Neighborhood Ventures with Jamison Manwaring

Welcome. This is the Insider's Edge to Real Estate Investing with James Nelson, the principal and head of Avis and Young's Tri State Investment Sales Group. In this program you'll learn game changing strategies to outperform the market. James will teach you how to source, execute and capitalize on the best real estate opportunities in New York and around the world. Now here's your host.

Welcome to episode number 150 of the Insider's Edge to Real Estate Investing. This is your host James Nelson. I'm principal and head of Tri State Investment Sales at Avison Young. Wow, 150 episodes. I think that's a milestone and yes, well why not? And I greatly appreciate you tuning in and certainly all the support throughout this time. Sharing the episode with your friends, rating it, adding comments, that's really what has helped this show take off. Today's show is no exception. Delivering to you tremendous value, helping you gain the insider's edge to real estate investing. With us today we have Jamison Manwaring, Co founder and CEO of Neighborhood Ventures and he's going to share about building out his own crowdfunding platform. If you're interested in raising from non accredited investors or how crowdfunding could boost your business, there will be many valuable takeaways. After years as a tech analyst, Jameson realized that everyone had the same information on Wall street and it was just a matter of trying to outsmart each other. Whereas with real estate he could gain an advantage, he also did not like the volatility of the stock market and preferred the stability of holding real estate long term. In 2020, Jamison was selected as the Phoenix Business Journal's 40 under 40. Before neighborhood ventures, he served as the Vice President of Investor Relations at Lifelock and assisted the company in its successful sale to Synmatic in February 2017. Before LifeLock, Jamison was a technology analyst at Goldman Sachs where he participated in over a dozen software IPOs including Tableau, Alarm.com and LifeLock. He graduated from the University of Utah with a BS in Finance and he began his foray into real estate by purchasing a 10 family in Idaho with his father's help. A residential broker in the area, he and he was hooked. He has gone on to acquire 15 properties in Arizona with his partner, with all of them being sourced off market for their first deal together. As an experiment, they tried to raise the money all online without using any of their connections. Through a lot of Google, AdWords and follow up meetings, they have built a massive following. One note is that if you do want to leverage crowdfunding please consult with an attorney as Jamison will share this is a highly regulated space, so proper filings and disclosures are essential. What I really like about Jamieson's story is how he views his platform as a way for everyday investors to gain access to direct real estate investing. You can find out more about Jameson at Neighborhood Ventures or listen to his podcast Kiss My Assets. Wow, what a name. And you can connect with him on LinkedIn. As always, you can find the show notes@jamesnulson.com where you can also find useful video series and of course a link to purchase my latest book which will help you gain the insider's edge to outperform the market. So we're gonna have a brief word from our sponsor and we'll get right into that interview with Jameson. Man Waring.

A Different Approach to Putting our clients first Avis and Young's Tri State Investment Sales Group sells multifamily office retail development and specialty sales throughout the New York metro area. As experienced thought leaders in our industry, our 35 member group is available to help you make informed investment decisions by advising you on your current holdings or identifying new opportunities in the marketplace. Our one unified team is built on an industry unique platform which promotes unparalleled collaboration and teamwork. We share core values of hard work, integrity and expertise. We we put our clients first providing tailor made strategies to achieve superior results. Please Visit us at aytristateinvestmentsales.com and follow us on Twitter, LinkedIn and Instagram amesnelsonnyc to learn more.

And now it's time for our Investor Spotlight. And with us today we have Jamison Manwaring, who is co founder and CEO of Neighborhood Ventures. He's also a fellow podcast host of Kiss My Assets. Yes, you heard it. Kiss My Assets. So and rumor has it that I'll be appearing on that show shortly, so keep a lookout for that. Jameson, welcome. Thanks so much for coming on the show.

Hey, thanks for having me. Yeah, we're a little irrelevant. What's the word? Irreverent on our podcast as much as you can be with real estate. So the name kind of inspires that. But thanks for having me. Excited to be here and to talk a bit more about what we're doing. And thanks for your leadership in the space. Your book, which I've gone through, we're really excited to be able to talk to you.

Wonderful. And I love the fact that when you first reached out, when your PR team reached out to collaborate, it wasn't hey James, can I just Come on your podcast. And that's, that's okay. That's how I end up meeting a lot of investors and guests out there. But the request was, hey, Jameson's going to be in New York and he likes to sit down and get to know you. And I thought that was really cool because we had the benefit to get to know each other before jumping on air. So that's, that's really fantastic. So Jameson, I know you are based out of Phoenix, so maybe tell us a little bit about your story, maybe how you got into the business as well.

Yeah, so I'm a little late to the business relative to a lot of folks. I actually out of school, went to New York and so I have an affinity for New York. I was an equity analyst at Goldman Sachs covering software equities. So I was part of the team that would rate Microsoft, Salesforce, Oracle, buy, sell, hold, and then we would write research reports on those companies, how they were positioned and ended up having a great experience doing that. Really loved what I learned from the folks at Goldman about financial analysis. How do you look at an asset, whether that be a company or any other asset, and see what the cash flows are going to be like and what the costs are going to be like and what the risks are. And when I was out in New York, my, I was looking to invest and one of the things I didn't love about the saw the stocks that I covered was the volatility. I mean they, it was very common that when they would report earnings the next day they were up or down 30% depending on how the earnings came out. And software is just the way that it is. And you know, I was one of the people who were expected to know that that space as good as anyone. And as I did that, I realized I don't want to put my own money in was not for me. I didn't want to ride that wave. And you know, I also advised clients about investing in these companies, you know, big pension funds and institutional investors, mutual funds, hedge funds. And you know, it was hard for me a lot of times to say to invest in these companies because I knew that the volatility that they were now the bigger, the bigger guys, Microsoft and the blue chip software stocks, those are more steady. But a lot of the early up and coming, you know, emerging software stocks is what I covered. And they were just volatile. And so when I'm, when I was in New York, my dad, who's a real estate broker to, you know, typically sold homes in my hometown of Idaho, I Grew up in small town Idaho Falls, Idaho. I was out visiting and he said, hey, I have a listing you should take a look at. It's a really good deal and it's a 10 unit multifamily property. And I started looking at it and running some numbers on it and I thought, well, this really could make a lot of sense. And I had a little bit of money saved, didn't want to put it in the stock market, and got excited about this listing he had. It was kind of an off market deal because he had the exclusive listing and the sellers wanted to sell as quickly as they could. And I run some analysis and in about a half a day I said, I may as well try this. I mean, I think the downside risk was really low because the cost basis was so low. It was a phenomenal deal. It was in an area that was kind of questionable, so it wasn't in a, you know, a big market. And it was kind of. That was the biggest hurdle. But I got over that based on the cost and it needed a big renovation as well. And I had some capital put aside where I said, hey, I'll put some money into this and let's just see how it goes. And really, it was an experiment. I felt like the downside risk was low. And so I did a little coordination while I was there. We made an offer, locked it up, and then through the course of the next couple months, my dad helped me find someone to help me renovate it and do all the things that I needed to do to get it up and running and operating and ended up just having a great experience, even though I was remote. And then all of a sudden, six months later, it started generating cash flow for me and I started seeing those checks come in and I thought, man, this is kind of, this is what I like. I like seeing it. I like an asset I can see and touch and feel and see cash flows. So that's kind of what piqued my initial interest. And then I got a job offer from Lifelock which is, you may remember, it's Identity Theft Protection. It was a stock that we covered at Goldman. And I worked on the ipo and they asked me to come out to Arizona to run their investor relations and moved out to Arizona to do that. And I was actually happy to get back out west. I'm more of a west guy, where it's easy to find parking and all those things, easy to get to the airport. I miss New York in a lot of ways, but I was happy to get out west. And we about 18 months after I joined Lifelock, we got bought out by another California company. And so at that point, I had the opportunity to kind of sit back and say, what do I want to do now? And I was looking at other software companies to go join in the Bay Area. And I ended up meeting a guy in Phoenix who was a lot like you, James. He had done brokerage, sold a lot of apartments. I think he had sold 1500 apartments at that point, over 30 year career in Phoenix, and had also done a bunch of development on his own and ownership on his own. And he really piqued my interest about starting a multifamily investment firm. And we were really gravitated toward, both of us, crowdfunding laws that had just been passed, I had been learning about those on my own because they were really interesting in the securities space and in the public offering space, you know, how you raise capital online. And he, on his own path, learned a lot about it because of raising capital for apartments. And one of the things that he came across and that he felt strongly about was why can't normal people invest in these offerings? Why do you have to be wealthy? Why do you have to be an accredited investor? And the maintenance people who work on the building and the property manager, those types of people, they couldn't actually invest in it, even though they knew it really well. So he loved what crowdfunding could do for opening it up to a broader audience. And together, he and I both shared that vision. We wanted to take the opportunity, invest in apartments multifamily to a broader audience. And so we launched the company about five years ago.

Wow, that's an incredible story. And I love the background and how you got your feet wet with the multifamily investment. I want to ask you some more questions on that, but first of all, big picture, because it's interesting that the title of this podcast, the title of my book, the Insider's Edge to Real Estate Investing, the whole premise is that you can gain the inside edge to outperform the market. Okay, now, you came from the public markets, where inside information is definitely a big no, no. And theoretically, everybody has access to the same information. Okay, so you are probably better qualified to answer this question than, you know, probably most of the guests that I've had who have not been been in the public markets. But would you agree with the statement that real estate investing has a lot more inefficiencies. Right. Than the public markets? Right. And I understand you have volatility. So let's not confuse Volatility with efficiency. Right. But, you know, the information that you had access to versus when you go and try to make your investment decisions now for real estate, which I would imagine that you can sometimes gain a better understanding before you make your investments.

I think that's a great point. When you go into the investment world with hedge funds and with equity analysts, the publicly traded world, you're really trying to just outsmart each other because the other guy on the other side of the trade has the same information, or they should. You know, they may do additional work. But, you know, let's assume that there isn't anything illegal going on. Everyone's supposed to have the same amount of information. So whoever's on the other side of the trade is. Is. Has a different position because they're either smarter than you or less smart than you. And to me, I always knew I was kind of smart, but I. I'm not competing with you. You know, these Harvard guys and these quants. I'm kind of like, I don't know if I have an advantage here now. So it's kind of like street smarts versus book smarts. When I met John, for example, he's a smart guy, but he had a lot of street smarts. He'd been doing deals for 30 years. And a lot of this happens with your network, with being able to look at a project and quickly make decisions, with having a funnel of pipeline of potential deals to look at and how you get those. So I think there's a lot more opportunity, to your point, in the inefficient market of commercial real estate. I mean, most of the deals we bought, we've done 15 deals now in five years. Over half of them have been off market. So they never hit the market. They were a direct seller. And we never would have got those deals otherwise if we hadn't hustled and executed on them. So I really, you know, you have to look at your advantages. And if you are a quant out of MIT and you can build an algorithm, go into the public markets and just outsmart people. And I just, I was honest with myself to know I probably had to hustle more and go a different work route.

Well, that makes a lot of sense, what he had to say about the access to the same information and again, the inefficiencies with real estate. And I talk about this early on in my book of when I was a broker, it always amazed me how we could go out and flip contracts where a property was sold off market because the owner thought, hey, I'll save a brokerage commission and this seems like a good price. And then we go out and expose it to the marketplace and all of a sudden you find out that that owner left 20, 30% on the table. Now listeners, this doesn't mean that every single off market deal is a great deal, but the odds are certainly in your favor if you're finding something off market where you're not competing with the whole world, that it most likely will be a better opportunity or certainly have less competition.

But yeah, and I also think there's, there's just those opportunities. There's some sellers who are happy to sell for a little less and not have to put it on the market, not have to do tours, not have to disrupt their, their, their team that's working there or their, their residents. So they're out there. That's the, that's the fun thing is it's, it's an opportunity. You just have to go and, and figure out a way to find them.

Great. Okay, so I want to hear about, because it's helpful to our listeners here to really kind of understand the numbers behind it. So a 10 unit multifamily in Iowa. Do you remember what you paid for it? What type of equity check was involved? You were able to get financing cap rate? I mean, were you even thinking about these numbers? Did you even know what a cash on cash return was when you bought this or did you just kind of figure it out as you went along?

Well, I put it in my Goldman model. So the model that we use to analyze a company, I put it in and it's actually pretty much the same. It's less complicated, which is nice. So these numbers are going to be sound crazy and they kind of are. We ended up the 10 unit building had been operating as a hotel for a period of time, as an Airbnb or it actually was a hotel as an apartment for contractors. So it was a little bit unique. And my idea was let's try it initially as more of a vacation rental. So the, it had been abandoned for two years and it, but it was right off of a, of a very busy freeway, I15. And if you look at a map in Idaho, I15 is the main freeway that takes you to Yellowstone park, it takes you to Montana, takes you to Salt Lake, and it goes all the way to Vegas. And the, the folks who had ran it, had ran it for 30 years. They lived on the property. There was a home on the property they lived in and they both, one of the spouse, one of the couple Passed away. And the other one started getting health problems. None of their kids lived in the town and wanted to run it, so they had to sell it. And at that point they had. It was dark. They hadn't. They hadn't been running it for about a year. So when they called my dad to list it, they said, you know, we'd love to sell it for. There's 10 units. We'd love to sell it for 20,000 a unit. And my, my dad ended up helping. He did for a little while, listed that. And there was no interest. By the time it got to me, it was 7,500 a unit. And they were. They were willing to carry the. About 50,000 of the purchase. So these numbers are just kind of. That's why I just looked at it and said, well, I may as well try this. This is going to be a good experiment here, because this is basically free. I ended up spending about 10,000 a unit to renovate it. So my costs were hire to renovate it. And, and so my all in cost was, you know, about 17,000 a unit. And then I. We got the property going about six months later, and I ended up selling it about three years later to the family who was running it for me. They ended up being able to get a bank loan on it. And I think I sold it for. It was about double what I bought. What my cost had been around 40,000 unit.

I'm smiling because in New York City, 75,000, you know what that buys you? It would actually buy you a parking space, literally maybe half a parking space. You could pull your motorcycle in there if you wanted. But, you know, look, the fact that, you know, and everybody needs a first investment to go in there and roll up their sleeves and figure it out. And that was your, I would assume, your mba, where you had to figure out how to operate, how to work with contractors, how to reposition. I'm sure there were mistakes along the way, but it's great that you enjoyed the process because again, there are problems that come up, there are things that happen. And sometimes people say, you know what? This is more than I bargained for. And so that's also why in the beginning part of my book, I talk about choosing not only the right asset class, but the right investment strategy to be realistic for your time. And I think at this point, it did seem like it was still a little bit of a side hustle, but it seemed like you had your father in your corner willing to help you because you don't want to take on something like this, that becomes a full time job, especially if you still have a 9 to 5. But it's great that that gave you the confidence. You come back to Arizona, you meet your partner and you start studying. And I love the observation that you all had that look. Real estate investing is usually this close to the vest, quiet. I mean by definition a private placement and having to raise money from accredited investors, there are laws where you cannot promote publicly an offering that's a private placement. And so as a result for every accredited investor and you might have the stats, I don't know how many potential investors there would be who are non accredited in relationship to every accredited. But then also being able to open this up and I know again this is probably the part of the show where we say consult counsel. I know you've done incredible research, so maybe you could talk about how you actually figured out how to do this. Because it's, you know, people say, oh, it's crowdfunding. I'm just going to post the deal up on a site and have come one, come all. I mean that's certainly a recipe for a lot of problems. So I'm sure you did a tremendous amount of research to understand what you can and can't do and how you file. And I know also when we met you told me that was very specific to Arizona because every state's different as well. Although obviously there's the federal, I think it's the blue sky laws. So maybe maybe educate our audience a little bit on the world of crowdfunding.

Yeah. And I think that one thing that as I look back, if I was to do it again, I don't know if we would have. But now that we are where we're at and the opportunity that's ahead of us, we're really happy we did.

But.

Anytime you ask someone to write a check for any product, it's a process and there's a lot of trust involved in anything else. And that product is something that is that they can see and touch when it's an investment. It's even another layer of trust that needs to be developed with education. And even if it doesn't really matter if that check is a million dollars or $1,000, people really look at it the same. And so it is not yet easy to build out a relationship with any investor. And what crowdfunding can do is allow you to use technology to bring in 500 investors or 1,000 investors into a particular project. Because everything is done online. The content is put online. You build a video, you put all the stuff in a way that it can be in a scalable way. So you're not having one on one conversations with investors. But at the end of the day, all of those people who actually come in and invest have to go through their own educational process. So it has been really challenging. With that said, I'm really excited about where we're at. Now to your question. There are about 10 million accredited investors in the U.S. somewhere in that range 10 to 15 million. It's kind of the 1%, maybe 1 1/2% of the population. So you have to have a million net worth, not including your primary residence, or you make over 300,000 a year combined income with your spouse. If you're single, it's only 200,000 year. We have to prove that for two years. And this isn't something you can fudge on. You actually have to prove that with tax returns or financial statements. So that's about 10 million a year. On the other side for us with crowdfunding, we have an addressable market of 200 million Americans, adults in the U.S. so it's a much larger pool of folks who can invest. And that's what I get excited about today. But let me walk back to what I was referring to about the challenge and I think why. A lot of crowdfunding companies did start out of the gate once these laws were passed and most of them have gone by the wayside. All but a handful are still who exist now have gone by the wayside. And I think the reason is on our first project. So our first project as a team, we kind of did another test and we said, look, we found a nice building in Tempe, Arizona, near Arizona State. We knew that the building was well positioned and we, we structured a deal where we needed to raise a half a million dollars. So it was very achievable. But John and I together decided and agreed that we wouldn't call our friends to fund it. We said we wanted to see if we could raise this capital from our typical customer, who we call Costco Joe. You know folks that have a couple hundred thousand or some money sitting around, but they don't hit that accredited threshold. And we said, we're not going to juice this. We want to just see if this can work if there's a market here. So it took us after about four months of trying to raise this half a million dollars, we tied up the building and the seller was a friend of my business partner. So he allowed us a little bit of a Runway to raise the capital. We needed before we needed to close. And about four months in we had raised about $200,000. I think we had 30 investors at that point. And it was at that point we realized this is actually really hard to do at scale. And we had done a bunch of investor meetings, we had done some marketing and some PR and other things. And one of the things that we realized, we're sitting in an investor meeting with about 100 folks and we had originally structured our deal with a waterfall and a preferred return. And again, these are non sophisticated investors and we're trying to describe to them this waterfall. And anyone who's walked through an investor waterfall knows it is not simple to understand for some, for a normal person, it's actually complicated. And we, we looked out at the, the crowd and there was just a lot of blank stares. They just did not get it. And we, we did, we mentioned in the meeting that we have one investor who we were going, who could come in and invest a chunk of capital for a 10% preferred return, which meant they would just get the 10% preferred return. They would get paid first. And if the property did really well, it didn't matter, they would get their 10%. If the property didn't do so well, they would still get their first, their 10% because they got paid first. And we had an investor in the, in the front right, raised his hand, he said, well, can I do that? Because I'd just like to do that. I don't know about this whole waterfall thing and it doesn't make sense to me. And we looked and we said, well, that's, no, we don't want to do that. Another guy raised his hand in the back and said, well, actually I want to do that too. I'll do that. I got 5,000. I'll do that. And John and I looked at each other and we kind of paused and we like a light bulb went off and he said, well, let us get back to you. Let's see if there's a way to do it that way. And we came back and discussed and we said, you know, these folks don't want a potential 25% return and then a potential 5% return. They more want something that's a bit more consistent. So we, we restructured the deal and we said, well, we'll pay you a 12% preferred return. Most of it's going to be paid when we sell the building, but then we'll pay you cash flows along the way. So once it starts generating cash, you're getting all the cash flows because you're getting the first 12 and then you'll get the remainder as we sell a building. And you'll get a 12% return for the period of time we changed it in about four weeks. We ended up funding the whole project. Half a million raised with 103 investors. And we have since now done another 14 projects all under the same structure. We've sold six of them that have gone full cycle. And our last project that we launched two weeks ago, we funded. We hit our target raise in 24 hours. 150 investors and a million and a half in the first 24 hours. So we hit our target and that's kind of what happens now, because people have seen what we do and they really like it once they understand it. Wow.

Amazing. So I have to ask though, and you did lead up saying that if you knew how difficult it was to do this, maybe you wouldn't have built your own system. I mean, there are clearly a lot of crowdfunding platforms that have raised hundreds of millions of dollars, billions of dollars. Right. So we're talking about our fundrises, our realty moguls, crowd streak. So how come you didn't just go to one of them?

You know, they, they, you still have to be accredited to invest through those guys. But they do it online now. Fundraise? No, but the other guys, you have to be an accredited investor and you do it online. So it's actually, they don't even call themselves crowdfunding. It's more online real estate investing because they still use reg D and those types of offerings there are. So to get in the weeds just a little. So you, in order to do a crowdfunding offering, you have to put your offering on what's called a reg CF portal. So this portal is approved by the SEC and they have to meet all these requirements. You can put your offering on there. And we have done a partnership with Small Change, which is a real estate reg CF portal. I'd highly recommend them. They're great folks, but at the end of the day, when you put your offering on another person's portal, those investors that you bring in are basically shared with that portal. So that's a crowdstreet investor and they brand it that way. And we wanted to build a business long term where the investors were, were with us. And so that's why we didn't do that. And we also wanted to go to, you know, regular folks and it just hadn't been offered by those portals. We.

So Jameson, how do you, when you think about crowdfunding you think about everything being done online. And I know that's where you know your, your platform exists, but I, I also hear that for you to find new investors, you are doing in person, meetings, investor breakfast. So talk a little bit about. And you said, oh, we do some marketing, we do some pr, talk about that aspect of the business, because I would imagine that's as important as actually then going out and finding the opportunity. So, you know, social media, obviously, we're doing a podcast now.

What.

What else?

Yeah, well, and if so, just to put into context for our current. We launched a reit, the first of this year, and it's a reggae offering, so it's open to anyone in the US this is regulated by the sec. The other offerings we have done were Arizona intrastate offerings. So it was an Arizona crowdfunding law that was passed. And your property has to be in the state, your entity has to be in the state, and all your investors have to be residents. And that's what we used initially. And then we wanted to grow our investor base beyond Arizona, so we launched a reggae offering, which is pretty extensive. A lot of legal expenses and timeframes to get it approved through sec, but now we have it live, and it's a fund structure, and we need to bring in 15,000 investors into that REIT that, to fund it, because our average Investor is about 5,000 per investment is how much they typically put in. So we have to bring in a lot of folks into our funnel, so to speak, our sales funnel, to be able to bring in 15,000 investors. So we do a lot of marketing right now. And we ended up, you have to have some money set aside to really invest in marketing. And that's where you either have to go raise some venture capital to do what we're trying to do, or in our case, as we've had some success with our early projects, we're now reinvesting all those profits into growing the business. And we made that decision. So we have a significant investment behind our digital marketing. We do do live events, and those can work great, but most of it comes from Google AdWords through social media, retargeting through, you know, you get home on Hulu or Netflix or YouTube and you get a video. You know, now if you're listening to us, maybe you'll get that on your, you'll see that because we, we put a lot of those out there as well to our, our audience. So, James, you'll probably be inundated with those videos from us. So it's, it's really building a consumer business. It isn't, it's, it's more, you know, we have to build a brand, we have to bring in, in those investors because the level of scale that we're at, we need to be at is just in a different league compared to a traditional fund.

Makes sense. So amazing. So let's talk about the real estate aspect of this. So on one hand you've got the marketing business, the crowdfunding business, but clearly what's powering this is the deal flow. So you have 15 opportunities which are off market. So talk a little bit about how you source opportunities. Talk about especially if, and it sounds like one of those first investments, you found a seller who's willing to give you plenty of time to raise money. But I know that wouldn't work in New York. New York sellers say, hey, I want to see proof of funds. I want a 10% deposit and I'll see in 30 to 60 days at the closing table. So how have you been able to line up these deals and fill them? Crowdfund them in time?

Yeah, in most markets that are stronger markets, you're going to have fewer sellers that give you those opportunities. Although I think you could probably get some opportunities right now in the office space in New York if you wanted to take on something there. So we're more take a developer sort of approach. We're not trying to just buy a building that's turnkey and cash flowing and, and where you're bidding with other institutional investors. And we want to take more opportunities and things that might be overlooked. With that said, we also, we have closed in 30 days on some of our buildings. One of our advantages now is we can raise capital pretty quick, but we want to identify properties in up and coming neighborhoods that are kind of on the fringe. So not the real established neighborhoods, but those that are heading in that direction where we're seeing, you know, some new development happening, we're seeing properties being renovated. We want to buy there so that if we time that that upswing right, you know, in a two or three year hold period, we can do well. And then we'll come in and we bring a team. We have our own renovation team, about a dozen folks who we bring in and they'll start renovating the building. We can even scale beyond that if we need to. But we have our own folks who lead that. One of our projects, our average rent, and this will sound crazy in New York, but two bed, two bath property was renting for 970 a unit and it was well located, but it needed a lot of renovation, needed a lot of work.

That'll get you a really nice parking space in New York. I'm talking covered parking. You know, you might even have a charger if you have your electric car. Wow.

The charger probably takes it up quite a bit. So we renovated it. We put in about 35,000 per unit and to renovate it, make it really, really nice. Now we're getting 2,100amonth rent.

Okay. And whereabouts now? Where are you looking to make these? The investments so far have been in Arizona, but now you're scaling.

Yeah. And so far we're all in Arizona, all but most of them in central Phoenix. And we like the central corridor. So some things that are happening here is we added light rail about 10 years ago and that's really started to drive where a lot of the density is coming. You know, if you drive, if you come to Arizona from New York, you're like, everything is one level here. It's everything spread out. And now, you know, there was this urban sprawl. And now folks who live an hour away from their job, we're an hour away from the Sun's game or the Diamondbacks game, they're like, I want to be closer to where some of the activities are and they're trying to come back to the core and they want to live closer to the core, to the airport and other things. So now we're starting to see more demand come back in and more density. And so those are the areas that are opportunistic for us is finding buildings that are there that need to be renovated. They need, they need to be managed differently. They need, they need an investment and they just do well here because the younger folks that move here want to live in a newer building with better amenities and better, better kitchens and other things. And there's a lot of these buildings that as they come up, we can nab. We, you know, a seller that's owned them for 30 years and hasn't made an investment. And then we buy them, go into our work, and then six months to 12 months later, we have Molly stuff in cash flowing.

Right. And how are you finding these off market deals?

So my business partner, like you, has been in the industry for 30 years in Phoenix and just has an extensive network. Sellers that call him because he's, he, he's been a broker and they want to sell their building and he says, well, I can still broker it for you, but we might take a look at it, might buy it myself. And so so John Kabrowski owns and started ABI Multifamily. They're the number one broker, apartment broker in Arizona for the last five years. And he doesn't sell buildings himself anymore, but he still runs that business and has his pulse on the business. He's, he's still the active broker and he kind of splits his time between that and then sourcing our deals. And he leads our real estate team. So our property management team reports to him, our renovation team reports to him and then all the financial reporting and investor stuff I do. So we kind of tag team it. But deal flow, you know, is we pass on, I don't know, 20 deals to everyone that we move on. And we look at a lot of deals. We're looking at many a week, many a day, sometimes like yesterday. And I can tell you one thing that's interesting right now is we were planning to do some ground up building this year and instead of that we have under contract and we just had, our latest offering was a 2018 building. It's 22 townhouses, three bed, two bath with a two car garage. And we're able to buy it below replacement cost and it's all leased up and the owner, the seller was in a pinch and the investors want their money and he said I just got to sell this and we end up getting it below and we don't even have to do any work on that. So right now we're being opportunistic and we have a couple other similar deals that we're seeing, you know, as these smaller developers get through a project and now they're getting it in, they're not selling it at a 4, 3 or 4 cap and they might have underwritten it in that range and they're more selling it at a six, six and a half and for them and they need to act quickly. So that's one thing we're seeing right now and we're being opportunistic on.

Yeah, I love you to say get to see a lot of opportunities to find something that's, that's actionable. But take us through. How do you filter those? How do you know what is a good deal on the surface? I mean if you're looking at 20 deals a week and maybe you have a full time acquisitions person, but is there just kind of a back of the envelope or do you just know what it is on a price per unit where you don't even have to take a harder look? Obviously things change from neighborhood to neighborhood. So how do you sort through these opportunities? Quickly to know which ones are actionable.

I do find that at first blush, a lot of deals end up not being what they look like at first blush. And so we do have a team and a member of our team who does that first glance and then kind of says, maybe dig into this one. This one's way too expensive. This one's not going to make sense. And then that's kind of the first filtering. But then that second level is really going down and doing some more due diligence around. Where are these rents really at and where could they go? What are the real, in the case of doing a renovation, what are the real costs to renovate this? I mean, are we gonna have to, you know, take it down to the whole kitchen's coming out, everything's coming out? Are there gonna be any plumbing issues, electrical issues and getting that granular and then really taking a hard look at the expenses, you know, is that, are those expense numbers realistic? Are these vacancy numbers right for this neighborhood? Because they can be so different from neighborhood to neighborhood. We love talking to our property manager saying, hey, we're looking at this. What do you think? And their boots on the ground. And a lot of times have other properties over there and say stuff's leasing over there in a heartbeat do it. You know. So John kind of brings, my business partner brings a lot of the street smarts and then I'm, I'm more on the number side. And the, and, and then combined we tend to make pretty good decisions. And, and we want to be good partners to the, the team that's bringing us deals. We want to make decisions quick. You know, if want to build a long term relationship with a broker, get back to them and let them know yes or no so they can move on. You know, I don't like it when it's been a couple of days and they, they're, hey, what'd you guys think? Haven't heard back from me. You know, so we try to be quick with it and then if we move on something, we're going to see it through to the end.

Appreciate you saying that. I'm sure also the brokers who listen to my show will appreciate that as well. I have a former partner who always said I appreciate a quick no better than a slow maybe.

Absolutely.

So Jameson, with only a little bit of time left, and I think I already know the answer on what you would say your inside edge to real estate investing is. So, and certainly this proprietary crowdfunding platform, I would imagine. But what else would you say gives you the advantage over the competition.

I've always kind of been a little bit of a do it myself kind of guy. And what I've found in this space is there is no way I could be doing this myself. It's kind of multifaceted where you really need someone who can go have some expertise on the asset, on the construction side on all of that. And so it's kind of for me getting and accepting the fact that you need a good team around you. And I think that's our edge now is John and I have a great relationship and we're very different. We've brought in some other property management and construction people who bring their own perspective. So I think that's our edge is we figured out how to work well together. We have some friction in our ideas and how we look at things and that helps us be able to make better decisions and then we'll pull the trigger and we'll go with it.

Awesome. And advice that you would give to someone new aspiring to get to the business. I actually have a student with me today, a sophomore at Penn who's a fan of the show. He's actually here shadowing us today. So what would you tell Tommy right now who's at school? He obviously still has his classwork to get through. But if he had interest in getting into the business, what would you tell him?

Well, I'm telling him he's doing the right thing already. That's really the right, an amazing step. And the fact that he connected with you and he's now working with you to be able to build a relationship with someone with your level of experience out of college. Whatever he's done, he's done the right thing so far. And then the other thing I'm going to tell him is his other friends are going to go work on Wall Street. Don't do that. I mean, if you want to be that quant guy, just look at yourself in the mirror. Am I going to be that guy? Because if you're not that guy, there's other ways to have more fun. And real estate is a heck of a lot more fun. You know, it's hands on, it's a tangible asset. You get to see something can go from here to here. And you, and you. There's a lot of fulfillment I get in that. So, you know, don't think, you know, he's a pen. He could probably go to some, some big Wall street firms. You don't need to do that just because everyone else is doing it. And you probably make a lot more money long term in real estate anyway.

That's awesome. Well, Jamison, this has been fantastic. I've certainly learned a ton. I have a lot of fun when I come on your show and I just appreciate your making the time and sharing this wisdom with our audience. And last but not least, Jameson, tell us, our audience, how they can find you.

Yeah, and thanks. Thanks James for taking the time with us and also just your thought leadership in the space. We all benefit from that. You know, we need folks like you in New York and across the country that are leading and I appreciate that and appreciate being on the show. So we're real easy to find. Type in Neighborhood Ventures to Google, you'll find us. Our website is Neighborhood Ventures, but we're Also all over YouTube and our channel is really fun. If you subscribe to us, you'll see a lot of our renovation before and after. We put those out every week and we try to have fun with it. Our podcast is Kiss My Assets and we want it to be a bit, a bit off the beaten path and so I think folks will like it if they follow along and hopefully we'll keep you engaged and entertained.

Awesome. Well, I've loved seeing your stuff and getting to know you. And again, thank you for coming and for all of you listening. Thank you as always, really appreciate your support. If you have not done so already, love it. If you could make a review, leave your comments that helps other people find this show and inspired to learn about the world of real estate or if you're already investing, to help step up your game and gain that insider's edge to real estate investing. So until next week, this is your host, James Nelson. Thank you so much for joining.

Thank you for listening to the Insider's Edge 2 to Real Estate Investing. We appreciate your subscribing and sharing with your friends. If you haven't already, please connect with James at James Nelson NYC on LinkedIn, Instagram and Twitter. Please also visit jamesnelson.com where you can find the show notes and other episodes along with an exclusive video series and other helpful resources so you can gain the Insider's edge to real estate investing. Until next week.