WS1874 How to Grow Your Real Estate Firm | Marcia Kaufman

Discover the secrets to navigating the dynamic real estate lending industry with Marcia Kaufman, a visionary leader propelling Bayport Funding to an impressive 40% growth. Gain valuable insights into the impact of surging interest rates on investors, developers, and the temporarily subdued multifamily market.

Unlock Marcia's profound wisdom as we delve into the unpredictable real estate landscape, spotlighting the indispensable role of bridge lenders amid uncertainty. Grasp how the Federal Reserve is influencing the economy and real estate prices, and master strategies to confront the challenges in this ever-evolving environment and the allure of high-leverage deals.

Uncover the core principles of successful lending, emphasizing experience, a proven track record, and low leverage. Marcia sheds light on the advantages of private lending over larger institutions. In our continued conversation with Marcia, we explore the Federal Reserve's impact on the multifamily market, the volatility of interest rates, and their effect on real estate prices.

Engage in our discourse on the current housing supply shortage in the US, population migration trends, and the necessity of a balanced yet assertive approach to investing in multifamily properties. Marcia shares invaluable strategies for growth, building investor trust, and the importance of maintaining a diverse portfolio.

Seize this opportunity to glean insights from a seasoned industry professional and elevate your understanding of the real estate lending landscape!


Connect with Marcia Kaufman today to unlock personalized insights and strategic advice tailored to your goals. Whether you prefer a direct conversation or want to drop a quick email, Marcia is eager to assist you. Call her directly at 516-441-5888 or shoot her an email at marcia@bayportfunding.com

For a comprehensive overview of Bayport Funding's services and expertise, visit their website at https://bayportfunding.com/ .

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Transcript

00:00 - Marcia Kaufman (Host)
The problem is that the rents were appreciating, interest rates were appreciating greater, so the cash flow couldn't catch up to the interest rates. So the deal started not to pencil so quickly. So people started to sit on the sidelines and say you know what? I need to see some stability on the interest rates. That's one side of it. 

00:25 - Whitney Sewell (Guest)
This is your daily real estate syndication show. I'm your host, Whitney Sewell, today our guest, Marcia Kaufman. Marcia is an expert in lending and she's going to lay that out today. The lending landscape and 30 years plus experience. So this is what most of you or many of you have been asking for. She's the CEO of Bayport Funding. She's grown the firm by 40% since she's been there Closed over 250 million across 220 transactions last year, listed in Housing Wire, connect, commercial Real Estate and other publications as a leading woman of influence and top performing lender in the tri-state area. So three plus decades of experience in the mortgage, banking and real estate industry. So ultra experienced leader here in this space and Marcia dives into that and shows that today. No doubt about it. You're going to hear her today and tomorrow we're going to dive into the lending landscape but also what's caused the 40% growth? And you're going to hear so much experience come out and just leadership. Her ability to lead and what she has done to grow has been incredible there at Bayport. 

01:38
Marcia, welcome to the show. Honored to have you on. I love having guests on who have been in the business a long time and with your level of expertise and experience, especially talking about a topic that's on everybody in this industry. Anyway, it's high Hide on their list. We're wanting to know more about and having lots of questions. So thank you for being on the show. 

01:58 - Marcia Kaufman (Host)
It's great to be here, Whitney, and thank you for having me. 

02:01 - Whitney Sewell (Guest)
Yeah, honored, we're honored to have you. I want to jump right in. You are an expert, no doubt about it, in lending Been in this business a long time and you even mentioned this is one of your superpowers is the lending landscape, and I think that's what everybody wants to hear anyway. So I want to just jump right in. Why don't you paint that picture for us a little bit right now on the current landscape around lending and some things that we should know as buyers? And but let's get started there. 

02:29 - Marcia Kaufman (Host)
Well, an expert, I appreciate that you know. Vote of confidence. I've been in lending for over 30 years really in the commercial sector for the past 10 years and when the Fed started their interest rate high campaign, interest rates started to soar. People started to panic. For me, it's a market. I started lending when interest rates were 18%, so when rates are at 7%, it seems like a really good environment. However, as you know, when everybody enjoyed two to 3% interest rates over the past couple of years, they lost sight of what a very stable, normal lending environment is. 

03:05 - Whitney Sewell (Guest)
Yeah, to think about 18,. I always remember the story my in-laws talk about when they bought their first house and I think they assumed the debt because I think it was 17 or 18% and they were thankful to get here 16, 17, something like that. 

03:21 - Marcia Kaufman (Host)
Correct. So right now, while you know, with the Fed interest rate and the 10, you know, commercial loans are normally tied to a 10-year bond and when the bond starts to inch up on the yield, interest rates rose pretty quickly. The difference in this market, compared to other types of the cycle where interest rates are up and down, if this was a pretty quick rise, they went up very quickly. Interest rates normally go up very quickly and come down very slow, but this was a pretty rapid acceleration and it caused a pause when people started looking for opportunities and to see if they were worthwhile with these current interest rate environment. 

03:57 - Whitney Sewell (Guest)
Yeah, walk us through that a little bit. Maybe even the repercussions of you know them going up so fast that maybe you know like we haven't seen that you know in the past. 

04:05 - Marcia Kaufman (Host)
So the repercussions are when investors or developers are looking for a multifamily opportunity, they'll take a look at it from obviously from a cash flow economics perspective, including debt yield and cap rate, and one of the key factors in analyzing a transaction is the current interest rate. So when interest rates are very stable, it's pretty relatively easy to analyze the deal and make sense to invest in. We've seen an appreciating real estate market in the last 10 years, like we have in a very long cycle. Normally there's always a bell curve. It comes up every 10, comes down. There's that curve. This was a very long time on the curve. 

04:42
So people are buying into opportunities and appreciation. As soon as interest rates start to increase, they start to stop buying into an appreciating real estate market and into a more normalized market. And what does that all mean in basic language? So in basic language it means that you look into a buyer of multifamily property. Interest rates are 2% and 3%. Rates of rent are rising rapidly. Nationally rents have increased rapidly. So when you require property, you acquire it, you'll renovate a couple of departments so that you can increase your rents and you'll buy that asset based on appreciating rents after you renovate those properties and re-rent them. 

05:24
The problem is that rents were appreciating, interest rates were appreciating greater, so the cash flow couldn't catch up to the interest rates. So the deal started not to pencil so quickly. So people started to sit on the sidelines and say you know what? I need to see some stability on the interest rates. That's one side of it. 

05:43
The other side of the concern was okay, usually on commercial loans for multifamily, their term loans, their three, five, seven, 10 year terms, and then they mature and then you have to refinance. Well, if you acquired that property when interest rates were between 3% and 4% and now you have to refinance around 6.5% to 7%, can you refinance with the current loan balance without bringing equity to the table? Will the rents support with the rents rising? Will they support the current interest rate environment? So there was a lot of concern in the market. There was a lot of concern in the market and I think the fear has really stabilized. The rents have really been able to keep pace with the increased interest rates and we're not seeing that many people on refinances having that bigger problem. Yet I don't know what the future brings as all these loans start to mature, but right now we haven't seen. You know the people. There was major concern in the market. I think that has softened quite a bit, has tempered. 

06:48 - Whitney Sewell (Guest)
Is that a surprise? Maybe that you haven't seen as many issues as maybe expected, or maybe they weren't expected. 

06:55 - Marcia Kaufman (Host)
You know, is it a surprise? I'm not really sure. I'm not sure. Have we not seen a surprise or have we not seen a surprise yet? It's the beginning. As I said, we're seeing the 10-year bond start to come down a little bit and interest rates come back down. I'm sure that's causing a lot of ease of the concern. It all also depends on how that sponsor buy that property. Did he buy it? Did he cash out and take all the equity out? Did the sponsor keep low leverage so that the rents really kept pace with the current interest rates? They didn't take all their cash out. There's a lot of different variables when we're analyzing what will happen. What will happen. 

07:40 - Whitney Sewell (Guest)
I guess. What are the situations now that you see that are the operators that are in the best seat? Are they prepared for this? What's the difference in them? And maybe the ones that, like you talked about? Maybe their rents won't support a REFI. 

07:57 - Marcia Kaufman (Host)
The key factor, I think, is what's the sponsor really experienced? Did they have a track record? Did they understand the asset class they were buying in? Did they not seek really high leverage when financing a deal? 

08:14
You saw a lot of newcomers come into the real estate multifamily market in the last number of years because there was so much opportunity. Everyone thought it's so easy oh, let me buy a property multifamily whether they were using their own equity or they were syndicating a deal, we'll buy them, we'll get the rents up, we'll refinance, return all the. You know give great returns back to our investors and it was wild for a while. Right Well, now it's not that quick. It takes a little longer to perfect their business plan. They may not be returning those type of returns so quickly right now. Investors may have to stay in their deals a little bit longer, which is truly what a multifamily deal should be. It's not a fix and flip deal, it's a long-term play. So you know, these are all things that I think we're seeing. 

09:03
But a very experienced sponsor who looked at multifamily opportunity has that track record and that experience, just like I do. I've been through many cycles of real estate. So I look at lending from a conservative, aggressive conservative perspective, we understand that prices could come down, rents could come down, interest rates could come up, so we don't look to lever people very high. As a bridge lender we'll be a little higher leverage because we're lending to the value added and how they can exit our loan. But we also take into consideration, as the market starts to change, what factors did we have to consider. 

09:42
So let me expand on that just a little bit. So when the Fed started their interest rate campaign, Bayport is a bridge lender will take a sponsor who's looking to buy a multifamily building, will identify an asset and might need short-term debt to add value by renovating the apartments, raise the rent and then they'll exit to a permanent loan from either a bank or an agency loan or a CRE loan or insurance fund or something of that nature. So when the Fed started raising rates about 18 months ago, 14 months ago, I told my chief credit officer start adding 200 basis points to interest rates. A while ago and my office was in an uproar. My originators were like our deals won't pencil, we won't capture deals, and I said the best deal we do is the deal we don't do. 

10:35 - Whitney Sewell (Guest)
Right. 

10:38 - Marcia Kaufman (Host)
And we're not doing an investor a favor by putting them into a deal they can't get out of. We have responsibility. So we were very proactive in really modeling to a larger spread and we also were the typical debt service coverage ratio. You look at 1.25,. I told my staff model it 200 basis points wider, do 135, just add some cushion because we don't know how long the Fed will start this campaign, how long rates will stay high and we want to make sure that the borrowers can exit our bridge to a permanent loan. Long story short, it was the right thing to do. As the Fed slowed their campaign, we eased up on that 200 basis points to 150, 100. Now we still are about 50 basis points above the current spreads and we're back down more to 125 because we're seeing it's covering and it actually worked out very well for us as a lender. We're a balance sheet lender, it's our own money and it worked out very well for our investors or our sponsors rather, who went out and identified opportunities that they bought a good opportunity. 

11:45 - Whitney Sewell (Guest)
Yeah, wow, now I appreciate you diving in there. I think it's hard oftentimes to keep up with what's happening or what the Federal Reserve's doing and what that means for us. And yeah, I've heard more and more talk about the caps that are coming due and whatnot and people can't afford them and you briefly talked about you can't afford the refile, whatever, but there's as many issues on the debt side. And one thing I wanted to mention that you said even earlier you talked about sponsors that have the experience. Typically, they'll have the lower leverage as well. 

12:16
And on and on, different people have interviewed, even recently, as we're talking about risk and people that have been in the business, like yourself, 30, 40 years, and one of the biggest things they say is low leverage, low leverage, low leverage. And so I just keeps hitting me in the face and I'm glad it is as an operator myself and so, but it's tempting, right, when things are just going, amazing how much, how high a leverage can we put on something Right, and that's you're not thinking long-term, right. You're not thinking about the potential downside in that moment. 

12:50 - Marcia Kaufman (Host)
Correct. And as a lender, we're competing for deals, for originating deals out there and we're sticking to our credit guidelines, our underwriting guidelines and we have long-term borrowers that have been with us for many, many years and we'll hear many times that the guy, the lender down the road, is gonna offer more leverage and for a moment you take pause. Are they smarter than we? Are right, we willing to lose a borrower to a lender who's a lot more aggressive or much, give them more leverage or may underwrite to a lower debt service coverage ratio or lower cap rate? And as a lender you really have to take. You say what do we do here? It's very hard at times when you're trying to build volume as a lender to stick to those strong principles. But if you don't stick to those principles, you're not gonna be in business to talk about it. 

13:42
But as you know, as everybody knows, there's been a lot of liquidity in the market over the past seven years. Everybody Wall Street's come in very heavily insurance companies, the market's been very liquid and the deal flow has been very strong. And in order to compete with deal flow, it's a couple of things the lower interest rates, higher leverage, more flexibility on sponsor experience, all the things of the bells and whistles that create. Should we be doing those deals? Ding, ding, ding, ding ding. And yet we have to do business. I have a partner's board that I report to. They're always discussing how's volume, how's origination, how's performance, how's our asset under management performing? And you got a balance set. It's operating company. 

14:30 - Whitney Sewell (Guest)
No doubt about it and I want to get to some of that in a bit, maybe in the next segment, just so the listeners know just the operation side of the company and how you have grown. What 40%? I think you know the business since you've been there. So I'm wanting to get into that. But before we do, maybe it's a good time for you to speak to, say private. You know lending versus, say, larger institutions and maybe some of the benefits you know of that. I know many operators you know listen to the show and may have used both, but maybe it's a good time for you to elaborate a little bit. 

14:58 - Marcia Kaufman (Host)
Great. So when the fed started their interest rate hike and we saw a couple of banks had some difficulty I'm not going to get into those names, we will understand who they are and banks in general started to have pencils down on commercial lending, they were taking a pause. Either they had to increase their deposits or whatever reason they took a pause or were slowing down. Maybe they wanted to have their assets under management or performing. You know, we're an alternative lender, we're a private lender and we have liquidity. We're here to lend money, so we're here to support borrowers and sponsors in their real estate opportunities. So private lenders or alternative lenders like Bayport are doing very, very well. 

15:41
People may say we're a little more expensive. It's not really the case, especially as interest rates have risen. But you know we have seen a big uptick in inquiries and business with the market the way it is. The flip side of that. We've also turned away more loans than we've actually done, because some of those loans are refinances of loans that are either not just a maturity default, might have an event default. 

16:08
So we've been very careful about the loans that we are putting on our books. But we are there to support the sponsors with their good opportunities and their good loans. We're also there to support the sponsors who have maturity defaults, but they just couldn't get the ideal done on time. So they've performed very well at their current lenders. They might be mid-construction or mid-renovation. They need a little more time. Maybe they had building department delays, the supply chain issue delays, and they just need a bit more time to complete their project. We've seen a big uptick in those type of loans come across our desk and we've actually originated quite a number of those. That's been very good for us from business perspective during these times. 

16:54 - Whitney Sewell (Guest)
Yeah, it's such a relationship business and I love having the expertise of our lender to underwrite our deals and give feedback. I love that. I love more eyes on that and experienced teams like yourself who have been doing this even a lot longer than we have as well. So when they push back on something, it sharpens our knife right, it sharpens our pencil, I should say, and so we get better at underwriting. And I bet many of those deals that you didn't do, those operators may not have done it, but they're probably thanking you now, right? They're thinking, man, they did me a favor by turning them away, so Right and you brought up a very important point. 

17:39 - Marcia Kaufman (Host)
There's no substitute for sponsor experience. There is none. We meet and speak to every sponsor that we lend money to. People think that's archaic but it's not. We want to look at them in the eye. We want them to express verbally what their business plan is, talk about their experience. There's no substitute for that getting to know somebody. Either it's done in person, via Zoom, or we'll go. 

18:04
If it's out of our home geographic, we'll get on a plane or train and go visit them, look at their project. We want to know where we're deploying our money and who we're deploying it to. And I would think equally important to a sponsor, if we're going to a private lender or a turnative lender, you want to know who you borrow money from. Do they have the capacity to deploy? You don't want a sponsor doesn't want to take down a loan and have construction or rehab money and not understand how that draw process money is deployed to them and how that affects their loan and their timeline. So it's very important for that sponsor-lender relationship getting to know them, meeting them in person. It's a very mutual relationship. 

18:49 - Whitney Sewell (Guest)
Yeah, we've created a relationship with a lender that's our good friends with the owner and stuff, and over time and as they've gotten to know us, we had not done a deal with them yet but we had another lender back out two weeks before closing and they had backed out almost 500 loans. It wasn't anything just about us and so it was a massive ordeal, but this relationship, this new lender, came in and closed within two weeks for us. So but it was a relationship that we'd built over a quite a long time and so I can't speak enough about what you just said. Just the relationship, meeting and just doing life, some life together, right To get to know each other, right Before you're in a crunch situation like that. Then you're calling Marcia saying and you're trying to figure that out and you only have two weeks. 

19:43 - Marcia Kaufman (Host)
But we're at that point also. That's the difference with an alternative lender. Is that timeline, as opposed to going to a traditional bank? If you were in that bind and you came to an alternative lender, a private lender like a Bayport, and you said I have to close, I have a time of the essence, I need to close in two weeks, no problems, once we have that appraisal and title and we can really get your information in, that is a tremendous asset that we lend to our sponsor. That timeliness and being able to close quickly. It's a story we hear all the time. 

20:13 - Whitney Sewell (Guest)
I bet. I bet it is, it has to be. What about speak to the Federal Reserve a little bit and the activities, what they do right, how that affects a multifamily and maybe your expectation over the next six, eight, 12 months? 

20:27 - Marcia Kaufman (Host)
Well, everybody always asks me what do I think rates are going to do? I don't know. Rates are going to go up, they're going to come down. My crystal ball doesn't work on Tuesdays or Wednesdays. Catch me maybe on a Friday. But the Federal Reserve? There's a campaign because they have to control the inflation. We're seeing some very good indicators. I think the employment numbers came out today. All those high unemployment is good for interest rates, good for the economy. I think that we're going to see. I don't know where they're going. I believe that we should see softening, hopefully within, I would say, 18 months or so. Some people say they're going to start to see softening already. You ask three people the same question. You're going to get four different answers. 

21:19
But Fed had to raise rates. Did they do it too aggressively? Inflation was out of control. Real estate prices appreciation were out of control. Rents were out of control. There was a need. This is not the first time that we've seen this. As rates go up, values come down, things come back in line, Although in some parts of the country we haven't really seen home prices come down or values come down or rents come down. 

21:45
That has to do largely also because we have a housing supply shortage in the United States and that's a big problem. So geographically, depending on where we're lending or where people are borrowing, it depends on where the geographic On the East Coast housing supply is tight. We just talked to the site multifamily on the once-in-a-bort family site. Did the housing shortage? Home goes on the market, it goes right away. So we haven't seen home prices come down really aggressively In more densely populated condo areas, urban areas, have we seen those types of prices come down? Yes, in the multifamily sector, have we seen rents really top out? I think they're topping out, but we're still seeing slight appreciation, not the way that it was before. 

22:34
Then you have geographic areas where government situations, where governmental controls, where you might have rent stabilization or rent control, and those leads to a whole bunch of other issues. In the New York area in particular, they did away with the 421A. So that's been a problem where sponsors or developers would come in and build a new multifamily with an affordable factor because they had this 421A tax abatement. New York's done away with that, so it's been. It has been a real incentive for sponsors to come in and build new multifamily because there's no tax abatement and the numbers don't make sense. So it depends on where the geographic area is, and that has a lot of effect on it as well. There's not a lot of incentives. 

23:23 - Whitney Sewell (Guest)
Yeah, where do you see, I guess, the most activity? Right, or the most you know, or from multifamily, as far as different parts of the country or places that are still moving, or not. 

23:35 - Marcia Kaufman (Host)
Well, we're seeing wherever we saw a huge migration from a, from migration In New York you saw a lot of and California, you saw, you saw a lot of migration to Florida and to Texas right. So, and it's not just in Florida in particular, it's not retirees, they're young families, people start in their careers, moving their families down there and they have a housing need and their population levels have really exploded and continue to increase. So those areas we're seeing, we're supporting especially, we do a lot on Florida, we don't lend, we don't lend in Texas, we do Dallas, we've actually moved into Dallas and we do some. We see a lot of opportunities there as well. But we're seeing, in the areas where the politics are right and the real and the income taxes are correct, for much more take home pay for our, you know, for people. We've seen that population migration and therefore they need a lot more multifamily needs in those areas. 

24:37 - Whitney Sewell (Guest)
Yeah, and I think it's helpful. Think through that. Yeah, where people are going. Obviously they need more housing and, like you said, there's there's definitely a shortage. You know earlier you mentioned, you know you all having an aggressive conservative perspective and I appreciate that. I even just saying it like that as well. I just think you know, as a buyer comes to you, what's helpful for them to know as far as exactly what you're looking for, Cause I think we should have the same perspective, right, you know as a buyer, can you elaborate just on what that means and more so, so you know buyers understand as they're looking at deals. 

25:12 - Marcia Kaufman (Host)
So, as they're looking at a deal first, they should be prepared. We want to know what your business plan, you know what's planned, and we're going to do a deep dive, as I mentioned before, into the sponsors experience. We want to know about their management. They owner manage? Do they use an outside management company? Do they have proof of concept with similar type of transactions? And we want to see that track record with their proof of concept. Are they building for appreciating real estate rentals or are they? Are they, I'm sorry, are they acquiring for appreciating real estate rentals or are they acquiring based on the slight increase and do the deals pencil that at those numbers, at today's interest rate? 

25:53
So we look at all those factors. Overall, it's just not the asset and the cash flow itself. Right, cause you can have a really great asset with great cash flow and you can have a sponsor come in and muck that up. Right, they just mismanaged, they don't understand what they're doing and they've taken a piece of gold and they've turned it into dust. So you can, you know, as a lender, we take a look at the whole gamut. 

26:17
So you know what I've been telling everybody today is when I look at a multifamily deal, if a multifamily deal pencils today at today's interest rates, at today's increase insurance rates, at today's, you know, adding a little more extra cat-backs, because there's always something unknown. If a deal pencils today from a cash flow perspective without looking for, I'm going to re-rent those apartments at 20, 30% more. And the sponsor has that track record, that proven experience, has its management team, either internally or externally, in place. That's a deal I want to lend to because an interest rate will come down over time. May not come down to two or three percent, but may come down over time in the next two years, two and three years, 200 basis points and they refine it. It's only going to become a stronger asset. We love those type of deals. 

27:13 - Whitney Sewell (Guest)
No, that makes sense. Man. Does it work today? Does it cash less risk? We're not counting on interest rates coming down in the next six months or getting a refi sooner than May and May has been. What about those that haven't done a deal like that before? Everybody's like, well, Whitney, how do I get started? And it's not so much how you get started conversation, but how do you get the debt If you haven't done that type of deal before? What does that look like? I'm sure you have people approach you all the time that maybe don't have that proof of concept right or done it before type of asset under their belt. 

27:50 - Marcia Kaufman (Host)
That's a phenomenal question. So because I've been lending for such a long time, people always come to me and say how do I get into it? Wow, it looks like real estate builds generational wealth or it makes so much money if I sell that asset. Everything looks easy when you're the outsider, right, or it's a crazy story. I have a friend of mine who works in a clothing store and the guy that owns it decides to syndicate a deal. Multi-family guy had no multi-family experience before. He's. Got a syndicated deal in North Carolina with his son and comes to the people that works for him to put money in the deal. It's bizarre. And this woman had money from inheritance and I said I wouldn't do a deal like that First. I wouldn't do a deal unless someone had a deep experience. And sure enough, she invested in the deal and she doesn't really talk much about how it's doing because I'm not really just leaving it at that. 

28:43
So we also have investors, or borrowers we call them investors, but borrowers who we lent to for they buy one to four family, they start out their career and one to four family fix and flip. Now these are not people that are sitting home watching HDTV. These are that's, my worst nightmare. So these are people that started out. They buy a house, they fix and flip, they do two, they do 10, they do 20. We have borrowers that have done 50, 100 deals and then they say I want to move up to do a bigger deal. They take a two family, they make it into a six unit or they convert to a condominium and then they'll say it's just as easy to do a six unit, let me do a 20 unit, a 14 unit, a 25 unit. And they build their experience very methodically and very carefully, getting their experience under belt, asset by asset. They didn't go out and buy, you know, a hundred unit multi-family building. We like those borrowers because they've learned very carefully if we support them and some of those borrowers that we've supported are doing tremendous, tremendous multi-family owners today, nationally. Some just are more geographic to certain area and that's a great borrower. They've learned the hard way. They understand every asset of operating, building, acquiring. They've gone through the pitfalls. 

30:04
You know, even for myself, just on a little sideline. You know, when the whole residential mortgage industry imploded in 2007, 2008, I started my career on the rescue side and when the world imploded I kind of sat aside for a while and started buying one to four family homes in Brooklyn, bronx and Queens in New York and to fix the flip. There weren't a lot of women doing it, I was probably the only one and I bought over I would say over a year and a half about 50 houses. Well, let me tell you something One of my houses was my biggest education. Everything that could happen to it happened. I had the wrong contractor. I didn't have one wrong contract, two wrong contractors. You know I couldn't. I had a deal to sell the house that fell apart and it was really my education and by the time of that one piece that really was my education. I never had a problem with ending my properties again. It was great. I learned tremendously about how to acquire, how to manage construction, how to build the right team, how to flip the property. It was really a great experience. 

31:11
So it goes the same on the multifamily side. Right, we don't. I don't want to lend to somebody who's in you know has owns a pharmacy. We see this a lot. They own a pharmacy and they don't own the real estate that's pharmacies in. They're actually renting, so they don't own the building and now they have cash and they want a multifamily property and they go out and they buy it. They have no idea how to manage it. Somebody told them it's a great idea and they fail at it. You know, in the course of them more money. They don't know how to do the repairs. They don't know how to do the cat-backs on it. They don't have to handle the rents. Go up a bit. Somebody doesn't pay and it's in a judicial state. They don't understand what it takes to evict somebody. So if you're in a judicial state, your tenant's almost your partner, right? So they don't have that knowledge. You know the best. 

31:58
If somebody wants to come in, the best thing is to partner with somebody who has experience, but really partner with them. You both should have, you know, cash in the deal. Don't just bring a partner in if he doesn't have any skin in the game, so to speak, or she doesn't have any skin in the game. You both want to be investors in that deal and you want to bring your expertise to the table. If their expertise is they've have the multifamily and the management and your expertise is that you have the cash, know what you bring to the table and pick the right partner and also pick that if the partnership doesn't work, make sure in that agreement, in your operating agreement, make sure you have a good divorce clause in that operating agreement. So make sure you have great representation when you're entering into a situation like that. 

32:44 - Whitney Sewell (Guest)
Very wise, very wise counsel, definitely very experienced counsel, no doubt about it. I couldn't not agree more with all of that, especially finding a partner more experienced and having that strong divorce clause, because unfortunately, it happens more times than not. I feel like in a lot of business ventures, right, that it doesn't work out for one reason or another, but yeah, and that's done ahead of time. Right, when everything seems rosy, right, before those times happen. But if you so, if you don't have experience, you need to find somebody that does, and I can say that in numerous respects to commercial real estate. You know where I didn't feel like I had the experience and we found people right To be on the team and partner with us and that did have the years of experience in that area that I did not. 

33:28
Well, Marcia, we're gonna end this segment here. I'm grateful for your time today and with listeners know we're gonna come back tomorrow with another segment with Marcia. We're gonna continue the conversation. We're also gonna dive into what contributed to 40% growth at Bayport funding since she's been CEO. So I'm looking forward to that conversation for sure, Marcia, how can the listeners get in touch with you and learn more about you? 

33:52 - Marcia Kaufman (Host)
So a great way to get in touch with me is through our website at Bayportfunding.com, where to call me? At area code 516-441-5888. 516-441-5888. I know a telephone sounds like old fashioned, but we'd like to talk to everybody. Or you can email me at marcia@bayportfunding.com, and Marcia is M-A-R-C-I-A at bayportfunding.com. 

34:25 - Whitney Sewell (Guest)
Thank you for being with us again today. I hope that you have learned a lot from the show. Don't forget to like and subscribe. I hope you're telling your friends about the real estate syndication show and how they can also build wealth in real estate. You can also go to lifebridgecapital.com and start investing today.