Deal Review Episode with Joseph Bramante and Heshel Mangel

Guidance on deal presentation for active investors and what to look for in a deal for passive investors with Joseph Bramante and Heshel Mangel.
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This episode originally aired on November 8, 2021

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Joseph Bramante
Joseph Bramante is co-founder and CEO of Houston based TriArc Real Estate Partners, a wholly integrated multifamily investment company. He purchased his first multifamily property in 2011, sight unseen, while working as a business team lead for ExxonMobil in Papua New Guinea. Today, working with business partners Carrie Breneman and Deborah Newsome, he has grown a portfolio of over 1600 units, increasing NOI by over 80% on average within 48 months post acquisition.
Email Joseph at info@triarcrep.com
Check out Joseph's website at www.triarcrep.com
LinkedIn profile: https://www.linkedin.com/in/josephbramante/

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Heshel Mangel
Heshel Mangel came into this industry with absolutely zero background or knowledge – he had heard about it from a friend who's family was in the industry. At the same time, was really struggling with 9-5 job, working as an employee at a desk and knew change needed to happen, both for himself and my family. He moved back to his hometown Cincinnati, and within 12 months, he was an owner and manager of 52 units with two full-time staff - all in the affordable housing space.  He’s now working with local social services to ensure safe, secure, and affordable housing for his residents.
LinkedIn profile: https://www.linkedin.com/in/heshelmangel/

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Your host, Brian Briscoe, is a co-founder and principal in the real estate investing firm Four Oaks Capital.  He and his team currently have 629 units worth $36 million in assets under management and are continuing to grow.  He will retire as a Lieutenant Colonel in the United States Marine Corps in 2021. Learn more about him and the Four Oaks team at www.fouroakscapital.com  or contact him at brianbriscoe@fouroakscapital.com - be sure to let him know where you found him.

Connect with him on LinkedIn or Facebook.

Transcript

Joseph Bramante: 0:00

written sales comps, these are all very important anyway, just providing some data though it's great, I think you've done a good job, you can tell you've done this by hand. And for me that that is that carries a lot of weight for me, because if I know that, for you to go out by hand to get this data versus for somebody else to pull a report on yardie, or wherever, and get those red cops means that you you did a lot of research here. That's what that tells me that you've done research, you feel very comfortable these numbers. So I think as a passive just keep that in mind that you can kind of tell if somebody had to really work to get these numbers that they've done a lot of research that, that it's not just them running a report online and it's selectively choosing

Brian Briscoe: 0:48

Welcome to the diary of an apartment investor podcast with your host Brian Briscoe. In this podcast we bring some of the top professionals in the apartment investing fields to discuss various aspects of the apartment investing journey with the sole purpose of educating listeners to make wise investment decisions. The Diary of an apartment investor podcast is sponsored by four oaks capital, bringing you high yield returns through apartment complex investing. Welcome to the diary of an apartment investor podcast. I'm your host Brian Briscoe with four oaks capital. Very excited for today's show. I know I say that every time but I really really, really am super excited for today's show. This is a throwback Episode Episode 19. We had Joseph Bramante and Michelle Mangal on the show. And we have both these gentlemen back on the show today. Incidentally, that was the top episode for about a six month period. It's still a top 10 episode. So if you have a chance, go back, check it out episode 19. And that said, Gentlemen, welcome to the show again.

Joseph Bramante: 1:48

Hey, Brian, good to be here.

Heshel Mangel: 1:50

Thank you, Brian. Thanks for having us back.

Brian Briscoe: 1:52

Yeah, absolutely. So let's do this. Let's let's do a little update since since we've had both you guys on the show. And one thing I forgot to mention, we did have, you know, Heschel on the show, again, for our first deal episode a couple months ago. That episode will also be you know, pretty close to the top when this this releases as well. But, Joseph, why don't you tell us what you've been up to since the last episode?

Joseph Bramante: 2:17

Yeah, sure. So since the last episode, we've acquired three properties, about 500 units. And we have gotten entitlements done permitting done on one of our new developments for energy and property we're breaking ground on. And we have also just finished completing preliminary design for another new development militarize, here in Houston. So we've, we're really been leaning into the new development space, things also just finished wrapping up the final edits on our own podcast, the engineering passive income show, so excited to get that launched later this month, it's gonna be focused, really, on the engineering audience, because you know, I'm an engineer, and we're a special bunch of people. And so I really just wanted to bring passive investing in, in discussion with the the context of the during mindset. And then also, we are launching, it's getting finalized now are hoping to be launched this month. But maybe next month is the passive investing Academy. We've We've done some beta testing with it, all the contents already created. And it's basically we go from top to bottom. And we teach in passive investors how to break down investment packages from their perspective. So it's not, you know, most of what's taught is how to buy property and how to break down a deal, or how to invest in a deal from an active investors. Like if you have all the data, you have these complex models, but nobody's really addressing it from the passive investors perspective, whenever they're given that that PDF package like we're going to be reviewing today, what do you do with it? And so that's the whole course is about that. We've had amazing testimonials for it. So we're just happy to get that launch.

Brian Briscoe: 4:10

I think that's an amazing product. Now I'm gonna I'm gonna back up a little bit. You talked about, you know, closing three and moving into development. Can you explain why you're going from buying existing to development?

Joseph Bramante: 4:23

Yeah, I mean, anybody who's tried to buy a deal in the last year, as realized cap rates are getting very tight, and your margins are getting squeezed. And it's getting very, very difficult to make these deals work, if you would the same cost of capital that we all have access to majority. So we made the decision. Y'all saw this coming four years ago. So this isn't a new thing. We've been in the new development space learning since 2016. It's taking that long, haven't you know, I've done this a long way I could have about two years ago I finally partner up with somebody and we accelerate our growth. And I think that's true with anything, you know, you can do it by yourself. And you can take on spend a lot of time doing it, or you can partner with somebody go a whole lot faster, especially when it comes to new development, because it is extremely complex. And with acquisitions, it's pretty worn path, you know, you do this, here's your steps, and you get from point A to point C, but new development, there is no kind of step one, step two, step three, it's a very iterative process, you know, you go to Step four, depending on the results of step four, you go back to step one, you know, so it's a, it's very complicated. So, anyway, that's why I went into new development, because we have seen the flight to quality, we've seen the compression of cap rates, and we really are investing more for the long term, we want to have these nice, beautiful assets. And there's much bigger returns for our investors, or they're buying wherever they're building something, their basis is so much lower versus when they're when they're buying it.

Brian Briscoe: 5:55

Yeah, absolutely. Now, if you look at return profile, and risk, can you can you talk a little bit about the difference between existing, you know, buying an existing A, B or C class versus, you know, a new development, you know, what's what's the return profile look like, versus the the corresponding risk? Yeah. So

Joseph Bramante: 6:13

on a new deal, your risk, if you're buying value at your risk would just be did the syndicator underwriting correctly did the do you get the red bumps that were projected, or the expenses and taxes as projected, and I think your margin of error, I would say is probably a little bit less, because if your, your chances of losing money are much, much less, I mean, worst case, you don't make as much money as you thought on acquisitions, versus on new development, your risk profile, there is you one year you're not dealing with, it's not it's the loans are all for recourse. So you know, versus acquisition is majority non recourse from the building perspective, you know, they're your costs up front, you do have some upfront costs, you got to acquire the land, you got to get spend money on engineers, architects get it built, but the big money isn't really spent until the money is until the loan is secured. And at that point, then you're spending millions of dollars. So I'd say your your upfront costs is about the same until you go to break ground. And then once you go to break around, you know, there is some risk that you the risk of it not getting completed is very minimal, you're going to build it because you got the projects are bonded. Also, by the time you get to the point where you're breaking ground, the lenders have extended this, like you wouldn't believe it's been through so many checks and balances to make sure that the project is viable, because the bank is your biggest investor on this deal. So they're not going to build something they don't think would work. And then when you get to the point of stabilizing and now you get to that risk of will it you know, you build it will they come. And so if you're in good markets, you know, Houston market major markets, it's less of an issue is when you try to build and more tertiary markets, that gets to be with lower populations, that gets to be somewhat of an issue. So you got to put checks and balances around all of those. But I think people may see develop, and they more worried about that latter half of cat build this, you know, that lease up period, that's where you kind of make your money, there's if it takes forever to lease up or not. But the windfall on the back end, your basis is much lower. And once you've built it, you've stabilized it. Typically you can exit within three years, and you get this huge windfall profits. So I think that the the risk reward is in check. They're so high risk, but high reward.

Brian Briscoe: 8:40

Okay. All right. Yeah. Sounds sounds everything on par with what I've heard on that stuff before the new development area intrigues me, you know, one of these days, you know, we may jump into that as well. But I think you're absolutely right, you know, with where Cap rates and competition have gone. It's it's extremely difficult to find deals in the marketplace right now. So

Joseph Bramante: 9:00

a quick thing I'll say is a time component is completely different as well. I've been working on one deal for four years already. So if you're somebody who's trying to go quickly, you want to do acquisitions all day long, you can grow much bigger portfolio acquisitions, and you will do development. So we just kind of branched off into development while still doing acquisitions. So we can do difficult.

Brian Briscoe: 9:23

Okay, so So longer time. Got it. So perfect. Well, thanks. Thanks for the explanation very much. Appreciate it. And you know, glad you're doing well. And, you know, shift gears really quickly and you know, Heschel how're you doing man?

Heshel Mangel: 9:38

Doing very well. It's great. You guys with both of you.

Brian Briscoe: 9:41

Alright, so we we last had you on I think about three four months ago, on your first deal episode and actually wasn't your first deal. You just showcased a deal you had recently closed. Tell us what's new.

Heshel Mangel: 9:54

Yeah. So and at that time, we were showcasing a deal that we had recently Close. And I think as well had touched on a deal that we were in the due diligence period that we were getting ready to close on. And we and we did successfully close on that, you know, about a month later. Since then we've definitely felt the the constraints of the market, it's definitely been a, a slower to come to find to find good inviolable deals that are making sense for us. And for our partners. At this point, we are getting ready to close another property here in a couple of weeks and have have another one under contract that will probably close in about a month and a half or so. But it's definitely we've definitely felt the pinch, pinch here in the market. And then equally, you know, walking through this and through the times, and just adjusting with the times and then learning as much as we can throughout the process and continuing to, you know, stay in touch with with with people and building our network, and we'll come out of this stronger.

Brian Briscoe: 10:51

All right, sounds awesome. Now, are these are these new acquisitions all in Ohio still, or you branched out a little further?

Heshel Mangel: 11:00

These are in Ohio. These both both of these are in Ohio. Yes.

Brian Briscoe: 11:04

Okay. All right. And I think like the one we thought we showcased last time was a Cincinnati property right. 32 units in Cincinnati. Right. Okay, sounds awesome. Well, let's jump into, you know, the the deal review, and we're going to have some slides on this one. So we'll do our best to explain it. For those who are listening to the podcast, we're also going to drop a link in the show notes to our YouTube page. So you guys can go to YouTube and watch this with the slides. So that said, I'll let you guys take it away.

Joseph Bramante: 11:38

Right? Well, before we get going, I just want to be clear on what this is, and what this is not. This is not a like, gotcha kind of presentation at all. And I just want to really commend Heschel for even like doing this coming in, he's putting his deal out for all to see. And let me go through and provide some very careful minor tweaks and updates, but still just have anybody go through your deal. Really, to me, it just just shows to me that shows commitment to constantly improving and getting better. And if I were an investor of hedge shows, I would be honored. Because I mean, that's, that's what you want to see, you want to see people pushing themselves trying to get better any way they can. And this is how you get better. And now he's you know, basically, like putting this out here, everybody, a lot of people don't get better as well, cuz I'm sure I know for a fact. Because because of that course, that we have passive investing Academy. I know for a fact, people are making a lot of these similar type things. And so by going through this, hopefully, others will see and we can all improve together. So thank you all for agreeing to do this.

Brian Briscoe: 12:41

If I can add my two cents on the first episode, the Ask the Expert episode, if I remember the number, right, you know, so you had about 55 units already under your belt. And I had asked you to come on as an expert. And you just turned it out on me and said, hey, you know, I want to learn more. Can you please pair me up with somebody? And, you know, I was actually quite impressed with that as well. And I echo exactly what Joseph said Heschel. I think that's an amazing quality to person, you know, you're you're humble, you're teachable. You're also just an amazing person. So thank you for for doing for being you, essentially.

Heshel Mangel: 13:18

Thank you. I appreciate it. It's a it's, we're all we're all working to help to help each other out and continue to grow grow the industry. So it's, I appreciate both, you

Brian Briscoe: 13:29

should also say that I'm trying to emulate you guys with the great facial hair, but

Heshel Mangel: 13:33

I like it getting there. Yeah, I like it.

Joseph Bramante: 13:38

Alright, so I've shared my screen. I believe you guys can see it now. Yeah, yep, we got it. Alright. So hopefully, this was a three pack deal. You were doing Columbus 33. And this is a very minor thing. But, you know, a lot of times people are printing these like, like me. And so whenever you print them, and you have a colored background on all your slides, uses a ton of ink. It just sometimes can. I would just as a formatting point, I would recommend avoiding colored backgrounds for an event that people do print down. But again, that's nothing to do with the actual deal itself is the formatting. So we've got you know, on slide two here, a table of contents, your standard kind of disclaimer, perfect to have all that, then we're the executive summary. I think these you know, this slide right here and typically executive summary is if the investor reads only one slide, like this is it they can throw the rest of the package away? And my opinion, this is the one slide and then if this slide is good, and they want more detail, then they can read through it. But if they don't, if they if they knew the objective of this slide, right, done well, is that you know, they don't need to go to see the next slide because everything they know what the deal, at least at high level points is there. Now of course some people are really big into the details. And so they're going to dig into it. But you've also heard that other side of that population that's not big into details, and they just want to know, you know, give me the high points here, and then they'll make a decision for that. So I think he did. This executive summary for me felt a little wordy, because you've got to actually read through some of this. And you know, on ours, we try to keep it more bullet points, shorter sentences. There's an entire paragraph here on the left side of the page. So just something to keep in for new. And there's my point is on the right side here, kind of broken out your investment snapshot shown your sources and uses was basically what that is on the top right. Now, looking at that is, is by somebody seeing the sources and uses on the top right, is that a decision making criteria for them? I would argue maybe it's not, because it's good to show the sources of uses, which you do later on the package, but somebody isn't going to make a decision. And so you've used up about 25% of your slide right here, showing the sources and uses for somebody which isn't really going to move the needle for them other than to see, really the main point, which I believe you're trying to drive here is that you're raising$650,000 For this deal. So I would have possibly just condensed it to total equity need 650. And you show some of your purchase cap. That's your your key metrics here. So you should have purchased cap, which is 9.5, which is unbelievable. By the way, I would love to have a 9.5 cap deal. Reminds me of back when I started even it's always started back when they're 12 caps. Now it's just like a distant memory. But I'd say

Brian Briscoe: 16:39

at this time, I'd love to have a six cap. So I mean, oh, yeah. Wow.

Joseph Bramante: 16:44

So, but keep in mind, just how many units are we talking about here? This is a yes, was it Heschel? 3333. Of course, 33. So I think, on smaller deals, I believe, again, I don't know, I'm not really in that space, I don't know what cap rates are on smaller deals. But this might be in line with those deals to be wrong. Also, just keep in mind, another thing I'll point out is that the way you're going to present a deal of this size, I'm not being critical besides a deal at all, I'm just saying that when you're presenting a 250 unit deal, which is when you're presenting a 33 unit deal, you're not going to have as much, you're not going to present it the same or go into the same level of detail, I wouldn't imagine because it's just it's a smaller. I don't mean this in an insulting way, but simpler of product that you're presenting here. So But back to key metrics. So we're showing cap rate, we're showing averaging a return or showing a whole time. One of the things that's missing here is the IRR. And we'll see where that's shown it's a big one. A lot of times so IRR is this universal metric that people will use to compare across deals, I guess I could put the money in Doa or DOB. And this is the IRR return. And it factors in everything from the mind investment to the whole period, the distributions, the exit price. And so putting in an IRR for your investors is very useful. I know in this day, people to try to put ranges and their IRR is it can be between 16 and 17%. And a personal preference of mine is really just is to draw a line in the sand and say we're going to hold this for this period of time. And these are our assumptions. And this is what the number we're projecting. And then if you want to give a range, then you can say it's going to be say 16% IRR plus or minus 1% if you want to give a range, but I think it's important that you draw a line in the sand you say this is our number. So anyway, IRR or stone, we're going to hold this for seven years refinance at year four. That was all the executive summary. Now we're gonna go on to the next page here, which is our property overview.

Brian Briscoe: 19:00

Again, Joseph, just just just to recap a little bit on that last slide. What are the key pieces of information that need to go on that executive summary? We talked about, you know, IRR needing to go on there? We talked about purchase price, what what would you say are the key pieces of information that absolutely need to be on there?

Joseph Bramante: 19:19

Yeah, so you're gonna want your equity being raised your IRR, your purchase price, your hold period, you're going to know if you're spinning rehab. So you do mention your capital permits up here. So if you're doing a rehab, you should definitely mention Hey, we're going to spend $200,000 doing a renovation, your rent bump, because that's a big important thing to say hey, we're going to do all this and our rent increase our average rent increase is going to be this average occupancy your average vacancy on the deals another important one and then it can get the also you want to see what are your terms so we're going to be this is your preferred return the deal this is your Promote. Sometimes if you have like a dual class structure or some crazy waterfall, you want to list all that out as well, just to give the investor everything they need to get on that one page. And that's why you kind of have to do it in bullet points. It's, it's, it's a bit of an art to get them right, because you don't want to be too busy. It's an exercise in simplicity, if you will, just keeping it nice and clean enough whitespace on the page. It's a combination of art and math, if you will.

Brian Briscoe: 20:29

All right, thank you. Thank you very much.

Joseph Bramante: 20:31

Now we've gone over to slide four, five, any comments on that special? Do you resonate with that? Or?

Heshel Mangel: 20:37

Yeah, I mean, that's all that was all very good points. And as, as you're speaking, I'm writing these notes down as well. Because just clarifying my own head, the purpose of each page, and really treat each page as its own piece of real estate. And, you know, as as you, as a developer knows very well, that's about maximizing the space that we have. So you really want to know the goal and the purpose of each page and bring out the point. Yeah, and

Joseph Bramante: 21:05

I am by no means one of these PowerPoint experts. I know there are people that go out and they do this, but my background, so I worked for Exxon for five years. And they're very big on nice clean formatting, and also perfect numbers. So we had to kind of get both, but I've seen some beautiful packages out there. And there's people that outsource this stuff, and they do a really good job. But for those of you who aren't outsourcing, I don't outsource it as of yet. And we do just fine. So those are just some tips for you. Property overview. So I think, yeah, this is important as well, you've kind of covered the basics, you got field description on the left side, talk about, you know, here's your number of units unit mix when it's built, current and ally, the utilities. Now, the question I would say is, is this really a page four slide? Or is this one that should be further in the back? I guess, you just hit him with the executive summary. And then now you're saying this is the deal. I'm not saying that it's wrong. I'm just saying maybe you could look at moving some of this further back to the package.

Heshel Mangel: 22:14

To do you think more of the the numbers associated with the deal that we just really spoke about an executive summary.

Joseph Bramante: 22:22

Earlier, you're going to pull, the executive summary is going to have, you're going to say, Hey, this is a 33 unit property that's built right at 69. You're going to cover that. Alright, I think those are the two big bullets on this slide. So now that you've already addressed it on your executive summary, this then becomes a detail page that you can put further back in the package. Right. So now we're on to the business plan. I think this is very important to have, what is the plan? So here we're saying you kind of list up business plan, big paragraph across the top, what is your general plan to do with the property sounds like you're going to bring professional management to the asset and improve the operations of the asset? So I'm assuming this was probably like a mom and pop style deal, and you're taking over your Embrace professional management? Perfect, right? Yeah. And so then you kind of list your, like what I like when you 123, it's great. So three bullet points. And so step one, you're going to upgrade management. So you've got bring your own systems and processes. That's great. Step two, you're going to prove the value by investing in the unit turns and spending some money basically doing a value add. And in step three, you can see long term vision where you're going to capture stable cash flowing asset at a time of market uncertainty. And so here, I guess you're using debt and equity and whatnot. And, yeah, really kind of playing on the longer term, just real estate as a whole. It sounds like,

Brian Briscoe: 23:46

right. Now, Joseph, you mentioned this, the slide on the property summary should be a detail slide later. Is this business plan? What you'd like to see right after the executive summary?

Joseph Bramante: 23:59

I think so. So I would couple of things. One, it depends on who the the time of the meeting and the presentation itself. So like, on a deal that we closed in October, I actually had two presentations. I had one. That was a 20 minute presentation that I borrowed from Florian cough, or Kate, he's famous. You can google him, he does a lot of pitch decks and whatnot. And I mean, I borrowed his format for that. He's specialized in that very quick, upfront, get them in the door. And then I had another more detailed presentation, where say, Hey, if you like that, when you want to learn more, or if you want to invest, great, that's the best. But if you want another presentation, it's more detailed than I had a more detailed one. So one kind of hands on which presentation, isn't it b Is it supposed to be the end all be all? And if it is, then I would want to see the rest of the slides to determine and then kind of make that judgment and So once you've kind of created all your slides, then you kind of look at everything. And you should always ask yourself is this the most important slide for this point in the presentation and figure it out from there. So I think generally having this business plan towards the front, it's good, it's not, it's definitely not a back half slide, it's definitely a front half. Now, it should be number five, and number six, or seven, that's to be determined with the rest of the slides. Perfect. So then we get into the financial summary. So here, you're repeating your, your snapshot. So again, you see all we talked about the executive summary. So you've already shown the detail here, on what that on the top left, you kind of break out the sorts of uses again, and then you show your closing costs on here. So you've closed a couple deals now. And so when I would challenge you to do is to go back on the deals that you've closed, break out those closing statements, and look at what your true closing cost was, especially because I believe your closing deals mostly in the same market. So your title fees, etc, would be pretty consistent. So for us, all of this is about this one line. Right? Here's so your your closing costs detail, you break out lender costs 20,000 due diligence costs of 10,000 Closing reporting and legal 40 an acquisition fee of 30. So I think it's on for this slide on represents investors, I think it's good to have it grouped like that. But on a Excel file, you should had it broken out in more detail. I don't know if that's the case or not. Maybe it is and maybe it just happens that they all ended up perfectly 20,000 10,000 4000. Most likely not. But if that's the case, great. So but the challenge for you is to break out those old closing statements. And what we did. So I've every deal we've closed, use a closing statement. And we figured out where we missed that because there's nothing worse than going to the closing statement, or going to the closing table and you're short, a couple $100,000 Because you underestimated something or something came in more expensive than you thought cetera. I've been there, I've done that, it really sucks. It's a lot of stress. We just closed the $36 million deal in October. And we were over by $100,000 in our closing statement, which was great. So but the way we've gotten it really accurate, is one I've interviewed and I've sat down with our title company and said, Hey, how you calculate all these costs, I've noticed that a T 19 endorsement shows up on every one of my deals, what is that? What are my reoccurring title costs, and we've programmed that into our pro forma. And we've figured out how to, you know, put some logic behind it. And you have all the data that you need to calculate exactly what the title cost is in your pro forma. So I would, you know, it's a little bit of an advanced step, but I know you can do it. So I would encourage you to reach out to your title company, reach out to your attorneys, if you got an attorney you're using every time say, hey, what can my range of call legal costs be? And yeah, just kind of see where you're at, you know, are just for reference our sources and uses page on our pro forma is about 60 lines. So it's rather detailed, we break out every single thing. And then of course, we condense it for the presentation to the investors, but the Masters also get a PDF copy of the performance, they could see every single line. So that's a challenge for you, that will help you definitely a lot more in the short term, you know, you might not see as much value from it. But as the closing amounts get bigger and bigger, the margin for error is much more meaningful. So there's that names on that right half of the page, you've got your operating summary, I'm assuming, is this? Are you trying to insert your trailing 12? Is this the current state of the finances

Heshel Mangel: 28:56

specialist who's got this has got this is the current? This is what where we will be currently like we're taking over the operation putting in our management. So it's the current the current rents with our management.

Joseph Bramante: 29:08

Okay. Yeah, it just would have been, I would have liked to see it, this was a little confusing. That's all it is. Maybe making a little bit more clear that this is the, you know, the trailing, comma, right in place financials, or the property.

Heshel Mangel: 29:21

detail, how would you suggest walking that where you you know, you can't make a financial summary 60 lines long and give the every detail in the end? Frankly, most people probably don't, are not gonna be interested in seeing every single detail of the deal. They want to know. Okay, how much is this going to cost us basically so

Joseph Bramante: 29:41

so I'm not saying you give, so that's not in your presentation to the investors. So that's, you know, we've got our just like you will you've got your own formula in Excel that most investors won't care about some will. And I'm sure you'll you'll give them either a PDF copy of it or if you want the Excel version, Harvard you are but The and you will take that and you're going to condense it into for like you did here. So you've condensed it from your Excel version. Right presentation. So we do the same thing. We bucket it all together. So there's only like three lines or four lines. But the detail is there. And whenever we have bucketed together, it's you know, it's$21,250.10, you know? Yeah, we're not, it's very clear that these are all calculated numbers, right? Understood. So that's all you're right. And I, you're going to group all these with somewhere, you should have that detail.

Heshel Mangel: 30:38

Right? So the numbers will be accurate, not rounded numbers. Gotcha.

Joseph Bramante: 30:43

Okay, so that was the financial summary side, we're on page six. That is read, now we get into the rent roll. Well, this is one where. So this is one that you can only do with his 33 units. So you would have listed all 33 units of a rent roll on this slide, you probably could have done this in two lines, I see a one bedroom and a three bedroom. So there could have been your two lines out of it. But you so this was kind of a waste of space, in my opinion. Because you I would have against the formatting thing, but I would have put your market rents, I would have put a total of the bottom of market rent a total amount of rent. Instead, because you put all 33 units on your page, you had to kick it off side to what the totals were, though. Anyway, just stuff that you know, you can. That's one of the differentiating factors on a 250 unit deal versus a 33. So you're not going to see 250 units listed on a PowerPoint page. But yeah, I think once you condense this down, that honestly that could have gone maybe on your property page, you're probably every page you could have listed there. If you want after this, I'll send you one of our present one of our deals we did, you can use what you want and see how we've laid it out. Choose what you will. So now we are on slide eight or looking at the returns for the deal. So you've listed, so you got kind of ownership structure, whoa, this is pretty neat here, say the right the left half of the page, you reference, the paragraph is to be read with the operating agreement, investors will receive 25%. And a manager will receive 25% of all cash flows. Cash as we dispersed quarterly, when refinance will be paid back first, then remaining split. So that was a whole lot of words, just to say that it's the 7525 split over whatever prep like you could have been that whole paragraph could have been one sentence. Investors are, are short for time. So you have to be quick, concise, especially in our presentation presentation should not have complete sentences, because you should be presenting this, may I imagine you're either going to be presenting this in a webinar, or you'll be presenting it one on one, but the intense should not be there reading this. So I would condense that. Then now we're on the right side of the page, you've got a box here, the top left and the top right. So you list out the deal returns and the investor returns. So you list out the ROI, average cash and IRR for both the deal and the investor. So my question is, why are you showing the deal returns? Who? What is your thought behind showing the deal return? Um,

Heshel Mangel: 33:38

the thought was, you know, as we rolled out our pro forma so we come to, you know, where how much capital there basically is and what the returns are. I wanted to share that with them even, you know, ultimately they don't, investors don't receive the entire this entire free cash flow. I was just showing them the the final product that we came to through. So

Joseph Bramante: 34:07

you're showing it in an attempt for transparency, transparency, which I think there's a better way to show that. Because basically what, in a way, what you're showing is you're kind of showing the net of your fees. This is how much you make as the investor. So you want to trance you want to be transparent and show them hey, this is how much money I'm making, which I think is fantastic. We do the same. I encourage all syndicators and active to show, you know, full disclosure, this is how much money we're making. And I think as a passive investor, you should want to see that somewhere. And when you don't see that, I think it's, you know, I just don't like it. I would be a little concerned you should always be transparent because it's they're transparent how much money you're gonna make. Right? You see right here. How's that so you're gonna make this much money. I think it's only fair that people see how much the active is something the sponsor makes as well. But the reality is, nobody makes us do will return Not, not you as the active or the investor, the dual return property makes but you actually make much more than that. Because you're you don't know what your basis isn't a deal. If you invested no money into the deal that your IRR is infinite. So it's there's, it's really, again, no wasted spot there.

Brian Briscoe: 35:20

Now, I'm gonna ask one more question for you. How shall I think on the earlier slide, you said refinance your four, and it was going to be a seven year hold. You've got years one through five on here, and maybe it's on the next slide. You know, I would just say, if you're advertising a seven year hold, put put all seven years on there. But I do think,

Joseph Bramante: 35:43

Brian, Oh, Mark, ready,

Brian Briscoe: 35:45

boom. Yeah, there you go there. Yeah.

Joseph Bramante: 35:48

So and I think hash and I talked on this offline this Yeah, this is about consistency, I'm pretty sure what happened was at one point, when you're doing the deal, and this happens a lot here, these deals, just so you know, as a passive, these deals go through so many iterations of business plan of whole periods of etc, it's very easy to lose track. And I think maybe at one point, you might have had this intended to be a seven year old. And then for whatever reason, you decided, You know what, it's better as a five year old. And so the performer model got changed to a five year but nobody scrubbed the presentation and pulled that out. So that's another thing. So whenever we do our presentations, you will notice, all of the metrics are in a table form. And that's because we're copying that table and pasting it from our so it's copying from our model, and paste it into the pro forma. The reason being is that mistakes like this don't happen. So whenever I say it's a seven or five year hold, it's because it's in a table that came from the performer, that whenever I changed, the performer whole period automatically updates the table. So that's one way to avoid those inconsistencies is to avoid manually typing in as much data as you can to PowerPoint.

Heshel Mangel: 37:07

So it's actually linked to your pro forma. So it's either

Joseph Bramante: 37:10

linked or it's a copy paste from that table. And it's very obvious the table is out

Brian Briscoe: 37:14

of date. Right. But yeah, I'll say on our first syndication we had, we probably had eight or 10 different iterations of the pitch deck that we had actually distributed. And we realized that, you know, on our second deal, that that was a mistake, you know, it was, every time we had major updates, we would update our pitch deck, and, you know, start using that one. But, you know, for for us, what we do is at one point, we just say, this is the finalized version of our pitch deck, this is what we're sending out. And from here on out, it's not changing so. And so far, it's worked for us, but it just means we're sometimes a little, we send it out a little later than sometimes we want to.

Joseph Bramante: 37:55

Yeah, no, that's, I think we've all made had those struggles, as well. And one of the nuances that we do, Brian is, so we also draw a line in the sand as well, you get to a point where you got to draw a line and say, these are the numbers. And these are the numbers on what presented to us. And you can continue to refine them, you're still going to do diligence, things are continuing to evolve your finances or continue to change your loan terms may change up to right before closing. And then the day we close, we sent out a final pro forma, we say this is our final, this is what we are projecting we're actually going to do now that all the dust is settled, or at least up to the closing date. And we actually sign off. So everybody signs off on performance, we give that out to the investors, so they know that here's our commitment to you the investor. And here's our phone numbers, and then we'll let the chips fall where they may for next five years. So interesting. All right ways to do it. So anyway, back to your return slide here. I noticed prior to this return slide though, there was one very important slide that was missing. So we talked about a trailing 12 for how the property is currently doing, which would typically just make a single column, but there was no slide anywhere where you're saying, here's our Enlai our GPR down to the to net cash flow for the next, I guess five years now, on radio, you just jump straight to investor returns, but you don't. So there's a lot here says cashless future, but there's no way to show like, where did that? Where did the company how do we get to this number?

Heshel Mangel: 39:29

Right. Yeah. Yeah.

Joseph Bramante: 39:31

I don't know if that was I hadn't seen in the backup anywhere. If anyway, I was just, I think that is that, at least for our students. The second most important slide we that we the, you know, I teach him to look for that slide first. Just stick to the package, pull up that slide, and then leave the rest alone. And from there, you can kind of start doing your analysis. But if you don't even include that slide, then they can't determine what was the right growth. What was the vacancy about Kokako? That was the tax growth. He just give them straight to the answer. I think that for some investors, what were a lot really they want to know, like he held you know, they're there they are doing some analysis. So anyway,

Brian Briscoe: 40:10

I would echo that when I look at deals as a passive investor. I mean, I'm going to look at the overview slide, I'm going to I'm going to look at the the the markets and everything else. But there's only there's only like two or three things I'm looking for on the number slide. Number one, what are the rent projections? And Are they realistic? Number two, what is the exit price? Okay, I'm always looking at that exit price. And I want to know how they come come up with the exit price as well, because those are the things that are going to drive more than anything else. And then I'll also look at the expense ratios, just to see what they're what they're doing with the expenses. But those are the three things that I look at personally, you know, I want to know, are the rent bumps realistic? Is the sale price realistic? Those are the two biggest things and then check out the operating expenses. So I echo what Joseph says those do need to be in there.

Joseph Bramante: 41:00

Yeah, and so typically, another some other things that you would see on that executive summary during back tenant slides, you wouldn't see you would see the cap rate that you're buying, and you would see the cap rate that you're exiting at. Right? Those are very important or also called the revision reversion. Capri, I hate that word. It's called the exit cap. That's not used fancy words here. from Louisiana, try keep it simple. So now the next slide, we're on slide notes, I'm on rent cops, written sales, comps, these are all very important. Again, think you would notice it's a little bit different for smaller units, because I think you are more bootstrapping this. And if I'm not mistaken, you're looking at or is there some these are houses on air. So you're, you've got a mixture of apartments, and house rents, which is perfectly normal. My first deal was a 26 unit deal, the entire basis of a$30,000 renovation we did was all based on surrounding rent comps, for houses in the area. So anyway, I think anyway, just providing some data, though, it's great, I think you've done a good job, you can tell you've done this by hand. And for me that that. That is that carries a lot of weight for me, because if I know that it's a means one, it's a lot for you to go out by hand to get this data versus for somebody just to pull a report on yardie or wherever you get those red cops means that you you did a lot of research here. That's what that tells me that you've done a lot of research, you feel very compelled these numbers that so I think as a passive, just keep that in mind that you can kind of tell if somebody had to really work to get these numbers, that they've done a lot of research that, that it's not just them running a report online, and it's selectively choosing.

Brian Briscoe: 42:49

Yeah, and for those listening to this, he's got a couple of Google Map chips on there, where he is individually put each pin in place where all the properties are. And then underneath that has a table for the rents. And I think I think same thing, I was thinking the exact same thing when you brought it up, you know, the level of detail you put in, you basically customized your own costar report, because what you did,

Joseph Bramante: 43:10

yeah, so I feel incredibly comfortable on the rank ops here just because I Well, he's, this guy has done his research. And yeah, looks good to me. So great job there. As you get into bigger and bigger deals, though, you're going to start pulling out, you know, this won't be as applicable. So I think it's also a, a story and what's possible, what's what you can get away with and do for your buying smaller properties, especially when you're bootstrapping because those those software's that we have, you know, it's a couple $1,000 a year that we're spinning several $100 a month, just to keep those subscriptions going. So they're not free. And especially when you're starting out, you get your first couple of units, you don't really get to keep things pretty skinny. And so I think this is actually a great way but as you start graduating into much bigger and bigger deals, you're going to want to start getting in those access to those software's. So now we're going to the market insight slide. Lots of color, man, my ink cartridge is struggling right now.

Heshel Mangel: 44:19

Send me send me the invoice for again.

Joseph Bramante: 44:25

And then so now we're on page 12. So here's we're just kind of giving some highlights. You know, for me, personally, I've never, I think these are important slides, but I've never really dug into them too much. But that's also because I've been in my same market for the most of my all of my career all 10 years. I think it's semi or passively investing and didn't know Columbus shirt. These are all important. I think that's I think you've done a great job of presenting it as such as from the perspective of an investor who is not familiar with your market and doesn't didn't know all the great things around it. So I think it's important to have these most my investors from my market. So I don't do as great of a job as you have done here showing all those things. So

Heshel Mangel: 45:11

kudos, I'm actually noticing now, as, as I'm looking at this, that these are for the Cincinnati market. So it must have been one from a previous deal. And it just wasn't updated on this on this package.

Joseph Bramante: 45:23

Well, again, I don't know your markets, I would have noticed that they weren't for the exactly the correct thing. But Rachel pointed that out. So in the future, make sure you're pulling

Brian Briscoe: 45:35

the market, I wouldn't have caught that either. But I I've driven through Ohio a couple of times, honestly, I couldn't tell you how far Cincinnati and Columbus are from each other. So I think I think this work, you know, pull the wool over my eyes. I know that's not what you're trying to do. But good point.

Joseph Bramante: 45:53

Yeah. And then so now we're showing, so here's actual copies themselves. So you, so you can save all the photos. And these are actually some pretty nice photos, pages 13, page 14 of a 16 page package, you've got the photos of the properties. You know, I would have liked to see these photos up front, a lot of times what we'll do is the cover page will be the photos. So the first thing you see is you would have seen, I think this property on page 14 on Southern Avenue is a nicer property. If you put some nice little effects over the top of it automate the cover slide a picture of this, or really these two together, you can kind of mirror them together. But you know, people are visual, especially investors, you have visual investors and numbers, investors, you got to cater to both. And by putting these pictures at the very end of the package, you really start that investor who's looking for those photos to the very end, you just hope they made it to that last page. So that's, that's my comment. There's incorporate those photos much earlier on. I like to do on the cover page. But you could do it, you know? Where's make sure they're towards the front? Yeah.

Brian Briscoe: 47:08

And I'll add this stuff is the stuff that's worth printing out. Right, Joseph? Yeah, this stuff is worth the,

Joseph Bramante: 47:17

it's worth the ink. Absolutely. It we've got our contact us page. So great job, putting your contact details there. I think that's a slide a lot of people forget, honestly, I can do it as well, some times is to do that. And here's a pro tip that we're doing now we're actually putting a QR code on our last slide. And so they can just put their phone over it or where ever he went on a presentation. If it's printed, or if it's on a computer, they can hover over it and the QR pop up, there'll be a link tree, and they can then subscribe to the investment they can do whatever I capture their email, because you never know where these packages end up. Right? You put it out there and it goes wherever it goes. And, sure, it's great that you've listed all this but now what is some I have to do if I if one of my friends just sent me this presentation, and I'm being lazy here right out, they all man I would type in headshaw at Fish bar pops up. It's not that big of a deal. But we know it as much as you can make this one step less for investors, you should do it and also you haven't captured anything, right? They they've got your info, but you don't have their info. And so I would recommend putting out, you know, a QR code, we actually use a flow code, which is a really cool QR code. But anyway, you can put that on there, including because you've got all this space on the right side so you can put all this and your QR code. Super is at one stone. Yep.

Brian Briscoe: 48:49

Now Now one thing that I would say on that last one, you have your capital called date but it kind of gets lost if that makes sense. You know, so you have your contact us. Most people me personally, I get to the Contact Us slide. And you know, I'm like okay, presentations over. Okay, so I do think the timing of the deal is important as well you know, here's when here's when the offering you know, the private placement memorandum is coming out. Here's when funding window opens, here's when the funding window closes. Here's when the deal closes. We'd like to make sure the timeline is clear. And I think putting that on the very last slide could get lost just because you know if you're if anyone else is anything like me as soon as you hear that, see that contact us slide you're like okay, presentations over and I turned my mind off.

Joseph Bramante: 49:39

Yeah, I've seen some really great presentations and yours you probably do the same Brian where you've got that timeline list on the bottom like a bar, you put the dates. I mean, people get really creative with the graphics and I think it's it's great. I mean, i i We're sorry to do it as well. And but I think that's absolutely an executive summary type Graphic. Because that's, again, that's one of the main keys as somebody is asleep. So when you're back to when you're doing an executive summary, just imagine that that's the only slide. It will call a one pager as well. So that was the one pager, they got it, make sure you got all that stuff on there.

Brian Briscoe: 50:18

So so how shall houses deal come out so far? I mean, you closed on this two or three months ago, right?

Heshel Mangel: 50:24

Yeah, it's, it's coming out really nicely. Thank God, it's coming out really nicely. We've, you know, we're still in that transition period, implementing a big part of our business plan of doing, you know, the major capital improvements. By the time we got to closing, there were a couple of vacant units, we had to turn those and get those fields, which, which turned out really well. So we're right in the thick of, of finishing out our business plan. And we hope that in a couple months, we'll be able to stay that that big, first bulk of it will be complete, and then be off to the races from there. Awesome, awesome.

Joseph Bramante: 51:01

Couple really quick comments, headshots, just flipping to a more time to presentation. So back to your earlier discussion about transparency and showing fees. So back on that slide, which is which we noted was missing, where you're showing the projections from your your noi net cash flow, etc, we take that time to go ahead, and we show we show the investor returns for whichever class they're in. And we also show the asset manager fees and promote that we'll be receiving for all these years. So that way, it's it's all on one page, and they can take away with it, and do what they will with it and do their analysis. Another thing that was not mentioned was a thing about your debt, the slides. So we don't know what kind of debt is going to be getting, we don't know any of the terms for it, only the terms of refinance. So those are all things that I know you, you know, you have those assumptions somewhere because you came up with that analysis. So just make sure that that is shown. So investors can have you know, at least have that information available to them. Also, because whenever, you know, whenever you go to exit these deals, they're always going to pull up their presentation. And they're going to say, hey, oh, well, what was it slowly? Assumptions? Why did you tell me? And you got to show that.

Brian Briscoe: 52:18

All right, awesome. Well, hey, thank you. Thank you so much. You'll first of all Heschel. Congratulations for closing this one and encourage Galatians For the the one you have under contract that I'm sure you guys will close on shortly. And Joseph, definitely thank you for for walking us through this. You know, I made a bunch of notes. And I think this is extremely useful. information. So thank you to the two of you for coming on and walking through this. So one question that I have for each of you just just to close up? how can listeners and viewers learn more about you guys? Joseph, you go first.

Joseph Bramante: 52:54

Yeah, so they can check us out at Triarch. Rep. Calm. And you can also find me on LinkedIn. I'm pretty active there. As you know, Brian, Joseph amante, on LinkedIn. And if they're interested in joining, come on investors again, go to our website, Trevor app.com. This little button there it says to come in investors. I know learn all about it's

Brian Briscoe: 53:17

absolutely in high school. Same question for you.

Heshel Mangel: 53:21

Yeah, LinkedIn, I think that's where all three of us met originally. True. So this is the the power of LinkedIn is right here. Try to stay stay over there and can find me there. I've actually also been toying around and getting a bit more active on Twitter as well. So all right, look for my name over there.

Joseph Bramante: 53:38

Hey, our show one more, show off that that flow code, because we just got it made. So I want to show you guys.

Brian Briscoe: 53:44

Alright, let's see. I actually Googled it while you're doing Oh, and it's branded to brand. It's a branded QR code. As

Joseph Bramante: 53:55

our flow tree, it's got my photo, my bio, it's got all my contact info right there. So they can hit the button, and they'll call me right away or text me or whatever. And I can edit constantly in the background while the QR code stays the same. So it's not some ugly QR code. It's a very nice, pretty looking thing. That's that's been custom branded for. For us. So anyway, it didn't

Brian Briscoe: 54:20

work. Yeah, it's loading right now. Good picture of you up top. Joseph Bramante. Yeah, and it's got all of your contact information. I like it. We're gonna we're going to be looking at that here soon. So I think it's a great idea. But anyway, thank you. Thank you so much for coming on the show today. Appreciate your time. And then for those listening or watching, we will put links to everything that was mentioned here, their social media profiles, and whatnot in the show notes for you guys to just reach down and tap and, and learn more about so. Thank you very much. And that's a wrap Thank you for listening to the direction apartment investor podcast today brought to you by four oaks capital. If you'd like to know more about how to invest in apartment buildings you want to be a guest on our show, visit our website at four oaks capital comm slash podcast or email us directly. If you're still listening you obviously like the show. So pull out your phone app, subscribe, and leave us a five star rating on your favorite podcast app. And we'll see you again next week.