EP 505 - How Maureen Miles acquired over 3,500 multifamily units, raised $75M+from investors, and exited near the peak of the market.

Speaker A: And then I realized as long as you can get a good team, it's treating people like people. Money makes people more of what they already are, I feel like. So you got to watch those people if that happens. So. But as long as you're good and you're, you can get a good team together, yeah, scaling is, it's really unstoppable.

Speaker B: Welcome everyone to our Hero Capital show. I'm your host, Tim Mai. And today we have another amazing, uh, guest speaker on the line with us, Ms. Maureen Miles. Maureen is a well known, uh, leading real estate expert, speaker, teacher, entrepreneur. She's been in the Ari Mentor community for a long time. And uh, Maureen, this is my very first time wearing an Ari Mentor shirt on one of these hero calls. Yeah. Maureen is the founder and managing, uh, partner of 4M Capital, which is one of the fastest growing multifamily private equity investment firm. In the last 12 years, Maureen has completed over 450 million dollar transaction, raised over 75 million dollars of private equity and purchase over 3, 500 multifamily units. And Maureen has exited out most of her portfolio at the height of the market. She was so smart at the height of the market in 21 and 22 and is now waiting to scoop up, scoop up all of the good deals that are coming on the market in the next few years here. And uh, Maureen has a vast amount of experience including property management, construction management. She's experienced from being a licensed Realtor, licensed general contractors, doing acquisitions, syndications, due diligence, renovation, asset management, raising money and all of the good things that we need in this syndication space to, to be good at. And Maureen is an active, she's active in the investment community. She's a member of the National Apartment Association, Connecticut Real Estate Investors association, the Apartment association of Connecticut and the Women's Real Estate Investors Association. And so with that everyone, let's give Maureen a uh, huge Texas welcome y'. All.

Speaker A: Thank you. Nice to meet, nice to meet so many new faces and thank you for having me, Tim. I look forward to the call here. Thank you.

Speaker B: Yeah, I'm so excited to get to know you a bit more and in the elementor community, everyone talks so highly of you. It was great to, to meet you in person at the ultimate partnering event a month ago and now getting to interview you. So if you can start share with us a little bit about you, how you got started in this whole war of real estate, especially in this multi family syndication space.

Speaker A: Yeah, my real estate journey has been long. When you read those credentials, I'M like, I sound like I'm 150 years old with all the stuff I've done. I've always loved real estate, and it started back when I was like. Not to go too far back, but I started learning when I was a teenager. Basically, somebody was flipping a house next door to my grandfather. I started helping them clean up the job site on weekends. And then pretty soon they're like, hey, can you carry this cabinet for me and hold this piece of Sheetrock? Can you do this? So by the time I was 19 or 20 years old, I could build a house pretty much from the ground up myself. I went to school for electrical, so I understand the wiring of all these things. So that was my first introduction into real estate. And some of those people I ran into, they had rental, so that I was just aware of that, right? They had three families, they had four families, things like that. And then I went off, got married, bought my first house, renovated that. So I. And I made quite a bit of money on that. I ended up finding there was an extra lot. I split the lot and sold it almost for what I paid for the house. And anyway, so real estate has always been something I've always been involved with ever since I was a teenager. I started buying small multis in 2000 after I stumbled. When I did that, I. That's when I first met Ari Mentor as well. So I stumbled in because I got cash tight on buying the smaller stuff in Connecticut, and somebody wanted to invest with me, but I didn't know how to take their money. I knew their rules. I had no idea what to. What I was doing. So I said, if we do anything, let me find a course. So I went out and I found a private money course. And that's how I actually stumbled upon Ari Mentor and syndication. I was never. I didn't know it was possible for somebody like me to own 100 unit property that wasn't even on, uh, my radar. I was just trying to accept some dude's money that wanted to buy a two family with me, right? So that's how my journey into syndication happened. And I was blown away by it. But again, I was working. I'm trained as a network engineer. That's my. That's what I went to school for. That's what I worked for. I used to work in a room with no Windows for 12 years. And after just a series of events, I got promoted and I was put on a work schedule or I couldn't really see my kids. I had to work Asia hours. So I would leave just before they got home from school. So I got, I started going a little crazy in my brain. It just wasn't good. I have to be busy or the world isn't safe. Right. Why my kids were at school and things like that. I could probably talk to you about a week about period in my life. But I knew I needed a change so I made a shift. They ended up offering a part a package at work and I was able to get six months off and I was making good money, I was making six figures. But I was so discontent with everything. Just missing the family and my work hours and I got a new boss that was. He was a real yahoo we like to call. So anyway, I needed to get out of there. I had three back surgeries in three years. I think my body was literally shutting down because of the stress and the angst and so when they offered the package in the meantime. In the last previous few years I had been buying smaller multis in Connecticut. Right. But there's only so much time in a day. I had about 30 units under where my kids were also involved in that. As soon as they got their driver's license they were collecting rent, they were changing locks, they were doing inspections with housing for me and things like that. So this is a whole family affair. But I realized I couldn't get past that limit of about 30 units. But I was self managing. I was, me and the family were renovating stuff ourselves pretty much. I still wasn't good on delegating and finding the right contractors to do the things. So that was my journey to where all of a sudden I got to this point in life after my third back surgery. Really discontent with this job where I was making good money. But my I'm not happy with my life and I decided to go for it when they offered that package. And uh, uh, in hindsight I could have went after the 100 plus units previously with the right partners or I could have raised money for it. There were ways I could have gotten involved but I was just limited in my own knowledge and capacity. But I was thinking I couldn't really go after the larger units until I left my that because I couldn't imagine somebody investing a million dollars with me and then buying an apartment complex and having an issue and saying okay, I'm going to put in a request for a vacation for next Tuesday so I could go look at it. It just to me I just couldn't connect those dots. So I had to wait till I was free from my job before I Did it and I did. I left my job and one year later is when I closed on my first over 100 unit property. And I just didn't look back. Within three months we had another 250 and another 242. I actually just did a presentation to a doctor's. The numbers are fresh in my head. Tim, we're hitting it. That was my introduction and uh, what I like to tell people too, if you're involved with smaller stuff or doing it. That's really why I was so good at it. I wasn't. You never know right when you buy your first giant property. I was living in Connecticut. It was in Atlanta. I didn't know if I like how it would be to delegate and operate something from so far away. I never use a third party management company. So there was a lot of new things for me. And the reason I was able to do that first property is I remember standing at the bottom of the driveway. It was like a big T. SH Parking lot. And we're thinking like, okay, if this property management, like this outside property management thing doesn't work or if this property gets in trouble, like I know I can sit in this office and run it myself and renovate units myself. Like literally. That's what went through my head to give me the confidence to step into that first deal. And I never had to. Luckily. Although we put a lot of blood, sweat and tears in it. But yeah, never had to run it myself. But I knew I could sit in that office and run it between my kids and my family and help. So anyway, that was my journey into the first one. And then I thought I was really good at it as I would run into issues with the property management company or maybe slow lease up or we're not getting applications. I knew how to go in and make adjustments. I didn't just have to rely on them. I like to tell people that are maybe doing smaller stuff for single family. And I used to feel like I was wasting time. I'm wasting so much time. Not in the 100 units plus yet, but again, I realized that's where I cut my teeth. That's where I learned what renovation takes, what materials are appropriate, how do you market correctly, what is a manager's fault? What is a tenant's fault? How do you manage tenants? So that was all really valuable for me those eight years or so that I did that with the smaller units in Connecticut. So I tell people it's okay if you're just renting out one condo or whatever you have going like you're learning so much.

Speaker B: Wow, that was an incredible story. So what year was that you bought your first multi family? Like the property?

Speaker A: It was 06. I bought two before I found even. Actually. Don was my coach. Don was my original coach back, which we laugh about now because it's 20. You're talking 20 years ago now. We both started when we were 15, obviously.

Speaker B: Yeah. So 2006, that's right there at the height of the last market. And then the recession happened shortly after that. What was that experience like? Was it very scary? People losing properties and any challenges that you had through that market cycle that happened in 2008?

Speaker A: Yeah, it showed me a lot. I did like that. I got into. It was two. Two families I bought in Connecticut. Then I did get in right at the height of the market. Of course, the plan was to just flip these suckers, right, and pop them out. And now I had. I used to work for a title company. I've done. I've worked for a tax company. I understand the game of mortgages. I was a real estate agent for a while too, so I understand this game. And back in that deal, when I bought it in 061 in Connecticut that I literally just sold a couple of months ago, I've owned it all that time. Recovery. Yeah. Ah, I didn't lose anything. Luckily I was able to hang on, but I wasn't able to flip it like I originally planned. I remember them offering a mortgage to me where it was like a negative, uh, amortization. So because I was planning on just flipping it going into it and they said you could, your payments could say. I don't remember the exact numbers, but say the payments could be a thousand a month. If I do that and basically every month a little bit more gets put on the principal. Right. Or I can do this fixed rate that I knew wouldn't change. And I thought about the two and my gut told me, just do the fixed rate because you don't know what's going to happen. Right. So I'm so grateful I did that. Just that one mistake could have blown up my real estate career. So this is one of the reasons I do talk to people. I do try to put information out there. I'm always willing to jump on podcasts and stuff because I feel that the more we know, the safer we can be in these deals. And really it's mistakes like that. You know, again, I was really tempted to do that thousand a month. What am I gonna do, hold it for six months? That would bring my carry costs down. But again, plan for the worst and hope for the best. Right. That's something I've always kind of lived by. So I'm like, okay, if anything happens, I need this other mortgage I could carry through if I had to. And so I. So I look back when people do lose properties and when things happen, like I do understand the mindset kind of how we get sucked in or we're not paying attention to always the right clues and reading things correctly. So with that, to answer your question is. Yeah, I carried those properties for a long, um, time.

Speaker B: I think.

Speaker A: I think like the second one I had for 16 years. The first one, I literally just sold it. So I held that property close to 20 years. It was good once I got people in there. Luckily it's a really good market, good school. So I had tenants this same two tenants in there for over 10 years. So that's always a. Ah, that's nice when get people locked into those properties and they just stay. So it was easy to carry, but I did see a lot of people lose their house, basically. It was rough for a lot of people. I remember going to some RA mentor meetings in the beginning, and I remember a gentleman standing up and he's. I own. I forget how many units it was. He's. And then somebody asked, what's the cash flow on that? I'm negative 3500amonth. And I just remember thinking, because I was brand new, I'm like, don't we do this to make money? I didn't quite understand. I knew that guy's trip did not end well way back then at some point. Right. But it did teach me that people will keep buying for not always the right reasons. Right. And so that I remember that one gentleman, I don't remember who he was, but I'd like to thank him because I think that was one of the reasons I knew to sell in 21 and 22 and to stop buying when the numbers didn't work. His story like just stayed in my head. So I also. You're talking about your conference coming up. I also tell people, go to every conference. You can be involved in all these communities because you learn things like that. You never know what little nugget's gonna stick with you that's gonna save you a bunch of money in the future or put you down a path. It might be a meeting of that one person that's gonna change your life and you're gonna work with for the next 30 years. You never know. But whenever you guys do conferences and whatever it Is it's always good to go to every single one you can, even if you think it's not. Not necessarily for you. But yours is right up everybody's alley here, Tim. So that's cool.

Speaker B: Thank you. Yeah. So share with us your first big 100 plus unit deal. Okay. Take us through. Because actually, right before that, how many, like, how many. What was the. The deal size prior to getting into your first big deal so we can have a good comparison. Because I want to see the mindset what was going through your mind as you're taking on this big deal and, um, the challenges that came along with that.

Speaker A: Yeah, so I was doing smaller units, like two to four units in Connecticut. And I had a good system down. I was in the position where if a broker called me for a deal and it was listed, I'd get mad at them. I'm like, dude, you need to let me know two weeks before you list it. If you're ever watching on the listing things and the unit or the property hits for an hour and it's under contract. That was me. I was sniping all these things all the time. So I had quite the machine and reputation built in Connecticut. I even had a broker give me my own HUD keys and stuff because I liked buying foreclosures. I was really good at construction, looking for those problem properties where it was like, I'm a hunter, I say, not a farmer too. So I love to go after the troubled deals. It's always been my game, and fix them. And you make more money off them too. So that's a great game to be in. But what. It was funny because it's a great question you ask because there's a big change from going from smaller stuff to bigger stuff. It's a big mindset change too. And what happened is I had my connections going. I was buying stuff, things like that. We were doing tons of renovations. And at one point, I remember calling all my contacts and saying, don't call me anymore with it. Because every time I was trying to spend time underwriting, I was trying to spend time meeting people as, uh, possible investors and things like that. And then all of a sudden, this little juicy three family would pop up and I get sucked right back in because that was my comfort zone. Right. That was like, where I was comfortable over here would. It was like a stretch. There's fear involved. There was an unknown involved. So as soon as I got that comfortable base to jump back onto, I would go. Literally, when they were calling, like, don't call, I Told them, don't call me for 60 days. I just had to focus on that. And I. I even got some really good deals. And so what I did is I was. I sent those deals to my competitors and they're like, what? I'm like, listen, I'm trying to refocus into bigger. I'm like, if you do the deal and it's successful, give me a thousand bucks. I'm like, but if that's all, if it works out. Because they're like, what do you want? You want a part? I'm like, you just do it. If it works out, give me a thousand bucks. And it's so funny, two years later on some of these deals, I was getting $1,000. These people. So I'm like, never took track. I never track of if those deals would work. But it was me folk, like, realizing where my brain was. That was the biggest key is, wait a second. It's comfortable over here. It's. I would say, beware of shiny objects. Right? So it's always easy to get sucked into something we're happy with. My kids, actually, I think some of them are on the call here too, but the kids always do tax time. That's the only time the linen closet in the house would get reorganized. They would literally catch me reorganizing my linen closet. Like, taking out. They're like, is it tax. Like it is tax time. So you really. I realize. So, uh, you just catch yourself like, oh, I'm rearranging the garage is reorganizing the garage is not the important thing. I really should underrate that deal. So just catch yourself as you're trying to make that transition. Because just by default, we go into this other mode, right?

Speaker B: Okay, so talk about how you found this first deal and then especially around the, uh, raising money for this deal. How much was needed to raise and how did you go about raising money for this first deal?

Speaker A: So that's a fun story too. I originally, originally. So that deal was in Atlanta. The 117 units. It was indicator Georgia. And the way I got into that deal is I was actually involved in a previous deal in Texas that was being raised for. They had brought me. They said, hey, would you like to come in as a GP and help us with this deal? We need some help raising money. And then I'm like, how much do you need? And they're like, and I'm going to give you guys a couple tips and tricks because I realized in hindsight I was being taken advantage of. I. But I'll Tell you. I'll tell you the story. So just something to look out for, right? So we needed every penny raised. These are supposed to be five experienced operators. And again, I'm. People that know me know I don't like a lot of partners because I feel like there's just a lot. And some people work great with a lot of partners. So I'm not hating on that, but just for myself. So this was supposed to be five experienced partners. And I was so new. I never raised for a big deal before, but I had been going conference to conference. I was well known in the area and I was always, I think Don told me, I always the number one network they know. I say follow Maureen around if you want to know how to network. But I just, I was so grateful to be able to do this business and I was so curious about all the people I'd meet. I wasn't trying to network. I was just networking by default. So I think that's why I was so good at it. But there was a Texas deal, five operators involved, and again, they couldn't raise a penny. So anybody out there, that's a red flag. If we have, uh, if you have a bunch of people and they need every single penny ways, that's a race red flag. It's if you're doing good, you should be able to raise some of your own money or at least go to trust people that can raise money for you if you've been in the business for a while. So anyway, they couldn't raise money. They had 2.75 million to raise. And I actually had enough contacts. So I'm like, I could do it. I'm pretty sure I could do it. So I went and I started pitching to some of my investors, some of the people that I had met in groups like this. And as I was getting the money raised, I'm looking at the deck and I said, okay, they want to buy it here. And they're projecting exiting here. There was like no comparison raised. So they weren't renovating apartments. They weren't. And I'm like, how are you guys planning to get from here to here? And so when I asked the first person, we'll say his name's Mike. I asked Mike and M. Mike says,

Speaker B: oh, I don't know.

Speaker A: Go ask Sally. So then I asked Sally and I go, no, I didn't do the numbers. Go ask Eric. So I went and asked. So I went to all five, and I realized nobody knew the A to B plan for this deal. They only just. It Was like a theoretic book of projections. And I'm like. And I was brand new. So that was the hardest move I had to make was to excuse myself from that deal because I'm like, listen, I. Because I understood that investors trust me. They're not real estate experts. They don't know so. But they're trusting me to put them in a good deal. And I'm like, I don't see the path here. So I excused myself from that deal. And that again, that was one of the hardest things, because you'll hear this in this world all the time, is, oh, they didn't have the money to close. I didn't want to be the one that was the reason for them not closing. But I just wasn't confident in the GP team basically. So I told them I had to step out. And right after that somebody called me because they knew I had been raising money for the Texas deal and that I stepped out. And this. There was a deal in Atlanta that somebody had a partner with, but they were short money. So I went, I got a phone call from the gentleman that was. So he already had the deal. He had the deal directly from one of the owners. He had the deal under contract. He had another partner, that other partner couldn't bring his portion of the money that he was supposed to bring. So they were looking for another partner. Partner. And somebody recommended me. We were both at, ah, an Ultra Ultimate Partnering by Ari Mentor actually. But we never met each other. We each met the same person so they put us together. He called me and then it was in Atlanta. Now when I'm at these conferences, one of the things I do is I find out what markets people are in. So I happened to meet a guy from Atlanta and so I called him as soon as the. This guy, uh, my first partner was with Andrew. So as soon as Andrew called me and told me about the deal, I hung up the phone, called the person that referred us. I'm like, who is this guy? You know, he's a good, he's a, uh, he's a good dude. I'm like, okay. So I got approval from him. So then I called my friend in Atlanta and I was like, hey, can you check out this property? He's as a matter of fact, where he goes, I happen to be literally five minutes away. He's on his way to the pharmacy. So again, somebody I met at one of the conferences was five minutes away. Within 15 minutes I had about 200 pictures uploaded to me. I knew that there were holes in the Fence. I knew the tenants were upset because they moved the garbage. I knew. So I called Andrew back and this is probably 25, 30 minutes later. And I gave him all this info. Boom. And then, because he was vetting me as well. Right. Can I perform? Can I do this? And in hindsight, those guys are super lucky that I got in that deal because of my operation skills that I wasn't sure if I was good at at the time, but I think I saved that deal for them. But so anyway, that was my first deal, was actually coming in with funds like what you teach fund of funds. Right. So that was. Was literally my introduction into this. Wow.

Speaker B: Uh, that's amazing. Okay. Would you say that the bulk amount that you raised for that first deal was from people that you met at, uh, events?

Speaker A: 100. I had no money and none of my friends or family had money. There was nothing there. Yeah. So a lot of people say, how do I get started if I don't have anything? I'm like, you could. I worked my ass off. I can operate these properties. I wasn't afraid to sit there and talk to the manager and understand how to make sure it ran well. So I provided value like that, but put every single penny from that deal. And it wasn't until my third deal I was even able to contribute as an investor, put any money in because I just didn't have it. So you can get started with no money, especially if you have, say, what is your value to the team? Operations is a huge value to a team. Construction is a huge value to a team because not everybody knows those things unless you have experienced them, um, before. So both of those, uh, you can earn your place on a team sometimes. And that's really what makes or breaks properties, is the operations. You could buy a property, but if you don't run it, great property will turn into a bad property very quickly. And then also I see a lot of money wasted in capex where if you don't have somebody on the team or a coach or somebody you could refer to, guide you a little bit, that can get. That can be detrimental to a deal as well, with a lot of wasted money.

Speaker B: That's so good you brought something up that a lot of people don't realize because the acquisition part of the business is the most fun, the most sexy part of the business.

Speaker A: Right.

Speaker B: Uh, it's exciting, but they don't realize that that acquisition account form maybe 20% of their success. Right. 80% of your success is in the operations. And yeah. In the five years that you have to run this thing and. Yeah, and it's so cool to hear your. That's where your strength lies. So share with us a bit about that. What are some of the things that you do in the asset management of these properties that you know that, that you see that others make m mistakes

Speaker A: on going back to the construction, one of the biggest things is capital. Because if you get a bunch of people, maybe they own previous businesses, they're retired like you get people doctors. Right. They just aren't aware of construction. So if you have no knowledge of construction and nobody on your team. Property management companies aren't always your friend either. You think they're looking out for you. But there's such a kickback thing in this environment. Yeah, we could talk a whole meeting about that stuff, what I learned over the years. But yeah, it's construction. Just to give an example, one of the deals I looked at one time, 1988 property, I asked for, hey, give me a list of capital improvements that the seller had made. And one of them was $800,000 for electrical. And I'm like, oh, in 1980 I could see if it was a 60s property maybe, right. But it's a 200 unit property built in 1988. I'm like, why did you spend 800,000 for electrical? And so I asked the broker, the broker didn't know. And so he let me ask the seller. He asked the seller and the seller's response was he goes, I don't know. The contractor told me I had to replace each of the circuit breaker panels in all the apartments. He goes, that's what that was for. And I said, do you know why you had to place replace it? He goes, oh, I don't know. He just told me I had to. Again, I could have gotten that same job done for a thousand a unit which I would have spent 200,000 versus the 800,000. So not only did he get paid 4x, but he did something. There's no reason, I've never heard of a reason to replace an electrical body property. So that's one of the things that I do see a ton of people get caught up on. Um, one of my first experiences in owning it was my second property. There was like windowsill rot. And on, um, one of the window sills in the clubhouse, and it was on the second story, but there was like a mini roof, interesting structure like that. So climbed up on the roof, I see the rat. And the property management comes, we'll get you some bids, right? So I'm thinking It's gonna cost a couple hundred bucks. I can literally do it myself. Okay, I get some bids. And there was a bid for 40, 60 and 80,000. Because they're gonna get me three bids for this. And I'm like, like, I was flabbergasted. I'm like, I can't even imagine how I would spend that much money if I had to fix. Are we replacing the windows? What does this entail? And I was so interested, so I flew down to meet them. I went to Atlanta and one of the guys. And again, this is a common trick. Sometimes they'll bid it out by different ones because they want you to go with the 40. So they're going to send you a 60 and 80,000. So you're like, wow, the 40,000 is definitely a deal. Boom. You don't think about it anymore. But I met the groups out there and one guys. Since we have to tear out the trim in order to replace this, we have to go all the way down to the studs to see if there's any damage. And then we're gonna have to reside the whole down, down lower half that was like the what everyone was quoting. And then the 80,001 was like residing the other portion that wasn't touched as well. So like the whole building when I got down there and I'm m. Like, can you guys just wrap this with, uh, aluminum coil? And they're like, the angles here are too hard to make. We can't wrap it because there was nothing structural. Just literally a windowsill that the paint had came off of. And it was like dry rotted a little bit. Like, I would just pull it out, replace it, and then wrap it so for prevent future damage. And he's, oh, no, my guys, we can't make bends like that. And I said, if you get the break for me, I could show you how to do it. And I wasn't trying to be a smart ass. Uh, my construction people were like, my team was laughing their asses off. But we got it done for four. We fixed that problem for 400 bucks. And so these are the things. Construction is huge and management is huge. Huge too. If you don't know how to watch your expenses and what they should be getting away with. And I tell everybody, and, uh, I'm not judging anyone but contractors, property management companies, a lot of managers even. I'm like, they're as lazy as you let them be. So sometimes there's little. They'll nickel and dime you if you don't catch it. They'll nickel and dime you again. If you don't catch it, it'll just keep getting worse until you question some of those expenses. The other thing is just freezing expenses is what I like to use example of is balloon rentals. All of a sudden there's $99 a month start showing up across 12 of my properties. So every month is $1200 a month for balloon rentals. And I'm like, what the hell is a balloon rental? I never even heard of a balloon rental. Right. And so they go, Maureen, it's like the used car dealers. Instead of having balloons, we blow up to get attention. We'll put it out at the street. And they're like hard vinyl balloons that don't really have air. But when I looked them up, you could buy them for $67. You could buy balloons. Balloons. Okay. And I'm like, this is not a good idea unless you're the one renting the balloons. So I'm sure the management company was getting some kind of a kickback for the supplies of management. If they're just earning a little bit off of your property and they do it times 50 properties or a hundred properties, it's very lucrative. So you just have to watch all that weird stuff. So that would be my. And I could, we could talk a week straight on, um, management things that I see that's.

Speaker B: Yeah, no, it's those little things that people don't realize that adds up a lot. Right. And it can eat into all your profits. And yeah.

Speaker A: One of the things I like to remind myself too, and everybody else too, is there's a 5,000amonth rule, as it's basically at a 6 cap is where the valuation comes in. But for every 5,000amonth you gain, it's a million dollar valuation on your property. And it works in reverse too. So every 5,000 extra in expenses, that's a million dollar valuation on your property. So if you're getting dinged, 500 bucks, I think that's one tenth of my million bucks they're taking a bite of. So every little bit like so my brain always works in chunks like that. So it's always so that. That works both ways. Yeah.

Speaker B: I love the way you simplified that. And it helps keep the numbers alive for you to watch out for. Right. That's awesome. Yeah. Okay, you went from single family duplex to 100 and you said 50 something units. And then next thing you know, you have 3500 units plus share with us that whole journey. What was some of the major lessons that you learned along the way in your path of growth. Yeah. To, to what the scaling looks like for the people that can see themselves in your shoes. You started where you were as a single family, expanded into multi family and really scaled and built it up into a uh, multi, multi, multi million, uh, dollar empire. Yeah.

Speaker A: And I tell people too to. So one of the stories I have when I was closing on my third property, which is a 16 million 16 and change million dollar property, I was literally in the attorney's office and my cell phone's blowing up. Right. And my partner there, he's. What is going on? Right. It was just going crazy. And come to find out it was. Somebody was parked in front of the dumpster at a 4 family I still had in Connecticut. It was probably a $300,000 property or something. But I realized it's actually easier once, once you make that. Once you cross that threshold of Realizing that that 100 plus units affords you a full time person inside and a full time person outside. That was the game changer for me because after running around for eight years. Right. And having the kids collect rents and changing locks and you, uh, showing the apartments. My sister's online, she showed a ton of apartments for me. But it's like after doing all that stuff when you realize the. Just the peace of mind you get with having someone. I said, there's somebody that literally wakes up in the morning, takes a shower, gets dressed, goes to work on my property. That was insane to me. That was such a mind shift. And then I realized it was easier for me to run this 242 unit building that was fully staffed or property rather than my four family. My four family was a bigger headache than the 242 unit property. And that was really an epiphany for me. And then I realized as long as you could get a good team, which again, it's treating people like people. Some people, they get into this business, they have huge heads and they're just the. I said money makes people more of what they already are. I feel like, uh, so you gotta watch those people if that happens. So. But as long as you're good and you're. You could get a good team together. Yeah. Scaling is, it's really unstoppable. It's rinse and repeat. Because once you kind of just get it down, you could just keep rolling and then it actually gets easier. One of the other big shifts for me was realizing when I'm doing the smaller units, there's always issues with the bank. It's like my gosh, if I ever bought a new car car or I put 100 bucks on my Macy's card or something, they're questioning it. Uh, right. What is this thing? It affects my debt to income. But once you get into these larger properties like as soon as, as soon as I had a couple under my belt, actually just two, I was able to always self sponsor myself after that. And they want to reward you with more. You have 10 properties, what would you like? Maureen and I remember one property, they were giving me trouble. It was in a really far out tertiary market and they didn't want to finance it because they're like oh it's too far, too small of a market. But I said okay, but whoever's financing that one is also going to get this 250 unit I'm buying. And they go okay, we'll finance it for you. So you kind of like really, you uh, get a lot of control once you start having a lot of bigger properties. So that was a really thing that would limit me in the beginning a lot was the financing when you're doing the smaller deals. Because even a portfolio lender is going to lend you about 10 properties if you have a credit union relationship or something like that. Like that. But this one, you're literally unstoppable once you, once you have one or two under your belt there's no limit. And they don't care if you're buying a new car or whatever. As long as you're not a felon, your credit, you don't have a bankruptcy, you have a decent credit, you're good. And as long as then they vet the property more so than you.

Speaker B: And not only that but a lot of these bigger properties is non recourse. They don't go after you personally like they do in the smaller properties, you know where you have to personally guarantee. Yeah. And a lot of people don't realize. A lot of people I'd rather go after the smaller properties because I can own 100% of it, I can control everything. But it's so much more work to all to, to own 100 of a million dollar deal than say 10 of a 10 million dollar deal. Because you have a whole team in a 10 million dollar deal that you don't have in a 1 million dollar deal. You are the team.

Speaker A: It's so true. And the team could make or break you too. I always tell people when they're looking about when they're thinking, thinking about partnering with somebody, make sure you have dinner with that person, make sure. You know them. I'm in a lot of different network groups and some of the people are pretty high net worth. And I remember in probably maybe 2020, it started happening where all of a sudden a lot of my friends, all of a sudden they're in multifamily now. And I'm like, wait a second. But you, you sell airplanes, like, why are you in? Or you sell different things. That's not your business. But they, they got involved. I'm like, do you know the sponsor? And they're like, no. So I'm like, just be careful. Just know the people. When you're going to partner, you're right. It can be glorious. And it's a lot, it's a lot more fun to actually do with a partner when you have, when you're tackling these deal together and you get it wrestled and under control and you close on it and then you get a great manager and you. I always work on the team a little bit, so I get a great team that's really cohesive. And then it's, it's almost like at home, it's like, uh, it's really good. And it's fun to enjoy that with other people. But the wrong partner will also make you wish he never heard about real estate or multifamily. Right. So I tell people, make sure when you're going to partner with people, have dinner with them. Uh, there was one issue. I went where the guy didn't get a fork or he dropped his fork and he asked the waitress for a fork and she was busy and she, like forgot and she, he came back. She came back. Or, uh, he like grabbed her and he was so rude to her. And I was like, whoa, I would never work with this dude. Because real estate is, there's. When it's good, it's really good. When it's bad, it could get very stressful. And you, I can guarantee you there's always ups and downs in this, right? I would say we're never bored. And once you join this, you'll never be bored. But just make sure you get partners that, that you're okay with that. Really get to know them, have a beer with them. If they drink alcohol, you want to know who these people are?

Speaker B: Oh, ah, that's so good. All right. You mentioned earlier, uh, about catching the telltale signs of, uh, when to exit the market back in 20, 21 and 22 share with us. What are some of those telltale signs that you were looking out for that people should look out for in the Next market cycle. And then also share with us. What kind of deals are you looking for now in, in this coming cycle?

Speaker A: Yeah, sure. The signs back then were because of COVID some of my projects were delayed. So we had a couple projects that we really should have sold in 2020, but they got carried into Twan. And what happened when I started, when I started selling those projects, I had two or three listed and I started getting offers for all my other deals. I started just offering again unsolicited. And I'm not talking one or two offers until 15 offers. It was wild. And these offers were coming in at uh, an even higher amount than what I had expected to exit in the full five years. So one of them, as a matter of fact, we had only owned for about 13 months or only 13 months into a five year project. And the offer was more than what I was expecting to exit at in five years. So I bought that 136 at Doran. I sold to it for 72 a door in 13 months. But what the signs of the market that, first of all, I hadn't been able to buy anything since early. I can't remember if it was 2020 or 2021 was like the last time. So we're in later 21 or uh, mid 2021 at this point. And I'm getting all these crazy offers and I'm looking at them, I'm like, these people cannot operate. I'm a good operator. I know how to tighten up when I need to tighten up and save money. And I'm like, they cannot operate the property properties at this price. I did not understand it. They're getting. Bridge debt was another red flag. And it was bridge debt because there was a lot of construction to do, or if it was 60% occupied, that's where kind of bridge that has its place because you're getting extra money for construction loans. But this was only bridge debt because they couldn't meet the purchase price. Right. And I talked to one of the brokers in Atlanta at the time, he's Maureen. Do you realize in the summer, um, of 2021, 95% of all the deals sold were sold with bridge debt only because they didn't meet the dscr, which is the debt service income ratio. So that means there's a bunch of people buying overpriced properties that are telling the lender, don't worry, Mr. Lender, in one year, two years, three years, I'll have the income up to this amount. And so that was a red flag. That was a huge Red flag to me, which I heard everybody was closing with bridge loans. The other thing was, as I looked at my portfolio again, I bought my first one in 2014. Made. We made. We did really well on, um, actually all the deals I like. Again, I like to buy a deal with a little bit of forced appreciation. It's just kind of my jam and it keeps me safe. I feel it's like a little insurance policy. So the deals we did really well. I'm looking back at the deals, I'm thinking, okay, was it the management, operations and opportunities that I found? Were those the biggest money winners? Was it the ones that had three buildings down from a fire that I could fix? Were those the biggest winners? And I realized that, that nothing affected me more than the cap rate. Right. Looking at what the cap rate did in the market. So just to give you an example, if I buy a property at an 8 cap for $12 million, that property, once it's in a 6 cap environment, that value goes to $16.6 million valuation. So I'll make $4.6 million not doing a damn thing to the property. That's the NOI saying exactly the same. So we were in. When you're in a market with, with cap rates that are coming back or suppressed cap rates, right, that's what we want. When they're expanding, like, we're in that market a little bit now, you have to just be extra careful. There's still deals out there, but you just, you don't want to be aggressive. So anyway, to bring it back to your question, Tim, is I realized people were buying some of these things for 3 and 4 caps. Like I knew friends in Dallas that were buying for like a 2.75 cap. And I'm like, where do you expect the market to go? It's my question. I get it. You project a 50 rent growth for the next three years, you can get numbers to work on a projection in theory, right? But like in reality, you buy something at a three cap, do you think it's going to a one cap? But. And I just, I, that's why we just stopped buying because I couldn't compete with, with what other people were willing to pay. Like in the tertiary markets, there aren't always quite the swings or the smaller market markets, always quite the swings that you'll get in the Dallas and Houston and Atlanta, things like that. But the cap rate is one of the biggest things. But that was the other red flag to have me stop buying is it couldn't compete with that. And it was too risky for me because we're lacking in rates that were. I still have a loan now. I, uh, locked in a 3.4% loan for till 2032, and that was fixed. People are buying these adjustable rates for 3%, buying at 3% cap rates. I'm like, it's insanity. If you just take a look back and take the emotion out of it, it like just realizing that cap rate is the most important factor, I think, out of everything.

Speaker B: Right. Wow. Uh, that's so good. All right, and then what are you looking for? Now I know you are on the sideline waiting for deals to pencil. What are you seeing? Because I'm starting to hear a lot of good deals coming online. And so what are you seeing and what are you looking for?

Speaker A: Yes. Where the market is. Everybody likes to hear. I feel like I have a crystal ball that I've been pretty good at reading for the last decade. I remember 2017, people were like, oh, we're not buying. The market's too crazy. I'm like, you still have all this opportunity. Like, you can. You kind of look at, like, where's the Runway on these deals and in this market. Right. So where I feel we're at right now, I stay in touch with some of the lenders and brokers. We've been talking for every quarter, every 60 days or so, all during this time, for the last five years. Right. And it's been playing out what we see. There's a few different things that get thrown in. So I think we're coming to the end of what I was calling the lenders extend and pretend. So, like, a lot of people that have deals that are. Aren't doing well, the lender really should have stepped in. But they're like, everybody's looking away from it. No, it's going fine, but everybody knows it's not going fine. Right. So there's a lot of those deals out there. Tons of those deals out there, actually. And so you have operators that are either going to. And again, a lot of people bought bridge debt in early 20,000, right. To 2021 3. I'd say those are the deals that now that bridge debt is coming due. So that's concerning for a lot of people. So they're either extending or they're able to refi or sell. But some of them have to show up with cash. That's one of the things I tell people if they're looking to Invest as an LP, one of the GPs have a little bit of cash on the side. That's so important to a deal because people can show up to cash and if they might have to add another million dollars to the principal or something in order to get a refi, that deal will still still be safe. It won't blow up. But we're looking at a lot of people that can't do that right now, too. So they're just been waiting. So there's a lot of deals out there. If they're not paying the lender and they see the kind of the doom and gloom at the end, they're not turning units. And that's a very slippery slope. Once you stop turning units, your occupancy drops so fast. So I'm seeing a lot of deals right now, 50, 60%. But I feel like they're still a little bit delusional on the pricing of it. So the pricing has pulled back, I think at least I'd say 20% for a normal stabilized deal. That's not having any issues if you compare it. We're getting a lot of calls from brokers. I was like, oh, it sold for 200,000 back in 2021, but they only want 30 for it now. I'm like, the value of it really is only 150 if it wasn't distressed. And now that it's distressed, it's way under there. So keep that in mind. So I do feel it's going to get worse before it gets better still, although there are deals out there, I just tell people, don't be aggressive in your numbers. One of the things we've seen recently is a lot of these new developments being delivered, right? And I said, when you're in a development. So I have a development in Texas that we're actually selling now, but so once you start a development, you're pregnant, that things come in one way or the other. You can't stop in the middle of the development, right. Or you'll lose it. Right? So a lot of these are getting developed, which in some of these bigger markets, you'll see two, three, four months of concessions, right? So I sat back. I've been seeing that the last few months getting worse. Actually, they're getting even larger future. And so I asked myself, okay, what does this mean in the market? And what I believe it translates to is a, uh, resistance to rents being lower. Because if they had lower rents, they'd be able to rent out those units, right? But they're trying to re. There's a resistance to lowering rents, so they give away free rent, hoping to keep those value highs, that value the Values high, especially on these new construction that they're hoping to refinance or sell out of. Right. So that's where we are right at this very moment in the market. So I believe at some point we're going to see some lower rent. So I advise people that I speak with or that are in some of my groups just. It's not just conservative anymore to just figure no rent growth. It's conservative to actually even project a rent. Like if you want to be conservative, it was conservative. Hey, there's no rent growth in my projections. That's super conservative. Right. I'm like, you might even want to pull back just to be extra safe. So you're looking at a deal right now, especially something 50 or 60 or 70% occupied, which that is going to be the plethora of deals that are coming to market. I feel in the near future you just want to make sure that when you do these bigger jobs like that you're always like projecting two to three years out because that's how long it's going to take to get everything under control, get everything leased back up again. So you want to just be conservative and really watch those numbers again. Once you get outside the major markets they don't swing as far. So if you're in some of the smaller markets, this might not apply to you. And then there's cities like Nashville. I think Nashville has legs. If I had to bet on one city, it's Nashville. I think there's a tax free state. They have all kinds of stuff going. Cities like Austin, Denver. I'd be a little bit scared of some of the AI stuff, right. Anything where there's a lot of software engineers, I'm like ah, like just be aware. And again, it's not saying something else won't fill those jobs. But Austin is the market with the four months concessions right now on some of the deals. Deals. And again, if you buy it at the right price, that's great. This is coming into a huge opportunity to buy. But just make sure you can carry it through whatever comes. I don't feel like it's going to be super aggressive yet. I tell people in my group that I run. There's deals out there. So definitely right. Because if you don't underwrite all the time, you won't know a deal. If it drops right in your lap, you won't recognize it because you're not aware of where the market is. But I do feel that, yeah, that the market is, it's, it's going to still get a Little bit worse before it gets better. In. In my opinion. So sorry, everybody. I know that's not what everybody. You're like, go now, back up the truck, buy everything. But I feel, and it's just my personal opinion, I feel like we're not quite there yet. And again, it's very market specific. Uh, your market may be different.

Speaker B: Do you personally have a favorite market that you're watching the most?

Speaker A: I started my business in Atlanta. I know Atlanta really well. I have my connections there. At least Atlanta's a rough mark. Like, I feel like a lot of the equity groups and people say New York equity, they hear Atlanta, it scares them to death. Because Atlanta could be rough if you don't know the area you're buying in, don't understand how to manage it correctly. It's just. I'm also in South Texas, and South Texas is like its own planet. I swear, you can. Unless you have a partner that's from South Texas, I feel like you cannot. I wouldn't be able to run that property if I didn't have a partner involved that was from the area because they just. They run on their own time. It's been very. It's developed my patience quite a bit because it doesn't run as quick as New York or Connecticut. And yeah, so I. And Dallas, Fort Worth, Houston, San Antonio, I think those are going to be some of the biggest hit markets with what's coming for distressed property. I don't want to say foreclosures, because who knows where in the path things will fall. But I believe anywhere that news were going crazy back in. In 2020-2023, say where they were just buying, buying. And I think that's why those markets are some of the more volatile markets now, which eventually will turn into the greatest opportunity. Right. They kind of are a pendulum. They kind of swing on both ends. I feel like somebody would tell me some Vegas numbers. I have a friend that buys a lot in Vegas and housing, there's 30,000 coming to Atlanta in, I guess, units that are not units, but properties that are. And I don't know these numbers, what he was saying that are in Trouble, basically. And Veg 3000. So it's like, so again, certain markets will get hit harder. But I also heard from one of the brokers, he was at a conference where the head of Arbor was talking. And Arbor is one of the biggest lenders. I believe it was the head of Arbor that he was talking to. But they go, when you hear that a property's in trouble, what market do you not want to hear?

Speaker B: It's in.

Speaker A: And he said Atlanta. And I'm like, yes, I'm okay if it scares them because I know how to operate there. But yeah, but I think all those markets are going to be huge opportunity. You're in Houston, right? So Houston, Dallas. Yeah. San Antonio, that. And then there's always tertiary markets and pockets everywhere.

Speaker B: Yep. All, uh, right. Maureen, before we open up for Q and A here, for those that want to reach out to you, learn from you, invest with you, where would you like to send them?

Speaker A: Actually? So this is. And for the women out there, kudos to you. They always, they still think I'm the property manager when I show up. But again, I know that's their art perspective, not mine, so it's cool. But I. There's so few women in this that I was able to buy QueenOfMultifamily.com so. But Queen MF is my website, so Queen. And then I'm like multifamily MF. Uh, so queen of multi. Or I'm sorry, www.queenmf.com and maybe we could put it in the chat to one of my people that are on here and you can reach out. We have a free community. Again, I just trying to keep people safe going forward because this has been life changing for me. Me generate, I've changed generations in my family by doing this. And I hate for somebody to get knocked out. Like way back when when we talked about that first two unit property, that if I just took that wrong mortgage, I would have been wiped out. Like real estate to me would have been something that's very scary and dangerous and risky. Right. But the more you know and the more you educate yourself, the risk can go way down. Like for me, I'd rather invest in real estate than buy stocks and bonds because for me that's risky. Because I don't understand it as much as the real estate that I can control Wrestle. I could make it do what I wanted to. I could go show up on the property and move into a unit if I need to. We can control that. But it's queenmf.com and supporteenmf.com I'll put you in touch with my sister and there's all kinds of stuff from there. You'll find the free information and however much you want to get involved, you're welcome to. But there's a lot of free good stuff on there.