Hot Investor Trends — Ep. 5: Investing Forward: Building Cash Flow and Certainty in Uncertain Times

A seasoned investor explains how he pivoted from operations into multifamily, self-storage, and private lending.

His advice: ignore flashy IRRs — invest in certainty, not promises.

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Transcript

myself and my wife got heavily invested into the apartment space we're in a little
over 8 ,800 doors today we seen ourselves as capital raisers and and raising capital
and allocating to those assets we now see ourselves sitting on weekly meetings
managing those assets to ensure every investor that we brought into our ecosystem
gets at least their money out if not more I know that for us over the last year
and a half we've probably put in another million million and a half dollars of our
own money so that we didn't have to reach out and do a capital call i've been a
part of two capital calls in the last three months one of them uh went off without
a hitch because we had equity and we actually positioned it well and then another
one i'm about to raise on that one in about a week or so uh because there's a
ton of equity in the building we can bring in secondary capital and the LPs
actually voted 83 % for me to go outside the current investor group to find more
capital because they had been squeezed on other deals because the capital had been
needed for other things. My wife and I invest in gas stations. We own a lot of
MHPs. I didn't know what the acronym was, but now I know mobile home parks.
I knew what it was when it was was a mobile home park I didn't know was called
an MHB until today when a gentleman that is from Scottsdale not too far for me
actually sat up here and said the exact same thing so we own a big chunk of in
there we own some self -storage we own car washes and over the last couple of years
since the interest rate environment went up 2100 % if if anybody's been watching that
it went up 2100 % that's what cut all the cash flow from the apartment space we
started hard money lending and we've been doing that for the last couple years in
Phoenix and now we've expanded that to do it across the United States we created a
fund around that to help other investors that are in our pool that are looking for
cash flow and so for me today I'm investing in certainty and cash flowing assets.
I don't give a crap about your IRR or your cash on cash unless you can actually
prove to me that it's actually going to happen. And so if you come to me pitching
IRR, I'm just going to laugh at you because everybody was pitching IRR two, three,
four years ago. And if you look at your numbers today, none of them match up. So
last night at dinner, I was chatting with a gentleman that I got into investing in
the apartment space with and he was asking me what i'm up to today and i was
talking to him about my debt fund and that we're doing hard money lending and he
goes well everybody invests looking backwards so backwards looking we're saying
apartments aren't cash flowing but i've had deals coming across my desk from a group
that is buying a deal that was bought three years ago for 65 million dollars you're
buying it today for the debt at 45 million dollars So are we still looking
backwards or should we be investing forward into where the actual cash flow and the
value at apartment space is going to come from? So that's another idea that we need
to start looking forward on our investing as opposed to looking at historicals
because the historical is not going to happen again. It's already been done and the
future is what we make it. So for me, I'm starting back into investing into the
multifamily space again this year. I did a little bit last year. So for me, I
think we hit the bottom. The interest rates are going to start to drop and that's
a great place to start taking our wealth. I love it. And for those areas that
you're looking at are specific regions, I know we had a list of 10 over here, but
do you have certain regions you're looking in? I'm really enjoying the Carolinas. At
this point in time, there's a lot of value there. I'm not seen as much in Texas
these days even though I was involved in a portfolio where a big operator that
we're a limited partner on had 18 ,000 units and they sold off five properties to a
wheat reet the only one i invested it in that five set of properties actually
returned to 1 .3x return in the last three years so i'm happy about that and so
that's sort of where i'm at i love it well let's give michael a little round of
applause and our whole panel here very nice Thanks for listening to the Hot Investor
Trends series recorded live at a Family Office Club event. To join us at an
upcoming summit, visit familyoffices .com.