Paging Financial Freedom
This podcast is about empowering doctors and their spouses to break free from the golden handcuffs of medicine by building wealth through real estate and smart financial strategies. Through our personal journeys and hard-won lessons, we share practical tools to help you create more freedom, flexibility, and control over your time and future.
Paging Financial Freedom
How Multifamily Deals Actually Work
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In this episode of Paging Financial Freedom, Dr. Daniel Shin, a surgeon and real estate investor, and Lila Kaplan, a former Wall Street professional and certified financial planner, sit down with Javi Beza, co-founder of Higher Ground Investment Group, to break down the full life cycle of a multifamily real estate deal—from sourcing and underwriting properties to asset management and eventual exit strategies.
Javi shares his journey from running his family’s construction equipment business into multifamily investing, how he partnered with his longtime friend Teddy Moulman to launch Higher Ground Investment Group, and why operations, systems and accountability are critical to scaling successful apartment investments.
The conversation dives into how operators find deals in competitive markets, why underwriting discipline matters more than ever and how building strong broker relationships helped Higher Ground enter markets like Des Moines, Iowa. Daniel, Lila and Javi also discuss the realities of closing large apartment deals, including due diligence, financing, capital raising and coordinating contractors and property management teams after acquisition. Additionally, they explore common operational mistakes that hurt profitability, why property managers must think like business operators and how successful multifamily investing requires constant oversight and adaptability.
Key Takeaways:
04:10 – Javi explains why residential real estate wasn’t the right fit for him and how he transitioned into multifamily investing.
07:27 – The importance of accurate reporting, analytics, and keeping property managers accountable in asset management.
09:24 – How Higher Ground approaches acquisitions in today’s multifamily market and why underwriting discipline is critical.
15:07 – How new operators can build broker relationships and establish credibility when entering a market.
17:04 – A breakdown of the 90-day closing process, including due diligence, financing, and raising investor capital.
20:28 – What happens after closing a deal and how operators execute value-add renovation plans.
29:25 – How operators decide when to sell a property and why flexibility is important throughout a deal’s life cycle.
30:24 – Javi explains LIHTC (Low-Income Housing Tax Credit) properties and how affordable housing investments work.
Daniel, Lila, and Javi emphasize that multifamily investing is far more than simply buying apartment buildings; it also requires strong operational systems, disciplined underwriting and active asset management to execute successfully. They highlight that successful syndication operators must remain deeply involved in every stage of the process, from acquisitions to renovations to property oversight, while continuously adapting to changing market conditions. For passive investors, partnering with experienced operators who prioritize transparency, accountability and execution can create long-term opportunities for cash flow, appreciation and financial freedom.
Links Mentioned in the Episode:
Welcome to Tading Financial Freedom, a podcast about doctors and spouses and attorneys of financial freedom through real estate and activities. I'm Dr. Daniel Stats of Surgeon and Real Estate Investors.
SPEAKER_01And I'm Final Catholic, former Walter Professional, Certified Financial Center, and the person on an expensive service investment in the next five years. I specify in a partner investing, helping doctors, and their families build true financial freedom beyond ARW2 income.
SPEAKER_02If you're interested in achieving tax-efficient financial freedom through real estate, you're in the right place.
SPEAKER_01Let's get started.
SPEAKER_02Welcome back, everyone, to the Paging Financial Freedom Podcast. I'm your host, Dr. Daniel Shin, the overnamed doctor, founder of Search Real Estate, and I'm here with my co-host, Lila Kaplan.
SPEAKER_01Hi, everyone. So today we're moving past the why of real estate investing and get straight into the how. So we're gonna pull back the curtain a little bit and we're gonna see how exactly how large multifamily deals come together from the operator's perspective.
SPEAKER_02Exactly. All right. And to do that, we've brought in an expert. Lila and I have both invested alongside uh our guest today, Javi Beza, and he's a co-founder at Higher Ground Investment Group out of Denver, Colorado. Uh Javi, welcome to the show. Thanks, guys, for having me. I really appreciate it.
SPEAKER_01So, Javi, let's jump right in. You have a finance degree from CU Boulder and spent six years running your own business before co-founding Higher Ground in 2022. How did that transition happen? And what made you look at multifamily real estate versus any other asset classes and say, this is the vehicle that I want to focus on?
SPEAKER_03So, yeah, I mean, a little bit into my professional career before real estate, I, alongside my brother, moved back to work at my family's organization. We are in basically um, it's like dealerships for construction equipment. So we operate that in in Miami and some South American countries. So that's where my professional career kind of started. And it's it's a bit unique because we went into a situation. My brother, I say we, my brother and I went to a situation where um, you know, traditionally at a family business, you have the older generation working there. And, you know, for health reasons, my father wasn't able to be in the business every day. So I got a kind of a crash course in business firsthand as you know, a 22-year-old going into a professional career, right? So learned a lot there. And my brother and I ran the business for six years from, you know, not being profitable to being, you know, pretty profitable and realizing some success at an early age. And it kind of taught me a lot about business, but I think more so taught me a lot about people and how to manage people, what motivates people, and how important people are to the success of the business. So got that kind of crash course for the first five or six years of my career. Ultimately realized that I wasn't passionate about the work I was doing, um, found it a little bit more difficult to work with family. Um, family businesses I've have found that they either work or they don't. And this kind of, you know, business didn't really work in the way that I wanted it to be working on the day-to-day. So decided it was best for me at the time to kind of step away and take take an exit and kind of reevaluate my career and what I wanted to do. In doing so, I moved back to where I went to college. So I moved back to the Denver area. Wanted to get into real estate. I had been interested in from a while from like a kind of a fix and flip standpoint. I was reading books, um, listening to podcasts. And when I got to Denver, I was like, you know what, I'm gonna get my residential license. So I got my residential license, and I think I lasted about a month, maybe, with my residential license, because I went to a listening appointment and I was like, you know what? I don't know if I'm that interested in people's must-haves and their needs and going to show 25 houses without putting in an offer. So that part of it, yeah, that that part of it wasn't for me. I really enjoyed operations, financial planning, business planning. The money side of the business is what really intrigued me. So lo and behold, I was like, okay, what am I going to do with in real estate? Because I've I've really been interested in real estate. And I went to catch up with an old high school buddy of mine at lunch. And his name's Teddy Molman, who's my partner and co-founder here at Higher Ground Investment Group. And we went to lunch and he's like, hey, like, what, you know, what what are you doing? Like, what, you know, what's your plan professionally? And I was like, Well, you know, I got my residential license, it's not working out. I really want to do real estate, but I kind of want to get into like commercial. And at the time, Teddy was doing really, really well as a residential real estate uh broker in Denver. He was doing quite a bit of transactions, and he was like, you know, it's funny you say that because I want to get into commercial real estate too. He's like, problem with me is I'm not the best with, you know, financials and underwriting. I go, well, you know, I'm your guy, like this is what I do, this is what I've been doing for six years. So from that lunch, he went back to his office and he had a financial model that was used to kind of underwrite multifamily deals. And he's like, Hey, like I've I try to kind of figure this out. I think I know how this works, but can you take a crack at it? And I played with the model for maybe an hour, and I was like, Yeah, this is what I do, this is what I've done. And basically from that moment on, Hierogon Investment Group was started, and we started underwriting deals.
SPEAKER_01That's a pretty cool story. I didn't even know that. And we both know Teddy, of course, uh, but I definitely see how you guys complement each other as well.
SPEAKER_02Just a question. So back when you were with the family business, did you run it with the same sort of like style as you bring to higher ground now? Because I I know when I watch these um calls and participate in on the general partnership side, you run things, you know, you run a pretty tight ship. You know, I I like that actually, how you kind of keep things very detail oriented and you you don't let things slide. So was it the same style that you had in the family business?
SPEAKER_03I think I I evolved into that style. You know, being being young at first was quite intimidating. You know, you're uh stepping into an environment where, you know, I'm I'm I'm a kid in most of these people's eyes, right? Most of the employees' eyes. Uh 22 years old, and having to, you know, I was I I guess like the difference in style was like I kind of had to like massage my way into like, hey, maybe this is a better route of like sales. Like maybe we should be logging our quotes and doing analysis in this way rather than what you guys have been doing for the last 15 years. So like I think at first it was intimidating, um, but I worked my way up to the style that you guys are used to seeing on these calls of like, hey, this is you know, this is how we need to run the business. This is our plan, and we have to stick to the plan to achieve the goal, right? And multifamily, it's it's NOI, it's occupancy, it's you know, lowering expenses. And I, as, as I'm sure you guys have noticed, have always been a stickler for reporting. I want the reporting to be accurate, and I think there's a lot of power in numbers and in analytics of your reporting. So when, you know, back in the day at the business, when the reporting was incorrect, it would really irk me. And I'm sure you guys have noticed that I don't accept uh faulty reporting from our property managers.
SPEAKER_02Yeah, I think it's been really informative, actually, watching the way that you you run the meetings for higher ground and kind of reflecting that back into my own portfolio and the way that I think about the the real estate fund. I'm like, wow, we really need information. Like you need the data if you're if you need to make decisions, you need the data. And um, it's it's brought a higher emphasis on my side for like actual good numbers and data and the dashboards. You know, they're so important.
SPEAKER_03Yeah, they really are. You know, how can you get to where you're going if you don't know what direction you're rowing the boat, right? And if you're getting the incorrect information from your property manager, then you're really, you know, it's gonna be really difficult for you to achieve their goal. So and yeah, it's it's kind of the overall theme, I think, and we'll probably get into this in a little bit more detail. Like the overall theme of asset management is keeping your property manager accountable. It's making sure that they're doing the job, whether it's actually boots on the ground and doing tours correctly or being leasing correctly, or if it's like, hey, we need our rent rolls to be a hundred percent accurate, we need our financial statements to be a hundred percent accurate. Like it all matters. And as an as an asset manager, it's it's all about keeping them accountable.
SPEAKER_02That's a really good segue. Lila, do you want to kick us off for the next part of this?
SPEAKER_01Yeah, absolutely. So before we get into the asset management side, which is obviously part of the life cycle of a syndication syndicated deal, maybe you can talk to our listeners about the actual life cycle of a deal starting with the acquisitions. So in a competitive market, how does higher ground find a property that actually pencils out, especially in the current market where, you know, there's still lack of inventory, um, you know, there's still some distressed owners right now that's trying to get out, but then getting some bank uh modifications as well. So what are you guys seeing out there and how you how are you guys finding deals right now?
SPEAKER_03Yeah, I think as an investment group, your approach has to be flexible and has to kind of mirror the market that you're in. If you think about kind of the 2021, 2022 market, really competitive. Everything was penciling because everyone was putting in these six, seven, eight percent rent growths year over year. Very, very difficult time to do business then. Um, much different than where we are now, where I think um some multifamily pricing is inflated. Owners are holding on to those 2021, 2022 days of wow, like I'm gonna throw a number out there in the market and someone's gonna pay for it. That's what was happening. It's not the case anymore. Owners have to come back down to earth and they they have, and and realize and be realistic, I guess, what the pricing that that they can get for their property. But bringing this back to us and how we kind of approach acquisitions is it's also kind of like a core value of any investment group is like you have to be very disciplined on what you go after and the metrics that you're seeking. And don't get lazy, lazy is not the right word. Don't bend too much with your underwriting standards and what you want to see. I think an underwriting model can change a lot if you tweak a couple numbers here and there, exit cap rate, annual rent growth. And once you start doing that to make a deal pencil for you, you're in trouble. Discipline is the name of the game. Knowing what you want out of a property and being realistic with what you can put the form on is, like I said, core values of us as an investment group. Um, but that translates into acquisitions from the sense of you know, I think it's important from an acquisition standpoint to if you get a deal from a broker, give them the time of day and give them what they want, which is hey, I underwrote your deal and this is some feedback. Um, this is where I'm at pricing wise. You know, basically have a conversation with them of like, what do you think? You'd be surprised at how often a broker comes back and says, basically like tongue in cheek, like, yeah, man, I I know we're we're really at that price. Like that's no, our our marketed price right now is 10, 12% higher than where we think we're gonna be at. So you know, we're we're a few years into this business, um, more than a few years, I should say, but you know, we're we're experienced now and we haven't spoken relationships, but acquisitions just basically boils down to discipline and what you want to buy and maintaining the relationship through the broker by giving them, like I said, what they want and giving them the feedback on their deal.
SPEAKER_01Yeah, that that those are great points. Um, and I know you guys are pretty much focused in Des Moines. You I know you do have some portfolio in Denver. How do you get into a specific market? What factors are you looking for? I mean, Des Moines, you know, I say Des Moines is not a very sexy market like Dallas uh or you know, Miami or California or New York, but it works for you guys. So how did you guys get into that market if you can just talk a little bit about that process?
SPEAKER_03Good question. During the time we were looking at Denver and Des Moines, and we wanted a yin to the gang when it came to Denver. I think Denver at the time, you were buying deals with very little cash on cash in the first couple of years, even with the value add program. So we wanted to go to a market where you're not gonna see these big swings in cell price, right? You're not gonna get this big pop of appreciation at the end of the deal lifecycle. However, like when you go into the deal, years one, two, and three, you're gonna be realizing five, six, seven percent right off the bat. So we felt like it was a good kind of complement to what we were doing in Denver and what we were looking at in Denver. Also, our investor base, you know, we were pretty young at the time and some of our capital was young like us as well. And I feel like with the younger generations, they kind of want to see cash return on their money now instead of you know in five or seven years. And it's just different financial goals. So we were like, hey, let's let's go and do deals in this market. We feel like we can raise capital for it. We're gonna get these cash returns in the first couple of years, and also there's we're minimizing our risk of big swings and re- and basically being affected by by the markets in in this country, right? Um, so so yeah, so we went into Des Moines and immediately started underwriting deals and immediately started realizing like, wow, the cash returns are here. Um, at the time it wasn't as competitive. Des Moines has become more and more on bigger institutions, radars in the last, let's say, two years, but it wasn't that competitive. Brokers were very happy to speak to us and and realize like, wow, there's outside capital coming into Iowa. And we just found it to be an easy, easier market to do business in.
SPEAKER_01And how did you build the broker relationships? Um, especially in these larger deals, usually they give it to their, you know, five best friends. Here you guys come send come into the market as new kids on the block. You know, how did you build those relationships? And then how did you start getting these off-market deals?
SPEAKER_03So, right off the bat, before we did a deal, I heard once you have to kind of create a real estate story for yourself. So, what is your real estate story? And and I decided that our story was, you know, this is who we are. We've had experience and success in business and in residential real estate. Um, this is what we're looking to buy. Come up with your buy box. And it was for us that, hey, we want a multifamily deal, anywhere from 50 to 100 units, purchase price of let's call it five to 10 million bucks. And if we want a value add component of it, uh we want to go over to go after class C properties. So um we're okay with an older vintage. And when I would speak to brokers and introduce myself, that's that's what I would say. It was almost a script, but it was just basically talking points of saying, this is who I am, this is what I want to buy, what do you have? And as they started sending me deals, and like I was mentioned earlier, as I started giving them feedback, I was doing two things not only building and creating a relationship with the broker, but also showing them that I am serious, I'm not just fishing for like the best deal out there, and I want to underwrite and find a good deal, and then I'm persistent. So that was really helpful. And then we ended up getting our first deal in Des Moines, a 60-unit deal, and we got it from a broker who is not part of one of these big shops like CBRE or maybe uh Christian Wakefield or something like that. But he had this listing and we had a good relationship with him, and he really pushed for us with the uh owner and said, Hey, like I like these guys out of Denver. I think they're, you know, not only are they gonna be able to raise the money to do this deal, he really helped us kind of transact with that owner. So because we had that relationship with the with the broker, we were able to close our first deal, I think, easier than if we were just, like you said, some new kids on the block that nobody had really, really heard of.
SPEAKER_02All right. So you you get a deal, it pencils, you know, the broker's pushing for you, and you get it under contract. Can you just give us a quick kind of insight into what happens at that spot and how do you move from there to actually closing the deal?
SPEAKER_03Right. So you are under contract, everyone signed the the PSA, the purchase sale agreement, now loyal. And it is, I'm not going to lie, I'll be very honest, it is a chaotic 90-day sprint. You have to raise the money, you have to do your due diligence, and you have to secure financing in 90 days. So you are juggling quite a bit, um, and you are doing it basically congruently all at the same time. So because I had a business partner, we kind of divided and conquer. I think Teddy dealt with at first the pitch deck and raising money. I dealt with some due diligence and also securing the financing. So to kind of like put that in chronological order, first 30 days of being under contract, you're doing, you're flying out to the property, but they flew out to Des Moines, you walk every single unit, you take notes, you make sure it's in the condition that you were expecting. Uh if not, you make a note, right? You want to check out um the mechanicals of a building, everything about it, everything about the property. Um, you're also looking into the financials. Um, you want to make sure that the financials that are given to you now, and as they progress through the deal, you want to keep checking them. But you want to make sure that everything about financials is checking out. Once you're under contract, you can request utility bills, um, certain contracts, like uh, let's call it, like kind of you know, landscaping and snow removal, and you can kind of see all the details of the financials of the business. So once you are through due diligence, the next 30 days is really about securing financing. You've been talking to the bank, but now that you're kind of in that financing contingency window, you are you know getting a real quote from them, you are submitting all your personal information, and they are going to their investment committee and saying, hey, this is this group, this is you know their financial background, this is what they want to buy, uh, this is their business plan. So after that, you know, after the investment committee comes back and says, you know, this is a green light for us on the lending side, then the last 30 days is really kind of wrangling up. And I don't say that uh tongue in cheek, like you're really wrangling people up to kind of give you their investment. It's uh raising capital is difficult, and everyone is an investor until they actually hit send on the wire. So really getting people to to wire the money and to sign the subscription documents and all that, that is kind of like the last 30 days. However, I will say you don't start raising capital on day 61, right? You start raising capital almost before you're you're under contract. So, but if I were to break it up kind of in three segments of 30 days, that's that's kind of chronologically what happens.
SPEAKER_02Okay, perfect. So you've done the due diligence, you've gotten the financing, the investors are in line and have acquired the capital, and you own the asset now. So how do you go from there to actually executing on the on the business plan? Like what is the timeline in general, obviously, and how do you get from A to B?
SPEAKER_03Yeah, that's a great question. It's like when you close the deal, it's like now the work really begins. You know, you you want to hit the ground running because we are value ad guys, we always have a bit of like a robust plan in the first, let's say, 12 to 24 months of the deal. It usually involves some level of interior renovations, which then involves organizing a contractor to do the work for you and all of that. So having a plan on day one is very important. You don't want to pick your head up after you close and you know start working on your plan. So I'll speak to my experience because we've always done value add deals. I think the first thing you want to do is when you get your property manager in place, is make sure they're on board with your business plan. Really sit down with them and take the time. And every deal that I've bought, I've sat down with the onsite property manager and really made sure they understand what the plan is and how it, more importantly, how it affects the financials. If they're not understanding how everything affects the financials, they're not gonna be in your corner and not gonna, they're not gonna fully get it. And you gotta, you know, for example, I sat down with a property manager. I'm like, hey, if these renovations are taking longer and we're a few months behind, this is what it means in regards to NOI. And this is what it means in regards to like distributions to investors. And I'm not willing to miss on my distributions to investors. So it's very important that we start from the top and make sure that we are renovating these units in a timely manner, right? Kind of showing them how it all trickles down and affects like the bottom line. So making sure your property manager is on board with your plan and understands what you're trying to do. The next is making sure that your contractor understands your timeline and level of renovations that you want to do. Contractors at first were a bit difficult for us to come by in Des Moines being new to the market. We were very lucky to find a really good one that we used and we still use. And that was, you know, a few months after buying our first deal. But that's a it's a very important piece as a value app program, right? Because as you're renovating interiors, you know, ideally the plan is to increase rents on that renovated product. And as your business plan, as you've underwrited a business plan, you are realizing increased revenue from those increased rents on those renovations. So that's probably the first two parts that are that are most important is getting your property manager in line and then also making sure your contractor is in line with your plan too.
SPEAKER_01Yeah, I think the contractors is definitely a really hard component to keep them in line because they're not business people. You really have to project manage them. And that's one thing that I've learned. I mean, you talked about fix and flip in the beginning. I did that for you know a few years. And man, I mean, if you don't keep your eyes on them, they will just do whatever. But that's pretty interesting from the asset management side. And property management is definitely very, very important as well. Um, so if someone were to go out there and say, you know, I need to find a property manager, what type of factor should they be looking for for a good property manager? Because I know you guys have had some transitions at that point. So what have you learned from that transition?
SPEAKER_03That's a really good question. I I think what makes a good, well, I guess we can start with what makes a good property manager. And I think it all boils down to number one, you want them to have a business mindset. You want them to understand how the deal works from a like as a business. It's not just about occupancy, it's not just about converting tours into leased units. It's, hey, I want to make sure that I'm getting the best bids for snow removal. I want to make sure that the contract I signed for my trash pickup remains at that dollar number that I'm contracted in. And if it gets away from me, I got to call and make sure, hey, why is this increasing on me? You really want you want a business manager, not so much somebody that's going to be focused on, let's say, leasing. So you're right, Lila. We have had some transitions and we have learned from not so good property managers what makes a really good property manager. And to go and find one, it's difficult, like a being new to a market. Um, you really, it's one of those things where you don't really know how well they perform until they're at your property working on it. But it's something that you can definitely figure out pretty quickly on if they're good or not. But I I would say as like a new person going to a market, you want to go with someone I think that you that you feel comfortable with. And that and I I like to see when people ask the right questions. If I'm sending over a pro forma of some underwriting and they're coming back to me and they're like, hey, like I I want to know why you got to this pro forma rent on a tea bedroom. Because it's I I you know, respectfully hobby, I don't really agree with it. I want to see that type of dialogue. I don't want somebody just to take my performer and be like, man, this looks great. I think we're gonna do even better than this. You know, I don't want, I don't want the sell on from a property manager. I want the I want the conversation. I want the dialogue. I want to come to the table and look at the same numbers and come up with a plan that we both agree with.
SPEAKER_02Let's make it a little concrete, actually, because you know, Lila and I both uh raised capital and invested in this pretty large portfolio deal, uh 360 units property in in Des Moines. And, you know, last year I think that was one of the challenges, um, this exact conversation. You know, there was a a very recommended established property manager in place, but there were some issues with expense overruns, um, and that affected the bottom line. So, how did you make that really hard decision to pull the trigger and and change property management for the HMR deal?
SPEAKER_03Yeah, I think we got to a point where, you know, we realized this isn't the best fit for us anymore. And I also think we, you know, we were for Hanson Meadows and the Ridges, the deal that you guys are talking about in our deal in Des Moines. We were working towards this pretty important piece of refinancing our preferred equity position. So we were going for this supplemental loan, and we're kind of in this position where we didn't want to change property managers before applying for the supplemental loan because with lending, it's just, I don't say a red flag, maybe it's called like a yellow flag. You know, they want to see kind of consistency in your property. So we knew that they weren't performing at the level we wanted to perform. And then we went for the supplemental and we didn't size to the number that we wanted. And that was kind of like the final straw of like, okay, this isn't working out. We don't have any any particular financing event coming up that's hasn't been affected already. So let's let's move on. But speaking about this property manager and you know, getting a little bit more granular on what it was they weren't performing on, it led to Teddy always said, the head of the snake or the actual property manager on site. So property managers, um, the the head count that we had on property was two leasing agents, a property manager, and then three maintenance techs. The property manager acts like the maestro, right? They coordinate the leasing agents, they coordinate the maintenance techs on where to go. So that person that was in place, we actually had two of them in place throughout the last 24 months, but they just didn't have, like I said, that business acumen, that business mindset. They thought that because they were leasing units, that they were doing a great job. And on many occasions, I'm sure as I'm sure you guys saw, like, hey, although you guys are leasing a lot of units, you have people moving out at the same rate, if not higher. So you need to not only consider, you know, you need to consider your move outs and like what your net lease and your net, your net moving move out number is, not just look at and be like, hey, at least 30 units this month. Like, that's great. You had 32 moveouts. So all in all, like, not that great. And then on the expense side, Daniel, kind of I kind of hinted to it earlier. Like the trash contract got out of control. Nobody wanted to call and say, hey, you're charging me double because you have extra pickups. Nobody wanted to look at the payroll number and realize, like, hey, we're over budget here. We need to either like cut headcount or you know, rework somebody's salary. That was the frustrating part. And to your point, like the expenses last year on this deal were way too high. And that is, you know, comes from the property manager and what they're responsible for. Um, and if they weren't going to respect the budget, then it was very clear we had to make a change.
SPEAKER_02And I've been really pleased that the new property manager's performance, you know, being in the uh GP meetings and everything, I'm seeing the different approach. I'm seeing the attention to detail, the proactive nature of it. And it's like night and day. So I'm really happy that you guys pulled that trigger on it. And, you know, just to round out the life cycle of the deal, you know, at which point do you decide to say, okay, we're we're at a good point in this deal and it's time to sell? You know, when do you pull that trigger?
SPEAKER_03You want to make that decision, not make a decision, you want to have an option or a window before you buy the deal, right? So this one was was marketed and our plan is five to seven years. It's loosely based around our our loan termination or our loan terms. So we have the first five years of this deal, we have five years interest only, and then two more years of interest and principal. So it's a seven-year note. So that's it, you know, our timeline is loosely based around that. But I think as your deal performs better and better, you you have more options, right? Maybe you pick your head up in year four and say, hey, let's get a couple brokers on the phone and and see what they think about our sell price. Or if the deal is not going as good as you thought, you know, having that extra two-year window of, you know, picking your head up on day one, year five, and being like, you know what, I don't know if this is either the best market to sell in, or maybe we can improve our financials over the 12 months. Let's push this out another 12 months. Like having that flexibility is important. So I would say make like kind of pulling the trigger on when to sell, it's market dependent. You want to be in a favorable market for you for yourself and for the deal. And then also what your financials look like versus your performer. If you think you kind of can improve then and then and you can afford to to kind of extend and then do so. But it's it's definitely an analysis when it comes time. An example right now is we bought a 50-unit light tech deal last June, and we bought it at an incredible price, incredible basis.
SPEAKER_01Javi, I'll can you pause there? Can you explain what LightTech is for our audience?
SPEAKER_03So LigTech stands for low income housing tax credit. I think it's a scary term, but to break it down just means that, hey, this when this particular building was built, it was subsidized by local municipality. And when the developer got those funds from the local municipality, the I guess like the rules or the contingency is like, hey, you can, I'm gonna give you this money and you don't have to pay it back. But we want this housing to go towards lower income folks. Um, and in doing so, these are the um rental rates that you are capped at. You cannot rent one of these units for higher than this amount. It's all based on kind of like medium income. It's a big calculation. I won't I won't get into the minutiae there, but that those are the rules. It's hey, you know, a two-bedroom can't be rented for more than this a month, and a three-bedroom can't be rented for more than that. So you have to, as you operate that deal, you just have to abide by those rules, and everything else more or less is is the same. And then also I would I I want to add that the tenant also has to qualify. So it's not like somebody making a bowlload of money can can go and rent a unit that's that's cheaper than than market, right? So the tenant has to prove their income and say, you know, they're they're below a certain certain uh annual income. So that's what that's what light needs. Um so we have this light tech deal. We bought it last June, bought it an incredible price, and we raised money for it, we marketed it as a five-year deal, and we are actually picking our heads up now, nine months into the deal, and looking at what a sale looks like on month 13, month 14. We are, you know, being told that it can, you know, we bought it for $48,000 a door, we're being told that we can sell it for $65,000 a door, $70,000 a door. So we're we're kind of at the point now where it's like, hey, what is going to five years look like versus what if we sold this summer, you know, and can realize anywhere from maybe a 40 to 60% return in 14 months. What's that look like? What does the investor pool feel? And obviously, this is something that we would bring up and say, hey, we're considering this. But yeah, it's it's it's one of those things when operating a multifamily deal, you gotta be, you gotta be nimble, not flexible. I think nimble with like, hey, like I guess I can have different options of either refi or exit, but definitely having your finger one on the on the pulse and kind of exploring all options at all times.
SPEAKER_01So, Javi, um, I heard you got engaged recently.
SPEAKER_03Yes. I did.
SPEAKER_01How does the future missus feel about you being in real estate and how involved will she be in the future of your real estate empire here?
SPEAKER_03Yes, I got engaged recently. It's it's an exciting time for me. You know, I'm I'm lucky to do someone who's really supportive of what I do. You know, kind of working for myself, Teddy and I are business owners. It's it's uh it's not a regular job, right? I mean, we make as much money as as we produce. Um, you know, our our next check is is the next deal that we do, and we have to really make sure that we we take care of our own, right? We take care of uh ourselves, we take care of the you know, the people that we have working for us. We have a a full-time assistant, we have a project manager. So she's really supportive of it. Um I think she enjoys candidly, I think she enjoys California a little bit more than Des Moines. But um she uh she'll come out for the state fair, hopefully one day, and I'll show her around the deals. But um she's really supportive of of what I do and and I'm lucky to have that.
SPEAKER_01Awesome. Yeah, I I fully believe that the spouse have a critical role in all of the things that we do today, right? So I'm on this journey to retire my orthopedic husband, and Daniel's on his journey to retire himself with the support of his wife, with the support of his wife. So um, so you know, it's just it's very interesting to just understand how the significant other thing, supports, you know, are there for everything that you do.
SPEAKER_03For sure. And it's you know, I'd be remiss to say that it's you know, it's definitely affects your and it's you know, being an out-of-state owner is there's challenges with that. You know, I got it. I'm going to Des Moines once a month this year, at least. I think I went three times uh in January, actually. Um, but we're going out there often, so it's definitely time away, but it's also kind of going bringing this back to a little bit more business. Like this is a full-time job. This is what Teddy and I do full-time. This is my side hustle. And, you know, people ask me what my day-to-day, I got asked last night, I went to get some dinner with a friend and it's like, what's your day-to-day look like? And I'm like, man, it really depends when I open my computer at 8 a.m. Like it's, you know, I don't, I don't know if I'm gonna be, you know, dealing with metaphorical fire. I don't know if I'm gonna be, you know, maybe prepping some financials for for an asset, if I'm gonna be doing like true asset management calls, like it all kind of depends. And being in Des Moines has really helped us kind of get in the weeds. I think that's something that we do differently as an investment group. That we are we are so involved, sometimes it it kind of hurts us, I think, because some of the property managers think that we'll just take the lead on some issues and and take care of it when it's really their job and that's what they get paid for. But we enjoy it. We really enjoy being in the weeds, we enjoy the asset management part of our business, and um being in Des Moines uh really helps out. We have a I'm like smiling, we have a we have a townhouse there that we keep. We used to do the whole hotel Airbnb rental car thing, but we got a townhouse there, we've had it for about a year and a half, and uh, if you were to ask me five years ago, or if you were to tell me five years ago, like, hey, you're gonna be renting a townhouse of Des Moines, I would have thought you were nuts. But no, it's been uh it's been great. It's been really great.
SPEAKER_02Well, fantastic. So thanks so much, Javi, for giving us this insight into really how a deal operates from you know finding the deal to closing on the deal to improving the deal and really exiting. And you know, I think it's a real advantage because we have this inside look into one of the deals that we've done with you. So thank you again. Where should listeners, if they want to find out more about your investment group, where should they go?
SPEAKER_03Uh, you can go to our website, it's uh higher groundinvestorgroup.com. Or I would say follow my social, but my business partner is the social media king. Definitely go follow him. Teddy, yeah.
SPEAKER_00Teddy is uh who flies airplanes.
SPEAKER_03He flies airplanes, he skydives.
SPEAKER_00And he has his own now.
SPEAKER_03He has his own plane now. He's two actually.
SPEAKER_00Two, okay.
SPEAKER_03Yeah, he has I call it one ones for sport and one's for actual travel. The one that's for sport is it's a single seater. It looks like it's uh it's a great plane, but it's uh yeah, I mean he's he's he's flying low in that thing, you know. Um takes it out in the backcountry. But he's uh yeah, definitely go follow Teddy. Um I don't know his Instagram handle off the bat, but I'll give it to you guys. But if you we'll put it in the show notes. If you want your feed to be blessed with uh some outdoor adventure and some real estate insight, definitely uh definitely follow him. He that's his uh department, I would say.
SPEAKER_01Awesome. Well, thank you so much, Javi, and thank you everyone for listening today. If you found this valuable, um please leave us review, like, subscribe, whatever you need to do, and wherever you listen to this podcast.
SPEAKER_02All right, thanks everyone. We'll see you on the next episode of Paging Financial Freedom.
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