MFM Live: Real Full Cycle Case Studies, Small and Large Apartments!

We have two guest speakers who will walk through two actual deals they’ve done that have gone full cycle – start to finish. Learn what they looked for, challenges overcome, and how they got to the finish line!

Speakers:
Feras Moussa
Steven Louie

VIDEO TRANSCRIPTION

00:00
so everybody welcome to multifamily
00:02
masters for those of you attending for
00:04
the first time i’m disappointed that you
00:05
haven’t attended before
00:06
but we’ll let you guys slide so for
00:08
those that don’t know basically
00:09
multi-family masters is really
00:11
about having a community right we
00:13
started this obviously pre-covert
00:15
and really the vision was to kind of
00:16
enable and build local chapter leaders
00:19
that are kind of
00:20
all building and marching on the same
00:22
brand and really helping enable them to
00:24
be leaders within their markets and at
00:25
the same time right
00:27
we’re all kind of connected and kind of
00:28
building on each other
00:30
um in this postcode world right we again
00:33
i’ve had to pivot a little bit while we
00:34
wait for the world to kind of
00:35
hopefully go back to normal and with
00:37
that right we shifted to
00:39
more of an online strategy for the time
00:41
being that’s kind of where mfm live was
00:43
born
00:43
which is the event that you guys are all
00:45
attending and so currently you know
00:47
multi-family masters itself we have
00:48
about
00:49
close to 60 chapters across the country
00:51
and i don’t know if anyone has really
00:54
started local meetups back up right i’ve
00:56
seen people do park things and things
00:57
like that
00:58
but we’re hopeful kind of sometime next
01:00
summer things can go back to normal but
01:01
in the meantime
01:03
i will continue to do uh these mfm lives
01:05
and so today is actually the last one
01:07
of the season right and we will start
01:09
back up again in january right we
01:11
figured with kind of thanksgiving and
01:13
holidays plus our upcoming event uh the
01:16
mfn express we figured kind of this
01:18
probably made sense to
01:20
be the last one for now and so with that
01:22
said i
01:23
am one of the hosts kind of helping put
01:25
this together my name is ferris for
01:26
those who don’t know me
01:27
but i have a company called disrupt
01:28
equity we have uh properties throughout
01:30
texas and georgia
01:31
and you know we’ve done several deals
01:33
kind of full cycle including georgia
01:35
including texas and it’s actually one of
01:37
the deals i’m going to talk about here
01:39
today a little bit later today
01:40
um we are vertically integrated we have
01:41
our own in-house management company that
01:43
is also doing third-party management
01:44
continuing to grow that part of the
01:45
business and so
01:47
with that said i will pass it over to
01:49
one of my partners algae
01:52
appreciate it ferris thank you um so
01:54
real quickly my name is powell chi
01:56
live in los angeles here um and
01:59
all of my multi-family uh investments
02:01
have been out of state so that’s
02:03
something that i know just for me it was
02:06
a big step
02:06
to realize that you could invest outside
02:09
of the state of california
02:10
and still live inside of california and
02:12
so all my investments have been in
02:14
areas like indianapolis dallas
02:18
san antonio atlanta jacksonville
02:22
phoenix things like that and then um
02:25
you know like when i think about this
02:27
group i think like has anybody
02:29
felt like they wanted to find a group
02:31
that they’re interested in
02:33
uh they’re interested in multi-family
02:35
trying to find this in a multi-family
02:36
investing group
02:37
where they could learn and they could
02:39
network and they could share experiences
02:41
right i mean i think that most people
02:44
would say yes right that’s what
02:45
that’s why you’ve come here and that’s
02:47
exactly how i felt a couple years ago so
02:49
um
02:50
i was looking for other people who were
02:52
in a similar position than i was
02:53
that they have similar interests but
02:55
also kind of a similar mindset
02:58
and so i started multi-family masters a
03:00
couple years ago to create a space for
03:02
all of us to
03:03
because i couldn’t really find the right
03:06
group
03:06
so i ended up just kind of starting my
03:08
own
03:09
and then um and i’m sure you know that
03:12
like
03:13
uh you can all like invest on your own
03:16
um
03:16
and you can find the deals on your own
03:19
you can
03:20
uh scrape up the cash on your own you
03:22
can do all the operations on your own
03:24
you can do all a lot of stuff on your
03:25
own but
03:27
um in multifamily you’ll find that like
03:30
if you do all that you’ll run out of
03:31
time you’ll run out of money and you’ll
03:32
have a hard time scaling
03:34
and so really this group helps
03:36
facilitate
03:37
the idea that multi-family investing is
03:40
really a team sport where you can
03:42
partner with a lot of different people
03:44
there have been many partnerships i i
03:46
wanted to go back one time and
03:47
just try to figure out how many
03:48
partnerships have actually come about
03:50
from
03:50
from multi-family masters but there’s
03:52
been way too many to really figure that
03:54
out
03:54
and this just kind of is a organization
03:58
to facilitate that
03:59
that networking that growth that
04:02
education side to help
04:04
all the investors kind of come together
04:05
whether you’re from california
04:07
you’re in indianapolis you’re in the
04:08
midwest in chicago you’re in san antonio
04:11
or you’re in
04:11
florida that there’s a way for us to all
04:13
connect and to invest together
04:15
um as long as we can sort of come under
04:17
the same mindset
04:19
similar interests and things like that
04:21
so that’s a little bit about us
04:23
and kind of who we are a little
04:25
background about us
04:27
and then just to just to kind of make up
04:29
a little plug like ferris kind of
04:30
mentioned
04:31
we do have an event um coming up
04:33
december 14th
04:34
which will be our uh every year around
04:37
december
04:38
we’d like to hold something a little
04:40
different um kind of the
04:42
wrap up to wrap up the old year kind of
04:44
usher in the new year
04:45
and this year what we have is called
04:48
express to success
04:49
okay and it’s uh december 14th so it’ll
04:52
be on a monday
04:53
it’ll start at 5 p.m it’ll go to about 7
04:55
00 p.m
04:56
and it’s pacific yes specific
05:00
and it’s going to be 15 speakers who are
05:02
all from
05:03
a wide variety of interests and i don’t
05:05
think hardly
05:06
there might be one person that is going
05:08
to speak about multi-family investing
05:10
see we spend of the 12 months of the
05:12
year we spent 11 months talking about
05:14
multi-family investing but we’re going
05:16
to spend this one month to talk about
05:18
all different types of things that can
05:19
help you grow as a person can grow as
05:21
your mindset
05:22
can just be educational can be fun maybe
05:25
just very interesting
05:26
um interesting topics and they’re all
05:29
five minute blocks uh five minute
05:31
presentations of 15 different speakers
05:33
kind of a rapid rapid fire live stream
05:36
that we’ll be having so
05:37
we want you all to join uh we’ll be
05:39
putting out on some information
05:40
about it pretty quickly it’s free we
05:43
want everybody to invite your friends
05:45
and everything
05:45
and um look forward to that yeah so
05:47
leonie just posted our event right there
05:49
so feel free to respond to
05:51
to our event right there and we’ll be
05:52
posting more information uh
05:54
thanks thanks leonie and definitely
05:57
check it out it’s a lot of fun it really
05:58
is action-packed
05:59
dense and it’s about a big variety of
06:01
topics right like pal mentioned
06:03
not just real estate learn all sorts of
06:05
different things
06:06
we’ll slowly start to sleek what the uh
06:08
the titles are right for the
06:10
presentations but
06:11
you guys check it out should be kind of
06:12
a fun two-hour section if anyone has
06:14
ever been to ignite
06:15
talks and presentations really it’s kind
06:16
of based on that theme
06:18
right really kind of a bunch of
06:20
different topics
06:21
really dense and usually in ignite it’s
06:23
you know you have 20 seconds per slide
06:25
and the slides are changing regardless
06:26
of how fast
06:27
or not fast the speaker’s going so
06:29
highly recommend it definitely go check
06:30
it out
06:31
yep absolutely go ahead ferris that’s
06:34
that’s for me
06:35
all right then i guess with that said so
06:37
for those of you that are joining if you
06:39
don’t know what our topic is today
06:40
really the topic is about talking about
06:42
kind of full
06:43
full cycle deals right and not just do
06:46
doing the same thing we always do baby
06:48
big deal on this call today
06:49
we figured we’d do two different types
06:51
of deals right
06:52
and so i’m going to talk about one of
06:54
them it’s going to be a 199 unit deal in
06:56
atlanta that we went
06:58
full cycle on last year yeah i guess a
07:00
little over a year ago and we also have
07:02
another guest
07:03
steve and i know i saw him on i know
07:05
you’re on he
07:06
will stephen will talk about and a
07:09
smaller deal that he did in a different
07:10
market right and you can kind of
07:12
you know it gives you a chance as a
07:14
listener and a viewer right to compare
07:16
and contrast the pros and cons the
07:18
challenges encountered or not
07:19
encountered
07:20
and you know help you kind of get a
07:21
taste of maybe is it a fit for you or
07:23
not or kind of what you may like
07:25
and so with that said stephen do you
07:27
want to go first
07:30
do you want me to go first you let me
07:31
know yeah sure i’ll be happy to let me
07:33
let me do that let me share my screen
07:35
you might go ahead and introduce
07:35
yourself and you know maybe at the end
07:37
you can drop your contact information if
07:38
anyone wants to reach out to you
07:41
let’s see here you see my screen yep
07:46
let’s go
07:50
all right um let’s do this so
07:53
can you i cannot see anybody now now
07:55
that i have my powerpoint up for some
07:57
reason but so
07:58
are you guys able to see this yeah okay
08:01
perfect perfect so hey kyle asked me on
08:03
friday and said hey there’s
08:04
i thought kyle was actually hosting this
08:06
but it turns out it’s youtube so
08:08
i’m glad uh glad you guys gave a great
08:11
introduction there so
08:12
um i follow a lot of the actual
08:14
principles that you guys have uh
08:16
and um really excited about this
08:18
opportunity here to uh
08:20
kind of join this group um here um let
08:23
me give you a little bit
08:24
i put together a quick uh uh agenda here
08:27
for us
08:28
um you know i’m going to go through uh
08:30
some introductions about myself i think
08:31
it kind of lays out uh about me
08:34
and then my my real estate journey and
08:36
then really about the acquisitions with
08:37
ferris just talked about
08:38
then open it up for q a and that could
08:40
be uh after with um
08:42
after ferris goes to um let me just give
08:45
you a little bit of my background first
08:46
let’s start with my family
08:47
so my family i’ve been married for 26
08:51
years
08:52
and uh i have two great girls beautiful
08:55
girls my oldest
08:56
is a junior in chapman university
09:00
uh out here in orange county and my
09:02
youngest daughter
09:04
is and um she is a
09:07
senior in high school right now and so
09:09
we just went back hybrid last week and
09:11
so we’ll see now that we’ve just gone
09:12
purple
09:13
she showed me we’ll see what happens if
09:14
she comes back to all lives so
09:16
kind of tough during the colbit
09:18
environment but
09:19
making the best of it i am a chapter
09:22
lead uh
09:22
for uh the north orange county chapter
09:24
and that’s with uh
09:26
jenny and ronnie goo and then baskin so
09:28
all three of us
09:29
uh work closely together and have uh
09:32
built a pretty strong chapter in north
09:34
orange county and we’re pretty excited
09:35
about that i think a couple that might
09:37
be on here
09:38
here’s the great news i’m exiting
09:40
corporate america um at the end of this
09:42
year
09:42
and so really excited about that i spent
09:45
you’ll you’ll
09:45
i’ll tell you a little bit about my
09:47
journey in multifamily that
09:49
led up to where i am today um just a
09:52
little background about me
09:53
i started as a group underwriter in
09:56
the health insurance side and
10:00
did that for about four years and
10:02
realized that
10:04
it’s really hard on an internal position
10:06
to actually
10:08
make the kind of money that you need to
10:10
invest so i actually moved over to
10:12
institutional sales so worked for
10:15
metlife for about 16 years all
10:17
in sales in a sales capacity
10:21
and sales leadership and highly
10:24
successful
10:25
on that which allowed me the the
10:27
opportunity
10:28
to kind of move over to a consulting
10:31
firm so i’m a partner at a global
10:32
consulting firm
10:34
we do all types of consulting on the
10:36
human resource side
10:37
health wealth and human capital
10:41
my current single family home portfolio
10:43
is about nine doors right now
10:46
and my multi-family about 2500 units
10:48
from a general partner standpoint
10:50
key principle and lp from a gp
10:52
perspective general partner i have about
10:54
800 units
10:55
just to give some contacts there
10:57
invested in arizona california ohio
11:00
tennessee and texas uh predominantly
11:03
focused right now
11:04
in the arizona marketplace
11:08
let me uh and these these couple boxes
11:10
help kind of line everything up
11:12
in terms of how i got into multi-family
11:14
uh so
11:15
you know back in uh may of uh
11:18
2017 i actually went to a meet-up and
11:21
i’m not the type of guy that
11:23
typically likes to go to meetups but
11:25
actually met one of my partners there
11:27
baskin and we actually had a similar
11:29
portfolio single family
11:31
homes um he had done some research
11:34
around multi-family and has did some
11:36
reading
11:36
said hey you need to go to a couple of
11:38
these seminars you need to listen to
11:40
old capital uh the old capital podcast
11:42
right and i think uh
11:44
a lot of you may may or may not may not
11:46
have listened to that yet but it’s one
11:47
of the better ones in my opinion
11:49
it really gives a lot of facts and also
11:50
talks a lot about loans
11:52
so it got me hooked on that that and
11:53
then um
11:55
one thing led to another he said hey
11:56
there’s a great mentor out in in texas
11:59
uh we should go check it out and then we
12:01
ended up being me
12:03
i ended up uh going by myself he instead
12:06
went on vacation
12:07
and that’s where i actually took the
12:09
opportunity to uh
12:11
really get engaged i signed up for a
12:13
professional mentor
12:15
in uh in dallas and uh the sky has kind
12:18
of been the limit it was called the race
12:19
to retirement
12:20
and you can retire in three to five
12:22
years and
12:24
what it did is uh just like powell said
12:26
you you do have to shift your mindset
12:29
uh if you want to get into this uh this
12:31
arena and and
12:32
set goals take action and really start
12:34
establishing
12:35
a real strong network of investors and
12:37
that’s what that enabled me to do
12:39
uh kind of get it get out of the mindset
12:41
of uh of single family homes which is
12:43
really an individual sport if you think
12:45
about it single family
12:47
versus the the multi-family uh team
12:49
sport which pal
12:50
mentioned as well i learned all these
12:53
different things to spend uh
12:54
so just so you know i spent an entire
12:56
year um
12:58
underwriting deals without uh without
13:01
actually even putting an loi
13:02
right so it just didn’t work right so i
13:05
had i had a
13:06
team of like four different people and
13:08
we were too conservative and so we
13:09
wouldn’t even put out an loi i know you
13:11
guys were talking about lois at the
13:12
beginning
13:12
so a bunch of underwriting for the
13:14
entire year no deals
13:16
and that was in the texas marketplace
13:18
but the good thing about
13:20
it i was able to invest passively with
13:21
individuals from a key principle
13:23
standpoint
13:24
which gets you kind of your gold card uh
13:26
with freddie and fanny
13:27
and then helped me to really align and
13:30
identify
13:31
my focus right texas was pretty
13:34
saturated uh
13:35
for dallas for for me living out here in
13:37
southern california
13:38
so i took the opportunity to take
13:41
everything i knew
13:42
and apply it in the arizona marketplace
13:44
right
13:45
and so all the things that you hear
13:47
you’ll hear about what we’ll talk about
13:49
is is you get you have to have a strong
13:51
relationship with the broker
13:52
the broker’s there your property
13:54
management is key you have to have a
13:56
syndication attorney and a transaction
13:58
attorney you need a bank or a loan
13:59
officer
13:59
and you need someone to help you with
14:00
construction so you know took a week off
14:03
work
14:03
met with a whole bunch of individuals
14:06
and then uh as you can see the last
14:08
bullet here
14:09
uh you know acquired what is this
14:11
probably 430 or so
14:14
different units across the board in
14:16
arizona
14:17
and so the two of them that i i wanted
14:19
to highlight and i can just highlight
14:20
one
14:20
as well is urban oasis and serenity
14:22
those are the 28 unit and the 35 units
14:25
um you probably know kyle and gary uh
14:27
through through different things and i
14:28
am a gp on
14:30
a couple of the the other deals the 34
14:32
34 week dow
14:33
and the midtown on 42nd uh
14:36
actively involved in those and we got
14:38
two more that are pending that will
14:39
close by the end of the year everything
14:41
looks solid on those between
14:43
a 26 unit and a 176
14:46
and so that gives you a little framework
14:49
of
14:50
how i set the stage in terms of getting
14:52
into some of the property that i’ll talk
14:53
about next
14:55
so this is the first one here in phoenix
14:57
uh urban oasis
14:59
so a heavy value add as you can see uh
15:02
28 units 24 uh twos
15:05
and four ones um really a c
15:09
class uh property maybe as c yeah
15:12
probably about a c the property itself
15:14
uh as the condition is maybe a c minus
15:17
or so
15:18
a huge value add you know 179
15:22
excuse me 1979 construction as you can
15:24
see the interior there
15:26
right um pretty uh you know
15:29
dated across the board not the
15:32
you know holes in walls formica
15:34
countertops carpet
15:36
etc leakage on the walls so it was a
15:40
great opportunity for us to
15:42
uh to step in you know and um
15:46
i’ll take a quick shot here this is what
15:49
we transformed it to
15:50
so this is before you can see the
15:52
cabinets this is after
15:55
right so with the the the hard work of
15:58
working closely with uh the property
16:00
manager the construction team
16:03
fully revamped this into basically a b
16:06
plus a minus or probably an a a looking
16:08
property
16:09
and by doing this we were able to
16:12
increase
16:13
rents from what it was 500 to now close
16:16
to 1100
16:17
right across the board so by doing uh by
16:20
forcing the appreciation on this
16:23
as you can see we added washers and
16:25
dryers as well
16:27
and a complete rehab we no longer have
16:29
carpet in there we originally went with
16:31
carpet
16:32
because the property manager suggested
16:34
that we do that to save some
16:36
dollars but that just as we know uh some
16:38
sometimes becomes
16:39
uh gets quite dirty uh during the move
16:41
out so i think we’re doing all vinyl
16:43
plank
16:44
now and the stainless steel package uh
16:46
there and this happened to be one of the
16:48
models that we had open as we’re do
16:49
going through construction
16:51
so as they they started with you know
16:54
three to five units we’ve moved people
16:56
out
16:56
and one of them was designed for uh just
16:59
a model and this was the actual model
17:11
uh so hey stephen i just wanted to
17:13
highlight what you said um
17:15
yeah you said that when you entered in
17:17
there was
17:18
the rents were 500 and now they’re up at
17:19
about 1100
17:21
yes that’s correct that’s awesome yeah
17:23
that’s that’s awesome i mean it looks
17:24
great
17:25
it looks fantastic here and everything
17:26
and i’m sure with the new flooring in
17:28
the bedroom said it probably looks even
17:30
better but yeah
17:30
very cool awesome and one of the key
17:32
things is building a relationship with
17:34
the brokers right so um
17:36
at our last meet up we just uh had a had
17:38
cbre in there which
17:39
ironically i’ve done all my deals with
17:41
cbre so um
17:43
i think four deals with uh cbre so one
17:46
of the things that i’ve learned is you
17:47
need to focus with the larger brokerage
17:49
houses and this is just me
17:51
right and what what you get from them is
17:52
a more sophisticated broker
17:55
in my my opinion right and uh what they
17:57
what you know this first deal here they
18:00
said hey
18:00
it’s um i think i actually have some of
18:02
the details on the next page
18:04
oh here’s what we did right so here’s
18:05
what we did and i’ll get into that i’ll
18:07
hold that comment there so um you know
18:09
put washers and dryers inside so
18:11
automatically that’s going to be raising
18:13
the the rent from 50 to 75 dollars
18:15
it already had air conditioning in there
18:16
so clean some of that up stainless steel
18:18
package
18:19
we even added a dishwasher in there uh
18:21
as
18:22
well probably not necessary so maybe
18:24
over improve that
18:25
but it’s just a nice feature there
18:28
uh the rest of the ceiling fans in every
18:30
room i think something to highlight
18:31
there
18:32
and it didn’t have a barbecue in the
18:33
back so we added a barbecue some lounge
18:35
seating and then
18:36
a pretty nice dog park in the back as
18:38
well into this small 28 unit property
18:42
if you take a quick look here here’s
18:45
basically some
18:45
a little bit of a summary of what was
18:47
done so we bought this at 85 000 a door
18:49
in 2018
18:51
all the value add that i just talked
18:53
about right there you can kind of see
18:55
that
18:56
and really helped us to reposition the
18:58
property
18:59
rents now um like i said pal was right
19:02
around 100.
19:03
here’s the great thing about this as
19:04
well from a cost segregation standpoint
19:07
just on this small property uh
19:10
excuse me million dollars of uh of bonus
19:13
appreciation right so we had a cost
19:15
saying done
19:16
and uh over a million dollars uh came
19:19
you know if you’re a real estate
19:20
professional it’s not a tax thing but
19:22
you can take advantage of a lot of the
19:24
depreciation to offset any of the earned
19:26
income
19:27
and then just recently in less than
19:29
about a year
19:30
and six months uh we repo we refinanced
19:34
out at
19:34
160 uh thousand dollars a door
19:38
and now um uh currently uh got all of
19:42
our capital back and it was just three
19:44
partners from a jv perspective did not
19:46
syndicate this one so we have all our
19:48
money back
19:48
infinite return across the board and if
19:51
you’d like to go see our website you’re
19:53
welcome to go take a look at it um
19:55
urban oasis apts.com and um
19:59
and this model is slightly different
20:01
than probably
20:02
what um some of the experts or the
20:05
coaches actually teach out there some of
20:07
them say
20:07
go larger you need to go 60 and above i
20:10
think if you have the right team and
20:12
have the right partners and have the
20:13
right property manager
20:15
the right bank to finance it
20:18
and all of those items uh you really can
20:21
take uh this to the next level
20:23
uh across the board and then you know i
20:27
i can go through i i had two of them i
20:29
wasn’t quite sure of
20:30
the agenda but this is our second one as
20:32
well but uh the same
20:34
type of same type of thing we we bought
20:36
this one this became an off-market deal
20:39
because of what we did on the first deal
20:41
the broker said hey i got another one
20:44
that’s sitting there never even went to
20:46
market and we were able to
20:47
to do the exact same thing on on this
20:50
property here as well
20:51
um uh i’ll be conscious at a time but
20:54
it’s a 35 unit
20:55
uh same type of thing here’s the outside
20:58
a little bit nicer
20:59
look to it and uh
21:02
we did a similar um you know we painted
21:04
we
21:05
we actually replaced all the windows as
21:07
well and as you can see the vinyl plank
21:09
the the washer and dryer and then just
21:12
the walkway there
21:14
um a complete uh rebrand of everything
21:17
we
21:18
exterior paint we added dual pane
21:19
windows washers and dryers
21:21
um a stainless steel package ceiling
21:24
fans
21:24
just like the other one uh and a grill
21:27
as well and in this uh this case we are
21:31
also able to raise
21:32
rents from 700
21:36
to now we’re close to about uh
21:39
1300 across the board so we’re going
21:42
we’re in the midst of a cash out
21:43
refinance right now on this one which
21:46
should bring all of the general partners
21:48
again the three of us
21:49
uh all of our money back uh you know
21:52
after that refinance we should be done
21:53
hopefully by the end of the year or
21:54
being in the next year
21:57
so that’s a little bit of snapshot of
22:00
what uh some of the smaller properties
22:03
and the potential for some of these
22:04
smaller properties and what you can do
22:06
and i’m happy to any questions pal i
22:10
can’t see you right at this stage yeah
22:13
sure not a problem they um and i think
22:16
so
22:16
we’ll probably get to all the questions
22:18
at the end we’ll probably save all the
22:19
questions for both you and ferris at the
22:20
end
22:21
um but if i know a couple of you have
22:23
written uh questions in the chat
22:25
continue to write some questions in the
22:27
chat as you as you as you
22:29
looked at these um
22:35
yeah you got the first okay um so
22:38
continue to add some
22:39
continue to add your questions we’ll
22:40
we’ll get a chance to ask them um after
22:42
ferris presents
22:43
uh to to either both stephen and ferris
22:46
and
22:47
then we’ll um yeah so just continue to
22:49
add them there but we’ll go ahead and uh
22:51
let ferris um go ahead and do his as
22:53
well all right
22:54
thank you though stephen that’s awesome
22:55
i mean basically a lot of that what
22:58
is what people are looking for in terms
22:59
of how to do it what they did
23:01
um and as well as the uh the exit as
23:04
well i mean that’s that’s very
23:05
impressive so
23:06
awesome go ahead paris
23:10
all right
23:13
all right so steven definitely showed me
23:15
up on the presentation so i added a few
23:16
more slides because i was going to keep
23:17
it pretty quick but
23:18
stephen great job on the presentation
23:20
great slide deck and so
23:22
i figured i was like all right i’ll tell
23:23
a little bit more story man i was gonna
23:25
keep it quick and
23:26
right but um i’ll go ahead and let’s go
23:28
share this yeah
23:29
so i think that people want to hear some
23:32
details
23:33
that’s that’s all right fair so we’ll
23:34
get some details in because
23:36
people want to hear it all right all
23:38
right i don’t want to bore people but
23:39
let’s get this going so
23:56
all right can you guys see my screen
23:59
yep it’s coming up right now all right
24:02
so i’m going to keep it quick because
24:03
hopefully most
24:04
of you know me but for those that don’t
24:05
i have a background in software i worked
24:07
at microsoft and really you know
24:09
i left microsoft with the vision of
24:11
building software and real and
24:12
industries like real estate that don’t
24:14
have a lot of tech people at it there’s
24:16
a lot of tech people working in smart
24:17
problems
24:18
at tech companies but not enough go to
24:19
other industries
24:21
long story short kind of fast forward i
24:23
did build software in real estate and
24:25
you know kind of found out about real
24:26
estate investing fell in love with
24:28
special syndication and it’s you know
24:30
some things i like it’s people’s game
24:31
it’s a numbers game it’s just some games
24:33
and operations
24:34
so all the things that i like and i’ve
24:35
since learned that it’s really more
24:37
about leveraging the things that are
24:38
normal in the temporal to kind of
24:40
combine things and really make us more
24:41
competitive
24:42
and so really really brief kind of the
24:45
company really disrupt equity is kind of
24:47
the parent company we do have other
24:48
brands and partnerships that we’ve been
24:50
continuing to build out and so i’m just
24:51
going to skip over those
24:53
but before i get going this is the deal
24:55
i’m going to talk about but i’m just
24:56
going to be candid i’m a candid guy
24:58
i like to share my thoughts and feedback
24:59
so please don’t make any
25:01
big important life decisions based on it
25:03
go talk to your professionals
25:05
stephen is probably a good professional
25:06
to talk to pal is a good friend talk to
25:08
those guys don’t talk to me about
25:09
anything big in life change but no i’m
25:11
kidding go talk to your attorneys your
25:12
accountants etc
25:14
so with that said i’m going to talk
25:15
about this deal right the woods
25:17
indicator i’m going to kind of give a
25:19
little bit of the background of the deal
25:20
these are pretty much the nicest shots
25:22
that you could possibly find before
25:23
about the deal
25:24
so it looks great but trust me there’s a
25:25
lot more kind of beneath the uh beneath
25:28
the
25:29
curtain i guess and really this came
25:31
from our actual
25:32
presentation of the adventure
25:34
presentation this is what we pitched and
25:35
i’m going to go through each of these
25:36
things but
25:37
all to my investors went in with the
25:38
mindset of doubling in five years
25:41
right we’re putting about nine hundred
25:42
thousand dollars into it and getting
25:44
about ten percent average cash on cash
25:46
and i’m going to go through kind of the
25:47
bottom three things here charlotte so
25:48
i’m going to skip over those
25:50
and actually okay pal let me um here so
25:53
let me just bit people
25:55
all right keep going so
25:58
you know they’re really kind of going in
26:00
right the things that you’re looking at
26:01
and i apologize for the jankiness
26:02
because i did
26:03
combine two slides but i’m really you
26:05
know you’re looking at market rents
26:06
right
26:07
right what are the two what i love about
26:08
this deal it’s all two bedrooms all
26:09
three bedrooms
26:10
right we have nice quality units and
26:12
it’s about looking at what is the market
26:14
doing
26:14
what is occupancy doing and you know do
26:16
we go for the high end rehabs or do you
26:18
go for a mid tier
26:19
right and ultimately you’re looking at
26:20
data and so
26:23
you know in addition to that right this
26:25
story what made this story interesting
26:28
is that this was a deal that i remember
26:30
you know flats atlanta and looked at two
26:32
deals this one and another one we ended
26:33
up offering on both of them
26:34
we didn’t win the other one but this one
26:36
we won because most people were scared
26:38
of it right
26:39
this property had nine down units
26:42
and it was just you know it was a deal
26:44
that was essentially
26:45
in an okay area but poorly managed right
26:47
it’s a deal that you’re not comfortable
26:48
walking around that you definitely don’t
26:50
want to walk around at night
26:51
right but the area was fine we saw
26:53
what’s happening in terms of the
26:54
proximity
26:55
and we knew that this deal was purely a
26:56
management play right
26:58
that the people that currently owned it
26:59
did not know how to manage right they
27:01
are very much people that are
27:03
lack of voter board poor avoided the
27:05
kind of the proof in the estimate is
27:06
really
27:07
that nine down units were down because
27:10
essentially the
27:11
one of the buildings backed up to a hill
27:13
so this property is 199 units so about
27:15
10
27:15
of the units were down one of the
27:17
buildings had essentially
27:18
been built on a hill and the back side
27:21
of the building right there’s nine down
27:22
you know
27:23
nine units and they were basically
27:25
sitting beneath the terrain and so there
27:26
was
27:27
essentially for all the suit but you’d
27:29
get pumped into a septic pump that would
27:30
have to then pump over and into the city
27:32
sewer
27:32
and so you you would think okay this has
27:34
got to be an expensive repair
27:36
because these were down to the stud it
27:37
had backed the pumps that failed and it
27:38
backed up to the stud
27:40
i’m sorry they backed up in the units
27:41
and they ended up having to demo
27:42
everything to a stud
27:44
and so you know we had budgeted in doing
27:46
about 400 000
27:47
of all the work right and i’m going to
27:49
go through what we ended up actually
27:50
doing here shortly right so
27:52
it all looked good you know we got the
27:53
loi accepted so we figured we’d go on
27:55
site
27:56
and this is really what we saw right and
27:59
actually sorry this is before i got the
28:00
other way accepted and you know there
28:01
was potholes there was damages
28:03
the deal was ugly and the other thing i
28:04
experienced is in atlanta it’s almost
28:06
always raining whenever your tour
28:07
property
28:08
don’t ask me why but it just seems to be
28:10
the case nine times out of ten it’s
28:11
raining in atlanta so
28:13
you know we knew this deal needed to
28:14
work right and you know from being on
28:16
site i learned a couple of things the
28:18
property management
28:19
clearly didn’t know what they were doing
28:20
their on-site manager had literally
28:22
disappeared right before the tour
28:24
never you know she just got up and left
28:26
mantis guy was happy to just show units
28:28
was not happy to actually work on
28:29
maintenance you
28:30
spent the whole day it was if you wanted
28:32
it to right there was the
28:34
pump station issue that i mentioned and
28:37
the deal itself needed a lot of rehab
28:39
more rehab than i have initially
28:40
estimated right that 400 000
28:42
is not going to get enough done for a 99
28:44
unit property
28:45
and so and on top of that too right
28:47
there was a plot of land right across
28:49
the street
28:50
that you could see that they were about
28:51
to start developing and so that was
28:53
you know like you could see something
28:54
was happening wasn’t very clear right
28:57
and so we had to admit a few more people
29:02
all right and again the surrounding area
29:04
was what really wasn’t that bad we saw
29:06
that basically and i’m going to show
29:07
this on a map here shortly
29:08
that again if you go west right so
29:11
downtown atlanta was west of us
29:12
if you go west every intersection was
29:14
improving better and better
29:15
right and so you know we get back like
29:17
all right we can make this deal work and
29:19
so you start to pencil it right
29:20
it’s all about the numbers people don’t
29:22
fall in love with any deal don’t fall
29:23
over locations
29:24
so on this deal we really have to go
29:26
from 400 000 of rehab to 900 000
29:28
on rehab and we adjusted our offer from
29:30
4.2 million to 3.8 million right because
29:32
that was where the deal had to
29:34
get done to work and so you know that’s
29:37
literally a screenshot of our loi
29:39
way back when our old template but you
29:41
know it got accepted right the call the
29:43
broker called back
29:44
there was a little bit of back and forth
29:45
we weren’t the highest offer right but
29:46
we had a good
29:47
you know 21 day due diligence and kind
29:49
of kept it quick we knew
29:51
and to most people i tell them is really
29:53
you know
29:55
why ask for 30 days to do diligence if
29:56
you don’t need it nine times out of ten
29:58
i know within the first five days if i’m
29:59
buying the deal or not right very rarely
30:00
is there anything that’s going to
30:01
continue on so after a little bit of
30:04
negotiation boom
30:05
loi accepted right on this deal and so
30:08
then that’s where we went back on site
30:09
again
30:10
right and doing our dd’s so first before
30:12
we do that you did the psa earnest
30:14
deposit
30:15
you do the walk through the property
30:16
management company start to really line
30:18
up everybody that needs to get out there
30:19
right it gets really really busy
30:21
to kind of plan it but now we end up
30:24
going outside
30:25
and this is a picture of me and vince
30:27
steven had his picture right now
30:29
obligatory due diligence picture
30:30
this was pretty much you know ben’s my
30:32
partner and this was after he warmed
30:34
up to the deal
30:39
can you show up you’re going too fast
30:41
you’re going sorry all right i’ll slow
30:43
down i’ll slow down
30:45
um so this was basically obligatory due
30:47
diligence picture it was essentially
30:49
after
30:50
you know we first got out there i could
30:51
see ben was kind of tense he’s like
30:53
all right what are we getting ourselves
30:54
into but once you get in you start to
30:56
dig into it
30:57
look at the numbers you look at the
30:58
units you realize that hey this can work
31:01
right
31:03
and so that was that picture and really
31:04
let’s talk about now what made this deal
31:06
attractive right
31:07
so we are the red dot right in the very
31:09
center right to the west of us
31:11
is downtown and you can see there’s
31:13
walmart to the east of that you can see
31:15
that they’re basically a
31:16
vacant building that was purchased 100
31:19
vacant for more than we were buying our
31:20
deal for
31:21
and the person ended up putting another
31:23
40 000 a unit into it and made it
31:25
essentially a v-class right
31:26
and that deal ended up selling for 125
31:29
000 a door we bought our deal for
31:30
39 000 and i’m gonna go through the
31:32
numbers in a little bit later
31:34
south of us sorry south of that was
31:36
essentially a brand new office
31:37
development that was going up
31:38
then there was us and a brand new
31:40
development going across the street and
31:41
as well as the deal right across the
31:43
street
31:43
had been fully occupied for two months
31:45
our deal people on paper was eighty
31:47
percent occupied on paper
31:49
right we ultimately ended up bringing it
31:51
down to forty percent
31:52
because it was totally not eighty
31:54
percent occupied but again if the deal
31:56
across the street had a weightless and
31:57
fully occupied
31:59
to where we couldn’t even tour a unit
32:01
that tells you something guys right
32:02
there’s demand in the area
32:03
it’s just purely a mismanagement play
32:05
and i like this kind of place
32:08
right so here’s really what we presented
32:09
to our investors right this is what we
32:11
went into the deal
32:12
expecting this is what we modeled and if
32:14
you notice we really modeled it as a
32:16
year three refi right for this deal we
32:18
did what’s called bridge debt
32:20
right bridge people get scared of
32:21
because it’s not the sexy agency debt
32:23
but bridge is the tool that you got to
32:25
use correctly so
32:26
essentially with agency debt right
32:28
stephen i’m guessing yours were freddie
32:29
gills probably
32:32
fannie agency actually our ours were uh
32:35
we used the bank
32:36
so okay i had to build a relationship
32:38
with a bank
32:40
on the bigger deals right if it’s
32:41
stabilized typically we get fannie
32:42
freddie what we call agency debt
32:44
this deal was not stabilized like i said
32:45
had nine down units it’s
32:47
already you know the agencies wouldn’t
32:49
even touch it let alone is 80
32:50
occupied again another strike against it
32:52
right so we did which bridge it’s kind
32:54
of the cheer down below hard money
32:55
lenders
32:56
and on this deal honestly we had the
32:57
bridge lender from hell that’s another
32:59
story from another day
33:00
right but we you know that allowed us to
33:02
buy the deal and get our business plan
33:03
going and so
33:04
you know if you notice that’s this is
33:06
kind of what we presented right we
33:07
modeled it as an eight percent exit cap
33:09
and people were expected to get about 42
33:11
in three years
33:12
with the refi right but
33:15
let’s talk about now what happened
33:17
during the deal right we literally took
33:18
it down from 78
33:19
to 55 and actually economic was 40
33:22
so 55 physical 40 percent the uh
33:27
economic occupancy right
33:30
trust me people whenever you’re
33:31
operating at 40 you know
33:34
occupied it’s stressful you are in the
33:36
red you are in the red
33:37
losing money each month after month and
33:39
you know if you have a bad bridge lender
33:41
they know that too and they’re trying to
33:42
get you the default long story
33:43
so you know we really have to work this
33:45
deal and manage it tightly right
33:47
this was an operational play we didn’t
33:50
have to bet on getting
33:51
amazing looking units like steven had
33:53
and getting that rent pop right we just
33:55
had to get units online and clean up the
33:57
property
33:58
let alone then the rent pops came later
33:59
and that also helps juice the deal
34:02
right on this deal again we brought
34:03
security and
34:05
literally had them walk down the
34:06
property implemented a curfew checked
34:08
everyone that was coming in and off the
34:09
property to where all the bad elements
34:11
knew that hey this is not the property
34:12
to mess with right
34:14
they knew that they’re not going to be
34:15
able to come and deal and do whatever
34:16
they were needed right
34:18
and ultimately you know we end up
34:19
pushing rents as we improve the property
34:22
immediately we started to really get
34:23
that income back up get the collect to
34:26
get the occupancy back up right
34:27
so we we quadrupled our total cash
34:30
collected in four months
34:31
right it was amazing i mean a little
34:32
moon from you know i think we our low
34:34
was 27
34:35
000 and then you know we got up to a
34:37
hundred thousand dollars in four months
34:39
right and you turn a community from
34:41
being a bad
34:42
area or a bad deal to being a place
34:44
people really cared about right
34:46
we you know first we clean out all the
34:48
bad elements then we started to build it
34:50
into community
34:51
doing tenant events putting in
34:52
playground and what’s nice about it is
34:55
the people that stayed through that
34:56
really appreciate it they love it and
34:57
they start to tell you about the bad
34:59
people too right
35:00
they have sense of community sense of
35:02
you know pride of ownership and living
35:03
in a property
35:04
which makes it really a complete night
35:07
and day situation
35:08
and so ultimately for the people that
35:10
stayed i mean they were super thrilled
35:11
and you know they saw what had been done
35:13
in the property
35:14
right and really in this deal you know
35:16
basically start to finish 18 months
35:18
we lost a lot of hair in the process
35:19
right but ultimately our investors did
35:21
really well
35:22
right 80 total return in 18 months which
35:24
you know
35:25
almost doubling their money in a year
35:26
and a half which is you know almost
35:28
50 irr right and
35:31
kind of continuing on let’s see what
35:33
else we got right here was the staff on
35:35
this deal so we raised 1.1 million
35:37
dollars
35:38
right it’s one of our first deals
35:39
smaller deal purchase price is 3.9
35:41
million
35:42
we sold this deal for seven million
35:43
dollars right imagine if we were able to
35:45
come in you know
35:46
cash right i mean we literally collected
35:49
on 1.1 million dollars we made two
35:51
million dollars
35:52
right and again that’s paying all that’s
35:55
net
35:55
everything all in and so again people
35:58
there’s
35:58
different types of plays out there right
36:00
stephen had more of um you know i’d say
36:02
a traditional
36:04
it’s a functional property it’s about
36:05
going in making it nicer
36:08
pushing the rents and collecting more
36:09
right and continuing to operate it
36:10
effectively there’s value ideals which
36:13
is like ours i’d say a deeper value
36:15
ideal
36:15
which is cleaning out the property
36:17
turning it around and then there’s deep
36:18
there’s even deeper
36:19
i’ve seen people that’ll do fully vacant
36:21
properties we haven’t done that
36:23
that’s not really i’d want to do that
36:25
right you know
36:26
just it’s different strokes for
36:27
different folks but again
36:29
what i tell people is be opportunistic
36:31
it’s not about one size fits all
36:33
i know a lot of people think it’s only
36:34
this only this but be open to it right
36:37
we weren’t expecting to do this kind of
36:38
deal honestly
36:40
right but we saw the opportunity we knew
36:42
the returns were there we modeled it out
36:44
and you know we decided hey let’s go for
36:46
it and ultimately
36:47
it also had the added benefit of letting
36:49
us get into atlanta
36:51
right it was our first deal atlanta and
36:53
really
36:54
to what stephen was saying get to know
36:55
the brokers i remember we were doing due
36:57
diligence at this property
36:59
and the broker came out that was they
37:00
sold us a property we asked if you have
37:02
anything else come
37:02
for sale he said well i have this one
37:04
deal coming up we just got the exclusive
37:06
on
37:06
it’ll hit the market in a month and a
37:08
half and i remember on the way back to
37:10
the airport ben and i stopped at the
37:12
property
37:13
we toured the deal we drove it we’re
37:14
like man this deal is a steal right and
37:15
i remember on the airplane ride we
37:17
modeled the whole thing
37:18
we landed back in houston that night and
37:20
we literally submitted out an offer the
37:22
next day
37:22
right we get the first peek at that
37:24
property that’s a property that we still
37:25
own today i love that property
37:27
right and so again talk to your brokers
37:29
get to know them and
37:30
especially in the bigger space right
37:32
where you know i’m talking 90 units and
37:34
up
37:35
every deal goes through a broker one way
37:37
or another right as a seller
37:39
i would say it’s negligent for me to not
37:41
use a broker
37:42
right now it doesn’t mean that it has to
37:44
get blasted to everybody
37:45
but i know people have this kind of
37:47
there’s a common myth of off market oh
37:49
it’s an off-market deal
37:50
as if no broker knew about it no it’s
37:52
not off market if i’ve seen the deal too
37:54
right i mean
37:55
it’s not like it’s a secret space it’s
37:57
ultimately about having trusted brokers
37:58
they know you can perform
38:00
they know you can close build those
38:01
relationships and getting one of the
38:03
first few peaks right
38:04
i’ve had many times a broker calls me
38:06
and said hey i’m showing this to you and
38:07
two other people
38:08
here’s the story here’s what’s going on
38:10
seller has this price
38:11
do you want it and we actually bought
38:13
one of our deals that way as well
38:14
so a different deal so again it’s all
38:17
about relationships in this business
38:19
whether it’s partners whether it’s
38:20
brokers whether it’s lenders whether
38:22
it’s
38:23
mortgage brokers insurance etc right
38:25
this business is all relationships and
38:27
that’s ultimately why we started
38:28
a big part of multi-family masters it’s
38:29
all about networking
38:32
and that’s it so q and a so i guess
38:36
i’ll go ahead and stop sharing my screen
38:38
and let’s just go ahead and open it up
38:39
right
38:40
if anyone has any questions let me know
38:42
let steven know we’ll go ahead and pal
38:43
you want to moderate and then we can go
38:45
ahead and answer yeah
38:46
there’s a bunch that were in the in the
38:47
chat but um my computer had to reset so
38:50
i
38:50
i lost all of them except for like the
38:52
last two so uh we have to
38:54
all right i’ll moderate really hard
38:56
questions and then i’ll take the easier
38:58
ones all right
38:59
there’s some good questions in there
39:00
though so yeah look check take a look
39:02
back
39:02
all right so i’m just going to kind of
39:04
scroll back um
39:07
let’s see so how do you manage a complex
39:10
that’s this size now the question to you
39:11
stephen
39:13
uh how do we so we hire the higher
39:15
property manager
39:16
and um we when during the rehab we we
39:20
actually had an on-site
39:22
person so instead of them renting uh is
39:25
instead of paying us rent
39:26
we just actually had them stay there and
39:28
it actually helped watch
39:30
watch over the property while it was
39:31
under construction and um
39:34
now that it’s fully stabilized we’ve
39:36
moved that individual out and the
39:38
property manager just manages it
39:40
like this have you had any issues have
39:43
you had issues with managing companies
39:44
doing
39:44
20-ish units or has it been pretty have
39:47
you been blessed i guess with a good
39:48
management company that’s been able to
39:49
kind of
39:50
because that’s just that spy where it’s
39:51
like too too big for a regular magic
39:53
company too small for
39:55
multi-family company right yeah no no i
39:57
think what you have to do is like you
39:59
said it’s all about building your team
40:00
so
40:01
what it really depends on you know
40:03
you’ve got to find the right
40:04
property manager we actually had to
40:05
switch our property manager
40:07
um two months in uh to the acquisition
40:10
of it so it was not
40:12
easy right so two months so the first
40:14
property manager gave us all the
40:15
strategy said here’s what we can do
40:17
the strategy was great the execution
40:19
wasn’t there we had to move to somebody
40:21
else
40:22
moved to somebody that was more of a mom
40:23
and pop they did a lot of residential
40:26
so they were able to push that up for
40:27
and they had all the construction
40:28
in-house as well
40:30
and so it’s building that relationship
40:32
they said they could do it
40:33
and we’ve had a successful relationship
40:35
on on these two properties
40:36
would i um recommend them for a 99 unit
40:40
property probably not
40:42
no you know that but they really can
40:44
play in that niche so
40:45
really take the time understand your
40:47
property manager understand where they
40:49
play
40:49
and then you can use different ones and
40:50
build that relationship that’s really
40:51
about the
40:52
the team like you said bears all right
40:55
yeah
40:56
that’s super important in that in that
40:58
size that’s nice for sure very much so
41:00
yep
41:01
all right so let’s see so can you cover
41:04
what’s a cost segregation at a high
41:05
level
41:06
so for those that know right your house
41:08
you’re able to depreciate it over 27 and
41:10
a half years
41:11
now with an apartment complex right not
41:14
everything ages at the same time
41:16
the stove lasts a lot less than the wood
41:20
in the building right for example and so
41:22
what a cost segregation study is is that
41:24
literally you’re paying a third party
41:26
to go in and segregate everything and
41:28
break it down into different functional
41:29
blocks
41:30
that are that depreciates over different
41:31
time periods
41:33
right now with residential
41:36
right you could do that as well most
41:39
people don’t do it because there’s a
41:40
cost to actually getting that study done
41:42
whereas with multi-family um that cost
41:44
is a pretty minuscule amount and so
41:46
most people will basically do it on the
41:48
multi-family side not as much on the
41:49
residential side but you can do them in
41:50
both
41:51
but what it allows you to do is really
41:53
get a lot more depreciation at the
41:55
beginning
41:55
right now in addition to that right what
41:58
there is currently is there’s something
41:59
called bonus depreciation
42:01
so not only can you front load your
42:02
depreciation on the front side
42:04
you can also get what’s called the bonus
42:06
appreciation you can
42:07
request year one and what that lets you
42:10
do is again get even more of a premium
42:12
on depreciation
42:13
now all that said right on a typical
42:16
investment on a c-class property
42:18
we typically see for a hundred thousand
42:19
dollar investment you’re getting about
42:20
sixty thousand dollar loss year one
42:22
regardless of any distributions or not
42:24
right now
42:25
the caveat to everyone right is that
42:27
that is getting recaptured at some point
42:30
talk to your professional right but
42:31
essentially you can keep deferring your
42:33
losses for a long time
42:34
that’s essentially what happened with
42:36
trump right he didn’t pay taxes because
42:38
he had a lot of real estate losses
42:39
and if you know how to work it correctly
42:41
you can also get that benefit so
42:43
that’s my maybe long short answer to
42:45
that
42:46
um let’s see so one question uh again i
42:49
think stephen this is probably during
42:51
whatever you’re presenting which is
42:52
do you recommend doing all rehab upfront
42:54
or phase in and finance with cash flow
42:56
for the property
42:56
with smaller properties can you support
42:58
property management
43:00
uh yeah so you’re i was fortunate enough
43:03
so one of the key things you have to
43:04
build a relationship with someone to
43:06
finance all this property so
43:07
i was able to get a bank to
43:11
finance all of the rehab up front so
43:14
well
43:14
they paid the 75 up front loan to cost
43:17
and then i paid the 25
43:18
on the back end right so my money didn’t
43:20
have to come out right off the right out
43:21
right off the bat
43:22
that’s not typical right so just
43:25
building a great relationship our our
43:26
team
43:27
actually had a little bit of net worth
43:28
to it so we were able to negotiate some
43:30
of some of that uh
43:31
back with with the relationship had a
43:33
really tough time
43:35
i live in southern california extremely
43:37
tough time finding someone to actually
43:38
finance the property for us because we
43:40
weren’t local
43:41
to uh phoenix at the time we had someone
43:43
take a a chance on us and now we have a
43:45
long-term relationship with that bank
43:47
right
43:48
so so yeah um we chose hey at the end of
43:51
the day the original property manager
43:53
that gave us the business plan said you
43:55
have to re
43:56
either rehab all of them or you just
43:57
rehab like 20 of them and leave but meet
43:59
on the bone for someone else
44:01
we chose to do all of them and it worked
44:03
perfectly
44:04
in terms of where we needed to be and it
44:06
was the market probably may have helped
44:08
us as well as
44:09
um you know the forced appreciation and
44:11
getting a better tenant base in place
44:14
i don’t know if i answered the question
44:15
i think i think i don’t think you did
44:16
and maybe the other caveat too right for
44:18
people is with bridge debt right another
44:20
thing we can do is we get a lot of the
44:21
rehab baked into the loan
44:22
with agency there’s different
44:24
regulations and rules around can you you
44:26
know between franny and freddie
44:27
but again a lot of times you can put a
44:29
chunk of that in
44:30
the loan and the way that works is
44:32
typically you’re giving that money to
44:33
the lender they’re holding on to it on
44:34
escrow
44:35
and you have to deal with a really
44:36
painful process to get that drum but
44:38
essentially you can have money sitting
44:39
with a lender
44:40
and as you do the work you get third
44:42
parties approve you basically submit the
44:44
request
44:44
they send someone out they verify the
44:46
work i’ve done it’s really a big paper
44:48
chase and it’s a really it unfortunately
44:50
takes a lot longer than expected
44:52
so my for me my personal new rule of
44:54
thumb is moving forward
44:55
i typically will not let the lender keep
44:58
a good most of my
44:59
rehab budget right because it ends up
45:01
getting in a cash crunch and that’s the
45:03
problem with these deals with these
45:04
bigger deals is
45:04
it becomes a cash play because if you
45:06
essentially have to spend five hundred
45:08
thousand dollars
45:09
to get a lot of work done and then he
45:10
said you did that to the lender and the
45:11
lender takes two months to approve it
45:13
well now you’re just kind of
45:14
waffling right waiting to get that money
45:16
out and so nowadays we try to keep maybe
45:19
only half of a lender i won’t give them
45:20
you know most of it like i used to um
45:24
and again yeah different for different
45:25
things now they hold uh i think a
45:27
12-month reserve on some of this right
45:29
so
45:30
reality 12 months is all held and we
45:32
just did it we just did a
45:33
guy three weeks ago and it’s exactly
45:34
that we we have 12 months of pni not
45:37
just even if it’s interests only yeah
45:38
the full pni payments for 12 months have
45:40
to sit in escrow
45:41
and you can request it after nine months
45:43
so in eight and a half months i will be
45:45
sending an email to the lender to get
45:46
that money out and that will be a huge
45:48
distribution back to our investors on
45:49
that date and so what we also did is we
45:51
we so we did a 75 loan to cost and then
45:54
we re and so you built in some of the
45:55
rehab dollars in there just like you
45:57
described
45:57
but when we refinance we didn’t go with
46:00
an agency we actually went with a bank
46:02
that bank was a non-recourse loan as
46:04
well so same exact terms
46:06
but much easier in terms of the process
46:08
i mean
46:09
the forms as most of you may know to
46:12
fill out on freddy are stacks and stacks
46:14
i’m going through them right now right
46:16
so
46:16
um it’s just a lot of different forms
46:18
that they require and a lot of check the
46:20
box so
46:20
if you can someone’s looking for a
46:22
problem if someone’s looking for a
46:24
problem to solve
46:25
go start a lending company that has the
46:27
best servicing department in the world
46:28
because literally we’ve had many
46:30
different lenders we’ve servicing is
46:31
always a very painful part of the
46:33
business so
46:34
i promise you we’ll send a lot of
46:35
business your way and i’ll make sure you
46:36
get more business too
46:38
um so let’s see that was that question
46:41
uh next question uh
46:42
was the cash out refi done after the
46:44
renault what was the benefit if you end
46:45
up with a bigger loan
46:48
what’s the benefit with the bigger loan
46:50
well you you’re able to um
46:52
cash out refinance so you know you that
46:54
that’s the difference that you get so we
46:58
cashed out over a million dollars right
46:59
tax-free that’s the nice thing about
47:01
that’s what i really like about um
47:03
holding a property yeah
47:04
so you can pull all that money cash free
47:06
it goes all to your investors as well
47:08
cash free so i thought that’s like a
47:10
return plus
47:11
you don’t get tax dollars there’s like a
47:12
return of capital right so
47:15
yeah we have a bad tendency of selling
47:16
but then you know you getting kind of
47:18
you do the jacks stuff
47:19
but our original business plan was to
47:21
sell right and sat on the market and
47:22
people were just a little iffy on it and
47:24
then we just cashed we refinanced
47:26
got all of that cash back so we have
47:28
nothing so in
47:30
essence all the investors have nothing
47:31
in the deal which means it’s an infinite
47:33
return
47:34
so every dollar that comes in is just
47:36
profit
47:37
for the investors all right and we’ll do
47:40
probably about two more questions
47:42
at the bottom of the hour so let’s see
47:43
the next one i think it’s to me uh how
47:45
long do you
47:46
you need to spend prefer to turn
47:47
self-piece on that deal
47:49
there was no preferred return that was
47:50
actually before we added preferred
47:51
returns to our deals that was in 80 20.
47:53
and on that deal was really no cash
47:56
and what we modeled was no cash the
47:58
first year right and then
47:59
you know we ended up selling it at the
48:01
18 month mark on that situation
48:04
um let’s keep going then uh how did you
48:06
hear find out about this deal
48:08
for me that was really i was searching
48:10
around just
48:11
that was a smaller brokerage it wasn’t
48:13
the really big national broker it was a
48:15
smaller
48:16
broker that you know not as big as a
48:18
cbre ease or the
48:20
cushman wig so that was one that i found
48:23
you know more i think i don’t remember
48:24
how i first came across it maybe someone
48:26
sent me something or i was searching and
48:27
really got to know them built out that
48:29
rapport
48:30
and you know that led to the deal and
48:32
then let’s do
48:33
one last question um when you remodel
48:36
units is it always a third-party
48:38
contractor
48:39
or have you ever had the property
48:40
management company handle stephen you
48:42
want to answer that one
48:43
yeah for us we had the property manager
48:45
actually handle that right so they have
48:47
a whole construction arm
48:48
and that construction arm allowed us to
48:51
save a little bit of money as well and
48:52
we could watch uh watch uh watch over
48:55
them as well
48:56
and during our weekly meetings we’d have
48:58
checkups and the property manager would
48:59
have the construction piece and then
49:02
the property management side um on it on
49:04
the calls
49:06
all righty perfect
49:09
well then let’s go ahead and call it rap
49:12
so
49:13
thank you very much stephen really
49:15
appreciated it i think that was
49:16
informative different
49:17
just a different kind of presentation i
49:18
liked it and for those of you that have
49:20
never been on our calls right we do a
49:21
breakout session at the very end so what
49:23
we’ll do
49:24
is really again like we mentioned like i
49:26
said like steven said
49:27
multi-family is all about relationships
49:30
getting to know people so what we like
49:31
to do is basically split the entire meet
49:32
up into
49:33
groups of about eight people probably
49:35
what we’ll do and you know
49:37
really gives you a chance to get to know
49:38
somebody new hopefully right
49:40
and so definitely stay stay for the
49:43
breakout right and get to know the
49:44
people we’ll do about a
49:45
maybe about a 12-minute breakout and
49:47
then we’ll kind of call it a wrap at the
49:48
end and come back and so
49:50
with that said everybody pal anything
49:53
else you want to add before i go kick
49:54
off the breakouts
49:56
nope i think we’re good i think we’re
49:57
good appreciate it
49:59
all right let’s go ahead and get these
50:01
going
50:03
got a haircut huh
50:07
that’s a zero right there right before
50:09
yeah you’re right
50:12
i just kept mine myself was uh yeah i
50:15
just did it like i just did it
50:17
an hour ago yeah that’s a zero though
50:26
all right well hopefully you all got to
50:28
enjoy that right like we said networking
50:29
is important get to know somebody right
50:31
go meet somebody learn something new go
50:33
share something
50:34
that maybe others don’t know so i guess
50:36
with that said right like i said we look
50:38
forward to seeing you all again in
50:39
january today was our last one for this
50:41
season
50:41
we will start again in january and you
50:44
know we’ll go ahead and keep this open
50:45
right so you know
50:47
i’ll leave i’m not going to close it out
50:48
so feel free to network i know there’s
50:50
definitely a
50:51
group that likes to do the after after
50:52
party so you guys are welcome to stay
50:55
chat and talk and with that said you
50:57
know
50:58
i’m gonna go ahead and call rap pal you
50:59
got anything else to add
51:01
yeah just really quickly the last the
51:02
last couple things are just again the
51:05
express to success uh sign up for it
51:08
we’re looking forward to it it’s a it’s
51:09
a great event that we’re we’re putting
51:11
out there so
51:12
um december 14th 5 to 7
51:15
00 p.m pacific uh free event
51:19
and a rapid fire live stream so we think
51:21
it’ll be a great great
51:22
event for you guys second thing is if
51:24
you’re interested in our mastermind we
51:25
do have um we do have a couple more
51:27
openings for our mastermind so
51:29
if you are interested in your mastermind
51:30
feel free to just ping
51:32
uh ferris ping myself ping bethany um
51:35
and we can
51:36
we can help you out with just kind of
51:38
maybe some of the questions that you
51:39
might have
51:40
and kind of set you on the path if
51:41
you’re interested in joining our
51:42
mastermind as well
51:43
okay other than that that’s good for me
51:46
uh also you could save the chat if you
51:49
guys want to there’s
51:50
down in your lower right there’s three
51:52
dots
51:53
so if you’re all the people putting
51:55
their information in there
51:56
if you click on it the three dots you
51:58
can do a save chat and you can
52:01
save all that information yep
52:04
thanks jeff good info
52:08
all right all right i appreciate
52:09
everybody i’m going to take off because
52:10
i’m open
52:11
to dinner yeah i’m going to eat dinner
52:13
but uh
52:14
same to you guys around everyone yep
52:17
thanks everybody