do you think about the multifamily market right now?  [00:07:00] Leslie Awasom: It still has it's a little bit riskier than it was a year ago because of the changes in interest rates and everything that's happening in the economy. [00:07:08] Leslie Awasom: But we think, I believe multifamily is still a very solid asset for long term wealth growth and world generat. We just have to be a little bit more conservative than we were before with some of the projections that we make on some of the growth and be more, selective in the markets that we're investing and the kind of assets that we're investing, just to decrease the amount of our risk exposure that might come along. [00:07:29] Leslie Awasom: If we have some significant changes to the  [00:07:31] Sam Wilsons: economy, when you say you're changing your growth projections, is that saying, Hey, we're gonna dial back what we think we can sell this for. Is that saying, Hey, we're gonna cut back on, what our rent projections are gonna be. I mean, is that even going so far as saying, Hey, what if we have a rent decrease? [00:07:47] Sam Wilsons: I mean, what do you mean when you say. Tweaking your growth projections.  [00:07:51] Leslie Awasom: Absolutely. It's a little bit of both. We project it, for example, if in the past we're projecting a 10 basis point increase in cap rates on on a yearly basis on exit, we might project a little bit higher depending on the market. [00:08:03] Leslie Awasom: Some markets we are doing even like a 15% annual in, increase 15 basis point increase in cap rates annually onto. Our rent growth. We are keeping our rent growth in some markets. Maybe the first year we have some in the other years we keep it flat. So, it just depends on what the kind of data we see from our data sources in each of the markets that we go into. [00:08:24] Leslie Awasom: So whatever like some of the tools that we use project, we kind of dial it down a little bit. And so that it keeps, we like to go into every deal, having enough cushion. Within the deal, such that if something goes wrong, we still fall within our numbers or even better.  [00:08:39] Sam Wilsons: Got it. Tell me about your role there inside of the company. [00:08:42] Sam Wilsons: What is it specifically that you handle?  [00:08:46] Leslie Awasom: So I handle the operations of the company on the company side. I make sure that we are meeting like we have the right systems in place to meet the goals that we set for ourself. Every year we meet and we come up with quarterly goals and we come up with annual goals as well. [00:08:59] Leslie Awasom: So, my role in there is to make sure that we are using the systems that we have created and other systems are working constantly evaluating constantly working with our employees to make sure that we can make our working process more efficient. And I'm also involved in the management of our assets. [00:09:15] Leslie Awasom: Manage the property managers making sure that they're keeping up with the KPIs that we set for each property, make sure that the properties are performing according to what we on the road or better. So, once our acquisition team, for example, finds an asset and they think that it's a good one for us to review and they've gone to the underwriting, I take that underwriting and I have to review it compared to what our business plan, what our typical business plans are and do some more. [00:09:38] Leslie Awasom: Checks and balances on it to make sure that it's a right asset for us to go into. So, I'm more of the, on the back side of things, just making sure that the numbers are right and everything is, functioning properly  [00:09:49] Sam Wilsons: What's the timeline. This is just a totally kinda left field question. Yes. [00:09:53] Sam Wilsons: What's the timeline from when you guys identify a potential asset on the acquisition side, get it through underwriting, get it to you, get you to review the underwriting and then say, Hey, yeah, this is a potential to make an offer. What's how long does that take? It usually  [00:10:06] Leslie Awasom: takes about three days. Because that Christian team is very busy and that's probably one of the most developed part of our business. [00:10:13] Leslie Awasom: We have a very solid team, so we have someone that goes in and finds the assets and stop to the brokers. Then pass it over to underwriting. They're underwrite it and they usually send it out to me. =, within three days after getting more information from our property managers, our debt brokers and our tax consultants. [00:10:29] Leslie Awasom: So within three days I get it and review everything and see if it makes sense to pursue any further or we pass. What is your  [00:10:36] Sam Wilsons: current, do you, I mean, if you don't know this, that's fine, but I bet you do. What is your current number of deals you underwrite to deals that you close what's that  [00:10:45] Leslie Awasom: ratio right now is about 134 to one. [00:10:49] Leslie Awasom: See, I knew you knew. And that asked to to best on final, not even close . Yeah.  [00:10:55] Sam Wilsons: What? Geez. So yeah. Okay. That's the best and final that's not even to  [00:10:58] Leslie Awasom: close. Yeah. Yeah. That's based on what we've done so far from the last from our last deal. So it's been crazy. We've been reviewing a ton of deals, but made a few best on finals, but it's not nothing is, has come through yet. [00:11:10] Leslie Awasom: Have you seen any  [00:11:10] Sam Wilsons: softening in the market or any I guess just any changes of note.  [00:11:16] Leslie Awasom: Yeah. Our feedback from our brokers is that there's a lot of re trading happening on some of the properties. So in the past we would talk to brokers and our underwriting might be a few millions below what they were asking. [00:11:27] Leslie Awasom: And we will ask if it could submit an offer and they tell us no, but this time around, it doesn't matter how low the offer is they actually to submit because , they want owners to see that things are changing with the interest rates. This deal still have to cash flow. Most owners still have expectations from when we were at a 2% interest rate in, and a 6% interest rate climate. [00:11:48] Leslie Awasom: So it's gonna take some time to adjust, but I do feel like it it is adjusting slowly.  [00:11:53] Sam Wilsons: It is. Yeah. And that's, there's lots of arguments, eight different directions on why interest rates won't affect cap rates, why interest rates and cap rates are completely, disconnected. [00:12:02] Sam Wilsons: And then you hear it the other way around. And I don't know which ways up to be honest in the end. But it is but just to confirm, you're confirming, what we've been hearing is that there are some re trading happen. We have, we are seeing some softening in the market as a whole and just, it is interesting to hear that, Hey, you know what, gimme your offer. [00:12:19] Sam Wilsons: So at least I can take it back. And that's been the word from the brokers too, is like, we need something to take back to our sellers, just so they understand that this is where the market is now. So yeah. Yeah. E even as you. As a buyer, you might feel like you're sending in an offensive bid, which is okay. [00:12:34] Sam Wilsons: Yeah. But. That's what they're asking for.  [00:12:36] Leslie Awasom: Yeah. Because if you think about it at the end of the deal, the deals still have to cash flow. Yeah. Maybe the cash flows might not be as, as robust as they were a few years back. But buyers would not buy deals that are doing a negative cash flow that are really that tight. [00:12:49] Leslie Awasom: So. It's just a higher risk. So, I do believe some softening would happen, but maybe not as drastic as as people think it might get, just because multifamily is still a very strong asset class with a lot of growth potential still.  [00:13:01] Sam Wilsons: Yep. Yep. Absolutely. I think that's really cool. [00:13:04] Sam Wilsons: Give me gimme one thing, one, one nugget on the asset management side that you say, man, here is something that. you just gotta have in order when you're the asset manager,  [00:13:15] Leslie Awasom: You like, you gotta stay on top of your numbers. You gotta Be able to trend everything on a monthly basis. Guys, stay on top of your numbers, understand what those numbers mean and how you could influence those numbers because that's where the key really that's where you have the power as an asset management to make these assets perform very well. [00:13:34] Leslie Awasom: So you really do have to understand the story behind those numbers and what role you could play to, to affect those.  [00:13:40] Sam Wilsons: Give me an example of a number you feel like that is something that you can directly influence that you should really be paying attention to.  [00:13:48] Leslie Awasom: I tend to look at it from a much bigger picture, but the simple things for example, just going into a property you might see a water bill that's been outrageous where as an asset management, you might come in and implement some kind of a water savings program, and you're able to decrease that and increase your NOI tremendously. [00:14:04] Leslie Awasom: And the other piece is like maintenance cost. Like, what I've found in some of our assets is like, by having a very good qualified maintenance personnel on staff that is well paid, but that has several skills. Right. You could provide a lot of tools for the, for that person front, and it's gonna save you a ton in maintenance upfront. [00:14:23] Leslie Awasom: And which is something that we're experiencing one of our assets, which is like finding the right qualified maintenance on site person that has those skills that you don't have to outsource a lot of the jobs that are involved in this assets that could save you a ton of money on your maintenance cost long. [00:14:40] Sam Wilsons: Yeah, absolutely. Do you guys help find that maintenance person or is that the property manager's job? It's the  [00:14:46] Leslie Awasom: property manager, but we try to kind of give a direction of of where we want to go. And our property management team has a lot of exposure. In the Southeast market. So they have a large footprint and they can kind of, it's just about giving some side sort of direction and then they go out and look for that person for you. [00:15:02] Leslie Awasom: So, so it's one of the things we talk about our property management team up front. When we taking over these assets. Yeah,  [00:15:08] Sam Wilsons: absolutely. What do you do when you aren't getting the numbers you want from the property management team? And I, what I mean by that is when, Hey, I need the last week's report on Monday morning, and then Monday comes and goes and you don't have those numbers. [00:15:20] Sam Wilsons: What do you do?  [00:15:21] Leslie Awasom: Well, you just have to remind them the importance , of getting those numbers on time. My, our approach has been to empower whoever we work with to take responsibility for what they're doing so that we don't have to sit on top of them every day. And and we promote good behavior. [00:15:37] Leslie Awasom: Right. So we focus in on what you're doing, right. And we promote that and we push that forward and we found that has really worked very well. And our property managers, our team members are ready to go above and beyond for us because they feel like they're part of the journey of this asset. [00:15:52] Leslie Awasom: They feel like they're part of the journey that are investors are joining us along. The way we, so, so, so far it has worked really well. And if there's something that is not done, right, like not getting a report out on time, we'll point it out to you and then hold you to the higher expectation, but make you feel like you are the one who is coming up with a much higher expectation. [00:16:09] Leslie Awasom: Like, so the property manager's gonna set the goal to have this on time by this time, then we'll hold you accountable.  [00:16:15] Sam Wilsons: Right. I love it. I love it. Lastly, thank you for taking the time to come on today and really give us the insight into what it means to be an asset manager. What it means on the underwriting side, how you guys are finding opportunity, what you guys are doing to stay competitive, your thoughts, really on the market. [00:16:31] Sam Wilsons: And then just talking about your, the way you educate. Your investors, your educational events that you put out. I think that's really cool what you guys are doing. Certainly appreciate you coming on. If our listeners wanna get in touch with you, learn more about you, your every Tuesday underwriting event, any of those things, what is the best way to do that? [00:16:47] Leslie Awasom: First off? Thank you, Sam. Thank you so much for having us on your platform and giving us opportunities to continue to share on what we do to the larger community. Yes. You could get in touch with myself or any one of my amazing partners by write our information is all available on our website, which is, www do X as in XLOPHONE, S as in Sam it capital.com. [00:17:10] Leslie Awasom: XSITE capital.com. Feel free, reach out to any one of us. We love talking to, to, to people and learning more about ways that we could help you at Tuesday underwriting classes every Tuesday night at 8:00 PM. If you are interested in that as well, there will be a means for you to join our community, to become part of getting communications about everything that we do. [00:17:29] Leslie Awasom: So, come join us. However way we could help you in your growth journey. Don't hesitate to reach out to.  [00:17:34] Sam Wilsons: Fantastic. Lastly, thank you again. I appreciate it. Have a great rest of your day.  [00:17:38] Leslie Awasom: All right. Thank you so much, Sam. Thanks for having me.

18m
Aug 04
The Introvert's Edge on Rapid Growth

Think introverts can’t thrive in business?   Matthew Pollard, author of The Introvert’s Edge to Networking, offers strategies on how introverts can harness their strengths and set themselves up for success through systems and planning. He is an internationally-recognized consultant, speaker, blogger, author, mentor, coach, and serial entrepreneur with five multi-million dollar business success stories under his belt, all before the age of 30. As the founder and CEO of Rapid Growth, LLC, he also reveals the formula for optimizing our skills and story to achieve maximum ROI.     [00:01 - 05:51] FINDING SUCCESS AS AN INTROVERT __ __ __ __ __ __   [05:52 - 24:04] CREATING A RAPID GROWTH BUSINESS __ __ __ __ __ __   [24:05 - 25:40] CLOSING SEGMENT __ __ __ __ __ __ TWEETABLE QUOTES   Matthew Pollard Matthew Pollard Matthew Pollard -----------------------------------------------------------------------------   Connect with Matthew through his website https://matthewpollard.com/. Discover the Rapid Growth Formula and get the template at matthewpollard.com/growth. Download the first chapter his book, The Introvert’s Edge to Networking at introvertsedge.com/networking. Listen to his podcast, The Introvert's Edge.   CONNECT WITH ME:   I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns.     Facebook https://www.facebook.com/HowtoscaleCRE/   LinkedIn   Like, subscribe, and leave us a review on Apple Podcasts, Spotify, Google Podcasts, or whatever platform you listen on.  Thank you for tuning in!   Email me → sam@brickeninvestmentgroup.com Want to read the full show notes of the episode? Check it out below:   [00:00:00] MATTHEW POLLARD: The big framing for me is that I learned to succeed as an introvert. And I will tell you that most people think that introversion is a disadvantage when it comes to selling to networking. I actually realize that we have a real edge, as long as we realize that we can't behave extroverted, that we systemize out our disadvantages while leveraging our strengths. And planning and preparation really allow us to leverage our major strengths of active listening and empathy, which something, I'd say, extroverts aren't quite as good as us at. [00:00:41] SAM WILSON: Matthew Pollard is the author of The Introvert's Edge, Amazon's eighth most sold book of the week. Matthew, welcome to the show.  [00:00:48] MATTHEW POLLARD: Hey, I'm excited to be here. Thanks for having me on. [00:00:51] SAM WILSON: Hey, man. The pleasure's mine. In 90 seconds or less, can you tell me where did you start? Where are you now? And how did you get there?  [00:00:56] MATTHEW POLLARD: Oh, in 90 seconds or less? Well, introverted kid, reading speed of a sixth grade, horrible acne, no business being in sales, fell into sales as a result of losing my job just before Christmas. 93 doors before my first sale, it was a horrific day of getting sworn at and getting told to get a real job, went home, taught myself how to sell watching YouTube videos, became the number one salesperson in the company in about six weeks, fast forward just shy of a decade, I had been responsible for five multimillion dollar success stories. And the big framing for me is that I learned to succeed as an introvert. And I will tell you that most people think that introversion is a disadvantage when it comes to selling, to networking. I actually realize that we have a real edge, as long as we realize that we can't behave extroverted, that we systemize out our disadvantages while leveraging our strengths. And planning and preparation really allow us to leverage our major strengths of active listening and empathy, which something, I'd say, extroverts, aren't quite as good as us at. [00:01:54] MATTHEW POLLARD: And that's really, you know, what got me to where I am today. I moved to the US. I started teaching people how to create rapid growth businesses by differentiating, by creating a niche strategy, and by creating a sales system that works, some of those people in the syndication space and, and really that's, what's allowed me to continue my mission of helping introverts realize they're not second class citizens. Their path to success is just different to that of an extrovert.  [00:02:18] SAM WILSON: Can you define for me? 'Cause I'm not sure that even everybody has a clear understanding of the difference between an extrovert and an introvert.  [00:02:25] MATTHEW POLLARD: You know, it's actually interesting. I, I think that psychologists have been paid a fortune in research grants to make it more complicated, not less so. So the classic introvert you would assume is not either you or ism, you know, the classic introvert would be that person hiding under the bridge. And I, I promise that I would out you as an introvert on this show. So there you go. And this is the biggest thing that I focus on, that most people perceive the introvert as the quiet person that doesn't want to talk to anyone. And what you may be experiencing right now is what you would perceive as perhaps two very articulate people, having a dialogue about a topic that they, you know, if they were true introverts, they wouldn't be able to have. And that's the mistake that everybody makes. Introversion has got nothing to do with your ability to succeed in being a podcast host, being a podcast guest, speaking from a stage, networking, selling, gosh, any other so-called extroverted or any, you think, as a matter of fact, I think that introvert dominate on, you know, all of those, as long as they've got a great system and they do planning and preparation previously. The difference is that after those activities, we're exhausted. Where an extrovert is buzzing, they're charged up and they want to go to the next so-called extroverted behavior.  [00:03:36] MATTHEW POLLARD: So the thing that I will say that separates us, and the best example I can give you is I run an event in Austin called Small Business Festival. And you know, Jim Cathcart, number one most award-winning speaker in the world, is a friend of mine. He came down, he's like, Matt, I'm going to be a closing speaker. And I'm coming down for the full three-day period. At the end of that three days, he and I had been involved in the event. We'd hung out with people. We'd interviewed people from stage. We'd both spoken. The difference was at the end, he was charged up and wanted to go and experience rainy street in the city of Austin, the live music capital of the world. I wanted to put on a hoodie and watch Netflix and maybe cry a little bit by myself and talk to nobody. I've never in my life had to ask a 70-year-old if I could please go home, I was tired ever, but that was the time. He was so charged up because he had three days of charge. I had three days of using my charge. That's all introversion is. It's got nothing to do with what we can achieve.  [00:04:31] SAM WILSON: Right. No, I appreciate that. Yeah. And that's the definition I was hoping you were going to give 'cause it's absolutely true. I mean, yeah, I'm doing, I run a daily podcast. I'm doing 12 interviews today. And let me tell you when these, this is all I do on Tuesdays, this interview, and when Tuesdays are over, I'm spent. Like I just go, I go home. Like, I, I really don't get any of their work done on Tuesday. It's like, I'm exhausted. I'm just exhausted. And I had a great day, had a great, great time conversing with people like yourself all day long. I get to meet the brightest and best minds in real estate, every Tuesday, all over the country. It's amazing. And it wears me out. That's just, just the way it is. [00:05:06] MATTHEW POLLARD: And you own that. And that's the important thing. I think a lot of people either get embarrassed by that. Now, truthfully, you have a ton of advantages being an introvert and extroverts, I don't want to be perceived as extrovert-bashing, extroverts have a ton of advantages, too. The goal is that you have to understand you have strengths and weaknesses and you have to leverage your strengths while learning how to improve on your weaknesses. The difference is an extrovert will go and learn how to actively listen or they'll go and learn how to empathize better. An introvert believes that they can't, and that's really where the biggest hurdle is. And I will tell you, Sam, I actually batch my interviews, too, for my podcast, The Introvert's Edge. I batch interview over a two-day period the entire series every time I launch one because I don't want to do it again for another long period.  [00:05:51] SAM WILSON: That's awesome. I absolutely love it. Let's talk about achieving rapid growth. So I know that's one of the things you're well known for, break down that process for me, if you don't mind.  [00:06:02] MATTHEW POLLARD: Yeah, absolutely. And I think the important thing for people to understand when it comes to rapid growth is that most people are amazing at their functional skill, but rapid growth has nothing to do with your functional skills. As a matter of fact, if you explain what you do as a functional skill, then people are less likely to want to work with you. So what I really highlight for people is there's three steps to rapid growth that are outside the scope of your functional skill. If you can nail these three and do them well, then you really can create a rapid growth business that, that you deserve. So what I'm going to do is I'm going to give you an example that's kind of outside your industry, but I want to tell you that I actually applied this to a syndication business. That's a feature in my new book, The Introvert's Edge to Networking, and he was able to obtain rapid growth really, really easily. But the key was, by the way, don't call yourself a syndication specialist. If that's what you are, don't say it to everyone. That's not in syndication. It sounds like a Ponzi scheme, like a scam, like I'm going to give you my money and you're going to run away from it, with it, I should say. Now here's the thing that I will tell you to everyone that knows what it is. It is a really good way of making money and it's a great way of leveraging income, but the truth is the average person outside that, the only way you're going to be able to explain it to them is by educating them, that's like opening your fire hose of information.  [00:07:16] MATTHEW POLLARD: So you have to separate yourself from that industry, and you have to leverage the power of story to educate. So what I'm going to do is I'm going to give you an example that does both, I'm going to show you how it applies, then I'll show you how it applies to syndication, but I'm also going to leverage the power of story because especially for those introverts out there, story does a few amazing things. The first thing it does is it activates the reticular activating system of their brain, which for an introvert that struggles to develop rapport, it allows my brain to synchronize with the brains of everybody that's listening. It creates artificial rapport that I can leverage into real rapport, super powerful. And it allows me to foster a relationship with everybody that's listening now. This is really, really powerful as well because people buy from people that they like, but it also is for introverts and for extroverts that feel like they need to educate, it stops us from putting so much jargon into the explanation. So leave your brochures, leave your manuals, and your jargon talk at home. Tell a story instead. The second thing that I will tell you is when you tell a story, people remember up to 22 times more information. So my goal of sharing this story with you is also that you retain it, that you remember it, and you actually apply the advice that I'm about to give you. [00:08:24] MATTHEW POLLARD: And then thirdly, and I think this is the most powerful, it actually short circuits the logical part of your brain. So when you hear a story, your emotional part of the brain is what hears a story. The logical part has no way of processing it. So literally in short circuits your emotional brain, goes story time, and listens. So the difference here is that if you try to give somebody jargon for six seconds until they're bored, you tell someone a story they're going to listen for two or three minutes. And they're only going to listen for whether the moral applies to them, which is even better because they assume all the detail is fact. So because of that, it gives you a huge advantage of everybody else, especially in the investment space where they're just overwhelming. Everybody in the industry just overwhelms people with jargon.  [00:09:04] MATTHEW POLLARD: So the example I'll give you is actually of a language tutor that was out of California. And she taught kids and adults Mandarin. And for the longest time, she was able to charge $50 to $80 an hour for a private consultation. Now she did that successfully until there are a whole bunch of people moving into California, willing to charge 30 to $40 an hour for a private consultation. On top of that, we now live in this global economy. There were people in China offering to do it for $12 an hour on Craigslist and technology that says, Hey, I'll charge you nothing. You teach me English. I'll teach you Mandarin. You know, no one charges, anyone anything, so she's competing against free. So she comes to me and she says, how do I compete in this crowded marketplace? What she's looking for is how to sell more effectively. But the key is that if you start with sales, you've already lost. What I said is we've got to avoid the battle altogether. So I looked at all the things she did for her clients outside the scope of her functional skill, and what I realize is for two of these clients, and literally, she'd worked with hundreds, it was just two. She helped them understand some pretty important things. These were executives being relocated to China. Now the first thing she helped them understand was the importance of rapport. Like here, if I was a really bad salesperson, at the end of 45 minutes, I might say, do you want to move forward? [00:10:11] MATTHEW POLLARD: And you'll say, yes, no, or, everyone's favorite, let me think about it. Well, if I come back a week from now and you still say you want to think about it, you're probably not going to go ahead. In China, they're going to want to see you five or six times before they discuss business. They're probably going to want to see you drunk over karaoke once or twice. It's just the kind of people that they are, but that's because they're talking 25 to 100-year relationships, not transactional deals like we do here. She helped them understand the importance of eCommerce or the differences between eCommerce in China and in the Western world and the importance of respect, why learning the language isn't enough. You've got to reduce your accent, how to handle a business card, why it mattered. These are the things that were significant to these two clients. And I said when you doing so much more for these people than just language tuition, what are you doing? Now in syndication, everyone has their own unique skills, their own things that they bring to the marketplace that they struggle to articulate. Otherwise, you won't have clients that keep coming back to you. And she said, look, there's just a few things I'm just trying to help, but I'm like, you're stuck in your functional skill. Is it fair to assume as a result of the assistance that you are giving these people, they're going to be more successful in China? And she's like, I mean, yeah. I mean, that's the point, right? I said, great. Let's call you the China Success coach then. Forget about Mandarin for a second. Let's focus on creating what we ended up calling the China Success Intensive, which was a five-week program to work with the executive, the spouse, and any children being relocated to China. [00:11:30] MATTHEW POLLARD: Now she loved the idea of this, but she's like, well, who do I sell it to? And I said, well, who do you think your ideal client is? What she's asking is who do I go out networking to find, right? Now everyone assumes the biggest group. So I said, well, who do you think you're supposed to sell this to? And she said, well, obviously the executive. I'm like, yeah. I mean, I was terrified of moving from Australia to the US. Imagine going to China where they speak a different language. Still, not your ideal client though. She's like, well, the companies are going to pay. I'm like, yeah, they got millions of dollars writing on an executive being successful, fair assessment. Still, I don't think so. Frustrated, she's like, well, who then? I said I think you're right. Your client's the immigration attorney. She looked at me puzzled. She's like what? I said, what do you think about this for a second? An immigration attorney gets paid five to $7,000 for doing a visa, doing all the paperwork and bureaucracy that comes with it. They've got staff, they've got office space, they've got a pay to get a client. They'd be lucky to make $3,000. I said, so just offer them $3,000 for a simple introduction. They were like double my profit for a simple introduction, sure. What have I got to say? These people are ecstatic to meet her at a networking event. [00:12:30] MATTHEW POLLARD: She said, well, all you've got to do is say, congratulations, you've now got a visa. I just want to double check you're as ready as possible to be relocated to China. These people, pretty confident, they'd say, yeah, I think we're set. You know, we've got our place sorted. We are learning the language. Kids are getting pretty good at it too. We've got our visa now. Thank you. I think we are good to go and they just respond with, there's actually a lot more to it than that. I think you need to speak to the China Success coach. She then got on the phone with the easiest sale in the world. Now put this in perspective. She charged $30,000 for doing this. She paid a $3,000 commission for this five-week program. She made $27,000 for the easiest sale in the world instead of struggling every day to charge $50 to $80 an hour, she had a business that exploded. Now, how do you apply this to this syndication space? Simple. You first need to decide the niche for you. [00:13:18] MATTHEW POLLARD: I worked with a client recently who specialized or had a lot of clients in the medical space, surgeons, people that were, you know, highly specialized doctors. Just, so you know, you're supposed to feel sorry for these people because they spent a fortune learning. Then they get into their career and they put themselves in golden handcuffs. They've got expensive lives, expensive spouses. Their kids are going to expensive schools. They have no idea how they're ever going to retire. The thing they do have is a huge income, but they invest it in things like condos and triplexes. The problem is that, usually, they end up the landlord and the hourly rate's horrible and the properties, 'cause they've got less time to look than everyone else, they usually lose money, not make money. So they give up on all that. That was the group that he cared about though. He sold it to everyone. I said, specialize here. Then we can frame the messaging differently. We actually called him The Arbitrage Architect. Why? Well, arbitrage means buy low and sell high. Well, if you can buy things low in a way that nobody else can if you've got a high income that allows you or affords you the opportunity to be involved in a syndication, a much smaller group, so it's more manageable and more profitable. Well, of course, you're basically making money out of arbitrage. So we created the unified message of The Arbitrage Architect. We then niche down to doctors and surgeons, and then we created a sales system that leveraged the power of relationships through other surgeons and messaging out to surgeons and doctors. That's what created his rapid growth business. Funnily enough, as soon as he started doing it, while the people that knew him were like, what are you doing? You're a syndication specialist, just stick to that. Even his father-in-law thought he was insane. He actually had a doctor's association in Canada, reach out to me like, you know what? We need someone to speak to our doctors. Can you work with us and help us with that? And he had a dream set of clients. Now he has no problem raising money and all the choice deals get given to him first because they know who he is. He breaks through the noise. So if you focus on these steps, firstly sales, step three, is a lot easier, but gosh, you stop feeling like you're having to convince and cajole people to do what's in their best interest. [00:15:28] SAM WILSON: Yeah, I like that. That's absolutely right. And I, I think you started with something there at the beginning was to leverage the story. You know, like any good brand leverages the story. I don't know if you've ever, ever done a whiskey tour, right? I remember I was on the bourbon trail in Kentucky and, and it's like, in the end, it's the same, almost the same, you know, same product, you know? Okay. All the, all the bourbon drinkers, like, no, it's not, I'm going to get a bunch of hate email, but, but seriously, in the end, they've always got some founding story and it's, I mean, the whole thing is about the story and how special the water is and how special the grains and what, it's like, okay.  [00:16:02] MATTHEW POLLARD: Oh, I'm with you. I mean, how many times have we gone to a winery and actually had pretty bad wine, but then we bought a bottle because the story was so great. You felt connected to this bottle of wine. It was nowhere near as good as a bottle half the price from California that we could have got it home.  [00:16:17] SAM WILSON: Right. Exactly. Exactly. You're like, gosh, is this a $6 bottle or a $2? I don't have any idea. This is not good though. I know that. Yeah. That's exactly it. And that's why I never need to go on a whiskey tasting tour ever again. It's like, this is, I've heard the story. Thank you. But still, even though, even, so I liked really what you said there of leverage the story. What are some things that people should do, I guess, to begin, you know, finding their unique story? Like for you, I think it sounded like it came from the experience of identifying yourself as an introvert, going, okay, you know what, I'm an introvert and this, this does not come naturally or easy for me. And I think you built upon that. What can other people do to really find their way of leveraging their story?  [00:16:57] MATTHEW POLLARD: Yeah, absolutely. So I think what we need to do is you need to say what are the skills that I have outside the scope of my functional skill and then say, well, what is the higher level benefit of that. So for Wendy, it was eCommerce, understanding of respect, understanding of rapport. The high-level benefit was China Success. For Shane, who became The Arbitrage Architect, it was the fact that he understood what doctors were going through, how to find deals, how to raise the money, how to connect with those right people. And then, you know, The Arbitrage Architect became the perfect fit for him because he understood what they were going through. He understood that while wealthy, they were actually stuck in golden handcuffs and they were trying to invest. It's funny, we came up with this slogan, stop investing like a poor person, right? Because the whole framing was around a super rich, egocentric kind of individuals that knew that they should be able to get access to something that everyone else did and they just couldn't find it. So it was a really easy fit.  [00:17:50] MATTHEW POLLARD: For me, I went, well, hang on a second. you know, I learned to sell as an introvert, yes. But then I started my own business and I realized that if you start with sales, you've already lost. So I actually learned to market, by the way, salespeople tend to be undergrad qualified people or people that aren't seen as highly qualified. Marketers on the other hand are highly qualified but have never had a relationship with a customer. They don't really go and speak to customers. So salespeople tend to hate marketers and marketers tend to devalue what's going on in the sales team. I actually was able to play in both spheres. Because of that, I actually had the ability to communicate between. So most people that are in small businesses, they generally have to hire a sales coach, then they have to hire a marketing specialist, and neither of them are actually connecting the dots for the other. Then the world went online. So I went, well, I understand sales and marketing offline. That's how I grew my business. And then I moved them online. And more specifically, I learned to move them online and realized that while everybody else was blogging every day, podcasting every day, taking photos of their donut for something to say on Instagram, because their focus was to be the loudest, I realized that if you were the clearest, i.e. had a great message, you didn't need to be the loudest you could optimize and even automate to break through the noise, i.e. in networking and online, if you can be the clearest, you don't have to be the loudest.  [00:19:07] MATTHEW POLLARD: By bringing all of this together, online and offline marketing and sales, and the psychology because truthfully, look, I've learned you can create a rapid growth business out of anything. I built five multimillion-dollar businesses myself from the ground up. And the thing I can tell you is there's nothing worse than a rapid growth business with customers you can't stand, the business, you don't like. So it's ensuring that you actually create the right rapid growth business as opposed, and trust me, you'll make more money if you focus on a business you're actually passionate about, too. Now, most people in this syndication space are so focused on the money, but there is a passion behind it. They just are so logical and so practical-minded or so focused on making money, they don't take time to think about it and learn how to articulate it. My realization that no one else does this stuff, made me realize that what my higher level benefit was was, yes, I was passionate about helping introverts, passionate about helping service provider businesses, more specifically than all businesses in general. And what I realized is I had a unique competency, which was twofold. One was that I had the ability to help a business create rapid growth, but also had the ability for a business owner, to help a business owner obtain rapid growth in their mindset, their focus, the business that they were going to create. So they actually created the business, the rapid growth business that they love as opposed to the rapid growth business that pays really well, but makes them suicidal. So I called myself the Rapid Growth Guy because it encapsulated that. [00:20:31] MATTHEW POLLARD: By the way, the first time I told a friend unified message is the last thing you should tell somebody else. It's like walking up to someone and saying, Hey Sam, I know you've called me, Matthew, my whole life. Now, when I want you to call me Tom. It just feels weird. Like, the first time I said to someone called me the Rapid Growth Guy, it was a friend of mine that was a sales trainer. And by the way, you don't want to call yourself a commodity, right? When I called myself a sales trainer, people looked at me like I was one step above a scam artist. When I called myself a marketer, they go, oh, I need that. How much do you cost? Now I'm talking about price. But when I said to a friend, I called myself the Rapid Growth Guy now, he looked at me and he's like, Matt, what are you doing? I mean, you sound like a male enhancement drug and not a good one, right? So for me, it was about making sure that I shared it with new people. [00:21:12] MATTHEW POLLARD: Shane, the first time he called himself, The Arbitrage Architect, his father-in-law was like, oh my gosh, I think you've hit your head, right? But now he's got a rapid growth business. So the advice I would give you is look at the skill sets. Every single person, yes, you do syndication or you do property, that everyone has unique experiences, unique past customers, unique qualifications, unique passions, and missions that perfectly qualify them to help a demographic, and that provide them unique skills in order to help them with. But here's what I'll say. You don't need to hire me to figure it out. I actually have a five-step template that I give away. You can go to matthewpollard.com/growth, and there you can download the template and it literally walks you through the steps of creating your own unified message and discovering your own niche, willing-to-buy clients. [00:21:54] MATTHEW POLLARD: It's funny. I did this at the National Freelance Conference, and this sounds amazing until I tell you the second part. At the end of the 45-minute session, I said, who here now has a unified message they believe will excite and inspire a prospect to want to know more. So when they introduce themselves at a networking event, people don't look at you like you're a scammer or say, oh, I need that. How much do you cost? But actually just intrigued to want to know more. But also they've identified a niche of people that are willing to pay themselves, pay them what they're worth. And like 97% of the room put their hands up. And as I said, sounds great until I tell you this. I said people keep your hands up. If this is the most time you spent actively working on your marketing since you started your business. Now, the keyword is actively. You might have read some marketing books, read them, and then read the next book. I mean, these people that read a hundred books a year and apply none drive me crazy. So the thing that I will tell you is that these people, 85% of the room kept their hands up, that this is the most time they've spent actively working on their marketing since they started their business. So the key thing is this template works if you spend the time doing it.  [00:22:57] MATTHEW POLLARD: And what I would suggest to people that are listening is team up with somebody that's not in the syndication space at all. Find a hairdresser friend, a florist friend, a lawyer friend, somebody that is not your ideal customer, but also not somebody that works in your industry 'cause they'll get you out of your industry jargon and you won't be selling to them in the process, right? But focus with somebody and spend, maybe get them to listen to this podcast. I'm sure Sam would appreciate you getting them to listen to this podcast anyway, but get them to listen to this podcast and then download the template and spend an hour and a half on them and then get them to spend an hour and a half on you. And you'll easily come up with a niche that makes sense because they'll hold you accountable to realizing that if you speak to far less people, you become the only logical choice as opposed to having more opportunity where nobody really takes you seriously or wants to work with you. So they will force you to make a decision and then you'll be able to work through what the high-level benefit of that is. And the template will take you through all of that. So go and download the template at matthewpollard.com/growth. And that'll really take you through every step you need to create the message and find the niche.  [00:24:04] SAM WILSON: Matthew, thank you for taking the time to come on today. This has certainly been informative and insightful, have really appreciated everything you've shared with us. My last question is typically, how do we get in touch with you? But it sounds like you've just showed us matthewpollard.com. Thank you again for coming on. Is there anything else you'd like to share the listeners before we sign off? [00:24:22] MATTHEW POLLARD: Yeah, absolutely. For the introverts that are listening, you don't need to buy my book either to learn how to sell or network as an introvert. You know, I'm really conscious of trying to make sure that introverts get over that belief that they can actually sell or network. So you can actually download the first chapters of my book at theintrovertsedge.com. You can get the sales book there in theintrovertsedge.com/networking. And that'll get you the first chapters, the sales book, for instance, I actually will help you overcome your belief. You can sell and give you the full seven steps. If you do nothing more than what you currently say into those seven steps, you'll realize there's some things out of order, you can fix that. There's some things that don't fit. That'll be all the jargon that you tell the client, you should throw that out. And then you'll realize that there's some gaping holes like asking great questions and telling great stories. If you just do that, you'll double your sales in the next 60 days. So whichever you want to focus on networking or sales, there's a book for you.  [00:25:10] SAM WILSON: Fantastic. Matthew, thank you so much. Appreciate it. Have a great rest of your day.  [00:25:13] MATTHEW POLLARD: My pleasure, cheers.

25m
Aug 03
Scaling Starts With A Mindset

Today let’s welcome Christine Hsu, Christine is a former R&D Product Research Scientist in the Food & Beverage Industry turned Real Estate Investor focusing on multifamily properties. Looking to connect with other active and passive investors, brokers, lenders, and professionals in the real estate industry. Let’s learn more about Christine’s journey, with no further ado let’s Dive in   [00:00 - 06:05] FORMER FOOD SCIENTIST TURNS REAL ESTATE INVESTOR,   __ __   [06:05 - 12:03] HOW TO SCALE YOUR COMMERCIAL REAL ESTATE PORTFOLIO   __ __   [12:04 - 17:45] SURROUNDING YOURSELF WITH SUCCESSFUL PEOPLE.   __ __   [17:06 - 19:28] CLOSING SEGMENT __ __ __   RESOURCE MENTIONED:    Who Not How: The Formula to Achieve Bigger Goals Through Accelerating Teamwork   TWEETABLE QUOTES ---------------------------------------------------------------------------- CONNECT WITH CHRISTINE HSU on LinkedIn and visit their website at noblivest.com     CONNECT WITH ME:   Facebook https://www.facebook.com/HowtoscaleCRE/   LinkedIn   Like, subscribe, and leave us a review on Apple Podcasts, Spotify, Google Podcasts, or whatever platform you listen on. Thank you for tuning in!   Email me → sam@brickeninvestmentgroup.com Want to read the full show notes of the episode? Check it out below: [00:00:40] SAM WILSON: Christine Hsu is a former R and D food scientist and researcher turned real estate investor. She started with a single family rental and then very quickly scaled to multi-family. [00:00:49] SAM WILSON: Christine. Welcome to the  [00:00:50] CHRISTINE HSU: show. Thank you so much, Sam, for having me. I'm excited to be here.  [00:00:54] SAM WILSON: Pleasure's mine. There's three questions. I ask every guest who comes on the show in 90 seconds or last, can you tell me, where did you start? Where are you now? And how did you  [00:01:01] CHRISTINE HSU: get there? Yes. So I started my career as a food scientist, as you mentioned in the intro. [00:01:08] CHRISTINE HSU: And then wasn't feeling the corporate world. So went into real estate and brought me a lot of freedom for myself and my family. And, Now I'm moving into multifamily looking not just a multifamily, really commercial real estate and expanding and hopefully diversifying from from there.  [00:01:23] SAM WILSON: So got it. [00:01:25] SAM WILSON: Now, what is a food scientist?  [00:01:27] CHRISTINE HSU: So, if you go to the store on the shelves, there's a lot of manufactured foods behind all of that is the technical part of a food scientist that formulates those food products to make it scalable and can be mass produced. That's my background. [00:01:42] CHRISTINE HSU: There's a lot of engineering, biology, chemistry behind that. And yeah, so my specialty, when in my career was actually a sensory. So I studied how people perceived how they experienced food through their five senses and measured it through statistics and research. So it was really interesting. [00:02:04] SAM WILSON: I'm sure. I'm sure it is. So you were part of the team responsible for making that awesome lime flavor on those todos lime chip. That probably has no lime in it. I'm assuming, but uh, certainly tastes like lime.  [00:02:17] CHRISTINE HSU: Yeah. It has lime flavors that are extracted from actual limes, but they put it into a powder and they spray it onto the chips. [00:02:24] SAM WILSON: Yes. That's just wild and crazy. I love it. Very cool. But you said, Hey, I'm not loving this, let's get into real estate. what gave you the real estate bug?  [00:02:33] CHRISTINE HSU: Yeah, so, I mean, I loved what I did. I just didn't like the corporate culture and, Just being in a corporate environment, it felt a little bit to me like stifling. [00:02:42] CHRISTINE HSU: It was just you how to show up to work every day, eight to five, at least if not more, when you had projects that required more attention. And even on the slower days where there's less projects, you still had to show up eight to five. So, I feel like there wasn't as much flexibility and really what hit the nail on the head was when I had kids young kids, I was. [00:03:01] CHRISTINE HSU: I would rather be at home watching my, six month old play than be here and do this stuff. So , I decided actually I asked my stuff. I was like, well, what can I do where I can still replace my income, bring home Bring home income to my family, but still have that flexibility and landed on real estate. [00:03:21] CHRISTINE HSU: And actually a lot of arrows pointed to real estate as being an advantage, including tax benefits that also, brought a huge benefit to our family. So that's kind of how I landed  [00:03:30] SAM WILSON: there. How long did it take you to go from single family to multifamily?  [00:03:34] CHRISTINE HSU: Yes. It took about, well, it was a little bit of both because when I became a single family investor, I did the birth strategy in parallel to that. [00:03:44] CHRISTINE HSU: I was also investing as a limited partner alongside all the active stuff that I was doing with rehabs and leasing and all that stuff. I had set aside money to put, to work on the. Passive side as a limited partner so that, that can make me money too. So it was two, it was a parallel path. [00:04:00] CHRISTINE HSU: I mean, I would say I was always involved in commercial and really I was had the intention of going that direction, but wanted to watch from the sidelines first to see the real, the big time experts how they run their show. And then it took about maybe a year. A year or two about a year and a half before I said, okay, I'm gonna go active into syndications in multifamily. [00:04:22] SAM WILSON: Gotcha. That's that's really cool. I love that. Tell me, if you have a background in, measuring how people perceive and taste food, right? Like that's yeah. That's a very nuanced skill. What are some parallels you see in between what you learned as a food scientist, doing what you did there to, how you approach your multifamily investments. [00:04:42] SAM WILSON: Are there any  [00:04:42] CHRISTINE HSU: parallels? There are definitely parallels because I think both meet the basic need of human beings. You've got food and you've got shelter. And I like to focus on those, you invest in things that will change lives. I think that was something that I heard recently, a quote. And they are things that we need. [00:05:00] CHRISTINE HSU: So I feel like recently now I'm, I'm starting to raise some capital for some larger deals. It's all about meeting a need. And I feel like there are a lot of people out there who are, making decent incomes. They don't have time to be active investors, but they do wanna invest passively and all they know is the stock market. [00:05:23] CHRISTINE HSU: So no one's really told them that they have other opportunities beyond that in alternative assets. And. I've met a lot of investors where, it's the need that's already inside of them. I said, Hey, look, you can invest in real estate and have all the advantages of real estate. And do it passively while you focus on your career still and not have to be so hands on, you don't have to be flipping houses. [00:05:43] CHRISTINE HSU: And changing out toilets, you can do this on the side and still get really great returns. And I've had a lot of investors. Convert to being at an LP very, very quickly and just, a couple of meetings. These are people that I know personally who ask, what are you doing now? [00:05:59] CHRISTINE HSU: And I tell them, I invest in real estate and I actually allow others to invest with me. And they're like, oh yeah, tell me more. So I feel like there's some parallels there because there's a need that is being met. Whether it's. Food housing, or just having additional investment opportunities to bring in passive income and even bring wealth generational wealth and a legacy to their families. [00:06:23] SAM WILSON: Yeah, absolutely. What are some challenges that you have faced in scaling a commercial real estate portfolio?  [00:06:30] CHRISTINE HSU: well I think I started in 2020 and the real estate world has seen a lot of. Very high ups and now we're kind of going on the downside. I, some of the challenges I face is just. The volatility of the market. [00:06:47] CHRISTINE HSU: Just in the time that I started and I wouldn't say it's a challenge, you kind of just go with the flow. It's almost like you're in the Rocky rapids, like choppy rapids of the waters. You kind of just have to, clinging on and go with the waves. And so really, there's things that I feel like is a little bit. [00:07:06] CHRISTINE HSU: Stable. Although real estate is still very stable asset, but just the ups and downs. It's been a little bit challenging for me. someone who started newer to kind of keep track of it, but it's also exciting too, because I get to see a lot happening. And really even. When the world is concerned, that's the best time is there's always opportunity in those kind of Rocky moments. [00:07:29] CHRISTINE HSU: So I'm excited to be a part of it. And really it's all about making sure that you're taking measured risks with contingency. And building that into all of the underwriting.  [00:07:39] SAM WILSON: When you say measured risk with contingency what is, what comes to mind when you say that.  [00:07:43] CHRISTINE HSU: so, the interest rates are going up substantially and very quickly. [00:07:48] CHRISTINE HSU: So it's making sure that the numbers are writing in higher interest rates and having that sensitivity analyzer, really Making sure. If it goes like extremely high to like maybe 9%, 10%, what would that look like? And just being prepared for any scenario that happens. Like, I don't think that's going to happen really just based on historical data, but you know, if it does, you never know, it's like no one has that crystal ball. [00:08:14] CHRISTINE HSU: But you have to be prepared for some, for something like that.  [00:08:17] SAM WILSON: Absolutely. Absolutely. Tell me about when I say the words, how to scale, like, what advice would you give to somebody. Or what advice would you give to yourself two or three years ago that you would say, Hey, this is what I would do. [00:08:29] SAM WILSON: If I wanted to grow my commercial real estate portfolio as an active investor, what would you say?  [00:08:35] CHRISTINE HSU: Yeah. So for me, actually it's a little bit different. It's about mindset. Scaling is all about mindset. And for me, I have to sit down and be like, well, why do I want to scale? what is my goal at the end of the day? [00:08:47] CHRISTINE HSU: So I really looked at those goals and kind of work back. And scaled, according to what that end goal is. So it could be anything like, okay, for myself and my family, I wanna cash flow $10,000 a month. Or I want to expand my portfolio to, a thousand units or 500 million dollars of real estate on assets, under management. [00:09:08] CHRISTINE HSU: These are just goals. And I feel like once you have the final destination in sight, you can work backwards to really. Define what those milestones are. to get to that end goal. So for me, it's all scaling is all about mindset. I think it's easy to just, keep going, but really not know where you're going or I'm speaking for myself. [00:09:30] CHRISTINE HSU: So I really had to be very clear on what that end goal  [00:09:33] SAM WILSON: was. Got it. I love that when you set that end goal. So, so now you determined your, why was there anything inside of you that said that's not possible or I that's for somebody else? Not me.  [00:09:46] CHRISTINE HSU: Oh, of course. I mean, Limiting beliefs are just, it's natural. [00:09:50] CHRISTINE HSU: We always have them. And I definitely did. But I feel like for me, it's like surrounding myself with people who are already there. Really helps me get there to say, I, yeah, it's daunting. I might just be starting out or new, newer in the business, but if they can do it and they're alongside kind of helping out and I'm asking them for advice, I could get there too. [00:10:14] CHRISTINE HSU: And probably in a similar timeframe. Cause I've been surrounded by so many people, just really talented, smart people who have gotten to. Goals in just a few years and I'm like, wow, how do they do it? And so it's just not being shy and really reaching out to them being like, Hey, how can I bring you value? [00:10:33] CHRISTINE HSU: And how can I just learn from you  [00:10:35] SAM WILSON: too? Right. And that was my next question. How did you go and surround yourself with people? Just put a flag out. That's, I want myself with really cool, smart people that are. Picking button taking names in real estate. Obviously it's not  [00:10:46] CHRISTINE HSU: what you did. [00:10:47] CHRISTINE HSU: What did you, yeah, no, I wish it was that easy, but these people don't have a lot of time to, you know, to talk to you if you just put out a flag. So for me as I mentioned earlier, I started off being a limited partner in their deals. Even if I didn't have a lot of one-on-one time to ask them like, small, silly questions, I just watched, I observed what they did, how they handled their business. [00:11:10] CHRISTINE HSU: How they acquired real estate, how they work with their investors and learn from that. And of course, they have people on their team to, that are available, their investor relations team. You can ask them as many questions as you want. I feel like they're an open door because essentially they have to be so, just utilizing their resources that are available for their investors being one of their investors in learning from them was the easiest way that. [00:11:34] CHRISTINE HSU: I was learning from them and  [00:11:35] SAM WILSON: observing. Yeah. And it's funny you and I took a similar path on, on, to, to that. I CA I came into commercial real estate, like you did first as limited partner. Yeah. And I recommended that countless times of people, like, what would, what's the first thing you'd do was like, well, if you have the capital. [00:11:50] SAM WILSON: even if it's just 50 grand in one deal, mm-hmm, do that. Get a front row seat and see how someone else already in the industry is handling their business, how they put out their deal, decks, how they communicate, how they do webinars, how often they give, quarterly updates. If they do live calls, like what is their process and get a feel. [00:12:07] SAM WILSON: And you might find things in their process that are broken. You might be like, oh, I can do that better. If I become an active sponsor or that's a really cool thing, they did. Let me see if I can duplicate that. So that's I think that's really cool. After you were a limited partner, what did you do next? [00:12:20] CHRISTINE HSU: Then it was a lot of networking. It was joining, meetup calls thanks to zoom. And even with the pandemic, everything went virtual. So everything is pretty much available. In LinkedIn, I was very active on LinkedIn. Really. If you're connected with one person you're connected with almost everyone in this industry. [00:12:38] CHRISTINE HSU: So really just, reaching out to people that way through those channels, seeing if they have meetup groups online, that meet and then going from there once. In a meetup group and network there, then you meet so many others and it just keeps going. It's it's endless in terms of the possibilities of the people that you meet. [00:12:56] CHRISTINE HSU: And then they become very close friends and part potential partners, too. And so that, that was kind of how I expanded my learnings and skilled really my network in real estate.  [00:13:06] SAM WILSON: How'd you get your first deal done?  [00:13:09] CHRISTINE HSU: First real estate deal or first,  [00:13:12] SAM WILSON: first commercial deal, first commercial real estate  [00:13:14] CHRISTINE HSU: deal. [00:13:15] CHRISTINE HSU: Yes. So that was actually recent. We only just closed a month or so ago and it was through networking. I had met this This operator probably over a year ago, about a year and a half ago at a conference. And just kept in touch with her. And it was. So the lead sponsors, there's a couple groups, but one of the main lead sponsors is an all female group. [00:13:40] CHRISTINE HSU: And so obviously we bonded being females in this industry and we just kept in touch. Like every quarter we would check in to see how we're doing, and if there's anything that we can help each other with almost became like pseudo accountability partners even. And then she she and her team had an opportunity that they were. [00:13:57] CHRISTINE HSU: Under contract for, and also raising funds. And that I said, Hey, I'd be happy to help you out and raise some money with you and join your team and also help with other activities, anything that you need help with. So that's, that was the first deal that I joined as a co GP on. And, it's been great. And even from there, other team members and connecting with them kind of just expanded my network and my knowledge too. No,  [00:14:22] SAM WILSON: that's really cool. I love that. And again, it goes back to those relationships. I think that you've been building, a year it's a good amount of time to know somebody, but it does take sometimes years, to where like, Hey, I actually. [00:14:33] SAM WILSON: We've known each other for a long time. Let's see if there's a chance for us to work together on something. So that's really fantastic. We're there. And I love the fact that this was just your first deal you got across the finish line. Cause this is very fresh for you. Yes, we'd get, we get all sorts of guests on this podcast or we get everybody from, you, Hey, I just closed my first commercial deal a month ago to, somebody else that might be like, Hey, I've got 3 billion in assets, under management. [00:14:56] SAM WILSON: I mean, they're all on here. So I love that we get to explore kind of both sides of this. journey. Tell me, was there, are there things that you would do differently on your next deal that you said, Hey, this is the lesson I learned. I'm gonna do it differently next time. [00:15:08] SAM WILSON: And then if so, why?  [00:15:09] CHRISTINE HSU: Yeah. I mean for us, we are just growing our networks, we're growing our investor list. And I think for the next deal, like we're growing and expanding our deals as well. So this first deal was a 5 0 6 B. We've done a couple others also in parallel. And now we're moving into the world of 5 0 6 CS where we can advertise. [00:15:32] CHRISTINE HSU: So I. Think that, I would really do anything differently per se. I think it's just a journey and a progression. But definitely in terms of learning, it's there's some things that I could do better in terms of investor relations and even the process just to improve on, the entire process and the experience for investors going forward. [00:15:49] CHRISTINE HSU: And I feel like with every deal you learn a little bit of something  [00:15:52] new [00:15:52] SAM WILSON: Yeah. Absolutely. Is there a software, is there a platform, is there something that you are using when you're bringing investors on that you would recommend?  [00:16:01] CHRISTINE HSU: Yes. So, For most of my deals, they've been syndication pro it's been a very user friendly platform. [00:16:09] CHRISTINE HSU: It's, aesthetically pleasing for both sides on the sponsor side and the, on the investor side, just to see everything clearly you can see your distributions whatever documents are housed, there is just very clean. And then we're also exploring with another group invest next. So just kind of comparing the different platforms. [00:16:29] CHRISTINE HSU: I wouldn't say I have a lot of experience with invest next cause we're just starting out. But it's nice to kind of see, compare and contrast the different tools that are out there.  [00:16:37] SAM WILSON: Absolutely. Absolutely. No, and that's great. I think it's one of the things that is, if you're listening to this and you don't. [00:16:43] SAM WILSON: And I'm not, we're not rec recommending one or another necessarily on this show, but if you don't have an investor platform, you gotta get one. I mean, it's something that, just, it really ups your game. They're not terribly expensive. Not com not relative compared to, the types of assets we're buying. [00:16:59] SAM WILSON: It's not an expensive investment. So that's certainly a cool thing. I'm glad really, to hear out of the gate you were launching launching with a good platform there. That's so cool. Last question for you. Is there anything else that you'd like to share with our listeners that you can think of? [00:17:12] SAM WILSON: You're like, Hey, here's something that has been meaningful to me in the last, I guess two years or so of your commercial real estate journey.  [00:17:19] CHRISTINE HSU: Yes, absolutely. For me, Just starting out in real estate. It looks, it seems like a very daunting thing, especially if, as you see everyone skilling at a hundred miles an hour and you're kind of a newbie like that was me. [00:17:31] CHRISTINE HSU: Right. I'm just like, how did these people do it? And really what changed my mindset and perspective was the book called who not how so. It's very popular in our space. I think a lot of people recommend that book and I do as well. It's a whole mindset shift. It's not about how to do something because we're so limited in our knowledge I've I was very limited. [00:17:52] CHRISTINE HSU: I didn't have the experience obviously, but leveraging people who do. So I feel like in syndications, the big keyword is leverage, right? Everyone's leveraging each other. It's a team sport everyone's working together. So for me, it was leveraging people who had more experience than me to get me where I wanted to be, as opposed to just figuring out how to do it. [00:18:14] CHRISTINE HSU: It's just, finding the who's that can get me there.  [00:18:17] SAM WILSON: I love it. Absolutely love it. Christine, thank you for taking the time to come on today. Certainly appreciate it. This was lots of fun. Learning about you, your journey thus far, getting your first deal done. Yeah. Kudos to you. Keep up to good work. [00:18:29] SAM WILSON: If our listeners wanna get in touch with you and learn more about you and what it is you're doing, what is the best way to do that? Yes.  [00:18:34] CHRISTINE HSU: You can check us out on our website at noblivest.com and also I'm pretty active on LinkedIn. You can find me on LinkedIn really looking forward to connecting with all of you. [00:18:45] CHRISTINE HSU: Don't hesitate to reach out if you have any questions or just wanna network. I'm always open to that.  [00:18:51] SAM WILSON: Awesome. And noble vest is N O B L I V E S T. If you're just listening to this, we will, of course include this all in the show notes as well. Christine, thank you so much. Do  [00:19:01] CHRISTINE HSU: appreciate. Awesome. Thank you so much, Sam.

19m
Aug 02
Real Estate Investing for Cash Flow

If you’re looking for expert insights into interesting real estate niches, then this episode is for you!   Sunrise Capital CEO Kevin Bupp sits down with us to break down three asset classes they’re investing in. With two decades of experience, he has $150M real estate transactions under his belt and is a thought leader in generating cash flow and building wealth. Today, Kevin gives his perspective on the mobile home park market and the challenges in the space. He also gets down to the nitty-gritty of build-to-rent and what makes it a promising investment to consider. Lastly, he shares what they are working on in the parking sector and explains their long-term hold strategy for their deals.     [00:01 - 04:52] MOBILE HOME PARK INVESTING __ __ __ __   [04:53 - 15:11] THE OPPORTUNITIES IN THE BUILD-TO-RENT SPACE __ __ __ __ __ __   [15:12 - 25:14] LONG-TERM STABLE CASH FLOW __ __   [25:15 - 26:35] CLOSING SEGMENT __ __ __ __ __ __ TWEETABLE QUOTES   - Kevin Bupp   - Kevin Bupp   - Kevin Bupp   -----------------------------------------------------------------------------   Connect with Kevin! Find out investment opportunities with Sunrise Capital on their website http://investwithsunrise.com. Head over to KevinBupp.com to know more about Kevin and his Real Estate Investing for Cash Flow https://kevinbupp.com/podcast/ podcast, and get a FREE copy of his book, The Cash Flow Investor.   CONNECT WITH ME:   I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns.     Facebook https://www.facebook.com/HowtoscaleCRE/   LinkedIn   Like, subscribe, and leave us a review on Apple Podcasts, Spotify, Google Podcasts, or whatever platform you listen on.  Thank you for tuning in!   Email me → sam@brickeninvestmentgroup.com Want to read the full show notes of the episode? Check it out below:   [00:00:00] KEVIN BUPP: So when you find a great mobile home park or, or even a great parking asset in a very strategic location and a growing marketplace where the demand is increasing. It's going to be very challenging to ever replace that particular asset. And I feel very much the same about these, these build-to-rent properties that we're building. And so, while I'm not going to say that we'll never sell any of these developments, that is not our intent. Our intent is to actually build to hold and ultimately, you know, build a portfolio of these strategically located infill locations and build a portfolio out of it. And so not saying that we might not flip one out to, you know, to an institution to lower our basis overall, but generally speaking, we're looking at a 10-year horizon here.  [00:00:50] SAM WILSON: Kevin Bupp. Welcome to the show.  [00:00:52] KEVIN BUPP: Sam. Thanks for having me, excited to be here.  [00:00:54] SAM WILSON: Hey, man, the pleasure's mine. Appreciate you coming on today. There are three questions I ask every guest who comes to the show: in 90 seconds or less, can you tell me, where did you start? Where are you now? And how did you get there?  [00:01:03] KEVIN BUPP: Yeah, fantastic. Started about 21 years ago, started buying a single-family, fixed and flip properties. Did a bunch of wholesaling as well. Built up quite a large portfolio in my early twenties of about 130 single-family rental homes at a few hundred multifamily doors. [00:01:17] SAM WILSON: Wow.  [00:01:17] KEVIN BUPP: Fast forward to today, been a full-time investor for two-plus decades. I've owned pretty much every different asset type out there, you know, office retail, industrial, self-storage, medical office. You know, today we are primarily focused on three different sectors of our business, one being manufactured housing, which we've spent the last decade in, the second being parking investments, which we've been in for a few years now. And then the fourth and probably one of the most exciting ones that we're currently involved in are built-to-rent projects, more specifically built-to-rent projects in urban infill locations in Phoenix, Arizona.  [00:01:52] SAM WILSON: That's a lot of moving parts. You're well known, obviously, for your podcast on mobile home park investing. And I think you run two different shows, don't you? There's a Real Estate Investing For Cash Flow and then... [00:02:03] KEVIN BUPP: I do. We have a mobile home park-specific podcast as well. I don't post any new episodes. I haven't for a few years, but we've got a, you know, 150 or so up there, and it still just kind of does its thing. [00:02:12] SAM WILSON: Gotcha. Okay. Very, very cool. I mean, mobile home parks has been a hot asset class. Can you kind of give us, you know, and maybe that's, to some degree, you know, due to you, you know, kind of advertising the asset class, but I mean, tell us about it. Where has it been? Where is it now? And you know, where do you see opportunity on that front?  [00:02:30] KEVIN BUPP: Yeah, it's, it's a great question. You know, it's funny, my, my business partner always kind of jokes with me that, you know, we probably did train some of our competition. We were the first podcast out there and, you know, for many years we were the only, you know, there was a little bit of other information out there in the marketplace, but, you know, we were the only podcast really speaking about it and, you know, kind of sharing techniques and strategies. And it's, you know, it's an asset class that has a diminishing supply. And so there's a massive supply-demand imbalance. You know, the demand has, you know, significantly increased over the last five plus years with, you know, just a number of larger institutions and private equity investors trying to really pour billions upon billions of dollars into the space where they had always overlooked historically, right? And so they're, you got all this money trying to come in, no new supply coming to the marketplace and it's just, it's created just a severe imbalance. And so, you know, we started buying parks 10 years ago. And, you know, back then it was, it was very mom and pop, which there's still aspects of that today. It's not fully consolidated, but it's I tell you that it's racing towards consolidation pretty quickly. So 10 years ago where we might have been, you know, the only bid on a deal or maybe there's, you know, one or two others we'd have, you know, had a much easier time of winning an opportunity back then than we would today. [00:03:40] KEVIN BUPP: And so, you know, they're, they're training at all time, low cap rates, in fact, data showed that at some point during the middle of the pandemic, you know, multifamily had always, at least over the last decades, it's been the asset class that has traded at the lowest cap rate, historically, at least for the past 10 years. Mobile home parks actually took over multifamily as far as, you know, where the average capric or trading at. And it was, it was sub-four level for a period of time. And they're still pretty much, they're down there today. You know, the institutions are just trying to gobble as much as they can. And, ultimately, it's made it a little more challenging for investors such as us, I guess you could say smaller, medium size investors and, you know, I don't necessarily have a cost to capital that would allow me to buy a stable four cap property that doesn't have upside. However, institutions they've got different sources of capital that typically is much cheaper than that of retail capital. And so there's still deals out there as, you know, you just got to pound the pavement more, you've got to, you know, turn over more rocks and find those needles in the haystacks. And they're there and we find that we just don't necessarily find it as many as we might have found years prior.  [00:04:42] SAM WILSON: Right. Yeah. I think that's a really good synopsis there. I appreciate you taking the time, you know, to share on that. I mean, if anybody says that there's no deals out there, then they're probably right. You know, 'cause that's...  Tell me about this though. I mean, you guys have found some other asset classes and especially want to hear, you know, what you guys are doing on the build to rent. That's your latest and greatest kind of foray. Why do you see an opportunity there? You just talk to us about that if you can.  [00:05:06] KEVIN BUPP: Yeah, no, no, absolutely. And you, I will say that, you know, we're the type of group that we really like to, we like to stay in our lane. You know, we, we, don't like to be everything to everybody. I think that you lose focus and you dilute your strength in any particular asset class when you're, you know, getting pulled in a million different directions. And so, you know, we had focused solely on mobile home parks, literally for, for seven years. That's all we did. We just kind of ignored all the other noise out there. You know, there's a million, one different ways to make money in real estate. And we, we chose that lane and we wanted to be the best at it. Parking came across our radar screen about four years ago, it took us a few years before we even dove into that space. And that space is a little different, you know, it doesn't necessarily, as far as the operational side of it, we don't have vertical integration, a vertically integrated property management company for the parking sector. We just work with, you know, local and regional operators in whatever particular marketplace we own in. [00:06:00] KEVIN BUPP: And so while there's asset management involved, we're not necessarily having to hire a lot of in-house employees to run that side of our business. And so it's not set it and forget it, but it's not as operationally intensive as mobile home parks. And again, we took a couple of years of really understanding that asset class before we dove into it. And really the same, the same is true with build to rent. And, you know, at the end of the day, build the rent, it's residential, right? I mean, it's, it's, it's residential housing and, you know, it's, it's similar to that of single-family rentals. It's similar to that of multifamily apartment complexes. It's similar to that of mobile home parks. It's just a different form. It's purpose-built, you know, residential housing. And so the projects that we have working in Phoenix are four urban infill locations. These are, you know, main, main on main locations, irreplaceable locations, walkable to all the nightlife restaurants, locations that you know, don't run the necessary risk of, of being on the outskirts of when the music stops, right? We've got a massive shortage of housing. Right now, the music is going to play for many years to come. The data will show that, like, anywhere between 4 to 5 million, you know, homes that we're short at the present time or residential units that we're short at the present time. And we're not nearly producing enough to ever catch up to that anytime soon. You know, again, data comes from all different streams, but one would say that it's literally going to take us 10 years to even, truly, you know, get caught up at any pace whatsoever. I mean, we're literally, we're still falling behind at present time. [00:07:26] KEVIN BUPP: And so, you know, we love Phoenix. I mean, Phoenix is just a, it's a very dynamic marketplace. You know, a lot of fortune companies there and moving there. It's a very diverse local economy as well. It's very different than what it was prior to the great recession. It's kind of, I like to compare it to Florida. Like, Florida is a very different state than what it was prior to 2008. Prior to 2008, it wasn't very economically diverse. It was heavily weighted and the construction side of things. So when we had an oversupply of homes and the music kind of stopped down here, a lot of those jobs, those folks that had no jobs anymore moved away. And so we had a, we had a population actually moved away for a period of time and ultimately in excess of housing. Today, that's a very different case and the same goes with Phoenix. And so just super excited about those properties. And, and again, really, I think one of the most exciting about built to rent is being able to actually purposely build a product today for long-term rental uses, not necessarily taking a townhome that was built to sell and then, you know, converting it into a long term rental. And so we're putting a lot of thought energy and focus into the materials that we use and the overall quality of build. So these things are durable and can withstand, you know, the, I'm not going to say abuse 'cause not everyone abuses their rentals, but. They typically see a little bit more abuse than a standard, you know, homeowner might put on a home.  [00:08:46] SAM WILSON: Yeah, certainly nobody washes their rental car idea. I mean, it's like, it's going to undergo more abuse than, you know, just a regular home, typically. Tell me, purpose-built. When you say that, like, what are the things you're doing? How is the build changing on a build to rent versus, you know, again, a house that somebody's building to go...  [00:09:04] KEVIN BUPP: Yeah, just a couple of simple things. I mean, even things such as, like the kitchen cabinets, right? We're not literally just going to put the builder-grade kitchen cabinets in. They're going to be more of a mid-grade quality, you know, solid wood and something. That's going to be more durable than some type of, you know, Formica or, you know, I don't, I don't know what they use in, you know, the cheap builder, great stuff, but basically a lot of mid-tier to higher tier components. So even down to like faucets, toilets, things that a lot of people just don't think about a lot, you know, those types of things that we don't think about them, and that's why in builder grade builds, they're literally cheap. They pick the cheapest toilets, they pick the cheapest faucets. They picked the cheapest flooring instead of the four mill flooring or instead of the six mill flooring, which they should be putting in, it's the three or four mill thickness flooring, right? So just little things like that, that the average homeowner doesn't think about that, ultimately, you know, we want to ensure that we're not, every turn that we have, we're not going in and having to replace, you know, these types of components that ultimately become very expensive if you don't do it right from the get-go. [00:10:02] SAM WILSON: Oh, for sure. Yeah. And I'm thinking about things like, and, and I'm probably even not even using the right words here, but like when you mention faucets like copper components versus plastic, it's like, yeah, this the plastic stuff's going to break in like 90 days.  [00:10:14] KEVIN BUPP: Absolutely.  [00:10:15] SAM WILSON: Yeah. [00:10:15] KEVIN BUPP: It looks good when it's new. [00:10:18] SAM WILSON: It sure does.  [00:10:19] KEVIN BUPP: Yeah. Yeah. But look at it 6 to 12 months later and you'll find that it, yeah, it surely wasn't durable. [00:10:24] SAM WILSON: Right. Absolutely. Tell me about urban infill. When you say that, is this, are you guys, you know, buying and building an entire neighborhood at a time? Is it one lot at a time? How, how does that work? [00:10:34] KEVIN BUPP: No, that's, that's a great question. So these particular four projects I was speaking to are townhome projects. So, two and then three story townhome, you know, contemporary, modern townhome projects. And when I say urban infill, these are, you know, each one of these sites, the majority of these sites had something else on it. You know, an old, an old building of some sort, or, you know, maybe a few homes on, you know, a couple of parcels that we've, that we've combined. But the average, you know, the small, the smallest size of these four projects, one is 21 units and the largest of these four projects is roughly 50 units. And so these are not, they're not full-blown at scale neighborhoods, but they're also not individual units as well. You're somewhat constricted to, you know, what you can build in urban infill locations, 'cause very rarely are you going to find yourself to where you can assemble, you know, multiple acres, 4, 5, 6, 7, 8, 9, 10 acres in these urban locations. And so, you know, we're talking a couple, you know, 3, 4, 5-acre tracks of land at, at the largest. And so again, somewhat restricted to what you could actually put there.  [00:11:35] SAM WILSON: I mean, that's kind of a needle in a haystack. I would think to be able to find, you know, again, even 4 or 5 acres in a, in an urban infill location, that's not already developed or not, you know, way overpriced. So how do you find opportunity on that front? I mean, is that just boots in the ground that know the area?  [00:11:51] KEVIN BUPP: That is boots on the ground. Yeah, so we've got a partnership. We, we basically partner with, he's a very close friend of mine. He runs a group called Urban Phoenix. He's been a developer for 20-plus years and, you know, cut his teeth in Manhattan for a decade. And ultimately has been, you know, working in the Phoenix marketplace, has the relationships, you know, he does seem to have the relationships. They've got the local market knowledge that's necessary, you know, to think that myself and my team, you know, we're not, we're based in Florida, we're not based in Phoenix. [00:12:17] KEVIN BUPP: Phoenix is a, it's a very large MSA. To think that, you know, we would just go there and be able to, you know, be successful in our own, I think would be silly thinking. You know, it takes quite some time to build that, not just the local market knowledge. Knowledge is one thing, but actually having those strategic relationships that are necessary and not even just with brokers, but also the municipality, you know, with the planning, zoning boards and, and knowing those individuals. And so the team that we're working with, the partnership that we formed, they've, they've been in that marketplace now for a decade and know it quite well. And so that's the strategic advantage that we really have in this particular project. [00:12:53] SAM WILSON: Absolutely. What are the compelling metrics in the build-to-rent space? I mean, clearly, you know, you told us in mobile home parks, you've seen them trade at a sub-four cap. So there has to be some more compelling kind of metrics surrounding build to rent.  [00:13:06] KEVIN BUPP: Yeah. You know, it's interesting. So I was just at the IMN conference down in Miami. I guess it's been about a month now. And, lots of smaller time and medium size investors in the residential space. However, over the last couple of years, it's, it's really morphed into not just residential investments, but built to rent really as its own category now at these IMN conferences. And, there was a large number of institutions being represented at these IMN conferences. In fact, they have, IMN now puts on, I think, two a year, built to rent specific conferences. One's actually coming up, I believe it's in, in Vegas sometime here in September. So coming up in a few months, but basically the institutions, it's literally the fastest growing sector, you know, or asset class. And it wasn't even considered an asset class until very recently, literally over the last decade. In fact, it's still trying to find its identity, right? You meet folks that say, they call it build-to-rent, some call it build-for-rent. Some do B for R, you know, I mean like it's, it doesn't really even have its true identity yet. But what it does have is it has a ton of interest on the institutional side. The challenge is that there's not enough supply. You know, most institutional investors don't want to get involved on the development side. They don't want to be there. They want to, they want to buy the product either at CFO or already occupied. They want to buy a stabilized property. [00:14:23] KEVIN BUPP: And, and so a lot of them have, they're willing to take to CFO, but there's not even enough homes being built right now for them to actually, you know, fill their coffers enough. And so when I say that, you know, we, we talk about mobile home parks and, and multifamily trading at just all-time historical low cap rates, built for rent, actually, you know, takes the cake there. Green Street and, and all the other data aggregators out there, they're following it. There's information about it, but not as mature as what we'll find here over the next five and 10 years, as it finally gets its own identity and truly becomes an asset class. But in any event, they typically trade for anywhere in two and a half ranges to, you know, sub-four range. So two and a half to the four is what cap rates these things trade on if they're being sold off at, you know, at stabilized, at a stabilized period of time. [00:15:11] SAM WILSON: Right. And so I guess that's my final question is what's the exit, you know, for you guys?  [00:15:15] KEVIN BUPP: Yeah. So yeah, no, that's, that's a great question. We're not really looking to build to sell. You know, building in these strategic locations, like, you can't replace them, you know? So it's kinda like how I always felt about mobile home parks and we have sold mobile home parks, but we know they're not making anymore, right? And so when you find a great mobile home park or, or even a great parking asset in a very strategic location and a growing marketplace where the demand is increasing. It's going to be very challenging to ever replace that particular asset. And I feel very much the same about these, these build-to-rent properties that we're building. And so, while I'm not going to say that we'll never sell any of these developments, that is not our intent. Our intent is to actually build to hold and ultimately, you know, build a portfolio of these strategically located infill locations and build a portfolio out of it. And so not saying that we might not flip one out to, you know, to an institution to lower our basis overall, but generally speaking, we're looking at a 10-year horizon here.  [00:16:10] KEVIN BUPP: Got it.  Has that investment thesis changed at all in the last decade for you with this idea of just build to hold? [00:16:17] KEVIN BUPP: It has not. It has not, but you know, things come up that ultimately that, that will, you know, maybe change, you know, that direction of, of what had initially been thought of is like, we're going to hold this thing for 10 years to, well, maybe we should consider selling it. I mean, there's a litany factors there, you know, just using maybe examples of mobile home parks, you know, buying an existing product, something that was built 50 or 60 years ago, you can spend, you know, months doing due diligence. You can do market studies, you can hire, you know, outside consultants and feel that you have a good handle on the property, but there's always skeletons that come up in a particular property. It could be skeletons related to the market, skeletons related to the property itself, or just, you might find that you originally intend on expanding in that, that particular market. And so you bought this one, you intend to buy three or four more, but then you come to find that that's not necessarily where you want to, you know, place your energy and resources. And so why we, why are we just going to hold this one in this one market, we should sell this one out and focus our energy where we've decided that we're going to do an expansion. And so again, but our, our, our general thesis has not changed. I mean, we're long-term holders. And again, looking at most of these assets, whether it's built for rent, parking, or mobile home parks. I just know that they're not building anymore parking, not a lot of it, right? There are major restrictions on new parking coming to market. We know that that's the case with mobile home parks and then these built to rent, at least these projects that I'm speaking to, given that they're in urban infill locations, they're already in areas that are densely populated that have minimal land for development. And so I feel that they're irreplaceable in that. We'll be very happy in 10 years, looking back that we actually held onto them.  [00:17:53] SAM WILSON: Yeah, absolutely. I love that. And that's something that, you know, we've heard that, and again, it goes back to your podcast, Real Estate Investing Cash Flow. I mean, that's kind of, but that's something I just keep hearing more, you know, we've seen a lot of, you know, equity multiples, you know, huge IRR returns, people getting really excited about these monster appreciation plays, but I've seen even a, a change of tune from investors, you know, as they're reaching out and going, I just want cash flow. I just want to know that whatever we buy produces an income for an undefined period of time.  [00:18:22] KEVIN BUPP: Well, well, so, you know, I, I agree with that and when you're continually, you know, flipping in and out of properties, you know, that's great. It produces massive IRRs and, you know, you're hitting home runs every time seemingly, but it also creates challenges on the other side, right? It creates challenges for your investors. I mean, as far as, you know, recapture. Now they've got, they got to think about where they're going to put their money again, right? Like, there's difficulties with that, especially with a lot of retail investors, like less sophisticated investors that they've got money to place. They don't want to be thinking about, you know, where the hell am I going to put this? You know, this a hundred thousand, 200, $300,000 thinking about every couple of years. And that takes work. That takes effort to do due diligence on your different sponsors, you know, if you're not going to stick with the same ones. And so, and it also creates, you know, tax challenges as well. And so I, I agree with you, you know, and we've done, we've tried to do a really good job over the, you know, the last decade or so as we really, you know, try to form our avatar and find who are our particular avatars of investor, who that individual is, what are they seeking? [00:19:21] KEVIN BUPP: You know, we're looking for that individual that's looking for, you know, long-term stable cash flow. They don't necessarily need to be hitting, you know, 20% IRRs to make them happy. They don't necessarily have to hit home runs. They'd rather hit singles and doubles and being very consistent, than that of just, you know, big wins every couple years, and then having the challenge of I've got to find a replacement, I've got to find a replacement. I've got to find somewhere else to put my money and, and making them actually have to work for their investment where their investments should be working for them.  [00:19:48] SAM WILSON: Yeah. And also I think coupled with that is, is when you hit those big wins, which they're fun. Don't get me wrong. I love a big win, but it also that big win comes with some risk attached to it. And I think I see with people, you know, recognizing that, especially in the turbulent times, we're in going, you know what? I kind of want to de-risk my portfolio. I want to make sure that it produces an income and then just kind of leave it, set it, forget it, you know, to your point there.  [00:20:10] KEVIN BUPP: And I think what it depends what stage you're at with your wealth. I mean, are you looking for, you're willing to take more risk today, you know, and hit those triples and those home runs to, you know, to accumulate more wealth? You're not looking for, you know, 2% or 3% returns, like you definitely want to grow your wealth still. So you're looking for something that's consistent, you can get, you know, 6 to 8% returns in your money, or are you looking simply for the lowest risk investment possible and just simple wealth preservation, right? Like, there's those three buckets, really, depending on where you're at. And I think, I think most of our folks are in that middle bucket, right? Like, they're looking for something consistent, maybe not just, they're not in a wealth preservation stage. They want to preserve it, but they still want it to grow as well. And looking for something that is fairly low risk and a great market to do it.  [00:20:51] SAM WILSON: And parking, I think, achieves that for a lot of people. Can you give us a run-through on the last deal that you guys closed in the parking sector?  [00:20:58] KEVIN BUPP: Yeah, no, absolutely. So, the last deal that we, that we closed, it was a, a multiple step or multiple-prong deal, but it was a, it's a parking deck. It's actually in our backyard. It's in Clearwater Beach right here in Florida, Tampa Bay market. It's a 702-space, seven-story parking deck with 12,000 square feet of retail on the first floor, it's a block from the Gulf of Mexico. It's a phenomenal location, massive barriers to entry. They literally will not allow more parking to be built on that island. This was actually a public-private partnership with the city of Clearwater and the local private developer. They built it six years ago. And, you know, as, as these things sometimes go. The partnership, it had strains in it, you know, the city was, you know, provided the proforma of how this was going to perform for them. It didn't meet any of those metrics for a litany of reasons. The private developer did quite well. They had the best floors. They condo-wise each floor. And so they had the best floors. They did a good job negotiating this deal on the front end. But ultimately the private developer wanted to, you know, take that money and redeploy it in another asset. [00:21:55] KEVIN BUPP: And then the city just wanted, they wanted to take that money and actually put in another project 'cause their return on it has been horrific over the past six years. They've kept their rates artificially low over the past five years, you know, half of what the market is there. And so we basically, you know, the, you know, the, the deal was essentially getting both parties to agree that we're going to, that we're going to sell. We had to close the private portion first, and then it took us some time to get the city's portion closed. We had an operator lined up already that we've prenegotiated a trip and net lease with an operator that manages, you know, 50 plus parking assets down along the beaches. And so very familiar with that marketplace. And so, you know, we, a lot of the value add was done in the year that it took us, you know, from the initial conversation to the actual closing of the deal, most of the value add happened in that span of time, you know, it being of negotiating with both the city and the private, and also getting that private operator, that local operator in place for that triple net lease. And so more excited about it. It's only six years old. I mean, it's a fairly new structure. I mean, which isn't that common in the parking space to find a garage that's only six years old, that's actually available for sale, any great location. [00:22:59] KEVIN BUPP: And, so anyway, we're super excited about it's, it's a phenomenal deal, you know, kicking off a ton of cash flow, and there's still a good bit of upside there for that operator stepping in. And, they've instituted some dynamic pricing, you know, the prior operator that worked for the city and the private developer, literally just had $3 an hour, didn't have any flat-rate pricing for, you know, events, holiday, weekends at the beach, 4th of July, things of that nature. They just kept that $3 an hour all the time. So they had a lot of meat left on the bone for that new operator step in, and they're excited about it. They're happy. We're happy. It's just been a phenomenal deal all the way around. [00:23:31] SAM WILSON: I love that asset class. That's really cool. And I, and I, and I'm pumped to see you guys, you know, doing well with that, that that's a lot of fun. I think that's, you know, again, unique asset class and it's cool. You're finding those opportunities. I've certainly seen the same thing. You know, those public-private partnerships. You know, we, we even had an opportunity at one point they brought us a bunch of garages to build, but their underwritten performers were just so, so far off, it was like, guys, you can't. It's just never going to work. Like, no. [00:23:58] KEVIN BUPP: Yeah, we actually got a hold of the proforma that the consultant provided the city, you know, prior to the development of the garage. And, like, there wasn't one year where it actually hit that. But again, most of that was because the city basically of the seven floors of the parking deck, the private developer owned the first, they owned the first two and the retail and the seventh, and then the city-owned 3, 4, 5, and 6. Well, in normal times, the first two floors got the majority of the traffic. And then proportionally speaking, they actually shared the expenses proportionate to their ownership. And so the private developer only owned 252 spaces. The city-owned, whatever the number is, it was, you know, 450 or 460. Anyway, they proportionally paid much more in expenses but had way less revenue. I mean, it was, again, kudos to the private developer from the negotiations on the front end, 'cause they did a phenomenal job, but unfortunately, the city got the short end of the stick and it just never ever met their projections. [00:24:49] SAM WILSON: Right. And I mean, the city doesn't know parking. That's not their business.  [00:24:53] KEVIN BUPP: No. They should have bought, the city should have actually bought the other. That's what they should have done, but they're already so far in the water and they just, they had another big project happening. They just wanted to take their, their millions and, you know, redeploy it into the other project. They didn't want to have any, any discussions about buying the other, you know, the other part of the parking. So obviously we were the guys with the capes on and came in and saved the day.  [00:25:14] SAM WILSON: Good for you. I love it. Love that story. Kevin, thank you for coming on the show today and, and sharing with us everything you guys are getting involved in, where you see the mobile home park space right now, how you guys are crushing it in parking, and then, you know, the opportunity you guys see in the builder rent market there in Phoenix. I love it. You've shared with us a ton of information. Certainly appreciate it. If our listeners want to get in touch with you or learn more about you, what is the best way to do that?  [00:25:34] KEVIN BUPP: Yeah, they can go to kevinbupp.com. You can contact me there if you want to learn about Sunrise Capital Investors, which is our investment arm. You can go to investwithsunrise.com and then, Sam, if you don't mind, I actually just released a book too. I'd love to give a free copy to your listeners. They can go to kevinbupp.com/freebook, and you can see it on the screen behind me. I don't know if we do this in video or not, but it's called The Cash Flow Investor. It's about building wealth in commercial real estate. And again, they can grab a free copy by going to kevinbupp.com/freebook.  [00:26:00] SAM WILSON: Awesome. We'll certainly include that there in the show notes as well. And yeah, this will be on YouTube as well for those watching on YouTube. So, Kevin, thank you again for coming on. I certainly appreciate it. [00:26:08] KEVIN BUPP: Sam. Thanks for having me. It's been fun. 

26m
Aug 01
Getting Started with Smaller Deals to Gain Traction

Welcome to How To Scale Commercial Real Estate, our guest today is Glenn Hanson, Glenn is the Found & CEO of Colony Hills Capital with 30 years of multifamily experience, managing complex organizations, and is a creative entrepreneur, his former CEO and chairman of a multi-million dollar company, he Co-founded River Valley Investors, Angel Investment Group. Glenn has formerly invested in 25 varied startups.    [00:00 - 07:51] HOW TO SOLVE PROBLEMS WITHOUT LITIGATION __ __   [07:51 - 15:26] HOW TO AVOID LITIGATION WHEN SCALING YOUR BUSINESS __ __   [15:30- 20:06] TIPS IN SELECTING YOUR PARTNERS.  __ __   [20:06 - 21:46] CLOSING SEGMENT __ __ __   RESOURCE MENTIONED:    Stephen R. Covey - The 7 Habits of Highly Effective People   TWEETABLE QUOTES   ---------------------------------------------------------------------------- CONNECT WITH GLENN HANSON visit their website at www.colonyhillscapital.com       CONNECT WITH ME:   Facebook https://www.facebook.com/HowtoscaleCRE/   LinkedIn   Like, subscribe, and leave us a review on Apple Podcasts, Spotify, Google Podcasts, or whatever platform you listen on. Thank you for tuning in!   Email me → sam@brickeninvestmentgroup.com Want to read the full show notes of the episode? Check it out below:   [00:00:00] GLENN HANSON: How do you solve that without litigation? The first thing you might wanna do is be prepared to just write a check and be done with it and move on. [00:00:08] GLENN HANSON: But this was too big. We couldn't, we didn't have that kind of cash. Right. So we approached it from the standpoint of litigation, but . We don't do it with a vengeance or with anger. We just do it as a tool to get to a solution. same thing with issues on the property. Just focus on a solution [00:00:24] SAM WILSON: Glen Hansen is an entrepreneur. He started and funded 25 companies from plastics, manufacturing to aerospace, FinTech banking, medical, and real estate. [00:00:44] SAM WILSON: And today he's got multifamily real estate with 1.4 billion in transactions. Glen, welcome [00:00:50] GLENN HANSON: to the show. Hey, thanks for having me. Appreciate it. Sam pleasure is mine in [00:00:55] SAM WILSON: Every guest who comes in the show asks the same three questions, which are, where did you start? Where are you now? And how did you get there? [00:01:01] GLENN HANSON: Oh, wow. In terms of real estate or in terms of business. [00:01:05] SAM WILSON: Oh, and I left one part out in 90 seconds or less wherever [00:01:08] GLENN HANSON: you like. All right. So I started in a family business when I was, out, came outta high school and I latched onto that as a. Machine tool maker. And I grew that business with my brother from 73 and we sold it in 1999 and we grew it from nine employees to 400. [00:01:29] GLENN HANSON: Wow. So it was significant in size. As a result of that, I retired at 47, 2 years past my targeted retire. Goal and bought a bell jet ranger, helicopter flew around the country, got bored. And I called it my Winnebago in the sky. And, I got bored. So I started funding startup companies in 2001 and did that progressively for several years. [00:01:55] GLENN HANSON: And then. One of the companies I started was a roll up of pet cremator and that's where I was reintroduced with the concept of scaling a company and focusing on the segments of success that I found, which is that the company can't go to China, wildly profitable, scalable doesn't need skilled labor and is recession proof. [00:02:16] GLENN HANSON: Multi-family investing apartments. Real estate fit that formula. So that drove me into the real estate business on scale. We, my wife and I, we had bought two families for 20 years prior and never made any money at it, aggravated with investors. I mean, with intent with the tenants. So, we never saw that as a place to go in business. [00:02:40] GLENN HANSON: We, we learned about scale. We learned about the industry, my experience at, up till 2008, when we started gave me the skills I thought to dig in and grow the real estate company. So you [00:02:53] SAM WILSON: started investing in multifamily in 2008. [00:02:56] GLENN HANSON: Is that what I mean? Yes. [00:02:58] SAM WILSON: Yeah. and that of course was right when everything was just, going the markets were going south in, in, in a hurry. [00:03:03] SAM WILSON: I mean, what gave you the confidence then to say, Hey, look, I think this is an excellent place to be, and [00:03:07] GLENN HANSON: we need to be buying.. Yeah. So 2008 September when I launched the business, the Lehman brothers were still in business a few months later is when they fell apart and the world tumbled. and as a result I had, I was funding 25 startups. [00:03:23] GLENN HANSON: So I was feeding a lot of capital into multiple companies in different industries. So I recognize that I didn't have enough B. To maintain that. And so some of those would have to be jettisoned or find their way without me. And I had to find a source of significant capital to satisfy my lifestyle. [00:03:44] GLENN HANSON: And, the pet cremation business I mentioned earlier was ongoing and I had operators there. We sold that in 2016, but I was able to focus on the real estate business and what gave me the confidence was, the experience in the past, recognizing that recessions passed, I never anticipated that the downturn was going to be what it was. [00:04:06] GLENN HANSON: So it was three years from the date I started until we bought our first deal. And the first transaction was a 35 million dollar property. And, the irony there is we bought it out of, receivership from. General electric and they wouldn't even let me bid on it because I didn't have experience. [00:04:26] GLENN HANSON: So I said, I may not have experience, but I know how to run a balance sheet and the guy you took it from had experience and he failed. So, maybe you could gimme a shot. So they said, if I can, if I could show proof of funds, they would let me bid on it. So anyways, we did that and, we got a shot and we won the deal. [00:04:42] GLENN HANSON: Wow that got us started. Yeah, that's a heck, that's a big deal. Heck of a [00:04:46] SAM WILSON: first start. I mean, most people who are buying their first multi-family property, don't start with a 35,000,001, let alone one in receivership. obviously you got a significant experience in business, but how did you know, Hey, this is even a good deal. [00:04:59] GLENN HANSON: Yeah. So the first thing I did was I hire. A fellow he's still with me today and he is a partner now, but I hired a fellow that worked for a competitor in the area that had scaled a real estate empire to 25,000 units. And he was an acquisition person for them. And so he came on and he knew what to do. [00:05:16] GLENN HANSON: I hadn't, I did not know it was his doing that created our success for sure. [00:05:21] SAM WILSON: That's amazing. That's amazing. Yeah. You're bringing on talent from another another organization that has the industry experience to say, Hey, this is what we should be doing. [00:05:29] GLENN HANSON: Yeah. Yeah. And it's all about the team. [00:05:32] GLENN HANSON: Right. And even today what we do I guide the team, but I'm not the expert in any segment. They I've got people that have come from the industry and know what they're doing. [00:05:42] SAM WILSON: Right. That's amazing. Yeah. I think one of the words that you use, or two words that you used before we kick this off was something you said programmatic scale. [00:05:50] SAM WILSON: Can you give [00:05:50] GLENN HANSON: some more points to that? Sure. In my tool and dye business that I scaled to 400 people is statistically average size of the company. And that industry is 10, 10 people. Wow. And to give you an idea that what can happen and through the process and, The disciplines, when I say programmatic scale is that what you need to do is set the goals in place, get the team involved and then believe your own story that you're going to do it. [00:06:17] GLENN HANSON: And then you have to talk it up, share it with. Other people, tell people what you're going to do. And what happens is the dream becomes bigger than life or the people involved, including myself and you build momentum. But inside of that, building of scale, you need systems and procedures and that's the hard part. [00:06:36] GLENN HANSON: And we're struggling with that today. I mean, we're, we have, significant amount of properties under management and we use third party managers. We have to manage them tightly. it's for us, it's worked and we're in multiple states. So it, programmatic scale is what, that's all about. [00:06:55] GLENN HANSON: What I just described, keeping that into control. [00:07:00] SAM WILSON: Absolutely. Absolutely. Yeah. I've heard, somebody say that it, that problems never go away. They just change, [00:07:05] GLENN HANSON: actually. Yeah. It's all the same. Yeah. Right. Yeah. Right. [00:07:09] SAM WILSON: I think every entrepreneur wants to solve all the problems on their desk and then it's like, well, by the time you make it to, I guess you guys are at 1.4 billion in assets, under management, you're still going, oh wait, there's just [00:07:19] GLENN HANSON: different problems. [00:07:20] GLENN HANSON: Yeah. Yeah. Well, we don't have 1.4 billion under management. We've sold this. We've gone along. Okay. We have today we have about 500, probably 500 million. Okay. Under management, but, we've traded. And, like I mentioned, our average labor IRR is 37% on the portfolio, so that's and no losses. [00:07:40] GLENN HANSON: Yeah. [00:07:41] SAM WILSON: That's absolutely fantastic. I love that. You, you said earlier that, that you have. Really, it sounds like developed a formula for success. Can you talk to me [00:07:49] GLENN HANSON: about that? Yeah, I can. that started in 1991 when I read Steven Covey's book, seven habits of highly affected people. And I ran, I started running my company using those strategies. [00:08:04] GLENN HANSON: At that time, I had 27 direct reports and, I trained all of them, myself and the. Procedures and systems and provided the manuals and the books that we all carried every day. And we followed that discipline and that's the magic for me of being able to scale. [00:08:22] SAM WILSON: Got it. When you think about your, your, over the course of your business career, what are some things that maybe you didn't get right, or that you did wrong, that you could help other people avoid? [00:08:32] SAM WILSON: Repeating. [00:08:33] GLENN HANSON: Wow. I did a lot wrong. that's let me think of wrong [00:08:39] SAM WILSON: or a mistake you made, you said, man, I, I could have [00:08:42] GLENN HANSON: avoided that. Well, litigation. I've had litigation that I could have avoided. and I would say that when I started this business, my attorney told me he knows people in it. [00:08:51] GLENN HANSON: And the first thing they do is set aside a budget for litigation. and it's too easy to get caught in the ego of litigation. And I would. Today. My, my view is run from any litigation. Okay. It's just not, it's not worth the time, money or emotional stress. So that, that's probably the most current, I mean, What else? [00:09:12] GLENN HANSON: What else can I share? Well, yeah, I, [00:09:15] SAM WILSON: if you can give some color to that, I mean, cuz there are people, obviously they're scaling their portfolios and when you say, Hey, set aside a budget for litigation is there and I'm not asking for particulars necessarily, but is there a scenario or something that you think of when you say that you say, Hey, here's a way either to avoid it. [00:09:31] SAM WILSON: Something you could have set up differently. Was there was it just, some of the crazy stuff where we here, where somebody got shot on your property and then they, [00:09:38] GLENN HANSON: it ranges from property issues and more, more directly to the financial community. For instance, we had a closing that a property, didn't receive the. [00:09:50] GLENN HANSON: At close to pay the taxes from the seller. So lean was put on the property by the state and we had to go back and get the seller to. Give us the money. They wouldn't do it. So obviously that leads to litigation. Right. Got it. So how do you solve that without litigation? The first thing you might wanna do is be prepared to just write a check and be done with it and move on. [00:10:12] GLENN HANSON: But this was too big. We couldn't, we didn't have that kind of cash. Right. So we approached it from the standpoint of litigation, but . We don't do it with a vengeance or with anger. We just do it as a tool to get to a solution. same thing with issues on the property. Just focus on a solution. [00:10:28] SAM WILSON: yeah, that's great. That's great advice. Yeah. And those are things that, I mean, some of those you just can't avoid. It's like you [00:10:34] GLENN HANSON: can't yeah. [00:10:35] SAM WILSON: They show up. Yeah. And that's that's really interesting when you said, Hey, just start setting aside a budget for it. [00:10:40] SAM WILSON: Cuz it's, at some point when you get enough assets under management enough people, enough property it's probably just bound to happen is what it sounds [00:10:47] GLENN HANSON: like. Yeah. By the way, I didn't say set the budget aside. It was my attorney when I started the. Told me, that would be a good idea. And I'm, thinking my brother and I ran, we ran 38,000 contracts over 30 years, 35 years. [00:10:59] GLENN HANSON: And we have one Indi indication, one incident of litigation. And that was it. So I said, we're not gonna have any litigation. Well, the real estate industry seems to attract it for sure. Yeah. So, yeah, beware. [00:11:14] SAM WILSON: Absolutely. Absolutely. And there are things that are beyond your control. I mean, there are people I gave earlier, I've known some people who've had. [00:11:21] SAM WILSON: Violence that happen at one of their properties and suddenly yeah. They're being drag into court and it's like, wait, I didn't, I had nothing to do with this. And yet, here I am, how did this, how did I get here? This is great. Right. So, yeah, that's wild. You talk about talk to me about funds. You guys have multiple funds that you're running now. [00:11:38] SAM WILSON: And I think earlier we talked about what you called seven years of struggle. [00:11:42] GLENN HANSON: Maybe yeah, sure. we started out seven years ago to raise 150 million in an LP fund. And I hired a series seven employee that was, came from a large institution, had raised billions of dollars and, she was unsuccessful and, it was largely due to the fact that we were a first time. [00:12:05] GLENN HANSON: We couldn't get any traction and especially at 150 million dollars. So along the way, we tried different approaches and we failed. And then along the way we, we converted it to a GP fund and we lowered the amount that we wanted to raise to 10 million. we were able to get traction on the 10 million from our own family and friends to get started and break escrow so that we could go ahead and continue the raise. [00:12:31] GLENN HANSON: And we raised 20 million for our first fund and that 20 million, we bought 380 million worth of real estate. So there we were able to, as a GP, take a GP piece, right. That's what the fund was. We were able to leverage that money to a significant. Amount of, real estate. So fund two, which we're in the process of raising now is a $30 million fund, same model. [00:12:57] GLENN HANSON: And we're at, we'd launched in January and we're at $15 million raised so far. So, what I learned from that is start small and, make sure when you start, you can hit your target, even if it's 5 million. And then that gets, the confidence credibility out there. I also learned that they're very expensive to manage. [00:13:16] GLENN HANSON: There's a lot of regulation around the administration and accounting. So, that's perhaps why people don't wanna get involved with somebody doing the first time fund is you don't realize when you start how much work it is outside of running the real estate empire. It's almost its own. to keep the fun. [00:13:36] GLENN HANSON: Going [00:13:37] SAM WILSON: right. Tell me the transition. I just want some clarity around, you said you started it initially as an LP fund and then said, right. That's not working. Let's move it to a GP fund. Yes. Can you clarify [00:13:49] GLENN HANSON: that for me? Yeah. So LP would be a different part of the stack capital stack than the GP. So, the GP fund funds only the GPS, which has the higher risk and higher return. [00:14:02] GLENN HANSON: So our fund documents say that we're targeting a 20, 25% internal rate of return and an 8% cash on cash. So you can do that when you're in the GP stack. So when you [00:14:16] SAM WILSON: guys come in, you're coming in, cuz obviously, if you set aside, let's keep this easy numbers here and I'm sorry if I'm getting into the weeds on this, but let's say it's a million dollar raise. [00:14:24] SAM WILSON: And just again, make making this easy numbers. That is the limited partners equity, but then the general partners may be throwing in a half, a million dollars themselves. So that maybe they told. And so you guys are coming in and so the total raise, let's say it's 1.5. You guys are coming in as the $500,000 GP [00:14:40] GLENN HANSON: side. [00:14:40] GLENN HANSON: Yeah, we have to part. The fund is considered, liquidity. We can use, it's considered capital that we control, but they still, to this day, they still want, me and my partners to put money in the game. Absolutely. So. [00:14:57] SAM WILSON: with that fund, are you guys going out and acquiring your own assets or is it something where you're working with other general partners to go and find deals? [00:15:06] GLENN HANSON: No, that we own all the assets. Got it. Got it. [00:15:09] SAM WILSON: Okay. Okay. Yeah. Very cool. I like that. And then also, so, so I guess on that front then, how are you guys funding the limited partnership side? Is that something where you're just going out and just raising. One on investors, one, one at a time. [00:15:21] GLENN HANSON: Yeah. So prior to this interview you sent me a list of asking me what's the hardest thing I've ever done. [00:15:26] GLENN HANSON: Yeah. And it's raising tens and hundreds of millions of dollars worth of capital for what we're doing today. That is the hardest thing I've ever done. And we're, we're out there. We're hard on a deposit. We don't have all the money yet, and we've got to perform and out of 37 transactions, there's only one time we couldn't close. [00:15:46] GLENN HANSON: And, so we've, we've been successful, but it is not easy. Sam, it's hard. It is [00:15:53] SAM WILSON: absolutely hard. Yeah. I think people underestimate that. How difficult raising capital can be. I always just say it's like herding cats. It's getting everything done and across the finish line, everybody signed everybody's money and everybody wired. [00:16:05] SAM WILSON: It's like, man, this is, this is a lot like work. [00:16:07] GLENN HANSON: It is, it is real work it's, but yet after you get going, it's, it's, the easiest thing I've ever done once you're once it's operating. Right. I mean, try running a machine shop with 400 people and 1800 custom parts. That's pretty tough. this becomes easy, I guess, at [00:16:24] SAM WILSON: that point that's absolutely incredible. [00:16:26] SAM WILSON: Tell me about that one deal. I'm really curious. What did you learn from the deal? You couldn't get done? [00:16:31] GLENN HANSON: Yeah. So we were working with aggressive money, which we seemed to find occasionally not always they're disingenuous in terms of their, their approach to, you've probably heard loan to own. [00:16:42] GLENN HANSON: Yeah. So we've run into some of those kind of. Targets. And, we were short 1.8 million on a 36 million deal. And, the CapEx budget was 12 million. So it didn't matter that we were short 1.8, we could have continued raising the capital after. Sure. But they wouldn't let us, they, they said, if you don't have all the money, we're not closing. [00:17:05] GLENN HANSON: So, we couldn't close [00:17:07] SAM WILSON: can you clarify that? Who, who wouldn't let you close? I mean, [00:17:10] GLENN HANSON: certainly, yeah, the, the partner, the partner that was putting up the cash. Right? What happens is the game is once you sign with these guys, they're exclusive. So you can't go out and get competitive money while they're controlling your calendar. [00:17:25] GLENN HANSON: Right. Got it. So you get to the end, then if they decide they don't wanna fund, what are you going to do? You haven't talk, you haven't been able to talk to anybody else, so you either better have. 12 million bucks to. Take their place. If that's the number or yet you're forced to give up the deal. Wow. So, well, that's a [00:17:44] SAM WILSON: risk. [00:17:45] SAM WILSON: I think we should all listen and learn and [00:17:47] GLENN HANSON: avoid well that's the thing that, I wanted to share with everybody is be careful who you pick as your partner. When it comes to finance, I mean, you have to be sure they're genuine. Number one, number two are they are there Satan clauses inside their contracts that are gonna trip their are their trip levers where they're deliberately targeting, an opportunity for themselves. [00:18:09] GLENN HANSON: And you wanna watch for that. And as we scaled the business, we got exposed to a lot of people. And, many most are fine, but there's always somebody that's trying to take advantage of the new, the newbie coming into the game. [00:18:23] SAM WILSON: Yeah. That's, a painful lesson learned. I think, like, like I said, a painful lesson learned the hard way. [00:18:28] SAM WILSON: I mean that nobody wants to be in that position. How would you identify. That money partner like that. Now, how would you pick 'em out of a crowd? [00:18:37] GLENN HANSON: Yeah, you can see it in their term sheet. When they send the term sheet over, you can see the language will jump out at you. If it makes you cringe in your stomach. [00:18:45] GLENN HANSON: Feel upset then you found it , it shouldn't be that it shouldn't be hard. Right, right. It should be. It should be. They want to do a deal with you. They wanna make it work. Obviously, if you break certain rules or you can't pay your bills, they've gotta take over the property. We get that. Right. [00:19:02] GLENN HANSON: Right. [00:19:03] SAM WILSON: It'll be right there in the term sheet. I like [00:19:05] GLENN HANSON: that. Yeah. Yes. You can see it. You can see it right out of the blocks and then just guard yourself against it and don't accept exclusivity at that point, for sure. Absolutely what we've been able to do is write in a, breakup fee. [00:19:18] GLENN HANSON: And if we don't like it the way it feels as we get into it, we pay the fee and find another partner. [00:19:24] SAM WILSON: Interesting. A breakup fee. That's yeah, that, that's very cool. I love that. Thanks taking the time to share that with us. One last question here for you. The markets are crazy. Multifamily has experienced incredible cap rate compression. [00:19:37] SAM WILSON: We've seen prices going wild. Where do you see risk in the multifamily market right now, if you see any and then how are you protecting your guides yourselves against that? [00:19:47] GLENN HANSON: Yeah. I was a, during my stint of retirement, I traded my own book of business in commodities. So I traded the indices and everything else you can imagine. [00:19:57] GLENN HANSON: And I learned that nobody knows where it's going to go. Sure. So I think the biggest risk is by not continuing with your business plan. So we're still buyers. We've just found a better way to finance and it's, we couldn't do. The way we did three months ago, we had to change the way we looked at the capital stack. [00:20:13] GLENN HANSON: But the risk is that people are pulling in their horns, thinking the world is going to end. And, the reality is that people still need a place to live. The Democrats or Republicans support housing, and the interest rates will come down. And as long as we're buying cash, Which we are. So what, we just have to wait. [00:20:31] SAM WILSON: I like that. I like that. And that's that's what I keep hearing over and over right now is that as long as we're buying cash flow, who really cares. So that's absolutely fantastic. Glen, thank you for taking the time to come on the show today. Certainly learned a lot. It's been a, a very interesting interview just from your history in the, in the tool and dive business and growing that to, as you called it, programmatically scaling your real estate holdings. [00:20:55] SAM WILSON: You've done some really cool things and, and I think learned some hard lessons that you were, willing to share with us today. So thanks for helping us avoid those mistakes ourselves. Certainly appreciate it. If our listeners wanna get in touch with you and learn more about you, what is the best way [00:21:06] GLENN HANSON: to do that? [00:21:08] GLENN HANSON: Yeah. Reach out to colony Hills capital.com [00:21:11] SAM WILSON: colony Hills capital.com. We'll make sure we put that there in the show notes, Glen, thank you again for coming on. Certainly appreciate it. [00:21:18] GLENN HANSON: Yeah. Thanks for having me. I appreciate that too. Take care, Sam.

21m
Jul 31
Building and Protecting Wealth Through Income-Producing Assets

As the author of Building Indestructible Wealth, Jack Gibson’s goal is to empower people to make financially smart and strategic decisions. He is a highly regarded serial entrepreneur and financial thought leader, and he joins us to offer actionable advice to generate passive cash flow. Having experience in multimillion-dollar businesses, he also speaks about the importance of working with like-minded people and how they are strategically protecting themselves against the changes in the market.   Tune in if you want to know the secrets to lasting wealth! [00:01 - 09:06] SURVIVING INCOME INCONSISTENCIES WITH INVESTMENTS __ __ __ __   [09:07 - 14:59] FINDING THE BEST BUSINESS PARTNER __ __ __ __   [15:00 - 17:47] MANAGING RISK IN THE CURRENT MARKET __ __   [17:48 - 19:15] CLOSING SEGMENT __ __ __ __ __ __ TWEETABLE QUOTES   - Jack Gibson   - Jack Gibson   - Jack Gibson   - Jack Gibson -----------------------------------------------------------------------------   Connect with Jack! Head over to his website to find his podcast and his book, Building Indestructible Wealth.   CONNECT WITH ME:   I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns.     Facebook https://www.facebook.com/HowtoscaleCRE/   LinkedIn   Like, subscribe, and leave us a review on Apple Podcasts, Spotify, Google Podcasts, or whatever platform you listen on.  Thank you for tuning in!   Email me → sam@brickeninvestmentgroup.com Want to read the full show notes of the episode? Check it out below:   [00:00:00] JACK GIBSON: In any time you have a partnership, as long as that you both have the shared values. And this was a discussion that we got into in an entrepreneurial meetup group as well because there was some that were like, yeah, partnerships don't work. And then I was like, well, you know, they do work really well, if, and this is the most important part, is that you both have the same values. [00:00:35] SAM WILSON: Jack Gibson is a serial entrepreneur. He has five companies in different industries. He has a strong focus on financial education for entrepreneurs to build multiple streams of passive cash flow to protect their lifestyle and normal income inconsistencies. Jack, welcome to the show. [00:00:49] JACK GIBSON: Thanks for having me, Sam. Pleasure to be here.  [00:00:51] SAM WILSON: Hey, man, the pleasure's mine. There's three questions I ask every guest who comes to the show: in 90 seconds or less, can you tell me where did you start? Where are you now? And how did you get there?  [00:01:01] JACK GIBSON: I started at age 19 from my college dorm room. And I got a flyer from another kid that he was passing out. You know, he was recruiting for a health and fitness distribution business, a direct sales business. Got started in that, built up a pretty large business over the last 25 years. It took a while. The first year was really rough. And then since then, I've launched four other companies. And then my main focus now is trying to help entrepreneurs and, you know, earners that have income inconsistencies to be able to produce multiple streams of passive cash flow to help supplement or protect their lifestyle and build wealth responsibly.  [00:01:39] SAM WILSON: Is it that kind of the goal of the entrepreneur though, is to build income. And to build passive streams of income? So I guess the real question in that is, in what way are you helping them augment their passive income?  [00:01:54] JACK GIBSON: Yeah. Well, no matter what business that you own, you're always going to have as an entrepreneur income inconsistency. If you're a commission sales rep, your income's going to flow in. It's going to add, it's going to, you know, go up and down. And that's even with my business, you know, 25 years in, you know, it's a more stable business, right? But it's still, there's some pretty dramatic swings in income. You just, you can't help it. It's business cycles, seasons, you know, et cetera. So what I found is that if you're relying on one stream, which is your business for your lifestyle and to protect your family financially. It's really tough because you just never know what's going to happen from month to month or year to year. So I really am strong on, when you're doing really well, you've got the harvest season and you're on your business, make sure that you discipline yourself so that you're banking that extra cash and then putting that into other cash flow producing assets that are going to create, you know, additional streams of income.  [00:02:56] SAM WILSON: Got it. That makes a heck of a lot of sense. Are you moving people into income, producing real estate, other businesses? What are you, what are you generally, you know, recommending for people? [00:03:05] JACK GIBSON: Yeah, I recommend the base level is always income-producing assets, generally real estate, and that's, you're always going to be your best, you know, income-producing plays. I love commercial real estate in terms of self-storage. No tenants, toilets, trash. You can, you know, sweep somebody's locker out in 10 minutes and then you got a tenant turn, right? So when they, they move all their stuff out. So with that, you know what I've found though, too, you know, it's, you got to be an accredited investor and a lot of those deals for syndication to do self-storage. So, that eliminates that option, unfortunately, for a lot of people. So they need to play the monopoly game, you know, start with the four greenhouses and work your way up, trade those in eventually for a bigger deal. But ultimately the goal in my opinion is about 80, 80% of your total investible dollars should be into cash flow producing assets, such as real estate. Short-term Airbnb rentals are great right now, mortgage-backed notes. We like those, you know, you, you've got a really solid return that you can count on each month. So then with those streams of income, if you want to get a little bit more speculative, you want to get a little more aggressive, take those streams and put it into things that can really, you know, 10x and really pop in terms of the appreciation, but are a little bit more risky, so you could lose the money. And then it doesn't matter because the income will just keep flowing back in from all your other cash flow-producing assets.  [00:04:40] SAM WILSON: Right. That makes a lot of sense. Five, you said five different companies. Was that in five different industries?  [00:04:46] JACK GIBSON: Two of them are in real estate. We have the self-storage indication company and then the other is we have a company called high return real estate and we help investors get into turnkey, you know, usually single family duplex type properties. [00:04:58] JACK GIBSON: And then we also just filled out a brand new division for short-term Airbnb, and we help investors get into those as well. And the returns are looking really strong. I mean, we're, we're moving most of our long-term tenants and those types of properties, either selling them off or, you know, transitioning them as the tenants turn into short-term Airbnb, the yields are incredible. [00:05:22] SAM WILSON: They really are. They really are. I've heard that from a lot of people you know, especially I think the pandemic really, really hyper fueled short term rentals in a way that we probably didn't expect. But tell me, I guess when you look at these various, 'cause I love what you're doing there. You've got the four, what'd you call it the four greenhouses to trade up for a red house? [00:05:40] JACK GIBSON: Right. [00:05:40] SAM WILSON: Right. You can kind of service all your, you know, all the different investor niches, you know, with your different platforms there. You've got the single-family home buyer. It's like, Hey man, we're going to start with a single greenhouse. And then you've got your syndication business in self-storage where you say, okay, now you're an accredited investor. Now you can come in and do self-storage and then also move into short term rentals. That's pretty fun. Do you, are those all separate businesses with all separate teams operating and running?  [00:06:05] JACK GIBSON: Yes. Yes. We've got a, for the short term, Airbnb rental team, we've got an acquisition team. We've got four or five different contractors that we personally utilized. And some of them we've utilized for over a hundred different deals. And then we have our property management team. So, you know, we have all those teams running that. So that's a pretty passive business for me at this point, once the teams are built out, obviously there was several years of hard work to build up, you know, the systems and the procedures, operations. [00:06:37] JACK GIBSON: And then the self-storage is a, a syndication fund that I put together. And then we invest into one of my longtime friends, Sean. Funny, I met him at in Mexico. We both forgot our passports and he was a baller, had his buddy fly into Canada, from another city in Canada, give him his passport, then he got on the plane and he made it. And my wife and I were stuck in Chicago for a day. So I'm like, I want to be like you, what do you do? Like, how are you a baller like that? He's like, oh, I do self storage. I'm like, tell me more. [00:07:09] SAM WILSON: Tell me more. Right. I want learn from you. When you look back at your, you know, building out these different teams and, and especially having them in, in, you know, while it's all in real estate, they're all their own unique niche asset class with their own particulars inside of those asset classes. What was a pivotal moment for you? When it was like, Hey, you know, something was in the way. And I was able to just get that out of the way. And then you kind of had exponential growth. Was there ever a point where something, you know, switched?  [00:07:37] JACK GIBSON: Well, if you track it all back, where everything switched for me in terms of my mindset is when the stocks that I was in, both of them had, you know, incredible drawdowns and value. This was, like, around 2012, 2013, and one of them got a short sale attack. So that dropped the stock by 50% within days. And then another one was called interval I was writing options on that, that dropped in half overnight. And I realized, wow, you know, I'm, number one, I'm an unsophisticated investor. I'm relying on the whims of the financial markets to dictate my financial future. And I don't like it I want to be in control. So that's when I really dove in, studied real estate, and turned that adversity, those setbacks losses, all of that. You know, I figured, okay, I can turn this into something better. [00:08:27] JACK GIBSON: This is the motivation that I needed to be able to learn real estate. So that's, honestly, that's what, like, that started everything for me in real estate. And then once I got in, even though we've had some, you know, I've had some rough patches trying to learn, you know, what to do. I'm never leaving real estate. It's just an incredible asset class, all the advantages. It just, to me, it far outweighs anything else you can do in any other markets. And I love, you know, I love crypto. I love stocks. I don't love crypto right now, but I love the future of where I believe it's headed. And those are, however, I can't build indestructible wealth with those types of assets. I need dirt. I need real estate.  [00:09:06] SAM WILSON: That's for sure. Tell me about your team. Who was the first person that you hired when you said, okay, I'm going into real estate. I'm going long, but I've got to, I got to build a team around me. How did you do that?  [00:09:17] JACK GIBSON: Most important thing for me was just finding a great partner. And I know a lot of people say, partnerships, what is this, Dave Ramsey said something about partnerships sink ships, or it's a sinking ship, I think is what he says. Well, I have not found that to be the case. I have a great partnership with my wife for 18 years that you know, that's amazing. And I've had a business partnership with Shecky. [00:09:41] JACK GIBSON: He's called Jeff, but he goes by Shecky and we've been partners for seven years and we always work things through and work things out. So I recruited him. He was my digital marketing coach for my direct sales business. And I really liked his integrity. I loved his knowledge and I knew I needed somebody like him to help me market, really market, and scale, to build that business. So when he came on, I gave him 50% equity, 50-50 partners. And he said this is the first time that I've anybody's ever pitched me on like doing something business-wise with them. That actually benefited me too. Like normally people would say they'd pitch them, but it was always what's in it for them. And my pitch to him was, you know, he didn't come across that way at all. So once we had formed our nucleus, then we started, you know, building on all the other parts of the company as well.  [00:10:33] SAM WILSON: What were some things I'm sure that there were discussions early on that were, I love what you said there were like, Hey, you know, obviously it's going to be beneficial for your partners or for your partner as well. But what were some kind of discussions? Can you give some or if you can remember it, give some color to those early on discussions? 'Cause I think a lot of our listeners are probably, you know, in that early stage of growth. That's kind of the, the name of the podcast is How to Scale. Like, so people are out there thinking, okay, I want to grow. But certainly, I would imagine you had some discussions where it was like, Hey, what's this look like? Did you guys put in fail safe? Did you guys, you know, how did you hammer out the, what ifs in that scenario?  [00:11:07] JACK GIBSON: You know, I think in any time you have a partnership, as long as that you both have the shared values. And this was a discussion that we got into in an entrepreneurial meetup group as well because there was some that were like, yeah, partnerships don't work. And then I was like, well, you know, they do work really well if, and this is the most important part, is that you both have the same values and therefore if you're operating from that base level, that foundation, then everything else that happens, conflict, conflict resolution, working through adversity, working through differences in opinions, all of those things can be no problem, instead of big problems, if the values are shared.  [00:11:53] JACK GIBSON: So our values, for example, we both really believe in, no matter what the costs, we're going to do the right thing for our investors, and we've taken some real hits where things that we kind of came out, shelled out some money out of pocket just to help an investor, you know, that was in a tough situation, those type of things. Or something went wrong in a certain situation and it could have gone either way and we pay for it. They pay for it. We generally take care of it. So we always, you know, operate from that premise. And then both of us can work through, you know, any of those challenges together. [00:12:30] JACK GIBSON: So yeah, I think a team, though if you really want to scale, I mean, doing it by yourself, if you're solo, I just don't, I don't see how you scale. You need to have a team. Like I look at my other direct sales business. That's a huge business, but I put an incredible team of people around me that, in a lot of cases, they're more skilled and harder working more talented than I am.  [00:12:53] SAM WILSON: I like that. I love the idea of coming from, you know, the position of shared values. I think that's, that's a really key piece of advice. How did you discover or what did you do to determine that your partner had the same values as you?  [00:13:06] JACK GIBSON: Well, I could tell the values, just kind of come through. I think anytime that you have beliefs or values or things that are internal, eventually, over the course of time, your true colors come out. You know, like those come out, those values come out through your words and your actions. So it was great because as him as my digital marketing coach for several months, I got to see firsthand, like, what is he made of? And I got to see how he handled, you know, himself in terms of, did he show up on time? Does he keep his word? Does he always thinking about how he can help me solve my problem first? Or is it, what's in it for him? So. I'm just looking at all those things and, and getting to know somebody like in that setting gave me the opportunity to kind of vet him, right, to say, do I want to extend an invitation to somebody like this to be a partnership? 'Cause if they're not on the same page as you, value-wise, beliefs, partnerships are going to be a pretty tough thing.  [00:14:10] SAM WILSON: Absolutely. That's really, really cool. Thanks for taking the time. 'Cause I think that that's not something we've heard a lot of here on this show. When, when you talk about building a team or surrounding yourself with people that are, as you talk about, better than you. You know, oftentimes think of that in the, in the hiring sense, but we haven't talked about it necessarily in a partnership sense. So thanks for taking the time. [00:14:27] JACK GIBSON: Yeah, my buddy, Sean, you know, he's got the, his self-storage company, almost hit a billion or hit a billion, you know, recently just in the last, you know, couple months. And I texted him and said, dude, like, that's incredible. A billion-dollar business. Like, wow. I mean, I met you 10 years ago and it was not a billion dollars. And I said you're my hero. He said, if you want to do that, you just got to get a great team. That's the whole key. Everything is who are the guys that you're putting around you and then are they smarter than you in certain areas?  [00:14:59] SAM WILSON: Yeah, that's absolutely it. I love that. Let's talk a little bit about risk, what maybe you see in the market right now. And again, you guys are diversified from single-family to short-term rentals to self-storage. Is there a risk in the market right now that you see that you guys are protecting yourself against strategically?  [00:15:18] JACK GIBSON: Well, certainly there is an absolute chance of a recession. I think we're all, probably speaking it into existence. [00:15:25] SAM WILSON: Probably. [00:15:26] JACK GIBSON: By what we're saying.  [00:15:28] SAM WILSON: Right.  [00:15:29] JACK GIBSON: So I hate to even be a part of that narrative. However, I think that when you print 40% of the money supply in a couple of years, then I don't see any other case happening except something not good. So that's what we're starting to see is something not good is happening from all this free money that was injected. There is no such thing as a free lunch. So I, however, feel most comfortable in real estate, I think. Right now the financial market, stock market, crypto, I think there's some incredible deals and sales. Have we seen the bottoms in those markets? Who knows. I suspect probably have not, but either way, I'm not, you know, I'm not going to wait and try to time the bottom. So I'm, I'm buying into those asset classes. At the end of the day, I keep saying to myself, you know, this is still a great time to invest in real estate. There's a limited supply. They're not handing out, you know, money to people that, you know, should definitely not have the money. They're not doing that. [00:16:35] JACK GIBSON: Lending is a lot tighter. Supply is low, so I don't think we're going to see this big correction in real estate personally. I think we'll probably see something. However, if you are buying properties with a great value under market value, you're, you know, putting in effort to create value adds or increase the value through renovations or whatever else you can do to make the property more valuable and produce more income, then you're going to be fine. [00:17:02] JACK GIBSON: And if the market corrects, there's no problem. You have cash flow coming in. You don't care, you can ride it out. But those who are doing more speculative projects right now, I think you ought to be careful 'cause you know, we could definitely see something where your equity just collapses on those. [00:17:19] SAM WILSON: Absolutely. And that's, that is something I've seen in all the investor conversations I'm having more and more of is that, even a couple of years ago, people were probably more focused on the, you know, equity multiple and things like that. And everybody I'm speaking to right now just says, I'm just looking for cash flow. That's it. Yeah, let me buy a property that produces an income, IRR, equity multiple who cares? I just want something that produces an income. So I love, love what you're talking about there. I think that's great. Jack, thank you for coming on this show today. Certainly appreciate it. It was great learning about you and your business, businesses I think I should say. You've given us a lot of things to think about, especially as it pertains to finding and having great partners here in business. And then, you know, really just how to scale and what you've done, certainly, certainly have enjoyed it. If our listeners want to get in touch with you or learn more about you, what is the best way to do that?  [00:18:06] JACK GIBSON: My website has everything and I actually just launched a new book that's called Building Indestructible Wealth. It's the six-figure earners’ guide to a multimillion-dollar portfolio. So I just lay out the strategies exactly. Actionable strategies are in there. There's concepts, it's conceptual in nature, but there's also specific links to here, if you want to do this, here's where you go to do it and how to get this particular strategy up and, you know, implemented. So that's on my website. You can get the book right there. myindestructiblewealth.com. Also, I have a podcast called Indestructible Wealth and a blog. So it's all right there.  [00:18:45] SAM WILSON: Awesome, Jack, thank you again for your time today. Certainly appreciate it.  [00:18:47] JACK GIBSON: Thank you so much, Sam. Appreciate the convo.

19m
Jul 30
Starting From 11 Rental Units to 1.2 Billion In Assets

Welcome Back! Today we are joined by Lane Kawaoka, Lane is a licensed Profesional Civil/Industrial Engineer, He now focused 100% of his time on his investments and helping others in his Passive Investor Accelerator & Mastermind program. He began investing in 2009 in Seattle and was able to buy early right after college. He has now 1.2 Billion worth of assets under management including multifamily housing developments and hotels.   [00:00 - 06:09] OPENING SEGMENT __ __   [06:09 - 11:37] HOMES IN THE MULTI-FAMILY MARKET REMAIN AVAILABLE __ __   [11:37 - 17:24] MULTIFAMILY MARKET IS A VACUUM  __ __     [16:30- 16:57] CLOSING SEGMENT __ __ __   TWEETABLE QUOTES Lane Kawaoka   ---------------------------------------------------------------------------- CONNECT WITH LANE KAWAOKA visit his website at www.simplepassivecashflow.com Or email him through Lane@simplepassivecashflow.com     CONNECT WITH ME:   Facebook https://www.facebook.com/HowtoscaleCRE/   LinkedIn   Like, subscribe, and leave us a review on Apple Podcasts, Spotify, Google Podcasts, or whatever platform you listen on. Thank you for tuning in!   Email me → sam@brickeninvestmentgroup.com Want to read the full show notes of the episode? Check it out below: [00:00:44] SAM WILSON: Lane Kawaoka. Welcome to the show.  [00:00:47] LANE KAWAOKA: Hey, thanks for having me, Sam Aloha, everybody.  [00:00:50] SAM WILSON: Pleasure to have you, man. Welcome. Welcome to the show from Hawaii. I'm certainly jealous of your location. Sounds like a great place to be here today on this hot day in June, but land, I've got three questions for you that I ask every guys who comes in the show in 90 seconds or last, can you tell me, where did you start? [00:01:04] SAM WILSON: Where are you now? And how did you get there?  [00:01:07] LANE KAWAOKA: Where did I start while I was a lowly engineer that didn't really like my job that graduated college in 2007. And I bought a little rental property and bought a bunch of turnkeys after that. And then I started syndications back in 2016 where I'm at today. [00:01:23] LANE KAWAOKA: We currently own over 8,000 rental units. 1.2 billion in assets under ownership, multifamily, or workforce multifamily. so hotels developments but all under the real real estate space, that kind of goes under the so the recession proof theory, right? That at the end of the day, this is a commodity, especially if you cater towards the workforce housing sector. [00:01:48] LANE KAWAOKA: Which is the col of the American population that, the, the need isn't getting any smaller for that. And then what was the third question? How'd you get there? How'd I get there? Well, it all kind of starts with the first one, right? Buying that first rental property, then saving your money and for down payments to buy the next one, I eventually got 11 rentals in 2015, and that was when I started to realize, although little rental properties are a great way to get your net worth out of the ground to half a million, million dollars. [00:02:18] LANE KAWAOKA: It's just not scalable for credit investors. And that was when I started to get into these larger multi-family syndicated projects.  [00:02:27] SAM WILSON: That's fantastic. How, how did you, I mean, having 11 units in 2015, where that's seven years ago, I mean, that's pretty meteoric growth in seven years ago, from 11 rental units to 1.2 billion in assets, under management. [00:02:41] SAM WILSON: What, what were, there were some very decisive steps that I feel like you had to take. In, in that seven year run, what do you feel like were some of those key key decisions you made in that process?  [00:02:56] LANE KAWAOKA: Well, I mean, part of it's vanity metrics, right? Like we say, you own over 8,000 yet. I don't personally own 'em all 100%. [00:03:03] LANE KAWAOKA: I own a fraction of it cuz we syndicated out would bring investors in. But if you probably do look at the equity, it probably has been an exponential growth. A part of it was just, telling folks what we did. And, we started with buying little class C crappy properties with that were kind of a pain in the butt with difficult tenants. [00:03:21] LANE KAWAOKA: Eventually moved more into buying class B assets. I still think that's a nice little sweet spot, especially if you buy in the emerging markets such as like, Phoenix, Houston, Dallas, Huntsville, Then we started to realize that we were just the entrepreneurs in this game and we started to hire it out to, property management professionals. [00:03:41] LANE KAWAOKA: Who've been in the industry over a decade and started to expand the team. And that's how we were able to kind of get, deal done every other month and scale pass, 5,000 units or, definitely get over. Like, I would say $500 million of assets of their ownership is kind of a big. [00:03:58] SAM WILSON: Yeah. Was there, was there a point in time when you said, okay, the, the machine can now kind of self replicate its own success?  [00:04:07] LANE KAWAOKA: I think there was maybe a big aha moment when you start to hire people under you that. Know, a lot better than you and will always know a lot better than you as the, the owner or founder. [00:04:19] LANE KAWAOKA: And, but, I guess that's like not to be, not, not a surprise. Right. But, for some strange reason, I think people in real estate think that, oh, anybody can do this. And on one level they are. Right. Right. It's not that difficult, but. Just like how, if I just tease one of my doctor friends, Hey, I'm gonna be a doctor tomorrow. [00:04:39] LANE KAWAOKA: So just to laugh at me, just like, if when I was an engineer, Hey, I'm just being an engineer, good luck buddy. You go to school for it and, work as sort of a semi white collar journey, man. No different than property management, right? Like, I mean, you wanna hire people that have been doing it for decade. [00:04:55] LANE KAWAOKA: Plus sat at the leasing table. Who's lived that life for five, 10 years and can look at a set of financials and know what's really going on. Where. Somebody like myself. I mean, I guess I'm kind of smart with numbers, I can follow patterns. That's just not, you're not, I'm not gonna have the holistics that somebody who's been in the industry, just like, construction engineer or project manager. [00:05:19] LANE KAWAOKA: I mean, that was kind of the world I came from. There are things that I know about, building contracts, holding contractors, accountable that, I, I kind of laugh and joke. You see these house slippers. There's some, Joe who doesn't have a professional job, number one, Or maybe they're an accountant and they know numbers well, but they don't know the side of managing contracts, managing scope, scheduled budget, playing the game with contractors. [00:05:42] LANE KAWAOKA: And there's a reason why there's the word con and the contractors name . But you know, I mean, I think some things you can learn, but some things I think you have to go through. Going, living, learning it on the job and that takes decade and, I'm not a big fan of college, but I think college prepares people for this type of stuff. [00:05:59] LANE KAWAOKA: I'm, I'm a big fan of, if I had kids I'd like to have, 'em go work for BlackRock or something like that, or property management from for six months, not forever. But I think that a lot of that insight is invaluable. Yeah,  [00:06:12] SAM WILSON: absolutely. And I think, I think what you, what you said there was that your aha moment came when you realized that people were coming on board as team members that knew a whole lot more about the industry than you. [00:06:23] LANE KAWAOKA: Yeah. That's that's correct. That's correct.  [00:06:26] SAM WILSON: Yeah. I think that's a fun, that's a fun place to be. And somewhere, I think that, maybe, maybe all of us as we're scaling our portfolios and growing our companies, that's something that that's, that's somewhere we should be consistently shooting for is bringing people on. [00:06:39] SAM WILSON: Around us that are better better at what, better at this than we are. And I think it's a common myth. I think even myself at times, I find it hard to believe that somebody else would wanna come work with me that maybe is better, better at a certain section of this business than I am. And it's, it's just, it's just not  [00:06:55] LANE KAWAOKA: true. [00:06:56] LANE KAWAOKA: Yeah. Well, I mean, there's a lot of people out there that are good number twos and number threes. They don't wanna do all the marketing nonsense and the business develop. There's also a lot of people who think that they can do that, but they're not, and they're good number twos and cos and operators. [00:07:12] LANE KAWAOKA: But I think the people who realize what, where they're good at most times, the entrepreneur, the founder is kind of just the good BS talker and the, the idea visionary. And they can't really put stuff together. But, those, I think it, at the end of the day, you need to kind of realize where you're at. [00:07:29] LANE KAWAOKA: I mean, the emit is kind of a great book for that. They kind of understand working in your business, not on it, but know, I mean, no different than like, the model that we use is just like a lot of, institutional, private equity firms, guys with 10, 20 billion of assets on their ownership, this is you look at their, their rosters of employees and that's kind of the B. [00:07:50] LANE KAWAOKA: Right.  [00:07:50] SAM WILSON: Yeah, absolutely. Absolutely. We talked about this off air, before we started, recording here. And you said that you guys have kind of taken a pause on acquisitions for the moment. Can you give some, give some insight as to that as to why that is?  [00:08:06] LANE KAWAOKA: Yeah, I mean, I think no secret the interest rates have kind of jumped up a little bit. [00:08:10] LANE KAWAOKA: And, that will change your debt, service coverage ratios a little bit, definitely change your, your holding costs and how much you cash flow. Although I would, I, I tell investors all the time, like in this type of investing, we're not doing the buy hope and pre model, the buy hope and pre model, people own little rental properties or, don't really do value add to their projects. [00:08:31] LANE KAWAOKA: The interest rate matters a heck of a lot. Even half of a point can take a huge chunk of your cash flow. I mean, we're, we're in the value add game, so it doesn't really matter too much, but, I think there's a lot of uncertainty. I haven't seen it jump up this. I mean, I've seen it jump up this much, but not like two to three, months in a row. [00:08:51] LANE KAWAOKA: Right. I think next month they're saying they're gonna be a half a point. It all makes sense. Right? They're they're using the, these quantitative, I think tightening is the right word to ease off the inflation. It's a war on inflation right now, to me, this is exactly what the fed is supposed to do to ensure that we don't go into a hard landing recession. [00:09:13] LANE KAWAOKA: And we stated this soft landing and off to the races for another five to 10 years, right after this. But you know, this, this is all intended. And what I look at is the unemployment at the unemployment's pretty much at, semi all time lows right now, as long as that stays pretty healthy and. We'll be fine and we'll come right out of it. [00:09:33] LANE KAWAOKA: But from our perspective, I mean, things are changing a little bit. So we decided to take a little bit of a break and we've been pretty heavy buying stuff since the year 2020 in the pandemic. And I think that year really set us apart. We're, we're when a lot of people just like fell off the map cause they couldn't close deals. [00:09:52] LANE KAWAOKA: I think that's what really established us, empowered us through 2021 and 2022. Where we are, we were making acquisitions, I would say every other month some kind of a deal. And that really got us up to the top of the list with a lot of brokers because we're active during those times. So part of it is we just, I mean, personally, wanna take a little bit of a break a little bit for maybe a month or several months, and to see how this, sloshes through the system. [00:10:19] LANE KAWAOKA: Although right now there is a little bit of a buying opportunity. A lot of the larger institutions the guys, who own over $5 billion in assets, in their ownership, the big sharks that can show most of the money and most of the, the markets they've kind of pulled back just like, how will we have, and part of it is, I was kind of copying what they were doing too. [00:10:39] LANE KAWAOKA: But They will they'll eventually come back because they have to, right. That's how these big institutions make money by just placing the money, which should make most people sick to their stomach, hearing that. But that's the reality. but they'll, they'll come back in maybe in the next month or two. And then that will put things right back into the cell, the general seller's market that we are it. [00:10:58] LANE KAWAOKA: I still believe we are still. But there is a little bit of buying opportunity, but that's, that's kind of where my head's at with the whole multi family market.  [00:11:06] SAM WILSON: Yeah. I like, I like that. And, and yeah, I do. I do see that there's a slight, I mean, I think anytime there's, it's like, I don't know. It's like coming up for air. [00:11:14] SAM WILSON: It's like, oh, Hey, any, any air is good air. And so people, when they see a slight softening in the market, like, oh, maybe it's becoming a buyer's market. Well, Maybe, but we've got a long way to go before, before this becomes a real, yes, there may be buying opportunities, but I don't, I don't think we're anywhere near a buyer's market yet. [00:11:31] SAM WILSON: I think we got a lot of places or a lot of a lot. It's gotta get a lot worse before this becomes a buyer's market.  [00:11:37] LANE KAWAOKA: Tell me about it's a little, a little vacuum buyer's market vacuum within the sellers market, essentially.  [00:11:43] SAM WILSON: Yeah, I think that's, that's, that's actually a great way to put that. I really like that you guys are focusing, I know you, you, you said you're not doing anything necessarily on the, on the value add multifamily. [00:11:53] SAM WILSON: Are you guys doing development? Are you guys doing, I mean, what else are you working on then? If, if you're not buying multifamily properties right now?  [00:11:59] LANE KAWAOKA: Yeah, I mean, our, our general trend was to kind of get into larger projects. As I mentioned, we started to do a lot of smaller class CS, 50 units, a hundred units. [00:12:08] LANE KAWAOKA: When we first started a lot of those tenants. I mean, you can make a lot of money in that type of stuff, but it's, it's a real headache, cuz your collection are way worse than their class B or eight tenant. And that ultimately is, for passive investor and passive investors perspective, they don't give a rip right about that. [00:12:26] LANE KAWAOKA: That's my problem. But I care a lot, the Jesus is not worth the squeeze. I don't really wanna do it. I'd rather just do class B and, have it be a little bit smoother process and have distributions come out a little bit more inconsistently which is why we've tried to, fight towards, larger class B assets larger deals. [00:12:45] LANE KAWAOKA: And then now, especially where, things are kind of going these last several months. I would say like late last year we bought like a deal for like 89 grand and now it's worth like one 20 for no good reason. I mean, it's just market appreciation and it just seems a little silly to be buying it at that price. [00:13:03] LANE KAWAOKA: And it's starting to get to a point. I mean, it has been getting to a point where like the debt surface coverage ratios aren't making, aren't where it was. We don't have as much. Fat there. Right? So this is just the whole tides. All tides are rising on boats. So from my perspective, if it makes sense to get on the train of more heavier value ad where you have more deeper margins, you have to buy, you have to build the thing, which is an expertise that a lot of people don't have. [00:13:32] LANE KAWAOKA: I mean, that's what I went to school for as a construction management, civil engineer. It's just a matter of bringing in the right professionals and getting to a large scale to be able to pay the right professionals to do it. So I think that's what one of a misnomer, a lot of people have is, development and, development just pulling the deal together. [00:13:50] LANE KAWAOKA: But it's actually the construction element part, getting the architect, getting the construction management, putting it all together, managing it and fighting every day with the contractors to get it built on time, on schedule of budget. Now that's the hard part, but if you hire the right professionals and you have enough budget, right? [00:14:08] LANE KAWAOKA: That's the other key thing. I mean, usually a capital raise of over five to 20 million in that range is what you need to have adequate budget to go after it. So you're not building a little 50 unit property, usually gotta go bigger over 200, 300 units. And then you can go to this certain scale and that's kind of that, that shelf. [00:14:29] LANE KAWAOKA: So it's always like this kind of constant swimming upstream to find locations or areas where there's less competition as people doing it in larger margins. So that whole concept where, you know, the, the air's nicer up at the top of the mountain, cuz there's less competition around. And the nice thing about development is. [00:14:50] LANE KAWAOKA: You don't really have to worry about little undulations in the market, bumps along the road. You just build it. You, you just raise all the capital up front, you build it. And you're kind of in a vacuum for two to three years that you're building it. And even if you, come out in a horrible time, I mean, in theory, you should have enough, you should be building it for such a price where it's just you're you. [00:15:16] LANE KAWAOKA: You would like have so much margin and another thought too was, like the price that you're paying for these class B units. I mean, like you could build that stuff brand new, right? You just have to go through the headache of building it. And then now you have a brand new property that is like 30, 40, maybe even 50 years, you have that much length and run time. [00:15:41] LANE KAWAOKA: So that thing degrades to a class B for that same damn price. Right. I mean it just, when you look at it from that perspective, I mean, it just kind of make it's a no brainer, but the hard part with this whole model is the land. The land to buy this stuff in the right places is very difficult, much more difficult to find that amazing deal, a hundred unit class, B, C property still harder. [00:16:03] LANE KAWAOKA: And then you have to kind of, a lot of times the general partners have to put up all the money for the land purchase. There's a little bit, your general partners need to be a little bit more higher network to be able to cover that. but , that's another, basically, we've kind of opened things up, right. [00:16:16] LANE KAWAOKA: To hit other pitches instead of just swinging at class B multifamily and B plus areas in the sun spell, it's like if you're only waiting for that inside pitch, right above the belt, You, you, you there are other good pitches that you might be able to do something with. Right. It's the baseball analogy,  [00:16:33] SAM WILSON: right? [00:16:33] SAM WILSON: No, I love that. And, and, and development is certainly yeah, I mean, I've heard that from a lot of people who come on the show that our developers are like, Hey, this is why we play here. And they've said the same thing you've said, which is that the reason we develop is we can, we can build for less than what we can buy. [00:16:49] SAM WILSON: 20 or 30 year old stock for even after we value add, it's still, we can still develop it for less than that. One of the things we saw in 2007, eight was that you, I remember just, just driving by project, up for project to project half built, they ran outta funding, the credit lines dried up half built projects. [00:17:07] SAM WILSON: Do you see any fear of that? Same scenario repeating itself. If we do go into a deep  [00:17:12] LANE KAWAOKA: recession, So good observation. So what's happening there is these BOS aren't going in fully capitalized for the entire build, which is a common practice of larger institutions. They run very lean. I think too much at risk type of their, their cash flow model. [00:17:30] LANE KAWAOKA: So we actually have like next to one of our in progress builds, we have like another institutional run they're hell of a lot slower, but what they do too is like they, they start to open up their facility in phases. Ah, they won't build the other half or, Until the first half is opened, created cash flow. [00:17:50] LANE KAWAOKA: They use that cash flow to buy materials for the other one. It makes sense from like a large, institution point of view, you, you don't have these huge overlays of cash and it's not sitting for three, four years, but I mean, as the general partner, I mean, I don't want my ass hanging out there. [00:18:07] LANE KAWAOKA: And not have something built because I guess he was going to have to take the recourse for that. Cuz as sure as heck it could be the passive investors, right. right. They, they ain't gonna pitch in and do capital calls for that kind of stuff. Right. And that's why, it just, I mean, selfishly and I, but I think this is more conservative, you go in with all the money you need up front for the build, you get your bank loan for the whole thing and then you, you build it. [00:18:33] LANE KAWAOKA: It's a very rare circumstance that the construction loans will be frozen, which happened to some people in 2008. Yep. But majority of, I know what you're talking about, cuz there are, they're all over the place to me. I mean every situation is different, but most of those was a byproduct of, they just didn't have all the capital raised up front and that was, it's not, it's a common practice. [00:19:00] LANE KAWAOKA: Sure.  [00:19:01] SAM WILSON: It, it sounds like your way of getting over that is just raising the capital upfront and just acknowledging that, Hey, we're gonna raise it all up front and that cash might be sitting idle until you need it, but you're it's for you. It's it is it's almost its own insurance policy. So if you look at it, the cost of capital sitting idle, it's like, well, that's not really just that, that you're just paying insurance so that you have the money when you need. [00:19:24] LANE KAWAOKA: I mean, if people wanna go do their own deals and. Do it, I'm sure you can pump your IRS up by not having that capital, just sitting there, but good luck do it yourself. Then .Right yeah to me, to me, even if you raise all the capital up front, I mean, for a development deal, I mean, for, for the sort of perceived more risk than going into a stabilized asset. [00:19:47] LANE KAWAOKA: I mean, you better be doubling tripling your money in that time or better. Right. but I'm sure the way these other guys do it, where they raise their money in adjusted time format. , I'm sure they're, they're technically hitting like. IRS of the forties to 50% plus slam, but like really do you need that? [00:20:06] LANE KAWAOKA: If you need that, go invest, go gamble. And some outgoing crypto, , I mean, the reason why we invest in real estate, cuz it's a hard asset at the end of the day provides income and it's stable, right? I mean, this is not like a get rich quick skiing. This is a, , have your money get your money on the table and have it work for you. [00:20:26] LANE KAWAOKA: But you don't have to worry about the damn thing, losing money.  [00:20:29] SAM WILSON: Right, right. You said it, man. You said it laying. I've enjoyed having you on the show today. Thank you for taking the time to come on and share with us your insights on the market. What you guys have been buying, how you guys are doing things differently, how you are, dealing or, or doing some developments and things right now that maybe are a little bit different. [00:20:46] SAM WILSON: And even then also on how to protect yourself in, in a develop. In a, in a changing financing environment. So it's been been a lot of fun to have you on. Certainly appreciate it and have enjoyed it. Tell me this, if our listeners wanna get in touch with you or learn more about you, what is the best way to do  [00:21:01] LANE KAWAOKA: that? [00:21:02] LANE KAWAOKA: Yeah, they can check out my website, simple passive cash flow.com. And then they're interested in connecting. My email is lane simple cashflow.com. Awesome  [00:21:12] SAM WILSON: lane. Thank you again. Certainly appreciate it.  

21m
Jul 29
Earning More Than $100K at 19 and Now Running His Own Firm

In this episode, we welcome Angad Guglani, Founder and Principal at Cooper Square Acquisitions. He built his portfolio by utilizing the BRRRR method and was making 6 figures before he even hit 20 years old. Today, he reveals his strategies for success, how he’s taking on bigger value-add deals with an in-house construction team, and why it’s his goal to buy small businesses. He also digs deep into the impact of inflation on real estate and the opportunities in the horizon for the industry.   [00:01 - 03:23] AN EARLY START IN REAL ESTATE   __ __ __ __   [03:24 - 15:14] BUILDING A VERTICALLY INTEGRATED COMPANY __ __ __ __ __ __ __ __   [15:15 - 18:10] INVESTING IN BUSINESSES __ __   [18:11 - 19:21] CLOSING SEGMENT __ __ __ __ __ __ TWEETABLE QUOTES   - Angad Guglani   - Angad Guglani   - Angad Guglani   -----------------------------------------------------------------------------   Connect with Angad! Visit the Cooper Square Acquisitions website or email him at ag@cooperacq.com.     CONNECT WITH ME:   I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns.     Facebook https://www.facebook.com/HowtoscaleCRE/   LinkedIn   Like, subscribe, and leave us a review on Apple Podcasts, Spotify, Google Podcasts, or whatever platform you listen on.  Thank you for tuning in!   Email me → sam@brickeninvestmentgroup.com Want to read the full show notes of the episode? Check it out below:   [00:00:00] ANGAD GUGLANI: When you're buying a piece of real estate, you're underwriting it, your competition, everyone's underwriting the deal. Everyone knows kind of where this deal's going to go. You're going to spend this much on the rehab. Your rent's going to be this much per foot or this much per year, this much per month, whatever it is, you figure out what your NOI is going to be. You figure out what your, the term loan is going to be at. And you know, you basically know, day one, what it's going to be now, granted you have to execute and you have to find the deal and the numbers could change depending on the market, but you kind of know that going forward. Versus if you buy a business, you can get in there and really say, oh wow. I had no idea we could take this company, in this vertical that we weren't even playing in.  [00:00:46] SAM WILSON: Angad Guglani started in 2016 with one single-family house. Now he runs a vertically integrated real estate investment company owning and managing 150 residential units without raising outside equity. Angad, welcome to the show.  [00:01:00] ANGAD GUGLANI: Hi, thanks for having me, Sam.  [00:01:01] SAM WILSON: Hey, man. The pleasure's mine. There are three questions I ask every guest who comes from the show: in 90 seconds or less, can you tell me, where did you start? Where are you now? And how did you get there?  [00:01:09] ANGAD GUGLANI: Sure, let's do it. So I started in, well, I grew up in Pittsburgh, but really started my real estate career in New York City, on the brokerage side, mostly residential rentals. Then I started investing in Camden, New Jersey and I've kind of expanded out to the general South Jersey, Greater Philadelphia Metro area, like the suburbs, and I live in Philadelphia now. [00:01:28] SAM WILSON: Gotcha.  [00:01:29] ANGAD GUGLANI: How did I get there? I guess a lot of, lot of BRRRR deals.  [00:01:32] SAM WILSON: Yeah. Talk to us about that. I mean, that's kind of what you said there, you know, in your intro was that, you know, you started in 2016 doing a lot of BRRRR deals. What was that process like? Can you tell us how did you do it so that somebody else who listened to this show may think about this as a potential strategy? [00:01:47] ANGAD GUGLANI: Yeah. The first thing I did is I started out in brokerage and I think it's a great way to start. I started, I got my real estate license. I was like 18 or 19 years old. And I was going to undergrad in New York at NYU. And I realized a lot of students were moving and they needed apartment. So they were paying rental, brokerage commissions. And I was like, wow, that's pretty cool. They're paying 3, 4, 5, 6, $7,000 in commissions. Each time they would move. And I'm like, wow, I could do that. So I got my license. I started doing that and started a company around that basically. And that was kind of my first foray into real estate. I mean, I learned a lot through that. But the number one thing that gave me was kind of the capital to start doing deals, really, and the capital to support myself. So my first, my first,, really year into it, I was already clearing mid six-figure like, you know, over 130, 140,000 bucks. And I was like 19 years old. [00:02:37] ANGAD GUGLANI: So I was like, wow, this is great. And that was kind of my jump into real estate. So I basically did that for all throughout college and for a few years after, and that money that I'd been saving up is what I used to start buying real estate. So I bought my first house at 16. I actually had two friends that I had partnered with at the time, just 'cause, you know, I'd never done any buying real estate before, I said, might as well have some friends help me. And so we did the first house together. I ended up buying them out, you know, at the end of that, And then 2017, I bought five single-family homes. These are all rehab, significant rehab, then rental, and then, you know, refi type deals. And at the end of 2017, I believe was when I first, you know, was able to, to refi, refinance all the equity out, plus some, and then I got all that cash back and was able to then just kind of snowball the, the equity from there. [00:03:23] SAM WILSON: Gotcha. And that's really the way that you've built your portfolio is just continuing that BRRRR method. What are you buying right now? Have you moved into any bigger assets or is it all single-family?  [00:03:35] ANGAD GUGLANI: No. So yeah, I haven't done any big communities the way a lot of people do. They do like, you know, the big apartment communities, but what I really like buying now, what we really like focusing on is I call them boutique multifamily buildings, like anywhere between like 3 and 15 or 20 units. I think those are really cool because. They sell for significantly higher cap rates than, like, a big multifamily building. And you can go in there, a lot of times they're owned by mom and pops and there's two types of mom and pop investors, right? One is just basically, like, just this family business. And maybe they're not as sharp to the current market conditions as, you know, someone like yourself or myself in the industry. [00:04:17] ANGAD GUGLANI: And then there's kind of like the slum lord variant. So we like to buy from the prior, someone that's, you know, kept up with the property, taking good care of it, but now it's just kind of wants to retire. They're in over their head, 'cause you know, all these, a lot of landlord-tenant issues arose during COVID that drove people crazy. So if you're a small mom and pop, it's tough for you to navigate those. So we like to buy from those types of people and then we, you know, fix the units up, getting the current market and operate them pretty well. I think that strategy's a lot more scalable in single-family. Not because I think single family's unbelievable business because you, your loan tendency is great. The amount of equity can create because you'll get really good pricing on them, that's awesome. The fact that you could sell it to a homeowner or hold it, whatever. It's cool to have all that multiple exit strategies. The issue that we run into with the single-family strategy is not lack of deals, it's not lack of capital. It's construction labor, we just have 23 people in our construction team in-house, and we just cannot find enough people, even third-party contractors to help rehab these homes. So, you know, these boutique multifamily buildings, they need a lot less work per unit than buying a whole house, right? So that's kind of what we've moved the strategy into. [00:05:27] SAM WILSON: Do you feel like those particular sizes of units are what is just available in your area? Like, is that just common... [00:05:36] ANGAD GUGLANI: Correct. Yeah. So there, I mean, I wish there were like 10, 15, 20, 30 unit buildings. Just not many of those in South Jersey, it's an old, an old area, right? So a lot of those types of, like, 30, 40 unit buildings, I think those were built in the fifties and sixties. And there wasn't that much building over here then. And it was mostly single-family stuff that was built around that timeframe. So we have these small, like, under 10 unit buildings all over the place. And there were generally just big houses that were like mansions that were chopped up over the years. So we have that type of product and we do have some purpose-built multifamily, and then we have some big communities and stuff too. But those, those I stay away from just because they're trading at like, you know, 4, 5, 6 cap rate stuff and those are, you know, not the stuff we buy.  [00:06:19] SAM WILSON: Right, right. That makes a lot of sense. Yeah. I mean, 'cause the, what you're describing there that, what did you say 8 to 20 unit that's, I would think that's a very specific asset type, you know, for your location. Tell me about this. You said you have 23 people on your construction team right now, correct? [00:06:36] ANGAD GUGLANI: Correct. And then the number fluctuates. We hire people. There's some attrition but, yeah, so we have a head of construction and to him report our whole construction team, which they're all W2, we pay for their worker's comp and do everything the right way. And, they're experienced or mostly experienced people. We have teams like, you know, teams that help, you know, do the sheetrock, teams that do the framing, teams that, you know, in conjunction with the licensed electrician, will do some of the basic electric work, teams that'll help do the plumbing work in conjunction with the licensed plumber. You know, that's, we have basically specializations within the team, within the company of, of people that do everything. [00:07:09] SAM WILSON: And that's, that's your own in house construction crew.  [00:07:12] ANGAD GUGLANI: Correct. Yeah. In-house construction.  [00:07:14] SAM WILSON: Are you guys doing, I mean, 23 people, you, at this point, you said you have 160 units. I wouldn't think that's enough units to support a 23-person construction team. Are you doing outside work for other people as well? [00:07:26] ANGAD GUGLANI: So you're right on the fact that the 160 units is not enough to support staff outside, but the reason we have that many people and we could hire, if you could, if you told me had 20 more people tomorrow, I would hire them tomorrow is because we're rehabbing so many units. We buy distressed, fix up, and then, you know, rent out long term. So right now in our pipeline, I can tell you how many we have, just homes that are, or homes and units that are just sitting, waiting to be worked on. We have seven that are construction-ready, seven that are permit backlogged, and seven that are waiting to put in the permit. So about 21 units that are, that are waiting. So then that makes sense why we have as many people as we have and how we could afford to double and triple our size if we could get the people.  [00:08:09] SAM WILSON: Yeah, shoot, man. Absolutely. Absolutely. So, so an eighth of your portfolio is in construction phase right now. [00:08:17] ANGAD GUGLANI: Correct. And frankly, that's, that's actually good. I mean, there have been times 30, 35 units out of a hundred that are getting rehab. 'Cause these rehabs are big deals, man. They take two months plus.  [00:08:30] SAM WILSON: Oh, wow.  [00:08:30] ANGAD GUGLANI: And they're no joke. They're no joke. Most of the products we buy, everything's average age is built in the early 1900. Some are even in the late 1800. So we're talking full gut rehab, like full-on gut. We're taking the house down to the studs, you know, looking at the framing, making sure it's okay. Putting in new plumbing, putting in new electrical, whole nine.  [00:08:48] SAM WILSON: That makes a lot more sense. I'm sitting here, you know, thinking. Okay. You know, 21 units, like that shouldn't take that long, but this is a whole different, a whole different ballgame on the construction side that you're describing. You know, when you're doing historic rehabs like that, I mean, we always sat on a historic project. It's like, Hey, whatever, whatever your budget is just double it. And you might be close if you're lucky.  [00:09:12] ANGAD GUGLANI: Yeah. Tell me about it, man. It's no joke. And, you know, thankfully we haven't really, I know a lot of bigger developers have issues with, you know, I guess the materials that they're buying in bulk and stuff. Haven't really run into many materials issues. It's just been finding labor.  [00:09:26] SAM WILSON: Right.  [00:09:27] ANGAD GUGLANI: And I wish we had, you know, a ton of subcontractors we could turn to, we just haven't been able to find many that are, you know, most of the subcontractors nowadays want to, want to do residential work, like, you know, homeowner work 'cause it pays better.  [00:09:40] SAM WILSON: Right, right. Yeah, absolutely. When you think about your company and you want to fast forward four or five years, where do you want to take it?  [00:09:47] ANGAD GUGLANI: So personally, what I really want to do with my, you know, business career is I want to set this business up in a way where I can kind of leave the reigns the next, next year or so. And this business will be like a regionally focused real estate investment company. 'Cause I really feel, I feel like you have to be focused on one region, and the way we're vertically integrated, it kind of makes sense where we do all our management, all the construction, all the maintenance, everything in-house, under one roof and one office. [00:10:14] ANGAD GUGLANI: So I want to kind of create this business, so it runs like a machine here. And it grows organically, you know, whatever the available deals in the market are that meet our criteria, we buy them. We're not trying to set the world on fire and triple our size in one year. At one point I was trying to do that because the deals were so good in the market. Now it's kind of like a needle in the haystack strategy where you have to look at, you know, a fair bit of stop to find the good deals. And, you know, if we could put on 30, 40, 50 units a year BRRRR method, I would be thrilled and, and, and just want to pass the reins off to the team and let them kind of take over. And personally myself, my goal is to buy businesses rather than real estate. would love to buy small businesses and turn them around versus just being a real estate.  [00:11:00] SAM WILSON: I want to hear more about that. 'Cause I think there's the, I'm with you on that, in that there is great value in buying businesses. Someone else that I interviewed earlier today, and I don't remember who it was. So I can't even tell you what episode will be on when this goes out. But they said this is their conclusion, is that BRRRR is dead. They said that, you know, not being able to predict where interest rates are going, not being able to predict the cost of financing, like, they said, I think BRRRR is, if it's not dead, it's dying. Do you agree with that?  [00:11:30] ANGAD GUGLANI: I would, I would disagree with that based, and I think it's a lot based on your market, right? So South Jersey really is a sleepy kind of quiet market. We never had institutional capital come here. I don't know, from this area at all, it just kind of came out, came out as a good opportunity living in New York. I figured this was a good place to go. Because, you know, north Jersey is very competitive. It's like a derivative of New York, South Jersey is kind of sleepy. So we have plenty of deals here that you could do as a BRRRR. Now, as I'm facing. And I'm sure a lot of other people in our market that I speak to are facing the shortage of labor and not being able to turn units that way, but it's not like we can't predict interest rates. [00:12:12] ANGAD GUGLANI: I was on a call with a banker this morning that we've worked with extensively last year, doing some term refinances. And he was saying, okay, you know, you're going to be seeing rates. The last deal we called 400, 4%. Unbelievable. And he's like, okay, now just underwrite for five, 5.75%, or like worst case 600. And keep in mind, our yield on cost on these things is like in the high, you know, 900 to sometimes even 1100 to 1200. So we have a nice wide spread, so I'm not too worried about that. I'm not too worried about interest rates going up in our market at least.  [00:12:51] SAM WILSON: Gotcha.  [00:12:52] ANGAD GUGLANI: And, and keep in mind, like, rents are rising quite fast. So even if you take a deal and you're paying five and a half, 6% interest rate that straight is these are five-year fixed terms, right? Where do you think your rents are going to be in five years? If inflation keeps ripping the way it is, the rents are going to go all, hopefully, they keep pace with inflation. In the past have exceeded inflation, right? If you look at the last couple of years, if they keep in pace with inflation or exceeding inflation, even if you're paying 5 or 6% interest rate, you know, your cash flow year two, year three is super generous, right? If your rents keep rising 6, 7, 8% a year.  [00:13:26] SAM WILSON: Yeah. I hear you on that. I would not challenge it, but I guess the other side of that is at some point, you know, the renter, no matter where inflation is going, the tenant just can't afford the increases. If the economy takes a dive and jobs go away and suddenly there's, you know, a glut, like, you're, we're, we're at a labor shortage right now. I think that tide unfortunately may turn. And if it turns, suddenly people don't have the income to support the rent increases. It's going to be a very interesting way that that plays out. But I do, I do understand that historically speaking, yes, rents have outpaced inflation.  [00:13:57] ANGAD GUGLANI: A hundred percent, I mean, and that, and that goes down to unit type, right? And unit mix and how you underwrite your tenants. So like, we like to see, you know, I just signed a lease yesterday in one of the units. And I like to review all the applications myself before approving them, which I know it sounds a little bit micromanaging, but, you know, I found, I almost have a phrase that we say, which is like a great tenant can make a terrible property an amazing deal. Not to say terrible properties are probably great, but the tenant is the most important thing. [00:14:24] ANGAD GUGLANI: Or you could have a great property that you spent hundreds of thousand dollars rehabbing, put a bad tenant in, and you now have a terrible investment. So anyway, it's very important the tenants you put in, but now these tenants that we're putting in, the rent is $995. It's a small, like, one-bedroom apartment. [00:14:38] ANGAD GUGLANI: The tenants are making, I think, just making minimum wage. They're making like, it's a couple, they're making $4,500, $5,000 a month. They're four times coverage, four and a half, five times coverage over the rent. So and these are minimum wage jobs. They're just over minimum wage jobs and one's at a hospital and one's at, one's at a school. So, like, these are pretty stable and that's what a lot of our tenant base they're, they're not working at these high flying jobs that, you know, that you can really fire people from. So that's why I feel personally feel comfortable with the environment going forward on the macro side.  [00:15:14] SAM WILSON: Got it. I love it. I love it. Tell me, lastly, last, last topic here, buying businesses versus real estate, what type of business are, or businesses are of interest to you? I know you said. You a year or so, you'd like to leave the reins of your company in, in, in other hands. So there's got to be something on the horizon you say, Hey, here's some businesses I think that are out there that are worth investing in.  [00:15:37] ANGAD GUGLANI: That's a good question. And frankly, I haven't really looked at many deals on the business. I looked at a handful, but I really think it's deal-specific and market-specific, right? And I think it comes down to really, like, I want to move to a different area where I would love to live somewhere warm. I love golf. It would be great to live in an area where you could play more golf and I would want to get in that area, get in the community and figure out what's for sale. And as long as the business has legs where you can figure out a way where you can grow it, I mean, most of these businesses are trading anywhere from four to seven times EBITDA on the high end, really and you can get some sort of SBA financing on the debt side. So your return on equities going to be much higher than it is in real estate, as long as you don't screw it up. Not to say that I'm going to have the expertise to run it, great, but I'm just saying, like, if you really buckle down and try to figure out how to, how to work this business. [00:16:24] ANGAD GUGLANI: I think you could really do something with it. So, I'm finishing up my MBA at the University of Pennsylvania, the Wharton school. And there are a handful of kids every year that graduate from that program that does this, which is called a search fund where they mostly go out and raise capital from institutional investors and high net worth. And they go out and buy businesses. And personally been, you know, fortunate enough for the real estate to, to have the capital to do that myself, but it's not unheard of path. And that's really what, what I find to be quite exciting. [00:16:51] SAM WILSON: Absolutely. Absolutely. Yeah. It is amazing in the business side of things, how they do trade at different multiples than what your real estate plays do.  [00:17:02] ANGAD GUGLANI: And you can grow it, right? Like when you're buying a piece of real estate, you're underwriting it, your competition everyone's underwriting the deal. Everyone knows kind of where this deal's going to go. You're going to spend this much on the rehab, your rent's going to be this much per foot or this much per year, this much per month, whatever it is, you figure out what your NOI is going to be. You figure out what your term loan is going to be at. And you know, you basically know day one, what it's going to be now, granted you have to execute and you have to find the deal and the numbers could change depending on the market, but you kind of know that going forward. Versus if you buy a business, you can get in there and really say, oh wow. I had no idea we could take this company. And this vertical that we weren't even playing in. Or maybe the previous owner didn't have much of a sales staff. We could put in a sales staff. And instead of, you know, day one, knowing what your income could be. Once you get in and operate this thing, you could see, you could really turn the income of that business a lot more than you could turn the income of a real estate property. [00:17:53] ANGAD GUGLANI: That being said, it's overly simplified. It could be really tough too. I mean, that's a beautiful thing about real estate is, you know, at the end of the day, like people need a place to live. There's always going to be some sort of demand than you could be at a company that has no demand, like your product go obsolete. So there is risk as well.  [00:18:10] SAM WILSON: Certainly. I love it. I love. Angad, thank you for taking the time to come on today and share with us your story of how you've built a real estate firm, you know, without outside equity, how you've done it via the BRRRR method, what you guys are looking at right now, and just what you see opportunity on the horizon for you personally, but also just in your real estate investments as well. Certainly feel like I've learned a lot from you today. So thank you for taking the time to come on. If our listeners want to get in touch with you or learn more about you, what is the best way to do that?  [00:18:38] ANGAD GUGLANI: Sure, they could just go on our website. We actually just redesigned it. cooperacq.com. C O O P E R A C Q, our company's Cooper Square Acquisitions. You could email me at ag@cooperacq.com and, yeah, look forward to connecting.  [00:18:52] SAM WILSON: Awesome. Thank you again for your time. Certainly appreciate it.  [00:18:54] ANGAD GUGLANI: Thanks Sam. Have a good one. 

19m
Jul 28
How To Use Real Estate To Save On Taxes

Larry Pendleton, Jr. has over 10 years of accounting, tax, and auditing experience as a CPA. He serves as a Board Member of the Hunton YMCA in Norfolk and The College of William and Mary’s Athletic Educational Foundation. He brings over 4 years of real estate experience and has closed on multiple deals consisting of single-family and multi-family properties.    [00:00 - 05:44] OPENING SEGMENT   __ __   [05:45 - 11:07] SYNDICATIONS MAY NOT BE THE BEST OPTION FOR HIGH NET WORTH INDIVIDUALS __ __   [11:08 - 16:29] PASSIVE INVESTING ADVICE FROM A CPA MASTER __ __   [16:30- 16:57] CLOSING SEGMENT __ __ __   TWEETABLE QUOTES Larry Pendleton   ----------------------------------------------------------------------------- Connect with Larry Pendleton on Facebook  Instagram and LinkedIn  Phone number (757) 535-8592.      CONNECT WITH ME:   Facebook https://www.facebook.com/HowtoscaleCRE/   LinkedIn   Like, subscribe, and leave us a review on Apple Podcasts, Spotify, Google Podcasts, or whatever platform you listen on. Thank you for tuning in!   Email me → sam@brickeninvestmentgroup.com Want to read the full show notes of the episode? Check it out below:   [00:00:00] LARRY PENDLETON: I may not be able to get the losses against my W2, but I'm making returns. And I'm not being taxed on those returns because I have these losses to offset. So I don't wanna be all doom and gloom in the situation, but there's a positive light to it where like, you're still increasing your net worth. [00:00:17] LARRY PENDLETON: You're still bringing in income. That's not being taxed. You're just being taxed on the income. That, that your, whether it's your main business or your W2,  [00:00:26] SAM WILSON: Larry Pendleton is a real estate investor and CPA with a passion for adding value to fellow investors. [00:00:43] SAM WILSON: Through tax consulting and accounting services. He says his mission is to help people achieve financial freedom through real estate investing and tax strategies. Larry, welcome to the show. Thanks. Thanks for having me. Hey man, pleasures, mine. There are three questions. I ask every guest who comes in the show in 90 seconds or less. [00:00:58] SAM WILSON: Can you tell me, where did you start? Where are you now? And how did you get there?  [00:01:01] LARRY PENDLETON: started in north Virginia. I guess from a CPA perspective, I really started in my accounting in high school for my high school crush on, on an accounting teacher. turned into a CPA certification accounting degree there. [00:01:16] LARRY PENDLETON: So I been doing that for over, over a decade now didn't work out with the teacher, so that's no reason going down that path, but, started up in real estate roughly seven years ago. My partner Terry con was already investing. I didn't think I can do it. Just limited mindset. He basically put a property in my lap. [00:01:33] LARRY PENDLETON: Get an FHA loan. Still have it today cash flowing 300 a month. And like I said, been able to take that and expand that to grow my portfolio and grow the tax business to be more real estate focused.  [00:01:45] SAM WILSON: Gotcha. That's really interesting. Yeah. I think, you, I guess you, as the, you, as the student can have the crush on the teacher, it's the other way around that you get in trouble with the law, right? [00:01:55] SAM WILSON: yeah, exactly. Oh, that's hysterical, man. Thanks for that. That's. That's a good laugh at a great place to kick this off. I guess when it comes to the accounting side of things, what are you seeing right now in the in the marketplace, as you're talking to different investors and you're talking to different people, like what are some things going on right now in the accounting world that we should be aware of? [00:02:16] LARRY PENDLETON: One, I think most people are aware of is that the a hundred percent bones appreciate that. A lot of people have been taking advantage of over the past five years. It starts to phase down in 2023, it goes down to 80%, 60% and so forth. Waiting on to see if the IRS is gonna make any changes just amendments of before it completely phases out or would be back at 50% like we were before 2017. [00:02:38] LARRY PENDLETON: We're also seeing. The IRS pump a lot money. I mean, the government pump a lot money into the IRS which technically means there's more audits coming as they're trying to reup lot the money that they've been paying out over the past couple of years. So for those investors, especially those that qual that's been trying to qualify real estate professional status, or have been qualified with the professional status, making sure you're tracking your hours. [00:03:00] LARRY PENDLETON: And from, I'm also seeing, from working with a lot of syndications and funds for those that are limited partners just being sure that whatever losses or the tax losses that your operator or syndicated is promising or offering, like, can you really take advantage of that? In the current year, in a lot of situations, we're seeing a lot of people not being able to take advantage of them. [00:03:22] LARRY PENDLETON: Wasn't aware of that until they get their K one S and file their taxes. And it is like, well, no one told me I couldn't claim these losses you, I thought I could have. So it was like just getting informed up front from your operator or from your tax advisor or from a tax advisor that knows real estate and how that may affect your taxes. [00:03:40] LARRY PENDLETON: Let's talk  [00:03:41] SAM WILSON: about that for a second. What are the situations in which a passive investor cannot take advantage of a loss on a K one?  [00:03:48] LARRY PENDLETON: So if you're if you're not, if you're, if your income is over $150,000, then you're limited to the passive loss limitations under four section 4 69, the TA IRS tax code. [00:03:58] LARRY PENDLETON: So that means. I mean, unless you can qualify for as a real estate professional, which means it's the 750 qualifying hours and more your half, half your work time in real estate. But if you're a doctor or or a business owner, that's not really, that's not in real estate. It's kind of hard to prove that you have. [00:04:18] LARRY PENDLETON: The qualifications to, to claim those, to claim real estate professional status, and then show that you material participated with those properties as a limited partner, you're not really making any management decisions. So that's where you kind get hamstring in certain areas and there's strategies around it. [00:04:34] LARRY PENDLETON: If you're doing short term rentals and you have your own properties, Somewhat group group all your activities together. But if you're just kind of just one syndication here or just, you're only doing LP investments, you may be limited to how much losses you can claim.  [00:04:49] SAM WILSON: What, when you, can you break that down? [00:04:51] SAM WILSON: I guess, give me gimme a hypothetical example. Let's say you're a doctor and you make a half million bucks a year. How much? And you get a K one and, you say you invested a hundred thousand dollars in the deal and you get an $80,000 right off the first year. Again, we're just making stuff up here. [00:05:05] SAM WILSON: Right? What percentage of that? Could they actually take as a write off, if any.  [00:05:11] LARRY PENDLETON: So in, in that scenario in year, one of that syndication the answer is. if all they have is if they have their W2 and over that $150,000, and then they invest in this deal and they got this $80,000 loss now, it's, it is important to bring up that even though you can't use it. [00:05:29] LARRY PENDLETON: In year one, that doesn't mean it disappears, right? It is suspended and rolled forward inter into future years, which means that it's going to offset future gains or passive income and passive gains from many passive activities or other rental properties. Syndications that individual may be involved in. [00:05:47] LARRY PENDLETON: And also when that property goes full cycle, any losses that's been built up along the way, then become active and now will help offset the capital gains on the back end. So if your goal is to really get into these losses offset in your w two and you're a, are a high net worth individual, you may be a bit may be outta luck. [00:06:06] LARRY PENDLETON: From that stand.  [00:06:08] SAM WILSON: Right. And that's something I think. And thank you for taking the time to clarify that, there, because I think that's something that is often touted in commercial real estate, especially in syndications is, Hey, there's tax advantages here. But yet I think there's a lot of ambiguity, especially as it comes down to, the example we just set forth of like, Hey, what can someone. [00:06:26] SAM WILSON: Actually take as a write off. And it sounded like you said somebody could group that too. So short term rentals that did make a bunch of money, maybe then they could go ahead and claim the full amount there. However works. I know everybody's, situation's unique, but  [00:06:38] LARRY PENDLETON: yeah, it's also important to bring up where it's like, it's a mindset where like you can take the offense of the, off the offense into this, where, okay. [00:06:45] LARRY PENDLETON: I may not be able to get the losses against my W2, but I'm making returns. And I'm not being taxed on those returns because I have these losses to offset. So I don't wanna be all doom and gloom in the situation, but it's like, there's a positive light to it where like, you're still increasing your net worth. [00:07:04] LARRY PENDLETON: You're still bringing in income. That's not being taxed. You're just being taxed on the income. That, that your, whether it's your main business or your W2, that's the part you have to deal with other strategies to offset that. But there's still a bright side of investing in real estate as a LP and be able to make more money. [00:07:20] LARRY PENDLETON: That's that's not gonna be, has less tax liabilities as W2 income.  [00:07:26] SAM WILSON: Right. Yeah, absolutely. Absolutely. What's it like being a, in a CPA and also an investor in real estate? I mean, do you feel like that brings you or gives you any unique advantage, in your, CPA side of the business?  [00:07:40] LARRY PENDLETON: Yes, cause it helps me find, be to bring more value to the seller where it is, if I can understand their pain points, where there's a deal in cums, Georgia, where the person didn't know what their capital gain hit was going to be. [00:07:56] LARRY PENDLETON: and they either didn't have an advisor or their advisor didn't know. But so part of my role on that particular team was to go through and like, Hey, here's your option? I gave them three options. If you sell. At the price that we're asking if you sell or finance it to us, here's your classifications. [00:08:13] LARRY PENDLETON: And if you just do a lease option with us here's your taxations. And the fact that he ended up selling at the full value cause he realized, okay, if that's my taxable gain, he just want to get out real estate, which is fine. We really wanted the the least option. Sure. Something we could have to bring in less money to the table, but it worked out, we still got the price and like he see, we see a lot of offers, but he wasn't the highest offer either. [00:08:36] LARRY PENDLETON: So, so something like that was it's like, okay, I haven't, he respect to bring additional value. To, to the the least to the sellers and to the each, even to the buyers for the teens, even I'm on the GP myself, or just consulting from that standpoint. Cause I'm sitting, I'm not, as I tell my clients, I'm not on one side of the table and you're on the other side. [00:08:54] LARRY PENDLETON: Like we're both on the same side of the table because if the deal looks good, like I may wanna jump in myself.  [00:09:00] SAM WILSON: Right. That's really that's an interesting strategy I hadn't thought about was especially, I mean, we're in an asset class right now in the RV resort space. That is almost exclusively mom and pop. [00:09:12] SAM WILSON: and it is, it's one of those things where, you know, that opportunity for seller financing oftentimes exists because they don't know what they're gonna do with the money. But I think, that you give 'em $5 million and they're gonna go okay, now where do we put it? But it also unique and unique spot to be in. [00:09:25] SAM WILSON: And in that, you could almost offer. A consulting call with an outside person, such as yourself and say, Hey, look, let me pay for pay. Pay Larry a thousand bucks to have a phone call with you. And then this will help you kind of lay down somebody I'm making up numbers here. You might be 10,000. [00:09:38] SAM WILSON: I don't know , but whatever it is, have a phone call with a qualified CPA. If you don't have one, cuz this may help you decide what your next. Root is, based on what the tax ramifications are. So I hadn't really thought about that before, especially as we're dealing with, and I don't wanna use this word, but less sophisticated sellers maybe than what you would in some other asset classes. [00:09:58] LARRY PENDLETON: Yeah. Especially, I mean, a lot of people in the, especially in the multifamily space or there's a lot of emphasis on the 10 to 80 units, cuz that's typically just those match your, his funds, like those similar words, like it's your mom and pops and they've been. Running this thing on their own for 20, 30 years and they just tired and they want to get out. [00:10:17] LARRY PENDLETON: Right. But there's a fear of like, what's the other side of receiving a huge lump sum. off of this nest egg that you built over the years is what you built, but. There's a, the IRS is kind of waiting on the side. see what you do next. the  [00:10:30] SAM WILSON: tax man. Come that's for sure. [00:10:32] SAM WILSON: That is for sure. Tell me on the acquisition side, how are you finding opportunity right now?  [00:10:37] LARRY PENDLETON: A lot of as I mentioned, like I've worked with a lot of different investment groups and so what I've seen is always a lot of Meers. Especially when it's a hot market, it's tough to go through brokers on any asset class. [00:10:49] LARRY PENDLETON: So there's a lot of just mailers trying to get to director owners as much as possible. As cliches, it sounds driving for dollars is still a thing and still, and just happen to drive past something. It was like, hope put in reverse to get this address written down whether it's a house or it's a vacant light or empty building. [00:11:07] LARRY PENDLETON: So, so yeah, there's a lot of different ways. And how people are sourcing these deals. And I have unique respective being able to see the multiple ways of people doing it,  [00:11:16] SAM WILSON: man. that's awesome. When you look back on either your CPA career or your investing career, has, has there been bad advice that you received along the way and, or good advice that you feel like people should hear? [00:11:28] LARRY PENDLETON: bad advice, Almost the aspect of it's weird because I tell people I'm rather a unique position where I've been like CPA masters, and it is like, I feel like I've been climbing this corporate ladder. It's like, this is up against the wrong building. So if I had the opportunity to start this whole, like, Start back at 18 all over again. [00:11:49] LARRY PENDLETON: Like I probably just, would've just jumped straight into real estate. And it may not be a CPA as of now. I'm not saying that it's bad advice. It's just I've conflicted by it because it's been a huge part of my success, but. now I'm starting to at least embrace the grind throughout the years of doing it to get to this point. [00:12:07] LARRY PENDLETON: but the best advice overall a, from a tax from a business investing standpoint is I guess the cliche of. Work work smarter, not harder, like hits harder. Once you realize that you tax more on on non passive activity, like having a job or, or, or just running a business. [00:12:27] LARRY PENDLETON: So it's like, okay, the quicker you can get into passive being a passive investor like the, like the better, like, cause I'm, I'm more and more, especially with TV two young boys, like I'm just. Like concerned about like how much time I'm really getting to them as I'm, as of many other people building our empires, in two separate fields,  [00:12:46] SAM WILSON: right? [00:12:47] SAM WILSON: Yeah. That's that's absolutely right. And that's funny, man. People ask me that question all the time. They're like, Hey, where do you wanna be? In 10 years? I'm like, well, in 10 years I'll be 50. In 10 years, I wanna be a passive investor only. I hate to say that, but it's like, that's where I want to go. Like I want to have, I wanna do all the things that I'm doing now for my passive investors and my deals. [00:13:06] SAM WILSON: Like I just, and I wanna do invest passively, but I'm not strictly passive investments. I've still gotta generate revenue in order to put more money into passive investments. So it's it's, it's one before the other, but part of it  [00:13:17] LARRY PENDLETON: also is, is, is. And you, it's not so much as bad advice as just what you notice. [00:13:22] LARRY PENDLETON: People just kind of trying to do all this on their own. they may not have said that, but like, if you're operating as such, like, and people observe you, like you're, you're giving bad advice where like, like, like this, this is a team sport, like life in general is a, is a team sport. Like you're not gonna be able to do any of this and scale and be able to do What you want in life, if you're, if you're just trying to put your head down and grind through everything on your own. [00:13:49] LARRY PENDLETON: So like, to be able to be of value to someone, to partner with someone or a group of people to do something bigger. That's, that's, that's kind of how I see where like for me speak for myself at least like that's, that's, that's a brighter, brighter future. From that stand. Right. Yeah.  [00:14:06] SAM WILSON: That's that's absolutely right. [00:14:07] SAM WILSON: And I guess that, that brings me one of my last questions, which is, you said that you've partnered with a lot of different people and a lot of different teams, and it sounds like a diverse geography as well. And that's kind of how you've scaled your personal portfolio. Is that right? [00:14:18] LARRY PENDLETON: Yeah. So jumped around from single family rentals to short term rentals, done some flips, burned, and crashed on some flips and, like say now it's just okay. How to scale it and there's okay. Get into the larger multi-family commercial properties. Where, like I said, if I can get 1% of a thousand deals, like I'll, I'll do my 1% at the best of my capabilities and I'll move on from there. [00:14:43] LARRY PENDLETON: Cause I know that's gonna take too much of my time.  [00:14:45] SAM WILSON: Right, right, man. I love it. I love it. You've given us some great things to think about here, Larry, talking about the bonus appreciation and how that's fading out. Thinking about more audits coming down, the coming down the pipe, that's never something that any of, any of us want to hear, but like you said, I know they've pumped a ton of money into that into that side of the IRS. [00:15:02] SAM WILSON: So be looking for that. The tax losses thing, I think was really, really interesting just in the sense that we oftentimes hear about all the ways you can use, you know, you can use passive losses and things like that. But I think that the key there in this whole conversation was reach out to your CPA before you, count your tickets for their hatch, cuz that You may or may not be able to take advantage of that if you are a strictly passive investor, and then you've just given us some other cool things or, you key advice and key mistakes you've made along the way. [00:15:27] SAM WILSON: And, and things that you'd say, Hey, this is the way you do it differently. And also the way that you would do it for the good advice you received. So, yeah, I love it. Appreciate it. Thank you for coming on today and sharing so much with us. If our listeners wanna get in touch with you or learn more about you, what is the best way to do that? [00:15:39] LARRY PENDLETON: Yes, I appreciate Sam. So I'm available in all social networks. It's typically Larry Penington CPA. I'm pretty sure my, my link app would be in the show descriptions. That's basically my digital business card. Right, right there. My phone number (757) 535-8592. Shoot a text. Like I try to respond within 48, 72 hours of texts and voicemails and emails as, as well. [00:16:04] LARRY PENDLETON: But Facebook, Instagram, LinkedIn haven't tackled Twitter. a little behind the times regarding that. So, but I'm three, three out of four. I'm now TikTok either.  [00:16:17] SAM WILSON: I hear you. I hear you. Yeah, those are platforms that I think for some of us have been harder to find the time to, to invest into, but certainly appreciate it. [00:16:24] SAM WILSON: Larry, thank you for coming on the show today and yes, of course we will link all of that there in the show notes. So thank you again. I do appreciate it. Appreciate you, Sam.  

16m
Jul 27
Leveraging Airbnb Analytics to Increase Rental Revenue

In today’s crowded Airbnb space, gain a competitive advantage through data analysis!   We welcome Airbnb data expert John Bianchi to discuss how we can extract and utilize Airbnb data to make our listings stand out and boost our bookings. John is the founder of Jaunt, an Airbnb property management company, and his goal is to help investors acquire profitable Airbnbs. Today, he offers data-driven insights on the current trends in the market, hotspots for opportunities to look out for, and proven ways to add value to our properties.     [00:01 - 02:24] MEET THE AIRBNB DATA GUY __ __   [02:25 - 13:13] EXPERIENCE IS KING __ __ __ __ __ __   [13:14 - 19:42] ANALYSIS WITH AIRDNA __ __   [19:43 - 21:28] CLOSING SEGMENT __ __ __ __ __ __ TWEETABLE QUOTES   John Bianchi John Bianchi John Bianchi -----------------------------------------------------------------------------   Connect with John! Shoot him an email and schedule a free consultation call at hello@pointanalytics.co. Subscribe to his YouTube channel for his Airbnb Data courses!   CONNECT WITH ME:   I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns.     Facebook https://www.facebook.com/HowtoscaleCRE/   LinkedIn   Like, subscribe, and leave us a review on Apple Podcasts, Spotify, Google Podcasts, or whatever platform you listen on.  Thank you for tuning in!   Email me → sam@brickeninvestmentgroup.com Want to read the full show notes of the episode? Check it out below:   [00:00:00] JOHN BIANCHI: Now the way that I explain this is that data is all about finding trends. You find some sort of consistency, some sort of pattern that can be repeated, right? It is, in a sense, the Burger King logic. So McDonald's spends millions of dollars to figure out what corner to be on, Burger King opens up across the street, right? We are the Burger King in this scenario. We use all of the Airbnbs that currently exist as guinea pigs that, to figure out exactly what's working, what's driving revenue. And once we find a trend, a home at a certain style and a certain theme where we can see that it's been done a few different times, what ends up happening is you see they're all roughly making about a hundred thousand dollars. So then that tells you if I then go open up across the street with the exact same style, look, and feel, I'm going to make about a hundred thousand dollars, right?  [00:00:55] SAM WILSON: John Bianchi built and sold an Airbnb business. And during that time he learned how to analyze Airbnb data so well that he's been able to build a consulting service based upon it. John, welcome to the show.  [00:01:05] JOHN BIANCHI: Thanks for having me. Appreciate it. [00:01:07] SAM WILSON: Pleasure, man. There's three questions I ask every guest who comes to the show: in 90 seconds or less, can you tell me where did you start? Where are you now? And how did you get there?  [00:01:14] JOHN BIANCHI: Started out of Michigan actually. So started out of my own bedroom. I had an Airbnb and I rented out the extra room. Just kinda get a feel for it Where I ended up, where I am now is an Airbnb data consulting business where I literally helped people purchase Airbnbs all across the United States, all across the world, actually, just to, I do reports in Italy and in London, England, and stuff like that. [00:01:33] JOHN BIANCHI: And I got there through a lot of work, ended up building up the business from, started in Michigan, building up a couple of homes, raised money, opened up a business in Chicago, built that up to about 15 locations, had some down in Scottsdale, Arizona as well. And also built out a cleaning company alongside with that. [00:01:50] JOHN BIANCHI: Then 2020 came and I had somebody who wanted to buy my business, so I sold it. And then I was trying to get, stay within the Airbnb world. And the data was something that I did extremely well and I realized that nobody else did well. And so I actually just created a course, put the course on YouTube 'cause I had no idea how to sell it and it wasn't that great. So I was put onto YouTube for free and now about 10,000 people have gone through it and 10% of those people have actually finished it. And literally, just from putting that course out there, I've kind of created a name for myself as the Airbnb data guy and literally, like, created a business from there. And so I've just kind of been rolling with it from then.  [00:02:24] SAM WILSON: Man, that's absolutely fantastic. I want to hear more about that. You know, everybody knows the trends inside of Airbnb and the reason I think you and I are talking on this show is 'cause I see personally Airbnb as a scalable business. And that's the name of the show, How to Scale Commercial Real Estate. Yes. Airbnb is typically in the single-family sector, but let's talk about a trend maybe that we're seeing before we get into the data side. So that way we have some kind of supporting evidence or things to apply the data to. What are some trends we're seeing in the Airbnb world right now that, yeah, just talk to us about that? I hear there's some interesting things going on.  [00:02:58] JOHN BIANCHI: So COVID is one of the most interesting things that has happened to the Airbnb world. Like, it literally shook up everything that was happening. Before, it was just very, very typical. You know, you get your single-family home, you rent it out and you go to the main areas that you could think of, right? So you got your, all your major cities. The biggest ones are obviously Nashville, Tennessee, because they were like a town, but also had a bunch of tourism from bachelor parties, stuff like that, right? Then COVID hit and COVID kind of changed everything. It stopped everything but also moved everybody out of the cities into these remote areas. [00:03:29] JOHN BIANCHI: And so what ended up happening was you saw these areas like Poconos, just outside of Philadelphia and New York, you know, the Smoky Mountains just like absolutely blew up, all these different spots. You could just go on and on about these different spots. We're just seeing insane revenue because everyone in America wasn't traveling internationally. They're all just staying local. And so there became all of these hot spots, like, you could literally buy a home within, in Poconos for $300,000 and it would make $150,000 in a year, right? It's insane. So now though, so a couple of things have happened. First, we're going into a recession. [00:04:00] JOHN BIANCHI: And so people are slowing down. People are traveling internationally now. So there's not as much people traveling around or, sorry, going to these local spots anymore. And Airbnb actually made major changes to their platform, which changes the way that people search for properties. They're no longer just typing in a location that they want to go to. They're actually typing the amenities that they want, right? Like, I want a lakefront. I want a lot of space. I want a view. Like, that's the way that people search for properties now. So they're not going to specific destinations. So the combination of all of that literally shifted the entire trend of Airbnb within the past two months. [00:04:34] JOHN BIANCHI: So places like the Poconos that were just absolutely killing it are sort of falling apart or softening. And so, you know, I work for an investment fund right now and every single time they were looking to go into a market, we're looking to see, is this market softening, right? Has too many people gone in there? Has the revenue dropped year over year, even though there's more supply? And so with all of that being said, it's really hard to say what the exact trend is going to be in the next year because everyone is going international. These ones are softening and we might be going into a recession. So there's like a couple of different factors we've got to consider, right? The way that I keep thinking about it is, what's the stuff that's never going anywhere that people are going to keep going to, that you can build a 10-year business, 20-year business off of, right? [00:05:20] JOHN BIANCHI: The easiest ones without a doubt are national parks, right? National parks, people are going to keep going to those. They're going to keep being cool. But the way to actually think about it is that there's multiple entrances to national parks. So as an example, Gatlinburg is, like, the main area to get into the Smokies. But on the other side of the Smokies is Bryson City, which is like this tiny little spot, which apparently is now doing even better, but you could also access the Smokies that way. It's just not as common. So that's where I think, like, a lot of the interesting trends are going to be is like find the places that aren't going anywhere, but where's the opportunities within those areas. [00:05:53] JOHN BIANCHI: And, like, one last thing to add to that is even airlines have created one-way flights to the second entrances of national parks. So, like, the second tier entrances, because there's a lot less business travel 'cause of Zoom. They're now trying to figure out other ways that they can fly people around. And one-way flights to these sort of second-tier cities that also enter national parks is happening as well. And that's just going to push more people to those areas.  [00:06:20] SAM WILSON: That's really interesting. I'm trying to think of, shoot, I'm thinking of like St. George, Utah or Kalispell, Montana, places like that, you know, you'd probably, a dozen other cities that would come off the top of my head. You never searched for those, right? [00:06:34] JOHN BIANCHI: Never. [00:06:35] SAM WILSON: If you're going to a national park, but yet you're telling me that those are cities now that we should probably start looking for flights into.  [00:06:40] JOHN BIANCHI: To be considering. You know, the way that I like to explain it is, a great example is Big Bear right out of, outside of LA, like everybody knows Big Bear, but it's an established market, been around forever, and all of the homes that exist there are Airbnbs, right? And so now there's restaurant stores, tours, all that kind of stuff. One of the main things that I'm seeing is that there's a lot of second tier, third tier locations that are turning into that because people who own family cottages are now selling them to Airbnb investors and Airbnb investors are bringing in, like, a hundred different families into that one specific home. [00:07:12] JOHN BIANCHI: If you get a hundred people doing that, right, now, you have like hundreds of new families coming into these new areas, which can support businesses, right? And so once that happens, they're creating new vacation areas, right? And so, like Big Bear, they ran out of space in Big Bear, right? So it's, like, now they need to create all these other new little spots. And so I think those new little spots that are going to be created that are close and have that similar amenities, right? Like the same sort of features that Big Bear has, but maybe not Big Bear is where the majority of the opportunity is going to be coming. [00:07:43] SAM WILSON: I like that idea, you know, but I guess I want to hear how do you account, if you're a data analyst, how do you account for search changes, softening of the market? How do you build that into, is this a good investment? Is this a bad investment? I mean, is it a crapshoot? [00:08:00] JOHN BIANCHI: Yeah. So the way that I think you have to win with Airbnb is you got to, you got to think long term without a doubt. Like, if you're just trying to get in for a year or two, just never makes sense, right? But Airbnb's all about the amenities, I said earlier right? Like, the boring homes are the ones that lose. So the people that buy the boring home in the neighborhood of a cool area tend to not do nearly as well, right? So what I mean by that is you need to have the hot tub. You need to have the views. You need to have the lakefront, if you can, you need to have, like, a home that's bigger than the other homes in the area that allows you to have a game room, right? I was just looking at this, doing a property analysis today. And this one home had a slide that went from the kitchen island to the basement, right? It's making $10,000 more than the home next door that doesn't have that, right? The reason being is 'cause they're focused on the kid stuff, right? And so the way that I always say, like, you have to wait in, like, what I'm planning on doing with my own portfolio as I continue to build over the years, 'cause I'm planning on rebuilding my own is just a hundred percent focusing on the properties that just provide everything that you could possibly want in comparison to the neighbors that don't have that. And I think even if markets soften, there's still going to be people going to those areas and it's going to be the homes that provide everything that people want that they're going to be going to, especially with the way that Airbnb is now creating their search.  [00:09:17] SAM WILSON: Yeah. That's a really good, really good points there. And I think that's what people want. We've shifted and for better or for worse, either way to a more experienced-based society. Especially with the younger generations coming up, it's like, I'm kind of part of that in the sense that, like the last thing I want is more stuff, right? Like our, I think our parents and our grandparents, like the acquisition of things in homes and like all this was part of their kind of ethos, but for us, it's like, I don't want any more junk. I just want to experience something really cool. And so to your point, like, Hey, a home with a slide in the kitchen, like, what in the world? [00:09:52] SAM WILSON: Like, oh, the kids go into the basement on the island. That's really, that's pretty fun. Like, I want to do that. So that's really, really cool. What about the trend that we're seeing in the motel space? I've heard some rumblings about this. Do you think that's sustainable?  [00:10:07] JOHN BIANCHI: Honestly, this is something that I need, I personally want to be doing even more research into, just because of the amount of noise that I'm hearing or the amount of people I hear doing certain things. [00:10:17] JOHN BIANCHI: So, the concept here is you take a motel that has staff. And, you know, it has a check-in desk and, has the breakfast and all that kind of stuff. And you get rid of all of that. And you automate everything that you possibly can within the motel, so that there's literally only a cleaning company. So that when people book on Airbnb, they get their door code, they get their door number. They don't have to talk to anybody and they just go to the door and they check in, check out, and the cleaning company comes, turns it over, and gets it ready for the next guest, right? This is referred to as like the unmanned hotel. You're also making them really trendy. So you buy this motel and then you make it super trendy, really cool looking, and get rid of the expenses, right, of like what you have there.  [00:10:55] JOHN BIANCHI: And you know, this is happening in motels. I've also seen it happen in apartment buildings, people taking over complete and entire apartment buildings. Sonder, which is, like, one of the biggest companies that exist did this in downtown Chicago. And I ran all the numbers 'cause I had all their data from the area and they were making like $250,000 more per year running it as that rather than as an apartment building, right? And so like, there's definitely money to be made in it. You just have to have the money to be able to buy the hotel, but you know, there's some big players. [00:11:22] JOHN BIANCHI: I don't know if I can necessarily name names, but, like, I know that Robuilt, you know, from BiggerPockets, they're looking at an apartment, a hotel in New York, right, and I can guarantee you it's going to be an unmanned hotel in New York, right? I know other people who are looking down in Miami to do that, I come across in the data, tons of these different places that are already doing it as well. There's one guy on our team who knows somebody who's, that's his entire portfolio. He literally is just looking for motels that he can flip into unmanned hotels.  [00:11:48] SAM WILSON: Right. And again, it goes back to, I think you said, you know, the experience based you know, this maybe isn't necessarily the roadside motel that is, you know, just servicing the local construction crew that's coming through, though that might be part of it. It is, you know, probably again, making them really, really interesting places to go and stay, and yet cutting so much of the expense. Like you said, you know, the breakfast probably nobody wanted anyway. And the front desk staff, the check-in just, you know, the inefficiency there behind that. [00:12:16] SAM WILSON: And we're certainly seeing that even in the RV resort space. I mean, adding, adding a lot of these places, we buy have cabins. They might even have a 10 or 20-room motel and that's a hundred percent the model we're taking, which is like, oh wait, we can completely get rid of the front desk. This makes all the sense in the world. [00:12:31] JOHN BIANCHI: Yeah. And that's, you know, that's, that's another area that I'd love to talk about even a little bit more because that's a super trendy, I don't know if it's necessarily trendy like it's going away. But people are amping up their game when it comes to these RV parks and unique stay parks, let's call them, right? Yep. There's one outta Yosemite. That is just absolutely amazing. Like it's, it's one of the coolest places. I want to own it. Like, I literally, I just want it. It's so cool. But there's, but it's creating this experience that you're not going to get anywhere else, right? [00:12:59] JOHN BIANCHI: Like, you can book a motel or you can book an Airstream and have, like, the really cool area that you're going to be saying. And it's, you know, it's going to cost double, but you're gonna want to pay for it because it's also the experience, right? [00:13:11] SAM WILSON: Right. Yep. That's it, man. That's it. I want to get into really the heart of this discussion, which is the data, the data that you're pulling. You're a data analyst. I want to hear what data you're pulling, how you're synthesizing it, and turning it into a meaningful, something meaningful that you can then make decisions based off of. Can you walk us through that?  [00:13:30] JOHN BIANCHI: Yeah. So AirDNA is the site that I use for Airbnb data. It's the number one Airbnb site or Airbnb data site, without a doubt. There's some other players out there but I've, you know, honed my skills within AirDNA. Now, the way that I always explain this is that data is all about finding trends. You find some sort of consistency, some sort of pattern that can be repeated, right? It is, in a sense, the Burger King logic. [00:13:55] JOHN BIANCHI: So McDonald's spends millions of dollars to figure out what corner to be on. Burger King opens up across the street, right? And we are the Burger King in this scenario.  We use all of the Airbnbs that currently exist as guinea pigs to figure out exactly what's working, what's driving revenue, and once we find a trend, a home in a certain style and a certain theme where we can see that it's been done a few different times. What ends up happening is you see they're all roughly making about a hundred thousand dollars. So then that tells you if I then go open up across the street with the exact same style, look, and feel, I'm going to make about a hundred thousand dollars, right? It's the same idea as comping in the, you know, comping a long-term rental, like, you're saying, okay, you got two bedrooms, two bath, but there's more to it, right? It's like, how did they design it? What amenities did they have? [00:14:36] JOHN BIANCHI: What kind of views do they have? Different things along those lines. So the way that to kind of bring this back is that when you're going through the data, you have to find the trend, you have to find the consistency. So I have a course on YouTube for free that teaches you how to take AirDNA data and extract it. So pull that data, pull that information out, plug it into a spreadsheet, and do that in a way that allows you to see how much do the four bedrooms make within this specific area of the city. And is there a difference between those four bedrooms and the next neighborhood over, right? [00:15:10] JOHN BIANCHI: And you'll be able to see this because there is, there'll be enough, depending on where you are, there'll be enough data to be able to see that sort of trend, right? And so some examples here is like I had my, I had a bunch of four bedrooms in Chicago. The closer you were to the city, the more money you would make. The further, the next neighborhood over would be $10,000 less. The next neighborhood, $10,000 less, right? You just kept dropping by $10,000, sort of the further out you went, but super consistent trend. So you knew whenever you were going to rent a home or whatever in the next neighborhood you had to account for that $10,000 difference in making sure that you were getting it for less than you were in the other neighborhoods. [00:15:48] JOHN BIANCHI: Right. And so, yeah, so like the idea is you're looking for some sort of pattern, some sort of consistency where you can literally just replicate that. And the best part about it is that, you know, everything that works. And then you can do more on top of that, right? it's like, oh, okay. I know that I know that I need all this stuff, but I'm actually going to design my home even better. I'm going to take even better photos and I'm going to add a hot tub in the backyard. So now I'm better than everybody else. And so I, I should be able to outperform these people and I'm actually going to be taking the reservations from them to allow me to hit that a hundred thousand dollars.  [00:16:18] SAM WILSON: Is there an algorithm that you use when figuring out what an amenity might be worth? [00:16:25] JOHN BIANCHI: I don't have an exact algorithm, so that's literally one of the hardest things to figure out. And the reason being is because you have so many different little factors, like, there's some listings that will be like great, amazing, amazing photos, really well designed, super professional, but it's not a luxury property. [00:16:42] JOHN BIANCHI: And then you have like a really bad, bad listing, bad photos, but it's a luxury property and they do the exact same. You know what I mean? So if, you know, in other words, not everything is equal when we're looking at the way that they're marketed, the way that they're designed. So you have to almost play with it, right? [00:16:57] JOHN BIANCHI: The only way that you're actually able to figure that out, first, you have to have a ton of data. That's the first one, right? You got to have a good enough amount of data. It, and it works really well. So like for certain amenities, it works really well when it's a larger amenity. Okay. So what I mean by that is views is a great example. So view, right? Like, if you have, in Blue Ridge Georgia. So I was just doing this analysis for the company in Blue Ridge, Georgia. If you have spectacular views, not just like, I can see off my deck, you need the rolling sort of mountain look, right? [00:17:28] JOHN BIANCHI: If you have those spectacular views from a deck, You can make about $130,000 as with a four-bedroom cabin, right? It's got to be a pretty good cabin, but you got, and you have the views. If you take that exact same cabin and you give it no views, you'll make $80,000, right? That's just like very, very clear consistency in the data, that's the difference between the views and no views, right? [00:17:52] SAM WILSON: So fifty grand a year in gross income, view or no view?  [00:17:56] JOHN BIANCHI: Right. A hundred percent. Like, that's not, that's not made up, that's not a gas I've gone through the data, like very thoroughly, right? That's an amenity that's really clean and easy to be able to see the difference because the homes are made fairly similar there, and then some homes will just be like, there's, they're just in the middle of a bush, which is awesome. [00:18:10] JOHN BIANCHI: But somehow the views, which is $50,000 better, right? Now, when it comes to like a hot tub, that's where it gets a little bit more difficult. . It's a little bit more of a guessing game, right? So the kind of the way that I think about this is, you know, in the long run of things, by adding in those hot tubs and adding in a game room and a pool table, all that's doing is sort of securing your bet, right? You're securing your bet in the sense that like I'm going to be better than these people. I'm giving more, I'm offering more. And so I should be able to get more. It is difficult to put an exact dollar number on the smaller stuff.  [00:18:44] SAM WILSON: Well, and I think that amenities like that, I like that. I like what you put, there's called it securing your bet. I also think about amenities as being regional. Like if I'm going to Breckenridge, Colorado and it's, then it's January. I absolutely, I'm not looking at listings without a hot tub. If I'm going to Destin, Florida and it's July, I don't give a rip about the hot tub, but the last thing I want is a hot tub. So it's like, you know, it is regional as well. [00:19:08] SAM WILSON: So I'm sure there's a bit of, a bit of art in figuring that out. But I think, I think the really big thing you gave us here was that one, you know, you got your course on YouTube where we, where we can make meaningful inferences from the trends we're finding in the data. So I think that's, that's really cool and something, I'm probably going to go watch as well. [00:19:24] SAM WILSON: 'Cause I think, I think it's just very fascinating. So thank you for putting that together for us. And also just the idea of making those, those amenities where it's, like, you will rise to the top, even if it's maybe, you know, getting the same, the same return or the same, same rent as everybody else, at least it puts you at the front of the pack. So those are very, very interesting things. John, this has been awesome. I can't believe our time is up here. We've covered so much. We've talked about everything from using data in a meaningful way. We've talked about the trends that we're seeing in the markets. We've talked about softening of the markets, how we're seeing some unique opportunities in some tertiary markets we've probably never even heard of. What did you call it, Bryson City?  [00:20:00] JOHN BIANCHI: Yeah, Bryson City. I was looking at it yesterday. Pretty sure it's Bryson City. [00:20:03] SAM WILSON: .Yeah. Right. Never heard of it so that, you know, that's, there's stuff like that, that I just think will be really fascinating to watch. You know, as here, as we potentially may go into a recession and then, you know, as international travel expands, like how does this market evolve, but certainly appreciate you staying in front of it and sharing with us your insight here today. If our listeners want to get in touch with you or learn more about you, what is the best way to do that?  [00:20:26] JOHN BIANCHI: Best way is to email me. So hello@pointanalytics.co. You can email me at that email and I like to talk to everybody and kind of give them a free consulting call to help them understand, you know, exactly what they should be looking for. So if you do email me, we can hop on a, you know, 15-minute call. We'll go through your situation and try and figure out exactly if my consulting business can be of use to what you're trying to do, otherwise it's just going to give you free advice. So, yeah. So hello@pointanalytics.co.  [00:20:57] SAM WILSON: Awesome. John, thank you again for coming on today. It was a blast. Certainly appreciate it.  [00:21:01] JOHN BIANCHI: Yeah. Thanks for having me on. 

21m
Jul 26
Achieving Financial Freedom in Short Orders

Neil Timmins became the number one Remax agent in Iowa at the age of 29.  He then moved into flipping wholesaling and innovating properties. He is currently focused on commercial real estate. Let’s hear how Neil and his team achieve financial freedom by doing what they do best in short orders.  [00:00 - 06:39] OPENING SEGMENT __ __   [06:40 - 13:00] HOW TO EFFECTIVELY LEVERAGE THE SKILL SETS OF OTHERS TO LEVEL UP __ __     [13:00 - 19:20] REAL ESTATE INVESTOR SHARES ADVICE ON HOW TO SUCCEED __ __ __   [19:21 -  22:37] CLOSING SEGMENT __ __ __   TWEETABLE QUOTES   ----------------------------------------------------------------------------- Connect with Neil Timmins on Facebook  and LinkedIn or visit their website legacyimpactpartners.com/gift https://legacyimpactpartners.com/gift     CONNECT WITH ME:   Facebook https://www.facebook.com/HowtoscaleCRE/   LinkedIn   Like, subscribe, and leave us a review on Apple Podcasts, Spotify, Google Podcasts, or whatever platform you listen on. Thank you for tuning in!   Email me → sam@brickeninvestmentgroup.com Want to read the full show notes of the episode? Check it out below:   [00:00:40] SAM WILSONS: Neil Timmins became the number one Remax agent in Iowa at the age of 29. He then moved into flipping wholesaling and innovating properties. [00:00:47] SAM WILSONS: He said the cash wins were great, but cash flow was missing. He then shortly thereafter, focused on commercial real estate and achieved financial freedom and short order. Neil, welcome to the show,  [00:00:56] NEILTIMMINS: Sam. Good to, good to be here. Thanks so much.  [00:00:58] SAM WILSONS: Hey man, the pleasure's mine, there are three questions. I ask every guest who comes in the show in 90 seconds or less. [00:01:03] SAM WILSONS: Can you tell me, where did you start? Where are you now? And how did you get.  [00:01:05] NEILTIMMINS: I started as a banker with Wells Fargo. I made my first entry point as a real estate agent on the, on the residential side right now we do still some fixing and flipping. We generate cash in the marketplace. We know and employ that cash in the commercial real estate side for cash flow. [00:01:23] NEILTIMMINS: And what we're headed down is to make that transition so that my whole team can be focusing on nothing but. Commercial investments.  [00:01:32] SAM WILSONS: That is really, really cool. You've done the, the typical graduation from single family to commercial real estate. And yet at the same time you just said you're still doing some fix and flip when the opportunity arises. [00:01:42] NEILTIMMINS: Yeah, you're exactly right. Well, that piece of the business is dialed in I'm I'm maybe four worst case scenario, five hours a week in that business. So I don't spend a lot of time work with the same contractor for years and years, we literally have done hundreds together. I work with the same guy. We do the same. [00:01:58] NEILTIMMINS: We do the same carpet. We do the same fan, I mean, everything is identical. So there, there are no, the choices to make are very, very limited.  [00:02:06] SAM WILSONS: Got it. And I guess just to ask on, on that front, I mean, are you, are you doing the same basic cosmetic remodels on these? Are you adding second floors or you do it  [00:02:17] NEILTIMMINS: Well, I mean, we, we, I made that mistake a few, probably three years ago, we got into one. And thankfully, the market rewarded us cuz we got out just fine. But I was like, this is like six months of terribleness. And so it was just an awful process. So after that particular one, I was like, no, here's what we're doing. [00:02:33] NEILTIMMINS: Here's I know where we win and here's I know where we lose it. Just in terms of time, energy effort, the guys, the contractors, they need to have small wins. And that, for that means. A week from now, that thing needs to look a lot different cuz mentally they just can't keep up on a, on a multi month project. [00:02:49] NEILTIMMINS: So start to finish. You're ready for this. Start to finish in a house from close to list. We are 27 days. Holy smokes. Oh, so they're moving. And that also means I can only do certain projects, right. A whole bunch of stuff. Can't do it. Yeah. Well,  [00:03:03] SAM WILSONS: well tell me, I, this, I didn't really wanna talk about this, too long in the show here, but I'm just super curious. [00:03:07] SAM WILSONS: How are you finding opportunity in the single family space  [00:03:10] NEILTIMMINS: right now? It's challenging. Our cost per acquisition has, has increased, over the last 24 months, year over year continues to go up. I mean, still same way, pull the list, find distress, contact. These people lock 'em up, but what we're paying, gotta pay twice as much for a deal. [00:03:25] NEILTIMMINS: Today is what we, there's no $50,000 deals anymore, so we're paying more. And but, but the market has been, has rewarded us extraordinarily well, we had. What month was it? It was, must have been last month. We had three closings on the resale side that all happened to hit that month. All three went sold for over the list price. [00:03:43] NEILTIMMINS: We had 30, so $37,000 in net profit over the list price. Wow now that, so you're like, well thank you for the market, but that you, you can't account for you can't count on that. Right,  [00:03:57] SAM WILSONS: right. You can't count on it, which it sounds like, both the scalability and the things you can count on are one of the reasons you got into commercial real  [00:04:03] NEILTIMMINS: estate. [00:04:04] NEILTIMMINS: Well, you're exactly right. That, and then. Flipping houses no different than being a realtor. And I had enough of that. I mean, you, you are out, you're grinding, you are working. And the only way you are gonna get paid more is by doing more, just more hard work. Right. And I got to a point where I was going, we got this, got this cash, from doing all these businesses and, and how's it gonna get employed? [00:04:23] NEILTIMMINS: You can't just sit around because the cash is going backwards every day, especially in today's environment. We're going backwards every day. I know perhaps today, double digits. Every year. And so it's gotta go someplace. It's gotta go to hard assets. And so that, that was my, that was my entry point into commercial to go. [00:04:39] NEILTIMMINS: Cool. Now, how do let's go sell direct and then after sell direct, how did I, how can I build relationships with brokers to find things  [00:04:45] SAM WILSONS: that's absolutely fantastic. What was the first acquisition you made in commercial real estate  [00:04:50] NEILTIMMINS: and eight Plex seller, direct APL, I pulled a very small list. [00:04:53] NEILTIMMINS: I'm talking under a hundred people, had it super dialed in, in terms of what I was after. Like a 79 year old guy called me at Friday night at about 9:00 PM left me a voicemail and you could hear the distress in the voice. , and so that has been a benefit, a big benefit of coming out of the single family space, buying seller direct as much as we have is that when I'm seller direct on the commercial side, I it's easier for me just based on the velocity of experience to understand. [00:05:18] NEILTIMMINS: Oh, okay, cool. I know what I know what motivation sounds like. Right. And so I literally called the guy back at nine 30 and a week or so later had the thing under contract, right. A giant, giant, giant win for me, especially on the first one.  [00:05:30] SAM WILSONS: Right. And that's, I think that's the, that you're dispelling one of the myths is that there's no good deals out there right now,  [00:05:35] NEILTIMMINS: which oh, it's total monarchy. [00:05:38] NEILTIMMINS: well, listen, you get what you believe, right? Sure. So if you walk around all day, every day going, oh, there's no good deals. Well, I guarantee you you're gonna find no good deal. I just, that is an attitude adjustment.  [00:05:50] SAM WILSONS: Absolutely. Absolutely. What are you guys buying  [00:05:52] NEILTIMMINS: right now? Right now I'm under contract, which we're scheduled to close this week with a self storage unit. [00:05:59] NEILTIMMINS: buy in my backyard unless, I buy in other markets when I've got a partner leading it in another market. And so I can fill in some of the other pieces of that puzzle, but they gotta know that market. Because I'm, we don't, I don't study any other markets. I literally focus in my backyard. So we're buying a self storage unit out of Indiana. [00:06:16] NEILTIMMINS: And it should be a really good deal. We got tremendous seller financing terms on that thing. On the back side  [00:06:21] SAM WILSONS: of it. Right? Right. So you're working on self storage facility out. And now let's talk about that for a second. I mean, it sounds like you've done a great job of building team around you, right? [00:06:29] SAM WILSONS: I mean, even become the number one real estate agent takes a lot of other people to help, help you keep that machine moving forward. Is that, has that been one of the kind of keys to your success is, is effectively building team. Yeah,  [00:06:40] NEILTIMMINS: effectively building team leveraging the skill sets of others, leaning into the skill sets of others. [00:06:44] NEILTIMMINS: So, my right hand gal started with me two years ago. She started as a transaction coordinator and I quickly, I identify she's got way, her skill sets and her, her ability to do, to do things was way past that job title. And so for me, great people. Great. People are going to find in an opportunity, find areas, like all of us as entrepreneurs, right? [00:07:06] NEILTIMMINS: We go that on the path of least resistance. Well, great, great people on your team. They're gonna, they're gonna stick with you, but you've gotta level up. You've gotta create opportunities for them or they will eventually leave. So I was able to identify that in her and just continue to take that on, as a leader or my organization is to, to challenge myself to go. [00:07:25] NEILTIMMINS: How can I best employ these people, their skill sets and lean into that. Cuz when you lean into their, their natural skill sets, it's for them, it's not really worked. They love doing it. It becomes a passion for them. Right,  [00:07:36] SAM WILSONS: right. No, I love that. I love that. , how do you get yourself out of the driver's seat? [00:07:40] SAM WILSONS: I mean, that's something so many of us struggle with that's  [00:07:42] NEILTIMMINS: that's that's a challenge and it's, I mean it's one we're living now is because how. It's a challenge. I live it every day to go, how do I transfer what I've got from a knowledge base when, when I'm buying seller direct or I'm buying from a, from a broker interacting to my acquisitions guy. [00:07:59] NEILTIMMINS: And so literally we, we, we just got done with an hour long meeting going after deal after deal FDL. We had a big, giant mail drop. So we've got a whole bunch of calls flooding in and a multitude of property. Mm-hmm so we're going. We're going over deal after deal after deal. All right, cool. Now, how do we, how do we categorically dial in, how do we evaluate these things, but it's past valuation. [00:08:19] NEILTIMMINS: It's really, how do you converse? How do you have this conversation with the seller so that they know, they know you're the real deal? That that's probably the number one question we get from people is how do I know you're real? How do you, you know what I mean? How do you know you're serious? How do you answer that? [00:08:35] NEILTIMMINS: Not some fly by, well, yeah, I, for us, we demonstrated it's demonstrated through the conversation. We have some with someone. Because that's like asking somebody, Sam, how do I know you can be trusted? Well, I mean, the answer really is, I could tell you all day long, but you really don't know until you see me demonstrate it day in and day out. [00:08:53] NEILTIMMINS: And for us, with the conversation with the seller is going down the path of asking the correct questions. And then as we get through that conversation, it's backing that up to go, well, here's our website, here's our credentials. Here's who here's, who leads our organization. It's been around a long time, all bunch of accolades. [00:09:07] NEILTIMMINS: And so they can become comfortable with us.  [00:09:09] SAM WILSONS: Right, right. Yeah. I guess what, when, when, when you say you, normally I would think that when someone says, all right, so tell me about who you are. So I know that you're real, you wanna start with your list of accomplishments here, our website, here's our founder, all the blah, blah, blah. [00:09:23] SAM WILSONS: But you said it a little bit differently in that you like to ask the seller a series of questions first. Yeah. Break that down for us. That that's, that's  [00:09:29] NEILTIMMINS: intriguing to me. Yeah. Well, Hey Sam, play, Hey, that's a great question, but let me ask you a little about your property, cuz oftentimes, to know that somebody's really good at what they do or a real, I think you can probably get a better sense of us going down this process to see if we're gonna be a fit for each other. [00:09:44] NEILTIMMINS: At the end of this conversation, I'll tell you what the next steps look like in our world and see if it lines up with you. Does that sound.  [00:09:50] SAM WILSONS: Right. Yeah, exactly. That's great. I love that. thanks for that quick example.  [00:09:53] NEILTIMMINS: And that becomes, it, it, it, there's two sides to this equation. [00:09:56] NEILTIMMINS: In my mind when we're buying properties, we're buying seller direct or we're buying, we're buying through brokers, right? And so our bread and butter has becoming from the single family world has always been seller direct. Now we buy. 40 or 50% of our deals. So about half could still come from brokers, primarily off market direct through brokers. [00:10:14] NEILTIMMINS: And that has been a terrific source for us. So that, that involves a different, different message, right? You're not like mailing these guys, a postcard, you gotta build a relationship. Cuz that takes, that takes time.  [00:10:24] SAM WILSONS: Absolutely. And you guys are buying in a variety of asset classes. I mean, you're not just doing multifamily, it sounds like you're willing to buy anything that pencils and makes sense. [00:10:33] SAM WILSONS: How have you effectively scaled across multiple asset classes?  [00:10:37] NEILTIMMINS: Yeah, I'm a, I've said my favorite one is I'm asset class agnostic. I. And that comes out of that comes outta single families think coming from single family, whether it was a house, a condo, a townhouse, a vacant piece of ground. [00:10:48] NEILTIMMINS: It didn't take long to get one's head wrapped around to know, oh, there's a market there. I can properly value it. Then I can make a buying decision. Well, to me, that's transcended into the commercial side of things. Some are way easier to go. Head wrapped around. Multifamily is very simple to get one's head wrapped around growing out of single family. [00:11:06] NEILTIMMINS: What the funny part is once you get into it, you're like actually some of these triple net deals on a warehouse or office are like the simplest thing ever. And so that's how we've been able to, to do it is just taking the time to, to educate, to get educated because we do own a number of things, right. [00:11:22] NEILTIMMINS: We own industrial. So multiple warehouses, we own offices, medical offices. So we own a variety of, of assets retail, which, we've owned retail for about. Three and a half years or so is probably the third purchase. I made that one actually we're reselling it. We've got a, in my mind, we're capturing the absolute peak of the market in retail for this particular property. [00:11:43] NEILTIMMINS: It's in the path of progress. So there's some other factors there other than just general market factors and we're scheduled to close tomorrow on that giant win for us. And then we'll, re-employ that capital else.  [00:11:52] SAM WILSONS: right. What do you say to people with capital? I mean, I know we capital think we talked about this early on. [00:11:58] SAM WILSONS: It's like capital's a wasting asset, correct. Where, where obviously for you, it sounds like you're finding ways to employ your own capital in a meaningful way, but what about somebody that's sitting on capital right now that maybe isn't gonna be the direct investor? Where, where do you see people putting it? [00:12:13] SAM WILSONS: Where do you, where would you recommend  [00:12:14] NEILTIMMINS: someone? Well, I think that's a great question. I think the, the very simplistic answer is you gotta connect with people like yous and MES the general partners of the world who do this for a living who, we've got a whole bunch of, think about what I just, I, I said earlier on is, we fix and flip to generate cash so that we can employ that on a meaningful basis and a long term. [00:12:36] NEILTIMMINS: asset Right. So that's kind of like the, it's not my day job, but it's a day job for, for that side of the business. Now, if you are a, a doctor, you're an attorney, you are whatever you are in your profession. Well, that's what you do to generate cash. And you're probably really great at it. Excellent. And that's exactly what you should do so that you can connect with somebody or somebodies who does something else to help you employ that capital. [00:12:59] NEILTIMMINS: It's very similar.  [00:13:01] SAM WILSONS: It's your it's basically your W2, if you that's will. It's exactly right, right. Yeah. It's your W2. Here's a scenario for you. I got a buddy yesterday. He called me and said, Hey man, I want to get into real estate. Would you recommend that someone skips a single family stage or is that something that you'd say, Hey. [00:13:17] SAM WILSONS: Everybody needs to start  [00:13:18] NEILTIMMINS: there. Yeah. No good question. I I'll I'll rephrase your question, Neil, what would you have done differently? No, you now know, right? I'm I'm 18 years into the business now from when I first started as a realtor. Yeah. Yeah. I would, what, what happens? It's easy to make that statement today. [00:13:31] NEILTIMMINS: Say skip it all. Just go into commercial, right? And that's, knowing what I now know, that's exactly what I've done, but there are, there's a whole bunch of POS positives and a whole bunch of benefits that have built through, through confidence and through education that can only get acquired through experience. [00:13:44] SAM WILSONS: Right. And so if that means starting a single family, that's, that's exactly where you could  [00:13:47] TRACK 1: start.  [00:13:48] NEILTIMMINS: That's exactly where you can start. Part of this is it's what we do is like the thing to get you to the thing. So sometimes it's not, you're not starting at where you're gonna end. [00:13:58] NEILTIMMINS: It's, you're starting at something so that you can, you can take on those experiences so that it gets you to the thing you actually wanna do.  [00:14:05] SAM WILSONS: Yeah, absolutely. Absolutely. On this topic of advice, is there any bad advice you feel like you've been given along the way that, you wish you  [00:14:14] NEILTIMMINS: hadn't heard? [00:14:15] NEILTIMMINS: Hmm, that's a good question, but I wish I had not heard. Probably, and I'm just trying to think what, what that might be. Right.  [00:14:22] SAM WILSONS: Or maybe think about the, think about the converse of that. What's some really good advice somebody gave you along the way that was pivotal.  [00:14:28] NEILTIMMINS: Really good advice. I mean, it, it, I think he has grown out of some experience, what actually the best of piece I ever advice I ever got, which I, which I give significant thought to my father-in-law gave this to me about two or three years ago, we were sitting at his home, outside at the pool and, and he had just sold his company. [00:14:45] NEILTIMMINS: He's been in the investment brokerage business for a long, long, like many, many years sold the sold the company retired. And so. We are sitting there talking and, and kind of, kind of having a conversation just like this. And I asked him, knowing what you now know, what would you have done differently? Mm. [00:15:01] NEILTIMMINS: I said, you're in the investment business, literally. I mean, you, you, you you're, you can invest any day, just like we, you and I do, but then also you have a business, right? He said, the one thing I would've done differently is I would've invested in my business. I would've been more strategic with who I hire. [00:15:16] NEILTIMMINS: And I would've invested more into the business cuz the business paid me way more than any investment ever did. And so that goes back. You, you touched on early on is how do I build teams? How do I build those, those who, who surround me? Because those who surround me often, offer up now uncover all the opportunities so that our business can capitalize. [00:15:35] SAM WILSONS: Yeah, I think that's, that's really, really obviously sound advice, coming from somebody in a, with a long, long career and also having sold their business saying, Hey, this is, this is what I would've done. Just slightly differently. I think that's, that's really, really cool. You guys bring on outside capital from investors, right on occasion? [00:15:51] SAM WILSONS: Yes. On occasion. What? Yep. Have you seen any shift in investor sentiment on the types of deals they're looking for? Have you seen any shift here with, I guess just. guess here, what is it, June 21st, we're recording this. So who knows where we're going in the market cycle? Have you seen this from investor taste or preferences? [00:16:07] NEILTIMMINS: Well, I I'm hearing two things and, and it probably speaks a lot to the, just the market and the uncertainty. One of 'em is, Hey, Inflation's inflation's crazy. I've got employ capital and it almost, doesn't matter. I don't wanna say not exactly what it's in, but really, if the deal's solid, I wanna get it employed. [00:16:24] NEILTIMMINS: Right. Almost and largely in, in an asset class agnostic world, the longer the least the better the term is the better the client, the tenant underlying tenant base. Great. Perfect. And then there's another segment going. Things are scary. I'm gonna, I'm gonna hold on to cash. I'm not gonna do anything. I'm gonna wait and see.[[ [00:16:40] NEILTIMMINS: Right. Right. So you got a segment of folks out there like that, and I I'm with you, you, you hit it on the head. We're gonna we'll, we'll see how, what the market reveals to us here. But, you're asking me where where's my dollar and cents going. As long as I there's a sound investment and hard assets. [00:16:59] NEILTIMMINS: That's where it's. Right, right.  [00:17:01] SAM WILSONS: Yeah. That's a, and that, that makes, that makes a heck of a lot of sense. Tell me, I guess, on a, on an investment thesis perspective, I know you said this, maybe you just did, captured it right there. Just if it makes sense, that's where your dollars are going. Mm-hmm but has there been any shift in the way you underwrite? [00:17:15] SAM WILSONS: Has there been any shift in. Well, and  [00:17:17] NEILTIMMINS: the under, yeah, the, the underwriting, for sure. If you're, if you're a kind of a bird methodology person in your in your underwriting, it's where interest rate's going to be a period of time from now. I think on the house side, the bird, the bird methodology is dead in my mind. [00:17:31] NEILTIMMINS: Hmm. because I think what you're going to. And that's largely a function of the underwriting criteria and comparables, because I think in my mind on the single family side, sales comparables are gonna start to pull back and you're with a rising interest rate environment with a pullback of sales comp you're you're pickled on the bird side. [00:17:50] NEILTIMMINS: Hmm. Now you may have an opportunity still right now, but I think the day is coming. Where that turns on the commercial side, because we drive those valuations based on an income approach instead of a sales comparison approach. We've got a greater opportunity to drive that bottom line, thus driving the, the, the valuation of the property. [00:18:07] NEILTIMMINS: So one can still complete, a bur if you will, on the commercial  [00:18:10] SAM WILSONS: side. Right? Yeah. And that, that's something challenging. I was having that conversation with an investor today and I was like, look, we just acquired this property. I don't know where we'll. In three to five years on a refinance. [00:18:20] SAM WILSONS: It's at this point, your guess is as good as mine. So we, we don't even underwrite a refinance at any of these deals. Just like, I, I don't know where you can tell me we're gonna be in three years then a correct. I'll give you a hundred grand right now. We'll go make a lot of money on that piece of advice. [00:18:34] SAM WILSONS: You're  [00:18:34] NEILTIMMINS: exactly. One, I'll give you little golden tip that we just employed. We, the building I'm sitting in, we acquired this about 60 days. Yep. In office building 10 suite office building 11,000 square feet, 50% vacant. So we acquired it. We moved into the space on one of the suites. So I've got 40% vacant it, cash flows today, cash flows positive based on where it required it. [00:18:57] NEILTIMMINS: But, but it required a capital injection. So I had to go in and these other four office suites, paint carpet painted the exterior of the building, did a few things to get this thing, looking. Looking nice so that we can actually, get it out in the marketplace. and my intent from the get go was to complete a cash out refi, right? [00:19:14] NEILTIMMINS: To recoup some of my cash, my down payment and my, and my downstroke for the physical improvements, which I paid for outta my own pocket. And so. When you enter a transaction, oftentimes you're like, I don't know where it's gonna be. I don't know when it's gonna get done. Right. So what I did was negotiate a refinance rate on the way in. [00:19:30] NEILTIMMINS: Hmm. So I put it it's a hundred and I'm going off memory. I wanna say it's a, 170, 180 basis points over the tenure over the 10 year treasury. So what they'll end up doing is gave me a blended rate between, my fixed rate. I even went into the deal with, and then now a new rate on the new dollars and then blending the rate. [00:19:52] NEILTIMMINS: But I negotiated that rate on the entry point. That's  [00:19:55] SAM WILSONS: really, really interesting. I'm not even sure. I would know myself how to do that. I guess you have to be a lender, or, is that, how does that conversation shake out?  [00:20:02] NEILTIMMINS: Yeah, it's a lender I've used once or twice before, but I knew, the, the intent with everything is, well, what's go in with knowing what, what your intended exit is. [00:20:11] NEILTIMMINS: So my intended exit was I wanna get some recoup, some dollars, get it set in place, and then I'm just gonna let it, let it cash flow.  [00:20:18] SAM WILSONS: And it sounds like you are well versed in doing, quick rehabs. So, I mean, what was your time from, what was your time from acquisition to now? We can refinance.  [00:20:27] NEILTIMMINS: Oh, so we're not there yet. [00:20:28] NEILTIMMINS: I'm 60 days in to the, to ownership right now. The rehab is all done. We, we just need to get a sign which has been delayed out front. That's not a big deal. Other than that the physical stuff's been done now it's a function of literally filling the property. So we've got four to fill one. I anticipate we'll get, we'll get an LOI sometime in the next week or so. [00:20:47] NEILTIMMINS: They've been here a couple times, so I know we're close on that one. So if I fill three of the four, and then at that point, the appraisal, the appraisal will match it to justify us going and refin.  [00:20:58] SAM WILSONS: Gotcha. That's very, very cool. I love that. I love that. Thanks for that tactical. Yeah. Tactical tip there. Neil, this has been loads of fun. [00:21:05] SAM WILSONS: Learning about your business, how you guys have gone from single family to not just multi-family, but all sorts of different commercial real estate assets. I've loved learning about mistakes you've seen in the industry. Things you've been told that's, excellent advice loved hear in again kind of some of your tactical pieces of, of insight there on, how, how to build in refinances on properties. [00:21:23] SAM WILSONS: You know that you're just now acquiring. If you can refining within a certain a certain window. Yeah. It's been a blast learning from you and hearing, hearing your story. If our listeners wanna get in touch with you or learn more about you, what is the best way to do that?  [00:21:35] NEILTIMMINS: Yeah, no. Great. Well, it's been a lot of fun being here. [00:21:37] NEILTIMMINS: I'm here. I wanna give two things. One, I wrote a little, little cheat sheet, how to source, how to uncover off market commercial deals. The who are the what? The way of the, how. So if you guys wanna get that totally free, just get on my website, legacy impact. partners.com/gift JFT. So legacy impact partners.com/gift. [00:21:57] NEILTIMMINS: You can check me out on LinkedIn. I'm on Facebook, Neil J Timmins, like, like most of us should be easy to find. Fantastic.  [00:22:04] SAM WILSONS: And for those of you who are listening, that's Timmins spelled T I M M I N S. Got it. Neil, thank you so much for coming on the show today. I certainly appreciate it.  [00:22:11] NEILTIMMINS: Pleasure. 

22m
Jul 25
The Keys to Leadership and Business Success

Real estate can be a competitive and cutthroat industry. How can we rise above and be better leaders and better people?   As the founder of CRE Success, Darren Krakowiak is focused on working with commercial real estate leaders to develop their people and grow their businesses. He creates content and develops curriculum to help people in the industry save time, earn more, and be top performers in their market.    Listen in to hear inspiring insights on leadership and success!     [00:01 - 06:09] BECOMING THE BEST LEADER __ __   [06:10 - 22:18] FINDING SUCCESS AS ENTREPRENEURS __ __   [22:19 - 24:00] CLOSING SEGMENT __ __ __ __ __ __ TWEETABLE QUOTES   - Darren Krakowiak - Darren Krakowiak - Darren Krakowiak -----------------------------------------------------------------------------   Connect with Darren! Visit cresuccess.co/links https://www.cresuccess.co/links to find his socials and tons of resources for commercial real estate professionals. RESOURCE MENTIONED __ __   CONNECT WITH ME:   I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns.     Facebook https://www.facebook.com/HowtoscaleCRE/   LinkedIn   Like, subscribe, and leave us a review on Apple Podcasts, Spotify, Google Podcasts, or whatever platform you listen on.  Thank you for tuning in!   Email me → sam@brickeninvestmentgroup.com Want to read the full show notes of the episode? Check it out below:   [00:00:00] DARREN KRAKOWIAK: How do you measure success? And I thought about that and I was thinking about how it, for me, it used to be about money or it used to be, you know, it'll be when I have this many investment properties, but what I started to realize was it's actually about my ability to, you know, be a bit more calm, to be more kind, to be more generous than I was in the past. So, I think if you can move your measures of success to have some financial ones in there, that's okay. But also have some non-financial KPIs of your life. I think that's a good place to get to as well.  [00:00:43] SAM WILSON: Darren Krakowiak works with commercial real estate leaders to develop their people and grow their businesses. And he helps industry professionals save time, earn more, and be top performers in their market. Darren, welcome to the show.  [00:00:55] DARREN KRAKOWIAK: Hey, Sam. Great to be here. [00:00:56] SAM WILSON: Pleasure's mine. Darren, there are three questions I ask every guest who comes to the show: in 90 seconds or less, can you tell me, where did you start? Where are you now? And how did you get there?  [00:01:04] DARREN KRAKOWIAK: Well, I started in Melbourne, Australia, which is where I was born and I was an employee at the start of my career, relatively humble beginnings, zero wealth that I started with. And now, I am still in Melbourne, but I got there in some different ways. So I'm in Melbourne now. Two years ago, I started running my own business on my own terms, working with clients who I want to help and who want my help. And I also just to remain on topic, have four investment properties, and host a podcast. That's coming up to a hundred episodes in a few weeks. In terms of how I got there. I got here via South Korea, so I spent 11 years living and working as an expat in so Korea. [00:01:43] DARREN KRAKOWIAK: And what that did was it equipped me with the knowledge, the leadership experience, and also I think the confidence that's required to do what you said that I do now, which is to help commercial real estate leaders to develop their people and to grow their business. And by going to Korea, I got opportunities that I wouldn't have gotten if I had stayed in Australia, certainly more elevated leadership responsibilities than would've been the case if I'd stayed in Australia. And I also picked up a wife along the way, and we had a daughter that I would definitely never have had if I'd stayed here. So, overall, you know, apart from, you know, it, wasn't just a one linear track all the way up, but certainly I, I did pretty well outta my time there and, you know, looking forward to what the future brings.  [00:02:25] SAM WILSON: Man. That's super cool. I love that. I love that you lived you know, out of your home country for 11 years. That's not something that a lot of people have the courage to do so well done on that front. Also, just want to say here on the air, thanks for taking the time to come on. I mean, I'm recording this at 8:30 in the morning for me. It's what, 11:30 at night for you? [00:02:44] DARREN KRAKOWIAK: It is, and I promise not to yawn. That would not be cool.  [00:02:49] SAM WILSON: Man, that's impressive. Thank you. Thank you for coming here and being on today. Certainly appreciate it. You know, I guess one of the things I really want to highlight and focus today on is leadership. I think that's something you are well known for is leadership and building teams. And I guess when I even say that term, leadership, team building, what do those things mean to you?  [00:03:07] DARREN KRAKOWIAK: Building a team is, it's about delegating to people, but not expecting them to do things exactly how you want them done, but to giving them the parameters, the responsibility, but also the reign to do things, how they think it should be done. But you know, I'm not expecting everyone to be exactly how you are. So the way you asked me that question made me think of a client I was speaking to just the other day who said to me, you know, one of my staff, they're slow, you know, what's going on? They don't speak fast enough. And he said to me, what can I do to change that? And I said, well, what you can do is try and be a little bit more accepting of the fact that they speak a little bit slowly because we can't make everyone the way that we want them to be. So, you know, leadership, there's so many different ways to look at it, but I think growing a team is about creating the right culture, having the values that people can understand, casting a vision forward that people can align themselves to, communicating, you know, where we are going, why we are going there, why it matters and how we know when we're, we're on the right track, bringing in the right people, having the right systems and structures in place, having relationships. There's many different aspects to leadership, but there's a few things that I think of when you ask me that question.  [00:04:23] SAM WILSON: Do you think that a leader is someone who is a leader naturally, or are leadership skills something that can be groomed?  [00:04:31] DARREN KRAKOWIAK: They can be groomed. There are people who are going to be naturally better at it, just as some people are born with say natural athletic ability. And then there are other people who have to really work hard at it and sort of work that muscle. But I think that the key to being a good leader is deciding to actually be a good leader, because if you don't actually set the intention to be a good leader, then you probably won't be a good one even if you have the innate skills that are required to be a good leader. [00:04:58] DARREN KRAKOWIAK: And if you don't naturally have some of those skills that are required to be a good leader, you can work at them. And by working at them, I think you'll be doing a lot more than most people do in particularly corporate leadership because a lot of people want to climb the corporate ladder for status, for ego, to make more money, to get a certain office, to have control over more people. [00:05:22] DARREN KRAKOWIAK: But they're all things which are about them and not about the people that they're there to lead. So if you can make your leadership about being a better leader for the people who you are there to lead, then that will set you apart from other people and will do a lot more for you than just having some innate abilities that perhaps are natural leadership traits.  [00:05:44] SAM WILSON: Gotcha. I like that. I mean, it sounds like more of the idea of servant leadership versus just leading because, Hey, I want to get out and get on top.  [00:05:53] DARREN KRAKOWIAK: Simple way of thinking about it is, you know, some people say, you know, 200 people work for me or, you know, I work for 200 people and that little sort of shift of perspective can tell you a lot about the way that some people see their role in leadership. [00:06:09] SAM WILSON: Gotcha. Gotcha. When you go into a commercial real estate business, what are some common things you see maybe across the board you say, Hey, here's some things that people, if they paid more attention to, you could get in front of, that don't necessarily require somebody, you, like you, coming in five years later and saying, Hey, here's all the problems that you could have fixed a long time ago. Are there things that you just commonly see?  [00:06:28] DARREN KRAKOWIAK: Yeah, probably a couple I could mention now. One would be around, people can be good at prospecting. So, you know, they'll deal with their dials, they'll set the time apart, but then there's the follow-up. And where people don't have the impact that they could have is through following up. [00:06:43] DARREN KRAKOWIAK: And the research shows that you should follow up seven times after your initial outreach within two weeks. A lot of people hear that. And they think seven times in two weeks? Like, that sounds like a lot. Am I going to be annoying them? Well, if you are not going to get on their radar, then they won't know about you and you won't be able to communicate what it is that you can do to help them. And if you don't, someone else will. So rather than thinking about, oh, I don't want to annoy them. Think about potentially someone else who's an inferior provider might actually end up helping them in a way that is not as good as I could help them. And, you know, people are busy. They're not just sitting around waiting for our calls, so we need to do something to get on their radar. [00:07:29] DARREN KRAKOWIAK: And part of that is just through creating a presence through some consistent contact over a short period of time. And one way that you can do it in a way that is less sort of repetitive is to try different channels. So not just to try and call someone seven times, but to try and hit them up on LinkedIn, maybe send them an email, and also to do your prospecting in a way where you get one, two, or three touchpoints in it once. [00:07:58] DARREN KRAKOWIAK: So you might try to connect with them on LinkedIn. You might send them an email and call their cell, or you might leave a voicemail on their office phone, send them an email, and reach out to them on another form of social media, for example. So you can get in a lot of touch points. You don't have to do seven separate touch points. It's just seven touch points or seven contact points over two weeks. You can do two at a time for example. I think that will make you more effective and stand out. People go, oh, okay, he's tried me here. She's done that. Okay. Maybe I should pay attention next time this person contacts me or maybe, hallelujah, I should actually call them back.  [00:08:35] SAM WILSON: Right. And that, you know, that's interesting. I think when you say that there is a little discomfort that comes in with that 'cause I think most of us are content to a fault to say, okay, I emailed Darren, let's see if he replies, I don't want to be a pest. Like, that's the thought that we're having, but you, if you're like me, I mean, email gets buried. I mean, unless it's super important email, like I filter my email. There's probably a hundred unreads in there 'cause they're all not important. And if I don't know you, Darren, I might be like, well, Darren can wait 'cause he's, you know, he's not in the urgent important category. So I don't know.  [00:09:06] DARREN KRAKOWIAK: And assuming that you're being a pest kind of relegates your position to something, which is not important, right? So if you've actually got something important that can help them, then you're not being a pest. You're actually trying to help them, and you're just trying to bring their attention to something which is important. So yeah, I know some people struggle with that, but I think that if you haven't ever heard anyone tell you to stop calling you, then you are nowhere near the line of calling people too much. So you're never going to get to the line if you don't cross it occasionally. So if you've never been told to get lost, then I think you can go a little bit harder with your follow-up because, yeah, some people are more sensitive than others, but for most people, they're just busy and you need to do a little bit more than most to get people's attention. [00:09:57] SAM WILSON: I love that. I mean, that's true if you are a commercial broker. That's true if you're running an acquisitions team in a commercial real estate firm. That's true even on the investor relations side, I think about that. I mean, how many, I'm sitting on stuff from 10 days ago that somebody shipped me a deal that I want to invest in and to be honest, I just happened at the time to get around to hitting the wire and filling out the paperwork. And no one's followed up with me. It's like, oh wait, like, I've already told you, I want to get in and there's time on this deal. So I'm also not pressured as the investor, but I think about that from an investor relations perspective where even, you know, Hey, I've got an opportunity and we send one email and I've heard this from groups I'm in, you know, we're like, well, I sent an email and I didn't get much reply. [00:10:37] SAM WILSON: And I'm like, what did you call them? Did you send them a text? Did you, like you said, connect with them on LinkedIn, Hey, by the way, want to follow up. So I think that follow-up, you know, process you're talking about applies across, you know, a variety of disciplines inside the commercial real estate space. I really, really like that. Is there anything else that comes to mind that you say, Hey, there's some common mistakes you see?  [00:10:55] DARREN KRAKOWIAK: The other one I would talk about with you is in relation to personal branding and people using LinkedIn and, you know, they've got their profile and they're posting on LinkedIn. They think that they're doing enough from a personal branding perspective, but when you, you know, to be fair, if you've got an up-to-date profile and you are posting content on LinkedIn, then you are doing more than 90% of people in the industry. But to be really elite, you need to be posting content that isn't just, I sold this. I listed that. You need to be really thinking about what it is that you do from the perspective of the person who you are trying to open up a conversation with. So really thinking about what's going to attract their attention. [00:11:41] DARREN KRAKOWIAK: And are they going to want to look at your staff when they see it on LinkedIn? Or are they just going to think, you know, this person's just going to be talking about another deal that they did. Boring, not interested. So how can we actually talk in the context of the people who we are looking to serve, who we're looking to work with to open up conversations with them? And I think talking about, you know, not just what we do, which is those deals, talking about listings, talking about accomplishments, but also why we do it, how we do it, so why we do it is about sort of stories of how we've helped people and why that was important. How we do it is kind of, like, documenting our day and just going behind the scenes a little bit to put a bit of context around the process. And then we can also talk about who we are and people make the mistake of thinking that LinkedIn is a super buttoned-up platform where we cannot talk about anything about business. And if I don't talk only about business, I'm going to get in trouble, but you can definitely talk about non-business things on LinkedIn. [00:12:37] DARREN KRAKOWIAK: In fact, it's a great way to help people see that you are not just another real estate professional, that you're actually a person and to bring people in a little bit. And you don't have to make it all like a sob story about terminal illness or something like that. It doesn't need to be, like, that personal. It just needs to be, it can be pretty innocuous. It might be, you know what, on Thursdays, it's my day to take the kids to school and we always go out for a breakfast at the local cafe on Thursday mornings. And it's my favorite day of the week because of that, or it could be, you know, I've just read this book and I think that people in my network might like it because of this. So sharing things, just letting people in a little bit, I think can go a long way to building a personal brand, would certainly go a lot further than just sharing posts about how wonderful you are or the deal that you've just closed.  [00:13:29] SAM WILSON: I like that. And that's something that to a fault I've been accused, not accused. I brought on a marketing manager and that's what she told me. She goes, you've got to get a little bit more color, you know, behind who you are and what, 'cause for me it was all just business. That's like, Hey, here's, here's awesome interviews I did with awesome guests like yourself, and here's deals and here's that. And she's like, there's nothing about you anywhere. It's just real estate-focused. [00:13:52] DARREN KRAKOWIAK: I will challenge you and also challenge the listener to post something more personal on LinkedIn and to see how it goes. And I've personally seen that when I am not posting about my business, I actually get more engagement. I get more likes. Now we're not trying to get likes. We're posting on LinkedIn. That's not the name of the game. We're trying to start up conversations and to post content, which helps people get to know us. Now, the likes and the comments are just a nice byproduct, but certainly, that is an indicator of how people are seeing your content. [00:14:27] DARREN KRAKOWIAK: So, the stuff that people like and engage with, more often than not, is going to be the stuff that is not work-related. And the other thing that the non-work-related stuff does when you post on LinkedIn, it kind of brings people outta the woodwork. And there are a lot of lookers and lurkers on LinkedIn who are looking at your stuff, but not liking it. But if you throw something personal in there from time to time, you can bring those people out of the woodwork and they might just punch a like or make a comment. And you're like, oh, I didn't realize that they were there looking at what I'm doing. And that can be enough just to open up a conversation as well. [00:14:58] SAM WILSON: Right. And I like that. Tell me, I guess when I think about that, when I think about even social media branding in general, and this is probably an unfair question in the sense that everyone's going to have their own specific desired outcome, but what's the goal in all of that? Let's say we do build a brand. We do get engagement. Why do I even need that?  [00:15:17] DARREN KRAKOWIAK: It's to open up conversations with people up off the platform. That's what we're trying to do. We're just trying to create more opportunities. We're trying to attract people who we want to do business with by letting people know who we are. And in fact, one thing that I show my clients to do is have a profile headline. So that little line under your name, where most people just put, you know, director of whatever company. Actually, put a statement, which says who it is you help, how you help them, and why. And what that statement should be is something that actually almost repels people who don't fit into that line but it works like a magnet to attract the people who do, and it makes you stand out compared to everyone else who just calls themself an agent, or a financier, or an investor, or whatever it is that everyone else calls themself. And people look at that and they say, oh, this person's for me. So, it's a funnel. It's a way to identify opportunities and also for people to self-identify as being the right prospects to come and speak to you.  [00:16:24] SAM WILSON: I like that. I like thinking of that as a funnel. And I think if I'm going to recap the things you said, it's who it is you help, how you help them, and then why you help them? Is that right?  [00:16:34] DARREN KRAKOWIAK: It's what you do, how you help them, or why you help them. I'll put those two in one category. So that's kind of like, you know, like a TV show, like Luxe listings or so it's kind of like a self-aware version of that. Like, don't be as annoying as those people on those shows, but Hey, it's not just talk about the listings, but it's talking about a little bit of behind the scenes and you know, what you get out of that and then the who you are, which is the non-work related stuff. [00:16:56] SAM WILSON: Right, man. I love it. I love it. When you think back on your business career, what's some good advice or bad advice maybe that you've heard along the way that you'd like, like for people to avoid or you'd like for people to take to heart.  [00:17:10] DARREN KRAKOWIAK: So one that I'm sure most of your listeners would know is that, you know, debt is okay. And I probably, I was taught that debt is bad. And, you know, whenever you've got debt, you want to pay it off but not all debt is bad debt, and that took me a while to learn and understand. And you know, that was bad advice. But I learned that it is actually okay to have debt because some leverage can help you buy and expand more and to do, to do more things. [00:17:38] DARREN KRAKOWIAK: So that was bad advice that I came to understand. Some good advice that I got, I think, was to be magnanimous. And magnanimous is a word that means to basically treat people kindly, even when they're not giving you any reason to be kind to them. And it was told to me before I was promoted into a certain role where I had a lot more responsibility and I, probably, in that role, would've been able to lord it over a lot of people. And this person basically said to me, Hey, when you've got this much responsibility. It's really important that you demonstrate magnanimity. And that is that even when people are giving you the opportunity to not be kind, that you are kind to others. And I think that often in commercial real estate, it's a very competitive industry where people sometimes don't always treat each other kindly. There is an opportunity for us to rise above it and to be the person who demonstrates magnanimity and to be magnanimous.  [00:18:33] SAM WILSON: I love that. I love that. It's the idea of John Mann's book, The Go-Giver. I don't know if you've read any of that.  [00:18:39] DARREN KRAKOWIAK: I love that book. Yes.  [00:18:40] SAM WILSON: Yeah. Yeah. And he's come on the show a couple of times, so it's been fun. Fun to have him on. [00:18:44] DARREN KRAKOWIAK: Oh, wow. I'm in the same company.  [00:18:47] SAM WILSON: Yeah. It's been fun to have, have John on the show, but you know, and talk about that. Like, what does it mean to be a go-giver? Like, what does it mean, you know, and that's a big word. I don't even know how to spell magnanimous. That's a lot of letters, but you know, to be, to be magnanimous and to kind of be that go giver, which you know, be kind to people that maybe you don't even necessarily have to even acknowledge like, Hey, you know what I want help you. And I think I see that a lot actually. I mean, yes, commercial real estate is, it's a competitive landscape. No doubt, no doubt. A lot of ego, and a lot of people, and a lot of money. And anytime you have that, you get a competitive landscape, but you know, certainly, I've also found it be a very collaborative industry in its own right, which is probably one of the things that I've enjoyed the most about it. And I say that a lot to people who are unfamiliar with it, it's the strangest industry because we do podcasts like this, where we just freely share information about how to get deals, how to build teams, how to go out and, you know, make acquisitions, follow up. [00:19:35] SAM WILSON: And it's like, this is, this is weird. I mean, I've been in other industries where it's like very closed, very closed loop. But, so I think there's a bit, there's a bit of both of those, but I love that. Certainly love that encouragement. Did you cover the, oh, you did cover the bad advice. You said something about debt being bad. [00:19:50] DARREN KRAKOWIAK: Yeah, that was the one I had for you on that one. I can give more if you like. Probably one other one that I think was bad advice was I was told by a former boss to, okay, you need to make this amount of money. And if you want to make that amount of money, then you're doing well. I kind of took that to heart and I think focusing on money and it's so in and of itself is not a good thing to focus on. Like it's great to have financial goals and there's nothing wrong with making money, but once you make that amount of money, you'll find out that your cup's not full yet. [00:20:17] DARREN KRAKOWIAK: You're not fully satisfied, right? There's always got to be more money that you can make. So, I think having something more significant to focus on than just making a certain amount of money is some bad advice that I was following until I, you know, started to realize that there needs to be more to life than just making money. [00:20:37] SAM WILSON: What did you do to shift your perspective?  [00:20:40] DARREN KRAKOWIAK: Probably, I guess I had a family, you know, I got married. I matured. I think that just comes from years and maturity, because for many years I was really focused on making money and I loved some of the trappings that come from having money of, you know, flying business class and yeah, little things like staying at nice hotels, which I still enjoy. [00:21:00] DARREN KRAKOWIAK: But I think that I was attaching a lot of status to that as opposed to sort of thinking about, I think that when you're making a lot of money and that's your measure of success, you can paper over some of the other cracks that exist in your life, whether that is issues with personal relationships, issues with your health. And what happened, I guess for me is that eventually the things that you paper over, you know, they get exposed and then you realize that the money that you're making, isn't ultimately fulfilling you and giving you a balanced life that is going to help you be satisfied in, in the long term. [00:21:35] SAM WILSON: Right. I think that's great. I think that's great. When you say all that, I think of the term just why. Like, why is it that I'm doing what I'm doing? What is the goal for my why? Like, if I make X, well, then what, what am I going to do with it? Or why am I going to get there? And so I've had to go through that myself actually several times when I go, okay, I see friends in the commercial real estate business, you know, they're killing it. [00:21:54] SAM WILSON: They're decamillionaires at this point, and they have huge companies and I go, do I want to be you. No, I really don't like, I don't want to get there. Like I can be content with X because it solves why I'm going out and working. Like, I have a small, far smaller figure in mind that I go, okay, when I can do that, that'll free up X, you know, X and Y, and then I can go do what I want. So I think I think that's really, really sound advice and I certainly appreciate it. Darren, it's been awesome having you come on today. Are there any last closing thoughts that you have that you'd like to share with our listeners?  [00:22:24] DARREN KRAKOWIAK: Be more generous in your life. Be more kind. You know, you did send through a list of things about things we might talk about. And one of the things that was on there was, you know, how do you measure success? And I thought about that and I was thinking about how it, for me, it used to be about money or it used to be, you know, it'll be when I have this many investment properties. But what I started to realize was it's, actually about my ability to, you know, be a bit more calm to be more kind, to be more generous than I was in the past. So, I think if you can move your measures of success to have some financial ones in there, that's okay. But also have some non-financial KPIs of your life. I think that's a good place to get to as well. [00:23:05] SAM WILSON: I love it. Darren, if our listeners want to get in touch with you or learn more about you, what is the best way to do that?  [00:23:09] DARREN KRAKOWIAK: Go to cresuccess.co/links. You'll see on that page my podcast, also you can connect with me on LinkedIn and there's a lot of free resources available for people who work in commercial real estate.  [00:23:22] SAM WILSON: Awesome. We'll certainly make sure we get all that included there in the show notes. Darren, thank you again for coming on the show today. It was a blast having you on and again, thanks for staying up now, almost till midnight for you. That's commitment, man. And I certainly appreciate it.  [00:23:34] DARREN KRAKOWIAK: My pleasure. Thank you, Sam.

24m
Jul 24
A Journey Through Health Challenges and Real Estate

Amy has always been drawn to growth and expansion and knew that she could support and serve even more people through investing in multifamily real estate. Her skillset, heart-set, and mindset were a perfect fit for real estate and she is now, providing clean, safe, affordable housing to working-class families. [00:00 - 05:58]OPENING SEGEMENT __ __ [05:58 - 11:40] EVANSVILLE IS A GREAT MARKET DUE TO ITS GROWING ECONOMY AND STRONG INFRASTRUCTURE INVESTMENTS BY THE STATE GOVERNMENT. __ __ Help them focus on their growing market. __ __ [11:40 - 17:05] A MIRACLE MEDICATION CAME TO THE MARKET THAT HAS GREATLY IMPROVED AMY’S HEALTH. __ __ __ __   [17:05 - 18:09] CLOSING SEGMENT __ __ __   TWEETABLE QUOTES     ----------------------------------------------------------------------------- Connect with Amy Sylvis by emailing her at reachout@silviscapital.com or  visiting sylviscapital.com https://sylviscapital.com/         CONNECT WITH ME:   Facebook https://www.facebook.com/HowtoscaleCRE/   LinkedIn   Like, subscribe, and leave us a review on Apple Podcasts, Spotify, Google Podcasts, or whatever platform you listen on. Thank you for tuning in!   Email me → sam@brickeninvestmentgroup.com Want to read the full show notes of the episode? Check it out below: [00:00:00] AMY SYLVIS: truly understanding where numbers are and how they change over time and being able to just track them and synthesize, Hey, is this getting better or worse? Is this a trend? Is this a blip on the radar? I humbly present to you that it's a bit simpler than maybe it sounds, I think the hardest part is just, compiling the data. [00:00:17]  [00:00:29] SAM WILSON: Amy Silvis is the founder and principal of Sylvis capital a real estate firm that invests in large multi-family properties and emerging markets throughout the United States. Amy, welcome to the show.  [00:00:40] AMY SYLVIS: Thank you so much for having me, Sam. What  [00:00:41] SAM WILSON: a pleasure's mind. There are three questions. I ask every guest who comes in the show in 90 seconds or less. [00:00:45] SAM WILSON: Where did you start? Where are you now? How did you get.  [00:00:48] AMY SYLVIS: Sure. So started with my first property in Clarksville, Tennessee. Yes. And what, how did I get there? It was a 10-year-long journey of trial and error and some personal medical issues and all sorts of interesting bumps in the road, but it is a story of the persistence never giving up, and making sure I followed my calling. [00:01:08] SAM WILSON: That is incredible. Now you're based in Los Angeles, right? Yes. So I mean, Clarksville, Tennessee, while for those of you that don't know, it's kind of a submarket almost of Nashville, correct? Clark Clarksville is north and west of Nashville. IFM not mistaken. Yep. how in the world did you end up buying a property in Clarksville? [00:01:26] SAM WILSON: This is now a decade.  [00:01:27] AMY SYLVIS: No. A couple of years ago. Okay. A couple of years ago. Yeah. Okay. Yes. Yeah. It took me 10 years to get into this space. I've been in this space for a couple of years now. Yes. so thankfully I'm not crazy enough to buy in California learned that lesson. I live here because of my family, but, right control and. [00:01:42] AMY SYLVIS: Eviction moratoriums that are still in place two and a half years post COVID. I am not interested in buying in, the state that I call home. Right. Instead, I'm a big market research guru. Endlessly studying markets saw that there was mass migration into the greater Nashville MSA. I knew that, although there was a ton of institutional competition in the main city going an hour Northwest, as you said of this incredible city with great economic growth, job announcements, and people moving, it was such a great space to be in my journey. [00:02:14] SAM WILSON: Right. And if you did that two years ago, I mean, gosh, that's Tennessees had just nothing but influx. Of residents, even, or ever since then, so that's absolutely fantastic. What do you feel like? So, so, so you bought a property in Clarksville. Where else have you acquired since  [00:02:29] AMY SYLVIS: then? [00:02:30] AMY SYLVIS: Yes. So we also own in Augusta, Georgia. As a GP owned in Evansville, Indiana, right across the border from Kentucky. Yes. And Decatur, Alabama, just outside of Huntsville.  [00:02:45] SAM WILSON: Yeah. Well, Huntsville's another one of those markets. I mean, not actually too far from it's just straight down 65. From, ex Clarksville is 24, but then 24 to 65 and still is not a far jump from Clarksville then down to Decatur, Alabama. [00:02:59] SAM WILSON: So that's really interesting. How were you able, I guess you, in a couple of years time to acquire so many assets.  [00:03:05] AMY SYLVIS: Partnership. I am a self-admitted only child's type a personality that loves to, be self-reliant. And if something needs to be done, gosh, darned, I'm gonna go out and get it right. [00:03:15] AMY SYLVIS: Or do it. But, I had great mentorship and realize that I can go further, faster. By partnering with other folks in this space. So, amazing partnerships with people that live in the Southeast and great property management is the recipe to get that going.  [00:03:30] SAM WILSON: Wow. Yeah. Good property management. [00:03:32] SAM WILSON: that's harder in some of these more other than say Huntsville. I mean, I think it would be harder in places like Clarksville and places like that to find good PMs. How have you done that?  [00:03:42] AMY SYLVIS: Yeah, we have one property management company that we work with that has scaled with us. So they're outstanding. [00:03:48] AMY SYLVIS: Yeah. They have done us. Good. And we have a mutually beneficial relationship there.  [00:03:52] SAM WILSON: Wow. So one that has scaled across all of those assets and all of those various Places you said that you love research, right? Yes. So I'm really curious about what research took you to Evansville, Indiana. it's right on the Ohio River. [00:04:07] SAM WILSON: It's at the bottom of the state, but. I don't know that I've spoken with anyone out of 500 and I don't know where we are when this goes live. We'll be pushing 600 episodes. It's investing in Evansville, Indiana. So  [00:04:17] AMY SYLVIS: let's talk about it. Yeah. Yeah. So think Chatanooga 10 years ago. Okay. [00:04:22] AMY SYLVIS: Lots of parallels. I know that's a hot take. That's a bold thing to say. Fair, but Evansville is the third largest city in the great state of Indiana. Yep. Indiana sometimes is deemed not as sexy. As maybe some of the Southeast markets, but my goodness is it pro-business. The state government is investing heavily in infrastructure, particularly in Evansville, always a dynamic, really dynamite sign that a market is emerging. [00:04:47] AMY SYLVIS: Toyota's bringing a bunch of jobs to the MSA good manufacturing jobs. We're seeing healthcare jobs and hospital expansion there. All of those really great key metrics, as well as decreasing property taxes, which you very rarely hear these days may not stay. But yeah, quite stunning. They've got a state law that property tax can't be more than 2% of the value of the property. [00:05:11] AMY SYLVIS: So it's a great environment.  [00:05:13] SAM WILSON: Wow now that's that's. Yeah I are a Hoosier. I wore a Hoosier. I am a Hoosier. Okay. I lived there for 30 years, so I know this state fairly well. But yeah, I mean that so which is, I just surprised, yeah, Evansville that's really intriguing. [00:05:26] SAM WILSON: That's just not something, yes. I would've really thought about, you mentioned the word that the state is, or you mentioned the phrase, the state is heavily investing in infrastructure. What does  [00:05:35] AMY SYLVIS: that. Sure. So specifically in the Evansville area, you may be familiar, but there's for the most part, kind of a disjointed disconnected two lane highway going from most of the way from Evansville up to indie, right? [00:05:49] AMY SYLVIS: That's changing, they're building an actual freeway building up the li the infrastructure there for logistics, which is another industry that's growing in the great city of Evans. They're redoing the bridge to make it wider and will robust across the river over to Kentucky, making rail lines investing in there and partnering, doing a public private partnership there as well to help with logistics. [00:06:11] AMY SYLVIS: So yeah, when the state's willing to invest in doing some of that infrastructure, it's always a good sign.  [00:06:16] SAM WILSON: Yeah, absolutely. No, that's really intriguing. There's a lot of there's a lot of parallels and things that you mentioned between Evansville. And Memphis, except for the fact that the state is investing heavily in infrastructure. [00:06:28] SAM WILSON: I mean, I'm thinking about things like rail lines you're on the water, mean Ohio river for our listeners that aren't familiar with. The Midwest is enormous. It's one of the largest feeders into the Mississippi. So, the, in, in the amount of goods that are transported up and down from grains to goods, I mean, up and down the Ohio is is pretty incredible actually to see. [00:06:47] SAM WILSON: and again, for those of you who aren't listening, that just the fact that they're building a larger bridge, between Indiana and Kentucky is a really it's a really big step, cuz that will actually connect. Now that I think about it, that would then connect really all the way down to Memphis, which is if we get a major highway running through there, that'll be really awesome. [00:07:03] SAM WILSON: So yes very cool. I love that. How, what resources did you use to research this and say, I mean, cause it's one thing to find a newspaper article like, oh whoop you do. They're building a new bridge across the Ohio. We really don't care. No one pays attention, but to aggregate all this data takes time. [00:07:18] SAM WILSON: How did you do  [00:07:19] AMY SYLVIS: that? It does yeah, it, it is quite frankly taken quite a bit of time. I've got a massive spreadsheet, I use some VAs to populate it, but you know, really looking at trends from the milk and report that comes out every year to simple things like job growth announced by the bureau of labor statistics. [00:07:36] AMY SYLVIS: A amazing resource that is paid, but for me, it's worth it called housing alerts.com. I don't know if you've heard of them. They're mostly single family focused, but as we know. Single family proceeds. Multi-family, it's a leading indicator by about 12 to 18 months. So a lot of great statistics and forecasting by demographers and economists have that site and pump out that data. [00:08:00] AMY SYLVIS: So I really look for overall trends, not just, a blip in the radar, but you know, consistent kind of green. In all of those metrics,  [00:08:08] SAM WILSON: is this something you've been kind of, traditionally trained in is in synthesizing this data and then coming up with a conclusion? Cause I think you can throw a lot of data at a lot of us, myself included in this. [00:08:19] SAM WILSON: And I just kinda, I look at it for an hour and I go. What does this tell me I don't even know how to make sense of this. How do you compile all this into something that's meaningful?  [00:08:28] AMY SYLVIS: Yeah. So, I think I, to, to answer your question, not overly trained, I do have an MBA. I do have a background in biotech where, data analysis and all of that has been. [00:08:39] AMY SYLVIS: Part of, how I've been trained, but nothing specific, but truly understanding where numbers are and how they change over time and being able to just track them and synthesize, Hey, is this getting better or worse? Is this a trend? Is this a blip in the radar? I humbly present to you that it's a bit simpler than maybe it sounds, I think the hardest part is just, compiling the data. [00:09:00] SAM WILSON: Right. Right. And then paint, painting the picture and saying, okay. Yes. Are things moving? What is the general direction that things are moving in that's really, awesome. I love that. Talk to us about what it means to, I guess, have a setback in life. Like what's a setback look like in life for you, and then how have you overcome. [00:09:19] AMY SYLVIS: Sure. I love to talk about this just because everyone has setbacks in life, right? None of us gets through this life without a setback or a bump in the road. Right? So it's, not whether you get knocked down, but whether you get back up I was born with cystic fibrosis. Some of you may have heard of this. [00:09:37] AMY SYLVIS: It is a genetic disease that impacts about 30,000 people in the us. And when I was born in 1981, my parents were told that I would live to maybe be 12 years. spoiler alert in two weeks, I turned 41 . but growing up there really wasn't much medication or treatment. And I was in and out of the hospital quite a bit with virent lung infections that were resistant to antibiotics. [00:10:00] AMY SYLVIS: and it made it really. To attend school regularly. And as I became an adult, hold down a job regularly, because the nature of the illness is progressive deterioration of my lungs in addition to several other organs in my body. So, it. Yeah, there were some bumps in the room there. Happy to dive in with whatever direction you wanna go down. [00:10:22] SAM WILSON: Wow. I guess, where does that bring you today? Some mm-hmm something has either changed medically or medicinally or something where, we get to have this conversation today. Yes.  [00:10:33] AMY SYLVIS: well, really scientifically, Explanation until about three years ago as to why I was doing so well. [00:10:39] AMY SYLVIS: And what, brought me so far, I say, maybe my hopeful attitude and my faith is how I explain that. But thankfully, a miracle medication did come to the market for the vast majority, not all of people with cystic fibrosis right before the pandemic in November of 2019. And. Almost all of, kind of my struggles. [00:10:58] AMY SYLVIS: I'm no longer in and outta the hospital. All of this has virtually disappeared. So, I get to enjoy the great health and live like most people, thankfully. Wow.  [00:11:08] SAM WILSON: Wow. That's gotta be just, I mean, literally life changing. Yes.  [00:11:13] AMY SYLVIS: Yeah, it was, there were again, a bump in the road where COVID came and , so I didn't get to fully kind of experience it until quite recently, but. [00:11:21] AMY SYLVIS: The true gift of it is this perspective. I knew from a very young age how precious life was that tomorrow wasn't guaranteed. So it was up to me to really take advantage and live life to the fullest and really led me to this career because I wasn't sure how long or if at all, I could trade my time for money. [00:11:40] AMY SYLVIS: And that was a big realization where I thought, although I'm sure my parents would've taken care of me, I wanted to be financially independent, not be a burden on them. So, gosh, darn, I'm gonna figure out a way to generate income regardless of my health. So I can continue to pay my bills and live by myself and have a prosperous life. [00:11:57] AMY SYLVIS: So, that is really one of the gifts of going through that struggle that has led me to where I am  [00:12:01] SAM WILSON: today. Wow. Wow. That's an incredible perspective. And not one, I think that many of us, would imagine or be able to share if it's like, Hey, I've had a debilitating disease, the bulk of my life, and yet it's been a gift in its own. [00:12:14] SAM WILSON: Right.  [00:12:15] AMY SYLVIS: Yeah, that perspective is everything right? Because there truly are. I mean, it's hard when you're going through it, right. I can relate to, maybe people have had other struggles with, family or health or, an inordinate number of things. But, I think it is so important to look back. [00:12:28] AMY SYLVIS: Once things do pass as they always do sometimes sooner, sometimes later and see what the gifts are because they're, they are there and they can be utilized as a superpower moving forward in.  [00:12:40] SAM WILSON: Wow. Wow. That's really cool. What did you do before you got into multifamily real estate?  [00:12:46] AMY SYLVIS: I was in biotech. [00:12:47] AMY SYLVIS: Raise your hand if you're surprised. but the notion that I could be involved in, developing and distributing medications to people that all also suffered, grievous illness was just really fulfilling. And it was a space I was very comfortable in, both personally, but of course, professionally. [00:13:05] AMY SYLVIS: So I was there for 13 years doing.  [00:13:06] SAM WILSON: Right, right. Wow. that's absolutely cool. I love that. Let's talk a little bit. Let's take let's thank you for taking the time to really share your sure. Personal health journey and using that as a springboard to say, Hey, look, anything's possible. So, thank you again for being so willing to talk about that. [00:13:22] SAM WILSON: Certainly appreciate it. Of course. Let's go back a little bit. And rewind the tape to the data conversation, a touch, and just kind of caught maybe not so much look in the rear view mirror, but maybe look a little bit out the windshield and say, all right, what do you see? You guys, you're in the multifamily space, right? [00:13:37] SAM WILSON: And it's been crazy hot, been lots of money flooding into it. And we have this potential recession on the horizon. We have inflation that's outta control. People are calling for stagflation, which wouldn't surprise me in the slightest. Where are we going from here? And how are you guys preparing for  [00:13:52] AMY SYLVIS: it? I love this question. [00:13:54] AMY SYLVIS: Let me get out my crystal ball. thank you.  [00:13:57] SAM WILSON: You're the first person that's ever said. You have one  [00:13:59] AMY SYLVIS: it's my superpower. No, you it is all about mitigating risk, right? Because none of us has a crystal ball, but, to your point, there are ways we can hedge ourselves. We can protect our investment, protect our investors contribution to our investments by a going back to market research. There is no one United States real estate market. Right. We all remember 2008 when some markets, I'm in LA completely tanked. [00:14:25] AMY SYLVIS: Right. Other markets, some in Texas were like recession, what? Housing Christ, who, right. It really, it was. Almost a non-event it's a great reminder that there are markets in the United States that are so robust and job fr or economically friendly job friendly. All of this. It's not to say, we assume that there won't be issues, but you can really hedge yourself with a recession. [00:14:49] AMY SYLVIS: And, being in a market that has recession-resistant industries where we know historically jobs aren't being cut and mentioned Decatur, Alabama. The FBI is expanding thousands of jobs there. The United States space force, which is such a wild thing to say, but that's a real thing is located from Denver to Huntsville. [00:15:09] AMY SYLVIS: These are recession resistant jobs. Not to say that there won't be layoffs or pay cuts, but they really position ourselves, to have still great renter demand. But yeah, interest rates are rising for how long? I don't think any of us know, but we do know the fed is really in between a rock and a hard place. [00:15:25] AMY SYLVIS: Midterm elections are coming up. The interest on the debt on the national debt is gonna become a little tricky if they raise too much. And we're all familiar with the term, a tape or tantrum, right? The stock market is not happy about this prospect. So in our mind, simply data-wise is looking historically. [00:15:42] AMY SYLVIS: It's only a matter of time before the fed starts cutting again, could be two years could be three. But history shows us that's usually the time period from when they fed raises to when cuts start happening again. So right. We are. Yeah, go ahead. That was a bit of a monologue.  [00:15:57] SAM WILSON: I'll take a breath. [00:15:58] SAM WILSON: Oh, I love it. I love it. That's a great way to, that's a great way to frame it, cuz you hear some people, I've been asking this question a lot recently. And some will tell you, how they're buying, right? They'll tell you, changes in their underwriting strategy. They'll tell you changes in, what they're forecasting or how they're, changing the debt they bring on. [00:16:16] SAM WILSON: And for you, you said, Hey, we're not really, you're not really focused on that as much as you are just saying, we're buying in the right locations. And I think, that's a great answer. So I appreciate that.  [00:16:25] AMY SYLVIS: Thank you. Yeah, our underwriting, it has definitely changed as well, just to be fully transparent and most of our deals could survive half renters, not paying at all, we're conservative in that respect and always making sure we protect capital, but yeah, the macro economic environment's really fascinating  [00:16:40] SAM WILSON: as. [00:16:41] SAM WILSON: Right, right. Yeah. The macroeconomic is certainly fascinating, but a again, just to reiterate, it's not like the microeconomic environment is what you are more focused on.  [00:16:50] AMY SYLVIS: Precisely precisely.  [00:16:51] SAM WILSON: Yeah. Is awesome. Amy, I thank you for coming on today. I certainly appreciate it. Are there any other closing thoughts you would have for our listeners or things you'd like to share before we sign off? [00:16:59] AMY SYLVIS: Sure thing. I would just encourage folks as they're on their journey, wherever they are in this journey to know. That obstacles are simply a sign that you're getting closer to your goal. And so keep going on, keep persisting I'm cheering you on. And if you'd like to get in touch with me, would love for you to reach out@silviscapital.com. [00:17:18] AMY SYLVIS: If you wanna chat about market research, the economic environment, or investing anything like that I love to talk to people. It's one of the best parts of what I do. So look forward to speaking with. Awesome.  [00:17:28] SAM WILSON: And for those of you who are listening that Silvi capital S Y L V I S. capital.com. Thank you, Amy, for your time today. [00:17:35] SAM WILSON: I appreciate it.  [00:17:36] AMY SYLVIS: Appreciate you. Thanks for having me.

18m
Jul 23
How to Build Meaningful Business Relationships

Looking to add a personal touch to your business?   In this episode, Rick Elmore, founder of Simply Noted, a company that uses artificial intelligence and automated machines to put pen to paper and write notes. Through handwritten communication, they are helping businesses to stand out and create connections with their client base.   As a former football player, Rick also reflects on his journey and how he is taking his competitive side to entrepreneurship. He discusses building a scalable and sellable business and getting the right partner and team to be successful.     [00:01 - 04:27] FROM ATHLETE TO ENTREPRENEUR __ __   [04:28 - 09:34] THE POWER OF A HANDWRITTEN NOTE __ __   [09:35 - 18:17] HOW TO RUN THE BUSINESS WITHOUT YOU __ __   [18:18 - 19:11] CLOSING SEGMENT __ __ __ __ __ __ TWEETABLE QUOTES   - Rick Elmore - Rick Elmore   - Rick Elmore   -----------------------------------------------------------------------------   Connect with Rick and Simply Noted on LinkedIn. Head over to their website and request a free sample kit now!   RESOURCE MENTIONED __ __   CONNECT WITH ME:   I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns.     Facebook https://www.facebook.com/HowtoscaleCRE/   LinkedIn   Like, subscribe, and leave us a review on Apple Podcasts, Spotify, Google Podcasts, or whatever platform you listen on.  Thank you for tuning in!   Email me → sam@brickeninvestmentgroup.com Want to read the full show notes of the episode? Check it out below: [00:00:00] RICK ELMORE:  it's just about standing out and you know, that handwritten note, when it lands on that desk, you know, versus the million emails and Twitter notifications and Facebook and LinkedIn and all these platforms that people are using now to grow their business. Grab that attention, right, with that handwritten note really, like, literally stands up on your desk, you know, because these are folded cards and they have a shelf life.  [00:00:34] SAM WILSON: Rick Elmore is an entrepreneur, sales and marketing expert, and former college and professional football player. Following his football career, rick translated his competitive drive to sales and entrepreneurship by founding Simply Noted an automated handwriting letter or handwritten letter company. Rick, I can't even speak today, but either way, welcome to the show.  [00:00:51] RICK ELMORE: Thanks for having today. This is awesome.  [00:00:52] SAM WILSON: Hey man, pleasure's mine. There are three questions. I ask every guest who comes to the show: in 90 seconds or less, can you tell me where did you start? Where are you now? And how did you get there?  [00:01:00] RICK ELMORE: Yeah, so my background's in athletics. I have a twin brother who went to the University of Arizona, played football. I was in the NFL for three years. After that, I still had that competitive drive and got into medical sales, did that for about seven years. First year as an associate sales rep and then six years straight. I was a President's Club Award winner, then went back and did my MBA in 2017 and really got the idea to start a company that can automate and scale sending real handwritten notes. And since January, 2019, I've been doing this full time, grown over 300% a year, going to qualify for the Inc. 5000 this year and are launching some pretty cool and exciting features this year as well.  [00:01:36] SAM WILSON: Man, that's a lot of moving pieces. How do you go from medical device sales to, oh, I know we should scale the handwritten note business?  [00:01:44] RICK ELMORE: Yeah, no, that's a great question. So both of my parents are, were small business owners. Their schedule was awesome. They were able to, you know, be highly involved parents. That was something I always wanted to do. And being in corporate medical device sales, the more successful you were, the busier you got, the more you moved around the country and I just never wanted to do that. And always kind of had the bug to want to be an entrepreneur, so 2017, when I went back to do my MBA, that was kind of like the catalyst to get it going, kind of see what I can do, see what I can learn. [00:02:13] RICK ELMORE: And always kind of had the idea, you know, handwritten notes were a good idea, but they just took too much time. You know, we did Christmas cards one year and I had 400 clients and it took us two weeks just to write the envelope in pen and stuff a printed card. I mean, it just, nobody has the time to do that. [00:02:30] RICK ELMORE: So, there was a company that's no longer around doing this, you know, focusing in the wedding industry they were called Bond and I always just thought, man, this would be so much better in, like, sales and marketing, 'cause like, you know, relationships matter, you know, standing out amongst the noise of all the digital, you know, things that are interrupting our day, every single day, you know, knocking on doors, you know. [00:02:50] RICK ELMORE: Really truly be different and send a handwritten note. And it really just started out as a project for school, talked to some, you know, people I respected, some mentors, and they thought it was a really good idea. I was really excited about it. And yeah, fast forward, you know, almost four years. You know, I have 11 full-time employees, 30, if you count like contractors, part-time employees, quality control, you know, all my engineers and everybody. Yeah, we're going to hit the Inc. 5000 this year, super excited.  [00:03:13] RICK ELMORE: Done this with no debt, no debt financing, no investors. Started this on a $10,000, 0% interest credit card. We've been cash flow positive since month three. So basically I took everything that I was good at in the past, being hypercompetitive, super driven, super motivated, self-starter, you know, athlete, you know, what I learned in sales of the medical devices at Stryker and Straumann, and really just put it to work here. And it's worked out pretty well. [00:03:39] SAM WILSON: Man, that's awesome. In order to be cash flow positive, you have to have sales. I mean, at what point in time did you say, okay, I've got a prototype, it works, and now we can go out and find clients?  [00:03:51] RICK ELMORE: Yeah. So I started researching this in 2017, really started messing around with some stuff in 2018. But you know, with my background, how driven I was, you know, when I took that leap of faith, January, Of 2019, you know, I have a family, I have kids, you know, failure was not an option. So, you know, getting creative and finding ways to fill that bucket every single month and make sure that we had money to pair bills and grow, that was the only option. [00:04:16] RICK ELMORE: And I think when you, you know, bring your boats and you don't have anybody there to, you know, have a backup plan and, you know, support you, you figure it out. And I was the type of guy that was going to figure it out. And yeah.  [00:04:26] SAM WILSON: Man. That's awesome. Very, very cool. Let's talk a little bit about, you know, kind of the use cases for sending handwritten letters. I mean, there are, I can imagine anywhere in real estate, even in commercial real estate, there are reasons to send handwritten letters. What are some use cases you guys are seeing right now in the CRE space? [00:04:43] RICK ELMORE: Yeah. So, you know what? We really work full, you know, fully across the board with, like, every industry, but, you know, real estate, mortgage, real estate investors. It's really been a pretty consistent niche for us. It just makes sense, 'cause you know, relationships truly do matter in this industry. Really when we're working with, like, the agency or the agent in the agency level, you know, they're just automating sending like thank you cards or anniversary cards or birthday cards, asking for a referral, so usually, the agency will touch them three or four times a year and all that's usually automated. Like a Zapier integration and Integromat and API integration into, like, the agency software, or even just agents go on our website and just send a few cards. But unlike the investor side, man, we've seen some pretty creative lists that people pulled. [00:05:26] RICK ELMORE: I think it's called PropStream, yeah, PropStream and PropertyRadar. They go on there, find these lists, absentee, divorce, expired listings. I mean, there's tons and tons and tons of lists on there that you can build, bankruptcy, probate. But I mean, we know it works because our clients that they've been working with us for, you know, three, four years. [00:05:45] RICK ELMORE: And the response rates on handwritten notes are just 7, 8, 9 times higher than printed mail. The ROI on a handwritten mail campaign versus a print postcard campaign, usually, again is, you know, 78 or nine times higher as well. So, you know, it's just a lot more personable. You know, our technology is unique. It's patent pending. We have robots that hold real pens. We've developed this ourselves in-house. They write real handwritten notes, completely personalized, you know? I can talk all day on, you know, how people can use this, but, yeah, that's just like a quick high-level overview.  [00:06:18] SAM WILSON: Right. I wonder, you know, there's, like you said, on the agency side, like thinking more, you know, thank you notes, birthday cards. They're kind of the more, more simple stuff. But I wonder when it comes to, especially, you know, for us as investors acquiring off-market leads, not just, not on the residential side, but on the commercial side, like, do you see people using this in mass, even on the commercial side, when they are, you know, bringing a list to you and saying, Hey man, we want to...  [00:06:41] RICK ELMORE: Yeah. So it was hard like during COVID 'cause a lot of our investors didn't think that they were in office, but you know, since like the COVID thing kind of slowed down, we've seen a lot of our commercial agents pick it back up, but really it's just about standing out and you know, that handwritten note, when it lands on that desk, you know, versus the million emails and Twitter notifications and Facebook and LinkedIn and all these platforms that people are using now to grow their business. [00:07:07] RICK ELMORE: Grab that attention, right, with that handwritten note really, like, literally stands up on your desk, you know, because these are folded cards and they have a shelf life, right? Like, people are going to read them, they're going to leave them there. They're going to last sometimes for days, weeks, or even months. We have some pretty cool use cases in the, like, the home service industry. [00:07:24] RICK ELMORE: But I know it's completely different, but literally, like we've seen customers have clients who, like, put these up, like, on their bookshelf or a fridge and come back a few months later and it's still there. So it's just a cool, you know, impactful and powerful, you know, marketing tool that, you know, gets the job done. [00:07:41] SAM WILSON: Right. What are some mistakes that you see people doing when it comes to direct mail?  [00:07:47] RICK ELMORE: So we have people like, I'm literally working with a real estate investor in New York right now. They want to do a, we recommend, like, shorter is better, you know, get to the point, you know, 30, 40, 50 words, right? Make an introduction, you know, call to action, make an ask who you are, what you can do, ask them to lunch or give me a call or something very straightforward, you know, because people's attention spans are so short nowadays. And we're working with an investor right now. And maybe they know something we don't know, but he wants to write a 250-word, you know, message. [00:08:16] RICK ELMORE: And it's just, like, this person you don't know, do you think they're going to sit down and spend five minutes reading, like, this card. You know, it's more expensive to write longer too. It's just like, Nope, this is what we want. Just do it. And we're just like, all right, fine. We'll do it. [00:08:30] RICK ELMORE: But yeah. I think mistakes really is, you know, inundating your client with too much information. Really, it's building that relationship, earning their trust, you know, just standing out, and being different is usually what we recommend. But yeah, try not to be too sales-y. Don't make this, you know, crazy card design with all these different, you know, advertisements on it and then stuff a different additional flyer with information. [00:08:53] RICK ELMORE: It's really just about the relationship and relationships go back, you know, since the beginning and time of business, you know, the deeper, the stronger, the more loyal the relationship, the more your business is going to grow. And that's what we preach over here. It's relationship first, relationship second, relationship third, like, that's your main priority. [00:09:10] RICK ELMORE: The ROI will come no matter what. It'll actually 10x 'cause you're going to have a loyal client. They're going to refer more clients. Like, they're going to do more business with you. Get you more business. So that's what we're preaching over here all the time.  [00:09:22] SAM WILSON: Man, yeah, that's really good. I like that. I like your keep it, what'd you say, 40 words.  [00:09:26] RICK ELMORE: 40 words. Yeah. Short and sweet. Yeah. Yeah. 40, 50 words, you know, keep it short and sweet, you know, respect their time, right?  [00:09:32] SAM WILSON: Right, man. That's cool. I love that. Let's talk a little bit about your business itself. You know, we talked about a book, here back on my shelf here before we kick this off, called Built to Sell by John Warrillow. I think let's say you pronounce his name. Maybe I butchered it. Not quite sure, but either way it was an impactful, impactful book for me, gosh, going on 11 years ago, when I sold a business and we started talking about some of the nuances in that book, tell me, what's it been like scaling your business, you know, in-house? What are some things you've done right? What are some things maybe you've done wrong? And then how can we learn from you on that?  [00:10:05] RICK ELMORE: Yeah, so I mean, one of the things I'm incredibly proud of is we built this company with no debt financing, no investors, no money raised. And I'm a marketing and sales guy, and I've started an industrial automation technology, robotics company. Being able to do that and be growing and hitting, you know, the list that we're hitting this year, I'm incredibly proud of, but something, you know, a big takeaway that, I mean, I recommend anybody who's in business regardless being an entrepreneur because even if like you're in sales, you're kind of running your own territory, your own business. That book Built to Sell is great because, for me, my big takeaway was you got to get out of working in your business, you know, the day-to-day stuff, the day-to-day grind and start, you know, working on your business. And there's a good quote in there that he talks about basically as an entrepreneur before you sell your business, they call it, kill the king. [00:10:51] RICK ELMORE: Because the entrepreneur usually is the business, right? He's has all the relationships, does all the sales, does everything, knows everything. And if you can kill the king or get rid of the, you know, the me in the business, your business becomes a lot more valuable, a lot more scalable because I'm a lot more hands-off, there's systems, standard operating procedures or systems in place that allow your business to grow without you. [00:11:10] RICK ELMORE: So, I mean, that's really been something I've been focused on in the last year is working on the business and killing the king. Like, how can I get rid of myself and have other people run this business 'cause that's how I'm going to sell this business.  [00:11:21] SAM WILSON: And is that the end goal with your company?  [00:11:23] RICK ELMORE: Absolutely. Yeah. I mean, I just, I think for the things that I've done in my life, you know, I was the first person to go to college, you know, professional athlete, had success in corporate medical device, and to be an entrepreneur, and grow a business, and sell it. I think that's kind of like the icing or the cherry on top of my career. [00:11:40] SAM WILSON: Who was the first hire you brought on?  [00:11:42] RICK ELMORE: So I had a buddy of mine, I mean, I'm sure everybody hires a friend early on, but I had a friend that I played football with for 10 years in like Peewee high school. And he's our like chief operations officer. So I'm like, I'm super high energy, like, worry about everything, paranoid. Like I don't know if a lot of entrepreneurs like that, I think you have to be, but he's super cool, calm, never gets worked up, you know, very opposite of me. So I do all the, you know, business and marketing and growth and you know, everything customer facing and he's behind the scenes and it's worked out great. He's been here since day one.  [00:12:16] SAM WILSON: Right. That's really cool. And I guess what was the moment when you said, gosh, if I want to grow this business, I'm going to have to bring other people on. How did you, I guess, as a solo entrepreneur go about bringing people on, how did you, how did you structure that?  [00:12:28] RICK ELMORE: Yeah. So hiring is a massive headache because in the early days, like you're basically building like the four pillars, like those first four or five hires, like it has to be right, because if you hire the wrong person, it can kill your business because it takes 4, 5, 6 months to get someone ramped up. [00:12:44] RICK ELMORE: And if you make the wrong decision, you're going to basically waste a year, and you can't waste time in a startup that's self-funded, that needs money today. So basically it was people I can trust, high character, you know, people that, you know, wanted to learn, like, played sports in the past that had, like, the mindset of being on a team. But it wasn't about, you know, buying business or bringing on somebody for a $200,000 a year salary that had experience, it was more about trust, reliability. And yeah.  [00:13:12] SAM WILSON: Did you structure that, and I'm sorry to dig into the nuance of this.  [00:13:15] RICK ELMORE: No, you're good. [00:13:16] SAM WILSON: This is a common question that people have when they're growing their business, especially in the early days and you go, okay, I need to bring on and commercial real estate's a very partnership, more focused industry than it is necessarily, you know, a business where you can bring on employees. But you know, when you set this up, did you have to give away equity to your buddy?  [00:13:35] RICK ELMORE: No.  [00:13:35] SAM WILSON: Did you just say, Hey man, come on as an employee.  [00:13:37] RICK ELMORE: Nope. So I own a hundred percent. I mean, without really getting too much into the weeds, I'm a highly driven person that, you know, I would say, I mean, I'm a highly driven person that gets things done. I call myself a Jack of all trades and a master of getting things done. I don't think I'm a master of anything but II know how to do a lot, and I know how to get a job done. And I don't really rely on people, you know, to get anything done for me, huge self-starter, that was one of the things that both of my prior managers loved. They didn't have to micromanage me. They asked me to do something. I get that done. I had foresight. I can conceptualize problems of the future because I was always thinking about the future. So I would think about things before they became problems and start working on them. So to kind of mitigate. So my buddy understood that and he's a huge team player, incredibly selfless, and he knew that I had his best interest in mind as well. [00:14:32] RICK ELMORE: So I think it's really important when you start a business, and I think a lot of people who start businesses, I've heard these horror stories, you know, people who start, there's one super, incredibly motivated, get done type of person. And then there's another guy on the side who knows how to talk the big game, but is more of like a leech. And he kind of attaches himself to the wagon of the other person. And I think that happens more often than not. [00:14:57] SAM WILSON: Right. Yeah. And it's certainly something to look out for. I can't remember what they called that in biology. What was that? A symbiotic and then, oh, symbiotic and parasitic relationship. [00:15:06] RICK ELMORE: Yeah.  [00:15:07] SAM WILSON: You know, you certainly, certainly have to look for those. What's a hurdle, when you think about your business and you say, okay, we've made it to, you know, to this point and you should be really proud of where you guys have taken it to this, you know, to today, but what's the next major hurdle for you and how will you know when you've gotten there? [00:15:21] RICK ELMORE: Yeah. So one of the best things and the worst things about our business is that people don't even know that things like what we do exist, which is great for our clients because it protects the authenticity of our product. But for us to go out there and grow, you know, people are like, you use robots to write handwritten notes? Like, it's so foreign, like, you can automate sending personalized handwritten notes through software? What?  [00:15:49] RICK ELMORE: Like people kind of, like, are confused about it. So, I think we're in the hardest genre of a business. It's a new product, a new technology, a new idea with a new client, you know, versus, you know, medical where it's like, you know, you have current clients where you can cross-sell or upsell products and, you know, it's like not a new idea. [00:16:09] RICK ELMORE: You're basically are, like, already in the sales process, sales mind with these clients. So yeah, the first three years were not for, you know, somebody who has a, you know, the faint of heart who has a weak stomach because this was not an easy business to build. You know, you can use like three access pen plotters or auto pens, but the barrier of entry, the cost of entry, you know, it's just incredibly expensive and incredibly hard. [00:16:33] SAM WILSON: Right, right. So what's, so I guess, what is the next hurdle for you guys? When you say, Hey... [00:16:37] RICK ELMORE: So our next hurdle is really figuring out how to scale into the millions of handwritten notes per month because that's a lot of capital, that's a lot of space. You know, we've had discussions with, you know, large companies who want to send hundreds of thousands of pieces a month, but that needs to be on contracts 'cause we need to scale capital, scale employees, work, you know, three, eight-hour shifts. So getting that figured out is going to be a big problem for us. Also, you know, I'm building my fourth website, you know, every time you build a website, you learn what you did wrong on the last website. And, every developer has, like, the perfect solution. And then you build it, you're like crap, like, this isn't what I want, you know? Like, it needs to do this. So it's like, and that's like part of the fun of being an entrepreneur. There's so much growth and I tell anybody I've, you know, who asked me about what it's like to run a business, you know, if you're an entrepreneur for five years, you're going to learn and grow more than in a 20-year career, because they're not going to challenge you. They're not going to force you to problem solve. They're not going to force you to find money and build deep relationship. They're not going to force you to do that. They're going to force you to do the job. They're not going to force you to build the business.  [00:17:43] SAM WILSON: That's about right, man. And just to know, you're in good company, I think all of us experience that with our website. It's like, you get it all done. You finally get everything. And then you're like, I really want to just start over. [00:17:54] RICK ELMORE: Yeah. Yeah. And it's not always the best thing.  [00:17:58] SAM WILSON: You said it though, you said, and I think that's gold, which is like, I'm not the master of none. I'm just the master of get it done.  [00:18:03] RICK ELMORE: Yeah.  [00:18:04] SAM WILSON: Where it's like, that is better than perfect. I think.  [00:18:06] RICK ELMORE: Yeah. I love that quote. I hear it in one of what is, there's a song that says right now and I always talk to my wife, like, I feel like I am a Jack of all trades and a master of getting it done. And she just laughs 'cause she agrees.  [00:18:17] SAM WILSON: That's awesome. Rick, if our listeners want to learn more about you, Simply Noted, and what it is that you do, how do they do that? [00:18:23] RICK ELMORE: Yeah, so our website's just SimplyNoted.com. You can go and request a free sample kit. We send like a really nice, you know, sample kit with a bunch of stuff in it, but yeah, SimplyNoted.com. We're on LinkedIn, on LinkedIn all day. It's one of our, you know, most used tools, but yeah, SimplyNoted.com. Just go to the business page. You can, we'll send you a free sample kit or just reach out to me on LinkedIn. [00:18:42] SAM WILSON: Awesome. Rick, thank you for your time today. I do appreciate it.  [00:18:45] RICK ELMORE: Thanks for having me.   

19m
Jul 22
Real Estate Investor with 80 Million Worth of Construction Projects

In today’s episode, we welcome Oliver Fernandez. Oliver is a successful entrepreneur who has successfully completed over 80M in construction contracts and is invested in over 150M in Real Estate.  He has been named contractor of the year and is on a mission to help other top contractors to do the same giving all the needs and right knowledge in order to effectively leverage them   Let’s Dive in! [00:00 - 05:33] OPENING SEGMENT   __ __     [[05:34 - 11:09] HOW ONE FLOORING COMPANY USES FOCUS TO SCALE __ __   [11:09 - 16:34] HOW TO BUILD A SUCCESSFUL PARTNERSHIP IN COMMERCIAL REAL ESTATE __ __     [16:35 - 17:55] CLOSING SEGMENT __ __ __   TWEETABLE QUOTES   ----------------------------------------------------------------------------- Connect with Oliver Fernadez by visiting the following websites: __ __         CONNECT WITH ME:   Facebook https://www.facebook.com/HowtoscaleCRE/   LinkedIn   Like, subscribe, and leave us a review on Apple Podcasts, Spotify, Google Podcasts, or whatever platform you listen on. Thank you for tuning in!   Email me → sam@brickeninvestmentgroup.com Want to read the full show notes of the episode? Check it out below: [00:00:00] OLIVER FERNANDEZ: everybody was moving in a hundred different directions. So we now we've like focused it in, we got one person doing the scheduling, we got one person ordering the materials. We got one person. Doing the next job. And it's really streamlined a lot of things so that they could take ownership over all of those little projects.  [00:00:27] SAM WILSON: Oliver Fernandez is a business owner and real estate investor that has successfully completed over 80 million worth of construction projects. And he's accumulated a real estate investment portfolio valued over 150 million over the last nine years. Oliver, welcome to the show.  [00:00:43] OLIVER FERNANDEZ: Appreciate you, Sam.  [00:00:44] SAM WILSON: Excited to be here with you. [00:00:45] SAM WILSON: Hey man, pleasure's mine. There are three questions. I ask every guest who comes in the show in 90 seconds or last, can you tell me, where did you start? Where are you now? And how did you get there.  [00:00:53] OLIVER FERNANDEZ: Where did I start? So I I grew up in Maine. I lived with my mom and three sisters graduated, went to college, got a job thought I would really enjoy engineering, realized that I couldn't make. [00:01:06] OLIVER FERNANDEZ: The type of money that I need to make to be able to take care of my mom and three sisters. So I then decided to get into real estate. And one of the reasons why I decided to get into real estate is my uncle died. 10 years before I went away to school, but I saw that real estate take care of his son for the next, for the, for those next 10 years. [00:01:26] OLIVER FERNANDEZ: And I was like, man, I really gotta get into something like that. And I got into real estate. My first thing into real estate was being agent. I was, running around showing people all these rental units. And at the end of the year, I'm always really reflective at the end of the year. And I realized, wow, I just put all these tenants in here for all of these landlords and I still gotta go out and make money, but now they're still continuing to make money from the tenants that are in there. [00:01:51] OLIVER FERNANDEZ: So I was like, I gotta switch this strip here and I, and start buying apartments and getting the ownership side of things. So then I started buying apartments went from converting, single family homes, into duplexes, triplex, and quads, and then got into the hundred plus unit properties. [00:02:05] OLIVER FERNANDEZ: And now we're at over 1200 units and continuing to  [00:02:08] SAM WILSON: grow, man. That's awesome. And that's on the active active real estate side, but you also own a construction company. Can you tell me about that?  [00:02:15] OLIVER FERNANDEZ: Yeah. So we do construction for the Navy, the air force, and we focus on like the one to $5 million projects for them. [00:02:24] OLIVER FERNANDEZ: We go in and we'll do like a renovation of an office space or like their past an ID office. So we'll be doing, mechanical updating the bathrooms, flooring ceilings, we'll paint the walls. And then at the end of the day they have a finalized product. And one of the things that I really like about the construction business is that I've been able to take the skills that I've learned in doing construction for someone else to do it, then do it for myself, right. [00:02:46] OLIVER FERNANDEZ: And for the, my team members and my investors, and we've been able to, Juice returns because of that.  [00:02:52] SAM WILSON: Tell me is there anything outside of construction for the air force in the Navy are do you have your hands in other, any other business? .  [00:02:59] OLIVER FERNANDEZ: Yeah, so we, we also do so, and it all started honestly with multifamily real estate. [00:03:05] OLIVER FERNANDEZ: Once you really get into the numbers and you start to really understand profit and loss statements, T twelves and the financial side of it, you really start to. Understand, like how businesses are valued. Right. So last year we made an acquisition of a flooring store, which is still construction in New Hampshire. [00:03:24] OLIVER FERNANDEZ: And also through the multi-family space, I understood how to like structure deals and like, so the way I structured that deal was. One of my childhood friends, he'd been working for this flooring store for the last five years. And the owner wanted to sell, he was 60 plus years old, wanted to get out and move on with the next phase of his life, where my friend was like wanted more for himself, wanted more for his family, wanted more for the organization. [00:03:46] OLIVER FERNANDEZ: And he brought that opportunity to me. So we structured it in a way. Where he would handle all the operations. I would still be involved from like a mastermind standpoint. Like I would help, with the strategy of the business where it was going, how things would be executed. Just because I had been in business before I had already completed 80 million with the construction, I knew the things to work on and the things to keep focus our energy on. [00:04:09] OLIVER FERNANDEZ: So, so we bought that business at the beginning of 2021, and we grew it from a 5 million business to 8 million. And then this year we're on target for 15  [00:04:17] SAM WILSON: million. Wow. You've tripled the volume in gosh, just a couple short years. It sounds like. Yeah. That's  [00:04:24] OLIVER FERNANDEZ: awesome.  [00:04:24] SAM WILSON: Yeah, that's awesome. and that's not an insignificant flooring company. [00:04:28] SAM WILSON: I mean, it sounds like you guys are doing mostly mostly commercial work through that flooring store then  [00:04:32] OLIVER FERNANDEZ: it's interesting. So like, so what the, with the side that I do the one to $5 million products for the general construction business We're doing probably, five to eight jobs a year. [00:04:43] OLIVER FERNANDEZ: Right. Right. Whereas that flooring business, their average job size is $7,500. So it's a high volume. I mean, we're doing wow. Like hundreds of jobs all the time. So it's a crazy business, but. We found a way to, through all like my learning in business how to align the team and get the team working on this thing and moving it in the right direction. [00:05:04] OLIVER FERNANDEZ: Cuz just like with multifamily real estate, when you have a lot of units, when you have a lot of activity, you can't do it all on your own. And that was one of the things that I promised myself when I first got into multifamily real estate. And what really excited me about multifamily real estate was that. [00:05:19] OLIVER FERNANDEZ: The opportunity was big enough where I could have 10 people working on one problem and we could just be really good at that one. And everybody could be really good at one thing and all come together and be able to add value to create something bigger than we could have all created by ourselves. [00:05:34] SAM WILSON: Right. Right. And how do you take that? cuz that flies kind of in the face and I'll tell you, I used to own a flooring company and own a flooring store. So I know the challenges intimately and we were never. I think our biggest year was maybe a $4 million year. And if your average job size, the 7,500 bucks, you can't swing the team, the 10 members going towards solving that one unique problem, so how do those two differ and then how do you solve each of those problems? Individually.  [00:05:59] OLIVER FERNANDEZ: so what we've done really good with at the flooring store is we got really good at like having everybody doing, being really good at one thing. So like we have a person that does all of our scheduling prior to that, like everybody was doing their own scheduling. [00:06:14] OLIVER FERNANDEZ: So it was like everybody was moving in a hundred different directions. So we now we've like focused it in, we got one person doing the scheduling, we got one person ordering the materials. We got one person. Doing the next job. And it's really streamlined a lot of things so that they could take ownership over all of those little projects. [00:06:31] OLIVER FERNANDEZ: Cause like there's so many little moving pieces that if someone doesn't own it, it slips through the cracks. Right. and I mean, like when we talk about like the bigger deal, it's the same thing. Like I'm really good at construction. So I focus on that. Like we bought 152 unit down in, in Atlanta, Georgia, and that property had 30 down units. [00:06:49] OLIVER FERNANDEZ: That was my entryway into multi-family real estate is because I had partners that were really good at, finding deals, being able to raise the money. And I was really good at the construction part. So we all came together and like, and then they saw how much value I was able to add to the group and they didn't have to babysit me. [00:07:07] OLIVER FERNANDEZ: all of the things that we want from our team members, I did everything I said I was gonna do. I, I showed up with a good attitude. All of those things I was doing. And then it just like, It's like, how can we do more products together? And then we went to the next one and the next one and the next one and the next one. [00:07:22] OLIVER FERNANDEZ: And then now we're just continuing to grow and scale and build off of the foundation. We've set  [00:07:26] SAM WILSON: 30 down units is quite a bit. What gave you the confidence that you could turn that 152 units into something worth owning? I guess when you go into it and you're 20%, 20% of the asset is down. [00:07:39] OLIVER FERNANDEZ: Yeah. No. Well, like when you understand like the way the real estate's valued you got your income minus your expenses and divided by the cap rate. Right. So I understand that. And then you realize, okay, well there's 30 down units. If I can get all of a sudden, all that income drive, then we're gonna increase the value dramatically. [00:07:58] OLIVER FERNANDEZ: So I built the confide. And being able to do those 30 units while I was doing the single family properties and converting them into the duplex and the plexes, I, we had a tenant that moved into one of our units and the first day he moved into it, I remember my wife calling me cuz she was handling all like the leasing stuff. [00:08:18] OLIVER FERNANDEZ: And she's like, they got water in the basement. And that feeling when your heart just like literally goes into your stomach and you're. Oh crap. Right. And you're like, you're hoping these people don't like get so pissed and they move off. And then I get there and he has this big smile on my, his face. [00:08:32] OLIVER FERNANDEZ: And I was like, I was actually happy that he wasn't pissed off. And like, cuz you know I knew internally that we were gonna take care of this situation. We were gonna figure it out and take and clean it up. Sure. But I just didn't want to have to deal with like angry tenants and all that stuff. [00:08:46] OLIVER FERNANDEZ: Right. So what we did is we ended up, tearing all the walls down and. Putting this waterproofing shield up that tied into a trench drain that ran around the perimeter of the basement so that even if the water did come through the bricks, it would hit this this vapor barrier and go down and. [00:09:02] OLIVER FERNANDEZ: And we did that on that property and it was a really tough pill to swallow. Cause it was like a $20,000 bill on top of all the other construction stuff that we had going on at the time at that property. And it was at the very end. So we thought we were just at the point where we were gonna start making money. [00:09:16] OLIVER FERNANDEZ: And then always a sudden we had this big hit, but that steam lesson was the same exact lesson. I used on that 152 unit building cause 30 15 of those 30 down units actually had water issues. Oh wow. So that those water issues were solved through the exact same process. We put a vapor barrier up, the water would come through the foundation, hit the vapor barrier, then go into our trench drain and get pumped out. [00:09:44] OLIVER FERNANDEZ: So we were able to do that and get those units back online. Within the first year. And then all of a sudden, there was now 15 units producing a thousand bucks a month dropping right to the bottom line. And it increased value tremendously that  [00:09:58] SAM WILSON: first year, right? Yeah. 15,000 a month. Quick math says what 180 grand, right? [00:10:06] SAM WILSON: It's a gross revenue increase. That's pretty substantial on any property. And even at a 10 cap, you just added 1.8 million to the, or to, to the value of the property. So I'm sure it traded for something different than that. So that's that's really cool. I love that. Yeah. You got, I mean, you got your hands in a lot of different things with your hands in the flooring business, with your hands in the construction company, with your hands in acquiring and running multifamily properties. [00:10:31] SAM WILSON: How do you keep it all, moving in a unified direction, is there any one of those businesses that you're ever afraid is gonna suffer? Because you're not paying attention? .  [00:10:39] OLIVER FERNANDEZ: Yeah, so that's a really good point. And like I'm a big believer of like focus and attention and, that was why I love multifamily real estate because. [00:10:49] OLIVER FERNANDEZ: You could do it with partners, right? You could do it with people that also were a high level people that were a players in their own. Right. And instead of like, oftentimes, when you're in the single family game, when always renovating those single duplex triplex properties, it was like, okay, how do I squeeze the most out of this? [00:11:08] OLIVER FERNANDEZ: Like this little great. And the reason why I needed to do that is cuz there wasn't enough to go around for every. Well, at least that's what I thought in the moment. Right. Right. And where these multi-family properties, you can have a team, right? Like, so I don't, I'm not doing everything for those multi-family properties. [00:11:24] OLIVER FERNANDEZ: I mean, I have a team that handles, the investors. I have a, I have other people on the team that are handling, the loan, you know what I mean? but one thing that I do handle is the construction side of the thing. So it's like, I've carved out the construction portion of all of these things where I've been, can come in and still add value and honestly invest in these things at myself too. [00:11:44] OLIVER FERNANDEZ: Like I, I make money from the construction side and I funnel all that money into real estate. So now I'm kind of guiding that, that money as well. Do that through, through. Income replacement and building wealth. And so the, focus comes through my partners, right? So, like, I can only focus on one thing at a time, but I've put really good partners around me that also are really good at what they're doing, and they can move the ball forward without. [00:12:12] OLIVER FERNANDEZ: Having to be involved in everything and they have the same, they're putting money on the line. They're, we're all aligned in, in how we're operating together. So, so it. It really allows you to scale, like when you really think about it, like Jeff Bezos has his hand in a lot of different businesses and he's not doing everything on his own. [00:12:32] OLIVER FERNANDEZ: He has a team like same thing with Elon Musk. He's involved in a lot of different businesses. He's involved with Tesla, he's involved in SpaceX, but he has a team and he's leaning into the team and the opportunity is big enough to attract good team members where you're not having to babysit people. [00:12:48] OLIVER FERNANDEZ: All the. Right  [00:12:50] SAM WILSON: man. I love it. I love it. And that's that's it's a team sport and I think you've hit on it several times just in the sense that one of the reasons we love multi-family or love commercial real estate is because, like you said, we're not squeezing that one little grape trying to get juice for everybody. [00:13:04] SAM WILSON: It's like, Hey man, there's enough here that we can bring in the right team members and build the right team and pay everybody. Well. And not worry about it. And that's, that's a unique, I think something unique in, in commercial real estate. And it's true in a lot of businesses, but particularly in commercial real estate where the numbers have enough zeros at the end of it to where you can actually do that. [00:13:23] SAM WILSON: Tell me, what is your ultimate goal when you think about your portfolio, when you think about business, where where do you want it to go? And when will you know that you've gotten there?  [00:13:31] OLIVER FERNANDEZ: It's such an interesting question. and honestly I pretty, really appreciate you asking it because it gets you thinking. [00:13:37] OLIVER FERNANDEZ: So for me personally I wanna be there for my kids. I have a daughter who's two years, three months, and I have a son that's three months and. I so grateful for all of the stuff that I put in place so that I can bring them to school to every day, during the week. So I really enjoy that. [00:13:54] OLIVER FERNANDEZ: I get so much pleasure out of that. So I want to just continue to be there for my family, my kids, my wife she has her own business. So I love being able to support her and honestly, You take any strategies that I might know as, Hey baby, this will work in your business. And then next thing she's implementing her business and then she's getting massive results and she's very successful. [00:14:13] OLIVER FERNANDEZ: And she puts in the work and she puts in the energy that that's required to be successful. So, kudos to her for all that. And then, from a. Standpoint. I really want to impact a million people personally, professionally and financially through real estate and construction. And in the beginning, when I first started out and got into real estate and construction, I wanted to, I was just trying to figure out a way to, to survive and, and take care of myself. [00:14:40] OLIVER FERNANDEZ: And then it was like, how do I take care of my family? And then. As I continued to move down the path and really opening my eyes and thinking bigger about what the, the real opportunity was there. I'm like, wow. We could help so many people that we do construction for and we provide housing for, but then at the same time, I'm leading a team of people that we can, I can help them as well. [00:15:04] OLIVER FERNANDEZ: And it's just like, it's so inspiring. It wakes me up every morning to not only. To just to show up for Oliver, but to also show up for them and to continue to show them and help them develop the skillset to be able to win into in the real world, because it's not easy to do, it's not. [00:15:22] OLIVER FERNANDEZ: Like there, if you get around the right people that show you how to win and, show you how to get results, you can start duplicating it. And once you duplicate it in the business field, you duplicate it in your life, your personal life and in financial life. And then all of a sudden you start winning in all these areas that you never thought were even possible for you. [00:15:39] SAM WILSON: Yeah. That's absolutely awesome. Very, very good. Yeah. I like the idea that results are contagious. Like it doesn't matter which way it is. If the people you're around the results and the people you're around are negative and not good, those results are contagious. But the, to your point, when you surround yourself with people who are doing awesome stuff as well, those results as well are contagious. [00:15:59] OLIVER FERNANDEZ: I'll give you a definite number on the target though. Yeah. So, you know, For, from a unit standpoint I always, I've always looked up to Sam's Allen and Barry stern looking, and those guys have over a hundred thousand units. [00:16:09] OLIVER FERNANDEZ: So I'm setting them target big man. We want I'm, that's where I'm headed.  [00:16:13] SAM WILSON: Wow. That's amazing. Go for it. I look forward to tracking your progress here. Oliver, you're doing some cool stuff you've made, you've made some really awesome points here today. Just about partnerships. [00:16:24] SAM WILSON: On how to grow companies, how to be involved in multiple industries and yet at the same time, be able to stay focused without, without sacrificing on any of those, individual businesses. You've talked about building teams and really putting in processes and stuff around you such that you can do, do the things that you do. [00:16:40] SAM WILSON: So really love it. Appreciate it. And thank you for taking the time to come on today. If our listeners want to get in touch with you or learn more about you, what is the best way to do that?  [00:16:47] OLIVER FERNANDEZ: The best way to get in touch with me would be to reach out to me on www dot, invest with oliver.com and we could stay connected that way and really appreciate your time. [00:16:57] OLIVER FERNANDEZ: And uh, I do wanna leave with one little thing and that is when I was at 12 units, I never, in my wildest dreams ever thought I would be able to have 1200 plus units. Right. So it's like, It's so possible. Now I'm sitting here, I'm sitting here saying that we're gonna get to a hundred thousand units. [00:17:13] OLIVER FERNANDEZ: Like I don't know how it's how I'm gonna do that, but I'm willing to put the time, the energy, find the resources, build with the right team members to be able to go and do that. And you're one of them in, and I'm excited to be connecting with you today.  [00:17:27] SAM WILSON: Awesome. Thank you, Oliver. I certainly appreciate your time.   

17m
Jul 21
Bringing Innovation to Investment Appraisal

Property research and valuation are now made easier with innovations in proptech. Joining us today is James Shaw, Co-founder and CRO of Edozo, a company providing commercial real estate professionals the tools and technology they need to research and value commercial property more efficiently.      James discusses how we can harness the power of data to drive transformation in the industry. He goes deep on the work they do to create an accurate picture of the market using multiple data sources and digital mapping. He also gives his take on the future of real estate, particularly as it relates to blockchain technology.     [00:01 - 04:28] CREATING A TOOL FOR PROPERTY RESEARCH __ __   [04:29 - 16:53] TRANSFORMATION THROUGH DATA AND DIGITAL MAPPING __ __   [16:54 - 18:33] CLOSING SEGMENT __ __ __ __ __ __ TWEETABLE QUOTES    - James Shaw    James Shaw  James Shaw -----------------------------------------------------------------------------   Connect with James and know more about their services at Edozo.com.   CONNECT WITH ME:   I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns.     Facebook https://www.facebook.com/HowtoscaleCRE/   LinkedIn   Like, subscribe, and leave us a review on Apple Podcasts, Spotify, Google Podcasts, or whatever platform you listen on.  Thank you for tuning in!   Email me → sam@brickeninvestmentgroup.com Want to read the full show notes of the episode? Check it out below:   [00:00:00] JAMES SHAW: I think the main mistakes people could make and, you know, a lot of these people are our clients. So be careful what I say here, Sam, but look, I think like any data from any provider in the market, right? [00:00:11] JAMES SHAW: It's always worth checking and verifying. So a way we help our users to do so is we provide the agent's details. Maybe that's the acquisition agent or the leasing agent. So they can call them up and verify. So we, we do that. We provide up-to-date information. [00:00:38] SAM WILSON: James Shaw is the co-founder and CRO of UK proptech Edozo, a real estate technology company that combines digital mapping with property data with the tools needed to make research and valuation and commercial property easier, quicker, and more efficient. James, welcome to the show.  [00:00:53] JAMES SHAW: Thank you very much, Sam. It's an absolute pleasure to be on the show.  [00:00:57] SAM WILSON: Hey, man, pleasure's mine. There are three questions I ask every guest who comes in the show, in 90 seconds or less: can you tell me where did you start? Where are you now? And how did you get there? [00:01:05] JAMES SHAW: So, where do we start? Well, you know, two of the three Edozo co-founders are chartered surveyors, who worked in the commercial real estate industry. So I was an investment agent selling office buildings and Andrew, the other co-founder, was a commercial property valuer. We were frustrated with some of the software we used in our advisory roles and teamed up with Marcus, an entrepreneur in the property space, basically to create tools that make property research simpler, faster, and more accurate. And in terms of where we are now, so, look over the last five or so years, we've got over 600 clients across the spectrum of the commercial real estate industry, including the likes of JLL, CBRE, Avison Young, Colliers International, as well as the host of investors and developers and some lenders too. [00:01:54] JAMES SHAW: We are a team of about 40 people based in the UK, in London, and expanding. In terms of how we got here, well, I suppose a lot of hard work, made mostly possible by building a brilliant team at Edozo across all disciplines and really supported clients, especially in the early days who believed in what we were doing and wanted to go on a journey with us. JLL, for example, was one of our first major clients in the early days. They've always been really forward-looking when it comes to technology and were instrumental in helping us to create our market-leading product.  [00:02:27] SAM WILSON: What was it when you looked in the market, you know, and you guys were using other platforms and programs that were out there, what was it that was missing that you guys said, Hey, this is something we can solve? [00:02:36] JAMES SHAW: Yeah, I suppose we were using the large legacy software providers. It was quite clunky, they were slow to innovate. A lot of them had monopolies on the market for a very long time. And therefore hadn't really pushed things forward. There was also a wave of PropTech businesses starting in the early days. And it created this time of innovation, but really it came down to, they were either too slow, either didn't have all the data that we needed so slightly inaccurate. And then the software was clunky and difficult to use. And in an industry where you're having to appraise multiple assets at a time, you know, efficiency is a big thing. And that's why I wanted to create software tools that help that efficiency and ultimately the liquidity of the commercial property sector.  [00:03:18] SAM WILSON: Right. And so who is, let me, let me ask this, who is the end, I know you said you guys work alongside of JLL and some of the bigger shops, but, you know, who is the end user of your product? Is it somebody on the back end of JLL, that's in there, you know, taking your data and integrating with your mapping software? Is it that the, you know, say me as a commercial real estate buyer, am I seeing your product? And then using it via JLL? Like, who is it that actually ends up interfacing with what it is that you guys do? [00:03:46] JAMES SHAW: Yeah, that's a great question. Well, it spans a whole number of disciplines within commercial estate. So at its core, in our core markets, so the commercial property valuers or appraisers, I think you call them in the US, so super important part of who we provide services to, then there's the brokers who are underwriting deals for their clients. [00:04:03] JAMES SHAW: And then there's commercial investors as well, you know, acquisitions team and people looking at underwriting assets and finding assumptions for their investments appraisals. So those, those are the main people, but then on our mapping side as well, it might extend to teams that focus on building surveying and doing surveys of buildings, that sort of thing. So really we've created a suite of products that covers quite a large section of the advisory, but also more and more the investment community as well.  [00:04:28] SAM WILSON: Certainly and combining that data with the mapping software, I think, would be where the, you know, the two kind of come together. Is that right? [00:04:36] JAMES SHAW: Yeah, exactly. Exactly. You know, and at, the core of any commercial real estate research platform is a map. And we essentially go about overlaying the relevant contextual data that's required to appraise investments. So that includes, for example, the legal title boundary combined with some commercial property comparables. [00:04:56] SAM WILSON: What are some things that you guys I think we're surprised, you know, when you started putting this together and you started, you know, obviously bringing all this data together, what were some surprising conclusions, or maybe some things that you found as you started aggregating this data? He said, oh, wow. [00:05:10] SAM WILSON: We didn't expect to find this, but we did.  [00:05:12] JAMES SHAW: Yeah. Okay. Well, look that's, that's an interesting question. And I think, I think the main thing that we found was actually how disparate and how opaque the commercial real estate market is, specifically in the UK, where our focus is, is that it's really difficult to find rent achieved and sale prices in commercial property unlike say, the residential sector. So when we started out on this journey, we thought, right, we're going to go into the market, collect the evidence and package it for our end users. But, you know, the market doesn't want to share, you know, maybe for competitive reasons and so on. [00:05:45] JAMES SHAW: So really it was figuring out a way to bring together multiple different data sources, data match it, and put it in our system just to ensure that that information is accurate. And today, I think one of the biggest challenges in the commercial property investment industry, the brokerage side, the advisory side, is getting access to up-to-date information, probably because the markets are quite opaque when it comes to sharing that information. [00:06:11] SAM WILSON: And other than going out and asking everybody individually, Hey, you know, what are you getting, you know, per square foot on your office building or on your multifamily, you know, project, how did you guys solve that problem? If it is opaque, it's opaque, probably like you, you know, the reasons you mentioned. How'd you overcome that? [00:06:27] JAMES SHAW: Yeah. And look it's, yeah, it's a problem we're still solving, but we've got an excellent research team who does do a bit of asking and that'll always play a part. But the amazing thing is, is that so much of this data is being digitized now, so we've actually partnered with some commercial estate data partners. And we've also combined that with some of our client-contributed data as well. So between these three prongs, as it were, we bring it all together and we can start matching the different data sets. For example, there's commercial land registry data in the UK. So we can take the registered transaction amount from say the commercial land registry, which, which registered the government department that registered all land transacted in the UK. [00:07:10] JAMES SHAW: And we use that as a starting point and can just layer on whatever else we've got on the system from our data providers, from our own research and so on. So yeah, it's an ongoing challenge, but there's many more means to help us solve that now.  [00:07:24] SAM WILSON: Right. Right. And then when you let's think about this from a broker's perspective, like what were some of the problems may be that brokers had that you said, Hey, we can solve, we can solve this problem and help you get whatever the problem was, you know, done more efficiently? [00:07:37] JAMES SHAW: Yeah. Well, look, we'll start with the sales brokers 'cause I used to be once. So, so look, I think some of the changes I had similar to that, that appraisers have, right? And it's just finding evidence to back up your assumptions. You know, you're advising a client and you've got a great investment for them and you want to make sure that you put the right data into your appraisals of the value of that asset or maybe it's the future value. [00:08:00] JAMES SHAW: And that could include rental transactions, you know, where you're positioning your, your commercial rent, or if there's any uplift in rent in the future. And then also positioning your yield when it comes to bidding, you know, a couple of basis points here and there makes a big, big impact on value, and advising your clients properly around what they should be paying for an asset is usually important and easy access to information. It really, really helps that.  [00:08:25] SAM WILSON: Yeah, absolutely, absolutely. And so you guys have gone out, you found ways to aggregate all of this data, then build a mapping software that goes into where we can all see this, or at least, the users of your, of your program can get in and see all this in one location and make a quick, easy, informed decision. Where do you go? What's the future of your business? Like where, where do you take it from here? What's the next problem you're solving?  [00:08:48] JAMES SHAW: Sure. The next problem we're solving is really just trying to get more insight for our end users from the data that we've got. So whilst at the moment, you can see different comparables in the market. [00:09:00] JAMES SHAW: We'd love you to be able to bring those all together and start helping you to inform a value. So we're never going to, well, I wouldn't say never, but we're going on a long-term journey just to basically help people appraise and get to a value a bit quicker than they used to. And part of that is aggregation. And part of that is creating a level of automation in the process of researching and evaluating a property. That will ultimately help you get to that value quicker. So yeah, in terms of the future where we are going a bit of aggregation of data, better analytics, and then ultimately where appraisers want to get to is an indication of value from, from all of that as well. That's automated by us for verified by the judgment of the broker lender or the commercial property investor.  [00:09:46] SAM WILSON: Yeah, that's something I hadn't thought about was the fact that lending institutions probably used your guys' product as well. [00:09:52] JAMES SHAW: Yeah, they can do. It's a market. We are early in exploring now, but there, there is a lot of interest for that reason is that they underwrite loans for big commercial property investments and small, and they need access to some of the information to sense check that the assumptions of whoever's applying for those loans, so, absolutely.  [00:10:11] SAM WILSON: That's really, really cool. I love that. Tell me some mistakes you feel like people are making right now in the data that they're pulling. I'll leave that question open-ended, but do you see people making mistakes in the data they're using? And if so, what are those mistakes and how should they be correcting it?  [00:10:26] JAMES SHAW: Yeah. Well, interesting question.  I think the main mistakes people could make and, you know, a lot of these people are our clients. So be careful what I say here, Sam, but look, I think like any data from any provider in the market, right? [00:10:40] JAMES SHAW: It's always worth checking and verifying. So a way we help our users to do so is we provide the agent's details. Maybe that's the acquisition agent or the leasing agent. So they can call them up and verify. So we, we do that. We provide up-to-date information, but when you're using them for really, you know, really important transactions and advising clients. We always advise, look, you know, we aggregate it, we put it all together. It's still up ultimately up to the individual to make sure that they verified it for multiple sources. So, that could be a mistake someone could make is, is take everything that you get from all these different data sources and take it as verbatim. So always, always check and verify is what I'd say.  [00:11:20] SAM WILSON: Are there really cool uses of data that you feel like people should be using it for, and yet aren't? 'Cause I know one of the things we've talked about, you know, a lot here is having what you've called an informed value. So are there data sets that people, you know, could and should be using, but they're just not in order to come up to what you'll call an informed value? [00:11:41] JAMES SHAW: Yeah, and, and this is something we call contextual data. So I've spoken a lot about comparables lease and sale transactions, but as we know, there's so much more to property investments than just that. And there's the surrounding area and the demographic surrounding that. And there's also the surrounding occupies. [00:11:58] JAMES SHAW: So we launched a product this year called the Edozo Occupiers. And this essentially maps out all commercial occupiers in the UK. That's retail, industrial, leisure, office occupiers in a certain location. Now you can do some pretty cool stuff with that in the future, such as say, you know, you want to know how many gyms around because you want to put a gym in your building as a developer or investor and want to know what the competition might be in the area. And so, really starting to think, think that way, instead of just around. The transaction evidence and how that informs what you do with your asset management strategy or your investment appraisal.  [00:12:33] SAM WILSON: I like that a lot. You called it Edozo Occupiers. And what we're finding, I'm thinking I've got my hand in the laundry facility business and so, here in the states, they will, you can go to a lot of your larger equipment manufacturers and they'll go out and do those same sort of studies. They'll tell you the demographic studies, they'll tell you who's in the area, you know, how many of them are there? But, you got to piecemeal all this together from a variety of sources. So it's not something. Equipment manufacturer, it's some from the local, you know, county GIS map, some from, you know, just, just basic Google search data and it's, and it's all a little bit, like you said, contextual. [00:13:08] SAM WILSON: So finding a way in one, in one location to put all that together would be, you know, really, really cool. I like the way you guys are thinking through how data really can be used and changed the way that we buy commercial real estate. Tell me this. There's a lot of talk around blockchain technology and, you know, how these transactions and things like this could eventually, and again, you know, I think at this point, a lot of it's just speculation, but how that could disrupt commercial real estate. Have you guys looked at that at all? Any thoughts around blockchain and it pertaining to, especially what you guys do on the data side?  [00:13:43] JAMES SHAW: Yeah, so real estate and blockchains are really interesting, really interesting topic. And we don't implement any blockchain technology, Intel technology now, but we’re definitely looking at it for the future. I think where blockchain can help a lot in the short term is in basically improving the liquidity of an asset. I think it takes a long time to register a property. Well, it does in the UK, I've heard in the US, it can take a while as well. And you know, just in terms of contracts going back and forth from lawyers and advisors and so on. And there's the contracting blockchain side, then there's the registration of the property at the country's land registry facility. So I think those two things, contractual, blockchain, then you've got the actual registration of it will go a long way to improve the liquidity. Now in the future, it would be great if there's an immutable record about the lease and the rent of that lease and so on that platforms like us and our advisors could use. So I think, you know, it has the potential to change the industry. There's nothing that's really doing so yet, but those two opportunities in the contract side of the property as well as the registration side can really speed things up and ultimately improve liquidity and maximize returns to your investors and shareholders. [00:14:56] SAM WILSON: Yeah, that's for sure. And on some of those fronts, I hate to say it, but some of the lack of transparency is good for us as real estate investors in the sense that we don't necessarily want it to know down to the penny, what people are paying per square foot for rent within a, you know, one tens of a mile radius on a retail strip center I may own, right? I don't necessarily want that 'cause I've come to an agreement with my local tenants and then that's our agreement and suddenly, you know, they're, they're shaking this paper at me saying, Hey man, like, you know, look, you're way more expensive. Now everybody else have to rework this lease, you know? [00:15:28] SAM WILSON: So in some regards I'm like, man, I don't really like that. But then I think about it in other terms of, you know, for us, we call them the register of deeds. I mean, it's horrible. I mean, there's, there are so many counties and so many places here in the United States that aren't even online yet. Like, you can't even, you can't search the records without driving to the courthouse and actually looking through courthouse records. It's like, this is, we're operating in 1875. Like, this needs to be, you know, brought up, actually search the records in a meaningful way.  [00:15:58] JAMES SHAW: I do think in real estate, that's where blockchain can have its, have a really big impact is speeding on that deed registration, the paperwork and so on in a transaction. And there's some great stuff happening here in the UK around that. But there's a long way to go. It'll take some time to be, to be more widely adopted.  [00:16:16] SAM WILSON: It certainly will. And, and in typical bureaucratic fashion, there's going to be a lot of people standing in the way of that. I'm thinking specifically of the people who work in the register of deeds office, the register of deeds people, themselves. And then, of course, all of your title companies that sell and make a lot of money on title insurance aren't going to necessarily be in favor, like you called it in immutable record, where all of us could just go, oh yeah, of course, James owns that and he's owned it for 50 years and, sure, he can sell it and I don't need title insurance anymore. [00:16:43] SAM WILSON: So I think we're going to have you know, like I said, in typical progressive fashion, people standing in the way of trying to make things simpler and easier, but you know, that progress will come either way. So this is really cool, James. I love what you guys are doing. I love how you've seen opportunity in the marketplace and, you know, created a product that probably so many of us on a regular everyday basis used and maybe not even know that you guys are the people behind it, making it happen. So I certainly appreciate what you guys do. I love it. Are there any other closing thoughts that you have as it pertains to your business, data mapping, software integrations, things like that, that you'd love to share with our listeners before we sign off? [00:17:20] JAMES SHAW: So, first of all, thank you so much, Sam, for having me on and, asking brilliant questions. Look, nothing, nothing more from me at this stage about, us. You know, if you, if you're interested and about learning more about our system and if you're UK based and need access to better research data, please check us out at edozo.com [00:17:36] SAM WILSON: Awesome. One last and final question for you here, James. And if this question does not work, we can just cut it out. But if so, we'll leave it right in. When are you guys coming into the States?  [00:17:45] JAMES SHAW: Ah, look, well, there's the Pretech New York, CREtech New York event coming up later this year that we're thinking of attending. We don't have plans immediately to come to the States, but yeah, we've still got a long, long, long road ahead of us and it's definitely one of the markets we're looking at. So, so you never know, you never know.  [00:18:02] SAM WILSON: I love it, James, thank you for your time. Certainly appreciate it. Have a great rest of your day. [00:18:06] JAMES SHAW: Thanks so much, Sam. Cheers.

18m
Jul 20
Recession Resistant Syndications

In today’s episode, we are joined by Andrew Keel, Andrew is a passionate commercial real estate investor, husband, father, and fitness fanatic. His specialty is in acquiring and operating manufactured housing communities and self-storage facilities. He graduated in 2010 from Augustana University in Sioux Falls, South Dakota where he majored in Business Administration, He started as an apprentice to a local Central Florida real estate wholesaler where he learned to flip houses. Eventually, he move to manufacturing houses, buying and selling individual mobile homes. Today he operates over 2,300 lots across more than 30 mobile home parks in 10 states and has few mobile home parks under contracts. Let’s hear more about Andrew and his journey. Let’s dive in!   [00:00 - 07:04]  5 STORAGE FACILITIES BOUGHT FROM MOM AND POP FOR INCREASED PROFITS __ __   [07:05 - 13:46] HOW SELF STORAGE CAN HELP YOU ACHIEVE YOUR BUSINESS GOALS __ __   [13:47 - 18:24] CLOSING SEGMENT __ __ __   TWEETABLE QUOTES   ----------------------------------------------------------------------------- Connect with Andrew Keel by visiting their website: www.keelteam.com       CONNECT WITH ME:   Facebook https://www.facebook.com/HowtoscaleCRE/   LinkedIn   Like, subscribe, and leave us a review on Apple Podcasts, Spotify, Google Podcasts, or whatever platform you listen on. Thank you for tuning in!   Email me → sam@brickeninvestmentgroup.com Want to read the full show notes of the episode? Check it out below:   [00:00:00] ANDREW KEEL: When we come in and we're now we have a call center that they can call and rent a unit, anytime their web, you can rent a unit from the website and get access to the gate, and implement more professional management. [00:00:09] ANDREW KEEL: We're able to already see increases in occupancy, increases in NOI and just fix the model that he had been using. So that's our whole model basically is buying from mom and pops that are not, running assets as, as well as we can. And, increasing the value.. Andrew keel owns and operates. 33 mobile home communities in five cell storage facilities. His specialty is buying from mom and pops and improving the bottom line. Andrew, welcome to the show. Yeah,  [00:00:46] ANDREW KEEL: thanks for having me, Sam. Pleasure's  [00:00:48] SAM WILSON: mine. Three questions. I ask every guest who comes in the show in 90 seconds or less. [00:00:51] SAM WILSON: Where did you start? Where are you now? And how did you get there?  [00:00:54] ANDREW KEEL: Started in central Florida flipping houses in the residential place moved into, individual mobile homes, doing what's called Lonnie, dealing where I was selling individual mobile homes on contract. And then ended up going to a bootcamp MSU bootcamp and met a investor there that was looking to deploy some. [00:01:14] ANDREW KEEL: Wanted a sweat equity partner like myself. So we ended up partnering on my first five mobile home parks together since then friends and family have jumped on board and wanted to invest. And we also got into self storage last year, which has absolutely crushed. So really really feeling good about our portfolio going into uncertain economic times  [00:01:34] SAM WILSON: when, or what year was it that you bought your first mobile home park? [00:01:38] SAM WILSON: 2017. Wow. Wow. That's pretty that's pretty fast growth from zero mobile home parks to 33, I think is is what you said there in your bio? That's a lot. What is that? I mean, it's only five is that five years. That's six parks a year,  [00:01:54] ANDREW KEEL: basically. Yeah. Yeah. Just about, I, the one thing I did is I burned the ships, right? [00:01:59] ANDREW KEEL: I left everything else. My, my home flipping business, my individual mobile home flipping business. I left everything behind. It just went all in on this. I saw the opportunity and it ended up being well worth it. Now  [00:02:11] SAM WILSON: That's really hard hard to do, cause I'm sure that your home flipping business was fairly profitable. [00:02:17] ANDREW KEEL: It was yeah. Around the central Florida area. And then, these Lonnie deals, I was buying these individual mobile homes, fixing 'em up very little and then selling them on contract. And I was getting what's called mailbox money. Right. Which Lonnie Scruggs talks about in his book deals on wheels. [00:02:33] ANDREW KEEL: And, that was going great. But I, that income from those previous homes I had sold really kept me alive when I just completely went full into mobile home communities. So that's how I was able to do it.  [00:02:45] SAM WILSON: I think that's important, to note there for people that are looking to scale, is that income while you do scale, how long did it take you from, Hey, I'm going long into mobile home communities in 2017. Like how many months was it before you actually got your first deal done?  [00:02:57] ANDREW KEEL: Oh yeah. I wanted to buy a park in 2015. Right. And then , the time it took to get there and the sales funnel. [00:03:04] ANDREW KEEL: And so forth It took about a year and a half. So, it definitely took some time before I actually got one.  [00:03:10] SAM WILSON: Right. And that's, I mean, I think that's something people overlook, when they're looking to grow and you hear the success stories where it's like, Hey man, one day I woke up and then three weeks later, I own 10 mobile home parks. [00:03:19] SAM WILSON: You're like, okay, whatever. You're not the normal person out there. The rest of us, it takes 18 months of, of blood, sweat, and tears to finally get that first one done. And from then of course, it becomes easier. It's getting the first one across the finish line. Tell me. Things are changing in the mobile home community space. [00:03:35] SAM WILSON: Like we've just seen cap rates compressed. We've seen hyper competition come in. What else has gone on in this space? And then what are you doing to still find a competitive edge?  [00:03:44] ANDREW KEEL: Yeah, we have a lot of institutional buyers coming into the space right now, a lot of big time, private equity money coming into the space. [00:03:52] ANDREW KEEL: And it's tough to compete. Right? They've driven cap rates down. I think one thing that we've done to kind of. Carve out our niche is, we've gotten really specific on our strike zone, right? Like we buy properties between 50 and 99. Lots. A lot of the bigger boys wanna buy a hundred lots or more. [00:04:11] ANDREW KEEL: So we target 50 to 99 lots. We target public utilities in a Metro with 50,000 or more population. And, that has really been a good strike zone for us. We've had to say no to a lot of deal. But it also keeps us it keeps us on track with where our time is best used.  [00:04:30] SAM WILSON: Yeah. Are you, I mean, so you gave four criteria for things that work for you guys, and it sounds like you're still able to find opportunity, even with those four criteria. [00:04:39] ANDREW KEEL: Yeah. Yeah. It's been great, last year was a lot better than this year. , honestly, we were able to really, our sales funnel kind of peaked and we closed on, a handful in 2021 20, 22. It's gotten tougher to find those deals that hit our strike zone. So we spent a lot of time in storage the last year because of. [00:05:00] SAM WILSON: Right. I mean, and that's also something though. I mean, you're in two asset classes that are fairly popular. I mean, I would think there's more storage facilities than there are mobile home communities. So, but even, so it's still a competitive storage, the competitive space to be in why the transition with it just cuz the mobile home communities were just, too competitive or was there a strategic move as part  [00:05:20] ANDREW KEEL: of. [00:05:21] ANDREW KEEL: Yeah. We like the complimentary factors that they have with our management and oversight of them. And then also it was strategic in the fact that, self storage facilities they're they have some benefits that mobile home parks don't right. They're a little bit easier to manage. [00:05:35] ANDREW KEEL: However, the supply is not constrained, just, as mobile home parks are. However we can buy in certain markets from mom and pop. That we bought a property in round rock, Texas just outside of Austin. And we bought it from a mom and pop owner. We direct to the owner and the facility was only 82% occupied. [00:05:53] ANDREW KEEL: It's your typical mom and pop story. Right? All the other facilities in the area are 95% occupied are higher. He was operating the facility on a flip phone and he was only open three days a week. If you wanted to rent a unit, you had to be there Monday, Wednesday, or Saturday. That was. So when we come in and we're now we have a call center that they can call and rent a unit, anytime their web, you can rent a unit from the website and get access to the gate, and implement more professional management. [00:06:18] ANDREW KEEL: We're able to already see increases in occupancy, increases in NOI and just fix the model that he had been using. So that's our whole model basically is buying from mom and pops that are not, running assets as, as well as we can. And, increasing the value..  [00:06:32] SAM WILSON: Those aren't even expensive, necessarily operational, like, like there's no major CapEx. [00:06:38] SAM WILSON: Yeah. There's some software that goes into that. There's some human, capital in the sense that you gotta pay to have a, the call center, answer the phone and things like that, but it's not, a million dollars in CapEx. You gotta dump it into your property. It's just a very simple, Hey, here's some operational tweaks and you can change the bottom line dramatically. [00:06:55] ANDREW KEEL: Dramatically. Yeah. And obviously in storage, one thing like probably the biggest value add component is that the mom and pops are not raising rents with market. Right. They, they just get comfortable. They think that a hundred percent occupancy is good. And that's where they're supposed to be. [00:07:11] ANDREW KEEL: Well, actually in storage, you actually wanna be around 90% occupied, maybe even a little bit less. Wow. Because if you're not filtering through and you're not raising rents enough, then you're not maximizing the no. Right,  [00:07:22] SAM WILSON: right. Yeah. And I can't do the math fast enough on here, but I know that there's a, here on the fly, but I know there's a point where it's like, Hey, it's better to be 90% occupied at X than hundred percent occupied at Y whatever that is. [00:07:33] SAM WILSON: Yeah. So that's exactly, that's really interesting. Yeah. We're experiencing that right now on a multifamily property. We own. We just hit a hundred percent occupancy, but we are, we have raised rent so fast and it's still the demand is there. And it's like, what? Or what are we doing something wrong here? [00:07:48] SAM WILSON: Because we're we bought it last year and we're already 400 bucks a month or 400 bucks a month per unit over where we bought it at. And it's like, Wow. And we're still not, or we're still a hundred percent occupied. So I get that. That's a hard thing for a lot of people though, especially mom and pops, cuz they go, Hey, you know what? [00:08:04] SAM WILSON: I'm fully occupied. I don't have to think about it. I can collect the check and then I go home. How do you find those sellers? And how do you find an opportunity? That makes sense like that. I mean going all the way to around rock Texas is a long way from Orlando, Florida.  [00:08:16] ANDREW KEEL: Yeah, we have a whole sales team of five cold callers that are cold calling and, reaching out to owners constantly. [00:08:24] ANDREW KEEL: We have three VAs that are skip tracing and scrubbing our data. And that's really been our competitive advantage is being able to go direct to these owners, contact them, cultivate relationships with them, and then, ultimately buy their proper.  [00:08:38] SAM WILSON: Right. Yeah. What's that conversation like right now, when you're dealing with these mom and pop owners, are they aware of, the interest in the self storage space or is it, still the maybe five, seven years ago where you get it off market deal and it wasn't quite as difficult. [00:08:53] ANDREW KEEL: There's always deals out there. Right? One of my mentors, Scott Shields, he says, Hey, the deal of a lifetime comes around once every six months. There's deals to be had. But yeah, I would say sellers are aware that. Their assets are desirable and they're wanting higher prices than ever before. [00:09:07] ANDREW KEEL: And I think the competitive advantage is the market research that we're doing to look at the competitors, to look at the facilities and really be able to underwrite based on, what it could be instead of what it is today. Do you  [00:09:18] guys  [00:09:19] SAM WILSON: Have you guys taken any deals down from broker. [00:09:22] ANDREW KEEL: We have, yeah, I think probably three or four we've taken down from brokers. There's deals out there from brokers as well. You just have to be the right place to right time.  [00:09:30] SAM WILSON: Right, right. We're you know, there's talk of us going into a recession and you are in two unique asset classes that generally bode fairly well, especially the mobile home communities in a recessionary environment. [00:09:42] SAM WILSON: Is there anything you guys are doing? To position yourself or maybe doing differently than what you were a couple of years ago as recession seems to be on the horizon.  [00:09:50] ANDREW KEEL: Yeah. Great question. I think mobile home parks in and of themselves are the most affordable form of non-subsidized housing, right? [00:09:59] ANDREW KEEL: So that, in a recessionary environ, Has done pretty well. And if you look back at the previous recessions, you'll see mobile home parks have done well, right? Because typically our tenants own their homes and they're just paying a very nominal amount for lot rent to have their home on the property. [00:10:16] ANDREW KEEL: So, mobile home parks are molded in that aspect. Not completely completely untouchable right in, in a recession. I think everybody feels it in some aspect but mobile home parks are. Are in a good spot storage as well. It's interesting because storage has an interesting dynamic where when people are moving up, right, they're upgrading their housing situation. [00:10:36] ANDREW KEEL: They need more stuff when they're downgrading their housing, it's the same thing, right? They need a place to store their stuff. And in a market like today where people are preferring to rent self storage is done really.  [00:10:48] SAM WILSON: Right. Yeah. There's there's and I think that's the thing that's fun about self storage is that there's the reasons for why. [00:10:52] SAM WILSON: And like you said, the reasons why people use storage varies no matter where we are in the cycle there's a certain. Section or a certain set of, of the population that needs storage for various reasons. So in a recession, businesses are downsizing like, okay, well now they gotta have a place to put all this extra stuff they have or, businesses are upsizing. [00:11:11] SAM WILSON: Well now we're building a new facility, we got a place to store our stuff. I mean, whatever it is. So I think that's that's really cool. What are, if you could rewind maybe, I don't know how long or when you started in real estate, but whenever it was, you started in real estate until. [00:11:22] SAM WILSON: And you could say, Hey, here's a mistake I made that. I think other people could avoid making. What would that be?  [00:11:27] ANDREW KEEL: Wow. That was a great question. I would say setting better systems earlier. In terms of hiring. Right? So when you're hiring people you don't in the moment, you're like, okay, it's like, you gotta ship and you gotta hole in it. [00:11:41] ANDREW KEEL: You're like, all right, stick a cork in it. Let's just keep moving. Right? Well, really, if you slow down, you take the time to set up a system, set up a training. You can really help yourself down the line when you need to replace that person or when you have turnover. So I would say slow down and really implement good training in the beginning instead of trying to go really fast. [00:12:02] ANDREW KEEL: That's something we've had to go back and do. And, we're able now to move so much faster when we do have turnover. Because we have good training systems in place, the new person's able to get caught up very quickly.  [00:12:13] SAM WILSON: Right. And that's I think that was something I read on a LinkedIn post yesterday was that the average entrepreneur really struggles with the documentation side of it. [00:12:23] SAM WILSON: Especially early on because it's fast. If I can just do it myself right now, but then documenting this process takes five times as long. And I don't have time for that. But then, yeah it's this you get caught there in the middle. So setting better systems when hiring now that's that's an absolutely great one. [00:12:39] SAM WILSON: I love, I certainly love that. Tell me this, you you're an Ironman triathlon runner. If I'm not mistaken, you do. That's right. How many of these you've done up up till this point? Are there correlations between what you do in business and how you run a triathlon?  [00:12:55] ANDREW KEEL: Oh, a hundred percent. I would say. [00:12:57] ANDREW KEEL: it's less about how I run a triathlon and more about the whole process. Right? The training, the discipline you know what I put in my mouth eating wise, like, the burning drive that I have to be successful. All of. It correlates to training for triathlon and competing in Ironman races. [00:13:15] ANDREW KEEL: So, I would say it, it has helped my business goals and complimented them and has kept me driven, kept me on track, kept me disciplined. When I don't wanna wake up at 5 31 day, I could I'll pay for it if I don't. Right, right. So it keeps me on. Right.  [00:13:32] SAM WILSON: Yeah, absolutely. [00:13:33] SAM WILSON: Absolutely. Yeah. In the, you said you mentioned something in there, but you said process, can you expound on that? Some.  [00:13:39] ANDREW KEEL: Yeah. Yeah. Specifically with triathlon, like for example, I just competed in Kona in the Kona, Hawaii, 70.3 race last week. Wow. And the process of preparing your bike, making sure that you have, good tubes and tires on and making sure that your batteries are charged for your, GPS and your your gear shifters. [00:13:59] ANDREW KEEL: The whole process of being organized. And like you said, setting a system in business is the same thing for triathlon. And that's not even including the training. Right? There's a coaching program. I have a coach that, that, sets up my training regimen and. Again it all correlates to my business and how I run that as  [00:14:18] SAM WILSON: well. [00:14:18] SAM WILSON: Right. No, I think that's that. That's absolutely cool. And congrats to you for finishing that that race in Kona. Was that your best time? Was that your worst time? How'd you do. , it  [00:14:29] ANDREW KEEL: was not my best time. But I did pretty well. I got 16th in my age group. There was like 84 people in my age group. I think. [00:14:36] ANDREW KEEL: So, my age group's pretty competitive. It's the like 30 to 35 range. Wow. But had a great time, was a beautiful race. Literally the swim was like swimming in an aquarium. I mean, I was seeing stingrays and, colorful fish. It was beautiful.  [00:14:48] SAM WILSON: that's absolutely awesome. I don't know. [00:14:51] SAM WILSON: Yeah. I don't know many people that get, get to say that when they run a triathlon, that it was like swimming in an aquarium. That's awesome. Andrew. What's what let's talk about? I had one question here. I forgot to ask you when it comes to mobile home community, something we're seeing right now is on the financing side of things. [00:15:06] SAM WILSON: Financing's changing lending is getting really kind of wonky out here. As lenders are trying to find their footing in the marketplace going, where are we going? Interest rate rise. What are you finding right now in lending? On mobile home communities.  [00:15:16] ANDREW KEEL: Yeah, interest rates are going up for sure. [00:15:18] ANDREW KEEL: , but there is really good options when it comes to financing, manufactured housing communities. The best debt is typically by the agency lenders, Freddie Mac and Fannie Mae Tim typical, similar to multifamily. Where, you're able to get 10 year fixed rate debt and, interest only periods. [00:15:35] ANDREW KEEL: We just locked in a really awesome refinance loan before rates started ticking up on, about seven of our mobile home parks. And, we were able to get really great. We did very low leverage. I think it was 65% LTV 10 years fixed fixed interest. And. It was full term interest only. [00:15:54] ANDREW KEEL: So, very attractive financing terms and that's through the agency lenders, your property has to meet a certain criteria. It has to be, for there's a whole list, but over 90% occupied, less than 25% park owned homes, it has to have off street parking and some other attributes that when we buy properties from mom and pop. [00:16:12] ANDREW KEEL: Typically we're getting like a regional lender to finance that. And then our whole goal is to fix these properties, to get them to qualify for the agency debt. And that is like our home run.  [00:16:22] SAM WILSON: Right. Cause then you can refinance it into agency debt. And then what's your plan, I guess what's your exit strategy on these? [00:16:27] SAM WILSON: Is this a hold in forever?  [00:16:29] ANDREW KEEL: We're buying hold. Yeah. I'm 34 years old. Wanna own these assets and fully appreciate 'em. That's what our investors are looking for as well. And it's it's been a win-win for us to be able to recapitalize the asset, pay back the initial equity and then, hold them long. [00:16:42] SAM WILSON: That's awesome. I like that in comparison to, a lot of the deals we're seeing right now that are coming across my desk are stuff like, Hey, three to five years, we're gonna sell it. We're gonna, get a two X equity, multiple and move on. I think people's appetite, at least I've found is really changing dramatically. [00:16:58] SAM WILSON: They're going okay. We really don't care about the equity, multiple of the appreciation play. We just. Want to clip the coupon. I think of the last hundred investors I've talked to in the last four months, they've probably evolved the same thing. Like we just wanna collect the cash flow. So that's very cool, Andrew, thank you for taking the time to come on the show today and really talk about mobile home communities, the opportunities you're finding there and how you're finding them. [00:17:19] SAM WILSON: I mean having five cold callers and three VAs, full-time skip tracing. That's a lot of people doing a lot of outbound lead generation. I think that's super cool. You've shared with us the way, that you prep for an Ironman and how that correlates there to your business. And then also how you're finding opportunity in self storage. [00:17:35] SAM WILSON: So you guys are doing a lot of really cool stuff. Certainly appreciate you coming on today and sharing if our listeners wanna get in touch with you or learn more about you, what is the best way to do that?  [00:17:42] ANDREW KEEL: Yeah, the best way for them to do that would be to go to keel team.com. That's just K E E L T E a m.com can fill out a contact form if you're interested in investing with us or partnering with us. [00:17:55] ANDREW KEEL: Awesome.  [00:17:55] SAM WILSON: Andrew, thank you again. Certainly appreciate it.  [00:17:58] ANDREW KEEL: Yeah. Thanks for having me, Sam.

18m
Jul 19
Vertical Integration and Scaling in Real Estate

In this episode, Kim Radaker Bays explains how to effectively manage massive business growth and expansion. Founder and Managing Principal of Exponential Property Group, Kim lead the firm to capitalize on over $1 billion of Multifamily Investments with an average IRR and equity multiple of over 30% and 2.0x, respectively. She is responsible for the strategic vision of Exponential Property Group, Exponential Property Management, and the Martha’s Ranch Foundation.   Listen in if you’re looking for expert insights on scaling and thriving in the current market!   [00:01 - 07:09] THE MARKET THEN AND NOW __ __   [07:10 - 16:15] STRATEGIES FOR A SUCCESSFUL SCALE __ __ __ __   [16:16 - 17:36] CLOSING SEGMENT __ __ __ __ __ __ TWEETABLE QUOTES   - Kim Radaker Bays   - Kim Radaker Bays   - Kim Radaker Bays -----------------------------------------------------------------------------   Connect with Kim! For investing opportunities, email invet@exppg.com, and for the supply and logistics side of the business, go to the Exist Multifamily website.   RESOURCES MENTIONED __ __ CONNECT WITH ME:   I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns.     Facebook https://www.facebook.com/HowtoscaleCRE/   LinkedIn   Like, subscribe, and leave us a review on Apple Podcasts, Spotify, Google Podcasts, or whatever platform you listen on.  Thank you for tuning in!   Email me → sam@brickeninvestmentgroup.com Want to read the full show notes of the episode? Check it out below:   [00:00:00] KIM RADAKER BAYS: You are never going to be able to make any deal work in underwriting if you assume the worst of the worst or the worst of the worst of the worst. So you're not going to hit your goals and your targets and your, you know, expected returns, if everything goes wrong, but you need to know that you're at least going to be able to float by if everything goes wrong. [00:00:17] KIM RADAKER BAYS: And what happens if half of the things go right and half of the things go wrong kind of a thing. So, you know, it's hard to underwrite it completely with everything going wrong, 'cause there, it just won't be competitive. [00:00:38] SAM WILSON: Kim Radaker Bays has completed 20 transactions with over a 2x equity multiple in the last three years. She currently leads 10 properties, totaling over 3,200 units across DFW and Houston. Kim, welcome to the show.  [00:00:52] KIM RADAKER BAYS: Thanks so much for having me on. [00:00:53] SAM WILSON: Pleasure's mine. There are three questions I ask every guest who comes in the show: in 90 seconds or less, can you tell me where did you start? Where are you now? And how did you get there?  [00:01:01] KIM RADAKER BAYS: Started with a finance degree, spent some time in the retirement plan industry working in 401ks and define benefit plans then got into some single family. And then for the past, almost 11 years now have been in multifamily. So started with the 77-unit property. And over time now between things we bought and sold about 9,500 units.  [00:01:18] SAM WILSON: Wow. That's a lot. That's a lot. 77 units now to 9,500 units in 11 years, you've seen a lot of things change. I mean, we've gone from everything was basically on sale and you could buy anything you want to now you can't hardly buy anything at all without a dog fight getting, you know, to get the deal done. Tell me about that. Tell me that story and how you guys are positioning yourself now.  [00:01:38] KIM RADAKER BAYS: Well, gosh, it sure was easy when everything was like $30,000 a door. Right. You know, now, now even the horrible, horrible stuff is a hundred thousand dollars a door. So it's a very different, very different marketplace. [00:01:50] KIM RADAKER BAYS: I suppose when I first started out, I was able to get one of, kind of the first loans that came back after the 2008, 2009 stuff. So it was in 2011. It was just when lenders were starting to actually lend on distressed properties kind of before that for a while, there was kind of no option to get loans on value add. [00:02:07] KIM RADAKER BAYS: So we, we were wondering if we were going to have to buy the first property actually for cash. And then today, fast forward, many, many years, many, many units, the lending environment has gotten a little crazy again. You know, for a very long time, it was a very close-packed groups of lenders. You know, the spreads were the same. [00:02:25] KIM RADAKER BAYS: The base rate was the same, you know, whether you wanted fixed or floating, there were, there were options for both. Now, I would say the fixed rates kind of have built in all of the potential yield curve and then some. So, you know, kind of have to almost go with floating rate at this point in time, but also the floating rate, you know, it used to be that basically everything was going to be in a narrow band, it's SOFR plus whatever, and you're going to have eight or nine loan quotes that are all going to be in that same band. And right now we've got some stuff and it varies somewhat based on leverage, but also just based on investor, on lender appetite right now. Some things are SOFR plus 250. Other things are SOFR plus 450. And so it just seems to be a little more all over the board in terms of lending terms and, and what's possible.  [00:03:09] SAM WILSON: Wow. I mean, is that just because lenders don't, they don't know, they, they don't think the market's found its footing, or what is it? [00:03:17] KIM RADAKER BAYS: I would guess it's a lot of that. I think they just kind of don't know exactly what it's going to happen, exactly where it's going to go. You know, definitely expected SOFR to increase, but for the spreads to have gone so wild over, so, I think, was a little unexpected. It's been very interesting and sort of, there's just a whole lot of uncertainty in the market right now.  [00:03:36] SAM WILSON: What have you guys done, I guess, to make it where, I mean, 'cause you got to underwrite to a certain, you know. [00:03:41] KIM RADAKER BAYS: Yeah.  [00:03:41] SAM WILSON: You got to plug a number in your underwriting spreadsheet. What are you guys doing on that front to kind of even be able to synthesize decent numbers, you know, when you're, when you're doing your underwriting?  [00:03:50] KIM RADAKER BAYS: You know, we're really kind of stress testing the whole gamut of things. What if we can get the loan for SOFR plus 300? What if it's so plus 350? What if it's SOFR four? You know, let's look at the yield curve that's going forward. How far into that can we underwrite a hundred percent of it, you know, only 50% of it? What does that look like? Make sure that kind of you're covered on the worst-case scenario, but understand sort of what that whole spectrum looks like. So you, you kind of have to rerun the numbers over and over again. Plan with it and kind of make a note of what the results are and seeing where that goes.  [00:04:23] SAM WILSON: You said that right now you almost have to go with a floating rate. What risk do you see in that?  [00:04:32] KIM RADAKER BAYS: I mean, most of the time you're going to have to buy some sort of an interest rate cap anyway. And really, I think the big thing is make sure that you're underwriting it with best and worst-case scenarios in mind. So make sure that you're underwriting it and all of those things, you are never going to be able to make any deal work in underwriting if you assume the worst of the worst or the worst of the worst of the worst.  [00:04:49] SAM WILSON: Right. [00:04:50] KIM RADAKER BAYS: So you're not going to hit your goals and your targets and your, you know, expected returns if everything goes wrong. But you need to know that you're at least going to be able to float by if everything goes wrong. And what happens if half the things go right, and half the things go wrong, kind of a thing. So, it's hard to underwrite it completely with everything going wrong 'cause there, it just won't be competitive. [00:05:12] KIM RADAKER BAYS: Although the big thing I'm seeing in today's market is that there are a lot of deals falling out. There are a lot of times that we are investing final on a project and suddenly somebody comes in and offers you. 2 million more, 3 million, more, 5 million more 'cause these are some large properties and, like, can't make the numbers work at that. [00:05:30] KIM RADAKER BAYS: It's that's too far out there. It's too risky. But a lot of times then I'm, like, don't go award it somewhere else. And so they do, but then sometimes people are getting a little bit more real as they're actually really getting lender quotes in, really seeing what's going on. And so sometimes they're walking away from deals now. [00:05:46] KIM RADAKER BAYS: And then the big thing that I'm seeing is that the brokers are coming back. They've already gone through a whole marketing process. They don't want to start from square one. Again, the sellers don't really want to start from square one again. Sometimes they've got a certain number that if we don't exceed this, we're just going to hold it. Other times they are just actually sellers. [00:06:02] KIM RADAKER BAYS: And so they're oftentimes bringing it back to just two or three groups that have toured that at least have underwritten it that are familiar with it. But that they have experience with, that they have transactional experience with that they know will close. And so there's been a lot of times that we've had at least second looks on things and sometimes, you know, sometimes it doesn't work out anyway. Sometimes it's still too expensive. The, yeah, expectations still aren't quite right. But at least really having those relationships gives you an opportunity at that last look.  [00:06:30] SAM WILSON: And that's a softening, I think, in the marketplace that we maybe weren't seeing 12 to 18 months ago.  [00:06:36] KIM RADAKER BAYS: Oh, for sure. That softening wasn't even there probably three to four months ago, but definitely has hit a bit now. I think the NOI growth from rent increases from inflationary pressures, particularly in a market like we're in Texas, I think will mitigate that over a longer term. I think the true uncertainty is probably a little bit shorter term, but I think there's going to, it's going to be a bumpy ride. And I think that really making sure that you're paying attention to the details of operating your assets is going to be hugely important in the short term. [00:07:09] SAM WILSON: Tell me about that. I mean, you guys have taken a unique angle on supplies and logistics. I mean, it's something that you told me about this off air. And I want to hear more about how you guys have solved a lot of the supply chain constraints around logistics around construction. Talk to me about that side of your business and how you have, you know, solved a problem that many people haven't.  [00:07:29] KIM RADAKER BAYS: Sure. we started out self-managing from the very beginning and still do. And so we also have a construction team that is in-house that does all of the interior renovations. We've found some fantastic GCs to work with as far as exterior, but it is just a very labor intensive piece to do the actual interiors of the units. [00:07:45] KIM RADAKER BAYS: And so we brought that in-house a long time ago. I think there's some newer players to that space that are doing things pretty well if you do want to outsource it. Haven't tried them myself personally yet, but the things that I tried years and years ago just didn't work out that well. So really bringing those things in-house. [00:08:01] KIM RADAKER BAYS: And then, we were fortunate on the second property we were buying, we knew we were going to need 200,000 square feet of flooring. So actually had a partner that was a Chinese national, went over to China with us, found sourcing for that. Over time, really built out that entire piece of the business, bringing in a lot of the renovation materials that we were going to need. [00:08:21] KIM RADAKER BAYS: And so obviously when tariffs hit, we had to realign the whole thing again and find other vendors in different areas. So we've done a lot of that. Also built a lot of domestic partnerships, distributorships for Frigidaire and GE and those kind of pieces. So it's not that we weren't without refrigerators for a little. But it was a much shorter lift thing than most people were experiencing for sure. [00:08:42] SAM WILSON: Right, right. Yeah. I think that's a business all in itself. And to build those out takes a lot of team and a lot of, I guess, planning ahead of time. I was at Reeding yesterday, there was something. But it was just talking about just entrepreneurship in general. And they said the main thing that, most entrepreneurs struggle with is documenting their processes early on 'cause they can just do it themselves faster. And then, you know, all of a sudden they're at scale mode and they go, oh my gosh, no one knows how to do what I know how to do. So how have you overcome that and scaled, I mean, you guys have a massive operation. How have you done that?  [00:09:14] KIM RADAKER BAYS: We do have a large operation. So we use EOS, which is Entrepreneurial Operating Systems based on the book Traction or Get a Grip if you like the storytelling portion of it better. So I think that's been hugely impactful. It's a good way to get information to where it needs to go to make the best decisions to really impact the business. They're obviously huge in documenting processes. I'm very, very fortunate. I've got a couple of members of my team, particularly one that is outstanding at documenting processes. So it is just sort of, even if it's totally not, her department, has nothing to do with the things that she normally touches. I'm always like, okay, teach it to Allie, get her to write it all down. She will put it with the screenshots, with the stuff and really kind of put that together and that, and that's been huge obviously as, as you grow it is hard to pull yourself out more and more.  [00:10:00] SAM WILSON: Absolutely. Absolutely. I love hearing, especially when, you know, you've gotten to a point where you guys are where you have not just built a multifamily business, but you've built a construction business. You built a logistics company. You've built a lot of different operations and they're all, you know, uniquely different. So it's one thing to build one company, but when you're building four or five, then I think it's certainly an interesting story and something we can always learn something from. Tell us, what are you guys doing right now to remain competitive? I mean, there is, like you said, we're seeing a softening in the market, but it's still a competitive marketplace out there. What are you guys doing?  [00:10:32] KIM RADAKER BAYS: I mean, I think the big thing is really sticking to our numbers. Not every deal is going to be a good deal, particularly not in the current environment. There's a lot of things that just got prices went up so fast so quickly that kind of everybody thinks everything is worth a fortune right now. So I think really paying attention to those things, digging into what it is, obviously with having our internal supply chain, with having some of the construction pieces in-house. There's a lot of savings that we're able to get from that in terms of just the general logistics, the supplies, the other pieces of that. [00:11:05] KIM RADAKER BAYS: So there's a lot of cost savings that can come just from that vertical integration piece, but also it's hugely important to just really watch the numbers, make sure that you've stress-tested your stuff. It's better to walk away from a deal than to get in a bad one. You know, it is hard to be competitive, but don't, don't get so enthralled in the thrill of the chase that you go after something you shouldn't. [00:11:26] SAM WILSON: Right, right. That is a personal flaw I'm trying to overcome as a deal junkie. It's like, oh man, it's so fun. But then you're like, no, no, no, this doesn't make any sense at all. So that's absolutely awesome. Tell me this. What's a mistake, maybe that, and I'll rewind the last 11 years, I think you said you started in 2011, is that right?  [00:11:44] KIM RADAKER BAYS: Yeah. [00:11:44] SAM WILSON: What's a mistake you've made. That you think other people could avoid making?  [00:11:50] KIM RADAKER BAYS: Well, I think one of the things is especially early on because we've been very capital gain focused and very kind of net worth building, not just for ourselves, but for our investor group is very focused on the general capital gain, much more so than cash flow. [00:12:02] KIM RADAKER BAYS: And so, we're always trying to sort of accelerate the process of get the renovation done as quickly as you can, get the rents increased. So, you know, we had one property where I probably pushed a little too fast and a little too hard. We were getting the rents for sure when we were leasing up, but kind of dropped occupancy a little more than I expected and stayed there for a little while. [00:12:22] KIM RADAKER BAYS: And we were fortunate. We were still cash flowing, even at a lower occupancy rate than I would've liked. But I think especially as the market has tightened and gone up so much, the big thing that I learned is to take it a little more gradually, even if it takes three or four years, you know, or a little bit longer to get through the project instead of, you know, two years and one month. [00:12:42] KIM RADAKER BAYS: Taking that time, you know, like I said, back then, it wasn't so much, I mean, it was, there were a few sleepless nights over it, but it was never actually a problem. But right now with where mortgage rates are and where property taxes have gone and where insurance has gone and all of those other pieces, there just isn't as much net to fall into anymore as there used to be. [00:13:04] KIM RADAKER BAYS: And so I think that's one of the things is I've taken it just a little more gradually, make sure that you kind of test it, work in steps, work in phases. Oftentimes the properties that you're able to find that are a good deal are the owners that haven't paid attention to the market at all and have cared only about as long as I'm 99% occupied that's all I care about. And so oftentimes they are three or $400 below market on some properties. And so, but you have to take that kind of in steps to make sure you don't clear everybody out all at once and end up with an occupancy issue.  [00:13:33] SAM WILSON: Right, right. Yeah. 'Cause if, if everybody's there is used to 400 bucks under market rent and suddenly you raise it, it could become a real issue. So that's really, really good advice. You know, I think a lot of people, when they look at where you are in your business, they say, gosh, I could never get there, right? 'Cause they think, man, now you got it, now Kim's got this figured out. They got this massive company, you know, they're kicking butt and taking names. [00:13:55] SAM WILSON: We can't get there. But I know that every business still has its own needs and its own things that you probably see from the inside looking out where you say, man, you know, we could improve X, Y, or Z. What are those things, if you don't mind sharing?  [00:14:06] KIM RADAKER BAYS: Some of the things I, we have been working on some software development, that's been a more challenging piece of it because neither of us are actually coders. We've hired some talent now obviously to get that done, but have tried to work through some offshore pieces and that's been a little harder it's, you know, with everything else, we are able to be like, just, just move out of the way out, install the light, picture myself, kind of a thing, or, you know, just give me the spreadsheet. It's fine.  [00:14:28] KIM RADAKER BAYS: And obviously anytime that you start expanding your business into areas, that can be hugely impactful and effective, but the skill sets that you personally have and you can't say, just get out of my way, hand it over to me, I'll fix it. That's definitely a piece. So that's we've been working really hard on trying to make sure that we find some top outside talent on the pieces that we don't know as well. [00:14:49] SAM WILSON: Gotcha. What are needs when you say software development? I'm really curious 'cause I'm, I can't think of anything off the top of my head. What's a software development need that you find that's not already in the marketplace?  [00:14:59] KIM RADAKER BAYS: A lot of it's just automating a lot of our processes in terms of the renovation piece. Some other pieces, some of the great skills that our accounting team has. There's a lot of things that we can just automate. Hey, go check and make sure all four water bills are in. Rather than having an actual person have to go look in the GL, click, and make sure all four water bills are in that number. You know, just, a lot of smaller things to just really speed up and. The more boring aspects of some of the business that are involved in really doing it right.  [00:15:31] SAM WILSON: Right, right. And those are huge things 'cause you know, suddenly you're two months later and the water company is, you know, calling you or shutting off your water and you're like, how did we miss this? [00:15:39] KIM RADAKER BAYS: Or your financials just look really screwy two months later 'cause suddenly there's one meter that didn't get put in. And so now, now you've got your books closed first, prior month and why'd you have this jump in water consumption? Well, I didn't, it's just something didn't get put in before the period got closed. [00:15:53] KIM RADAKER BAYS: It's always  [00:15:54] SAM WILSON: something it's always something. And I think, in its own right, is comforting to know that the problems never go away. They just change.  [00:16:01] KIM RADAKER BAYS: They do.  [00:16:01] SAM WILSON: You know, and obviously take on a different tone as you grow. It becomes less of like, how are we going to grow, but now how are we going to manage the growth that we have, which is a, I think a more fun place to be perhaps, but the problems never do actually go away. They just, like I said, they just changed. Kim, this has been a blast. Thank you for taking the time to come on the day, share about your business. You guys are doing awesome stuff there. If our listeners want to get in touch with you or learn more about you, what is the best way to do that?  [00:16:25] KIM RADAKER BAYS: Sure. So we have two sides to our business, supply and logistics side of the business is Exist Multifamily. So you can go to existmultifamily.com and see, 'cause we service not only our own properties but about 250 to 300 other properties in terms of those supplies and logistics, getting everything in a single kick box for your upgrades so that your guys are not spending the whole day running back and forth to the shop or running back and forth to Home Depot, even worse. [00:16:47] KIM RADAKER BAYS: And then also on the investment side, invest@exppg.com. Tell us a little bit more about our general side and even emailing invest@exppg.com, whether it's for investment purposes or other pieces. That team is fantastic at finding the right person to direct you to inside the organization.  [00:17:03] SAM WILSON: Awesome. We'll make sure we put all of that in the show notes. Kim, thank you again for coming on today. I certainly appreciate it. This was a blast. [00:17:09] KIM RADAKER BAYS: Thanks, Sam. Had a great time.   

17m
Jul 18
How Busy Doctors Can Invest in Real Estate

In today’s episode, we are joined by Harry Nima Zeggara, MD. Dr. Harry graduated from the Universidad Peruana Cayetano Heredia Facultad De Medicina Alberto Hurtado in 2003. He specializes in Critical Care Medicine, Internal Medicine, Pulmonary Critical Care, and Pulmonary Disease. Being a busy doctor it didn’t stop him from investing and pursuing a career in real estate, Now Harry and his wife are involved in commercial and multifamily apartment complexes syndications and helping other physicians invest in real estate. HIGHLIGHTS:   [00:00 - 05:43] OPENING SEGMENT __ __   [05:43 - 10:59] HOW TO INVEST IN REAL ESTATE AS A PHYSICIAN __ __   [10:59 - 16:21] HARRY'S STORY: TAKING ACTION, BUILDING A PORTFOLIO AND POSITIONING IT FOR THE FUTURE __ __   [16:22 - 16:59] CLOSING SEGMENT __ __ __     TWEETABLE QUOTES   ----------------------------------------------------------------------------- Connect with Harry Nima Zegarra by visiting their website www.nimaeuity.com You may also follow and watch their videos on youtube     CONNECT WITH ME:   Facebook https://www.facebook.com/HowtoscaleCRE/   LinkedIn   Like, subscribe, and leave us a review on Apple Podcasts, Spotify, Google Podcasts, or whatever platform you listen on. Thank you for tuning in!   Email me → sam@brickeninvestmentgroup.com Want to read the full show notes of the episode? Check it out below:   [00:00:35] SAM WILSON: Harry Nima Zegarra is a Peruvian physician, entrepreneur, and real estate investor. He helps other doctors invest passively in real estate. Harry, welcome to the  [00:00:45] HARRY NIMA ZEGARRA: show.  [00:00:47] HARRY NIMA ZEGARRA: Hey Sam. , Thank you so much for having me today in  [00:00:49] SAM WILSON: your show. Pleasure's mine, Harry. There's three questions. I ask every guest who comes in the show in 90 seconds or less. [00:00:54] SAM WILSON: Can you tell me, where did you start? Where are you now? And how did you get. .  [00:00:57] HARRY NIMA ZEGARRA: Yes, absolutely. We started about five to six years ago when we moved to Dallas Fort Worth. We have been here in the us, like for 10 years already, but we were moving every two, three years. So, we were very interested in real estate and, When we arrived to Dallas, , we decided to start investing initially in single family homes, , long term rentals. [00:01:16] HARRY NIMA ZEGARRA: And then after, a couple of years , three years or so, we were getting like already a couple of, , units under our belt and it was more and more difficult to manage. So we continue our education around that time. And, We decided to jump into, commercial real estate, which is where we are now. [00:01:31] HARRY NIMA ZEGARRA: So commercial real estate, mainly, apartment complex syndications where we, work together with other, sponsors experience and sponsors. And, we buy apartment complexes , with the help of our investors. And, , how did we get there with a lot of effort, a lot of time education. Networking. [00:01:50] HARRY NIMA ZEGARRA: And , and I always say at the end, , taking action, right? Be because all the prior ones like, are like, are important. If at the end you don't take action and you don't get anywhere  [00:01:58] SAM WILSON: at the end. Now you're a full time physician still though, right? Yes. That's correct. [00:02:03] SAM WILSON: That's correct how did you find that time to educate yourself and to then take that plunge into bigger assets? What was the. thing, when you said, Hey, I'm gonna set aside X so I can do Y tell us about that. .  [00:02:15] HARRY NIMA ZEGARRA: Yes. Yes. And, , I can tell you, I mean, it's not easy, but you just have to be intentional, right? [00:02:20] HARRY NIMA ZEGARRA: So you just have to find the time to do it. I'm a full-time physician. My wife is also a physician and she was working also full-time until just recently until November. you can imagine like both. With the full-time jobs and with two kids six and 10 years old and doing real estate at the same time, it was not easy task , but yeah, I mean, like I like, like again, we found something that we were very interested that we had a passion for it and we decided to  [00:02:46] SAM WILSON: go for it. [00:02:47] SAM WILSON: How many single family homes did you guys have before? You said, man, this just isn't working.  [00:02:51] HARRY NIMA ZEGARRA: So we have nine units in the Dallas Fort-Worth area. And which is where we live right now. So we started five years ago or so. And we started acquiring every couple of months until we reached the ninth  [00:03:02] SAM WILSON: property. [00:03:03] SAM WILSON: And what was the turning point when you said, man, I just, I can't do this. There's gotta be a better way.  [00:03:08] HARRY NIMA ZEGARRA: Yeah. Yeah. And don't get me wrong. I mean, we were doing good. I mean, I mean, actually, and that was the reason we were growing so fast and like the thing is that again, like the more single family homes or units, you have the more difficult it's to manage, even with that property manager. [00:03:22] HARRY NIMA ZEGARRA: And I was mentioned this and every single decision all the responsibilities and liabilities. Specifically on you, right? And we found ourselves like every single week, like talking with our property manager about like small and big problems that we could have in every single unit. [00:03:40] SAM WILSON: Yeah. Yeah, absolutely. So talk to us about that transition then to multi-family. How did you get involved in your first deal and what would you suggest to somebody else maybe in your same position.  [00:03:51] HARRY NIMA ZEGARRA: Yes. Yes. so We found ourself already with nine units and it was difficult to manage. [00:03:56] HARRY NIMA ZEGARRA: It was taking out like already a lot of our time. And we found ourselves that we were not able to scale that quickly. And we always hear the stories about people who invest in single family homes that at some point in their fifties or sixties, they're already with 80 units or 100 units and they don't know what to do with them. [00:04:13] HARRY NIMA ZEGARRA: and then As need, like to unload them like very quickly or like a discount. So we decided to continue our education at that point. Like again was like about four, two years ago. and start going, to, to meetups, to conferences, to to listen to audio books. So I live like about half an hour from where I work in downtown Dallas. [00:04:30] HARRY NIMA ZEGARRA: So, so that helped me like to. To listen to podcast like yours to listen to Audi books. And again I just continued that education and it brought me to multi-family apartment complexes now,  [00:04:42] SAM WILSON: apartments syndications. I know you, you said this early on was that you have found great sponsors to work alongside. [00:04:49] SAM WILSON: If somebody wanted to go out today and they said, Hey, I wanna find a good sponsor in the multi-family syndication business. I mean, there's a lot to choose from. How did you select the people that you had ultimately ended up working right alongside.  [00:05:02] HARRY NIMA ZEGARRA: Yeah. And that's very important, right? Because multifamily is a team sport, am I always say I'm part of a team that, that is doing already this And the reason is because I'm a physician, I'm a full-time physician. So I wouldn't be able to do this by myself at all. Right. Because just trying to find apartments, trying to do the underwriting, trying to acquire them, trying to manage them is more than a full-time job. Right? And there's many people doing this already many people with a lot of experience that many people who are doing this for many. [00:05:33] HARRY NIMA ZEGARRA: So I would do be doing this service to my investor or the people who are trusting me in trying just to do this myself. So I was able to partner out with different sponsors. Like initially I actually joined like a mentorship group here in like in Dallas forward. And that gave me like, again That I became very comfortable in being like in a group, like with a abandon mindset, right. [00:05:56] HARRY NIMA ZEGARRA: So, and we know each other and we know each other for some time already. And we share like our underwriting and we share our notes and all of that. So it's very important. Always like to know who you're working with to ask for references to ask for, again, like prior projects, good and bad experiences. [00:06:14] HARRY NIMA ZEGARRA: Right. Because again we will know from people like when they tell you about the great experiences and great, like the return on investment, but it's more important, like to know when they have had a problem and how they managed it. That's,  [00:06:26] SAM WILSON: that's exactly right. It remind me of us saying my dad always told us. [00:06:29] SAM WILSON: He said, it's not, if you'll have problems, it's what you do when you have 'em. So, yes. Finding out that information I think is is really helpful with your sponsor. So you found a good sponsorship group and what was it that you were able to bring to the table? That they said, Hey, here's a way that you can plug in with this Harry. [00:06:45] SAM WILSON: We'd love to have you on board. What did you bring to that general partnership that made it valuable for everyone?  [00:06:53] HARRY NIMA ZEGARRA: Yes. And this happens to, I believe to everyone who starts in real estate or specifically multifamily we, we start in the space, very excited and we think we can do everything. We want to learn everything. [00:07:04] HARRY NIMA ZEGARRA: right. And and at some point we need to be honest with ourselves, right? And we need to find. The best thing that suits us and the and the field that we are stronger at. Right. So, I'm a physician. I have a good network of of people who have seen me in real estate already for a couple of years, have family, friends colleagues people in like the medical field. [00:07:24] HARRY NIMA ZEGARRA: So, they, they were looking at me when I was doing already single family homes and long-term rentals. So when I told them like that I was switching into multi-family, they were on. And they were there to support us and the.  [00:07:36] SAM WILSON: Got it. That's that's really cool. Let's transition this conversation maybe a little bit, and we'll talk about what it's like to bring on other physicians. [00:07:44] SAM WILSON: I know you said here that there in your bio that you spend it sounds like quite a bit of time helping other physicians passively invest in real estate. What have you built either? Either? I guess, tell us your process for how you bring a physician on maybe that doesn't know anything about real estate and you educate them such that they then feel comfortable investing in real estate with you. [00:08:02] HARRY NIMA ZEGARRA: Yes. And we start from the fact that again, like you invest in what you're familiar with, right? Like in what you feel comfortable with. So most of us in the US, like in even in professions we're only familiar with stocks with the mutual funds with stock market. Right. [00:08:18] HARRY NIMA ZEGARRA: And that's the way we invest, but we don't know that there are other. Alternative ways to invest and maybe even safer, and maybe even where you have more ways like to take advantage of that. So what what is important is again many physicians like us, they. [00:08:32] HARRY NIMA ZEGARRA: They work very hard. They go through a long process of training, but at the end of their careers, they don't have enough financial education again and we try to help them and to bridge that gap, like in terms of just showing to them that the others ways to invest, right? [00:08:46] HARRY NIMA ZEGARRA: And again they don't necessarily need to invest like in syndications but again they may be like interested in being more active, again, like in single family houses, we're doing something different. It's just again, like to have the options for them. Right,  [00:08:58] SAM WILSON: right. And so how do you, I guess, how do you approach that conversation with your colleagues? [00:09:02] SAM WILSON: Is it something where they just come to you and say, Hey Harry, I hear you're investing in real estate. I'd love to learn more.  [00:09:06] HARRY NIMA ZEGARRA: Yes. Yes. They, so again, like we're working towards our financial independence and that's how we approach this conversation with many of our partners, right? [00:09:15] HARRY NIMA ZEGARRA: So you would think again, as physicians, high earners we have a very comfortable life and we get good income. However, we get taxed very high. So, so, so that's one of the problems that we all have. Right. And also we're kind of trapped like again, We depend on one stream of income. [00:09:32] HARRY NIMA ZEGARRA: Right. Which is our work. If something happens to us, we would be in, in serious trouble. So, so that's why I sometimes with we talk or discuss about these things about what would happen if something would have happened to me for example during the pandemic, right? So I would be in serious travel because I don't have any other source of income. [00:09:50] HARRY NIMA ZEGARRA: So that's, when you start thinking about that you need to start investing somewhere else other than the stock.  [00:09:56] SAM WILSON: Right. Yeah. Assets that produce an income is is something we talk about quite a bit. And I think it's even becoming more relevant, today we're working exactly on what June 14th. [00:10:06] SAM WILSON: And we've just watched here recently, the blood bath and the stock market and, oh, you know what, yes I want to buy things that, that no matter what the stock market is doing, it continues to produce an income. And I think that's. That's a really key point that I hadn't really thought about, and when it comes, for those of us who are in the business, yeah. [00:10:24] SAM WILSON: I've got multiple sources of income, but as a physician or as a high income earner, there's. There's a single new one single source, right? Yeah. Getting that diverse diverse income stream is is certainly a need that it sounds like you're solving that's really cool. I love that. [00:10:37] SAM WILSON: Tell us your story. A little bit of coming to from Peru then coming to the, becoming a doctor in the United States and then investing in real estate. Was it what was that journey like?  [00:10:47] HARRY NIMA ZEGARRA: That was, that was very interesting. so, so we came here to the states, my, my wife and I about 15 years ago. [00:10:54] HARRY NIMA ZEGARRA: So we, we both are from Peru. We both did our medic, our medical school over there. Wow. So we were actually friends for seven to eight years. Until we decided to come here to the us, we started dating and then we got married. And so we came here we did our training again, like we were in different states because of the nature of our training. [00:11:12] HARRY NIMA ZEGARRA: We were in Pennsylvania. We were in Virginia for the followship. And then we end up like in south Texas, initially in a private practice set up like for a couple of years. And after that we decided to came to to, to Dallas and finally to settle here. So we were always in interested in real estate. [00:11:29] HARRY NIMA ZEGARRA: And actually one of our first encounters with real estate was like when I was, when we were moving to, to Richmond, Virginia for my fellowship. So we, it was around 2011 and we needed like to find a place to leave. Right. And we didn't want to rent initially. So we decided to buy like a small townhouse. [00:11:46] HARRY NIMA ZEGARRA: It like, it was a short sale actually. So , and we didn't know anything about short sales in that moment. So we thought it was like actually a short process, but actually it was a long process and like a very long process. There's nothing short about a short sale. Yes. Exactly. So, and at the end of the three years, we decided to sell that property and we were very nicely, so surprised that it had appreciated. [00:12:07] HARRY NIMA ZEGARRA: Very good. And then like in, in south Texas, we we, at some point we were planning like to stay in that area. So we decided to buy a piece of land to make, to maybe to build a home there. But at the end, we changed our plants and we came to Dallas and we, when we were selling that piece of land, it also had appreciated like a good amount [00:12:25] HARRY NIMA ZEGARRA: So we were really primed, like to get started in real estate when we decided to come and settle here in  [00:12:29] SAM WILSON: Dallas. And I think that's the thing that you said early on is that for you, one of your keys has been just taking action. It's finding a way it's finding the time. It's, it is no excuses approach to getting it done. [00:12:43] SAM WILSON: Like you set your sites and then you go and do it. So I think that's a really compelling story, for a lot of people they think they feel overwhelmed, it's gosh, where do I start? How do I start? They see all the obstacles as opposed to the opportunity. And I always love the story of where people come to the United States. [00:12:58] SAM WILSON: They work hard, they figure out how to get it done. And I think that's it's always a good reminder that it's still possible even today. So that's awesome. Absolutely. Thanks for, thank you for sharing that one last question here for you before we sign off, what are some risks that you may see in multifamily or in real estate in general right now? [00:13:18] SAM WILSON: And then what are you doing to maybe position your portfolio in such a way that you maybe don't take the shock that some other people maybe some risk other people may be taking on. So you see any risks right now in the commercial real estate space?  [00:13:30] HARRY NIMA ZEGARRA: Yes. Yes. I mean, we have seen just lately, like the hike, the rates for everything, right? [00:13:35] HARRY NIMA ZEGARRA: Like for residential, but also for commercial real estate. I mean, actually it has hit more in the residential space. It's very funny that again, which means that people see more risk in the residential than in co. Commercial is more again like resistant, right? So, I mean, we see that these rates may continue to continue going higher. [00:13:54] HARRY NIMA ZEGARRA: Right? So like the thing that we need to make sure is to do a very conservative underwriting. Like again, and what means a conservative underwriting is to do what we call a stress test and putting ourself in the worst case scenario, right? Like in terms of the rates in terms of occupancy, in terms of the cup rates that until now in the last five or 10 years, they have been great. [00:14:15] HARRY NIMA ZEGARRA: And they have helped so most of us like to get great returns for our investors, but again, like we need to be more more. More into this, like analyzing all these deals now, like again that you need to look for your investors in this sense.  [00:14:29] SAM WILSON: Right, right. Yeah, absolutely. Absolutely. Do you think here's a subjective question. [00:14:35] SAM WILSON: Do you think rent rates will continue to climb? Have they reached a peak? Where are we when it comes to, and again, obviously this is very location specific, so. This is a general question, but we've seen just enormous rental growth rate in the multi-family market. Where's it going?  [00:14:53] HARRY NIMA ZEGARRA: Yes. It's very difficult to see in this moment. [00:14:55] HARRY NIMA ZEGARRA: And the thing is that again, like they have been raising with inflation too, right? And also with the salaries too, it like, in some areas there's discrepancy like, like between like where the areas, where the people is moving in and and where the people are moving out. [00:15:09] HARRY NIMA ZEGARRA: like again, we see this discrepancy and for now we're assuming that it's cont it's gonna to continue to grow, but it is very important to doing our underwriting, to not expect that explosive grow like in the next couple of years. And that's the way that you should be doing a conservative underwriting, right? [00:15:26] SAM WILSON: Yeah. I think that's key, over time, I think no matter what we will. Rents continue to climb, but I think, potentially it sounds like you, you're saying we should be underwriting little to no rent growth just to be conservative.  [00:15:37] HARRY NIMA ZEGARRA: Yes. Or like in the three to 4% at most. [00:15:40] SAM WILSON: Right, right. Very cool. Harry, thank you for taking the time to come on the show today and really just tell us your story, how you got started in real estate. What you've done to build your portfolio from single family into a large multi-family portfolio. The get it done. Um, just take action attitude and where, and how that has brought you to today. [00:15:59] SAM WILSON: So certainly appreciate it. Love your story and love your enthusiasm for real estate and what you're doing. Is there anything else you'd love to share with our listeners here before we sign off?  [00:16:07] HARRY NIMA ZEGARRA: no Sam again, thanks so much for having your show. I really appreciate this. And I re enjoy our conversation. [00:16:12] SAM WILSON: Absolutely. Harry, if our listeners wanna get in touch with you or learn more about you, what is the best way to do that?  [00:16:17] HARRY NIMA ZEGARRA: Yes, they can always reach us our website which is Nima equity.com. NEA is N as in Nancy I M A .com like we also have a Youtube channel where we have a free education about multifamily real estate investment. [00:16:31] HARRY NIMA ZEGARRA: Awesome,  [00:16:31] SAM WILSON: Harry, thank you again. Appreciate it. Have a great rest of your day.  [00:16:34] HARRY NIMA ZEGARRA: Thank you, Sam.

17m
Jul 17
Building Community in Real Estate

Positive resident experiences increase the value of the property. Here to talk about how they are uplifting communities are Ken and Rachael Wick.   Ken and Rachael, founders of Higher Point Investing, are educators turned real estate investors. Their purpose is to bring a sense of home and belongingness to their tenants and, in this episode,  they share their unique way of doing that. They also discuss the value of partnering, education, and networking, and how these helped them along the way.     [00:01 - 04:37] FROM EDUCATION TO REAL ESTATE __ __   [04:38 - 12:29] LESSONS LEARNED ALONG THE JOURNEY __ __   [12:30 - 17:45] CREATING PLACES THAT PEOPLE WANT TO LIVE IN __ __   [17:46 - 18:55] CLOSING SEGMENT __ __ __ __ __ __ TWEETABLE QUOTES   - Ken Wick   - Rachael Wick   - Ken Wick   -----------------------------------------------------------------------------   Connect with Ken and Rachael at HigherpointInvesting.com https://higherpointinvesting.com/!   RESOURCES MENTIONED __ __ CONNECT WITH ME:   I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns.     Facebook https://www.facebook.com/HowtoscaleCRE/   LinkedIn   Like, subscribe, and leave us a review on Apple Podcasts, Spotify, Google Podcasts, or whatever platform you listen on.  Thank you for tuning in!   Email me → sam@brickeninvestmentgroup.com Want to read the full show notes of the episode? Check it out below:   [00:00:00] RACHAEL WICK: So for us, I think a goal would be whoever we are partnering up with in various different properties that that would be a sole focus, not only, you know, complete the business plan, creating income for our passive investors, but also build up the residents that live there and make it a place they don't want to move out of. [00:00:30] SAM WILSON: Ken and Rachael Wick are former educators. They are co-founders of Higher Point Investing and they invest in multifamily properties in different parts of the country. They focus on acquisition and asset management and are keenly interested in giving back. Ken, Rachael, welcome to the show.  [00:00:46] RACHAEL WICK, KEN WICK: Thank you. Nice to be here.  [00:00:47] SAM WILSON: Pleasure's mine. There are three questions I ask every guest who comes to the show, either one of you can take this for us, but it goes like this: in 90 seconds or less, can you tell me, where did you start? Where are you now? And how did you get there?  [00:00:58] KEN WICK: We started 17 years ago, a small multifamily in our hometown. We started with a duplex, a triplex, a single-family home, then acquired a second single family home. We had 6 children and managed those through two educational careers and most of the last 17 years until about two and a half years ago. And then I had exited teaching in Rachael. I exited in 2019 and we decided, Hey, why not look into large multifamily? It's maybe a little bit more work, but the scalability is so much greater. So we jumped in, took an education program, had a whole bunch of people made great connections, did some investments and here we are. [00:01:37] SAM WILSON: And then here you are. That's a lot of moving pieces. So you were educators for the bulk of your career and, you know, but also had some real estate experience. And then in 2019, you had the opportunity to say, Hey, let's go long in multifamily.  [00:01:53] RACHAEL WICK: Yeah. [00:01:53] KEN WICK: Exactly.  [00:01:54] SAM WILSON: That's absolutely great. I love that. Tell me about the first deal you got done. How did you do it?  [00:01:59] RACHAEL WICK: Sure. Well, we are on our fourth deal right now. And the first three we did with partners, we're actually still partners in the fourth deal as well, but they live out in Henderson, Nevada, right next to Las Vegas, an amazing market, as you know, and they picked up, they started probably a year ahead of us, I would say. So we met them actually through our educational program and they were very like-minded in how they wanted to build community in their properties. And so we ended up partnering up with them.  [00:02:31] KEN WICK: Now, our first deal, it was a 24-unit class E rehab apartment complex about four blocks from the convention center and not the greatest neighborhood in Las Vegas, but our partners did a great job bringing us into the deal, teaching us a lot about how to go through the asset management process, taking care of the backend bookkeeping, and so forth. And as it turns out, we ended up selling a complex before, or they were even finished renovating it for a 15% profit within 15 months, I think.  [00:03:04] RACHAEL WICK: Yeah. Yep. During COVID.  [00:03:06] SAM WILSON: Oh, that's awesome. That's absolutely awesome. Cool. I love that. So tell me, tell me this. You said this is the fourth deal that you guys are doing together with your partners and is everything you're doing out in Nevada?  [00:03:18] RACHAEL WICK: No, we, so we actually live in Minnesota and we wanted to do some stuff a little closer to us. They've got their hands full with all the stuff they're asset managing out there. They've even started to get into development and affordable housing, which we love as well, but we wanted to pick up some stuff that we could asset manage back here. So we have found that the Des Moines market in Iowa is amazing. And right now we picked up a 48 about 8 or nine months ago down in Ankeny, Iowa, which is just a few miles north of Des Moines about three hours from our house. And so that has been our most recent deal.  [00:03:57] SAM WILSON: That's cool. I love that 48 units. And this is a deal you took down all by yourself?  [00:04:01] KEN WICK: We did our biggest partners came in and helped us with some of the cap and Rachael and I did the bulk of it.  [00:04:08] RACHAEL WICK: And we have other, yeah, we have a few other partners.  [00:04:11] KEN WICK: We put this indication together, did all the groundwork and we're kind of still doing all of your groundwork, that's okay. [00:04:16] RACHAEL WICK: We still have some of our hair left.  [00:04:18] KEN WICK: Yeah.  [00:04:19] SAM WILSON: Hey, now you're getting close to home. You know, I can't grow any of that. So that's, you almost hurt my feeling there. But I think this is important here to point this out because, you know, it sounds like this is the first deal that you have taken down, a larger deal where you're the lead sponsor. [00:04:37] RACHAEL WICK: Yep.  [00:04:37] SAM WILSON: What are some of the things for those that are listening that want to be in the shoe, you know, in your position? Oh gosh. I'd love to be the lead sponsor on a deal someday. 'Cause that's the name of the show is how to scale. What are some of the things you feel like that you could go back, if you could rewind 12, 16, 18 months and tell yourself what would you tell yourself to do differently or to do the same?  [00:04:57] RACHAEL WICK: Do you want to start?  [00:04:58] KEN WICK: Go ahead. I'm sure.  [00:04:59] RACHAEL WICK: The list is relatively long.  [00:05:00] KEN WICK: You can fill up the whole podcast.  [00:05:02] RACHAEL WICK: And honestly, you know, just to tell the people that are listening, you're going to, you know, always wish you did something as part of the learning process. So you'll always kind of wish you improved something. But I think probably, you know, we did a good job, I would say, with the underwriting, being very conservative on your underwriting, number one and your business plan. And then after you thought you'd been conservative, be more conservative, like to the point where the numbers barely work, and then, you know, so be realistic. [00:05:33] RACHAEL WICK: If we had to go back, I would probably do more like a 6 pref to investors because we're going through this little economic storm. Prices are going up. Labor shortages. And, you know, we choose to do class C value-adds most of the time. So I guess right off the bat, that would be something, I guess, we would also, you know, kind of think about maybe do fixed rates right off the bat, especially if you saw this coming. I mean, we have a pretty good set long loan bridge, but, you know, bridges can always be a little, in this kind of timeframe, you know, what's going on out there.  [00:06:08] SAM WILSON: Question on the fixed rate, that comment. Did you buy an interest rate cap?  [00:06:11] KEN WICK: At that time? There were really offering interest rate caps. [00:06:14] RACHAEL WICK: Well, we have.  [00:06:15] KEN WICK: For long-term debt. [00:06:16] RACHAEL WICK: We do have a fixed bridge.  [00:06:17] KEN WICK: We do have a fixed bridge.  [00:06:18] RACHAEL WICK: Yeah. It's just that it's a bridge.  [00:06:20] SAM WILSON: Right, right. [00:06:21] KEN WICK: Now you hear about that almost on a daily basis or by deal basis, you can purchase that cap. That wasn't a thing 9 months ago or 10 months ago. [00:06:30] SAM WILSON: Right, right. Yeah. Very, very interesting. And I'm, and I'm wondering, you know, on your comment there about, you know, dropping that 6 pref down, would you have dropped or, it should be, you would maybe drop it to a 6 pref. [00:06:41] RACHAEL WICK: We not like a crazy difference, but you know, we have found, we're in a group of other syndicators and, you know, just kinda listening to the very high level experienced syndicators. They pretty much all do a 6 pref because that gives you a little wiggle room for additional reserves, or additional repairs, or renovations, or additions to some new amenities in the future. So I think that would be a nice cushion to also have if, for our next one.  [00:07:10] SAM WILSON: Right, right. Just because, is there, I might be getting too personal here, but is there like something inside of you that says that, Hey, I have to pay out the 6 pref or that you feel compelled to pay the 6 pref and you know, if you don't hit it? [00:07:24] RACHAEL WICK: I think we're people pleasers. I mean, who doesn't want, you know, we want our investors to continually return. We love to see smiles instead of hesitation. So of course we want, you know, the business plan we wanted to run with no hitches, but you know. [00:07:38] KEN WICK: So a little, a little history. At first, you know, we were in Las Vegas, didn't pay anything the first year. And between that time and the time that we took on the Iowa deal, things had changed. People were giving 6 prefs, or 8 prefs. So we aim for a conservative 7 and we thought at the time we could, we could meet and it's okay.  [00:08:00] SAM WILSON: Right, right. And you had mentioned that, that you said underwriting, you would be conservative and then you'd be even more conservative. What would be a tweak you would've made on the underwriting side of things when you review this deal?  [00:08:11] RACHAEL WICK: I would just recommend to listeners that are underwriters to maybe keep in mind, now this is current, so it could definitely change with, you know, the rest of the economy, but I would say for when doing a value-add and doing most things in a, an apartment for renovating, I don't think it's crazy to put 10 to 12,000 per unit. So many times as we are learning, we are told 6,000, you can redo an entire unit for $6,000. Right now that's not... [00:08:38] KEN WICK: That's not true. [00:08:39] RACHAEL WICK: Not feasible. We got to pay higher wages. There's definitely a labor shortage. So you're kind of at the mercy of time, you don't want vacancy too long. And then of course supplies are more expensive.  [00:08:49] SAM WILSON: Right, right. Yeah. What's not more expensive? I hadn't purchased paint in years and I had to go buy two gallons of paint yesterday and it was like, it was, oh, I can't remember the, the price was up 50%. [00:09:04] RACHAEL WICK: Yes.  [00:09:05] KEN WICK: My son just bought his first house. And it's in Minneapolis. And so last weekend we were up helping him paint and he went to Sherwin Williams on our recommendation, bought the paint and I said, Hey how much did that cost you? $60 a gallon in Sherwin Williams.  [00:09:21] RACHAEL WICK: Yeah.  [00:09:22] SAM WILSON: Right, right. Yeah. Yeah, absolutely. I was picking up some paint for some contractors yesterday. They're working on a project for us and, yeah, it was just like, oh my gosh.  [00:09:31] RACHAEL WICK: And there's a shortage. So, like, sometimes you got to go with whatever's available.  [00:09:34] KEN WICK: Whatever color they have.  [00:09:35] SAM WILSON: Right, right. Yeah. Well, luckily we didn't have that problem. We still got to pick the colors that we still need.  [00:09:40] SAM WILSON: Good for  [00:09:41] RACHAEL WICK: you. [00:09:41] SAM WILSON: Yeah, absolutely. Absolutely. So, so those are some things you would do differently, but tell me about some things that you would do, you would say, Hey, these are things we really did right that I feel like other people should emulate.  [00:09:51] KEN WICK: The number one thing is get education and some kind of training from some kind of reputable entity that will take you, that will train you from start to finish on how to put the multifamily syndication if you're interested in doing multifamily syndication.  [00:10:07] RACHAEL WICK: And being an operator, I mean, you got to come in with this eyes wide open and really know it's not, you know, a simple cakewalk. There are steps that you have to continually do in your life every single day. So if you're planning on operating, know that, you know, it's pretty hard to work a full-time job and asset manage a property, which is really running a business.  [00:10:28] SAM WILSON: Right. Yeah. It absolutely is. Do you guys have a property manager in place or do you self-manage this property?  [00:10:33] KEN WICK: We do. We have a property manager in Des Moines.  [00:10:37] SAM WILSON: How did you find a good property manager for a smaller property. I mean, 48 units, it's tough to find a good PM for that.  [00:10:44] KEN WICK: That's a great question. And hit the nail on the head. Sometimes property managers don't want to take out 48 units, right? Like the bigger, the bigger size is then they can put somebody on payroll, staff on site. We just happen to meet our current property manager back in 2019 when we were doing a different property in Des Moines. And when this one came up, we, you know, we exchanged business cards back then, and this one came up, we called 'em up and said, Hey, would you like to look at this property with us? Because of that relationship, we just continue to, we hired them.  [00:11:19] RACHAEL WICK: And that's something I'd like to recommend to listeners too. Before you even find a property, if you are having a specific market that you want to stay in, go interview property managers, narrow down to who you might like, and take them from the get-go to the property for the initial tour, get that information. They're the ones that know the vendors that you're going to be using. I mean, you need those connections as soon as you close.  [00:11:43] SAM WILSON: Right. Yeah. Yeah.  [00:11:44] KEN WICK: The other thing, Sam, that I was going to mention, you asked the question, what are some things you felt you did correctly? And Rachael just touched on it. It's that connection piece, the networking piece, we had to talk to lots and lots of people, had lots of phone calls, went to a whole bunch of different conferences, landed in our Kingdom REI group, the group of Christian investors who have been just great, great contacts and great, great friends to bounce ideas off of and make connections with. So the two things in our opinion are education and networking with people and making those connections. And, and it's really, actually, it's really fun. You meet some very interesting people in different parts of the country, not focused on your own area. It's fun to talk to lots of different people.  [00:12:29] SAM WILSON: Absolutely, absolutely. Fast forward this business five years, where do you want it to be? [00:12:34] RACHAEL WICK: So far we have a focus on building community in the properties that we are a part of. So for us, I think, a goal would be whoever we are partnering up with in various different properties that that would be a sole focus, not only, you know, complete the business plan, creating income for our passive investors, but also build up the residents that live there and make it a place they don't want to move out of. And of course scale. [00:13:00] KEN WICK: Yeah, sure. Short term, we want a 200 plus units in the same market in Iowa. We started to reach out to some local people in our town her in Southern Minneapolis and we made connections with people up in the Twin Cities, Minneapolis and St. Paul, to start looking for properties and deals around here.  [00:13:19] SAM WILSON: Got it. Got it. I think that's great. I want to circle back on the comment you made of building community. What does that mean?  [00:13:26] KEN WICK: We realize and, and hopefully most listeners do, too, that people that live in these apartments are people. These are their homes. We are blessed enough to live in a house. Some people are blessed enough to live in an apartment. We want to create a community where people feel safe, comfortable, have friends in that apartment complex. And that creates what, what is known as sticky tenants. They tend to stay the more community they feel in an apartment complex. They tend to stay there. We also, because we're Christians, we also want to spread that love through the things that we do. For example, last Thanksgiving we decided, Hey, why don't we, Rachael and I just decided, why don't we go get some apple pies and pumpkin pies and knock at everybody's door and hand out, hand, 'em a pie for Thanksgiving. Just something, just a little thing to try and make them feel welcome and that they're cared for. And that's really what we mean by building a sense of community.  [00:14:18] RACHAEL WICK: We'd also like to build up enough units in one market so we could bring in a company called Apartment Life where we actually plant a couple or two people in one apartment and they are specifically there to help build community. And not only does it help with, you know, resident retention, it overall helps the NOI because it's about $2,500 on average for a turnover so people staying and enjoying the place also helps the bottom line. And then usually they'll start telling others to come and live there, so they will actually help build like a list for the property.  [00:14:54] SAM WILSON: Right. That's your cheapest form of advertising is certainly word of mouth. When you say Apartment Life, is this like a third-party organization? I've never heard of it.  [00:15:04] KEN WICK: It's apartmentlife.org. And it's an organization that, they have at least 10, between 10 and 20,000 units across the country. They operate in large markets and they do exactly what Rachael said. They plant people in apartment complexes to create community. They bring in outside resources. Let's say, there's a single mom that doesn't know how to change a tire and she needs her tire changed. Well, that couple will find somebody either within or outside the complex to come in. And help that mom out, or they sometimes offer classes and seminars on, you know, good banking practices and... [00:15:39] RACHAEL WICK: Building your credit. [00:15:40] KEN WICK: Building your credit. [00:15:41] RACHAEL WICK: They'll have events once a month to bring people together. They will... [00:15:44] KEN WICK: Like pop-ups.  [00:15:45] RACHAEL WICK: They'll be like the welcome wagon when a new tenant comes in and then they'll check with them four months before they go to leave and be like, would you like to think about staying and what do you need? You know, what are you missing, blah, blah. You know, just lots of different connections.  [00:15:58] SAM WILSON: That's really cool. I think that's a great way, a great way to build community. What, and I know you're not, you didn't come on this podcast to market Apartment Life. [00:16:07] RACHAEL WICK: We could be their cheerleader though.  [00:16:08] SAM WILSON: Yeah, I mean gosh, we're at, I don't know when this will go live, but it'll be somewhere close to 600 episodes. I've not heard anyone talk about this yet.  [00:16:16] KEN WICK: You're kidding.  [00:16:17] SAM WILSON: No, I'm not. And so this is, this is why I want kind of spend a couple of minutes here and kind of highlight this. What do you, you know, if you were to move forward, I'm sure you've done the research on this, what do you as operators have to give? I mean, do you give 'em a budget? Do you then give 'em a place to stay? Do you, what does that look like to bring these people on board?  [00:16:36] KEN WICK: So the typical complex size is 200 units or a combination of some nearby complex is a total 200 units. The owners typically allow the Apartment Life couple to do live in an apartment, either run for here at a greatly reduced rate. The apartment owners include in our marketing a budget for the things that Rachael was talking about like offering potlucks or bringing in other outside people to teach a class, that kind of thing. And they have proven, and if you go to their website, they have proven statistically that the apartment complexes that are successful doing this, it's actually increasing their NOI way past the cost of supporting a couple in one of those apartments.  [00:17:21] SAM WILSON: Right, right. Yeah. That's really, really cool. That's creative marketing. I'm going to, I'm going to call it a marketing tactic though it's more than that, so I don't want to downplay it, but it's certainly, it certainly is providing incredible value to the people who are living there. And then yet you as the building owners and landlords get to reap the benefits of providing that value. It sounds like a really cool and true win-win. This is awesome. I've loved your growth thus far, loved how you guys have taken down some larger assets, you partner with some other people, and then also use those same partners that then help you take down your first 48 unit. [00:17:57] SAM WILSON: You've given us some great things to think about on the underwriting side. Maybe even how you would adjust your preferred returns just to protect more cash in this environment. And then really talk about what success looks like for you in the future. So thank you for taking the time to come on today. Ken, Rachael, certainly appreciate it. If our listeners want to get in touch with you, what's the best way to do that?  [00:18:16] KEN WICK: higherpointinvesting.com, higherpointinvesting.com. [00:18:20] RACHAEL WICK: Yep.  [00:18:21] SAM WILSON: Fantastic. I will make sure I put that there in the notes. higherpointinvesting.com. Thank you so much. I appreciate it.  [00:18:27] RACHAEL WICK: Thank you for having us. Take care. 

18m
Jul 16
Finding Quality Investments and Providing Partners with Great Investing Experience

  In today’s episode, we are joined by Ryan Webster. Ryan is an NHBA award-winning home builder, experienced real estate professional, and entrepreneur. Ryan is the Managing Partner and the founder of Equity Yield LLC. He has over a decade of experience owning and operating a Midwest-based construction, and development company, with a wide range of project experience managing new construction, and value add multifamily projects.   HIGHLIGHTS:   [00:00 - 05:34] OPENING SEGMENT __ __   [05:35 - 11:04] RENTS STILL AFFORDABLE IN TODAY'S MARKET __ __   [11:05 - 16:21] CAPITAL RAISES $50 MILLION IN NEW FUNDING __ __   [16:22 - 17:15] CLOSING SEGMENT __ __ __ TWEETABLE QUOTES   ----------------------------------------------------------------------------- Connect with Ryan Webster by visiting their website equityyieldgroup.com CONNECT WITH ME:   Facebook https://www.facebook.com/HowtoscaleCRE/   LinkedIn   Like, subscribe, and leave us a review on Apple Podcasts, Spotify, Google Podcasts, or whatever platform you listen on. Thank you for tuning in!   Email me → sam@brickeninvestmentgroup.com Want to read the full show notes of the episode? Check it out below: [00:00:00] RYAN WEBSTER: we've got a lot of investors. And I think for them, it comes down to, am I participating in the market or am I not at this point? And we have a lot of investors looking at okay. [00:00:09] RYAN WEBSTER: What else do I do with my money? The stock market's very volatile as of late bond yields.  [00:00:15] RYAN WEBSTER: Uh  [00:00:15] RYAN WEBSTER: aren't that great. So if I am a participating investor in the market, where do I wanna be? And a lot of them still want to be in real estate. It is, a low-risk investment historically has been a great, instrument for the preservation of capital. Ryan Webster is the founder and Managing partner of the Equity Yield Group. Ryan. Welcome to the show. Hi, thanks for having me. Hey man, pleasures mine, three questions. I ask every guest who comes on the show in 90 seconds or less. Where did you start? Where are you now? And how did you get there?  [00:00:54] RYAN WEBSTER: Yeah. Absolutely. [00:00:55] RYAN WEBSTER: I've been in real estate, most of my career started in the construction development side and recently transitioned into the buy and hold side. And that kind of transition took place, motivation of kind of shifting to be able to spend more time with my family and, build a different business that was inherently more scalable. [00:01:12] SAM WILSON: When you say you recently transitioned, what is recent  [00:01:15] RYAN WEBSTER: for you? Within the last two years.  [00:01:16] SAM WILSON: Okay. All right. Fantastic. So you guys, so, but you were in, remind me again, you were in real estate before that.  [00:01:24] RYAN WEBSTER: Yeah, so I owned a construction development company prior to starting this company. So within real estate, but on the other side of it in the, build and sell model, as opposed to buy and hold. [00:01:33] RYAN WEBSTER: Got  [00:01:34] SAM WILSON: it. So do you do any more development or is everything you guys buy right now? Existing?  [00:01:38] RYAN WEBSTER: Yep. Existing stabilized assets is what we do now.  [00:01:41] SAM WILSON: That's really interesting. What were you building?  [00:01:43] RYAN WEBSTER: We did a lot of, single family homes national home builder association. [00:01:46] RYAN WEBSTER: Award-winning home builder. Did some small multi small commercial strip malls back when that was the hot thing. Standalone restaurants.  [00:01:54] SAM WILSON: Got it. Okay. That's that's really interesting. One of the things that we hear a lot on this show, especially as it pertains to multifamily. Is that the cost to build is lower than what people are getting now for used product that they have to value ahead. [00:02:08] SAM WILSON: How do you find opportunity right now in the multi-family space? I guess, especially coming from the, background as a builder, Like, how do why are you guys buying existing stock?  [00:02:19] RYAN WEBSTER: Yeah. Absolutely. There's a couple different reasons. part of it's geographically motivated. [00:02:23] RYAN WEBSTER: I live here the Midwest and in a market that has very affordable housing, so there's no real retail demand for multifamily. And as a asset class, I, I liked. The idea of multi-family. I think in, in major markets, there's always going to be demand for multi-housing. It's a very stable asset class as far as real estate goes. [00:02:41] RYAN WEBSTER: So to be able to invest in that asset class I had to be outside of. My market. And it's a little more different to, to build outside of your market. And there's a risk reward profile from, the building and development side returns are a lot higher because there's lot more execution risk of getting a thing up out of the ground, getting it stabilized. [00:02:58] RYAN WEBSTER: And the other, Obstacle on the development side is it's constant capital gains. Depending on what year you building and what year you sell in you don't have the deductions to offset the capital gains where it's stabilized assets through, cost, egg studies and accelerated D appreciation. [00:03:12] RYAN WEBSTER: You're not hit with a tax bill all the time,  [00:03:14] SAM WILSON: right? Yeah. That's the largest expense. I think most of us incur. Is that tax bill. So if we can eliminate that's certainly a helpful place to be. One of the things you and I talked about before we kicked off this episode was that you think that interest rate hikes will increase consumer demand for multifamily. [00:03:31] SAM WILSON: Can you break down your thought process behind  [00:03:33] RYAN WEBSTER: this? Yeah. Absolutely. So. Interest rates not only affect us as investors on the commercial side, but they also affect the retail consumer your what would be first time home buyers. So I think what we're going to see is a lot of first time home buyers are going to be further priced out of the market and they will stay renters longer which will put a little more demand side pressure on multi-housing. [00:03:56] RYAN WEBSTER: And if you're looking at, at least major markers across the Southeast who have seen this very high inbound net migration A lot of these people move planning to, buy a home later since there's such low inventory. But I think there's a percentage of these people. That'll now be priced out of that market. [00:04:11] SAM WILSON: How do you think that compares, especially in the Southeast where we've just seen astronomical rent growth. I mean at some point, are they also getting priced out of the renter's market as well? I mean, at this point, I don't know what an average let's use Greenville, South Carolina. I don't know what the average two bedroom rent would go for, but at the north of 13, 1400 bucks, I mean maybe even 15 or 1600 bucks. [00:04:36] SAM WILSON: So at what point in time does it, I mean, is there a tipping point there where at some point you go wait, well, now we could afford a house cuz rents at the multi-family properties are just so high. I mean, What's your crystal ball,  [00:04:46] RYAN WEBSTER: tell you, I mean, generally speaking in denser markets, it is cheaper to rent than it is to buy. [00:04:52] RYAN WEBSTER: But when we're talking about this topic of, the astronomical rent growth, and we're invested in around Tampa where it saw last year in excess of. 32% rent growth. Wow. Which is just insane compared to, historically what we're used to seeing. Right. So we've had, a number of conversations around, okay, well, where does this end? [00:05:09] RYAN WEBSTER: What's fueling it. And obviously can't go on forever. But for us, it comes down to, three factors. You have the supply and demand the demand pressure driven by, population growth, which is usually driven by jobs for the most part. Parts of Florida's also driven. [00:05:23] RYAN WEBSTER: Retirement migration. And then you have supply constraint. Are there barriers to entry of new supplies or availability of land or zoning laws? Convoluted? Is it expensive to build? And the other piece is the affordability component. This comes down to jobs and wages and the diversity of the job market in that area. [00:05:40] RYAN WEBSTER: And rents will only continue to grow so long as they're affordable. And they, we define affordable as kind of roughly 30%. Of the income is what the annual rent should be. And that's how we qualify, income for all our properties, both on new leases and renewals.  [00:05:57] SAM WILSON: What figure do you guys use when you say 30% of income? [00:06:01] SAM WILSON: I mean, you have to have an adjusted. Kind of median income for the area. Is that what you're working off of? When you say, Hey, rents are still affordable or what's, what can you give us some insight into how you calculate  [00:06:12] RYAN WEBSTER: that? It depends on where we are in the process at a first glance. We are looking at, median incomes for the census track of that area versus kind of median incomes, our medium rents of the property. [00:06:22] RYAN WEBSTER: As we get closer to bidding on our property, we'll actually look. Incomes of the tenant base at the property. We'll look at where those tenants are employed. How far is from the property, what the median income of those companies that those tenants work for. And then back into what are rents of the property what are rents of the property post value add or post stabilization? [00:06:43] RYAN WEBSTER: so we get more granular as the process goes on.  [00:06:46] SAM WILSON: Right, right. What's a high level. You said, I think maybe you did maybe answered this already, but the high level pass is just using the median income for that census tract is your just kind of initial soft  [00:06:56] RYAN WEBSTER: pass at it. Yep. And that's the kind of, okay. Are we gonna dig in or are we not gonna dig in? [00:07:00] RYAN WEBSTER: And if the census track doesn't really cover the rents at an income ratio that we like, then, we kick it out and onto the next deal.  [00:07:08] SAM WILSON: Right? Right. Tell me about fundamentals. You guys are. Fundamental investors, according to you, what does a fundamental investor, what does that mean to you and how do you guys stick to your  [00:07:20] RYAN WEBSTER: fundamentals? [00:07:21] RYAN WEBSTER: Yeah. we start. pretty wide and work our way in. So we start with the supply and demand of a market and then dig into really the supply side of the submarket or an area within the submarket. And to make sure that we're investing in a place where you have supply and demand working in your favor, that's gonna support rent growth or rent premium, post value add. [00:07:43] RYAN WEBSTER: And then we do a very detailed comp analysis, especially if we're. Value add of, okay, we're gonna reposition this property. What are, the qualitative pieces of our competitors nearby, what are tenants looking for in a place they live, other than just geography? What amenities they're looking for? [00:08:01] RYAN WEBSTER: Architecturally, what do the properties look like that are proving the premiums that we want approved and then we look at our position in the Comp. set versus where we wanna be in the comp. And we like to represent an affordable option to the tier that we're at. So we really like this, what we call a minus space. So we're in newer properties, preferably nineties to mid two thousands built for a couple reasons with my background in construction I've done a number of renovation projects and in this environment, it's very hard to accurate. [00:08:30] RYAN WEBSTER: Project how a big construction project is going to go. It's harder to get materials. Labor costs are going up, getting contracts to show up is difficult. And there's always some part of the scope of work that's a surprise. You can't see inside the walls, you can't see behind cabinets. There's gonna be something in the budget. [00:08:46] RYAN WEBSTER: That's gotta get pulled outta contingency. So the newer properties are generally well amenitized. The exteriors look good so we can come in and really focus on cosmetic interior updates. That are easy to do. It's a smaller scope and be able to prove out the same premium throwing less dollars at it. [00:09:02] RYAN WEBSTER: But the other more important piece is they're located in newer neighborhoods that come with an easier to work with tenant demographic. They're typically higher incomes, nicer communities places where people want to live and work.  [00:09:14] SAM WILSON: That makes a lot of sense. Yeah. And I love kind of the insight you gave there on the rehab risk and constraints that, a lot of people are running into. [00:09:23] SAM WILSON: Certainly. Certainly right now it is a shifting environment we're in, I mean, I'm hearing from various parts of the country. This is a daily podcast. We get talk to a lot of people and we're even here in, on, on some fronts that there's kind of a soften. Of prices in the, in, in some particular markets. [00:09:39] SAM WILSON: And there's a softening where there people are having, brokers now reach out to them with, Hey, I've got a multifamily asset for sale, would you like to put an offer in on it? Are you guys seeing that where you are and let's start with that question. I probably have several on this  [00:09:50] RYAN WEBSTER: for. [00:09:51] RYAN WEBSTER: Yeah, no, absolutely. And I think it's gonna be market by market asset by asset, but we've seen such aggressive cap rate compression over the last 24 months, that, that can't sustainably continue. And you look at rising interest rates, lowering your current cash on cash yield and lowering your leverage. [00:10:09] RYAN WEBSTER: And as far as value, add projects go, you gotta look at if. Banking on a refinance. How do you size that refinance in the future? When interest rates are going up? Because we spent an environment in the last 24 months, everything was LTV constrained and asset prices continue to go up and you could just peg, 75% LTV debt. [00:10:26] RYAN WEBSTER: But that's because. Debt was so cheap. Right. Now we're, DSCR constrained you, you don't have the income to cover the debt service anymore. So if you're trying to back into a refinance you may be looking at 50% leverage to your future value, which doesn't pencil in a lot of deals. Right?  [00:10:42] SAM WILSON: So do you guys even underwrite a  [00:10:43] RYAN WEBSTER: refinance? [00:10:44] RYAN WEBSTER: Currently we don't and we're not even doing variable rate debt anymore. We did, while debt was cheap, we bought very aggressive interest rate caps, cuz those were also cheap at the time. and are very much in the money. We just refinanced one of our properties to get into fixed rate debt sold the remaining term on our interest rate cap for about $700,000. [00:11:04] RYAN WEBSTER: Which we paid 85,000 for when we purchased it 12 months ago.  [00:11:08] SAM WILSON: I don't even understand what you just said to me. How do you sell an interest rate cap?  [00:11:12] RYAN WEBSTER: So yeah interest rate caps are they're derivative the bank, offers them as a derivative product and they agree to. Cover your debt surface coverage above a threshold that you set. [00:11:21] RYAN WEBSTER: And we bought 50 basis points caps on all our variable rate debt and sofa is now well above 50 basis points. So the value of those caps is a lot higher now.  [00:11:31] SAM WILSON: Right. And so who do you sell those to?  [00:11:33] RYAN WEBSTER: Back to the same people we bought 'em from generally you can go to Chatham financial, who brokers a lot of these deals. [00:11:39] RYAN WEBSTER: And we purchased that through them and went back to them when we refinanced it. Hey, we're going to fix rate debt. We don't need the cap anymore. Can you sell this back to the market?  [00:11:46] SAM WILSON: Wow. And so then the market said, Hey, your $85,000 interest rate cap is now worth $700,000 and you got to resell it. [00:11:54] SAM WILSON: Yep. That is fantastic. I'm sure your limited partners really enjoyed that. Tell me about that on the capital raise front. That's one of the things that a lot of people, getting started struggle with, or, have. just varying methods for how they are raising capital. What are you guys seeing on the capital raise side of things? [00:12:12] SAM WILSON: What are what's what's the investor sentiment that you feel like you're getting from from your investor  [00:12:16] RYAN WEBSTER: base? Yeah, we've got a lot of investors. And I think for them, it comes down to, am I participating in the market or am I not at this point? And we have a lot of investors looking at okay. [00:12:26] RYAN WEBSTER: What else do I do with my money? The stock market's very volatile as of late bond yields. Aren't that great. So if I am a participating investor in the market, where do I wanna be? And a lot of them still want to be in real estate. It is, a low risk investment historically has been a great, instrument for preservation of capital. [00:12:46] RYAN WEBSTER: Right.  [00:12:47] RYAN WEBSTER: Yeah. Yeah, absolutely. Absolutely. I love that. Very cool. So some of the things I hear that you guys are doing, you are not underwriting refinances. Obviously you were wise in buying your interest rate caps. When you guys closed on your deals what else are you guys doing right now to stay competitive in the market and continue to acquire assets? [00:13:06] RYAN WEBSTER: Yeah. we're not focusing so much on being competitive. Again our focus from the GetGo has been, really looking for quality investments that generate great risk adjusted returns in providing our investors, a great investor experience. So we're actively bidding. On a lot of deals a lot more than we had historically cuz there's a lot more deals on the market, a lot less of a pencil. [00:13:26] RYAN WEBSTER: Right. But lately it's been more of an exercise of bidding and staying in touch with the brokers and keeping our finger on the pulse of the market. As you see, asset revaluations in, in some of these markets and as the debt market continues to shift. But we're offering at, the price that makes sense for our business plan. [00:13:43] RYAN WEBSTER: And we've historically. Lost a lot more deals than we've won and, expect to continue that trend into the future.  [00:13:49] SAM WILSON: right, right. I love it. I love the candor there. Tell me about the investor experience. I know we talked about this early on, was that when you guys formed your company, the investor experience was part of, kind of your. [00:14:01] SAM WILSON: Framework for how you wanted to run it. What does that mean? Yeah.  [00:14:05] RYAN WEBSTER: Absolutely. Our investors, they're limited partners and they should be treated as partners. And, as, passive investors, ourselves, myself, my partner, we've had, experiences where there's, big lacks of communication between, the general partners and sponsors and the limited partner investors. [00:14:21] RYAN WEBSTER: So when we formed the company, we. We wanna form a company that not only provides great investments for investors, but a great investor experience. So we're very consistent about sending out investor communications the 15th of every month. Distributions are always on time. [00:14:35] RYAN WEBSTER: Our communications are detailed that we have a full. Financial reporting package every month as well as, tracking key performance metrics of, projections versus performance, and then just being available and responsive to investor questions. If they have a question they're able to utilize, we're getting an answer back to 'em, later that day and hopefully within the hour. [00:14:54] RYAN WEBSTER: Right? Yeah.  [00:14:55] SAM WILSON: And that's, amazing to me as well. I'm with you in that I am alluded partner. On a lot of different deals with a lot of different S around the country. And I think that's one of the things, as people grow and scale their companies, I think it's a great place to start. Maybe if you're not in, in commercial real estate right now, but you're looking to get, it's a great, if you have the capital go be a limited partner, I think you'll learn so much, much, like you're saying there, Ryan, where you get to experience other sponsors communication styles, get to see what they do. [00:15:22] SAM WILSON: You get a front row seat to the opportunities. But also at the same time, kind of learn how you wanna do it as well. And I love how you guys have implemented that there in your business and said, look, we don't love this experience. We're gonna make it the way we want it and make the investor experience amazing. [00:15:37] SAM WILSON: So, yeah, that's that's very, very cool. Are there any other thoughts you have around the economy around how you guys are structuring deals around how you guys are really where you see the multifamily business going here before we sign off? Yeah, absolutely.  [00:15:53] RYAN WEBSTER: Long term, we're pretty bullish on multi-family. [00:15:55] RYAN WEBSTER: I don't think there's any indication that demand is going to go anywhere. Structuring a capital stack that makes sense. And making sure that your debt term exceeds your business plan that you can get into fixed rate debt or the business fund requires it really makes sense of variable rate debt and have plenty of contingency there. [00:16:13] RYAN WEBSTER: But long term, I think it's going to perform people will always need housing. Right,  [00:16:18] SAM WILSON: right. Nope. I love it. I think you're absolutely right. Ryan. If our listeners wanna get in touch with you and learn more about you, what is the best way to do that?  [00:16:25] RYAN WEBSTER: Yeah, the best place is to go to our website at, equity yield group.com. [00:16:29] RYAN WEBSTER: There, you can sign up for monthly newsletter and kind of stay up to date with what we're doing and what we're seeing in the market. You can also subscribe to our investor network. You can. Some of our recorded podcast episodes like this. There's a bunch of content up there available for anybody looking to learn more about multifamily real estate investing. [00:16:46] SAM WILSON: Awesome. Ryan, thank you for your time today. Certainly appreciate it. Yeah. Thank you.  

17m
Jul 15