From Teacher to Multifamily Syndicator with Carmen Dettloff

Meet Carmen Dettloff: a former professor, mathematician and now a multifamily syndicator with over 3,000 units. Listen in to see how she did it!

Here are some highlights from today's episode:

• How she transitioned from single family to multifamily syndication in 2019
• How her investment strategy has changed in 2023
• An easy trick she used to learn underwriting that you can implement today

Are you looking to level up your commercial real estate game? Join the Commercial Real Estate Bosses Community for free at https://crebosses.com/join and get access to live trainings, industry professionals, and a network of like-minded investors. 

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Apple Podcast: https://podcasts.apple.com/us/podcast/from-teacher-to-multifamily-syndicator-with-carmen/id1648166587?i=1000618513064

Spotify: https://open.spotify.com/episode/7y4TjENH5qYPZh91k2KnTP

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Connect with Carmen Dettloff:
Website: https://bigfootequity.com/
Facebook: https://www.facebook.com/profile.php?id=100006892218578
LinkedIn: https://www.linkedin.com/in/carmen-dettloff/

Are you looking to level up your commercial real estate game? Join the Commercial Real Estate Bosses Community for free at https://crebosses.com/join and get access to the Passive Investing 101 masterclass, live and recorded trainings, and a network of like-minded investors.

To listen to our past shows and be notified of our upcoming episodes, subscribe to our Podcast or Youtube channel:

Apple Podcast: https://podcasts.apple.com/us/podcast/commercial-real-estate-bosses/id1648166587

Spotify: https://open.spotify.com/show/1aRI59MdwaTMZL4mdhztk2

Youtube: https://www.youtube.com/@crebosses/streams

Transcript

Ciaara: 0:00

Hi everyone. Welcome to Commercial Real Estate Bosses where we interview badass investors who are crushing it in the commercial real estate space. I'm your host, Ciaara Hoffmann, and on today's call we have Carmen Dettloff of Bigfoot Equity. So thank you so much for being on the show today.

Carmen: 0:15

Thanks for having me. It's fun to be here.

Ciaara: 0:17

Amazing. Now, as usual, I'd like to start off by knowing more about your story. So tell us about your background. What did you do before and how did you get into commercial real estate?

Carmen: 0:28

Sure, I was a mathematician and I worked at a bank for a long time, and then I worked at an airline and we read Rich Dead Poor Dad, and we were like, we should get some rentals. So we started a single family and we thought we were crushing it. And then I started learning about multi-family. And I went to a conference and I happened to have breakfast with somebody and I casually asked and I didn't think they would answer. I said, how much do you make on your passive investments with multi-family? And they said, half a million dollars a year. And I realized at that moment I was not crushing it. And I was like, I need to make a change. So we started by doing a 10 31 exchange from our single families into multifamily, into a syndication, and it was the best thing I ever did.

Ciaara: 1:11

Awesome. Yeah. So did you start off as a passive investor?

Carmen: 1:15

I was a GP on my first deal because I brought enough capital to be a GP.

Ciaara: 1:20

Oh, okay. Yeah. Great. So that's a great experience to have. In the beginning you already had all your single families, you had that capital that you could bring into the deal and also learn alongside an experienced operator on your first deal, right?

Carmen: 1:34

Yeah. Oh, it was a huge win all the way around. Yeah. Awesome.

Ciaara: 1:37

So now your background is mathematician. So in your current deals now, are you big into the numbers and the underwriting? What's your role?

Carmen: 1:45

Yeah, I'm big on the numbers and underwriting. I don't do the asset management typically. I have before. I just, it's not my favorite thing. So I do a lot of analysis and thinking about the best way to manage a deal. And then I like to go through and re-underwrite it as we go along. Is it a good time to refinance? Is it a better time to sell? That type of thing.

Ciaara: 2:04

Awesome. Yeah, it's very useful to have all that experience as a mathematician in this business. Obviously the numbers are very important, plus all your experience in this single family. How have you been able to translate that into your current

Carmen: 2:17

projects? Obviously the math is, a mathematician to using multi-family. It's just Excel, right? It's not rocket science, if you have an analyzer, I personally think anyone can do it. It's not, might not be your cup of tea, but you could do it. Math wise and then, translating, you from single family. We had a property management on some and some we did not. And really going through the process of already having the experience with property management, understanding, there's a significant markup on everything and, really being able to dig into those numbers as far as, at the end of the day when they provide you your profit and loss, even if it's for a small portfolio, we only have five units. Or maybe six. But, going through, you just, you learn how to nitpick a little bit. And then you're just doing it at a bigger scale and you're going back to your property manager and you're going why did we spend$30,000 on this? Because there're a cheaper way and, nitpicking and figuring out also what adds value for the tenants and what's appropriate in the given market.

Ciaara: 3:13

Awesome. So tell me about what your portfolio looks like today.

Carmen: 3:17

My portfolio, I'm part ownership of one Airbnb, and then I have over 3000 units that I'm a GP on, and they're spread all across, mainly the Southwest and a little bit in the Midwest.

Ciaara: 3:29

Got it. And as far as like why you got into this business, obviously you built a pretty big business. It sounds like you did fairly quickly as well. We didn't talk about the dates or anything like that, but tell us about that timeline and what really drove you to get into this business versus the single family.

Carmen: 3:45

So I just saw the economies of scale being so significantly different for multi-family. That it just really drove me to move there. And also you can grow your business so much faster, working with other people you can grow and be partners on the deal. In the process, I quit my job as a professor and we sold our other business to free up time and capital to focus on multi-family, cuz the return was so much higher. And really looking at the space as far as like we had a gym. And we decided to put them on the market because, the gym can only grow so big. You can only have so many customers. And we reached that level and then Covid hit I know, yeah. But we just, had an honest moment with ourselves about, do we think this is gonna be long or short? And we thought it's gonna be long, and we decided to just go ahead and sell anyway, because, We felt like that was the right choice. So we got a little cash out. We were able to reinvest that other places, which worked out great.

Ciaara: 4:37

And How quickly did you get to the 3000 units?

Carmen: 4:39

I started in 2019. So pretty quick.

Ciaara: 4:43

Yeah. That is very quick. Was it hard to get in, I guess the first deal was easy for you cuz you already had the capital. Was it pretty smooth process to get into your first It

Carmen: 4:51

was so smooth. The biggest thing is if that's something you wanna do and you're selling multiple properties, the timing is very tricky. Because you have 45 days to identify and you have to close, after that, it's a very tight timeline and also listing your properties. We had some that were on the same street, two houses apart, so obviously you cannot list those on the same day. Yeah. So we had to wait for one to go under contract before we put the second one under, so just I think working with a single family team that's really strategic and that hasn't handled the type of thing before is really important. Yeah. And then from there, we went to multi-family. I found that first deal and then the second deal I found on my own, and we actually sold that this past year. Nice. Congratulations. And investors 3x'd. Wow. So that was exciting. And then I worked with, I was part of a mentorship group. And so within that group, I found other people that could help fundraise and participate in the deal in other ways and work together. And it worked out really great. Perfect.

Ciaara: 5:49

And so when you first started multi-family, how many single families did you have and did you liquidate them all pretty much at the same time? Or did you do it gradually?

Carmen: 5:57

Okay, so we had six or seven, I can't remember. And I sold one and we used that profit, we paid the taxes on it and we invested in three different deals. And so we got to see three different operators. And that was in 2018. And we were just LPs and we're like, Okay. That's when we wanted to learn more about it and that's when we decided to sell five additional houses to roll into multi-family. Perfect. All right. And at that point, I had already worked with a couple operators and spoken with them and said, I'm having this money coming online. Can I be a GP? Is this a good fit? And found somebody that I could work with as well.

Ciaara: 6:35

Great. Yeah, it really helps to have those mentorships cuz you can have not just the mentorship itself, but the network that they have. All those people that you connected with to get your deals done. I think that was key as well in your growth.

Carmen: 6:47

Absolutely. I definitely couldn't have done this by myself.

Ciaara: 6:50

Awesome. Now you say we, so who are you in business with? A spouse or what's your structure look like?

Carmen: 6:56

Yeah. I am loosely in business with my spouse. My husband and I own the gyms together, and it was really hard and we decided that we wanted to stay married and we wouldn't do more business together. I handle the real estate at this point and he handles other stuff. Perfect.

Ciaara: 7:11

Yeah. All right. What I would like to do is walk through one of the deals you've had. How many have you done on your own? And walk us through that whole process of how you found it, what you liked about it, maybe something that didn't go as you planned, that you had to work through.

Carmen: 7:28

Sure. I'll do my first deal. The one that sold recently. It was 152 units in Kansas City. Found the deal. It was a little outside of Kansas City and it was hard to get property managers to wanna come look at it and meet me, but I found somebody that was willing to, and they felt like there was a lot of potential in the property, but we really underwrote it very conservatively. And luckily, rent went up, but we bought that in February, 2020 and Covid hit about a month later. Yeah. And your friends and your family, they put money in the deal. And I was like, in a panic. I was like, oh my gosh, this covid thing's gonna be disastrous. Yes. But it actually worked out pretty well. The market was very hot recently, obviously. And it's a smaller submarket of Kansas City. It's in Leavenworth, Kansas, which is near the prison. And so some of those people were laid off during that time because, they were cutting down on workers. Yeah. But working with the property management team about being very proactive, about working with anyone that was behind on rent to apply with the state to get additional funding. Really helped a lot. The staff was incredibly proactive in getting on top of that because, there's many properties where that was problematic

Ciaara: 8:41

For sure. Yeah. It's really key to have a good property management team in place, especially when something like that happens. You realize, if this is a good team or if this is the right team to be managing your property for you. That's when they're really tested.

Carmen: 8:55

Absolutely.

Ciaara: 8:57

Has your investment strategy changed at all? Post covid, we're 2023 right now. Has your underwriting changed or any of your

Carmen: 9:04

assumptions? Sure, of course. One, interest rates seem like they're rising every single month, right? And so what you're forecasting for your refinance rate, if you're refinancing or your exit for your cap rate, has to be significantly more conservative than it was. Where it's gonna end up, we have no idea. Being prepared for that. And then at this point, my investment strategy has changed quite a bit because I'm looking more for I'm always looking for cash flow, but cash flow is more and more important. So if I can lock in on day one, on the rate for a long-term property, that's really my ideal right now.

Ciaara: 9:40

Got it. Yeah. What I really love about your story is you pretty much just went all in on multi-family, sold all your single family, sold your business, and you're in this. So how long did it take before you quit your w2?

Carmen: 9:53

I quit like right away because I was a professor and I was working part-time and I was only making$23,000 a year or something like that. At that point in time my husband was like, it's this not worth your time. If you think that this is the thing, let's just quit and go all in. Yeah. It was easier for me to quit my job cuz I wasn't really making a lot. Yeah. But if I had been, doing my full-time mathematician gig would've been a really different story. A lot harder to walk away from.

Ciaara: 10:16

Got it. What would you say to somebody who you know is in their W2 right now, hasn't done their first deal? What's the biggest piece of advice you'd give them in making that transition?

Carmen: 10:26

I'd say betting on yourself. Because even though I was walking away from not very much money, we made some choices. We put my daughter in full-time childcare and I quit my job and I paid to join the mentorship group. So all that money in my head, I was like, I have to make that back in year one. Yeah. Because like I spent this, and I think especially as women, we know we have just a hard time like investing and betting on ourselves and when we do that, this pressure is high because it's like, this is money that I took out of our family's pocket or money that might, sometimes for us, if we don't make as much of money that my husband earned, right? And it's, thinking of yours being like, I am successful. I can do this right and getting after it. So I think just being willing to bet on yourself and say, I'm successful. I'm gonna make this happen one way or another. And especially if the bet's this big, I'm not gonna let it fail.

Ciaara: 11:15

Absolutely. Yeah. That's so crucial. Obviously you're fully focused on underwriting and if someone wants to get into being an underwriter, what are some things that you would advise them to learn? Maybe some things that they can read or listen to?

Carmen: 11:29

Just one of the biggest thing is finding somebody else that's doing a deal. Ask them if they've closed recently and asked to see their underwriting. Because looking through it and going through whatever analyzer they use, zero it out, redo it and see if you come up with the same thing. Because like as a professor, I always look at it and think, how do I learn by doing, because that's what sticks with me long term. So I highly recommend, asking somebody else to look through their underwriting. And if they're willing to share their analyzer, zero it out. Start again. Start with all of their paperwork, the rent rolls, et cetera. And see like, how close you come. And if you don't come close, ask them. Say, Hey, I redid it and I'm not sure about why these things are different.

Ciaara: 12:09

I love that. I've never heard that strategy before, but that's super useful. Some people that are listing now might be really good with numbers, some might not be, but underwriting is the key. Anyone who's yeah in the business has to understand the underwriting. Even if you're a capital raiser, even if you're an asset manager, you need to know the underwriting because it basically drives the whole deal. Yeah, absolutely right? And you need to be able to explain the numbers to investors to even if you're an asset manager, right? You're that person that's in between the property manager and the owners, right? Understanding the numbers is key no matter what role you are in the business. So what are you working on right now and what's next for you and your company?

Carmen: 12:50

I have a couple properties that I have one that's listed and one that, another one that'll probably be listed in the next couple months. I'm gonna be looking for places to reinvest my money. So I'm looking for partnerships. There's a couple people that I've worked with historically that I love working with and I definitely wanna work with again. So I wanna be in a position when the deal comes around that one, I have my own capital to put in a deal, and two, I can help them out in other ways, whatever they need. So whether that's doing earnest money or co-signing possibly, I wanna be available.

Ciaara: 13:21

I love that. Since you've been doing this business, you've been growing. Have you been able to co-sign on deals throughout this whole process and create that trajectory where you can then become a sponsor as well for other people?

Carmen: 13:34

I've been I've co-signed on almost every deal that I've done. But my co-sign sometimes, they've let me co-sign as courtesy sometimes, right? And then get percentage for it for it to gain experience. I do have my agency card at this point which is huge. So yeah, I am in the position now where I can co-sign. I can't co-sign on something that's 50 million, I can co-sign on a medium size deal.

Ciaara: 13:56

Nice. Congratulations. So that's huge. What kind of partnerships, if someone's listening on the show, what are some places where they can find you and reasons for them to reach out to you?

Carmen: 14:07

Sure you can find me on my website and I'm on LinkedIn and Facebook and I just love talking about real estate and if you're interested in getting started, I'm happy to chat with you. I got started because I was working at this company and I worked there. Some things just happen for a reason. I was there for, Four months. And I was talking with my boss and I was like, it seems impossible. Retirement seems so far outta the scope. And he said, I'm doing this single family. And that's how we got started. But he sat down with me and then he referred me to somebody else and then they sat down with me. It's just one thing snowballs to another. So you never know where things are gonna go. So I always say, reach out, talk to people, whether it's me or somebody else, like I sat down at the table with a guy who told me he made half a million dollars a year off of passive investments. You never know who you're gonna meet and what you're gonna learn. So it's always worth the time on both parties cuz I might learn something from you. Absolutely.

Ciaara: 14:52

Thank you so much for being on the show today. I'm gonna put a link in the show notes. for people to go to your website, reach out to you, and thanks everybody for tuning in today. If you guys enjoy today's show, please write us a five star review on Apple Podcast or Spotify. Every review helps us to reach more and more people looking to get involved in commercial real estate.

15:11

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