A Guide to JVing the Right Way

 Passionate about multifamily real estate, Mandy McAllister, CEO of GoBundance Women, left medical sales for financial independence and to help others do the same. This episode highlights her joint-venture partnerships strategy, crucial to her success. McAllister shares how aligned visions with partners and her reputation secured her first multifamily property during the pandemic. She also discusses the evolving market, economic predictions, and balancing motherhood with entrepreneurship.

Transcript

Rachel Oh 0:04

Welcome to Peaks and Portfolios, presented by PEG Companies, your go-to podcast for all things commercial real estate investment. I'm Rachel oh, and together we're diving into current events, trends, issues and opportunities impacting the CRE investment space, from dissecting the latest market moves to sharing insights on today's commercial real estate landscape. It's time to maximize portfolios here in the peaks of the Mountain West and beyond. Welcome everybody, so glad you're here with us today for Peaks and Portfolios. I am super excited about today's episode because I think we're going to be talking to a very fascinating individual whose story I am most particularly intrigued by and I really want to dive into a bit more with. But we will be addressing joint venture partnerships in real estate and, most importantly, jving the right way. So I'm going to introduce you to today's guest entrepreneur, multifamily investor, mama, coach and women's inspirational leader, mandy McAllister. Mandy, welcome, hi, I am so excited to be here.

Mandy McAllister 1:11

Thank you.

Rachel Oh 1:12

Mandy, where are you calling in from today?

Mandy McAllister 1:14

I live physically in the suburbs of Chicago, so that's where I'm at today.

Rachel Oh 1:18

Okay, and is it windy? No, I'm just kidding.

Mandy McAllister 1:23

Actually, do you know? Chicago is called the windy city because of our politicians are full of hot air because of the actual wind. Okay, how about that? There's some trivia for you.

Rachel Oh 1:33

Okay, I like that and that makes a lot more sense. No, that's awesome, okay. So, mandy, I have for my show notes some info about your background, which I'm going to read just so I have it clearly, but I'm pretty sure there's more to it, so we're going to dive into that in just a bit, but let me kickstart this right now by sharing a little bit. You know to our listeners who you are, so Mandy McAllister is a multifamily real estate investor and connector.

Rachel Oh 1:57

She spent the bulk of her career in medical device sales, chasing cases and commission checks, and in 2021, she left her W-2 life to lean on the financial independence she built through real estate investing. So Mandy's real estate expertise includes repositioning underperforming assets to increase cashflow and value. Her portfolio is currently comprised and you can correct me if I'm wrong on this, mandy 373 doors of class B workforce housing, furnished student housing and a motel reposition. Mandy also now serves as CEO of GoBundance Women, a tribe of healthy, wealthy, generous women who choose to lead epic lives, and I loved this. Mandy. You are most proud to be mama to your seven-year-old son, duncan, who I understand, also wants to be a real estate investor when he grows up.

Rachel Oh 2:42

So, Mandy, I love your story and I honestly love hearing about entrepreneurs who identify opportunities in the marketplace and run with them. And we wanted to bring you in today because I think you represent such an interesting part of the overall real estate investment story and that's how one gets into real estate investing to start and how you are now ratcheting up your portfolio by partnering with others, and so I really want to hear you know how you have, you know, kind of ventured into joint ventures, how you determine the right partnerships and, most importantly, JVing the right way. So I alluded to this a bit in reading out your bio and, by the way, again I just want to emphasize I love a good story about real people doing exceptional things and, if you wouldn't mind, I would love to hear in your words how you came to be where you are today. Would you mind sharing with us more about your story?

Mandy McAllister 3:30

Sure, Both my parents were self-employed. My dad farmed. I grew up on a farm so I needed to do a lot of hard work coming up and followed a volleyball scholarship. So I learned the competition there. And when I was in college I met a friend who explained that her dad had bought the house that we were standing on the porch of and she was renting out the rooms to her friends. And I thought, oh my gosh, you get to keep that money. That's the best idea I've heard in my whole life.

Mandy McAllister 3:59

So the seed was planted for must invest in real estate in like 1999. And then, you know, I did all of the things you're supposed to do. I got all of the degrees and, you know, followed the right path, quote unquote, and ended up getting a master's degree in economics and, you know, followed the money, went to the board of trade and then subsequently medical device sales Cause it felt like a nice, safe path to earn a lot of money and build the life that I wanted to build. So I chose not to go to medical school because I didn't want to be on call and the kind of the irony of my life is that I ended up ascending the ladder of medical sales, such that I was on call in a medical sales job. So I realized then that it was time to really put all of the learning that I had put into place in real estate investing into action and ended up buying my first fourplex just as my son was born in 2015, 2016.

Rachel Oh 5:00

Okay, so you were in medical device sales. You were climbing that ladder.

Mandy McAllister 5:16

Okay, so you, you were in medical device sales. You were climbing that ladder and I mean obviously medical we know that it can be quite lucrative and theme that I loved. I loved getting to help patients and the devices that I sold were cardiac related. So I had hugged people who were alive because of something that I touched and nothing is more powerful than that. But you know, I had to go back to work at four weeks after having my son. I was on call. I was working seven to seven.

Mandy McAllister 5:43

And I was missing his life, and that is not the life I envisioned for myself. So at some point I realized that it's a math problem, that yes, I'm making multiple six figures here, but I can figure out the cashflow of these properties such that I build a floor of income coming in. So I can then choose what I do with my time. So, I really put my head down on trying to build the most cash flow in the safest way possible that I could, and that resulted in multifamily real estate.

Rachel Oh 6:12

Okay and tell me what was going on at the time, like, what was the environment like? Was you know were you and I don't know now what year you were at, but you know, was it a great time to invest? Or did you just be like, you know, just, I'm just going to do this, I'm just going to go buy something. You know what were you thinking Like, were you trying to time the market? Or you just like, let's just do this? Like, tell me how, what you were thinking.

Mandy McAllister 6:33

So I had done all of the learning and, as a straight I think many female high performers will resonate with this that I got all straight A's and I waited my turn and I raised my hand and I did all the right degrees and I did all of the things perfectly that taking a big risk what felt like a big risk in buying a building was more than I was willing to stomach. But then when I did it you know, when my son was born, I it got real. You know, like you get one pass at this life, you get one chance to try. And I ended up, you know, taking a swing. And when I didn't die after buying my first fourplex and I actually had like a thousand dollars cashflow coming in a month, I realized I wanted to continue to rinse and repeat that process. So, you know, 2016 into 2017 is really when I decided to start scaling up.

Rachel Oh 7:23

Okay, so you bought your first property by yourself. Sounds like you didn't partner with anyone. You just did it on your own. Yeah, okay, yeah.

Mandy McAllister 7:30

I had saved enough that the four flex was my own, moved on to a six flex that was my own and a 10 unit all just me, and then you run out of money pretty quick.

Rachel Oh 7:41

Yeah, yeah, I was going to say I mean that's a lot of down payments at 20% plus or whatever it is, so okay. Absolutely so you did that, so it sounds like, so I actually. You did leave medical device in 2021. So you started buying properties and then you just left your your medical device career forever. Is that right?

Medical Device Sales to Real Estate

Mandy McAllister 8:02

Well, that was too scary. So here's here's the way I couched that to myself. I had built a good enough reputation in medical device sales that I knew I could go find another job If it hits the fan, and I needed. I was a single mom at the time. If it hits the fan and I needed to go find another job, I knew I had the confidence that I could do it within six months. Right, right. So I decided to take a year sabbatical, right, like I. Just we're going to do an experiment see how this feels 12 months from today. I'm going to see how this feels and if it feels great, I keep going.

Rachel Oh 8:44

If it feels great, I keep going. If it feels wrong, I go find one of those jobs. So that took a lot of the pressure off and didn't feel so permanent, Right. So you took a sabbatical, you started all in or went all in on the real estate and then it sounds like you never went back.

Mandy McAllister 8:49

I have not gone back.

Rachel Oh 8:53

You don't miss it at all, yeah.

Mandy McAllister 8:55

You know I miss getting to work shoulder to shoulder with really smart people.

Rachel Oh 8:59

Yeah.

Mandy McAllister 9:00

But, end of the day, the chance to build my own empire, the chance to you know in any type of sales. If you have a really good year for a big company, your number resets right, oh yeah.

Rachel Oh 9:16

And then it goes higher. Right, it goes higher. Oh my gosh, it's the worst To make the same money. Right and yeah. And then it goes higher. Right, it goes higher. Oh my gosh, it's the worst To make the same money right and you're chasing your tail Actually.

Mandy McAllister 9:23

So it so happened in 2017 that I had won a president's club. I was number five out of 500 or something, and I had sold 3 million when I should have sold 1 million, and then my number the next year was to make the same base pay. I needed to sell 4 million, which wasn't possible.

Rachel Oh 9:41

It wasn't fair, you know. No, it's like, hey, you can move me to 1.5 million or 2 million maybe, but yeah, Right yeah, yeah.

Mandy McAllister 9:48

But a boss at the time said well, you just need to go find more patients. And that didn't feel, that felt beyond the scope of a moral compass that I had. So that was really the catalyst to leaning into. I need to figure out how much money I need to get out of this so that I can live the life that I want to live.

Rachel Oh 10:08

Okay, so you took your sabbatical you had, obviously, and you just you gave yourself a soft landing in case things didn't go well. And then you mentioned you started running out of money. So what did you do then?

Mandy McAllister 10:21

Yeah, so what I saw?

Mandy McAllister 10:23

was learning about multifamily debt, the chance to get agency debt, the chance to get non-recourse debt on something for the long term really felt like how the rich get richer. You know if it hits the fan and you haven't done these bad boy things that you know you're, you're, you know forgiven is the wrong word, but it's non-recourse. I'm not personally liable. So it felt like a second, like belt and suspenders of a safety net for me to move forward into these larger properties. So I had such a clear vision on where I was going. I wanted class B properties in Indianapolis. I wanted it to be. You know, I live in Chicago, so I needed to get to a market that was growing in population and GDP and jobs and I needed to get down there and back before dinner with my criteria so that was how you picked Indianapolis.

Mandy McAllister 11:15

Exactly.

Mandy McAllister 11:16

So, I sold a number of things that I owned in Illinois. So I had some single family rentals previously that I was kind of doing concurrently with those small multis and I sold those and I had a little bit of capital that I wanted to get into the bigger stuff and I talked that big vision of exactly what I wanted to other investors and it turned out vision of exactly what I wanted to other investors and it turned out. You know, we I found a partner who wanted to throw a million dollars into something he was in hotels and he was kind of getting crushed during COVID and he liked this vision. So he another guy and I went in on a 53 unit in Indianapolis in September during COVID. So that was the first larger acquisition on agency debt and I got there because I had partners who moved with me.

Rachel Oh 12:07

So they put in their capital, you put in some of yours. Are you the sweat equity? And, by the way, you were at a phenomenal interest rate environment. So tell me how that worked.

Mandy McAllister 12:18

Yeah, totally. So we came in with I didn't want to have a taxable event. So one thing in JV that matters for anybody taking notes if I came in with $0 and my business partner came in with a million, day one of acquisition, the IRS would feel that I had a $500,000 taxable event right. So we structured things such that we would not realize that. So I only took 10 percent of that first deal because I knew the path I wanted to go. What I needed was to be able to have signed on that, that Fannie Mae loan so that I could go get it on my own later down the road Got it.

Mandy McAllister 12:53

Right, exactly so. What I really loved, though, is it didn't seem possible for interest rates to go down much below that 3.2% rate that we were going to get, and because my goal and my business partner's goal we were very aligned and we wanted something for cash flow for the long term. First thing in figuring out who to partner with is is your vision aligned? Is your vision aligned? Because, if you want to get in and out quickly and your partners want to hold on for the long term, you are absolutely not well matched and need to find someone else. So we were absolutely well matched and we moved into that. It was about a $4.1 million acquisition, and we moved in. I brought 10% of the down payment, another guy brought 10% and another guy brought 80%, so we have ownership commensurate with our on that first one.

Rachel Oh 13:46

Okay, so you're a pair of pursue with your partners and you have the same vision, and you guys are just going to hold this through perpetuity, sounds like.

Mandy McAllister 13:54

Exactly With the best possible rate for for the longterm Right, right, okay, so that sounds like it's your first joint venture then, so that we could put a supplemental loan on it, should we choose to pull out any equity in the future.

Rachel Oh 14:20

Right, okay, so that sounds like it's your first joint venture, then, is that that was Okay? So you I don't know were you? Did you have a grand design when you did that, or did you just kind of stumble into it, or like it sounds like? I mean, it sounds like it was a little more strategic than what I'm alluding to. But tell me, like what? Was your thought process there.

Mandy McAllister 14:38

Well, the ultimate goal was to get that loan. I felt like the loan product in that low interest rate environment was the ultimate asset that you know. Yes, having cash flowing real estate that is Maslow's hierarchy of need dictates that you always need a place to live, and it's in this growing market. I think that that is the right investment for the long term. Need a place to live, and it's in this growing market. I think that that is the right investment for the longterm. But that loan is really the thing that I needed to grow my wealth in a big way. So that was really step one.

Mandy McAllister 15:08

I'd love to say that I was so strategic that I knew that that was going to be a first step in the direction of where things are going but, I just knew that I needed to have some sort of track record of having done these types of deals so that I could go after that loan product on my own in the future. So that is exactly why I did that deal.

Rachel Oh 15:28

You know it's so fascinating to me that that was the impetus for your joint venture partnership. So you know, peg has been around now for 20 years. We're in our 21st year. We're about 2 billion AUM no-transcript which I'm not certain I've heard any other real estate investor kind of focus on. I mean it's usually like timing, the market making, you know, taking advantage of interest rates, or you know, I have never heard anyone saying I wanted to be to have a track record on, you know, a loan type.

Mandy McAllister 16:24

I don't think I've heard that.

Rachel Oh 16:25

I don't know, maybe I'm wrong and I'm looking at my producer and he's like he's shrugging his shoulders, he doesn't know, but but yeah, no, I love that. That was your vision and now, so tell me what has happened since then.

Mandy McAllister 16:38

Yeah, you know, just to kind of finalize that point there, there's a new book by this guy, morgan Housel, who you know this idea of, like Warren Buffett talks about it that you know, rather than trying to predict what's going to change in the future, it's easier and more, you know, beneficial to try to predict the things that will stay the same.

Mandy McAllister 16:59

Okay, right, and in my opinion, a thing that stays the same is that people need a place to live and that an interest rate of 3% will be really low. Yeah, and that because the fed has a plan and a target for inflation, then inflation will continue. Right, if I do all of those things, then that loan product sets me up for success.

Rachel Oh 17:16

Yeah, no, and inflation has definitely been a part of our story recently, which you know we're down, right, we're down to about three-ish percent. I know the Fed wants to be at two and you know we just had an episode about Fed funds rate hike and you know when they anticipate and et cetera. So, but okay, so, yeah, no, I love that. And again, what was the name of that author? You said it Morgan Housel. Morgan Housel? Okay, I mean Warren Buffett, we all know right, the Oracle of Omaha.

Mandy McAllister 17:40

Yeah, okay, so cool. Famous ever is the book Famous ever. Guide to what never changes.

Rachel Oh 17:45

Okay, I love that. I love that. So we're no longer in a 3.2 interest rate environment and costs have skyrocketed since that time, so how are you viewing these? You know again. I want to go back to JVing the right way. So now, how are you approaching things, given today's macroeconomics and sort of? You know the opportunities that may or may not be existing at present? Are you continuing to JV? What are you doing right now with these joint ventures?

Mandy McAllister 18:15

Yeah. So kind of the beauty of the way I've approached things is, you know, when it felt like the time was absolutely right to lock some things in, I was. I was fortunate enough to lock in kind of three what for me were larger deals a 38, a 53 and 104. And that then produced a floor of income that helps me live my life, so that I get to buy and watch the market. I get to sit on my hands if I need to sit on my hands. I get to do a little pivot of things that I'm curious about. For instance, that motel that I bought in joint venture was a product of I do small multis. I met a person who her expertise was in short-term rentals, so we work to do a different type of a project together.

Mandy McAllister 19:00

Most recently, kind of having taken note from this group, gobundance, that I have an opportunity to serve as a leader in the looking at the people who are doing things bigger than me, who are at the 200 million net worth base Time and time again to get to the $100, $200 million net worth. There's a business component beyond just real estate. So being curious about that in this timeframe when there is not really price discovery for multifamily in the way that we have seen previously and will see in the future. I acquired a car wash a business, a real estate heavy business, to work, to have an engine for cashflow to throw into multifamily when it becomes doable again.

Rachel Oh 19:47

Okay, so you are now pivoting a bit based on where the market sits, but always with your eyes on the prize, which is accumulating wealth or, you know, additional cash, whatnot, so that you can pounce on the opportunities when they do present themselves.

Mandy McAllister 20:02

That's exactly it. My end game will always be multifamily on non-recourse debt. I really feel like the billionaires who want to store their wealth. They store it in that fashion. So how can I answer the question? How can I, with whatever limiting factors I have, how can I mimic the people who got to the absolute for this place?

Rachel Oh 20:27

Yeah, the partners that we work with, and we work with institutional groups as well, but we also work with large family offices. These are billion, you know, billion dollar plus family offices and 1000% a huge part of all their portfolios is real estate. A lot of times they made their monies in different, you know, like tech or oil, and gas or, um, actually some even in home building.

Rachel Oh 20:52

But the way they've grown their wealth and cause, you know they're about wealth preservation. At that point, right, They've already made their wealth, since they want to preserve their wealth for their you know the future about wealth preservation. At that point, right, They've already made their wealth, since they want to preserve their wealth for their, you know, the future generations. But they also have wealth accumulation and you know, a huge portion of their portfolio is real estate.

Mandy McAllister 21:08

That's exactly it. It's this engine for cash flow that if you have a especially a business engine, you have that business engine and can put those proceeds into something that is like a vault as close to a vault, as close to a vault as you could possibly have. That is the single most proven asset class for creating wealth. Then that is the best possible formula, in my opinion.

Rachel Oh 21:30

Yeah, and then to your point, everybody needs a place to live, right? So, yeah, exactly, which I love, which I love, and, man, we can go down that rabbit hole of you know, the rise of the forever renters and renters by choice and et cetera, because you know I do that all day long. But we, we, that's not today's episode, well, we can cover that in a separate thing.

Real Estate Investment Opportunities and Strategies

Rachel Oh 21:49

So okay, so let's, let's pivot a little bit. So you've told me about how you got into joint ventures. It sounds like you're kind of waiting in the wings. What are? Where do you see, then, the real estate investment opportunities? Like, what are you waiting for? Like we know, we, you know and I don't know, one of the big things we keep talking about is all the maturing debt coming due right, like I mean, there's, they say, roughly about 500 billion a year, but we're looking, we're talking about 2.2 ish trillion between now and maybe 20, 27, 20, 28. So now and maybe 2027, 2028. So that's just me just talking. But where does Mandy see the real estate investment opportunities? And what are you kind of waiting for? Because it sounds like you're waiting in the wings. So what are you waiting for?

Mandy McAllister 22:29

Yeah, what are you waiting for? Yes, I am sitting on my hands a little bit, but I continually underwrite, every single day.

Mandy McAllister 22:35

But, what I need to like. I have a buy box and my buy box doesn't change because of the market. I think that you know the, the, you know the. The money is made in. The weight is what, uh, you know uh, warren Buffett would say right, it's not made in the buyer to sell, it's made in the way.

Mandy McAllister 22:51

So how can I buy? Wait until I can buy something that is going to meet the criteria that I need to see, and what I have found is in these growth markets, and I want to be just an expert in one, maybe two markets. So Indy is the place that matters to me most. I want class B assets because I think it's, you know, less headaches than the C and not as exposed in downturns as the A's, and I would need to see cash on cash double digits by year two. And I would need to see cash on cash double digits by year two.

Mandy McAllister 23:20

So what I love, what the perfect property for me is, is when I can find something that has upside value at opportunity, that is not construction risk, because I really started to scale during COVID and seeing the changes of inputs and labor costs and all of the things that go into increasing an NOI right, like it's so unpredictable. So the things in getting into an asset that are appealing to me is how can I lessen that risk? How can I mitigate and, you know, reduce the risk that's in front of me? So if that upside is a rug, if that upside is, you know, a pet rent or a parking rent, or you know putting in place, mandating that my tenants have their insurance or renter's insurance in place, whatever those types of management heavy plays that don't involve construction. That is the ideal play. So I need to see an asset in place that will, by year two, with these management strategies, yield me at least a double digit cash on cash. That is what I'm waiting for.

Rachel Oh 24:22

Okay, so how long are you going to wait for?

Mandy McAllister 24:28

Well, I know.

Rachel Oh 24:29

We look at underwriting every day and it is so not what it was, and it's really because of the two things you mentioned. Well, you didn't mention so much interest rates, but it's cost and interest rates. Like we are not, you know, in our world. Now we're looking at I mean, we're trying to find unlevered yields at roughly 7%, which is incredibly difficult to find.

Mandy McAllister 24:51

Well, the thing is, though, you're deploying a ton more capital than I am at a time. I mean, the maximum I would deploy at a time is like a million. You know, it's easier to get a significantly higher return when you've got a smaller number you know, so I'm in a way at an advantage, because my N is lower.

Rachel Oh 25:09

Yes, true, true that. But then that begs the question again when do you think you'll find those double digit year, two returns.

Mandy McAllister 25:18

So I underwrite and hope every day, but at the end of the day I do think you know. If you look at that data on however many trillions of dollars that are coming due, you know I wish I could dig deeper into that number, because what's coming due sometimes is debt that was put on deals 12 and 15 years ago.

Rachel Oh 25:38

Totally.

Mandy McAllister 25:39

Like you can't tell me that there's not like an equity basis that would support a refi at a ridiculously higher rate.

Mandy McAllister 25:45

You know, so, anyway, I think that once price discovery starts, we will feel it. I don't think my crystal ball is broken but, that being said, I do feel like you know, after this election, after we have a little bit more certainty in what's happening with you know, our leadership, we will have more certainty with what's happening in our economy in terms of price discovery happening in these multifamily deals. So it dropped by like 61 percent. I read recently transactions last year.

Mandy McAllister 26:19

I don't think that. I don't think that picks up until 25. So you know, I'm interested in being patient and hitting home runs because my strategy is such that I don't need to be right 30 times. I need to be right like five more times in my life and I have a legacy that I get to lead to lead to the next generation.

Mandy McAllister 26:39

Yeah, so five more deals, that's all you need, and you've hit your goal I mean, at the end of the day, if you're, if you get a cashflow of $20,000 per deal you know you do four or five of them you've built a really nice life.

Rachel Oh 26:52

Yeah, no, no for sure. And all this from a farm girl out of the suburbs of Chicago.

Mandy McAllister 26:59

No, this is what.

Rachel Oh 27:00

I'm saying, like I'm telling you real people, real stories and real wealth, and that's what I thought was, because you're a little bit different than our typical guest. But I really globbed onto the tidbits that I had seen, and so this is what I'm trying to get into, and again, the big nugget that I'm coming away with is I love your laser focus on the type of debt that you were able to, you know, to position yourself for, and then that has kind of set.

Rachel Oh 27:32

And now you're waiting and you have. You have the luxury of waiting because you've built to be able to do that right, to be able to create that. So let's shift gears for just a second. So you mentioned a motel deal and it sounds like it came from a partner that came out of this GoBundance and we haven't really talked about this GoBundance too much. But tell me a little bit more about your motel bill. But tell me also about GoBundance, because did I get that right? You found your partner through GoBundance. So tell me a little bit about this GoBundance, because I'm sorry, I didn't mean to gloss over it because I really want to get kind of into the nitty gritty, but I think now is a good segue. Tell me about GoBundance.

Wealth and Leadership in GoBundance

Mandy McAllister 27:59

Perfect. Gobundance is a tribe of healthy, wealthy, generous people who choose to lead epic lives. We refer to ourselves as the tribe of millionaires. The thing that really drew me to the women's division was I felt crazy, you know, again being the farm kid who wants to go off and buy apartment buildings. Many of the people who loved me thought you are. You are crazy. Like it must be nice to be able to do this thing that you're doing, but it was a ton of hard work. They got me there. Not, it must be nice, you know.

Mandy McAllister 28:30

So getting an opportunity to be shoulder to shoulder with a bunch of other leaders, playing whatever game they play, in a really big fashion, really putting focus on all of the things in life. Because, yes, financial freedom matters, but what matters so much more in the chat is how connected are your relationships? Are you getting back in a way that feels authentic? Are you spending time thinking about what your physical body is like? You know, um end of the day, you know we we do talk a lot about financial freedom and steps to get there and ideas and hacks, and you know learning from each other, but a lot of time is spent on the right depth of connection in the right places in my opinion.

Mandy McAllister 29:09

So I now get to be the CEO of GoBundance Women and I ended up, you know, because my expertise was these small multis to five to 50 units largely. I met a friend who did these short term rentals and we we found a deal that was incorrectly listed on MLS that had commissioned a study, for more overnight stay was needed in that community because they like 5x their size during the summer. They're a late community and we decided to make this really problematic, ratty, you know hotel motel into something that was really kind of um, kitschy and beautiful and we we actually uh were able to take the overnight rent from uh nine to $10 a night up to uh we got 130 in the peak season in our first year.

Rachel Oh 30:10

Wow.

Mandy McAllister 30:11

I'm sorry, from nine to $10 a night.

Rachel Oh 30:13

What, what? This sounds like a seedy motel. It was a seedy motel, it was exactly what it was.

Mandy McAllister 30:17

It was a seedy motel. It was a seedy motel, it was exactly what it was and it had been a huge problem for the municipality, so they had a ton of hope and help for us to be able to make the transition happen.

Mandy McAllister 30:33

So in this area it's called Balsam Lake. In that area there's multimillion-dollar cabins and the bulk of the people who needed to stay is, let's say, it's a three bedroom cabin and you've now invited 10 of your friends to come to the cabin with you. The spillover would come. Stay with us and you know we we refinished it in a way that we were really proud of. So that's something I'm looking to exit because the lesson learned is the the management stuff is.

Rachel Oh 31:01

it's a highly operational game yes, I listen we do hospitality all the time and it is incredible, it's and it's it. You know it's definitely cyclical. So pandemic was rough for some of our properties, although pandemic was great for some of our resort properties. So you know it all works out well. But to your point, property so you know it all works out well. But to your point, yes, operations is key. So you definitely need a strong, you know property management group to to manage the asset and then, of course, you know to get the, the ADRs and the occupancies and all that. So I'm sure you're learning all that and it's way different than multifamily, because you know you've got annual leases versus nightly rentals.

Mandy McAllister 31:38

So is it making you more crazy? Is that what you're saying?

Mandy McAllister 31:41

You know, uh, the, the, the management of it is um you know, it's something that you want to just hand over and it's you got to manage the manager and that you know, uh, a small town candidly more difficult to to be able to pull off. So it's, uh, it's not the right asset for me and I'm looking to exit it, but we've done something really cool for that area and, uh, looking to still have that kind of business background or backbone, um, in order to, um, uh, build wealth moving forward.

Rachel Oh 32:14

Yeah, no, I love it. I um, there was that Netflix episode about those two women in Canada or something. And so, yeah, sorry, you remind me of them. I'll just a little, and I wish I could properly cite their names. I have no idea, but I remember seeing that, and so when you told my story, very cool, okay, so Balsam Lake, huh, where is that?

Mandy McAllister 32:35

Where is that?

Rachel Oh 32:36

I'm sorry, I have no idea where Balsam Lake is.

Mandy McAllister 32:38

It's a lake community. Yeah, there's. A number of their hockey players have a cabin on the lake, their newscaster, their weather girl, that is the lake that she vacations on, so it's a little bit riskier. There's a ton of money coming into the town and the play makes a ton of sense. We just can't make the management work. Yeah, because we're not local.

Rachel Oh 33:04

So, anyway, that is why I'm looking to exit that Well, I love it and I love Lake vacations, so I'm going to I'm going to look it up after this class.

Mandy McAllister 33:13

Maybe I'll be there, but okay, so.

Rachel Oh 33:17

so then you met this. You met her through GoBundance, and GoBundance is a big part of it sounds like right now, a lot of your time, and you're finding a lot of fulfillment in that. So a lot of your time and you're finding a lot of fulfillment in that, so is that then? So tell me now what, as you're kind of waiting in the wings and discovering that maybe you're not a hotel operator and whatnot, what is what is?

Rachel Oh 33:36

taking up your time and how are you? You know what are you looking to in the future and you know what. What are your next steps?

Mandy McAllister 33:43

Absolutely so. I acquired the rights to operate GoBundance. So that is a building out those teams with a couple of partners. I built out, I acquired the rights and I'm now building out the women's division and we're really proud of what it's becoming the type of personal development that women are experiencing being next to other high performing women, figuring out the stuff, the connection and all of those other things that I previously named.

Mandy McAllister 34:11

In addition to that, the car wash piece has been really getting systems in place because we bought from a mom and pop owner who had a lot of back of an afghan type handwritten books so in the same way, um acquiring a building from a mom and pop is is a lot of heavy lifting in the numbers to make right the uh, you know whatever accounting pieces they've had. We're. We're doing that with the, the car wash, looking to expand that a little bit so that we can um have the full-time management.

Mandy McAllister 34:46

So, the lesson I learned in buying smaller multis is you know, there is a point of scale where life gets a lot easier and I'm I'm not quite there with the carwash stuff yet. So getting myself, feeling myself out of management of the carwash is the primary thing that I have going now, and then using the funds created from that engine for cashflow. Because, just a little bit of math on it, if I'm going to buy at a four cap of a building, I'm basically saying I'll pay $25 for that dollar of cashflow. Cashflow is my goal right.

Mandy McAllister 35:23

If I'm going to buy a car wash I pay $3 for a dollar of cash flow. So the cash flow comes in significantly more with those business-based real estate plays than it does with just multifamily. So, building up our powder, getting as much powder dry our war chest ready for I think maybe 12 months from now is when I'm going to buy as much as I can possibly afford yeah, in multifamily.

Rachel Oh 35:49

Yeah, yeah, no, I hear you, you and I think everyone else, yeah, totally.

Mandy McAllister 35:53

Exactly.

Rachel Oh 35:55

We're starting to see things right. Well, sorry, we're starting to see things on the hospitality side. So there are some hospitality I think that's coming up that we're able to acquire. We are also waiting in the wings for multifamily assets, but, interestingly enough too, we really feel like now is a great time to build, which I don't think is necessarily what everyone thinks, but we really do think this is going to be a vintage year for development. So, but that's just kind of the way we approach things. But you pointed out very, really articulately that you know the deployment of our dollars versus what maybe individual investors do is really different. So kind of the way we look at things. But again, like I said, real people, real lives, real challenges and real solutions.

Rachel Oh 36:35

That's what I've really loved about, you know, what you've shared with us today. So last question so if you were to crystal ball, sort of where you think things are going to go and I think you've said the next 12 months, just like what I mean, what would be your just kind of prediction for real estate and where you think things are, when you think things are going to turn and where you see the opportunities are?

Mandy McAllister 37:00

Yeah, I so. I did a master's in economics, so I my favorite thing about economists is there's never enough band, like a never enough timeframe for you to really prove if somebody's really right or not. So this type of thing like you shining out my economist crystal ball makes me really happy seeing a bunch of my people that I grew up with in multifamily having done a lot of these shorter term bridge loans that I felt unease with. I think that we are going to start having some price discovery here, beginning maybe nine months from now, but I think that there will feel like more certainty in the market after the election.

Mandy McAllister 37:46

I just it doesn't like. I don't want to be a conspiracy theorist, but knowing that that is on the horizon, that there are a lot of things in play, and beginning of the new year is in 2025 is is going to give us a lot more information, and that is when I plan to make some big decisions about what the next right step is.

Rachel Oh 38:05

OK, yes, I've heard, survive until 2025.

Mandy McAllister 38:11

So you've heard it here.

Rachel Oh 38:13

Well, I've heard survive until 2025. And I'll tell you, the pegway is we are definitely moving forward in 2024 as well. So there's a combo between the two.

Rachel Oh 38:22

Okay, Mandy, thank you so much for your time, for your insights, for being a little vulnerable and sharing with us your story. But then what I what I love is that you have a very clear and defined vision for what you're looking for. You have criteria on. You know the investment type deals that you're looking to do. You also are giving back to your community through this GoBundance and I know that, while we were kind of, you know, prepping for this, you have some new life changes, including the growth in your family.

Rachel Oh 38:59

Yes, so I am just thrilled to have had this time with you and, and I'm hoping, maybe in the future you'll join us again. So, amanda, thank you so much for joining us today. Thank you, this was so great. Thank you, I hope you have the best day. Awesome, thank you. Okay, so thanks everyone for joining this week's episode of Peaks and Portfolios by PEG Companies. I am Rachel O, your host, and we look forward to speaking with you again. Thanks, everybody.