How to Pick Your Real Estate Market for Multifamily Investment

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Learn how to pick your real estate market for multifamily investment!

This money monday$ we are examining metrics and various factors that would make a real estate market good for your investment!

VIDEO TRANSCRIPTION

00:00
coffee we finally got to catch up with
00:01
people switch from people man
00:03
miss talking to people seeing people oh
00:04
my gosh it was like brushing off the
00:06
cobwebs man
00:07
you know conference was a big hit so for
00:09
those of you that attended thank you
00:10
very much we had a blast it was awesome
00:12
seeing you all
00:13
and for those of you that didn’t attend
00:14
i’m disappointed and i hope you all tend
00:16
to
00:16
attend the uh the event next time no we
00:19
we got caught up with a lot of old
00:20
friends
00:21
met some new ones i think the feedback
00:23
that everybody was giving us was
00:24
thank you thank you thank you for doing
00:26
an in-person event because i think
00:27
everybody’s getting a little bit of a
00:28
zoom
00:29
fatigue was the was the saying going
00:32
around right
00:33
yeah so for those that are interested in
00:35
the next one
00:36
follow us on our mfin page or on the
00:39
disrupt equity page we’ll be announcing
00:41
it but just so everybody knows
00:43
july in florida will be the next time
00:45
we’re going to do one yeah so
00:47
we’re going to double down you know now
00:48
that we got the first one out the gate
00:50
again
00:50
we’re going to keep doing this so uh be
00:52
on the lookout for it in july so keep
00:54
that open
00:54
people do not do anything so we’ll be
00:56
after july 4th probably before the end
00:58
of the month
00:59
so one of those two weeks bring your
01:00
disney ears in your bathing suits
01:02
because we’ve been one of those one of
01:03
those two
01:03
no it’s going to be either tampa don’t
01:05
wear your baby disney though yeah it
01:07
might be tampa orlando we’re just trying
01:09
to see what’s the most
01:15
it’s going to be orlando or miami that’s
01:17
right what
01:19
we’re telling people tampa you were
01:20
telling people to invalidate miami why
01:22
were you saying
01:23
whatever all right anyway it’s going to
01:24
be florida it’s gonna be fun it’s gonna
01:26
be great
01:26
it’ll be warm we’ll be close to the
01:29
water hopefully
01:30
i was wondering why i wanted to do tampa
01:32
but anyway
01:34
besides that what are we talking about
01:35
today man real estate how to pick your
01:37
real estate market for multi-family
01:39
investment
01:40
okay okay so this is one of the most
01:42
important things so three things that
01:44
you want to look for
01:45
right you know who’s the team that’s
01:47
putting the deal together
01:49
who what’s the where what’s the property
01:51
right you know what’s the vintage and
01:52
where is it located at right so these
01:54
are the three core things that as a
01:56
passive investor you need to be looking
01:57
at
01:58
right so how do you pick we can go we’ve
02:00
gone through some of the other ones how
02:01
to pick a syndicator and some things to
02:03
ask right
02:04
today we’re only going to focus on the
02:06
market right you know and how do you
02:07
pick those as a syndicator or
02:10
some of this could even be as a passive
02:11
investor right if you’re trying to vet
02:12
deals doing due diligence on a deal that
02:14
you’re looking at
02:15
you know some things to maybe ask this
02:16
indicator that uh you know that you want
02:18
to know right
02:19
so before you’re getting into
02:20
investments right you need to understand
02:23
the market and how things are kind of
02:25
affecting that from population to job
02:27
growth to
02:28
media and income in the area to crime
02:30
statistics to
02:32
what are the school districts like right
02:34
you know and i think even as a passive
02:36
investor you need to have your box
02:37
defined we’ve talked about this several
02:38
times on this show
02:39
right and as a syndicator you definitely
02:41
need to have your box to find because
02:43
you’re going to need to
02:43
establish those relationships with the
02:45
brokers right so you can’t just be
02:47
throwing random offers out all over the
02:49
united states it just doesn’t work like
02:50
that right
02:51
so pick maybe starting off i’d say three
02:53
to five to really focus on
02:55
and uh you know get to know those
02:57
brokers right you know but some of the
02:59
metrics like that we talked about that
03:00
you need to analyze are
03:02
the basic stuff right you know and if
03:04
you don’t know these things in your
03:05
market then
03:06
you’re probably yeah and maybe one thing
03:07
to add right the metrics what are the
03:09
point of the metrics right all these
03:10
things you’re doing you are looking to
03:12
do what
03:12
you’re well you’re trying to determine
03:14
ultimately what are you looking to
03:15
reduce this is how ben can read
03:16
risk risk you know you’re trying to
03:18
reduce risk you’re also trying to
03:20
determine the demand
03:21
for rental product right you know
03:23
because more population growth more
03:26
job growth a great school district
03:29
right that all is going to drive demand
03:32
for rents right so because we know
03:34
people that or we’ve we’ve heard of
03:36
residents that will
03:37
you know come to some of our properties
03:39
just because they’re in good school
03:40
districts
03:41
absolutely right so you have to
03:42
understand that that’s a driver too for
03:43
certain people
03:44
so so and it’s yeah it’s it’s not this
03:47
you know you’re doing this to reduce
03:48
risk and make your life easier and
03:49
hopefully perform on what you’re trying
03:51
to
03:51
do right it’s not to say you can’t make
03:53
money without all these things right
03:55
absolutely you can make money you know
03:58
in the moon if you can sell
04:00
to aliens that’s not a bad bad analogy
04:02
i’ve been on an algae high i finally
04:03
busted it all right yeah you bought that
04:05
but you know it doesn’t matter where you
04:06
are you can make money in certain things
04:08
but ultimately you’re looking for
04:09
making life easy right detroit people
04:11
still make money right you can still be
04:13
in a war zone and still
04:14
make money right and so but you’re
04:16
constantly looking to be a smart
04:17
investor
04:18
reduce risk right yep so no absolutely
04:21
right you know i mean this is not an
04:22
all-inclusive every box needs to be
04:24
checked
04:24
or don’t look at it right it’s just
04:26
these are some of the things that we
04:27
look at so we want to share that
04:29
with you know people that are tuning in
04:30
right you know these are the most
04:32
important things so once again
04:33
job population growth median income
04:36
you know we talk about absorption rates
04:38
on our that’s that’s important too
04:39
somewhat right to see
04:41
if there’s going to be an oversupply
04:42
right which will you know um
04:44
you know put stress on rents um but i’d
04:47
also say
04:48
crime and school districts are just as
04:49
important too right so
04:51
check those out and a lot of this stuff
04:53
is readily available right
04:55
what is it citydashdata.com you know so
04:57
you don’t necessarily need to have a
04:58
co-star
04:59
you know access like we do which costs
05:01
us a fortune um
05:03
but you know you can also ask mortgage
05:05
brokers right
05:06
they’re gonna have access to that right
05:08
you know sometimes your insurance guy is
05:10
going to have access to that
05:11
right so ask those folks and and and
05:14
they’ll be able to provide those reports
05:16
to you
05:16
right which is going to have a lot of
05:17
this data right so
05:19
kind of moving along right um some other
05:22
things to kind of understand in the
05:23
market right are where are cap rates
05:25
where prices per door right you know
05:27
you’re going to need to understand that
05:28
what are
05:29
the taxes in the sub market and how do
05:30
you handle those how do you underwrite
05:32
to those like one thing that was
05:33
interesting to us when we started
05:35
getting into phoenix and
05:37
arizona which we made offers and we do
05:39
not currently own it
05:40
right um taxes and insurance are
05:43
crazy low compared to what we have to
05:45
deal with here in texas right
05:47
and so that’s why you know at the end of
05:49
the day a class c property is trading
05:51
for six figures
05:52
no people need to realize that right i
05:53
think people always you know including
05:55
ourselves right whenever you don’t know
05:56
enough about a market right you just
05:58
look at price
05:59
compared to here to there well let’s
06:00
just take an extreme example right let’s
06:02
say you have a market where
06:03
you’re paying a million dollars in taxes
06:05
a year yep and you have another market
06:07
where it’s
06:07
twenty percent of the basis so it’s
06:09
actually two hundred thousand dollars
06:11
that eight hundred thousand dollar
06:12
difference that’s a lot that’s a lot
06:14
let’s just say it’s at an eight cap or a
06:16
six cap right
06:17
let’s do it right now divided by 0.06
06:20
right that is a difference of 13 million
06:23
dollars
06:24
that’s a lot in value wow and so it’s
06:26
easy to say so
06:28
that’s just a six cap it’s actually like
06:30
for likes you got a 13 million dollar
06:32
price difference it’s really
06:33
kind of like for like in terms of cash
06:34
flow yeah so atlanta is actually a good
06:36
example where it’s literally 40 percent
06:38
of the
06:39
cost basis the the appraised basis is
06:42
what
06:42
is taxed houston is not that
06:45
unfortunately and so
06:46
even in atlanta right 130 000 a unit
06:49
deal may be equivalent to a hundred
06:51
thousand deals in houston
06:52
yeah because of that right so don’t mind
06:54
don’t dismis we like prices per pound
06:56
just to have
06:56
that’s just one metric that you can kind
06:59
of put into your underwriting as
07:00
as another data point right it’s not the
07:02
end-all be-all where you think oh that’s
07:04
expensive right
07:05
don’t ever dismiss things out of hand
07:06
i’ll pay a million dollars a door
07:08
right if the rents justify it right you
07:11
know so cap rates understanding what
07:13
where those things are trading out in
07:14
and the brokers that you’re talking
07:16
about if they’re candid and honest and
07:18
transparent which most of them are
07:20
they’re gonna tell you hey this is where
07:21
things are trading at it’s four and a
07:23
half five cap for
07:24
class b or whatever right prices per
07:26
door need to understand taxes like we
07:28
talked about
07:29
home values you know i would say you
07:31
know median income
07:32
as as well economic drivers right and
07:34
the one thing
07:35
that you need to understand is is it a
07:37
one-trick pony town right you know is
07:39
there one industry or one factory or one
07:41
thing that’s driving
07:42
you know job growth and what happens if
07:44
that goes away right that’s going to
07:46
destroy your whole thesis
07:48
right so you need to understand that and
07:49
i’m not saying once again that you can’t
07:51
make money in those markets just
07:53
understand that that’s a risk
07:54
and what are we trying to do reduce risk
07:57
mitigate
07:58
risk right risk mitigation is all we try
08:01
to do
08:01
de-risk the deal right so vacancy and
08:04
rent
08:05
uh rents right you know understanding
08:07
where those are at there’s gonna be some
08:09
markets where
08:10
you know occupancy should be 95 there’s
08:13
going to be other ones that are going to
08:14
be closer to 92 right
08:16
so you need to understand where that is
08:18
and and and how does that kind of bake
08:19
into your underwriting
08:20
and then ultimately what are the rents
08:22
trading at right i think the one thing
08:24
the two
08:24
data points that we usually look at
08:26
really really quickly is what’s the rent
08:28
and what’s the price per pound
08:29
right you know and then we can quickly
08:30
kind of determine is it even worth it
08:32
for us to look at this
08:33
because there’s just you know i’m not
08:35
going to give away this formula because
08:37
we’ve talked about this sometimes but
08:38
you know um there is a correlation
08:41
between the two
08:42
right and if you have too much of a
08:44
price per pound
08:45
and not enough rent i can tell you right
08:47
now i don’t even have to look at it
08:49
um you know the deal’s not going to make
08:51
sense so you need to have a good
08:53
understanding of these different metrics
08:55
to determine if the market is even
08:57
something that looks good and one thing
08:59
i want to point out i don’t know if we
09:00
had it on
09:00
on the next slide but don’t just look in
09:03
your backyard
09:04
a lot of people get caught up and well i
09:06
want to
09:07
you know look at it and kick it and all
09:09
this stuff right
09:10
so i think you need to understand that
09:13
you know you might be passing up on
09:14
opportunities right
09:15
you know i mean we shied away from
09:17
houston for different reasons for quite
09:18
some time
09:19
uh but now we’re coming back to houston
09:21
for other reasons
09:22
right so um but you mean you can
09:25
certainly make money and
09:26
be very very successful outside of your
09:28
backyard right there’s a great there’s
09:30
great property management companies out
09:31
there there’s great vendors in other
09:32
cities
09:33
and ultimately you might be passing out
09:34
on opportunities just because you want
09:35
to see the deal
09:37
right you know so
09:40
what markets we like and why all right
09:43
any market i can make money in
09:45
yeah that’s it that’s my political
09:47
answer that is very that is actually
09:49
that’s
09:50
you know on a high level that’s true
09:51
right you know i mean we’ll buy a deal
09:53
pretty much anywhere i mean i always
09:54
always kind of hate on certain markets
09:55
right you know california new york being
09:57
a couple of them
09:58
but if you know somebody’s going to give
10:00
it to me at the right cost basis
10:02
i’m going to be able to make money there
10:03
too right the problem is those
10:05
places tend to be priced at a premium as
10:08
well as
10:09
having some other headwinds that go
10:10
against it right not being landlord
10:12
friendly not being tax friendly
10:14
two things that you know we really want
10:16
to make sure that we’re doing and that’s
10:18
that’s to add to the list of the things
10:19
that you should look at when you’re
10:20
talking about sub markets right
10:23
we talked about this at the conference
10:24
this weekend right you know if you’re in
10:26
a non-landlord-friendly state you know
10:29
you could get
10:30
hosed you know i mean we’re already
10:32
struggling as as an industry
10:34
um with evictions and moratoriums and
10:37
delinquency and stuff like that
10:38
do you really want to be in the sub
10:40
market that’s also just generally going
10:41
to make it hard on you
10:43
as a landlord and you know i mean
10:45
eviction process in some of these places
10:47
can take six to twelve months in the
10:48
best cases not the most vulnerable you
10:50
know you think anybody’s evicting
10:51
anybody in california
10:52
absolutely not right so some of the
10:55
markets that we like
10:56
right this is not an all-inclusive list
10:59
but you know obviously we are here in
11:00
houston
11:01
we like houston we like central texas
11:04
what does central texas mean that means
11:05
san antonio that means
11:07
austin and anything along that 35
11:09
corridor
11:10
uh we do like dfw even though we’re it’s
11:13
a pretty competitive
11:14
market so as austin uh we like atlanta
11:17
and we like florida right and we’re not
11:20
we don’t like miami as an investment
11:21
even though some people are trying to
11:22
talk me into it this weekend
11:24
you know i like tampa i like orlando and
11:26
i like jacksonville
11:28
miami he loves miami so i can go visit
11:30
my amateur no no i mean it gives you an
11:31
excuse to go to somewhere cool right but
11:33
uh
11:34
you know and and we do like we talked
11:35
about earlier i like phoenix we just
11:37
haven’t really
11:38
we haven’t explored those markets as
11:39
much as we probably should and we
11:40
haven’t developed those relationships
11:42
right but arizona is a great place so is
11:44
sort of the carolinas
11:45
but our core markets are going to be
11:47
texas georgia and florida right and the
11:49
reason
11:49
being is
11:53
population job growth landlord friendly
11:55
tax friendly four metrics that we look
11:57
at
11:58
and in a lot of those ways and then
12:00
tampa and
12:01
jacksonville orlando and atlanta
12:04
are all very very similar in those
12:05
respects to texas
12:07
right you know and no offense to people
12:09
that live in the northeast or live in
12:11
california
12:12
but i’m sorry there’s more people moving
12:13
out of those areas into the sun belt
12:15
states than there are
12:17
uh people moving out there right and
12:19
there’s a reason why
12:20
right and it’s because it’s not business
12:22
friendly there’s a high level of
12:24
regulation and taxes
12:25
and that that’s that that hurts
12:26
investments i totally agree
12:28
but so before you keep going money
12:30
mondays we do this every monday 3 30
12:32
central usually we sit
12:34
talk about a presentation drink some
12:36
coffee or two
12:37
and then um you know kind of open q a
12:40
and so
12:40
if you have ideas for future topics
12:42
definitely leave a comment let us know
12:44
we’re happy to watch them
12:45
and you know on today’s show we were
12:47
talking about choosing your market
12:48
things to look for in the market so
12:50
that’s kind of the topic for today if
12:51
you do have any comments questions go
12:52
ahead and leave them we’re about to
12:54
shift to the q and a
12:55
and let’s see so chat says hey guys it
12:56
was great to see you this weekend great
12:58
seeing you as well
12:59
chat didn’t expect you guys to be in
13:01
here talk about commitment
13:02
absolutely oh come on you know we party
13:05
hard
13:06
and you know definitely my voice is a
13:08
little bit gone
13:09
but then do all the talking yesterday
13:11
mine was totally trashed you know i woke
13:13
up
13:13
with my voice back but um no chad i mean
13:16
we want to keep adding value and we
13:18
appreciate you coming out
13:19
chad has a great women’s group yeah you
13:21
know uh
13:22
huge four great women’s group she
13:24
appreciated as a speaker at the event
13:26
so i think i heard from multiple people
13:28
that was actually their favorite
13:30
yeah their favorite panels no no they
13:31
had the biggest buzz going in and it
13:33
definitely delivered
13:34
so uh we appreciate chat and your
13:36
support too so let’s see
13:37
chris collins says oh snap you guys just
13:40
finished the conference and still doing
13:41
alive crazy dedicated
13:43
man hey man that was like that was a
13:44
long time ago i was like 48 hours ago
13:46
not even 40 hours ago we ended that
13:47
thing you know i mean come on you know
13:49
coffee helps
13:50
right but you know i mean the the world
13:51
moves on we came into the office you
13:53
know there’s
13:54
i’ve only got 236 emails to go through
13:57
totally agree
13:58
so kathy libby says good to see you guys
14:00
here since i couldn’t see in houston
14:02
hope to be our next event hope to see
14:04
you there for those of you that heard it
14:05
earlier
14:06
it’s going to be we’re aiming for july
14:09
in florida in florida all right so where
14:12
in florida
14:12
is tbd but follow us here on disrupt
14:15
equity’s facebook page or one of our
14:17
pages on social media
14:18
or on the mfin facebook page
14:22
and we’ll be making some announcements
14:23
that’s all right so let’s keep going so
14:25
chris collins
14:26
good question says thoughts on tyler
14:28
longview and clean
14:30
tertiary markets for buying rights
14:33
i am going to tell you one market that i
14:35
do not want you to be in
14:36
killing going i can read his mind do not
14:38
be in killeen
14:40
all right there’s a reason why they’re
14:42
still trading in eight or being clean
14:44
but
14:44
understand the risk-adjusted part yeah
14:46
that’s fine okay so yeah if you can if
14:48
you can pick it up for a song
14:50
i get it but you know unfortunately you
14:52
know they’re still being priced
14:54
fairly aggressively you know because
14:56
people want to buy multi-family but why
14:58
should a person do not want to be in
14:59
killeen and again for the if you’re in
15:01
colleen no problem with it too but it’s
15:03
just for someone that
15:04
gets lured by the price needs to just
15:06
kind of realize also the other side of
15:08
right there
15:08
and i’ve i’ve almost fallen into this
15:10
trap multiple
15:12
times on colleen you know where i’m like
15:13
dang this is a great deal it really
15:14
spits off cash flow
15:16
the problem is is that it’s a military
15:18
town everything
15:19
is is revolves around fort hood right
15:22
which is one of the biggest military
15:23
bases in the country and i don’t
15:25
don’t ever see it being shut down the
15:27
problem is if we go into another war
15:29
you can have half your tenants or maybe
15:30
even three fourths year tenants
15:32
say overnight hey i got orders they can
15:34
bring their orders in they can get out
15:35
of their lease
15:36
you can’t there’s nothing you could do
15:38
you can’t charge them anything
15:39
additional
15:40
that’s how this works right and uh we’ve
15:43
seen some people lose their shirt and
15:44
colleen
15:45
um you know another one that i would shy
15:47
away from would be oklahoma
15:49
you know but once again we’ve seen some
15:50
people be successful but the majority of
15:52
consensus is is people are not
15:54
successful in oklahoma
15:55
um tyler longview we’ve seen some deals
15:59
come out of there recently we know some
16:00
people that actually brought us
16:01
ourselves i
16:02
did a little mini vacation at tyler a
16:03
couple of months you went to the
16:06
there’s like a water water park a little
16:08
small water indoor water we were looking
16:09
for underwater park there’s like three
16:10
in the country in the state
16:12
that was one of them and i was like hey
16:13
this excuse to go check out a new city
16:15
what’d you think um it was smaller than
16:18
i expected maybe
16:19
it’s definitely a small town but some
16:20
parts of it is pretty developed i guess
16:22
right so i guess maybe that’s what
16:23
maybe there was more of it is more of a
16:25
spread in the discrepancy of the the
16:28
you know of the city than other places
16:30
meaning you know you go to houston you
16:32
go to you know
16:33
everything is kind of various levels of
16:35
the same thing yeah
16:36
whereas over there you know there’s
16:37
parts that really old
16:39
really country there’s parts that are a
16:41
lot more modern so it’s kind of that’s
16:42
what i mean
16:43
yeah um so that was maybe i mean again
16:45
and there’s nothing wrong with it it’s
16:46
just what wasn’t what i was expecting so
16:48
overall nice coin i think it’s growing
16:50
and so i think there’s some
16:51
opportunities there yeah we know a
16:52
couple people that own in longview too
16:53
and we’ve looked at some deals there too
16:55
um let’s say those are tbd i don’t know
16:58
enough about those chris um i do know
17:00
colleen and i’d say
17:01
don’t go after it bro let’s see let’s
17:04
keep going then so
17:05
chat says are those tertiary markets yes
17:07
they are
17:09
all right yes those would be considered
17:11
tertiary yes if anyone has any more
17:12
comments questions go ahead and leave
17:14
them
17:14
we’re in the q a section of the of the
17:17
show so we’re happy to kind of
17:18
yeah and maybe we talk about secondary
17:19
tertiary right you know
17:21
what is a secondary market then yeah i
17:23
mean it’s it’s smaller than a primary
17:25
right you know so here in in texas what
17:28
would be considered a secondary would be
17:29
like a corpus
17:30
a waco a lubbock a beaumont
17:34
those types of places right whereas a
17:35
tertiary would be like a
17:38
long view or a colleen those are smaller
17:40
than the secondary markets right
17:42
and we actually like secondary markets
17:44
right as long as they’ve got some dry
17:45
some economic drivers behind them and
17:47
we’ve done very very well in beaumont
17:49
you know we’ve looked at deals in corpus
17:51
we actually like corpus
17:53
you know you just once again you need to
17:55
understand that it’s a smaller market
17:56
and
17:56
because it’s a smaller market there’s
17:58
going to be some inherent risk there
18:00
right because it’s not as diversified of
18:02
an economy as say a houston would be
18:04
so you know that’s that’s one thing to
18:06
kind of think about
18:08
what else we got man who else has
18:10
comments questions comments questions so
18:12
chris says
18:14
okay thanks guys one goal is to buy
18:17
oh my my own stuff versus largest
18:19
indication so looking at markets that
18:21
can still work
18:21
yeah and you know and i don’t think
18:23
ultimately christmas goes back to the
18:25
age-old thing is in the secondary
18:27
tertiary marker you’re gonna have to
18:28
figure out how to manage it right
18:30
it’s gonna be just less management
18:31
companies willing to do it if you’re
18:32
looking to do your own it might be small
18:34
so now you’re in a place where there’s
18:35
less
18:35
people that will do it and a smaller
18:37
asset which is less attractive to people
18:39
too
18:39
yeah you’re not de-risking that in mind
18:45
if you’re trying to get your own chris
18:47
one thing to think about is maybe
18:49
not do a syndication but do you know a
18:51
small jv right yeah
18:53
you and three other guys at least you
18:55
can buy something big enough
18:56
or maybe in the right market that makes
18:57
sense that’s kind of how that’s what i
18:59
would do and that’s kind of what i would
19:00
say you know
19:01
it goes back to like you know if you
19:02
have 50 units in in houston you can
19:04
probably have
19:05
you could probably find something to
19:06
manage that right but 50 units in
19:08
colleen that’s going to be a stretch
19:09
right you know um so no i totally get it
19:12
man that’s
19:13
you know a lot of people were seeing
19:14
trying to kind of go down that path yeah
19:15
and chris says the other fear is who to
19:17
sell to absolutely
19:18
no that’s the problem right you get
19:20
caught up in these seven
19:21
eight nine caps and you’re thinking man
19:23
that’s a great deal but there’s a reason
19:24
why it’s a seven
19:25
eight or nine cap it’s because it’s in
19:27
killeen right and you’re good that’s
19:29
what you’re going to ultimately sell it
19:30
for
19:31
in the future right so your ex it’s not
19:34
going to be as strong
19:35
right you know but i’m not even as
19:37
worried about that right because we’re
19:38
cash flow investors anyway
19:40
it’s more so that the fear that you know
19:42
you’re you’re you’re completely beholden
19:45
to that
19:45
fort hood base right and what happens
19:47
there yeah and again it depends on your
19:49
goal for goals hey you just want an
19:50
asset for 40 years then you probably
19:52
don’t really care about who you sell
19:53
to or some of these other things right
19:55
you’re just going to hold on to it and
19:57
then
19:57
make an exit whenever it makes sense for
19:58
the market yeah okay right for us we’ve
20:01
kind of shifted we’ve done secondary
20:02
markets
20:03
we’re focusing more on primary just
20:05
because you can go full cycle more
20:06
quickly and more easily et cetera yeah
20:08
there’s more buyers
20:09
right which was another thing that came
20:10
up this week right you know or this
20:12
weekend which is
20:13
you know kind of you know buying deals
20:15
to you know and and looking at what is
20:17
the exit strategy and who was your buyer
20:18
pool after the fact
20:20
right and you should always look at that
20:22
right think of what’s your avatar
20:24
person that’s going to buy this deal in
20:26
five to seven years if that’s your exit
20:27
strategy yeah
20:28
you know and if you’re thinking man
20:30
there’s not a lot of people that are
20:31
gonna buy that deal
20:32
five seven years then there might be a
20:34
reason why
20:35
right because it may be ain’t as
20:36
attractive as you want it to be night
20:38
right now
20:39
so something to keep in mind right
20:41
absolutely any more questions mayor
20:42
where’s ronnie
20:44
people have questions comments go ahead
20:46
and leave them you better not be our
20:47
clubhouse
20:48
i know that guy oh let’s see 20 000
20:51
followers on clubhouse man
20:52
yeah so let’s see naster says what are
20:54
your thoughts on student housing
20:57
uh it’s a thing right you got to know
20:59
how to operate it it’s
21:00
you know it sounds great on paper
21:02
sometimes but then you dig in a little
21:04
bit more
21:04
you just kind of know how to operate
21:05
right i mean ultimately all those units
21:07
80 i think something like 80 percent of
21:09
the leases of student housing happen
21:10
within a two three month window yeah if
21:12
you’ve got to
21:13
turn all the units and get them all
21:15
leased up in that two three months and
21:16
so
21:17
and so there’s a risk there right so you
21:18
need to know when you’re gonna buy those
21:20
deals too and where are you at in that
21:21
leg right because if say you buy in
21:23
january and you’re
21:24
you’re gonna you’re gonna update and
21:25
turn units and lease it up because it’s
21:27
currently at eighty percent realize that
21:29
it’s going to be 80
21:30
until the summer because they’re not
21:32
going to sign new leases in the middle
21:33
of the year
21:34
right so uh or middle of the the school
21:37
year that is
21:38
uh because what’s what’s going to happen
21:39
is mom and daddy are going to come in
21:40
sign the lease for the whole year
21:43
in that kind of june july august you
21:45
know time frame and after that your sol
21:47
so but once again for those
21:51
for those in the audience what does sol
21:52
mean come on this is a pg
21:55
a show all right i dropped the hd or he
21:58
double hockey sticks before and somebody
22:00
got onto me
22:02
so what else we got man any other
22:03
questions who else has comments
22:05
questions we are here for you
22:08
so i said uh chat said uh thinking
22:12
of more than one exit strategy would be
22:13
good also
22:15
uh kathy says how do you like san
22:16
antonio we like san antonio we do it’s
22:18
an operator’s market it’s an operator’s
22:20
market you’re not going to get the
22:21
appreciation that people in dfw are
22:23
getting that people in austin are going
22:24
but it’s starting to get expensive now
22:26
so maybe maybe we are starting to see
22:27
some of that here yeah
22:29
you don’t get the rent growth that the
22:31
other guys are yeah that’s yeah that’s
22:32
maybe the better
22:32
that’s probably yeah that’s probably the
22:33
better way to explain that right you’re
22:35
not getting that you’re not getting
22:36
the right the crazy rent worth that you
22:37
do get in like a dfw
22:39
right but it’s starting to get kind of
22:40
expensive so everything’s starting to
22:42
get expensive you know and that’s that’s
22:43
something that we were talking about
22:45
this weekend folks there is a
22:46
ton ton of demand and there is a ton
22:49
of money in the market and so you have
22:52
to realize that it is going
22:54
to be a competitive situation on almost
22:56
every single deal
22:57
so chris says basically
23:00
thanks for the inside any markets around
23:02
dallas i think are still
23:03
viable yeah i mean we like the dfw
23:06
markets
23:07
i think fort worth is still i think
23:09
there’s still a little bit left to be
23:10
had in
23:10
fort worth it depends on which side
23:12
there’s there’s there’s one side
23:14
you don’t want to be um i forgot which
23:16
one it was either the east or the west
23:17
the west side but i mean even then i
23:20
mean
23:20
you know opportunities there’s like a
23:22
ranch trail road or something that’s
23:24
supposed to be the hood you want to stay
23:25
away from that but
23:26
no no dfw anything that’s in the
23:29
metroplex man
23:30
you it’s going to be competitive yeah
23:32
because there’s a lot of people there
23:33
that are looking for deals too you know
23:34
i think denton is another sub market
23:37
kind of of dfw you probably double down
23:39
and that’s far enough away maybe
23:41
there’s less competitive less
23:42
competition you can probably pick up
23:43
some deals right as
23:45
as it grows you know i mean yeah i mean
23:48
i’d say you know fort worth west side is
23:49
a side that you usually don’t want to be
23:50
on
23:51
dallas south far south side yeah the
23:53
south side of dallas
23:54
but again there’s opportunities there
23:56
and if you know you know if you dig in
23:57
and get to know those markets i mean you
23:58
might be able to make a
23:59
better informed decision than us right
24:01
yeah we’re playing general there’s and
24:02
there’s a ton of other markets man dfw
24:04
every time we go up there we’re amazed
24:05
it’s growing it’s growing it’s growing i
24:07
mean so is houston
24:08
um you know but the the metroplex for
24:11
everybody that i’m
24:11
just so you understand right it’s dallas
24:13
and fort worth
24:14
right and it’s kind of merged together
24:16
as one big blob of of a metroplex versus
24:19
houston
24:19
yeah but ultimately you know it was kind
24:21
of verified that houston is the better
24:22
city
24:23
in texas but you know dfw is a good
24:25
place to invest as well so
24:27
ah there we go we did not say that with
24:29
any bias whatsoever
24:31
all right so we got another question
24:32
really quick before we wrap up last
24:34
question what’s your primary motivator
24:36
for deciding when
24:37
to disposition a property ultimately
24:40
it’s about we’re we like to say we are
24:42
opportunistic investors this is not a
24:43
meet up then not
24:44
uh we’re we’re opportunistic investors
24:46
right if it makes sense we don’t have to
24:48
stick to the business plan
24:50
right you can tell investors hey we want
24:51
to let’s take a vote let’s make an exit
24:53
sooner yeah
24:53
right it’s ultimately about what makes
24:55
sense for that deal there’s not a
24:57
one-size-fits-all mentality right if
24:59
there’s you’re sitting on them like
25:00
there are situations you might be
25:02
sitting on a ton of equity yes
25:03
not as much cash flow right like we said
25:05
actually good example center where
25:06
you might have some of the equity
25:07
because price values have dropped but
25:09
there’s
25:09
the rent growth hasn’t been as
25:11
correspondent so now we’ll maybe you
25:12
make an exit right
25:14
or you might have deals that are just
25:15
cash flowing really simple deals and
25:17
you’re like you know what
25:18
you know maybe we’ll just do a refi and
25:20
hold on the deal longer right so it’s
25:21
really about thinking through your deal
25:23
your situation
25:24
yeah but ultimately you know it’s
25:25
balancing where’s the deal right now
25:27
it takes six months to get to know a
25:28
deal really does right so once you’re
25:30
kind of in the deal it’s about okay
25:31
what’s going on in the deal right it’s
25:33
presumably not going to change
25:34
drastically between today and three
25:35
months from now
25:36
right so once you’re in it you kind of
25:37
know and understanding where you are
25:40
where cash flow is where your debt is
25:42
right and
25:43
being able to kind of go out there and
25:44
make make what you need to happen to get
25:46
your returns
25:47
yeah yeah no it’s it you just have to
25:49
look at the market constantly and
25:50
and don’t don’t feel like you have to
25:52
understand that or have a crystal ball
25:53
because the brokers are going to be
25:55
breathing down your neck to sell your
25:56
deal anyway after about a year or two so
25:58
they’ll tell you where things are
25:59
trading and then you ultimately can
26:01
do some back of the napkin analysis and
26:03
figure out does it make sense right
26:05
you know i’m a big proponent of you know
26:07
if you can sell now take money off the
26:08
table and roll that into the next deal
26:10
that that’s always a good thing right
26:11
but you know there’s some deals that we
26:13
like and
26:13
are clean and we’re just going to hold
26:15
on to for a little while right so just
26:17
just depending on the market really but
26:19
hey we got our tool kit
26:21
so all this content that we like to pump
26:23
out right all of our checklists all of
26:25
our webinar replays all the podcasts
26:27
that me and ferris
26:28
are on you know we all bundle this into
26:30
the toolkit so
26:31
check us out www.disrupteequity.com
26:35
toolkit uh we’re not selling anything
26:38
it’s just all right there make it all
26:39
clean and packaged up for you
26:41
so what are we talking about next week
26:44
what are we talking about oh
26:46
financing one of the more important
26:48
things you got to have your equity
26:49
raise the money and you have to have
26:51
your debt right so what do you need to
26:53
know
26:54
about how the the capital stack works
26:56
how putting debt together how
26:57
getting a loan on these properties works
26:59
right so that’s important part of the
27:01
process
27:02
absolutely all right all right look
27:04
forward to seeing you
27:05
all there when we’re already at times so
27:08
we’ll go ahead and call it a wrap
27:09
mondays every monday 3 30 central if you
27:12
have any comments questions let us know
27:14
if you have any ideas for future topics
27:16
let us know
27:17
otherwise we’ll see you all next week
27:18
and talk about multi-family financing
27:20
next monday
27:21
thank you thank you

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