Bad timing. Wrong loan product. A market that turned upside down mid-execution. And somehow, this became Brian Sutton's favorite deal.
In Episode 9 of Lessons the Hard Way, Brian sits down with co-host Sam Chillingworth to break down a Birmingham, Alabama multifamily deal that had everything going against it: bought in 2021 at near-peak pricing, repositioned from student housing to conventional during Covid-era supply chain chaos, sitting on a bridge loan while the Fed raised rates to the moon, and still sold at a profit. Small profit, but a profit.
What made it Brian's favorite was not the return. It was the people who stayed.
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🔗 Two Waters Capital: 2waterscapital.com
real estate deal autopsy | Birmingham Alabama multifamily | student housing repositioning | bridge loan real estate | how to recover a bad real estate deal | multifamily investing podcast | accredited investor education | real estate partner relationships | deal gone wrong recovery | Lessons the Hard Way podcast
1:18 What full cycle means: from acquisition to disposition
2:09 The 5 to 7 year hold
3:03 Leave the meat on the bone
3:41 The setup: not my favorite going through it, actually a painful experience
4:04 Birmingham, Alabama: bought in 2021, near-peak pricing, post-Covid skyrocket
5:38 Student housing near two universities
6:32 The thesis: reposition to conventional and attract grad students and families
7:33 The Fed raises rates: what nobody could have predicted happening mid-deal
7:50 The conversion process: Covid delays, materials, staffing, eviction moratorium
8:34 Fought through it: rehab, painting, upgrades, repositioning, and sold within the bridge window
9:02 The right investor partners: who you need when the market stops cooperating
9:30 No investment has zero risk: even money under your mattress has a rat problem
9:54 Investors stayed supportive: hey, we understand the market is not going your way
10:21 Why this is his favorite: struggle and strife can reshape and reform you
10:53 The workout analogy: you only grow muscle when you strain it a little
11:45 Pressure that does not break you: what this deal did to Two Waters as a team
12:14 Resetting investor expectations mid-deal: the honest conversation that saved the relationship
12:58 Everybody got their money back and made a little: what success looks like under pressure
13:19 New OREO deal incoming: the bank came back, same market, new opportunity
13:43 Relationships with banks:
14:26 Buy better properties in better areas
15:14 Neighborhood quality as the key variable
15:37 Better neighborhoods attract more buyers: why it mattered at exit
16:02 Not my favorite deal, but the one I am most proud of: the distinction
16:24 Pride is forged through going through tough things: the real takeaway
17:08 Find partners you can trust: it is always about the people
17:28 The magic carpet ride ahead
18:38 Good times vs. tough times: the high fives are easy, the trenches reveal the truth
19:07 Three types of people in a crisis: those who stick, those who leave, those who create more trouble
19:48 Notice all three: the people who stayed are the ones to keep
20:12 Move away from the people who made things worse
21:08 What are your non-negotiables
21:27 Being a yes person: the lesson this downturn taught Brian about saying no
22:05 The right partners make you want to keep going
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