VIDEO TRANSCRIPTION
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go first hello everybody i am ferris musa uh one of the partners at both
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multifamily masters and disrupt equity um i i’m based in houston texas we have properties throughout texas and georgia
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and you know very active buyers and sellers so we we are vertically going to have our own management company as well
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and that’s really helped kind of give us just a platform really for mfm to continue to grow and you know help share
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some of what we’ve learned to everybody in the audience and so excited to have everybody on and for those that don’t
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know right multifamily masters we are essentially a group that is based in kind of throughout the country and
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really the goal is to help create a platform to help people to have their kind of localized meetups right one
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common brand one common set of things and so we’re excited now that kovit’s winding down for people to start to kind
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of help kick that off and you know i have one of my friends and partners powell on as well and so
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pal you want to go to introduce yourself as well sure sure absolutely so i’m paul tri uh i’m
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one of the one of the leaders here won’t be family masters i’ve been with the group ever since we started so i
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uh started the group really in 2017. since then just a little about me as far
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as you know we started in los angeles and i live in los angeles still
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although all of my real estate investing has been out of state so i don’t invest in california it’s all out of state and
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2017 is really one i bought my first multi-family deal uh it’s in indianapolis
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and uh after that bought another one a year later and then in 2019 got involved in
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on the general partnership side of five to five different syndications and so i have the background of doing
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both jv’s doing deals by myself as well as doing uh uh being on syndications as a general
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partner and then when kobet hit i kind of added a different asset class to my
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my repertoire so i added self storage to my repertoire and started buying some self storage so i bought my first self
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storage deal in 2021 and in january 2021 so had that for
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about 15 months now since then closed on six total in 2021 um
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six total uh self storage deals it’s just specifically self storage close my
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seventh one in february number eight should close in about a week
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and uh number nine is coming up pretty quickly here so that’s a little bit about me as far as a multi-family and self-storage investor
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um that’s and and powell really quick you’ve never invested in
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anything in california right never invested in anything in california yep there’s always here and get some
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people to know that it works doing out of the estate and last but not least you know we met and we’ve done a deal
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together and we met through this stuff and so people you know i like to just kind of rehash the people networking works right meeting people and you know
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events conferences webinars i mean that’s really how we all get started it’s you know this this is a
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relationship business and that’s absolutely the way to grow so glad to have everybody on here
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absolutely i think i think partnerships is one of the big things that multi-family masters has brought there’s been you know i used to want to count
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like try to count the people and see how many partnerships have actually formed through multi-family masters and there’s it’s been way too many to count so
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there’s um you know like ferris said uh him and i have partnered on deals ferris has met a business partner i’ve
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met my business as well on on from doing meetups right
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yeah great okay um so as far as as far as today goes uh
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what we’re gonna do is we are really going to have um our original plan was we’re going to
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have a panel kind of a panel and talk about recent closed deals but instead of that today we were actually going to
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shift it a little bit more to to more of an interactive uh session where we’re going to have a lot of
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questions and answers uh we’d like to bring on we have a special guest here that we’re going to bring on as well
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and we’d like to you know really just kind of open this up to more of questions and answers and because
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uh you know in our facebook group as well as you know just facebook messages and
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everything that we see we see a lot of questions that come up and a lot of times we’re we’re not able to really
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kind of dive deep into those questions we maybe give answers as much as we can online but we’d like to be able to dive a little
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bit deeper and to ask to answering people’s questions of what they you know what do they want to hear um
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and what’s relevant to them whether and and hopefully we can address those particular uh those particular questions
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so that’s what we’re gonna do today um towards the end of uh towards the end of our session we’ll also probably have
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a breakout session where we’ll get into smaller groups of maybe maybe like four or five people maybe you
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have a 10-minute session to have a small breakout group so you can get the network a little bit more because multi-family masters is really built on
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this idea of of networking right and that’s where that’s really where our focus is
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is networking and forming those partnerships so we try to give everybody we facilitate a way to to
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meet some other people and to potentially um see where those partnerships take you okay
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um first you wanna you wanna do you wanna introduce your brother or
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you wanna yeah so you know did we get on i know one of the biggest topics people want to
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know is about raising money right and so disrupt equity we have someone dedicated to essentially
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investor relations and helping raise money and he just so happens to be my uh my brother he’s a little bit less charming
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a little bit less of an all around a great guy so derek do you wanna go ahead and hop on and introduce yourself
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hey guys hey pile everest thanks for having me everyone yeah so to give a little context um i am with directory as
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well ferris is also my brother um i’m the more humble one for those who don’t know so
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i do tend to take on the investor relations and raising capital and part of my background actually is i
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spent years in new york city working on the finance world over at blackrock actually so i’m sure many of you heard
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that company before so we’ve taken a lot of you know the connections to talent and the skill set then basically the
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background from that world and bring it to disrupt equity and and whatnot but applying it to the multi-family space in
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particular now so that’s where we focus on what i focus on here at this equity trying to help raise capital and ultimately answer any questions you guys
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may have around that how much have we raised in the past six months
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gosh we’re coming up on close to 100 million dollars really um that’s
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well it’ll be a little closer than six months close to maybe 60 but if you extend it to 12 months
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probably closer to yeah yeah so for those on call you know lots
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of if you want to understand how to raise money definitely the guy to talk to so yeah
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i guess i want to go ahead and moderate and facilitate sure sure uh definitely and i think we um
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you know just we appreciate you being here tarek i know that raising capital is is one of the main things that people always want
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to know in doing deals right it’s like where’s the capital going to come from if i’m looking at buying
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whether it’s a 500 000 um you know duplex or triplex or you
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know 10 million dollar property or a 50 million property there has to be where is this where is you’re raising money
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from and obviously there’s some specifics around that and doing it right so that’s a super
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important topic and i’m sure we’ll probably have some questions about that as well um
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okay so you know um i know we uh we’ll have some we have a few quick questions that people have
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written in earlier to us uh just to say you know just to kind of kick this off but we’re really here to answer your
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questions so if you do have any questions um drop them in the drop them in the chat
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and um and one of us or both of us or as many of us can answer these questions as possible so
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um serena was there any um can we start off with any other questions i actually had i had a question uh it’s about
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raising capital so um how how do you know that this much money is enough like
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um i don’t know how to put this question uh say for example um it’s uh um the
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dealers um i have to raise uh 30 so let’s say it’s about 3 million
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uh i have raised 3 million okay and i have um say a a network of
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100 people who are ready to invest with me because you know because of my networking and
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this and that everyone’s like okay sorry though whenever when you’re saying we are ready to invest but obviously you know when i get the
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deal at that time it might be that you know some people have had their uh yeah someone’s
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pregnant or someone’s getting married and you know at that time how do you um
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calculate that this many amount of people is what i need and
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say if i go over that threshold say three million do you say okay thanks i’m all done i can’t take you in or how how
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how do you approach that as well does that make sense i don’t know that’s a good question so how about you
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take that eric do you uh when you have a situation you’re going for a raise um
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how do you manage you know uh manage those investors whether it’s timing whether it’s the amounts uh
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what do you do yeah good question serena so part of the answer someone depends on
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where you are in your journey right if this is earlier on where you don’t really have a track record of success you don’t really have a big network of
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folks then obviously you got to kind of take what you can get to some extent right but assuming you’ve kind of built
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a network of folks who have capital who’ve expressed interest who know who you are who want to learn more about
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what you’re you have available then the way to handle that is when the deal comes around and you have something
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available to to them to invest in that’s when you presented and those who are actual
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walkers not just tire kickers are going to step up right and they’re going to offer capital now your question about
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how much is enough well you know obviously what your minimum is that you require in order to close on the deal that’s something you would determine with your lender based on your
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underwriting and all that good stuff now the question kind of extends further to say well what if i have raised too much
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capital right the reality is um there is such a thing as too much but
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up until a certain minimum threshold the reality is we have to in our case for example we
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have uh everything comes as a first-come first-served basis so if somebody wants to come in and provide all the capital
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in and of itself just as one individual hey we’re done right if a hundred people behind them want to come in we really can’t accommodate everybody but the
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reality is it’s not usually one investor but let’s just say we have a hundred investors if we’re raising a ton of capital and we have another hundred
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behind them that want to come in but the first hundred have filled us up then we’re going to close it up at that point and that’s that right there’s there will
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be future opportunities and this kind of puts a little bit of pressure on some of the investors to realize that hey you
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can’t just sit around and wait for for things to be done at your own pace if you don’t step up others will so there’s
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a little bit of the urgency to the matter right but to answer the question the thesis of it is first come first serve and let them kind of see who is
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going to actually materialize and come to the plate yeah and i’ll add to that a little bit
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uh sarita just answer that person’s question so here um
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what i like to do and i think you know is that you you set it up in a way that
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that it rewards people who are going to take action right so when you’re when you’re
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setting up your your your raise you’re going to start on a certain day and probably previously to that you’re
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going to take as many soft commitments as possible so these soft commitments again they aren’t there aren’t hard commitments because you’re not actually
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taking the money but you’re finding out who’s interested are you interested you’re talking some you know your
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your buddy from college or something hey i got to i think i’m going to get a deal is this is this something you’re
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interested in how you know how much would you invest if you wanted to invest uh is it the timing working out for you
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you get those kind of soft commitments you have an idea of who’s going to come in right after you gather as many of those soft
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commitments as you can you’re going to have a certain day where you’re going to say okay now it’s ready uh the documents
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are ready for everybody to review and sign and then the bank account is also
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ready for to accept wires and once that happens it’s really like
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you just got to reiterate to people as much as possible i don’t know first come first serve just like derek
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said that’s what we do as well because because it’s like if you’re gonna if you’re gonna actually do it
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i’m probably gonna accept your you know your capital versus somebody who kind of said well you know maybe maybe next week
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maybe a week after i actually got to clear some money away and i gotta ask some people if i if i can do it it’s
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like okay i know you’re my friend and everything but like we you know we can’t we can’t just wait for you the whole
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time so it becomes a first-come first-served basis and then if it fills up it fills up right and the the truth is
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you’re trying to get it to fill up as much as fast as possible now another thing that um we do as well
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as it will over raise a little bit right because um especially it you know
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probably overrate maybe 20 to 30 percent just to know that like all those people are actually going to wire the money
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because people will sign the documents but that doesn’t mean they actually went and wired the money and then
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and then they may say oh i wired it or i i couldn’t go today i have to go next
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week and then and then there’s always like okay well it’s always a little big excuses and why isn’t it coming why is it coming it’s like hey just over raise
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a little bit and then just take somebody else and just say hey sorry you know you were just too slow i mean it looked like
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you were going to get the documents in but it took you four more days to wire and somebody else’s came in other people
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were just coming in and they just finished it so okay truthfully there’ll be a point
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where you do cut it off and you want to get to that uh to that i guess experience where you can tell
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people hey i’ve we are cutting it off like sorry email goes out to everybody thank you for
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everybody who joined but we have to cut it off and you basically cut it off that also
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lends people to like give you more credibility and more i guess um
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it builds a sense of urgency with your audience that they weren’t able to get into the deal
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they might have just been making a deal or they might have just got the email they didn’t really pay attention to it they didn’t really take it that serious
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but then they realized oh i missed the opportunity it already happened and um
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you just tell people sorry that’s it so those are some of the other things that that uh that i would do as well
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um just when it comes to raising capital so um i think sue wants to ask something
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she has raised her hand sure okay sue once you come off uh go off meet soon ask a question hey hey everybody sue
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budding i i totally agree with you i had a comment actually on the question because um we had a 10 unit apartment
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complex that we closed on and we locked up all of our partners it was a joint venture deal
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and two weeks before we closed signed the papers one of our partners decided to back out
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so now what we’re doing is as soon as we have our operating agreement signed by
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all our partners they wired the money to escrow uh to avoid that but my my lessons
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learned from that experience was that always have a backup back up to a backup to a backup
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so always losing money and having a backup so yeah maybe that’ll kind of condition one of
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my earlier comments where i mentioned that you could have one investor who funds the whole deal well realistically you probably don’t want to do that
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unless you know this investor you work them before you know they’re good for it because if somebody comes in steps up and says that i’m willing to fund the
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entire deal or a significant portion of the deals have to be all of it and you set all your eggs in that one basket
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right with a few baskets and somebody ultimately pulls out then you’re in a tight position right so it is better to overrate kind of what pal said we tend
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to do about 10 to 20 as well uh depending on the deal again depending on the individual but we will also
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we’re willing to be accommodating to some extent where we’ll open it up and ultimately it is a first come first serve basis but if we work some before
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and they’re in a situation where they might be working through a custodian for example such as an ira or 401k some sort
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of retirement plan typically that takes a little bit longer to to basically obtain the capital so in those cases if
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we know individual we know they’re good for it and ultimately the capital is there it’s just a matter of we have to wait for the processing we’ll close it
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off and and hold that spot for them and give them a couple days maybe a week or so to fulfill but we would have had a
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runway in total of maybe 20 or 30 days to raise the capital so we have some extra time on the back end if we need to
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take advantage of it yeah good points good points there erica
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thank you thank you sue um okay so oh you know one of the things
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that before we get too far into some of the questions so continue to write some questions in the chat or raise your hand
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like sue did and we can we can bring you offline and bring you on and on camera and to ask you a question but also a
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good thing to do here is if you have your contact information if you would like to network you can go ahead and
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post that inside of the chat as well so that people can share your contact information so feel free to put in your
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name your email your business you know don’t write a whole paragraph of just nonsense here but you know just
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put your contact information people will be happy to save that you can save that later on
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as well okay all right so let’s see sarita uh somebody else asked another
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question um what was the question here oh someone asked what was your worst deal
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and what did you learn from it what was the outcome what was okay um
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you want to go territory i mean i could go as well yeah sure so gosh i mean
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order again every deal has something unique and special about it right but i think that
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ultimately a lot of this comes down to how concerned you are in your underwriting and your projections so we tend to be fairly conservative and
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ultimately we’d rather under promise over the liver and hope for things to go better rather than potentially part of ourselves visions who be have some pain
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later on now that said for us some of our worst experiences our worst deals have been related to management
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companies um i i think this is probably no surprise if you’ve done any sort of real standards in the past i think you’ve
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probably experienced firsthand or heard of bad management companies and our experience we’ve had a handful of them
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where they just kept dropping the ball we we are a very tech driven company we build things from the ground up here we like
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to move fast and do things reliably and consistently and have metrics we can track on a relatable basis unfortunately
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a lot of the real estate industry as a whole is very antiquated with the way that they operate and
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to me it’s the most interesting situation because ultimately i would argue real estate is probably one of the first industries to exist right probably
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been around as long as lane and humans have been around which is theoretically forever right so despite that a lot of
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these folks like to operate like they’ve been around for decades and not really keep up with technology and modernize to
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the present day and those have put us in very tight situations where we will set certain
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expectations or business plans in place for these deals and these management companies will drop the ball they will have one excuse after the other after
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the other and keep saying give us another week give us another month right we’re going to make it right and ultimately after enough
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excuses let’s call them what they are uh we eventually have pulled the trigger and cut ties with them right we’ve got to do that numerous times but there have
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been two deals in particular where it got so bad and pushed control where there was just no results after the
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constant meetings and agreements and and new plans that we set forth that we actually got to the point where we
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decided you know what we cannot rely on these people um and if we want to keep growing as we intend to do as a company
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we have to build our own management company and have control our own destiny so we have since built our own management company called disrupt
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management and that is what we utilize primarily for our deals going forward so ultimately we know that
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the management is a very very tough business let’s be candid it’s not the biggest profit center there’s a ton of staff on there it’s a tough business it
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really is for context we have more than 100 employees on that side of the business it’s a lot of moving pieces but at the
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end of the day it’s a worthwhile headache because it allows our acquisitions our investment side business to flourish because ultimately
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we know that whenever we put forth the business plan we can hit those targets with confidence or exceed them so that
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is ultimately what where our biggest pain points have been and we have been working on to on solving that for a long
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time we’ve gotten uh made a lot of progress on that side but it can always be improved but frankly we’re in a very
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good position now we know that what we’ve done in the past can only get better
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yeah that’s that’s great that’s great i would tell i would say that my my well the worst deal is my most
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challenging deal it was really my first one right and it continues to be challenging because i still have that deal so uh this one i mentioned i bought
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by myself in 2017 and um and that one has been challenging pretty much the whole
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time i mean it’s pretty much i would say it’s c minus class uh property and um
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i had some difficult management issues so management again that became a thing i
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don’t have my own property management it’s a 40 unit building so i had to rely on a third-party property manager it’s
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in indianapolis and i live like i live in l.a so i wasn’t going to self-manage this property
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uh and that’s not what i wanted to do anyway i certainly i had no thoughts of even self-managing this
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property um but uh i would say that the the two issues
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that i had mostly was i think management was one of them second of all was i was under
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capitalized so i was i bought this by myself i had i had money put away for cat packs but
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i ended up spending that money on going and buying another property and so i was very under capitalized for a long time
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and it really wasn’t until earlier this year that i was kind of thinking of like okay
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what am i going to do great thing is that i bought it very cheap so i kind of didn’t you know basically
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breaking even this whole this whole time that i’ve had it however what i decided to do was either sell it
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or bring out a partner and i decided to bring out a partner and um so now
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it’s in a very different state and it’s getting to that very different state than than it was previously so i would
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say you know we’re we’re significantly put in a lot more money into the capex
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side of things and now we’re really kind of uh really upgrading a good portion of the property so
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it’s it’s really kind of in that turnaround phase so i would say it’s not turned around yet but it’s in that turnaround
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phase where we put in a lot of work and a lot more money towards it and i think those are the two big lessons that i
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learned from it is really like i said how to make sure you have good property management which i feel like my property
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management now is much better much better equipped to do it to achieve our goals and the second
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thing is don’t be under capitalized as if you’re under capitalized i can really really
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uh put a strain on on you for a long time so um don’t get in that position
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yeah i think maybe just as a corollary to this part of the way to maybe protect yourself from those situations and avoid
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these bad situations really it’s going to come down to first of all getting referrals will not for property management companies to ensure that they
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are able to walk the walk and not just talk it but once you actually want to buy the property don’t just rely on your due
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diligence right or your your underwriting that’s a great starting point of course but you don’t really know the reality until you get on the
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property and start walking so be very very diligent during your due diligence period right when you actually
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visit the property find out exactly what it needs plan for the worst case scenarios right we’ve had floods we’ve had gangsters we’ve had prostitutes
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we’ve had all on our property we’ve had murders even before right plan for everything and ultimately have reserves for those contingencies hope for the
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best but prepare for the worst and if you do that properly then you should be in a pretty good position where
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it’s it’s okay to have some reserves on hand that you never needed them to but it would be terrible to need to divide
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them and not have them available so plan accordingly yeah and i would say that another good lesson
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that i learned from this was really to partner with people i mean there’s there’s certain things that i’m good at
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there’s certain things that i’m not so good at and when you have a deal and you’re doing it all by yourself yes you
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get all the profits you get everything and whatever you get all of it right you 100 yours and you get all to make all the
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decisions everything but that also means if you’re i guess anywhere similar to me
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is that you’re good at some of the things and you’re not so good at some of the things and you want to spend time on some of the things and you don’t really
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want to spend a lot of times on these other things but guess what you have to do all of it and so i personally
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do not really want to be in that same situation now i i don’t necessarily need to have you know
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50 different partners or anything but i do want to have a really core group of partners that i can feel like hey they
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can take this on because they really like doing that stuff or they’re very good at that particular thing i’m much better at this thing we can work
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together and and really uh you know um achieve more success and be i guess
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more engaged with the property in a better way and in reality if you have some weaknesses that offset
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your strengths and having all the profits of zero dollars of profit is nothing right we are very big operation
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here ultimately that’s why this mfm exists in the first place why we’re all here and we would rather have a smaller
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piece of a much larger pie with the right partners we can share it with absolutely
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okay great great uh let’s see cerrito what was uh i think the next question was difference between
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a jb and a syndication um difference between a jv and a syndication uh let’s see uh i’ll go
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ahead and take that so so when you structure a deal okay when you’re stretching with multiple partners
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right um there’s different strategies you can do now typically two of the very very
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popular ones right now are to do a joint venture which is generally a smaller group of people right so i don’t know
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whatever five ten people whatever something small um and you are going to go take down a
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property with everybody in that group now everybody has to have an active role in a joint venture right so part of the
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thing is you’re not taking uh money from people passively that everybody has an active role inside of this uh instead of
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this deal and so uh that’s that’s a great opportunity to to
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do it you know like i did that with some friends and family you know i’ll go buy my first um uh second deal with friends and family
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or my first self-storage deal friends and family right just a small group of us you get a little limited in terms of you
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know how much money can will come in right so it’s if you’re gonna get a deal that’s uh say the deal is five million
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dollars well you know if you’re gonna have to come up with twenty percent it’s it’s not the easiest thing to come
26:30
up with a million dollars between five people right i mean yeah i mean there’s there’s certainly groups that can do it but you know if
26:36
you’re just kind of starting out that may not be your network yet right so you may be limited in terms of the amount of
26:42
money that can come in so it’s the size of properties that you can get so that might be there’s some benefits as well
26:48
as um you know disadvantages of a joint venture now syndication
26:54
on the other hand is a little bit different structure right so now what you’re doing is you’re pulling together a like a larger group of people and
27:00
you’re pulling together their money everybody’s right now many of them in a syndication there’s generally
27:06
broken down between two different groups inside of the syndication one is called the general partners they are the active
27:12
partners right they are the people that are making the decisions on the property they found the property underwrote it
27:17
they’re getting the loan signing on the loan they’re making the operational decisions that’s the general partnership
27:23
for raising capital there’s also the limited partnerships which is the people that are passive in
27:28
the deal so they are investing money but they are not involved in any of the necessary the rights or the decision
27:35
making that goes on with the deal now so that’s a different type of structure right so now you can have a larger pool
27:41
of people that are investing so you could potentially take down a larger deal it’s
27:46
there are some rules about you know what what type of syndication and things like that but in general that’s what you’re
27:52
looking at as far as the differences a joint venture it’s probably a smaller group probably taking a smaller smaller
27:58
deal i mean you know depends on how much everybody is able to bring everybody has to be active
28:03
uh syndication there is two different groups inside the syndication one is the active group
28:09
which is the general partnership they are the ones making the decisions and the second group is the limited partnership the limited partners who are
28:15
really the passive investors inside of the deal okay so those are really the two distinctions between a uh syndication
28:23
and a joint venture um to to uh ask a sub question to that
28:29
so uh general partners what all different roles do they have like i know there is a
28:34
a partner who would like bring uh the money in so you know the one who signs
28:40
on the deal and you know the kp so can you just give a breakdown of uh maybe a couple roles that are like key and
28:46
important to have when you are thinking about general partners sure sure
28:51
and actually hey i see garrison i see that you join buddy what’s going on buddy you want to hey do you uh you want
28:58
to come off you do you want to answer that question uh you know the crazy thing is i just got off of a capital raising call
29:05
um so i break my teams down a little bit further than probably what powell might have
29:11
described i have someone who handles absolutely everything um even down to my new detail of i have one girl teresa i
29:19
don’t know if she’s on this call or not she does nothing but call and check for insurance for us
29:24
my whole team raises capital um i have another two people that do nothing but due diligence and property
29:31
inspections and lining up the property inspector and things of that sort on top of i have two individuals that do
29:38
the asset management portion of it we babysit the babysitter which is the property manager property managers are great and so
29:44
they’re not great they generally start out really really strong and they start to tail off
29:50
as the project goes um very similar to contractors so that’s probably the main
29:55
three or four points on top of of course one person signed for the loan sometimes two people depending on what net wealth
30:01
is required um one or two people might be coming in with the bank balance the liquidity
30:08
aspect of it um and one person two people normally i’m the person that comes in with the resume experience of
30:14
it i have 21 years of nothing but real estate i think i covered most of the
30:19
aspects of my team what did i miss pal and what did i miss tariq tariq your team’s way bigger than ours
30:26
yeah we we’ve grown quite a bit over the years um but to the point at the end of the day there are certain functions that
30:31
every deal has to have the question is which roles can you provide and play yourself versus what do you need to
30:37
bring in partners for right garrison kind of hit the highlights of them there’s someone who has to manage it who basically asked to manage the deal
30:42
somebody who’s going to manage the property manager which is the ass manager effectively somebody’s got to raise capital and then someone who’s really going to just manage operations
30:48
as a whole right there’s all these other small little pieces but those are kind of the big categories so ultimately
30:55
which ones do you have the skill set and the competence and the comfort to be able to provide and then which ones do you need to supplement with someone else
31:01
so that’s where the partnership and again this kind of platform makes a lot of sense to work with
31:06
yeah so so serena and all that you know the more that you can do um the more
31:12
value that you bring to the table right so if uh and just for anybody right so if you
31:18
have uh if you’re able to sign on the loan if you’re if maybe your net worth or liquidity is strong then that’s going to
31:25
be important and plus if you can raise some capital that’s great and if you have some you know you’re able to underwrite deals hey even better and if
31:32
you know like whatever you can bring to the table that’s that’s that’s going to make you more valuable to your
31:38
particular team right and you know what what pal just mentioned is one side of the equation you know if i’m brand new
31:43
to the business business i’m trying to add value to someone else but now that i’m i’m several years into
31:48
this right i built my team and my team got a lot larger and your team’s a lot larger
31:54
you’re giving away too many pieces of the pie garrison long story short i would rather have someone else who wants to learn this by
32:00
doing it and wants to learn it by doing it the right way i’d rather have them do all the little minute details while i
32:07
get to sit back take some pressure off of my shoulders because we make more money when i’m out there negotiating
32:12
with brokers looking for the next deal raising capital things of that sort
32:20
awesome okay um let’s see let’s see somebody else wrote
32:26
in another question when underwriting what all factors do you keep in mind um
32:32
that might significantly change the outcome okay mr chris collins joined the call my man
32:38
i know i was like wow hey what’s up chris how you doing chris chris field some of these questions man
32:44
you’re super knowledgeable let me see if i get my uh
32:50
setting up this new computer how’s everybody okay awesome anyone who doesn’t know chris collins shoot that dude a friend request
32:56
instagram facebook this guy does a lot of deals just overall just a great great great person to surround yourself with
33:02
for sure absolutely man so i just find anytime garrison’s in a room
33:07
then i show up and he says nice things about you that’s it
33:12
i’m going to comment on my buddy one of my coaching students is here raymond this guy he’s got a cr he’s got a good
33:18
looking outfit on what are you wearing raymond my my comfortable plan i like it man
33:24
you’re in you’re in upstate california uh where is it humboldt county is that right mendocino county yeah
33:31
i just sent my first round of uh postcards direct to seller i think they’re probably the most terrible
33:36
postcards i’ve ever made but dunn’s better than perfect my man you know absolutely absolutely love that attitude
33:44
that’s great where did uh vessi go jesse are you sir are you here i saw her a minute ago
33:50
she’s still here she just turned her kids camera on look at that hey
33:56
hello hello bessie give us a give give us a little bio about yourself and then answer this
34:03
question for us please about what are some factors that to keep in mind that can significantly change outcomes when
34:09
you’re doing your underwriting so just a little bio and then answer that question for us
34:15
brief bio based in la california similar to most californians invest out of state
34:22
tennessee central florida is where i started in the residential space and now making the transition to
34:28
multi-family closing on two properties soon meaning within the next two to three weeks
34:35
um underwriting one of my favorite topics a couple of metrics that can significantly change the outcome um rent
34:43
growth assumptions that’s one of them and i can dive into each one if or as
34:49
needed um cap rates starting cap rate and reversion cap rate um expense ratios
34:56
and of course your financing terms that’s a very high level summary but i can dive deeper if needed
35:03
sure sure so so just give us an idea of rent growth what are you what are you seeing what are you thinking for
35:10
and uh in in a way of what you’re projecting for red growth
35:15
and give us an idea of what markets too because obvious rent growth in certain markets may be different so
35:21
absolutely um so the markets i focus on for deals searching or deal finding are
35:26
tampa central florida and jacksonville all three markets have experienced
35:32
phenomenal rent growth over the past couple of years so the key question is will that be sustained
35:38
um usually i like to consult with my local booth on the ground property managers
35:44
when i validate those rent assumptions um the outlook for this year is still
35:49
pretty strong probably another 10 to 15 percent growth um but the consensus is
35:55
it is expected that those rent growth numbers will start tapering
36:01
down back to more of a normal in the long run so personally when i underwrite
36:06
uh try to be more conservative so i start off with a lower number certainly not
36:12
15 even though that’s somewhat expected in year one
36:17
and taper off in year two or three um that’s how i usually approach it um i
36:24
guess if you see aggressive assumptions in anyone’s underwriting and just ask the question and maybe validate that
36:30
either through comps uh and other third parties that could potentially warrant that
36:38
yeah very good i appreciate that and maybe just talk about cap rates you did you brought in a entry cap rate versus
36:45
exit cap rate reversion cap rates uh explain to people what you mean by that and how
36:51
that would affect uh you know their underwriting or their values absolutely so
36:57
the entry cap rate um usually that’s the market cap rate which may or may not be
37:04
the same as your purchase price cap rates particularly in the current competitive environment those are being
37:12
compressed either further even further and so that’s your typically your starting point
37:18
again get a room of real estate investors in a room and you can get a lot of varying
37:25
opinions on where cap rates will go but for prudent or more conservative underwriting um
37:32
the better practice is to assume those will increase in the long run if they don’t um then then that’s added bonus
37:40
um so anywhere from 10 to 25 basis points um increase per year is what i’ve
37:46
seen in underwriting um why does it matter well because it
37:52
affects your evaluation uh which is noi divided by a cap rate and it functions
37:57
almost like a multiple um so it can have a pretty significant impact on your exit
38:04
valuation and therefore projected returns yeah very good very good
38:11
and that exit camera that exit cap rate is probably one of the most sensitive numbers that people manipulate
38:17
in order to make a not so good deal look super good something to keep in mind
38:22
it’s very easy it’s very easy to do right it’s to make to make the numbers fit your narrative for sure
38:28
yep thank you bestie that was very that was very good uh that was very good i feel like you should boost you on some
38:34
type of interview you’re good i know you guys you guys are all besties fifty dollars for for the underwriting
38:41
list okay so okay um hey hold on one more question for bessie
38:46
where’s your accent from it sounds like virginia where are you from born and raised in virginia yes uh
38:54
born and raised in bulgaria and bulgarian armenian american uh so blend
38:59
of lots of different cultures but i love it yeah sister
39:05
okay awesome awesome okay so let’s see um
39:11
yeah i’ll jump in here really quick pal for go for it while i’m at it um i know bessie was talking about like
39:18
rental rates and seeing what when you’re underwriting like what makes sense i think one thing that’s really helpful
39:23
and very practical and the easy something you can do when you’re checking out a property is to go
39:28
look at all the comps around there um and to me what i try to do is i find
39:34
kind of comparable this is what our property looks like and what it you know what’s gonna rent similar but
39:40
then i find like the high end like okay like we bought a property in jacksonville and our rents were like
39:45
here and i found a property down the street that had like boat docks and basketball courts and drive garages for
39:51
all the units and i’m like okay we will never get to that rate right this is out of our range so
39:57
if we’re underwriting beneath there cool but if i see underwriting that’s like above that it’s just a red flag that
40:03
like okay these properties are not getting anywhere near that so it’s a good
40:08
practical anyone can do it just by driving around and plus you start getting that feel of what other properties feel like and that feel is
40:15
something that i mean grant cardone talks about all the time it’s like he just goes and and walks the property and
40:20
looks around and feels like what it feels like to be there and you’ll start if you’re kind of newer and you haven’t
40:26
walked a lot of properties and you haven’t unwritten properties and haven’t looked at what what makes sense to raise rents too it’s like i don’t know can it
40:32
go from 800 to a thousand sure i don’t know but if you look up street and they’re only getting 9.50 and they’re a
40:38
way nicer property it’s like are you going to get to 9.50 maybe but if they’re saying you’re getting to 1100
40:45
you know maybe second guess that so just a practical quick tip for you very good point very good point and you know
40:51
something to piggyback off of what chris just said raymond might be able to vouch for this i tell all of my coaching students i
40:57
tell all of our multifamily masters mastermind students spend time at properties
41:03
go hang out when you take your wife on a date or your husband on a date or whatever friday night date night stop by
41:09
an apartment complex drive through it just just look at the cars in the parking lot look at the windows look at the blinds the shutters the the roof the
41:16
trash the people hanging out you know get familiar get acclimated because you don’t want to go look at your first
41:22
apartment building be like oh this is great i love it i want to buy it but you have nothing to compare it to and a year
41:28
later you’re like holy hell this is and i’ve seen people do it all the time you don’t know what you don’t know
41:35
just something to keep in mind and you know make it fun you know take your wife take your spouse take your kids take
41:40
whoever and go hang out with these complexes that you’re interested in buying and get get your spouse and your family excited about this business as
41:47
well while you’re learning yeah that’s that’s great stuff
41:52
what uh let me see bessie you did have a question here and i think that’s a good question to bring up uh it says i’ll
41:58
just read it for you uh what strategies have worked well for you to successfully expand your ability to attract capital
42:04
beyond friends and family who may be tapped out or hesitant to invest so
42:09
getting beyond friends and family um we have a number of different people here who have uh who have raised capital and
42:16
we’ve been very successful raising capital so going beyond friends and family um
42:21
what ways uh you know have has been successful for you so maybe tarek you want you want to
42:27
jump in here oh wait yeah here we go okay so this is the fun stuff right
42:32
ultimately the answer depends on what kind of person or entity or group you’re looking
42:37
to get to right and where you are on your journey once again so earlier on the process of course you’re gonna probably have to rely on close folks
42:43
friends family your social circles let’s say right but at some point you tap them out and you really need to start expanding beyond that now logically you
42:50
probably still don’t have a huge track record you probably don’t need a ton of capital yet so the logical answer is to
42:56
find more what they call retail investors right individuals and that could be folks from meetups that’s a
43:01
good place where we’ve used a lot of that right even not just local medias but even virtual meetups like this one
43:06
right find other folks who are interested in this kind of asset class looking for housing opportunities and trying to
43:13
ultimately procure capital from them now at some point you probably want to type into
43:18
individuals who have higher net worths right more capital to spend than fewer so ultimately that’s another still
43:23
category of retail investors but going after high net worth individuals now assuming you’ve kind of tapped that
43:29
market or maybe you feel like you haven’t really found additional opportunities that you can that will suffice for what your needs then it probably makes sense to
43:36
expand and try to jv with another co-sponsor right you have your equity pool of contacts they have their equity
43:42
pool contacts and try to join forces together yes you’re probably going to give up some gp in the process right but
43:47
ultimately you’re trading off one positive for another right so you weigh things at some point assuming you’ve got
43:54
a good established track record you’ve got a lot of capital of deals you can you can walk the walk and you’re a
43:59
player right then it makes at some point to narrow it down a little bit and get more money from
44:04
fewer people and that’s where the areas where there’s already pulled capital comes into play right private
44:10
equity family offices other institutions but those folks usually come their capital comes and streams attached
44:16
typically so you want to make sure that you have your show really well buttoned up you know what you’re doing and that
44:22
you know your numbers very tightly because you can see what you can negotiate or what you can push back on in order to get their capital because
44:28
ultimately if we raise capital from 300 people which we’ve done before in a single deal before that’s a lot of paperwork that’s a lot of communication
44:35
a lot of calls a lot of emails a lot of everything right and on the back end of course every year we got to do k1s and
44:40
taxes for those folks it’s a ton of processing to take to take care of that a lot of manpower ultimately if i can
44:46
find one institution who can stroke one check and be done that’s a lot easier on me right but ultimately that’s gonna be
44:53
a lot more difficult for me to get especially early on in my career but later on once we prove them we know what we’re doing
44:59
here’s our trackers here our results back it all up they know that they have basically mitigated their risk and that
45:04
they’re not going to be putting their investors capital at risk uh and in a place for potential loss then it makes
45:10
sense to have those conversations so it’s a journey that you have to grow into a lot of people want to jump the gun and just go straight to the big guys
45:17
right i’ve literally had somebody say hey how can i how can i get blackrock to invest in my deal i’m like this is
45:22
literally your first deal they are they only know you are they don’t care to know who you are these are guys with 10 trillion dollars under management right
45:28
a 10 million dollar deal it’s a drop in the bucket right uh dropping the ocean frankly so you have to work your way up
45:35
to it but that’s the way that i would start focus on the retail grow into higher individuals then start going into pooled
45:41
capital like institutions and so on okay that’s awesome that’s awesome
45:46
overall chris why don’t you give us an idea i know that you’ve raised capital not only from probably initial friends and family but
45:52
you’ve grown that friends and family to a larger network right and and even beyond that so once you give us some
45:59
idea of like um things that have been successful for you when it comes to raising capital beyond just you know
46:05
your initial friends and family sure i mean i think that the biggest kind of easy thing is they
46:12
just always be talking about it always have it on the tip your tongue always have something you’re talking about oh
46:17
hey we just sold a deal in florida i just got a check for it you know what i mean like you just have something to be able to
46:23
talk about in any given situation um have it be kind of your main
46:29
thing that you do you know and i know garrison i’ve talked this before where you know you bring it up and if
46:36
it’s the conversation activates and it kind of like oh really tell me about that then you can jump into it and if it
46:41
doesn’t don’t push it because it gets to be you’re the annoying guy that’s always talking about real estate so have it
46:46
available but don’t push it too hard [Music] finding anywhere that you can go be
46:53
online and just have a presence and be consistent is kind of one thing that
46:58
will pay off it’s something that i haven’t been that great at during kobe to be candid and i’ve talked to pal
47:03
about a bunch but like just jumping on like i
47:08
not a guarantee but if you spent the next 30 days and did a live video every day you’d be shocked at how many people
47:14
just start calling you a day 31 day 35 day 40. um it’s like an
47:19
almost guaranteed way to expand your email list expand your investor list and not everyone’s going to call you back
47:25
hey man i got 100 grand i want to invest but they’re going to start those conversations and that will lead to down the line people who invest with you
47:32
another i guess quick tip i would say is if you’re at an event where you’re able to speak
47:39
you’re able to be the the person that’s up on stage or whatever it is
47:44
take advantage of that opportunity but then also acknowledge that when you kind of step into that level
47:50
you gain a sense of credibility and i had a scenario once where i was uh i
47:56
was at a a speaking event in was it carlsbad and
48:01
i’d kind of been raising a lot of money in like fifty thousand dollar chunk sixty thousand 000 chunks um a couple
48:07
hundred thousand dollar checks but it was kind of in that range and i had a guy come up to me and he’s like so
48:12
what’s your investment minimum and i had this mentality of like well you know it’s 50 sometimes we can do a
48:18
little bit less but it kind of depends and he literally like laughed it off was like oh like never mind and he was
48:24
thinking why so low like his mentality was like oh i was thinking like 100 200
48:29
300 you’re talking about these small deals and so it’s under it was a very humbling experience to realize like my
48:36
response should be something like well what are you looking for we have kind of different deals for all levels
48:41
and you kind of feel that from them rather than you assume that they’re going to want low by asking that
48:46
question so there’s like a small takeaway that i like impacted me forever that someone might want to write you a
48:52
large check that you may be expecting um so that’d be kind of my main things be online be social have it
48:59
on your tip your time and then look for larger amounts if it’s there because you
49:05
never know um what that person might be looking for no matter how they ask it yeah that’s awesome awesome garrison you
49:12
got anything to add here you know i’ll say very similar to what chris said always plant that seed you know i tell every
49:18
coaching student i probably said this to raymond before if raymond and i went to the beach this weekend and we got
49:24
absolutely wasted and just hung out all weekend if bessie if i meet if i see you on monday or next week or whatever
49:29
you’re like harrison haven’t seen you in a while what’s up you know my reply is not hey me and my buddy went to the beach all weekend instead it’s like hey
49:37
me and raymond we sat around and we been analyzing properties i’m looking for another apartment building to purchase
49:42
so i’m just always planting that seed and kind of sparking that conversation like chris said if they’re not excited
49:47
about that conversation if i’m on a ski lift right i always have an elevator pitch if i’m on a ski lift and i’m like
49:53
hey what do you do for work what’s their reply well i do this what do you do that’s
49:59
when i go into the real estate and if they look the other way you’re like hey it looks like it’s gonna snow no harm no foul on to the next day
50:05
but a lot of times they’re like oh what do you mean people like me you help people like me invest into real estate i
50:10
don’t have any money sure you do you got a 401k you got a self-directed ira you got cash in the bank blah blah blah blah
50:17
blah blah you know and another good point um a different level from what tariq said
50:23
i’m pretty new at raising capital actually you know i brought a lot of money home from china and i was able to pay cash for a lot of
50:30
stuff for a lot of period of time and now i’m starting to raise capital i just got off a capital raised call we
50:36
tapped down at 100 people that was absolutely fantastic we set this call up two days ago how do they
50:42
get 100 people i’ve reached out to my friends chris do you want to be part and just say
50:48
chris is a little bit more rookie than what chris actually is chris you want a part of a gp spot you
50:53
can help me with asset management tell every all of your friends and family about our deal you get them on
50:58
the call i’ll sell it i’ll present it but chris you bring in your network pow you bring in your network vessi you
51:05
bring in your network and now i’ve got three or four people feeding people into my funnel
51:12
and then we do deals together and hey you know what maybe chris and i we love each other after the first deal let’s do it again chris this was rockstar on the
51:19
other hand maybe it’s pow man i don’t like working with pow pow’s lazy so you know what i don’t want to deal
51:24
with pal next time um but in general you know that’s kind of how that’s how i did it i’m not
51:30
saying i did it the best way but i did what worked for me i played off of my networks network
51:36
those are no that’s all good points so i mean you can take a ton away from all three
51:41
of them as far as like you know they’ve all been able to raise a lot of money and you know go beyond uh the the
51:47
initial friends and family and
51:52
i used to be so jealous of this guy he started real estate way behind me and he started raising a boatload of money
51:58
right and this is how multi-family masters was formed powell would get on here and say hey i started multi-family messages i
52:04
did this and that really what happened was pal and i were at a conference he starts buying all these deals
52:10
i was like dude how did he do this he’s like i got 10 meetups in california it was like interesting i thought about it
52:17
for two weeks couple weeks i then called pow up and i said hey i’m gonna start a hundred meetups across
52:22
the country if you did awesome with ten i’m gonna do a hundred if you wanna be part of this let’s rock and roll
52:29
and so pow with that being said like he was raising capital before capital because of meetups and whatnot but what was your
52:36
you you skyrocketed right out of the gate you took off way faster than i did what was your secret sauce
52:42
i mean very very similar to what you guys were talking about right is that you
52:47
you want to tell as many people what you’re doing as possible right like i have this if anybody knows me i play beach
52:52
volleyball right beach volleyball has really nothing to do with real estate but everybody there on my beach volleyball crew they all know that i do
52:59
real estate so whenever something’s happening they all know about it and and i get
53:04
actually investors through beach volleyball right and it’s like there there are people that are interested now not everybody you know not everybody
53:10
wants to talk about real estate while we’re playing beach volleyball so but there are people that are interested and they’ve invested with me and
53:17
beyond that um like chris said if you can get a platform which is maybe it’s a meetup
53:23
maybe you start a chapter of multi-family masters meetup in your location and uh that’s what we give the
53:28
opportunity for people to do and that’s that’s what i did you know chris and i were
53:33
uh co-leaders of our our location for a long time and we brought in people we
53:39
always had a really good turnout of people that would come to our to come to our event and you know when you start
53:44
shaking hands with a lot of people you know people get really interested in what you’re doing and they they know you and trust
53:51
you and that’s the thing that you know people really know and trust you and they’re investing with you right they’re
53:57
not really you know they look on paper and they look at you know okay this deal well truthfully that deal looks a lot
54:03
like that other deal and probably looks like the other five other deals that they saw right the numbers are very close to the same probably similar
54:09
markets it’s really they’re trusting you like you’re inside of that deal why are you inside of that deal okay and i like
54:16
you and i trust that you’ve done your homework and that you are going to make this successful you’re going to look out
54:21
for your your people right so um you know because
54:27
once you get sort of beyond that uh you know you get to that trust level people will really
54:33
i mean there’s they’re more i don’t know i don’t say blindly but they’re just going to be like okay
54:38
what what deal do you like you like this deal because of what all right there it’s it sounds like a good deal they
54:43
just are going to go for it because you said it is right you want to get to that level the other thing is like what i
54:49
like to do is i like to bring more value as much value as possible to the people that are investing with me
54:56
so those people who are now inside of my joint ventures
55:02
they’re getting basically trained and experienced and they get transparency as much as possible so that
55:08
they can go off and do their own deal because i know that people aren’t going to just stay inside of my deals all the time they’re going to want to do their
55:14
own deal so i’m trying to teach them as much as possible and give them as much hands-on experience so they can go off
55:20
and do their own deal and to me people find that like hey actually i could probably be
55:26
involved in many people’s deals i have enough money to be involved in any of these people’s deals but the reason
55:32
they’re probably choosing me and getting inside of my deals is because i’m offering them a lot of that transparency
55:38
um in in decision making as well as like teaching them like how to go and do this
55:45
themselves right it’s not just like it’s not just like oh get inside the deal and then you know um you know you get you
55:52
get some updates here and there and things like that it’s like no we you actually are involved in the conversation you’re actually uh exposed
55:58
to other things that that i’m exposed to right so you get experience like through somebody else so
56:04
to me that’s been probably the avenue that i’ve had the most success with especially lately and
56:11
nowadays um yeah you i just get a lot of people that are that are really interested and
56:17
i just kind of know my avatar i know the people that want to invest with me i know what they want and i’m trying to
56:22
give them that and that’s a lot of value vouch for powell there i mean everything
56:28
he says dead on like i’ve been on those calls and he’s very transparent and you get a sense that he is open and he will
56:34
tell you like you don’t get nothing’s hidden you know you’re not gonna get that i don’t know i feel like there’s
56:39
something he knows he’s not telling me like he’s transparent so if you ever get a chance to be on those calls and look at his deals
56:45
i highly recommend appreciate that thank you chris um okay so i want to go go to the next
56:52
question but for some reason my mouse just died so i can’t scroll and it’s like stuck on the screen right now so
56:58
just uh here’s a question for you wow here’s a question for you have you and chris ever done deals
57:04
together after hosting meetups and and building that part of the business we haven’t but we’ve talked probably
57:10
probably like three or four times about like hey let’s get get on on the next deal so i mean literally we just had
57:16
some text messages flying back and forth about 30 of them earlier today about kind of like what’s the deals and what’s
57:21
going on and things like that so uh we haven’t yet um but i mean
57:27
chris chris knows that he’s one of the he’s one of the first guys i reach out to a lot of times just like let him know hey there’s another deal coming up
57:33
where are you at so hey if your mouse died can i scroll through a couple of these questions yeah
57:38
somebody yeah you could take it out take that part over for me um i’m just gonna start at the end and work my way up it
57:44
i’m still this is from alan gordon i’m still not clear about being a resident of california
57:49
and creating an llc for a property in another state do i need to register the llc in california and pay the minimum
57:55
tax of 800 for a small deal no you do not i use a company called registeredagent.com
58:02
i set all of my llcs up in delaware approximately 200 a year no state income
58:08
tax uh and it is uh what’s the word i’m looking for my
58:14
name shows up nowhere it’s anonymous um that’s how i set my llc’s up
58:19
how can you take the address uh the the link of uh the site that you just
58:24
mentioned please residentagent.com i think it is there just so you know whoever answered
58:31
that question too i mean obviously we’re not we’re not uh you know we’re not lawyers
58:36
or cpas or anything so you should really talk to those people to get your advice really from them right so but in general when you are
58:43
buying a property that stay out of state you you usually want that you usually want the llc that’s going to own that
58:50
property to be either in that state or in a state that your lawyer is recommending so maybe garrison’s lawyer
58:55
is recommending delaware or if the property is in tennessee maybe maybe they’re going to recommend tennessee but
59:01
you’re going to want to get a recommendation from a lawyer of where to hold host that llc right so most of the
59:06
times it’s in that state that you’re buying it okay um
59:12
go ahead uh with more questions here garrison oh you know also too we got about i would say eight more minutes
59:18
before we uh before we break into the uh into the uh breakout session so
59:24
um unfortunately i can’t i can’t read any more questions this thing only goes back
59:30
into when i logged in i didn’t realize that’s how zoom was okay sorry you gotta okay
59:36
uh give me a minute uh someone asked about underwriting yeah so chad was
59:42
asking what are your favorite matrix uh to use uh to underwrite a deal what
59:48
ones can make or break a deal go ahead chris what do you underwrite
59:53
what do you what do you do when you underwrite um so for me
59:59
it boils down to a couple main things it’s your exit price exit cap and your rent projected rental rates um there’s a
1:00:06
lot of small things that are going to make big plays like how your construction renovation budget
1:00:12
is going to play out in real life but at the end of the day what i’m trying to get a good sense of is we’re going to
1:00:19
sell this deal for a four cap and we bought it at 70 door we’re going to sell it for 160 a door
1:00:26
kind of back to somewhere earlier where i was saying like if you go walk a property does it feel like you’re gonna rent it for a thousand bucks i kind of
1:00:32
do the same thing on exit price am i gonna be able to sell this property for 160 a door you know like i’ll try and
1:00:38
talk to the brokers and go is that a real number um and i’ve been really surprised over the last couple years so i’ve been kind of
1:00:45
over conservative on a lot of deals where now we’re selling it for those numbers and i was like i don’t know if we’re gonna get that but
1:00:52
um so that’s a big no is what kind of eggman price you’re gonna get who’s going to buy it for those prices you know is
1:00:58
another investor in this room going to buy it for 160 adore or are they going to be looking at it for 70 okay if they
1:01:03
want it for 70 who’s buying it for 160. so i’m looking for like kind of real what
1:01:09
are real numbers and brokers will give you that good idea um lenders will give you that as a good idea and other
1:01:14
investors who are kind of high level will give you that and that’s kind of going to come from networking but um and
1:01:19
then average rent rates like if you think you’re going to buy it now at 800 you know you’re you’re
1:01:25
renting for 800 but you’re gonna try and project that you’re getting 1050 when you sell it
1:01:30
because a lot of these numbers when you’re underwriting it all has to do with when you sell it everything along the way is like
1:01:36
gray area until you sell it and that’s what these big numbers that you’re gonna get projected and go hey we’re gonna double your money in five years or six
1:01:42
years or four years whatever it is um those are a lot of based on what you exited at um
1:01:49
so to me it’s these are numbers that you can practically feel out i can call the properties
1:01:55
around and see what are you renting for now do you have any specials right now or
1:02:00
are you actually getting 900 you know for your rent whatever it is so are the rents that we’re seeing that we’re gonna
1:02:06
get in year four and five if we think we’re gonna get from 800 bucks now and we’re gonna get it to a thousand by the
1:02:12
time we sell is that realistic or is it like we’re projecting 1400 bucks and that’s too much so
1:02:19
um trying to get a grasp of those numbers is i think something that books don’t
1:02:25
put enough emphasis on they kind of just say use a three percent you know rent growth a
1:02:30
year i’m like well that might be not enough you know that might be too much so getting that sense is really where
1:02:35
you need to start talking to local people in the market talking to brokers talking to lenders and talking to property management so that’d be my my
1:02:42
main things is get a grasp because even as a passive investor those are things that you can check out and as a past because
1:02:48
i still invest passively in some deals and i’ll call the properties around there and get a sense it’s i can do it for my house here you know um but i try
1:02:56
i go to markets and i sit you know i mean i was in dallas last weekend literally just sitting at one of my properties for like an hour just kind of
1:03:01
sitting outside just feeling who’s walking around there who’s outside you know what are those people what kind of
1:03:06
shoes that were what kind of dog do they have like you get that that real sense by being on the ground and feeling
1:03:13
out the market so that’s my quick answer there
1:03:19
the uh siri what uh what other questions have come up i want to try to hit as many as
1:03:26
that we can sort of like a fire roundish
1:03:33
chat box but i wanted to ask what do you guys use for underwriting like do you have a software do you use a company
1:03:40
what what would you suggest for someone like who’s just beginning what what is your opinion on that
1:03:46
sure so um well i’ll just start off on this and it’s like we have our own underwriting
1:03:53
tool so we do have you know it’s like software that we built basically right and then so you know
1:03:58
but if you’re just starting out um you don’t need to build your own right you don’t need to go through all that there are
1:04:05
there are underwriting tools out there right and there’s there’s many underwriting tools out there they’re all
1:04:10
probably pretty good you just need to like figure out uh how to manipulate them how to you know how the formulas
1:04:16
actually work inside of them but i don’t think you need to spend a ton of money on figuring out underwriting tools
1:04:22
but you do need to get good at underwriting to the point where you can understand how things can be
1:04:29
um you know when you change certain things how does
1:04:34
that drastically affect right your overall projections and what happens to your pro forma right so you need to be
1:04:40
good enough to understand like the little tweaks that you do how are they
1:04:46
you know changing out the whole proforma the reason why i say that too is because a lot of people
1:04:52
trust other people’s underwriting and underwriting to me is as much of an
1:04:57
art as it is a science like yes there is a certain science behind it that you need to plug in these certain numbers
1:05:03
certain places but there is an art behind it between reading out why do they have
1:05:09
why are they projecting this much rent growth why are they projecting this much in in terms of you know um
1:05:15
cap rate you know the regression numbers or why are they projecting this you know
1:05:21
all of this is really kind of the art behind it and this is really where you’re saying am i trusting these
1:05:26
numbers um so sorry i got off on kind of a tangent of the actual tools and everything but
1:05:32
um yeah that’s that’s what i would say as far as like underwriting tools uh what about the rest of you guys as
1:05:37
far as underwriting tools um anything that you use or or
1:05:42
have out there on our side we use trustyxl more than
1:05:48
anything at the end of the day that is what the backbone of most of these software’s basically are anyways right a some sort
1:05:56
of spreadsheet and i think it’s good for you to understand what the different calculations are that go into that and then the software just kind of
1:06:01
simplifies that process later on it kind of makes it a little more expedient faster uh we’ve basically been able to
1:06:08
create a lot of revisions and a lot of changes and tweaks and adjustments as needed on the fly based on how we’re doing things and a lot of that really
1:06:14
comes down to excel and then our process that we built on top of that and even in the past month we’ve been able to 10x
1:06:20
our our volume basically that we look at simply through adjusting how we do things within excel but ultimately there
1:06:25
are a lot of tools out there like pellet mention they all more or less do the same thing they typically do a pretty good job but i think it behooves you to
1:06:32
understand what is going on behind the scenes that way it’s not just okay i plug this number here and i get this out but i don’t really know what the mechanism is that’s causing that so our
1:06:39
bread and butter here really is excellent i think what you’re going to find is most of mostly anyone who’s in the finance world
1:06:45
typically is going to be have a pretty strong confidence in the excel technology
1:06:52
i’ll chime in with um so michael blanc has his syndicated deal analyzer that
1:06:58
i would say i recommend to everybody and not just because it’s the tool but it comes with like 12 videos of how to use
1:07:05
the tool um if trevor gave his analyzer excel spreadsheet to everyone
1:07:12
in here i would say three of us could probably use it i probably couldn’t use their model off the bat i would go uh
1:07:18
show me how you use this um so i think any kind of tool that you get i posted a video
1:07:25
it’s basically a search on youtube of my buddy david he’s got i don’t think he sells his analyzer tool anymore but he
1:07:31
basically walks through using his tool how he uses it for like hour long videos
1:07:37
so that is it’s like imperative because if you hand me david’s tool i mean i use it all the
1:07:43
time if you had someone else david’s tool you’re like oh this is a h page spreadsheet that everything
1:07:49
interconnects and you change one thing and it messes everything up here so that’s not helpful to you if you don’t know how to use it so
1:07:54
michael blanc’s syndicated deal analyzer has a great video series it’s only like 150
1:08:01
bucks like the best money you’d spend on a tool because you learn how to use that tool and then if you buy i don’t know
1:08:06
like i don’t know if david does his sells his tool anymore but he
1:08:11
has videos i just posted that walk you through how to use his tool so um i would say whatever you do find you got
1:08:17
to figure out how to use it first before you and i think everything yeah everything is mostly based in excel at
1:08:22
some some form or another so that’d be mine to that point i mean i’ll add to that that michael blanc’s tool is great right well you definitely use that once
1:08:29
upon a time and as a starting point i think that it it’s you’re gonna save a lot of time kind of looking at what’s already built
1:08:34
and then you can reverse engineer that if you again you want to understand it and then you can customize it and tweak and evolve it later on to fit your
1:08:41
process your needs as need as as basically you need right but michael block’s tool is great there are many
1:08:47
others out there but find something that is already being utilized reverse engineer understand it and then expand
1:08:52
it to fit your needs 100
1:08:58
okay um hey uh serena can you make garrison a co-host garrison we’re going to be
1:09:04
breaking this up into um into our uh breakout rooms i think right now um i forget my mouse doesn’t work so
1:09:11
i can’t really do anything right now um can you uh break us up into maybe like i
1:09:18
don’t know maybe we’ll give it uh four or five people per room we’ll go uh
1:09:25
we’re gonna create a breakout room and then we’re gonna open this channel up everyone will come back and then we’ll open this channel up for
1:09:31
networking or anything that might go on afterwards but feel free to hop in a breakout room in 60 seconds
1:09:39
awesome everyone back looks like we are this was multifamily
1:09:44
masters live thanks so much for showing up we will keep this channel open feel free
1:09:50
to hang out feel free to network i’ve actually seen this thing open an hour from now we won’t shut it down we will
1:09:56
stop the recording
