Teamwork, Mentorship, and Apartment Syndication with Vlad Arakcheyev

Vlad Arakcheyev, an experienced real estate agent and investor based in Jersey, shared his journey into the real estate industry and his current focus on multifamily. He highlighted the benefits of multifamily/apartments as a safer investment in the current market cycle. Vlad encourages people to network, join mentorship communities, and educate themselves in order to succeed in real estate.

Connect with him at: 
Vlad@ZontikVentures.com
https://zontikventures.com/
https://www.linkedin.com/in/vladarakcheyev/
https://www.facebook.com/Vlad.Arakcheyev1/
https://www.instagram.com/vlad_arakcheyev/
https://www.tiktok.com/@best_apartment_advice

Connect with Enrique at:
enrique@foxtrot-capital.com
https://foxtrot-capital.com/contact

Transcript

Enrique: 0:00

Disclaimer. The views and opinions in this podcast are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment decisions. Always consult with your financial advisor. Hello and welcome to the Property and Wealth Podcast with your host Enrique Hernandez. This podcast is brought to you by Foxtrot Capital, a real estate investment firm with a focus on the acquisition and management of value-add multifamily properties. In this podcast, we interview successful investors with the purpose of learning and informing listeners on a variety of investment strategies and methods for building wealth. Our guest today is Vlad Arakcheyev. Vlad is an active real estate investor, JV partner, co-sponsor, and CEO of Zontik Ventures. Vlad left his W2 job as a graphic designer and went all in on their pursuit of his financial goals. Today, he's allowing us to dive into his path to becoming a successful apartment syndicator with over 500 units under management. Let's jump right in! Intro. Vlad, welcome to the Property and Wealth Podcast. How are you today?

Vlad Arakcheyev: 1:14

Great. Thank you so much for having me.

Enrique: 1:16

Thank you for making time to talk to us and for the listeners that have not had the pleasure of meeting you yet, would you mind giving us a little bit about who is Vlad Arakcheyev?

Vlad Arakcheyev: 1:26

Yeah. Wow. That's pretty good. So yeah, I'm in Jersey and I started my real estate career being a local real estate agent. You know, and actually I am, I'm still am, I'm selling residential houses here in Jersey, and then my path took me to a flipping wholesaling, your typical, I guess, progression as I started going to real estate investment meetings here in Jersey. And then slowly, but surely I realized that I was looking for something else. Which is passive income. That's, I think, that's what everybody's goal. At that time I had a W2, I was a graphic designer. I know nothing to do with real estate whatsoever. I used to make posters and flyers and billboards. And shortly after I resigned, because I started losing deals while I noticed while you're at your W2, you can't pick up the phone. You don't have the flexibility to speak with clients all the time. And others will beating me out on deals, maybe meeting with clients faster. Or go to appointments sooner. And I lost three deals. How much money? Only I wouldn't even know, maybe tens of thousands, maybe a hundred thousand. I wouldn't even know, but I know I lost them. So after I resigned, I started. We started buying single family rentals here in Jersey. They were quite successful but still it was not enough. So we, I'm not talking about money, but I'm talking about growth, right? We went to a multifamily conference after that. And that was in Texas. After we were flying back and when I say we, it's me and my wife I was hooked on multifamily. It was like a drug. And I immediately started thinking, Hey, listen, what do we need to succeed in multifamily? Well, we need education, but we need mentorship, of course and connections. So for that, we started interviewing mentors who or networking coaches and groups and we joined Jake and Gino the multifamily mastermind, and after that, everything took off, even though I still do single family my main focus is multifamily, of course. So yeah, we buy operate and manage garden style apartment complexes and very select markets in Midwest. And Sunbelt. And now we expanded to the Carolina market. I guess that's not Sunbelt, is it? Yeah. Let's just say Carolina market. I'll take it. Sure. Yeah. But yeah, so that, that's all recent entry into a multifamily. So I, I love it. I do this now full time. I still sell houses here. I focus on the difficult cases like foreclosures, liens, violations, things like that. And of course my main focus is my multifamily. So. And

Enrique: 4:31

you mentioned something earlier when you said you resigned and went straight into multifamily. So was there a plan B or you just said, no, I'm getting out. I'm going to make it happen. How did that happen? Yeah.

Vlad Arakcheyev: 4:42

No plan B, no plan B whatsoever. I burned the boats. You burned them all, huh? I burned them. Yeah. The thing is I, you know, after reading a lot of books, it's, it's basically, it's either do or don't do. Right? There is no try. If you're going to try, most likely you will fail because trying means You, for the lack of a better word, you're not, you're not focusing. Trying is like, yeah, let me just try it. But it's okay. I have something to fall back on. In here, there is no falling back on anything. And the funniest thing is, after I actually resigned, I said, that's it, I'm not doing you know resign anymore. I got so many offers for jobs, doesn't that always happen? They're like, oh my gosh, look at all these. I got so many offers to do all these things. And I'm like, guys, I don't do this stuff anymore. That was, of course, a long time ago. That was four years ago. I shouldn't say a long time, but fairly long time. And I said, that's it. I'm in real estate. I don't want anything to do with graphics whatsoever. I completely A. You know, stepped out of it. That was in my past. Now I'm hyper focused on multifamily apartments. I only do apartments, even though we do have some land that we are selling in Sarasota. It's by Sarasota in Florida. I typically don't do land rezoning, but it was my very first deal that I got into, I'm very happy with it. It's just, I consider apartments, especially in this market cycle, as the safest investment or safer investment.

Enrique: 6:24

And now that you mentioned apartments and that they're safer, what makes apartment, because you're in apartment syndications, correct?

Vlad Arakcheyev: 6:32

That's right. I've done JVs and syndications.

Enrique: 6:36

David, okay. Would you mind explaining the difference between a JV and an apartment syndication?

Vlad Arakcheyev: 6:41

Sure, yeah. So when it comes to JV, which is joint venture, typically those are smaller deals I would say up to 2 million, a group of people come together. They have, they all active, they all operators. We pool the money together, of course, with the help of a bank or debt. And we purchase something. Everybody participates and does something. Like, I'll give you an example. We have a deal, 40 unit in Kansas City. So on that deal, there are five partners. We all put our money together. And everybody does something. Like, for example, one person does the books. We do asset management. We have weekly calls with our property manager to see, you know, how is everything going, the turns who left, what projects are going on, stuff like this, another person's doing anything legal or related to banking. Because that's their background and they're comfortable with that. And another person's actually boots on the ground. So they are visiting the property. I would say biweekly speaking with property managers, face to face, asking tenants if they need anything, stuff like that. So everybody has a task now when it comes to a syndicate and you have to put a lot of money down in order to close by a lot, I mean. Maybe 75, 000 more in many cases. It's more, it varies, but you have to put money down in a syndication. It's, it's very similar, but there's another component to it. You have passive investors, so you have operators, right? Or sponsors. And then you have passive investors, passive investors get all the benefits. Of real estate, they get cash flow, they get depreciation, they get tax write offs, they get compounded interest, they get everything. The only thing is they're passive, they cannot make decisions. Right? So if I wanted to, let's say, I always make this silly example, like, if I want to paint it yellow and you want to paint it blue, and you're a passive investor, we're painting it yellow. The thing with passive investors is it's, it's full transparency. They know everything that is happening. They know how much money we're making. They know how much money is going out. They know what projects we're working on. Occupancy, I mean, you name it, it's a hundred percent full transparency. At any point, a passive investor can call me or any other sponsor. And ask any question and we have to completely be fully transparent and give them all the answers. Typically we send reports monthly and then big updates quarterly. With our previous deals, our passive investors receiving monthly distributions. Typically on the last deal, there's 7 percent cash on cash distributions on their investment. So, and of course, they receiving a compounded interest in the absence of taxation because they receive K1 forms depreciation forms. So that's the difference where you have passive and active and joint ventures, pretty much everyone's active. So, and syndication, you can do larger deals. And just to give you an idea, and JV typically it's smaller deals, we'll say up to 2 million. You, I mean technically you can do more, but I would just say, from my experience, what I've seen and what we closed, I would say 2 million, maybe even less. That's like the sweet spot. I guess so. Yeah. It just varies deal by deal basis. Of course. I mean, there's so many variables. It's just, that's my experience. Like last deal that we closed was nearly 40 million. And we had, obviously, I think we had 12, 12 main sponsors and about 60, 60, 60 passive investors. Typical investor invested alongside us, Approximately 180, 000 on average. Somebody invested more, someone invested less. Some money came from self directed IRAs, Roth IRAs, 1031 exchanges, 401ks, and some just invested. You know, from the savings account or cash you know, it, everything works and it just depends on where you invest from, let's say you invest from a Roth, which is tax free retirement account, any gains that you make. From that investment is also tax free. That's also an awesome way, right? So if you invest in with your Roth and you make, let's say 20 grand, just hypothetically, we're talking number 20 grand is tax free because it came from a Roth investment. So there's a lot of strategies you can do and utilize. If, if it's regular, traditional Investment like traditional IRA something like that 401k or 401k IRA. Yeah then it's tax deferred. Yeah, you have to pay taxes later. When you start pulling the money, what is it? Fifty nine and a half years. It's similar, but On Roth, you already paid taxes. So it's, you have to consider this. And I'm not a CPA or anything, speak with your CPA about it. Neither am I. But the strategy is this, you're going to have to pay tax either now or later on the seed or the crop, right? And it's your choice when you want to pay. Everybody's situation is different. It's your choice.

Enrique: 12:38

Right. We're not financial advisors, but, if you believe that taxes will be lower by the time you hit 59 and a half, then by all means, go with the traditional IRA, right? Yeah. If you don't believe that they will be lower, then if you believe they'll be higher, then Roth IRA might be your thing. Not financial advice, right? Because we're not, but something to think about. Yeah. And you mentioned you invest on, along the Sunbelt and now you have interest in the Carolinas, right? South Carolina, North Carolina. Is there any specific areas where you're looking into?

Vlad Arakcheyev: 13:13

Yeah. So previously we invested in Boone North Carolina and Columbia. That's in South Carolina. We got some student housing there by the university. So that's, that's doing great. We got 39, 39 beds. They, the, you're counting by beds when it comes to Boone, we actually got a brand new development from a builder and it's 19 houses and they are doing fantastic as well. And the cool thing about it is that you have several strategies there. You can do long term rentals, of course, or you can do midterm rentals. And cater to traveling nurses, right? So it, from what I have learned is that it's really, I think it's really great to have multiple strategies, right? Not only exit strategies, but business plan. Exactly. So, thank you for, for helping me on that. So, right now, there are long term rentals, but since there's a hospital next door, what we're doing is we're trying to call the hospital, local places, and seeing, hey, listen, how many traveling nurses do you have? Maybe we can convert one or two of those into mid term rentals. Right. Not only will help the community and people that are looking for that, also we're helping, you know, the investors because we're gonna have high cash flow and of course more cash flow or distributable cash, we can distribute more money to our investors. So it's a win-win. So

Enrique: 14:59

your market research includes actually calling hospitals and talking and trying to gather information from this hospital that's also part of your market research.

Vlad Arakcheyev: 15:08

Yeah, absolutely. I called about 10 of them and actually being completely honest, people, people are, there's a lot of various online resources, absolutely. But calling hospitals, it's, it's one of the easiest things. Just call and say, Hey, listen, I'm a local investor. I am potentially looking to have midterm rentals. Do you have any traveling nurses? Do you have any need for this type of housing? And those people are more than happy to speak with you. Then they're not gonna hang up. They don't think it's a weird question a lot of people say like, oh my gosh, I'm afraid to No. Don't be afraid to call. Just call. I mean, the worst thing you can say the the worst thing. What, what's the worst thing that can happen? They can say, Hey, this is not, our department wouldn't deal with it. Call somebody else. And they, they're gonna hang up on you. Yeah. They direct you the right way. Yeah. Never happened to me. They all, they, they were all great. And they gave me a lot of information and that's why we are considering this small conversion just to test the market.

Enrique: 16:13

Nice. Now, something I forgot to ask you earlier, because you mentioned it's been four years, so you obviously went through the whole good old COVID situation, right? Before that, how, how did you navigate that time where all that unpredictable craziness was happening?

Vlad Arakcheyev: 16:30

Yeah, COVID was definitely scary stuff because a lot of stuff was shut down, right? So when it comes to, at that time, I was not in multifamily yet. I was just kind of thinking about it. I was, I was acting as a local agent and it was weird. Let me tell you what the masks everybody's of course every time you want to show a house that was like a line of 50 people outside, you know, They were all spaced out like 10, 10 feet away from each other. So everybody's wearing booties and all these kind of things. So it was a lot of uncertainty. But one thing I know is that people, it doesn't matter what, what, what crisis, whatever's happening, people have to live somewhere, right? They have to buy and sell houses. They have to rent apartments or, you know, places to live. Oh, that's why I'm hyper focused on multifamily because it's your basic human need, food, clothing, shelter, apartments, people have, they not going to go homeless. So even during crisis where a lot of businesses were shut down and you know, if non essential business closed, restaurants closed, movie theaters, everything, but real estate wasn't because people have to move, people have to buy. So they understand that. And it was, I would say not typical but it had to be done in order to make the deals work. But in my opinion, it kind of. If I should dare to say, change things for the better. And what I mean is that e signatures became common. Like, you can e sign everything. Oh, it's like, oh yeah, you need wet signature for certain papers. Now, e signature for everything.

Enrique: 18:22

That's out the window a long time ago. Yeah, you have these remote closings. You don't have to go to the title company. Actually, title our title company used to go, we used to go to, like, local Starbucks or had a closing, you ready for this? On the back of a car. Like on the hood of a car. Yeah, so three people got together outside because all the indoor location restrictions are restricted, especially here in New Jersey. So we were doing it outside, like on the hood of a car, signing everything in the park. So it became normal. We kind of adjusted to it. And now. We, we thinking, why do I want to go to a title company that's like an hour away if we can go to a local Starbucks or coffee shop and do the same thing? And with e signatures, it's just so much easier. I mean, I can just e-sign everything and get the reply within 10 minutes. So it, it changed the way things work, and I believe it made it faster, right? We were forced to be changed. Everybody was forced to make this change and things are more efficient now, I would say. So I, yeah, so I You know, I shouldn't say it's kind of like, yeah, gotten better, I think more convenient, a lot of look at we're doing now before we would be on the phone now we're on zoom looking at each other. So everything changed. Yeah, And you mentioned earlier, people always needed a place to leave, right? Which is also very good for apartment syndication. Because right now, what do we have? We got crazy, but really crazy. Obviously, historically, it's been higher. But we got crazy interest rate compared to the last few years. So last thing I read is a person making 80, 000 a year is not able to afford a home, right? These are, these are now apartment renters, right? Obviously, probably not a Class C, it would be Class A apartment because they can afford that. But the interest rates can't support them buying an actual single family home just to support your point when you mentioned earlier. So, yes, I agree with that. People always need a place to live. It's either a house or an apartment.

Vlad Arakcheyev: 20:43

It's much more difficult to let's say, afford a place that you really wanted. Just due to the rising, and also we have, we have shortage. Right. So what I hear the most is this, Oh, right now, my rate on the house is 3%. Why would I want to get another house and sell mine at 7%? And we were, we, we actually, we were selling a house or still are in Newark, right? Arguably, Newark is not the best area in New Jersey. There's a lot of changes in Newark, but if you look at the whole area where you want to be you know, Newark is not the best. It's very good for investors. It's an investor friendly area. There's a lot of stuff happening, a lot of activity in Newark. So there was so many people just showed up and try to buy that house. We got six offers, competing offers, even now with 7 percent or six and a half percent rates. I'll give you another one, Monroe, New Jersey arguably fear one of the best, well, I shouldn't say the best, very, very good area to live. Very desirable. It's about an hour away from New York city. Great places, great communities, nice schools, right? So I have a client that wants to buy there. Not only don't have any places to buy. There was one that came out. We gave an offer. Now, it actually happened this, this Saturday. We gave an offer, 10, 000 above asking, we, 10, 000 above asking, 30 days close. Now, we got a call from the listing agent and they said we have 7 more offers, 3 of them in cash, and the seller is picking those. Can you believe that? At this time still, so even though you think that the market is cooling or anything, it's not cooling. It's not. And additionally, what I'm hearing is, and I don't want to get, you know, too deep into the weeds of things. Yeah, but all these companies like BlackRock, Goldman Sachs, all the private investment firms, what are they buying? They're buying real estate. And what are they looking for? They're looking for what we look for. 3, 000 to 2, 000 to 3, 000 square foot house, three bedroom, no double yellow lines, quiet neighborhoods great schools. That's what they're buying. So as they're buying all those single families, right, the prices will be higher still or be at that level. Even if the, if, if the interest rates drop, that's what the, I'm not an expert, that's what the experts say. And I tend to agree with them because like I said, people want to be there. Look what happened. As soon as the rates dropped, everybody started buying everything. Oh my god, people were buying houses, even though they didn't even need them, just because the rates were low. People were like, oh my gosh, look, my neighbor is running over there and buying something. I gotta go and put some money on that too. And it's crazy what happened. But you know, we have housing shortage. That's, that's, it is what it is. I see it every single day.

Enrique: 24:12

I've seen a few communities where houses, single family homes are being built, not for sale. They are to be rented. I'm actually seeing around here in North Carolina as well. So yeah, it's interesting to see these market and economic trends how the things are moving, right? So

Vlad Arakcheyev: 24:30

it's interesting time for sure. Yep.

Enrique: 24:34

So how do you source your deals?

Vlad Arakcheyev: 24:37

Yeah, there's a few ways. We go direct to seller. And we, I literally call sellers. That's the, and follow up with them. So the, one of the ways is direct to seller. Another way we have a person on the team that is building broker relationships and he is on the phone all the time, speaking with brokers constantly providing feedback, we underwrite a lot. I would say five deals a day up to now it's September. Up to September, we looked at, I actually got that, that report, that KPI, nearly 170 deals. So, there's, there's a lot of deals floating around, because, unfortunately, people give, see, as the prices did not adjust. To the rates because the rates jumped up too high too quickly, right? They were high before, but they, they, they went up very quickly at level. So a lot of new operators. Started throwing out numbers. Oh yeah, we'll buy it. Look at that. Absolutely. That's a, that looks like a great deal, but they aren't able to close deals that we looked at a year ago, a floating around still, I let today we had a call with the team, two deals that we looked at last November. I still floating around. Nobody purchased them. Just the sellers want too much money. They do. So we have real, we build relationships, of course, with brokers, like I said, direct to seller and you know what partnerships like literally if somebody wants to do a deal and they need capital raising or they need a boots on the ground you know, they need to operate the deal, right? Or they don't have the capacity. Let's partner together and do it together. And that's exactly how several several of the last deals happen. As we purchased them in Dallas one of the deals we got last November, same thing. We, we raised money for it. We, we got the debt on it. Another team's running it. So it's, it's a perfect combination. It's a win win. So partnerships, in my opinion one of the best ways to do deals. Yeah, look for that and you know, talk to people because people need other teams to do deals together. I'll give you another example, which is, which is literally just happened. So let's say you are in you want to do a ground up development and you don't know how, right? Just partner with an experienced developer, right? There you go. So it's a win win because they get a deal that you brought them. For example, at the same time you in the deal, you're learning as you go experience, let's say you in the new market. So you, you it's, it's a win win for everyone. I think teaming up is one of the best ways to get into deals that, but, but please make sure to vet. And that's a different topic. Absolutely. Don't just jump on the deal that you see. Don't just be like, Hey, listen don't post on Facebook. Oh my gosh you know, bring me deals. Come on, you know, vet your partners, know them because you're going to be in a deal with them for five years. Let's say, would you really want to be in a deal? Or connected to that person for five years and you don't even know them. So be careful.

Enrique: 28:25

That's a long marriage. It is. It is. Now that you mention that I've read within the next 12 to 18 months there is a certain amount of commercial loans coming due, maybe a balloon, maybe they're doing capital calls, whatever it is, right? Do you see that as an opportunity? Or do you see that as a, as a reason for investors to be, to be scared?

Vlad Arakcheyev: 28:49

No, no. Listen, when, what's that quote that Buffett said? When blood's running through the streets, that's where you have to buy.

Enrique: 28:59

Be greedy when others are fearful and be fearful when others are greedy. Something like that.

Vlad Arakcheyev: 29:05

Yeah. So it, for me, listen, when, how do you get the best deal? And that's what, let's go back to, let's go back to basics. This is, this is really interesting, right? So you let single family house, forget about multifamily for a second. So you can get the, you can get a house off MLS, right? Multiple listing service. Typically those are the highest price. Houses, right? How do you get the best deal? You have you have to find the person that is really neat that that is looking to sell they have no choice Right, they're desperate to sell for example That's what i'm working on now foreclosures, right a person or pre foreclosure Person has to sell that or liens or violations probates or pre probates so they have to sell in the foreclosure case because If they foreclose on the house, there you go, your credit, your credit score is destroyed, right? So, and that blemish is going to be on their record, number one. So, they have no choice but to sell. So you can offer them a slightly reduced price, but you solve their problem, right? You solve people's problem and why you're offering them a lower price because you're paying cash and You can close within 10 days Typical closing is what 45 60 days right here with cash in the foreclosure case We closing in 10 days It's a lot quicker. Yes, but you're solving a problem, right? Like if you look at the same thing with loan assumptions or subject to deals, right? Solving a problem for people. Like, let's say they have no equity in the property, right? And if they sell now, they're going to have to come out of their pocket to pay for closing costs. So what if I take over your property subject to, so you're solving their problem. They're not going to come out of pocket. They still going to have cashflow or say their credit. Exactly. It's a win win. So the same goes for multifamily. You just kind of scale it larger. Right? Those are just a few examples with single family. Go to commercial is the same thing. Not only you're saving the operator that's trying to get out of a deal. Most importantly, you're kind of concerned for the investors as well, right? Because a lot of investors ask me, what's the worst that can happen? Like a fire? I'm like, no, fire is not the worst thing because we have insurance that can pay for that. The worst thing is foreclosure. Right. Cause everybody loses money if the building or anything goes into foreclosure. Everybody lost. It's, you know, it, it's, it's horrible. So when you rescue, quote unquote someone from, you know, a bad deal when the loans are coming to you, or when they put variable rates on, you know as debt mm-hmm. on, on, on their properties, and now it's spiking to, what is it, 7%, 8%, whatever it is. Is it enough on the, yeah. Distributions on, and you underwrote for three. I mean, forget about cashflow, you're on the water. So you kind of rescue a fellow investor, right. By buying their property at the discount. And at the same time, you know, you saving the passive investors as well. It's a, it's a, it's a win win. So when, when, yeah, I foresee a lot of opportunities coming up a lot. So a lot of people are holding back money now. We, we, we don't. If the deal's there, we buy. Deals are here now, we buy. We don't hold back. But we always keep our eyes open. You have to be in the game all the time. You can't just sit on the sidelines and think, you know what, when the fourth quarter comes around, you know, they're gonna put me in the game. You know, no, no, no. You have to play the first three quarters too. You're not going come on, you're not that special. So, so, it, it just, Figure out this way, you have to be in the game. So, yeah, I'm pretty... I don't want to use the word excited to describe what's about to happen, or what's predicted is going to happen. But I feel from speaking with others That are very much into this microeconomics and cycles and everything that's happening. There's going to be a lot of changes going happening. So I wish I'm going to say curious on how, how, how the whole thing will change. Yeah. It's going to be a very interesting. Very.

Enrique: 34:13

I'm right there with you. I'm interested in finding out how this all turns out. Yeah, especially this is next 12 months, though. Yeah, for sure. Would you mind discussing some of the challenges that you've seen in some of your deals?

Vlad Arakcheyev: 34:29

Yeah, right now, as of now, I'm just going to talk about like September. Yeah, yeah. Debt, and insurance. Two of the largest I would say obstacles that we facing right now when it comes to insurance. It's, it's, I, I, I don't want to even, I don't know how to describe it, but it's just completely ridiculous. That's the reason why we exited Florida with the insurance rates being so high. It's not only killing cash flow, it's killing deals. Just to give you an example, let's say in Houston. Let's, let's go to Texas my, arguably my favorite market. Let's go to Houston. A couple few years ago, insurance was 900 a door. Now, it's 1, 600 a door. And it, it's just... Yeah, it's completely bonkers. Yeah, we... We're moving more inland, Dallas, the whole DFW area. That's why we moved from Florida to Carolinas. A lot of people say Midwest is one of the hottest markets. That's what I'm hearing as well, yeah. Yeah, it's not jumping. It just has steady growth, right? So if you, if you, if you're looking for spikes in the market don't look at Midwest. It just has steady, continuous growth. Right. So if you look at that steady, you know, upward trajectory Midwest is for you. So, and the insurance is much less, but it still went up. On our property in Kansas insurance went up 30%, 30 percent in one year, which is just completely crazy. So insurance is killing deals. Yes. And of course debt. Two deals that we were ready to purchase about a week, two weeks before closing a lender pulled out of the deal. We could not find, I mean, we found another lender, but obviously with the new updated rate, because the rates are going up so quickly. Obviously the rate went up and returns just wouldn't work. Yeah. The projections that we were looking at on the original debt now we just don't work anymore. So we had to walk away from the deal. Earnest money deposit loss. Sure. Yeah. You can't go without that. But yeah, debt, and I would say insurance two of the, you know, biggest deal killers.

Enrique: 37:09

And it's all crazy how inflation affects all this, right? The price of goods and services goes up insurance shoots up, right?

Vlad Arakcheyev: 37:17

It's like everything everything goes up, but it can go up That's fine. We expect it to go up just not that quickly because typically you're looking for adjustments, right? So let's say the rate goes up then six months after the prices adjust But now the rates went up so quickly, like 75 basis points, boom, boom, boom. Every what, every single month they just jump up. And it's not just, it's not just the rates it's uncertainty. It's the risk. Cause rates is one thing, but the banks, they, they want to be super safe, right? So before we were, we were buying in like tertiary markets. Now we're not even looking at them anymore because it's more risk for the lender. So they said, Hey, listen, you have to put more money down. We'll give you, let's say, I don't know, 50 percent leverage or something. I wouldn't even ask them anymore. We just kind of staying away from them. Now we going in main markets, main areas. It's just, if you want to do deals, that's the way to do them. Now, loan assumptions yeah, we've done two, they worked out great. You just have to raise more money. It's more difficult to raise money, but that's doable. Sure. People still want to invest. People want to diversify. They don't want to be just on stocks and bonds. If you think that's diversification, you're just fooling yourself. That's not diversification. If you want to truly diversify, you have to put your money in real assets, right? Gold, oil even in, in a real estate space, you can do car washes, RVs, apartments, ground up development, storage. Of course. Yeah. There's so many ways. Don't think if you in stocks and bonds or mutual funds or whatever you were like, oh, yeah, I'm diversified. I got the best deals No, you're not. No, as long as you're sleeping at night. That's fine. That's not diversification And it please don't argue with me about this I just spoke with really really smart guys about this and I used to do the same thing I'm like, hey, listen, I got some, I got a lot of diversification. Look where I'm investing, and the guy's laughing at me. He's like, I was in your shoes too. He's like, that's not diversification at all. That's it's not. And he showed me his portfolio and I was just floored. I'm like, Oh my gosh, what, Oh, I can't believe I was missing this. So so talk to people, you know, you know what you should speak with financial advisors or speak with people that have been doing this for a long time. So if you ask a person who's been in the game for, let's say five years plus. And just ask where all the investments are, not for specific numbers, just kind of, you know, ballpark figures, they'll tell you like 50 percent in this, 30 percent here, 20 percent here, you know, they, and they're going to name different industries, different, completely different areas where they invest through diversification. I learned that. The hard way and now I'm truly trying to diversify, so.

Enrique: 40:29

The best experiences are learned the hard way, right? No. All right, Vlad, I want to thank you for your time. I wish we'll have more time to go over more stuff because I got a bunch of other questions to ask you but for now the floor is yours to share any final thoughts, any, any projects you got going on.

Vlad Arakcheyev: 40:48

Yeah, a few. I'm not going to talk about the projects because we typically right now, we actually do a B to a C conversion on some of our deals and what works out well because we give opportunities to five or six B to sophisticated investors to invest in our deals as well to, because typically if you go, you know, with With 506c, yeah, that's great. You can advertise, but those I'm going to say not a lot of people can get involved in projects like that. So we do conversions nowadays, so I'm not going to talk about the deals but. If you really want to be in real estate, what I've noticed is it can be a long, hard way or fairly quicker, but you got to pay to play. And what I mean is get educated get mentors. If you really want to be in real estate and want to accelerate quickly, it's perfectly okay to pay 10, 000, even 15 more for education, for mentorship, because don't forget, you're not paying for mentorship. You're paying for connections. You're paying for your network. Think about this. How can I live in New Jersey, invest in Texas, right? That's my number one question. People like, how are you investing in Texas? I'm like my whole team's in Texas. Everyone everyone's there. Well, there's few people that are like in Carolinas, but most of them are in Texas. So that's how we invest. I connected to them and how did I do it? With joining a mentorship, networking, and there's two way you can network by going to zoom calls or in person events, that's the long way, but you have to prove yourself. You have to prove yourself and you have to let others to trust you because it's, it's, it's, it's a long game, or let's say you pay for a mentorship. Those people who are in the mentorship already. We'll think that, or we'll know that you're a serious person. If you're paying 10, 000, that's a lot of money, 15, 20, 000. That means you're so serious about your future and investing in yourself. They'll give you a shot. They'll give you a shot to be on their team. Right. So let's say somebody from Facebook comes over to me and says, Hey, Vlad, I, you know, I have this amazing deal. You know, but I don't know them. I have to vet them. I'm not going to jump in the deal with them. All my partners that I worked with, and it's just been two teams so far. I know them for over a year. I vetted them. I know them. I, I, you know, we ate together. We, I, we talk pretty much, I would say every other day. So it's, it's really important to know who you're investing or going in the deals with. So I believe that teaming up with people that you know, it's it, that's the safest way, but how to, how to do it? Networking. And the true power of networking is mentorship or be in this community. So there's so many out there if you think of joining a community, that's just from my experience too, interview with them literally like the, just Google all these. You know operators and, you know, mentors will pop up. Just speak with them. You're clicking, see if you're on the same page and then join their community. And another thing you can do is ask for references. Just say, Hey, listen, can I speak with a few of your students? You know, just completely, you know, three random students and see what they experience is with that with that community. So that's just my two cents when it comes to networking, of course. And education and education is invaluable. Listen, when you speak with brokers. And you don't know what you're saying, brokers don't want to waste their time. They're not going to take you seriously. So it's really important to know and leverage, leverage the other team. So you can leverage the members in that community, right? So you can call a broker and you'd be like, Hey, listen I really, like, for example, I I really liked that property. And I want to tour it. So me living in New Jersey and I want to tour property in Texas. How can I do that? Right. I have to fly to Texas. No, I just call my partner in Texas and I'm like, Hey, listen, if you have 30 minutes, why didn't you meet with this guy and tour this property? Right. So definitely a team sport. Oh, yeah, absolutely big time without the team. You won't be able to do it That's just my experience. I mean, can you yes, but you won't be able to grow and I'll give you an example I spoke with one person. He I don't know. He just doesn't trust anyone just trust himself He purchased 40 units All by himself. And it's like a mixture of duplexes and some six units here and there. So he got 40 all by himself, which is awesome. Right. All by himself. And he goes, so what about you? I'm like, I don't know, 700 and he was like, oh my gosh, how? I'm like teams, teams. And I don't get into every deal, but if you get into deals, that's how, that's how you learn you teaming up with others. And that's exactly how that works. And I described earlier, and if you want to get into ground up development, team up with a developer, if you want to, like right now we finished rezoning our land in Sarasota. I didn't know anything about rezoning before. We teamed up with an experienced person who knows how to speak, how to walk the walk, how to speak with a local county, what to ask, what to say, what documents to submit, what to look for. I learned. That's exactly how I did. I wouldn't be able to rezone land to multifamily. In Sarasota, because number one, I'm not from there. I don't know who to call. I mean, can I? Yes, but I don't. The coolest thing is now I have a person there that we're doing a deal with. And now I know, I know what to look for. I know what to ask, right? So I learned through experience by teaming up with that experienced operator. And he is more than happy to teach me. That's exactly how that works.

Enrique: 47:53

And you met this operator on the same mentorship you're a part of, right?

Vlad Arakcheyev: 47:57

Yes, absolutely. That's exactly how that happened. It's exactly how that happened. But as you grow, you're not gonna rely on the, on the mentorship as much. Why? Because people will know you, you already more established. You're going to go to a lot more conferences. And speak and like meeting others. So, the, the, your, your, let's say your network will be much larger, much wider. So, you can, like for example, on last two deals that I've done in Dallas, I, I did not do with anyone from Jake and Gino. It was a completely other, it was a, it was a different operator. But how did they know me? From the previous deal that I've done within the community. They just, they just heard about me, heard good things, right? So reputation as well. Yeah, that's exactly how it happens. Yeah. So one person hears of another and be like, Hey, listen, what do you know about this person? Oh yeah. Okay. Let's have him on our deal. Yeah. I can vouch for him. He seems like, you know a nice operator. I, I worked with him before. Let's do that. So that's exactly how that works. I know I went on a tangent here, but I'm just it's, it's, I, I believe it's really important. It's crucial. You know how they say, Hey, I find the deal and then the money is going to come. The, the, the team's going to come. No, that doesn't work this way whatsoever. The money is not going to come because most investors, they're looking at the team first. They're not looking at the deal. They're looking at the team. So if you, if you don't have a team in place and you don't have the money in place to close on that deal, then you're doing it backwards.

Enrique: 49:44

Then you don't have a deal.

Vlad Arakcheyev: 49:45

Yeah, find the team first and then look for the deal. So that's, that's a whole nother topic that I can talk about for hours because it, I, I truly believe in the power of teams and the potential of growth. So it's, it's huge. So reach out to me. I'm all over social media, on Facebook, Instagram, LinkedIn, Vlad Arakcheyev. I have a very unique first and last name so you can find me anywhere and Yeah, ask any questions. I'm always here to help. I I love talking about real estate. I can talk about it forever So

Enrique: 50:21

thank you vlad appreciate your time today And you are just to confirm you are in linkedin. What other social medias are you in?

Vlad Arakcheyev: 50:29

Oh facebook, instagram, I started TikTok Yeah, I'm, I'm, well, I'm doing something fun over there. I'm combining my two passions, real estate and motorcycles. So I go to, let's say, a networking event or you know, an open house or something like that, or do like a flip here in Jersey on my motorcycle. And I always put it somewhere in my shot. Like in a video and as I turn the camera, I always make sure that my motorcycle's in a video. So I, I, you know, it's just my thing. It's like finding Waldo type of thing, you know? I, I, I, I like motorcycles. I always throw it in you know, like, oh yeah, if you're curious, yes, I rid my bike here. You know, stuff like that. So I'm, I'm, I'm just making it light and fun and also educational. Of course. So,

Enrique: 51:21

alright, last question. What kind of motorcycle is

Vlad Arakcheyev: 51:22

that? I have a KTM Adventure motorcycle, KTM Adventure R. I, I went through several motorcycles, including naked bikes or street bikes, as you call them. Yamaha MT 10, MT 09, and some cruisers. And since I'm tall, I'm 6'3 I... After long and painful process of experimenting with different motorcycles, I discovered that upright motorcycles that are tall off the ground, like the adventure bikes are much more comfortable for me so that I'm sticking with those.

Enrique: 52:01

I used to have a Gixxer 1000, that's as far as I went then I sold it, had kids, got scared. But that's a story for another day.

Vlad Arakcheyev: 52:07

I know, that's a fast bike.

Enrique: 52:10

Yeah, all right Vlad, thank you very much, man. I appreciate your time. Let's stay in contact.

Vlad Arakcheyev: 52:16

Of course, thank you so much. I really appreciate it.