Old Capital Real Estate Investing Podcast with Michael Becker & Paul Peebles

It can be done. Mike explains the additional complexity and underwriting rules for foreign nationals to finance apartments in the US.

Thomas & Timothy Black are brothers and principals at Napali Capital, LLC. Napali Capital acquires and operates Class B & C apartments. Tim recently retired as the chief operating officer for GREAT WOLF LODGE corporation. Tom is currently an EMERGENCY ROOM DOCTOR that also helps physicians and other high-income professional overcome career crisis by teaching them how to expand their personal net worth through passive income real estate. What a combination! These brothers have something going for themselves. Why should doctors look into investing in commercial real estate? Tom reflects on the high rate of burn out with critical care professionals. In the last three years…6 in 10 emergency room doctors are burned out with the excessive amount of hours worked, government intervention, lawsuits, patient satisfaction and declining insurance reimbursement. Tom acknowledges that physicians have high income, but they have limited personal net worth. Typically, physicians are not financially savvy due to the time that is needed to learn and master their medical craft. What medical school fails to teach doctors, Dr. Black educates. Tom's newly released book is called "The Passive Income Physician." Tom shares a memoir/ guidebook that helps high-income professionals understand how passive income through commercial real estate investing can help buy back your freedom. The book has a very "Rich Dad / Poor Dad" theme. Contact Tom & Tim Black at http://freedomintheblack.com/author/tomblack/ "The Passive Income Physician" is at https://www.amazon.com/Passive-Income-Physician-Surviving-Expanding/dp/0692827404 To receive our FREE 15 page WHITE PAPER REPORT on the 2017 FUNDAMENTALS OF MULTIFAMILY FINANCING 101 and to learn more about upcoming events at Old Capital Speaker Series please visit us at OldCapitalPodcast.com Are you interested in learning more about how Multifamily Syndications work? Please visit www.spiadvisory.com to learn about Michael's Real Estate Syndication business with SPI Advisory LLC

A unique feature with a Fannie Mae loan is the ability to assume the existing loan from the seller and then apply for a new subordinated loan to get max leverage. Mike explains the additional benefits and needed structure of applying for a Fannie Mae assumption & supplemental loan.

Greg Willett- Chief Economist RealPage RealPage is the leading provider of on-demand software solutions for the rental housing industry. RealPage supplies property management software to over 12,000 ownership groups that own or control over 30,000,000 residence units. They are the Facebook or Google in their industry. RealPage collects a tremendous amount of data on trends within rental housing throughout the country. Greg and his team analyze the up to the minute data. They are data miners. Greg believes that this strong rental cycle started in 2010 with huge demand. 2017 will still have great performance for the nation. Probable peak on annual rental revenue growth was in 2016. Golden age of apartments is now; but it is not realistic to expect for continuous sustainability. Rent growth is good at 3.5%. Developers are continuing to build apartments. They will deliver over 360,000 units nationally this year. Greg likes Sacramento, the Inland Empire in California, Las Vegas, Seattle, & DFW. Texas has 4 major markets. DFW is a step ahead than other Texas markets with rent growth at 6%. Almost 50,000 units under construction right now in DFW. Houston, is seeing some pricing concessions and rental cut on mostly A product. Austin is seeing a little slow down from the year before with rental growth at 3%. San Antonio is the most stable of the Texas markets. Rent growth is at 3%. In 2017, Dallas will deliver over 25000 brand-new Class A units. Still big gap between A & B product; A vs B is a 40% rental price difference. Annual rent growth on value added B is 6%. DFW added 680,000 new jobs since 2010. Qualification index: Rent to Income ratio has stayed the same from 2010. Never one type of renter profile. RealPage: https://www.realpage.com MPF Research: https://www.realpage.com/mpf-research/ Dallas/ Fort Worth: https://www.realpage.com/mpf-research/apartment-demand-drives-dallas-fort-worth/ To receive our FREE 15 page report on the FUNDAMENTALS OF MULTIFAMILY FINANCING 101 and to learn more about upcoming events at Old Capital Speaker Series please go to OldCapitalPodcast.com and sign up. Interested in learning more about how Multifamily Financing and connecting with Michael Becker and Paul Peebles. Contact: [email protected] or [email protected] Are you interested in learning more about how Multifamily Syndications work? Please visit www.spiadvisory.com to learn about Michael's Real Estate Syndication business with SPI Advisory LLC.

Always have a physical due diligence report done BEFORE you buy the property. Make sure that you understand the rental submarket and the tenant demographics. Rely upon the information from a qualified property management company that operates in the same submarket. Don't over improve the asset too much for the submarket; if the market doesn't recognize the improvement (pay you more rent) you could have thrown good money after a bad idea. Listen to Michael's thoughts

Chris Deuillett and Danny Baker

Chris has been selling older (Class B & C) apartments in the Dallas market for 17 years. Chris comes from a family of real estate professionals; his two brothers and father are in the business. Danny is originally from Wisconsin and has been selling newer (Class A, A-, B+) apartments in the Dallas market for 7 years. CBRE is a Fortune 500 company that represents buyers and sellers of all different asset classes throughout the globe. In 2016, the Dallas CBRE office did over $1.5 billion in multifamily sales. Perspective: Chris is seeing a lot more buyers in the market with less inventory than last year. The biggest challenge today; too many buyers, not enough sellers. DFW market is one of the top markets in the country for rent growth & occupancy on already built apartments. The amount of new construction supply of apartments in Dallas is a concern, but not too big because the new construction does not really compete against older assets with lower rent costs for work force housing. The recent rise in interest rates did have some effect of the reducing the value of assets. Advice: When sellers are listing their properties: have a good story on what the next buyer can do to increase value and also do not change management companies right before you decide to sell. How does CBRE help the seller choose a new buyer? Have your ducks all lined up; financing, equity, initial rehab budget, management company review operations and then actually visit the property. CBRE uses a questionnaire to qualify a potential new buyer and when a potential buyer is identified, they will do an introduction call with the buyer and seller. Doing well on the phone interview with the listing agent and the seller is critical. Why are sellers selling today? Loan is maturing or partnership has completed their original business plan. Building a personal relationship with the listing broker is critical to your success. Contact: Danny Baker at [email protected] or Chris Deuillett at [email protected] To receive our FREE 15 page WHITE PAPER REPORT on the 2017 FUNDAMENTALS OF MULTIFAMILY FINANCING 101 and to learn more about upcoming events at Old Capital Speaker Series please email us at [email protected] Are you interested in learning more about how Multifamily Syndications work? Please visit www.spiadvisory.com to learn about Michael's Real Estate Syndication business with SPI Advisory LLC

What happens first; raise the investors money or find a building? Or is it vice versa? Before you do either, you must understand what it takes to be the managing member (responsible party) to operate an apartment building. Michael explains how a deal syndication works and being transparent with your investing partners.

In less than 10 months, Venkat and Ramana, purchased 3 apartment buildings in 3 different states with over 500 units, for $27 million. Now, they are hooked on buying apartments. Venkat is the IT Services business. Initially, he started buying single family homes. From 2007-2014, Venkat had purchased over 20 homes. He maxed out his ability to get long term Fannie Mae home loans and wanted to learn how to scale his real estate business. He found an apartment mentor that specifically taught multifamily investing. He then found a partner with Ramana in that same mentoring group. Ramana is the IT Services business for 13 years. He had done some investing in real estate, but on a limited basis. First transaction was in Norman, Oklahoma. Second transaction was in Phoenix, Arizona. Third transaction was in Mesquite, Texas. Phoenix seller forced buyers (Venkat & Ramana) to use their local mortgage company. After 3 weeks, their mortgage company could not deliver. Buyers brought Old Capital into the transaction. Old Capital was able to close within 43 days and with max 80% leverage and a non recourse loan. Next deal, Tradewinds Apartments was a $15 million acquisition in Mesquite, Texas. James explains the difference between CapX and Re-Incurring expenses and why it is important when you need to qualify for the loan. Venkat relied upon his property management company to research the submarket to make sure they could hit higher rents. What we learned: More transactions that you do, the easier it becomes to raise capital from limited partners. You can make 50 calls to new investors and explain it 50 times; or you can invite 50 friends and investors and do a recorded webinar and explain it one time with slides by explaining the benefits of investing in your deal. Being part of an apartment mentoring group can help you bring your apartment investing business to the next level. Connect: Venkat at [email protected] Ramana at [email protected] To receive our FREE 15 page WHITE PAPER REPORT on the 2017 FUNDAMENTALS OF MULTIFAMILY FINANCING 101 and to learn more about upcoming events at Old Capital Speaker Series please email us at [email protected] Are you interested in learning more about how Multifamily Syndications work? Please visit www.spiadvisory.com to learn about Michael's Real Estate Syndication business with SPI Advisory LLC

70% of the lending decision is based on the building operations (historical and future) and 30% is based on the sponsor (liquidity, net worth, past ownership experience of apartments) Listen to Michael explain what's important in apartment financing.

John Griggs, with Presidium Group in Dallas, owns over 10,000 apartment units. He co-founded the company in 2002.

John and his business partner Cross Moceri, were unhappy lawyers in California when they got bit by the real estate bug. They first started buying, rehabbing, and selling single family homes and four-plex's in California. They wanted to expand, and after looking into several markets throughout the country, John and Cross decided on investing in Dallas. 1000 units eventually became 5000 units in just a few years. Presidium stayed on the sidelines, during the recession. At first, Presidium started buying value added 'C class', now they are building large new apartments in good areas and still buying value added 'B class.' Tips: In a declining market, you don't want to be the last guy to change your rent structure. You want to meet the market. Don't keep your head in the sand; keep the building filled!

Keep your property clean with good maintenance during a down turn. Buy and renovating apartments still works in Texas. Make sure the neighborhood can support the rent bumps after the rehab. Do your homework. Getting started in new apartment development was a very steep learning curve. Mitigate your risk with having the best team (bankers, general contractor, architects) on your side. When buying a building, make sure that you raise more equity than you need too, because you can always give it back to the investors if you don't need it. Don't get caught short with capital at the beginning. Contact John at [email protected] To receive our FREE 15 page WHITE PAPER REPORT on the 2017 FUNDAMENTALS OF MULTIFAMILY FINANCING 101 and to learn more about upcoming events at Old Capital Speaker Series please email us at [email protected] Are you interested in learning more about how Multifamily Syndications work? Please visit www.spiadvisory.com to learn about Michael's Real Estate Syndication business with SPI Advisory LLC.