Building Passive Income

By Wayne Courreges III & CREI CollinBusiness Education Self-Improvement Investing

Building Passive Income episodes

September 20, 2023Diving into the Depths of Commercial Real Estate with Jeff Greenberg
In this episode of The Untold Stories of Real Estate Investing, host Wayne Courreges III invites Jeff Greenberg, the CEO of Synergetic Investment Group, to share his final thoughts on a fruitful real estate journey. Jeff Greenberg goes deep into transitioning from being a GP to focusing on raising funds and working with investors. He also discusses the customizable equity fund offered by SIG, its benefits, and its structure for passive investors.
Jeff Greenberg is the CEO and managing member of Synergetic Investment Group LLC, also known as SIG. Jeff has over 12 years of experience managing all aspects of commercial real estate ownership, including acquisitions, operations, value-add implementations, and dispositions, and is a seasoned expert in the field. He's been involved in projects worth nearly $150M. Properties have consisted of over 2000 units, including student housing, and short-term rental and market-rate multifamily properties. Through the SIG Wealth Fund, Jeff provides high-net-worth individuals the opportunity to passively invest in commercial real estate. With his extensive experience and network, Jeff uses the best-in-class commercial deal syndicators to help investors discover and invest in high-quality alternative investments.
Topics on Today’s Episode:
Introducing Jeff Greenberg, CEO and managing member of Synergetic Investment Group, LLC (SIG).
Background and experience of Jeff Greenberg, highlighting projects worth nearly $150 million.
Discussion on recent changes in Jeff's investment strategy. He has shifted from selling off assets to focusing on raising money and working with investors.
Introduction to SIG and its offering of a diversified and customizable equity fund for high-net-worth individuals.
Explanation of the private equity funds created by Jeff, allowing investors to decide whether or not to invest in each deal brought into the fund.
Insight into the benefits of the fund, including the ability for investors to self-diversify and choose deals based on their criteria and goals.
Details on the flexibility and customization of the fund, providing investors with the opportunity to have a say in their real estate investments.
Explanation of the one K-1 form issued to investors at the end of the year, regardless of the number of deals they are involved in.
Discussion on the advantages of a single K-1 form for investors, simplifying the tax reporting process.
Insights into Jeff's focus on transparency and communication with investors in the fund.
Highlight of the student housing property in Georgia that Jeff still owns as a testament to his ongoing investment success.
Examples of successful deals and projects that Jeff has been involved in, showcasing his expertise and track record.
Explanation of opportunities for passive investors to grow wealth through real estate by investing in SIG's equity fund or with CREI Partners, LLC.
Links and Resources:
Jeff Greenberg:
jeff@synergeticig.com
https://www.synergeticig.com/
https://www.linkedin.com/in/jeff-greenberg-a9974411/
CREI Partners:
https://www.creipartners.com/
https://www.creipartners.com/podcasts/
https://www.creipartners.com/ebook/
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September 12, 2023Scaling Up in Real Estate from Single-Family Wholesaling to STR and Multi-Family Properties with William Quinton Hollis
In this episode of The Untold Stories of Real Estate Investing, host Wayne Courreges III speaks with William Quinton Hollis about wholesale real estate investing and short-term rentals. Hollis is the principal of 24 Capital Group, a real estate private equity firm based in Connecticut that specializes in helping real estate professionals take back their time and own their futures by investing passively in cash-flowing real estate deals. 
Hollis’ passion for real estate began when he was a kid, watching his family’s landlord collect rents. As he got older, he became an expert in creating opportunities and finding deals, and is committed to staying at the forefront of the latest technologies.
Hollis is also dedicated to sharing his knowledge and expertise with others, regularly speaking at real estate conferences across the country.
After growing 24 Capital Group’s asset portfolio to over 80 properties in 2022, Hollis is excited to tackle new opportunities, and to continue making a positive impact on the real estate community.
Topics on Today’s Episode:
Introduction to William Quinton Hollis and his real estate journey, beginning with inspiration from Mr. Carter, their landlord in Queens, NY.
After initially believing that real estate investing was out of reach, he attended a real estate conference and learned about wholesaling. Wholesaling was different from Mr. Carter's approach.
Economies of scale lead to transitioning to larger real estate deals and the importance of partnering with others, which led to starting their firm, 24 Capital Group.
Exploring specialized short-term rental companies.
Emphasizing the importance of partnering when investing in short-term rentals.
Partnering with individuals in different markets who are "boots on the ground."
Differentiating between hiring and partnering for a higher level of commitment and service.
Advice on finding a partner in a favorable short-term rental market.
Discussing the concept of commoditization using the example of milk: Create a product or property that has no competition. There is less competition at the top, where similar amenities are rare. Below the 75th percentile of revenue, it’s a race to the bottom of price, it’s a commodity. Above that, there’s little competition and much greater price flexibility.
Highlighting the unique vacation experience provided by Airbnb and praising incredible homes created by Airbnb with various amenities.
Involvement in a venture outside their portfolio partnering on smaller properties.
Importance of market analysis and attracting families or groups of friends to minimize risk.
Significance of design effort and amenities in distinguishing properties and charging premium rates.
Partnership with Tech investors on a short-term rental fund and its benefits.
Valuing trust, personal relationships, and having uncomfortable conversations in real estate.
Links and Resources:
William Quinton Hollis
https://24capitalgroup.com/
https://www.instagram.com/reihollis/
https://techvestor.com/
https://www.propstream.com/
CREI Partners
https://www.creipartners.com/
https://www.facebook.com/creipartners
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September 06, 2023How Real Estate Investors Save Thousands in Taxes Through Cost Segregation with Matt Clark
In this episode of The Untold Stories of Real Estate Investing, host Wayne Courreges III speaks with expert Matt Clark to dive into the details of how real estate investors can save thousands in taxes through cost segregation.
Matt Clark currently lives in Houston, TX, where he was born and raised and attended the University of Houston. His journey into the world of real estate was an exciting pivot from the software realm, where he honed his skills as a value-added seller.
Currently, Matt is part of the dynamic team at Madison SPECS, a company with over 15 years of experience in the field and an impressive track record of completing 10,000 studies nationwide. In his role, Matt specializes in offering Cost Segregation Studies, helping real estate investors unlock hidden value within their properties and optimize their financial returns.
With a passion for property and a commitment to delivering top-notch service, Matt is dedicated to helping clients achieve their real estate investment goals through the power of Cost Segregation.
Topics on Today’s Episode:
Cost segregation study timeframe: Typically, the IRS has a seven-year cutoff. Workarounds and special scenarios can extend the timeframe to up to ten years
There are workarounds to potentially extend the timeline up to ten years.
Cost segregation (cost seg) calculated per property, not per investor
Savings pass down to individual investors if the property has multiple investors
Classification of properties. Multifamily properties are typically considered commercial and fall under a 39-year scale.
Residential properties with long-term leases qualify for residential tax breaks
Cost segregations break down each component of the property into different asset classes. This allows depreciation deductions to be taken on shorter time frames for components that qualify. Therefore, this accelerates the rate at which depreciation deductions can reduce taxes on the property's income.
The depreciable basis is the property value minus the land value (around 15% in Texas)
Quicker tax savings are available by accelerating depreciation deductions
Bonus depreciation and carry-forward deduction: Upfront deduction of all five-year and fifteen-year assets. Rates are currently at 80% and phasing out in 20% increments. Deductions carry forward indefinitely
Eligibility and benefits of cost segregation: Anyone who invests in real estate and plans to hold the asset for more than a couple of years is eligible
Active investor status for real estate professionals with 750 hours of service in real estate activities.
Maximize tax savings with cost segregation: To meet this goal, it is important to add every little piece of the property for larger lump sum savings.
Cost segregation typically worth it for most investment properties
Depreciation schedules and savings: Multifamily properties are commercial, and residential properties can still save a significant amount
Investors will save on a 39-year schedule
Bonus depreciation phase-out and potential return. Last year was 100% bonus segregation, this year it's 80% and phasing out by 20% each year, but there is speculation on bonus depreciation potentially returning due to upcoming elections
In-person versus virtual property study: Depends on type of property and availability of online information. However, larger properties may require in-person study, while residential properties can be done virtually if extensive online information is available.
Links and Resources:
Matt Clark
https://www.linkedin.com/in/mczz/
CREI Partners
https://www.creipartners.com/
https://www.facebook.com/creipartners
https://www.passiveinvestorcoaching.com/Enrollnow
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August 03, 2023Behind the Scenes of Multi-Family Underwriting for Passive Investors
In this episode, we have an insightful conversation with our managing principal, Wayne Courreges III, as he dives into the fascinating world of underwriting for passive investors in real estate. Wayne takes us through some of the most important aspects of underwriting and vetting deals from a passive investor’s perspective. He also discusses the role multifamily investors should play behind the scenes of multifamily underwriting.
Wayne leads the investment lifecycle and investor relations for CREI Partners as the lead sponsor and general partner. For more than 15 years Wayne has worked with a Fortune 150 commercial real estate firm leading property management services of 4.5M+ square feet for both institutional and non-instructional clients over his career. Wayne has worked closely with dozens of real estate professionals executing building strategic plans of over $60M and assisted owners through their investment lifecycle. His background in commercial real estate, passion for leading teams, and desire to increase his investor’s and team’s wealth pushed him to start CREI Partners.
Topics on Today’s Episode:
Importance of understanding return rates and conducting sensitivity analyses
Assessing projected interest rate increases and exit cap rates
Emphasizing the importance of trust and relationships with the sponsor
Importance of timely communication and responsiveness from the sponsor
Goal of increasing net operating income, NOI
Increasing revenues through various avenues
Reducing shared property management expenses by managing multiple properties together
Building a strong team for investors
Importance of the rent roll in determining monthly rent and other charges
Evaluating financials for a specific time period (T-12, the prior 12 months of financials)
Calculation of net operating income by subtracting expenses from total rent revenue
Use of income statement for underwriting
Preference for multifamily investments due to cash flow potential and economies of scale
Explanation of multiclass waterfall structures for profit distribution
Importance of GP sensitivity analysis in investor presentations
Approach to finding on-market and off-market opportunities
Importance of rent roll and income statement in evaluating opportunities
Staying conservative and assessing achievability of business plan
Assessing competitors and listening to the company's story
Trusting instincts and passing on questionable opportunities
Benefits of interest-only payments for distressed properties
Adjusting the exit cap rate in investment analysis
Considering different scenarios for interest rates and cap rates
Analyzing cap rates to determine if they make sense for the deal
Explanation of property condition reports and working with trusted contractors
Commercial real estate can have variable hold times. While underwriting for passive investors, we shoot for 5-7 years but that can change based on market factors.
Investors may have different preferences for cash flow over equity upside or longer holding periods.
Resources:
https://www.creipartners.com/
https://www.passiveinvestorcoaching.com/
https://www.creipartners.com/podcasts/
https://www.creipartners.com/ebook/
https://www.youtube.com/@creipartners
https://www.linkedin.com/company/creipartners/
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July 06, 2023Secret Weapon For Passive Investing: Solo 401K and Self-Directed IRA with Zachary Wilson
On this episode of The Untold Stories of Real Estate Investing, host Wayne Courreges welcomes guest Zachary Wilson, an IRA specialist from Quest Trust Company. With over 20,000 clients and $2.8 billion in assets under administration, Quest Trust Company is the largest self-directed IRA custodian in Texas.
Zach is originally from New Orleans, Louisiana. He began as a Chemical Engineer at LSU. After a couple of years, he realized that he wanted to take his life in a different direction. This led him to packing everything up and moving to Houston to pursue a degree in Finance at UH.
Even then, the traditional route of a normal Finance major didn’t seem like the right fit. That’s when he found Quest. He started his career at Quest over 4 years ago in Quest’s Internal Auditing team. This meant that he led a team that looked over every investment that came through Quest. He learned in detail how these investments are structured.
After that, he joined the IRA Specialist team which he is currently on. This allowed him to get a different perspective. Now not only does he know how most investments are structured at Quest, but he also now gets to take a deep dive into the networking and business development that make these deals possible. Quest has had a profound impact on his life and the way he views his own personal investments for the future.
Topics Covered on Today’s Episode:
Zach Wilson is an IRA specialist from Quest Trust Company. Quest Trust has grown into the largest self-directed IRA custodian in Texas with over 20,000 clients and $2.8 billion in assets.
Importance of knowing and understanding retirement accounts.
Zach is happy to provide assistance and information to clients, not just Quest clients.
No negative implications for developers using SEP IRA funds from investors.
Must perform due diligence and ask questions.
Use the entity's information instead of personal information when investing with an IRA. The IRA is a separate entity with its own name, address, and EIN.
Reporting requirements: Value of assets held under administration reported to Texas Department of Banking and IRS annually.
Quest Trust YouTube channel has educational videos.
Taxable and non-taxable entities for investing: Differentiate between taxable entities (individuals, LLCs, corporations) and non-taxable entities (self-directed IRAs, nonprofits)
Benefits of self-directed IRAs: Allows individuals to invest in the same deals in a tax-advantaged account.
There are 3 main reasons why you should self-direct your IRA: 1. Diversify, 2. Tax Benefits and 3. Invest in what you know best.
Restrictions on investments with Self Direct IRA include, but are not limited to, yourself, spouse, immediate descendants and ascendants or any company that they are affiliated with. You cannot buy, sell or trade, loan, extend a service to or receive a benefit from IRA, whether direct or indirect. Investment restrictions include life insurance policies, and you cannot use your IRA to invest in collectibles.
Important considerations in investments in real estate syndications with self-directed IRA include UBIT (Unrelated Business Income Tax) and UDFI (Unrelated Debt Finance Income) refers specifically to the amount of unrelated business income that is subject to UBIT.
Links and Resources:
Zachary Wilson
[email protected]
www.QuestTrust.com
855-FUN-IRAS or (855) 386-4727
CREI Partners
https://www.creipartners.com/
https://www.creipartners.com/podcasts/
https://www.creipartners.com/ebook/
https://www.youtube.com/@creipartners
https://www.linkedin.com/company/creipartners/
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June 12, 2023Open Discussion and Q&A about Investing in Real Estate Syndications with Courtney Bhenderu
In this episode of "The Untold Stories of Real Estate Investing" host Wayne Courreges III interviews Courtney Bhenderu about her experience in real estate asset management and investing. They discuss the current state of the market, investment opportunities, and the importance of making the numbers work. Additionally, Courtney shares her thoughts on entrepreneurship, parenting, and creating educational opportunities for children. This episode is a must-listen for anyone interested in real estate investing, syndication deals, or growing their wealth passively. Tune in now on your favorite podcast platform and let us know your thoughts in the comments!
Courtney Bhenderu is a passionate learner who has been involved in the creation of newsletters, blogs, and social media posts for over a year now. Her craving for knowledge and inspiration has led her to delve into the world of passive investing and real estate syndication, which has recently seen a surge in popularity. As she continues to create content for others to learn from, she is also excited to get to know her audience on a more personal level. Her journey toward a more fulfilling career in finance has just begun, and she can't wait to see where it takes her.
Coming from 10 years serving on teams managing assets along the skyline of Houston’s Central Business District and Galleria submarkets, Courtney has deep knowledge and experience in every aspect of high-end commercial property management—from building countless Fortune 500 tenant relationships to helping manage multi-million dollar high-rise renovations. She firmly believes in the foundational principles of good old-fashioned service, transparency and teamwork—values that mesh perfectly with the pillars of CREI Partners.
Topics on Today's Episode:
Teaching kids about money and investing to ensure future prosperity.
Raising confident daughters with traditional values.
Kids create business plans and launch lemonade stand to learn entrepreneurial skills.
Flexibility in investment approach for profitability.
CREI Partners launching investment into luxury storage for RVs, boats, and businesses.
Prioritizing investment goals for syndication projects.
Invest for long-term gains, not dividends.
We are hands-on asset managers and prefer fewer, well managed, deals per year.
Commercial investment advice and helpful resources available.
Excellent property manager perseveres amidst turnover.
Investing is better than saving money to offset inflation.
As an investor, you have to know, like, and trust the deal sponsor, but avoid overthinking. We are always available for a chat or lunch to get to know if our goals align.
Links and Resources:
Courtney Bhenderu
https://www.linkedin.com/in/courtneybhenderu/
https://www.creipartners.com/invest-with-us/
CREI Partners LLC
https://www.creipartners.com/
https://www.creipartners.com/podcasts/
https://www.creipartners.com/ebook/
https://www.youtube.com/@creipartnershttps://www.linkedin.com/company/creipartners/
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June 06, 2023How To Save A Deal As An LP… You Are NOT Powerless with Sandhya Seshadri
In this episode, Wayne talks to Sandhya Seshadri, who has invested as a limited partner, key principal and general partner in over 3000 doors, holding 200 million in assets throughout the United States. She's been a leader in the equities markets for over 30 years and moved to commercial real estate due to the tax advantages and the ability to uniquely force appreciate each asset become her mission to help others capitalize on all the benefits of real estate investing. Sonya is based in Dallas. She focuses exclusively in the Dallas area.
She will discuss how passive investors can save a deal and avoid potential train wrecks in the current environment, where rising interest rates, insurance costs, and property taxes are creating challenges. The conversation covers topics such as stress testing deals, communication and transparency, private placement memorandum, and evaluating distressed real estate opportunities. Seshadri shares her experiences dealing with a train wreck deal and offers advice on how limited partners can communicate concerns and take actions early to avoid potential pitfalls.
Topics on Today's Episode:
Guest introduction: Sandhya Seshadri, an experienced real estate investor.
Discussion on the challenges faced by real estate investors due to rising interest rates and lack of rate caps.
Importance of stress testing deals and evaluating property management practices.
Analysis of failed real estate deals in Houston due to poor underwriting and troubled locations.
Importance of reading and understanding the Private Placement Memorandum (PPM) for investors.
Focus on the details of the PPM and operating agreement when a deal is in trouble.
The significance of transparent communication with the sponsor syndicator.
Availability of monthly financial reports for investors, providing full transparency.
Understanding the impact of additional capital raised through a capital call on the deal's recovery.
Importance of assessing risks and potential outcomes when evaluating a distressed investment.
Communicating concerns with the general partners and documenting questions in writing.
Involving other LPs to add their voice and request a meeting to discuss problems.
Seeking advice from the syndication lawyer and obtaining original copies of relevant documents.
Writing a demand letter and requesting a meeting or webinar to get clear answers.
Assessing the deal and making an informed decision on whether to hold on or exit.
Considering the runway and potential future distress deals in the decision-making process.
Sandhya Seshadri's successful real estate deals that outperformed the S&P 500.
Importance of being sophisticated and informed as a passive investor.
Encouragement to be prepared to invest in distressed real estate opportunities and remain vigilant in evaluating investments.
Links and Resources:
Guest Sandhya Seshadri
linkedin.com/in/engineered-capital
engineered-capital.com
AcePassive.com
[email protected]
CREI Partners LLC
https://www.creipartners.com/
https://www.creipartners.com/podcasts/
https://www.creipartners.com/ebook/
https://www.youtube.com/@creipartners
https://www.linkedin.com/company/creipartners/
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May 10, 2023Real Estate Investing Strategies for Navigating Market Turbulence with Senate Eskridge
In this episode, Wayne talks to Senate Eskridge, who is an expert real estate investor who currently owns a managed portfolio of single and multifamily homes. He owns or manages over 500 units across the country. Senate has over 10 years of experience in real estate investing, and more than 20 years of experience in business development, management, and sales.
Senate Eskridge is a multifamily coach that teaches students how to purchase multi-family properties. On this episode, he shares valuable insights and experiences. Listeners will learn about the advantages and risks involved in passive investing and multifamily vs single-family investing. The speaker discusses key questions to ask when considering a deal and warns against working with people who may not know what they're talking about. They share their journey from accidentally becoming a landlord, to becoming a coach and investor with 595 multifamily units. Listeners will also gain knowledge about diversification, valuations, mentorship, and a lot more that goes into investing in real estate.
Topics On Today’s Episode:
The speaker has been an entrepreneur most of his life, starting with selling things in school. He got into real estate by renting out a house he couldn't sell. He then discovered the BRRR strategy that involves buying, repairing, renting, and refinancing. He eventually moved into flipping houses and commercial multifamily apartment buildings. He sought mentorship and became a coach for investors in multifamily. Currently, he owns 595 multifamily units across twelve transactions.
Start with multifamily if that's your end goal, but starting smaller is okay. Single family isn't a necessary step.
Single-family houses are risky and not profitable. They generate around $100-200 per month, but require a lot of time, effort and carry significant risks for maintenance. Vacancy can lead to zero income and additional expenses. Investing in larger complexes spreads risk and is more profitable.
Real estate investing can either be active or passive. For passive investing, investors need to network with known people and invest money, then read property updates and cash checks. For active investing, hiring a coach is essential to find out what kind of investment to pursue and what goals to set.
The five buckets for active investing include deal finding, due diligence, risk capital, a key principle or deal sponsor, investor relations or capital raising, and asset management.
Elite performers have many coaches, while beginners are resistant to coaching. Coaches help compress time frames and achieve success faster.
Specialize in one thing, and get really good at it. Build a canyon of knowledge. Be a specialist in one thing and be the best and make a ton of money with that one thing and then use that money to diversify through other people that specialize in one thing.
Networking is key to finding real estate investment opportunities. Join online forums, attend conferences and investor clubs to meet potential partners and passive investments.
Investing in turbulent markets requires caution. But money can be made in any market if someone knows what they are doing.
As a passive investor, vet the people you work with and ensure they know what they are doing. Look for long-term fixed debt with a 3-year minimum. Ask about rent escalations and expense projections.
It is important that the sponsor has confident and transparent answers to these questions and knows what they are talking about. Lack of answers or transparency is a red flag.
Senate loves high-interest rates and buys deals that make money with current rates. He anticipates rates will come down around election time. Higher rates help decrease competition to buy a property at a low price and allow refinance later when rates come down.
Senate’s first proud moment: Senate bought a junkie property and raised rents with improvements. The tenant was initially anxious about rent increases, but after 9 months, she appreciated that he gave her a nicer home. She was happy to pay more, rather than an impersonal apartment in poor repair.
Senate’s second proud moment: Real estate student came to Senate, wanting a big portfolio. They dove deep into the “why” behind the goal, and the student realized he wanted to retire but had been building a second job. Senate helped build a plan, so he could completely retire in less than 5 years with mailbox money.
“Master your one thing, and partner with people who have mastered their one thing.”
Links and Resources:
Senate Eskridge
The best way to reach Senate is through is website, which includes contact information and a free course:
https://senateeskridge.com/
Join us for Passive Investor Coaching, the course by CREI Partners and Wayne Courreges III that teaches you to confidently passively invest in real estate syndications in order to meet your wealth building goals:
https://www.passiveinvestorcoaching.com/
CREI Partners LLC
https://www.creipartners.com 
https://www.passiveinvestorcoaching.com
linktr.ee/creipartners 
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April 26, 2023Considerations when Underwriting Multifamily Syndications with Rob Beardsley
In this episode, Wayne talks to Rob Beardsley. Rob oversees acquisitions and capital markets for Lone Star Capital and has acquired over $350M of multifamily properties. He has evaluated thousands of opportunities using proprietary underwriting models and sold over 10,000 copies of his book, The Definitive Guide to Underwriting Multifamily Acquisitions. He has written over 50 articles about underwriting, deal structures, and capital markets and hosts the Capital Spotlight podcast, which is focused on interviewing institutional investors.
Rob’s areas of expertise include
Multifamily Underwriting: Basic overview, key metrics, sensitivity analyses, stress tests, comparables, cap rates

Partnership Structures: How to structure deals with investors, waterfalls, preferred equity, matching your strategy

Raising Capital: How to partner with institutional investors, how to form joint ventures and co-GPs

Financing: Overview of debt options for multifamily, matching debt product to investment strategy, loan term nuance
Topics on Today’s Episode:
Rob got an early start in real estate through his parent’s brokage firm that focused primarily on construction and fix and flips. This led Rob to dive into multifamily as the best way to accumulate wealth and assets.

At 20 years old Rob, alongside his partner Kent Piotrkowski, started Loan Star Capital about 7 years ago. In that span of time, the firm has acquired close to $400M worth of multifamily properties.

Growing up around real estate and his father’s mature conversations contributed immensely to Rob’s entrepreneur mindset and his ability to lead and inspire others.

You really do not understand business until you are in business. Higher education is only textbook knowledge, real-life business is the best teacher.

Risk factors are so important when starting a business, however the stakes become higher when you have a family and other responsibilities. The best time to take a risk is early in life when liabilities are less.

Being Bullish on Houston makes sense because it’s a diverse city. Houston is not only an oil city, but also the largest medical center in the world and the busiest port in the US in terms of foreign tonnage. It is often overlooked, making it one of the most accessible large markets to penetrate.

Insurance is one of the biggest obstacles in today’s Houston market. Not to mention that interest rates have affected all markets.

Rob and Wayne discuss the main factors behind high insurance premiums. The spike of property insurance in Houston has been caused by:
1. Many hurricanes have made landfall, and repetitive major losses have followed.
2. The number of carriers that are willing to insure in Houston has decreased.
Rob talks about what the risk is in today’s market. Being mindful of risk is key. Consider whether a value-add deal will yield the same return as a clean stabilized deal. If you are not getting paid for the risk, it’s better not to take it. There are cycles in the market that will recenter prices and insurance costs.

Operational headwinds are likely to approach in the near term, such a recession which will impact collections, rents, occupancy. This makes it critical to be tighter on proforma rents, growth assumptions and wider exit cap rates.

Good Underwriting fundamentals are key when considering Cap Rates. Taking the current market cap rate and widening returns by 50 basis points (0.5%) is a good strategy.

Debt is the biggest strategic difference, focusing only fixed rate permanent financing. No more bridge loans. Doing 70% LTV Ration is typically the sweet spot, where there is a long-term view but short term enough to be an opportunistic seller or refinance into a better capital market.

In today’s climate, it is hard to know exactly where the market is since very few deals are getting done.

There is so much liquidity in the market right now that we are not going to see a deep and prolonged buying opportunity. Buying when the market is going down will be the best option.

What is the best deal you’ve ever done? It is the one you don’t do. The best deal is walking away from the wrong one. Its better to walk away from that wrong deal that can break you.

On the retail side of capital raising, private high net worth investors, we are still seeing a sustainable amount of capital, despite a 75% transaction decline. Capital is available but there are few places to put it.

On the institutional side, however, it is completely dry since institutional investors pay attention more to “headline risk” and tend to operate in unison, waiting to see what the next person will do.

The Dallas market is very competitive and forces you to spread your numbers when underwriting.

Rob talks about his book, “The Definitive Guide to Underwriting Multifamily Acquisitions” which has sold almost 15,000 copies. He felt there was a gap in the industry to show the true process of underwriting multifamily from someone doing it in real life.

Rob recorded the audio version of the book himself to take advantage of the opportunity to highlight his personality and build a relationship with the audio listener.

When underwriting a deal, it is important to leave room for failure. If you are aggressive on some parts and conservative on others, it can balance out.

There are 2 ways to stretch the numbers in underwriting. 1. To get more aggressive on assumptions. 2. Accept a lower return.

However, #2 is less likely to excite the investor hence over-promising by deal sponsors.

Under-promising and over-delivering is the name of the game. This is the way you win in the long term.

Rob’s lesson learned: It is best to have your team in place prior to getting the property under contract. It is a mistake to put the property under contract and then go look for a managing partner.

Rob’s proudest moment was when they closed their first deal in Houston. It validated everything he had been working for. He was prouder closing the deal than selling it.
Links and Resources:
Rob Beardsley
https://lscre.com/
https://www.amazon.com/Definitive-Guide-Underwriting-Multifamily-Acquisitions-ebook/dp/B087114QRT
Amazon.com: Structuring and Raising Debt & Equity for Real Estate eBook : Beardsley, Rob: Kindle Store
https://www.youtube.com/@RobBeardsley-LoneStarCapital
https://www.linkedin.com/in/rob-beardsley/
CREI Partners
https://www.creipartners.com
https://www.meetup.com/texas-multi-family-investor-meet-up/
https://www.passiveinvestorcoaching.com
https://www.facebook.com/creipartners
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April 06, 2023The Evolution of Real Estate Investing with Virginia “Ginny” Bolling
In this episode, Wayne talks to Virginia “Ginny” Bolling. Ginny has been in real estate for over 35 years working as a consultant expert in real estate acquisitions in the governmental arena.  She has extensive knowledge and ability to understand and work through land title, land use, zoning, valuation, contracting, litigation, permitting, and environmental issues, as well as closing complex transactions. She has:
Acquired or supervised the acquisition of over 600 properties

Earned the designation of Senior, Right of Way Associate (SR/WA)

Bought first foreclosure property in 1987

Real estate broker over 30 years

Residential (2-yr) and commercial real estate appraiser over six (6) years

Started first of five (5) businesses in 1984

Worked in highly litigious & contentious environments (eminent domain) 22+/- years

Fix & flip investor (4) years

Currently holds rentals in Central Florida and Jacksonville

Limited Partner in 544 units in Houston, TX
Ginny is known for her calm, collaborative style, zest for data, and communicating difficult concepts well.  She has a passion for community development and redevelopment and one of her businesses in the 1980s performed real estate research specializing in feasibility studies.
She is known for having a considerable real estate network. She connects with, as well as follows, leaders in the industry closely.  She enjoys volunteering in the community and has served on many boards.  Ginny currently serves on the Board of Directors for Valhalla Villas, a nonprofit whose mission is to provide independent living facilities for people with autism.
Topics on Today’s Episode:
Ginny’s Journey into Real Estate began early in childhood with her parents being real estate investors involved in flipping and selling. After studying marketing, she entered the governmental arena, participating in real estate purchases for the state of Florida and negotiating complex settlements.

After leaving the governmental arena, Ginny moved into commercial real estate syndications. Covid presented a great opportunity to get into Syndication as renters were defaulting and sellers were looking to get rid of properties.

It is less important to time the market than to “buy right” with solid underwriting and have the 3-legged stool of commercial real estate syndications.
1. Location

2. Team

3. Business Plan

The darling investment of the day is still multifamily, generally value-add. Ginny’s acquisition team is mostly focused on Multifamily because of a long-term housing shortish.

Additional opportunities in Commercial space include potential to build, medical office, mobile home park, self-storage, and assisted living.

The “Silver Tsunami” is coming and there will be opportunities to invest in assisted living facilities. There is potential to invest as an owner and hire complete management.

The 2 biggest factors to consider when underwriting are taxes and insurance

You should assume that the property will be appraised after purchase to 80-90% market value.

Insurance estimates can increase by 40-60% higher than initial underwriting in coastal cities.

Get real insurance estimates before you close, and assume the taxes will increase due to assessor valuation increase.

It is becoming harder in Florida to find insurance options because many companies have left the state. Florida recently signed legislation to mitigate potential lawsuits for insurance companies to open competition and reduce rates.

The new law signed by Florida Governor DeSantis gives funding to two major funding programs and tax credits. These will allow for a 4-9% tax abatement dedicated to the affordable housing market. This will create opportunities for multifamily investment. Incentive is toward solving the affordable housing problem-Investors are incentivized to build affordable housing complexes. They are also possibly offering additional services, like financial literacy classes, to improve the lives of residents.

The current market presents an amazing opportunity for investors as the debt service cover ratio rises due to the increase in interest rates on variable loans. It will be harder for owners to re-finance, moving forward, so they may be more inclined to sell.

Future challenges for property owners will include the inability to refinance or will need to bring in more capital to do so. This is due to higher debt-to-loan ratio and interest rates.

For Investors out there listening: This is a great time to forge broker relationships and find properties off market that might be suffering because it’s getting harder and harder to refinance.

Investment companies need to build key relationships with lenders to explore whether they know about a property that might be in distress, that they don’t want to take back.

Key idea to learn: It is possible to invest in multifamily with retirement savings, rather than cash savings. You don’t have to limit yourself to the stock market. Using custodian accounts, such as 401K, retirement funds could be a fantastic way to get started in passive investment.

The Jobs Acts of 2012 and 2017 paved the way for current models of syndication. The 2017 TCJA created opportunities for syndication. Current business models have been called the “information age” by Harvard and other experts. Trends have moved away from packaging a product to shipping it out.

Its important to know, like, and trust syndicators that you passively invest with. It is a long-standing relationship with a lot of moving parts, so positive feelings between parties helps the process.

Real Investment Firms must follow SEC guidelines. These require that you formalize a joint venture opportunity through a Private Placement Memorandum. This allows investors and the management team to understand their responsibilities and liabilities.

If you are not in the game, you can’t play. It’s always a good time to buy real estate if you buy it right. The syndication model allows people to control their risk better than stocks and other assets as a shared risk model.

Proudest moment: Florida DOT success story-Ginny was involved with negotiations in which a 2 story, L-shaped condominium building. She was able to negotiate a settlement with the building to remove and replace an entire wing. Negotiations took more than a year but were successful.
Links and Resources:
Virginia “Ginny” Bolling
Pivotal Real Estate Investments – Passive Income Through Sound Real Estate Investments
https://www.youtube.com/@PivotalREI
https://www.linkedin.com/in/ginnybolling/
Interested in Multi Family Acquisitions » APPLY TO INVEST WITH US » CREI Partners
CREI Partners
https://www.meetup.com/texas-multi-family-investor-meet-up/
https://www.passiveinvestorcoaching.com
https://www.facebook.com/creipartners
38 min

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Welcome to the Building Passive Income podcast with your host, Wayne Courreges III. From serving as a U.S. Marine to becoming a successful real estate investor and founder of CREI Partners, Wayne…

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