Podcasts about IRR

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Best podcasts about IRR

Latest podcast episodes about IRR

Pillars Of Wealth Creation
POWC #504 – The Secret to Closing Your First 350-Unit Deal with Prashant Kumar

Pillars Of Wealth Creation

Play Episode Listen Later Aug 8, 2022 47:27


Prashant Kumar had a 24-unit property and the next property he closed on was 350 units. Learn the secret to how he was able to quickly scale up in today's episode. Welcome to Pillars of Wealth Creation, where we talk about building financial freedom with a special focus in business and Real Estate. Follow along as Todd Dexheimer interviews top entrepreneurs, investors, advisers and coaches. Prashant Kumar is the founder and partner of My Realty Gains. He is an enthusiastic, passionate, and goal-oriented multifamily operator. He applies his 25+ years of experience in corporate America to analyze Income producing assets in favorable markets and looks for long term capital appreciation for his investors. His projects have produced 20+ IRR year over years for Investors so far. He runs meetups in NY and runs online masterminds with many groups. He does JV and Syndication deals. Along with Multifamily, he has a passion to purchase assisted living properties. He lives in Long Island with his wife, daughter, and son. 3 Pillars 1. Mindset 2. Hard work 3. Networking Books: The Heartfulness Way by Kamlesh Patel and Joshua Pollock You can connect with Prashant at www.myrealtygains.com or prashant@myrealtygains.com Interested in coaching? Schedule a call with Todd at www.coachwithdex.com Connect with Pillars Of Wealth Creation on Facebook: www.facebook.com/PillarsofWealthCreation/ Subscribe to our email list at www.pillarsofwealthcreation.com Subscribe to our YouTube channel: www.youtube.com/c/PillarsOfWealthCreation

How to Scale Commercial Real Estate
Commercial Real Estate Financing Solutions

How to Scale Commercial Real Estate

Play Episode Listen Later Aug 5, 2022 18:14


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 Ari talks about his humble beginnings in real estate Introducing Loanbase and the solution they offer in the space Clients can now search for loans in a very simple and seamless way Finding the best lenders by proprietary algorithms and partnering with banks  Leaning into product-led growth Focusing on making a good quality product Expanding their customer base through referrals   [07:05 - 17:11] Navigating the Current Market The impact of higher interest rates on lending Why we should expect more defaults and foreclosures This will also open up opportunities in distressed real estate  It's important to be conservative and don't optimize for profit Make sure no deals will go bad Ari lists things to consider when underwriting conservatively Being a better borrower gives access to better loans  Track record matters Establish credibility and experience    [17:12 - 18:13] Closing Segment Reach out to Ari!  Links Below Final Words Tweetable Quotes   “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… And that's the best type of marketing I think in our industry and in general.” - Ari Shpanya   “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 inventory and so on.” - Ari Shpanya   -----------------------------------------------------------------------------   Connect with Ari through 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   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. 

Investor Connect Podcast
Startup Funding Espresso -- Where Does the Angel Play?

Investor Connect Podcast

Play Episode Listen Later Aug 5, 2022 1:40


Where Does the Angel Play? Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing. So, what startups do angel investors pursue? Angel investors invest in high-growth startups, most often tech-enabled. Restaurants, retail, and service businesses are not necessarily a fit for angel investors. Angels seek a return on investment in the range of 44% IRR. While some angels are looking for home runs, most angels invest in deals that are singles and doubles for returns as they don't have the deep pockets to fund a startup all the way. Angels look for capital-efficient deals and have the opportunity to scale. Those startups with recurring revenue are preferred.  Angels invest in businesses that, for the most part, have an initial product and are going into the market. They look for companies that, for the most part, can run themselves.   Unlike the VC, which earns a paycheck through their management fee, the angel has no management fee, so all costs come out of pocket, and all time comes from the angel investor's own time. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.Let's go startup something today. ___________________________________ For more episodes from Investor Connect, please visit the site at:   Check out our other podcasts here:   For Investors check out:   For Startups check out:   For eGuides check out:   For upcoming Events, check out    For Feedback please contact info@tencapital.group    Please , share, and leave a review. Music courtesy of .

Commercial Real Estate Investing From A-Z
Pros and Cons of Investing in Car Washes

Commercial Real Estate Investing From A-Z

Play Episode Listen Later Aug 4, 2022 16:17


Why should anyone invest in car washes? What are the pros and cons? What are some ways to add value in car washes? Whitney Elkins-Hutten, Director of Investor Education at passiveinvesting.com shares her knowledge. What are some of the pros and cons of car washes that you have invested in so far? A pro would be that we are looking to buy properties from Mom and Pop owners that are already stabilized and performing, ideally they already may have several properties under management. However, because they are the operator, they haven't figured out how to scale themselves out of the business. That scaling problem is what we are looking to solve. That is also the next pro, because we are looking to build one of the only third party management companies for carwashes. We take advantage of not only operational expenses, sharing full time employees between different properties and keeping our labor expenses low. But we can also keep our chemicals and supply expenses low because we can buy in bulk. We also have a great Training Management Program. Anyone that has run a business knows that one of the hardest things to scale is your people so with this, we can actually achieve that type of scaling. Then, the ability to layer on a strong brand and duplicate that model over several other properties is of benefit. As for cons, this is a different type of investment. Investors that get into the space can be starry-eyed, they may look at the returns and think that this is easy money. They may think they can make passively 10 to 15% cash on cash 20 30% IRR on this type of investment, but it does come with its different types of risks. It has seasonality type risks, business competition and competition between competitors. There is also intra competition, which is between the assets you already currently own. You have to be partnered with an operator that knows what they are doing as far as being able to acquire the right facilities that have the right metrics layer on this type of strong marketing brand. When buying a carwash, you can't just pick a piece of land and build a carwash, it doesn't just work anywhere, you have to have eyeballs on the property. More importantly, you have to have the traffic count coming by, similar to self storage, you need the traffic count coming by, but it also needs to be able to turn in the correct direction and lead to the correct direction. Whenever you get the traffic on the property, you now need to be able to manage the traffic on the property and get a correct flow to be able to service your customers because at the end of the day, it's your customers that's going to drive your business. What are some ways to add value in car washes? One, make sure you are in a great metropolitan service area that has the demographics to be able to support a carwash. Start the due diligence while you're under contract, what is the current operator doing well? What are they not doing well? What we are seeing, especially picking up from mom and pop owners, is that their employee count is very high. Their employees are not trained, there is no strong branding on the property, they haven't moved to subscription model. Look for ways to increase your income, look for ways to decrease your expenses. Can you renegotiate vendor contracts to bring down some of your chemicals that you purchase? Can you optimize the tunnel speeds so you are not spending as much in water and electricity? Can you add an express lane to the property to add an additional tier to your subscription model and move those people that pay a higher tier through faster? Whitney Elkins-Hutten whitney@passiveinvesting.com www.passiveinvesting.com/whitney --- Support this podcast: https://anchor.fm/best-commercial-retail-real-estate-investing-advice-ever/support

The Lessons in Real Estate Show
Episode 100: Celebrating our 100th Episode with Anthony and Peggy Pinto

The Lessons in Real Estate Show

Play Episode Listen Later Aug 4, 2022 13:01


In this episode, we explore: Celebrating 100 episodes of Lessons In Real Estate Show Going on hiatus Thanking you, the learners What's next? About Anthony: Anthony Pinto is the Managing Partner of Pinto Capital Investments (PCI), a real estate investment firm focused on acquiring affordable and workforce multifamily properties and apartment buildings through syndications. Since 2019, We have gone full cycle on 2 large apartment complexes (+100 units) with IRR in excess of 85%. Today's episode is a celebration of Lessons in Real Estate Show's 100th episode. Two and a half years on the air and we still clearly remember the hours, the guests, recordings, and editing that led to today. We're also taking this opportunity to express our thank you to the learners and listeners. We also talk about what's next for the podcast and maybe some future plans. Check out this episode to learn more! Connecting with the Guest: Website: https://pintocapitalinvestments.com/ Facebook: https://www.facebook.com/pintocapitalinvestments/ Linkedin: https://www.linkedin.com/in/anthony-pinto/ #100thepisode #realestate #gratitude

Passive Income through Multifamily Real Estate
Episode #253: Navigating the Current Market Situation with Julie Anne Peterson

Passive Income through Multifamily Real Estate

Play Episode Listen Later Aug 1, 2022 31:46


If you want the inside scoop on the current market situation, you've come to the right place. Today's guest, Julie Anne Peterson is a senior director for Old Capital Lending and founder of Zoom@8, a platform connecting new and experienced investors and opening up real estate doors for people across the world! As you probably know, inflation rates and cap rates are high and rising, so in this episode, Julie offers valuable advice on how lenders and borrowers should be thinking about their investments currently, what changes to expect in the coming months, and the Old Capital Lending tool that could greatly benefit you. It's far from the doom and gloom you may be expecting, so don't miss out! Key Points From This Episode:Introducing today's guest, Julie Anne Peterson.How lenders are responding to the current market situation.What sellers need to come to terms with about the current market situation.The four different types of lending products that Old Capital Lending focuses on.Increase in the SOFR rate over the past two years.How the increased rate cap affects borrowers.What to expect from the SOFR and cap rates in the coming weeks.Words of comfort for investors who are feeling panicky about the state of the markets.What a good IRR is right now.Julie explains what a debt yield is and how it has changed over the past 20 months.The benefits of Old Capital Lending's fixed bridge product.Julie shares what motivated her to found ZOOM@8 and what the platform does.The impact that women can have in the real estate industry.Links Mentioned in Today's Episode:Julie Anne Peterson Phone Number — 630-453-7150Julie Anne Peterson on LinkedInJulie Anne Peterson on InstagramJulie Anne Peterson on YouTubeZoom@8 RegistrationZoom@8 on FacebookOld Capital LendingVertical Street VenturesPassive Income Through Multifamily Real Estate Facebook GroupPeter Pomeroy on LinkedInPeter Pomeroy Email

How to Scale Commercial Real Estate
Real Estate Investing for Cash Flow

How to Scale Commercial Real Estate

Play Episode Listen Later Aug 1, 2022 26:36


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 Get to know Kevin Running the first mobile home park-specific podcast There's a huge supply and demand imbalance in the mobile home park market Large institutions and private equity investors are pouring money into the space Finding good deals is becoming difficult for small and medium-sized investors   [04:53 - 15:11] The Opportunities in the Build-To-Rent Space Kevin emphasizes the need for focus when investing in an asset Parking and build-to-rent are similar in terms of not being too operationally-intensive  Data shows that there is a great demand for housing Kevin discusses the market in Florida and Phoenix  Build-to-rent houses have a long-term purpose Materials and build are of better quality What does urban infill mean? The importance of strategic partnerships to succeed in a location This is the fastest-growing asset class and there's a lot of institutional interest   [15:12 - 25:14] Long-Term Stable Cash Flow Why Kevin and his team are not building to sell It takes work to flip in and out of properties, not only for the company but also for the sponsors There is value in small consistent wins Kevin talks about their current parking project and its potential for cash flow   [25:15 - 26:35] Closing Segment Reach out to Kevin!  Links Below Final Words Tweetable Quotes   “I think that you lose focus and you dilute your strength in any particular asset class when you're getting pulled in a million different directions.” - Kevin Bupp   “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.” - Kevin Bupp   “Knowledge is one thing, but having those strategic relationships are necessary, not even just with brokers, but also the municipality, the planning, zoning boards.” - Kevin Bupp   -----------------------------------------------------------------------------   Connect with Kevin! Find out investment opportunities with Sunrise Capital on their website. Head over to KevinBupp.com to know more about Kevin and his Real Estate Investing for Cash Flow 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   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. 

Crime, Wine & Chaos
Episode 94 - The Murder of Erin Corwin & Duncan Alexander Burrell Gordon

Crime, Wine & Chaos

Play Episode Listen Later Aug 1, 2022 67:40


In this episode, Amber covers the murder of Erin Corwin. Erin was a 19-year old military wife. After suffering a miscarriage she leaned on friend, Christopher Brandon Lee. The friendship turned into an affair and Erin became pregnant again, this time with Chris's baby. In June of 2014, Erin headed out to Joshua Tree National Park to meet Chris for what she thought was a marriage proposal, but Erin was never seen alive again. Sources: The Press Enterprise “Ex-Marine Gets Life In Prison For Killing Erin Corwin”  / Joe Nelson / November 30, 2016www.dailymail.co.uk / Lauren Fruen / April 3, 2019www.abc7.com  /“Former Marine Sentenced To Life in 2014 Murder Of Pregnant Lover” / Rob McMillan / November 29, 2016www.people.com / Chris Harris / November 3, 2016www.oxygen.com / Brittany DuBois / July 26, 2019www.oxygen.com / Jill Sederstrom / November 17, 2021www.allthatsinteresting.com / “Inside The Chilling Murder Of Pregnant 19-Year Old Erin Corwin” / Bernadette Giacomazzo / June 26, 202248 Hours NCIS: The Marine's Wife We got to record in person this week, so that also meant we shared wine.  We drank 'atuar' Branco - Vinho Regional Minho and a Chardonnay from Brindlebridge.  Both were very refreshing which helped since we were melting. So DAMN HOT!!!!!!!!Then Erika covers the story of Duncan Alexander "Alex" Burrell Gordon.  Duncan who went by Alex, had just graduated from high school and was just 20 years old, when he mysteriously disappeared.  Alex worked at the Industrial Recovery and Recycling Plant (IRR) in Greer, South Carolina with his father Michael and 2 of his older brothers.  Alex and his father were inseparable and spent every moment together.  That is until May 4th, when Alex went missing while working on the shredder at IRR. Sources:www.wspa.com / What happened to Duncan Alexander Burrell Gordon? / Scott Den Herder / July 21, 2022www.goupstate.com / OSHA, Spartanburg County Sheriff's Office investigate death of Greer man at recycling plant / Chalmers Rogland & Bob Montgomery / Herald-Journal / July 7, 2022www.the-sun.com / BLOODY SCENE Major update in mystery of man missing since May after human skin and bone found under a SHREDDER at his workplace / Danielle Cinone / July 7, 2022www.nbcnews.com / Missing man fell into shredder at South Carolina recycling plant, coroner finds the remains of Duncan Alexander Burrell Gordon, who was reported missing in May, were found under a conveyor belt at Industrial Recycling and Recovery, Inc. / Associated Press / July 8, 2022www.wyff4.com / Human remains found under machine where missing SC man was last seen, coroner says Duncan Alexander Burrell Gordon was last seen in May / Stephanie Moore / July 7, 2022

How to Scale Commercial Real Estate
Getting Started with Smaller Deals to Gain Traction

How to Scale Commercial Real Estate

Play Episode Listen Later Jul 31, 2022 21:47


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 Glenn Hansen is an entrepreneur and started and funded 25 companies from plastics, and manufacturing to aerospace, FinTech banking, medical, and real estate. Glen says that the key to success as an entrepreneur is to focus on a solution and not get angry or vengeance in litigation. Glen's real estate company has scaled to 1.4 billion in assets under management.   [07:51 - 15:26] How to Avoid Litigation When Scaling Your Business Glenn shares that Stephen Covey's book, "Seven Habits of Highly Effective People," was a key inspiration for starting his own business. He ran his company using the seven habits of highly affected people and provided training to all of his direct reports. He says that litigation is not worth the time, money, or emotional stress and recommends avoiding it by being prepared to just write a check.  He transitioned his business from an LP fund to a GP fund and raised 20 million dollars in the process. They own all the assets of their GP fund and use it to acquire deals"   [15:30- 20:06] Tips in selecting your partners.  Glenn shares that it is important to carefully pick who you want to be a partner  He adds to take note of contracts made sometimes there are trip levers where they only have the opportunity for them And as we scale there are always people trying to take advantage of the newbies coming in.   [20:06 - 21:46] Closing Segment Reach out to Glenn Hanson Links Below Final Words   Resource Mentioned:    Stephen R. Covey - The 7 Habits of Highly Effective People   Tweetable Quotes “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. So we approached it from the standpoint of litigation, but we don't do it with vengeance or with anger. We just do it as a tool to get to a solution” - Glenn Hanson   ---------------------------------------------------------------------------- Connect with Glenn Hanson visit their website at www.colonyhillscapital.com       Connect with me:   Facebook   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.

How to Scale Commercial Real Estate
Building and Protecting Wealth Through Income-Producing Assets

How to Scale Commercial Real Estate

Play Episode Listen Later Jul 30, 2022 19:16


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 Jack on starting as an entrepreneur in his dorm room to launching four companies His focus is to help business owners create multiple streams of income to protect their lifestyle  Investing in cash-flowing assets is key  Why Jack diversified into self-storage and short-term rentals He shares the pivotal moment that motivated him to get into real estate   [09:07 - 14:59] Finding the Best Business Partner To Jack, partnerships have never been a problem How Jack decided on the person he was going to partner with  Partnerships will work as long as you share the same values  Forming a great team is essential to scale   [15:00 - 17:47] Managing Risk in the Current Market How Jack and his team are preparing for a recession Why he thinks it's still a good time to buy real estate   [17:48 - 19:15] Closing Segment Reach out to Jack!  Links Below Final Words Tweetable Quotes   “I'm never leaving real estate. It's just an incredible asset class, all the advantages. To me, it far outweighs anything else you can do in any other markets.” - Jack Gibson   “80% of your total investible dollars should be into cash flow producing assets, such as real estate.” - Jack Gibson   “If you're solo, I just see how you scale. You need to have a team.” - Jack Gibson   “Over the course of time, your true colors come out. Those values come out through your words and your actions.” - 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   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.

BizNews Radio
A-Plus Show - Ep 13 - CR's sweeping power reforms, 2024 coalition prospects, informal economy booms

BizNews Radio

Play Episode Listen Later Jul 28, 2022 34:09


BizNews A-Plus Show duo Alec Hogg and Michael Appel are back with episode 13 of their weekly round-up of business, investments, news and politics banter you need to know. In focus this episode: President Ramaphosa this week announced sweeping reforms to SA's energy sector; the former CEO of the IRR, Dr Frans Cronje, reflects positively on SA's future national coalition prospects come 2024; political analyst Dr Ralph Mathekga on what we should take out of the ANC's KZN conference and informal economy specialist GG Alcock on why SA's unemployment rate is far lower than the official numbers suggest. And Capital Energy Resources' Enrico Ganter discusses the potential unintended consequences of SA deregulating 93 octane petrol. Learn more about your ad choices. Visit megaphone.fm/adchoices

BizNews Radio
Dr Frans Cronje: SA economy on brink of post-ANC rejuvenation, 'was optimistic a year ago, am very optimistic now.'

BizNews Radio

Play Episode Listen Later Jul 27, 2022 28:15


For over a decade, Dr Frans Cronje was SA's party pooper. The former CEO of the IRR was perceived as an arch pessimist, a man guaranteed to prick bubbles of optimism before they could inflate. He regarded himself merely as a realist, sharing the harsh truth because anything else would have been dishonest. Cronje's prescience when the country has sliding into its darkest period adds considerable weight to the credibility of his forecast of a political transformation that is set to unleash SA's undeniable potential. In this fascinating podcast, Cronje explains to Alec Hogg of Biznews how he reached his phoenix rising conclusions. Shaped by deep polling of ANC voters, a bloc now busy divorcing itself from a party it regards as useless, incompetent and corrupt. The future, he predicts, will be governance by a German or Israeli-type coalition - a unique situation for a nation which for 400 years has been subjected to a dominant, often abusive ruler. Learn more about your ad choices. Visit megaphone.fm/adchoices

2 Crickets In A Thorn Tree
Zuma's 2 steps to freedom

2 Crickets In A Thorn Tree

Play Episode Listen Later Jul 26, 2022 79:05


Gabriel and Nick chat about the IRR's legal arguments for why Jacob Zuma should not have been released from jail at the direction of Arthur Fraser and what Zuma can do to turn around his reputation and the country. Recommendations: Nick: Heilung https://www.youtube.com/watch?v=SVbc_Fwbt50 Gabriel: Sibelius Theme and Variations for Solo Cello (1887) https://music.youtube.com/watch?v=tJ-BIEutAWc&feature=share

Two Smart Assets
How to Successfully Start a New Real Estate Business with Kim Bays

Two Smart Assets

Play Episode Listen Later Jul 23, 2022 24:33


Join Daniel Nickles with his guest Kim Bays, the founder of Exponential Property Group, as she breaks down how you can make serial entrepreneurship happen. Setting up a business for success is one thing, but having multiple of those under your belt is another. Here, Kim explains why Exponential Property Group focuses on Texas, her take on creating successful businesses as a skill, how she approaches hiring top talents, and why the multifamily space is your safe place during economic uncertainty.  In this episode you will learn:  The State of Texas – the greatest country ever  What it takes to be a successful serial entrepreneur  How to put the right people on the right seats  Kim Bays on being vertically integrated  There will be a continued reshuffling of where the economy is benefiting and where it isn't  About Kim Bays:  Kimberly Radaker Bays is the Founder and Managing Principal of Exponential Property Group. Under her leadership, the firm has capitalized over 1 billion in 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.    Prior to starting Exponential Property Group, she spent many years managing all aspects of a single-family rental portfolio for her family's business which ignited her passion for real estate. Preceding the launch of her real estate career, Kim spent over a decade designing and administering qualified retirement plans.    Kim holds her Bachelors of Business Administration with an emphasis in Finance from the University of Iowa. She is a Certified Apartment Portfolio Supervisor and is a member of the Dallas Business Journal Leadership Trust. She is a frequent speaker at various Multifamily Investor Conferences, has been a guest speaker on numerous podcasts, and is highly focused on giving back to the community.     With any free time she has, she spends time with her husband, Matt, twin sons, James and Nathan, and step-son Jett. She is passionate about supporting the broader autistic community via the Martha's Ranch Foundation, a 501c3 she created to provide a source of fun and support tailored for families with autistic children.    Connect with Kim Bays on:  Website: https://exponentialpropertygroup.com/    Connect with Two Smart Assets on:  Website: https://twosmartassets.com/  Facebook: https://www.facebook.com/TwoSmartAssets/  Instagram: https://www.instagram.com/twosmartassets/  YouTube: https://www.youtube.com/channel/UC5b8x2o3ByaPBcz5Lkev7uw   

Real Estate Asset Management Podcast
Episode #111: Mitigating Rising Expenses with Darin Garman

Real Estate Asset Management Podcast

Play Episode Listen Later Jul 22, 2022 20:46


Welcome to the Real Estate Asset Management Podcast! Today, we are joined by author, investor, property owner, and commercial real estate coach, Darin Garman! To start off this episode, we hear Darin's story of coming from nothing (neither money nor experience) to building a company that mitigates the stress of its clients, all while being in the process of raising its deductibles and ensuring blanket coverages. Darin gives us advice on property cost surges and the main reasons for the property cost increase: property tax, property-casualty insurance, and cost of labor. Plus, we learn about why you should not chase the IRR, how to combat and understand the increase in inflation rates, and his take on how to deal with expenses outpacing income. With over 30 years of experience and 5 books under his belt, Darin's advice is not to be missed!Key Points From This Episode:A welcome to today's guest, Darin Garman! Darin's background of starting out with nothing.A look at the motivation behind Darin's books.Chatting about property cost surges, relating specifically to the inflation rate increase.Three main areas of property cost increase:One: property tax.Two: property-casualty insurance (14% to 16% per multifamily community).Three: cost of labor.How Darin's company is raising their deductibles, ensuring blanket coverage, and coverage for roofs.Darin's thoughts and concerns on expenses outpacing income.Why you should not chase the IRR.The mitigated stress of working with an experienced operator.Darin's asset management superpower.Links Mentioned in Today's Episode:Darin GarmanDarin Garman on TwitterDarin Garman on LinkedInDarin Garman on FacebookDarin Garman on YouTubeAsset Management Mastery Facebook GroupBreak of Day CapitalBreak of Day Capital InstagramBreak of Day Capital YoutubeGary Lipsky on LinkedInGarzella Group

The Rational Reminder Podcast
Prof. Ludovic Phalippou: Private Equity, Under the Hood (EP.210)

The Rational Reminder Podcast

Play Episode Listen Later Jul 21, 2022 56:26


If you have any interest in private equity or have thought about it as an asset class, then this episode is for you! What is private equity? This might seem a simple question but the answer is more complex than you think. Private equity is a nuanced subject that requires a deep understanding to make successful investments. To help unpack this non-trivial subject is expert Ludovic Phalippou, a Professor of Financial Economics at the University of Oxford Saïd Business School. Although he studied economics in general, his research mainly focuses on unravelling the complexities of private equity. He has written many papers on the topic, including a book called Private Equity Laid Bare. He has a Masters in Economics and a Masters in Mathematical Finance from the University of Southern California and a Ph.D. in Finance from INSEAD, making him well versed in the subject. Besides his impressive qualifications and experience, his insight and ability to speak to the data make him stand out from other experts. In our conversation, we get into the basics of private equity and what makes it attractive to investors. During our conversation we discuss the challenges for measuring performance, how to best measure the performance of private equity funds, the different facets associated with private equity, how to tell if certain private equities are a good investment, and the differences between private and public equity. We also hear how it is applied as he walks us through some real-world scenarios and gives us some insider knowledge on the best private equity options. As you will hear from our conversation, there is no easy answer!   Key Points From This Episode:   We learn what asset classes are included in the broad term of private equity. [0:03:39] The end-to-end process for investing in a typical private equity fund. [0:06:49] The challenges with measuring the performance of private equity managers. [0:09:48] How investments that have not yet been sold are treated when a manager is reporting on their performance. [0:12:48] Professor Phalippou explains how well the IRR captures the economic results delivered by a fund. [0:14:04] Whether there are alternative approaches to evaluating performance. [0:17:52] A discussion about the typical characteristics of a buyout fund. [0:19:35] The best approach for evaluating your private equity. [0:21:24] Find out if a public equity benchmark has to be adjusted for leverage, regarding buyouts. [0:24:26] We learn about the fees that private equity limited partners typically pay. [0:26:34] Outline of the less obvious fees that limited partners might be paying. [0:28:11] Whether an investor paying carry is a sign that the investment has done well. [0:31:07] Comparison of private equity performance relative to public equities. [0:32:31] What number Professor Phalippou would assign on an expected return to private equity, as an asset class. [0:38:46] How successful investing in private equity has been for institutional investors. [0:39:32] The performance of Blackstone and KKR is discussed relative to an average private equity fund. [0:42:11] We get details about the Yale situation and how it manifested. [0:44:24] Reasons why private equity is regarded as the best performing asset class for institutions. [0:45:32] Professor Phalippou tells us if he thinks private equity offers diversification benefits to a public equity portfolio. [0:46:01] He discusses a recent case study regarding Hilton. [0:47:11] Why he thinks sophisticated investors are allocating funds to private equity. [0:48:14] Professor Phalippou shares how to be successful when investing in private equity. [0:50:00] Whether the returns of private equity can be replicated in public equity. [0:53:09] How Professor Phalippou defines success. [0:55:18] We end the show by finding out if the value premium is risk-based or behaviour-based. [0:55:35]

#plugintodevin - Your Mark on the World with Devin Thorpe
Investment Crowdfunding Allows Impact Investing So Easy a Child Can Understand

#plugintodevin - Your Mark on the World with Devin Thorpe

Play Episode Listen Later Jul 21, 2022 31:24


Devin: What do you see as your superpower?Will: Great question. Superpower? I think it’s the ability to have empathy with others.William McGuire is the founder and CEO of Incolo, a venture accelerator designed to help entrepreneurs find capital right in their backyard, often via investment crowdfunding. He envisions a world where everyone in the community is invested in its businesses, thereby participating in the upside collectively.So Easy a Child Can UnderstandAn intriguing part of our conversation revolved around helping ordinary people understand and value the opportunity to invest in local businesses. To prove that even kids can understand the basics of investing via crowdfunding, Incolo hosted some sessions with “little investors,” some not having even celebrated two-digit birthdays.Will says, “We just want to see how our kids interact.”After identifying several companies that would naturally appeal to children, including an app, a film and other opportunities, they held the session with a handful of children. This list also included some boring fare, like an assisted living project.“We asked all the kids, ‘What’s interesting to you?’”The response of a ten-year-old was notable.“That company was cool, and the film company was cool, but Livewell Assisted Living was my favorite offering.” She added, “They were my favorite because the way the business owners talk about the business, I felt like they were going to take care of grandma. And grandma is aging.”Investing in private companies via crowdfunding is risky. I’m not writing this as investment advice. Will was careful to say he’s not offering investment advice. Investing with the crowd, however, provides an opportunity to share the burden of due diligence and to take investment risk in small bites.“Most of the companies in this [startup/small business] world, especially private market, are going to fail,” Will says, noting that he and his wife have invested in 80 businesses, “the same thing that an angel or VC would do.”Because most will fail to provide a good financial return, if you invest in only a few, statistically speaking, you are most likely to lose money. Because one in a bunch will increase in value dramatically, a rare winner can offset losses in your portfolio—meaning that you need a diverse portfolio.For Will, the primary goal isn’t the financial return on investment but the community benefit. “To us, it’s more of the intention of how things are built than any type of financial IRR that can be attached to it. It’s more like ROX, where X is defined as impact.”He says, “I’m always asking people, ‘What’s your X? Is it the amount of lives saved? Is it money returned and reinvested? Is it the number of people you touch? Is the amount that can go back?”“It all has to be defined around the X for the individual with some intentionality around it,” Will says.Will will conduct a special session at SuperCrowd22 for founders. If you're a founder who wants to learn how to build a successful investment crowdfunding campaign, Incolo's team will be helping founders prepare campaigns as an optional part of SuperCrowd22. Registered conference participants are eligible for this free support.The Incolo Accelerator“What Incolo is doing is we’re fixing capitalism for communities,” Will says, describing the venture accelerator he founded.“Incolo works with business owners and founders that are building [local] businesses and shows them and gives them the optionality to raise from their local community, from everyday people, their customers and their fans right alongside their more traditional forms of capital,” Will says of the four-month program.The program includes a deep dive on corporate governance. “We call it founder protection.”Will works with entrepreneurs to find the optimal sources of funding. Depending on the business, he may pair crowdfunding with traditional sources. Some founders complete the program determined not to raise capital but merely to grow revenue and profits to self-fund.For the founder, Will points out that a $1,000 check-writer may be worth much more than their individual check. Those small check investors may have connections worth millions to the business.“Overall, what the accelerator is aiming to do is to give founders the optionality to go after it and then grab the bull by the horns and pour some gas on the fire and run with it if they’re ready to go,” Will says.Will says, “One of the first things I ask founders is, ‘Do your customers love what you do?’” If the answer is yes, he says, “There’s potentially a likelihood that some of them would probably already invest.”Before launching a crowdfunding campaign, he checks a second box. “Do they have their sales and marketing processes right lined up?” That critical business function is vital for fundraising in a crowdfunding campaign. If that team is ready to sell a product, it can be leveraged to market the offering—carefully, in strict accordance with the regulations.In all his work, Will leverages empathy as a superpower.How to Develop Empathy As a SuperpowerWill dates his lesson in empathy to adolescence. “When I was 14, I found out that I needed this thing called a cardiac pacemaker because my heart was damaged, or the sinus node that controls the beating of the heart was damaged.”“Everything kind of points back to that being a pivotal moment in my life,” he says. “I realized there are some greater purposes in life that I was supposed to be filling.”For Will, empathy is both a deeply held value and a practical tool. He wields it in the accelerator to help founders get on the right path for them.With friends, he’ll ask, “What really drives you?”In the context of the accelerator, Will also goes deep. “One of my first questions to founders is, “‘Where do you see yourself in 15 years?’”“The way the person sees the world in 15 years, I often find, is a reflection of where they are on that journey.,” he says. “That [vision] becomes the foundational aspect of everything that they do from this point moving forward.”“That, I think, is the key to tapping into people’s calling and then being authentic with it,” Will says. “But it’s not something that can be shoved on somebody. It’s something they have to self-discover along the way.”If you follow Will’s example and advice, you can make empathy a superpower that enables you to do more good. Get full access to Superpowers for Good at devinthorpe.substack.com/subscribe

How Did They Do It? Real Estate
SA482 | Reward Yourself Freedom and Options by Investing Passively in Syndication with Prashant Kumar

How Did They Do It? Real Estate

Play Episode Listen Later Jul 21, 2022 30:23


There are many possibilities in passive investing, but the real question is whether you're willing to seize them. So in today's show, Prashant Kumar delves into passive real estate and all you can achieve with it. Learn the differences between owning and renting single-family homes and investing in a multifamily dwelling, syndication benefits, and recession-proof investing. Key Takeaways to Listen forSingle-family vs. multifamily in terms of operational process and procedureHow to scale up from residential space to larger syndicationChanges that real estate investing can make for your freedom from different aspectsInsights on where the real estate market is heading in a probable recessionWhy you should surround yourself with the right people in real estateResources Mentioned in This EpisodeSchedule Appointment - My Realty Gains7 Day Email CourseFree Apartment Syndication Due Diligence Checklist for Passive Investor About Prashant KumarPrashant Kumar, CCIM is an Enthusiastic, Passionate, and Goal-Oriented Multifamily Operator. He applies his 25+ years of experience in corporate America to analyze Income producing assets in favorable markets and looks for long-term capital appreciation for his investors. His projects have produced 20+ IRR years over year for Investors so far. He runs meetups in NY and runs online masterminds with many groups. He does JV and Syndication deals. Along with Multifamily, he has a passion to purchase Assisted Living Properties. He lives in Long Island with his wife, daughter, and son.Connect with PrashantWebsite: Multifamily Realty Gains | My Realty Gains | Personal Loving CareLinkedIn: Prashant KumarFacebook: Prashant KumarTo Connect With UsPlease visit our website: www.bonavestcapital.com and please click here, to leave a rating and review!SponsorsGrow Your Show, LLCThinking About Creating and Growing Your Own Podcast But Not Sure Where To Start?Visit GrowYourShow.com and Schedule a call with Adam A. Adams.

Investor Connect Podcast
Startup Funding Espresso -- Early Exit Deal Structure

Investor Connect Podcast

Play Episode Listen Later Jul 21, 2022 1:48


Startup Boards -- Early Exit Deal Structure Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing. Investing in startups is risky. One way to reduce the risk is to define the exit.  TEN Capital's Early Exit term sheet is a convertible note with a 3X in 3-year redemption right at ‘investor sole discretion' to provide the investor an option for an early exit.  The investor receives 3 times their investment 3 years from the date of investment.   So, $100K in yields $300K out. A 3X return in year three from the initial investment yields an IRR of 44%.    ‘Investor sole discretion' means each investor makes their own choice about continuing in the investment or not at year 3. If the investor takes the early exit, then a payment plan is worked out. There are several benefits, such as: Let's you define the exit for your investment since most startups raising equity funding cannot  Provides the option of short-term exit or long-term equity investment Gives the startup the opportunity to prove itself, and then the investor chooses between holding a short or long-term investment. Easier to implement than revenue-based funding   Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.Let's go startup something today. ____________________________________ For more episodes from Investor Connect, please visit the site at:   Check out our other podcasts here:   For Investors check out:   For Startups check out:   For eGuides check out:   For upcoming Events, check out    For Feedback please contact info@tencapital.group    Please , share, and leave a review. Music courtesy of .

How to Scale Commercial Real Estate
Vertical Integration and Scaling in Real Estate

How to Scale Commercial Real Estate

Play Episode Listen Later Jul 18, 2022 17:36


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 Kim  on how she got into multifamily From 77 units to 9,500 units Her take on the current lending environment How they are underwriting amid the uncertainty Looking at the best and worst-case scenarios Is there a softening in the market?   [07:10 - 16:15] Strategies for a Successful Scale Creating solutions for supply and logistics In-house services and domestic partnerships Why it's important to document processes Staying competitive by sticking to the numbers There is value in taking things more gradually What Kim is looking to improve in her business   [16:16 - 17:36] Closing Segment Reach out to Kim!  Links Below Final Words Tweetable Quotes   “Make sure that you're underwriting it with best and worst case scenarios in mind. 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.” - Kim Radaker Bays   “I think 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.” - Kim Radaker Bays   “ It's better to walk away from a deal than to get in a bad one.” - 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 Traction by Gino Wickman Get a Grip by Gino Wickman and Mike Paton Connect with me:   I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns.     Facebook   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.   

TacSho
TacSho Summer Session 1.0 (IRR 11.0)

TacSho

Play Episode Listen Later Jul 17, 2022


The boys are BACK! IRR 11 is recapped, trucks get fixed, sheriff's get high fives, there is a big ass tree, asparagus I aspara-guess, F1 takes, zippers, Idaho is hot right now, and a whole lot more. Remember us, we are delightful!

The Real Estate Syndication Show
WS1365: Passive Investing 101 | #Highlights

The Real Estate Syndication Show

Play Episode Listen Later Jul 17, 2022 19:42


If you want to grow your wealth, you need to learn how you can make your money works for you and that's what we call earning passive income. And to start, you need to know how to successfully do passive investing. Today, we feature once again our conversations with successful real estate entrepreneurs Brian Robbins and James Kandasamy who talk about the art of passive investing.Brian recounts his journey from being in the healthcare industry to transitioning to real estate. Meanwhile, shares the numerous things that the passive investor needs to know, including considering cash flow versus back-end profits and calculating IRR. Listen now and learn how you can start earning passive income today!

Creating Wealth through Passive Apartment Investing
EP#259 Multifamily is a full time job with Sam Bates

Creating Wealth through Passive Apartment Investing

Play Episode Listen Later Jul 15, 2022 22:03


Today, I sit down with Sam Bates, the Principal & Board of Director at Systematic Capital Group. Sam started his real estate journey in 2009 and has been directly involved in the acquisition or development, repositioning, disposition, asset management, and strategic planning of over $200M in AUM. His portfolio currently has 1,035 multifamily units in Texas and the South East. They have 1,100 units in the development pipeline.Mr. Bates and his team have provided an average IRR of 61% on all deals that have gone full cycle. The market cannot provide this and someone would be hard-pressed to find another real estate investor to provide these types of returns to their clients.Sam spent over a decade in Corporate America working in various consulting, finance, and accounting positions. He quickly realized a W-2 job was not going to satisfy his desire to help people improve their lives. Once Sam started investing in real estate, he quickly realized how powerful real estate is and decided this was how he wanted to help others meet their goals and create generation wealth to leave their legacy.Episode Spotlights- Upside to transitioning from Corporate America- Working on state & local taxes from a business & personal property standpoint- Multifamily has gained insignificant popularity- Supply chain issues - Choosing a property management team for yourselfBook Recommendation: Who Not HowConnect with Sam - Email: sam@systematiccap.comsam@batescapitalgroup.com Grab your freebie - Tips for Multifamily Investing at www.ushacapital.comFound this episode insightful? Show us some love by spreading the word on social media or  rating and reviewing the show here - https://podcasts.apple.com/us/podcast/multifamily-ap360/id1522097213Follow Rama on socials!LinkedIn | Meta | Twitter | InstagramConnect to Rama KrishnaE-mail: info@ushacapital.comWebsite: www.ushacapital.com

The Industrial Real Estate Podcast
The Truth About Cap Rates

The Industrial Real Estate Podcast

Play Episode Listen Later Jul 13, 2022 51:34


In this week's episode I interviewed Brian Burke, President & CEO of Praxis Capital to discuss the following topics as it relates to commercial and industrial real estate: 0:00 - Introduction 1:10 - Cap rates are NOT a return metric 7:10 - Why are cap rates so popular? 8:38 - Cap rates vs unleveraged yields 12:30 - Cap rates & interest rates 15:01 - Valuating a deal (and how cap rates are used) 21:48 - Actual return metrics (IRR, cash-on-cash, equity multiplier) 30:20 - Looking for deals in today's market 35:50 - Active vs Passive real estate investing 39:44 - Manipulating cap rates 44:15 - Software for analyzing deals 47:40 - Forecasting rent growth 49:23 - A fantastic summary of cap rates -- About Brian: Brian Burke is President & CEO of Praxis Capital, Inc., a vertically integrated real estate private equity investment firm, which he founded in 2001. Brian is also a member of the Praxis Investment Committee. Praxis operates on multiple platforms, currently managing active syndications for the acquisition of single-family, multifamily and opportunistic residential assets in US growth markets. Over the course of a real estate investment career that began in 1989, the offerings Brian manages have acquired over 750 properties, including over 3,000 multifamily units, with the assistance of proprietary software that he wrote himself. Acquired asset classes include single family homes, self storage, mixed-use and large apartment complexes in multiple states. Brian has arranged well over $500 million in debt and equity for Praxis acquisitions. Praxis' current portfolio exceeds $200 million of real estate assets under management. Brian is the author of The Hands-Off Investor: An Insider's Guide to Investing in Passive Real Estate Syndications, and a frequent public speaker at real estate conferences and events nationwide. Connect with Brian: LinkedIn: https://www.linkedin.com/in/praxiscap... Praxis Capital Website: https://praxcap.com/ -- ⚡ Become an Industrial Insider: https://www.youtube.com/c/ChadGriffit...

How to Scale Commercial Real Estate
Breaking the Mold of Traditional Development

How to Scale Commercial Real Estate

Play Episode Listen Later Jul 12, 2022 20:41


Real estate is continuously evolving, and one area that is prime for innovation is construction.    In this episode, Mike Angelo discusses what they are doing to usher change and challenge the status quo in the development world. Mike is the founder of NK Development Group which focuses on large multifamily (apartments) and ground-up development. He gives the nitty-gritty on industrialized and prefabricated construction and the challenges and opportunities in the sector. He also shares his journey as an investor and how he's able to grow his business.   [00:01 - 09:27] Exiting Corporate America and Entering Multifamily Becoming an investor after being let go of the company he's working for Mike talks about his first deal How they were able to raise capital Breaking down the deal structure Hitting their business and personal financial goals   [09:28 - 19:31] Bringing Innovation to Development What Mike and his team are doing to build better properties What are industrialized and prefabricated construction? Balancing quality and affordability The importance of speed to market  Why vertical integration is key Navigating local codes and regulations Mike discusses the projects they're working on right now Lessons Mike learned in his journey   [19:32 - 20:40] Closing Segment Reach out to Mike!  Links Below Final Words Tweetable Quotes   “We're trying to break the rules here and do things differently. We've had traditional home builders doing stick frame building forever. And it's an antiquated process.”  - Mike Angelo   “We have so much technology around us, but construction really hasn't innovated. And so we're trying to push those boundaries.” - Mike Angelo   -----------------------------------------------------------------------------   Connect with Mike! Email him at mike@nkdevelopmentgroup.com and follow him on LinkedIn.   Fannie Mae Life Bridge Capital Connect with me:   I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns.     Facebook   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] Mike Angelo: in order to break the mold, you got to challenge the status quo and the reason we should challenge it is the profitability. Once you build some of these projects, you're in single digit margins, which is highly risky, especially going into the volatile world where we're now shifting into. How do you increase those margins and also build maybe a lower cost product because the affordability factor is also a challenge. [00:00:32] Sam Wilson: Mike Angelo's a full-time real estate investor focused on value add multifamily and ground up development across the Southwestern United States. Mike, welcome to the show.  [00:00:41] Mike Angelo: Hey, thanks for having me, man. Super excited.  [00:00:43] Sam Wilson: Pleasure's mine. There's 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?  [00:00:50] Mike Angelo: Awesome, man. Started in corporate America. I was an executive sales leader for the last 20 years. Basically we worked for the construction supply world, so working on selling stuff to contractors, I love the job. I love the people, but it was brutal and I was trying to find a way out. [00:01:03] Mike Angelo: And my, my exit came in 2019. I got the pink slip and, and a severance package and I said, okay, what do I do now? And I knew for sure it wasn't going to be another corporate job. So, I had been researching real estate multifamily specifically jumped right in convinced my wife to support us for the next couple years until I figured it out. [00:01:19] Mike Angelo: And today we are I don't know, about 50, 50 plus million in assets, under management, couple of projects that we've closed. Now, couple more projects in the works as we speak, including a ground up development deal. And it's been fun, definitely wouldn't go back, but it's definitely been challenging at the same time. So, we love the space. We love trying to provide housing, but yeah, it's not easy. It's competitive out there. [00:01:41] Sam Wilson: Jumped right in. I mean, it's one thing to be like, Hey, by the way, you're fired. And then you said, I just jumped right into multifamily as if there were a pool of water there waiting, you know, for you to leap into what can you, what does that mean? And how did you jump right in?  [00:01:55] Mike Angelo: I think the biggest thing was listening to podcasts like yours and there's a, there's a group out there. Life Bridge Capital, Whitney Sewell. If you heard of him, I'd been listening to him. And I had, it was just eye opening to go, you know, my real estate experience was consistent of two flips in 2007. [00:02:09] Mike Angelo: It's all I had. And, and he's talking about buying apartment buildings with, you know, syndication process, pulling, you know, investors together and being able to do this. And it's such a, I always thought the country club guys, or the big corporate America or, or who own apartment building. And so once I realized that, one, it was possible, two, you know, I could do this. [00:02:26] Mike Angelo: It's not rocket science. What, what do I need to do? And it was just go, go for that. The numbers made a ton of sense instead of, you know, buying a duplex or a triplex and just trying to move my way up. I said, I have to find the quickest path to replacing my corporate income and it wasn't going to be through small projects. It had to be, you know, 50, 60, 70 units at a time.  [00:02:43] Sam Wilson: How did you find and acquire your first property?  [00:02:46] Mike Angelo: Lots of digging around. It was actually kind of by accident, to be honest with you. We, we were under contract on a deal in Albuquerque in New Mexico and another city's called Las Cruces, a couple of hours south of there. [00:02:56] Mike Angelo: And I just didn't know anything about the market other than I had been there a little bit. And I just randomly found a broker on LoopNet, which is the worst place to find deals, by the way ,but great place to find brokers. And I saw his name and I just called him cold call and said, Hey, I'm, I'm going to be in town. [00:03:10] Mike Angelo: Do you have anything that's coming up? He's like, yeah, I'm getting ready to list a 60 unit deal. And great. Send me some info, would love to take a look at, underwrote it, said, ah, it looks interesting, but I'm going to focus on my energy on the other one. The other one fell through, unfortunately. And then I circled back to him about a month later. [00:03:23] Mike Angelo: I said, Hey, is this still available? He said, we're getting some traction, but, you know, put an offer in. Put an offer in, got it accepted. And it took us four months to close it, just working through the nuances of our first raise and all that kind of good stuff. But yeah, we got that done in May of '21. So just a, a little over a year ago.  [00:03:38] Sam Wilson: Man, that's awesome. That is absolutely awesome. You know, tell me about this. I mean, going through your first capital raise, I mean, that's the two things and I, and I say this over and over play a broken record on this show, but you probably don't know that. You know, the two things we need this business are money and deals. [00:03:52] Mike Angelo: That's right.  [00:03:53] Sam Wilson: You found the deal. How did you solve the money side of it?  [00:03:56] Mike Angelo: So fortunately, through, I did get some education in multifamily by the way. So I didn't just listened to podcasts. I went and got formerly educated and I found a couple of folks to help us get the deal done. So one, Michael, my partner, he had some ability to access capital and, you know, the rest of it was us hustling. [00:04:10] Mike Angelo: It was him and I calling our friends and family and, fortunately, it wasn't the first time, you know, our folks had heard about us doing real estate, but this was our first deal. So everyone's always like, Hey, when you have a deal, call me. And so sure enough, if that list is a hundred people, they're like, ah, I can't I'm I'm tied up right now. [00:04:26] Mike Angelo: Or, or there was always some excuse. It's always the first one, right? It's a challenge. So, it was a struggle, but we got it done. We raised just enough money to, to get our CapEx deal, our fees and all that kind of good stuff, but a sprint to the end call it. But definitely not easy. And fortunately through that same network, and I think the network is everything in this business. [00:04:43] Mike Angelo: You know, we found our key principal to help us sign on the note, 'cause not only do you need the money, but you got to have liquidity, net worth, experience. You know, we got a, a Fannie Mae loan and Fannie just doesn't loan to anybody that wants, you know, to buy an apartment building.  [00:04:56] Sam Wilson: Right, right. And so it was through, it was through your network that you had joined. It's not like you joined a mentorship group, which there's lots of 'em out there, but where, you know, lots of people putting their heads together and saying, Hey, you know, we can find the key principal here that can help you sign on the loan. We can have the experience, you know, check box, check by this person coming on as a, as a KP in the deal. How much deal equity do you feel like you gave away? Or what did you give away in order to make sure that all of those right people were on the right seats in the bus in order to get the deal done?  [00:05:26] Mike Angelo: So our first deal, we were just like, we got to do whatever we can to get it done. I think, as I've talked to other folks that have gone through my shoes, you know, they've given 50, 60% of the deal away to, to get it done. [00:05:35] Mike Angelo: We were very blessed that we didn't need to do that. It was in the thirties, but we did all the other work. So the person that was on our, you know, our key principle for the note liquidity. 30%, everything else we did. And so it's an awesome deal. Our investors are, are super happy right now. The one thing I will say is, man, we structured that deal for, to be very investor friendly. [00:05:54] Mike Angelo: And now that it's crushing it, we're like, man, we'd love to get a little bit more of that on our side. That's okay. It's good. It's a good story to tell because our investors are, are now repeat investors, right? And that's what you want.  [00:06:03] Sam Wilson: Right. Tell me about the the way you structured that deal. Can you, can you give us the specifics on the structure of it and how you maybe want to do it differently next time?  [00:06:10] Mike Angelo: In the syndication world, you usually hear kind of 70, 30. The limited partner gets 70% of the deal. 30% goes to the house. We did a preferred return of 7% and basically we didn't do any IRR hurdles or any of the stuff. I didn't even know what the hell IRR hurdle was when we were first doing it. So, you know, this thing is cash flowing at like 9% or 10% now. So we're getting a little bit of the scraps, but it's all good. And we've been able to hit our, you know, three year business targets in year one, we just did our first year. [00:06:37] Mike Angelo: And so, you know, the market has definitely helped . So everyone looks to be a hero at this point, but we've been able to find a deal that was under market from a rent standpoint and push it. So, yeah. And we'll do the same, I think, on the rest of the future deals, it's similar. We're just putting in a few more hurdles. So once we hit like a 19 or 20 IRR, then the split changes a little bit. But it's very nuanced buy deal. [00:06:57] Sam Wilson: Right, no. Understood. Understood. I just, you know, I've, I've had people come on the show that, you know, had given away 90%, they're doing 90 10 splits on their first deal, just 'cause they're like, man, I don't care if I don't make a dollar on this or maybe I that's all I make is a dollar. I just need to get the first one done. And then, you know, we'll worry about, you know, making profit later on. We just want to take care of our investors and get a deal done.  [00:07:19] Mike Angelo: I challenge that model by the way. Because here's the thing. If an investor's giving you money, they expect you to work for that. That, that is how you're also getting paid. And so you're, you're now you have to be a fiduciary for these guys, and if you're only getting a dollar, how motivated are you to go work on this deal? You have to, it has to be equitable for everybody. And we're very transparent about that. And, and our investors are good. [00:07:42] Mike Angelo: You know, they're good with it, you know. Do they love our three and half percent AC fee? No, but Hey, here's what you're getting for that. And, and I think that's critical 'cause everyone needs to make a good amount of money to support the 'cause it's a lot of work. This is not like, Hey, we bought a building, the PM now does everything. We do nothing. No, that's absolutely opposite.  [00:07:58] Sam Wilson: Right, absolutely. On the topic of money, one of the things that you set out to do in the multifamily space was to replace obviously the income that you had before. Have you been able to achieve that yet?  [00:08:10] Mike Angelo: This year, we will. I will hit that target. So it took two and a half years, two and a half years. So it wasn't pretty, it wasn't pretty along the way. My wife has a full-time W2. Thank goodness. And, and I think I mentioned, I had a little bit of a severance package and I followed the Dave Ramsey method. So we had some cash in the bank for that rainy day fund and it worked, you know, thank goodness. [00:08:29] Mike Angelo: So you know, we've depleted through a lot of that and you know, this business takes working capital. So there's a lot of that, you know, get it in, get it in, and then you got to wait till, you know, the deal closes and get it back out and then return it. So this year, we'll hit that number. So we're halfway through 2022 and I'm happy to say I was hoping to hit that target last year, but, you know, we didn't close enough deals. [00:08:49] Sam Wilson: Right. No, man. The reason I bring that up is because, you know, a lot of people either have unrealistic expectations, you know, when they jump in and some people do. I mean, certainly we've had the people come on the show that are like, Hey man, a year ago, you know, I got fired from my job and now, you know, I'm making seven figures a year and you're like, wow, good for you. [00:09:06] Sam Wilson: Like, you know, it can happen. But that's the exception that proves the rules, is that the right way to say that? I don't know. Anyway, you get the point where it's like, Hey, this is a, get rich, slow game, and it takes time to build your nest egg, to build your team, to build your properties. [00:09:19] Sam Wilson: It's something that, you know, I like to talk about that because it gives some realistic expectations for people that are looking to get in and grow that this takes a lot of time. So, you know, thank you for being willing to share that. We talked a little bit off air about development and development deals. Tell us what you guys are doing on the development front, how you finding opportunity there and why development.  [00:09:39] Mike Angelo: Great. Awesome. So, when I left the corporate world, the first thing I wanted, I always wanted to be a developer. I just had no business doing it 'cause I didn't know anything about it other than, you know, they need stuff to build it. [00:09:48] Mike Angelo: So, you know, we, we said, Hey, let's do multifamily value add first. Let's build a cashflow, let's build a resume. And let's pivot into development 'cause as we, you know, being in Phoenix and is one of the hottest markets in the country, you buying value add deals, there's a kind of per unit cost and that those are trading for, and those are 1970s, 1960s even properties. [00:10:06] Mike Angelo: Here trading for about two 50 a door, right? Yeah. Yeah. So, you know, when you look at the replacement costs and you look at, you know, ground up construction, Those are similar costs per square foot per unit however you want to look at it. And so then the math, you kind of scratch your head, go, I can build something brand new, rent it for at least a few hundred dollars above value add deal. [00:10:26] Mike Angelo: Yes, it takes me two years, two and a half years to build it, but that makes a lot more sense. And the yield is, you know, very good. And so it's just a different way to look at the same problem, which is we don't have enough good housing. And so that was our kind of mantra. Say, we got to figure that out. [00:10:40] Mike Angelo: And then I'm trying to break the rules here and do things differently. We've had traditional, you know, home builders doing stick frame, building forever. And it's an antiquated process. You know, we have so much technology around us, but construction really hasn't innovated. And so we're trying to push those boundaries and there's lots of guys doing those modular solutions and finding ways to, to build better 'cause we have a labor shortage. We have housing shortage. We can't produce quickly enough. So we're trying to figure that out. And we found a great partner. We found, you know, some developer experience and contractors locally that are willing to help us and, and also break the mold of the traditional, Hey, we're going to do it this way. [00:11:13] Mike Angelo: And so it's early on in the phase. We bought the land last year and we're in the entitlement phase. So that's improving the property on paper essentially. And working to get that green light so we can reach up already in the next 60 days, hopefully.  [00:11:25] Sam Wilson: What will you be doing to break the mold, as you say? [00:11:30] Mike Angelo: It's finding this network that we talked about. It's called industrialized construction. So think of, you know, Tesla building houses and factories. Now you got to, when you think modular, most people go to mobile homes and that's not what we're doing, right? We're building a high quality product, just in a factory environment. Finding the network, right now, I think 5% or less of all construction projects are built in industrial fashion, industrial modular fashion. So that, you know, pre-fabricated method. So in order to break the mold, you got to challenge the status quo and the reason we should challenge it is the profitability. [00:12:02] Mike Angelo: Once you build some of these projects, you're in single digit margins, which is highly risky, especially going into the volatile world where we're now shifting into. How do you increase those margins and also build maybe a lower cost product because the affordability factor is also a challenge. [00:12:17] Mike Angelo: You know, we have a huge middle market America that can't afford $1,900 rent for a one bedroom. So can we charge $1500 or $1400? Well, you can't if it costs you so many dollars per unit to build. So that's the problem we're trying to solve is how do we build it for lower cost? And the only way to do that is to make it more efficient and use smarter products and, and then try to solve the problem the other way. So, that's the why.  [00:12:39] Sam Wilson: Tell me about that a little bit more, you know, industrialized construction. Have you guys settled, assuming you get the property entitled, have you settled on a particular, Hey, this is how we're going to build this product. This is how we're going to put it together. This is going to be the supplier. This is going to be the timeline. I mean, have you solved all of those factors yet?  [00:12:56] Mike Angelo: No. I'd love to say yes. And we had, we thought we had it solved from a complete, again, build the entire unit in a factory. The challenge is an uphill battle with majority of America and even local contractors are like, dude, you're crazy. Don't do that. And so what we're going to do is something in the middle. It's pre-fabricated cold form steel. So instead of building out a wood, we're building out a light steel studs. And you still get that fabricated panel. So you got a floor. You get walls. Assembly is, is almost as quick as building it in the factory. [00:13:24] Mike Angelo: And then you have your finishing crews, your mechanical electrical guys coming in and, and putting the rest in. So there's still labor on site. I would love to get to a point where I have an complete, you know, wall exterior, interior, plumbed. And then it gets assembled. That's where I'd like to get to. We're not there yet. [00:13:38] Mike Angelo: I think it's, again, that, enforcing people to think about, you know, even robotics, if you think of a factory, instead of having labor there, you have robots doing this stuff. It sounds super high tech, but that's where we're going.  [00:13:50] Sam Wilson: Is where a speed to implementation advantage?  [00:13:53] Mike Angelo: Usually you could save between 30 and 40% of time. A multifamily, call it a three story, you know, boring, a hundred unit deal. Wood frame will take you 18 months, 24 months. You might be able to do that in 12 to 15. So speed to market is one of the main reasons, but that comes with a cost. And so folks get hung up on, well, it's going to cost me more on paper. [00:14:13] Mike Angelo: Well, it might cost you a little bit more front, but now you don't have punch list stuff. You're saving holding costs, holding costs are incredibly expensive. We haven't got it all figured out. We're getting there slowly. First project, right?  [00:14:24] Sam Wilson: No. Absolutely. And again, these are things, I know you don't, you don't necessarily have all of your ducks in a row on this yet, but I think it's, it's a great time for us to chat about it 'cause you get to see the inside view of kind of the problems you're trying to figure out and solve as you go through this. So maybe you don't have all the answers, but it's like, Hey, here's a way that this could work. You know, if, if we had it in the ideal world. I guess one of the other things I would think about in this, in this kind of pre-fabricated, you know, development space is that you probably have a much more consistent product would be one of the things I bet you would get out of something like that.  [00:14:55] Mike Angelo: Yeah. Quality, consistency. And so the other, I would say the other piece of challenge is a red tape amongst municipalities and inspections and, you know, Hey, you're building something in factory. [00:15:05] Mike Angelo: I can't inspect it on site like I've been doing for 50 years. Okay. Yeah. We'll come to the factory, let me show you what we're doing and we're building a better product. So it, it will get there. And I'm telling you, there's probably, I think, a dozen or less firms working to solve this problem. We are the tiniest, tiniest little guy on the development front. [00:15:20] Mike Angelo: I think the solution is vertically integrate. So you're the developer. You need to have access to a manufacturer, whether that's your partner or you're doing it yourself. And that way, those products just flow through. And there's a couple big companies doing that right now. So we're looking to align with them and, and understand how they're doing it. [00:15:36] Mike Angelo: And again, not reinvent the wheel. We'll probably just partner with them and say, put us on your list, 'cause we need, you know, 1500 units in the next two years.  [00:15:43] Sam Wilson: My next question is, is about codes on that, like dealing with codes, dealing with your local municipalities. I mean, that's, it's one thing to find a cool product that may be the perfect fit, but getting it through your local zoning and building ordinance departments may be a nightmare. How are you guys navigating that?  [00:16:00] Mike Angelo: So all of these manufacturers are building to international building code, IBC, right? The latest building code. So they're better products than anything that's being built on site. The challenge is a local municipality, like you just said, so it's getting them aligned early. [00:16:12] Mike Angelo: You know, those fire marshals, the, the city inspectors say, Hey, this is why we're doing it this way. And the groups that have been successful thus far, they align very early on and they partner with that developer to, you know, say, Hey, you know, we're going to build six of these. The first one's going to be the hardest, 'cause that'll be the one, the trial project. [00:16:29] Mike Angelo: But once that municipality buys in on it, then now you're building within that county or that city, then you're rubber stamping from a production standpoint and that approval process becomes easier. The other challenge is the subs. If you're an electrician and you've been doing it traditionally forever on site, and you got to hire 50 guys to do this, but you might only need three guys now on site because all the work's being done in factory. So that's a mind shift as well, you know, change on how you staff it.  [00:16:54] Sam Wilson: Right. Yeah. I can only imagine. Getting your subs educated, getting everybody in your team built around this. But I think, you know, the long term play is what, what you're in it for here in that once you get the kind of kinks worked out, it will become a much smoother process. [00:17:09] Sam Wilson: I look forward to tracking with you on that. You do have two developments, I think you said, underway. Are both of those in the kind of prefab construction space or are those, any of those going just traditional build?  [00:17:20] Mike Angelo: So we have one multifamily project that's we started earlier and then this month we're closing on another piece of land that wasn't on our radar. And, and we already had a lot on our plate, but it was such a cool project. So I'm in Phoenix desert, but we have an area called Pinetop. It's up in the mountains. That's like 6,000 feet. And so we're buying some acreage up there for single family development. A couple of modular builders, because again, it's the same problem. [00:17:42] Mike Angelo: How do we build it faster, quicker? And so we'll, we're taking on a single family development. Again, our developer that we partner with or is helping us navigate the complexity of that. But that'll start hopefully in the next couple months as well. And so, yeah, we're taking on a lot of things, but it's, it's fun to try to solve problems, you know? [00:17:59] Mike Angelo: Absolutely. As you review the last two years of your multifamily and commercial real estate experience, is there anything that you would do differently that would either speed up, save time, you know, shave some learning curve off? Is there anything that you would do a little bit differently if you could do it over? [00:18:17] Mike Angelo: I think I spent a lot of time underwriting 'cause, you know, I didn't have a ton of net worth, I didn't have a lot of liquidity, so I passively invested a few deals, but I was like, how do I bring value to a, if you just talk about the multifamily space, you know, again, you need key principals, experience liquidity and you got to find the deal. [00:18:33] Mike Angelo: My goal was I'm going to go find a deal and then I'm going to go find partners to bring in and, and they'll sign on the note for me. And that was kind of the education that they teach you, by the way. And so I just spent a ton of time looking for deals and not enough time finding partners, good partners, vetting them. [00:18:45] Mike Angelo: And that key principal would've made life a little bit easier on, Hey, you know, we need this much cash for hard money, earnest money. We need, you know, this much for, and we need to have an investor base other than, you know, friends and family. And so I would say if I did it again, I would go back and spend a little more energy vetting those partners earlier. [00:19:02] Mike Angelo: It took me like almost a year to kind of figure that out. I had partners come and go. And would I change it? Maybe. What I learned in the process is, man, I can underwrite really well in the conditions that I look at. And now, fortunately, I have a team that can help us do that and they, they do the majority of the underwriting. [00:19:18] Mike Angelo: So delegation and maybe doing more of that for getting out of the weeds. Actually, I told you, I spent, I was up till midnight doing a, a YouTube video for our investment webinar. I need a marketing person, right? I shouldn't be doing that, but it's what you got to do when you're, when you're early in the process. [00:19:32] Sam Wilson: That's absolutely you're right, Mike, I appreciate you taking the time to come on today and share with us your story. You know, how you have grown to where you guys are today. What your thoughts are surrounding development and solving the housing shortage problem and doing that in a, in a very creative way. Thank you for taking the time again to come on and share today. 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?  [00:19:53] Mike Angelo: Yeah. Awesome, man. Thanks for having me on the show. I'm on LinkedIn. It's Mike Ashish Angelo. You can email me if you want. It's mike@nkdevelopmentgroup.com. Love to reach out. I always challenge folks on podcasts. Call me if you, if you're in the same, you know, struggles, let's set up a call. And I'd be happy to talk to anybody and, and try to help 'em through the process.  [00:20:09] Sam Wilson: Awesome. Mike, thank you again for your time. Certainly appreciate it. Have a great rest of your day.  [00:20:13] Mike Angelo: Thanks man. Take care. Cheers. 

Get Real Wealthy
36 - Key Metrics Every Real Estate Investors Should Know

Get Real Wealthy

Play Episode Listen Later Jul 12, 2022 8:40


Episode Summary In this episode of Get Real Wealthy Season 2, Quentin talks about the key metrics every real estate investor should know about.  Metrics are a way for you to use tools to identify where you are, and where you're going. Some matrix can help you when you are evaluating a property while others can help you in the investing phase. One of the first things to look at is Cash on Cash Return, which helps you evaluate how much profit you've made in a year. Another key metric that you use in real estate investing is called Cap Rate. The formula for Cap Rate is equal to Net Operating Income (NOI) divided by the current market value of the asset. It depends on three different factors: the condition of the property, the location of the property and interest rates. He adds that if you go to a different area, you may find a different cap rate. It comes in handy when you are trying to identify an opportunity.  Another key metric that we use is called an Annual Rate of Return. It is the amount earned on an investment over a 12-month period, and is usually expressed as a percentage. He adds that it comes into play when we are refinancing or selling an asset, adding “that usually happens on the sale or refinance of an asset, the shortest time that I've ever been able to do that is a year, the longest time I've been able to do that is four years in an apartment building.” The last metric you should know about is the Internal Rate of Return. Internal rate of return (IRR) is the discount rate at which a project's returns become equal to its initial investment. It is the percentage of returns that a project will generate within a period to cover its initial investment. In conclusion, he says that as an investor, you should be familiar with metric such as Cash on Cash Return, Cap Rate, Annual Return, Internal Rate of Return, so that you can make informed and profitable decisions.  Important Links and Resources https://www.instagram.com/qmanrei (https://www.instagram.com/qmanrei)   quentin@getrealwealthy.com  https://educationrei.ca (https://EducationREI.ca) https://getrealwealthy.com (https://GetRealWealthy.com) https://durhamrei.ca (https://DurhamREI.ca)

Street Smart Success
185: Quality Multi-Family is Still Commanding

Street Smart Success

Play Episode Listen Later Jul 11, 2022 46:07


Prices on quality Multifamily assets are holding firm. Although there are significant price reductions in older properties, Class B+ and A- in growth markets are holding firm because of the huge amount of capital still flowing into this stable asset class. These days you can expect a 4% annual return on your money and an IRR of 10-12% on these deals. Mark Hamilton, founder of Hamilton Zanze in San Francisco, owns over 23,000 units, and has over three decades of multifamily experience.

SunCast
492: TT: An instant feasibility tool for optimizing utility-scale solar? Ashton Vandemark, Terrasmart

SunCast

Play Episode Listen Later Jul 5, 2022 29:05


You need a way to define winning solar projects fast, while eliminating all doubt that you've selected the most optimum configuration. And it's frustrating to commit to a design strategy knowing that if you had the time or data, you could find something better. Furthermore, in the current procurement process, constrained by module availability, trade concerns and interconnection timelines, the need to modify project configuration is an increasing concern to keep these projects on-time.  Today's Tactical Tuesday conversation should help with that. I don't often give such an overt (and free) endorsement of a specific design tool, but when I discovered the Solar Instant Feasibility Tool, I knew it was something I needed to share w/the community.  Today's guest will tell us about a product he created to solve his pain as a project development engineer. And I think you'll find it could help you make better decisions as well. https://www.mysuncast.com/suncast-episodes/492 (Ashton Vandemark) is the business unit manager for the Solar Instant https://www.mysuncast.com/terrasmart (Feasibility Tool) (SIFT) at Terrasmart, a provider of ground-mount solar racking technology primarily used for solar projects. SIFT — a design, performance and financial modeling solution — is Ashton's baby.  In today's podcast, Ashton shares his experiences from graduating with a mechanical engineering degree from The Ohio State University through relocation to China and ultimately founding the company where he developed SIFT. He founded that company, Sunfig, in 2017, which he sold in January 2021 to Gibraltar, a provider of solar racking technologies, electrical balance-of-system products, and installation services. Gibraltar concurrently acquired TerraSmart in a significant expansion of its solar portfolio, and rebranded the portfolio of companies Terrasmart earlier this year. While Ashton's role has changed, he still proudly promotes the early-stage feasibility tool he developed "to help clients gain confidence in their decisions, maximize margins, and submit winning bids with a competitive edge." He says SIFT can Increase a project's internal rate of return (IRR) by 5% to 15% and speed up the development cycle. Want to know how? Give today's Tactical Tuesday a listen. If you want to connect with today's guest, you'll find links to their contact info (linked, twitter, etc) in the https://mysuncast.com/suncast-episodes/ (show notes) over on the blog. SunCast is presented by https://www.mysuncast.com/sungrow (Sungrow), the world's most bankable inverter brand. You can learn more about all the sponsors who help make this show free for you, here: https://www.mysuncast.com/sponsors (www.mysuncast.com/sponsors) Remember you can always find the resources and learn more about today's guest, recommendations, book links, and more than 485 other founder stories and startup advice athttps://www.mysuncast.com/ ( www.mysuncast.com). You can connect with me, Nico Johnson, on https://www.twitter.com/nicomeo (Twitter), https://www.linkedin.com/in/nickalus/ (LinkedIn) or email.

Un dimanche de cinéma
Faut-il aller voir : Irréductible, la Traversée, L'Equipier et Decision to Leave ?

Un dimanche de cinéma

Play Episode Listen Later Jul 2, 2022 14:14


Chaque samedi, dans CLAP !, Laurie Cholewa donne la parole aux critiques, qui commentent les sorties de la semaine. Aujourd'hui, Franck Valliere de Canal+ et Didier Allouch débattent des films Irréductible, la Traversée, L'Equipier et Decision to Leave.

The Remote Real Estate Investor
Brandon Schwab on how senior living facilities are powerful win-win investments

The Remote Real Estate Investor

Play Episode Listen Later Jul 2, 2022 29:33


Brandon Schwab is based in Chicago where he specializes in boutique assisted living. Brandon who is, founder, and CEO of Shepherd Premier Senior Living and Boutique Senior Living Fund had experienced first-hand the deficient care of his grandfather at a large, industrial-type senior living facility, he vowed to make improvements in the industry by starting his own senior living company that provides better, quality care to the elderly. It seems that parts of the US are significantly under-served with this class of product. To learn more or to connect with Brandon tune in to today's podcast and you can set up a time to speak with him directly. Brandon talks about his unique business model of syndicating small senior living assets. Episode Link: https://boutiqueseniorlivingfund.com/ wwww.shepherdpremierseriorliving.com www.brandonschwab.com   Before we jump into the episode, here's a quick disclaimer about our content. The Remote Real Estate Investor podcast is for informational purposes only, and is not intended as investment advice. The views, opinions and strategies of both the hosts and the guests are their own and should not be considered as guidance from Roofstock. Make sure to always run your own numbers, make your own independent decisions and seek investment advice from licensed professionals.   Michael: Hey, everyone, welcome to another episode of the Remote Real Estate Investor. I'm Michael Albaum, and today I'm joined by Brandon Schwab, who is going to be talking to us about how he's turning the senior living facility industry upside down. So let's get into it…   Brandon Schwab, what's going on, man? Thanks so much for taking the time to hang out with me today. I appreciate you coming on.   Brandon: Hey, man, this year is awesome, man. Thank you for having me.   Michael: Oh, of course and I think we're gonna have a lot of fun today, talking about senior living, which is I don't think we've ever covered this topic on the show before. So I'm super excited.   Brandon: Never…?   Michael: I don't think ever I don't think ever and shame. I know, I know, I know. Shame on us, that's our bad but give us the quick and dirty. We're gonna get into senior living in just a minute. Give us we can do it, who you are, where do you come from and what is it that you're doing in real estate today?   Brandon: Down and dirty… I've been in Crystal Lake Illinois. For 35 years, I am 40. I've got two kids I got in real estate in 2010. But back before that, I actually opened up our own company at the age of about 15 years old. I did that for 14 years, until I figured out quickly that I didn't actually own anything. I thought I owned something the whole time. But I found out at the end, I didn't actually own any assets. So therefore, I  didn't actually have anything to own to actually have up for sale. So I got into this industry in 2010. After I got crushed after 2008 happened. I at the age of 15. I was cleaning cars in RVs for 14 years and I thought I was crushing it doing there. I was taking home 200 220,000 per year but I was probably working 7080 hours per week. So like wholesaling back in 2010. Because I was like dude, I got paid like $200 for each car and probably about 500 for each RV. So like wholesaling in our first deal was like $1,000 I was like, do you know that would take me like 40 hours just to like, even come close to that and I said I have to get into that business. So that's it, man, it's awesome. Fast forward to today I am changing the industry for how the elderly are taking care of totally upside down.   Michael: That's wait. So you're putting elders on their head? I don't think is that is that good for them?   Brandon: We obtained we are changing the whole and we're changing the whole industry of how everyone thinks of it because typically, if you think of the older industry, right? You think of 100 to 200 type with a ton of elderly in there, right? Tons of them, right and they typically have a pretty terrible odor and the odor isn't very good. It's the odor because people don't get any help and then there's also the atmosphere of everyone asking for help because the average caregiver has to care for 20 to 30 people. I don't know on you, but we are in the top country in this whole entire and if that's how we care for the elderly, I feel like we didn't do things properly and they have to be totally turned upside down because how they're currently doing it isn't able to operate. I had a thing happen in our family back in 2004 where there was a person in our family who was 85 who ended up in a place for 200 beds and we pulled the pull cord to have people come in there to help them and it took them 10 minutes 15 minutes by 20 minutes like I'm getting like pretty irritated by 25 minutes like I just lose my shit and I go out to get a them to help them and I can't say I handled it all that well because I kind of exploded but like that's how I was first exposed and it turns out that's actually common to how the industry is able to operate and I said that's terrible. I hate this industry, hate it, hate it hate it.   They bought 10 years after that I was down in Florida and I got exposed to a five a home that had five people in it and I was like what is this? You know at the time I had 23 homes in our total I began build In our portfolio in 2012, and by the end of 12, I had 23 homes and I had, I thought I kind of had everything figured out. Well, at the end of 14, I'm in this house down in Florida and I'm doing each one of these like arms kind of crossed, because I'm just looking at the place and I go, What is this? I haven't ever seen a home before that is it was probably a 2800 foot house. There was houses on each side, probably 10 or 12 feet from the house and I was just like, What is this because typically as I would go down to Florida, Kelly's dad would play his piano in the old folks home 328 times per year for 35 bucks and I hated going because it was typically in these huge in the elderly in the odor was just terrible and I was just like, if we can get out of that, is there anything that I can do that I don't have to actually, and I would offer to like cook to clean all of that just so I didn't have to go? Thank God, I didn't I didn't have any option because I was ill put this house and I was like, What is this? This is cool. It's it didn't have any odor. It had this awesome atmosphere and I was just like, how have I been in?   How have I been investing in assets and I don't have any clue what this is and I asked the girl in charge, and I said, hey, how much do these people pay to be here and I threw out a figure of like 1500 or $2,000 in this girl did this hurt? Like her eyes came down here and like this girl's answer was like, and just kind of kept on walking and I was like, Kelly, what the hell was that answer? She didn't even answer me. So I ended up calling her and the girl goes, Brandon, I am sorry, I thought that you were only kidding because they begin at $5,200 a month, what times five people I'm like, that's $26,000 and every home that I had all 23 Our highest was like $2,200 per month and our average was like 18 and I said holy crap that one house with five people in it was outperforming every house that I had two times each month. And I was like, I'm in the I have to get into that business and by the time I was able to come home, I found a house in a town of 832 people and it was the house was 4880 feet on three acres. So like we bought it for 250 and put $550,000 into it right over the top. I got this house full by February of 17 and we were gross and 55,000 of income within a cost of the expenses of like 30 to 32,000 a month. So this house was jam on month, one month, one house, we were changing the industry to and offered this cool option that people have never heard of.   Michael: So you're netting like 20 grand a month on this place.   Brandon: Per house, yes and I have homes that are 1015 and 20 each home. So that's the that's the entry level for us, is 10, so…   Michael: I mean, okay, I've like speeches, I have so many questions. So I've got to imagine caring for the elderly. This is a very medically intensive, medically heavy industry and so talk to us a little bit about how do you how do you get into this industry because I think there's so many barriers to medical and then care and I could go on but tell us how you how you got started.   Brandon: So when I got going, I had everything in the to open up the house, right, I was able to open it. I even got the first two or three people in there, right and when I quickly got past like two or three people, I quickly figured out that I didn't really have the experience to operate them, right. So I was doing what I was trying to do to get the house full was I was calling on churches, in particularly wanting to talk to the head of each church. Now, I found out quickly that churches are hard to call on because they don't ever answer and they don't tend to call you back but I finally got one and I called in I was talking to the church pastor and honestly, I think he felt terrible for me because he's like, Brandon, you aren't so good at this like this is this isn't going to be your thing, right? So like he goes Brandon, hi god, their closest friend was in health care for 38 years. She just retired in in. She was getting kind of anxious to like go in to do things. So they introduced me and she was in health care industry for 38 years I ended up taking You're out to eat every Tuesday for about six months and I finally got her on our team, I got her to invest, but I had her in charge of operations and that was back in 2015. So I basically was able to open up homes, but I quickly figured out that I needed a team of experts to actually operate them. So after I had her in, it was in 2015, I kind of had her handle the ops and I focus on opening up homes.   Michael: That is wild. So at the beginning, before you brought her up, where I mean, were you there at the home, cooking, cleaning, doing all that kind of stuff yourself?   Brandon: No, I only had to go there when people didn't come in. So there was a handful of times where a person called in, and I had to go in there. That wasn't very fun and I quickly figured out I need to have things in place that that isn't going to ever happen over because I found out quickly that I am not very good when it comes to cleaning and taking care of people I quickly said, you know, I had to get out early. So I found people, I did have to cover a handful of shifts and I did call in for help because there were some things I just couldn't do.   Michael: I can imagine, I can imagine. So when you're looking at properties, I mean, this first property, what about it kind of jumped out at you and said, Hey, this, this is a good candidate or a good prospect to purchase, you know, for this type of business.   Brandon: So when I was down in Florida, I saw a five bed house in the five bed house was great. But the five bed house wasn't. It was geared for like an owner operator, a person that was in a health care field and I quickly figured out that that wasn't going to be us that I couldn't do that personally. So I decided to exercise. So I was looking for a first floor house, it was like 5000 feet, first floor 5000 feet. That's hard to find. So when I came back home, I thought that they'd be everywhere because down in Florida, there's 1800 of these homes. California has 2800 out there close to you, I think Arizona has 3000, Texas has 15,000 back by us. There's 55 by five, so I said…   Michael: And when you say when you say these homes, you mean like single family homes in neighborhoods that are being used for senior care facilities.   Brandon: So I am talking about homes that are caring for the elderly under 10 people. It is under 15 people per home.   Michael: Okay, All right. So you had 55 in your market…?   Brandon: 55 not in and there's 18 in all of Florida, and there was only 55 here, right and I said, that's bingo. Perfect I'm in, so that's how I first jumped in but a thing a thing that happened is when I first got in, there wasn't a ton of other people out there doing this. So I had to kind of go teach people this concept. So the healthcare part was definitely challenging but the houses that I was trying to find where four to 5000 feet, first floor only our first house, it was on three acres. It was a financial planner that I purchased that bought our debt built in office on to his house. So I had to open things up, I ended up putting 550,000 into the first house. So I had four private bedrooms, and I had three bedrooms for two people each. So for privates, and then I had three for two. So I had a total of 10. Did I go over, did I go overboard? Absolutely but I feel like if you're going to do anything, you have to do it how it ought to and I put three ADA A's on the inside for people to go to the psych bathroom, I only had to have only one and I had 380 access points to get into the house and out of the house and we just did everything over the top. So that's how I first got in and then beyond that house, it was harder to find that type of house over. So fast forward to today I've got five homes up and operating. I got two homes opening up in quarter three this year. And then in 2000 are in I also have 7.2 acres of land that I bought before COVID that I was going to put our own homes on.   Michael: This is incredible. So what is the financing look like for these homes? I mean, can you go to a bank and say hey, I want the purchase. I want to purchase it at 20 and I want you to give me a line of credit for the construction for the rehab. I mean who's financing this type of stuff…   Brandon: I had a chance, dude when I went in there to talk to these guys, they thought I had like, they couldn't get it. These guys are used to like, easy, typical type deals, when I told them that, that I was going to 10 people each paying 5000 to 5500. Each month, their heads literally exploded. They're like, Hey, man, why don't you come back after you do your first house? Then I'll talk to you and I was able to do that and they're like, hey, why don't you come back when you have two houses and then at that, at that part, I am like, you know, I don't think I'm going to actually go ask him for anything anymore. But like, that's how it happens. So a thing that I do for financing is I actually brought in private capital, from investors on a per L for each home and that's, that is how we did, I had to offer some pretty high IRR hours. But when you're first getting things going, that is your only option and a thing that I found that I was really good at is when I was buying properties, I was buying like oddball type properties, not the typical like three to 2200.   So I was buying houses that were on properties that the typical family at the time weren't trying to buy, right. So I was buying houses that were on the app on the MLS for 200 days, 400 days, 500 days and what I would do is I would give them an offer for them to carry back financing at the full asking price. Or I would give them an offer for cash but the cash offer was like so like 50% and a lot of times I was just using that cash offer to help prop up the other offer but I've had a handful of times where when I was putting in those two offers, they would take the other one. So I bought one house off the MLS one time that was on for 2.4 million. I bought that for 750 cash and other time I bought one in Connecticut that was on the MLS for 2.1 million. I bought that one for 700,000.   Michael: Okay, you are not kidding, those cash offers 30, that's incredible a budget you're solving for someone's like, that's…   Brandon: Yeah, those are offers that as I was able to have them in I thought no ways anyone can ever take this off or like they are going to be like, click just kiss but they took him because our other offer was 1.8 million owner carry back financing and they just didn't take but that was probably only 30% of our upfront portfolio. The other ones, I've had them take the owner offer carrying back financing. So that so that is how we did hazing.   Michael: And then you bring in investor capital to do the rehab, whatever upgrades you need. Yep, amazing.   Brandon: Yes, sir.   Michael: So like, when you're looking at properties, there's got to be at Imagine zoning limitations or requirements or local licensures that you need to get what, like, what should people be on the lookout for or how should someone be thinking about those?   Brandon: Well, anyone that's thinking of getting into this themselves and having people operate it themselves, I would tell you don't do it. It is something that I casually got into it thinking that I could just figure it out and it's been one of the most challenging things I've done, where it's taken me eight years, open up five houses and it's challenging. But as I would look for houses, I would look for houses in an area where the household income, the average was over 80,000 and then one of the things that I would do is I would go to the population and I would look for a population of in each town over 65 years of age, I would look for like 10 to 12% plus, anything that was up over hire, that was awesome. I did buy the 7.2 acres of land, all of our first five homes, they're in towns where it's like, you know, 10 to 20 or 10 to 18% over the age right. And then the town that I bought this dirt in for 7.2 acres, we paid 220,000 per acre but it is located directly next to a Dell property.   That's that is 5500 homes that are all 55 plus. So our percentage of over 65 in this town of 26,000 people is 32% Wow. Let's go. All of us purchase that. Before COVID. We were finishing that we got through entitlements, we were going to build six homes, 20 beds each and in office, it was gonna cost us $15.5 million. We had the all of that done, we even had a closing in place for a family office down in Florida, actually to give us a 10 $10.86 million at 12% and they were going to close March 13 2020. We were going to begin pushing dirt April 1, 2020. If you think back to the time, a little COVID pandemic entered into this plan, and the family office were two guys that were probably in their 70s or 80s themselves that earned a bulk of their family office capital from offices and they were in the class a office industry, right and they were trying to take cash out of that inputted into any other asset class and they ended up pulling out two days before closing. Yeah, because they were having tenants that GSA weren't paying. So it wasn't ideal, the overall timing of it, but our things have changed where we aren't building today because cost the build is just too high, where we are holding off until that cost comes back down and we are doing other things today that that fit what is going on.   Michael: Okay, you should have told those guys look, you'll get a free room and board. Just give me the money. I'll build you a spot.   Brandon: I was trying. It just wasn't great timing. I was like, what COVID? Come on. That's fine. It was just too early for us to have any clue. So yeah, unfortunately, they passed but I'm gearing things today now to try to build those connections up with those guys, because a ton of those guys have capital galore. So much dry powder that's just sitting, where if they can find an asset class that is out there that can help the elderly that can help give them awesome IRR that's going to top inflation and also help have a tangible asset. That's what they are looking for today. I think the days where people earn in 200% 300% Kryptos those days are kind of over for some time now, where people are looking for tangible assets today and I have this, so…   Michael: That is amazing and so these houses, I would imagine they serve three meals a day, and they've got all the medical care and there's like it's like a proper business like you would expect to see if you went to a traditional elder care facility, you would have all those same amenities and sounds like and then more, right…   Brandon: So a thing that's different for us for a for every home that has 10 Total people in it, I have a caregiver to every five to eight, five to eight total people compared to the other. The other competition has a caregiver every 1520 to 30 people. That's the thing that causes the old the overall odor. So in a home for 10 total people, I've got two caregivers in there from 7am till 10pm and then I've got a RN that comes in in the am and in the evening just to have eyes on everybody and then I have… that comes each week or as he has to write. So I offer everything in a home that is very cozy that other places have in 100 to 200 type building. Now, with that being said, it's actually harder for us to be as efficient as everyone else. As I only have 458 homes, I actually need like 1020 3040 80 homes to actually have things be efficient. So I'll tell you 10 Plus, under 10, it's hard to be efficient and that's a thing that keeps other people from being able to get into this overall industry or if they do get in there.   They're the owner operator that owns a home or to homes but they're in it every day going 80 hours per week probably profiting 250 to 400,000 per year, but they're busy and I said you know I can't do that I'm going to operate a company that I can expand, to have time to go do other things. You know, I've our oldest is 14 years old and I openness that I could have time to coach him, right and I have been able to coach him playing baseball just since he was eight years old and that's only possible because everything here so time free is…   Michael: That's amazing, Brandon. I think my last question for you. I mean, I have a million more, let's be honest but we gotta keep this within time. How do you insure the thing, is it like us traditional long term rental? Is it insured like a medical office? I mean, what does that look like?   Brandon: Yeah, so the insurance is going to, you're going to have insurance on the overall asset but then you also have to have extra, the extra insurance for operating it for E and O for if anything is able to happen, if anyone's able to get hurt all of that. That's typically about $800 Each house each month but a thing for us, though, is because I haven't had any issues. Over the past eight years, we haven't had any, any type claims, whereas you're in a home with only 10 people, if you offer on if you offer awesome care, they don't tend to have any issues and that's what's awesome on this because typically at the other places for 100 to 200. They have a they've got a caregiver to every 20 to 30 people because the owners are trying to get it to earn extra money. The only avenue to do that is either to push up your income or to cut your expenses. That's the only thing to change the actual NOI. So what they typically do is they cut the care giver item, which is going to an increase the NOI. However, when people are able to have issues and they are able to pass, then you have their families, a attorneys after you and they're pissed, telling everyone how terrible you are. I always feel that it is better to do things how they ought to be done upfront, even if it's harder, because everything that I'm able to do is harder. Like this isn't easy by any means I would tell you, it takes you getting to like home tend to like really cover the overhead. The overhead I found to truly operate this properly, is over 500,000 per year and in order to pay for that you need enough houses paying towards that, to don't have each house covered in too much expenses that they just can't cover, so…   Michael: That makes total sense. Big numbers…   Brandon: Big numbers.   Michael: Yeah, awesome Brandon, this was so much fun, man. If people want to learn more about you reach out with additional questions. What's the best way for them to do that?   Brandon: They can they can call me or text me. So on my phone, you can call me at 815-790-2330 or else you can call our office of 847-380-8624, yes, 847-380-8624.   Michael: Amazing and do you have a website that people can check out as well?   Brandon: I do for our fund but our fund isn't for everyone or funds only for a for investors that are a core they are qualified purchasers. So it's a tear a BB it's a 506 C they can check that out their shepherd, our operating company, I can get you the page to put in there. So it is well just for anyone to put eyeballs on our actual homes or our fund is https://boutiqueseniorlivingfund.com/   Michael: Awesome.   Brandon: That is that as well, man. Thanks for taking time to talk with us today, man. This has been awesome!   Michael: It has been a pleasure, I am sure we'll be in touch soon and take care.   Okay, everyone, that was our show a big thank you to Brandon for coming on super, super interesting topic that like I showed at the beginning of the show. I don't think we've ever had someone on the show talking about this topic, so really interesting. Definitely go check out Brandon's fund, and it's an interesting asset class. See where it goes from here. As always, thanks so much for watching or listening, and we look forward to seeing the next one. Happy investing…

The Real Estate Syndication Show
WS1348: Syndicating Senior Living Assets | Brandon Schwab

The Real Estate Syndication Show

Play Episode Listen Later Jun 30, 2022 27:40


Syndicating large commercial real estate is not always the best way to go. Sometimes, going small gives better business IRR and yields valuable returns on one's personal and social well-being. That's what Brandon Schwab is aiming for. He's on a mission to raise the bar for senior living by syndicating smaller, resident-focused senior living assets that deliver quality care. Our guest today is Brandon Schwab, founder and CEO of Shepherd Premier Senior Living and Boutique Senior Living Fund. Having experienced first-hand the deficient care of his grandfather at a large, industrial-type senior living facility, he vowed to make improvements in the industry by starting his own senior living company that provides better, quality care to the elderly. Syndicating senior living assets helped him scale his business while maintaining compassionate, familial care for residents. Listen now and get to know Brandon.

Laissez-vous Tenter
Au cinéma, "Irréductible", le film RTL de et avec Jérôme Commandeur

Laissez-vous Tenter

Play Episode Listen Later Jun 29, 2022 12:06


- Au cinéma ce mercredi, outre "Irréductible", le film RTL de et avec Jérôme Commandeur, Stéphane Boudsocq nous fait partager son coup de cœur pour " Decision to leave" du réalisateur sud-coréen Park Chan-wook, prix de la mise en scène au dernier Festival de Cannes. - Dans une semaine, Isabelle Boulay fêtera ses 50 ans sur la scène de l'Olympia. Steven Bellery a rencontré la chanteuse québécoise. Coups de coeur, coups de gueule, reportages, interviews, et des invités prestigieux : "Laissez-Vous Tenter" dresse un panorama de l'actualité Musique, Cinéma, Littérature, Médias, People. Ecoutez Laissez-vous tenter avec Steven Bellery et Stéphane Boudsocq du 29 juin 2022

Les Grosses Têtes
PÉPITE - Jérôme Commandeur ne veut pas d'ennuis avec son film

Les Grosses Têtes

Play Episode Listen Later Jun 27, 2022 0:44


Invité exceptionnel des Grosses Têtes le 24 juin dernier, Jérôme Commandeur est venu présenter son nouveau film, "Irréductible". Et visiblement, l'acteur ne veut pas d'ennuis... Découvrez la page Facebook Officielle des "Grosses Têtes" : https://www.facebook.com/lesgrossestetesrtl/ Retrouvez vos "Grosses Têtes" sur Instagram : https://bit.ly/2hSBiAo Découvrez le compte Twitter Officiel des "Grosses Têtes" : https://bit.ly/2PXSkkz Toutes les vidéos des "Grosses Têtes" sont sur YouTube : https://bit.ly/2DdUyGg

How to Scale Commercial Real Estate
Pitfalls and Opportunities in Self-Storage Investing

How to Scale Commercial Real Estate

Play Episode Listen Later Jun 26, 2022 22:24


Learn about the good and the bad of the self-storage space with our guest, Mark McGuire!   Mark is a limited partner in 12 syndications ranging from multifamily to industrial hospitality and self-storage. He talks about how storage units are becoming an increasingly popular asset, why it's important to build relationships with brokers, and what bad investments to avoid in the market. Starting from the bottom of the ladder in his career, Mark also shares the lessons he learned as he worked his way up to success.     [00:01 - 03:08] Taking Action and Following Up How Mark climbed the ladder to success Investing time with people smarter than us   [03:09 - 21:03] What You Need to Know About Self-Storage Investing The self-storage industry is controlled by a select group of brokers This is the right way to approach and interact with them Comparing the first and the last self-storage deal he did Looking for locations The landscape then and now Mistakes multifamily investors make when transitioning to self-storage How Mark and his team position themselves and make moves in the current market The benefits of investing in self-storage What is a bad storage investment?   [21:04 - 22:24] Closing Segment Reach out to Mark!  Links Below Final Words Tweetable Quotes   “Find someone smarter than you, go ask them what you should do next, do that thing, And then once you're done, let them know that you did it and ask 'em now what the next step should be.” - Mark McGuire    “Self-storage is like the halfway house for recovering multifamily addicts.” - Mark McGuire    “The people who are willing to pay the most are young females and young females want properties that are well lit, and that are aesthetically pleasing, and have a lot of security cameras.” - Mark McGuire  -----------------------------------------------------------------------------   Connect with Mark at InvestingInMark.com and follow him on Instagram, Facebook, and LinkedIn.   Connect with me:   I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns.     Facebook   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] Mark McGuire: We've been in an atypical market where we've been up to the right for the last four years. So, you know, despite how poorly you've operated a deal or priced a deal like you could sell it just in spite of your knowledge base, but there will come a day when you reach the high water mark and then pricing starts receding. And then at that point in time, brokers are going to be calling you asking, what do you think this is?  [00:00:33] Sam Wilson: Mark McGuire's biggest passion is wealth building and investing. He's a limited partner in 12 syndications ranging from multifamily to industrial hospitality and self-storage. He's invested in multiple private companies in the biotech, finance and AI spaces. Mark, welcome to the show.  [00:00:49] Mark McGuire: Thanks for having me, Sam. I'm pumped, man. Excited.  [00:00:52] Sam Wilson: Thanks for coming on today. Certainly appreciate it. Here'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?  [00:01:00] Mark McGuire: Yeah. So started in, as the maintenance guy, the assistant to the maintenance guy. So I started, if there was a bottom rung on the ladder, I think I started in the ground and currently now functioning as the chief investment officer at Hearthfire Capital. And we focus in the syndication of the self-storage space and, you know, my journey getting there was from, you know, doing all of the work that nobody else wanted to do and kept finding people who were smarter than me and asking them for advice and then executing on the advice they gave me and going back to them and saying, Hey, I did that, now what? If I could give one piece of advice, find someone smarter than you go and ask them what you should do next, do that thing. And then once you're done, let them know that you did it and ask 'em now what the next step should be.  [00:01:48] Sam Wilson: And that is the follow-up that I think 90% of people miss is that, Hey, I did it. Lots of people are willing, lots of people are willing to say, Hey, you know, what do I do? And then they listen and it makes 'em feel good to hear what they should do. Then one, they don't do it. And then secondly, they don't follow up and go back and say, Hey, I did it, now what?  [00:02:06] Mark McGuire: I mean? Yeah. Some of the smartest people that I know, people that have mentored me, you know, I've asked them after the fact, like, why did you choose to invest time with me? Because, you know, time is a resource that people who, it doesn't matter how wealthy you are, you can't make more of it. [00:02:21] Mark McGuire: You can earn more money. You can earn more time. And the answer that I got from multiple people is you were a dealer. You went and you did what I told you to do. And then you followed up with action. So take action.  [00:02:34] Sam Wilson: Absolutely. That's an inspiring story. I think for all of us, I love starting, if there was a bottom rung of the ladder, I started in the ground. Did you, did you go to college? [00:02:43] Mark McGuire: I did three semesters, non consecutively, and never graduated.  [00:02:47] Sam Wilson: I love it. I love it. That's one I'm my, now it makes the story even better. Tell me what you guys are doing today.  [00:02:53] Mark McGuire: Yeah, so Hearthfire Capital, we currently own 12 facilities, about 420,000 net square feet buy, operate, manage, improve self-storage facilities. That's what we do.  [00:03:08] Sam Wilson: That space has seen, I mean, as all, I think real estate asset classes have, have just seen an incredible interest from the institutional side of things. How is that changing what you guys do, your strategy, your return profiles. I guess I asked that question and then like, we'll start there got too many questions for you, but we'll start with that one. [00:03:30] Mark McGuire: Hey, fire away. It's interesting. I was actually just on a call before I hopped on here today with a broker in the space. Just asking them what they're seeing. 'Cause we've been, self-storage has really been controlled heavily by a small group of brokers. So it's interesting in self-storage, that's different from other asset classes is that it's not, like there's a bunch of people, especially everyone comes from multifamily. Everyone knows multifamily. It's the easiest one to get into requires the least amount of capital. There's the most amount of possibility, but there's not a lot of like good trophy properties. And they're, the brokerage of those properties is A, a lot of them don't ever get on the market that they maybe get limited bid at best. [00:04:10] Mark McGuire: But two, there's a lot larger pool of brokers competing for the inventory versus in self-storage, it's controlled by like eight or nine groups that really do the vast majority of the industry across the country. So when you get in with a couple of them, you prove that you can perform, you sign deals up on the front end. [00:04:29] Mark McGuire: You don't retrade them. You take them down on the back end, obviously, assuming that, you know, you didn't get lied to or debt didn't go up 200 basis points over the time in which you had it in your contract. That's how you get in with these people and self-storage is really controlled by a select view group. [00:04:46] Sam Wilson: Got it. So how did you crack that egg? If you're coming in is the new guys on the, on the block, like what would you say to somebody if they wanted to get in front of these people and actually become a credible buyer?  [00:04:58] Mark McGuire: Yeah. So, you know what I would tell anybody who's looking to make that move, you know, reach out to them, sit down with them, tell 'em what you're looking for. And then when new offerings come in, that are what you're looking for, offer on them within like, you know, 24 to 48 hours. And, and if they don't work for you, tell them why that property wouldn't work and give them actual reasons, not just like, I don't feel like buying this today. [00:05:27] Sam Wilson: That is, and I hear that over and over and over. I think I've heard that 10 times in the last three weeks from guests on the show and it's something I just think that just needs to be reiterated again. I mean, I, I can't thank you enough for saying that, which is tell 'em, tell 'em why it doesn't work. [00:05:42] Sam Wilson: Communicate with your brokers. And I think that's, I need to go back and just kind of splice all these and put like a broker advice podcast together from about the last 30 guests and say, Hey, this is, this is how, you interact with brokers, 'cause it is, it is an interesting art and figuring out how to get in front of, and stay in front of them and what it means to be a valuable buyer to them. [00:06:01] Mark McGuire: And so many people misunderstand that they, they have the relationship with brokers confused. People think that brokers are supposed to bring them deals and, you know, brokers are out looking for deals, but the expectation of you telling somebody that you want something one time, A, is bad that, that's a horrible assumption that they're going to actually remember that they talk to you, let alone remember the specific criteria that you gave them. [00:06:28] Mark McGuire: And you want to find a way to bring value to them. 'cause sometimes brokers missed a mark on their pricing. And sometimes, you know, they look at it and we've been in an atypical market where we've been up to the right for the last four years. So, you know, despite how poorly you've operated a deal or priced a deal, like you could sell it just in spite of your, your knowledge base, but there will come a day when you reach the high water mark and then pricing starts receding. [00:06:51] Mark McGuire: And then at that point in time, brokers are going to be calling you asking, what do you think this is worth? And that's where the true relationship, it's a true two-way street at that point where they're coming to you asking, Hey, what would you pay for this and help me understand why because if they're not getting the pricing that they told a seller, they want to be able to go back to that seller and articulate why, what's changed in the market that's prohibiting them from executing on what they said. 'Cause it's an all about reputation and integrity and if you don't have those two things, you're out of the business.  [00:07:19] Sam Wilson: Exactly. And you know, to the point, yes, you are a buyer. Yes, you are a quote client of the broker, but like you said, it becomes a two-way, the symbiotic relationship in the sense that you need them, they need you, yes, they get paid, but you also get paid by buying deals as well. So it's and it becomes very valuable when that last step, I think, occurs. Like you said, where they suddenly go, oh, okay. Hey, you know, Mark, what do you think about this? [00:07:43] Sam Wilson: Tell me this is a project we're looking at. What's it worth? And, and they'll, they'll smell. They'll smell it. If you, if you're not telling, you know, giving 'em accurate feedback, low balling 'em with something that, that doesn't make market sense. That's a cool point you make there. Tell me about your first deal you did, and then compare it to the last deal you did. And tell me how things have changed and maybe what you guys are doing differently from the first to the 12th.  [00:08:07] Mark McGuire: So the first deal that we did with Hearthfire Capital or the first deal that I ever did relative to one that I just did with Hearthfire Capital? [00:08:12] Sam Wilson: Let's talk all self-storage. [00:08:14] Mark McGuire: Okay, cool. Very first self-storage deal we did, we purchased for, I think it was about 1.7 million. We're actually on market right now at 3.5 million to take that full cycle as we speak here. A lot smaller facility worth about a third of the value. And actually it's worth less than a third of the value. [00:08:37] Mark McGuire: It's just less, it's less decimal points. That's all it is at a certain point though, you know, if you're playing for big, for more decimal points, you got to really know your craft because when there's bigger decimal points, you can create more wealth. The process is the same, but the stakes are higher. [00:08:56] Mark McGuire: You want to kind of start a little smaller, so that way, if you do make a mistake, it, you don't get, I'm going to say totally crushed and knocked out of the game. Go a little smaller in the beginning and that one had no expansion. That one was just a pure revenue play, a pure, you know, optimization, doing some parking lot renovations and converting a particular area, the facility to climate control. [00:09:19] Mark McGuire: And the one that we just did, we bought a 31,000 square foot facility with a 34,000 square foot expansion that we'll be doing. So we're building 34,000 square, effectively taking this facility size to 65,000 square feet and upgrade in the class of that facility.  [00:09:34] Sam Wilson: What was the purchase price on the 12th one? [00:09:36] Mark McGuire: Man, now you're testing me. The equity, I think, the purchase price of the, the 12th one was like, you know, dirt and existing facility was like 4.7 million stabilized values going to be in the eight or 9 million range.  [00:09:55] Sam Wilson: Okay.  [00:09:55] Mark McGuire: And the first one was 1.7 million going to three, three, somewhere between three and three five. We'll see how it shakes out.  [00:10:02] Sam Wilson: Right, right. So, so yeah, I mean, obviously you're getting into bigger projects. It doesn't sound like you're playing for the 1.5 or 1.7 million dollar projects anymore. You guys are looking at bigger assets. Tell me on a square foot basis. Like I know 31,000 square feet, is that a small, I don't, I don't own, no, I don't own any, I have a passive investor in self-storage. I don't own any personally. So tell me you know, what's the size of a good facility for you guys? Like where do, where do the numbers make sense?  [00:10:28] Mark McGuire: Yeah. So from a sizing, it really kind of depends because, and, and, and I hate to say that, but it's the truth. If you're already established in a market and you can get economies to scale by pulling a property manager from a local facility nearby, and then getting cost shares on the operations side of things, you can go and take that facility and that facility makes sense. If you're going to go and penetrate a new market and stand, set up a flagship, buying a 20 or 30,000 square foot facility is, is going to be challenging unless there's a big, like we're doing here a big expansion on the backside to really get that economy to scale. So if we're, we call them bolt on sites. [00:11:06] Mark McGuire: So if we're going to look at a bolt on-site, we would do 20 to 30,000 square feet. If we're looking at a flagship, it's going to have to be 50 to 60,000 minimal.  [00:11:15] Sam Wilson: 50 to 60,000 square feet is a, okay, so that that's kind of the entry-level where you say, Hey, we're starting in a new market. It's gotta be at least 60,000 square feet. How have things changed on the buy side competitively? Like what, what's that landscape look like now for you?  [00:11:31] Mark McGuire: You know, it's funny you say that literally that was the call I had this morning with a couple of brokers. I've been reaching out to some brokers I have relationships with 'cause we've been swinging and missing on some deals. And we're just getting outbid and it's, and like, these are deals that when we hear what these things are selling for, I'm like the IRR at the investor level was like 11%. Nobody wants them, invest in a private equity deal with an expansion component for 11%. That assumes everything goes right. If anything goes remotely wrong, you're toast.  [00:11:59] Sam Wilson: Right. 11 became 4. Thanks at best.  [00:12:02] Mark McGuire: Maybe at best. Yeah. So, you know, we're, like you alluded to earlier, there's a lot of capital pouring into this space and there, and this is like, I always say self-storage is like the halfway house for recovering multifamily addicts. [00:12:16] Mark McGuire: And it's everyone who's sick of chasing diminishing returns and doing stupid stuff to try to acquire a facility that's way overpriced and overbid. And you know, there's not a lot of meat on that bone, it's been picked over. Now all those people are coming into self-storage and people are starting to put non-refundable deposits, which is stupid. [00:12:36] Mark McGuire: And they're starting to do, you know, waving due diligence. Stupid. I mean, it's just literally like, let me just increase the risk factor as much as I possibly can and be as ignorant as possible so I can absolutely make sure to get burned.  [00:12:52] Sam Wilson: Do you see, I guess that, and if, and if that's the way you, I guess that is the way you see it, is that eventually they will get burned Where do you want to be when that happens and how are you positioning yourself for that?  [00:13:04] Mark McGuire: Well, I don't want to be competing for their deal. I don't want to be competing for the deal the first time, I want to be competing at it after they've lost their shirt and the bank calls their note because they don't make their debt covenants. [00:13:13] Mark McGuire: That's where I want to be. But we're right now, like in order to acquire, I mean, it's an off-market game right now. I mean, and self-storage has for a long time, been controlled by brokers and a lot of the inventory was traded by brokers. And self-storage didn't have that popularity. And I mean, there were times, man, these things are trading for 10 to 12 caps. And that same property that traded for 10 to 12 cap five to six years ago is now trading for six. Like, it's nuts. [00:13:44] Sam Wilson: Right. Yeah. It's absolutely insane. What are the economic things or the environmental moves that maybe have to occur for you to think that it will return to a point where you can then pick up these properties at a discount when these people can't cover their note? [00:13:59] Mark McGuire: So self-storage, what no one talks about in the whole recession resilient thing about self-storage, during 2008, 2009 as a part of CMBS defaults, self-storage was at 0.03%. That is three-hundredths of a percent. Like that's a lot of decimal places in, in front of the decimal, smallest. The next closest, I forget whether, I think it was industrial, I think was the next closest. And it was like, not even close. So self-storage has traditionally been low leveraged. You're talking 65 to 70% loan to value. And you have people that, like, it's not a lot of money. I mean, you're talking like a hundred dollars a month for a unit and the alternative is put it in your house. [00:14:49] Mark McGuire: Well, if people don't have the space in their house, they don't have the money or the income to go buy a bigger house. Guess what? A hundred dollars a month is cheap alternative. So that all being said, I completely forgot the question.  [00:14:59] Sam Wilson: What has to happen economically for you? Because you had said, Hey, you see people taking a huge risk, people doing things, you go, gosh, that doesn't make sense. You guys are just, you're making this as risky as possible, paying the most you can. And when you get burnt, you can't cover the note. Then I want to be there to pick it up.  [00:15:15] Mark McGuire: So what has to happen is that people don't do their due diligence and a new facility gets built in the three or five-mile ring that totally crushes that other facility who had marginal returns to begin with. [00:15:28] Mark McGuire: And they, and, you know, either they don't meet their debt service or they just barely meet their debt service and, you know, make it out, you know, by the skin of their teeth. But the deal returns are you know, super compressed.  [00:15:40] Sam Wilson: Right. [00:15:40] Mark McGuire: So it, honestly, it just takes patience and time.  [00:15:44] Sam Wilson: Yeah, absolutely. Tell me about, you know, again, but you just kind of stay on the economic times conversation. You've invested as in, as a, maybe even an active investor in industrial and some other asset classes. How do you feel like you guys are going to weather any, any economic uncertainty and really, why have you favored this asset class over another?  [00:16:05] Mark McGuire: So self-storage just provides a really unique aspect to it where it kind of blends hospitality in terms of the dynamic pricing of the rates. [00:16:16] Mark McGuire: But it, it manages that and then has a better sticky factor that's more along the lines of multifamily. But it's got agility to it. So what I mean by that is people don't want to go and move their stuff. With self-storage, if you think about multifamily, right? And your rent is 2000 bucks a month, and someone says, Hey, I'm going to give you a 10% rent increase every six to eight months. [00:16:40] Mark McGuire: If you go from 2000 to 2200 to then, you know, 420 dollars within 12 months, you're going to be like, I'm out of this place. Forget it. Self-storage has 30-day leases. And, you know, if someone's unit rent is a hundred dollars a month and you raise it 10%, that's meaningful in terms of your revenue collected in your NOI. [00:17:02] Mark McGuire: It's not meaningful to the person who's renting the unit who has to then rent the U-Haul truck, pick up all their stuff and then go put it down somewhere else. At which point they may be able to find a place that's the same and probably not cheaper, probably more expensive. And then they got to take the time to move at all. Nobody wants to do that. For $10 a month, you're not moving that. You're not moving your stuff. [00:17:24] Sam Wilson: Right. Yeah. You're going to spend eight hours and 500 bucks moving all of it. And it's like, well, I'll just pay the 10 bucks a month to be done.  [00:17:31] Mark McGuire: So then if you go and get another 10% rent bump in eight months, people were like, eh, I don't really feel like moving it for another, you know, $11. That's what happens. And this is how it's just like, you're just tweaking the dial and turning the heat up. And that frog doesn't realize that that water's getting hot. But man, before you know it, it's boiling, that frog is cooked.  [00:17:50] Sam Wilson: Right. Right. Tell me about this. What are some storage units right now that you just look at and you go, man, I wouldn't buy that if it were free? What's some garbage out there on the market that makes a bad storage investment.  [00:18:03] Mark McGuire: Man, so, you know, what's interesting is aesthetics are such a, an important part about self-storage. Self-storage was used to be marketed to the cheap and three or four years ago, people realized they started doing more analytics, data. [00:18:19] Mark McGuire: I'm sure it was always being done, but it became more widely understood that the people who are willing to pay the most are young females and young females want properties that are well lit and that are aesthetically pleasing and that have a lot of, they have security cameras and solid gates and fencing. [00:18:40] Mark McGuire: They want to feel safe at the facility, 'cause if they feel safe while they're there, then their belongings are safe and therefore it's a good place to rent. And if they have to pay more for that. So be it. That's sanity that's well spent. So a couple of things I wouldn't buy. A, a facility I could buy, you could, you could build an A class facility in, in an oversaturated market that can't support the rent and I don't want that facility. So a facility that's located in an oversaturated market and how do you know if it's oversaturated? You know, there's base rules around square foot per capita, and it's historically been eight to 10 square feet. [00:19:15] Mark McGuire: I think that's totally busted. It really depends on the three and the five-mile rings. You gotta really understand your supply-demand analysis and how to execute that. Once you execute that, or you understand that, like the 8 to 10 square foot per capita is a great 1% rule of thumb, if you will, for storage, but it could be six square foot per capita, but there may not be enough population there to support the demand. Or you got stuff that's built to the wrong sizes. So if you go in and when you're doing your supply demand analysis, you're noticing that this facility is way under-rented, but it's all five by fives and five by tens. And the, the, the market wants ten by twenties. [00:19:54] Mark McGuire: That's a facility that I don't want, like, 'cause you could be 50% vacant. You're like, oh man, there's so much occupancy I could use here. But if it's not what the market commands, unless you can convert it, I don't want it. And then, I mean, ultimately it comes down to, I want a facility that looks, that looks nice, or I have the ability to make nice. And if I can't, the turd is a turd all the way through, and there's no amount of polish that's going to make it sparkle. I'm out.  [00:20:20] Sam Wilson: Right. That makes a lot of sense. No, that's really cool. I was just curious, you know, again, with the, with the buying frenzy, it seems like that we are in on so many fronts, you know, what it looks like or... [00:20:30] Mark McGuire: It's asset class agnostic, man, the buying frenzy doesn't care what asset class it is. There's just a ton of liquidity and there's sovereign money coming in now. Where these people, I mean, sovereign wealth funds where they're losing principle balance by not being spent. So these people were like, Hey, if I get 5% on my money, I don't really care.  [00:20:47] Sam Wilson: Right. Yeah. That's, that's really, really interesting, but still even in that, even in that buying frenzy market, I'm always curious what those, who are active buyers, aren't, aren't buying and why. And you did a great job of kind of explaining deals that just simply don't make sense even right now. So thanks for doing that. Mark, thanks for taking the time to come on the show today. It was great to have you on learn about your business, what you guys are seeing in the market, how you guys are interacting with brokers, what you guys are doing to get deals sent to you. Again, I love the, you know, just the, the, the information you gave us about how to interact with brokers, how to stay in front of 'em and then, of course, your info there on mentors and how to be of value to them and let them know that you are actually doing what they're saying, and then get them to continue to pour into you by, you know, giving them feedback and following exactly what it is they say to do. [00:21:31] Sam Wilson: So I think that was all awesome information. If our listeners want to get in touch with you or learn more about you, what is the best way to do that?  [00:21:38] Mark McGuire: Yeah, best way is investingwithmark.com. That'll put you right through our, our website and capture or contact form and or if you're in on socials Instagram slash investingwithmark. Facebook, same thing, LinkedIn, same thing. [00:21:51] Sam Wilson: Awesome. Yeah, we'll make sure we put those also in the show notes. Mark, thanks again for coming on today. I certainly appreciate it.  [00:21:57] Mark McGuire: Awesome. Thanks Sam.

Les Grosses Têtes
PÉPITE - Jérôme Commandeur arrive enfin aux Grosses Têtes

Les Grosses Têtes

Play Episode Listen Later Jun 24, 2022 7:12 Very Popular


A l'occasion de la sortie, mercredi 29 juin prochain, de son film "Irréductible", Jérôme Commandeur est au cœur d'une journée spéciale sur RTL. Et pour le plus grand bonheur de Laurent Ruquier, l'acteur a rendu visite aux Grosses Têtes... Découvrez la page Facebook Officielle des "Grosses Têtes" : https://www.facebook.com/lesgrossestetesrtl/ Retrouvez vos "Grosses Têtes" sur Instagram : https://bit.ly/2hSBiAo Découvrez le compte Twitter Officiel des "Grosses Têtes" : https://bit.ly/2PXSkkz Toutes les vidéos des "Grosses Têtes" sont sur YouTube : https://bit.ly/2DdUyGg

Laissez-vous Tenter
Jérôme Commandeur est l'invité de Laissez-vous tenter avant la sortie mercredi prochain de son film "Irréductible"

Laissez-vous Tenter

Play Episode Listen Later Jun 24, 2022 13:37


Jérôme Commandeur est l'invité en direct de Stéphane Boudsocq et d'Yves Calvi avant la sortie mercredi prochain de son film "Irréductible". Coups de coeur, coups de gueule, reportages, interviews, et des invités prestigieux : "Laissez-Vous Tenter" dresse un panorama de l'actualité Musique, Cinéma, Littérature, Médias, People. Ecoutez Laissez-vous tenter avec Stéphane Boudsocq du 24 juin 2022

Les Grosses Têtes
PÉPITE - Jérôme Commandeur et les anecdotes de tournage de "Irréductible"

Les Grosses Têtes

Play Episode Listen Later Jun 24, 2022 3:47


Invité exceptionnel des Grosses Têtes ce 24 juin à l'occasion de la sortie de son film "Irréductible" mercredi prochain, Jérôme Commandeur est revenu sur les conditions de tournage durant la pandémie de Covid-19. Et les anecdotes sont nombreuses... Découvrez la page Facebook Officielle des "Grosses Têtes" : https://www.facebook.com/lesgrossestetesrtl/ Retrouvez vos "Grosses Têtes" sur Instagram : https://bit.ly/2hSBiAo Découvrez le compte Twitter Officiel des "Grosses Têtes" : https://bit.ly/2PXSkkz Toutes les vidéos des "Grosses Têtes" sont sur YouTube : https://bit.ly/2DdUyGg

How to Scale Commercial Real Estate
Choosing the Right Real Estate Asset Class

How to Scale Commercial Real Estate

Play Episode Listen Later Jun 23, 2022 16:57


Ep. 571  From Management Consulting to Commercial Real Estate Investing'   Matt Jones is a real estate investor based out of Minneapolis who specializes in investing in both small and large multifamily properties. He has a master of science in mental health counseling which comes in handy for building positive relationships in real estate. Let's hear him as he shares his thoughts about adding value to your clients and maintaining that relationship to achieve exponential growth.     Highlights:   [00:00 - 05:08] How to Add Value to Others and Get Ahead in Real Estate Matt Jones is the CEO of Hawkwing capital, which raises capital from passive investors to own large apartment buildings. He also wrote the book Book About Real Estate. In 2019, he learned about real estate syndication and decided to switch to this model to speed up his progress. He currently owns 244 beds of senior assisted living and is looking to raise capital for some other deals. Opportunity for him right now is through broker relationships.   [05:08 - 10:19] Real Estate Investor Shares Tips for Success Matt's shares his experience in real estate, including their time as a manager of group homes for adults with disabilities and their current focus on multifamily properties. Success for the author is defined as achieving goals that expand one's horizons and making progress towards those goals. Matt anticipates transitioning more from an active investor to a passive investor in the future.   [10:19 - 15:20] How to Raise Capital and Take Down Deals Matt suggests that you should raise capital from people who you trust and who understand the risks and rewards of the investment. When raising capital, you want to make sure that you're the people raising capital from and that they understand what they're getting into. Matt's approach is to first ask somebody if they would be interested in investing in a deal, and then to show them the investment and how it would benefit them. If someone says yes, Matt will ask them for their contact information so that he can contact them about the investment. Matt had success raising capital by being patient and being prepared with possible outcomes as seen today's market    [15:21-16:56] Closing Segment Reach out to Matt  Links Below Final Words Tweetable Quotes   “You want to add value to other people and it doesn't even necessarily have to be real estate related. Let's say you meet somebody who maybe they wanted to play the guitar and if you know how to play the guitar, you can offer them some free lessons right there. Then they're going to want to do business with you. Or you never know where things go with this, but by adding value to everybody around you at all times, good things are gonna come back your way ” - Matt Jones   ----------------------------------------------------------------------------- Connect with Matt Jones by visiting their website at: https://www.hawkwingcapital.com/   Resources Mentioned:      Book About Real Estate     Connect with me:   Facebook   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] Matt Jones: You wanna add value to other people and it doesn't even necessarily have to be real estate related, yes, it's great. If you're able to raise money or you're able to find deals or, you know, some kind of real estate related value, but let's say you meet somebody who.Maybe they wanna play the guitar. And if you know how to play the guitar, you can offer them some free lessons right there in an instant value. And then they're gonna like you, and then they're gonna wanna do business with you. You never know where things go with this, but, by adding value to everybody around you at all times, good things are gonna come back your way.  [00:00:36] Sam Wilson: Matt Jones is the CEO of Hawking capital, which raises capital from passive investors to own large apartment buildings. And he also wrote the book about real estate. That literally is the name, the book about real estate and co-host of pillars of wealth creation podcast. He also owns 244 beds of senior assisted living. [00:00:56] Sam Wilson: Matt, welcome to the show.  [00:00:57] Matt Jones:Hey, good to be here.  [00:00:59] Sam Wilson:  Hey man. Thanks for coming on today. There's 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] Matt Jones: So in 2015, I bought my first Plex. I was living I house hacked it and I saved up money from my W2. It took me a few years before I was able to buy a second triplex and by a second Plex. And I was just so frustrated at how slow my progress was going. Like the idea was like eventually own like a large complex. And I was like, oh, this is gonna take me. Years before I can scale up at this pace.And then I learned about real estate syndication in 2019 and thought like, oh, this is bananas. Like, like it solves all my problems with now. I don't have to save up my own money. I can use other people's money and I don't have to wait to scale up to bigger properties. I can just jump in and start right now.And so then I found a mentor to help me out who actually I co-host the podcast with now. And Recently raised some capital with him for a 228 deal in Kentucky and then looking to raise capital for some other deals as  [00:01:58] Sam Wilson: well, man. That's that's really, really cool. I mean, 2019 till now that's pretty fast progress.I would say. , know you said , you had a mentor, but what are some other things you feel like you did right. That other people should emulate  [00:02:10] Matt Jones: I think, well, the biggest hurdle that I had to get over was my own mindset. So if you can, change your mind of thinking, like, how can I do this rather than like, oh, I, I couldn't buy a a hundred unit place. [00:02:20] Matt Jones: Like, whether you say you can, or you can't you're right. think it was Henry Ford that said that. And so, Getting into the mindset. Like I can do this. I just need to figure out how or better yet who I can work with to get me to that level.  [00:02:33] Sam Wilson: Right, right. That's that's really cool. Tell me what are you guys doing? I heard you say something about opportunity there in Louisville. What are you guys doing right now to find opportunity? You moved on from the Plex world, cuz you said that was two slow growth. You moved into mostly multifamily and I hear some also assisted living, but what does opportunity look like for you right now? [00:02:52] Matt Jones: It's primarily through broker relationships. So, built to connections with brokers. And so we're seeing a lot of on market deals, but I think some people prefer off market or on market, but with, on market it's you get all the numbers like it's presented in a way that's they're the seller is ready to sell.And you have the broker there to help make sure everything falls into place. So, plus through, on market deals, we get a lot of deal flow and right now you gotta look through a lot of stinkers before you find that one gem .  [00:03:19] Sam Wilson: Yeah, you do. How are you underwriting those to where it makes sense.That's what we're seeing a lot in across all asset classes is you're just. I don't even know how the current buyer is making this pencil. So what do you guys doing differently? Feel?  [00:03:31] Matt Jones: Well, we just go through the numbers. Yeah, the I'd say yeah, 99 out of a hundred deals, we just kind of shake our heads at like , I don't know how this is gonna work at that price point, but once in a while we find that one that actually does pencil in and then when we think oh what did we do wrong in the underwriting?But we're still underwriting conservatively. We're still, stress testing the numbers to make sure like, okay, if. If there's another recession and we get to like the record high, they can see raids or record high concessions and things like that. Is the property still gonna make money to ride through a potential recession?If yes, then that is a good deal. But a lot of these properties are like you say, they're going at these prices that if anything goes wrong for these operators they're gonna lose  [00:04:10] Sam Wilson: their pants. Talk to us about positioning, how are you positioning yourself in front of. The sellers. It's a, it's almost an art.I think of putting yourself in front of the sellers in a way that makes the seller wanna work with you, which is kind of a weird place to be in the cycle where it's like, Hey wait, like, why am I trying to court? You? Shouldn't you be courting me as the buyer, but it's not the way it's working. What are you guys doing on that front? [00:04:32] Matt Jones:Well, it comes down to relationships as well, relationships with our lenders, property management, the brokers, when you can build a reputation, or if you don't have one right now, partner with people who already have a good reputation. And so you can say like, my team, this is our experience and to show to the sellers that like, Yes, we can close we've closed on, X number of units and, taken so many units to, full cycle and such. And we already have the professional property management, that's local. That's gonna do a good job that already does a great job with these other properties. Just to show the seller like, yes, we can close. Yes, it's gonna go smoothly. And we can make it happen  [00:05:08] Sam Wilson: right now. I saw, we read that there in your in your bio there in the, in intro that you are also involved in assisted living. So, is that a core focus for you or is that just an opportunity that came your way and you participated in it? Walk us through. kind of being diversified across asset classes [00:05:23] Matt Jones:. Yeah. That was an opportunity that came up my way. And the numbers were really good. It had an IRR of 21 plus, so I couldn't say no to that.And I come from a background of managing like group homes for adults who have disabilities it's really, really similar the operation side, which I'm really well versed with. And so. And multifamily is where my focus is, but it's on a different cycle than senior assisted living. Like multifamily is high right now, senior assisted living.And a lot of times, and we focus on rural areas actually that's cheap so we can buy these mom and pop shops for a song from operators who didn't do well during the Covid but we're hitting the silver tsunami here with the baby boomers that are getting to that age where they need are starting to need more intensive care from senior assisted living.And so there's just a lot of opportunity right now. The, demand is gonna be much stronger than supply here shortly. [00:06:15] Sam Wilson: When you look at things like that, is that a a potential core focus for you when you see opportunity?  [00:06:23] Matt Jones:Yeah, I think it there's the potential thought we might shift focus to that being our primary. But multifamily is our bread and butter. We understand that we've done well with it and we know how it works.  [00:06:31] Sam Wilson: Got it. Got it. That's that, that is very, very interesting. Tell me what's a an excellent piece of advice that you were given. Say like in 2019, when you said, Hey, I wanna switch, I wanna go into something that can scale quickly. [00:06:44] Sam Wilson: What's something somebody told you, you feel like that, that everyone else should also hear.  [00:06:48] Matt Jones: you have to add value to other people without expecting value in return. And, if you try to just take and take from other people, take their knowledge, take their time, take their money without giving anything in return.You're gonna, it is really off putting like you you wanna add value to other people and it doesn't even necessarily have to be real estate related, yes, it's great. If you're able to raise money or you're able to find deals or, some kind of real estate related value, but let's say you meet somebody who.Maybe they wanna play the guitar. And if you know how to play the guitar, you can offer them some free lessons right there in an instant value. Like, and then they're gonna like you, and then they're gonna wanna do business with you. Or you never know where things go with this, but by adding value to everybody around you at all times, good things are gonna come back your way. [00:07:30] Sam Wilson:What are some surprises or potential pitfalls maybe that you learned or that you feel like other people should avoid?  [00:07:36] Matt Jones: I think my biggest mistake starting out was trying to do it all on my own. I consider myself a smart guy, very capable. And so I was trying to do everything on my own and I was just spinning my wheels for years before I realized I needed to take a nice big slice of humble pie.And, I, I'm very shy. And so I had to force myself to network with other people and just get out there and find people to partner with to make things. And once I did. My, my career propelled much faster than I, I could've on my own.  [00:08:06] Sam Wilson: When do a lot of education in this space.I think that's where your book about real estate really comes in. What are some of the common questions or common things that people come to you and you say, Hey, we're gonna start at square one. What's square one for you. And then how do you kind of work 'em through the process?  [00:08:21] Matt Jones: Square one is exploring the different types of asset classes and deciding which one two it the most, but preferably one that you wanna focus on right away. And because like there's a million different ways to. Make money in real estate. And if you try to do 'em all you're gonna do, 'em all poorly. So you're much more better being niche and focused. And like my book, it covers the whole spectrum of real estate investing. So to help people explore, like self storage units or mobile home parks or multifamily, or, all these different things.And then you choose like, okay, this one makes the most sense to me. This one, I think I can do, and then become specialized in that [00:08:57] Sam Wilson: Got it. Got it. So yeah, if I'm hearing you're right, you say, pick two at the most asset classes, and that goes back to the, and I'm even gonna contradict your statement there a little bit, but it said, he, he would chases two rabbits cases.He would chases two rabbits catches none. Right. If I could speak today. And I like that idea of that. You gotta really, that there's a lot of ways in this business that you can make a lot of money. Talk to us about success. If you were to define success for you, what is success and where do you look? What does success look like for you in the future. ,  [00:09:26] Matt Jones: you know, success is just, having goals that really expand you as a person and having a good plan to be able to achieve those. So whatever it may be, whether it's financial freedom, so you can hang out with your family more or being able to travel which I enjoy just, I guess living the kind of life that you want and taking the actions necessarily to make that happen. And as for the future I anticipate I'll transition more from an active investor, to a passive investor, so that I'll just have my various investments and enjoy the free money that shows up at my bank.  [00:09:58] Sam Wilson: I hear that, man, I'm a passive investor in a lot of deals and I can't wait till that is all I am. I love being an active investor, but there's something really special about that ACH in your account once a month. And you're like, oh, that was relatively easy. I could do more of that. So absolutely hear that. Raising capital, you went out and said, Hey, I've figured out that this industry, I don't have to have all the money myself. I can go out and pool other people's capital and take down deals. Talk to us about the capital. Raise side for you. Can you walk us through that journey? Getting your first deal done. Maybe some of the hiccups or the things that you would do differently on that front.  [00:10:32] Matt Jones: Yeah. Well, I guess just in general, when you're raising capital, you wanna make sure you're the people that you're raising capital from, understand what they're getting into. So, you don't wanna be like some scammer type of person. You I'm very upfront and honest, so. I make sure that I'm not taking, somebody's like last $50,000, for example, I don't want that. Like, if you need that money to live off of this is not the right kind of thing for you. So I, first make sure that they understand that like the risks and potential rewards and what'll happen with their money. And and then I, show them like what that, like, I'm myself. Investing my own money into the deals that I'm raising capital for. I just increase their confidence that okay. Like he's putting his money where his mouth is so that this must be a good deal. [00:11:11] Sam Wilson: Right, right. What were there strategies or I guess, methods you employed on your first capital raise.  [00:11:18] Matt Jones: Yeah, you start out with friends and family and like work acquaintances and, people like that. But I would say my approach is, I first ask somebody like, Hey, could I ask you a couple questions about your finances? And if they say they're, usually say yes, if they say no, that's fine. But once they say yes, then you say like, would you be open to a 10% return on your. Through an investment and which, is conservative very conservative for a real estate investment or the kinds that I'm looking at. Sure. And, they'll generally say yes because that's better often than the stock market will provide them and with their 401k such, but once they say yes, then I say, like, if I found an investment that could provide you with at least that much a return would that make sense for me to contact you about that? And just run it by you, and then they're gonna say, yeah, sure. Cuz that doesn't hurt for me to just like tell 'em about something. And then okay. If I found something like that, how much money would you have available to be able to invest in that kind of deal? And then they'll tell me like, whatever amount it is. And so now I've got, sort of a soft commitment and I can shut that down and like, get their contact information. What's the best way for me to contact you if I do find a deal like that, cuz I, I don't have anything right now, but you know, if I do. So then you can contact them. You've got their soft commitment already, and then you can show them like, Hey, there's a deal. That's gonna give you a 15% IRR or what have you then they're gonna be like, all right, here's that original money that I said. [00:12:34] Sam Wilson: Are these conversations you're having, like, under what? In what environment are you having these types of conversations? [00:12:43] Matt Jones: all environments. Because if you don't tell people about what you're doing, nobody's gonna know. So you really have to be, open and honest about yourself and authentic with that. And plus I think of it as all, there's all these people around me that are missing out on great opportunities if I don't tell them about it. If and so I'm doing them a disservice by not having this conversation with.  [00:13:05] Sam Wilson: Yeah. Yeah. And that's there you're absolutely right there. It's, I think it's uncomfortable. I'll be honest. You're you're I think the questions you asked there are excellent, but I was kind of envisioning myself asking those so directly and I'm like, oh man, that makes me uncomfortable a little bit, in, like you said, in all environments going. Hey, tell me about your finances. Like, well, maybe no, like okay. But it sounds like you've had great success with that.  [00:13:26] Matt Jones: Yeah. I would say the first time I did it, I certainly felt awkward, but it I got through it and I'm like, oh, that wasn't so bad. I can do that again. Do you ever get any,  [00:13:35] Sam Wilson: any any complete, just like, no. We're not talking about that responses. [00:13:38] Matt Jones: I haven't yet because it's not, like you say, like, hi, my name is Matt. Can I ask you a few questions about your finance? build a little rapport first, right?  [00:13:45] Sam Wilson: Right. I get it. Okay. No, that's cool. I like that. And I think that's an encouragement to our audience. And even to me to be more direct where it's just like, Hey look, we've got we do have excellent assets. We have excellent opportunities for investors. And, we're achieving amazing returns for 'em and it's kind of, it's bad on me if I don't actually just go out and tell people about it.   [00:14:07] Matt Jones:Yeah. You're keeping people from achieving their financial goals from achieving their dreams by not talking about it. [00:14:11] Sam Wilson: Right. Oh, for sure. For sure. Yeah. I had an investor call me she had received her first distribution in a passive deal and and maybe this is bad, it was extended family. So I, don't hang me for maybe not doing my My know, you're know you're customer as well as maybe I could have, but they're like, Hey on, wait. So I get this money. Like you get a distribution. And yet I still retain my equity in the deal. I'm like Uhhuh, like you still have your a hundred grand in the deal and you're gonna still get a quarterly payout. And they're like, wow, where's this been all my life. I'm like, , I'm on, I'm onto something here. So yeah, I wish they'd understood maybe the mechanics of the deal light slightly better, but that's okay. It all worked out. So that is fun. You're absolutely right. Not sharing that stuff with your investors is yeah, it's something we should all take certainly more seriously. What are you guys working on right now that you were excited about?  [00:15:01] Matt Jones: We're in between deals right now? My. Partner. He just did a his fire step five, six C offering, which I wasn't involved with. But before that did some that raising for that 228 unit deal. So looking for the next deal being really patient, being really cautious right now, cuz we're, potentially seeing some changes I guess in the market, but being prepared for that. [00:15:21] Sam Wilson: Right. Absolutely. Absolutely. Matt I've enjoyed our time today. Certainly appreciate you coming on, telling us how to get out of the triplex rat race, if you will, and how to scale and grow quickly, certainly look forward to sharing the links to your book, hear the book about real estate. Again, that is the title of the book about real estate that I don't know how you got that title, but that's awesome. It couldn't have been absolutely more clear. And then, just some of the values that you add the day, adding value to other people. Without expectation is one of the ways to certainly grow. You said, one of the mistakes you made early on was trying to do it all on your own and the bigger deals we go, certainly the more, this becomes a team sport and then also about sticking to your niche and not going too wide. [00:16:02] Sam Wilson: So I appreciate that. Thank you so much. Is there any last piece of advice that you would like to share with our  [00:16:07] Matt Jones: listen? It takes three things to get going in real estate, educate yourself, networking with other people. And most importantly, take action.  [00:16:15] Sam Wilson: Love it, Matt, for listeners. Wanna get in touch with you? What is the best way to do that? [00:16:17] Matt Jones: You can go to my website, Hawkwingcapital.com and you can schedule a call with me through there, and you can also even download a free chapter for my book as well. [00:16:26] Sam Wilson: Awesome. Matt, thanks so much your time today. I do appreciate  [00:16:29] Matt Jones: it. Yep. You bet.  

Popopop
Jérôme Commandeur et Pascale Arbillot

Popopop

Play Episode Listen Later Jun 22, 2022 53:34


durée : 00:53:34 - Popopop - par : Antoine de Caunes - Ils viennent nous présenter Irréductible, le deuxième film de Jérôme Commandeur : Pascale Arbillot et Jérôme Commandeur sont les invités de Popopop !

How to Scale Commercial Real Estate
Keeping Your Fingers On The Industry Pulse

How to Scale Commercial Real Estate

Play Episode Listen Later Jun 16, 2022 19:49


Real estate investing has long been one of the proven ways to become wealthy. But like any other business, it's not as easy as it sometimes appears. Wesley Yates is the Co-Founder of VFR Capital Investments, a real estate investment company focused on the acquisition, management, and disposition of opportunistic to core-plus multifamily assets that can be repositioned on behalf of and for its investors. With his years of experience in real estate space and management, he shares valuable lessons on how you could start investing in real estate with little capital, finding the best people for your team, and how to qualify deals.   In late 2018, he turned down an Operations Management opportunity with Amazon to begin actively networking within the real estate investing community. Quickly building relationships with other like-minded entrepreneurs, he has created an extensive network of accredited investors who believe in his vision for methodically acquiring commercial assets.    Wesley is an enthusiastic leader and brings with him skills crucial to building successful teams and driving performance.   [00:01 - 03:14] Walking Away From a Job Opportunity to Get Into Real Estate Get to know Wesley Yates How Wesley led his team in growing their portfolio from zero to 862 units in just a little over 15 months   [03:15 - 09:11] Learning from Failure Experiencing his first failed deal Putting up his own team together  Achieving self-confidence with his wife's support Being willing to admit defeat and reflect on what went wrong   [09:12 - 17:31] Tips on How to Stand Out and Succeed in Real Estate The bad advice he received while scaling When it is best to get greedy Learning to say No Take the time to build relationships with the gatekeepers How Wesley leaves a good first impression Know who you are working with   [17:32 - 19:49] Closing Segment The best piece of advice Wesley has ever received Reach out to Wesley!  Links Below Final Words   Tweetable Quotes   “It's not a matter of when you hit a problem. It's not a matter if you have a problem. It's a matter of when. So who you have with you fighting those is really going to determine on how successful you are.” - Wesley Yates “Sometimes you got to look yourself in the mirror and just really go, what do you want? What can you live with? At the end of the day, what can you live with? Can you live with saying, I failed to chase a dream? Or I was too scared to try?” - Wesley Yates “You can't make a bad deal good. But you can make a good deal better.”  - Wesley Yates -----------------------------------------------------------------------------   Connect with Wesley Yates for commercial real estate investment opportunities! Visit the VFR Capital Investments now and follow them on Facebook and LinkedIn. Email Wesley at wesley@vfrcapitalinvestments.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 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] Wesley Yates:  One thing I will say and whatever advice you're taking it from vet out who is giving it, right? So if someone's telling you it's okay to overpay, meaning you know what if it's a good deal and you believe in it, then it's okay to get more aggressive on your price.  [00:00:28] Sam Wilson:  Wesley co-founded VFR Capital Investments, a syndication company that is owned by a team of veterans and first responders. He served as the CEO and he's led his team and growing their portfolio from zero to 862 units in just a little over 15 months, estimated about $70 million in assets under management, Wesley, welcome to the show.    [00:00:47] Wesley Yates:  Thanks, Sam. I appreciate you having me on.   [00:00:49] Sam Wilson:  Hey, man pleasures mine three questions I ask every guest come to the show 90 seconds or less. Where did you start? Where are you now? How did you get there?   [00:00:56] Wesley Yates:  Where did I start? I started at the bottom. Where am I now? Closer to the top? How did I get there? A lot of hard work racking my brain and most importantly, having the right team by my side. Because it's not a matter of when you hit problem. It's not a matter if you have problem. It's a matter of when. So who you have with you fighting those is really going to determine on how successful you are.   [00:01:20] Sam Wilson:   Man, I love that. That's absolutely right. Tell me when did you decide to take the plunge from smaller deals into larger deals?   [00:01:29] Wesley Yates:  So yeah, like a lot of people I think, you know, they started with residential, really wholesale. And I was more like a plus one. My wife was the one that was really in real estate. I was on a contract to go to Amazon. So I'm like, Yeah, I'm just here, you know. So as I was networking, it was really that was the story. But I got a phone call on July 19 of 2019 said, Hey, do you want to do some syndication? I said, Do I need a license for that? They laughed. I was serious. But showed up the very next day and just started networking had about 250 cards in my pocket after the first event. First conversation went something like this, Hey, what do you guys do? They said, You know, we're investors, investors, investors, I'm LP and this many doors, all that what do you do? Oh, I'm gonna be raising capital for a group. That's, you know, syndicating multifamily. They asked me, you know, the typical questions, what's your cash on cash? What's your target IRR? What's your total returns holding times? I didn't know a single thing that they had said. So I reverted back to my old days of being a leader in the military. You never could say, I don't know, you could say I will get you the answers. So that's exactly what I said. You know, those are great questions, I'd really like to get you the right answers. So whenever we get closer to ironing out our numbers, I'd like to be able to get those to you. Do you have some way for I can reach out to you later on? Boom, boom, boom, five cards, went back to the group that invited me there. said, Yeah, I have no clue what cash on cash IRR. So back and forth, I went for a good hour and a half of that event. And still, by the end of it was having full-blown conversation. So cared more about the journey ahead and building momentum than how dumb I looked asking what people would call dumb questions. So that's where I started. And that was, you know, was that almost three years ago now? So   [00:03:15] Sam Wilson:  Oh, and so you started off raising capital for somebody else? Yes, sir. And is that what you do now?   [00:03:23] Wesley Yates:   No, I will like I am now in a more the CEO route, found out that I was better with my brain doing the operations overseeing the formulas, the processes, you know, I've got the whole six sigma training, the, you know, I was gonna go work at Amazon as one of their manufacturers was the operations managers. And so a lot of tracking performance, tracking efficiency, you know, driving that all forward. And so that's kind of what I did to our team and our processes is put a manufacturing engineer mindset to it. And we really started cranking out some deals. But it wasn't until I put, I guess, my own team together that I ever closed the deal our first year and a half of syndicating with other teams, I was not successful.   [00:04:11] Sam Wilson:  What do you mean by that? You were not successful? I mean, if you're putting deals together with other teams, did all the deals fall through today?   [00:04:18] Wesley Yates:  Just yeah. So in a nutshell, the, you know, as I was raising a capital A, you know, raising capital for that first role for that first team. You know, there were some things that I found out later on, once we really got into due diligence of our first deal, kind of notice that or some unethical things that have been done in the underwriting some unrealistic things that had been changed in the underwriting to just make numbers work. And, you know, I kind of rapidly dove into everything to where I could, you know, read the underwriting, or at least started catching on to those things. So yeah, I had to say, hey, look, I can't move forward with this deal in my better judgment, and told my investors in good faith I cannot advise you to invest in This deal, some of them kind of said, Okay, most of them respected that. And one of them is actually now one of my partners on my company today. So one of the co-founders of our company, Robert Newbern was actually originally going to be a passive investor. So, you know, less than I kind of learned a lot. I mean, still is, you know, you can have many different definitions to that. But did I close a deal? No, I did not close a deal, until I started my own team with the right people. So up to that point, it was more of an I was learning, and it was a trial, and fail and learn and move forward. So   [00:05:40] Sam Wilson:  what gave you the confidence to keep moving forward or being as the new guy to the space you're learning from some other people, then you get involved and you put time, effort and energy, you're going to conferences, you're shaking hands, you're talking about deals, you're, you know, have an investor conversation, then you get halfway through it, you're like, oh, wait, I don't like any of this. And I don't want to work with these guys anymore. I mean, that's, that's, that's a lot of setback for somebody new to the industry. What gave me the confidence to say, you know, that I'm on to something, I just haven't figured out the right way to do it yet.   [00:06:10] Wesley Yates:  Well, I don't know. To be honest, sometimes I made the joke that I was just too dumb to quit. I guess it's that inner marine and us we hate failure. I mean, you gotta practically kill us before we'll stop trying. Right. And I think that's what it was, is I still saw every step of the way, I did learn, I did grow. So I was scaling up. Even without, you know, closing something, I went from just investor relations to, you know, operations of a hospitality company, to a co-manager of $100 million fund. So I was still scaling up and building up experience and building up skill sets, learning more rapidly growing. So I still believed in myself at the end of the day, but I'll be honest, a lot of it has to do with my wife. My wife really supported me through all of that at the end of the day, she she kind of let me know, you know, you can do this. You've got what it takes. My family didn't feel the same sentiment of that, you know, a lot of my family flat out, tell me you're you're an idiot. What are you doing? You walked away from a guaranteed paycheck with Amazon and all the bells and whistles? To do this? What do you what do you do? So sometimes you have to look in the mirror and just really go what do you want? You know, can you can't What can you live with? At the end of the day? What can you live with? Can you live with saying I failed chasing a dream? Or I was too scared to try. You know, which regret Do you want to have? And I felt like I would rather chase this thing down to the bitter end until I could catch it, beat it and make it mine. Before I wanted to say nah, I gave up.   [00:07:48] Sam Wilson:   I think that's a valuable lesson. And I'm butchering this, this quote, but it's something like failure weighs ounces, regret weighs tons. Something to that idea,   [00:07:58] Wesley Yates:  one of the things that I think I've read, I've read, you know, the little motivational quotes that and it's funny because I hate rah, rah. But some of those quotes still get me okay, they still get me I think the one that really helped me when I needed it, it said, Winston Churchill says success is going into a new endeavor with the same enthusiasm. You started the last, huh? And I was like, well, there you go. So, you know, a lot of people say, as long as you learn, you didn't fail. And I think that's one thing that, you know, throughout my time in the military, throughout my time as an entrepreneur, I realized that if you don't look back and reflect on the lessons learned the Hey, what did I do wrong? What did I do right? Then? How are you going to grow? You have to be willing to admit defeat, you have to be willing to meet to address. Where did you mess up? versus what's that? And, you know, that's something that I've always been able to do is look back on whether it was a successful takeover, it was a complete fail. Where could I have made that process better? What can I have done? What could I have had differently in place to make overall something move better in the future?   [00:09:12] Sam Wilson:   That's a great stance, and one that is often sorely lacking in today's society is just that personal responsibility piece. What's what is though, perhaps, some bad advice that you received during the scaling process? Has there been anything that you dislike? And somebody told me this and that was completely bogus.   [00:09:31] Wesley Yates:  It's okay to overpay.   [00:09:35] Sam Wilson:   Elaborate, please.   [00:09:38] Wesley Yates:  One thing I will say and whatever advice you're taking it from, vet out who is giving it, right. So if someone's telling you it's okay to overpay meaning you know what if it's a good deal and you believe in it, then it's okay to get more aggressive on your price. Like okay, but then I stood back and I reflected on who was telling me that was the guy that required me to use his broker to buy his deal that gets paid on commission based on price. So of course, he's going to tell you it's okay to overpay. But yeah, I would say that right? There is probably one of them. That's still It's like no, you mean, in real estate. And really anything, you make your money on the bot, right? You make your money on the buy, because there is a ceiling to a market, there is a ceiling to, to an industry, and including into every asset. So you've got to know what that is, and believe in your numbers stick to a criteria. And don't fall for it. You know, was, since we're big on quotes right now was Abe Lincoln said, Whoa, it was like, find your stance and stand firm or something like that. Like I probably butchered that one worse than you did. But, you know, basically, you know, that's a lot of the advice that I look at from the, you know, true leaders and true successful people. You know, Warren Buffett is a good one. I think right now, in today's times, it's never, it's never been more true, then be cautious when others are greedy, and greedy when others are cautious, right. And as we are going through this syndication has never been more hot of a topic. And I was looking at some people that were studying justification, they say there's going to be a 60% increase of syndicators in the next two years. So it's like, wow. And everyone's just trying to, you know, get there do get a deal. Get a deal, right. So, you know, in some just being out flat, greedy, we've had the lowest interest rates, and you know, whatever, almost right. And now we're fixing to go from that switch to where, look, the feds have just announced they're gonna rise again, and be even more aggressive than the last race. So and they're not done. So now's the time to really be cautious, and let others be greedy. And then later when the shoes on the other foot and you know, maybe we could see, hey, it might be a buyers market here soon. That's when it's time to get greedy with the right plan.   [00:12:01] Sam Wilson:  Yeah, that's for sure. Give me that. In practical terms, though. I mean, you guys are still actively buying, you're still actively looking at deals? What are you guys doing differently now, maybe than what you weren't doing? Or what are you guys doing differently now that you weren't doing six months or a year ago?   [00:12:17] Wesley Yates:  saying no. What I mean by that to elaborate is, you're gonna have some opportunities that come your way. And you got to understand is it a valid opportunity? Or is it just a time suck? Is it a, you know, risk? How much risk is with saying, yes, how much risk comes with actually acquiring the assets? We've had a whole lot more deals that we had the opportunity to be a part of that we said no, than the few that we were, I will be under, you know, understanding, looking back to where I was looking for that first deal. And so hungry and so almost desperate for it, it's hard to say no, it's hard not to try to make something work. But one thing that I've realized very early on, and I've just instilled it into every one of my team members is, you can't make a bad deal good. But you can make a good deal better. And that's really what it is of that is we screened more finally, we stick to our criteria. And at the end of the day as a syndicator, you're not looking for deals for you. Whether you realize that or not, you're not looking for deals for you. You're looking for deals for your investors, right? So what are your investors ultimately looking for? Because if you don't have a seller, if you don't have an investor, you better have the money yourself. So, you know, that's a lot of what we had to get, you know, more fine-tuned of what we're looking at and branching out to say, you know, what, there are more markets than just my backyard.   [00:13:48] Sam Wilson:  What? Yeah, I like that. Maybe that's you maybe you're gonna answer this question already. But what are you guys doing to be competitive? Like when you do put in an offer on a property, especially in multifamily? It's unlikely you're the only offer? So what are you guys doing to be competitive?   [00:14:07] Wesley Yates:  So a lot of that goes back before you even make that offer. A lot of that goes back and when people realize that this is a game of relationships with other co sponsors, but more importantly, with the gatekeepers, that's what I call my brokers. Ultimately, the brokers are the gatekeepers to the good deals, if they don't have a good feeling about your you and your capabilities, and ultimately, obviously, it's not just me, but when I say you, I mean my team, your team, then they're never going to push your package forward in front of that seller. You know, example right now, I was a good 300 I think maybe 500,000 under some of the other offers going into best and final. But the broker liked our team to the point where he encouraged the seller to still take our offer even a lesser amount because of who we are and what we have done. So even if you are looking at your first deal, co sponsor with someone that has been there that has a sucessful track record, that's how you can still overcome that. But take the time to really build your relationship with your brokers. Because that'll go a long way when the time really counts and do more than just put in an offer. When I put in my offer, I have a nice brochure that says who is VFR Capital Investments? What do we stand for? Why us, the bios of every member, the team and our portfolio and a nice PDF brochure versus just a letter, just a, you know, a Word document bio, or even worse an email, Hey, this is who I am in the body of an email. So take the time you get one first impression to that seller. I've had sellers actually come to properties and come up and say, Hey, while we were doing our due diligence, and they recognize us from our from the logo on my shirt, it was like, Oh, you're the VFR Capital Investments team. Yes. Hey, you know what, guys, I really want to let you know, I really liked your story. And your brochure really impressed me I had higher offers. But because y'all look like y'all were more prestige and more sophisticated, I ended up going with y'all. I've been told that twice now on two different properties during the due diligence that the sellers had to come out just to meet us.   [00:16:23] Sam Wilson:  That's cool. And that's, that's a good gold nugget, you know, getting, you know, developing your relationships with as you call it, the gatekeepers and doing more than just putting in your offers and finding ways. And those are relatively almost cost-free ways. You know, to stand out, some people are taking much more aggressive stances, and putting down you know, hey, we're gonna throw in a half-million bucks of hard money, day one, whatever it is, you know, trying to stroke the bigger check, which is, you know, that may be necessary to that's another card in the, in the deck of cards you can play, but I like what you're talking about. They're just an easy way to stand out.   [00:17:05] Wesley Yates:  Yeah. And I didn't have the deep pocket to go. I mean, I started this, I was making $24,000 a year, I was broke. So you know, having the deep pockets to be like, You know what, I'll just do a little bit more. Let me slide this over there. So I worked what I had, and I had the ability to take the time to actually get to know who I was going to be working with. And that was to me, in some cases to others. More important than how much dollars were on an offer.   [00:17:32] Sam Wilson:  Yeah, absolutely. What's one great piece of advice, we asked this question earlier a bad piece of advice he received? What's probably the best piece of advice you feel you've been given?   [00:17:43] Wesley Yates:  Hmm, that's a good one. I think you would probably be you know that. It's okay to say no, I know, I kind of discussed that. That's really something that that I've struggled with, but it's okay to say no, it's not an admittance of failure if you're saying no to something that is ultimately a dead end. Right. And that's something that I know some people might not relate to, but, you know, everything that dangles in front of you is not, it's not something that you need to chase, they could just truly be a carrot on the stick.   [00:18:14] Sam Wilson:  Right? Right. You have the stick at the end of the carrot. You gotta watch out for that stick. Yeah, yeah. That's absolutely awesome. Wesley, thanks for taking the time to come on today, really break down your story, how you have found success, the things you're doing to remain competitive, protect your downside, giving us some kind of insight on what you do to establish relationships with brokers and really just kind of your investment thesis and mindset that you've taken and implemented to get you to where you are today. If our listeners want to get in touch with you or learn more about you, what is the best way to do that? Yeah,   [00:18:47] Wesley Yates:  So I've got my email, wesley@vfrcapitalinvestments.com. And you can look it up on Facebook or LinkedIn, we're there as well. And I'd be happy to connect and if there's anything I can do to help another co-sponsor, with their first deal or their hundreds of deals. We're always happy to sponsor beyond co-sponsor a deal and, and hopefully add value as well as hopefully maybe learn from another person's strategy. So that's, that's what we're about.   [00:19:19] Sam Wilson:  Awesome, Wesley, thank you so much. Appreciate it.   [00:19:22] Wesley Yates:  Thanks, Sam.

Working Capital The Real Estate Podcast
Real Estate Syndication, Scaling and Systems with Mark McGuire | EP108

Working Capital The Real Estate Podcast

Play Episode Listen Later Jun 16, 2022 33:07


Mark McGuire is a Chief Investment Officer, Hearthfire Holdings. in 2017 he started to build a real estate business. He hired and fired agents, learned from his mistakes, and then re-hired all over again with a new perspective. Since 2013, Mark and his team have brokered more than 300 homes with a total sales volume exceeding $83M. They have also raised over 15 million in capital for Hearthfire. Mark's biggest passion is wealth building and investing. He is a limited partner in 12 syndications, ranging from multifamily to industrial, hospitality to self-storage. He has invested in multiple private companies in the biotech, finance, and AI spaces. In addition, he currently owns 20 residential units in various real estate partnerships and oversees the management of 130 residential units his family owns. Mark has also executed multiple 1031 exchanges. He's seen up-markets and down-markets and discovered opportunities in both.  In this episode we talked about: * Mark's  Bio & Background * Building his Career in Real Estate * Limited Partnership Role * Real Estate Deals Outlook: the best Takeaways from Investors * Red Flags while looking for LP & GP * Multifamily Investments * Mark's Focus in Real Estate Right Now * Economic Outlook 2022-2023 * Mentorship, Resources and Lessons Learned Useful links: Slicing Pie: Funding Your Company Without Funds https://hfirecapital.com https://www.linkedin.com/in/investingwithmark/ Transcription: Jesse (0s): Welcome to the working capital real estate podcast. My name is Jesper galley. And on this show, we discuss all things real estate with investors and experts in a variety of industries that impact real estate. Whether you're looking at your first investment or raising your first fund, join me and let's build that portfolio one square foot at a time   Jesse (23s): This is Jessica forgotten and you're listening to working capital the real estate podcast. My guest today is Mark McGuire. He's the C I O of Herth capital. He's a full-time real estate investor and operator that's when mark at the time plunge into real estate sales, after running hard on his own for three years, working 80 to 100 hours a week, mark realized he needed help. He transitioned his real estate practice to Keller Williams in 2017 to learn how to build a real estate business. He hired and fired agents learn from his mistakes and then rehired them all over again.   Since 2013, mark and his team have brokered more than 300 homes with a total sales volume exceeding 83 million. They've also raised over 50 million capital for her fire, mark, you and I were just talking before we want to get into a lot of what you're doing now, which sounds like general partner and sponsoring deals. First of all, welcome aboard.   Mark (1m 13s): Thanks for having me Jesse excited.   Jesse (1m 15s): Yeah, I really appreciate it. So lots to talk about here. You've had a pretty, a pretty interesting background in terms of where you started out in your career and what you're doing today. And I want to get into for listeners the different asset classes that you're working with, but before we do that, why don't you take us back to kind of where you got into real estate? How that your story unfolded at the beginning?   Mark (1m 39s): Yeah, so real estate was something that was in my family. You know, I tried to go the college route net that really didn't align with my way of being a really I learned hands-on and I could, I could do the school thing, but I just hated it. And my mom's a teacher, so that went over really well. And then, you know, transition to my first entrepreneurial venture was playing in a band and we played, I was in a band professionally for seven years. We ended up getting a record contract with RCA records and I had had my I'm sorry,   Jesse (2m 15s): Small outfit.   Mark (2m 16s): Yeah, yeah, just a little bit. And I had had my real estate license at the time. And when we got the record contract, I remember, you know, this real moment of clarity of looking at how much money I was going to get as part of the contract that was guaranteed. And then how much money I had commissions pending with my residential real estate sales business. And I just was like, well, why would I sign this 14 to 20 year contract? Like that makes no sense. I'm, I'm going to be a slave. So went into real estate sales full time and had the opportunity to, to really start to understand business and learned about this whole thing called like a profit and loss.   I never went to school for any of it. So it was kind of just a giant trial by fire and I'm kind of became obsessed. And then after that, it was just like, how much more could I could I build? It was just a constant pursuit of growth.   Jesse (3m 8s): Fair enough. So you kind of run through the process, you're in music, which is awesome. What a, what instrument or where you vocals? What did you play?   Mark (3m 16s): No, I was actually, I was, I played drums. I did sing background vocals, but drums was really my main contribution.   Jesse (3m 22s): Nice, nice. I'm a big, big guitar guy. Just, just, just bought a, a PRS recently. And so I'm pretty, I'm having fun with that somewhere in the background there. So that's really cool. So RCA, I, like I said, it's not exactly a, a small outfit, so congrats on that. But even with that, you kind of look back and you start real estate as a path. So bring us up to speed today. I know that you're continuing to build wealth through real estate and you are LP on a few deals in various asset classes and running point or general partner on others.   Maybe you could tell listeners a little bit about what that looks like and how that process kind of evolved.   Mark (4m 3s): Yeah. So when I was in residential real estate sales, I spent a lot of time, you know, getting to run numbers on just single families. One thing that I was really fortunate to have was a family that was in real estate. So my, my grandfather was the main driving force and he owned a bunch of properties and I got the opportunity to work and be the, the, the assistant to the maintenance man. So I was like the guy that just said, Hey, there's a pile of trash, go over there, go take it and load it in the truck and throw it out.   So I did that for a couple of years and, you know, that's what it took to be in the band and have the flexibility to be able to get up and go whenever I needed to, they either had to go for on the site or they didn't. So there, it was just a matter of, you know, as I made money and, and, and generated income from residential real estate sales, my grandfather always told me, you know, real estate sales, you know, will make you money, but it will make you rich. And I don't know if you've ever heard of the saying brokers died, broke because so many people in sales, they make good money in commission, but then they, you know, spend it all and they don't get into assets that help you defer some of those taxes   Jesse (5m 19s): And build wealth.   Mark (5m 20s): Yeah. So it really came down to saying, Hey, I want to, I want to be able to get paid while I sleep. And so I've started buying condos and single families. And because this was 2013, 14 when the market was, you know, really, really low and then just kind of wanted to grow it from there and got interested in the commercial loan space. And, you know, I lived on as little as I could without feeling like I was, you know, I'm going to say punishing myself.   I wasn't like sitting there and eating ramen. No, I was never the ramen noodles guy. There's a lot of those people that, you know, they, I mean, I like pain, but I don't like it that much.   Jesse (6m 0s): You know? And I don't understand that maybe we said Italian upbringing. I'm like, you know, pasta is just this chief.   Mark (6m 5s): It is. But Robin noodles is pasta. It's just possible of sodium   Jesse (6m 10s): A hundred percent, exactly. Dumping, just dumping a bag of salt in there.   Mark (6m 16s): So I basically took it from, you know, just doing small single family and getting introduced to the concept of syndication I was trying to buy up. And it was just, I didn't have enough income. I didn't really know the way that the game was played. So syndication was my way to be a part of bigger deals. And I got, it was a, it was a question of bandwidth because you only had so much time to operate so many deals the right way to execute on them. And syndications for me were a way to keep my money moving at a good velocity without having to actually be the one driving the ship forward.   Jesse (6m 50s): So in those syndications where you limited partner in like the first one,   Mark (6m 55s): Yeah, I was an LP in probably seven or eight before I started on the GP side.   Jesse (7m 3s): Yeah. Which is that's fascinating to me because some, some would argue that it's, it's easier to get into being the LPN and definitely in a sense it is right. You're just, you're just providing capital. But I think the analysis is for somebody that's breaking into the industry, it's pretty, you know, ballsy to just jump into LPs with, without doing your proper due diligence. And I'm not saying that you didn't, I'm saying a lot of people, they see an investment and then they go in and that's why we had Brian Burke on.   He wrote the passive, I think it's passive real estate investor.   Mark (7m 36s): It's a hands-off hands-on that's   Jesse (7m 39s): Right. So we were both talking at the last BiggerPockets conference and what I found fascinating about this book, not just to plug it, it's just from the LPs point of view, which you never really read in a lot of these books. A lot of it is you're the GP you're running the deals. So that's pretty awesome. And then the other thing I, I feel in tell me if this is what you experience, I've told partners of mine before that we should be an LPN, this deal. And it's not necessarily because I think the deal is great. Is I really like the sponsor. I really want to see what, what he or she does with the investment.   And you learn so much about, okay, they're using this software, oh, they're G they're doing updates this way. I, you know, the last person I invested in did, did them this way. So I feel like there's a lot to learn from somebody who has already established themselves as an LP. Was that kind of your experience in those first, you know, six or seven, whatever they were.   Mark (8m 27s): So it's funny. I never went into syndication, investing, thinking I was going to be the guy syndicating. So I always went, I went into it because, you know, I could do my own deals. I knew how to run them. I knew how I knew how to pull the levers. I mean, it started as single family, right. Which is buy it at the right price, fix it and understand what the rental value is going to be at the end. Now, syndications do that same thing on a scale times, 100, 200 times. Right? So that's, it's the same concept, but it's kind of like if someone just gave you a graphing calculator and said, Hey, tell me what the graph looks like for this, you know, inequality, if you don't know how the basic calculus or algebra works behind it, then, you know, giving it, given that calculator is great, but like, you need to know how the, the math, how, what the long form version is.   And that's what single family was for me was the long form version. Now that I'm in a syndication, it's like, okay, what are the levers that we're going to pull here? How are we going to pull them? How much do we need to pull in totality in order to get up to what we can project? And at that point, like, I can pretty quickly go like, all right, this, this will wo