How To Thrive In The Multifamily Industry In 2025

There we go. Okay, welcome to our Syndication Attorneys Podcast. Um, would be helpful if I actually had my introduction up here. Um, so welcome to our Raise Capital Legally podcast and YouTube channel where we talk about topics of interest to real estate investors Syndicators and fund managers with the opportunity for live questions and answers before we sign off. I am Kim Lisa Taylor, founder of Syndication Attorneys, and I've known Dave Lindahl, our guest today, for— oh my gosh, I don't even know how many years, but I think I met you in 2000 and—

Almost 2 decades.

5, I think.

Decades now.

Yeah. Yeah, it's been— yeah. Wow. That's crazy. That's 20 years. Wow. Okay. But before we get started, please note that audio and video from this event will be posted on our podcast platform, in our YouTube channel, website, and social media will be made available to the public. You can ask questions at the end of the broadcast by raising your hand or typing it in the Q&A. But information discussed during this event is of a general educational nature and should not be construed as legal advice. Uh, so, um, that's kind of where we are today. Um, but today we, uh, we usually interview Dave Lindahl every year because we want to get his take on what's going on with the markets, right? And I know we're in this like crazy uncertain time right now for the next couple of weeks until the election happens.

Yeah.

And everything I'm hearing is kind of like everybody's holding their breath. Uh, but what happens afterwards, right? Like, uh, you know, I don't want to make this a political discussion, but just surrounding the topic of real estate investing, we don't know what's going to happen. I mean, it could go one way, it could go the other way, but I don't think anything comes to a screeching halt. No. What are your thoughts on that?

Well, you know, the, the long-term trend of multifamily real estate looks good because regardless of who gets elected, it will be better if Trump gets elected. It will be good if Harris gets elected. But either way, you know, the worst is good. And that's because interest rates are starting to come down. And the reason that interest rates are coming down is because debt is due. You know, the United States debt is due. They need to start refinancing their debt. And in order to, you know, they got to get the rates down in order to refinance the debt. Otherwise, it's going to cost them a lot more. So we're going to see those rates come down, you know, certainly a quarter of a point every Fed funds meeting, but maybe even a half as well. And that's going to trigger inflation later on. But that's something we'll deal with, you know, probably in about 2 or 3 years. But the, you know, what the rates going down is going to do is it's going to allow more investors to actually get their properties on the market and sell them either to be made whole because, you know, people have been trying to survive. Survive to '25 has been the motto, you know. And so you'll see a lot more properties coming on the market, which is good. You'll have motivated sellers. These are the people that have struggled for the last few years because they bought wrong. Right. And even though the trend of the market now is going up, those are the people who just get out because they've been so stressed out for the last 3 or 4 years. They've had to deal with their investors. They haven't had good conversations, and they'll be happy to be made whole. And they have to lose a little, then they'll lose a little, just as long as they don't lose everything. That's what their mindset is. They don't even see the fact that if they can just hold on and then ride this next wave, not only will they be made whole, but they'll be actually making a bunch of money as well. And that's why it's a great time to buy. When you're buying, you know, after the market goes from a seller's market phase 2 into that down cycle, you know, you're, you're buying from motivated and stressed out sellers. So that's good. And then again, the timing of the market, the fact that the interest rates are going down, more properties are going to come onto the marketplace and we start seeing appreciation in the market. So we start riding up to a buyer's market phase 2 and through a seller's market phase 1. And that's where all the money's made. Although, you know, people that bought in 2010, 2011, they, you know, they did really, really well. People that bought in 2003, 2004, they did really, really well. Now it's 2024, 2025. And, you know, you'll, you'll still do well in 2026 and 2027, but you won't do as well as 2025 because it's just going to be you know, so cheap. And the other thing too is, you know, we've got the debasement of the currency going on. So the United States currency, just like most of the world's currencies, fiat currencies are debasing at a rate of between 10% and 15% per year. So your dollar at the end of 2024 is worth 85 cents, you know, and that same dollar at the end of 2025 is going to be worth 60 cents, you know, and then 2026, it's going to go down another 15% to 45 cents. So that's why getting into real estate, you know, the only hedge against that is real estate, gold, silver, and crypto.

So somebody— someone else told me ammo.

What? Ammo?

Ammunition? I don't know. Yeah, say that. I just thought it was interesting. Like, well, okay, maybe I don't know how that works, but—

Oh, so I forgot. I forgot one other thing. So not only have sellers been trying to hold on and not give back to the banks, But the banks have been trying to hold on and not foreclosing, not, you know, not going through the foreclosure procedure because they didn't want those assets on their books, those non-performing assets on their books. So they've been allowing the sellers to kick their— or their owners to kick their can down the road while they've been kicking the can down the road. And now they'll start taking over assets because they can resell them in the marketplace and get a better price for them. So they haven't been doing that because they, you know, they knew they were going to get— they weren't going to come close to the mortgage that they had out on them. Wow.

Well, but if you're in a property that's facing foreclosure, isn't it a better strategy to try to get out of it instead of let it go to foreclosure and get it sold, even if your investors take a little bit of a loss? What would you—

You know, that's all like, it's property specific, it's market specific. You know, that's not like a cure-all for all because, yeah, I mean, when you're in a situation certainly where there's no hope, Then you've got to get out as early as possible and take whatever haircut you have to take. The problem with that is, you know, every— you always assume that things are going to get better, right, until they're not. You know what I mean? And then it's usually too late. There's this deep psychology there on why people hold properties too long. But they do. Even the investors, even if you've got a really good syndicator, they've been communicating with their investors, they've been collaborating together on how to turn this property around or how to survive. Everybody has like a groupthink of, you know, this can, you know, we can, we can make this happen just a little. We just need a little bit longer, a little bit longer, and then it will get to the point where there is no more time.

Right, right. And then you just got to bail.

The earlier out, the better. Yeah.

But from an ability to continue in this, this market and continue as a multifamily investor, I think it would— wouldn't it be better not to have a foreclosure on your record? Right. If you could even sell something short, it's probably better than As long as the bank gets made whole, they don't care. They're not going to look at you adversely if you didn't, you know, make money for your investors. But they would look at you adversely if you let them take back a property. Is that not true?

So if you get a foreclosure on your record, what will happen is, is when you're applying for another loan, it's not an automatic disqualification, but the bank's going to ask you about the situation and the circumstances. And with a good lending broker, You'll come up with a narrative that basically says, you know, yes, this was a situation, this is how it happened, but the bank didn't lose any money. And if you have that part of the narrative in there, they're more likely to take a chance, you know, and especially if you have a track record with other deals as well.

Yeah. So, you know, ideally the thing is, if you're in that situation, you should be talking to us. You know, you should be talking to your real estate coaches. You should be getting some help from people that know what they're doing. And, you know, you know, try to figure out how to work things out so that you don't end up— and talking to your mortgage broker too. Hey, what's the best scenario here? Should we sell short? Should we, you know, we want to be able to continue in this, in this career. What do we do? And, you know, get some advice from professionals to make sure that you're going down the right course and you just don't, you know, just don't stick your head in the sand and just let it all go away because your investors will be mad. Your lenders won't— may not want to deal with you anymore. You know, you're just gonna have a worse situation than if you try to be proactive about it and propose a solution that works, you know, at least for the bank and, you know, and as well as possible for your investors, I think.

Okay.

So—

For a lot of people, hold on a second. For a lot of people that are in their first market cycle that are having difficulties, they're just like under learning and understanding. Some people are gonna get kicked out completely and they won't be in this business anymore. And others will take their, take their, their oats, their lumps, and then learn from them and move forward. And if you do have good guidance from, you know, people that have been through it, you know, anybody that has— that will tell you that they've been in real estate for a long period of time and they've never had a bad deal, they've either not been in real estate for a long period of time or they're lying to you. Do you know what I mean? Because even on my first market cycle, I ran into the same thing way back in the early 2000s. I got really aggressive and all of a sudden the market changed. You know, everything I was touching was turning to gold. You know, so I had that— I thought I had the Midas touch type of a thing. And then boom. And just like it always does, the market changes like that, you know. And then when you— on those last few deals that you did where you got too aggressive, those are the ones that hurt you the most, you know. And then you have to negotiate with the banks. You have to— you have to negotiate sometimes with your capital partners. I remember I was negotiating. The bank had actually sold off a note in a property that I owned in In Arkansas, Fort Smith, Arkansas, and they had sold the note off. So as I'm negotiating, trying to negotiate, negotiate out of a foreclosure because it was in pre-foreclosure, and the note holder said, he said, okay, he said, we won't do the foreclosure as long as you can pay off this amount. Right. And I said, okay, so let's say, let's just use numbers. Let's say it was $1.2 million. Like I said, they said, as long as you pay off $1.2 million. And I said, okay, well, we can pay off $900,000. How about that? Assuming that eventually we're going to get somewhere in the middle. And he came back and said, okay, you can avoid the foreclosure if you pay off $1.4 million. And I said, wait a minute, you just said $1.3 million. They said, yeah, but you didn't come back and say you would do it. So now we want more. And I was like, well, well, all right, what if I do? What if we can do like, because I assume we come up with just over a million. What if we could do, you know, just over a million? And they said, then we would require $1.5 million. I was like, what? So I would— it was a really savvy negotiator. I'd never been in a situation like that before, but I learned really quickly that I had to come up to their number or, you know, we were gonna have to suffer the consequences.

Yeah.

So, you know, see, that's why, like you said, you know, go to people that have been through it and they can walk you through it as well, you know? And as long as you go through it and learn from your mistakes and avoid it on the next cycle, then You know, life is good again.

Right, right, right. So you've mentioned market cycles a few times, and I remember learning about those from some of your events. So how can people who are on the call or listening learn about the market cycles you're talking about? What's the best way?

The best way to learn about market cycles. That's a good question. You know, I've got— I can offer recording. That, uh, I do. I actually, uh, there's a recording that I send over to the boot camps that we do, um, and we— it talks about the current market cycles, which it actually talks about the 4 phases of the market cycle, you know, and what strategies to use in each one of those particular phases, um, how to recognize what phase you're in, but more importantly, how to recognize the transition. Because it's the transition is where you're either going to make, make or lose money, because in that transition you need to change your strategy. If you don't change your strategy, then you get hurt. So yeah, so I can send you over to the latest recording that I sent to the boot camps and then I talk about, you know, what markets are out there right now that are in emerging, past emerging, the ones you want to avoid. And the best list is the pre-emerging because you get in there early and you make a lot of money.

So I think I learned about that in your Multifamily Millions boot camp. Is that where—

Yeah, the boot camp. That's the, that's the event. Yeah. So, you know, I don't teach that anymore personally, but I've got other people that do. But I do teach market cycles because that's my, that's my forte.

Yeah. Yeah, I think that's great. And then also you've got some books, right? Do they— you've got the—

I do. I've got Emerging Real Estate Markets. That's all about the market cycles. And I've got Multifamily Millions. That's all about how to invest in multifamily properties. And I'm coming out with a new one probably at the first of the year called Multifamily Moneyball. How, how active passive investors create extreme wealth investing in apartments.

You know, there's a strategy I've been starting to talk to people about with 1031 exchanges, how the syndicator actually gets like accelerates their position in the second property and they can continue to do that. I don't know if we talked about that when you interviewed me for the book, but that is something that you might want to hear about because it's just such an amazing tool if you learn how to use it.

In my book.

have your syndicate 1031 its property or another property and you stay in the deal, not only do you get the cash out that you would've gotten if the sale had occurred, and now you can either take part of that cash, all of that cash, and, you know, pay the taxes on it, or you can put it in as a Class A membership interest, as an investment interest in the new property.

Right.

And then you still get your carve-out for the management team. In the replacement property. So you've actually increased your position in that second property significantly if you, if you roll your money in. So it's, it's a really cool tool.

I think that is excellent. I do talk about, I do talk about 1031 exchanges in stacking different strategies together to, to, you know, move well forward. But I didn't know about that aspect of it. That's, that's excellent.

Yeah, that's, that's really— we've had some clients that have done it and it's just worked out really, really well. All right, so what do you think are the best strategies for people to implement in 2025? You know, should they be, you know, making offers? Should they be holding off? What, you know, and between now and here, what should they be doing?

This is the time to be creating your networks, you know, creating your relationships with— first of all, you got to decide which markets are you going to be in. You're going to be investing in your own backyard or are you going to be investing in an emerging market? If you're interested in emerging market investing, you can actually do Both. I suggest that people start in their own backyard, you know, get to meet and greet brokers. They get to walk through properties, do the analysis of these properties. But you can see the numbers and then you can see the property at the same time and build the team in your own backyard. And with that experience, it doesn't take very long. You can parlay that experience over the phone to an emerging market, a market that you want to do business in, and then be doing business in both markets. And so for people that are not familiar with emerging markets, their markets through job growth, that whose appreciation is going to accelerate over the next anywhere 7 to 10 years, and that accelerated depreciation, if you couple that with value add, you know, doing improvements on a property, you can make a lot of money in a very short period of time. And that's what we specialize in. We've been doing that since Wow. Early 2000s. But even if you're not interested in going into another market, an emerging market, you know, understanding market cycles and, you know, using the right strategies in your own backyard, you can do really, really well as well. So the thing now though is to be building your teams. All right? And be putting in offers on a regular basis, still putting in those offers because the offer is like popcorn. You know, the offers are starting to pop. I just got a text from a good friend of mine that just, you know, he hadn't had a deal in about a year and a half. He's like, I just got one in Phoenix. So things are moving. Things are starting to move. They're going to move faster next year. Yeah.

Phoenix has always been a tough market. So that's amazing that they found something. So if, yeah, somebody can find something in Phoenix that works. So, okay, what does work, Dave? I ask you this every single time you teach Dave's Holy Trinity, and I'm always imagining that, oh, there has to be a scenario where that doesn't work. Tell us if you know what your thoughts are on that.

Well, the Trinity is buying properties that have a cap rate of 8+, a cash-on-cash return of 12+, and a debt coverage ratio of 1.6+. And those numbers, when you put them together and a property matches that criteria, it allows you to get investors into your deal and you'll still get 25% of the cash flow. You get 25% of the equity on the resale, and you also get 100% of the acquisition fee. So that's where the trinity numbers come from. And the better those numbers can be. So let's say you get a cap rate of a 9, a cash-on-cash return of a 14, and a debt coverage ratio of a 1.7, 1.8, then you can carve out instead of 25%, 30% of the deal, 35%, 40% of the deal. But so when does that work? It works like it works in every market. But the thing is, is, and the reason I say that is because, you know, I've been teaching since 2002, and when markets get really tight like they did from 2018 to 2022, one of the most common responses we get in tight markets is the Trinity doesn't work anymore. I was like, oh no, that Trinity does work. It keeps you safe. It's for good momentum style deals that are going to cash flow at closing. If you— and if you don't buy within that Trinity, that's when you run into problems. That's where a lot of people ran into problems. Some of my, you know, a lot of people, a lot of my clients became successful and started teaching themselves, you know. But when they started doing deals, because I see, you know, we're all part of each other's lists on, you know, raising money, and we see each other's proposals and all that. And sometimes those deals would go by my desk and I look at it and I call over and it's like, how are you going to do this deal? It doesn't make any sense. You're way below the Trinity. You know, your value-add doesn't take place until year 3. And it just doesn't make sense. And like, oh, well, you know, this, this and this. And like, wow, that is a really high-risk deal. That's not something— that's not something that, you know, that we're really interested in. And now after 2022, what happened was I was getting phone calls that were saying, Dave, how do I get out of this deal? You know, the deal that they shouldn't have done in the first place. But the Trinity— so it's when in the tight markets, you know, when people say the Trinity doesn't work, what they're really saying is I don't have good enough relationships that are going to bring me deals that actually meet the Trinity. Yes, in markets that we're about to go into, there's going to be a lot of deals that meet the Trinity. It's a good time. You know, it's a good time to be seeding and, and watching, you know, your garden grow. But as, as the market gets tighter and tighter, those deals that meet the Trinity are less and less. So therefore, your relationships have to be strong so you're getting those deals brought to you. So that's, that's what it's all about.

Okay. So, and do you say that it has to meet the Trinity like right out the gate, right after you close, or is there some period of time that you think it might take somebody to get there?

All right. So here's the deal. If you're first starting out and you haven't done any deals yet, then your first 2 or 3 deals should meet the Trinity because those are— that's a very conservative formula. It was taught to me by one of my mentors, and that property is going to cash flow for you. You know, you're going to, you're going to feel what it's like to be a successful multifamily investor instead of, instead of looking at the Trinity and trying to figure out ways that you can come in less than the Trinity, you know, do a value add and then it meets the Trinity. Well, here's the problem with that. Yeah, the problem with that is you haven't built your real estate gut yet. You understand what a value add is, but you've never executed one. And until you execute one, you really don't know all of the— like, there's always going to be a big surprise during a value add. You don't know what it's going to be. That's why it's a surprise, right? But there's always a surprise and you've got to be prepared for a surprise. And then it's all about, you know, when you have a value add, you're building relationships with contractors and management companies and, you know, all the different players. And in theory, you understand how that works. But until you start to do it, until you execute a value add, you don't know how it works. So you take the first 3 deals and they could have small value adds in them, but they, they meet the trinity. They steal cash flow without that value add taking place. And then you execute that value add and now you've built that. You're starting to build that gut and you do 2 or 3 of those types of deals with small value adds. value adds that meet the trinity. And by the end of that third deal, you know, your gut's built in. You can go into that fourth deal and maybe you do drop it below the trinity, but you know you've got a value add that you can execute at a certain period of time that's going to bring you that trinity and then above after that. So that's the whole idea behind, you know, can you play with the trinity?

Yeah. And, you know, hey, ask anybody that got caught out doing a value add during COVID Was that a big surprise?

Yeah, absolutely. You know, even, you know, even the biggest where people got caught, you know, in 2021, 2022 was because of the bridge financing came below Freddie Mac and Fannie Mae, you know, the rates, which never happened before. I can't even remember a time where it happened before. And they were, they were getting their deals to pencil out. But the problem was, is that financing was short term. It was only good for 3 years. So the big risk was You know, as long as the rates didn't go up, they were okay. You know, or if they could execute that value add in time before any rates might have gone up, they were okay. But in a lot of cases, the rates went up, you know, and caught everybody by surprise. You know, my favorite saying is, at a low tide, the naked man becomes exposed.

Right? That's interesting.

It's true. So watch, watch the risk that you're taking on.

Yeah, well, and that's true. I think that was the people— those were the people that I saw lose big in 2000, you know, after, after the last recession, were the people that got into the short-term debt and then they had maturities. The markets were depressed. So the lenders are looking at their property saying, look, you know, it doesn't even appraise for the value of our loan. How are you going to finance this? And so it was really hard to raise more capital from your investors. It was really hard to get anybody And then, you know, the bridge lenders ended up getting those properties or, you know, whatever lenders. But there was a lot, you know, so the, what I always tell people, if you want to de-risk your investment and tell me what your thoughts are on this, but, you know, use a lower loan-to-value. It's not necessarily best for you or investors to go into an 80 or 90% financed property. And, you know, make sure that you have the longest maturity date that you can get where you, you know, owe that balloon because you want to be able to ride out a market cycle. If you need to, and if you wait long enough, it'll, you know, property will come back, the values come back. But what are your thoughts on that, Dave?

Yeah, I agree. You know, in tight markets, the bank's going to require that, or I should say in down markets. In tight markets, the banks are a little aggressive, but when the market starts to shift, they immediately go to a 75% loan-to-value, you know, and sometimes a 50% loan-to-value, which we've seen in the last year or so. But yeah, you know, that's how you, that's how you mitigate your risk. A 90% loan-to-value is— that has got to have a really good value add that's going to be executed in a short period of time and in a not-so-risky market, you know, in order to get that type of debt. I remember at one of my events years ago, a lending guy came up to me and said, Dave, he said, I got great news. He said, I can get your clients into deals with a 1 debt coverage ratio. Which means if you're not familiar with it, for people that are listening, a 1 debt coverage ratio means that for every dollar you have in cash flow, it covers your dollar in debt. Okay? So your cash flow is just basically covering your debt. And I said, I said, oh, great. I said, then that means that you can get my people into deals that they'll probably lose, you know, 2 or 3 years down the road. He goes, what do you mean by that? I said, that's probably the riskiest type of a deal that you can do. You know, when you're coming in at equal to debt coverage ratio because you've got all those other expenses on the top immediately anyways. But, you know, he wasn't, he wasn't really concerned about that. You know, you'll find that people are concerned about their fees, you know, their immediate fees. That's why, you know, one of the lessons I learned when I was— before I started syndicating, I got into some syndications and I quickly learned that some syndicators are actually more interested in their acquisition fees Than they were in the actual performance of the deal or the ability of the deal to perform, I should say. So that's something, you know, as a passive investor, for the passive investors out there, you know, be sure that your syndicator has a really good track record. They've been doing it for a long time and they're not just after those fees.

I have a name for those people. We call them syndicate acquisition fee junkies. They're junkies. Yeah, you know, they're, they're, they're jumping after the next fix because the last property isn't cash flowing or it doesn't cash flow for a very long time. And part of that's the way they structure their deals too, though. So, you know, first you got to have the good enough deal, but then you got to work with, you know, us or really experienced securities attorneys that are going to make sure that you're not putting all your income at the back end. Because when you do that, you've misaligned your interests with the investors. And now, you know, your reward comes at sale. And they like the cash flow, so they want to keep the deal. And you have a fiduciary responsibility to put their interests ahead of your own. And all of a sudden, you end up working for a very long time for free. So now you're, you know, jonesing for the next deal, right? You got to go get another acquisition fee to, you know, make your house payment. So that's not a good position to be in. You know, follow Dave's holy training, you won't get there.

That's the second lesson for passive investors that are listening, is that is You know, if they're getting the money at the end of the deal, if they don't— if they're not getting returns as the deal goes through, they lose interest in the deal.

Oh, yeah, that's very true.

Here's something interesting, right? So, you know, we've been teaching since 2002. So for 22 years, we've been teaching how to buy multifamily properties, how to raise money for multifamily properties, and how to operate multifamily properties. So of the 3 events that we have, The how to buy multifamily properties is the one we have most often because we have it like 3 times a month in different cities around the US. How to raise private money, we typically have 4 times a year and they're pretty large events. And then how to manage the property, how to asset manage your property. We brought that down to a digital download. We don't even do it live anymore because it's the least attended event.

Wow.

And it's probably, you know, other than buying and raising the money, it's the third— it's like the third leg of a 3-legged stool. You know, but people, they see the acquisition, you know, they want to know how to go and get the deal and then they want to get the acquisition fee from raising the money for the deal. But then they have to operate the deal to actually be in business, you know, and to get the returns for themselves and for their investors. And it's the— it was the least interested event that we, that we, that we did. So, and we used to sell them as a package, you know, so you would get that 3rd event. And we went, we were doing it 3 times a year, went down to 2 times a year, went down to 1 time a year. And then now it's just in our online learning center. Crazy, isn't it?

That's the managing manager, right? That's the— yeah, you call that one. So the— just so you guys know, if you go to RE Mentor's website and check out their live events, they have a list of what's coming up. And the Multifamily Millions is— they're doing that like 3 times a month at different places around the country. Everybody who wants to buy multifamily should go to that. I went to that. In 2007, I believe. And it was— it just blew me away with how much I learned, you know, about what to buy, what not to buy, what markets were the right markets to look at. Uh, this— the amount of information was just staggering. So you've— you really have to go and start there. Even if you've learned from some other mentor or something, you're going to get some new tips and nuggets at that event that are going to shape the way that you see real estate. And it might And it might change your thinking a little bit. Then the Private Money Bootcamp, that's the one that I co-teach with Bob Bowman. And we do that several times a year. And that's, that's pretty intense. So that's, you know, where I get to really, you know, talk about the deal structures in depth and the securities exemptions and, you know, how you can do this confidently and legally. And then Bob's going to teach all the practical aspects of it because he's got a tremendous amount of experience raising the money. And then, yeah, if you don't listen, if you don't figure out how to manage the asset, what happens? You know, a lot of times what I've seen people do and some of these acquisition fee junkies, they don't raise all the money that they need because we, you know, they do have the ability to raise money after they close on the deal if you don't raise everything you need. But here's the problem. What don't you raise? Well, you got to raise enough to close and to satisfy the bank that you can do the deal, but they don't really care necessarily if you have all of your capital improvement budget in place. But if you don't and you, you take your foot off the gas after you close on that property, well, you have the exact same property you just bought from the seller, and it's going to perform the same way for you as it did for them— not as well as you wanted it to and not going to meet your projections. So you've got to make sure that you raise all the money that you need, including the money to pay yourself the asset or the acquisition fees, and, um, you know, pay off your pre-closing expenses and all that stuff. So, uh, you know, just Yeah.

Until you raise all the money, you don't get paid.

That's right.

You paid your acquisition fee.

Last thing on the list paid is that acquisition fee. And if you don't raise enough money, you don't get it. You know, you might be able to take it later on, but maybe, maybe not. You know, maybe you can't.

So the golden rule to raising money is you get, you know, you get people on your list that say that they're interested in investing in real estate and investing in you. And then you realize that 50% of the people on your list that say that they're interested in giving you money when you have a deal, won't. The problem is you just don't know which 50%. So if you, you know, if your next deal, your first deal is going to be, say, a million-dollar deal, you know, just assume that you're going to have to raise 30% of that. That's the easiest thing to do. So that would be $300,000. So if you have to raise $300,000, make sure that, you know, you've got at least $600,000 in people that say that they're interested in investing with you, and then you're comfortable, you know, being able to complete that raise. So if you go in there with that mindset, You'll do well.

Well, and the SEC says that the median raise of, uh, Reg D Rule 506 offerings out of the 25,000 that are filed with them every year, uh, is $2 million with 14 investors. And if you've got it, you probably need to have at least 3 times that many people in your database that you can talk to because not all of them are going to be interested right then. Um, what's your thoughts on that, Dave?

Oh, I agree. Yeah, then, you know, they may not be interested then, they may not be interested at all, you know, buyer's remorse after they you that they're interested in being in your deal. But yeah, you've, you've got to, you got to be out there sourcing people inside of your database on a regular basis. And it's not a hard thing to do, you know, because you can do it. You know, when I was cutting my teeth, I was going to every business meeting and they didn't have meetups back then. They, the real estate investment clubs, Chamber of Commerce and things like that I would go to. And I hated it because I'm an introvert, you know, total introvert. And then I realized that, you know, I was asking for money. You know, I was going in there saying, hey, you know, look what I got. You're interested, you know, like a beggar. You got any money for me? I got to close this deal. And then I realized that, you know, instead of asking for money, it was actually a conversation that I had in my head because I would actually drive to some meetings and I wouldn't go in. I'd just be like, it's like when, you know, when you get a gym membership and you drive to the gym, but you really don't want to go in there. So you don't, you drive back home. So it was the same thing with me when going into these investor groups. Because I just didn't like talking to people. I still don't, you know, I don't like talking to people I don't know. And then, so I would go, so I was outside of one event and I'm saying to myself, my one brain saying, you know, you gotta go in there, you need to raise money for this event. I'm like, I don't wanna go in there. Those people, you know, they, they can't even see the fact that this deal's gonna make 'em so much money. It's like, yeah, but you know, you've gotta get in there and you've gotta do what you gotta do, you know, so you can, so you can raise the money. And the other side's going, yeah, but these people, you know, you know, why don't they just understand that this deal is going to blah, blah, blah. And all of a sudden, the other brain is like, just go in there and tell them that, you know, talk about your opportunities and don't ask for money. And I was like, that's a good idea. So I went in there and when they say, what do you do? I just like, oh, I invest in multifamily real estate in emerging markets. And they'd be like, what? And I'd say, yeah, I invest in multifamily real estate in emerging markets. Sometimes I wouldn't even say multifamily because that would trip people up. Oh, you got tenants? Oh my God. You know, did they trash your place? So I stopped saying multifamily and just real estate until I, you know, got them down the path. And, you know, the best part about that, you can do that. Just you just wait until somebody says, what do you do? Or at a social situation which everybody goes to is, what have you been up to? Right? Like, oh, I've been looking at investing in emerging markets, emerging real estate markets. People hear emerging real estate markets and they think money. You know, it's a, it's, you know, it's an opportunity. And the people that are interested, they'll start asking you questions. The people that aren't interested, they're not going to ask you questions about real estate. So, you know, you, you know right away, you know what you got. And then the people that are asking you questions about real estate, right, what they're really asking you is their objections, you know, and if you just simply handle their objections and you let them ask away, ask away, ask away, and as you're handling their objections, you know, you seed in there somewhere about your investors. Yeah, you know, my investors love this about the, you know, these projects. So my investors love the fact that multifamily, you can, you can use depreciation against your other income, you know, to reduce your taxes at the end of the year. You just seed something in there and all of a sudden in their minds like, oh, he's got investors. So then by the end of it, if they're really interested, they say to you, you know, hey, when you think I could get into one of your deals or hey, when you get a, you know, another deal, let me know about it. And it's just so easy that way. And it changed my, you know, it changed my ability to raise money like really big. I still don't like to go to groups. I remember I was over at the European Family Office Summit. I think it was in Amsterdam. And I had been there like, this is how introverted I am. Like, I have to talk myself to get out of the hotel room in the morning, you know, to go out there when the event starts because, you know, because I know I have to start to talk to people. So I go, so it's the 3rd day, hadn't raised any money yet. And I'm like, I gotta, I spent a lot of money to come here. I spent a lot of money on this event. I gotta talk, I gotta talk to people. So my, my idea was to pick people off as they're going to get coffee, individuals instead of trying to get into groups. And the first guy in the morning, as he's going to get the coffee, I walked up to him and I said, hey, you know, my name is Dave Lindahl. I invest in multifamily real estate. And my goal during this break is to just meet one person. Would you be willing to be that one person? And the guy was like, big smile comes on his face and he's like, absolutely. And we went in the corner and we talked and I thought that went— that worked really well. So I used that line. You know, every time now it's like, I just want to meet one person and people always want to be that one person because they want to do you a favor.

Oh, that's so cool. Yeah. One of the things I talk about when we do our masterminds is, you know, to say, for, have my clients say to people, you know, I invest in real estate and, you know, with groups of people like you, right? It just kind of, because a lot of times when they just say investors, you know, the person that you're talking to thinks, oh, you mean rich people? I'm not one of them. Right? And so you want to kind of make them feel included. Oh, you mean this is something I could do? Wow. Well, okay, tell me more about that. If they're interested, they'll ask, right?

Yeah, that's a good line.

Yeah, just, yeah, with people like you. Yeah, so just, you can do it. Um, yeah, but I think you're right. Mindset is really— there's— you've got to flip that switch in your head. I'm not asking for a favor. I'm not asking you to loan me money for some personal thing. I'm offering an investment opportunity that's going to help you diversify your investments. You know, so many people have things only stuck in the traditional, you know, stocks, bonds, things like that. But we all know that that stuff can drop dramatically in a very short period of time.

Oh, yeah.

And if you diversify and have some real estate holdings as well, then all of a sudden you feel a little more comfortable if that drop happens. Hey, at least I've got this. It's eventually going to go up in value. And, you know, you're actually helping them. And so you've just got to realize that you're offering investment opportunities that they may need. And, you know, that's, that's how you got to approach it. But you have some events that help people with mindset. You want to talk about that? Your Insider?

Oh, the Insiders. Yeah. Yeah. The Insiders is a community. It's our high— it's our high-level High level in the sense that you get direct exposure to me and some people that are doing some really good things in the marketplace. And it's a combination of people that are just starting out, people that are like— I call them doers, people that haven't done their first deal yet. And then we've got rainmakers, people that have done between 3 and 1,000 units, because primarily a rainmaker is trying to put together all their business systems, or I should say their deal systems, in order to keep deals coming in on a regular basis. And then we have magnets, people that have 1,000+ units, And they're really focused on their business systems because their deal systems are working really well. They're growing their businesses and they become magnets and then titans. But anyways, inside that group, we work a lot on mindset because, you know, without the mindset, you're not gonna, you're not gonna progress yourself. And the best part about that group, as you know, because you're part of it, is the community.

Yeah.

You know, it's just a community of like-minded people, you know, that are, that are moving their way forward. And it's a, it's just a really, really good, it's, it's even like a support group, you know, we're all on WhatsApp together. We're talking on a daily basis. And then, you know, people can reach out to anybody at any time. It's really, that's a really good group.

And you go through with a cohort. So you're, you know, you're, you're seeing the same people over and over, you know, during the period of time that you're involved. And I've just seen the people that started out in it, you know, they're sitting in the back of the room, they're not talking to anybody, they're really nervous. And all of a sudden, you start just drawing them in and drawing them in, and pretty soon they're up on stage talking about the deal they got. They're super excited. Their confidence level has just, you know, grown exponentially just by being at that event.

You know, being an introvert, I try to look, look, I'll like scan the crowd and look for the introverts as well, and I'll pull them up on stage and give them hot seats. And, uh, and at times, like at the last meeting, I said, uh, I forget what the gentleman's name was, uh, oh, it was Mike. And I was like, like, it's like, guys, Girls, Mike is an introvert. Everybody can see that Mike's an introvert. So I want somebody, some group of people to invite him out to dinner tonight too. Right? Like, oh yeah. And like, that's the thing, you know? And that's the about that group is everybody's looking for that person that's like kind of hiding in the corner or leaning against the wall to pull them in. Because, you know, there's a lot of people in that group that are just so robust in their personalities, you know? And they love to, to pull people in. It's, it's just, it's full of different Different types of people from all walks of life.

Yeah. All right. Well, I want to remind everybody here that we are approaching the point at which we want to pick Dave's brain. So if any of you on this call— and we've got a lot of people live— want to ask Dave a question, you know, this is a rare opportunity to get face to face with Dave Lindahl. Don't pass it up. So you can either put it in the Q&A, put your questions in the Q&A, or you can raise your hand. But in just a few minutes, we're going to you know, give you that opportunity. So don't, don't pass that up. So what do you think about AI in the real estate industry? Where do you see that going?

Oh, man, AI is going to make everything— it is making everything so much easier in terms of your contact management system and contacting brokers and contacting private money underwriting. You know, the biggest thing with AI is the fact that it makes underwriting so much easier because that's the most difficult thing for a lot of people. And for those people that are not left-brained like me, that are right-brained, and even though I know how to underwrite and I know what good underwriting looks like, I hate to do it. And I actually, you know, hire other people to do it, and then they send it to me for the final approval so I can just, I look for the outliers. But with AI now, you can underwrite what you normally would take like 3+ hours. You're doing it in 10, 15 minutes. It's incredible. So that's the biggest breakthrough, I think. And that's the thing that helps support most people. But every aspect of the deal can be taken over, taken over by AI. I call it the brain. Actually, I laid it out for my team the other day. I was like, look, this is the brain, the contact management system, and then the deal flow. And then from there, every part of the deal, you can even use an AI scraper to scrape, you know, deals in your particular area. You can go from the scraper to the underwriter. Once the underwriting gets done, you can actually, you could go into an AI negotiator. So when you put in an offer and the counteroffer comes back, you can put it in like, what are my best options for a counteroffer? You know, help you do that there. You can go in with AI and do an app tracker, you know, and you can do your property inspection through AI. And at the end of it, that inspection, it just— it sends you out what it's going to cost you in improvements in order to do this deal and what the general quality of the deal is all the way through asset management. It's a, it's a huge game changer for those that aren't involved in AI. The people, the people that are, are gonna far surpass you in deals and profits.

I remember hearing you say that, I think at the Insider's Club. It's not the AI is gonna replace people. It's the people that are using AI that are gonna replace people.

And yeah, that's right. And that's a, as you know, that's a focus on AI. We've got a couple of gals in there that are just, Like, on top of it on a regular basis. They give us their regular reports each time we meet on what's changed. And, and like, so much has changed in between like the 3 or 4 months that we meet. And in person, we're meeting weekly. There's so much, there's so much going on in that group. You know, every week there's something. It's either the book club meeting or there's a deep dive, you know, or I'm doing an AMA. It's, there's a lot going on. Well, yeah.

I had an encounter with a company called Janover, janover.co, that is using AI to source loans, commercial property loans, primarily on multifamily properties. So, so they'll go out and, you know, get hundreds of loan officers and they'll take the place of the mortgage broker, but they're gonna sift through all of those and help you figure out which ones are the best ones. And, you know, so you don't have to look at hundreds of offers. But they're going to help you figure out, okay, this one meets your criteria and then help you pursue those.

Wow, that's pretty smart. I wish I thought of that.

That could be a game changer.

Yeah. I wonder where they get their data pool from. But that's interesting. I wonder if Eric Stewart knows about that because Eric is— people don't know Eric Stewart's the guy that I use to fund most of my deals. He's a mortgage lender. I wonder if he knows about that.

Yeah, I don't know. I haven't talked to him recently, but yeah, David, Yeah, Eric is amazing. He's— he helped us. He stuck with us for 2 years on a property that was like basically not financeable. And then it was crazy because it was a property in Ohio. We lived out of the state. We actually ended up buying a single-family house for my stepdaughter in Ohio. And the minute we bought that, all of a sudden all these lenders wanted to loan to us. Oh, you have other property in Ohio? Okay. And he stuck with us for 2 years to help us get a loan on this property. And It was amazing. He's, he's got a lot of perseverance and a lot of integrity, and I've known him for years. So highly recommend Eric Stewart of Atlantic Capital, I think. Yeah.

Was it— is he still at Atlantic? I know he went out on his own.

Yeah.

But anyways, you can always get by his contact information if anybody's interested in talking to him, because he will do— he will fight by you.

Yeah. Reach out to us if you want contact information for, you know, anybody we talk about here. But Yeah.

And we'll— I want to give a plug for my Ultimate Partnering before I start taking questions.

Absolutely.

As you know, that's going to be in like 3 weeks in Nashville, November 8th, 9th, and 10th. And Ultimate Partnering is all about anywhere between 800 to 1,200 people in a room, real estate, multifamily real estate investors. A lot of them are alumni. It's a big like hug fest because everybody is so warm, embracing, looking to help each other out. There's money in that room, there's deals in that room, there are business partners in that room. I remember right before COVID happened, we had an Ultimate Partnering and 5 members, 5 people in the group got together. They called themselves Quantum Group. And during COVID they did 18 deals, 18 deals, and they didn't know each other prior to going into that group. But there's great education on the stage, but off the stage is such great networking. So you can go to ultimatepartnering.com there, ultimatepartnering.com, and you will Love that event. We've been doing it now for almost 20 years.

Yeah.

Oh, yeah.

It's, it's, it's a really great connection event. And we've, we've sponsored it every year that you've had it. And it's always been a great experience for us. That's where we get to meet a lot of our clients face to face. And it's just, yeah, I can't. And it's in Nashville. So who doesn't want to go to Nashville, right?

Yeah, absolutely.

So, yeah, definitely go to the RE Mentor live events page. It's there. You can register right there. Do it soon because I've heard that the room blocks are filling up.

And yeah, the price is going up one last time.

Yeah. So you really need to go. You know, not only are you going to meet, you know, other people that are successful that are going to get you excited and, you know, you're going to meet the tremendous vendors that can provide services you need as your business grows. And you don't know when you're going to need them, but all of a sudden you're going to be like, oh, I met that company. I need that now. And you're going to be glad that you were there. But I've seen so many, you know, people who meet their partners at these events. In fact, I met my original partner at this event. You know, I met him at the Private Money Boot Camp. This was, I think, before you were doing the Ultimate Partnering. But I think the Ultimate Partnering is just a really tremendous way to get to meet.

I can say that whatever you need in terms of your real estate investing, multifamily real estate investing is there. And if for some reason you can't find it, Then you just simply ask the attendees and they will point you to whatever resource that is, whoever that person is that has that resource that you need. That's how good that event is.

All right, quick commercial. I've got 2 books out on capital raising. So one is a beginner's guide. So that's How to Legally Raise Private Money, short book, only 160 pages, how to syndicate step by step. I've also got How to Raise Capital Legally for Real Estate. It's about twice as long, so it's more detailed. I consider it to be more like a desktop reference. Table of contents is very detailed, so you can go in there and find exactly what you need. Read that chapter. You can, or you can listen to it on Audible. This one's available on Audible. Both are available on Kindle. So, you know, you can get them at Amazon. Kim Lisa Taylor, just look up my name. That's the best way to find them. If you don't already have a free copy that you got from us, you can get one at our website if you go to syndicationattorneys.com and go to the free book tab, or you can text the word syndicate to our phone number, which is 844-796-3428. So let's see, let's go to some questions. Well, so what is the cost to be in the Insider's Club? I think you're probably going to want to have a call with with one of Dave's team, right, for that information?

Yeah. Call the office. He will take you through the whole process. It's not, not cheap, but you really need to know what you're getting involved in to make a good decision as to whether you want to get involved in it.

Yeah. And you want to know—

I'm sorry, go ahead.

You want to know everything it includes because there's a lot more than just showing up at events. You're going to get so much more out of it.

Yeah, the number here is 781-878-7114. 781-878-7114.

Or go to their website, rementor.com.

Yeah, you can't find Insiders though. Insiders is not on that website. It's like our secret organization.

Right, right. You can get the phone number there though if you didn't catch it on the—

Oh yeah.

Yeah, right, right. Okay. Is there any new Dave's seminar or webinar coming up? Well, so the Ultimate Partnering, absolutely. That's the next thing. That's November 8th through 10th in Nashville. So definitely that's the next thing on the agenda. And then if you want to know about any of his other events, if you haven't been to the Multifamily Millions, I cannot stress enough how important that is for you to go. You have to go. That's your foundation. If you don't have the foundation, the whole thing could crumble around you. You know, you're gonna learn how to analyze deals. You're gonna learn, you know, what deals to avoid, and you're gonna learn not to make $100,000 mistakes with other people's money. That's crucial. Kenny, post the link for Dave's community. Like to know the details on the cost. How can experienced people— so Can join, so I can put into the chat and we'll put into the show notes too because this will get put out on our our podcast. Let's see if I can get to the chat. For some reason, it's not letting me. There it is. So going out to everybody, just rementor.com like real estate mentor, mentor, mentor.com. That's the best way to learn about Dave's events. Get their phone number, call Jeannie about the Insiders Club, or figure out, you know, how to get yourself to the Ultimate Partnering. Okay, let's see what else. Kim, you briefly mentioned about 1031 exchange strategy, strategy to change your position higher in the next investment. Can you give an example or more illustration of what that looks like? You're in a deal right now. Let's say your management team has 30% of the backend profits, right? So you, you know, hopefully you've gotten some cash flow along the way, but you're, you know, a 70/30 split. So at the end, you're going to be entitled to some share of profits. So when you get a property, you've got an offer on your property, hopefully you've found or identified a replacement property because you've got some time periods within which you need to do that. And then you're going to work with a 1031 accommodator to hold any funds from the sale, make sure that none of that touches you. You're going to have to take a vote of your current members to ask them if they want to do it. And if there are any people that don't want to do it, then you either buy them out before the sale, or you take them forward with you into the replacement property, and then you resyndicate the new property. So you can raise some more money to buy out those earlier investors. And also because you may be buying a bigger property, you need more money for that property. So during— after the sale occurs, you're going to reconcile your books and figure out how much cash every single member is entitled to, including the members of your management team. So once you figure out what cash everybody's entitled to from the proceeds of the sale, then you can offer your investors and all of your management team members the opportunity to take that cash and pay the tax. Or to roll it forward into the next deal. And so you're going to give everybody kind of a statement. Hey, here's how much you're going to get. Here's your capital contributions back, plus here's what you're going to get in profit share. Do you want to roll all or part of this into the new deal? They're going to tell you how much they want to put into the new deal. They then sign— you have a new set of syndication docs for the new deal. They sign a subscription agreement for the new deal. They give you a transfer form. We have a short transfer form. They can say, take my money from here. Put it over there. Here's my subscription for the new deal. That's how it goes. Well, so your management team, let's say they had 30% in the first deal. Now they also are entitled to get a 30% carve-out on the second deal, or whatever your, your financials allow them to get. Usually going to be 25 to 30% is what we see a lot of in this market. But in addition to that, you take all the cash that you want to roll in. And you buy Class A interests or investment interests in that new deal with that cash. So now you own part of the Class A interest and you own your 30% share of the Class B interest in the new deal. You are now a bigger investor in that deal than you were before. So that's how that works. I think we actually have something on our website about it. I wrote, I wrote about that strategy recently in one of our FAQs. If you go to syndicationattorneys.com, you'll get a bar, uh, just type in 1031 and everything we've done on 1031s is in there. But I think there's a recent article that got posted about that that I wrote. So, uh, let's see, uh, are these books available on audio too, like Audible? Uh, yeah, this, uh, this book is available on— go ahead.

No, I'm sorry, I wasn't sure which book she was referring to.

Yeah, this book right here is available on Audible. So this is the more encyclopedic one. So highly recommend you get that. What about you, Dave? Your books are available on Amazon too, right?

Yeah, they're on Amazon. One of them is available on audio and the other one isn't. I'm not quite sure which one.

Yeah. So check those out. And then Al asks, what platform do you recommend for AI underwriting? Do you have that?

You know, if you take Claude and you start feeding it you, you give it its parameters, it works really well. You have to massage it a little bit. Claude AI.

Okay. Claude AI.

I haven't heard of that one. Yeah, it's kind of, Claude's kind of like a version of ChatGPT, but through a different provider. And that's getting us the best results. There are a couple of different products that are coming out there now. What is it? I researched one of them, but the problem was I couldn't get all of the I think it was called Red Capital, Red Capital Group. I couldn't, it didn't unformat certain aspects of the P&L. So it didn't, it didn't remain in the format, but it's getting better and better. So I don't have a product recommendation right now, but there, if I do get one, I'll send it over to Kim and one that's working well. But we like kind of did a prototype of our own with Claude. We put in our parameters and—

That's Is it claude.ai? claude.ai.

Yeah.

Okay, I put that in the chat. Somebody asked about that. Um, so somebody's— thank you for answering my questions. Um, let's see, just looking, scanning quick here. We've just got a couple more minutes. Um, oh yeah, so somebody said for the prior podcast where Jeannie was interviewed She mentioned that she would only feel comfortable promoting opportunities that gave off annual returns of 12%, 20% or higher. How is this different from your 12% to 13% cash-on-cash returns that you mentioned earlier? You want to speak to that?

Okay, I can answer that. So Jeannie was talking about a— not IRR, but ARR. Average annual returns. All right. And what we're talking about is cash-on-cash returns. Cash-on-cash returns measures yearly. The annual returns— the average annual returns measures the returns on the entire deal throughout the life of the deal. So it's a different equation. But yeah, typically we'll get into deals in the past couple of years. You know, you could get into it, you could present a deal at a 15% ARR. Jeannie being very conservative and we like to be conservative, wants to do deals at a 20+ because you make a lot more money on a 20+ deal. But investors, because there was so, so less inventory out there the last couple of years, were willing to take a 15. And I've seen deals go out there at 11 and 12 ARR and get, you know, get funded with a 6% cash-on-cash return.

And the preferred return, somebody usually asks about that all the time is what is a preferred return? How does that differ from these things? Well, the preferred return is really what you're paying out from cash flow. And that just means that you're going to set a hurdle rate for your investors saying to them, we're going to make sure that you get at least this every year before we take our cut for the management. And so that's, that's a preferred return. For decades, the preferred return that everybody loves and will invest with you again and again is 8%. But that's not what you're selling to your investors. A lot of people get mixed up about this. What you're selling to investors is this average annualized return. Because you have to take into account eventually we're going to sell the property, we'll have created value, there's going to be equity that's going to also be shared with you. Add that all together from what you got from cash flow, and that's going to help us calculate that average annualized return. So that's, that's important to understand the distinction there. So, Dave, we're at the top of the hour. This, as always, has been just amazing. Phenomenal. Love having you on.

Fun.

So I look forward to seeing you at UP. Can't wait to go.

We'll see you there in 3 weeks.

All right. Thanks again.