The Best Ever CRE Show

Matt Faircloth and Herve Francois discuss multifamily underwriting, emphasizing its importance in the real estate business. They explore different roles in their company, DeRosa, and highlight the significance of market selection and thorough underwriting. They also discuss financing options, property renovations, and the need for a well-thought-out business plan.

Travis Watts, a full-time passive investor, shares five tips for teaching kids about money including starting financial education early, using relatable books, personal finance discussions, setting up brokerage accounts, gift-giving focused on financial growth, and mentorship in financial literacy.

Welcome to the Best Ever midweek news brief, a new series where we will highlight the top headlines CRE investors should be paying attention to this week, followed by a deep dive on a larger news topic or trend alongside a CRE expert. Today’s Headlines: Retail is Back, Baby: Retail vacancy has hit a 17-year low, prompting landlords to withdraw the rent discounts and concessions they’ve been offering struggling tenants since the pandemic. This signals intensifying competition, meaning that retail may officially be back. PHX Leads in Q4 Apartment Demand: Apartment demand in Q4 outpaced pre-COVID norms in some key markets, with Phoenix leading the way with an absorption of nearly 4,300 units in Q4 — close to 3,500 more than the annual average in the decade leading up to the pandemic. Rental Fraud on the Rise: According to a new survey from the National Multifamily Housing Council and the National Apartment Association, more than 70% of major apartment landlords say they have seen an increase in fraudulent rental applications over the past 12 months. With this report, it appears that this problem is here to stay. (Here’s our previous episode on how renters are using TikTok to defraud landlords.)   Today’s Guest: Andy McQuade is the principal of The ARM Companies, which provides procurement and management consulting to clients in the real estate industry. Andy joins host Paul Mueller to discuss recent JLL reports which suggest that material costs are expected to increase in 2024 by anywhere from 2-6%, but electrical and related switchgear costs could be higher as companies continue to face labor and availability issues. Meanwhile, HVAC manufacturers and suppliers have also announced price hikes as high as 10% in some cases. Andy McQuade | Real Estate Background Principal at The ARM Companies Previous episode: JF3265: Save Six Figures on Your Next Project With These Construction and Efficiency Upgrades Portfolio: Self-Storage Based in: Rochester, NY Say hi to him at:  andymcquade.com LinkedIn Podcast   Sponsors BAM Capital Learn more about your ad choices. Visit megaphone.fm/adchoices

Andrew Brewer, a real estate developer and the owner of IronGall Investments, joins our host Ash Patel to discuss his strategy for development in one of the nation’s hottest markets: Austin, Texas. His former career as a stationary engineer led him to real estate development, and in this episode, Andrew details his due diligence process, the right time to raise capital, how he works with local municipalities, and more. Key Takeaways: His Competitive Edge: Andrew targets hyper-local projects in the Austin area to maintain a competitive edge. He carefully invests only in the city's fastest-growing submarkets — communities seeing major growth and development of their own job centers beyond just being commuter towns into Austin. By focusing on these localized markets with increasing housing demand, Andrew maintains a competitive edge vs. out-of-market investors. Being Diligent with Due Diligence: Andrew's ideal land contract includes 4-5 months of due diligence with two months to close, plus 30-day extensions on both. This allows time for necessary third-party reports like geotech studies, endangered species assessments, utility mapping, and meetings with the city planning office to confirm allowable density. He prefers to sequence reports by risk level rather than paying for everything upfront, avoiding sunk costs if a deal-breaker emerges. Working with the City: Andrew invests in both raw land and land zoned for multifamily. He aims to maximize density, but scales based on target demographics and pricing. While cities generally don't oppose his projects, he avoids battles by targeting locations aligned with their future land use plans. He secures variances to tweak development requirements, but ensures the overall project conforms to the area's designated use. Andrew Brewer | Real Estate Background Owner, Developer | IronGall Investments Portfolio: Multifamily, townhomes, mobile home parks, RV parks, single-family subdivisions Based in: Austin, Texas Say hi to him at: IronGall Investments Distance 3 Development LinkedIn Best Ever Book: Michael Collins, by Tim Pat Coogan Greatest Lesson: Make sure that you are very careful when choosing a partner and make sure that the people you partner with can actually deliver on what they say they can do.   Sponsors BAM Capital Learn more about your ad choices. Visit megaphone.fm/adchoices

Sarah Sullivan, CEO of SuGo Capital, joins our host Joe Cornwell on the Best Ever Show to discuss her road from Silicon Valley to the headaches of single-family investing and eventually to multifamily and alternative assets, including how diversifying her personal portfolio turned into a shift in her business model and the opportunities SuGo provides to investors. Key Takeaways: Outsource, Simplify, Educate: Sullivan likes to outsource as much as possible. Managing vendors is easier than managing employees. If you bring someone in-house, that's a big commitment. SuGo doesn’t have property management in-house. They have investor relations and marketing in-house, but everything else — legal, accounting, etc. — is all outsourced. Their marketing strategy is simple: strictly email. You won't find Sullivan on social outside of LinkedIn, and her company focuses on virtual events to educate investors with the goal of providing as much value as possible. A Business Model Is Born: Looking at her personal investments, Sullivan realized at one point that she was 90% invested in multifamily. Realizing she was exposed to market trends that could impact her entire net worth, she built out a portfolio that included alternative assets to get her multifamily exposure to 60%. She then packaged these alternative investments like forex and gold — which she does due diligence on herself — for investors, and they were a hit, effectively shifting her business model to offer more options for her investors. Due Diligence Never Stops: Companies grow. Team members change. Executives change. The way they do business changes. Doing continuous due diligence on your partners and with whom you invest ensures that as relationship dynamics change, your partners continue to align with your goals and trajectory. (You can download Sullivan’s investor due diligence checklist here.) Sarah Sullivan | Real Estate Background CEO | SuGo Capital Portfolio: Multifamily, energy, forex, and gold Based in: San Francisco, CA Say hi to her at:  Sugocapital.com LinkedIn Freedomin3.com  Leleka Care Foundation Best Ever Book: Rich Dad, Poor Dad, by Robert Kiyosaki Greatest Lesson: When you’re getting started, don’t try to do everything yourself. The right partnership can really launch you. Find someone who’s 10 years ahead of you, figure out how you can add value to them, learn from them, and then you can take off on your own.   Sponsors BAM Capital Learn more about your ad choices. Visit megaphone.fm/adchoices

What does the Air Force’s nuclear weapons department have in common with multifamily syndication? Geoff Kudlacz. Kudlacz — known as “Geoffrey Dollars” on social — joined our host Slocomb Reed on the Best Ever Show to discuss his transition from Air Force nuclear missile operator to multifamily syndicator, including how he got started by raising capital from family and friends for his first deal, which was located in a neighborhood that you would not want to find yourself in. Kudlacz goes on to discuss his tips for getting started in multifamily syndication, the mistakes he and his team have made and the lessons borne from them, and why finding the right partner(s) is everything. Key Takeaways: The Property Management Tipping Point: The reality about third-party property management is that they’ll never do everything the way you want it to be done. That’s the tradeoff. Operationally, once you get your business in order and you optimize NOI, then it’s time to consider vertically integrating with in-house property management. It’s a natural evolution that every syndicator eventually reaches. Mistakes and Lessons: The road from nuclear missile operator in the Air Force to being a GP on 700 multifamily units was littered with mistakes and valuable lessons learned — mistakes like overspending in the wrong areas, overshooting rent projections, and buying buildings outside of the team’s operational wheelhouse. But mistakes have to happen. If you worry about being perfect on your first deal, you'll never get started. Partnerships Are Everything: When choosing partners, don’t be blinded by the dollars they might bring to the table. You can find money anywhere. The right partners are rare. A partnership is like a marriage — you’ll be interacting with this person and having difficult conversations with them daily. Treat the search process as such. Geoff Kudlacz | Real Estate Background Managing Partner | Pacific Sands Funds Portfolio: GP on 700 multifamily units across four states Based in: Los Angeles, Calif., and Kansas City, Mo. Say hi to him at:  Geoffreydollars.com Instagram LinkedIn Best Ever Book: Buy Back Your Time, by Dan Martell Biggest Lesson: Stick with what you know. If you’re going to buy something that’s outside of your purview, make sure it’s at a small scale and you’re doing it with your money and not your investors’ money.   Sponsors BAM Capital Learn more about your ad choices. Visit megaphone.fm/adchoices

Ash Patel and Dan Lewkowicz discuss Dan's real estate journey and expertise in net lease investments. They explore strategies for risk mitigation and profit maximization in single tenant properties, comparing them with multifamily assets. Dan offers practical advice for investors in the retail and net lease sectors, emphasizing the importance of analyzing tenant and property health. Dan Lewkowicz | Real Estate Background Senior Director | Encore Real Estate Investment Services Based in: Birmingham, Michigan Say hi to him at: LinkedIn Best Ever Book: Think And Grow Rich by Napoleon Hill Greatest Lesson: Having to start over as a CRE broker after getting out of house flipping.   Sponsors BAM Capital Learn more about your ad choices. Visit megaphone.fm/adchoices

Multifamily Fundamentals is a 10-part series hosted by multifamily investor and syndicator Matt Faircloth of the DeRosa Group. In each episode, Matt and his guests dive deep into the fundamentals of not just investing in multifamily, but in building a real estate business. They dissect everything from choosing the right market, to underwriting and financing multifamily properties, to mastering investor relations — all the way to building out your multifamily dream team.   On this episode, Matt Faircloth and Vincent Celeste delve into the intricacies of raising capital and nurturing investor relationships for multifamily real estate projects. They discuss creating a strong investor database, leveraging social media for outreach, and the importance of systematic processes in business growth. The conversation also highlights the need for investor education and building a robust infrastructure before seeking deals.   Key Takeaways: Investor Database Importance: The episode underscores the significance of building a robust investor database. This foundational step is crucial for successful fundraising and maintaining long-term relationships with investors in the multifamily real estate sector. Educating Investors: Matt Faircloth and Vincent Celeste highlight the need for educating investors. Providing comprehensive knowledge and insights about the multifamily market can build trust and encourage more informed investment decisions. Systematic Processes and Social Media: They emphasize the role of systematic processes in business growth and the effective use of social media. These tools are vital for outreach, marketing, and maintaining investor engagement, thereby playing a key role in the success of real estate ventures.   Sponsors BAM Capital Learn more about your ad choices. Visit megaphone.fm/adchoices

Passive Investor Tips is a weekly series hosted by full-time passive investor and Best Ever Show host, Travis Watts. In each bite-sized episode, Travis breaks down passive investor topics, simplifying the philosophy and mindset while providing tactical, valuable information on how to be a passive investor. In this episode, Travis Watts discusses improving personal financial management as a crucial step before investing, highlighting ways to save on everyday expenses like utilities and vehicle costs, and the importance of hiring tax strategists and reviewing insurance premiums.   Sponsors BAM Capital Learn more about your ad choices. Visit megaphone.fm/adchoices

In this episode, host Joe Cornwell is joined by David Meyer, a real estate investor who serves as VP of data and analytics at BiggerPockets. David discusses current market conditions and trends, the dangers of sitting on the sidelines, and what he’s buying now and why.  Key Takeaways: The Great Interest Rate Debate — What He’s Seeing: Mortgage rates likely won't continue falling linearly, as hoped, in 2024 due to factors like record-low affordability, inventory shortages, and sluggish sales. Some demand and supply improvements are happening slowly, but no big shifts in market dynamics appear to be coming over the next few months. While bond investors expect further rate cuts, we may see more volatility first before rates can meaningfully decline again. The (Dangerous) Waiting Game: Trying to time the real estate market is dangerous and near impossible. If rates fall again, competitive conditions will return, erasing affordability gains. Rate declines are expected to be slow. Even a small decrease may spur lots of new competition and higher prices. So while tempting, waiting for the perfect entry point doesn’t necessarily guarantee better affordability or opportunity. The Midwest Resurgence: David is currently focused on acquiring small multifamily and single-family rental properties in the Midwest, bullish on the region long-term even as others eye the Southeast. “I think in 10, 20 years, we're going to see a resurgence in the Midwest,” said Meyer. “And I want to get into it.” David Meyer | Real Estate Background VP of Data and Analytics at BiggerPockets Portfolio: Rental properties and one lonely STR in Colorado Passive investor in multiple multifamily syndications Lending funds Based in: Amsterdam, Netherlands Say hi to him at:  LinkedIn BiggerPockets — where David's new book, Start with Strategy, is now available. Greatest Lesson: Not outsourcing things quickly enough and trying to do everything himself.   Sponsors BAM Capital Learn more about your ad choices. Visit megaphone.fm/adchoices