Multifamily Investing 101- Diversifying Wealth Through Passive Investments

Foreign welcome everybody. It is Monday, January 27, 2025. It's our first meetup of 2025 and we're excited to really go into multifamily investing 101, diversifying wealth through passive investments. We just completed our breakout groups where we network in the beginning of our meeting and so we're going to dive right in. And since this is a recording of a live session, I will do my best to be checking chat messages and if anybody on the call has questions, feel free to interrupt me. I'm going to do a little Q A afterwards. But just to start, I want to introduce myself. I'm Wayne Courageous. I'm based out of Bryan, Texas. I lead the investment life cycle for CRIA Partners. Started the company in 2019. We have grown to over 50 million assets under management in Texas, Alabama and Louisiana. Our portfolio mix includes apartments, build to rent communities, RV boat and business storage and retail. I left full time real estate at CBRE after 16 years back in July 23rd. So we are full time at CRE Partners. We have Shelby Whitaker who's joined our team back in September. She heads up our investor relations. And then we've got Will Swenson who just recently joined as our asset manager, Senior portfolio manager. So our team is growing and we're all in full time employees based here in central Texas. So my background in real estate, passion and leading teams and desire to increase my investors wealth which is, you know, first and foremost priority is to grow wealth. And our team's wealth pushed me to start Crai Partners in 2019. I got an MBA from University of North Carolina, Master of Arts in Economics from University of Oklahoma, Metro Business Administration, National University and a certified property manager. My why is this family here? This was a Disney cruise we took last year. My wife Jennifer, my son Hunter, Lily and my youngest Emma, they've been asking to go on another Disney cruise. So we need to keep buying properties to afford that Disney cruise vacation. All right, so this is what we do. It's pretty simple. We raise money to buy assets. We cannot buy the assets on our own. So what we do is send it. We pull our money with other people's money, family, colleagues, other investors, etc. To buy assets that we couldn't normally buy on our own. Many of us when we drive by we think of, you know, large commercial real estate as properties that maybe a wealthy individual or an institution is buying. In many cases that is the case. But a lot of cases it's also groups like CIA Partners where you know, we source and Find the deals with, we raise capital, we close the deal and then we asset manage, you know, the, the business plan. We execute our property business plan based on, you know, whatever is needed to grow and optimize net operating income. We distribute returns to our investors for those cash flowing properties. Sometimes it's a development and so you know, cash flow doesn't come later but it's the ultimate value add because you start from raw land, you're developing it and then you eventually cash flow and then you have the nice upside of equity at sale and then we implement our exit strategy and distribute profits. So CIA partners, we are lead sponsors. We typically do not raise capital for other people's deals. We are sourcing, working broker relationships, working our off market direct to seller relationships, asset managing. So we handle, you know, the full lifecycle of the investments. And we primarily focus in the Texas triangle. So we have, you know, properties primarily in Houston or Bryant College Station. We are actually looking for opportunities in San Antonio, the Austin area and as mentioned before, we have properties in Louisiana and Alabama. So enough about me, let's talk about the discussion points of today's meetup. It is, you know, high level. You know, we're gonna there I'll mention later in the presentation about an opportunity where it's free. You can go in and learn a lot more in detail or continue doing these meetups. And we're going to get, as 2025 goes on, we're going to get deeper into passive investments. But for January 2025 it's high level. And then obviously there's Q A. I'm happy to go into anything that y' all have questions on but today we're going to talk about defining commercial real estate and passive investing. Why invest in commercial real estate, types of investors, risk profiles, financial metrics, general versus limited partner and closing and how to learn more. So I noticed I didn't put a whole lot of multifamily even though this is a multifamily group. But regardless of what asset class you decide to invest in, it's all generally the same whether if we're buying a retail asset, a multifamily, the storage, etc. So a lot of these things can be cross into other asset classes as well. So as we move along, you're going to see pictures. Even that first slide were pictures of our properties that, you know, CI partners and our investors owns. And so you know, as when I first started this like five years ago, I was using other people's pictures. So it's pretty cool to you know, start putting pictures of our investments into the presentation. So this is our lux 20 by 50 storage in Brian, all 20 by 50 with 14 foot roll up doors. We started this with raw land back in 2020, I guess 2023 and we're fully complete by July 2024 and we're in lease up mode. But you know, let's define commercial real estate and multifamily is in that commercial real estate definition. Commercial real estate is intended to create a profit either from capital gains or rental income. Commercial property includes office, medical, hotels, malls, multifamily which is four or plus units residentials, anything less than four units, farmland, warehouses and garages. This picture here is Ivy of the Galleria. We bought this in 2022. But let's define passive investing. So this strategy of placing your capital into a real estate syndication that is managed for you, so backing up to what CI partners does in sourcing and finding deals and then we syndicate where we are going out to outside investors, building the trust, educating, etc. And then you know, buying the deal together. Those that are investing in the deal, and we'll talk about this a little later, are limited partners. And those limited partners are getting the full benefit of passive and you know, income or investments without having to do anything with the tenants, the toilets, the termites, you know, the everyday, you know, just things that go on into, you know, commercial real estate. So it's nice because most of our investors don't really want to leave their day job. You know, we have some that do, but most of them love what they do, but they don't want, and they want to invest in real estate, but they don't want to be in real estate. So that's what passive investing is, it's passively investing in commercial real estate. So why passively invest in real estate? Well, we look at the risk resilience, you know, like today, I don't know, we've got, I always say be diversified, right? So stocks, we have stocks, we've got 401k, etc. But like we're heavily invested, you know, personally in the S&P 500 and NASDAQ. Well today like took a pretty big hit because Nvidia, you know, shares dropped because of a Chinese company that seems to be doing rock star things in the AI space. So like every day, you know, we're looking at our stock portfolio and for me it's just diversification, you know, I, I view it long term so I'm not at all selling or stressed out. But in real estate It's a physical asset that people you know, need to either lease, whether it's an office or retail space or they need to live in. And rent's due on the 1st and if it's not due on the, if they don't pay on the first, then there's a late fee and there's this process by the lease of eviction process. What I love about real estate and why I am personally invested in majority of our net worth in real estate is I don't have to worry about an Elon Musk tweet or anything that's going on outside of that submarket and really the, the brick and mortar of that property. So if you look over the last 70 years, real estate has had many more up years than, than the down years and then in stocks many more up years as well. But you know, you have more down years and then bonds, the same thing. So if you look from a risk standpoint, real estate, just by the nature of it being a fixed asset and not really tied to any outside Facebook, technology etc other than, you know, possibly the reviews, you know, you gotta, you gotta do well, you know, customer service, it is a people business when dealing with tenants and residents. But just in general, you know, having that diversification in the portfolio is, you know, my opinion, a great thing to have especially when you know, we have fluctuations with external forces in the, the stock market. So if you look at like last reason why I love real estate and then within real estate, I love apartments because it really does lead the charge when it comes to, you know, year over year returns. So if we look at like the average real estate and I kept it to 20, 2016 and haven't really updated and I did that on purpose because over the last few years we saw a huge skyrocket in all asset classes, especially multi family where their, you know, valuations skyrocketed. A lot of people made a lot of money in a short amount of time. Well that's not really the normal real estate market. It works for a lot of people. Great. But a lot of people are also struggling. You know, if they had properties bought in 2022, 2023. So actually 2022 and 2021, you know, especially with bridge debt. But if you look at like the holding period returns, apartments averages about 9.05%, industrial 8.27, office 6.99, retail 8.68 and hotel 8.63. You know, apartments has led the charge. The thing I love about apartments in particular is when the market downshifts you, you still need a place to live. You know some tenants, we used to call it going dark. You know, when I was in, you know, commercial real estate for cbre, we would be checking on tenants when times were tough and they would move out at the middle of the night and you know, a lot of times leaving their stuff and just like closing, closing doors where you know, apartments, you know, at the end day people need a place to live. As we saw during COVID and other, you know, financial impacts, the government tends to help those residents as well. Whereas office and retail, you know, it, it doesn't always get the support and help it needs. But even then if you're getting a return, you know, average mean of these returns, like overall that's a pretty normal market. And then we're not even talking tax depreciation which will be talking about here shortly. So many of you, those listening and maybe you don't know, but there's a huge reason why 90% of millionaires or people made millions in real estate. A big part of that is tax depreciation, keeping your hard earned money, you know, whenever you sell that stock, you know, if there's a gain, you're paying capital gains tax, right? And in real estate a lot of that is deferred. You know, we still pay capital gains tax, it's at a deferred rate but during the whole periods you were offsetting the income of a property by the depreciation and it's in, it's in three buckets. Next month in February we're going to be working, hoping to get James Bowen our, my personal CPA who also does all of our K1s and tax documents and going to invite him to the meetup and share more information on K1s. So again this is very high level, but depreciation is taking like a physical asset. Think of like your office, your apartment building and thinking about all the cabinets, the flooring, the roof tiles, the ceiling tiles, et cetera and putting a lifespan on it, right. And so depreciation, normal depreciation without going into specific details of every cabinet etc. It looks at it more of a depreciation over 27 and a half years in multifamily. So in multifamily in particular, so if you, if you look at like a 25 unit apartment, that's three and a half million, the land can't be depreciated because the land doesn't really lose, you know, value, right? It's not, you can't depreciate it, but the physical asset is all depreciation. So if the 2.75 million of the 3 1/2 million is all the physical asset, and you divide that by 27 and a half years, you're getting a hundred thousand per year depreciation for the next 27 and a half years. What does that mean in layman terms? Like, if you made, you know, a hundred thousand dollars in income off that commercial property and your depreciation is a hundred thousand, then on paper losses, like you're a zero taxable income for the income that you made. Right. And so that's where a lot of real estate investors and a lot of people start diversifying into real estate because they're getting that huge tax benefit. Now, it's important to note passive income offset, or excuse me, passive losses offset passive income. So if you're just starting in passive real estate, you're not getting, you know, it will make. It'll take, you know, several years for you to build up a portfolio where you are, you know, say, bringing in 80,000 in passive income, and then you're offsetting it with 100,000 or whatever in depreciation. So that's 27 and a half years. But then they go into accelerated depreciation. And this is where cost segregation comes into place. This is where we would hire a group like Madison Specs. They would come out, and we do this on every single one of our properties. They come out and they do a survey. We actually do it through Zoom now, but we go in and we walk the units. We go through the overall property, and they're coming up through their engineering report of how much instead of 27 and a half years. Let's define maybe the cabinets of maybe having 10 years. Maybe the ceiling tiles is more, you know, seven years. Whatever, whatever. The aspect is, the, the appliances, maybe that's, you know, a five year instead of a 27 half year. So you get all these different categories, and you accelerate the depreciation even further, maybe into like a five to seven year, which is huge because instead of that 100,000 per year, you know, maybe it's 500,000 per year, and maybe you've made 500,000 passive income, so you have a much bigger, you know, tax loss. But then they really made it incredibly attractive, you know, several years ago under Trump's first administration, and that's where he did the bonus depreciation. So at that point, it was 100% depreciation. So at that, going back to the original example, he had 2.75 million. That was depreciation. You could accelerate that into year one. Well, that has changed, you know, since his first administration. It went from 100% and then it went to 80% and then 60%. And now in 2025, that's 40%. So it's still good because you still can benefit from accelerating even further depreciation. But then you're able to, you know, years two through five still benefit from depreciation because you didn't take all of it in year one. So that's something I'm learning that I actually sort of do. Like in a way is that like the assets that we bought over the last couple years, we still, I'm still during tax season right now looking at getting losses because I didn't, I didn't do 100 depreciation of those years. So again, this is very high level and we're going to bring in an expert to go through, you know, some of the tax benefits of commercial real estate. The big thing to note though is active losses are, or passive losses offset passive income. There is a caveat if you're a real estate professional, but for the purpose of this, you know it, we'll focus on passive investors. All right, so this is Majestic Apartments. We bought this in October of 2023. And let's talk about more reasons why we love commercial real estate. Multifamily investing. One return on investment after. If you think of every property as a business, in essence of revenue expenses and then you get net income. So revenue minus expenses, net income. That net income pays your debt service. After your debt service, it's all profit. So your return on investments is the profit of that business, I. E. The real estate. And those distributions for us at CRI Partners happens on a quarterly basis. There's some groups, they do it on a monthly basis, but for us we do it on a quarterly and that's deposited right into our investors checking account or if they use an ira, you know, it goes into their IRA account. So it's obviously one big reason why we all do it is to make money return on investment. The other is market demand, especially in multifamily. We are heavily focused here on the Texas triangle. So the population growth, declining homeownership, it all increases the demand for multifamily driving up future values leverage. You know, when you think about this, a lot of it's, you know, debt related. So we can get a, say a 65% loan to value. So 65% of a purchase price is the debt. And so we're coming in, say at 35% equity to close on a deal. So it's a massive leverage to buy an asset which is, you know, something you couldn't do in like a normal like stock investment, you know, you're not getting leverage to buy that, you know, investment. And lastly, appreciation and amortization. Typically real estate, you know, appreciates in value year over year. But what I love really about real estate in general, not just multifamily but all asset classes, is that your tenant is paying your mortgage. So over five to seven years, when your mortgage is being paid down just like your personal home is, you know, that's more equity coming your way, you know, at exit. So this is one of my investors based in California. He makes over a hundred thousand passive income from us every single year. And I went out to Los Angeles last, I don't know, I think it was May or so anyway, sometime last year and he said, he told me it was like totally off. I wasn't expecting it, but it was pretty really cool. He's like, he paid zero in taxes because of the depreciation that we provided. So imagine like you're, you're making over a hundred thousand in passive income. He does nothing, he's retired, he gets his income and then he's offsetting it by you know, these, the depreciation losses. So and there's always, you know, there may be, you know, tax down the road and there's ways to even shield that through a 1031, etc, but just a pretty cool experience. We had a Dibali event in Cypress, Texas and he flew out and you know, we sponsored it. He flew out and you know, spoke to the, you know, the audience there was pretty cool. But for this slide, there's types of real estate investors, there's passive investors and active investors. So think about the active investors, that's me, CR Partners, we source the deal. We're spending a lot of time, a lot of money on software systems to track property performance, to look for deals, to analyze markets. You know, we are, you know, building up our team to be better focused in asset managing and investor relations. We are working day to day with our property management teams to, you know, deal the day to day stuff that comes up at the property. So we are actively involved in the day to day real estate of the property. Whereas passive investors, your work is everything is up front, it's very upfront. So you analyze the team, you analyze the deal, you analyze the returns, you analyze the risk, you know, once. And if you feel comfortable with all the things and you Know, you want to get obviously educated and this is a good step of doing it. You then invest into the deal and then you should just be getting monthly updates, full transparency on financials, quarterly distributions. If it is a cash flowing deal. Some, some are not, you know, some are development deals but you know, whatever the, the business plan is, you should be getting those updates. Right. And so you are literally passive investing. And the other, you know, nice thing about passive investing is you are not liable, you're only liable for the investment that you know, you put in. Right. So you're a risk standpoint and mitigation of diversifying your wealth. You know, you're not having to be directly responsible, you know, for the loan as an example or if someone trips and falls, they're not coming after you personally as a passive investor. So just a few more slides here but you know, something to consider in risk profiles. And I, you know, I'm comparing a lot to stocks because you know, we're all familiar with know stocks but there's different risk profiles in commercial real estate similar to, you know, the stock market. You know, you have your core asset and I always think of like the core asset is like your downtown highrises. A lot of the, the money that invest in those commercial real estate or large institutional firms, you know, maybe like a TIA Craft or a Prudential or a Clarion, JP Morgan's Met Lives. These are big investment groups that manage a lot of retirement funds. So like as you invest in your retirement, those funds go out into investments that are considered core stable assets. They're not going to be crazy risky on returns because the rents are what they are and there's not a whole lot of value add because the buildings are already extremely nice. Right. They're newer properties, they're in prime location. So those are like your less risky cord. They're not going to be as sexy on the returns. But from a standpoint of, you know, preservation of cash, etc. You know, core, depending on where you are in your investment life cycle may be, you know, a good play to invest. Then you get into core plus it's a little bit outside that downtown area, a little bit outside the area, but still, you know, a newer asset that has strong credit, tenants or residents, etc. It's a little bit more risky, a little bit more return and then you get into value add. This is where CR Partners likes the land and this is where the value add. We buy a property, maybe it's not being managed well, maybe the rents are a little lower than the area. So we're going in and we're actually providing value, renovating units, adding amenities. I have never bought a property and just immediately raised value. I know, you know, some people, like, I raised the rents $100 and did absolutely nothing. Like, yeah, that's okay on the investment. But just as a human being, like, looking at these residents, like, I want to say, hey, we, you know, resurface the pool and, you know, made the amenities a lot better. Did a, you know, fitness center or, you know, some. Some properties we bought a lot of. The H Vacs weren't working or the roofs were leaking or there was decaying facade, whatever it is. Like, you know, they see those changes, you know, carports that are completely corroded. And, you know, why, why even have a carport of rain can just go through the holes because of the corrosion. So we're adding value by doing minor, you know, renovation. I say minor, some as big, but doing renovations. And in doing so, we're pushing value through. Maybe it's lowering expenses, maybe it's increase in income, but ultimately the goal is to maximize net operating income. Maximizing net operating income maximizes your distribution and everybody's return. So that's where I really sit heavily. And then we get into opportunistic, which also CRI partners do, because we have a lot of investors who wants that cash flow once that value add. But we also have the opportunistic investors who, you know, believe that the ultimate real estate investment is buying raw dirt and developing its best use. And so we develop a lot. In Bryan College Station, we did that storage deal, but currently we're about to launch a 150 unit multifamily development. We're also doing a retail office development and also a hotel, all on this 12 acres. So definitely more opportunistic. But the, the returns are going to be incredible, you know, as we, you know, develop, bring in tenants, bring in those residents and sell. You know, of course that's more opportunistic. So that return should be a heck of a lot higher because it's a lot more risk than, say, a value add. So where CRI partner sits, Value add, opportunistic. But depending on where you are in your investment life cycle, you'll want to find a group that fits and aligns with your risk profile just like you would any other investment. So. Oh, About that. Zoom just logged me out, so I'm gonna log back in. All right. Hopefully y' all can see this green. Okay, so Shelby, can y' all Can y' all see it on your side? Yeah. Thanks, Lorna. All right, so just a few more slides. Financial metrics, these are huge metrics. Again, some of this is basic if those of you have already invested on several deals. But again, starting off in 2025, we're just going back to basics and then we'll ratchet up the, the, the knowledge over the next 12 months. But financial metrics, cash on cash, pretty much what is the return on your investment? So if you invested 50,000, or, excuse me, say 100,000, make it simple. And we paid a $7,000 distribution over 12 months, then your cash on cash is say, 7%. Right. And so that's how you would, you know, look on a cash on cash basis. If you're in retirement mode and you're looking to live off the income that a property is producing, cash on cash is important. You know, for our properties, typically year one, two is a 3, 4% return, because going back to that value add pieces. We're taking on a property and improving it. So we want some cash flow, but we're improving it. So by the time it stabilizes, we're getting that seven. Eight percent return. Right. So cash on cash is a great metric to consider. Internal rate of return, I mean, it's a, it's a massive calculation. But ultimately, when an investment comes your way, usually an IRR internal rate of return scale is given, so maybe 15 to 17%. The days of 20% plus, if you get any of those deals right now, just question it, red flag it again. Real estate, a lot of people made a lot of money really quick in a few years. But, you know, typically a return 12 to 15% IR is, you know, a normal investment in real estate that's not as risky. It's not disappointing you if it's not hitting that 20%. But anyway, so it's calculated based on all future anticipated cash flow and it brings it back to, you know, present day. So if you're comparing multiple investments, you may look at an irr, and in many cases, if the money's returned to you in a faster period than another investment, then the IR is going to be higher because you've returned that capital and that investment in a shorter period. So IR is another metric that you will hear quite a bit. And then equity multiple. This is the one that I like. I just want to know how much my money is going to double every three to five years or maybe five to seven years. So if the investment's 1.8 to 2x multiple, then I mean over five years, like, that's good. If I look at that, that's an average annual return of 20% plus I'm getting tax appreciation. So a lot of times people will publish on Facebook and social Media, average returns 20 to 25%. And you're like, how the heck are they making that on average annual return? What they're doing is they're taking all the annual buckets of money and then the exit at sell, and they're averaging it over the whole period to get you that. So, yeah, with CRI partners, you should get a 20%, you know, plus average annual return. But that's all cash flows, including the exit. And so that's where I like equity multiple because it's easy. Like, hey, if I invest 100,000 in something, I'll get my main principal back plus, say 80. If everything goes well, there's always risk. But, you know, if everything goes according to plan, you know, 80,000 or another 100,000. So I have 2x my money in five years plus, you know, gotten really good, you know, tax benefits along the way. So this is our builder rent community, lorna. We've got 55 of our 98 homes being built. We are going fully fast on this development project, which is cool. This is in Lafayette, Louisiana. 98. Nice. Yes, it is really accelerating. It's pretty cool, but. Accredited versus sophisticated investor. Accredited investors. So SEC Security Exchange Commission governs these investments. So all these investments that CRI partners or other groups will do if they're raising capital is they're selling securities, which is backed and governed by the Security Exchange Commission. So the Security Exchange Commission has identified two buckets of investor types for alternative investments. An accredited investor and a sophisticated investor. So an accredited investor is someone who's making an individual that's not married, makes income north of 200,000 or has a net worth of at least $1 million. Or if you're married, then the joint income would be $300,000 between you and your spouse or a net worth of at least $1 million. In both scenarios, whether you're an individual or you're married, it does not include your primary residence. It can include the furniture, all Your personal, your 401k, your stocks, your other real estate portfolio, etc. But not your primary residence. So what is a sophisticated investor? What's a sophisticated investor are those that, like, are on this call right now who are being educated and learning about passive investing, but who may not be an accredited investor. So hopefully that helps explain. So you're either an accredited Investor based on the definition the Security Exchange Commission provides or you're not in which you want to become a sophisticated investor by learning, educating and most importantly, building relationships with, you know, groups like CRI Partners, because that's a requirement by the SEC to invest in, you know, a certain, like 506B offerings. All right, so let's go back to a target returns for investors. Say you did a $50,000 investment and you know, year one, the percent return was 7%, so $3,500. Year two, it grows to seven and a half percent. Year three, 8%, year four, eight and a half. But notice in year five, 87,500 is, is, you know, distributed out. Well, there's an exit, there's an equity at sale. So when you look at all the percent returned, you know, you're looking at internal rate of return of 17% and your total equity multiple is about 2.06 or 103,000 returned. Just letting someone in the group here. So, you know, value added property investors, you know, 7 to 9% post stabilization. So maybe the first couple of years aren't projected to be at a higher return because you know, again, we're buying a property, we're stabilizing it. But typically once it's stabilized, you'll want to see a 7 to 8% per year, you know, possibly 9% per year post stabilization. Typical hold periods, typically five to seven years. The days of two to three years hopefully will return. Hopefully the real estate market will just go crazy again. But the reality is you have to think more of a longer term hold with real estate investing. And if you need the liquid cash, don't invest in these syndications, you know, invest in maybe a REIT or a, you know, other investments that are more liquid. But you know, if, you know, these alternative investments, they're, it's money held into an investment. And those, those money are like soldiers working on the investment. So that way in five to seven years or whenever the exit is, they've done their job as soldiers and returned, you know, the capital back to you. One note on here deal sponsors may sell or refinance earlier based on, you know, what's going on. So like us personally, we have, you know, primarily one broker, but we also discuss things with another broker, but primarily one. And they do a broker opinion of value every year for us on our properties. And, and so we want to stay engaged, like, hey, is this a good time to sell or refinance? We also have our senior portfolio manager who's looking at the numbers and Looking for, you know, the right time to refinance or sell as well. All right, so just got more slides here. General versus limited partners. We sort of hit on this a little earlier this evening, but think of general partners as the active partners. They're the active real estate. There are people, you know, every Wednesday, for example, we have calls on all of our properties and we go through the KPIs, collections, you know, lease, rents, et cetera, with our management company. So we are general partners. We also sign on the loans. We've got more risk, et cetera, than, say, the limited partners who are the passive investors. So if you hear general partners and limited partners, just think active investors. For the general partners, limited partners are the passive investors or. Yeah, for the passive investors. Um, This was very service level. We're going to go into Q A right now, but, you know, continue, please. Joining us the fourth Monday of each month, we are relaunching. Since our last time we did, I think it was like July. We're going to be bringing in, you know, SEC attorneys, we're going to tax advisors, people from CoStar. Like, I'm really going to try to bring in people that will add a lot of value to this group from a passive investing standpoint. And then we are very, very close on my book Courage to Invest. So that will be going out very soon. You can also check out my podcast. I haven't done any new podcasts recently, but there's a lot of great information you find on crapartners.com but there's about 50 or so podcasts that are, you know, just great listens to, you know, continue learning about real estate investing. Our website has a lot on blogs and podcasts and, you know, terminology, etc, so that's at Crypto, another tool we're doing. And this is free. It's passiveinvestorcoaching.com I do about nine hours and I go into depth on everything. So, like, if you don't want to wait, you know, over seven, eight months to learn this or read a bunch of books and you're more of a visual or video and you want to see how to analyze deals as a passive investor or how to, you know, review ppms, et cetera, like, I go through all that and about eight hours and it's free. Like, I'm just throwing out as much education value as I can in hopes that, you know, y' all learn and, you know, make the best investment decisions for yourself. So with that, I'm gonna go ahead and stop share. I know we Covered a bunch of stuff. But I wanted to open it up to questions and I will, I will answer, you know, them. If you want to put it in the chat box, like maybe you don't want to be recorded. I'll read the question and, you know, happy to answer anything that y' all want to discuss.

Wayne?

Yeah.

I've always wanted to know what's the motivation of a syndicator to open it to a active and a general accredited investor versus a sophisticated investor.

So when you first start, like when I first started, trust is a huge factor. So the people that trust you most are your family, your friends, you know, people that know you. And so a lot of those people are not accredited investors. So 506B sophisticated investors are, you know, are good to start with. We did five, a lot of 506B deals and I, every single one of them. I always felt like I had a hand behind my back tied because I couldn't advertise. I couldn't, you know, focus on getting the word out it for us as a company and as an individual sponsor, it had its purpose early on, but now that we've, because we're, you know, each deal we're raising, you know, five to $10 million. That's hard to do with family and friends. It's, you know, mostly accredited investors where you need to advertise and, you know, build the, the group. But there are some investors, like there's one group that I partner with, they, they raise capital for our deals and they do steal a bunch of 506p. They want to know every, you know, really know every single investor and make sure that they, you know, you know, that that's totally on them. But I don't know if that helped answer your question, but that is sort of how the credit investors fit, you know, CR partners.

So you can have a combination in any, any deal.

Not any deal. So there are two. So there's a lot of different regulations that the Security Exchange commission governs. There's two primary and real estate investing. It's a 506B and a 506C. So a 506B is I can take an unlimited number of accredited investors, but I can also take up to 35 non accredited, so those sophisticated investors. So I can open up to 35 of those investors and I can take an unlimited amount of accredited investors. The thing on that though, 506B is I can't go on Facebook, I can't go on social media and advertise or if Eileen and I know you're an accredited investor. But say if you weren't a credit investor, like we were just meeting, like I couldn't offer you the opportunity to invest because we haven't had a significant amount of time to get to know each other. Right. And so the SEC doesn't really determine, hasn't really come out and said, hey, you need 30 days of relationship. But it's general rule, like, hey, if we met last night, if you weren't a credit investor, like, you can't invest in the deal. So that's 506B. Now 506C offerings, which is really 99 of what CRI Partners does is. Is 506C. That's only accredited investors. And so accredited investors, no sophisticated. And so we, we can advertise. We can. So it's important. Like those. If you're not a sophisticated or an accredited investor, that's fine. Like we, you all, everyone, you know, the goal is to become an accredited investor, but you would want to network and find groups that just do 506B or maybe they do more than what we do. If that makes sense.

Yes. Thank you. So the one that you're doing, Brian, is going to be for accredited.

Yeah. It's all 506. It's all 506C. Yeah. The only. I did 506B on Majestic Apartments and I did 506B on Gallery Apartments or Ivy every. All my other deals have been 506C.

Okay, thanks.

We've got a question. What are some examples of current opportunities for investors thinking about the value add category? So, you know, right now I speak for CIA partners. Like we underwrite several deals a week. We're always reaching out to brokers. We're working. We have a person on our team that's reaching out to people that are owners of real estate. And so we're trying to, you know, find opportunities to buy their properties direct. So those opportunities come like last year and for a lot of investors, active investors, so GPs like ourselves, we love it when the world out there says there's no good deals. Like we just closed on a property in September, you know, a few of you are investors on that deal. Like the loan rate was 3.82% fixed rate for five years. And it was cause it was a refinance or, excuse me, a loan assumption. So we assumed the loan the year before that, you know, on Majestic as an example, that was seller financing, 6% fixed rate. So, you know, deals only happen if you do all the legwork, hard work of doing it. But if you're just like, oh, there's no good deals and there's no good deals. So hopefully there'll be some opportunities. I know for us, we definitely have a development opportunity. I'm also looking from a value add standpoint of, you know, multifamily. But Nico, like there's other great sponsor syndicators conferences like Houston is having MFin, I believe. Yeah, MFin on February 1st. That's a great conference to network with other active investors. You know, they may have opportunities doing these meetups. You'll find those opportunities by networking. And I'll tell you, like, and then I, and I appreciate this on my passive investor coaching program. At the end of the day, you gotta like the person. You gotta like the sponsor. If the guy or the lady just seems a little off putting to you, like probably not someone you may want to invest with. So it's a relationship game of building the relationship, seeing from, you know, other people who have worked with them, good and bad. Like I'll tell you, for us, you know, not all of our investments have been good. We got one property that struggled like heck, but we've fought through it. We have so much grit. We've modified the loan when so many loans are going back to banks. But you just want to hear that from the sponsor, like how do they get through the tough times because it's not always attractive. So Nico, hopefully that answered your question. But you know, there's always opportunities, you know, for investors.

Yeah, perfect.

Thank you. Yeah, no, for sure. All right, well, what I'm going to do is I'm going to stop recording now because sometimes people like to ask questions when they're not being recorded. So, you know, for those that are listening to this recording in the future, you know, the fourth Monday of each month at 7:00pm, you know, we do this. We're going to be continuing to add value. Definitely reach out to us@waynereipartners.com again wayneripartners.com and love to get to know y' all on a one on one. So I'm going to stop recording.