Apartment investing why you should scale to 100 doors now

Hey guys, we are going live with Global Integrity Finance today in McKinney, Texas, and I've got Toby Potter sitting next to me. I'm obviously Kaley McMahon, y'all know me. We're going to be going over some questions that individuals have posted this last week about apartment investing, I believe is what most of these are about.

Yes ma'am.

And that's what I know.

Hi everybody, this is Toby with Global, and as you remember, both Kaley and I went and did a real quick promo last week. You did it down in Florida, down in Miami. Yeah, this little shack, Palm Beach.

Yeah, I was by the pool then.

Yeah, talking about today's episode and talking about some questions that some people may have. We got a handful that came in, and I think this will walk us into several other avenues about apartment investing. We do have the Apartment Queen here, and we've had you on the show a couple times. And so I think that From your show that we've done and the things that we've talked about, it has sparked a lot of interest with a lot of people about how the hell did this young lady get so embedded into apartment financing and done the things that you've done. So we can either jump into the questions or if you want to kind of give a little bit of overview about you and your apartment investing. Was Miami another project or was it a vacation or both?

It was the Super Bowl. I went to the Super Bowl.

Heaven forbid. I forgot about that happening.

My buddies that I met 2 or 3 years ago at the Houston Super Bowl.

Nice.

They are from New York. So, well, one's from Connecticut, New York, whatever. But they came down and I reached out to one of them and I was like, you know what, I'm going to go. And I wasn't even planning on going to the game and last minute we're driving to the game and things just happened.

Nice.

Yeah.

Isn't it awesome when you can— and how old are you?

30.

You are 30. Yeah. I thought you were still late 20s, but—

Sure.

30 years old, you pretty much living an amazing life, right? I mean, honestly. I've been very grateful.

Yeah.

Not trying to, you know, put you on too big of a pedestal, but at the age of 30, you're doing amazing. All through apartment financing, right? I mean, you started, you've got some things that you've learned along the way, but I think you're climbing that ladder in apartment flipping, financing, and growth.

I mean, I do still have one single-family SFR that someone's living in that gives me like $650 cash flow a month or whatever. And the tenant is super easy, does everything, and it is whatever it is. I don't love that, but that was my first taste of what it feels like to have somebody living in your— and it was a commercial loan that we did on the property, so it was just based on the income of the property and Anyway, it was my first flip I ever did, so it gave me a taste of like what it felt like to have passive income. And then I was like, do this on a larger scale. So it started somewhere and just kind of listened to other people that were like, just add another zero, you know.

And I remember when we talked, the reason why you got into apartment financing versus continuing down the SFR road was because it grew your per door value so much faster. Right.

And many other things, you know, it's not recession-proof, but it's recession-resistant, especially here in Texas. It doesn't follow the market as, as closely as the housing does. I mean, it takes a lot longer for it to be an effect or cause and effect on the apartment, especially if you're buying it right. It may never actually affect it, just slightly as far as like vacancies and stuff. But you have, you know, 200-something units, so a couple vacancies, we can handle it, you know.

But yeah, just versus if you have 10 single families and you have a 50% vacancy, you're drowning. If you have an apartment complex, even if you had a 50% vacancy, which is huge, you still would still have enough cash flow to stay above water.

If you buy it right, yeah. Like, that's your break-even number that you have to know. Like, on one of my apartments right now, we have 66.6% vacancy, or occupancy, which is scary. But, you know, I got on the phone with my partners. It's because we're not flipping units fast enough. And so we have a new contractor in there now. But I was like, by the way, guys, our breakeven is 50% at a $500 per unit basis. Right now they're over $600.

Nice.

So like, we're okay.

The numbers work, but that's what I'm saying, with that, because it's a volume structure, you can take a recession and still be okay. Whereas in the housing market, it's a little tougher.

Yeah, we plan for the recession in every underwriting. The exit cap rate, assuming our rents decrease 10%, increasing the vacancy 10%, we just assume that that'll just happen.

Prepare for the worst, hope for the best.

Yeah. Yeah, yeah.

Let's jump into some of the questions real quick. So first one we have is Sally out of Tennessee. Says she's a new investor, and as a new investor wanting to get into the multifamily, how should— what kind of size of project should she be looking at? If you were to start all over, how would you advise a newbie to look at? Do I need a 20-unit, 50-unit, 100-unit? How does that look?

Well, definitely you have to be over 4, because then you're a commercial loan situation instead of having it to like depend on your DTI or your debt-to-income income ratio. But going back to what my original mentor showed me, he goes, "No, start at 70." And now I would say, depending on how you're buying it, maybe more towards like 100. But right now my minimum criteria, even when I'm talking to brokers, is 60, and I'm getting about 100 minimum, which is cool. But the reason why is because right now with the way that it costs, if you have the right property management company, so like third party, I think we're getting ours on a big project like that for, we can get her down to 3.5% of the gross income of the property is there. Payment for managing everything. And it makes a lot more sense inside the structure of the deal and how much, you know, capital we need to raise, how much cash flow is being created already inherently from the property because of the size of it, to be able to afford a full-time third-party manager and to afford a full-time maintenance person. So you just want those people doing the day-to-day stuff, you know, tenants, toilets, evictions, termites, all the things that, you know, because you'll never scale or grow if that is your goal if you're stuck in the business trying to do all the things that you don't even know how to do. Like, honestly, that's what they do the best. So let them do their job. And I constantly have to get like elbowed in the face, proverbially elbowed in the face by my property manager. She's like, I have done this for 40 years, let me do my job, you know, quit trying to be in the business. That's not your job.

You hired me to do a job. Let me do that.

Your job is to go find new deals, good deals, and set up the the financing and all the partners and all that stuff, not, you know, be in the business.

So, okay, so it's not so much about— I mean, there is a per-door breaking point, but it's really about the buy rate or the buy price, cash flow, and the potential. Could be a 10-unit, could be a 70-unit, could be 100-unit. You just have more latitude when you have the bigger— the more doors.

Yeah, and economies of scale too. So you're gonna get supplies super cheap. You know, if I have, say, a wing of a complex to renovate renovate, so we gotta buy flooring and window, whatever we have to buy, we buy it in bulk. So think about how much cheaper it is at Costco versus, you know, going to Walmart to buy the same thing. It's like half the price. So you get to take advantage of economies of scale that way too. And again, the third-party manager helping you make sure your project, like some of your lending situations too, they want to see that. They want to see, especially if you're new and you're inexperienced, they want to see that there's an experienced property manager managing the property. And the seller sometimes wants to see that too. They want to know that you're not going to screw this whole thing up, you know, that you're going to take care of the property. So I'd say start at 70 doors.

Okay, great. So the next one, we got Tom out of Houston, and I don't know if he asked this correctly, but he's got a 45-unit complex down in South Houston with a cap rate around 4% and wanted to get your opinion on how to increase that cap rate without overspending on improvements. Now, isn't Texas more of a closer to a 10 cap? Isn't that— Texas is kind of famous for the 10 cap.

No, Dallas right now, we have like super bad cap rate compression. 4 to 5 is what we're seeing in Dallas now. And Fort Worth is the only place I'm finding like— well, in Houston actually, I found some stuff there. But where you're like 7 cap or so, because I'm buying C-class, so the normal range in the C-class apartment. So I don't know what type of class this is.

Probably a C with a 45-year.

If it's C, you want to be buying it between 6 and an 8 cap. If it's any lower than that, you need to start renegotiating the price. And and heavy, it sounds like on this one. The cap rate being 4% is scary.

That's heavy debt at 4% cap.

Yeah.

So I guess the question would be is—

or there's no value add left. So I don't know how much value add he's looking for.

And that's what I think he's scared of, trying to go in there and improve it, but yet not overspend. Kind of like on the fix and flip. You know, I can, I can buy a house in Garland for $130,000, and if I put $200,000 into it, now I'm into it for $330,000. I can't sell that house in Garland. But I can do that same thing in Dallas and on the M Streets, and I can sell it for $500,000. But I over-improved the house in Garland. I think that's his concern here is if it's at a 4 cap now, is there— I guess you need more data to say if you can even increase that to a 6 or 8.

I would say that the price needs to be adjusted, but honestly, if you're buying something at a 4 cap, there should be no No need for improvements. It's already stabilized. That's what that means is a 4.5 cap. It should be pretty much— there might be a little bit of yield in there that you can mess with, but as far as like the actual unit renovations and, you know, like for example, I looked at a property in Fort Worth before I left the other day to Houston, and they wanted a 6.5 cap. I would need them to give me like a 7.5 cap for me to do it because there's a lot to be done. We have to sub-meter the property. We have to put in HVAC/AC. There is no central We have to finish off the laundry room. I don't know what's all in there. It looks new, but just all these extra CapEx things. And because we have to put in that work, therefore I should be able to negotiate a better price at a higher cap rate because it's unstabilized. Straight up, if it's a low cap rate and it should— it shouldn't be ready to work.

You should be able to turnkey that.

Yeah, you should be able to just sit on the cash flow on that kind of—

perfect. We got Peter out of Dallas in the metro area. Not when you say Dallas metro, crap, that could be anywhere. So How do you go about raising capital? This is probably the number one question that we got was, you know, do we take on debt through a hard money lender or do we raise capital and share equity?

Do both. I mean, I do both.

You do both?

Yeah, we debt leverage and then don't over-leverage. Actually, I'm trying to have a meeting with some family offices today and we're going to see if we can get them to LP or limited partner so they can come in without. So Family offices are a scary thing because they want control and they want— they'll put up a ton of money. I mean, they'll write like $35 million check and do whatever, but they want control. So instead of letting them have like put in that much money, I'll let them put in chunks of like $250,000, $350,000, something like that. And then they're a limited partner getting the returns that every other limited partner is. So that way I, you know, they get equity in the deal, don't get me wrong, but they don't have control. That's the scary part. Limited partners, they don't have voting rights. They're just in it collecting the cash flow. So there's more of a silent partner. Yep, absolutely. So that's how we structure our deals, where we give away— we're pretty generous. Some of the bigger guys out there, they'll do 60% or 50 or 60% available equity in the deal for their passives or limited partners to have. We give our limited partners 70 to 80% of the project so they can come in and they can own that much of the deal, but they have non-voting shares and they're, like I said, limited partners. So they put up the cash and then we do all the work and run the deal and we make the voting decisions, and they have to be okay with that, letting us drive the bus, you know. So we give equity all day. I don't care. They can have as much as they want. Even on one deal we're backing up, we already closed it, and we have people interested, so we're going to give away some of our owner's equity for other limited partners to come in, and that's okay. We'll just replace some of our capital, let them come in, but again, they're limited partners. So that's the key. We don't give away all of our equity. We'll still keep 20-30% of it, depending on the size of the deal. Like we did a $17.1 million deal in Phoenix. We ended up doing 80/20 because it's such a large deal. Like, we make enough fees and enough stuff at that point that we can take less as far as equity, and that's fine.

But then the equity's not paid until the project sells, right?

No, so on these deals we buy Class C pre-existing cash flowing day one properties. So what we do is our limited partners get a, they own a slice of the pie, like a physical piece of that asset so they can offset their taxes. With bonus depreciation, the cost segregation we do, regular depreciation, there's a lot of tax benefits to being an investor. And then on top of that, they get quarterly cash flow. So we basically, in our pro forma, put together, hey, here's when you're going to expect your mailbox checks to start. Each project's different depending on like how much, you know, what's, what's there before we buy it. So I personally, if I'm putting together the project, I say 12 months out you can expect to get your checks and then try to do it before then so they're surprised. But basically, while we have their capital and they're sitting on it, they're getting 10% average cash on cash, annualized average cash on cash, while we're sitting on the project and improving it. And then when we refinance the project, then there's more because we cash out, there's more checks for everybody. And then again on sale, but that's, that's the big one. That's the big check.

Yeah. And that's where that equity comes in versus the debt, where the debt is a monthly disbursement from day one. While you're renovating, while you're doing all that, and you're not collecting all your earnings from it, you still have that debt out there.

So, I mean, the mortgage, right? Yeah, yeah, yeah. We try to get IO as long as we can, especially if we're like doing a heavy lift for a value-add. I'll negotiate with the bank and try to ask for way more than I think they'll give me. Like, for example, like, oh, we can only do a year. I'm like, no, we're gonna do 3 years. And then we'll negotiate some— somewhere in between there, you know, you ask for the moon and you get the stars. I mean, something. But yeah, so we do have to pay the debt service, obviously.

So all that's built into your pro forma. So when you're laying all that out, you've already done all that and laid out the roadmap of how this project is going to flow out. That helps you raise that capital because you have crossed the T's and dotted the I's.

Yeah, they know. And then also, I don't even start raising capital. I guess this is one thing for my, I guess, newbie friends who've tried to just stab at this, don't do that. Like partner with people that have done at least a deal, like, come on. Or at least like if you're syndicating, find that's already syndicated at least once. They've been through the process. But yeah, they started raising capital, or you legally can't do that if you're doing a securitized offering like we do. But they're announcing, hey people, do you want to get in on this before due diligence was completed? And I don't tell anyone until like all of those boxes are checked. We got in there and we saw if everything matched our assumptions or not. Because then we can say, okay, we're going to move forward, we're going to go ahead and close on the deal. Now you got 30 days, Why are your funds, you know, so this is our drop dead date.

Let's have the proceeds ready.

We have extensions built in because things always happen. But raising capital so you can raise, raise capital all day long. Don't give away your equity. I mean, we give away a lot of it. But again, they're non-voting. So it's not a big deal. And we want to do lots and lots of projects. So we can't be selfish. We can't—

so it's a volume deal, not I'm gonna get rich on this one deal and cut you guys out.

Yeah. Yeah, I want to do 10.

10 deals. Boom, boom, boom.

Yeah.

And more times than not, I would believe that these family offices that you've done a couple of deals, they're your easiest now to go back because they've had a proven track record with you.

Right. And then it's word of mouth.

Yeah.

Because you're kind of friends and stuff. Yeah.

Right. And if everybody doesn't understand the family office, family office is high net worth group, high net worth family, usually multimillionaires, billionaires. That there's a management firm there that's handling that family office funds. And they're the ones that you present to, they present it to the family itself, and then allocate those funds out.

Yeah, and the one I'm meeting with today is an Aggie-owned one. Aggies are my best investors, man. They're like, they're like, oh, I get you. You're like, you're real, you're conservative, you're honest. Like, mm-hmm.

Yep. That's awesome. That's awesome. Jennifer from Atlanta, she asks, "How many deals do you look at before you decide on the one, and what is usually your deciding factor?" Well, that's almost common sense, but for a newbie, maybe they're not understanding the total process.

So it depends on how to answer that question because I used to look at a lot. I used to look at about 100 a month. That's a lot, you know, that are out there because we're really stringent on our expectations of the deal. And a lot of what we need to make sure that it does well isn't out there. There are very few of these types of projects that fit our model out there. So then I've gone back in and I focused instead on getting on every broker's list on the planet and trying to underwrite every deal and whatever, instead looking at every deal quickly and giving them light feedback. Like, you know, there's not enough meat on the bone here, take me off of South Carolina, like, you know, narrowing it down so that when they start sending me stuff, they're very specific. And then now I'm starting to get off-market listings where they're, they're not listed, they have not put it on market yet. And then, you know, it meets my exact criteria where, you know, like this one I got yesterday, it's in Sugar Land, and there's 80% meat on the bone left. It's almost a 7 cap right off the bat. Long story short, so that would be one where I have like a handful of questions to ask the broker before I'll even bother underwriting, and then I'll underwrite. So it used to be 100, And now I would say 20 to 30 a month will see it looks decent enough on the outside to start doing the underwriting process. And then from there, sometimes none, like, like, like, will be worth even putting in an LOI on. I did yesterday, but again, it was everything looks good minus 2 different things. And those things really greatly affect the price and offering the seller about $10K per door less than their target is. I told the broker, look, if this is going to— it's a relationship business too, because you're going to see that seller again. They own other things and word gets around, you know, if you're a super lowballer, or if you know, whatever. So I was like, if this is something that's going to embarrass you as a broker to show your seller, don't give it to him, just keep it. Or if this is going to ruin this relationship, don't. But this is just what I can do. So I do that a lot, a lot, a lot, a lot. And I'd say 50%, 6 to 8 to 10 months from now, they come back. And because someone fell out of the deal, they couldn't close, whatever.

And your offer doesn't look as bad as it did originally.

Right. And then they become a little bit more realistic to what— because they always want to get what the market will bear, which means like the maximum idiot will pay. Like, don't we all? Yeah, they'll put a price out there because they're like, how high can you go? Like, it's pretty much what they're looking for. So, so a lot of deals, I'd say 100, 30 to 100, depending on how specific you are and how tight your relationships with your brokers are. Because those are the people that their job every day is to go hunt for deals. And if they know what you're looking for, and you're like on their team, or they're on your team, it helps you spend less time having to look through a ton of stuff.

I mean, you're sitting, you're looking at possibly 3 deals a day, every day back in the day. Today you're at 180 deals.

I still do probably look at 4 deals a day.

Yeah.

But now I'm better at being able to look at a 30,000-foot view and go, does it meet this, this, this? If not, move on.

Right.

And I have an acquisitions person too, and Angela is just, she's a killer. She's awesome. So she knows our criteria, and there's a couple other bird dogs, if you will, out there that want to help me, and they know if they bring in a good deal, obviously they're going to be in the deal. So I get sent all the time stuff, and They're starting to do that.

Filtered out for you.

Yeah.

Nice.

Yeah.

Nice. And I think that is where— I think last time we talked, or it might even have been last year when we talked, that was one of the things you were doing the most, or trying to find, is I got to quit looking at every deal that comes across because there's a lot of junk out there. It takes a lot of time to discern if this is junk or if this is just, you know, not clear— clearly presented to you. If you have that team that can filter all that for you, Now you can look at 20 deals of which 10 have meat on the bone, of which I'm going to make an offer on 2 and spend more time really pursuing those 2.

Yeah, I saw one the other day just like that where I forgot where it even was. It's probably Fort Worth or Dallas or something. And, you know, C-Class, '60s, late '60s vintage. Anyway, they wanted it like a 5 cap and I was like, you're out of your gourd. No. So I told Angela, I was like, if you ever see that deal, just pass. Like, if it's passing, minimum is 6. Like, and then I would actually not even feel comfortable with that unless there was a lot done to it.

I was already like, renovated.

I don't, I don't even remember. I just thought it was a 5 cap and it was like a prior to '70s. I was like, you're out of your mind.

No, can't raise the rents on that.

I don't know, I didn't want to look at it. I was like, can we get in the 6s? Then we can look at it, you know.

All right, so we got Anthony from South Dallas, uh, What is one area or one state that you like better than others? Is Texas still your number one go-to?

Yeah, for sure. I have also started to like Phoenix, Arizona. As long as you set up a term on your loan that's longer than a cycle, so longer than 10 years, I really feel confident if you're buying right that like you're gonna be fine. It's not as cyclical as Vegas. Vegas is a good market right now. —But with the new stadium going in and all that, it's just, it's, yeah, it's like California. It's a roller coaster. So Phoenix, yeah, and then right now Texas. So we're focusing on large cities. We've got a deal in Houston right now. It's closing on the 10th. How big is that deal? 256 units. Wow.

Now when did you start? I'm gonna add into this question, but so let's talk about that deal. When did that project start?

It started technically, like offers and all that, October of 2019. Yeah. Okay. And then back and forth, purchase and sale agreement, November, and pretty much so my partners on that deal, we did the Phoenix one together. And I really liked them. They're, even though that I'm way less experienced than them in comparison, they're still really open to feedback that I have or ideas that I have or whatnot. Yoshi is very creative and very patient. And then Juan is like numbers whiz. He's very aggressive, but I like that he's not a jerk. Like, he's aggressive, but he's just direct, you know. And bottom line, yeah. And that's how I am too. So they like my hustle and they like, you know, so we kind of work together well. But they just mentioned to me in December when I was trying to close this Denton deal, and I was like, I gotta get my investors to focus on one deal at a time. We can't be like Paperwork. We have this one out here. We'll never close one, you know? No. So I had to tell them, no, I'm not interested in doing this deal with you guys. Wait till the next one. Well, then it got into January and we closed the Denton deal. And then I had leftover people. This happens all the time. I have leftover people that couldn't get their IRAs in, like, not in, but couldn't get their IRAs funded in time, or they had pension, whatever. They had stuff that needed processing time. And we didn't have enough time. So they got it done. And then someone told their friend and someone else heard me on a radio show and random stuff. And so I'm like, well, these people have this capital, like, so I called them. And actually what happened, it started with someone that contacted me about a $100 million 1031 exchange that they had, and they were interested in investing their money from California to Texas. And they wanted to do commercial, they want to do multifamily. And long story short, so then I contacted the guys, I go, this could be a possible match, you know, and then if you guys do this one, there's a couple other deals in that same submarket that we were going to look at going after. And it didn't end up working out because the principal behind that money is just like a squirrel. He's like, I don't know if I want to do mixed use. I don't want to, you know, we're like, oh, whatever. Well, we got to close this. So forget about it. Right. But so then I ended up bringing in those investors and then doing some stuff this month where I just met other people like the Super Bowl, those guys, 3 of them wanted to put it into the deal, you know, so I was like, sure, yeah. So then I was like, okay, change of mind. I'll help you guys close this one.

So anyway, but yeah, so you started that back in October. Have weeded through all the weeds and all your due diligence into closing this month?

So it was probably like middle end of October when it was initiated, then you go back and forth for like a week or two weeks or whatever, then you get your final purchase and sale agreement figured out. Then, then you start due diligence. And on this one, I don't know if there's pre-diligence or not. I don't think so, because it was off-market. But see, then you start your due diligence, which is 30 days, and then after due diligence is completed, so that would be like end of November. So then we're in the holiday stuff too. So same thing as our Denton deal, we ran into Thanksgiving, then we ran into Christmas. Like, people are just not responsive. We're like, oh my God. So they weren't— we could have closed it a lot faster, but you know, holidays screwed it up. Yeah. So then it was, let's see, probably end of November. And then there was, there's always at least a month built in. So usually like you do due diligence for 30 days and then you have 30 days to close after that. And then we're in January, I guess, at that point. And then there's always two 15-day extensions that we build into our contract. Really? Yeah, we had to pay for them. So it's like— Additional earnest money? Yeah, 10% more of the earnest, original earnest deposit each new one. you put it down. Yeah, so then that takes us to February 10th.

Gotcha. So right around the corner.

And I think the lender might have also gave us another week too. Yeah, we do that. We build that in the contract. Like, if the lender therefore requires, we can have another 7 days for free. Yeah, cool.

Well, good. So based on that, so with a normal project, that one's taking 120 days, give or take. Normal is 90? On a smooth— 120. Yeah, 120.

Yeah, I mean, I have a friend that took 8 months. That's a lot because the seller was just being like, ah, I changed my mind. You know, yeah, all of us were like, I'm really—

that your investors must love you to hang on and wait, to hang on for 8 months without anything, pulling trigger. Yep. All right, because their money's—

they're losing money the whole time.

This is the question I like the most, and we get this a lot. So Kelsey and Rich out of Tampa, when you're looking at these, and of course you didn't— I don't think you've done any on the coast yet, any, any coastal Would you look at those as a potential Airbnb situation? Like an apartment complex that's a coastal area? Would that be something you would build into it pro forma?

That would be something that we would just do by the regular way we'd buy it. What I have done is corporate units. Yeah. So like on my West Texas ones, we just kind of screwed around and said, let's try one, let's try two, and just see. So I mean, what we're doing is we're, uh, we bought furniture at Sam's rooms. You know, so it's fully furnished.

So it's fully furnished. It's one of the bigger suites. All bills paid.

Yeah, it seems nice. All bills paid. Um, and it's really only two, three bills paid. It's like cable, water, electrical, and that's it. So if they want anything extra, go for it. But, um, so the normal rent on that one is like $630 a month or so, and on that one it's $900. So, um, I think after you subtract all the bills we just get an extra $200 a month.

Like, and how often does that stay relatively leased up? Because that's on a week by week, or this one is actually, I think, quarterly.

I think it's 3 months. Yeah, so it's— there is some kind of a semi-lease to it, but so it's shorter term than the other, um, the other units. But I mean, that one has worked well. So, um, it's always about testing and then also knowing that market. So knowing what the local government or city or what they allow. Because a friend of mine, we were talking when we were at the Super Bowl, and he, Ken, has started to run a whole bunch of Airbnbs for Bob. And so he was looking, showing me a property they're gonna buy. It used to be a skilled nursing facility, but it's in this interesting area of Nashville where he's like, basically we could turn it into this Airbnb bachelorette thing, you know, whatever. And so they were talking about how to convert the beds and He did say something about, you know, he wasn't sure about how Nashville's permitting worked for that type of business, but it sounded like they had just— you needed some kind of permit, you paid probably some kind of tax, and it's not a big deal. But some places are not Airbnb friendly. So, so far I haven't gotten into that. I've done an Airbnb in Dallas and it was fine. I mean, actually a horrible experience, but it was fine as far as dealing with Dallas. They just wanted like a hotel tax essentially off of it.

And that was an apartment, or was that just a—

that was an apartment? Old condo. Condo? Yeah, in a community like that. So, yeah, I don't know. I would test it for sure. I would, because I've never done it, so for me it's not a proven model. Corporate units, depending on what kind of, like, HP campus in Houston, or if it's around something like that, yeah. Hospitals, coastal. Coastal, I think, would be huge. Yeah, so I would just test it. I don't see why it wouldn't work. My big fear would be Just always underwrite the deal as if you're doing a normal deal, because you can always count on that all day long, no matter what happens with Airbnb's company or the economy or any— I mean, not economy, but the local regulations that may change at any time. So never build that into your underwriting, or I wouldn't. And then just try it out, you know, little bit by little bit, whatever. If it works, it works.

Cool. Yeah. Yeah.

I think, I mean, it's sweeter for all the investors. Yeah, it's—

yeah, I think it's an awesome opportunity if you're in that area. That would support that for number one, whether it be a coastal, um, or a Nashville, something like that that's got high tourism. Yeah, yeah. I wouldn't do something like that in Sherman or in Denison or anything like that. Um, what else you got to share with us today?

It's funny, my ex-boyfriend just bought a jet and he like, he's parking it at like the Grayson County Airport up there. Yeah, yeah. And he's like, I'm selling shares. I'm like, hmm, maybe I think I'm going to try to talk to him. What's his name? Jonathan Earnhardt. I just saw that. Yeah, I just posted that. Yeah, I think I'm going to talk him into selling, giving him some of my apartment shares for some of the jet shares.

For the jet shares? Yeah. I want to meet his pilots first before I buy any shares into that.

Yeah, I hope it's Casey. I don't know the guy that was in the front there, but yeah, Casey, he's type rated. He's really good. Yeah.

What else you got for us today?

Um, let's see. Uh, oh, Oh! Got sponsored! Yeah? So I got an email 2 days ago from— there's a company out of Chicago called Nesse. They decided to sponsor my podcast. Nice! Yeah, so that's one thing we've been looking for, but I knew that we would probably have to get some higher numbers before we get sponsorship. Right, more followers. But they're just doing it based on more downloads and more follows and more— they'll pay more and stuff like that.

As it grows.

Which will help us to pay to advertise it more. That's awesome. Yeah, and that's what we wanted, to be able to have it get out there. And yeah, so, and then I did a little contest the other day trying to bring on more ladies, you know, vote on your favorite woman-owned business, let's put them on my show to help other people get their business out there. So that's just, that's what we're looking for right now. And then, you know, I've just really had some people step into my life recently who really are just stepping up. Step up. I mean, I'm really impressed. You know, a couple divorced ladies, you know, they're— they have settlements and things like that. And so they're willing to put like hard money down on these deals if we need it, or soft earnest money deposits. Because that's always super key in the beginning. Whether it's, you know, you have a business line of credit, or you have personal cash or whatever it is, just to have funds available. So when you do finally find a good deal, you can go, you know, so those people stepping up have been awesome. Cash is king.

Cash is King. Yeah, that's awesome. Yeah, well, that's exciting. And you said you traveled 6 cities in the last 24 hours? 40 of those?

I don't know, 7 this week. This week?

Because, uh, so where have you been besides Miami?

I might have gotten it wrong. So Dallas, I did— I was just— Dallas, uh, PBI, so Palm Beach, uh, Miami, uh, Houston, Austin, and then to Dallas, so 5 actually.

Wow, but that's a city a day-ish. Yeah, city a day. Nice. Did you have fun at the Super Bowl? Yeah. Yeah, who are you rooting for? Don't say KC because they won. Kansas City.

I had no skin in the game, so I didn't care. But, um, so I was like, go Cowboys! Oh, okay. The Cowboys were there. They're just in the stands. Yeah. I saw several of them there. Yeah? That's funny. Yeah, so the guys there are mostly from Connecticut, New York, whatever.

Oh, so there was really nobody that had a dog in the hunt?

No, but they always go. It's like a guy's trip. So I just got to be one of the guys for like 4 or 5 days. Nice.

Yeah, it was fun. So you've got a project closing in a few days. On the 10th. Then what happens after that?

That one, by the way, is a 506(c) offering. So it's accredited investors only. That's the first time I've ever done one of those. But it's an $8.6 million raise. And we have 200 or 300K left as of like today.

Overfunded?

Oh, they just finished the race. Yeah. So I feel like it won't be a problem because I've had some people, again, from other projects now that that's closed, they're like, well, I told you I'd have more.

And so I'm like, Okay, now it's time to come to the table.

Yeah. Nice. Is it exciting? Yeah, it's a little nerve-wracking. I mean, yeah, yeah, it's, I mean, for me, you know, follow-up process and making sure that we're timely with everything the best we can do.

All the i's are dotted.

Yeah, it's stressful till, you know, it's closed. And then you can breathe. Till it's closed and bank accounts are moved. Kind of, I mean, yes and no. So like literally the day of closing, it's takeover. Over day. So right now it's time to roll your sleeves up and get to work. Then we have the property manager meet whoever's boots on the ground for that one. So that one would be Juan. He lives in Houston, so he'd be there, show up with them to intercept all the keys, give notices, let everybody know who's now owner, what we're going to do day one.

Is that a door-knocking process or is that a mail-out?

Hopefully if the current property manager doesn't vacate, that's happened so many times. They'll just pack up and leave. They'll just peace out. Yeah, they're like, bye. Or they'll go with the other guy. So, but if that doesn't happen, usually there's process where they expect us to close. And so that property manager has been notified, she's on notice, or he or she is on notice to wait until we say we are closed. And then the next business day they put notices on everybody's door, here's takeover day. So it either might be that day or 24 hours right after. And all that means really is just there's new people there. Like, we're not going in and doing anything to their units. We're not actually, you kind of have to let the dust settle for about a week. I would think so. You have to kind of like—

because you don't want a mass exodus. No. Yeah.

At all, ever. So yeah, you're just like, we're just new management, we're putting some new signs, nothing crazy. And then you just kind of wait and see what happens for about a week. And then, then after that week, then we can start figuring out, you know, where our leases are that are already up and not being— haven't been renewed. People that decide they want to leave. Start working on getting people out that aren't paying.

So let's just take this project a little bit further. Let's— you've got a property manager that's there in place now. Let's say that person walks out. Do you have somebody in backup ready?

Okay, I'm just— that's the big advantage of being in a large city. I have some smaller city ones and you just, you don't have many to choose from. You have maybe like 5 PM companies, and that sounds like a lot, but it's not a lot.

So you interview them in advance and say, hey, if this person walks out or after 20 days, we're moving you in, so get prepared.

Well, I never make irrational decisions, and usually the property managers, they're professional, they're not going to make irrational decisions either. They're a large company, like they have a name. Yeah, and they're nationwide, all of them are. So pretty much, if I start getting to the point where I'm super frustrated and things aren't getting implemented and I I've talked to them, given them another 30 days to get it done, still not getting done, then that's when I start actually calling the other company and saying, okay, I need you guys to go do it. I need you to secret shop my property. I need you to go in there and like, they'll send in like their little high school age girls to like pretend they're leasing the place and like see what the community is like, what the reputation is. Is there trash everywhere? Are your signs— has the phone number changed to call the right person? Like all that stuff. Is any of that Or maybe there's other frustrations I have, try to figure that out. And then give me a report. And then we make a decision based on what their fees are and what's included, what's not. Do you guys want to take this property on? Is it big enough for you? Like CityGate, Don won't touch under 100 units. And then Kathy, she'll do with Class A, she'll do a variety of different things. I feel like comfort level is probably 50, 60. She's done smaller, but I do 'cause it's just, then you start paying a ton of money for it, and I don't wanna waste your time. So, but yeah, and there's even more. When I was in Houston, I met 3 other firms. I'm not a huge fan of those ones, 'cause they're not, like Wainer, for example, that's another large one. Ryan Wainer owns that one. They've been in business for a long time. There's lots of backups, yeah. Even in other markets, like in Oklahoma City, in Oklahoma, basically Trinity's really good up there. There's different, yeah, you just have to ask. Yeah.

[Speaker] So you've got those in place, just in case there's contingency.

And when I don't, I just ask other people who've already done deals there, like, "Hey, who's good?" You know, and they'll tell me. Who can I trust? Nice, nice. We help each other out.

That's awesome. I am, again, excited, overwhelmed, thrilled, just to sit here and listen to what you do day in and day out. I thought we had a full schedule. I don't think I want to trade shoes with you. I think our day is hectic enough and got enough moving parts that what you do would probably bury us up.

And I've got a new concept Which is— I can't tell you yet.

Oh, we haven't made it public yet.

It's a think tank item. So every week we have a phone call. And that's one thing that's like, what, what challenges in the market? What opportunities do we see? What— so one thing that— long— I'll make it very brief. Basically, there's a need in the market, everybody knows, for affordable housing. But I'm like, let's get stats on that. What does that mean number-wise? Like what exact zip code neighborhoods are in need. Are they in Texas? What, what do they need? What price ranges are, you know, I'm just thinking about my grandparents and they're independently living by themselves and that's great and they can continue to independently live, but they can no longer continue to afford living where they live. And well, actually these guys, my grandparents, can because that house is paid off. So they can. But not everybody has that. Right. So there's a lot of people that, you know, have lived on, they have a pension, they have like small accounts that they have saved up their entire life. Then when they retire, they have this small budget they have to live off of, and maybe they don't need a full, you know, nursing care quite yet. It's like that, that gap between a 70-year-old and somebody who's like maybe in their 50s, 60s, something like that, where they just, they don't want to live in an A-class brand new nice accommodation.

Huh? Are you saying 50, 60 years old?

No, I work for 51. No, no, no, but they always market it as like Active Living 55 and up, and it's really not 55, it was really like 65 or something. 65, 70, and that's where you start. And then I know—

It depends upon any kind of health issues that you might have, but yeah.

So I just realized there's a gap there. And I'm like, I buy C-class workforce housing, but it's in that, it's livable, we make it nicer. Nice. We're not, I mean, some of our places aren't over $1,000 a month, like it's reasonable, and for someone that can live independently, there's no yard, that might be a good option versus these A-class accommodations that are just crazy expensive. So I'm like, hmm, maybe I could use some of the properties that we buy for that purpose. Or I just have to do some more research on like turnover and how that would work and some other things. Or building like B-class facilities with no amenities and having people that are independent be able to live there, but just, you know, 2, 3 yards. Yeah, yeah, so just more affordable, but no, not top, top.

Sounds great. Thinking about it. That's awesome. That's awesome. Well, everybody, we thank you for being on the show, listening to the Apartment Queen tell her story and kind of go through some of these questions that everybody brought about. Again, you can still continue to ask questions. You can go to Kaylee the Apartment Queen site, to this blog, and ask your questions. We're going to be continuing. We will post this again on Global Integrity Finance's site on Tuesday at 2:00. There'll be a broadcast of it. If you have any questions between now and then or during that, both Kaylee and I will both be available to answer those for you and try to help you grow your book of business. I'm telling you, this young lady has taken the apartment purchasing by storm, has become very successful at it, and promise you, it wasn't just—

because of other people helping me.

Yeah, it's not just her, but she has She has masterminded how to make it work, how to get the right people on her team, how to network, how to read, research, and dig in to have the success she has. So it's a great honor for Global to have her part of our network, part of our team, and on this show. So, Kaylee, I thank you so very, very much.

Thank you for having me, Toby. Appreciate it.

You bet.