Directed IRA Podcast

Buying Low in Distressed Markets - Featuring Jamison Manwaring

• Mat Sorensen and Mark Kohler

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In this episode, Mat Sorensen is joined by Jamison Manwaring, CEO and Co-Founder of Neighborhood Ventures, for a deep dive into the intersection of alternative investing, real estate innovation, and how everyday investors can participate in projects traditionally reserved for institutional capital.

Jamison shares how Neighborhood Ventures became Arizona’s first public real estate crowdfunding platform, structured under Regulation A, and how it enables unaccredited investors to access professionally managed real estate opportunities with low minimums and consistent returns. Mat and Jamison also unpack the regulatory structure that allows these offerings, discuss the due diligence process behind each deal, and explain why real estate continues to serve as a cornerstone asset in many self-directed IRA portfolios.

Whether you're a seasoned investor or just exploring real estate crowdfunding for the first time, this conversation offers actionable insights into building passive income with transparency, regulatory compliance, and community impact in mind.

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Neighborhood Ventures Homepage

Directed IRA Homepage: https://directedira.com/

Directed IRA Explore (Linktree): https://linktr.ee/SelfDirectedIRA

Book a Call: https://directedira.com/appointment/


Other:
Mat Sorensen: https://matsorensen.com & https://linktr.ee/MatSorensen
KKOS: https://kkoslawyers.com
Main Street Business https://mainstreetbusiness.com



Speaker 1:

Welcome everyone to the Directed IRA Podcast. This is Matt Sorensen, joined in studio by the great and powerful Jameson Manring.

Speaker 2:

Great intro. I love it yeah.

Speaker 1:

You know, I wouldn't say it if I didn't think it. So we're here to talk about investing and kind of the tried and true strategy of buying low and selling high. And we're calling this a case study because Jameson's got a deal they're doing right now. He and I've been talking about it. I'm like this is good to talk about on the podcast because out in the real estate space I think particularly recently, it seems like a little flat People like are there deals out there? So I want to dig into what you guys are up to right now. So why don't you kind of first I mean comment on that buy low, sell high? You know, easier said than done maybe, but let me get your thoughts on that and then we can get into the case study here.

Speaker 2:

Yeah, you know, when people are talking at the at the water cooler, about how real estate is hot and where I heard my friend sold their house and they made all this money or they're buying some land, they're in this land deal is probably not the time to invest in real estate. The folks who are doing well in those periods are the folks who had bought prior to that, in the prior cycle.

Speaker 1:

They're realizing their gains now, exactly.

Speaker 2:

So, if you think of just the last five years, when interest rates went way down, you could sell your buildings for top dollar. The folks who are selling in that cycle that's the smart money. They had bought properties beginning in 2010, held them, ran them well and they saw the opportunity and they sold Groups who were very aggressive about buying in 2021, 22, 23,. They were buying at the higher end of the cycle. I don't want to own those portfolios right now. We know groups that got very aggressive in those periods because interest rates were low. Let's buy. Things look good. There was a lot of hype and there's a lot of hurt in that group today.

Speaker 1:

Yeah, but you are buying right now. I know you bought a distressed deal just a few months ago and you have another one coming through right now. So, like just from the investor mindset, right now is now a time where you can buy low.

Speaker 2:

It absolutely is. Now is a bad time to sell. So if you are an operator and you're able to get through this period, you want to hold your properties, focus on operations, try to get some cashflow, and there's a few reasons. Want to hold your properties. Focus on operations, try to get some cash flow. And there's a few reasons. Debt is still high relative to where we were and it's high relative to even where the Fed thinks rates should be. The Fed is still saying we're in a restrictive rate environment, so rates are still high to combat inflation.

Speaker 2:

Operations are tough because we've had a ton of new supply in the last three years. In our case in Phoenix, we're either one or two of the last three years in new apartments constructed and new supply has a big impact on rents. It has an impact on concessions and your tenant quality, and so there's some challenges in the market right now. The folks who are operating well and they have good teams in place. They're doing just fine. In our case, our buildings are full, we're cash flowing, so we're paying all our expenses. In some cases we have several buildings that are still paying out dividends to investors. But we also see the next few years as the supply gets absorbed, and it is in markets like Phoenix. It's getting absorbed.

Speaker 1:

Because they're not starting builds right now?

Speaker 2:

That's right.

Speaker 1:

They were a couple of years ago.

Speaker 2:

This is stuff coming off the conveyor belt now that started three, four years ago and now it's getting delivered. It's getting leased up, and that's what's been happening the last couple of years, and so rents have been flat to slightly down. But as we look out at the forecast because these new building projects, these take years to plan we're seeing a drop off a cliff, beginning later part of this year and then going forward for several years with new construction. So supply is going to dry up, the supply is already being absorbed, and so that's when we'll start seeing rent growth and at the same time, we probably will see relief in interest rates. So we think the forecast and the fundamentals are very good. Our buildings are full.

Speaker 2:

We really focus on operations and the people who are needing to sell. They're needing to sell. In this case that we'll talk about today, it's a for-sell situation where the loan was a temporary loan a few years. They're not able to refinance it because their debt amount's too much. They're not cash-flowing the property. They weren't. They're not able to refinance it because their debt amounts too much. They're not cash flowing the property. So the bank basically says if you don't sell and pay us off, we're going to, we're going to foreclose, and so that's. That's the deal that we're going to talk about today.

Speaker 1:

Yeah, so let's dig into that deal. This is 78 units, it's in Phoenix, um, and you said you've been following this for a while. Like these deals don't just all of a sudden pop up and it's like on the MLS. I mean, like, give me the story about this. You said you've been following it for over a year. You've just been waiting for the shoe to drop, type thing or like the axe to fall? I don't know what the analogy here is.

Speaker 2:

People realize that we're in a short-term pullback and so groups are trying to work things out with lenders. They're not just handing the keys back to lenders. And last year they put this out for offers. We put an offer in and then they ended up working something out with a lender to get them another period of time. They had to do a principal reduction, so he raised a little bit more money, put it into the lender and then, uh, here a year later, they, they still are not in a position to make it work. And um, we at the time last year we did an inspection, we really liked the building. We, we know the area really well. It's right up from our the street, from our office. We, the same group that we bought our 52nd street deal in foreclosure this is the same group, that was the that had owned that deal as well.

Speaker 2:

Okay, and so we know the the some of the work that they had done, you know and they're no, no folly operator they just kind of got in at the wrong time. They weren't able to execute their plan, they didn't do some of the renovations they expected, and so when the opportunity came back up, we looked at it with fresh eyes. We said, hey, things have probably changed, let's look at it again. But we were able to make a good offer and move this year. But we've been looking at it for over a year.

Speaker 1:

So how do you know that you're buying low right now?

Speaker 1:

Like, give me the numbers you know, I mean seriously like right, you want to know that I'm not buying at the top of the market, that I'm getting a deal. You know, I mean multifamily might be a little more simple, because I mean I shouldn't say simple, but you know you're running probably like the cashflow on the property, but compared to, like you know what they did on the property and where you're at right now and what you can acquire it for, I mean, are you getting a discount on this?

Speaker 2:

Like yeah, uh, we believe we're buying it at an attractive entry point. The reason is because we can cash flow with this new entry point, this new purchase price, with the current rent that's being generated, even though it's not being ran well, at an initial loan of $8 million. The prior group had a $12-something million loan on it. They weren't able to cash flow it, so our debt gets reduced significantly from what they had and that's a 25% difference in debt 25% difference and then we're also bringing in a really strong operations team.

Speaker 2:

We've been able to do this in the past where we bring in our own team and we see immediate improvements. The group that owned it. They didn't have their own team, they were outsourcing everything. They were out-of-state type of owners and it's a little different when you own it.

Speaker 2:

I had heard this example by a Wall Street veteran when I was in New York. He said it's impossible to time the market perfectly and buy low, sell high perfectly. But if you can think of an old analog clock where the six is at the bottom and the 12 is at the top and you have the minute hand going around, he said you can do really well if you don't have to buy necessarily the six, but if you can start buying at the seven or eight. That's when you start seeing things are moving in the right direction. And so some of the things I'd point out right now is we're seeing a drop off in supply and we're seeing positive things when it comes to occupancy and rent. We are also seeing positive things for interest rates. So you start to see that movement and that's what we're looking for. So maybe that's the 7 or 8. It's not the near bottom and then you want to sell. You don't have to sell at the 12. Maybe you can sell at the 10 or 11.

Speaker 2:

And he said you know you can do really well if you just do that throughout your life. You don't have to be perfect in either scenario, and I like that analogy because it means you don't have to be perfect. You just have to see those things that are forward-looking and then you know what you want to sell it. You don't need to sell it at the top of the market. You made a good profit and that's how we look at these deals. These are three-year deals for us. Once we hit an amount that we've already a hurdle rate internally, we're going to sell it. We don't have to hold this thing forever. Once we've hit our profit and that's around the 10 or 11 on the minute hand- yeah, I love that analogy.

Speaker 1:

That's a great analogy because, if you think about it, it's hard to know when you're at the six, how long are you there for. Think about it, it's hard to know when you're at the six, how long are you there for? I mean, the six could be stopped dead and it's the bottom, bottom, bottom. But you do see signals of when it is start moving. You're going to see there's other economic signals, there's other indicators, things you could look at, whatever asset you're looking at of oh, this is starting to come back and knowing this is the time to act and so you can then make a decision versus like I'm buying at the absolute bottom before I see anything come back because I need to get the best deal possible.

Speaker 2:

And what we really look at is our existing units, because we own a lot of units several hundred in the same market and we've already started to see good signs where lease up is a little quicker, tenant quality is a little better, we've been able to push the rents a little bit and we've got good response on that. Once I start seeing that, then I get confidence that our team can execute on this plan.

Speaker 1:

Yeah, and it's interesting because I was just going to ask that question. It's like what are the things to be looking for? Because you know, I mean Wall Street's doing this every minute, right, like what's the next indicator, what's the next thing that's going to show me where the market's going tomorrow, let alone in a month or a year. Right, they're just like so focused on those, like those leading indicators to make a decision on, and you have your own internal things. I mean real estate's local right, I mean it's it what's going on in another market, another state or city is different, but you're like invested in the market, have properties around it, and you're using those indicators to inform you.

Speaker 2:

I was just going to go there because each market. I don't know what's going on across the country, but I can talk about Phoenix. We've had this huge investment at TSMC in North Phoenix $100 billion investment Trump administration's one of the biggest wins of the administration so far. It started with $40 billion, then it went to $70 billion, now it's $100 billion. I think they actually announced another chunk. And not only are we going to see high-paying jobs for TSMC there for we're not talking 10 years, we're talking for multiple decades but also their suppliers.

Speaker 2:

It's kind of like the ecosystem in Detroit when the auto manufacturers were what made America great. Then all of these suppliers in Ohio and across that area just drove that economy. And we're already starting to see their suppliers Now. They want to be close to TSMC, they want to. And so new companies announcing several thousand people that they're hiring here. That's just almost one example of what's happening here. But the growth in Phoenix continues and we have quite a bit of confidence in the migration growth. But we're also seeing wage growth. We're seeing, you know, kind of largely historical construction jobs here that were more blue collar. We're seeing starting to see higher end, higher, higher income jobs move here. So we have a lot of tailwinds in the Phoenix market that we don't see signs slowing down around that in the Phoenix market that we don't see signs slowing down around that.

Speaker 1:

What have you seen like outside multifamily, at least in Phoenix, and I know everybody's market is different, but it's just good to like pick up on some of the things that you're seeing. Like someone out there in the single family market is multifamily. I mean, I know every asset class is different, even across real estate, from multifamily what's going on in office or single family. I mean, what are you guys seeing on the single family front?

Speaker 2:

We follow the single family uh vertical pretty closely because it does impact uh rentals and multifamily and it's held up pretty pretty well through the higher interest rates in our in the Phoenix market. But we are starting to see some distress from some of the speculators, the builders. They have deeper resources so if they've started a project they can pull back and they can make that work. Some of those are public companies and that's part of their business. But right now we have more listings on the MLS in Phoenix than we've had pre-COVID close to 30,000. That's healthy, that's good for a buyer because we typically you're used to seeing that in a buyer at Buyer's Market in Phoenix. So we're around that range. Homes are staying on there longer than normal and we started seeing distress from multifamily about 18 months ago and we started seeing the writing on the wall.

Speaker 2:

I'm starting to see now some single family stuff, some of those really early risk takers. One example a group that had bought five houses to flip and renovate went into BK. Houses to flip and renovate went into BK. They've handed those homes back to the bank. You didn't see that for you haven't seen that for a while in Arizona and starting to see some of those things.

Speaker 2:

I don't think that there'll be anything near what the GFC when it comes to single family, but I do think there's going to be some opportunities out there. Because interest rates are higher than normal, costs to renovate are also elevated. They've continued to go up and they don't have an exit. They can't just put a home on the market and sell it in a shorter period of time, and so some of them start to see the writing on the wall, and in this case, they're just giving those homes back. So I do think, if you're a buyer, you know if you're, if you're, you can be opportunistic. There's going to be some opportunities there. I don't know how, how you know deep that will be. I just think, though, that I'm already seeing some.

Speaker 1:

Yeah, um. Well, let's come back on this deal that you're doing right now. This is the one in Phoenix 78 units. You guys raise capital on these deals. It's not meant to be an endorsement or anything. I have invested in neighborhood ventures deals. I own shares there and, like I've invested in your REIT, I've invested in some of your other funds, and you have other offerings from the REIT to specific funds. This one's in a, and you actually have a specifically targeted distressed fund though. Yeah, is that what this one's in?

Speaker 2:

Yeah, and this is our fourth asset in our distressed fund and you can invest in the fund. We also have the ability to invest in this deal directly. Some people would rather invest in one asset versus a fund. Fund gives you some diversification in the portfolio. Asset versus a fund. Fund gives you some diversification in the portfolio, but this asset is it's a little smaller raise, so we're raising about three and a half million. We have a few share classes that we are raising so people can invest in it and get a 12% preferred return in it, or they, if they invest a little bit more, they, they can get some of the upside. So we, we, um, we started fundraising last week. We're almost fully allocated. So it's been um, uh, this has been one of our busiest years. You know, we pulled back in 22 and 23 because we saw that the, the, the numbers, the, the underwriting wasn't making sense with where interest rates were. So we started pulling back and now Some good discipline.

Speaker 2:

Yeah, we got a little bit lucky in some ways, just because we said this isn't making sense, let's just pause, and that took a little bit of discipline and some hard conversations, but we've had our most active year since uh, you know, 2021, this year, this is, this is our third deal of the year.

Speaker 1:

And I know at least two of them. I don't know if all three of them I, but I know two of them have been distressed deals.

Speaker 2:

All of them are distressed, all three of them, the only thing you're buying right now is distress.

Speaker 1:

The only thing we either.

Speaker 2:

Yeah yeah, that's all we're doing right now, because that's what makes sense today and there aren't that many buyers out there.

Speaker 1:

Yeah.

Speaker 2:

So, on this deal, um, there were a few other groups, um, but uh, this is an opportunity for us and we're not thinking we're going to make a quick buck and sell this in six months. We want to get in there, operate it. We're going to renovate the property, we're going to put in new appliances, we're going to do all the right things.

Speaker 2:

We're going to get rents to the rest of the market, yeah, and then we let the market take care of itself. We'll sell the building when it's ready, but we're only buying distress deals. We hope to get a few more this year too.

Speaker 1:

Interesting, okay, only buying distress. So you're not even looking at anything else. Like you're like there's just nothing worth buying unless you can get it to stress, like right now in the rate environment and kind of where rents are at, like you have to buy distress to make it work.

Speaker 2:

Because sellers are not selling non-distress buildings right now, if they-.

Speaker 1:

They're trying to weather the storm.

Speaker 2:

Yeah, and we're not selling anything either.

Speaker 1:

We're just holding everything tight, running things Well I know you've talked to you guys feel like you have some really good assets and it's like this is not the time to sell. No Like unless you have to sell, you're a fool to sell right now.

Speaker 2:

Yeah.

Speaker 1:

You want to wait because you want to sell high.

Speaker 2:

Yeah, that's the other end of it.

Speaker 1:

Right, we've talked about the buy low. The time to buy low is not the time to sell. Yeah.

Speaker 2:

And and you may get in a situation where you have to sell. You know various things the loans coming due, there's a partnership that's fizzling out. We're looking at all those deals and we see it as an opportunity right now, but but we're not selling anything. Um, we need to get through the cycle. You know there'll be a time to sell, and that's the beautiful thing about real estate and about investing in general as things, things cycle around, there will definitely be a time where where we'll be able to sell these assets for where we want them to be. And you just have to have the patience and and uh and know that um, control what you can control. That's run things well.

Speaker 1:

Make good decisions and then we'll wait for the market to come back. Awesome, all right. Any other tips out?

Speaker 3:

there for investors. I don't know, I just want to give you kind of a catch-all thing, a little catchphrase or something I love the six o'clock thing with the handle.

Speaker 1:

See, you did learn something on Wall Street. There was some valuable information working at Goldman Sachs.

Speaker 2:

There's a lot of smart people there, and then it comes down to a little anecdote like that that I remember, after all my time there, and it's all the modeling and analysis, and it's a little anecdote.

Speaker 2:

No, I I I've had conversations with several investors who they're having some liquidity events. Maybe they're selling a business. They have some investments that have matured. I think right now, multifamily is a great time to invest and you can tell when you look at our numbers of what we're buying this at and where the rents are going to be as we do our work on it. It's a good time to put money in this asset. So, going all the way back to the beginning, you know the water cooler conversations of 22 and 23,. Hey, things are hot real estate, let's buy. I think now is the time to go buy those assets and in, in, uh, the, the. The next water cooler conversations that's when you'll be selling those, but now is the time to go acquire them.

Speaker 1:

Awesome, okay, well, thanks so much. Neighborhood Ventures. The website is neighborhoodventures. You can learn more there. Um, and thanks James for coming in talking about this.

Speaker 1:

I think that you know investing is tough and a lot of you know our people who have accounts here myself clients I talked to on our law firm right, some people are trying to time the market but also just find the right deals and buying opportunities and there's so much noise going on out there, you know, with what's happened with rates and the economy and I think a good kind of look at this again and talk about buying low and selling high. I just want to keep it simple today and try and do a case study, because I think it comes down to every individual deal. Like, what do I look for right now? How do I know it's a good deal?

Speaker 1:

I know you guys ran your numbers on this, but it's just interesting to me that, like, you guys are only buying distress right now and sometimes I think if you're an investor, you do need to wait. Maybe, like, if you don't have distressed opportunity like, let's say me, I don't have distressed opportunity deals I can find I guess I can invest in your deal, but like, I think sometimes as an investor, you might need to be patient or get active in finding those distress deals, which for you guys has been about building a network. And maybe actually let me ask that as a last question, here is any advice for people and like, how have you guys gotten the position where you got those? You know now three distress deals in the last year.

Speaker 2:

Yeah, I think if, if you're in that position right now, it may be the time for you to build your network. Do your homework, figure out what your strategy will be, you know, for next year, for 2026. Um, if you're a real estate investor, what are the markets that are interesting and start following those markets? Start finding your niche Cause we've been doing this for eight years, so we have the right broker relationships. My business partner has been here for 40 years. He knows all the sellers in the in this in the market, and we started putting this strategy uh to uh together about 18 months ago and now we're executing on it this year.

Speaker 2:

So you know you use those gaps to. You know, sharpen the saw, figure out what your strategy might be. And it's a great time if you have money on the sidelines, that's a great time to go figure out what you want to do with it and not be in a hurry. That's that's, you know, a formula for disaster. But when you can be slow about it and use that time to to fine tune your strategy, then you'll be ready when you're, when the deal comes up.

Speaker 1:

Yeah, yeah, I think it was. Who was it? I think Jeff Bezos was interviewing Warren Buffett and Warren Buffett was kind of giving his investment philosophy and how to build wealth and Bezos summarized it and he's like it just kind of sounds like get rich slow really is what you're saying. And he's like how come everyone's not doing it? And he's like that's the thing Everybody wants to get rich fast, that's the problem.

Speaker 2:

I remember that interview and John and I my partner for the first four years of our business we made $0. We put a lot of money and work in and we made $0, even though our business was doing well. Then we went into COVID, then we went into this cycle. So we've been very patient, you know, for eight years, and that's the name of the game. But we enjoy it. We enjoy the grind, we enjoy the, the, the opportunity to figure figure out what. What will our, our strategy be? But you have to be patient and and and I think Warren Buffett said yeah, most people just don't want to be so, yeah, they're just impatient, and that, uh, and I think Warren Buffett said yeah, most people just don't want to be so.

Speaker 1:

Yeah, they're just impatient and that's. You know, that's when you make bad decisions. So cause I mean, sometimes, uh, a good investment is the one you don't make?

Speaker 1:

Oh, absolutely, it's the one you don't make and you take the patience to wait right and buy right. So, um well, thanks so much for coming in again. I for coming in again. I appreciate all the time. Neighborhood Venture is where you can learn more about Jameson, what they're up to not meant to be an endorsement and, again, I have invested in some of their stuff before but we just want to get in experts here to talk about this, get some insights to maybe do what Jameson's doing. I know you've talked about the single family market Also. They do have some investment offerings if you do want to look at that. So thanks everybody for being here. We will see you next time. Until then, stay calm. Self-direct on.

Speaker 3:

And thank you everyone for listening. A quick disclaimer and reminder this presentation does not constitute an attorney or CPA client relationship and it is always in your best interest to consult competent legal and tax professionals when conducting your own personal transactions.

Speaker 1:

We also want to make sure you know this is not investment advice or financial advice. We're just trying to give you education, ideas and strategies you can take to your professionals or conduct your own research on. We'll see you next time.