Episode 020: The Next Big Wave – Are You Ready?
Jim Stuart joins David Lindahl in taking your questions and how they’re getting ready for the next big wave of multi-family deals that could set you up for life!
Speaker 1: Stay tuned for a special edition of the multifamily deal and podcast.
Speaker 2: What advice would you give them going into the next round of buying?
I honestly think laser-focused. You’ve got to have your goals set up, fill in the gaps now because you won’t have time to fill in the gaps after whether it’s education relationships, making sure you’ve got your potential capital side, ready to go. Because when it goes, you want to be like a well-oiled machine. All the noise goes right by me.
Get yourself ready when it starts, it’s going to start and it’s going to be fast and furious for a two or three-year period. It’s going to be great. So when you go to the downtime, now, get yourself ready, and then… let’s go!
Speaker 1: Welcome to the multifamily deal lab podcast, where we dissect a deal before your eyes and ears. So you can discover the strategies and tactics that got each deal to the finish line strategies and tactics that you can put in your own toolbox to get you to the closing table from sourcing the deal, raising due diligence to the property takeover, multifamily deal lab shows how you too can get the deal done. And now here’s your host. David Lindahl, everybody. Welcome to multifamily deal lab. I’m your host Dave window.
Speaker 2: My guest today is Jimmy Stewart. Who do we have in the queue Let’s take a few questions. Yeah. Thanks Jim. And thanks Dave, for taking my call. Yeah, I’ve been, I joined a RD mentor and about four months back. And my background is I’ve been a single investor, real estate invested in single family homes for a little over 10 years now. And I’m, I’m based on a belt in Texas. My question for today is basically I’ve been actively networking and allow networking. I love meeting new people all the time. Now, one of the key indicators for multifamily, what I realized is it’s show me the money. Where’s the money coming from. So I’ve been talking to a lot of my, my good friends who are what I think they have a lot of money. And now they all came back to me and they are interested in partnering with me, but the one way to make a presentation for 30 minutes all about real estate and why they need to join me and what is in it for them.
Speaker 2: Now, there are three different groups which I have, which I need to make presentations, which one is all the friends among the friends. I have friends from school, from college and from different careers. And that is number one. Number two is all the professionals. I, I put them separately in terms of all the doctors and all the lawyers and all the CPS different. And number three is the family members. Now, Dave and Jim, do you have any script for this or do, what is your, what is your salvation on this How do I talk to them
Speaker 3: I can, here’s what I say. Here’s what a 30 minute presentation, is, is long. Okay. But at the same time you’ve got the apartment house Rich’s manual. All right. So I believe it’s chapter four that talks about emerging markets. Okay. So you want to open up with the opportunity and I would just simply, you know, I would go into that manual and create a presentation based on the four phases of the market, where the opportunities are in each particular phase of the market. And then, you know, then start focusing on emerging markets and the opportunity with emerging markets, feel free to, the book emerging real estate markets that I wrote. Yes. if you want to get some of those, I’ll be happy to autograph them for you. And then you can give them out as a gift, that I’ve had people do that before presentations.
Speaker 3: You certainly don’t need to do that to be effective. but I would start there and then I would go into how to syndicate a deal. You know, what a deal syndication is. And that explains the whole process, you know, that, that investors are going to go through and a syndication and then, then I would open it up and then I would go into the types of deals that you’re going to focus on. and then I would go into a Q and a, what do you think, Jim What would you add to that Yeah,
Speaker 4: I think, I think so. what I would say, you’ll have to pick your audience, judge your audience because, 30 minutes can go by pretty quick, but for some people and you’ll have to decide what type of people you’re presenting to 30 minutes will be too long and you may want to go more at a higher level initially. And so you might want to be a 10 to 12 minute presentation. If they have further interest, then you go into a more detailed presentation, but you’re just kind of, creating interest from it and it, and, and you’re presenting it in a manner that allows them to have more questions, which then gives you an opportunity to have further dialogue with them. That probably be what, what I might look at, suggesting. so know your audience in this case, you mentioned fish that they wanted a 30 minute presentation. So, then the way Dave suggests I would suggest that’s a pretty good way to go.
Speaker 3: Yeah. I would also, don’t forget the part about what you’ve been successful in, in life. and, and, you know, if you haven’t done any deals yet, you know, how you’re being educated to do and the team that you’re building around
Speaker 4: The team. Yeah. I agree. The team is critical because then you use their, their credibility.
Speaker 2: Okay. Can I, can I talk to them about my past year investments and how does working out for me, your, your passive investments Yes. Yeah.
Speaker 3: You can give examples. I mean, those are the similar to the types of deals you’re going to be doing. you can, as far as I know, you know, you might want to consult with, an sec attorney, but I’m sure he could tell them, you know, these are, these are the types of deals I’m doing. This is the type of deal I’m actually in. And, and that’s actually given your experience as well. Isn’t it You learning from that, those deals.
Speaker 4: Yes. Yes. Yeah. I mean, I’ve been learning a lot from meeting with all the syndicators and the email correspondence and updates and the reports, what I’ve been getting from them is a learning process. And that’s it. Thank you, Jim. Thanks for your time. And thanks, Dave. Thank you, right.
Speaker 5: Hi. How are you both, I’m sorry. Interesting. What you’re saying, Jim, I have a quick question for you when you started raising the money and you said you didn’t have much luck with friends and family. How much time did you give yourself to raise that money Be your first deal
Speaker 4: I would say I actually started working on raising capital about five, six months before the deal and looking for potential people, so that when we actually had the deal, then I was circling back to those people that I had better qualified. So it wasn’t a cold start. I, I, I would find it highly stressful to start the day. I’ve got a deal to look for capital. I think, I think you’re asking for trouble personally. So in my case, I was still pretty new into this, but I was focused back while I think March, March, and this deal closed December, but we actually had the deal under contract in September, so.
Speaker 5: Okay. So did you just pitch them more, your idea of what you were going to do if you don’t have something to share
Speaker 4: Kind of what Dave, and fish had just talked about. It was conceptual at that point, but just going through kind of a, what if scenario talking about the whole emerging market in my case, I was focused on Atlanta. So I talked specifically about Atlanta and what I liked about Atlanta and how that was an emerging market itself and what criteria we were looking at on properties. And when we found that sort of criteria, we would then be executing on it. And, and, and then my background.
Speaker 5: Oh, thank you very much. I appreciate it. Thanks.
Speaker 3: Wait, you’ve got to start, building your private money list. As soon as you realize that this is something that you’re going to do. So you start seeing opportunities, in social situations, you start focusing on going to business situations, meet up groups, and then just telling people, you know, what you do and the ones that are interested, you ask them if they, you know, they want to learn more when you, you know, when you start doing deals and then you get them on your list and then you contact them, you know, once every couple of weeks with maybe a newsletter or an update on what you’re doing, because, you know, if you wait until you get a deal to start raising capital, that’s like, that’s the worst thing you can do.
Speaker 3: High, high, high stress, number one, number two, anytime you are three weeks to the closing of a deal and you don’t have the capital raise, you’re still raising money. People psychologically feel rushed and they make a no decision when they feel rushed. So when you have three weeks out, that’s like it was crunch time. That’s the worst time. So you really need to be raised three weeks out to a deal, or, I mean, if you actually get there anybody listening and you’re actually there, then do an extension on the deal. So you have more time to raise that money because it’s so difficult to raise with just three weeks ago.
Speaker 4: Just one more quick question. Yeah. Jim, how did you find your partners I went to ultimate partnering. That was a great event. And, that’s, that’s a, a great room. And so I went there and that’s how I found my partner and how I’ve raised money there too. I mean, it’s just a phenomenal event.
Speaker 3: Okay. Let’s take another question. Hey Jim, thank you for doing this, Jim. Thank you for being here. I happened to go on a tour in Atlanta with your property out near the airport. It was awesome. The way you and your partner presented it and the work that y’all did, it was just remarkable. You were inspiring. I just have two quick questions. Number one. Do you use social media to get contacts on raising money And if so, what social media do you use
Speaker 4: Sure. I’m smiling ear to ear right now because, I’m kind of an old school marketer, the four P’s of marketing everything. And, that is what I’m working on right now, as a matter of fact, is that whole getting that social media site going because up to now, no, I have not done that. And I’ve been more of an old school relationship type of person where I’m in front of people and doing it with the handshake and that’s eyeball to eyeball as opposed to doing it the other way. So to me, it’s a learning curve right now, but, you know, I’m working on LinkedIn to Twitter, to Instagram. I mean all the, all the typical website and it’s, being worked on as we speak right now. because with this whole COVID 19, it’s really highlighted the issue and how you have to, to me anyway, you have to be able to do that type of business up to now. I’ve been kind of able to hide and not do that, but, it’s, it’s a new world now.
Speaker 3: Yes, it is. Are you using VA’s or Fiverr to help you with that Or are you doing it on your own
Speaker 4: Initially right now I’m working with a company out of India and then ultimately we will be using some VAs, quite honestly, really what we are a marketing company. And so one of my first hires will be a marketing person to work alongside, alongside of me. That’s that’s my plan is to physically have someone here, but also doing virtual as well.
Speaker 3: Yeah. Delegate. Yeah. Let me give you a couple of tips. First of all, Facebook and Instagram and all that, it’s, you’ve got to really be up on the sec rules. You know, you certainly don’t want to do a general solicitation or if you, you know, because you get in trouble for that, number one, number two, it’s not so much the social media people, the old school works the best, you know, getting face to face with people, people aren’t going to give you the money until they, they have a sense that they know you and trust you. so you’ve got to, work on that. That being said, though, you can create a funnel, a digital funnel that you can advertise on Facebook, which basically says, Hey, you know, if you’re interested in and this, you know, not interested in a deal, but if you’re interested in investing in apartments or blah, blah, blah, well, I’ve got this piece of information and, you know, and then they raise their hand and they get that free information, and then you can contact them after that and introduce yourself.
Speaker 3: And that’s how you can start meeting people. And then eventually either a phone call or a face to face. If they’re far away a phone call, I never really thought that you could raise money through phone calls except, there’s a guy in Indiana that did it a lot through direct mail. if he would, he was one of our students a while back and, he, he had this direct mail campaign where he mailed, you know, 50 miles out. and then, because it was so rural in Kansas, they would do it all by phone call and it worked well for him, but maybe it was because it was overall. I don’t know, generally, you know, eventually you got it now with zoom, you can get face to face and people get an idea, you know, about who you are and what you do. So that makes it a lot easier. But yeah, so that’s, that’s the deal. The old school works, the basket face-to-face with people or zoom to face one or the other zoom to zoom. Last question. how are you proceeding Jim in these next few months,
Speaker 4: Cautiously basically in terms of the underwriting, building in a lot of, fudge factor, right now I’m finding there, there isn’t a lot of deal flow at this point. those that are wanting to sell are hanging on for the moment and those that have to sell, I don’t think have experienced enough pain yet they’re able to hang on because the rent collections have been better than they expected. Right. And, so because of that, it’s probably going to be more August, September, October, if we get a second wave, then that could help trigger something depending on how the funding is on that. So I, for myself, I’m building in a lot of, extra, we’ll just say sensitivity, because of the financing criteria, because of the risk factor, in terms of, of, vacancy or economic occupancy. So I’m proceeding very cautiously. I don’t have to do a deal. I don’t want to do a deal to do a deal. It’s gotta be a great deal or I’m not interested in, so what is a great deal to me right now It’s one, that’s got everything factored in that gives me a lot of comfort. So I’m targeting more people that are going to be motivated to sell. And those are the people that I want to be ready for. Thank you so much for being there. Be safe, be well, be kind. Thank you.
Speaker 3: Hey, I wanted to mention a couple of things. First of all, what, you were just talking about is the opportunity that’s happening. That’s evolving right now and Jimmy’s right. I was just talking with my partner yesterday and the fact that, you know, private money starting to, you know, we typically do deals now with just one partner so we can avoid a syndication. and it’s not that you’d have to avoid a syndication, but it’s, it’s just a lot easier when you have one partner and they’re involved in everything as well, have better relationships and you can do, it’s easier to get the deals done. So, but we were talking to them, we’ve got one particular, very wealthy individual that wants to do deals and deal flow. And it’s like, you know, everything’s going to shake out the sellers. Haven’t realized the situation.
Speaker 3: They still think they can get the higher prices, you know, right now in the buyers realize what’s going on and they want the lower prices, but the two minds haven’t met together yet. And it’s gonna take a couple of months for that to happen. But in the meantime, for, for those of us that see this opportunity shaping up, it’s like, all right, get everything in place, you know, fill the gaps in your business. So you’re prepared for this opportunity because it’s going to be here for a good year to two years, but that’s where you buy up a ton, you know, and then you’re sad. I mean, there’s one opportunity. We’ll set you up for the rest of your life, which is a beautiful thing. so the article that I just, that I was talking about at the beginning of this, and the, and the percentages of rent paid is it had had a significant line in there, or a very important line says despite the economic and health challenges facing so many, we have found that apartment residents who live in professionally managed properties are meeting their obligation, professionally managed properties.
Speaker 3: Those are not going to be the people in the trouble. You know, those are not the marginal owners. The marginal owners are the ones that never took the time to learn how to operate properly properly. The ones that, that learn how to buy and learn how to raise funds, but they didn’t learn that, you know, the rest of it, you know, they were chasing acquisition fees, they were chasing the next deal. those are the people that are, that all of a sudden going to be like, Holy crap. And they’re going to have to learn how to operate, but now they’re offering in like the worst of times, and you don’t become a good operator when you have to operate from a deficit. And that those are the people that are our opportunity that are going to be coming up and they’re going to be plenty, but you’ve got to know, you know, the right deal to buy. There’s going to be land mines and gold mines during these times as well. The goldmines is going to propel you forward. The landmines are going to be good until all of a sudden we have another situation with the economy and then they’re going to expose, and you’re going to have difficult times for those. So fill the gaps, get ready and let it all go for this great ride. That’s, that’s very, that’s coming up in a short period.
Speaker 4: I agree. A hundred percent part, part of what we did is, I wanted to reposition out of the C properties. So 2018, 19, we sold out
Speaker 3: No, a rental property below the airport to see property because I toured there a couple of times. That’s all right.
Speaker 4: Yeah, no, it’s it’s, it was a C property. And we did very well. We sold that, for just over 12 million and the salary commissions and everything. WhatsApp, you bought it for 7.1. Is that what you said Yeah. So the, the, the rate of return, we owned it for two years, 11 months, and it was over a 90% overall rate of return for the investors.
Speaker 3: Me do, markets is all about that is what being in the right place at the right time.
Speaker 4: Yeah. And we did personally, we did very well off of that deal. and so to your point, Dave, to be ready for this next wave, we all can do extremely well if we’re ready to go. because these things don’t happen. we’ve talked at the mastermind over the last, couple of years about one of deals. Well, now I honestly think you can stake a flag in a market. for instance, I will, one of my markets will be Atlanta cause I’m familiar with that market and we’re going to see if we can go after multiple deals in that market. because I think now we’ll be able to stake at versus we did a deal recently and St. Louis, we’ve been in South, South Columbia, in, down in Phoenix. And so we’re all we’re scattered right now, but now we’ll come back and focus in on a market.
Speaker 3: Well, that’s what happens in the late evenings of a, of a cycle. You know, all of us, there’s just not a place that you can go that’s large enough that has enough opportunities to be able to buy multiple deals or like, like you said, stake, a flag, right That’s all going to change. Everything’s going to have a big reset. Yeah. It, you can be a one, three markets. I want to thank you for coming on and sharing your expertise. How about, you know, the people that are asking questions, our mastermind and mentorship students, what advice would you give them going into the next round of buying
Speaker 4: I honestly think laser focus, like you’ve got to have your goals set up and you’ve got be laser focused and to what you just mentioned earlier, fill in the gaps now guys, because you won’t have time to fill in the gaps after. So shore up, whether it’s education relationships, in terms of making sure you’ve got your potential capital side ready to go, because when it goes, you want to be like a well-oiled machine. So you’ve got to make sure you’ve got your teams in place and everything in place. So this is the time to basically do a SWAT analysis and make sure you’ve got your strengths, weaknesses, the threats, all, all handled. And if you’ve got all that handled, you’re going to be in good position to hit the pavement running hard. So, and you’ve got to have your focus goal. Don’t, don’t let fear just laser focus. I’ve always had a point and I just, I’m just, I let all the noise goes right by me. I’m focused on
Speaker 3: And don’t get an itchy trigger finger. Yeah. True opportunities when they come. It’s like, right now, it’s just a downtime, you know So can you sharpen, sharpen your skills, you know, kitchens over already, but just know that it’s okay to be, to, to be, Placid at this particular point, you know, to be focused on, you know, maybe reading some books or doing some other stuff because when it starts, it’s going to start and it’s going to be fast and furious for a two or three-year period, and it’s going to be great. So you go to the downtime now, get yourself ready, and then let’s go, let’s go hard. All right. I want to thank everybody for being on D-Lab and I will see you all next week.
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