MFM Live: Growing Your Multifamily Business

Learn the ins and out of growing your Multifamily Business from our Mastermind Members David Hudgins and J. Michael Kilmer, from searching for investment opportunities, identifying and achieving your financial goals, partnerships, rental rates, capitalization rate and calculating cash flow.

About our Speakers:

David Hudgins is a Co-Founder and CFO of OTMFC, a successful multi-million-dollar equipment rental house for the entertainment industry.
In 2007, David and his wife, Natalie Alchadeff, a prominent real estate Broker in Los Angeles, started the HB Group, LLC which invests and manages single-family and multi-family residences across several States. They purchased their first Multifamily property in 2018. They currently own or have invested in over 450 units in 5 States totaling over $42 million.

J Michael Kilmer

J. Michael is driven to be a housing provider that offers high quality options that serve the community and the investor. He is an owner, experienced hands-on operator, and investor of multifamily. Using house hacking to begin, he has experience owning and operating a portfolio of boutique multifamily properties using some of the best-known strategies including BRRRR (Buy, Rehab, Rent, Refinance, Repeat), owner financing, traditional commercial mortgages, and cash buying.
He has a unique quality as an Asset Manager with hands on experience in renovations, underwriting, and operating that deliver return on investment.

VIDEO TRANSCRIPTION

0:00
it’s so good so appreciate it um so everybody uh my name is powell uh
0:05
powellchi i live in los angeles and i really kind of
0:12
one of the things for me is that i was looking to get involved with real estate but doing it in la or the san francisco bay area where i
0:19
was born is very very difficult and so i thought you know what i really put real estate on a back burner until i realized
0:25
that i could do it out of state and that was a big turning point for me so i really um
0:31
kind of like formed this group to make sure that or to you know network with people that are buying real estate and
0:37
that are uh and that we could network across the whole united states uh do that and so
0:43
i don’t know i guess the group started about 2017. i’ve been involved in seven
0:49
uh seven uh what do you got seven multi-family deals five of them are big syndications
0:56
uh so i’m a general partner on five of those syndications and then more recently i’ve been
1:01
involved also it’s self storage so i have uh about 2 000 self storage units
1:08
2 250 000 square feet um adding to that uh currently as well so
1:15
uh for me it’s kind of all about it’s all i’m all about acquiring the best deals looking for what’s the best deal out
1:21
there so all of my deals have been out of state so i don’t do anything inside of california but i am obviously looking
1:28
to partner with people and see how we can bring value to you and that’s really what multi-family masters is all about
1:35
perfect and it’s ferris is he on here i don’t think so he’ll be joining in a
1:42
second i don’t see him yet okay um i’ll introduce myself real quick garrison gilbert i’ve been doing real
1:49
estate full time since college never had a w-2 job uh always learning always
1:54
growing um i’m part of the the team here at multifamilymasters.com and my job is to
2:01
pretty much run the mastermind um and advertise the conferences and different things that we do have going
2:07
on in order to give back to the community so with that being said i’m here to learn alongside with each and
2:12
every one of you uh this is a constant learning process never feel like you own it never feel like you you know it all
2:20
when you do that’s when god will punch you in the face i’ve been there it’s happened it’ll probably happen again so
2:26
with that being said i have two good friends of ours mr joe kilmer mr david hudgins
2:32
uh take it away fellas um let’s start off with david hutchins um
2:38
joe and dave already introduced themselves david over the last 18 months what has your
2:44
career looked like uh where did it go from and where did it go to and what are some of your goals right now for
2:51
everyone to learn a little bit about you well i
2:56
my wife and i bought a property in 2018 2019 wanted to get into bigger deals we
3:01
need to find people to partner with and just didn’t really know where to find people how to do it so then to 2019 i
3:08
found multi-family masters and started going to meetups in la and there were a bunch
3:15
of chapters and was going to like five or six meetups a month and metal met powell met a lot of people
3:22
and uh then covet hit and started uh doing these zoom calls and
3:28
networking with people through that and 2020 gave me the time to you know really spend a lot of time on
3:34
this and then 2021 uh renato who’s on here somewhere and is in the mastermind also
3:41
he and i went to florida and we started meeting with brokers and driving around getting to know the area so i
3:47
had was no wasn’t a gp in any deals just kind of getting started and figuring out
3:52
my bearings so last year was a great year of just meeting people and
3:57
putting the work in and working hard and you know you start to wonder when is it going to pay off when am i going to get
4:03
this elusive first deal then finally the last fall we got something in
4:10
atlanta was it 324 units something like that and closed on that the end of the year
4:15
uh with another guy from la so that was great finally got that elusive first deal
4:21
and then started working with disrupt in january and just continuing to work hard
4:27
and you know it’s not like you work hard and you get something once a month that’s you work hard for a long period
4:34
and then you have to get a bunch of stuff and then work hard for a long period and get a bunch of stuff
4:39
so you know working 20 30 hours a week on this month after month after month and you
4:45
know learning stuff but not really paying off and then all of a sudden we end up getting you know the market shifts a
4:51
little bit and we get six deals under contract so now it’s just exciting to have all these
4:57
deals that we’re capital raising on and closing on and we’re going to get through this and then it’s kind of back to pounding the
5:03
pavement again looking for deals again and uh probably gonna be another couple months of just grinding it out and then
5:09
hopefully we’ll get some more stuff under contract so going forward you know hoping to get
5:15
another deal or two or three or four by the end of the year and then just ramping up for next year and trying
5:22
to see if we can expand into more markets and get some more deals going and still just constantly going to
5:29
seminars and conferences and meeting people and networking because you never know
5:34
who’s going to be the next partner that you’re going to end up working with
5:40
fantastic dave uh with that being said two years ago to today how do you feel
5:46
about how fast or how big your business has grown is this where you thought you’d be are you behind a little bit are
5:52
you further ahead a little bit like what’s that process look like i don’t know i think i’m always like
5:59
trying to drive and go faster and so i’ve always feel like that i’m behind
6:06
even though i was waiting to ask renato this the other day when we’re talking i forgot
6:11
when we started in 2001 what was our goal was it to get in two deals
6:17
2001. i’m sorry 2021 last year beginning of last year was it to get into two deals last year i
6:24
think that’s what it was so okay we got into one deal so a little behind scheduled there but then
6:29
this year i guess it would be to do another two or three deals and it looks like that’s happening now so
6:34
i think it’s out gonna average out and end up where i want to be but it’s just taking longer
6:40
than i thought and wanted to but i think that’s the way life is no gotcha
6:46
um mr joe kilmer hey here here’s something i’m gonna throw this guy a little bit of a of a bone a little bit
6:52
this this guy drove how far did you drive on my first meet-up joe
6:58
about four hours he drove one way four hours to come my first meetup i had about 110 people or
7:04
so in baltimore maryland and this dude rolled in i took him out to dinner afterwards this guy really went above
7:10
and beyond um networking in order to grow his business and that’s fantastic that’s what you really got to
7:16
do um so with that being said joe let’s same questions dave just answered um
7:22
give us a little bit of a heads up what your business was like two years ago one year ago what you got going on today how
7:28
does that process look and are you further along than what goals you say are you a little bit behind are
7:35
you right on track or how does that whole thing look for you yeah so that was that was a great meetup
7:41
but a lot of a lot of heavy hitters how she happened to fly in for that too right um or no wow
7:49
so i knew it was somebody from california made it further than me uh so two years ago i think i had you know
7:57
maybe 12 units and i was just buying them one at a time here and there
8:02
um smaller multi-families um [Music] looking to do similar things like david
8:10
had mentioned work hard cash out a lot of a call a lot of people call it the burr method
8:16
and um had achieved a certain level with with that
8:22
that i was happy with and i was working on developing relationships locally i knew about this
8:28
family that had properties um and funny enough i went to rod please uh
8:34
event with garrison in baltimore and i met a guy from the next town over
8:40
and uh through that process actually going to baltimore to meet up i ended up
8:46
learning that somebody else had this deal under contract and then i just kept following up with
8:51
them following up with them and they never closed so then i wrote a loi for it
8:56
and it was it was the retrade from retrade from retrade i think originally
9:02
i um i had an loi for 1.1 million for the was
9:08
it 45 units and i called out a five
9:14
unit that i didn’t want after going through due diligence and ended up closing on 40 units for about 875 000
9:19
and that is a pretty decent distress deal i got about a four
9:24
hundred thousand dollar budget right now for um improvements some of it’s capex
9:31
something i’m doing out of operations right so you’re putting about 10 thousand the door in is that right
9:37
yeah i mean some of it’s just regular turns so there’s less than ten thousand the door and then other
9:42
times it’s roof like one of the things i just did a quick live video on in our group was about a roof so i got a 12
9:49
unit mixed use building that um has a rubber roof on it or actually his old tar and felt
9:56
and i thought i was going to have to do a rubber roof i got quotes to do a rubber roof and it was going to be about 80 000
10:02
which was a lot more than i had budgeted honestly um and i ended up just beating the
10:09
beating around trying to find different things um didn’t go to rubber roof didn’t go tv tpo i ended up going to the
10:16
metal roof because there is a slight pitch on it and that was just getting finished up for
10:21
about twenty four thousand so and i had budgeted thirty two thousand so i came in under budget on that i was very happy
10:28
um and we had a nice rainstorm the other day so we proved out its usefulness
10:34
no leaks at all huh yep no leaks at all um the other
10:39
so so what was the other question where am i at where were we do you feel like do you feel like you’re a little bit behind your goals or do you
10:46
feel like you’re a little bit further than what you said goals that you said or like how does that look to you i always like to have a stretch goal and
10:52
then if i land somewhere near it i feel um good about it i’m not somebody that’s
10:58
hung up and beats myself up over you know missing a little bit here and there i’d like to be a lot further along in
11:03
this reposition right now i’ve got about 15 units out of those 20 that are in some form of construction
11:09
and return over one is a five unit that had to get a
11:15
sprinkler system put in because it didn’t have a cfo and that process is moving along a lot slower
11:21
and then there’s another five unit near it that is also um a full gut
11:26
so those those are pretty significant and i was hoping to be further along through the summer
11:31
but the other ones are going real well and i wanted to share a little bit of success i think i shared this out maybe in the group at
11:37
one point but just with um going in and making some improvements in the rent
11:44
roll um i was able to raise rent about 3 600 a month which
11:49
worked out the 43 000 annual and with the 8 cap rate that was about
11:54
542 000 of added value man that’s that’s a nice 500 000 payday
12:02
yeah so then i just went through and some of those leases we did just six month improvements and then we’ve also
12:08
had some turnover so just from basically in place people and
12:14
we just raised rent again and now we’re up 525 a month
12:20
62 000 annually and that’s about 783 000 total um
12:26
value-added 80 cap rate which is uh it’s pretty reasonable for around here so you put 500 000 in equity in you
12:34
and your wife’s pocket off of a 1.1 million dollar purchase is
12:39
that right 875 purchase so i’ve almost doubled the i’ve also doubled the value
12:45
good for you man we forgot your biggest claim to fame this year what’s the
12:52
biggest thing that happened in your life this year man well he’s a year old now so yeah i had a third child and um so
12:59
now i got three boys i love it so with that being said here’s a little here’s a little tip for
13:04
everybody listening if you think you’re too busy if you have an excuse if you have a w-2 job joe do
13:09
you got a w-2 job yes i do joe do you got a wife and family of course joe did you just have a new
13:15
baby you know that joe did you just close a 40 unit apartment complex
13:21
yeah because he has no excuses what’s your excuse i hear excuses all the time if joe can
13:27
do it i don’t want to say if joe can do it anybody can do it but if joe can find time anybody can find time
13:33
you have a w-2 job i just put in my two weeks today no no no let’s let’s find do you have it just
13:40
yes or no do you got a w-2 congratulations thank you thank you you got a wife
13:46
i do how many kids you get how many kids did you have this year i had one so he’s 15 months old so boom with that being said
13:53
just no excuses people there is no reason you can’t find time if you want it you got to find time to go go make it
14:00
happen sorry joe man i didn’t mean to cut in with that but i needed to throw your enzo out there yeah buddy
14:07
um awesome pal uh go ahead feel free to take the next question my man yeah so
14:12
you know what i wanted to just rewind just real quickly maybe both of you guys can talk about their first deal right
14:18
first multi-family deal right so let’s talk about the very first one just really quickly like what was it how did
14:24
you find it how’d you finance it and uh maybe some lessons kind of learned along
14:30
the way so we could start at the very beginning and then we could get to the end and then we could start to talk about the growth of uh growth of your
14:37
growing your business right so hudgins just give me a little bit of a little little detail about your first deal that
14:42
you’re closing how difficult was that first deal to close uh the false first multi-family it was
14:48
really hard uh you know i’d done a bunch of single families i was kind of used to that but
14:54
dealing with the lender on this give us an idea what it was where what you know size-wise and
14:59
everything because people don’t really might not have joined early on it’s a 36 unit in memphis
15:06
so and when did you buy it uh 2018. we went under contract in 2017 and closed the
15:12
beginning of 2018. okay so just inspections are different there’s different stuff you’re looking
15:18
for different requirements that the lender has we had to fly out there and meet with the lender
15:23
and the management company which that never happens in single family the lenders never go to the property so there’s just a lot more hurdles that
15:31
you’re getting through and the you know lenders wanting you to write letters for
15:39
items uh that they have concerns with so there’s a lot more hoops to jump through
15:44
but it was great it was great when we finally got it done and i i enjoyed the experience and look
15:50
forward to doing it again mm-hmm awesome awesome okay hello joe
15:56
give us your give us your first one what was it what was your first one like um so yeah i had purchased duplexes
16:02
before my first true commercial was a five unit and um it’s funny because i had seen it
16:10
go up for sale before i thought geez you know how am i ever going to afford something like that um
16:16
and then i made a relationship with the owner uh i had made him what i thought was a
16:22
fair offer and at the time he wasn’t interested in
16:28
selling so i just kept going along doing my thing and if you
16:34
probably close to 18 months later i got a phone call from him he had another deal he was
16:39
trying to close wanted to cash out of this and uh
16:45
i was able to show up um i was already familiar with the property i had a banking relationship
16:52
with the community bank and um was able to close very quickly
16:57
and take care of that for him and i think i ended up buying it for less money than i had originally offered first time um even better yeah
17:06
so and that’s that’s turned out to be you know really great property for me um
17:11
i’ve burned out of that a couple times and anyone in the audience this is
17:17
interactive um audience has been pretty quiet so far this evening any questions you got feel free to
17:23
throw them in the comments below yeah in the comments below we’ll get and
17:29
we’ll get to them at the end for sure um you know what what uh one thing i wanted to know too uh from both of you guys
17:37
was that along the way in your real estate journey both of you guys have started say uh
17:43
david you got a 36 unit was your first one uh joe yours was a five unit and doing it by yourself
17:49
what can you give us a sense of a lot of times there are steps like something that was a big a big step for you maybe
17:55
it was a partnership or maybe it was you know i don’t know if it was something you learned along the way or you joined
18:01
something or you know give us a sense of like was there anything along the way that that kind of helped you accelerate
18:08
um you know whether it was a relationship with somebody or a lender or anything like that that maybe
18:13
somebody would benefit from hearing about a certain type of relationship or
18:18
experience that you may have had to help you accelerate
18:24
and i think i’m not pushing it because we’re here but i think multifamily masters really helped me accelerate
18:29
because that gave me connections with people you know i got hooked up with you pal i got in with
18:35
ferris i got in with garrison you know i ended up flying to baltimore
18:40
to garrison’s halloween party because i’m like i want to meet this guy in person and hung out and met people and then just
18:47
going to the different infants and the mfm and conference last year just
18:54
meeting everybody and getting to know people and making connections because people need to be before people
18:59
are going to work with you they need to be comfortable with you so you need to have had a couple of conversations with
19:05
people so they get comfortable with you and they’re like okay i like this person and i want to work with them and that’s the
19:11
first step and then the second step is figuring out how you can work together and then the third step is actually
19:16
going and doing something so i think just being being in this environment with people and
19:22
and then going to conferences and meeting people in person is is kind of like the great way to get started
19:28
and the one step i’ll add to david i’ve been here the whole time i don’t
19:33
know why my zoom keeps crashing it’s been a little bit of a pain all good i try to talk multiple times and it keeps on screwing up but i was going to say
19:40
the thing you know that david does i think very uniquely is that he always shows up
19:46
right doesn’t matter he’s in la he’ll go out and find ways to show up and add value right i think that’s something
19:52
for people that are newer you know it’s something to think and you know think about right like it
19:57
shows that david is a very dependable person which is ultimately someone you want on your team and so you know again
20:03
if you’re newer you’re constantly looking at how do you add value and i think showing that you can show up being boots in the ground
20:10
and trying to figure out how to solve other people’s problem is a value in itself and so something i think you know
20:16
i think david is very one of the best at in my mind from kind of what i’ve seen uh i’ll agree with that and i’ll go one
20:23
up on that uh they did something that most other people will not do there’s an expression i’m
20:29
sure every person on this call has heard it get down to your comfort zone
20:34
in order to do things now that other people i can’t remember how the hell it goes how’s that go pal how’s that go
20:40
dave i messed that up i butchered that big time it’s kind of like you do things uh you
20:46
do things uh let me see how i’m saying this um
20:51
you do things that uh do the things that other people don’t want to do yeah i was gonna say i could help you
20:57
out there you go joe hit it i think dave ramsey says live like no
21:02
one else so you can live like no one else you know not that i’m a big dave ramsey fan but basically do your do the
21:09
hard work now and reach your rewards later yeah absolutely and what i was trying to get at is dave
21:15
how much time did you spend driving around florida meeting with all these different commercial brokers in order to
21:21
further your business not today not next month but six months one year two years
21:26
three years down the road uh renato and i spent two weeks waited two weeks went to multiple
21:33
markets met with a bunch of multiple brokers how many brokers do you think you met with during that two-week time
21:38
period uh i want to say around 20. that’s
21:44
fantastic man that’s awesome yeah and then i’ve been back to the markets a couple of times i’m going to tennessee
21:50
in a couple of weeks to meet with brokers so you just have to constantly be making those connections and remaking those
21:56
connections absolutely and joe kilmer whenever you and i first talked when you first got in the mastermind i remember you and i
22:02
talked about was it memphis or was it nashville knoxville tennessee
22:08
so with that being said i’ve seen your your career blossomed over the last 12 months or so are you still interested in
22:14
tennessee are you now focused more close to home or what’s that game plan look like for you and the missus
22:19
yeah absolutely i mean i think we’re heading there on thursday um oh okay we’re going to see our friends who live
22:25
there and uh we like that area i think long term you know this deal that i have now
22:31
is a real game changer and hopefully it will lead me to the same path that powell’s on or as just uh taking the
22:38
step and being independent um and then i can have you know
22:43
all that equity to invest in other deals or focus on my
22:50
gosh syndication business and things of that nature so going back to the question you asked
22:55
earlier you know what what’s some of the stuff and i just want to talk about you know really want to name names like frank
23:01
greco david has become a really great friend i see glenn on here jillian eddie wong you know some of the ogs that have
23:07
been here steve ronan we’ve been at the party together ferris um you know there’s just so much benefit
23:13
and even if you’re like a guy like me that does a lot of stuff on his own so does frank you know um you don’t have
23:20
to just be interested in syndicated apartments out of austin texas to get value from a group like this and and
23:27
from being a part of people uh that are that are interested in doing this kind of stuff 100
23:34
yeah that’s what i i kind of bonded with joe in the beginning because we both had the same financial goals the same amount
23:40
we’re going to make and we’re kind of going at it from two different directions and i think he’s probably ahead of me
23:46
and i i think that’s great i’m kind of you know i’m excited to see both of us go and be successful and reach those
23:51
goals so that’s what’s been great about getting to know people is you you get to know them and you have the
23:57
same goals and it kind of helps motivate you yeah absolutely
24:02
um i think there was something in here there was a question in the group about you know the banking relationship somebody asked how important was the
24:08
bank relationship been buying multi-family commercial are using the same bank relationship over and over
24:14
i have been using the same relationship over and over and this last deal i did
24:19
was kind of a bit of a stretch of a distressed deal for somebody to
24:25
take on on their own and because you know they had a relationship with me i’ve
24:31
basically you know they’ve lent me a lot of money and i’ve given them back more money um multiple
24:37
times and they said you know because of that you know we’re willing to take a risk on you for something of this nature because
24:44
you’ve shown performance i don’t know how you david you probably use multiple lenders
24:53
yeah well the first deal i tried to get in san antonio we went through seven
24:58
lenders and couldn’t get approved and had to walk away from it so that was a huge learning experience for
25:04
me yeah i mean the lending side of every the lending can be something that you
25:09
need to focus on right and make sure that you have you have a lender who will who does
25:14
believe in you right and so sometimes it’s hard to like get that lender right away like you need to you need to massage that relationship
25:21
uh you know the whole time you’re that you’re looking for properties not just when you get a property right so it’s
25:27
it’s a super important part of the of the process you got to be comfortable with that lender too so
25:33
um you know we’ve all heard about some predatory things that have occurred and i looked at different lenders um
25:41
when i was buying this deal and i i got some quote and i think i could have had a more
25:47
i could have possibly shaved a little cash off of the expense and did a little
25:52
bit better but i knew i was going to close i had surety of closing and had surety of the relationship
25:58
in the repositioning process that i didn’t want somebody new that was going to be
26:04
jerking me around and doing things that would make me uncomfortable either
26:10
and one more trick in regards to the lending it’s great to build that relationship but always have backups you never a
26:16
lender’s great just like a contractor a lender is great until they’re not so great a lender is great until they
26:22
disappear lender is great until xyz happens and it happens so always
26:27
have a backup lender even though you do build and form that relationship
26:32
you know i could think of nothing more valuable to a lender than to be referred to
26:37
other potential syndicators or investors how hard would it be for you guys to publish a google doc for highly
26:43
recommended lenders that you’ve worked with share some of that information you know we share that around the
26:49
mastermind we definitely do that and that’s definitely appreciated but uh here’s an example
26:55
i have a lender who i refer down to a lot of my coaching students lender was strong he was a good guy for
27:02
two years until all of a sudden he disappeared in the middle of a deer a deal and none of my people have been able to
27:09
get a hold of him since um so with that being said you do want to back up but yeah great point uh kevin
27:15
definitely a great point yeah so um now that we’ve got to sort of
27:22
the beginnings of where you guys are i think it’s i think it’s good to take an assessment of like what are you seeing
27:27
like what’s what’s in the near future for you in terms of like properties size where are they located
27:35
uh partnerships you know like what’s what’s kind of on the horizon like the near term horizon for you guys what’s
27:41
your goal for the next 12 months yeah you know one thing that i’m a little
27:46
nervous about is there’s still a lot of offers out there a lot of people um you know wanting investors
27:53
but the irrs that they’re offering uh seem perfectly realistic with what’s happened
27:58
over the last two years but within a higher rate environment that might
28:05
uh stabilize or plateau appreciation rates um some of their irrs are i think are
28:12
off base you know 18 to 24 after three four years um could be
28:18
completely shot out of the water should you know we get rates another uh three-quarter point maybe another
28:24
three-quarter one point after that um it would i would think it would have to impact uh the rate of appreciation in
28:31
multifamily real estate over the next couple years but far from being an expert so i’m just
28:37
kind of looking at offers right now to jump in on and i’m a little nervous about going in with the syndication
28:43
being part of a junior debt stack versus me controlling my own single family rental and paying cash for it or you
28:49
know or or if i’m lucky enough to get it financed go for another rental property so i kind of would love everybody’s you
28:55
know anybody that has an opinion to because speak up about the irrs that you’re seeing being advertised on actual deals
29:03
uh how you feel about uh how realistic they are given this kind of raid environment that
29:08
we’re seeing and what happens when somebody runs through their cycle three five years out
29:14
has to refi and we’re in a whole different world at that point go ahead dave or joe one of you
29:21
well as far as the refi if you look historically when we’ve gone through these rates go up but then they
29:28
end up coming down in like 18 to 24 months a little bit so i feel like that
29:34
a lot of people are doing bridge debt now and they have to refinance in three to five years so i think by the time
29:41
people doing deals now have to refinance we’re going to have gotten through this and rates will be normalized out some so
29:48
i don’t think it’s going to be as much of an issue maybe somebody that got into a deal five years ago and then now
29:54
they’re having to refinance now and into the higher rates then that’s where it’s going to be a little bit more challenging i think with irr that is
30:02
going to depend on you know your market if you’re in hot markets that rents are still pushing
30:08
really high that’s still going to push the ir higher if you’re in a lower a market where it’s more
30:15
stabilized and things aren’t growing that much i think it could be affected a little bit more by the higher interest rates because
30:21
that’s going to increase your cost your debt cost and reduce your noi
30:28
yeah i think to build on what you’re saying maybe you know look beyond the irr see how
30:33
they’re building their model what is the performa for rent increases um you know are they are they trying to
30:39
get something crazy like well maybe it’s not crazy 10 every year in rent increases
30:46
or something of that nature one of the major drivers of cpi everybody speaks about
30:53
gas is housing cost so if you have somebody who’s modeling in really
30:58
conservative two percent three percent rent increases and it looks like
31:03
the market’s going to give you better than that then that might really negate out some of the issues that you’re
31:08
bringing up with rates that i think i would agree with david that
31:15
there’s so much global debt maybe you didn’t say that there’s just so much global debt that sovereigns are going to
31:21
be paying so much more if they keep jacking up rates too like the whole world needs
31:28
reasonable rates um and some of the issues i’m going down this macro world which you know frank greco
31:34
probably would talk about more but some of the issues we see out there are things like the war on ukraine and
31:40
supply chain issues if those things give up then we could have a lot of improvement
31:47
in the cpi coming down and life’s not looking so bad for jerome powell jack and upgrades
31:55
okay so in three to five years if we’re not in an environment hold on i know this this is a great topic to
32:01
discuss but it’s a little bit of off of what where our original main topic is so
32:07
okay i hope that you can stay before the uh stay for the uh breakout rooms
32:13
because then maybe you’ll get inside of joe or david’s room um and and then you can kind of discuss this as like a topic
32:19
around that butcher initially let’s just focus on what we’re talking about right now we’re about to get into some q a
32:25
with everybody i don’t want just this topic to be the only topic we talk about but thank you kevin okay appreciate it
32:32
um so our last couple questions here that i wanted to ask you uh both david and and
32:38
joe to just to go over are just some like advice advice or lessons learned
32:43
that you that you have throughout your career that you could give to uh sort of either newer investors or
32:50
somebody that’s coming on and just you know thinking about investing or they’re just starting to get into it what are
32:55
some things that you could give to them advice wise for growing their business
33:04
i think it like a lot of a lot of people told me two years ago when i first started this
33:10
that’s all about consistency and i was like okay well i guess that makes sense but i didn’t really relate
33:16
to it i think garrison was was one of the ones that was driving the consistency message and now hindsight two years later i
33:23
think you know what they’re right like it’s just being consistent and i know uh
33:29
bessie asked about brokers and credibility and i think one of the things with that is just being consistent just
33:35
constantly every couple months i’m talking to the broker every couple months i’m going to the market and seeing the broker and now
33:42
two years later i’m still there i’m still doing it so it’s not like i’m some new guy that’s going to waste their time and
33:49
and go away i’m still there i’m consistent i’m doing it and it’s same
33:54
thing with this being around you guys and being consistent in this group i think just being consistent with everybody
34:00
is one of the things that you need to do and also timeline people think oh i’m going to
34:06
start this and i’ll two months from now i’ll get my first deal and it’ll just start snowballing not necessarily i mean
34:13
everything has this long slope and then you go like that so you’ve got a you know it’s a longer term
34:20
project it’s a multiple year project so you just have to have that mindset going into it that you
34:26
need to work at this for a couple of years david could you give people uh a sense of how do you keep track of your
34:32
consistency how do you how do you do it it’s just all in your head that you need to call somebody every two months or are
34:39
you doing using any type of system that that helps you out with your consistency i could use a better crm system to be
34:47
honest with you i have one i don’t use it i use it some i use a spreadsheet
34:52
some and i keep up with kpis so i’m trying to track
34:57
how many brokers that i call this week how many lois do we do this week how many deals
35:03
do i submit so that’s kind of a good way for me to kind of track it and
35:08
be oh i’m i’m behind i didn’t talk as many brokers last week or two i should reach out to
35:14
some this week and kind of play catch up so i feel like using kpis is a good way to track it
35:20
okay all right good good um joe how about how about a sense of like lessons learned for everybody
35:26
lessons learned uh some advice that you could give to people to grow their business right
35:32
yeah absolutely i think you’ve got to be willing to do
35:37
what you believe in while everybody’s telling you that it’s a bad idea and maybe it is a bad idea but if you
35:45
have something that’s proven like multi-family real estate and you’ve worked with a group
35:51
um people that know the business people likes that are on this call right now and they say geez that is a good idea
35:57
and you’re getting good feedback on things like that other people in your world might
36:02
not be so supportive so there’s a lot of time when you’re going to have to show up
36:08
and you’re going to have to be consistent when those around you might not necessarily see the um
36:14
benefits of what you’re doing and you’re probably going to have to do some small tasks that aren’t going to be
36:20
very significant for a long period of time without a huge payoff you know i shared
36:26
for me some numbers that were pretty significant and um you know maybe they’re not
36:32
significant for others on this call but for me they’re pretty significant and you know there was a lot of time
36:38
where it wasn’t numbers like that you know i was excited to be clearing uh you know 200 a month or
36:44
something on my first duplex or something of that nature but um
36:49
so that’s the big piece of the consistency that maybe isn’t talked
36:54
about just the mindset of being able to show up while there’s adversity mm-hmm no that’s good has there been any
37:01
um things are that have helped you to have that right mindset that when people are telling you kind of like negativity that
37:08
you’ve been able to stay positive stay on track any any sort of um
37:14
systems or mechanics or anything that has helped you um yeah honestly um
37:19
you know i i love excel spreadsheets and then and i could see progress of things that are improving on
37:25
a regular basis you know we measure things in annual uh
37:31
periods of time so every time you do your taxes you see well i’m just much further ahead as far as the mindset and
37:36
things it’s used to maintain positive energy i mean i really like jim rohn um he’s got a lot of good
37:44
sayings and i actually have this kind of old cd from the early 2000s that i used
37:50
to listen to that was a lot of his speeches put to a beat with some music
37:55
and it’s it’s really a phenomenal um set of knowledge that is uh easy to
38:02
listen to so yeah those are two things
38:07
awesome awesome okay well thank you so um i wanted to get into some of the q a
38:12
that people have been putting in the inside of the inside of the chat here so um let me see we got one from marcus uh
38:20
asking and both of you guys can answer this we you don’t have to spend too much time because there’s a decent amount of
38:25
questions here but for your first apartment how did you raise capital was it
38:31
primarily family and friends or yeah what was your ways of raising capital for your first deals
38:37
why did you start david uh for me i was house hacking in la so bought a house in 2009
38:45
that needed a lot of rehab did a slow flip on it sold it and took that capital and put that in
38:51
used it to buy my property in memphis okay all right good good so did it by yourself mostly
38:58
by yourself yeah through a house act that you that you had okay good good all right joe oh your first one
39:05
uh well my first one i did a house hack with an fha loan and that was a free unit my first one i didn’t live in
39:12
was um i basically had 20 000 bucks and some credit cards
39:18
and i was able to buy it really low and in a distressed deal and put in sweat equity
39:24
um and then my other my first commercial one was a basically a bur out of a
39:30
single family okay all right so for both of them they didn’t start out necessarily raising
39:35
capital for your first one is that does that sound accurate to you guys yeah okay so you guys did them on your
39:41
own yeah they didn’t really they didn’t really look to raise capital on the first one um you know i mean that’s that’s all kind
39:48
of your personal choice i know that that was my personal choice as well my very first one it’s just i wanted to do it by
39:53
myself because i didn’t really want to put anybody’s money at risk and i thought like if it’s anybody’s money at risk if
39:58
it’s mine if i fail and then it’s my fault right i’m not really going to blame anybody else and i don’t want to take anybody’s money when i’m
40:06
doing my very first deal right so that’s something to think about um
40:11
so amman that kind of answers your question about how did they find investors for your first deal when did you start maybe this is a question uh
40:18
related to yours a month but when did you start looking for investors or start talking to people about investing
40:25
in your type of deals so when did that come around david
40:30
uh for me it was when i did the first syndication deal the end of last year that’s when i first started
40:36
talking to people about it and uh
40:41
you know i’ve been talking to people that have been doing this but that was really my first opportunity every people invested so i really had serious
40:48
conversations and then now that you know i have another deal that i’m working on then
40:54
i’m able to have more conversations with people and it’s it’s been great to catch up with some old friends and and talk
41:00
but uh that was just kind of the progression for me i didn’t really start talking to
41:06
people about investing until i really had something to invest invest in and maybe i should have started earlier doing that mm-hmm
41:14
yep yeah um you should have i would tell you this if you have a 36 unit apartment building you should be telling people
41:20
and you should be letting people know what you’re doing and getting them ready for the next deal and even if that deal takes a year from you to get you you
41:27
should definitely be like letting people know what you do and i know i remember talking to you about that before it’s just like dave you already got a 36 unit
41:34
why aren’t you telling everybody to do it right so how about how about you joe when did you start telling people about
41:39
uh investing with you and what you’re doing um you know i remember going to that first meet up in baltimore i didn’t even
41:46
have business cards or anything like that and i was talking to a friend i was really nervous
41:51
and you know he said just just start texting people your your name and number and
41:56
things of that nature and where you’re at so that was really the first time that i went to a meet-up and uh
42:03
started telling people what i was doing and developing those relationships with the best investors
42:09
sure and how how about uh marketing both youtube so you guys starting out hey you
42:15
may have started out like david you said you might have started out uh later uh joe you just said you didn’t really even
42:20
have business cards talk real quickly about what type of marketing maybe that you do now or what what did you do when
42:26
you started out well in 2020 when i started i
42:33
did the sorry others i did the raise logo did what little
42:38
website did business cards just to try to start communicating with people what i was doing and use that to pass out to
42:46
people got more active on social media got on linkedin facebook and tried to start
42:53
talking about real estate and educating people more in what i was doing
42:58
okay all right joe how about marketing wise for you yeah the facebook groups um i really
43:04
started out in radcliffe’s group and uh actually got kicked out of his group a couple times for sharing some
43:10
information or sharing links and he ended up calling me personally and letting me back in and apologize that
43:16
was a fun experience um but then i guess the first real step to
43:21
do something more than just networking and marketing in a group was in this particular mastermind i’d say that
43:27
marketing and developing that type of messaging is my weakness i’m strong with operations and rehabs and things of that
43:34
nature qua helped me get a website together as a group um we came up with i came up
43:42
with some names and and the group kind of fielded them for me a little bit we came up with always equity so i was able
43:48
to buy that domain alwaysequity.com um i remember that i remember that night
43:54
when we did that yeah so i mean that that was really i you know it sounds like an infomercial
44:00
but this group has been really phenomenal in helping me with areas i’m not strong at
44:07
good good and i think that’s something that everybody can kind of take away from is that a lot of times when you start looking at people that have had
44:13
success you start looking at like the end goal like where are they at right now but everybody has got to go through a lot of
44:18
steps where they are not very good at certain things right i mean everybody including myself there’s tons of stuff
44:24
that i’m definitely not very good at and i could be a lot better at but if you just kind of get started
44:30
start learning how to do it and the thing is to just take some action and do that whether that’s raising capital
44:35
whether that’s marketing whether that’s reaching out to brokers or finding deals it’s really about taking the action and
44:42
then learning to do it consistently and um and if you’re not very good at it at first or if it’s not your strength uh
44:48
there’s there’s people around that can help you and hopefully people like people in this group that can help that can help you as well
44:55
um so dave we got a question it just said uh this was from jeffrey it was kind of about your first deal right
45:00
about getting funded and i think as a issue of uh what was the issue with you getting
45:06
funded not to get too personal uh but i’m wondering what like roadblocks there were when you were trying to get funded
45:12
uh i guess maybe this might have been i’m not sure if this is the san antonio dealer he’s talking about are your very first deal but um any kind of roadblocks
45:19
that you came across well we’ll start out briefly with the san antonio deal
45:25
i had talked to several lenders and they were all like oh yeah no problem
45:32
that’s not going to be an issue and then two weeks into it they were all like oh it’s an issue we can’t do it so then i
45:37
have to start over with another round of lenders and they’re going into it oh it’s no problems no issues and then
45:44
all of a sudden there’s issues so that was kind of frustrating and i think
45:50
it’s more now learning you know getting to know the lenders a little bit better and a little
45:55
bit more seasoned on what you should know going into it and how you should approach it to try to see if they’re going to be
46:02
able to perform or not um the memphis property that was our first multi-family so yeah we were doing
46:08
agency debt and i don’t think now i could get the properties because now they want you to
46:13
have three have signed on three deals but back then uh we were able to get um
46:21
you know we had to write several letters for several things it helped because we’re buying in memphis and i grew up in west tennessee
46:27
so we wrote a letter talking about how i was from the area and i knew memphis and
46:32
uh one time we were visiting the property we even went to university and got like a hat and stuff and my wife
46:38
took a picture of me and like submitted with that showing that as a fan of the university like trying to
46:44
embellish it a little bit to the lender and you know they’re going to want to have a
46:49
third property third party property manager so we had that so we just kind of try to check all
46:54
those different boxes that the lender has and from all the lenders i’ve dealt with
47:00
there’s really two people there’s the sales person that says oh yeah no problem then you get to the underwriter
47:06
who’s like no hold on we don’t want to fund this loan so it’s really once you get into it trying to work with that
47:13
underwriter and get through whatever hurdles they’re going to throw up throw not throw it throw out so that way
47:19
you can get the deal closed good good how about you joe do you you run into any roadblocks on any of your
47:25
deals lending wise uh and roadblocks whether you overcame them or maybe some that you
47:30
just couldn’t overcome um you know i think uh
47:36
not necessarily roadblocks but it is i guess is it soft skills or just
47:42
anecdotal things that seem to come into play uh and david’s right you know you’re working with a loan officer or
47:49
somebody that’s more on the sales piece and you’re telling them you’re soaring you really want them to be your advocate
47:55
and then it comes to underwriting um and it i remember on this deal one of
48:01
the things that the loan officer came back to me about he
48:07
said you don’t know how much it meant to the underwriters and the loan committee who votes on if they’re gonna
48:13
give you this loan um that you financed your personal vehicle the best and i’m
48:18
like really that’s really what’s important like okay so
48:24
um yeah it’s it’s it’s interesting what their world is important and and uh the
48:30
anecdotal things yeah i mean for sure it’s you know anything that can you never know what’s important to them
48:36
and something like you having another uh i guess another relationship with them where you
48:42
your car i guess you know can help certain lenders and that that could be something that’s um important to them
48:49
i think we got a let’s see another question here uh let’s see jeffrey just put in there uh what would you say is
48:55
the best way for preparing for lending like compiling okay so what do you need all that
49:00
yeah so go ahead and go over what do you need when you’re submitting like a package to
49:06
the lender you’re gonna need three years of taxes at least you’re gonna need to push through a financial statement
49:13
um you might need things to back up the personal financial statement like appraisals on real estate owned and
49:19
you’re obviously going to need statements to back up your um you know other accounts
49:24
that you’re putting towards your net worth it might be in stock market things of that nature um
49:31
gosh rent rolls absolutely yeah that’s that’s definitely huge
49:36
david anything else you want to add because they’re also not only are they looking at you and your financials
49:42
they’re looking at their property because you’re buying a business so they want to make sure the property is going to be able to perform
49:48
and be able to cover the debt service that like they there’s a debt service coverage ratio that’s a usually 1.25 is
49:56
what they want so you have to make sure that’s going to be able to do that so when you’re doing your underwriting
50:01
doing your spreadsheet if you have at the bottom here’s what the dscr is here’s what the debt yield is then i
50:08
think that helps them be more comfortable with you because they know that you
50:13
understand what they’re looking for but just doing your pro forma and having it be a realistic pro forma
50:20
and showing your rent comps like everything that you’re saying you want to do you need to be able to back it up
50:26
like if you say this is my income here’s my w-2 this is my assets here’s my bank
50:31
statement these are the rents i think i can hit here’s rent cops that supports that so
50:38
you want to have compile like all these supporting documents to be able to help your case so that way when the
50:43
underwriter needs you know question stuff then you have those docs another thing that i
50:49
find really helpful is i do a dropbox and put everything in the dropbox because you’re going to submit it all to the lender and then two weeks later
50:55
they’ll ask you for where’s your may bank statement you just go to dropbox send it to them or i give them the link
51:01
to the dropbox and sometimes the lender will just go to the dropbox and look at it get it themselves so i find having a
51:07
dropbox is very helpful in the process yeah it’s very helpful um i would say that you you know we kind
51:13
of touched upon it is that obviously you need the things from the from the property right so you’re going to need
51:20
tax returns property taxes a lot of the p l uh you’re also gonna need the stuff on you right so you’re gonna need your
51:27
personal financial statement so you can get that template from a bank like any
51:32
kind of banking relationship they’ll give you a personal financial statement and you need to fill that out and it
51:37
needs to be current so it’s going to include all the things that are assets to you and all the things that
51:44
are liabilities and so that’s something that i could just say you need to keep current and you need to have uh you need
51:51
to have those numbers on hand sometimes if you don’t have those numbers offhand it could take you a little while to get them because some of you might have
51:57
invested in a deal and then you’re saying i invested 100 000 in this deal but that was six that was three years
52:03
ago what is that hundred is a hundred thousand worth you know all kinds of different questions that you may
52:10
may take you some time to kind of go through that so make sure you have your personal financial statement uh updated and just so you know for me i just fill
52:17
out one like i fill it out for one bank and if another bank asks me for it i just give them the same one so even
52:22
though they might say they might say hey here’s our personal financial statement fill this out i’m just like no here’s
52:28
here’s here’s the one i already filled out i just i just submitted you know even if it has bank of america and it’s
52:34
supposed to be wells fargo or you know anything like that it doesn’t really matter they they get the idea okay
52:40
um well very good well very good well i appreciate uh you know joe and david uh
52:45
lending their uh their knowledge their experience of what they’ve done in multi-family i hope you guys have all got some value out of this
52:52
at this point we’re going to go into some breakout rooms for probably about eight ten minutes or so um
52:59
and something that we like to do or people can network in smaller groups and we can you can talk about you know whatever comes up i would suggest
53:06
generally the way that i do it is you let everybody talk for a minute just try to introduce introducing who you are
53:13
where you’re from what you’re interested in and then maybe a question or topic that you’d like to talk about let
53:18
everybody just let everybody go around the room for one minute and then go ahead and start your topics and talk
53:23
about whatever it is after that we’re bringing everybody back into this
53:29
and then we’ll just kind of leave it open and and for people who want to stay because there’ll be people who want to stay for a lot longer so we’ll just
53:35
leave it open after that kind of an open-ended thing but just for the last couple of announcements
53:41
if you are interested in um in our face let me see our facebook group um
53:48
join our facebook group it’s multifamily it’s facebook backslash group slash
53:53
mf masters we do announce a lot of different things inside of there um so we’d love to have you join our
53:59
facebook group um also uh while you’re at it there’s people like listing their uh
54:05
their information uh david joe make sure you guys list your information again in the chat so that people can have it
54:11
because i know you guys did in the very beginning but we had a lot of people enter in after that so uh everybody else do that as well make
54:17
sure if you’re interested in connecting with people offline um putting your uh information in there
54:24
multifamily con we got multi-family con coming up october 1st and 2nd um it’s our in-person event it’s in las vegas
54:30
that’s caesar’s palace so for those of you who are interested in coming attending a live event and meeting
54:35
people in person which personally i think is much better than zoom but i i love being out there and just
54:42
kind of shaking hands with everybody and getting to know people in person so if you’d like to do it you’re going to be able to see a ton of
54:48
us who are on here out there it’s october 1st and 2nd las vegas
54:53
multifamilycon.com if you just use my name powell um as a code it’ll get you
54:59
100 off at this point okay so um that’ll give you some some incentive
55:04
to go there and let me see oh and just for a little quick plug i
55:09
don’t know for everybody uh if you are interested in buying a property i do have i do i have a property that i am
55:14
selling so i put it all on like facebook and a bunch of different places but you can reach out to me
55:21
uh personally i have a 40 unit in indianapolis it is my very first property that i bought and i am looking
55:27
to sell that and so if you’re interested let me know okay that said i’m going to break us into uh
55:33
breakout rooms again we’ll go there for about 10 minutes or so i get to know people make sure you make sure you
55:39
connect with people make sure you give everybody in the room your contact information and uh and we’ll go from
55:45
there i’ll see you on the back side