Forrest Jinks: 0:00

for the most part, we're always looking at it as if it could be a 10-year-plus hold. We want to be able to hold it forever, and then if it makes sense to sell, we will. We view real estate like... a- any investment class, it goes in cycles, right? You're up and down. And if you say S&P 500 you're going up and down, but your band is the bid-ask spread, so it's very narrow. But real estate has a much larger band. I don't care where you are in the cycle, you can buy low and sell high.

Ed Mathews: 0:30

If you're within three feet of me, we're probably talking about real estate, much to my family's chagrin. But here's the thing, most people see 7% rates and freeze. I see opportunity. They're waiting for the perfect deal, and well, I've analyzed thousands of them, and perfect just doesn't exist. So I talk to operators across every asset class, flippers, multifamily syndicators, note investors, and whatever else is working. No sales pitches allowed, just real lessons from people actually doing it. I'm Ed Mathews, and this is Real Estate Underground. Greetings and salutations real estate undergrounders. It is Ed Mathews with the Real Estate Underground. Thank you so much for joining us today. Today we're we're going back to old school. We're going multifamily, but we're also doing some other really cool stuff and and we're gonna get into that in a minute. But with me today is Forest Jinks of Altus Man- or Altus Equity Group. And Al- Forest, welcome to the show. It's good to see you.

Forrest Jinks: 1:34

Hey, thank you. It's great to be on. I really appreciate you, you having me. And like I mentioned in the, the pre-conversation, I've enjoyed listening to your podcast. And, Thank you ... hopefully we're not too aligned because then there'll be no fun in arguing, but,

Ed Mathews: 1:45

Oh, we're gonna argue. It's all good.

Forrest Jinks: 1:47

Yeah ... we have a lot, we have a lot of alignment in philosophy and stuff. And, Yeah ... just let me throw out to people that are listening, if you like Ed and you get value, throw a five star review in there. It really helps.

Ed Mathews: 1:58

I appreciate that. Thank you very much. And if you're out there and and you haven't subscribed yet, please do. 'Cause that does help the show grow, and I'm grateful. With that for those folks who haven't discovered you or haven't discovered Altus yet, I want you to tell us a little bit about you and your company.

Forrest Jinks: 2:13

So Altus Equity Group is a real estate investment company. That's what we're talking about here. I would say we're differentiated from many companies in that we are not necessarily focused on top line IRR. So we work with family offices and high net worth individuals that are looking for both term so we're, to maximize IRR you're in two, three, four years and you're getting out, but you're also leaving a lot of meat on the bone. And real- we believe that sometimes there is a need for that, but a lot of times real estate wealth is built over time and it might be awesome to get an 18% return over 10 years versus a 20% return in three. So that's part of it. We really focus on the net return. So taxes are a big consideration in how we do things. The, there's some stories for groups we've bumped up against, which I think just do a huge disservice to their investors by not paying attention to that. And again, their waterfall and their compensation's based on IRR, right? So they're focused on the gross, but really net IRR is what we spend as investors or net, but not necessarily just IRR, but the, the, the net returns. So term a- and net versus gross. And then I think another big thing is risk adjusted returns. So if I ask you, is it if I have two investments and one projects a 12% return and one projects an 18, what's better? Like the, the knee-jerk reaction is to say an 18% return is better." But I didn't tell you what you're investing in. So like one, one thing I really appreciate about your company is you guys do debt and equity, and we do the same, and we just think it's great to have both buckets 'cause you have your stocks and your bond bucket effectively. But 12% can be a first position deed of trust at 30% loan to value. That is a very low risk profile versus that 18 might be ground-up construction that has all sort of development risk. Like for me, I'll take that 12% return versus the 18. So I think that's really important to include in any conversation when we're talking about making investments.

Ed Mathews: 4:19

Yeah. I th- I thank you for your comments. The the thing for me is- 2011, '12, '13 I was swinging for the fences. I was looking for home runs. And these days I'm at a different point in my life, right? And I think a lot of the folks that work with us are as well. And man, I'm just looking to hit singles and doubles, right? And, I wanna pile those wins up so deal volume becomes im- as important as returns, right? But the fact is that all real estate investments are not created equal, and depending on where you are in your financial journey dictates the type of deal you wanna do, right? And, I have plenty of folks that are looking to get in and get out quickly. And so with those, with our flipping business, they're working with us there, right? Okay. Yeah. And then there are others who y- who are a little more measured in terms of the timing. And they want the ability to get in and out within a year or two, right? And that's not necessarily a syndication deal, and they're okay with 11, 12, 13% returns. And a, a debt fund makes sense for them, right? Absolutely.

Forrest Jinks: 5:38

Yep.

Ed Mathews: 5:38

And I still run into plenty of folks and I try really hard to measure or to help them measure their expectations because, they're like, "Oh, I want the 21% returns." I'm like, "Yeah, me too." But- But those days are, are behind us because the, the world changed, right? The interest rate in particular. But a lot of, rent doesn't grow as fast as it used to. Expenses are growing faster than they used to. The, the interest rates are... we're sitting here on September 23rd recording this show, and the last 48 hours have been pretty eventful in our worlds, right? And so in, in terms of rates increasing. And there are still doubles to hit but I don't know that there are home runs. There may be one or two a year that we see, but the, the volume that we saw in '17, '18, '19, it's just, it's unrealistic to expect.

Forrest Jinks: 6:39

I think too that when there is distress in the broader market like there is right now- Yeah The home runs are harder to wrap your head around. So y- we bought a industrial property a couple years ago in Mississippi. It... We bought it for $12 a foot.$12. Ooh. You can't pour the concrete for $12 a foot for an industrial property, literally. And we spent like a dollar a foot improving it. And we signed our first lease with a Fortune 500 company at 550 a foot triple net. That's a s- a th- 30 something percent yield on cost, right? It's a massive home run. And at $12 a foot, the downside is super limited. But- That was only a $4.5 million deal for 350,000 square feet because it was only $12 a foot. So bigger investors are, they're like, "We can't even pick our pencils up for that small of an investment." Smaller investors are like, "I've never even heard of Starkville, Mississippi," home of Mississippi State, by the way, for those of you in, in SEC country. So it's this weird tweener and we're like, "This is, we love this deal." The, the downside risk is so minimal and the upside literally is we will, when we get it fully leased it will be 4X our cost basis. So they're out there but it's just this weird stuff that it's hard to wrap your head around.

Ed Mathews: 8:09

Yeah. And they're not numerous, right? That- They're not, no you found that deal. How many deals l- of similar return and risk profile did you find in that same 12-month timeframe?

Forrest Jinks: 8:19

Oh, we're not finding... we've bought, since 2021, not including a couple of 1031s that we had to reinvest, so they're stuck on some of those, and those were 2022 and we didn't have... we sold at the height and bought at the height so it's just trading dollars. But take those out I, literally, we've only done six transactions in five years.

Ed Mathews: 8:41

Yeah.

Forrest Jinks: 8:42

Now some of them have been big transactions with s- one had six properties in it, but our volume has not been there. We definitely would like to see an increase in volume, but we, you know, you're not gonna reach for return if it's not there.

Ed Mathews: 8:55

And we're talking acquisitions, not necessarily- Acquisitions ... the debt fund, right? Yeah,

Forrest Jinks: 8:59

yeah. Yeah, that's correct. Yeah, lots of stuff in the debt fund.

Ed Mathews: 9:02

And I'm curious, tell me about your debt fund. Where do you focus? Is it geographically focused? Is it focused on particular asset classes? How do you approach the market?

Forrest Jinks: 9:11

So we're not in the Northeast or really Mid-Atlantic. We're mostly kind of West Coast, mountain, Mountain West, and then across the South. W- it just turns, it happens that most of our loans end up being in California 'cause we have an office in California and a really good network there. But we've done loans in Mississippi and Alabama and Carolinas and Texas and Oklahoma. So we're totally comfortable as far as that goes. I think- The thing that gives us a little bit of an advantage over many debt funds is as equity investors, we understand what the borrower needs, where a lot of debt investors don't. They look at it and say we can't do that." And then, we work with them and we c- end up structuring loans. We're like, "W- this is such a great loan for us because we're able to take this bit of collateral and cross-collateralize this," or, "We're able to do this on an earn out," or different things that, you know, wearing our equity hat work. But also our first underwriting is would we love to own this in our equity business at the debt amount pl- plus foreclosure costs and whatever else? If the answer is yes, we're gonna figure out a way to make that loan work.

Ed Mathews: 10:21

Yeah. It's an interesting approach. We tend to be on our end, and we're focused entirely mostly in Connecticut actually. The... And the reason being is that this was our first, this was our first offering in the debt space. And so I wanted to be able to do two things. One I wanted to be able to consult to the flippers and- Yeah, that's great ... small multifamily investors and help them hopefully avoid the laundry list of mistakes that I've made over the last- ... 18 plus years. And also- It doesn't look

Forrest Jinks: 11:22

that bad, by the way. You're, you don't have that much gray. You're not showing it like, like I am. My beard is- it's- ... growing gray fast.

Ed Mathews: 11:27

Yeah, it's on the side. I c- I just cut my... I cut the hair close to the to my, to the side of my head, so I hide it pretty well. Th- that and I have daughters, so that'll make your hair prematurely gray as well. Yeah. The y- it's interesting though the, the idea of- focusing here on Connecticut is, I wanna be able to consult. I wanna be, I don't have to and you don't have to listen to me, but if you have a problem that you'd like to solve and, or you need a, a contractor that does something weird that you found on the property, pretty good chance I know a guy, right? And so I'm happy to help. The, but the second piece of it is I walk every property, right? I'm vetting every single project in terms of how realistic is this is this re- renovation project. And, obviously me and my partners, we also do the financial vetting as well. But I think it's important for me to actually go out there and and step foot on the property. In fact, these days there may be a day where I'm not able to do this, but right now I walk every property every month. At least every

Forrest Jinks: 12:29

month. I think th- that's, the second part of that's really impressive. We also believe that we need to look at each property we do. And we have a separate fund for non-performing notes, and we, in that fund we don't always walk every property. Sometimes you know you're gonna get stuff that's garbage and you just- ... factor it into your underwriting. But for loans we're doing, we walk every property. But not every month. That's impressive. There we have three offices. So there's one in Austin, one in South Carolina, and one in California. Yeah. So we're, we have a pretty good dispersed workforce. And so if a loan comes up, someone from one of the offices or someone we've worked with will, will go take a look at it.

Ed Mathews: 13:05

Yeah. I live in I live from here about four miles from the direct center of the state of Connecticut, so I'm an hour every way and 45 minutes to the northern border and probably 35 minutes to the southern border down, you know, on the shoreline. And so I can be at a property in an hour anywhere, pretty much anywhere in the state.

Forrest Jinks: 13:26

Yeah. You can tell by looking in the background that I'm on the road right now, and you're making me very jealous.

Ed Mathews: 13:31

Yeah. There's, like I said, man, there i- I put in my road work in the first 20-something years of my career and if I can avoid it, I'm done. I, yeah. I'd rather invest with guys like you who are out there and are on the ground, rather than me get on a plane and go manage something.

Forrest Jinks: 13:47

Yeah. Good for you. Yeah. That's a great spot to be.

Ed Mathews: 13:51

Someday. Y- the, but the, the, the whole idea is to be able to go out and keep those deals from becoming problem paper, right?

Forrest Jinks: 14:02

Absolutely. And-

Ed Mathews: 14:03

Yeah ...

Forrest Jinks: 14:04

and even though the, we say we only wanna lend on it if we'll own it, we don't ever wanna own it. That is, like- Correct ... the foreclosure process is such a headache. Awful. It's such a pain in the neck. Your fund, and our fund is specifically set up for very low risk, consistent income. We don't have back-end leverage other than just for kinda transactional type stuff. We're not providing... some of these debt funds are providing 14, 15% returns, 'cause they're going max leverage. That's just not us. We are effectively a, a proxy for the 10-year Treasury.

Ed Mathews: 14:35

Yeah.

Forrest Jinks: 14:35

And, Couldn't agree more we don't, we do not want problems in the debt fund. And so we wanted borrowers that are good. We want properties that have a lot of protection, 'cause if there's a lot of protection they're not gonna f- let it go.

Ed Mathews: 14:47

Yeah. You

Forrest Jinks: 14:48

know?

Ed Mathews: 14:48

I couldn't agree more. There's a friend of mine who actually invests in industrial out in the Midwest Joel Friedland. He got me thinking. I met him probably two and a half, three years ago at this point, and he got me thinking about, he said one thing, and that is that he does not he does not believe in leverage, period. Yeah. All of the industrial properties that he invests in, he and his partners invest in, 100% equity. And the, and I said h- why do you do it that way? Don't, doesn't that impact your returns?" And he said, "Yep, sure does, but I also sleep really well at night." And and I thought, man, there's something to that, right? And so we've done the same thing with the debt fund. I have w- zero leverage. We don't borrow to bor- we don't borrow to lend at all.

Forrest Jinks: 15:33

Yeah. Yeah. I think that's a great place to be. And, we're gonna, we're gonna lose returns and some investors to the higher rates, and that's okay. From our perspective, we want investors that have the same philosophy as us. We don't want every investor. And because there's not a ri- like from, there's not a right or wrong. I think some people, Dave Ramsey, might say that, this is the way to do it. There's other people say, this is the way to do it. Yeah. I don't necessarily believe that to be true. I think that there's lots of ways to do it, and you gotta choose one that fits your mentality, your investing philosophy, your time horizons. And this is who we are, and investors that want to be in alignment with us, great. We're gonna have a great partnership.

Ed Mathews: 16:14

And I've res- If

Forrest Jinks: 16:15

an investor d-

Ed Mathews: 16:15

I respect that so much because, the fact is that w- we're not for everybody. You're not for everybody, and that's okay. I, we talk about here, we talk about dating before we get married. And- ... there is that process of, "Hey, look, let's talk about..." And I'm curious what your thoughts are is, when you're talking with a potential partner what's your process in walking through and evaluating A, where are they on their journey? But also, are you a good fit for what they want to get done? What's your thinking

Forrest Jinks: 16:45

there? Yeah. Yeah, and I think we have three separate buckets of investors. Yeah. We've got the, the high net worth investors. We've got more like the family office type investors, and then institutional investors. We do have institutional partners, but generally speaking, we're not a good fit for them because of those things I mentioned earlier. They're super in and out, IRR, multiple focused. Get to the IRR, get to the multiple, get out. And that's just not great for us. We, when we do those deals, the way we view it is we work for them. And so it's, they're way more sophisticated than we are. We, yeah, we're doing our co-invest, but really, it's their deal, and they're calling the shots. And so if we're talking to them, we're talking to them like, are they gonna be a good boss? It's like what's gonna happen when things don't go right? Because it's investing, and things don't go right a lot. That's the reality.

Ed Mathews: 17:36

Yeah, we break

Forrest Jinks: 17:38

sometimes Yeah so family offices, I think those are relationships that build over time, and it's really those conversations of how do you think about this? What would you do in this case? How would you view this?" Family offices are way more tax sensitive which is really fun for me because I love that kind of brainstorming and structuring and they're, they can be way more creative in a lot of cases. That's a great fit and we learn a lot about each other just talking about how do you... how would you do it in this situation, how would you view this and talking through that. The smaller investors, the first two groups it's a joint venture structure generally. So we're coming together to come up with everything. We might have a suggestion, but really it's negotiation. The third bucket is really this is what we're offering, do you want it or not? And in that case, we have told investors like, "This is not a good investment for you. You want cash flow. This is a ground up construction deal. This... there's nothing... I don't care if you like the returns, this is not good for you." And I think there it's really important that we know our investors the best we can, know what their goals are, and then, try to align those goals with the opportunities, because we have lots of different opportunities. Again we're looking at risk-adjusted return. So that doesn't mean risk is bad. It just means that if we're taking on a lot of risk, we want a lot of return. But if you're 85 and wanting cash flow, don't do that deal, right? If you're 22 and you also like Bitcoin, okay, maybe that is a good deal for you.

Ed Mathews: 19:08

Yeah. And it's interesting. We hear no a lot that we're not a good fit for them. Cool. And we say no a lot. "Look, we're not the, we're not the droids you're looking for here," right? It's not a it's not a good fit. And I'm okay with that. And hopefully the people we're talking to are okay with that as well because, if... I'd rather have that tough conversation upfront than two years from now when there's that disconnect that we knew about two years ago comes to the fore and now we have to have a hard conversation because we tried to fit a proverbial, square peg into a round investing hole.

Forrest Jinks: 19:47

Absolutely. And I think the biggest thing the biggest red flag for us is people that want to get rich quick.

Ed Mathews: 19:55

Doesn't exist.

Forrest Jinks: 19:56

Eh, especially in real estate. You can- Yeah, wrong business ... build massive amounts of wealth by being consistent and investing in real estate, and investing through cycles and everything else. But if you wanna get rich quick, we are not the group for you. Yeah. And same with you guys. I think that's... There are people out there that, that will try to get rich quick, and that's fine. Go you, again, it's, there's no right or wrong necessarily. We have our opinions, but it's just more matching the person on the ground with the person with the check.

Ed Mathews: 20:25

Yeah, get rich quick is call my buddy Satoshi and go buy Bitcoin, right? A- and I wish you luck. It's just not my thing. Yeah. And, One of the things you said, and it was really interesting to me, and it's something that we've done as well and I'm curious about your thinking in terms of in your acquisition process, when are you identifying the properties to say that are, hey we're gonna get in, we're gonna renovate, we're gonna bring up rents we're gonna hold this three, four, five years and get out versus the ones, like, that you look at and think, "This one's a 10-year plus hold." I, what is your calculus?

Forrest Jinks: 20:59

Yeah, for the most part, we're always looking at it as if it could be a 10-year-plus hold. We want to be able to hold it forever, and then if it makes sense to sell, we will. We view real estate like... a- any investment class, it goes in cycles, right? You're up and down. And if you say S&P 500 you're going up and down, but your band is the bid-ask spread, so it's very narrow. But real estate has a much larger band. I don't care where you are in the cycle, you can buy low and sell high. Yeah. Now, it- as information becomes more ubiquitous, that's more and more difficult to do. And so instead of buying low and selling high, maybe you buy low, improve operation of the property, whatever, and then sell high. So it's more of a management type play. But 'cause going back to your original question, when we're looking at our debt stack and different things, we are generally assuming that we want to be able to hold it forever, and then if we can sell at the top of wherever we are in the cycle, we'll do so. That said, there have been cases where things fall in our laps, and maybe it's a C property, and normally we like Bs and As, but we're getting it so cheap that we know we can go in and fix the management stuff and, upgrade windows and do different things and sell it kind of top of market. I think those are the ones where we might say it's a shorter-term deal just because it's not something we wanna own long-term, but it's... We're getting such a great buy that we c- almost can't pass on it. I will say, as our company has matured, we do less and less of those deals.

Ed Mathews: 22:33

Yeah.

Forrest Jinks: 22:33

Partially because they're mostly smaller deals, and so you have to make so much margin, so much upside to make it worth the headache that we just don't do a lot of them anymore.

Ed Mathews: 22:46

Yeah and here's the thing. You require sleep, right? So- ... there's only a, it's a finite amount of time in the day that you can spend on deals, and so you need to pick and choose the deals that deliver the returns that are in line with, your overall business plan. And I get it, man. I and I, I've- Focused on flipping. I've dialed it back, I've shut it down, I've brought it back, I've dialed it back down again, 'cause it is a shiny object for me, right? And-

Forrest Jinks: 23:15

But there, there's one thing, though, about flipping that I... 'Cause we've done, especially coming out of 2008, did hundreds of them. The gr- awesome thing about it is you have something you can be proud of when you're done.

Ed Mathews: 23:29

Yes.

Forrest Jinks: 23:30

It's a ph- it's a physical "Look what we did. We took this dog and made it a really nice dog," "it's well-trained now." And there's satisfaction in that where, some of the investments we do they're financial engineering to a certain degree. And I don't wanna say that to the extreme, but we're playing with numbers, and we're squeezing pennies here and everything. And that's fun, and it's creative, and you're like, "Ah, that was fun," but it's still the same property. We didn't take... these, we're buying this portfolio in Tennessee right now. They're all 2021 and newer.

Ed Mathews: 24:00

Yeah, they're... It's already gorgeous.

Forrest Jinks: 24:02

Yeah, we are gonna do some CapEx. They, they did a terrible job on landscaping, so we're gonna go in and do some landscaping stuff, but it's gonna be marginal versus some of the older stuff we've done where we've literally done every unit, renovated it, moved everybody out, cleaned it up, cleaned up the whole neighborhood. We look back on those and be like, "Yeah, they were great investments," but they also, we improved society. And there's, I like that, and that's why I really like flipping. And we, like I said, we've done a lot of that. We've done some new construction. It's very tangible.

Ed Mathews: 24:31

Yeah. So when you're looking at the market you're walking in the door on Monday, and you start perusing deals that are coming across your desk, what does that look like for you? How do you organize your time? How do you look at the, the various kinds of deals and start to focus in on, "Okay, here's where I'm gonna spend, the next two hours"?

Forrest Jinks: 24:51

So I'm not the first line of defense in acquisitions. We have an acquisitions team that does that, and so I'll answer for them to a certain degree. Sure. We are uber relationship driven, and so most of the time is spent talking to people either on the phone or in the markets. And that is how we find... Like this, this portfolio, it's 1,200 units. It's a very large portfolio. We found it because of relationships. Was never listed. And if you go back through our history, it's over 80% of what we buy is either off-market or was on market, but one of our broker relationships called us and said, "Hey, I need an offer today, and y- it can be this low because this has to move." And so we're like, "Oh, okay. That's great. We'll do that." And so that's where we start. And then from there, it kinda goes into a funnel. We actually have some AI set up to, to filter different things, and then our acquisition team goes through and will underwrite just hundreds of properties. If an agent or broker calls us directly and says, "You need to look at this," it goes straight to the top and so we look at those first. Sometimes it's like, "Hey, I got this listing. It's interesting." Okay that might be, tier two, tier three. Sure. But the reason that people will come to us is certainty of close. It might need a creative solution. We can work with sellers around estate tax and different things and structure things where, there can be a lot of value added outside of just the purchase price. It could have hair on it, like it's half built. We've done stuff like that. Could be in distress. So there's different reasons people might bring things to us, but that's really... when they do, it goes straight to the top.

Ed Mathews: 26:39

Right on. Right on. And when you're looking at a, an acquisition deal, obviously there's no cookie cutter. So what are the things that you're looking for besides the, the trusted broker, for instance, right? What... In, in that, what... You- when your team looks at a deal, what are you telling them to look for?

Forrest Jinks: 27:01

So we have two different buckets. One is our larger strategy bucket, and that strategy changes throughout market cycles. Right now... Oh, I shouldn't say right now. Right now, we're not sure what it, what our strategy is, 'cause interest rates are doing what they're doing. But if you go back three, four, five months, that was really '80s, '90s quality multifamily that we can buy with a good spread in a market we like. Yeah. And so we weren't trying to be heroes. We were doing the single thing like you were talking about. Because we, we did, we were successful in a couple purchases, and our bases are insanely low, and we're talking like 250, 300-point spreads between the cap rate and interest rate. We clip the coupon, we amortize the loan, we wait for the market to recover. Yeah. That's nirvana from our perspective. And then our other bucket is very opportunistic and we don't know what's gonna land in that bucket. It could be that deal in Mississippi that's the industrial deal. It could be someone that has land in a market we like that they don't know how to build on it. They got the approvals because they, know the council people, they got the zoning change, whatever, but they don't know how to do a capital stack. They don't know how to oversee a big construction project. So we'll come in as co-GP's, take over from there and they can still participate in the promote and enroll their equity. And that... some, some people just wanna sell the land and move on, but some people are like, "Why would I pay tax? I'd rather own a part of a big apartment building or a big industrial building." There's some, some different buckets there. On the strategy side, that's kind of a company-wide discussion. That's our investor team, that's me, that's our operations team. They're the ones that are gonna have to run the property. We need to know what they think about our numbers, how hard it is to find labor. I, Labor's been a big issue-

Ed Mathews: 28:44

Yeah ...

Forrest Jinks: 28:44

for the last few years. And when the whole immigration thing happened last year between May and August, we could not find maintenance people to save our lives. It was ugly. We're fully staffed again now thankfully, but it was really tough. And so it's important for us to have operations, our asset management team to have their input in that as if we're doing a kind of a bigger strategy discussion.

Ed Mathews: 29:08

Yeah. It's it's a new world out there, my friend. So the... One of the things you mentioned that, that kind of r- rang true to me was the spread, right? You... I think I heard you say 250 to 300 bibs, right? And that's the, that's my guidance in terms of our team as well, is that, we can't even think about looking at a deal if there isn't a 200 point spread, right? It's it's just... It's too tight and the, and the reason it's too tight is I've seen so many people get into hot water when they th- when they think, we'll create the spread on the back end, and no, you won't. A- and there's a $2 trillion wall of refinances coming down the pike that are about to hit a brick wall and the reason being is because they tried to pull that off and so I admire your approach. So I'm curious, why why extend it to 250 to 300? Are you seeing deals-

Forrest Jinks: 30:06

No, I think, we would definitely go less than that. Okay. That's just where those ended up being. Gotcha. W- they were singles that were home runs, if you wanna-

Ed Mathews: 30:13

Right on. Okay ...

Forrest Jinks: 30:14

from that perspective. We weren't trying to create massive IRR, but literally we were walking into, to seven and a half cap o- on this one deal was two properties side by side. One was built late '80s, one was built in the 2000s. Those are ... and by the way, we a- we assumed the debt with 10 years remaining at 4.6%. Those are really good numbers. We're, we did a happy dance. The, the downside of doing that is now you think you can repeat it. And-

Ed Mathews: 30:43

Okay, where's the next one? Yeah.

Forrest Jinks: 30:48

Where's the next one? Yeah, and acquisition's like, "Are you kidding? We should be heroes here. Don't tell me to go find it again."

Ed Mathews: 30:52

Yeah, the guy that found that one in your office should be carried around on your shoulders for half an hour and celebrated. And, Absolutely ... and, then back to work, and maybe a year from now we'll find another one just like it. Maybe. Yeah. It's time for our new segment, Questions from the Underground. One real problem, answered straight. No filler and no theory. Jose in Trenton reached out to me this week, and he's in the middle of a rehab financed with hard money l- with a hard money loan. And his contractor finished the rough-in and asked for his eighteen thousand dollar payment. The lender's inspector came out and approved half. Now, the contractor's saying, "No money, no work," and Jose's question is, "Who's right, and how do I keep this job moving?" Well, most people think this is a fight about percent complete, but it isn't. It's a fight about the definition of done. A payment milestone isn't necessarily one line item. Rough-in sounds like one thing, but it isn't. It's plumbing, electrical, HVAC, framing fixes, rerouting, bringing something up to code. Every single one of these is a different line item, And for each line item, you need to make sure you understand, your contractor understands, and your lender understands how the word done is defined. Done means there's nothing left to do. Not mostly done, not done except for the trim out. Done, complete, nothing left. If your contractor thinks the electrical is done because the wire was pulled, and the inspector thinks it isn't done because the boxes aren't set and it hasn't passed inspection yet, you're gonna get half your draw, and you're going to think it's the other guy who's wrong. That's not their fault. That's yours. You need to use the exact same language in both schedules, in your scope of work and your draw schedule. You have a project schedule with your contractor. You have a draw schedule with your lender. You have to manage your project milestones and your reimbursement milestones with the exact same language and the exact same definition of done. Misunderstandings are still gonna happen, but if you're crystal clear about your definition of done, your project milestone, and your draw milestone, it'll happen a whole lot less. Lastly, you need to build in a contingency. This is why we recommend having ten to twenty percent of your project budget set aside as a contingency. You're human. You're gonna miss stuff. There are also a lot of things you're gonna find out once you open up the walls. We've been flipping since two thousand eleven. I have yet to find a property that doesn't have a surprise waiting inside those walls. Every single property throws you a curveball, every single one. You need to expect it. You need to plan for it. That's questions from the underground. If you're stuck on something, send it to me, and I'll take a swing at it on an upcoming show So all right. Hey man, I could talk about this stuff for days, but I've already... You've been incredibly generous with your time and your flexibility. Why don't we get into the final five, and 'cause I'm always interested in how leaders like yourself, how your heads work. One of the things that I've noticed about business leaders from all walks of life, frankly, is that, the financial piece their financial lives are pretty well buttoned up, right? If you decided to not show up to work on Monday, financially you'd probably be able to make the mortgage payment. You're probably doing okay. You're probably handling that, right? It's squared away. But nevertheless, you show up on Monday, fire in your eyes hair on fire and ready to rock, and for me, that is purpose, right? There's something else that's driving you, and I'm curious, what is that for you?

Forrest Jinks: 34:31

Look, I'm sure you're familiar with the book Simon Sinek's book about getting to why.

Ed Mathews: 34:36

Yes.

Forrest Jinks: 34:37

And as a company, our why is we're invested. So we're invested in the success of our investors, we're invested in the success of the communities that we own or the commercial tenants that we have. We're invested in the success of our team especially. And so I, f- I keep going because I'm invested in the team and our investors. I want them to have success. And really that started, I remember exactly when it started. It w- coming out of 2008, things were pretty rough, and I literally was on projects swinging a hammer myself doing remodels. And there was one particular one that we bought off-market again. Roof was falling in, but we bought it crazy good deal. And I was out there physically working and I thought, I can do three or four of these a year and make a really good living." And at that point, I had investors that would back me. It would be brain-dead, like we would have one piece of paper between us. Or I can not make a good, a living in the short run, and I can build a company that's going to last, or I could at least try to do this. And y- it's clear as day. I still remember the day exactly where I was, the whole thing, and it was like, you know what? I want to build a company. I wanna build something that can be handed off to people in the future. And so that kinda came, that became... That was probably 2012 and since then, it's been about building a company, which as is very difficult in real estate because we're not like... We don't just turn on the cash flow spigot, right? Our profits come way in the future in a lot of cases, especially when you're a long-term buyer. That would be

Ed Mathews: 36:17

a lawsuit

Forrest Jinks: 36:18

because- Yeah. So th- that's been the goal. We've had a board of directors that's been very helpful. We're... very few companies have that. But again we're thinking about as an operating company mindset. And so I define success for me as when I leave the company, can the company do better in the future than it's doing with me at the helm? That would be me doing a good job as a leader, and that's my purpose, is to get there and then change people's lives by giving every employee we have the chance to be wealthy. And they should be. They have the opportunity to do every investor will have the chance to be, wealthy because they're... we're creating those opportunities for them.

Ed Mathews: 36:56

Sure. So I'm also interested in, y- invariably, you don't get to where, guys like you are or where I am without a lot of help. And, I'm curious about the mentors you've had along the way, and specifically, what's the best advice you've ever been given, and who gave it to you?

Forrest Jinks: 37:16

H- how do you really pick out one thing of great advice?

Ed Mathews: 37:19

Tell me which, tell me which child is your favorite, right? It,

Forrest Jinks: 37:22

I would s- Yeah, e- exactly. I, I've read hundreds of books. There's always... Almost every book, at least one thing you can take away. Keith Cunningham I would say was my first real mentor. Keys to the Vault. This was back pre-2008. Just a great guy. I learned so much about business from him, not... and investing too, but it was more on the business. And I s- I still incorporate all sorts of things I learned from him into how we run the business, which is really counter to kind of prevailing knowledge, right? Just things that he taught are awesome. And then Michael Adler and Mark Nelson were our first real board... They were our first advisory board members and board members, and just, "No one goes out of business by having too much cash." Just these little truisms that get so ingrained over years of sitting in meetings with them. And they were on our board for years. They're both emeritus now. They're retired. But I've so much appreciation for them. And just the great thing about our business is we're dealing with successful people. So I can learn from pretty much every investor we have has had success in some way. So me meeting with investors, I view it as my chance to learn from their experience, and I learn so much. I love meeting with our investors. In fact I'm g- leaving from here to go meet with a family office that we've done work with for 15 years, and the, the, the fellas that run it, they're, in their 70s and 80s, and just all kinds of wisdom that I benefit from every time we meet.

Ed Mathews: 38:51

That's fantastic. Yeah, my when I graduated from college, my grandfather pulled me aside and said you think you're pretty smart." I'm like, "I- the school I went to is pretty good. Yeah, I'm k- I'm kinda bright." And he's like, "Do me a favor." He said, "Next six months, I'll see you at Christmastime. Next six months, go talk to as many people with gray hair as humanly possible wherever you are." And I followed his advice, and I... It was humbling and it was also... Which is what I needed at that point, when I was 22, 23 years old. But it was also a, a fountain of hard-gained wisdom and experience. And, it's amazing what you can learn when you ask one question and whoop, keep your mouth closed, and just listen and actively listen to the experiences of people who've been doing this lo- a lot longer than you are, you have.

Forrest Jinks: 39:40

Yeah, and, as the market's changed and everything else, the knowledge that we've built up over time is not gonna be as relevant. But the wisdom that we've built will endure, and, I hope that people see me as a resource in the future, and I g- I love these kind of conversations. You and I bet we could talk for four hours and tell stories and things we've learned and stuff, and I don't think we would e- feel like we wasted our time. And I look forward to those conversations. Oddly, and maybe it's I'm just hard to approach, but I don't have that many people ask, which is interesting to me sometimes.

Ed Mathews: 40:17

You know what's interesting? So I, I actively ask, right? And we have a new segment called Questions From the Underground. I literally am on social media saying, "Hey, ask me questions." And I figured I'm gonna get hundreds of questions and, we get a bunch of questions, but it's a couple questions today, three or four questions tomorrow, and, we see some commonality and then we address it, and then we answer the question. But I, I once spoke in front of a room, it was the Connecticut Rea- Real Estate Investors Association here in, in s- in Connecticut, and had to be 150, 200 people in the room. And I s- I gave them my cellphone number and my email and said, "I am a cheap date. I will buy anybody in this room a cup of coffee. I will spend 20 minutes with you. I'll even spend more if you need it, and I'll buy the coffee." And I think I got half a dozen people. And so I went back- Sure ... a few months later and I called on the six or seven people that I ended up meeting with, and I made the same offer, right? And they, I said, "Do me a favor. During the social hour, talk to those people." Because, the thing you get from a guy like you or a guy like me isn't me pontificating or standing on a soapbox and talking about, "When I was your age," blah, blah, blah. It's we solve problems w- and I'm I always tell people, "If you ask me a question and I don't know the answer, really good chance I know the guy that does know the answer. Really good chance." Yeah, absolutely. Absolutely. And so I view our role now and the mentors that I've had in my life as connectors, right?

Forrest Jinks: 41:51

Yeah.

Ed Mathews: 41:52

Not necessarily only fountains of wisdom and experience, but, I know the guy, let me hook you up.

Forrest Jinks: 41:59

And also, w- the things we learn I, I think that are most valuable are from other people's mistakes.

Ed Mathews: 42:07

100%.

Forrest Jinks: 42:07

And if you don't wanna make the mistakes that I made, I can tell you how to avoid them. And so I'm happy to share about my mistakes. Yeah. And and it surprises me how few people actually will take up people like us and others on our willingness to be like, "Don't do this." It's scary."It turns out badly."

Ed Mathews: 42:26

Turns out it's scary. Even though you and I are nice guys, it turns out it's scary to approach somebody.

Forrest Jinks: 42:30

Yeah.

Ed Mathews: 42:30

And y- and actually, that brings me to my next question. Yeah I do, I agree with you. I think we absolutely learn more from our mistakes than our, from our successes. And so I'm curious about a, a professional situation or a decision that you made that you look back on knowing what you know today and go, "Man, I if I if I knew what I knew today when I'd had, when I was confronted with that challenge, problem, whatever," I'm curious what that was for you and I'm curious how you handled it.

Forrest Jinks: 42:59

I, with the caveat being I still make lots of mistakes.

Ed Mathews: 43:02

Amen.

Forrest Jinks: 43:03

We're growing a business, which means as long as we're growing, I've never been a CEO of this size of business before. So every day is brand spanking new.

Ed Mathews: 43:12

Yep.

Forrest Jinks: 43:12

And I think it's important to make mistakes 'cause that means we're breaking things and we're learning. But y- in 2008, I was... You were on the coast, I was on a coast. The coast got crushed. Nationally, housing went down 24%. Where I was, it was down 40%. And I got out of housing before it came. I thought I was so smart. We had some infill development. Our margins were crazy. It's like, okay, housing goes down 20%, no big deal. We still got lots of margin. We... Did... We're doing commercial condo conversions and retail renovations and bra- ground up retail, like, all these things. In my arrogance, I guess you would say, or hubris, there was people that gave me money, and I looked them in the eye and said, "I will get you this money back no matter what happens." If you're a borrower, okay, that's fine. I'm borrowing money. But if you're investing alongside of me, I cannot make those promises because guess what happened? 2008, 2007 actually was really the, the epicenter. We had retail that we could not give the space away for just to pay the triple nets. "Here's free space." Couldn't give it away. So how in the world if the economy change that much can I keep true to this crazy promise I made about paying everybody back every cent? Now, I made the promise, I had kept the promise, and I'm down to, a very small amount left to, to return. But I will never make those promises again. Yeah. And no one in our company- Pain- ... will ever make those promises again.

Ed Mathews: 44:56

Yeah. Pain for you, pain for the investors and the thing is that especially when you're dealing with sophisticated investors, they know the risk. They understand, right? It's a measured risk. And,

Forrest Jinks: 45:08

yeah.

Ed Mathews: 45:08

And, And- ... I admire- ... it

Forrest Jinks: 45:09

doesn't mean I'm not gonna do my best ...

Ed Mathews: 45:11

i'll tell you, I admire the fact that you're, sounds like you're still whittling down a list of folks that you made that promise to. And the fact that you're following through is something if i- investors out there, if you're not listening to this, this is the part you should be listening to. You're a man of your word, and that's something to be respected. It's actually really rare in this business as well.

Forrest Jinks: 45:32

I don't feel like I need any pats on the back about it. It was- Calling it

Ed Mathews: 45:34

as I see

Forrest Jinks: 45:35

it, man ... it was it was my word. I just won't make that word anymore. Yeah. You have my absolute word that if anyone that invests with us or through us, whatever, we are going to do our best.

Ed Mathews: 45:46

Of course.

Forrest Jinks: 45:48

Sometimes the best is just not good enough. I mean- ... I know a lot of really good investors who have lost a lot of money over the last five years.

Ed Mathews: 45:57

Yeah.

Forrest Jinks: 45:58

It had short-term debt. Those decisions at the time, maybe they seemed like good decisions. They didn't go through 2008. I did. I had... we made decisions to have long-term debt because of that. That, the original pain resulted in us having way less pain now than some really smart people. And I don't blame them for that, that's just-

Ed Mathews: 46:17

No, I mean- ...

Forrest Jinks: 46:18

things change, right?

Ed Mathews: 46:20

COVID, interest rates doubled or almost tripled. Insurance nearly doubled. And that's just the cost, right? Yeah, absolutely. If you were buying in '21 plus, you got smoked unless you had a pile of cash.

Forrest Jinks: 46:31

Yeah.

Ed Mathews: 46:32

Absolutely smoked.

Forrest Jinks: 46:33

Absolutely.

Ed Mathews: 46:33

Absolutely ... and I was at a conference in '20, end of '24, and the mantra was survive to '25, right? Here we are.

Forrest Jinks: 46:42

I wa- was that in Salt Lake City?

Ed Mathews: 46:43

No, it was in Phoenix actually, but it's the same guy. Oh,

Forrest Jinks: 46:46

okay.

Ed Mathews: 46:47

Yeah. Okay. 100 times. Yeah. Yeah. But that was the mantra, right? And the and they weren't wrong, it was just, here we are nearing 2027 and people are still dealing with that wall of refinances that they ha- they, they need to make, and they've been kicking the can down the f- down the street. At some point the, not to mix metaphors, but the music will stop and there will only be a finite amount of chairs and people are gonna get smoked again. Yeah. Absolutely. W- how do you take in information? Like for instance, I'm curious, what's the book on your n- nightstand these days?

Forrest Jinks: 47:22

So I read a lot about economics.

Ed Mathews: 47:24

Okay.

Forrest Jinks: 47:25

I have a finance degree originally. Always had a little proclivity towards around investing even before I started in this business. So I love investing, love economics. And I do think it helps us, as we're picking markets or, being kind of counter trend. Certainly helped us through 2001 till now. So I read just publications and probably stuff that's not front page of CNBC, more analysis and I really wanna understand the thinking behind the different assertations. I, I do some podcasts. I've listened to your podcast a few times. I like it. I like some of the big ones of course that everyone listens to I'll tune into as well. But it... I knew you were gonna ask this question, so the book I just started was the Make the Zeros Count.

Ed Mathews: 48:10

Okay.

Forrest Jinks: 48:11

I had a, a- Awesome ... a group I was in was on a call with the author yesterday actually, and that's how I got the book. And it's a great book for investors, not so much about investing, but how we view money in our lives. And again I'm only a little ways into it, so with that caveat.

Ed Mathews: 48:27

That's all right.

Forrest Jinks: 48:27

But, like how... What's our mentality around tipping, for instance. So just different... they're each little chapters on it. It's probably not too different from some of Morgan Housel's stuff, which I also love. Yeah.

Ed Mathews: 48:37

Sure. Absolutely. Yeah. I- it's, And thank you, 'cause that one's going on my reading list. So I'm also curious about, you mentioned success earlier when we were talking about purpose, but I- I'm curious about, personally from your individual perspective, how do you define success in your life?

Forrest Jinks: 48:55

I so I think you have to look at different buckets. Spiritually I have what I want to be, how I wanna show up, what I, how I wanna spend my days. For my family, certainly, great relationships with my wife, great relationships with my kids, help them find their own path and build their own success I think is a, a way I would count success as a father. Not shirt tail off the success my wife and I have created. I, I actually, I love this quote. Shaq, Shaquille O'Neal- ... at one point was saying he takes care of his daughters, they're his princesses, but his sons want money, and he's like, "It's not your money. It's my money." And I think my wife and I look at it as we accumulate wealth over time, that's going to be to help people. Our kids got to go find their own way.

Ed Mathews: 49:45

Yeah.

Forrest Jinks: 49:45

They're not gonna be destitute, but they need to figure it out on their own. In fact, my, my daughter is 14 and she's s- we live on a, a farm. We grow olives for olive oil. So she got bottles, started building it. I invested in her company, but it's an investment. She owes me the money, and she owes me returns, and she owes me financial statements and everything else. So yeah, she has a leg up because that $7,000, maybe there's kids that don't have the ability to get that $7,000 money to start with. But she's also got to go out and earn it. It's not, we're not just saying, "Oh, we'll pay for this. We'll pay for you to start it." She's got to go do it herself. We're not

Ed Mathews: 50:24

doing it for funsies, right? This is a life lesson.

Forrest Jinks: 50:26

No. No, this is an investment. I expect a return. And then professionally, I think I mentioned if I can look back in 15, 20 years, maybe, I'm on the board of directors at that point. May- maybe I'm a, still a figurehead CEO, 'cause I love doing this sort of thing, talking real estate. I love talking with investors. But if the company is stronger without me being in the day-to-day than it is with me being in the day-to-day, to me that would be such a huge, massive success. Because that means I enabled people to find their own success.

Ed Mathews: 50:57

Yeah. You've built a business rather than a job, right?

Forrest Jinks: 51:01

And not just that, but I- if I'm not there, that means someone else is there taking on responsibility, building wealth, building a great life. And if I helped them to do that in any way that's a win. So cool.

Ed Mathews: 51:13

Yeah. Gratifying, absolutely. All right, my friend. So when you're not talking about real estate and you're not investing in in olive oil enterprises- ... what do you like to do for fun?

Forrest Jinks: 51:26

Our family lives on a water ski lake, so we got that going for us. It's surrounded by the olives, as it turns out. So big water skiing family. I don't compete a lot anymore just 'cause I'm too busy, but I still like to get out and hold myself, to... Water skiing, for those that don't know, has, is a slalom course. It's very measurable. You can say how I did today versus yesterday. So-

Ed Mathews: 51:47

Yeah ...

Forrest Jinks: 51:47

being competitive, I can compete against myself there. I coach youth sports most- mostly baseball, but I do help out with the kids' basketball teams as well, and I play basketball competitively still. Nice I'm the o- as far as I know, I'm the oldest guy in the league, so I'm not sure how much more time my team is going to allow me to drag them down. We'll see.

Ed Mathews: 52:10

Hey keep plugging, right? Y- just, y- eight points, 10 points, eight poi- eight rebounds, 10 rebounds, be the guy that be the guy- I- ... that causes the off night for the guy you're guarding, right?

Forrest Jinks: 52:22

Absolutely. Draymond Green can't score, and he's been in the league for 10 years.

Ed Mathews: 52:26

There's a guy, Devion, and I'm blanking on his last name, played for Baylor. Oh, yeah. But his nick- Yeah, I've- His nickname is Off Night, which I think is my favorite nickname in the NBA, 'cause every time you play him, you're having an off night, 'cause he is gonna be up in you.

Forrest Jinks: 52:41

Yeah. Yeah, I think he p- I think it's the Sacramento Kings that drafted him, if I remember right.

Ed Mathews: 52:45

Correct. Correct. I can see his face, I just can't think of his last name. Forrest, I've really enjoyed this conversation, and I'm cur- Yeah, likewise. Yeah, thank you. So how can people learn about you or get in touch and learn more about Al- Altus Equity Group as well?

Forrest Jinks: 52:58

It, people, I'm gonna do the same thing you did at the Realtor Association. People are always welcome to contact me directly. It's fjinks@altusequity.com. Happy to talk real estate, happy to talk investing, brainstorm tax. I just love that kind of stuff.

Ed Mathews: 53:14

Yeah.

Forrest Jinks: 53:14

But we publish an article each month on the last day of the month called the Altus Insight, and it talks about investing specifics, investing philosophy. It talks about economics, talks about... We don't, we try not to get into politics, but as it turns out, political decisions do impact investing, and so we need to understand those and how it's gonna, to change the landscape. And the last eight years has been very difficult from that perspective, 'cause things are changing, it seems like, almost daily. Yeah. "Oh, here's a loan that's gonna fund. Oh, wait, w- no, it's not. The administration said we're not doing those loans anymore." It's like, "Oh, okay we've been in this loan process for six months." So that sort of thing, we try to understand a little bit and help people explain. We'll dive, do deep dives. So that's altusequity.com\\insight, or you just go to altusequity.com and then it's on the top bar there. Just click on Insights. You can subscribe, you can go back and read. We've got 15, 20 years of insights there. And so you can go find things that I might have said 15, 20 years ago, and throw them in my face now, 'cause I'm sure there are some mistakes and some bad reads in there as well.

Ed Mathews: 54:23

Just proves you're human, man. Yeah ... Forrest Jinks, thank you so much for joining us today. It truly has been a pleasure. I wish you continued good fortune and let's keep in touch.

Forrest Jinks: 54:31

Absolutely, Ed. Appreciate it. Thank you very much.