#332: Bootstrapping a 100+ Unit Portfolio In Small (Tertiary) Markets and Lessons Learned Along The Way with Phil MacArthur

Axel once again sits down with Phil MacArthur — a Boston-based real estate broker and multifamily investor who has quietly bootstrapped a 125-unit portfolio across some of the most remote, tertiary markets in New Hampshire. Phil's story is a refreshingly honest account of what it actually looks like to build a portfolio the hard way: no outside capital, no institutional backing, just hustle, grinding commissions from Boston condo sales, and reinvesting every dollar back into the next deal.

He also shares the management chaos he experienced, contractor war stories, and the key hires that finally allowed him to step back and operate at scale.

This episode is essential listening for any investor who wants a real, unfiltered look at what bootstrapping a 100+ unit portfolio actually costs you — in time, stress, and opportunity — and what you'd do differently if you were starting over today.

Join us as we dive into:

• Why Lake Sunapee and Farmington, NH — not Manchester or the Seacoast — were Phil's first markets, and how affordability and personal connection drove the decision
• The reality of self-managing 25+ units across remote New Hampshire while running a full-time brokerage in Boston — and why Phil calls it one of his biggest regrets
• How Phil found his generalist property manager through his own tenant network, and why she became the "cork in the bow of the boat" for his portfolio
• Why Phil recommends new investors finance renovations rather than self-fund them — and how selling Boston condos to fund New Hampshire renos slowed his growth
• The hyperlocal bank strategy: why Phil targeted lenders that already held the existing debt on properties he was buying — and how that unlocked financing others couldn't get
• Why New Hampshire has been largely insulated from the distress hitting other markets — flat expenses, stable insurance, and strong meds-and-eds demand drivers from Boston
• Phil's current buy box: Class B buildings purchased below replacement cost, separate utilities, light cosmetic value add — and why he's deliberately stepping back from heavy renovation work
• The 90% tenant retention rate Phil has achieved — and why rapid maintenance response is the single biggest driver of whether a tenant stays or leaves

Connect with Phil:

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Listen to the Previous Episode with Phil:

Ep119 - Living in an Expensive Market and Investing out of State + Quickly Building a Personally Owned Portfolio of 70+ Units via Spotify or Apple

Are you looking to invest in real estate, but don't want to deal with the hassle of finding great deals, signing on debt, and managing tenants? Aligned Real Estate Partners provides investment opportunities to passive investors looking for the returns, stability, and tax benefits multifamily real estate offers, but without the work - join our investor club to be notified of future investment opportunities.

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Transcript

SPEAKER_01 0:00

What's up, everybody? Welcome back to another live edition of the Multifamily Wealth Podcast. Joining me is Phil MacArthur. Phil, I think you were on the show three years ago. So technically a repeat guest, although a whole bunch has changed, I'm sure, in the last three years. Probably a lot of similarities as we'll get into, but I know a lot's changed. And I think in that first episode, we spent a lot of time talking about, you know, your work as a broker in Boston, why you started buying in New Hampshire, but we're gonna get into all that again and go a little bit deeper. So why don't you start with a quick refresh for everybody? How'd you get into real estate? Where do you live? You know, how'd you find the business and what are you up to today?

SPEAKER_00 0:36

Yeah, absolutely. Thanks again, Axel, for having me on. It's been a couple years. Glad to be back. Yeah.

SPEAKER_01 0:42

All right, everyone. Before we get to the rest of this episode, I have one simple and easy request for you. And that is to share this podcast episode or the podcast in general with anyone in your network who you think would find the content valuable. The only way we can grow this show is by sharing it with folks who we think will learn something from its content. So if you have someone in your network, whether it's a friend, a colleague, a business partner, your dog, the guy across the street, I don't care. If you think they would enjoy the podcast, please consider emailing it, texting, or sharing it with them however you see fit. As always, thank you for listening. You guys are the best, and enjoy the rest of this episode.

SPEAKER_00 1:25

But just as a little recap, I'm a real estate broker in Boston. I grew up just north of the city in Rockport, Gloucester area, and went to college in in downtown Boston at Suffolk University. I got into real estate on the brokerage side, like I mentioned, but really got caught up after playing a year of Division III college basketball. Worked with a real estate broker that connected me with some other younger guys. I was kind of like an office, like Wolfle Wall Street at that point. And that was my first introduction into the industry. From there, I started doing rentals downtown. As you know, living in Boston yourself. Great market to really kind of grow a business, especially at the time that I did in 20, 20, or 2013, 2014, where the city was kind of going through a large growth period like New Hampshire has the past two or three or five years now. From there, I started a real estate team and started investing in real estate. And that's how you and I got connected, of course. I bought a three-family in the town that I grew up, purchased that at 370, sold it at 720, did a cash-out refinance in between, and then moved my portfolio out of Massachusetts just because there's so much capital there. And I thought that New Hampshire had the largest growth opportunity. And 1031 that into about 20 apartments in New Hampshire.

SPEAKER_01 2:46

A three in a billion into 20 apartments. That's like, you know, they're geographically close, but they're very different markets. And specifically, just again, this is my knowledge of where you've bought deals, and we're going to talk about it. Like you went pretty far north. I think a lot of the Boston guys are the mass guys, you know, maybe they got their three unit in Southie or in Medford or whatever, you know, close to the city, maybe the owner occupied or they bought a rental. They sell, they want to go like 45 minutes north or an hour north, and being a big city, and you were like, we're really heading up 93. So talk about like where those 20 units were and like why you why you kind of bought in the area that you did and and describe that deal a little bit.

SPEAKER_00 3:26

Yeah. And I went way up there, up uh up 89 even.

SPEAKER_01 3:29

Yeah, this is the boonies is the easy way to describe this. Yeah, people think New Hampshire's the boonies, but like this is the boonies within the boonies. Yes.

SPEAKER_00 3:37

So the first building I bought was an eight-unit uh off of Lake Senipe, which is you know a highly desirable second home location in New Hampshire. And there was an eight-unit apartment building at the time that I purchased for $350,000. So what drew me to that type of property was two things. One, I had a friend that had a lake house and we played golf up in New Hampshire there. So I used one of the units for myself. Uh but then also was the affordability aspect, you know, buying eight apartments that were grossing rents at that time at about a thousand dollars a month for $300. Like per unit. Per unit. So eight grand. Yeah, eight grand total a monthly rent roll at that time. Um and it was just the affordability aspect. Uh I didn't think that it was gonna appreciate what it did, of course. Uh but there was it was a little bit selfish that I, you know, wanted a place for myself too. The other building was up in Farmington, New Hampshire. Now, if you're looking at a map in New Hampshire, I'm going, you know, an hour and 45 minutes north of Boston, kind of northwest to now as kind of as far east on the New Hampshire main border that you can.

SPEAKER_01 4:48

You're basically buying a big drawing triangle.

SPEAKER_00 4:53

And that was uh that was a 14-unit apartment building, so 22 units total that I purchased for 1.1 or 1.05. Uh that was a little bit more of a stabilized asset that did grow into a little bit more of a value add and was able to kind of work through that deal. Do a full cash out refi within a couple years and then redeploy that capital again.

SPEAKER_01 5:16

How did you find those?

SPEAKER_00 5:19

I would say I now own four, I've transacted on 14 or 15 different multifamily buildings in New Hampshire. And I would say probably about 10 of them have been on market. I am licensed in Massachusetts, but also in New Hampshire, and that is one way that I have found all my properties, is just going on on the MLS and finding stuff that has, you know, been sitting out there for a little bit, working with a seller and trying to either get them down or get them involved in the deal as well through a seller financing note and you know, just trying to figure out the best way to make it happen.

SPEAKER_01 5:54

And so, well, actually, let's let's start here too. Like, what year did you buy that first one up in Sunape in Farmington? Was that that was like 2018, something like that?

SPEAKER_00 6:01

Yeah, 2018.

SPEAKER_01 6:03

Gotcha. So at the time, you know, I'm speaking personally now too, and I'm sure you had the same experience. Like, you could go on the MLS.

SPEAKER_00 6:09

Yep.

SPEAKER_01 6:10

Somebody would list a property, even if it was, you know, Manchester, New Hampshire, which is literally exactly an hour north of Boston, for those who aren't from New England, it's you know, the largest city in New Hampshire, so this is where the bulk of the transactions are occurring for multifamily. At the time in 2018, like you'd see a property listed for 80 grand a door, you know, in Manchester. Now that same property trades at 160, 170 a door. As many markets throughout the country have seen, you know, 2018 to 2026, like a lot's happened. But at that time, like you could just you could buy a deal, quote unquote, on the MLS and it would cash flow and you could get it financed and it had good DSCR and it you know made sense more so than it does today. Like that was the dynamic at the time. And then you only, you know, that that dynamic was only more prevalent if you were looking in markets that were even farther outside or in more remote areas. So, you know, at that time, like that was certainly a strategy that worked to go out there and find deals, right? You're identifying an inefficiency, and like these properties are grossing a ton of dollars. We're buying them at, you know, these this low price premium. I mean, the sun would be one is like 50 grand a door or something like that. Yeah, it was less than that. So, but the other flip side is okay, probably less, you know, slightly less tenant demands, probably, you know, and now I'm just making assumptions you can correct me if I'm wrong, like slightly lower class of tenant on average. And then the management piece, right? You're living down in Boston, you're working as a broker, as an agent, you're doing deals, you have a, you know, let's just call it uh another job. You've got something that's calling you and making you work money through Friday, even though you might be able to set your hours. And you've got these properties that are between 90 minutes and an hour 45 away. What did that look like early? Like what were your systems early? Did you, you know, just always want to self-manage early? Like, how did that all come to be?

SPEAKER_00 7:56

Yeah, at a start, it was definitely chaos at all times. Uh my life felt that way from managing the apartments to also then selling. It was just constant chaos that I was involved in, which who cared if I owned 25 apartments at that point? And I was dealing with that on top of what I was already dealing with within the industry. I had set up, of course, like online payments, e-signatures, everything along the lines of that. But I would drive up at 10 a.m. to go show an apartment in Seneque, New Hampshire and grab a you know, extra large Dunks coffee and make my way up there to then also be back in the city of Boston by 12.30 to go do an open house at a three million dollar listing. I just got nauseous. Yeah. Right. And I did that far too long. And that's one of my kind of biggest regrets, of course, was not bringing, you know, at that time I really should have outsourced management, but I was really trying to bootstrap as many deals as I possibly could and take as much as I possibly could to roll into the next transaction. In hindsight, definitely not the way to have done it, but that's what I had done. And it is possible.

SPEAKER_01 9:03

Not alone. That's how most people do it when they start, right? I mean, uh like that's what I was doing. I was living in East Boston and I was driving up to Manchester at eight o'clock at night to meet the carpet guy. Like that's my that was like my triggering event to get out of it at, you know, just to no longer self-manage. Uh it was like 25-30 units or so, was like, I I am it's 10 o'clock, and I just got stood up by the carpet guy, and I was like, I can't all set. I was like, I think I'm good, right? That was my personal endurance for pain, but like as you described it, there are a lot of reasons to self-manage. And I think also there was probably dynamic in those areas where it's not like you've got a ton of awesome PMs to choose from, especially back in like 2018, 2019. Yeah. And I would imagine that probably played into it too.

SPEAKER_00 9:44

Yeah, absolutely. I did interview a Son of P PM up there, but it what they wanted, I think it was 8% off of gross rents, and you know, I was looking to scale, so I couldn't necessarily take that out of my bottom line every month. And I also still was self-funding a lot of the renovations. Yeah. So I didn't want to give up a lot of that control where I knew that I could work with one plumber, he was gonna charge me X, and there wasn't gonna be an additional charge-up fee to that. Yeah. So really, you know, kind of controlling everything. It isn't the way that I would recommend doing it to somebody looking to get into the industry now. I would definitely, you know, to new investors out there, I think the playbook now would be, of course, to find more properties that you can truly add value to by adding units or square footage, but then also not self-funding the renovations unless you absolutely have that capital. But I was going out selling condos to then go fund my renovation. So that that's one of the biggest takeaways that I kind of regret having done within building a portfolio now of a hundred and twenty-five units.

SPEAKER_01 10:55

Is is financing more of the renovations, and maybe I know you mentioned too, like before we got going, like you know, maybe raising capital would have been a part of that too, and not relying on your own dollars to you know to just continue pouring into the deal, one to buy and then two to to fund the rentos. Yeah. Like if you were to go back like tactically, would you have like looked to find like a business partner maybe to help raise it? Would you have you know syndicated?

SPEAKER_00 11:16

I don't know if you've raised capital since or if you're still 100% solo, but Yeah, I haven't raised any capital, so I am still solo, but doing it in the smarter way. Yeah. If I was to be buying my first property in the next looking to buy my next property in the next six to eight months, I'd be looking to bring on a partner or an investor that can help take off some of the load of myself financially to be able to scale and grow faster.

SPEAKER_01 11:39

Yeah. And I think I think what's interesting though is, and I would say the same thing. Like I didn't work with investors either until I you know probably a similar trajectory have got to like the 80 doors or whatever before I raised any money. But it was like it was a lot of debt, it was a lot of stress and money across tons of different projects, and then sometimes those projects hitting a wall because the money's not there to continue doing the next unit or the next phase of it, and it's like you gotta refi this one over here to roll the money into that one over there. That's how a lot of people do it. I think that's like how the I mean, I'm speaking broadly, but like the majority of like the kind of deal-oriented real estate guys who don't come from like the institutional real estate firm, and then their only exposure is like, oh, we raise capital to go buy this stuff, and then they go and raise capital to go buy their own buildings, is like you're probably trying to like bootstrap and get a few under, but I would agree. I mean, I I think a big lesson for me is like after you've done four or five deals, like you you probably have a good enough sense of what the whole process looks like to go and bring in some capital and feel comfortable about it, and that does alleviate a lot of the stress around it, while also obviously letting you grow faster. But it seems like you had a similar experience with like gotta get this you know deal closed and down in Boston to go and get that commission check to go pour it into the next three unit renovations or whatever it would have been.

SPEAKER_00 12:57

And it creates a lot of imposter syndrome, yes, even still to this day, where I was doing all of this and I didn't necessarily know exactly what I was doing, whether it was right or not. And I think you know now where I am, I kind of see back that I did it okay. I could have scaled and grown faster, but surrounding myself more so in the past three or four years with people like yourself, you know, we're at the vault, my ketchin's like all these other people that are investing in markets that we're in, kind of helping validate what I did was okay, but then also really kind of helping me to take my game to the next level from a management standpoint, which was my biggest bottleneck within the my portfolio, I would say.

SPEAKER_01 13:42

Yeah. And you know, you went from the 22 units, you have the eight in Sunapi, you got the 12 or the, I should say the 14 in Farmington. I know you did a handful of deals after that of kind of similar size, and and maybe there's milestones along the way where something clicked management-wise, where you, you know, brought somebody on, or you, you know, got much better at a particular process, or like you found the right GC. Like, what were some of the key kind of things along the way that made management a little bit easier as you continued to grow?

SPEAKER_00 14:11

Yeah, once I got to about 75 units, having probably at that point 100 tenants in a lot of class C, even class D stuff within a lot of these markets that aren't necessarily in the highest demand or have the best tenant prospect, I would say. You know, for me at that point it was okay, I can't keep showing up to these showings at 8 a.m. on a Saturday and getting no-showed.

SPEAKER_01 14:35

Right? Like that was that's specifically it's the no-show after driving a while.

SPEAKER_00 14:40

That really, really gets absolutely where I then had, you know, bought enough buildings, started networking even more, and I had a tenant that had worked for a larger real estate company in New Hampshire and was one of their like kind of handy people. Yeah. Cleaned and did a lot of tenant communication, and I took her on, and she's really kind of been my saving the grace the past two or three years, which has allowed me to step back, focus on how do I make my portfolio a little bit of a from a cleaner on a like a financial standpoint, and she's gonna deal with uh, oh, this person's looking to you know take on a new cat in their apartment and deal with that, or we have uh two vacancies coming up, you know, do the walkthrough with the previous tenant, you know, get the security deposit back. You know, it it's freed me up a lot to be able to, you know, take it into the next gear.

SPEAKER_01 15:36

Yeah, so she's kind of operating as like a generalist property manager who's I'm gonna do a little bit of leasing, I'm gonna, you know, take some calls, you know, from tenants who I want out a roommate and I'm gonna go and help people move out, kind of handling like all the stuff that maybe requires you to be physical up there. Like she's kind of taking on all that.

SPEAKER_00 15:53

Yeah, I tell her that she's the cork in the bow of the boat.

SPEAKER_01 15:56

You know, there you go.

SPEAKER_00 15:57

Instead of water keeping coming in and hitting me, she's the one that kind of is dealing with a lot of that, and uh it's been I wish I had done that when I bought like 35 units. Yeah. I think that was the time to actually scale to that point instead of keeping it on for another two or three years.

SPEAKER_01 16:14

Yeah, but you know, that I think that's kind of the magic number though for a lot of folks is like whether it's 35 or 50 or 75, like generally speaking, in that broad range, like you could probably get to 75 if you've got like all really nice newer A-class buildings that were built 20 years ago, 10 years ago, whatever it might be. But if you've got 100-year-old buildings in remote areas in New Hampshire, like yeah, maybe that is 35, right? But whatever it is, like that's the best first hire is somebody who just kind of deals with a lot of the stuff and has like good soft skills and is like a generalist versus like one kind of narrow specific person. But tools and software that you picked up along the way, or maybe that you use now where you're like couldn't live without it, you know. I'm sure you've got like a property management software or something like that, but like even outside of that, like anything specific that's really helped you get your arms around the whole thing?

SPEAKER_00 17:02

I'd say, you know, two big things was a change for me getting onto Door Loop. I don't know if you're familiar with that. Shout out Door Loop. No free ads, we're gonna hit them up on the floor. But they have been super helpful. That that whole platform's been super helpful, just managing tenant, you know, payments, who's behind, even just putting together reports for me as a property owner to get over to the bank when they request it. Yeah. Rent rolls, and all of my my maintenance requests now. I've gotten all my tenants to go through that portal, put everything in there, it gets sent over to her, and she facilitates now with the plumber or the you know the electrician or whatever needs to end up happening. I would say that's the biggest one for me. You know, obviously all online ads and things along the lines of that. I don't do any direct outreach to sellers uh looking for deals, which is I know kind of how most people are finding their best properties that they end up purchasing. I'm still kind of you know just directly with working with agents that I've built relationships with over the past now eight or so years.

SPEAKER_01 18:08

But I think I think that makes a lot of sense in terms of where you're buying, right? Because the direct-to-seller thing, obviously, we do a ton of direct-to-seller, it's a core part of our business. We do that, but we also still work with the agents and we still work with you know the investor who runs across a deal but does, you know, timing doesn't work for them, so they want to just refer it over to someone. Like we're still kind of doing all of those different things. But in the competitive markets, that's where we've spent more time doing direct-to-seller, like the southern New Hampshire markets of like Derry and Nashua, you know, Dover and the Seacoast, like where there's not like a lot of out-of-state interest in those towns from a from a deal standpoint. As you head farther north or you head farther east, or not really east because you've got the ocean, but farther west in New Hampshire, and it's less competitive, like you can have a good relationship with a local broker out there who just wants to get somebody on the phone who like owns in that area and can close. Because at the end of the day, like trying to get the out-of-state guy, which ironically was like you in 2018, but usually that's a harder sale to make, you know, is like the guy who hasn't done anything in New Hampshire going up and buying 14 units in Farmington, like usually they kind of want to be in the more populated area, it feels safer, it's probably a little easier to get financing, all that stuff. So I have to imagine like you've become you know kind of entrenched in the in the local area up there in terms of like the brokers that are doing those deals and all that, just given the fact that you own a lot up in these general areas now.

SPEAKER_00 19:31

Yep, absolutely.

SPEAKER_01 19:33

So after the 22 units, I want to just you know kind of quickly talk about like the thought process around because I know you kept buying more in these areas. Was it was there ever a thought like I want to head farther south, closer to home, or was it always like I want to be in these more you know smaller town tertiary areas, kind of more podunk regions of New Hampshire?

SPEAKER_00 19:52

So for me, it was again going back to the affordability of what I could buy. I didn't foresee what was going to happen in 2021, 2022, but you know, reek the benefit of that, right? And now I'm actually selling out of those markets and buying into you know larger Class B properties, using 1031 exchanges to be able to take that capital or cash out refines of properties that I see myself holding for longer periods of time and redeploying that capital back into you know a larger, more stable market and a more desirable property for the long term.

SPEAKER_01 20:27

Yeah. At the time when you're buying these buildings up there, like from a financing standpoint, how are you getting them financed initially? You know, I'm assuming that you created some value or the market continued to gain steam as it did, and then you you know you refined like availability of debt up there, you're working with like local banks, credit unions.

SPEAKER_00 20:47

Uh, within those markets. So, for example, Sunepee, there is a bank just off of the lake there that had used, and this is one of the key pieces I think that actually helped me close a lot of these deals, was working with local banks that already had the existing debt on the property. So they were already familiar with the property, and that's all public information to go look up or even just ask the seller's agent when you're going to view that. You know, that was uh I think something that a lot of other banks wouldn't have looked at to buy. But I did create the value, one in, updated most of those units, and now I'm selling a couple of them, like I mentioned.

SPEAKER_01 21:24

Yeah, yeah, no, I love that. I mean, I think when you're in an area that doesn't have like a lot of, you know, for example, there's not going to be many like northern mass banks or credit unions that probably want to go and finance the deal in Farmington, but they would maybe go and finance the deal in Southern New Hampshire that's you know 30 minute drive time away, or just in a more densely populated area where it feels a little bit, you know, less risky. Yeah. But in those areas, you do have those like very hyper local three, four, five branch banks or credit unions that are like, we really want to invest locally, like in the local community, and put you know, put a put a sign up on the fronters. Something like that that says, hey, we finance this building, typically that's a development versus a value added, but like same concept. And yeah, the easiest way to find them is just go look at who has the loan probably on the deal that you're buying. Yeah, exactly.

SPEAKER_00 22:11

If they've already had that loan for 20 plus years, you know, buying from a small mom and pop, they're probably going to want that again because they don't already have they're not pulling in a ton of business all that often. And I did find some you know reasonable terms that I you know was happy with.

SPEAKER_01 22:26

Over the years, how has your time investment and maybe it hasn't changed, but how how has your time investment changed or focus changed as it relates to like brokering deals in Boston and selling the condos and selling all the single families around Boston versus like growing the portfolio up in New Hampshire? You know, has it kind of been the same since you started or has that changed?

SPEAKER_00 22:46

I I'm starting to uh I'm not as young as I was back then in willing to spread myself so thin. Um definitely with my time, I'm getting a lot you know more honed in with what I want to be doing. The brokerage side of things is a great way for somebody that wants to get into either real estate development or you know multifamily long-term, just to understand how the lingo works between brokers putting deals together, but then also how to find deals and how to actually execute. The brokerage side in Boston's, you know, a great market. It's changed a lot since 2021 from a being in a smaller or slower market, but it's it's a grind being in sales. I love the multifamily game, being able to go in, find a property that has some type of value add, whether it's adding space, bedrooms, or just strictly cosmetic upgrades where a seller is tired, you know, has rents at 1600 where markets at 2100, right? Like that's just creating value. And as long as the box looks pretty good, you know, it's kitchens, countertops, appliances, LVP flooring, which you know I feel very comfortable being able to do. So I've shifted most of my time in my investment, in my you know, just my focus, I suppose, to wanting to be in grow, continue to grow my multifamily portfolio up here.

SPEAKER_01 24:11

Yeah. Yeah, and I would imagine it's you know, as the the deals get a little easier to run and you can manage more units with one person or a smaller team, if there's more people at some point, like it's you know, you're you start making more money across more of these, you know, from a nominal dollar amount standpoint, probably it's a little easier to replace some of the work you're doing on the brokerage side. And you know, I I mean, outside of that, too, I think if you're gonna be buying closer to home, you probably increase your, you know, increase your band, closer to home being Boston versus going all the way up, you know, not that you're physically heading up there, but you probably still physically head up there to go look at a property during a walkthrough or do, you know, do inspections or or what have you. You know, generally speaking, like long-term objectives for you, like multifamily-wise or or buy and hold-wise, you know, you I think you said 125 units, right? It's current portfolio. Like, is the goal to grow a large business vertically integrated? You've got hundreds and hundreds of units with like a big staff, or or is kind of, you know, you want to maintain the lifestyle design of I'm a you know, I'd love to broker some deals, maybe 20 hours a week versus 50 hours a week, buy some rentals, and you know, kind of keep my arms around the whole thing.

SPEAKER_00 25:20

Yeah, so I I was working and I really got burnt out from working in Boston with like a large national brokerage. A lot to it, you get a lot of people coming at you for a lot of different things. I started my own brokerage, I just do my own deals now. And but what I mean by that is working past clients, referrals, friends of friends. It's taken a lot of stress off of me. And I've enjoyed the selling process more than I did in 2021 and 2022. For multifamily, where do I see myself? I have three properties under contract that I'm doing a 1031 on and looking to identify, hopefully, a Class B garden style 1970s or so build. And then what I've bought over the course of the past two or three years, I've added the value within the past couple years within that time frame and looking to start to do a cash out, sort of then redeploy back in probably like 2028 at that point.

SPEAKER_01 26:16

Yeah.

SPEAKER_00 26:17

You know, rates are still a little bit elevated. I was buying deals and I bought, you know, my best properties that I've been buying have been with higher interest rates. Some of them have debt at you know seven and a quarter percent. Hopefully, we can ride down the rates a little bit longer where I can take a little bit more of the cash out after having added some value, and then continue to look to buy in more central markets like Manchester or just around there or closer to the seacoast, southern New Hampshire, and you know, buy stable properties with uh a lot of separate utilities. That's one of the other things. And a lot of these like Farmington, Sunope's, is you don't have properties that have gas, heat. So you're dealing with a lot of oil up in the northeast, right? And that you know is a variable that you don't necessarily know what's going to exactly look like at the end of the year. Where, you know, now I think in New Hampshire, you you start getting into these class B properties that are newer builds, and you have that, you know, separate utilities, all gas, but probably still on some type of septic, right?

SPEAKER_01 27:21

Yep. Yeah, it's well, it's interesting. I mean, it's like once you go up into you know the Farmingtons of the world or the Sunnepees or you know, Pembroke, New Hampshire, or Tilton, or like all these towns that are small towns, you know, out there, like it's not uncommon to see a six or an eight unit building that at one time was just one big, like, massive single-family home, and then you know, maybe this big like six-bedroom house, and then over the years they've chopped it up and diced it up into two studios and four one-beds and this random two-bed. And yeah, it's multifamily, but you know, maybe there's two electric meters for six units and you're paying the electric. Or even if it's separate electric, you've got the one heating system, and all it takes is, you know, one of the tenants living there will just leave the window open for a weekend, and next thing you know, your whole year is shot, right? I mean, it doesn't take much. No. So it's it's interesting, and it's it's not a problem, I think, that many folks, you know, because there's national folks listening to this podcast where it's like if you're in Florida and you're buying your very cookie-cutter 1980s concrete block, it's all just, you know, we've oftentimes got a water meter heading into each unit. Like you're submarined in the water easily and there's no utilities. Where it's that is an interesting dynamic that we have to manage in New Hampshire, but it sounds like you're, you know, you're just looking at different deals where that's not a concern.

SPEAKER_00 28:38

Yeah. Now, in you know, I think that's one of the interesting things about New Hampshire, right? Like that I I view that almost as a class B building. Yeah. Where in a lot of other markets, like I know you had invested down in Florida, yeah, is that more on like the Class C-ish type stuff?

SPEAKER_01 28:52

Yeah, I mean, like, unless you're in that really nice geographic location of like a good neighborhood in like Tampa or you know, Miami or whatever, and a 1980s building is Class B, but like most, you know, the vast majority of the state, if it's built in the 60s, 70s, 80s, like it's a Class C building. And it's like if I see something built in the 70s in New Hampshire, I'm like, we got some, we got a we got a new build here. It's nice. Yeah, there's good stuff. Look at this final siding, it's beautiful. Um But it's it's interesting because it it just demands a different approach in how you underwrite it and how you operate it, right? It's it's just because something is built in the 1970s doesn't mean that the building itself is functionally, you know, trash, right? Like that's not really the case because the rental market in New England is a ton of early 1900s built galley kitchen, like you know, weird living room, just kind of functionally obsolescent stuff. So something that was built in the 70s is actually very functional because it's you know a little bit more modern. Yeah. Whereas that's not the case in a lot of other markets, which is very interesting.

SPEAKER_00 29:51

I think we benefit, of course, being in the Northeast, you know, being in a little bit more of an isolated market where we have more, you know, I think less inventory overall as a whole in the meds and eds, which is down in Boston with the education and you know the the pharma whole industry, where that all bleeds up into New Hampshire, which I think just insulates the market a little bit better, where we don't see those large fluctuations that a lot of investors are seeing nationally, whether in Arizona or parts of Florida right now, I would say that we haven't really seen much of that.

SPEAKER_01 30:24

No, no. I mean, I think broadly speaking, you know, people just assume that everywhere's, you know, everywhere, meaning every geographic kind of market or area within the country has had some level of distress over the last few years, and it's like there just has not been distress in New England. It's funny, earlier today, and I know, you know, I believe you know Pat Brady, who debt broker, yeah. We recorded an episode earlier today, and he he jokes, he's like, I get two calls a week from guys who are like, you know, which banks are like struggling right now who've got the bad loans, and it's like there's no distress. It doesn't happen. No, bigger. Unless it's like office, right? Or something. But for multifamily, it's like the rents, you know, rents have kind of flatlined, I think, in New Hampshire. At least, you know, I want to talk about a market I know, which is New Hampshire. Last 12 months, 18 months, it's like maybe in some areas you've got little one, two percent rent growth, some areas you kind of one, two percent rent declines, you know, and there hasn't been like a lot of real actual rent growth. But expenses haven't gone as crazy as they have in many other markets. Like insurance is kind of relatively similar, our utilities are relatively similar, and yeah, cost of labor maybe is going up, but like we're not seeing like the insurance, you know, 2x like it has in Florida and all of these other markets where you know the PL is also kind of getting hammered along with the fact that people structured the deals wrong from a capital standpoint. So, New England I think is interesting in that respect, where a lot of people have been able to play like offense the last few years, right? And I would just, you know, you being a good example of like these buildings that I bought in these you know very small markets have still appreciated significantly in value. The rents have continued to increase. I'm selling them at these really compelling prices, and I've been able to keep buying, keep buying, keep buying, which I think is you know not a dynamic that everyone or that every market in the country has been able to kind of capitalize on. Now, in terms of pursuing deals now, you know, we're gonna talk about a deal in the deal segment where we kind of really dive into this, but generally speaking, like what sticks out outside of being you know, maybe Class B, Southern New Hampshire, good area, like what type of value add deals are you looking at? Like what's kind of the story of what you're looking for from like a deal standpoint? Is it still kind of we're just looking for light, moderate value add stuff and we're gonna create some value that way, or are there other little things that you like to see when you're looking at a deal?

SPEAKER_00 32:39

Yeah, I would say that is probably my main focus right now. I feel, you know, like I got burnt out in 2021, 22 selling real estate. I feel a little burnt out right now of doing a lot of the value ads, adding apartments to buildings and you know turning over probably 20 to 25 units a year in the past couple years. So I've kind of hit that burnout point where I am still within the in the business, you know, more than probably like how you're in your business. But you know, something that I can kind of go in and just do a light cosmetic would be really great. Hard to find, right? And it's not gonna look all that sexy on a on a pro forma, but you know, I think with where we are in the market and I my belief of New Hampshire multifamily, I still don't think that we can go wrong with you know buying up here. Yeah. If I if it's a Class B building and I can buy under repair replacement cost, I think that that's probably a little bit of a win for right now.

SPEAKER_01 33:38

Yeah, I would agree. I mean, it's also you know, we also really like the light, moderate value ads. You know, our whole thing is like we want to be paid for our knowledge versus swinging a hammer. You know, how do we how do we optimize the operations and some pet fees, some you know, garage rentals, maybe a storage unit or two, maybe you know, finishing some attic space that's unfinished, where it's like the little light lifts that create the outsized value where it's more of our know-how that's where we're earning the dollars versus like we're going in here and we're just gutting this apartment and taking on all the risk that comes with gutting the apartment. Yeah. Last question before we wrap, I just you know, it's I can only imagine that it was probably challenging to find consistent help to renovate apartments where you were buying them. Like, did you end up finding like a good crew or two that you just kind of kept sending back in, or like, you know, any war stories from that that that stick out?

SPEAKER_00 34:31

Oh yeah, and still wear a lot of those bruises. Yeah, you know, I have you know, as I was scaling, I would just use still a lot of my network out of Boston. And there is a crew of guys that lived in Revere that were willing to go drive two hours to go work for me. And I think God's speed. And they got me to where I kind of am now, to a mostly stabilized portfolio. Yeah. So I still use them. More recently, I brought on somebody, you know, to work for me for four days a week. He goes and does two other days with another property owner in southern New Hampshire, and you know, he's just doing whatever I need. There's definitely times where there's you know, probably paying him, and he's not doing all that much other than just kind of tightening up loose ends on certain properties. But having that guy now that I can call, or really at this point, Cheryl calls, to go deal with any tenant issues or you know, the leak at 10 o'clock at night is huge for me.

SPEAKER_01 35:30

Yeah, I well, you kind of I mean 125 units at at that point, you kind of need somebody who's on call, more or less, at least at least some percentage of the week. And even if you know he's not working a full day and you might be paying him or whatever the structure is, it's like just having the speed of my water heater isn't working, I need somebody to go look at it. Like instead of trying to coordinate with a few different vendors who are all over the place, just having someone you can send is like good tenant satisfaction, I would imagine.

SPEAKER_00 35:57

Definitely. And that in you know, I I think one of the keys to my success is tenant retention year over year. Um I think you know, I I have probably ninety or so percent retention, which I think industries, you know, high. That is high. Right. I in you know, the past couple years we've seen rents kind of level off, so there hasn't been any crazy jumps in rent that I've been looking to get. So people have been staying, but you know, it's that's one of the big things that, you know, since having Tyler has really helped me kind of keep people as well.

SPEAKER_01 36:33

Yeah, which is good. Yeah, I mean it's I mean that's at the end of the day, like where you make all your money. It's like do you retain tenants?

SPEAKER_00 36:38

We are right. We are in a service business, I still feel as landlords. Like depending upon how you know hands-on you are, you have to provide some type of service to your tenant. Yeah, and they are kind of your client at the end of the day. So you know I had gone through all of those you know years of losing tenants year over year, somebody's only there for 12 months or whatever, and then leaving. And I think a lot of that was because I was waiting two to three days for a plumber to show up in you know, Santa Peter Greenville, where there are only a handful of plumbers, right?

SPEAKER_01 37:11

Like literally, there's like five or three or whatever the number might be. But and it's and yeah, that's like the number one reason, like outside of I so I guess maybe it's not the number one, but number one is lifestyle change, you need a bigger apartment, moving out of town, whatever. But like number two, and the industry says this, like if you I you know, all the surveys that NARPum does, like the National Association of Property Managers, it's like crappy maintenance response. It's like I I didn't have hot water and I took cold showers for a week. Like, I just don't want to, even if I know moving is gonna cost me money and it's economic waste in my life, I just don't want to continue renting from this individual because I don't like them. Like that's a real dynamic for sure.

SPEAKER_00 37:50

Yeah, and I think you know, being landlords, we get a bad rap right out of the gate. Yeah, exactly. So, regardless of how excited somebody can be moving into their apartment, you know, if if you have issues within the first 30 to 90 days, like they're probably already made the decision that they're probably gonna end up moving out.

SPEAKER_01 38:09

Yes, a hundred percent. All right, man, this has been great. Appreciate you taking the time. Where can folks reach out to you and learn more about you?

SPEAKER_00 38:16

Yeah, so I'm just on Instagram. Um Windrift R E is my little handle there. It kind of showcases what I got going on in and around the city and then what I'm doing up in New Hampshire. Always happy to grab coffee with you know a new investor, local investor, or somebody looking to do a deal.

SPEAKER_01 38:31

Sounds good. Well, thanks again for the time.