Windows of Opportunity with Chris Finlay

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 164 of the.

Insider's Edge to Real Estate Investing. This is your host, James Nelson. Thank you as always for joining.

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We have an incredible guest for you.

All, Chris Finley, who is the CEO and chairman of Lloyd Jones, a global real estate firm with subsidiaries in development and construction. He also has a platform called Aviva Senior Living, which is actually a topic we have not covered in depth on this show and certainly a huge need for it in that space. They're involved in multifamily and hospitality. He has a variety of partners from institutions, family offices, accredited investors, as well as his own principles.

Chris is actually one of at least.

Two pilots we've had on this show, or I should say, I know we've got a pilot coming up in a future show. Chris began working for Eastern Airlines and he was investing in real estate on the side and in 1983 actually shifted full time into commercial real estate to start his company, the Finley Company in New England. Now, Chris has delved into real estate over these past 15 years, developing, constructing and managing 40 multifamily and senior housing communities. And when the Great Recession hit, Kris jumped to the opportunity and is now offering these opportunities to outside investors. Now with a 40 year track record in real estate, Chris also has great educational credits including Upper Canada College and postgraduate studies at the Harvard Graduate School. He's, he's completed extensive industry training which he's going to share about with National Multifamily Housing Council. He's also a member of the American Senior Housing Association. So during our conversation Chris discusses how he has followed different segments and been able to make moves during downturns, which I think is really timely. And his vast experience ranges from low cost housing programs to raising institutional capital, building out senior living operations. And so for our listeners starting their journey, he says, we primarily we've been a multifamily developer, investor and owner, but I'm a believer that the best asset class in the world for anybody to be in when he's speaking about senior housing. So I think you want to definitely give this a listen. And regarding what he says ahead, he says, I think there's been a disruption in the market and we have a period of time before it gets corrected. So now is the time to make that very nice ride up. You can connect with Chris at his company websites at Lloyd Jones and Aviva Senior Living. As always, you can find the show notes@james nelson.com as well as a lot of helpful content that was designed for you. We're gonna have a brief word from our sponsor and we'll get right into that interview with Chris Finlay.

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Chris, welcome. Thank you so much for joining us.

Thanks for inviting me James.

Perfect. So I know that you are now Dallas based and you also spent some time in my hometown or home state rather in Connecticut, but maybe tell us a little bit about your story and ultimately how you got into real estate investing.

Sure. Well you know we founded the company in 1980 in New Hampshire and grew a large platform throughout northern New England and you know, primarily focused in those days on commercial brokerage, appraisal and property management. And we grew that. Then in the early 90s we moved into developing primarily affordable housing utilizing the low Income Housing Tax Credit program and historic tax credits and every possible program out there to develop and build affordable housing Workforce housing. And we did that very successfully for about, oh, 20 years. And we were, you know, we've probably done 40, 45 of those developments all over the country. So very big in that program. And then in, you know, in the late, you know, 2010 range or 2008, we really decided to move from being a developer to an investor. Because obviously after the 2008, whatever you want to call it, great recession or great, whatever term you want to put on that, the economy collapsed and it really became obvious that buying existing assets, you can buy a nice apartment complex for 50 cents on the dollar, basically. So we pivoted and moved away from development and construction and then focused entirely on investing and a value add strategy in multifamily. And we've continued that on until 2021, when we basically disposed of most of our multi family and moved into the senior housing space. And that's where that's our primary focus now. James, is the. Is the senior housing perfect?

And I see that you started off as a pilot for Eastern Airlines. This is really interesting because the last guest that I interviewed, Ryan Zico at Cardone Capital, is also a pilot. So, you know, maybe it's just a coincidence, but I will ask you the same question that I asked him, which is, what lessons did you learn as a pilot that you were able to apply to the real estate business?

That's a good question. You know, I haven't thought about that, but let me, you know, I really can't think of anything right now. I'd say the great thing about I flew for Eastern Airlines, and actually I was living in Connecticut based out of, you know, Kennedy and LaGuardia. And, you know, I'd say the good thing about that is you're sitting around a bunch of smart guys, and normally you fly two or three days a week, so there's a lot of spare time. And nearly all of them had different businesses on the side or different investment strategies on the side. So it was a great way for a young guy to learn what others were doing and how they were investing in different kinds of assets and so forth. We had guys over. I remember one guy was a dairy farmer, you know, another guy has an ice cream store. So, you know, it was really sort of funny that you could learn a lot from these people by sitting around.

Well, maybe it's an untapped audience here for us at the insider's edge to real estate investing. Maybe we should be reaching out to pilots who have free time and capital to invest. So, you know, Ryan did say, what was interesting was he said, as a pilot, there's checklists for everything. And so kind of the, really the game plan and as far as how he applied to his business and certainly as he looked to scale their business, that having that playbook, if you will, was very helpful. So would you say that in the same way that maybe you piloted flights and you had your checklist, is that kind of the way you go about your business or are you still very. Do you have that routine when you approach a transaction?

Yeah, absolutely. And we certainly apply the checklist formula. So, you know, that was a great answer. While I was thinking, there's one thing that I would take away from my flying days and that is don't run out of fuel. So the key part, the key thing there is to make sure. And that sort of applies to debt in the real estate world, right? Don't run out of debt and don't get into a point where you're in trouble debt wise.

It's really interesting commentary because I think one of the traps that you can fall into as an investor is not to think about the trajectory of the deal, the lifespan of the deal. You really, at that moment in time, you're thinking about, okay, how am I going to reposition this day one, how are we going to secure the transaction? But you might not be thinking about that exit three, five years down the road. So I like that idea of staying fueled, thinking about, do you have the right debt equity matched up for the transaction so you don't find yourself in a situation where you need to, you know, pull the ripcord, so to speak, and you don't have the, the Runway to see that game plan through. So that's really interesting commentary now.

Yeah, 100%. I would say that that's one of the most important considerations because as I tell people, you can make a lot of mistakes in real estate investing, but if you over leverage the asset and lose it, you've lost everything. Right? It's called 100% loss. Whereas if you make it through that difficult time, it always comes back. Right. So there are always cycles and there's always periods where real estate goes through a stressful time. But if you have the right capital structure and you're not over leveraged, you make it through. And the other side, you do even better because it continues to ramp up. Right. So the key is not lose the investment.

Great point. So, Chris, maybe talk about your first investment. So I guess you're a pilot at this point. Did you retire or you already started investing on the Side, when did you finally make the decision to commit full time to investing in real estate and what did that look like? When you start off, you said you were doing a bunch of these affordable projects. I mean, what I know about the affordable space is it's a very technical business where you really need to understand the government programs and all the subsidies. So I'm sure if you were just dabbling on the side to go into the affordable world right from the get go, must have been a very steep learning curve. So maybe talk a little bit about that transition, going full time into real estate and then how you were able to learn about the affordable space.

Yeah, so we started out, as I mentioned, 1980 and we were focused on commercial brokerage management and appraisal. We had a big, you know, Mai appraisal group which gave us a lot of data on, you know, where, where the market was, where values were and so forth. So we continued that all the way up until about, you know, 1990. And I think we started our development in 1990, the late 80s, early 90s up in New England. I'm sure you remember the FDIC came in and we became one of the largest asset managers for the FDIC and they were closing banks all over the, you know, all over that region. And so for a large part of that we were asset managers for them. But we, you know, we wanted to do something productive. So I got into we. At that time the only thing you could get financed for a development project was a tax credit deal. And so we started doing a couple of small ones and just learned the program. And as you said, it's very brain damaging stuff. You talk about bureaucracy and government. I mean, it's beyond belief the complexity of these programs and how they relate to one another and so forth. So you know, we just, we just dove in there and studied it and our first deal was like, you know, year 11 of our company, I think. So, you know, we knew the, we knew that commercial business and the management side of it. And then we learned and started out very small and doing small projects and then grew that to be quite a business.

That makes a ton of sense for you to build up the management capabilities first brokerage, understand how the business is done. You probably, I'm sure, had a lot of experience seeing what other operators and owners were doing. Were there lessons early on where you saw something, the way someone was running their business that seemed to work well or maybe lessons of what not to do?

Yeah, of course. I mean, you know, I think brokerage, being a broker is probably the best way in the world to learn, right? Because you get to see so many deals, you get to understand how they structure them, how they buy them, how they sell them. And if you're in the management business, you can get inside and take a look at how they manage the asset as well, which as you know, is probably one of the most important parts. So, you know, so in that, in that space, being in that space for all that time, you really get to learn a lot, see a lot. It's a great way to move into the real estate business in whatever capacity, stay as a broker or whatever you decide to do. It's just a great way to learn and see a lot.

Yeah, I couldn't agree more. And as a broker and an investor myself as well, as I've said on the show and in my book, the majority of my investing is a limited partner. But what I will tell you is that as a broker I see hundreds, if not thousands of transactions. And so I get to see what works, what doesn't work, what different sponsors are doing, different business plans. So, you know, I'm not sure if I would say an inch deep, a mile wide. But the point is, if I was a full time developer, I might only be working on a half a dozen projects a year. Right. And you'd be going very deep on those and really understanding the process. But as a broker, you have so much exposure to different types of businesses. So for those of you who are brokers out there who are listening right now and thinking about what to do next, I would say think of your most successful clients. Who are you resonating with, what are the business plans that you like and really embrace those so it can really give you some great exposure. So Chris, talk about the affordable business and ultimately, I mean, maybe you'll tell us that you still own many of those affordable deals today or I know a lot of those affordable transactions. Really the compensation is it's a fee based business where you're getting compensated on the way in. Or these deals that continue to cash flow. Talk a little bit about, you know, the payoffs in these deals, so to speak, and are these longer term investments or did you build them and then you flipped out of them? Talk about how those worked.

Yeah, no, I mean most, you know, most tax credit deals, you've got to be in them for 15 years in order to, you know, in order to get all of the credits. So it's a 15 year hold. And you know, it's very important to manage them because if you lose it before that, then there's a recapture of those tax credits. So it's a major problem. So it's very important to keep these things running and successful and you have to stay involved to do that. And that's where the management side of the business becomes very, very important. Because these, these deals are, are thin deals. I mean, they're, you know, the, the margin for error is very, you know, is, is really slim because the rents are very low, but your expenses are, are equal to everybody else's. So, you know, so it takes a, takes a very dedicated and management emphasis to keep these things going for 15 years. Now what we're finding though is, you know, on the exit where we pro forma probably in our initial underwriting enough to pay off the debt, they're becoming very valuable. So now all of a sudden they're selling at very low cap rates because there's such a reliable tenant base there and they're ending up having some value at the end which none of us underwrote. So nice surprise to have.

No doubt. So, just for our audience, because I don't think we've spoken a lot about tax credit deals. Can you just very high level explain what is a tax credit? And then my understanding is there's really a secondary market where you are producing these tax credits and they are being sold to for profit companies that buy them at a, at a discount or in some cases if there's enough, enough demand, I guess some of them could potentially sell at par. But can you just explain to our audience how these tax credits work and who ultimately ends up utilizing them?

Sure. So, you know, it's a federal program and it's based on population per state and there's an allocation given to every state and every state then has an agency and that agency comes up with the program that they want to emphasize, whether it's, you know, family housing in the city. So they put together a very, you know, complex formula for where they want it produced. And the application process is a point driven process. So you have to get the maximum amount of points in order to get allocation of the credits. And so you get sort of an allocated basis and then from that you get an allocation of tax credits. Tax credits are like the equity in the deal. Each credit is worth a dollar and it's paid over 10 years. So you discount that because as a developer you want that money up front. Right. So there's a discount applied and today they're paying somewhere between 90, say and 93 cents on the dollar for the total dollar amount. That you would have got. So in other words, if you got an allocation of a million dollars and you get, you've really gotten an allocation for $10 million over 10 years and you discount that to say 9.3 million. So somebody buys it today for 9.3. And the biggest buyers of credits are without a doubt the banks. Most of the major banks are the biggest buyers, some insurance companies, some other corporate buyers, but by far the most are the banks. And for that they get points where they, you know, it's called cra, Community Reinvestment act, requires banks to invest in local communities and that thing. So they get a benefit of not only the taxes, tax credits, but they get a benefit from the points that the CRA is driven by and that allows them to expand in those areas. So it's a very complicated program, but it's a great see only program in the United States for probably the past 20 or 30 years to produce new affordable housing.

Yeah, no, definitely sounds like a win win and I appreciate your explaining that. Chris is there and you said it's basically state by state as far as what kind of allocation, what kind of points. I mean, I assume they're looking for these projects in a certain neighborhood. So is there a certain allocation where when you're looking to buy a deal, you need to first find out if they are willing to allocate these tax credits and if so, are you basically tying up pieces of land for three months, six months, and then your deal is actually contingent on being accepted in this program? How do you deal with trying to control the property but then making sure that you actually are in the program?

Yeah, no, there's no question. Yeah, you hit on it. So, you know, going out and trying to, you know, tie up land for a year and a half and put in an application process, you know, it's difficult to get a seller to go along with that. Right. So that becomes a real challenge. But that's what it amounts to, James. You hit it right on the head. The developer has to go out and try and find several sites, put in, you know, several applications in order to get one deal. So, you know, so it's a very, it's a very tough business, let me tell you. So you know.

Well, yeah, and I know the deals that I've sold that are predicated on a tax credit. And yeah, they are contingent deals. And most New York City sellers are allergic to contingencies. But when they see the price, usually there's a trade off where, okay, well, here's a price. If you want a 30 to 60 day close. But if you're willing. And I think here is where track record is so important because if anyone just showed up and said, hey, give me six months soft to go and see if I can get into this program, or to your point, a year, year and a half, I'm sure if you did not have a track record of 40 successful transactions, they probably say, you know, Chris, are you out of your mind? But I've got to assume that based on your track record, you're explaining to the owners, okay, this is going to take a little bit longer, but here is my record of success and this is gonna allow me to ultimately pay you this premium price.

Yeah, exactly, exactly. And we did that up until about 2010 and then flipped out of that and went into the, you know, into the value added investment part of the business, which, let me tell you, is a thousand times easier. So.

Yes, so tell us about the creation of Lloyd Jones, because you did this at a very interesting time right after the GFC 2008, 2009, you decide to launch this new company to allow investors an opportunity to participate in your acquisition. So, I mean, to many that would seem like a very challenging time to get a business off the ground. I mean, maybe, and I'm sure there's a parallel here because now post Covid now, obviously overall economy, we have interest rates on the rise, so probably not the easiest time now to start a company either. If you people listening to this are thinking of starting an investment platform, but maybe tell our listeners about getting Lloyd Jones off the ground in 0809. How are you able to convince investors to come off the sidelines at that point? Because I think that's one of our biggest challenges right now is everybody wants to wait. When there's uncertainty, it's easier to say, you know what, I'm going to just sit here and wait for six months a year. There's going to be better deals to come, there's going to be more certainty. But if you listen to the Warren Buffett school of investing, the times of uncertainty is when you want to strike.

Yeah, great question. So we started off investing our own capital as the Finley companies. So all of our previous companies were Finley this, Finley that, and then around 20. So probably didn't start bringing in outside investors, James, until about 20, 2013, 2014. And so we deployed our capital first. We sort of proved up the strategy and we really knew what we were doing from a value add strategy. And then we, you know, we were, as a company, we're pretty well known. And so we were able to go and talk to some major investors and bring aboard some, you know, some major players who came in on a joint venture basis and partnered up with us. So you know, we did not go out to the accredited investor market and in fact in that time I'm not sure if it was even launched at that space. But we were fortunate to be able pretty well known and had good, good background. And so we were able to go raise some institutional capital and start, you know, expanding. Based on that.

Maybe you could talk a little bit about the difference of raising institutional equity as opposed to high net worth. Because for those of our listeners who are a little more advanced and they've already done the friends and family and they're thinking about breaking into the institutional space, there's definitely pros and cons. Institutions typically can write bigger checks instead of having to go out to multiple investors. It's kind of one stop shopping, but I would imagine there's a lot of trade offs. So maybe talk about kind of how you approach your fundraising between the high net worths and the institutions.

Yeah, well, we've been 100% institution until just recently and we've just recently launched a deal on our own platform. We actually first launched it on Trout street and raised some money there. And then we've decided to launch it on our own platform. And so this is our first time trying to raise capital from individual accredited investors. Previous to that, all, you know, major joint venture partners. Typical check size for equity for us is somewhere 20 to 40 million. And so, you know, so that's a, that's a totally different business. It's a business where you obviously need to know those players, but it's a different kind of marketing. You're calling on them, you're presenting your deals, you're selling your track record and so forth. And they're pros, so they've got more analysts than you do. And so they're very well qualified at digging into the investment. And that's a help really because they become great partners.

So Chris, with that in mind, then why did you decide to pivot? Because usually the trajectory is you start off with friends and family and you graduate into the institutions. And it would seem to me that you're actually going in the opposite direction or at least looking to diversify. So maybe talk about why, you know, if you're able to attract this institutional capital, why would you have the need or the desire now to tap into the accredited investor space?

Sure, great. Great question. We by no means are leaving the institutional capital world. So, you know, we fully intend to continue with that and expand that platform. But, you know, now that we've moved into senior housing, the size deals that we're looking at are much smaller than, you know, what we were dealing at in multifamily. So, you know, most of our multifamily acquisitions were, say, in the 50 to 100 range. And so, you know, you're talking of a 20 to 40, $50 million check equity, right? So those are the size checks that the institutional investors want. Many of them have, like, a minimum. You know, it could be most of them, it's like 30 or more. And, you know, if they know you, they may go down to 20, believe it or not. But. But you show them a deal where you need 10 million in equity, they don't want to look at it. So unless it's a portfolio you bring to them that's got, say, 50 million or more, they're just not interested. Could be the best deal in the world. They just don't have the time for it. So we felt that now that we've moved into the senior space. And by the way, I just think it's the most unbelievable. I equate the senior space, James, to, like, 2010 multifamily. It's just unbelievable. Time to be buying these assets. You're buying them at 50 cents on the dollar. It's just. And there's a huge demographic wave of baby boomers coming, you know, coming down the pike here. So I think the demographic is just like the millennials really, you know, provided the tailwind for multifamily. You know, from 2010-20, the millennials just filled up the apartment space. Well, you know, the baby boomers are going to do it for the senior space. And, you know, I just think it's a fabulous time. So to answer your question, those small check sizes, you know, we're challenged. Where do we go for capital for those? And, you know, we still have some family offices that will go down to that level. So, you know, we're replacing them with family office money. But, you know, we're looking at getting into this accredited investor space, and, you know, we think we bring a very good track record and a long, long term, you know, been in this business a long time. So I think, you know, we have a good platform and we're going to give it a try. So.

Sounds great. So, Chris, maybe let's just take a step back and define the senior housing space, because, you know, what I know of it, there's everything from age restricted housing all the way up to assisted living, memory care, what nursing homes. So what space are you targeting? And maybe just like you were kind enough to kind of explain the tax credit domain, maybe tell us a little bit about the basics in understanding senior housing and where to potentially play in that space.

Sure. Well, for senior housing, our focus is really independent assisted and memory care. And that's really what we consider senior housing now. The 55 plus market, we're also in that they call it active adult. It's really sort of a blend between. It's more multifamily than senior housing. It's much closer to being a multi family asset, although there are differences and different ways to manage it and so forth. So there's little nuances to that space that if you didn't know it, you wouldn't realize that it's very different from an apartment. But it's nowhere near like an assisted living or memory care facility where you have a staff, you know, 60 to 100 people, you're 24, seven, you know, you're around the clock. And so, you know, that's the difference in space. Where we see the greatest opportunity is in that assisted memory care space. The 55 plus is priced even more aggressively than class A multifamily.

Still, it would seem to me though, again, if someone was looking to get into this space, a independent living 55 and above. I mean, I'm sure there's certain accommodations that you need to think about when building or converting. But to your point, assisted living, memory care, not only is there a real estate aspect to it, but there's also a operational component to it. So having those specialists on board, nurse practitioners, whatever the typical staff is. So you could tell that this is not a space that I've spent a lot of time in. So I guess, Chris, would you say, are there parallels to assisted living and memory care to say the hotel space where you would actually bring in a manager, where they would, you'd sign a contract with them and they would actually be running all these services? Because I would assume you're only concerned with the real estate component. You're not the one who's actually providing the care. Or have you actually built a company that does soup to nuts, so to speak?

Yeah, yeah, absolutely. That's a great point. So we have built that company and it's called Aviva Senior Living. And we created Aviva senior living in 2019 and that is our operating platform to operate these facilities. And when you mention, you know, it's not just Real estate, it's operations. I would say it's 80% operations and 20% real estate. So it's so operationally intensive, and it's even more operationally intensive than hotels because not only do you have the hospitality component, you know, room service, meals, you know, all of that kind of stuff, housekeeping, but you have nursing as well. You have care, a care component where you're taking care of these people. And, you know, so that takes it to a whole different level than a hotel. It's like, you know, It's a hotel 2X.

And Chris, you're being very humble, but I've taken a look at your site and this is not just. You didn't just put one person in charge here. I mean, you have built out an entire platform and a team to do this. So I guess the question is, where do you start? So if you have a deal, you're trying to bring the team, you know, it's kind of, I guess, to go back to the pilot analogy, are you building a plane while you're flying it, or how did you make this happen? Because I gotta imagine building a team like you did was not cheap to bring in that talent, that infrastructure. You obviously have to marry it with the project. So how did you bring both the real estate and the operational piece together at the same time?

Yeah, well, it wasn't the same time we built the operations side of it. So when we made the determination to go into this space and settled upon that strategy, and to us, it's such an obvious strategy that, you know, I'm delighted that not many other people have caught on to it. So, you know, I've got a window here where I can maybe get, you know, get some deals done. But it's so. It's so operationally critical that I decided the first thing we do is build the operating platform and then we go out and buy assets. So it took a huge investment. To your point, James, these people are expensive and you need a lot of them because there's so many different departments. You know, you have health and wellness, you have sales, you have operating, you know, the executive directors, you have food services. And, you know, bringing in talent like that. The fortunate thing about it was we sort of grew it in a small sense prior to Covid. And then, you know, once Covid hit, we just basically sat on our hands. And then once we saw the end of COVID now there was a tremendous opportunity, a window of opportunity there to hire some great talent, because, you know, everybody was challenged. I mean, you could have been the best operator in the world. But, you know, Covid uniformly decimated everybody in the industry. I mean, nobody made it through unscathed. So a lot of them were in trouble. A lot of them had just run out of capital. It was a very, very sad situation. The industry was really pummeled. But the good side for me was there was talent availability there where I could really get some excellent talent with some excellent experience. So for putting together the team, the timing, if there hadn't been Covid, I would have had a much, much tougher time finding that talent and assembling the team.

Chris, such a great point that you took a challenging situation and instead of looking at the glass half empty, glass was half full. And, you know, to those of you out there who are thinking of starting your own business right now, there's a lot of talent out there and all those big institutions that are sitting on the sidelines, I mean, look, they might not keep their teams in place. So, you know, these are, you know, these times in the market where there's a pause or even a downturn can be a great time to bring on talent, especially from individuals who want to become part of something entrepreneurial. So, you know, Chris, and the other thought I was thinking is that I'm sure your experience figuring out the affordable space, and I'm sure there's a lot of parallels to figuring out the senior housing space, because very complicated business. And when you have a complicated business like that, there's going to be barriers to entry. But once you figure it out, you kind of have that moat surrounding you. So really, really interesting. So I guess what I would ask, you know, these are very intensive properties to own, to manage. I would think that it would make sense that these are larger investments by definition. I mean, if you're going to have all this staffing, wouldn't it make sense that you'd have 100 units, 200 beds that would require a larger check? Because you were saying that the reason why you've gone into this accredited investor space is because you need access to smaller check sizes. But to me, it would seem like these investments would be much more capital intensive.

Well, that's the situation. Most of them are in such a distressed state from an occupancy point of view and an NOI point of view that, look, they're losing money. Some of these are losing a million a year. So, you know, what's the value of an asset that's losing a millionaire? You know, it's just. It's just, look, in good times, they maybe maybe sell for 50 million. It's now selling for 25 million. So, you know, on a 25 million dollar deal, we need an 8 million dollar check, 10 million dollar check. So, you know, that's, that's, that's what's happened and that's a unique investment opportunity at this time.

And Chris, are those investments distressed just because of the capital state of the capital markets? Maybe they took on too much debt, they're just financially strained, or is it mismanagement? What are most of these failed investments that you're looking at? Why are you able to come in and buy them at such a steep discount now?

Yeah, because primarily Covid, I mean, as I said before, COVID decimated everybody. So you could have been the absolute best operator in the country. You know, when you, these things take an occupancy of say 75% to break even. So, you know, so remember during COVID these, in many cases, many states precluded anybody from coming in. So, you know, so you were, you were losing tenants due to sickness and that kind of thing, and then no one could replace them. So you sit there and watch your asset go down, down, down in occupancy and then to recover from that is really difficult. So you have the situation where even the biggest and best, you know, the big public companies of course, have the ability to go out, get capital and not lose the asset. But a lot of the smaller operators have just, you know, had a very difficult time. And then you think about the new assets. So we can, we can buy, you know, our strategy is what we call the class A strategy, which is basically a brand, a new asset from 2018 and newer and had gone through the COVID and been destined, you know, been hit by. But just think about supposing you went into the ground in 2019 or 2020 to build one of these brand new in a great market and you come online In March of 2020, you're toast, right? I mean, you are absolutely no fault of your own, but you're devastated. And so some people have hung on there and, and so it's just a very, unfortunately a very distressed time for the people that were already in the business. The good news is I'm starting out with a clean slate and I don't have that kind of trouble and challenges on our plate. So it's tragic timing for them. Very fortunate timing for me.

Yeah, no doubt that real estate can be a cyclical business and so timing is sometimes a very large part of success or not. But Chris, besides just market fluctuation there's gotta be something about your team, the way you approach these opportunities where you're able to get them to operate at a higher level. So for example, if that nursing home, excuse me, assisted living facility is only at half occupancy, how are you able to drive 75, 80, 100% occupancy? What are you able to do differently?

Yeah, great question. I mean, I think the key ingredient, there is a, you know, sales and marketing in this business. Huge. And you know, in the multifamily business, sales, you know, leasing and so forth is very important. But you know, there's so many websites you can put it on and you know, forrent.com and all of those that are broadly out there. There's not that sort of technology available to senior. So what happens in the senior space is that you have to, you have to do all of that yourself and build the team to do that for you. So it's very, very important to have very strong sales division and a marketing division. And remember, average length of stay is two and a half years in these places. So you're constantly turning over and trying to bring in new people. So the difference, you asked the question, what happens when we buy one at 50? Well, and by the way, we love buying them at like that, 50% because we're basically buying a brand new asset with none of the development risk and it's already halfway leased up. Right. So, and at a very distressed price. So the key there is come in with your marketing and sales team, have the capital. In that case, we're not putting a value add to the, to the property. We're not, you know, redoing everything. Chances are it's already in great shape. We may do some minor stuff, we may bring in some new technology, but your main investment in the turnaround is your marketing investment. And so that's where you apply your, you know, you apply your, your value add, so to speak, is the marketing budget and getting it leased up.

Well, this definitely seems like an industry that is ripe for disruption. And although seniors might not be the ones who are, you know, looking on their apps for accommodations, but, but your.

Main investment in the turnaround is your marketing investment. And so that's where you apply your, you know, your, apply your, your value add, so to speak, is the marketing budget and getting at least up.

Well, this definitely seems like an industry that is ripe for disruption. And although seniors might not be the ones who are, you know, looking on their apps for accommodations. But the way you were explaining to this to me and you're right. I mean, the apartment rental side of the equation, I mean, there's lots of platforms in New York Street. Easy is the de facto multiple listing service where you can go and you can look at every single apartment that's been rented or sold in a building to understand what it is. So, you know, it sounds like a great opportunity for someone to create the app to offer senior housing. And even if it's not the seniors using it, maybe it's their children who are looking to find a home and good value and understand how to compare. Because if not, I would imagine if everybody's trying to individually market their projects, that probably, there's probably tremendous amounts of inefficiency there. But in the meantime, I mean, the big part of why I like real estate investing is a big part of premise of why this show and my book is called the Insider's Edge to Real Estate Investing is because you can gain the advantage from these inefficiencies in the market. So fair to say that senior housing, on the whole, you found it to be a very inefficient market. Maybe there's other examples there on how you've been able to outpace the competition.

Yeah, sure. No, I think you're absolutely right. And I think you're absolutely right. Somebody should, you know, you got me thinking now, so somebody should put a platform out there. And, you know, the difference is also that, you know, certain operators are very secretive about what their rents are and what they're charging for this and that as well. So it's not as public and it's not as, you know, easily obtained data.

And I would imagine there's different levels of service as well. I mean, if you're renting an apartment, sure, there's an amenity package you can look online. Is it a doorman? Is it, does it have parking? But senior, if it's assisted living, what levels of care? I'm sure it's a lot of a big a la carte menu where there could be 20 things you could add on. So, yeah, probably be a little more complicated to do, but very interesting.

Yeah, you're 100% right. I mean, that's exactly the case.

So, Chris, what would you say has been your key traits for success? I mean, all the things that you do, what are the things that have made you successful over your career? What are the things that make your company successful?

Good question. I think we've always been, I think, open to trying new things and looking at different asset classes. And even while we were focused for you know, 30 years on multifamily. We're always keeping an eye out. We put, you know, 25 years ago, I built our first assisted independent living. So I was watching that industry for like 25 years before we jumped in, you know, feet first. So, you know, I think it's always, it's always good. Look, primarily we've been a multifamily developer, investor, owner, and I'm a believer that I think it's the best asset class in the world for anybody to be in. So, you know, so even though it's going a little rough right now, it's still without a doubt, from a long term perspective, very, very hard to beat multifamily. I think we're at a time now where senior is, is presenting a unique opportunity. I think there's been a disruption in the market and I think we have a period of time here before it gets corrected. And I think, you know, hopefully in the next 18, 20, 24 months, the really great deals will be gone and then it will be a very nice ride up, you know, and it has to be a ride up because the demographics are so overwhelming. Welling.

And Chris, I've got to ask you, and again, you have a 40 year track record, so we know you're at least over 40 years old. You've been doing this a long time and here you are, you said, I like trying new things and you're jumping in. I mean, this new. Not only building a new company after the gfc, now Aviva senior living, where I'm sure some of your peers have retired their jersey. You know, what, what is keeping you out there every single day? You seem like to me that you're not someone who's just out on the golf course every day. Or maybe you are and, you know, you figured out the way to have it all. But maybe talk a little bit about where you are in your career and why you're choosing to do this now.

Yeah, look, I, you know, first of all, I'm lousy at golf, so. So, you know, that's not an option. And. No, look, I just love this. I love what I'm doing. You know, I love working with smart people that are, you know, a lot, most of them a lot younger than I am. And it's just, to me, there's just nothing, nothing more fun than, you know, not only just buying one of these, but operating one of these and getting in there and learning about the different facets. I mean, it's really a, it's a wonderful space. I mean, these the people, the difference in apartments is that, you know, you're dealing with somebody who's renting a home. That's a very important thing. There's no question. But you know, in a senior living, your staff are really caring for people and it's really sort of a heart driven occupation. You have to love people and love what you're doing. To work in one of these people places, sometimes it's really challenging. And so it's fun for me to see those people and how they relate to people and their commitment to this space. And I'm just learning so much, you know, it's just fun.

It's wonderful to hear. And you know, when you love what you do, it's not work. So now I usually ask the question, what advice would you have for the aspiring real estate investor? But how about, I mean, because you've now built out two teams, two companies, what do you look for when you get a resume? So if you have a position to fill, and let's say you're, whether it's an analyst, maybe it's an acquisitions person, what are you looking for in that application that will help it jump off the page? Or are you, I mean, how do you generally hire people and what are you looking for? Because I get a lot of career advice questions, I get a lot of resumes. So how do you sort through them? What makes for a great applicant?

Yeah, I mean, look, I think, you know, first of all, I'm a firm believer that IQ or intelligence is really important. And you know, especially for the, you know, analyst roles, financial roles roles and that kind of stuff, if it's more of a caregiver and so forth, then the opposite is the case. You want somebody with a big heart. So. But look, it's very, you know, hiring people is very, it's the toughest, you know, job in the world. It's. Anybody figured that out, I want to know. But it's very, very hard. But look, you gotta, you gotta go with your gut. You gotta meet them. I believe in definitely multiple interviews by your team members. I don't ever make a decision by myself. It's always the team's involved and then, and then, you know, probably the most critical thing I've read this somewhere is if you can't get your former boss to give you a great reference and then your previous boss to give you a great reference, you got a problem. And so you know, the winner, you know, the A players, their previous bosses are more than willing to tell you that that person is a great person. Right. And if they're not a great person, then chances are they don't want to do that. And so I think reference checks with who that person reported to, directly reported to, is probably the most important of all.

Chris, that is fabulous advice. And for those of you whether, you know, maybe you're a couple years into your career and you're looking to pivot and make a move, it's so important. And also have that conversation with your employer, I think oftentimes people are very afraid to have that conversation. They want to make a move, but they don't want to tell their employer. And so they're trying to keep it a secret as opposed to just putting it out there. And one of my big mentors is Paul Massey, and what he would say is, look, if you're at that inflection point in your career, have that conversation with your employer first. And it can be daunting. No one wants to come in. You think, oh, maybe you're scared of your job security, where they're saying, you know, hey, you know, you're not interested in staying here, you know, get out. But you'll find if you've been doing the right thing. And I know even when our team members have come to me and said, hey, James, I'm looking to make a move, it's always, hey, I want what's best for you. A couple years into your career and you're looking to pivot and make a move, it's. It's so important. And also have that conversation with your employer. I think oftentimes people are very afraid to have that conversation. They want to make a move, but they don't want to tell their employer. And so they're trying to keep it a secret as opposed to just putting it out there. And one of my big mentors is Paul Massey, and what he would say is, look, if you're at that inflection point in your career, have that conversation with your employer first. How can I be helpful? And then you can have that conversation and to your point, point, have that person be an advocate for you in the future. So, Chris, this has been amazing. We really appreciate you sharing your story. We've covered some topics here that we have not addressed here on this show. So I know a lot of people are going to get a ton out of this. Chris, what's the best way for people to find you? Would it be at the Lloyd Jones website? Is that where your information is? Because it can be daunting. No one wants to come in. You think, oh, maybe you're you're so you can get information on Aviva there as well.

Sure. Lloyd Jones, LLC scared of your job.

Security where they're saying, you know, hey, you know, you're not interested in staying here, you know, get out. But you'll find if you've been doing the right thing. And I know even when our team members have come to me and said, hey, James, I'm looking to make a move, it's always, hey, I want what's.

Best for you.com and you're right, Aviva is there as well. So absolutely wonderful. Thank you very much, James. Really enjoyed it.

Yeah, Chris, thank you so much for coming on and how can I be helpful Then you can have that conversation and to your point, have that person be an advocate for you in the future. So Chris, this has been amazing. We really appreciate you sharing your story. We've covered some topics here that we have not addressed here on this show. So I know incredible what you're doing and really inspiring. So really appreciate your sharing your story today. And for those of you listening, thanks as always for joining. If you like the show, go ahead. A lot of people are going to get a ton out of this. Chris, what's the best way for people to leave a rating? That's what helps us spread the word to help you gain the insider's edge to real estate investing to outperform the market. Until next week, this is your host, James Nelson. Thank you again to find you. Would it be at the Lloyd Jones website? Is that where your information is? Because I see you can get information on Aviva there as well.

Sure. Lloyd Jones LLC.com and and you're right, Aviva is there as well. So absolutely.

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SA.