WS1975 Property Profits | David Toupin

Are you looking to enhance your real estate investment strategies? Listen to the latest episode of the Daily Real Estate Syndication Show featuring David Tupin, a notable multifamily real estate syndicator and entrepreneur from Austin, Texas. Discover how David went from buying his first property at 20 to managing over $120 million in commercial multifamily properties by age 28. Learn about his innovative approach to deal structuring, like selling telecom leases to boost investment returns, and his venture, Real Estate Lab, which offers essential tools for multifamily acquisitions and asset management.

David discusses the current market outlook, predicting cautious times ahead with challenges for recent deals. He shares insights on raising over $20 million in capital through strong relationships and compelling narratives. Also, find out how David leverages social media to connect with investors and source deals, and his commitment to mentoring aspiring real estate professionals.

Key Takeaways:

• Innovative Deal Strategies: Unlock the potential of creative deal structuring for better returns.
• Market Insights: Prepare for the market's ups and downs with David's analysis.
• Raising Capital: Learn how to attract investors through strong relationships and engaging stories.
• Leveraging Social Media: Use platforms like Instagram to widen your investor network and find new opportunities.
• Educational Resources: Tap into David's expertise and Real Estate Lab for your investment journey.

For those interested in exploring more about David's strategies or Real Estate Lab, reach out to him via Instagram @realestatejedi or visit www.realestatelab.com.

Remember to like, subscribe, and share the show with anyone interested in growing their wealth through real estate. Start investing with us at lifebridgecapital.com.

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Transcript

David Toupin: Now I'm eliminating $2,700 a month in income on the rooftop, but I'm getting $700,000 paid up front towards my $2 million down payment. So now I only have to come out of pocket $1.3 million, effectively juicing my returns and IRR and cash by a significant margin. So that's kind of a really creative structure of how I was able to make this deal work and make sense of it.

Whitney Sewell: This is your daily real estate syndication show. I'm your host, Whitney Sewell. Thank you for listening to the show. My goal is for you to become a savvy investor by learning from some of the best operators and investors in the business. I'd like to hear from you. If you have questions you would like us to ask on the show, or if you have someone you would like me to interview, please let us know by emailing info at lifebridgecapital.com. Would you please leave us a written rating and review? I would be grateful. Well, do not hesitate to let me know how we can best serve you at LifeBridge Capital. And now for an amazing interview with my friend, Ben Kogut.

Ben Kogut: This is your Daily Real Estate Syndication Show, and I'm your host, Ben Kogut, sitting in for Whitney Sewell today. Today, our guest is David Tupin. David is a multifamily real estate syndicator and entrepreneur based in Austin, Texas. He started investing at the age of 20 when he bought his first property while in college. By the age of 28, David has purchased and developed over $120 million in commercial multifamily real estate, as the owner of Tupin Holdings. David is also the founder of the Real Estate Lab, a multifamily acquisitions and asset management software for investors. Today, he shared with us some fascinating best practices for putting a creative deal together. For example, he'll talk to us about how he is under contract to purchase a property that has a cell phone lease on the roof. and how he's able to sell that lease in order to be able to reduce his basis in that underlying asset. Super fascinating. He also talks to us about best practices and how he's been able to find so much success before the age of 30. And he also talks to us about the software that he's created and how he's been able to bring in over 150 other companies who are using the software to improve their asset management. David, welcome.

David Toupin: Hey, man, thanks for having me.

Ben Kogut: So it's good to catch up. My pleasure. Yeah. Give us the 90 seconds on your background in your involvement in real estate syndication.

David Toupin: Yeah, so I guess a little bit of the interesting part of my story, I just started very young in this business. Bought my first property when I was 20, going on 21 years old, a little 12-unit deal. And I'm 28 now, so I've been doing it for about seven, eight years. Almost 1,500 apartments, a couple self-storage facilities, some mixed-use, commercial. We do a lot of joint ventures, a couple syndications. I've gone full cycle on 13 deals to date, I believe. And I'd say we do almost everything in-house, except for we don't manage quite everything. We manage some of our stuff. But yeah, it's been great. I live and breathe real estate. Diehard entrepreneur, started a software company as well two years ago, also in the multifamily industry. And both of those businesses keep me very busy. I'm just happy to be here and share a little bit about what I do.

Ben Kogut: Amazing, David. It's so impressive that you started at such a young age and have accomplished so much. It's really, really incredible. Where did you learn all this? How did you get your start in all this? Was it just grit and hard work? Did you have mentors? Did you take any mentorship classes? What was it?

David Toupin: Yeah, I'd say it's a little bit of both. I certainly had mentors along the way, had people I learned from, you know, YouTube, books, all that type of stuff. I joined some masterminds. But really, at the end of the day, I attribute most of it to just, you know, not being afraid to jump in and get my hands a little dirty and fail along the way. And I learned a lot from that. You know, I put my first deal on a contract without having pretty much any conversations around raising equity. And so it's like, get the first deal locked up, now figure out the money and figure out the bank, figure out that type of stuff. So for example, I was on my third deal. I didn't even know what agency financing was. And I was like two weeks into due diligence when I found a website that spoke about Freddie Mac financing. And again, I didn't have anyone tell me that that was even a thing. I just found it online and connected with a company called Hunt Financing. And so I got my first Freddie Mac loan done at that point. So it's stuff like that, that it's just kind of trial by fire and figuring it out along the way.

Ben Kogut: Amazing. And I know that you've done some pretty creative deals and maybe talk a little about that.

David Toupin: Yeah, man, I've done a lot of different types of projects from light value ads. I'm sitting today doing this interview with you from a project that I completely got renovated, these townhomes, about 100,000 a unit in renovation. So everything in between. A lot of different, I'd say, creative type deals. One I'm working on right now is pretty interesting. It's a 45-unit, seven-story building in San Antonio. We're closing on this in about a month and a half. There is a telecom lease with AT&T on the rooftop. It's a tall building, so a lot of times these telecom companies will want to put a cell tower or something on the roof and utilize the space and they pay you for that. Well, there's companies that are not AT&T, but other privately held companies that want to earn that income from AT&T and have access to your rooftop to put additional leases up there. So I go in a contract on this deal. I knew this up front as well, but found a company that was willing to pay me for this $2,700 a month lease. They're paying me $700,000 simultaneously at closing to buy that lease from me. So what's kind of cool is my equity to do the deal originally was $2 million. This is what I needed to raise. Now I'm eliminating $2,700 a month in income on the rooftop, but I'm getting $700,000 paid up front towards my $2 million down payment. So now I only have to come out of pocket $1.3 million. effectively juicing my returns and IRR and cash by a significant margin. So that's kind of really creative structure of how I was able to make this deal work and make sense of it. And, you know, we're always looking for things like that, you know, to find deals that maybe other people might pass on and turn them into a big win.

Ben Kogut: So if I'm hearing you right, they they took that twenty seven hundred dollars My rough math is it's like a 4.6 cap or something for that rooftop. And you're bifurcating the roof, which is a lease. So you're not even selling them the fee simple real estate. You're just selling them basically a lease that's to the telecom group. And then you're using that as equity to go into the actual real estate that's below the roof and lowering your down payment significantly. Yeah, it's super, super creative.

David Toupin: Exactly. You're exactly right. Yeah. So there it's, it's technically the, the legal instrument is it's an easement. It's like a rooftop easement. Uh, it's, and, and then what we do is there's an agreement between them and the lender, uh, uh, kind of a subordination agreement, um, that separates it from the real estate itself. So, um, you know, the, the, the sell lease will now be technically property of, you know, this other company for, uh, kind of easiest way to explain it. So for example, if like the property ever got foreclosed on or I sold it, that lease is completely separate. It's it's now property of that telecom company. They will all have a time but Oh, sorry, go ahead.

Ben Kogut: Carry on.

David Toupin: I was going to say that that same company that's buying this is also going to attempt to put additional leases on that rooftop. So we're talking like Dish Network, a couple other groups. They'll lease space up there for $1,500 to $3,000 a month, and we then have a profit share on future leases. So I do have a chance to actually continue to earn a portion of income of any additional leases they put on it going forward.

Ben Kogut: So very, very nice. So not yet. They are able to increase their revenue, you'll get a piece of that is what you're saying.

David Toupin: Exactly. 100%. So instead of buying it for 77 a door, I'm looking at it as like, I'm buying it for, you know, around 2.8 million now, like, you know, 62 a door.

Ben Kogut: So how do you find deals like this?

David Toupin: This deal was on market for two years, and an old gentleman owned the property. And he wanted, to my knowledge, he wanted like five or six million for the longest time. His kids ended up, I think he's in his 90s, his kids ended up taking over kind of the trust and the estate, you know, as he got older. And this happened in the last six months. And I'd offered on it beforehand, like, love three millions. I came back to the deal nine months later. Again, I've been sitting on the market, sitting on the market. They've been turning down any offer up to $4 million. They didn't want to even look at it. Then the kids get involved. I make an offer at the right time and they accept an offer at $3.5 million. It's just the timing thing. Somebody else maybe could have gotten in there a month or two later and gotten a deal, but I followed up at the right time and it worked out perfectly.

Ben Kogut: Timing is everything. And what are you seeing in the market going forward? We're in March of 2024. What is your crystal ball think is going to happen going forward?

David Toupin: I think it's going to be slow. I mean, I'm an eternal optimist, but I do think this year is going to be a really slow year. I think a lot of deals are starting to go back to the bank. They have already been. I believe Q2 and Q3 of 2024 are two quarters where groups are struggling to hang on to their last bits of reserves. And deals that were done in 2021, 22, that were maybe overpaid for and underfunded are kind of coming to that point where, you know, these floating rates have just maintained. And, you know, you can't blame some of these groups, honestly, because, like, you know, first of all, who would have expected it? You know, rate caps are coming off, payments are going up, and it's just happening. So I think that's going to happen a lot. Some lenders like actually I heard recently Arbor is starting their own asset management division and taking some of these deals back and not selling them so that's really interesting. I would hope rates start to kind of trend down towards the end of this year but I think the Fed is too scared to do that and see things kind of explode again to drop them anytime in the next like three to six months unfortunately.

Ben Kogut: Great, great analysis there. I don't disagree with you and definitely seeing a lot of properties going back to the lenders and it makes a lot of sense for some of them if they have the resources and the desire that you hold on to them and get at that lower basis and kind of wait for. Yeah.

David Toupin: I was going to say, what are you seeing on the commercial side as opposed to multifamily? Maybe because, you know, commercial has, I would say it's very obviously niche specific, right? Depends what type of commercial, but commercial in general has slowed down a lot, especially office, right? Some retail over the last five years. Have you seen as much of a kind of decline in the last 12 months as we have in multifamily?

Ben Kogut: Not nearly as drastic as multifamily. You know, these deals are, so I'm a retail triple net guy. And so the shopping centers and single tenant net lease deals are still, you know, we're still able to get financing, albeit at a lower LTV, but typically we're locking in 10 year fixed rate. And so we're not, we're not seeing that kind of decline like what's been occurring in multifamily. Plus we're starting at higher cap rates as well. So there's less competition. And so it just gives you a lot more breathing room for if and when rates do shift unfavorably. And so yeah, there's less transacting, but the valuations are still holding like pretty darn close to where they used to be.

David Toupin: Okay, yeah, probably just cap rates have gone up a little bit based on interest rates. But other than that, how to see more stable, whereas multifamily just spiked like crazy and people were buying deals and just prices that made zero sense, you know, so

Ben Kogut: Let's pivot a little bit and talk about your real estate lab because I think that is something that I know you put a lot of energy into that. Share with the audience about what's going on there.

David Toupin: So I built a spreadsheet kind of starting back seven years ago. It evolved over time. Started selling the spreadsheet as a syndication kind of model and a lot of people loved using it. So long story short, I ended up starting a software company and we built a desktop web application for tracking all of your deals. looking at public records for properties, underwriting deals. We have a ton of different models you can choose from, development models, storage models, multifamily models, etc. You basically use it as your hub for all the deals you're looking at, all the deals you own, underwriting, you can store all your documents. I mean, it's like people really don't have a central place for that normally. They'll use like a Dropbox maybe or Google Drive. And then you've got a platform maybe to manage your investors. You've got like a Syndication Pro or Juniper, but nobody's got like a deal side software, unless they modify maybe like a CRM for that. So that's what ours is. And you can upload rent rolls, T12s, pull the data out of them, put it directly in your model. We do a little bit of predictive analysis on your operating expenses and auto populate those. And as of last week, we have a brand new feature where you can pull all of your multifamily rent caps directly from our software. So we provide national data on rental comparables and help you kind of suggest what your rents should be and show you comparable properties nearby and their rates and their rates per square foot and all that type of stuff. make decisions directly within our software platform. So it's cool. I'm not a tech guy. I have no tech background. It's been super interesting. I've poured a ton of money into building it out because really I built it kind of for me at first. I use it every single day. And you just kind of take feedback from our users in our community now. But we're up in the last year, we started selling it like April of 23. When we started, we've got about 150 companies utilizing it now and growing every single month. It's like a homegrown software, but it's come a long way. I think it's really cool and transformational for people's businesses that don't have those systems or are doing a lot of deals and want to speed up the process. We're that software for them.

Ben Kogut: Amazing. Have you all tapped into AI in any of this process?

David Toupin: We utilize AI for the rent comps. It's a part of the equation to identify similar properties. Utilizing photos of the subject property will determine if they have similar build quality amenities, if they are a comp or not. AI helps us kind of determine that. That's a part of it. Other than that, it's just a lot of very typical, you know, good old fashioned data and and whatnot.

Ben Kogut: So nice. Let's pivot to the syndication side and raising capital. And maybe you could share with us a little bit about what your strategies have been in that department.

David Toupin: Yeah, I can't say I've got any secret sauce to capital raising. I've been doing it for the whole seven years I've been in this, and I think to date a little over $20 million has been raised in capital, all in-house. I tend to not do any co-GPs. I think out of all of our 23 deals, 22 have been all in-house, capital raised. And I really just do like relationship based capital raising. So I've got a lot of investors on a list. And anytime I meet somebody new, I put them on the list. I keep them informed with emails. And then I have kind of my select list of people I know with larger check amounts. I literally keep a note, keep it in my notes app on my iPhone. And when I get a deal, I just call them up and I tell them, hey, I've got a deal. And these are people that have, you know, 250 to 5 million. And typically that's how I raise the capital. I'll send an email out and I'll start hitting up my contacts. And normally within 30 days, we'll raise the, our raises normally like a million and a half to 4 million, not huge raises. I stick in that sub $10 million deal size. So yeah, I wouldn't say it's a secret sauce. We use Juniper Square to manage all that. I think communication is key with investors. That's something that we definitely like to stay focused on is just good communication and reporting. And it's all relationship based. You can't force somebody into investing in a deal. You can't hard sell an investor. It's really just presenting a project the right way, telling a good story around it. And normally the story sells the deal. more than the numbers, more than anything else. I could show a deal at a 16 IRR projected. I could show one at a 25 IRR. But if I've got a great story around the lower return one, I mean, sometimes it doesn't matter. People invest sometimes based on that emotion. And it's our job to obviously make sure we're putting deals in front of them responsibly at the end of the day. Because most of the time, they don't know the numbers. They don't underwrite the deal themselves. They're investing in you. and the story. So just responsible capital raising, I think is important and not lost a dollar to date and have performed on every deal, knock on wood. You know.

Ben Kogut: Congrats on that. Congrats on that, brother. Yeah. And speaking of touch on the real estate Jedi, which is your Instagram handle. How has social media played a role in your business? And how many followers do you have?

David Toupin: I think something like the 90,000 range on Instagram. Yeah, over the last six, seven years, you know, I post a lot. I promote a lot of posts, you know, ad wise, which I think really helps a lot, too. So spending money on it has helped, you know, for the different events we throw and this and that. And then my biggest has been word of mouth, I think. Just from when I started really young, I did a lot of podcasts like these, and it's helped a lot. I've connected with a ton of investors. Say a majority of my investors have come from word-of-mouth referrals through social media. And I just talk about and I post about deals that I'm doing and I just naturally, that's just the beauty of social media, just naturally you get people that gravitate towards you that either want to invest or participate or bring deals. I've had two or three deals I've done that have been seven figure plus profits that were just people through social media that brought a deal and didn't know how to buy it, but they found it and I bought it with them. It is a beautiful thing. You love it and hate it too at times, right? Social media, it is a job in itself. And I don't love putting myself out there too much in terms of like private life and everything. So it is one of those things that you've got to kind of treat it like a business a little bit. So.

Ben Kogut: Absolutely. Absolutely. Yeah. Well, thank you for sharing all that and congrats on your success with all that. Let's pivot again. What would you say has been the number one thing that's contributed to your success?

David Toupin: It's hours, man. It's the grit. Yes, seriously. It is time in the game. And I believe that you can create success by outworking everyone else. Not that it's a competition, but My first three years in the business was 100-hour weeks every single week. It was extremely difficult, but people ask, how did you do it at a young age? That's how I overcame that with having no contacts and no knowledge of the business. I had to put in extra time to learn that. I'd say for anyone else, What's the secret? If you want to, if you want to build any successful business, you got to work harder than anybody else. That's just the truth. And it's a, it's a cheesy kind of loaded answer, but it is just the truth, right? You're going to, you're going to be the best in the business by putting the most time into it.

Ben Kogut: Sure. Sure. Well, uh, hard work, absolutely paying off for you, brother. That's amazing. And how do you like to give back?

David Toupin: I like teaching people. I mean, as many people as I can get into this business and teach them how to do it. I think it's cool. I had people teach me along the way. And so that's why I come on and we'll do these podcasts and hopefully inspire somebody to, you know, maybe, you know, quit their job and jump into it or, or whatever it may be, or spark a new idea. I mean, I, especially other young people, I'm passionate about that, very passionate about that. Just, just getting other people to kind of, open their eyes and see you don't just have to do single family or, you know, you can jump in and buy multimillion dollar deals. If you are persistent and you put that effort in, it's doable.

Ben Kogut: Amazing. Well, it's super inspiring to hear your story and appreciate you giving back here to us here on the show. And so if somebody wanted to get ahold of you, what's the best way for them to do that?

David Toupin: Yeah, Instagram real estate Jedi. You got my website www.realestatelab.com be great way to learn about our software, but Instagram is probably the best way to get on.

Ben Kogut: Amazing. All right. Well, thanks again, David, for coming on the show and

Whitney Sewell: 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.