MFM Live: Lessons From Buying Multifamily Property

MFM Mastermind members Bernadeau Charles and Elsa Nguyen will share their insight on their recent acquisition of a 40+ unit property.

About Our Speakers:
Bernadeau Charles:
Bernadeau Charles began his real estate journey in 2017 where he primarily focused on identifying and analysis of multifamily value add properties in Central Florida. Bernadeau started a group called Orlando REI in the central Florida market where he developed and maintained relationships with local investors.
Bernadeau acquired his first property in 2019 and currently has 50 units under management, which he has accomplished in just under 4 years.

Elsa Nguyen:
Elsa has been actively involved in the Real Estate industry since 2002 when she started out as a passive investor and doing fix and flip. In 2016, she left her 15-years of corporate career where she worked as a Controller and Human Resources Director, to be a full-time Real Estate Entrepreneur. Elsa serves as the Principal for One Sunrise Holdings, LLC. where she actively engages in Acquisition, Financial and Asset Management, and Investor Relations. Elsa has a portfolio of over 500+ doors and the number keeps going up.

VIDEO TRANSCRIPTION

0:02
and we are recording my name is Garrison Gilbert we are
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multi-familymasters.com this is multi-family Masters live we do this
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once a month third Wednesday of the month every month Monday oh yeah sorry third Monday of the
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month every month uh tons of free content tons of value add
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we do this simply because we want to increase our Network number one number two
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we want everyone to understand this business we want everyone to know this business we want everyone to be able to
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do this business from the ground up because plain and simple we want you closing deals because we want to partner
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with you we’re all about surrounding ourselves with good people we’re all about surrounding ourselves with the right people
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uh on top of that we have a conference coming up beginning of October first and second uh
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Vegas multi-family Masters uh.com conference it’s called
1:03
multi-familycon.com get your early bird special VIP ticket get it now get it
1:09
early um and let’s get this party started tonight we have Mr Bernardo Charles we missed Elsa Nguyen this is going to be
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hosted by myself Mr pal Chi Mr Ferris Musa my two business partners I’ll
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introduce myself real quick uh my name is Garrison Gilbert been buying real estate full-time 21
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years I’ve never had a W-2 job um I bought a lot of properties I’ve made a lot of mistakes in my day I
1:35
learned this business the old-fashioned way by doing it um my two business partners Mr pouchy Mr
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Ferris Musa they’re a lot smarter than myself they have a lot more going on than myself uh go ahead and take away Mr
1:47
Powell appreciate that Garrison so uh yeah just a real quick background on me so I live
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in Los Angeles so my name is Powell chi I live in Los Angeles um invest out of state so really I have
2:01
never invested inside of California all of my investments have been out of state whether they’re multi-family or Self Storage
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um really kind of grew my legs with multi-family buying my first apartment building in Indianapolis a year later I
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bought another one in Indianapolis um if anybody’s interested I’m gonna sell one of them so uh if you let me
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know if you’re interested um uh let’s see if I want to buy your
2:26
apartment buildings in Indianapolis how do I get a hold of you I mean let’s see the best way truthfully
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is social media so if you are on Facebook join our Facebook group or get on Facebook
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um reach out to me that way it’s probably the easiest way I mean I just get bombarded with too many emails so
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reach out on Facebook friend me and send a message that you’re interested and uh and then we can go from there um
2:50
but happy to talk to you it’s a 40 unit apartment complex in Indianapolis um besides that uh bought a couple more
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uh was a general partner on five different syndications uh all large apartment buildings several of them have
3:04
sold um several of them are in the process of being sold and and then when uh the
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pandemic hit I added a different asset class to my repertoire and I added Self Storage to my repertoire and since then
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2021 I bought my first one in January of 2021 uh added five more Self Storage
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properties in 2021 so I have a total of six that year 2022 I closed on two more
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this year um and I’m working on number three for this year so uh that’s what I’m doing
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right now and um super excited to uh super excited to hear from bernardell as well as Elsa
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about this about the this property and why don’t I turn it over to ferris ferris you’re here aren’t you
3:49
all right thank you pal hello everybody I’m Ferris I do not have a 40 unit in
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Indianapolis like pal um for those that know me I’m based in Houston Texas I have a company called disrupt Equity we’re a vertically a
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vertically integrated company we have our own management company a few other businesses as well uh we have about 3
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000 units or so mostly in the Texas and uh George markets we do actually close our first floor to deal last week and so
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continuing to grow and you know I think again like we tell people this business is all about relationships and
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networking and just getting educated and so being part of a community being part of a mastermind is a big part of that
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and you know I’ve done a deal with Powell and you know I’ve done stuff with Garrison so it’s kind of about growing learning and kind of meeting other
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people and so with that said too we’ve done two that’s right two and so you
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know stuff works people so you know I tell people get uncomfortable get out there go meet some people and learn to grow and so with that said excited to
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hear from Bernardino and Elsa and I will hand it back to Garrison to help introduce them so go ahead Bernadette feel free to
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introduce yourself and Bernadette and Elsa put your contact information in the chat below
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name cell phone email address text message social media links whatever you
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got whatever you want for people to reach out to you um these are individuals that are actually doing deals actually closing
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deals these are the type of people that you want to surround yourself with these are type of people that you want to partner with these are type of people
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you just want to brainstorm with and be friends with uh let’s start with Well normally I would say bernado but Elsa
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ladies first I have to say ladies first Elsa introduce yourself okay thank you guys and hi everyone
5:29
thank you for being here tonight my name is Elsa Nguyen and I am from San Francisco Bay Area I have been in the uh
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syndication business since 2019 and I did not start it out in multi-family I
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started out in Land Development um shortly after that
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um we bought that piece of land to do a hotel syndication and shortly after the
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pandemic I learned that a hotel is probably not the right access class to
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focus on so I switched here over to apartments and that’s when I started to
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partner up with um multi-family Masters work with Pearson we have clothes
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this is the fourth or fifth builder we close together I can’t remember and uh
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come to know a lot of great people met a lot of great people to this program that’s about it
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for me take it away my man all right so I’m Bernardo uh based out of Orlando Florida
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I started investing in real estate back in 2019 um really I started back in 2017 started
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a meet up to kind of learn uh went deep bugs podcasts meetups conferences and
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then so I took my first jump in 2019 bought a single family home and from there are duplex and I realized I went I
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wanted to go bigger and get cash flow much faster to leave my W-2 so I began
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to Branch out into communication as of last year and as you guys know I because my first Dale recently um and so yeah
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that’s when I’m here they’re gonna grow awesome and uh Bernadette you know what he is the epitome of what you need to do
7:11
if you actually want to do this business you don’t just talk about it you actually go do it I met Bernadette probably Bernadette
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he’s in our Mastermind how long ago did you join The Mastermind yeah so I actually went and attended the
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multi-founding Master’s conference last year and so when I went there I was like
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this is this is amazing I’ve been to a few other conferences but this one was just the way it was framed and um the
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way it went it was just so amazing it was a whole different vibe it was um I learned a lot from a minute so I wanted
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to join that day um that I went there and so I joined right after okay so you’ve been in The Mastermind
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for seven months or so now six seven months five six months yeah a few months
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I joined back in novemberish early December yeah and and while we’re talking about the multi-family Masters
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conference I got to give a special shout out to Mr Chris Collins what’s up homie he was the emcee at that event I’m
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hoping I can get him to Vegas to do some cool stuff with this yeah man I’m gonna put him on the spot and make them stay
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yes right here in front of everybody okay it’s funny Chris is really funny
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yeah I’ll ask Chris’s agent the fee is a very nominal fee please reach out to me and we’ll coordinate payment yeah Ferris
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takes it’s only like it’s like 8.786 it’s some weird number but the good
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thing is you know I give 8.76 to Chris and the rest goes
8:35
to me as the agent the rest goes to charity he’s a great person everybody and it can all be paid in crypto but no
8:41
uh did you think that within five six months you would actually close the 66 unit apartment complex I mean that’s a
8:47
pretty big deal that’s a 4.5 million dollar property honestly to be honest I did not I thought it was going to take
8:53
me a year maybe a year and a half to get there and so um I was hungry so I kept just
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networking underwriting bills calling Brokers on my lunch break in the morning at night so I was just going at it
9:04
constantly um until it happened but yeah I thought it was going to be at least a year minimum to get something going so I was
9:10
definitely surprised by it good for you man I appreciate that’s awesome yeah I would say vertigo even even a year
9:17
truthfully it’s pretty fast for a good sized property like that it takes a while to learn the business as well as
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Network enough to to be able to find the people that can help you take down that type of deal right it’s not just like
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hey I’m gonna go buy a a 150 000 uh house or duplex or something like that
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it’s it’s it can be a significant uh step up from from you know doing that so
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that’s that’s great that you were able to do that that fast and we have also on here because he partnered up with his coach in The Mastermind uh so those who
9:47
have one-on-one coaching calls and whatnot they created a little bit of a friendship boom let let’s do some business awesome
9:53
um so bernado Elsa whichever one tell us about the property how big is it how
9:58
expensive is it what class is it tell me anything and everything you know about it like give us some details give us
10:04
some of the juicing yeah so this one is 56 units in Columbia
10:09
South Carolina uh built in the 1970s um and so we saw this property uh rent
10:15
averages were about 775 and the market was about 950 and so uh we jumped on it
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it had a lot of uh deferred minutes on it really bad property manager and a
10:27
absent landlord or owner so those that definitely opportunity there just for better Improvement of the property
10:33
management aspect of it um and again um the market was just high demand for
10:39
the rents pushing higher so we just jumped on it and how long ago did you guys close this
10:45
deal we just closed this deal I want to say uh last month right so very recently
10:52
um it was definitely a long time in the works as far as the negotiations the underwriting uh just uh pretty much
10:59
everything I put in the books and the podcast now I was doing that and I didn’t have you know uh time to really
11:04
uh took my time really it was myself just hit the grounds running to get it going
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so no good for you so you you went to a conference you joined a mastermind and
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you’re on podcast is that right yeah I’ve done a few podcasts um you know just talking about my
11:23
experience in real estate um again I’m so hungry that I began I started a meet up before I had no
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experience at all you know in my market so I just I went at it man and so I’ve been a few podcasts before I even had a
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deal and now I’m doing a few more after this um you know I bought this Dylan so I’m just I guess I’m hungry so I’m here
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to work good man where’s your meet up at what city what state yeah so I have a meet up in Orlando
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um it’s in Orlando Florida we meet once a month this one is you know everything from single family multi-family land
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deals um flipping and so if you’re interested please if you’re in the area just let me
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know I also just started a multi-family Masters Orlando chapter here in Orlando
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and that’s also taking off um two meetups I didn’t I didn’t know that actually I have three but okay good so
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um so that’s also going pretty good it’s taking off too and so um yeah man thank you good Alex so do
12:18
you have any meetups or what’s your story what do you got going on I I go to a lot of Meetup Garrison but
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one of my coaching students and I are actually building a starting a new
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Meetup now in the Bay Area and uh our first one is going to be the
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first um the second Thursday of July so we
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came together we put our brand together and we came up with this uh great Meetup idea so I can’t wait till she’s a she’s
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also a real estate she has a real estate background I have a real estate background we have a lot of people that
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we know in the real estate business as you know it’s probably a lot easier for
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us to reach out to those folks and um you say the real estate business you’re talking Realtors attorneys real
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estate Realtors so a lot of this are real estate agents that we know because
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before uh doing this uh syndication full time I was working as a real estate
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agent so so we do have a quite a big network of people that we know in in the real estate business and this meetup
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group is for everybody but I would say Premiere is that we’re going to take it to uh other friends and people that we
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know in that space good congratulations awesome uh so with that being said bernado let’s
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get into Elsa let’s get into the nitty-gritty let’s talk about the headaches let’s talk about issues that
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you had to overcome let’s talk about any mistakes that were made um let’s talk about any wins let’s talk
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about any successes um I’d also like to find out how they found the deal right I mean like that’s
14:02
uh that’s an important piece of like how’d you guys find the deal all right one of the steps you went through to
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find it and actually get it under contract because that’s one of the hardest parts for for people who are starting out yeah so this deal um was
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found by one of my partners and so I was honestly just via talking to Brokers right so
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um this is a broker that we built the connections over time had lunch with and so uh she had to deal and
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sent it over to us and we just underwrote it so we’re just talking to Brokers and it came our way how much
14:34
time and effort and energy have you put in the last six months year whatever that time frame is to network with
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brokers a lot of energy um any time that I have is either talking to a broker or another investor
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and so uh I have W-2 so I have to kind of use time and be an adapt right and so
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if it’s a lunch break I’m on the phone it fits in the morning I’m on the phone at night time on my way home from you
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know from work I’m talking to an investor or some other individual that may potentially I can add value to or
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vice versa good what’s your W-2 job if you don’t mind me asking yeah so I am an engineer by trade so I’ve been I’m
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working in the engineering field since 2014 and I’m looking to slowly kind of
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leave the field and kind of do this full time oh good for you man full-time job a couple meetups you join them like good
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for you for taking action yeah I don’t I don’t sleep much so and I have a daughter are you married you got a
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couple kids running around yeah I have all that um honestly um when you’re sleeping I’m not right so
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I’m your kids you seriously have kids I have a daughter yeah I would have never how old are you man I am 31
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Elsa uh give us something I just want to add that this deal even
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though it was introduced to us by a broker but uh I just go I belong that is
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also on the MLS so keep in mind folks a lot of time we go to big Brokers Loop
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net Craig C or even co-star to fight deals this one was actually on Redfin so
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if you’re gonna look for deal uh don’t overlook those places sometime uh you
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can find good deals on Redfin just on the MLS so this was actually on the MLS
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I’ll throw a little tidbit out there a lot of people also Overlook Loop net
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um a lot of those deals have been picked through and looked up if you really dig deep dig into those financial those mom
16:41
and pop properties a lot of times you can still have decent deal I’ve come across a few of them in my day
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um go ahead pal I apologize I know I was I was just going to kind of echo what you guys were both saying it’s like you
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know a lot of times a lot of times they’re in places where you would just think that they’re not you know you would just skip over so
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whether it’s Redfin or food net or things like that you know my very first property that I bought the one that I’m
17:04
actually talking about selling one that I bought it was on some random website that I literally after 10 minutes after
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I found it I didn’t even know how I got there I I couldn’t have gone back it was
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like I went to one website and then I clicked to like a bio and then a bio I clicked to like you know see portfolios
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and then it clicked to another one I don’t know how I got there but I got to some some random site that I was like
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I’ve never seen this property at this on any of the other sites that I’ve been to never seen this property didn’t think it
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was real called up the broker immediately and she said yeah uh we’re you know we’re selling this property
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it’s been it’s been on market for about two weeks um if you’re interested let me know and
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uh eventually I just you know I just jumped on it as soon as I could because I was like I didn’t think that I saw any
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other deal that even compared to what I was looking at so I mean I don’t know how to get back to that website but it
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was like just some random small website it probably had like six listings on there so it was like tiny little website
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that the broker probably didn’t know how to list it on a bigger site or didn’t want to pay for the money for it to be
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on a bigger site or I don’t know why but it was wasn’t on any of the bigger sites so and to be honest because yeah I would
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have never because I was told you know loopnet is what Bill’s gonna die I mean we all have heard that before and so I
18:20
would have never looked at loopnet for deals but now I mean if you look carefully and know what to look for I
18:25
guess you know it can happen so I’ve learned that lesson let me let me ask Chris Collins question let me ask Chris
18:32
Collins a quick question why I got him on here how do you find all of your deals man you got a lot of customers I
18:37
also wanted to weigh in I know people I mean you guys are talking about loopnet I feel like a lot of these things are knowing your Market more than others I
18:44
mean if you look on loopnet and you’ve never been to Tucson Arizona and it’s like oh these numbers don’t make sense
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but you know that those streets around there hey these are all renting for 1100 and this one’s renting for 750. there’s
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a huge Delta well if you’re newer and you just go I don’t know it looks like a terrible property it’s running for 750
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these numbers don’t make sense but if you know the market better than everyone
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else seeing it then you can see those opportunities that’s just gonna weigh in on that really quick um but yeah I mean to me deals right now
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are all about Brokers I personally am not putting in the time to cold call all Sellers and get to know everyone because
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I have the relationship with the Brokers and they do that all day so I’ll just leave on them to do that work to be
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honest I mean right now it’s you know it’s tough to find deals right now out so that’s literally all they do all day
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so I’d rather be in with the Brokers and then they can send you stuff off Market before everyone else sees it is kind of
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the best way that I think right now I got a question that I think a lot of
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people’s mind what was harder than you guys expected during the deal also in order to do
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what was harder um for me I would say finding the lending the terms to make
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the deal work right so because this was a project condo
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um calling lenders was kind of tough to kind of get some good terms they wanted you know different ltvs much slower and
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so um that aspect of it took a while it’s gonna get rolling um for good terms
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also Elsa you’re involved in quite a few deals what’s your biggest aha or biggest
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takeaway from this deal your biggest headache your biggest wow I can’t believe that happened
20:27
I think the number one chat the biggest challenge for me uh is that GP on this
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deal was that because I came um I was brought into the deal after uh
20:39
do diligence so I did not have a chance to walk every unit which I always do
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before I sign off on any contingency I would have I would walk every unit I
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would take a millions of photos and I would have all kind of inspectors to
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come out and inspect a property um just because I was brought into the
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deal after the inspection period I did not have the opportunity to do that so
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it was it was very uncomfortable I did go out to the property to walk the
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property but I couldn’t get to the inside so I did the best that I could walk the property walk the neighborhood
21:19
spend a lot of time there and um I just had to trust what did he
21:25
members say the property was because they were walk the property so that was
21:31
probably my biggest challenge is that um not not able to do a very diligent job
21:39
on the due diligent period during the duration period and also I see that it’s dark in the background you’re actually
21:45
you live in California the properties in South Carolina and you’re actually in South Carolina tonight right
21:51
yeah so we we closed the property and now we can uh you know of course we own
21:58
the property right now and we can go and and look at the property we wanted so actually our team is actually out here a
22:05
few of us here today at tomorrow Ashley and we’re going to walk there’s a few vacant units which we’re
22:12
gonna walk and we have contractors with us uh and at the same time we’re going to try to get in you know at least 10 to
22:18
15 occupy units so then we have a few of what is really like and how much it’s
22:24
going to cost for us to fix those um turn those units around so yes it is
22:30
dark because I’m actually sitting in my car right now and you’re heading to Statesboro Georgia to check on another
22:35
property that you got after this one I only say that because I saw Daryl Brooks just hop on who’s our partner on that property what’s up Mr Daryl uh so go
22:43
ahead pal I’m sorry no I mean I’m just interested in hearing you know just kind of more stories like
22:50
uh you guys have talked about the uh you know what what was the biggest challenges right and so those are I
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think you know like whether it’s big aha moments or big challenges I think those are really important
23:02
um in in terms of just so everybody knows too if you have
23:07
any questions continue to post them and then we’ll ask those questions at the end we’ll just kind of go on and ask
23:12
those questions but and if you’re watching this on social media register for these calls we do this once a month
23:19
it’s our multi-family Masters live there’s a huge benefit for you to get on this Zoom uh in about 15 minutes or so
23:27
10 minutes or so we’ll open this up to q a number one how often do you get the opportunity to ask someone questions who
23:33
just closed on a four or five million dollar property uh number two we’re gonna have a breakout session
23:38
that’s what this business is all about not just multi-family Masters we’re formed on our networking aspect that’s
23:45
our Meetup aspect of it but you want to hop on these Zoom calls you want to network with these individuals you want
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to post videos and and screenshots of this call tonight you want to let everyone know what you do uh what you’re
23:59
doing uh in regards to education closing deals Etc et cetera et cetera because you don’t want to wait till the last
24:05
minute to raise Capital speaking of which raising Capital Bernadette how
24:10
difficult how easy how hard how mind-numbing how whatever your thought
24:16
process is man what did you think of your first experience raising big capital and how much did you guys raise as a team yeah so uh raising Capital uh
24:24
it’s it’s hard I mean I know you guys have heard the term find a deal and the money will come uh that that is not the
24:32
case per se I think you also have to learn how to present the Dell to an investors and so
24:38
it’s definitely not something that is easy as people make it seem to be but I
24:44
definitely learned how to approach the deal talk to investors and so forth I myself you know raise the of some amount
24:51
from family and friends but I’m looking to kind of grow more and talk to other investors and and so forth so so raising
24:58
Capital how difficult was it how easy was it what was your thought process there
25:05
um definitely not um you know what I have to Echo what
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bernado say it’s it’s not an easy thing to do however uh Teamwork Makes
25:16
everything possible so we do have a few Rockstar Capital raised in our team and
25:22
I’m very thankful that with their help we were able to pull together our Peach
25:28
deck uh I would say um within a couple days two or three days because I was actually brought in a
25:35
deal about seven days before it was supposed to close and having to raise
25:40
almost three million dollars in such a short period of time I couldn’t do it on my own so I had to engage a few people
25:48
to help me with that and thankfully you know the numbers was um very strong even
25:55
though this is a fractional condo I like South Carolina market a lot we
26:01
we look at the comms we look at co-star report and we know there is at least 150
26:07
rainbow that we can do on this property easily so with that being said the
26:14
numbers are super strong and that make it a little bit easier for us to go to our friends and family we did a 506b so
26:22
we hope we could only engage with people that we know so we took it out to them and they they trusted us so we were able
26:29
to raise all the money that we needed and clothes to do on time actually to buy the seller wanted to back out last
26:35
minute I guess they came to realize that that it’s probably worth more than what they were selling for so they became
26:42
extremely difficult on the day of closing and changing that storms on us and we ended up having to go out and
26:50
raise an additional six hundred thousand dollars to close the deal and we push it
26:55
back for one more week but we managed to get through the finish line and and you know initially we only had
27:02
one razor on on board so you know one thing I learned is you know um for the other size you can’t just have one razor
27:09
on your team right you need multiple razors that we’ve experienced to be able to raise so much Equity you know for a
27:15
Delta size it’s team sport my man right yeah I would like to you know like
27:21
certainly hear more about um you know the pointers uh that you could point out the mentioning of like
27:28
how to raise Capital like you know what way is that always that you could tell the audience like that would help them
27:34
be able to raise Capital better or uh what what things that you learned but I’d also like to Echo that not only is
27:41
like if you have one person raising Capital that that can be a sort of a dangerous situation that you could get
27:46
yourself a sticky situation it’s also the same for your investor so if your
27:52
investors um if you only have one big investor so say you’re raising I don’t know what you
27:58
guys said three million dollars or something you’re raising three million dollars you have one investor who’s going to come in for like 2.5 or I don’t
28:04
know two million even if it’s a million you’re counting on that one person for 33 percent you know of your whole raise
28:11
that person could pull out at any time and have any sort of emergency or any
28:17
time to feel like I don’t really want to do this deal uh no I actually got a better deal sorry somebody else offered
28:23
me more and I’m going to be part of the GP or something whatever I want to put my million dollars somewhere else and
28:28
you could be out and hurting really badly uh so you don’t really want to put yourself in that position where you have
28:34
one big investor as well so whether there’s one big razor one big cap uh one
28:40
big investor but love to hear uh from you Bernadette or Elsa um any any tips
28:45
to uh for anybody that is you know in this process of uh raising capital or talking to their friends and family how
28:52
to talk to friends and family uh not you know not just posting on social media or things like that what what are the
28:57
things that you would do to sort of Harbor these relationships and be able to raise capital in the future
29:03
so so I think what I learned in in this process you know um was that you don’t sell the deal per
29:10
se you just talk about the opportunity and you present it and you know if people are interested great if not you
29:16
just kind of move on but you don’t really try to like sell them and kind of you know be so aggressive to that you
29:21
know it turns them off so I’ve learned to kind of just be calm here’s the opportunity it’ll be a great to have you on board if not we understand we have
29:28
more coming down the pipeline we’ll stay in touch so
29:35
erasers that you [Music] um we’re going to build up our reputation
29:41
we got to build up our brand so people know um that we are not the type of sponsor
29:48
who um throw out all kind of promises and not able to keep those so establishing
29:56
those relationship even before you uh and I’m talking about a 506b right now
30:01
because we we can only go to people that you know so just you know just making sure that the numbers are strong have a
30:09
database of people that you know and keep on engaged with them and this is why I go to meet up and I have my own
30:15
Meetup Group because I want to be able to establish relationship with this folks but to me the most because I came
30:21
from an accounting background where I work uh close to 20 years at crunching numbers uh and and so number is is just
30:30
I just know number like the back of my hand and I get to know the in and out of everything so when I look at deal I
30:36
underwrite I’m very very carefully so with that I’m very confident when I
30:42
go and I talk to my investors because I don’t just take other people’s work for
30:47
it I do my own research I underwrited you I look at every aspect of the deal
30:53
so whenever I talk to people I know exactly what I’m delivering to them and I recommend that if you are going to
31:00
work with people raising Capital uh you get a master you’re underwriting don’t
31:06
just take the sponsor or the you know other people’s work for it you need to know the in and out of it you need to do
31:13
your research on rent comps you really need to do your research on the capex expense and this is why like I didn’t
31:19
get to do the the due diligence and that was difficult for me because my capex
31:24
expand was an estimate that I wish I could have have a woman accurate numbers
31:29
I think we’re pretty close to it I would probably budget a little bit more after
31:35
it now that I know the the deal is a little bit more but again you know this
31:40
is some of the aspect of the deal that we want to know uh prior to going and
31:45
talk to our investors yeah definitely makes sense
31:52
let’s field a couple questions from the audience pal okay sure let me uh rewind
31:57
here I I do want to add one quick thing I apologize I was double muted you know I’ve referenced a ton of money and
32:05
raising money is not you don’t raise money whenever you have a deal right you raise money
32:11
before you have a deal and what that really means is it’s about building your
32:16
reputation right getting people excited and essentially all of the prep work
32:23
that you do beforehand so whenever you have a deal it’s like what Bernardino says right you’re really explaining the
32:29
opportunity maybe answering some questions you’re not selling the deal if you’re selling the deal whenever you got
32:34
to build a contract you know you’re doing it the hard way and you’ve probably did it way too late right for
32:39
those who want to raise money it’s about all of the legwork and prep work they need beforehand like a disrupt Equity
32:46
I’m very meticulous with what we communicate and how we communicate it right there’s a lot of thought that just
32:53
needs to go into how do you prep your investors how do you seed your investors how do you set yourself up for success
32:58
and so you know for those on the call definitely give that some thought because really it’s about the homework
33:04
dated beforehand right like Bernard has said you know with if with the right deal the money will show right and as we
33:10
kind of learn it’s a little harder than expected and you know the money will show in the sense that hey there’s people that’ll get excited that are
33:17
Partners will help you get it across the Finish Line right that’s what that really means but for those of you that are looking to directly raise money
33:22
yourself it’s really about the prep work that you do beforehand
33:28
speaking of the prep work when you go to conferences take those business cards utilize those
33:35
that contact information when you’re on zooms like this if you look in the chat below there are 5 10 15 I don’t know
33:43
there’s a few email addresses contact information utilize that utilize your CRM utilize all the resources around you
33:51
in today’s environment when you see someone closing deals on social media on Facebook on wherever become friends with
33:58
that person hang out with other individuals who are doing something that you want to be doing don’t go to
34:03
conferences grab all these business cards and come home and do nothing with them it’s extremely easy to take a hot
34:09
lead and turn it into a code lead it’s very time consuming and very difficult to take a warm lead and turn it into a
34:16
hot lead but that’s what this business needs and it takes consistency yeah what the is this a charity
34:23
event kick rocks both
34:28
let’s go ahead and delete that guy okay uh I removed him we should be good I
34:36
feel like that was adding a lot of value personally but okay Chris that was
34:41
salima man first question from the audience this is Def
34:47
equal the answer to this but bernado you’re a successful engineer you have a good job you make good money you got a
34:53
family why go from the passive side of investing to the active side man why give yourself a job why why why why why
35:01
why great question you know I I kind of I went down the traditional route of you
35:07
know going to school going to college getting my degree um you know I got a job I thought I had
35:12
made it um but when I what I realized man I’m just not happy being in a cubicle just working away and so I wanted to be able
35:18
to change that and have my time back that’s honestly what I wanted and so I realized I could do it passively but I
35:24
enjoy Real Estate I enjoyed talking to people I enjoy numbers and so I wouldn’t be in this business um actively and I have time just goes
35:34
bye and I don’t mind it in University where at my job I’m looking up what time
35:39
is it is it time to go home yet you know so it’s just it’s a different environment for me and so I want to be
35:45
able to get my time back from my daughter and my wife myself my family and I’m able to do that via real estate
35:50
investing and I enjoy it so it’s a plus um so that’s uh that’s my why
35:57
perfect my answer to that question is who wants a full-time W-2 job I don’t care what you do I don’t care how much
36:02
money you make if you got to wake up to an alarm clock Bernadette when was the last time you set an alarm clock to wake up uh this morning okay so next time I
36:11
set an alarm clock to wake up I don’t even remember then there’s nothing wrong with that but
36:16
the goal is to live life on your terms right my man yep uh so with that being said pal hit me
36:23
with the next question um okay this is a question just just talking about kind of a team makeup so
36:29
just wondering did uh all your team members raise capital or did you just have a couple people on the raising
36:35
Capital side so we had a few people on Race Capital um initially we thought it was going to
36:41
just be one one person like one-man Razer we learned pretty fast that was not a good way to go and so
36:47
um the few people on board to raise capital and going forward now we know we can’t just have one main person to rely
36:53
on because you never know what could happen Downstream number one it’s a team
36:58
effort number two raise more Capital than what you need if you have soft commitments for one million and you need
37:05
one million you better go raise a couple hundred thousand dollars extra because a couple people are going to back up back out Chris Collins have you
37:12
ever had someone back out they tell you hey man I got money for you I want to invest with you I got a hundred thousand
37:17
I’m gonna send you the money and you don’t get it have you ever had that happen every time
37:23
every time there’s never something that doesn’t happen I mean uh you know for me
37:28
I kind of keep like an ongoing list I mean I have on my board here of kind of like your your hard people who are like
37:35
hey man I got 100K on your next deal just let me know is it ready it was your next deal is your night so those people
37:40
you’re like they’re not gonna back out and then you have the people who are kind of um you know they hit you up and say hey
37:46
man I’m definitely interested in this I’m looking and you kind of get out of them they’re looking to deploy like 50 to 100 Grand but they’re not really like
37:52
hitting you up they’re like this soft you know so I try to keep a list and I kind of have a running tally of like how
37:58
much roughly I could raise today and then you know there’s always a stretch
38:03
like beyond that you can kind of reach out and try to get more but they’re always I mean there’s there’s
38:09
never a time when someone doesn’t back out for me at least maybe that’s just you know that’s just life and reason
38:15
that doesn’t happen I think you’re probably not pushing yourself you know your Network’s not growing yeah
38:23
I’m gonna throw my question out because I’m on the mic so um I was I was curious you know this it’s been a tough time right now to
38:30
raise Capital Financial landscape is tumultuous at best like it’s shifting everywhere people’s stock portfolios and
38:36
tank you know so what were some of the concerns that investors hit you with where they deal specific were they like
38:43
hey financially in the whole financial world like what were the challenges that you came across and you know how did you
38:49
overcome those or was every investor just like sure here’s my check everything’s great
38:55
most of the investors that we work with on this deal did not concern too much
39:02
about the do yourself though after we closed I had a couple people that came
39:07
to me and asked about the um the condition of the property the rent bumps
39:13
um and um you know we know that the market kind of slowed out a little bit so what we
39:19
had projected for the rent increase we could not achieve that so uh uh probably
39:28
currently at 7 50 and when we took over the the neighbor property which I’m
39:34
going to walk tomorrow was rented out for 1200 so we listed our 11 30 and two
39:40
weeks after that the PM came to us and said you know what they dropped the price to 900. so I’m like okay and um so
39:47
that was some of the things that we need to make the adjustment I think we still have enough room in there but that’s I
39:53
had a few concerns about that asking us like you know how as far as the
39:58
stabilization do you think you still can hit the protective returns um but other than that I didn’t I didn’t
40:05
have a lot of hiccups
40:13
awesome are you having are you having hiccups right now Chris is that why you asked or what what are you seeing in the
40:19
landscape of today’s environment I mean I’ve been on five five calls this week from various people who are like is
40:26
it is it rough for you right now like we’re trying to raise we’re like short on this race Like It’s just tough this
40:31
is I mean the last like two weeks so maybe you guys closed at a great time like you know a month before things got
40:37
really bad but it’s it’s generally I think people are a lot more scared
40:42
across the board um which you know depends on your thesis like for me it’s like a good buying
40:48
opportunity but it’s tougher to raise capital in that time um and so for me I’m just like doubling
40:54
down on content and getting my name out there but like you know if you’re raising Capital today it’s not
41:00
necessarily easy I don’t think so oh stocks you know they’re portfolio drops so uh I had uh one or two
41:08
investors but they were gonna put off money I want to invest from the IRA and it kept dropping so they started out at
41:15
100 and they went down to 75 and it went out to 50. so that’s definitely
41:21
understandable but Chris real quick are you finding you got
41:26
a sweeten a deal at all then with the investors you are working with then on some of this stuff because not only
41:32
stock market but crypto’s getting slaughtered you know everything’s kind of down so people are turning up a
41:37
little bit but I’m guessing guessing to kind of unfold over the next
41:43
couple weeks couple months uh probably gonna have to change with the landscape of today’s environment a
41:48
little bit would you agree with that Chris I mean so I’m full I’m not raising
41:53
for any deals today right now so I don’t have that specific issue Daryl this is
41:59
kind of more of a general like I have people hitting me up to raise capital and people hitting me up to talk about deals and that they’re having problems
42:05
with but personally I wouldn’t change your deal structure um I I wouldn’t be looking to like
42:11
sweeten the deal or change the underwriting I think that it’s more about having your to me it’s kind of
42:17
having your investors preface up front I always say that I don’t want People’s First fifty thousand I want their second fifty thousand so like it just is a
42:24
phrase because if someone’s that then where the stock market drop is really
42:29
impacting their ability to invest then maybe they should have a money you know let’s talk about this for six months down the road where you set money aside
42:35
just for Real Estate um but I you know I know Daryl’s been doing this a lot longer than I have so
42:41
I’m still kind of learning here as well but for me I wouldn’t be you know I don’t think I’d be trying to
42:46
change my ideal structure to address that I mean I’ve seen you know one of my deals we were in
42:51
um they’re looking at taking on preferred equity which is changing investor returns because we had you know they were taking less at the end of the
42:57
day less money out of the deal so you can always look at preferred Equity if you’re
43:03
um you know looking to raise money and having a tough time with individual investors as well
43:09
gotcha thanks yeah all right we’ve got another question here for you uh bernadill
43:16
um this is kind of looking towards the future here and uh you know how many doors or what number are you targeting
43:21
before you leave your W-2 so like down the road here what do you what do you what are you targeting so I I don’t have
43:29
a door count my number is the number that is going to exceed my income at my
43:35
job so that number is fixing my brain so as soon as I hit that number I’m walking away and then I’m going to keep going
43:41
forward so really um it’s not more so door count but just cash flow that I can just leave my
43:48
active you know job so yeah that’s good I was going to say door count is door count is one of those very very uh I
43:54
don’t know nebulous type of things where like you know if you have if you own the whole property it’s a very big
43:59
difference between that and say you split it up with a bunch of different people it’s your door count is very you
44:05
know the percentage that you own the equity that you own is very different so care about your bank account
44:12
good good uh let’s see I’m going down more questions here
44:18
question came up from Queenie uh let’s see have you made any mistakes in your multi-family uh investing journey and
44:25
what have you learned from them any other mistakes that you uh like to discuss
44:31
uh yeah so we made a lot of mistakes on this deal um how much time do you have
44:36
um so uh one that I could say right now we did not walk out of the units I mean that’s that’s something that for sure
44:42
next time we’re walking all the units um not gonna not do that
44:47
um what else did we not do uh an official inspection was not done on this property
44:52
we had a few GCS initially in our teams with 20 plus years of experience so that
44:58
kind of led us astray from doing that because they’ve done it themselves and that was a big mistake
45:04
um there’s a lot more I mean I could I could talk for hours of mistakes so sure but truthfully one of those things
45:10
burned though you know when you do your first one you’re gonna make mistakes I mean this is it’s very easy on this side
45:15
to say oh we should I should have inspection should have should have walked every every floor or every every
45:20
unit you’re always going to make mistakes and you’re going to make a bunch more and like certain like other deals you do as well it’s really about
45:26
like learning from those mistakes so it’s not a it’s not a bad thing to make these mistakes and it’s not but it’s not
45:31
a it’s more of a bad thing to learn from though and and you you know so and don’t feel like you got
45:38
to know everything just because you do one deal I mean there’s there’s many people out here that many many deals continue will still make mistakes right
45:45
and so don’t feel like hey just because I did one deal and people are asking me questions and I get on a podcast that I
45:51
gotta know everything it’s like you don’t have to know everything there’s there’s a ton out there that that everybody’s consistently learning so
45:59
that that’s more important yeah um question came up about uh the I think
46:05
that’s just to you uh Elsa as the why was the seller this for Marcus why was the seller able to apply that kind of
46:11
pushback given that you had a contract in place this was I think talking about towards the end uh making you either
46:19
um you had to change the terms or raise more capital or you had to do something right at the end
46:24
foreign we’re supposed to close if I remember
46:29
correctly which is the end of April and he changed the loan terms on us so part
46:36
of this part of this was seller finance that uh wasn’t mentioned earlier so those are the terms that were changed
46:41
yeah okay yeah that makes sense so and technically I mean if we had a choice at
46:47
that time to say hey you know what it’s not us but not closing right now it is you so if we don’t agree to it then I
46:55
would assume that you’re going to return audit process and we don’t have a deal but at that point in time I felt I I
47:02
felt that the deal was too good to walk away so we try to make it work and I we
47:07
were able to I was able to let’s say we we were able to negotiate the interest rate down by uh 0.5 so initially he had
47:17
it at 5.5 interest only for five years and I told him look if you want me to
47:24
give you more money um then you’re gonna have to take that rate down by 0.5 so back and forth
47:32
finally he agreed to do a five percent interest only and if you remember you know the beginning of may end of April
47:39
rate has already gone up we did have a term sheet from uh old capital but their
47:45
interest rate was I think six or six and a quarter I can’t remember so it was it was way higher than what we could have
47:51
got with this guy and um we we raised like you know Garrison mentioned we should always write extra
47:57
money and we did we had I think we we raised three hundred thousand dollars extra so I’m like you know what we do
48:03
have some extra money sitting here uh need to raise a couple hundred thousand dollars more but if we underwrite a
48:09
number that you’ll still work with the lower interest rate so we went ahead and
48:14
and make it work um because I thought that you know we could understand where I was still worth
48:19
six six and a half million dollars so it’s it’s um let’s do a good deal awesome awesome it makes sense that it’s
48:27
seller financing so that’s why he could change the terms all of a sudden right at the very end which is
48:33
that’s uh yeah okay hey Ferris we got a question for you you there you there first
48:39
I’m here all right awesome got a question for you it says uh it’s from Gabriel says I’d love your perspective
48:45
on how you would finance a deal if you had to close 60 days out from now any worries about a three one one loans
48:55
all right well I just so happen to be someone that closed the deal last week and closing the deal next week and
49:00
another 160 days from now also um ripe to kind of speak of it the first
49:07
thing I’ll say is you know think about what you’re doing on your
49:13
value-add right what is your intention with this deal the reason I say that is the biggest
49:18
concern that I have as a buyer with my deals you know outside of interest rate
49:25
out of the short term it’s really what does it look like whenever I get to that refi right and how do I buy myself
49:31
enough time to get to that refi right so having a 3-1-1 helps because obviously you can get the extensions but the thing
49:37
a lot of people ignore during that is you know to get those extensions outside
49:42
of the cost there’s certain thresholds you need to meet and so we always negotiate kind of what those thresholds
49:48
look like from a debt yield perspective just to give us more Runway right and a lot of things hate is to think you’re going to get a extension in year three
49:54
and they’re like well sorry the deal is not hitting this debt yield that you need to be at so that’s a big one to
50:00
think about and negotiate the other thing to think about really is what do your interest caps look like
50:05
those things have gotten really expensive right from the example I like to give is you know we close the deal
50:11
this past Monday so a week from today on the Friday before right meaning like literally the the previous business day
50:17
that was whenever the news came out about inflation being high in between the Friday that we were quoted for the
50:23
rate cap and the Monday whenever we close our interest cap went up you know 150 000 dollars
50:29
so on a 500 000 just cap I mean it went up twenty percent so just realize those have cost and
50:36
you know think about the structure right now me personally again I don’t think Sky High inflation
50:42
is going to be here for the long term right I don’t think this guy Rachel gonna be here for a long term but I am concerned in the two to three years
50:48
so you know the FED has raised rates on average right I think something like 18
50:54
months and you know the most I’ve ever done was 27 months I went and actually looked up the data myself it was that
51:00
Saturday at the raw fed data and so realize that right there’s a chance that
51:05
it goes on for a year and so how do you work through that and that’s where for us we’re going in low leverage the first
51:11
thing on the loans right with a little leverage you can usually get better debt to begin with and the other piece of that is also just having plenty of cash
51:18
in the bank you know investors are not going to be mad that you gave them a little bit less return they will be mad
51:24
if you lost their money so first rule you know Warren Buffett says it’s about not losing investor money
51:30
then there it’s about okay how do we you know maximize returns
51:37
it’s a great thing uh I mean great perspective to have somebody’s uh you know who’s got the experience
51:43
something’s closing like three Deals in like a month within the month’s time frame so that’s awesome
51:49
uh we got another question from Daryl Brooks uh this is probably for uh you know Elsa like what are your thoughts on
51:56
value add versus buying for cash flow right now not typically a lot of money to go around until the property is
52:02
stabilized so buying uh cash flow deals that are stabilized versus deals that are valued
52:09
at what are your what are your thoughts on that I always
52:15
I always go for both cash flow and value ad so there are uh so Daryl I think the
52:23
only property that I have that has no cash flow is actually the one that you’re working on with us right now and
52:30
States borrowed because that’s like a total 100 rehab but for the most part
52:35
Kirsten and I uh we try to find deals that um will give us at least enough return
52:43
to pay the pref to our investors and then the equity piece come later I know
52:48
there’s a little bit more difficult to find and um but
52:53
um I I feel more comfortable you know having right in that distribution check
52:59
every month to them um just somehow it gives them that piece of security assuring that you know that
53:06
they’re not putting their money into a hole so um
53:11
so that’s just my my strategy it takes a lot more underwriting for me to do a lot
53:16
more deals that I have to look at I don’t close as many deals as other people but for the most part the deals
53:23
that I close I almost always able to pay the pref to our investors until the uh
53:29
until we can stabilize the assets then they get equity times so I’m in the same boat and I think
53:36
that’s why I can’t find as many of those as I’d like because I’m looking for cash flow and also why you add deals right
53:42
even on my smaller units I do the same thing so um if it doesn’t cash flow day
53:47
one um you know I’m probably not gonna look at it much longer
53:53
all right awesome with that being said Pals or any other questions that we need to fly
53:58
through before we open this thing up to uh breakout sessions
54:03
um the ones are probably a little bit more difficult no so we can we can open it up I think we’re good I think we’re
54:09
good to go awesome so with that being said if you are not live on this Zoom if you’re watching this on social media
54:15
this is where we break out into breakdown sessions this is where I’m going to end the uh the social media
54:20
aspect of it make sure you hop on this call every month third Monday of the month multi-family Masters live free
54:26
content to anyone looking to buy their first or their 51st apartment complex if
54:32
you want to go to a conference Vegas October 1st and 2nd uh multi-family Khan
54:38
c-o-n multi-familycon.com uh that’s our
54:43
multifamilymeasters.com conference Las Vegas um on top of that we have a mastermind
54:49
Bernadette Elsa involved in our Mastermind we want you understanding this business inside and out because we
54:55
want you closing deals because we want to partner with you if you’re not a member of our Facebook group find us
55:03
multifamilymasters.com I’m going to end the social media aspect we’re going to break out into a couple breakout rooms
55:09
and then just to give everybody a heads up we’re going to come back from the breakout session I’m going to let this
55:15
channel open we’re going to close it out but I’m going to let this channel open until the last person hops off here this
55:21
is where the real networking happens oftentimes I’ll come back and look at this channel literally one two hours
55:27
later and Frank Greco uh he will absolutely be putting on a show and be
55:34
putting out all kinds of contact information things I say that hopefully he stays on here tonight uh that’s his
55:40
call for sure but that dude knows his stuff inside and out and he’s always on here and networking with people such as
55:47
Bernadette I see Bernadette on here all the time so let’s hit some breakout sessions
55:53
and we will end the breakout sessions in about 10 minutes
56:01
share contact information share stories get to know one another
56:06
and connect once again after you hop out of multi-family Masters