Speaker A and Speaker B examine whether Brandon's $25 million capital raise led him to overpay on a Houston multifamily deal, assuming a sub-4% cap rate when historical rates ran 5.5-6.5%. They trace his path from single-family rentals to mobile-home parks to multifamily, questioning whether ego or scale drove the leap, and note he refused to appear on the podcast.
Chapters
Well, here's question number 1, and you're kind of dancing right on the grave. Oh yeah. Did access to endless amounts of money make you do a bad or skinny deal?
I would, if I was Brandon, I would probably answer that question as, you know what? Yes, it did. That had to be, that had to be a factor.
And now you know why he doesn't want to come on my podcast.
Cause as soon as he says that liability, it's a hard, it's a hard question. Yeah, exactly.
Exactly.
You can't say yes., but the answer kind of has to be yes, because no one else could have done that deal. You couldn't on that deal's fundamentals have pitched that without the brand and got money. I, I just— last one. Yeah. Michael and I combined could not have raised for that. I, I don't believe that two of us—
no, I don't believe so.
With, with our little, with our little reach, but all of our capital raise power, I could not convince someone, hey, massively overpay for this deal. I just don't see that being— and it was a big deal.
Yeah, he raised, I think he raised $25 million in total, but yeah. So again, question 1, did access to endless amounts of money make you do a bad deal? All right, here's number 2. And again, why he won't come on my channel. Did you really, did you really think a sub-4 cap in Houston would go lower, right? On the exit. Lots of people thought that. And I'm like, did you really? Like, did you really, really think that?
What do you think? Yeah, the historic lows. So it's never, it's never been lower in Houston ever. That's the lowest it's ever been. Now, to be fair, there was a lot of operational upside and they did technically hit their operational upside. So there's probably an argument.
Doesn't matter if cap rate doubles. Doesn't matter.
No, no, it does not. There's an argument of if cap rates had stayed the same, which they weren't going to.
Yeah.
But let's just say, let's say they weren't going lower. If they had remained the same or even gone up a little bit, they added so much to the NOI that maybe it was okay. So Brandon might survive that question. There's an operational answer of. Hey, this is what I'm good at. I wrote the book on, I wrote the book on rental properties. I can, I can manage this thing. There's NOI increase. No one can survive the double when you overpay.
My follow-up question for that, if he would've answered the way you did, is I would've asked him what's the historical cap rate for Houston? Because I don't know the answer. Maybe the historical average is 5. So you're within the realm, but if historical average is 7.5, again, that deal was dead the day it was closed.
5.5 to 6.5, it fluctuating in that range is probably no, we'll call it like a Houston's a 5.5, 6 cap market in most areas of Houston. Katie? Yeah. Probably a 6.5 cap market.
Okay, cool. I have no idea. So question number 3 really goes back to, and again, this is my understanding of Brandon. Please tell me when I'm wrong. He started very much one rental at a time, right?
Absolutely.
And again, that got him to Hawaii. Then Brandon started doing mobile home parks and near as I can tell, had wild success. And then he went to—
and then he went to one brand. Yeah. And then I went from houses to duplexes to mobile home parks. That, that, that makes sense to me. I would invest in that. That makes sense.
Yeah. And then he went to multifamily. So here's my question, assuming that is the right progression. Was it ego or boredom that made you risk it all moving to multifamily? Because he already had a good life.
He did. That's the, that's the thing is he, he, he made it on all metrics. He, he had made it. Which is the bummer to see this happen at that point. I would love to see what it was. I would have to imagine it's a mix of both as a serial entrepreneur, 'cause he, everything he's touched has mostly worked. The temptation is always to scale and add new stuff.
