Seller Financing The Sellers Perspective - Guest Staring Caleb Hommel Live

Hello and welcome to Multifamily Strategy Live. I'm Christian, joined again by Caleb. Caleb, welcome.

First time on the channel. Thanks for having me.

Now, I broke a microphone during our last webinar. It was so awesome, the mic stand couldn't even handle it.

So he spiked it into the ground.

We're sharing a mic today. I believe I got the audio dialed in, but if it's— if it gets pitchy or a little bit off, just feel free to let me know in the comments and we will go ahead and get that fixed to the best of our ability. However, I think it's working pretty well. I'm excited for today. I haven't done enough sharing this. I've shared many times on this channel that I seller financed one of my companies, my property management company, before moving to Texas. What I haven't done a good job of and what we're going to do in the beginning of this episode is we're going to talk about what it actually feels like, looks like, and why I would seller finance. I've done so many purchases seller financed. We talk about, you know, how do you find these owners or how do you pitch this? I want to have an interview, or not really an interview, but, but a conversation of being on the selling side and the buying side, what it actually feels like, and why I offered, you know, low-ish down but low interest, lower price on a seller finance deal. So we're going to talk about that. Then as always, we open up to questions. So if you want to talk real estate, creative finance, you want to talk business, uh, we got several companies together. I have a few companies by myself. We have done a lot of business and we will talk a lot of business and creativity. So, uh, first and foremost, thank you for joining the episode today. So seller financing, Caleb, you have done— how many of your transactions have been seller financed? 4 out of 5?

3.

3 out of 5?

No, no, 4. We— 4.

Yeah, 4 for 4.

4.

Yep, the 25 years.

I was trying to think, I'm like, was that seller finance or conventional? I can't remember.

That was, that was. So Caleb has done 4 seller finance transactions. He's 21 years old, started with $300. Today you're worth about— we just calculated you, we just actually filed for a bank loan, so we just did this— you're a little over half a million dollars.

Yeah, right in there.

He's 2 years into the game, he's young, he has a long way to go. I think— and by I think, I am very, very sure— within 2025 Caleb's gonna hit millionaire status.

That'd be nice.

You got deals in the pipeline, you got businesses that are growing. I think just on your business valuation alone, you're probably gonna pick up the half million even if you didn't buy any real That's my thought as well. So Caleb crushing it. He built his business starting with seller financing. I started my business with seller financing. When you start with no money and you have no equity, you can't seller finance.

Nope.

3.5 years in the business, I had packaged my systems. I actually started a property management company so that I can have employees managing all of my different LLCs and all of my different rentals and being able to move them across. Caleb right now is working on one of his companies on his phone as we speak. But I had 3 and a half years of systems to run my company. So not my core company being real estate, the property management was to manage my properties. And we got really good at it, we built some systems. I was like, you know what we can do? I don't even need to make a profit. I would like to subsidize the cost of the people that I use to manage my portfolio and be able to hire more people. And so what I did is I took on management of the buildings around mine, and not only did I get to influence market rent and do a good thing in a market that needed it, I was able to hire more employees, get more systems, more processes. And it got to a point where when I moved to Texas, I didn't want to be in that job anymore. But what it took to build one business, those systems were sellable. We got valued at $300,000. I had an offer come in for cash for $300,000. I did not like the person enough. They were fine, but it didn't feel like the right person to manage my portfolio. I did not want to sell my property management company to someone who I did not think was qualified to manage the clients that I have built or my own portfolio. As an owner selling a piece of real estate, I think this is directly relatable. The feeling on my end is, look, I want to sell to someone. One, I don't want to have to take the company back. I'm moving states. Like, my motivation— I'm leaving. If I'm going to sell or finance, I better trust them. Otherwise, I need a clean sale. I need to sell to someone who I think is going to take the business to the next level, who's going to protect the employees that I have in place. And what you like to see, it's not necessary, but what I would like to see is that I sell the company and it continues to grow and it's a great asset for whoever buys it. The broker who listed it owns a few businesses and I've actually done a lot of business with them before. I've known them for years.

Great guy.

Caleb and I have done some business with them as well. Well, they haven't closed some business, but he's been working on it. Yeah, he's been a part of our business and advisor in our businesses. He reached out and said, hey, I know I'm listing this, I know the broker, what would your thought be if I actually bought this? And I was like, well, I think you have too many businesses right now. I don't think you have the attention. I think you have the skills, not the attention. He said, hey, well, actually I have a couple other partners on this. They just retired, they sold their company, they're independently wealthy, we'll all personally guarantee it. I'm like, okay, well, 5 guarantors makes me feel pretty good. And they have a portfolio that's significantly larger than mine. So I'm like, oh, so you'd manage my portfolio, Cody Davis's portfolio, uh, all of my clients, about 15 of them, and you already have a large portfolio in an adjacent county. There's synergies here. This makes sense. Most importantly, we have trust. I do not want to take that company back. Caleb and I have built Apex Asset Management, and that property management company in Texas is is taking off and doing really well. And it's gonna grow, I mean, it's growing, but it's gonna grow like crazy, especially next year. As we grow that company, I do not want to have to think about my prior company. So I took someone who I know, like, and trust, and I sold the company to them. I had to clear bills, and I had two partners that needed to be bought out in cash. It was a $250,000 sale. It was $100,000 down. So while it wasn't low down, It was enough money to close out the company completely, buy out the partners. The remaining money I seller financed. So of my equity remaining in the company, I seller financed almost all of it. And while it's not a big transaction, the way that that felt, I really was willing to take a lower price and I was willing to accept— I did not get a lot of cash the first year. I get an additional— it pays itself down $50,000 every year.

That's cool.

Yeah, it's a nice, it's a nice little income stream. But I was willing to structure it creatively and to lower my price and to not receive a big cash out at close to pass it to the right person. And so the lesson here— I've preached this online for a long time— meet the people who've done what you want to do, connect with them, have a personal relationship. Businesses sell to insiders. Real estate sells to insiders, not outsiders in the industry.

Absolutely.

Don't look for deals, look for people. I've said this forever. Being on the selling side, it went to an insider. I would have only done this structure with an insider if you want to get that type of terms. If you're starting with less money, the ability to do those transactions are with people have a high equity stake in their business. I may not have been in business for very long. My first property was in 2016, but most of my business has been built over the last 4 years. I've been in business long enough where I did own a company free and $20,000 credit card debt, which is paid at close. I had basically no debt in the company. I needed to— I had a problem. I wanted to clear out the partners and I wanted to move states. He solved my problem and it went to someone I know, like, and trust. If you are trying to get this, I'm telling you as a seller now, this is the way the game is played. If you're seeing any other method online, a lot of them work. There's hundreds of ways, just like any business, there's hundreds of ways to make money in real estate. The most efficient way we have seen to do it, if you have little to no money, is to just move from an outsider to an insider. If you can do just this, you'll move farther in real estate. If you want to buy businesses, I have friends who do that. You want to buy or build businesses, it's actually easier to buy them than build them, but that's a topic for neither here nor there. Yes, the way to do it is to go from the outside to the inside, get around people, go to meetups. Uh, speaking of, speaking of, tonight if you happen to be in Dallas and you're one of the like you know, 30 people watching this. If you happen to be in the Dallas area, I have a free event. You can go to my Instagram @ChristianOsgood. Uh, we're hosting a Manhattan Project—

Manhattan Project Beer Company Dallas in the Trinity area, 7 o'clock. Be there.

Yes, it— I'm very excited. I, um, I actually spent too much money on food. I spent like a grand and a half on this. It's a free event. Um, I don't plan to run these at a $1,500 loss every single month. That is not a business plan. That's a good idea. However, the last one is on me. This one is on me. Tickets are free, food is free, people are free. It should be— I'm going to guess we're going to have probably 35 to 50 people. But if you happen to be in the Dallas area, this is your last chance. If you can register, that helps me make sure that we have enough food for everyone. Okay, now questions. Every live we have room for Q&A. Ask your real estate questions. We get to learn together. Uh, today again, I have to go over to Dallas and prep. I'm over in more of the Fort Worth side of things. So I'm going to answer the first question here. Everyone else, this gives you a little bit of time to think of your questions and get them in that chat. Emmanuel asked, what would you say is the number one thing that makes your PM company stand out? On my first PM company—

good question.

Yeah, on my first PM company, what made me stand out is very similar to this one. I, I think we have one new secret, like, superpower on my current company. The first PM company— there are a lot of service providers in that market that were not owners of real estate. There was a lack of leasing, there was a lack of effort, there was a lack of on-site. The property managers in that area— I started my company because I couldn't find a PM who would treat my building like they owned it. So what stood out for my company then is we had the strongest bookkeeping, which was just because everyone else wasn't all that good. But the big thing was we're there on site, we're passionate about the properties. When I get your values up, my values go up. I'm incentivized as another owner to do an excellent job running this.

I think that makes a ton of sense.

And I think the employees we had there— because I am very quick to hire and very quick to fire.

Yes, you are.

I cycle. Yes. And I, I can, I can be brutal to work with, and I understand that. But I built a company where we had a team of players who knew exactly where their roles were, how to work with one another, and it took a lot of time, a lot of iteration, a lot of hiring, a lot of firing. I think we were more aggressive about treating our business like a business where I feel like a lot of other PMs— there's a few bigger ones there, but a lot of them are either places from out of market who don't care, or they treat their business like a hobby. And so we came in and we cleaned up in that market. Now, in my current PM, I think it's a little bit different. We have a different set of players. Caleb is one of the owners of this company, actually equal owner to me. I do not want to be the biggest person in the company again. I wanted to dilute some of the responsibility. Caleb is so aggressive on relationships and expansion. Caleb's an actual extrovert, which is not me.

Not—

you actually don't need to be an extrovert to, uh, be successful with these relationships, by the way. I'm not an extrovert.

I mean, we want to talk about being an extrovert cold calling for property management. Yesterday, uh, met the owner of a very prominent barbecue chain here in Dallas, which was pretty cool, kind of random.

Our favorite barbecue chain in fact. Um, Caleb is amazing from these relationships. We have the ability, um, I, I built a team on the internal side where we have a ton of experience in the bookkeeping. We have operators who are owners. We can— I think our power here is decentralized management though. Absolutely. Before I digress too much, almost everyone here opts for either an on-site manager or they're buying small multifamily. There's a lot of things that's like, hey, if you do this, there's going to be additional payroll overhead. It's expensive property management. It's good property management. We actually see some better property managers here than I did in Washington, but it's expensive the way that they run it. What we've been able to do is through software and then through acquiring a lot of mid-sized properties into our management portfolio I can hire on my team a maintenance coordinator, a leasing team who can service 10, 15 mid-sized buildings as opposed to one on-site for every area.

And that's—

schedule this and get people in.

And that's the cheat code. A lot of these bigger owners— I form relationships, dudes who have 6,000+ units are worth a heck of a lot more than us combined, multiplied by a bunch. They've got these huge complexes spread out, so they don't have a roving team. They just have the one main— or few maintenance people, leasing management assistant, leasing, whatever, all on site. When we have a conglomerate of properties within, what, maybe a 3-square-mile radius— that might even be a little large— everything's right next to each other. It's like, okay, we can have that team go here and here at the same time. And that decentralized management, when you own a lot in an area or manage a lot in an area, is a cheat code.

And a lot of what we've done, and we continue to do this, we're always innovating on this. To have a decentralized team, it means you don't have one core office that everyone meets at. Now there's huge problems in trying to do that in business. It's very hard. We have a lot of people who either work from home or maybe like my prior company, we had a very, very, very, very, very small office that we rent that barely got used. I've actually leased offices 3 times for my prior PM and we never used them any time. It was just straight loss.

Was that the one with the barbershop?

Uh, yes, that was for a while. I had the barbershop one. Um, I also shared an office with Matt and Beth Flynn for 1 year.

Okay. Yes, I remember that. You go to their office and rent it.

And, um, I went there 3 times that year and none of my staff ever went. So I found I don't need physical space to manage that. What you need is you need results-based incentives. So when people lease, they are paid— like, my leasing staff is paid more the more that they're leasing. Now, my bookkeeping, that's going to be more of a fixed cost. You have some jobs that are salary, but a lot of the objectives— hey, we want to get this many leases, we'll increase the pay per lease. Like, we will incentivize people towards the mission and the outcomes. And we have a compensation plan that allows for people who excel to make more money. And I did this at the Robin Hood Village Resort. I've done this in PM, both companies. It's been— we do this in our— we have a sales and marketing company that has actually done— I mean, I, I think what we do is phenomenal. Millions of dollars of sales for people, and, and it's 100% commission-based, results-based work. And we've been able to decentralize, manage multiple buildings with small teams at a very high level because we've lined compensation up so well with people who live in these markets and we communicate well.

And is that going to be easy? The answer is absolutely not. No matter what company, it's a hard way to run it. Incredibly hard way to run it at first. Even when you scale up, it's still gonna be difficult because you have people that are decentralized, you have people going from place to place, A to B to C to D, whatever. It's more difficult, but there are a lot more synergies. One thing in business you need to make sure of is that everybody's pulling the same way. If one person is incentivized to grow and the other person's incentivized to stay put, you're going to get friction going. You need to have everybody incentivized going the same direction. This is something we're working through real time that I'm trying to grow out of business myself is making sure just the realization even that you're all on the same page and incentives need to be lined up accordingly with growing accordingly.

We're getting some good questions here, so I'm going to move on to the next question. But I'm very passionate about PM. It's one of my favorite companies that I'm in. They traditionally are fairly low margin, but they allow me to do my other businesses. That is a plugin that has worked well. And because we are owners, this business works for us.

Let's get a shameless plug in there too. If you have property management anywhere north of Austin, DFW, Stephenville, Comanche, Abilene, Mineral Wells, Granbury, Corsicana, Waxahachie, Hillsboro, Mansfield— I'm trying to name all the—

Stephenville, Mineral Wells, all the Dallas cities.

No, if you have anything in the north-central Texas area— Waco, I almost forgot.

I think Waco is going to end up being our core. I think we're getting a lot of business in Waco.

We're picking up, we're expanding. We would love to manage your buildings. If you have anything, please shoot Christian or I a DM. Would love to chat more with you. Yes, had to throw that in there.

No, no, that's it. Well done. Like I said, we own a sales and marketing company. Um, okay, Oscar, uh, if you found a deal that's 28 units, 14 duplexes, 100% occupied, meets 1.25%— I assume that's DSCR— in a good market, would you invest in those properties or no since they are single family and the units are not one roof? Um, 1.25 is probably— I mean, you're coming in a little tight. If there was some upside on it and there was a chance to get it to a 1.5 DSCR within, I would say, for the first 18 months— duplexes are pretty small, so shorter timeline.

Is it all in one parcel?

I doubt it because he's calling them single family. Uh, so I think—

I, I feel like it's one parcel because it's a GLS 28 units. Oscar, if you want, make another comment or shoot Christian a message, and we'd love to chat with you more on this one. But that is super interesting.

Yeah, I, I So, so in context, I'm assuming these are not the same parcel.

Then I wouldn't.

Um, I would the— well, today I wouldn't. Uh, if I was anywhere in the starting of my— absolutely, 28 units I own today. Do I sell one? I did, I did sell one. I own 10 duplexes in my portfolio. Most of them are side by side, but they're not one parcel. Um, they perform Uh, uh, Pelican Point. I own on Pheasant Street, basically all the P birds. I need to find a street— I need to find a Penguin Street and a Pigeon Street.

We can work on that.

If anyone has a duplex on any of these streets anywhere in the country, I will pay double. I must, must collect them all.

We'll buy it at one cap.

Uh, but Pelican Point, uh, Pheasant Street, I have duplexes. Uh, where else do I have duplexes? I do have more duplexes. I'm, I'm spacing somewhere in Moses Lake. Yes. Oh, I have them on Gibby Street. Um, I have duplexes all over the place. I just sold Bremerton, uh, but I used to have some duplexes over there for— and then I have, uh, triplex in Mason County right next to Robin Hood. We bought that, uh, big white house. I will buy those, absolutely. I want to see a little bit more cash flow than $1.25. That's a little bit tight for me, but if you're going in at that, you're probably cash flowing. I think you can do it, but I want to have a path I'm going to buy them if there's enough rental upside to get them to a 1.5 DSCR. If we can sit there, I'll keep them. They typically do well. They're easy to manage. They don't make enough money for financial freedom, but if you can pick up 28 units at a time and they're cash flowing, every deal you just look at its own merit. So are you going to force appreciation on them? You probably will, but your new income on them doesn't merit a higher price necessarily. They're based on the price that the neighboring property sold on. So my exit strategy would probably not be banking on a refinance or banking on a sale to pay off an investor. But if I had a long-term partner, I had my own money on it, or this deal was able to work with 100% financing, I would buy this deal as long as I'm not relying on a future refinance to reimburse either a loan or an investor. Absolutely.

I think big thing there, just make sure it fits with your pieces. If it's— if you've already had stuff in another market far away and you're looking into this new market, I just— it has to make sense. Um, I'm on the stage of my business probably I wouldn't buy that. I don't think at this point we're looking at some bigger deals. But like Christian said, if it makes sense for you and your pieces and you can do 100% financing or long-term investors parking cash, or it's your own money and you're passionate about it, go for it. Did he give us any more context, by the way?

No, I'll check. Uh, yes, uh, it's one parcel in Edinburg, Texas. Oh, near— oh yeah, well, one, uh, I like Edinburg. I like McAllen too, a lot. I'd buy it then.

One parcel, absolutely.

One One parcel. Yeah. So that, that is actually— so it's all one parcel. It is commercial. So they're not single family. That is a multi-family complex. Uh, yes, individual roofs. So you're gonna have a little bit higher maintenance cost. You just have to factor on average. Yes, in that case, yeah. Uh, let's throw out everything I said about the refinance. Uh, you get the income up on that, it's worth more empirically. Um, love that, buy it. So I, I would, I, I would love to do those. Uh, Caleb and I have a campus that is all fourplexes. It's actually called Town Creek Force. Yeah, and the— well, in the apartment complex, that was called Town Creek Village Fourplexes. That's, that's what the big sign on the front says. Uh, they're all four-unit buildings. We have, uh, 6 four-unit buildings and then one that is a laundry room, office, and an additional unit. So for a total of 25. That is one of my favorite assets that we own. It does phenomenally. Um, and they're all 4-plexes, but it's one parcel, so they are commercial. Uh, 28-plex is better than 25, by the way.

So choose the tax. Would love to chat more about that one.

Yeah, and if you're talking DSCR 1.25 starting, I, I'm in Edinburgh. That—

or Burg—

Edinburgh. That's it.

You've got the sign-off. Edinburgh.

Yeah, that, uh, that has my blessing. Good market.

What do we got?

Okay, I have, uh, I had a good one here. Uh, there's two questions in one. What software do you use for bookkeeping and the highest stupid tax?

Uh, it sounds like a manual starting a PM company.

So for bookkeeping, I use AppFolio. You can only use this if you have over 50 units. That's for collections, that is for security deposits, that is for my general ledgers. AppFolio, in my opinion, is the most powerful software out there on the open market, uh, without getting into like custom buildouts.

Custom buildouts are different.

And AppFolio is really, really, really powerful. It is not full bookkeeping for an LLC. There's some stuff at the bank level. I also have a bookkeeper who runs QuickBooks for me. Um, it is a service that I am willing to run and roll out for larger clients, uh, where we can get them connected with direct bookkeeping, where it's like it is ready and packaged for tax filing, where they can just send the full packet to their CPA. However, we do about 95% of that within AppFolio. I can get a bookkeeper anything they need. There usually needs a little bit of packaging at the bank level because we do not process, for example, your mortgages or your large renovations. Those happen outside of AppFolio, so I don't see them in my books. You would need a bookkeeper with direct access to your bank account, but outside of that service, we do full bookkeeping. We use AppFolio to track that, and we have a really robust custom, uh, They call them the GL accounts, the general ledger accounts. I have an assignment for everything that one could think of for how we're categorizing every transaction, how we're going to put it together and package it for you. So that, I think bookkeeping is one of our real strong suits.

Absolutely.

Uh, we do AppFolio and then we work with a group called APM Help, standing for AppFolio Property Management Help. It is a separate company that specifically audits on a daily basis. Are your accounts balanced? Did everything go out? Have you transferred? If there's ever a dollar that is deposited and not logged in AppFolio, I will get alerts up the wazoo. So that is the system that we have used, AppFolio, paired with a contract with a company called APM Help that has given us virtually perfect books at all times on every company.

And then what is the highest stupid tax for running the PM company?

Um, okay, let me, let me go with the one starting it in Washington. Yes, yes. Well, my portfolio was in Washington, that was the place to start it. Biggest stupid tax for me would be Not going with my gut with employees. I actually had some of my other staff who I know, like, and trust. I had the most hiring experience and I had a bad feeling about one of our first employees and everyone else, everyone else.

I remember exactly who you're talking about in the entire situation.

Everyone else on my team, I wasn't even on the team. Everyone else on my team, uh, had a different pick than I did for our first, uh, major in-market employee, like like boots on ground director of PM. I had— I, I was like, I don't think this is our person. Everyone else outvoted me. I do run the companies as an idea meritocracy, which means everyone's ideas are heard at every level, from, from janitor up to CEO. However, it is weighted by your experience. So for example, my director of leasing in that company, her name was Corey, she was my director of PM. She's done more leasing than me. If we're talking about leasing processes If Corey and I both have an idea, even though I was the owner and CEO, if I have an idea and Corey has an idea and we're in a discussion, unless there's a very specific reason that we're going to supersede, her idea outweighs mine. I actually had this conversation about a week ago with my current director. They had one idea, I had another idea. We both explained our thoughts and I said, hey, you know what, you have more experience, so you have higher weighting. So that's how we make decisions in our company. That was an example where I should have superseded the general process and said, I understand you guys want to go with this person. I do not have a good feeling. We're going to go this way. There's a certain point when you own the business that you need to take responsibility. Putting that person in there lost me clients. It lost me leases. It damaged my portfolio. It was a disaster. There was another hire where I did not attend, and this was for a pretty key position. I didn't attend their hiring. I had outsourced that to other people in my company that I trusted. For major players in your company, you should attend those. They came, referenced, I didn't attend. Uh, turns out leasing started going down when we audited it. Um, I'm going to keep this as PG as possible. They, before working for us, did not have access to a stable internet. When we gave them a company phone, uh, there was 5 hours a day of not child-friendly material, um, being YouTube banned, being— yeah, there was a— there were certain sites, uh, that were, uh, not the picture, not necessary, uh, for about 5 hours a day.

Picture, picture explained, picture closed.

Yes, there was, uh, we've dealt with some employment issues. So on the employee issues, I think, I think personnel has been the biggest stupid tax, uh, the situation being what it is. It's lost revenue. I don't care what they're doing during the workday. If it's not work, it needs to stop. They're doing personal activities and personal on work time. Leases are not getting signed, showings are not being done, revenue goes down, clients are unhappy. I had to learn how to fire people ridiculously quickly and make that decision almost instantaneously. On the hiring end, I learned show up as the owner of the company to almost every level until I'm a company that's, uh, if RPM company, I'm gonna say if we get above 25 people, it would be weird for me to come in for entry-level positions and be at that interview.

Yes.

But for key players like, hey, you are my leasing person for my portfolio, like key roles, you have to take ownership of that I attempted to delegate that for a level of passivity. That was stupid. That was a stupid tax that cost me a lot.

And I think if we're going on that point, there's certain things in your business you can delegate and there's certain things upfront you just can't delegate. That being one of those other things, but it's like, oh, I'm trying to be lazy and I'm trying to give this to somebody else. And if you aren't giving them constant oversight as needed, you're going to suffer. I agree.

I absolutely agree with that. I'm also checking on Instagram. Just so you know, Instagram, I am also getting to your questions too. I have a lot on the YouTube side, but Instagram, I'm not forgetting about you, so I am here. All right, um, are all your properties C and B class? All the ones that Caleb and I own are. We have a few Cs, uh, Houston's a C property that we've really fixed up really nice.

Working on finishing that project right now.

Yeah, it's— we took it from a— I would say we took it from a D to a a C+. Yeah, and it's in a C+ B- area, so we have a little bit more to go on it, but we've, we've taken it most the way through its project. Um, it's on, you know, it, it's in its senior year of being, of being renovated and brought up to—

yeah, we're almost done.

Um, we have a lot of B, a lot. Most of what we have is Class B.

Would you say Town Creek's B, Trinity's B+?

Uh, I would say they're both, they're both solid B properties. There's some, there's some true A properties in Stephenville that are just very nice.

The Edge. We're—

yeah, we're not, we're not in that. No, there's no chance that these buildings at any level would be a new build, correct? They're nice buildings, they're actually very nice B's, but they, I— they could never be in an A-class because of what they are. The garden style—

what would you say Riverwalk is that we're looking at?

A-minus? A-minus? Yeah, B-plus. B-plus. It's a B-plus.

B-plus-plus maybe.

Yeah, if we want to get really specific. Uh, but yes, um, I know I have, um, like the Robin Hood is a Class A boutique hotel for, for what it is— waterfront, foothills of the mountains, individual cabins, hot tubs, next to a winery.

Uh, that place is so good.

Yeah, next door.

I need to come speak at your event. I just want to go back to that place.

Yeah. Uh, I have an upcoming event, by the way. I'll post it, um, I'll post it very shortly.

I'll be there next month.

I need to start marketing for that. Um, but Robin Hood Village Resort is A. I have one rental that's an A. I think Pelican Point's probably an A. Uh, everything else, high B, high C. That, that is very much our niche. We just got— what's the hardest role within your PM company to outsource slash hire for?

It's a good question.

In some ways it's the easiest, in some ways it's the hardest. I'm gonna say leasing. There's a million people who can lease. It's actually very easy to get an employee in for. It's also very hard to find the right person. It's hard to outsource because it's so critical to get right.

Absolutely.

And when it's been missed, it costs so much. So you have $1,000 a month rent, and say you're like me and you have several hundred units. If you go down 5% in occupancy I have more than 200 units, but for easy math, I'm going to say back when I was at 200 units, 5% vacancy is like, okay, we're, we're bleeding a lot of money. Like, that sucks. 5% vacancy, that's what, 10 additional— 10 vacancies, $10,000. $10,000 a month, $120,000 a year. Is what I am bleeding from that decision. I'm one owner. There's more owners than me in that PM company.

Absolutely.

You actually lose a lot of money if you are not great at leasing.

People look at that the wrong way, I think. I think people look at, like, excessive vacancy, they're like, oh, it's vacancy. You should be looking at that as revenue bleeding. There should be an urgency to get your units back.

Vacancy is a loss.

One unit we're looking at managing, it's like the guy's like, hey, current PM doesn't really give enough attention to this. It's like, okay, what they should be doing is looking at that. If you're at 70% occupancy, you're bleeding 30%.

All they should be looking at is how do we get the occupancy fixed. And we watched that building and they had barbecues too close to the building, which would violate insurance. They had garbage out. It wasn't horribly managed until you look at like, what's the occupancy? Oh, it's 30%, uh, vacant. It's like your PM's not doing their like you need to get those filled.

When you show up on the campus and trash is just being picked up, or they're like trying to steer you away from certain parts of the exterior because there's trash and stuff built up there, there's probably a management issue.

Um, okay, uh, Oscar asked, how do I find owner's numbers? Somebody— or use OpenCourseWare? I found some numbers. What am I doing wrong? It takes a lot of— not a lot, it takes some practice on Google. It's just getting fluent with Google. So if I'm on OpenCorporates and I find someone's name, or I find their entity name, you Google it and the property address, or you Google it in the city address.

What do you think? Do you use True People Search at all in your algorithm?

Rarely. Occasionally. True People Search is a good one.

I really like that. That's how I do it. I do True People Search. I don't do Google. I just go OpenCorporates, name, address. You can like plug the address into True People Search now, and it just searches by address, and usually their name pops up right under it.

Really?

Or you can get the name and the city down to the zip code. And search it that way.

And so all you're doing is you're basically following a trail of crumbs. No matter which way you do it, it's always a trail. Should people search? It may not give you their— all their phone numbers, but you might find the person's name and something else with the address. You take the pieces you find, you plug them back into the search engine. So if I find, um, okay, so I found a building, it's owned by 123 LLC, uh, and it's based in, you know, Dallas, Texas. I'm gonna type in 123 LLC, Dallas, Texas. Word phone number, see what shows up. If I didn't get a name, I'm like, I cannot find the name, I plug it into True People Search. Maybe I find a name, maybe I find, you know, like John Smith. I'm like, well, shoot, there's a million John Smiths. John Doe. Yeah. Uh, so we're looking for— now we're looking for, uh, John Smith, Dallas, this address, the word phone number. I find a— I find a site that has the last 4 digits of his phone number. Take the last 4 digits and plug them into the search bar, and what it does is it will find, oh, Where is there a John Smith in Dallas with the last 4 digits here and a phone number? And all of a sudden you find the phone number, but it's taking the breadcrumbs and putting it back into the search bar. When you get good at this— I know it sounds like a lot of steps— when you get good at this, it takes about 5 minutes to find any phone number. In fact, I was just looking for an employee, and while I was on the phone, I was looking for employee for one of my lenders. While I was on the phone, Caleb just texted me, oh, here's, here's like 5 different versions of a phone number that might go to them. By the way, the third one down was their phone number. I ended up getting in contact with them and I was like, hey, that was on the list. Caleb's like, here's 5 possible phone numbers. I was like, oh cool. Had I called the first one, I don't know who it would've gone to. Had I called the second one, I don't know who it would've gone to. Probably somewhere else in their company. I would've got them though on that search. And it took Caleb like 20 seconds.

Yeah, I think it probably took me 20 seconds to do that. You just literally, you can find anybody on the internet.

It's kind of scary when you realize that, but you can find anybody's phone number. Any remote company or position you're currently hiring for in the PM company? Not currently. We are expanding pretty darn quickly. The biggest thing that we're going to be doing is we're going to have maintenance contacts who live in market and leasing contacts. The thing with PM is that the big thing for us is that I need— most of what we need are in-market people. For out-of-market we have a pretty strong roster for— when you run a decentralized management, you have to have a pretty strong core.

The core is there. Now it's building out the branches.

Yeah, and the branches are going to be specifically in market for the way that our company works.

If you live in Hillsboro or Waco, we can talk.

Oh yes, or Stephenville or Mineral Wells. There's, there's opportunity. Ah, our good friend Heiner. Having issues with my agents, wants to see funds before getting into contract. Mentioned I can close the deal, my investors need to see a contract first. I'm still getting pushback.

You are not working with the right agent. I will just say that off the bat.

Yes. Now, agents control the deal, right? So if it's a listed property, you know—

well, is it a buyer's agent or is it a buyer's rep? Or—

this is a— this is a— the agent who is selling the property. Uh, so it's a listed property on the— I know this deal. Um, so the property is listed.

I forgot he was in your mentorship.

Oh yes. Oh yes, we love Heiner. If they are not— so if you need a proof of funds, which is like 1 out of 5 brokers are going to get stuck on this because that's what they've been trained to do, and you can't overcome that for some reason. I've always found that if you have enough confidence going in of like, hey, look, here's how it's going to work. I can close this. I'm gonna have two partners on it. Here's my capital partners. They're not sending me bank information without this on a contract. If you're just stuck where they're like, well, we're not going under contract until we see the money, it's like, well, first of all, that's not really how real estate works. Most typically you find a deal and then you line up the funds. That's a normal thing. So it is a little bit of a weird request from a broker on multifamily. That being said, it happens. Your next option, and what I do all the time, go figure out who might partner with you on this and have them send you their proof of funds. You are allowed to change partners in the middle of a contract. There's nothing unethical. Or if you are pitching to someone, or you're like, hey, I have a deal I'm looking for partners. It doesn't have to be you, but if we're going to get this opportunity, I need to work with someone who can show proof of funds. Have them show you the proof of funds. It's basically a screen— basically it's gonna be like a bank statement or a screenshot of accounts. You just need to have them send a bank statement to open up the opportunity. And the trade is, I'm going to give you a first shot at this. They can still say no, but hey, here's what me and my team would like to do. Here's the money we have access to. Let's go under contract. That is the way to do it if you're stuck. That happens to me very rarely. Uh, in fact, it's only happened to me one time, and it was on a deal that I ended up walking away from in the middle of due diligence. Uh, but I was working, looking at buying, uh, 60 units in Walla Walla, and to go under contract for that, I had a partner who was seriously looking at investing in the deal show me proof of funds.

I remember that one too.

Yeah, that deal had other problems, but partner was a great guy—

is a great guy, he's not dead.

Yes, still got the Robin Hood.

Yes, come there next month.

Yes. And Rob, if you want to— if you want the Robin Hood, we can talk. Uh, I, I do not want— I love the Robin Hood and is going well.

Awesome place.

It is a business that has nothing to do with my core business or where my business has gone and is in a state that I no longer live in. So while I still run events there and I'm still going to be there and I still love my staff there, I am receptive to offers at this point, uh, because I don't need—

he lives in Texas—

it doesn't do anything for the business. It does still take some time, and I want to take that time and free it up for my—

you're at a point now where there's the money you get from that business, you'd rather have the time down here, is what I would say.

Are T-12 documents good as far as verified numbers for property? They're helpful. However, a T12 can still be edited in Excel. Yes, a bank statement is very hard to forge. If you can't get a bank statement, at least get a tax document, the Schedule K from the property. Get a tax document that shows that they filed based on the income that they're reporting on the T12, because it's very hard to— it's very hard to forge a bank statement. It's extremely hard to forge an IRS document because it is what is filed. So you want to have them send that to you. Um, highly recommend. Rob, is there a building size where you always have some vacancy consistently? Yeah, I would say you're always going to have some vacancy. For the most— occasionally it'll be fully occupied, but you, you factor for all—

cycles through.

Yeah, 20-unit buildings, you're rarely ever going to be 100% occupied. That's, that's just too many people in one spot. You, you're going to be at 95, and that's considered fully occupied.

Agreed.

Because that's, that would mean on average everyone needs to stay there more than a year. All the, like, you, you basically have perfect leasing. You're gonna cycle people, stay for multiple years out of 20 people. That's not very common. You'll usually have some vacancy. A way to actually cut down on that is you want to stagger leases. You don't want all your leases starting on the exact at the same time on a 1-year lease. It'd be nice to have, you know, a handful of people coming in every season. Now, some markets leasing is more seasonal. We're finding that in Stephenville. But you do want to stagger them the best you can throughout the year so you don't go with seasons of fully occupied to seasons of half occupied to seasons of 75% occupied. Like, you want to— you want stability, as stable as possible. Emmanuel. What would you be doing if it wasn't multifamily real estate?

Working at CoStar?

No, uh, I left, I left the CoStar group. I did love that job. I actually really do like the company. Um, they're aggressive, they're, they're challenging to work for. You do make a lot of money there. There's a lot of things that to say that are very positive about the CoStar group. Um, if I wasn't doing multifamily Man, it's hard to even imagine. I've spent so many years only focused on real estate and building my multifamily portfolio. If I wasn't in multifamily, the only other thing I've ever wanted to do is develop. That was develop multifamily. Um, let me think. There's a few companies that I've really enjoyed that we've done. Uh, I love our sales company.

Sales and marketing is a blast.

Um, I found in the course of taking Multifamily Strategy and trying to get the word out to more people, we ended up building an amazing community in Multifamily Strategy.

We have— you have—

but the actual— okay, so there's a great example, great example with the property management company. I talked about how I had systems that I was able to— it became its own business, right? I had to run my multifamily portfolio. We built a PM company, it expanded to more people, and then one day I seller-financed company to someone else. And it's now continued to grow and become its own thing while I start a new company. Like that, I had to build sales and marketing systems to go— like, you know, there's people spending a million dollars a month trying to market crappy courses to people and rip— quite frankly, to rip you off.

There's a lot of them.

For us to come out and compete with million-dollar marketing spend companies, I had to be innovative, innovative, because I started with no money. And it costs a lot of money to get a message out there, to build a YouTube channel, to build a community, to build a mentorship group. Uh, and love or hate online mentorship groups, I don't, I don't care for the purpose of this. We built sincerely cool systems. So what our sales and marketing company does is we find people exclusively who are not online gurus. We look for operators in their business who are trying to compete with your crappy online gurus standing in front of their Ferraris, their yachts, their $10 million houses, and going like, oh, buy my course, you'll be rich. I'm like, no, buy your course and you'll be rich. We're looking for— we are looking for people who want— who are actual operators who want to compete with them. That company is one of the most fun, high-velocity businesses I've been in. I love that type of sales and marketing of how do you build an audience around a meaningful product and how do you frame the significance of a product. That company has been really fun. And different— creating different funnels that are stacked on top of each other. I think I would have gone into sales and marketing, not to be a crappy online guru or an Instagram influencer, because that's all stupid and temporary. But I actually love working with other people, getting behind their products, understanding what content is good and what content is fluff. What is signal and what is noise? And going like, let's get as much signal out there to people.

When you're in the game, you start realizing there's a whole lot of fluff.

There's a lot of fluff. A lot of Kevin O'Leary did a series on Elon Musk where he was talking about, you know, some people are all output, they're all signal, and then there's some people are noise. He's like, hey, working for Steve Jobs, he was like 10% noise, 90% signal. That's incredible. He's like, Elon's the only 100% signal guy he's ever met. But we want to find people who are all signal, the people who are just like, go, go, go, doing the thing that they teach. They're in the field, they have the experience, and they're not just doing a course as a side project. It's someone who's like, I want to teach people so that they can succeed and emulate my business and have success on their own. I'll tell you, we turned down probably 9 out of 10 clients for that. We also don't take on competing clients. Like, there's a bunch of stuff we do, but without just like pitching the company, I, I actually loved that project. It's one of my favorite things that we get to do outside of multifamily.

It's fun.

It's my— I think it's my favorite thing. I wouldn't have discovered that if multifamily didn't become what it was. I would have never got into that space. So it's kind of a like, I couldn't have done it without multifamily. But knowing what I know today with the current skill set I had, if all the multifamily was stripped away and I couldn't do that, which is what I do 100% of the time, I would go all in on that company. I would learn more creative funnels to get great products to great people.

Absolutely. We gotta wrap this up shortly because we're going to Dallas.

Rob, getting any sleep there, Papa? No, no, uh, actually negative sleep. Sleep at midnight, up at 4:30 today, then up at, uh, 7 briefly, and my wonderful wife took that shift, so I got up, helped, and then went right back to bed. Um, so last night wasn't horrible, but, uh, we're on 3 weeks of doing the same thing, wake up about every 3 hours. Uh, I am, I'm a, I'm a tired and very happy Papa. I, I love my little boy. I am very happy. We've hit every goal, uh, thanks to multifamily. Uh, last question: what is your favorite Florida market if you had to be on the sunny side of the US? Well, I'm in Dallas, so I'm on the very sunny side of the US. Thank you very much.

Miami.

But, um, gosh, multifamily strategy in particular, we're seeing a lot of success in Jacksonville. I'm thinking about Marco's deal there. He just knocked around the park. A little bit more hurricane resistant. Uh, which is kind of nice. A little bit less competition than Miami. I actually enjoy being in Miami. I don't— I've never been. I don't think I would live in Miami, but it's a phenomenal place to visit.

Just hard, hard to buy. I think Jacksonville is a great spot. I think some stuff up on— farther up in North Florida is awesome. Obviously Tampa's a super strong market. There's a lot of good markets. Just don't buy it on a swamp and buy into where that's growing, which a lot of it is.

Yeah, I, I think overall though, due to the velocity that I've seen in multifamily strategy, right, we've seen multiple people close deals in Jacksonville. They've had a lot of success, and the deal quality has been really high, and the— for some reason they're getting a lot of seller finance opportunities out there. I would say just based on raw exposure from the couple thousand people in multifamily strategy, I would say Jacksonville, Florida would probably be my first pick if I'm trying to stack the deck in my favor.

Let's go Jaguars!

Yeah, I don't know about that.

Trevor Lawrence, baby.

Uh, actually, I actually have nothing against any, any Florida teams. Funny enough, Dallas, I'm sorry. You guys need to come to our event tonight, by the way. If you're in Dallas, it's free. I'm paying for food. Check out my Instagram story if you want to register for free. But I can't get behind the Cowboys. I can't do it. I would much rather the Jacksonville Jaguars or whatever, the Buccaneers. I'd rather them just destroy Dallas. I'm so sorry. I can't get behind the Cowboys.

I'll root for the Rangers, I'll root for the Stars, I'll root for the Mavericks. Never, ever will I be a Cowboys fan.

I can't. Yeah. I'm in the same, the same boat. We got to go get down to Dallas. Speaking of, we're going to be at Manhattan Project. I would say shameless plug, we're friends with the owner. Caleb is. He plays pickleball with the owner.

He's a great pickleball player.

Coming from Seattle, which has great beer, I will give it that. I don't really drink anymore. I will have a beer at Manhattan Project. It is a phenomenal brewery. They are very good. I used to brew beer. I have a passion for good beer. Dallas has a lack of good beer. Manhattan Project is actually quite good. Uh, so if you guys want to come down, enjoy a beer, uh, food is on me, venue is on me. We're gonna have a lot of owners there. I built my business in the owner meeting. We're calling this event the owner meeting. I'm rebranding my podcast to the owner meeting.

Literally friends with the owner of the place from pickleball. Great business.

Yeah, great how we found the venue. Owner meeting. This is a meeting of owners. I'm going to be sharing a little bit about seller finance and creative finance here specifically. We're going to start getting some guest speakers in, but I'll actually be doing a 15-minute presentation for you guys. Uh, but this is just a place to connect. If you guys are in Dallas, make it. If you're not in Dallas and you haven't liked and subscribed the channel or this episode, uh, hit like so the algorithm thinks we're awesome. Uh, leave a comment after I post this if you really want to help boost it. We'll see you guys same time next Wednesday and every Wednesday. Appreciate y'all and see you on the next episode.