
Agents Building Cashflow
Surprisingly approximately 80% of agents want all the benefits real estate investing provides, including tax write-offs, and growing their family’s wealth but they never take action. This show will help you take that action so you don't stay stuck trading time for dollars. Since 2009 Randal McLeaird, has been a Broker and investor and had closed over 500 transactions as a principal. Randal and his guests are actually doing what you want to be doing, and they'll show you how. Join us Monday's and Friday's because you're a 6 figure agent who wants the power of passive income. Gain your time freedom back, take that trip to the exotic destination, increase your net worth, and move into the I quadrant.
Agents Building Cashflow
EP 186: From House Flipping to Multifamily Millions with Brian Burke
President and CEO of Praxis Capital Inc., Brian Burke, delves into his inspiring journey from house flipping to managing multifamily real estate investments and debt funds. Brian reveals key insights into navigating market cycles, raising capital, and diversifying investment strategies. He shares his approach to scaling operations, mitigating risk, and staying agile in unpredictable markets.
From strategic shifts post-2009 to proprietary tools that streamline operations, Brian’s expertise offers actionable advice for novice and seasoned investors. Don’t miss this episode packed with investment wisdom - tune in now for the full story!
Key takeaways to listen to:
- Discovering the power of market timing and strategic exits during real estate downturns.
- Transitioning from house flipping to multifamily investments through calculated growth.
- Leveraging proprietary tools for streamlined underwriting and asset management.
- Understanding the benefits of investing in real estate debt for consistent cash flow.
- Embracing diversification to balance high returns with risk management.
About Brian Burke
Brian Burke is President/CEO of Praxis Capital Inc, a vertically integrated real estate private equity investment firm, which he founded in 2001.
Brian has acquired over 800 million dollars’ worth of real estate over a 35-year career including over 4,000 multifamily units and more than 700 single-family homes, with the assistance of proprietary software that he wrote himself. Brian has subdivided land, built homes, and constructed self-storage, but really prefers to reposition existing multifamily properties.
Brian is the author of The Hands-Off Investor: An Insider’s Guide to Investing in Passive Real Estate Syndications, and is a frequent public speaker at real estate conferences and events nationwide.
Connect with Brian Burke:
- LinkedIn - https://www.linkedin.com/in/praxiscapital/
- Website - https://praxcap.com/
- Instagram - https://www.instagram.com/investorbrianburke
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Brian Burke: [00:00:00] One shift I made is I shifted to the debt side of real estate where I started a debt fund and we raised a bunch of money to buy real estate debt instead of buying the real estate itself. We were buying real estate debt that was originated for the purpose of like fix and flip loans, short term bridge loans that were made to small multifamily investors, that sort of stuff.
Just as a bit of a different strategy because it's high current income and it's a lot lower on the risk scale.
Intro: If you're a real estate agent earning 200, 000 a year and you want to grow your passive income, this show is for you. Learn secrets other agents use and hear from experts in our field who will guide you on your journey to investing in assets like apartment communities so you can take your commissions and turn them into cashflow.
Here's your host, Randall. Let's dive in.
Randal McLeaird: Hey Brian, welcome to the show. It is good to have you. I'm looking forward to the [00:01:00] conversation and just Chatting with you because you have such a wealth of experience. I feel like we're all going to learn something today. So thanks again for jumping on.
Brian Burke: It's great
Randal McLeaird: to be here.
Brian Burke: Thanks for asking me.
Randal McLeaird: Why don't we start with again, you have a bunch of different asset classes that you've gone through maybe just high level the iteration over time. Did you start in single family and then you had you progressed or one of the guys that just started syndicating and your final is big apartment complexes from the jump?
Like, how did you get going?
Brian Burke: Yeah, I'm a recovering house flipper. So I came all the way up through the ranks of starting out with buying, fixing and flipping single family homes and then bought a lot of houses as rentals and built a pretty broad rental portfolio right after the market collapse at 2009, which turned out to be some pretty good timing and then grew into multifamily as a natural progression of my single family business and started out with smaller multifamily and then grew to larger and larger.
And like, every property I bought was bigger than the last 1 kind of thing. So I'm an organic [00:02:00] grower into the multifamily business. Not 1 of those that just landed into the business, having no experience, which I think personally is a recipe for disaster. For sure.
Randal McLeaird: Yes, I agree. So, you started buying in 2009 in a heavy way for the rental side.
Is that what
Brian Burke: I did? That's when my house flipping business really took off. I started out house flipping in 1989, if you can believe it. But by 2009, I went from a business that was doing 20 houses a year kind of stuff to doing over 100 houses a year in almost a flip of a light switch because after the 2009 great financial collapse and all the foreclosures that was kind of my specialty was buying distressed property and foreclosures.
So we were drinking from a fire hose for about 5 years and when the market bottomed in 2010, I think it was around 10 or 11 is really when we started looking at the rental as the next progression of the [00:03:00] strategy, because values had fallen so far, you know, in 2010, I was buying houses where if I went and researched the title on some of the houses we bought.
I found that the prices we were paying were sometimes lower than the prices the houses had sold for in the 1980s. So, having kind of turned the clock back 30 years on house prices, I thought this is a really good time to hold some of these. So, we collected about 120 of them in the San Francisco Bay Area right there at the bottom pricing with the thesis that the prices were going to double in 5 years.
And of course, everybody said we were crazy. It's the wrong time and we're catching a falling knife. I heard all those excuses, but 5 years later, it turned out I was wrong. The houses didn't double infact they doubled in a half. It turned out to be a
Randal McLeaird: really good trade. That's wild. So that's when I started buying houses was 2009 and buying houses in San Antonio for like $20,000, you know, so what was the price point?
We don't have to dwell on the single family side too much, but [00:04:00] what was the price point that they were trading at in 9 and 10 when you started picking them up?
Brian Burke: We were buying stuff for anywhere between 100 and 250 you know, in a market where, you know, before the collapse, you're talking 200 to 500.
So it was substantially lower than just a couple of years prior.
Randal McLeaird: Yeah. I've noticed lately, I mean, I was on MLS today, just looking and a lot of the big names, at least in this market that were listing all of the foreclosures, they're popping up again. I've seen a number, I don't know if you're seeing any of that in your market or not, but if you're not doing the single family side as much, then you probably wouldn't be seeing that.
But it was just interesting to see that. All right, so you were doing that. When you're working on that many projects and properties you have to build a team. I imagine you had contractors. I mean, that's a lot of moving parts and a lot of things going all over the place. On the finance side, how are you structuring that and were you out?
Was that your initial foray into raising capital or had you already been raising capital on deals prior to that prior to doing that many deals?
Brian Burke: I'd already been [00:05:00] raising capital prior to that for my house flipping business just to kick it started the way that I did because when I started in this business, I had nothing.
I had no money, no contacts, no knowledge, no nothing. After several years of basically kicking and scratching my way into whatever deals I could get into I decided it was time to raise some money from investors. And, the first time I raised money from investors, I raised $500,000 in $5,000 increments from coworkers and friends.
And it was really kind of doing it the hard way. And that was for the house flipping business. But when the foreclosure stuff came around, things really accelerated quickly, and then I was forced to a position to raise a lot more money a lot faster. And so, that's when I started raising money for that side of the business.
And we got a lot of investors that were following us. We got a lot of press coverage and and that kind of stuff, which, caused people to come to us wanting to get involved [00:06:00] in what we were doing. And after a time, I started to notice that we'd built this huge following of investors yet the foreclosure crisis was only going to last a few years.
And it's like, what are we going to do after that? You know, when the foreclosures are gone, there's no houses to flip. I've got this great base of investors that want to place money somewhere and I have no place for them. And that's when I decided that I really needed to place more emphasis on the multifamily side.
I'd already had been doing multi for a while, but on a much smaller scale, like with smaller multi doing my own a couple small syndication raises from Friends and family for mid sized buildings like 50, 60 units that type of thing but it was really time to grow and scale and that's when I started making that effort and Raising money for 100, 200, 300 unit buildings.
Randal McLeaird: Nice. So, when was that when you first started taking on like, 150 plus unit?
Brian Burke: I think our first one was around 2011 or so 2011 or 12. [00:07:00] I think it was our first larger one. My first multifamily was in 2002. So I've been doing this for about 22 years, but it was about 12 or 13 years ago that we really stepped up our game into much larger properties.
Randal McLeaird: Yeah. Got it.
Okay. Let's fast forward a little bit then because yeah, so you're moving into the multifamily. And again, just from looking on the research that I did, you've got still a single family flips going, you've got single family rentals going, you've got the multifamily. Looks like you have a fund dedicated to rebuilding.
Is that is that a fund that you guys are doing real estate wise, or is that some other kind of fund that you guys are working?
Brian Burke: Yeah, that one's another single family fund where our city was halfway burned to the ground in a wildfire a number of years ago and 5300 houses were burned down.
And so that fund is dedicated to acquiring lots from owners that didn't want to rebuild and building spec homes on them. And we've done a few dozen spec builds. That's winding down and getting close to the end [00:08:00] on that one. So, we won't be seeing much more of that opportunity because we're almost all built back.
So, which is a good
Randal McLeaird: thing. Yeah, for sure. For sure. Well, so again, going through that. One thing that I noticed is that you sold off, what, 75 percent it sounded like in an interview you gave, 75 percent of your multifamily assets in 2021. Is that
Brian Burke: accurate? I did. Yeah. I saw something coming.
I wasn't sure exactly what it was, but I could tell that something was coming and it was a really good time to get out. So, started selling in 2021 and finished selling early 22. We got 3 quarters of our portfolio sold and then the market just fell off a cliff. So timing wise, it actually worked out pretty good.
I wish I could have sold everything. That would have been nice, but didn't quite work out that way, but I'm still glad I don't own
Randal McLeaird: everything. Yeah. I mean, that was the question. Like, what was the indicators that you were looking at to give you that? It sounds like you said it was a gut feel, but [00:09:00] bet there was more to it.
Was it just the pricing? I mean, the pricing was through the roof.
Brian Burke: Yeah, pricing was through the roof, but more than pricing sentiment was through the roof. And so what I started to notice is that we got into this thing where I would jokingly call it that everybody wants to be a syndicator phase of the market where literally people with 0 experience are buying 50Million dollar apartment buildings with
all investor money and the investors had no idea what they were getting themselves into or how inexperienced the sponsor was, and that sort of stuff and they were bidding prices to the moon. And we first noticed this because as a buyer, we were getting outbid by groups is like, well, who are these people?
You know, where they come from? And why are they paying 3Million dollars more than we would be willing to pay? And why are they outbidding the highest bidder by a million dollars? You know, none of that made any sense. And oh, by the way, they're putting up a million dollar non refundable earnest money deposit at [00:10:00] contract signing.
So, you start to see that kind of thing happen. You're like, if that's what's really going on out there, we should probably sell some of our stuff to some of these guys. Yeah. So, we got an unsolicited offer on one of our properties and it was like way more than we ever could have imagined getting.
So we're like, if you want it that bad, it's yours. So, we signed that deal and got that one sold, then it got us to thinking, well, why don't we try selling some more stuff and see what happens. And we did. So we put things on the market and we'd get 20, 25 offers and, you know, way up over our whisper price with non refundable seven figure earnest money deposits at contract signing.
And we just kept it going. And we kept doing that and kept doing that and kept doing that, until finally, we had a property fall out of escrow because the market had started to turn and the buyer couldn't get his financing and we knew the party was over and it's like, all right, now we have to shift into hold mode and just wait this out.
Yeah,
Randal McLeaird: so you weren't [00:11:00] acquiring? When did you stop acquiring or were you still buying in 20 and 21? We
Brian Burke: bought our last property in 21. . And I think we bought one or two in 2020 and that was it. And we haven't bought anything since. Yeah.
Randal McLeaird: Interesting. So
have you shifted investing into other asset classes?
Brian Burke: Not real estate asset classes, because I've done that already in the past and I found that every time I ventured too far out of my lane it didn't always work out the best for me. I mean, thank God I've been doing this for multiple decades.
I've never lost a dime of investor principle. So that I've got going for me, but, I also didn't make myself any money doing some of these other strategies, so I decided that this time around, I'm not going to do that and venture off and start doing office buildings or, you know, any of that kind of stuff.
Instead, I made a couple of different shifts. One shift I [00:12:00] made is I shifted to the debt side of real estate where I started a debt fund and we raised a bunch of money to buy real estate debt instead of buying the real estate itself. We were buying real estate debt that was originated for the purpose of like fix and flip loans, short term bridge loans that were made to small multifamily investors, that sort of stuff.
Just as a bit of a different strategy because it's high current income and it's a lot lower on the risk scale. So, that was the 1 shift we made and the other shift I made just on a more personal level as I just started allocating more of my resources to things outside of real estate, such as just your typical run of the mill stocks to private placements in biotech, pharmaceuticals, agriculture, oil and gas.
You know, really kind of shifted my personal investment portfolio to alternatives outside of real estate for a while. And I think that'll end up shifting back. I think real estate is [00:13:00] going to bottom out here sometime in the not too distant future and I'll be right back to getting after it again.
Randal McLeaird: All right, well, let's pull on that thread then, because like we were talking about a minute ago it's a maybe I was talking to somebody else about this, but it's. Alternative assets in general and what the return profiles are for different types of asset classes and investments of the things.
Obviously, you have the real estate experience and now you're the LP going into these other offerings. What are you most excited about from the myriad of things you've invested in? What again, this is for educational purpose for me, for anyone else who may be looking at alternative assets or alternative investments rather than sticking everything into real estate.
And what do you like the most and what's giving you the best returns for the lowest risk right now?
Brian Burke: Well, I think when you start in any kind of a new strategy you feel like a kid in a candy store where everything looks great. And then when you get seasoned and soured, you start to realize that
everything's just another threat. So, I'm [00:14:00] still a little on the newer side on some of these other alternatives. So I think everything I invested in is a great or I probably wouldn't have invested in it at all. But history will be the guide and I won't have that hindsight until it's all said and done.
But, everything that I'm investing in on the alternative side is a little bit what I would call higher risk for my typical risk profile. You know, anytime you're in with a startup, you know, pharmaceutical, inventing a new drug, a new agricultural technology, these things may take off and they may not take off.
I really do like the oil and gas opportunities. I think it's a little bit less risk than some of the other more startup investments that I've been in. I've got quite a balance of risk, and I think that's the best way for me to do it where I don't say, like, well, this is going to have the highest returns, so I'm going to put all my resources there. Rather. It's more of a little bit of a focused diversified approach where [00:15:00] I've picked the thesis is that I believe the most in and I've made sure that there's several of them, so that if one of them fails, it's not going to injure me too badly.
And I've mixed that in with stuff that is a little bit more plain vanilla that's maybe not going to be really super high return, but is a little bit lower risk and maybe more consistent cash flow. So I've tried to build a portfolio around thinking about aggressive growth balanced with current
income and lower risk stuff and trying to have all of that.
Randal McLeaird: Okay. So what is the? Like pharma those types of investments I can see it could be more on the risk side. But what's providing current cash flows? Is it oil and gas stuff?
Brian Burke: Yeah, the oil and gas is the highest current cash flow that I have and then the next one I have is I've invested in a company that does some trade finance, which is a way of doing business debt, but their approach is a really creative way of [00:16:00] doing business debt, which is, it's a high yield yet lower risk strategy, which is really interesting and unique. So, those are the two things that I found right now providing the most current cashflow. Of course, all the startup stuff, not so much. All right. So
Randal McLeaird: same with multifamily, same with syndicators a lot of guys coming here and not having the experience and a lot of LPs giving them money and then finding out later, right?
So we talk about, and I know you talk about like vetting a sponsor and how to find sponsors and that sort of thing. How did you go about finding operators in each of these fields? What is some parallels maybe with the multifamily side or with the syndication side in real estate for the investments that you were looking at?
Brian Burke: Well, I took the easy way out is I have a family office that does that for me and will bring me opportunities to look at and make decisions on my own, whether or not I want to participate in [00:17:00] them and, they have a lot of exposure to really unique opportunities through their many years of relationships
in the fund space, and so on. So they see a lot of things that I never would have had the visibility to see, and that's something that , for many years I struggled with like, why would I ever hire a financial advisor. I'm going to literally hire somebody that's making $75,000 a year to make decisions on my portfolio.
And it's like, okay, I blew past them a long time ago. And so, I resisted for a long time. And then I came to learn there's some really smart financial advisors out there and you just got to find them, I think. And the funny thing in this case is sometimes they find you. And that's, I think, more of what happened in this case is just one relationship led to another relationship that led to another relationship.
And eventually you're like, okay, you really know what you're talking [00:18:00] about and I'm going to start listening to what you say when you bring me opportunities and that's really how it plays out.
Randal McLeaird: Interesting. Yeah. Let's get back into the real estate side of things then.
Are you guys pencils down right now? Are you guys not looking for new opportunity? Are you guys doing any more of the failed developments and that sort of thing? Where are you, I guess, right now
Brian Burke: in the market? I'm really not much in the market. We've been pencils down for about three, a little over three years.
I'm coming up on almost coming up on four, but I'm starting to sharpen the pencil and we're looking at some deals now. And, we've looked at some occasionally throughout this entire period, because we wanted to stay involved enough in the market to have a sense of where the market is and where it's going.
I mean, if you completely ignore it, things will happen and you'll never see it coming. So we've always stayed involved where we're looking, but, we're just been way off. There's a huge buyer seller disparity. We haven't been able to reconcile it. And so, we gave up [00:19:00] trying and we just underwrite for the fun of it, just to see where things are trending.
I am noticing now things seem to be trending more in line with where they begin to make sense. We've been getting relatively close on deals. And by relatively close, I mean, maybe we're only 10 percent apart instead of 30 percent apart. So there's, progress. We're looking at one now where we might get close on it.
And who knows? Maybe not. I guess we'll see. It's just a matter of time. I mean, more distress enters the market it creates more opportunity on the buy side. And, that's just only now beginning to happen.
Randal McLeaird: Yeah, is the debt fund structured for all real estate? It's all real estate debt fund?
Brian Burke: It's all real estate debt. Yeah. So everything we're doing is fix and flip single family, fix and flip small multifamily. We did some ground up construction. I don't think we have any ground up construction in our portfolio currently but it's all on the residential only side.
It could be commercial [00:20:00] residential, but it has to be residential. We don't do office buildings, industrial parks, you know, that sort of stuff. Do you have
Randal McLeaird: any portion of that that is pref equity on a capital stack for the multifamily side, or is it really you're going in taking over the first position?
Brian Burke: Yeah, we're first position
Randal McLeaird: lean holders. Yeah. We don't have any prep equity spots. Yeah. And what is a check size you guys like writing on those deals?
Brian Burke: I think our average loan size is. I don't know, like 6 or $700,000, but, we have deals as small as a hundred thousand and as large as four or 5 million.
Yeah. So it's a little bit all over the board. Yeah. Do you guys focus mainly in one market or are you guys all over us? We're all over the place. I think the majority of our loans just happen to be in California, Oregon and Washington, but, we have loans in several other states across the U.S.
Randal McLeaird: Yeah. Nice. All right. From an investor point of view then, for the debt fund, then what, I mean, is it something you can talk about? Or is it a [00:21:00] close? Yeah,
Brian Burke: I can talk about it. Our investors are basically getting a preferred return and then a split of the profits above a preferred return.
So the interesting thing about this from an investor standpoint is, the structure of it's relatively familiar already. If they've invested in equity offerings, the difference is that, we're investing into a lower section of the capital stack than if you're making an investment that's acquiring the real estate. When you acquire the real estate, your money is in 1st loss position.
When you're investing in this debt fund, your money's in 2nd loss position because the owner is in 1st loss position. So it's a different risk profile. That's one of the reasons why I did is I felt like our investors are really going to enjoy having a lower risk alternative where they don't have so much principle exposure based on market movements.
The other reason I did it is because, it just seems like people really are looking for current cash flow. It's a real priority. It used to be everybody was [00:22:00] focused on appreciation but then appreciation all of a sudden vanished, so people realized the value of current cash flow. And when you acquire like a value add multifamily, for example, your cash flow could take a year or 2 to really ramp up to anything meaningful. Oftentimes, 1st year cash flows are 2 to 3% if you're lucky. 2nd year, it's 3 to 4 and it's like year 4 or 5 or 6, you start to get into the high single digits. And the thing I like on the debt fund side is that high single digit cash flow literally is day one.
I mean, like, prorated to the day you made your investment, we're making distributions and high single digits day one, and that's just something you don't get on the equity side. And you're giving up the upside, which you have when you invest in a multifamily fund, for example, but you're exchanging that for immediate current cash flow.
And I just think that's appropriate for the time that we're in. In a year or 2 from now, maybe not so much. Are you guys
Randal McLeaird: still [00:23:00] raising for that? It's just an open ended fund where you guys are, when you need capital you call capital or how does that set up?
Brian Burke: Yeah, right now we're buying loans as fast as we can raise capital.
We've been raising for it and who knows how long that'll keep going. It could happen for a considerable amount of time because unlike acquiring assets where you got to find something at a really good basis and you got the numbers got to work and all that kind of stuff,
it's hard to find deals. But, on the loan side, it's a lot easier to find deals. There's a lot of debt out there and we're not as concerned with a quote unquote deal. We're more concerned with borrower quality loan to value ratios, what's the equity cushion, what's the debt yield going in, debt yield going out, how much cash reserves does the borrower have, all those kinds of things, because that's what's standing behind that loan.
Randal McLeaird: So if you're buying the debt and you're buying the note that's already been created, are you guys getting significant [00:24:00] discounts typically on that? Or is it the season's enough and you guys are paying like face value for the note? Or are you guys just creating the debt from if it's a rehab loan, and then you guys are, I guess,
Brian Burke: Creating the loan.
Yeah, we buy at par. The loans that we're buying are 10 and a half 11%. You know, there's short term bridge fix and flip type loans, what you've seen out in the private money marketplace. We don't have to buy at a discount. These aren't distressed non-performing loans, you know, these are performing loans.
So, we don't have to try to chase down discounts.
Randal McLeaird: Got it. Yeah. Interesting. So, we've talked about a number of things here. It's kind of all over just because again, you've done a lot of things and I'm just curious. So, in the next 12 months, or you guys are just buying as much debt as you can.
What does your team look like right now? If you guys aren't buying multifamily, did you guys shift the team, pivot the team? Or did you guys, you just still have people underwriting for the fun of it? I like how you said that. Like, we're just kind of, you [00:25:00] know, Jim Bob, go over there, you know, look at that deal, but.
Brian Burke: Yeah. That's how it's been. Our debt team is completely separate from our multifamily asset team. The only thing we share there is investor relations because we're raising the money for it. And then we've got a team that specializes on the debt side. On the multi side,
we never grew that team. We did a lot of transactions and a lot of business and had a large portfolio with a very small headcount. So we didn't have to change our headcount when we stopped acquiring. We've only got just a handful of people, 5 or 6 people. So, that was the good thing.
We did, of course, have to trim operationally. We had 50 employees on the management company side, but as you sell properties, most of that is property staff. They tend to stay with the property and get hired by the new buyers management company. So, we didn't see a lot of layoffs and job loss.
It was just our operational team shrunk as we sold the assets off. So, we've had a pretty easy time of [00:26:00] having the kind of that rubber band effect where you can shrink and grow without causing too much damage.
Randal McLeaird: Okay. So there's one thing I didn't want to talk about, but I don't know if it's going to apply right now because again, if you guys are depending on what you're working on, but, um, what kind of software did you guys create?
Cause that's something that we were looking at and said, you created a proprietary software to help you with the acquisitions. So is that on the single family, multifamily, like what asset class was that in?
Brian Burke: Both actually I first created my own software package on the single family side cause I was buying foreclosed houses on the courthouse steps and I needed a way
to track foreclosure auctions because they frequently get postponed. I needed a way to gather all the title research because you don't get a title report and title insurance. You know, you buy whatever title the lender had, and you better know what that looks like. And so you have to be able to keep track of all those things. Houses will go to auction on a moment's [00:27:00] notice.
So, you have to prepare in advance by looking at the houses. So, assessing the condition of the property, you know, the roof windows, landscaping, paint, all the things that you can see from the outside. You don't get on the inside. You know, what's the rehab budget? What's it going to cost?
And keeping track of all that data and having it accessible when it's auction time to be able to set bidding limits is crucial. So, that was the 1st software package I wrote was something to help us deal with that massive amount of information and that became invaluable. By the way, when we were chasing 300 houses a day at the peak of the foreclosure crisis several years ago. On the multifamily side, I wrote my own underwriting model.
Where, we can gather all the financial data for the property, historical data, make future projections, insert a variety of financing alternatives, a bunch of different capital structure [00:28:00] options, like preferred equity or not, and assumable loans are not new loans, and underwriting the loan sizing, what's the debt service coverage constraint that might limit our loan proceeds, where's that going to land?
And then being able to give forecasted data to the investors for our pitch decks, you know, you've got to have a really good solid financial model to show that future income and calculate future exit prices, what the waterfall is going to look like. Basically follow the cash flow all the way from the rent check all the way to the investor distribution. And on the asset side, the acquisition all the way through to the disposition and being able to track all of those things.
So it became a very complicated and complex model, but I think it gives us a tremendous competitive advantage.
Randal McLeaird: Yeah. So you don't sell that? It's not a packaged and SaaS?
Brian Burke: I don't want to be in the software business and software support, now I'm taking calls from well, I, you [00:29:00] know, this is my scenario.
What cell do I fill in? That's not the business I want to be in. I'm in the business of acquiring real estate. And I think, it's an incredible exercise. And, I'll tell anybody that wants to really get into this business and raise investor money is, you're going to get a lot of questions from investors about how the finances work and that sort of thing.
And, I'll tell you what, there is no better way to understand every element of how this all works and to have to create your own model. I mean, if somebody has a question about how one number relates to another, I have the answer. And it's amazing to me how oftentimes sponsors will be like, well, I'm not really sure, you know, it's like, I don't really know how I got it.
That number. I put it in the model and it spit this out. You know, it's like, okay, well, how does it arrive at that? That you know, understanding all those calculations, understanding how to do a waterfall and, to the extent where you could literally calculate it by hand that's the level of understanding.
I think you have to be really successful in this business. And I think the only [00:30:00] way to really get that level of understanding is to write your own software model.
Randal McLeaird: Yeah. No, that's great advice. I remember taking classes and creating our own models and how much more involved you get and know what is happening in those things.
I was going to ask, do you have a finance background or you just picked it up as you went as you were buying? And as you were, what's
Brian Burke: the? I'm all self taught. I've got a PhD from the school of hard knocks.
Randal McLeaird: Well, Brian, look, man, I think we can wrap it on that. I appreciate you jumping on. It's All the things that you're working on, you got a ton of stuff going on.
I'm hopeful for the, at least on the multifamily side. I hope that bid ask starts to compress and get to a point to be personally, because I want to be buying some things. And if you are still raising for your debt fund, then by all means, I want to, invite people to reach out to you directly and your team so that you guys can have that conversation if you guys are still raising for that thing.
So, again, thanks for jumping on, sharing your knowledge, talking about your business and what you got going on. My pleasure to be here. Thanks for having me. [00:31:00] Yeah, for sure. Did you know that 80 percent of the agents we speak with got into real estate in order to gain passive income so they could obtain financial freedom and become work optional.
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