Cameron Pimm is an experienced multi-family and commercial real estate professional with a background in acquisitions, financing, asset management, and dispositions. Co-founder of two successful real estate investment firms specializing in revitalizing multifamily properties and acquiring urban commercial assets. Previously managed multifamily portfolios for institutional and private clients, directed operations for shopping centers in the Southeast, and consulted on state-owned real estate utilization for the Governor of Tennessee.
Here’s some of the topics we covered:
- Cameron’s Real Estate Background
- Strategies For Keeping Happy Tenants
- The Ups and Downs of Having A Partner
- Debt Balances and The State Of The Market
- Rod’s Insane House Flipping Story
- The Key Elements Of Having a Well Run Asset
- Renewals and Open Time on Work Orders
To find out more about partnering or investing in a multifamily deal: Text Partner to 72345 or email Partner@RodKhleif.com
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Full Transcript Below
00:00:00:08 – 00:00:18:06
Rod
Hi, my name is Rod Khleif and I’m the host of the Lifetime Cash Flow to Real Estate Investing Podcast. And every week I interview multifamily rock stars. We talk about how they build, increase wealth for themselves and their families through multifamily properties. So hit the Like and subscribe button to get notified every Monday when a new episode comes out.
00:00:18:08 – 00:00:39:19
Rod
Let’s get to it. Welcome to another edition of Lifetime Cash Flow two Real Estate Investing. I’m Rod Khleif and I am thrilled that you’re here and I know you’re going to get tremendous value from the gentleman I’m interviewing today. His name is Cameron Pym, and he’s with Stone Mark Landing Stone Mark landings dot com. And he’s been involved in over 4500 doors and he’s a bear like me.
00:00:39:19 – 00:00:51:22
Rod
We had a little little discussion about that before we started recording. So, you know, buckle up because you’re going to hear it. You’re going to hear how bad it’s going to get, but you’re also going to hear how excited we are about the opportunities that are coming. So welcome to the show, brother.
00:00:52:02 – 00:00:52:13
Cameron
Thank you.
00:00:52:13 – 00:01:05:20
Rod
Yeah, let’s have some fun. So we met at I am in the mid-market conference in Atlanta or Charlotte. Where was it? Atlanta. Atlanta. And I really liked what I heard. I don’t remember if we were just from a discussion or if you were on a panel. I think you were on a panel, weren’t you?
00:01:05:20 – 00:01:08:17
Cameron
I was on a panel, yeah. Yeah. You’re on the same bearish news, right?
00:01:08:17 – 00:01:25:00
Rod
Right, right. Doom and gloom. Doom and gloom. And there was a lot of sweat on browse there, I’m going to tell you. Okay. And so, you know, why don’t you before we get rolling here on the question, just kind of give us an overview on your background. You know, did you start in real estate? If not, what did you do briefly before then?
00:01:25:00 – 00:01:30:20
Rod
Then why real estate? Why multifamily? Did you start in single family? Go to multi? Just give us a little of your history.
00:01:30:20 – 00:01:50:07
Cameron
Sure. I went I went to college. I majored in business, my B.A. from Goizueta University at Emory University with a focus in real estate, marketing and management. Okay. As I got out of school, my first job was actually to be a financial advisor, which was away from the action that I wanted to be a part of, you know.
00:01:50:09 – 00:01:55:11
Cameron
So we were tailoring investment plans that we could make.
00:01:55:13 – 00:01:57:05
Rod
This was one of the big houses.
00:01:57:07 – 00:02:13:13
Cameron
Yes, yes, yes. And so we were tailoring financial plans and minimizing downside risk, trying to maximize upside. But ultimately there wasn’t enough control there. And equities in the equities market, right. You’re investing and other people executing.
00:02:13:13 – 00:02:15:21
Rod
And when was this that you were doing the financial planning stuff?
00:02:15:23 – 00:02:17:16
Cameron
25 to 27.
00:02:17:18 – 00:02:28:04
Rod
000. That’s a that’s an interesting time frame right there. Very interesting. The world was, you know, oh, my God, this is going to last forever. It’s going to be great. Real estate’s the best thing ever.
00:02:28:04 – 00:02:28:18
Cameron
That’s right.
00:02:28:18 – 00:02:30:18
Rod
And then 2008. Yeah.
00:02:30:20 – 00:02:34:01
Cameron
So it’s an interesting time to pivot into the commercial real estate.
00:02:34:01 – 00:02:35:03
Rod
Perfect timing, actually.
00:02:35:03 – 00:02:41:13
Cameron
Yeah. So, you know, I was my commercial real estate career was born in a very.
00:02:41:17 – 00:02:42:11
Rod
Tumultuous.
00:02:42:17 – 00:02:51:08
Cameron
Time. Yes. Thank you. Yeah. And so, you know, I learned how to work through challenging deals and how we, you know, execute.
00:02:51:11 – 00:02:54:12
Rod
So you started it. You started acquiring what, oh nine.
00:02:54:14 – 00:03:02:12
Cameron
I worked for investment local or regional investor and developer. Okay. And got, you know, the training under some really great minds.
00:03:02:14 – 00:03:05:07
Rod
This is this is through the beginnings of the crash.
00:03:05:09 – 00:03:05:19
Cameron
That’s right.
00:03:05:20 – 00:03:08:03
Rod
Okay And where was this geographically?
00:03:08:03 – 00:03:09:00
Cameron
It was in Atlanta. It was.
00:03:09:00 – 00:03:12:08
Rod
In Atlanta. Okay. All right. Is that where you live now? Is that your home base?
00:03:12:08 – 00:03:16:08
Cameron
I was there for about 15 years. I moved to Las Vegas for about five years.
00:03:16:08 – 00:03:22:12
Rod
Oh, that’s right. You told me you came in from Vegas. I appreciate you flying all the way out here. I know you got family here, but still, it’s a big, big, big ask. I appreciate it.
00:03:22:12 – 00:03:34:14
Cameron
Happy to be here. Yeah. Thank you. Yeah. So, you know, we were working through it was kind of Southeastern Focus, so not just in Atlanta and we were working through, you know, how do we batten down the hatches for what’s going on.
00:03:34:16 – 00:03:44:03
Rod
And so so he was it was all in in, in stabilization mode. And then during the storm mode, it wasn’t acquisition mode yet at that point.
00:03:44:04 – 00:03:53:13
Cameron
It wasn’t. No, no. The acquisitions had happened. And, you know, I cut my teeth in asset management with the hopes of getting into more of the acquisition and development side of things.
00:03:53:16 – 00:03:56:20
Rod
So you helped him on the asset management side through the storm.
00:03:56:22 – 00:03:57:16
Cameron
That’s right.
00:03:57:18 – 00:03:59:07
Rod
Talk about that.
00:03:59:09 – 00:04:02:03
Cameron
Well, you know, every day was different and every day was a challenge.
00:04:02:09 – 00:04:06:03
Rod
How many doors and where were they? All in Atlanta or No.
00:04:06:03 – 00:04:10:23
Cameron
Atlanta, Tampa, Charlotte. Nashville was a big regional markets.
00:04:11:00 – 00:04:11:19
Rod
Great, great. Goodness.
00:04:11:20 – 00:04:13:17
Cameron
Yeah. Yeah. At the time.
00:04:13:17 – 00:04:15:00
Rod
What asset class?
00:04:15:02 – 00:04:16:10
Cameron
Hey, a class also.
00:04:16:10 – 00:04:17:19
Rod
Nice assets. Okay.
00:04:17:21 – 00:04:29:12
Cameron
At the time it was more of a condo boom and related mixed use, high rise development in urban environments. So a lot of that was pivoting from condominiums to rentals.
00:04:29:13 – 00:04:30:10
Rod
Yeah, rents.
00:04:30:12 – 00:04:31:09
Cameron
Was great on broken.
00:04:31:09 – 00:04:32:04
Rod
Condos, right?
00:04:32:04 – 00:04:37:16
Cameron
That’s right. So there’s great opportunity to pivot, change the business plan, which, you know, I had to you.
00:04:37:16 – 00:04:51:18
Rod
Had to change because you had to innovate, you had to pivot. I mean, you know, and not. Let me speak to that for one second. You know, I remember, you know, throughout life, you may end up having to innovate or pivot as things come up. Like, remember when COVID hit, I was supposed to have 800 people in Orlando.
00:04:51:18 – 00:05:08:07
Rod
I’m like, Holy crap, I still have two tickets. What I wanna do. So I innovated, built this studio and you know, here we are. And, and don’t be afraid of that because in what’s coming you’re going to see more and more of that where you have to reinvent yourself or you have to innovate, or you have to just change what you do.
00:05:08:07 – 00:05:25:16
Rod
Don’t be afraid of it. Embrace it and push through it. Because the I will tell you, the largest and the strongest companies on earth were born in the times that are coming. Okay. And it’s and it’s coming. So so you were so talk about some of the things that you had to do. How many doors were that what you’re dealing with at the time?
00:05:25:16 – 00:05:28:07
Cameron
You recall thousands and.
00:05:28:09 – 00:05:37:22
Rod
Thousands of doors. Okay. And so it was all about at that point, it was all about KPIs, asset management, maintain occupancy. Yeah, through whatever means possible.
00:05:38:00 – 00:05:39:06
Cameron
Moving into a rental.
00:05:39:06 – 00:05:41:22
Rod
Were you. Yeah. Yeah. Pivot from condo sales got you to a.
00:05:41:22 – 00:05:51:00
Cameron
For rent model and then also maintaining those retail tenants at the bottom and doing a lot of work outs on leases, adding some term in exchange for some free rent to get them through.
00:05:51:06 – 00:06:15:18
Rod
Right. Because retail suffered then too. Yeah. Yeah. Yeah. So let me ask you this because this came up in the last interview you just had did the A-class assets because I wasn’t in that marketplace. This is for my own edification that they suffer because people moved into lower priced solutions. Or how did a class do compared to some of the other classes in your experience going through it?
00:06:15:21 – 00:06:23:16
Cameron
We saw a lot of demand for it. The demand that left entirely was the the the for sale or the buyer sales.
00:06:23:16 – 00:06:24:11
Rod
Sales.
00:06:24:13 – 00:06:40:11
Cameron
There was plenty of money in those growing Sunbelt markets. Right? Right. There’s plenty of people still in those markets that want to be there for quality of life and Right. Tons of job opportunities. And while those cities got hit and hit hard and oh yeah, senses those are where the jobs are. So people are still.
00:06:40:11 – 00:06:48:18
Rod
So they still had to have a place to live. That’s right. And the and the but as it related to the asset class. So the asset class did okay compared to the capital.
00:06:48:18 – 00:06:55:18
Cameron
I mean you see. Yeah. We didn’t have in that instance, we didn’t have any exposure to B or C, so it’s tough for me.
00:06:55:20 – 00:07:04:07
Rod
Fair enough. Fair enough. But, but certainly your occupancy dropped. Oh yeah, but, but, but it was still sustainable then. That’s right. Okay. Okay.
00:07:04:08 – 00:07:12:02
Cameron
I know there was a lot of, you know, working out with the banks, Hey, this is a new model and banks had plenty that they were working through.
00:07:12:02 – 00:07:22:07
Rod
Oh, trust me, everybody. I mean, I met I met with bank presidents and everything else when it was going on. And it was not a fun time, but that’s what you did. So, yeah.
00:07:22:07 – 00:07:25:16
Cameron
You know, we got through that and.
00:07:25:18 – 00:07:29:04
Rod
You learned a lot. You grew a lot. Trial by fire.
00:07:29:06 – 00:07:49:03
Cameron
That’s right. Yeah. You know, I’m I’m kind of perusing the landscape here and seeing that a lot of things are at a at a discount and there’s strong rental demand and and I started in order to start myself, I had to go buy and the C class space where I could afford to and get started. And we found some great opportunities in Atlanta.
00:07:49:03 – 00:07:49:13
Cameron
That’s right.
00:07:49:13 – 00:07:50:09
Rod
Now.
00:07:50:11 – 00:07:53:18
Cameron
You know, myself and some partners and we started buying.
00:07:53:20 – 00:07:55:20
Rod
JV or a syndicate.
00:07:55:22 – 00:07:56:12
Cameron
Syndicated a.
00:07:56:13 – 00:07:57:01
Rod
Syndicated.
00:07:57:01 – 00:08:06:17
Cameron
Syndicated. As a start we had one investor to start and it just that believed in us and the first deal was a success. So the next day we. AT How big.
00:08:06:17 – 00:08:07:09
Rod
Was the first deal?
00:08:07:14 – 00:08:08:02
Cameron
36.
00:08:08:02 – 00:08:13:23
Rod
You know, 36 years. Bam! Okay, okay, guys, wait, wait. Drumroll. What was it? Per unit cost.
00:08:14:01 – 00:08:15:03
Cameron
Was about 23,000.
00:08:15:04 – 00:08:17:09
Rod
$23,000. Oh.
00:08:17:11 – 00:08:18:11
Cameron
Oh, my crazy.
00:08:18:11 – 00:08:32:01
Rod
Oh, good God. Oh, to have those days again. Yeah, right. But so. Wow. Okay, so you just. So you syndicated how let me ask you this. So keep going. I’m sorry and I’ll interject here in a second. I have a question and I’m gonna wait a minute. You know.
00:08:32:01 – 00:08:36:16
Cameron
With each success, you know, were sharing to our network of family and friends and. Okay, that’s.
00:08:36:16 – 00:08:46:12
Rod
What I was going to ask you, since you said that, how did you build reach? How did you how did you did you have a meet up group? How did you build reach to find more investors to go do more deals?
00:08:46:14 – 00:08:49:01
Cameron
It was it was more organically as.
00:08:49:01 – 00:09:01:23
Rod
I was just networking, family and friends. You didn’t like create a Yeah, I mean, social media wasn’t really around, but but a lot of a lot of the operators that have had your door accounts and hire the sitting in that chair did meet up groups or real estate investor club meetings.
00:09:02:01 – 00:09:18:21
Cameron
I would go to some of those and then kind of share our successes and what we were what we were saying. But a lot of it was sharing our success with friends and family that then got interested in it. They saw the opportunity, they tell us, scared to come out at first because, well, you know, everything started. Oh yeah, that’s when you back then.
00:09:19:00 – 00:09:32:21
Rod
Back then, you know, the news was say real estate’s going to be terrible for ten years, you know, don’t get into real estate, which is crap because, you know, multifamily rents exceeded pre-crash levels in less than three years from the crash. So but Well, and.
00:09:32:21 – 00:09:42:06
Cameron
You could buy cash flowing deals right. And it wasn’t this super competitive environment where everything was bid up to a point that it no longer cash flow and you would have to do it.
00:09:42:08 – 00:09:44:17
Rod
Which has been the last three years. Right, right, right.
00:09:44:21 – 00:09:53:10
Cameron
So you’re buying cash flowing assets and you’re going, well, these rents are below market and I don’t have to put a lot of money in. I just turn a tenant or at renewal or.
00:09:53:10 – 00:10:09:05
Rod
Just get the occupancy up. That’s right. You know, my, my, my, I had some apartment complexes here in Florida and I crashed and burned because I had 800 houses. It was the houses that pulled me down. And I was only at a 30% loan to value, by the way, which is shock people. Yeah. Wow. But houses just don’t cash flow.
00:10:09:07 – 00:10:26:05
Rod
They just I don’t care what anybody tells me that I you know, and these were class houses, so a lot more maintenance tougher on the properties. And maintenance is what killed me. Yeah, but my apartment’s pulled back I don’t know, 11, 12% in occupancy. I mean, wasn’t the end of the world. They would have easily survived if I’d cross collateralized them with packages of houses.
00:10:26:05 – 00:10:35:13
Rod
But. But so you started buying. Yeah. Syndicating and just networking, family and friends to to, to, to raise money for your deals.
00:10:35:14 – 00:10:39:22
Cameron
Right. And, you know, we’d do a bigger deal each time. Right. It snowballed.
00:10:40:01 – 00:10:43:03
Rod
And this was with some partners. Yep. How many partners.
00:10:43:03 – 00:10:43:10
Cameron
To other.
00:10:43:10 – 00:10:47:13
Rod
Partners are they still with you now? Okay. Okay. So it’s just you now or you have other partner?
00:10:47:13 – 00:10:48:15
Cameron
No, I have other partners. I got.
00:10:48:15 – 00:11:05:04
Rod
You. Got you. That’s how it works. Yeah, well, partnerships. The only problem with partnerships, those are like a marriage. Easy to get into and hard to get out of. And I have this resource, by the way, if you’re thinking about getting in a partnership, it’s the questions you should ask before you get in a partnership. And it’s on Rod’s links in the free books.
00:11:05:05 – 00:11:20:13
Rod
It’s in the free book session, Yes. Yeah. So it’s on Rod’s links in the free book session, you know, because like I just said, a lot of partnerships don’t make it. And sometimes they end and they’re ugly. I’ve had positive endings and not so positive endings. I’m sure you’ve had the same.
00:11:20:13 – 00:11:21:06
Cameron
Yes, sure.
00:11:21:08 – 00:11:28:00
Rod
Yeah. Yeah. So ask those hard questions upfront. So. So anyway, back to your story. Please continue. Sorry. Keep in a.
00:11:28:01 – 00:11:47:22
Cameron
Problem. Yeah. No, it’s still, you know, the second deal, we had two investors, okay? And then they would tell a friend and we would share our successes and people wanted to get more and more involved and things started thawing out a little bit too. So people wanted to jump in that class. It happened to be at a time where my network was starting to make some money too, as professionals and looking for places to put it.
00:11:47:22 – 00:11:52:00
Rod
To be, went to school with and so on and so forth that you know, just peers got. Yeah.
00:11:52:02 – 00:12:08:22
Cameron
And with each deal, you know, we were conservative in our underwriting, you know we bought right, 23,000 or things like that. And so we would beat expectations. Right. And that is the best marketing you can have. People are talking about you at cocktail parties.
00:12:08:22 – 00:12:20:14
Rod
When you when you have investors and you tell them they’re going to get 8% and they get 8.1%, they are thrilled. They get 7.9%. You’re the anti-Christ. Okay. That’s right. You have to under-promise and overdeliver. You agree with this?
00:12:20:14 – 00:12:21:10
Cameron
Yes, absolutely.
00:12:21:10 – 00:12:28:03
Rod
Yeah. So very cool. Okay. And then it just grew and grew and now you’re 45 freaking to 4500 doors.
00:12:28:03 – 00:12:37:07
Cameron
Yeah, yeah, yeah. The next step from there, you know, from syndicating the friends and family and then getting referrals. Then you take the next step and you start working with some family offices or.
00:12:37:08 – 00:12:39:23
Rod
Oh, so you’ve done some of that as well. Oh, yeah. Okay.
00:12:40:00 – 00:12:45:16
Cameron
You know, you’ve got capital brokers that have those relationships and can help walk you in and introduce you to those people first.
00:12:45:20 – 00:13:09:18
Rod
So let’s stop there for a second. You know, I’ve not worked with a family office or a private equity yet, and I’m about five K myself. So I’ve heard, you know, you hear good and bad. Can you talk about the good experiences but also some not so great experiences in dealing with these larger organizations that have a lot of money and the control component, or if that came into play.
00:13:09:20 – 00:13:31:08
Cameron
We haven’t had too many bad experiences with family offices or private equity. I think it’s really important to make sure that you’re on the same page when you enter into this. Now there’s private equity is typically more expensive, right? And I have heard stories where, you know, because of their fund parameters, hurdles, whatever it might be, they may force a sale.
00:13:31:09 – 00:13:39:02
Rod
That’s not we bought an asset in Lexington that that was the exact same scenario. The guy didn’t want to sell. He was pissed that he had to sell. It’s private equity made himself. Yeah.
00:13:39:04 – 00:13:41:05
Cameron
And so some of that’s going on right now.
00:13:41:06 – 00:13:48:01
Rod
Well, sure it is. You know, it’s one of those. Right, Right. Yeah. You know, it’s going on right now, but. But so you didn’t have any, any negative really experiences.
00:13:48:01 – 00:13:59:21
Cameron
We had an experience when we were new to the capital broker business and this capital broker had promised us, hey, you know this, I can absolutely raise the money for this, but I need for.
00:14:00:02 – 00:14:00:12
Rod
Upfront.
00:14:00:12 – 00:14:08:22
Cameron
My work, I need upfront money. And so we ponied up for that and it was not successful. Yeah, so that was a hard lesson.
00:14:08:23 – 00:14:32:04
Rod
Like a seminar? Yeah, exactly. I had a $50 million seminar, so don’t feel bad, but that’s what it is. It’s a seminar. Okay, got it. Yeah. I don’t like put money upfront. Not now. That’s, that’s proven concept to referrals and everything else. Yeah. In fact, we just got hit up by this outfit that supposedly they will do a huge line of credit for you if you put money in an account.
00:14:32:05 – 00:14:49:06
Rod
And once they fund the first deal, you can get the money back and it just smelt a high heaven. And I’ve had attorneys look at it and yeah, it’s just very dubious. You know, it looks too good to be true. It walks like a duck, talks like a duck. You know, it usually is a duck. You know.
00:14:49:08 – 00:14:53:16
Cameron
There are tried and true traditional structures and those are where I would recommend. Thank you.
00:14:53:16 – 00:15:09:14
Rod
There you go. There you go. Good answer. Good answer. So I know you’ve got to you’re you’re doing an opportunity fund just like we are. That’s right. So let’s talk about your view on the current economic situation. What’s coming and why.
00:15:09:14 – 00:15:32:01
Cameron
Well, I think I think there’s going to be tremendous opportunity, like you’ve said on this show and many of your other ones, when people sponsors equity, we’re chasing deals at sub three caps and low interest rate environments. And you had, what was it, 14 straight, 14 months of straight interest rate increases. I think there’s a lot of distress from that.
00:15:32:01 – 00:15:41:17
Cameron
And we’re seeing it in certain deals where the package from brokers is in some instances sizing the purchase price to what the seller’s debt balances.
00:15:41:17 – 00:15:45:19
Rod
Oh, sure. A lot of that right now, a lot of that may not be enough.
00:15:45:21 – 00:15:52:07
Cameron
It’s not in my. Yes. Yeah. We’ve seen some where we’re just saying I can’t get it. I can’t get to that balance.
00:15:52:09 – 00:15:58:22
Rod
And so they’re going to it’s going to have to go to that go to the lender and the lender is going to have to discount it. And then there’s going to be opportunity. Yes.
00:15:59:00 – 00:15:59:19
Cameron
That’s exactly right.
00:15:59:19 – 00:16:13:09
Rod
And that’s what happened in 089. And, you know, these these lenders, they’re they’re not in the management business. They don’t want assets on their books. Banks, you know, And so, yeah, I know I’m sure you’ve seen the news are some big players that are in trouble you know.
00:16:13:09 – 00:16:13:19
Cameron
Very big.
00:16:13:19 – 00:16:25:03
Rod
Yeah like 20,000 doors in big trouble, you know, five, six, 7000 doors. And even some of the big billion dollar outfits are hand and keys back over. Yeah. And.
00:16:25:05 – 00:16:28:10
Cameron
And this is just the start of it with all the maturities so.
00:16:28:12 – 00:16:36:19
Rod
1.6 trillion do by the end of next year they either have to sell or they have to refinance. Neither one look really great right now.
00:16:36:19 – 00:16:37:04
Cameron
Right.
00:16:37:10 – 00:16:38:01
Rod
You know.
00:16:38:01 – 00:16:41:00
Cameron
And a lot of those refinances are requiring.
00:16:41:02 – 00:16:42:16
Rod
Money in money in money and.
00:16:42:16 – 00:16:43:13
Cameron
And and a.
00:16:43:13 – 00:16:44:03
Rod
Rate cap.
00:16:44:09 – 00:16:46:05
Cameron
Yep. Yeah. Which are very expensive.
00:16:46:09 – 00:17:23:09
Rod
They’re insane. I mean, you know, I tell the story, I read an article and a $100 million rate cap through in 2020 for three years and 3% was $23,000. This was six months ago. It was 2.3 million for the same rate cap and it was only for one year. Forget three years. Wow. And so, you know, so I, I, I know you heard it on the show before, but I’m going to mention because Cameron hasn’t heard it, I’ve got an attorney in Dallas that half of his and he’s a big one half of his business now is forbearances capital calls and foreclosures, half of his business dealing with his clients that are in trouble.
00:17:23:11 – 00:17:49:22
Rod
You know, I mean and Bridge did speak to speak to speak to that scenario with people that use bridge debt. These last few years to get a higher LTV or whatever. You know, it’s not what it was for bridge debt supposed to bridge the gap from a non-performing asset to performing asset. And people used it to ramp projected returns, not anticipating what’s happened with rates.
00:17:49:22 – 00:18:06:08
Rod
And boy, we’ve seen we’re bidding on a place right now here in Florida that they’re they’re it it’s re their loan comes due in three months and their their interest rates like 8.3% right now and I’m sure that’s you know they bought that places in the fours so.
00:18:06:12 – 00:18:11:11
Cameron
Well hopefully they’ve they’ve done a good job of executing their improvement plan. Right and pushing the rents.
00:18:11:16 – 00:18:20:19
Rod
It we like the deal I don’t I think it’ll trade in Florida so hot right now it’s just the damn insurance here. That’s insane. So where are your assets now, by the way?
00:18:20:21 – 00:18:24:21
Cameron
Our holdings currently are in Atlanta and Charleston, South Carolina.
00:18:25:01 – 00:18:36:07
Rod
Great markets. Both of you love it. So we’re we’re both in agreement that the you know, what’s going to hit the fan here At some point we’re going to see some pain, but we’re going to see some opportunity. We’re going to look at it through rose colored glasses. Yes.
00:18:36:12 – 00:18:44:03
Cameron
Yeah. Yeah. I think you’ll see discounts similar to what we saw during the great financial crisis. I agree. I don’t know if they’ll be as deep, but that’s going to be the best.
00:18:44:03 – 00:19:06:06
Rod
Was going to be great. That’s right. Best pricing we’ve seen in years. So talk about some of the strategy around remaining conservative and diligent through this process. So let’s start with underwriting. Talk about your underwriting strategy as we move into this because it’s not a time to be aggressive.
00:19:06:12 – 00:19:29:03
Cameron
Yeah, Yeah, right. So any time we’ve underwritten and this is how we were able to under-promise and overdeliver, right? So if we are showing you rents of 1500 dollars, I typically feel very confident that I can get 1650 and I want to show you 1500 because then I feel really good that I can hit those. Yeah, same thing with operating expenses.
00:19:29:03 – 00:19:34:23
Cameron
I usually have a little bit of padding in there just as well Over these last few years with inflation that blew out, who could have seen.
00:19:35:03 – 00:19:37:01
Rod
Have you bought in the last year?
00:19:37:03 – 00:19:41:22
Cameron
Last year we did was September of 22. Okay. We had put that under contract.
00:19:41:22 – 00:19:46:01
Rod
And then prior to that, when was the when was the last year you bought.
00:19:46:02 – 00:19:50:15
Cameron
We had bought some stuff. January. Okay. So in March of 22 as.
00:19:50:15 – 00:20:11:01
Rod
Well, you bought some stuff early in 22 and then September. Yeah. We only about two deals in the last 18 months. Yes. But both deals were eight 5050, not 73, 8020 on the tail end. I mean they were that good. So but have been probably a little too conservative. But I think it’s going to it’s going to it’s going to wash out.
00:20:11:01 – 00:20:15:19
Rod
Okay. Based on what’s coming. So, you know, ten year debt fixed, you know, we’re golden on those.
00:20:15:19 – 00:20:23:14
Cameron
Yeah. Good place to be. If you get cash flow in place, your investors are happy. Yeah. Loves mailbox money that’s what’s a lot of people get into this right? Investing in real estate, right? Sure.
00:20:23:19 – 00:20:42:06
Rod
Sure. So so you underwrite very conservatively. You you, you look at that some of the pro forma numbers and you decrease the rent, you increase the expenses to Sure. Any other stress testing that you do when you underwrite?
00:20:42:06 – 00:20:42:23
Cameron
Absolutely.
00:20:42:23 – 00:20:43:19
Rod
And I’ll talk about that.
00:20:44:00 – 00:20:55:02
Cameron
The capital improvements were very heavy value add focus. Right. So we typically have worst case scenario on construction and then we add a contingency to that.
00:20:55:02 – 00:20:58:02
Rod
On top of that, which sometimes happens.
00:20:58:04 – 00:21:01:16
Cameron
All the time the last few years. Right. Pricing. So thank you. Well, we had supply.
00:21:01:16 – 00:21:07:18
Rod
Chain issues and all that crap, I mean. Right? Yeah. So good. Okay, good. So you do it on the CapEx. What else.
00:21:07:20 – 00:21:18:12
Cameron
The expansion of cap rate. Right. And if cap rates compress. Great. And you’ve right, then you’re investors are going to be singing your praises. Right. And if the deal works with that, then okay.
00:21:18:15 – 00:21:37:03
Rod
So so what he’s talking about is, is when you take your your pro forma out five years, you project a higher cap rate than what you bought it for, even though it’s a very good argument that that that they’ll cap rates will come down because interest rates should come down. But you know, who knows? But if you’re projecting a higher cap rate, you know, I don’t know.
00:21:37:03 – 00:21:57:15
Rod
What do you do? 15, 20 basis points. What do you do typically. Yeah. Around there. Yeah. So so you know, 15 100 basis points in 1% of interest. Okay. So 15 basis points is you know 15% of 1% and, and you just do that a year and, and then like you said, if the cap rates come down, then the investors are thrilled.
00:21:57:17 – 00:22:02:07
Rod
If not, then you’re you’ve you’ve been conservative. Very conservative. Sure. What else?
00:22:02:07 – 00:22:15:07
Cameron
We’ve got a deal right now where we’ve done we’re modeling a three year hold, but we’re doing a full point and expansion over that time frame just because we’re.
00:22:15:07 – 00:22:46:01
Rod
Could very well be who knows how things are going to shake out here? I mean, it could very well could they could raise rates some more next year. I mean, these things, we just never know where they’re going to go. Nobody expected what’s happening right now. Nobody expected some of these huge players, not just in office, of course, offices, a complete you know, what show right now but in multi their hotels there’s their hand in these things back and you know in my view we’re going to see some more bank failures because a third of this debt is commercial debts held by small and regional banks.
00:22:46:02 – 00:22:46:20
Cameron
Mm hmm.
00:22:46:22 – 00:23:06:18
Rod
And, you know, of course, you saw these. It is I know in the current administration putting for the limitations on the larger banks to in commercial. I’m sure you’ve seen the press about that. You know, it’s kind of interesting how it’s all shaking out here, but I think we’re going to see more bank failures. I don’t know what you think, but I.
00:23:06:20 – 00:23:07:06
Cameron
Unless.
00:23:07:06 – 00:23:16:05
Rod
They print another $2 trillion to take care of this debt that’s maturing. Right. God forbid, if they do, then we’re definitely gonna have more interest rate increases because inflation is going to continue.
00:23:16:05 – 00:23:19:03
Cameron
Then we get back to the those teens.
00:23:19:05 – 00:23:33:19
Rod
When I was 18 and I got in this business, the interest rate was 18%, okay? And I bought real estate then. I mean, the numbers are, you know, they talk about the 1% rule in the single family space. You can rent it for 1% of what you paid for it. I was renting a 2% of what I paid for it.
00:23:33:21 – 00:23:38:11
Rod
I was buying houses for 20 grand all day long back then. Yeah, it’s a lifetime ago. But pricing.
00:23:38:11 – 00:23:38:19
Cameron
Changed.
00:23:38:20 – 00:24:02:23
Rod
And. Yeah, just a little bit. Yeah. Yeah, just a little bit. I’ll tell you a funny story. I had this asset in Denver, this house I bought. I bought it for 57 and sold it for 77. It was a flip. The market crashed. I bought the same house back for 18. Okay. Sold it. I don’t know, five, five, seven years later for 160, it’s now worth a million.
00:24:02:23 – 00:24:16:06
Rod
The area gentrified. So it was like, yeah. Oh yeah. Crazy, crazy. So so so that’s on the underwriting side That’s, that’s super important, you know and I’m sure that you raise operating reserves as yet as well.
00:24:16:06 – 00:24:23:12
Cameron
Yes. No money in the bank. One other thing that we underwrite, Chris, who is our buyer, what is their what is their exit going to be?
00:24:23:14 – 00:24:25:16
Rod
How do you meet their requirements? Right.
00:24:25:18 – 00:24:37:22
Cameron
And they’re going to have to go through the same process we went through with lenders. And any equity is okay what where are proof’s in the market comps in the market on the sales on a per dollar basis for that vintage.
00:24:38:00 – 00:24:55:19
Rod
You prove the concept, you leave him some meat on the bone so they can finish, you know, and, and roll. You roll it to them. But you’ve got to look at what their capability, you know, what their abilities are going to be. You know, are they going to be able to get the debt? Are they going to be able to show the numbers they need to show to be able to get you the returns that you want?
00:24:55:21 – 00:24:56:04
Cameron
That’s right.
00:24:56:04 – 00:24:56:18
Rod
Yes. Right.
00:24:56:18 – 00:25:06:09
Cameron
Yeah. And you have to take into account is okay, if this is what you want their asset to be, not only can they comp out of that, but you need to adjust for the taxes that they will pay because of money. And many.
00:25:06:11 – 00:25:07:06
Rod
That’s really where.
00:25:07:06 – 00:25:13:06
Cameron
Municipalities, they reset taxes based on sales price. Sure. And there’s certain markets that we’re in that they don’t.
00:25:13:07 – 00:25:35:09
Rod
Right. Ohio, where you sell the LLC in Vegas is another one. No kidding. Well, yeah, yeah. You buy the LLC and there’s some risk there. But but you have to in some places. But but that’s really smart and I hadn’t heard that on the show before. You know, where you where you really take the time to project, you know, if you if you’re buying and selling.
00:25:35:09 – 00:26:09:00
Rod
I mean that’s not our motto. But but if you’re buying and selling, that’s a fact. The last guy said that, though, didn’t he? Now, you weren’t listening. You know, the last guy the last guy said it as well that that he does it. I’m sorry, but he articulate a little differently. That’s why I. I missed it. But. But yeah, no, that’s really smart, too, to really look at your exit, not just in the cap rate and potential interest rate increases or things of that nature, but look at, you know, your ultimate buyers ability to to help you execute your plan.
00:26:09:02 – 00:26:25:23
Rod
Love it, love it. So now let’s talk about let’s talk about execution. Let’s talk about how you actually asset management at a time like this, because we talked about this briefly before we started recording. And I said, you know, the water is going out right now. We’re going to see who’s naked and sees who’s wet behind the ears.
00:26:25:23 – 00:26:36:13
Rod
That’s never really asset managed in a tough time. So talk about some of the things that you’re doing or projecting to do as we move through this part of the cycle.
00:26:36:15 – 00:26:40:20
Cameron
I think a great way to summarize it is take what the defense gives you. Right?
00:26:40:20 – 00:26:42:17
Rod
Okay. And when I mean elaborate. Yeah.
00:26:42:18 – 00:26:52:18
Cameron
What I mean by that is this is not the time to push, push, push on rents. I think now is the time to preserve serve occupancy.
00:26:52:20 – 00:26:53:22
Rod
Number one thing.
00:26:54:00 – 00:27:06:07
Cameron
Occupancy is going to be number one. And keep in mind, with rising operating costs and material costs, that keeping an existing tenant, keeping your existing customer is much cheaper than attracting your biggest expense.
00:27:06:07 – 00:27:13:08
Rod
Typically, besides taxes and insurance is going to be turnover. That’s right. And so you want to minimize turnover at all costs.
00:27:13:09 – 00:27:20:14
Cameron
Costs have gone up, right? And then the cost to attract them are very competitive market.
00:27:20:16 – 00:27:41:10
Rod
I’m getting assigned I’m getting a sign spinner, our natural asset. I’m going to have somebody standing out there holding a frickin sign with an arrow says, Great deal, three bedrooms over here. And yeah, I mean, this girl is marketing now. Exactly. So that’s what’s coming. Yeah. So? So, okay, maintain occupancy. Talk about it. Can you elaborate further on on execution.
00:27:41:10 – 00:27:50:19
Rod
Right. Elaborate further on on. You know, measurement and control and accountability. Speak to that. How you plan to do that.
00:27:50:19 – 00:28:05:10
Cameron
One, your ability to execute starts in your due diligence period, right. Of your underwriting. You need to understand if there are infrastructure issues specifically with that vintage course instruction type course. And so, you know, there’s a lot of people that.
00:28:05:10 – 00:28:22:20
Rod
Have different types of PVC, see, you know, aluminum wiring, if they’ve been pig tailed, the linesmen scoped, sewer lines been scoped. You know, is there a chiller or a boiler that’s that’s, that’s limping, you know, or what’s if they’re a bunch of VCs what’s the what’s the age of those all of that.
00:28:23:01 – 00:28:45:00
Cameron
So all of those things are crucial to having happy tenants and having a well-run asset. Yeah, but those things don’t drive rent growth. Those are standard expectations of your customer that these things work when they get there. And if you don’t identify that and address it during the contract phase and the acquisition phase, you’re left paying for that.
00:28:45:00 – 00:29:05:16
Cameron
And that could be out of some of the CapEx budget that you were going to use to go drive rents and and drive value. So you don’t want to miss on that. Then upon acquisition, you want to have your plan ready to go day one and you want to have your asset ready to take advantage of opportunistic markets as soon as possible because you never know when they’re going to come, right?
00:29:05:21 – 00:29:09:23
Rod
So do you are you vertically integrated or do you use third party management?
00:29:10:02 – 00:29:11:19
Cameron
We use third party property management.
00:29:11:19 – 00:29:12:05
Rod
So do we.
00:29:12:05 – 00:29:16:21
Cameron
Yeah, but we have in-house construction and asset management. Okay. And it’s very hands on.
00:29:16:23 – 00:29:26:19
Rod
Yeah. Okay. So, so you’re doing your construction in-house, you’re doing your turns and all that. And I know it turns as much I suppose, but your CapEx, you’re doing your CapEx in-house.
00:29:26:21 – 00:29:37:05
Cameron
Depending on what the project is. I see typically we have third party vendors, but our construction management team has got. Okay, got it. Getting them on the asset and saying, this is right, this is wrong. Gotcha.
00:29:37:05 – 00:29:57:14
Rod
So you have you have a construction management team that manages local assets to make sure that it’s done properly. That’s right. That’s right. And that’s a great way to do it. Yeah, that’s a great way to really have some controls in place and whatnot. Now, let’s talk about on an ongoing basis as your asset managing that asset and you’re managing that property management company.
00:29:57:20 – 00:30:00:22
Rod
Talk about how you get through that.
00:30:01:00 – 00:30:25:02
Cameron
Sure. I think upon acquisition in your setting, the expectation of, okay, this is what we’ve modeled, they’ve signed off on the budget, operating budget and CapEx budget and what the plan is. So we’re aligned on a vision day one. From there we have two calls a week at least standing calls that talk operations and then that are also doing rent pricing.
00:30:25:04 – 00:30:39:16
Cameron
And what it does is we get to understand what the issues are, what the challenges are, what their wins are, and celebrate the wins with them so they know that we’re aligned with them. We also get to see what the occupancy is in the market and trends in the market. When we’re looking at pricing calls and what our comps are.
00:30:39:16 – 00:30:41:13
Rod
Doing, what asset class are you in now?
00:30:41:13 – 00:31:09:23
Cameron
Primarily we are we typically buy like a C plus B minus and try to get to A, B, B plus. Yeah, we underwrite with some but with some metrics. As far as affordability naturally occurring, affordable housing is our target. Some discounts to average mortgage prices in the area and the but predominantly our tenant base, our customer is going to be a renter by necessity and there’s a stickiness to that.
00:31:09:23 – 00:31:19:07
Cameron
But these renters by necessity at this price point, are also the backbone of our community, right? They’re educating our children. They’re providing health care. There are.
00:31:19:09 – 00:31:20:01
Rod
Yeah.
00:31:20:03 – 00:31:36:09
Cameron
Yes. And so we want to show them value and we renovate to an A-class scope on the interior. You know, we’re not that the A-class high rise that just came out of the ground, but our interior finishes look very similar, really, and our amenity package is.
00:31:36:11 – 00:31:40:05
Rod
So you really want to be the best in your asset class, in your submarket.
00:31:40:05 – 00:31:53:06
Cameron
That’s right. Yeah. And so we want to be very close to employment and entertainment hubs and a lot of times we are in the same neighborhood, even on the same street as an A-class New, whether it’s garden style or high rise.
00:31:53:06 – 00:31:53:15
Rod
Right.
00:31:53:15 – 00:31:58:23
Cameron
And we’re hundreds of dollars cheaper. Right. And so that proves robust demand.
00:31:59:00 – 00:32:11:06
Rod
Sure does. No, that’s good. That’s good. So you have a couple of calls a week and talk about I just got a little micro just for the listeners that don’t understand what happens on these calls. Talk about some of the different things you’re looking at each week.
00:32:11:08 – 00:32:17:02
Cameron
We want to look at our current occupancy and future trends. We want to see renewals.
00:32:17:04 – 00:32:18:06
Rod
I’m sorry, renewals.
00:32:18:06 – 00:32:22:22
Cameron
Renewals, what’s our renewal rate retention rate, what is the lease trade out on.
00:32:22:22 – 00:32:39:19
Rod
So, so so yeah, so on the renewals and yeah, lease trade out as well, let me explain both those things. You don’t know what that means. So on the renewals, you’re going to want to have at least a three month window moving forward. How many people’s leases are expiring and what’s happening with those leases? Okay, well, two of them are have notice to vacate.
00:32:39:19 – 00:33:01:19
Rod
They’re going to leave. Three of them have renewed. And in the market trade out is what’s the new pricing you’re getting for those units that when the for the people to stay and how close is it to the market there. And so that’s what he’s talking about. Then there’ll be some that haven’t decided yet, but that’s something you want to track very closely.
00:33:01:19 – 00:33:02:11
Rod
Please continue.
00:33:02:14 – 00:33:05:10
Cameron
Right. And we look at the reasons why people are moving.
00:33:05:10 – 00:33:05:23
Rod
Oh, very.
00:33:05:23 – 00:33:19:16
Cameron
Important. And they will be candid about and they’ll say I’m unhappy with service. And so the asset that we bought last September that we were talking about, I set the expectation I’m going to go through and understand why are people leaving and when it’s unhappy with service, I’m going to ask about that.
00:33:19:18 – 00:33:20:06
Rod
Oh, yeah.
00:33:20:09 – 00:33:34:16
Cameron
And you know, it was actually some things beyond their means. The previous owner had rented washers and dryers for those units and the third party vendor couldn’t service them. People were frustrated that their washer and dryer couldn’t work.
00:33:34:16 – 00:33:37:15
Rod
Yeah, that’s a big deal. It’s a big deal for sure.
00:33:37:17 – 00:33:48:12
Cameron
Part of our part of our CapEx budget was to buy washers and dryers. Well, let’s first put those in our existing tenant spaces at. Sure. Retain those tenants to believe it.
00:33:48:12 – 00:33:49:21
Rod
So good. And it.
00:33:49:21 – 00:33:53:12
Cameron
Shows them that we’re not just.
00:33:53:14 – 00:34:10:04
Rod
We’re not just raising rents. You’re not here. The new sheriff in town just to raise rents and make your life hell right now. By the way, whenever you buy an asset, ideally you’re making some exterior improvements that everybody sees that you’re you’re going to really care about the place. You do all that before you start pushing rents. Okay?
00:34:10:04 – 00:34:11:17
Rod
You let them see the correct.
00:34:11:17 – 00:34:13:08
Cameron
That’s right. You see the value, Right.
00:34:13:09 – 00:34:13:16
Rod
Right.
00:34:13:16 – 00:34:23:04
Cameron
Right. And so our feedback was very quickly that these owners care. They’re making improvements. Right? That they were happy here, some somewhere beyond saving. So we’re just so frustrated. Right. And that happens. Yeah. And that’s okay.
00:34:23:04 – 00:34:23:09
Rod
Yeah.
00:34:23:13 – 00:34:39:18
Cameron
Nothing new, but at least you know and some of the comments in it were, hey, the property manager was great at following through. She, you know, not her fault at all. We just found a new place in that time frame. Honestly, we like the trajectory of where it’s going. So we also recognize the staff are doing a great job.
00:34:39:18 – 00:34:44:22
Cameron
Hey, you couldn’t save this person, but look at the customer service you’re providing. And I think that’s a lost art. Sure.
00:34:45:00 – 00:35:07:13
Rod
Yeah. We just bought an asset. Well, no, not just bought it, but we have an asset in Nashville and the comments online, we’re always the maintenance guys are great. They just don’t have the parts they need because the seller seller wasn’t providing that resource, the money to, to buy parts. It was, it was ugly. And so, you know, you’ve got reputation management you’ve got to look at as well by the way, as a little tip, I don’t know if you’ve introduced those pop cards.
00:35:07:13 – 00:35:29:04
Rod
You have those pop cards. You know what I’m talking about. It’s like a card that anybody with an iPhone can scan and it goes right to the Google Review for that complex. Okay. So, yeah, I’ll get you I’ll get you a link for that because it’s been a game changer, because, you know, when it when at least when somebody’s moving in or they’ve just had their problem handled, they’re in the office and they’re like, Hey, can you take 2 minutes to scan this and just say some nice things?
00:35:29:08 – 00:35:34:03
Cameron
Yeah, awesome. That’s a great way to get there because we often ask for right?
00:35:34:09 – 00:35:50:01
Rod
Right. But then they don’t do it. But if it’s right there and you can scan the card, I’ll get you a link for that. But anyway, so, so that’s an important piece. And so you’re looking at so we’re talking about the asset piece here again, by the way, is the asset management book in in the books or now it’s not.
00:35:50:01 – 00:36:10:04
Rod
Okay. All right. I have a free book on asset management that’s kick ass. If you dm me on any social channel and say asset management, I’ll get you the book. It’s like best in class. It’s really good. It’s like this. It’s like two inches thick. But, but so, but to further the education here so you looking at renewals, you look at open time on work orders I’m sure as well.
00:36:10:04 – 00:36:10:12
Rod
Yes.
00:36:10:13 – 00:36:14:03
Cameron
Yep. Units turn. How long is it taking. That’s how long is it them down.
00:36:14:05 – 00:36:25:05
Rod
That’s right. He’s hugely important. A week matters. Okay. Like if it’s a difference between one week and two weeks, that really matters when you carry it out over the year and you see how much rent you’re losing, right? That’s right. Yeah.
00:36:25:06 – 00:36:29:00
Cameron
Now looking at your online resources, which are the most effective and where should.
00:36:29:06 – 00:36:31:02
Rod
The marketing resources. That’s right. Yeah.
00:36:31:02 – 00:36:31:23
Cameron
Where should we be.
00:36:32:05 – 00:36:33:00
Rod
Doubling down.
00:36:33:05 – 00:36:34:03
Cameron
And what should we pull.
00:36:34:03 – 00:36:51:14
Rod
Yeah. Yeah, that’s basic marketing. They’re good. So you tracking that? Do you track the lease process? Like. Like, okay, lead comes in. How long was it before they responded? How many resulted in in showings, how many showings resulted in apps and how many those apps resulted in leases? Absolutely. We do that to.
00:36:51:16 – 00:36:51:19
Cameron
Look.
00:36:51:19 – 00:36:53:16
Rod
For breakdowns in each one of those sections. Right.
00:36:53:16 – 00:37:14:10
Cameron
Exactly. And it’s very it’s incredible how quickly or how pivotal. Pivotal it is that you respond in a timely fashion. Be critical. Are people are looking for a place and they’re going from place to place to place. And if you can answer within 10 minutes or right away, right. You have just you’ve stopped them.
00:37:14:12 – 00:37:38:09
Rod
Yeah, you’ve stopped them and they’re going to come look at your place. You know, that’s that’s critical know it’s critical piece. And you can see whether or your leasing agents really care. You know, my ex is getting a place here in Sarasota and I was with her help and shop that and and we went to this one beautiful asset and man we couldn’t get the guy the guy didn’t want to show us units.
00:37:38:09 – 00:37:50:07
Rod
It’s like we really don’t have anything good with all the hours real small And he was I mean, this is terrible. Then we found out that it was owned by the bank. It’s owned by Deutsche Bank. I know. There you go. They don’t care. So so it was it was fascinating.
00:37:50:08 – 00:37:51:07
Cameron
A buying opportunity.
00:37:51:07 – 00:38:05:00
Rod
Well, there you go. You know, I’ve thought about that as well. And, you know, that that that on site presence, you know, the leasing agents, the property manager by God, when you somebody mystery shops, you better see them jump out of their chair to say hi and smile and greet you.
00:38:05:00 – 00:38:05:13
Cameron
Right, right.
00:38:05:14 – 00:38:22:18
Rod
Absolutely. Yes. We want. And then, of course, you’re looking at late pace, you’re looking at evictions, you’re tracking that everything you know. And this these are the weekly calls. This is the kind of stuff you’re going through, guys. And what am I forgetting? You know, collections, of course. What are the collections for the month? You know, how does it compare to last month?
00:38:22:18 – 00:38:30:14
Rod
And of course, you’re looking for any anomalies, any any exceptions, anything that that that’s out of the norm. You have to deal with crime, things of that nature. Yeah.
00:38:30:17 – 00:38:32:00
Cameron
Okay. So the tenants.
00:38:32:03 – 00:38:53:17
Rod
So that’s, that’s execution. So let’s talk about raising equity. You know, it’s becoming harder and harder because you’ve got these onerous, you know, news articles about how horrible things are and that things are going to get bad and there’s going to be some investors that lose their money. But there’s again, also going to be exponential opportunity. How do you communicate that?
00:38:53:17 – 00:38:57:03
Rod
Well, I think I know the answer because we’re both doing the same thing. But go ahead. All right.
00:38:57:04 – 00:39:20:21
Cameron
Well, you know, the basic thesis of investing is buy low, sell high. Thank you. And so right now, that is what is happening. And it’s just starting to happen. Right. But I think there’s going to be a lot more of it with all these debt maturities. And, you know, as we talked about, people paid very aggressive prices and they weren’t necessarily they didn’t hit their performance, whether that was through execution or more of a macroeconomic issue.
00:39:20:23 – 00:39:38:13
Cameron
And so a great pricing reset will allow somebody to have an incredible asset. And, you know, I think there’s another opportunity here to provide working class, affordable housing for people, because if these prices are reset, they got so frothy in some ways that people had to raise rents so much.
00:39:38:13 – 00:39:51:02
Rod
But rents have been insane. I mean, like in was it 21, Tampa went up over 30% in one frickin year. Yeah, I mean, crazy, crazy, crazy.
00:39:51:02 – 00:39:57:03
Cameron
So people underwrote to that, which is all I know credible to me. I don’t know how that passed mustered with.
00:39:57:05 – 00:40:07:01
Rod
It just it was lenders, right? Yeah. Same here, same here, same here. So raising equity is going to be more challenging. What are your thoughts on that? Let’s let’s elaborate on that a little.
00:40:07:01 – 00:40:24:11
Cameron
Yeah, people are very cautious, right? Family offices, private equity, they don’t want to lose money. I think you have to have you have to be able to demonstrate that you are getting a great discount. Right. And a great asset. And I think your track record is going to be incredibly important. Important.
00:40:24:13 – 00:40:43:21
Rod
But even with retail investors, you’re talking about, you know, family offices and private equity due to work with retail investors as well. We do. Okay. So I’m sure you’re seeing it’s much harder now. A lot more phone calls, a lot more hand-holding. Yes, absolutely. And it’s I mean, back you know, you could have a webinar, a deal and be fully subscribed fairly quickly.
00:40:43:21 – 00:40:45:21
Rod
Now, it’s a lot of hand-holding and whatnot.
00:40:46:00 – 00:40:52:03
Cameron
That there’s more questions, but we’ve always been very hands on with those investors. Any investor.
00:40:52:03 – 00:40:53:07
Rod
And. Right.
00:40:53:09 – 00:41:04:16
Cameron
An investor. So sorry for taking up your time and we say no an educated investors or best investor. Thank you. Here is where the risks are here’s how we mitigate them. We can’t guarantee returns.
00:41:04:21 – 00:41:05:18
Rod
Right.
00:41:05:20 – 00:41:23:14
Cameron
You know, we’ve been proud of our track record, though. We’ve never lost investors money and we’re cautious and they want to keep building on that, of course. But we can’t live in absolute guarantees. Right? Of course. So if we can educate them on the process and and hey, there’s bumps in the road, you know, this is we’re seasoned.
00:41:23:14 – 00:41:36:22
Cameron
We understand how to handle them. Mm hmm. And and here’s what we do when these things come up. The other thing I think has been important in this time is to be very transparent in the assets that you have. And, hey, we’re seeing.
00:41:37:01 – 00:41:38:02
Rod
Even if it’s bad.
00:41:38:04 – 00:41:49:14
Cameron
That’s right. Yeah. We see some challenges with oncoming supply and it’s creeping into our market because they’re offering to two months concession on brand new A-class product right now. And that’s a reality.
00:41:49:14 – 00:41:58:03
Rod
Yeah. So, you know, we got to we may cut rents a little bit temporarily until we get through this that’s that’s actually happening on our natural asset right now. So yeah.
00:41:58:04 – 00:41:59:09
Cameron
Preserve occupancy that’s.
00:41:59:09 – 00:42:14:06
Rod
What we want to keep and see is everything. Yeah. Okay. So yeah, but, but that communication is critical with your investors, that ongoing communication. I assume you send an email at least once a month, at the very least like we do, we do.
00:42:14:07 – 00:42:16:11
Cameron
Monthly updates and then a more robust quarterly update.
00:42:16:15 – 00:42:32:18
Rod
Yeah. And like maybe a webinar or something, show behind the scenes, show some pictures, some of the things that we’re done, we do that as well. I try to educate a little bit behind the scenes as well because, you know, that’s what I do. So I incorporate that and and I think investors appreciate that, you know, and I’m sure you do the same thing a little bit.
00:42:32:18 – 00:42:41:18
Cameron
And the feedback has been we appreciate the transparency, the constant communication, and it builds trust that you’re doing what you said you were going to do.
00:42:41:20 – 00:42:58:22
Rod
And you’re on it and you’re on and you’re on it. You’re you’re paying frickin attention, right? That’s super important. Yeah. And so I know you’ve just put together a fund. Yes. That’s is that this is at the stone market landing scallop in Europe you’re in. It’s just distressed asset opportunity fund. Yes.
00:42:58:22 – 00:43:01:07
Cameron
Right. We’re calling the opportunistic value add fund.
00:43:01:07 – 00:43:04:01
Rod
So opportunistic value add fund. Okay. Like, yeah.
00:43:04:01 – 00:43:15:17
Cameron
So, you know, over the past cycle, as I alluded to earlier, it used to be you could buy a castle on day one when I got into, well, you have to be really good at executing right to hit your, your proforma projections.
00:43:15:17 – 00:43:16:07
Rod
Sure.
00:43:16:09 – 00:43:46:14
Cameron
And now I think you can combine the best of both worlds, right? You take your ability to execute and reposition an asset. You combine that with discounted prices because of the distress that’s coming. Right. Basically buying as the wave crashes and riding the next wave. As you said, we’re going to surf this next wave. Right. And our and our intent is to buy about 300 million and assets across Sunbelt and Mountain West markets that we’ve lived, work played in, that we understand that are growing.
00:43:46:15 – 00:43:50:10
Rod
This is where you and your partners live, work and whatnot. Yeah, that’s right.
00:43:50:11 – 00:44:10:12
Cameron
So we’re focused on those markets and, you know, it’s it’s modeled as a five year hold, which theoretically should be early to mid cycle, plenty of time to get out. We’re happy to leave meat on the bone for the next buyer as long as we are hitting our projections and or exceeding them as we’ve built our reputation on.
00:44:10:14 – 00:44:15:08
Rod
So your model is buy and sell your models, not by refinancing. Hold, we.
00:44:15:08 – 00:44:22:05
Cameron
Will refinance as well. Okay, We’ve done that in this model. It there’s a couple exits, right? You could you.
00:44:22:05 – 00:44:45:20
Rod
Always have that. We always have that. But I you know, it’s I love holding. I hate everything I’ve ever sold or lost in 2008, nine. And so, you know, I love the hold personally, but, you know, it’s not always possible. So talk about you know, everybody thinks it’s all gravy. You’ve been in 4500 freaking doors. You’re going to have 5000 more by the next time we talk.
00:44:45:22 – 00:45:03:04
Rod
And so talk about some of the setbacks, some of the seminars, failures you’ve had because it’s everybody thinks all rosy and there’s never I mean, I’m sure you’ve got a menu them to choose from, but talk about one that maybe that that’ll in part a lesson something you learned anything come to mind.
00:45:03:05 – 00:45:13:06
Cameron
We did a deal that wasn’t necessarily in our expertise or wheelhouse. We took an apartment community and repossession and into for sale condo.
00:45:13:08 – 00:45:14:15
Rod
Oh, you did a condo conversion?
00:45:14:15 – 00:45:15:18
Cameron
We did a condo conversion.
00:45:15:18 – 00:45:19:00
Rod
Okay. And when was this? When was this?
00:45:19:02 – 00:45:21:21
Cameron
We must have bought it. 2018.
00:45:21:21 – 00:45:22:11
Rod
Okay. So.
00:45:22:11 – 00:45:28:00
Cameron
And cashed out around that. Covered 2020.
00:45:28:03 – 00:45:31:21
Rod
Gotcha. Did you beat the covered to cash out before?
00:45:31:23 – 00:45:46:17
Cameron
No, no, no. Not through kind of the end of the year. So yeah, but, you know, there was still demand for home for homeownership, but it wasn’t our core, right? It wasn’t what we understood. And we overbuilt not so many.
00:45:46:17 – 00:45:49:20
Rod
Meaning the amenities were too much. You spent too much money make us.
00:45:50:02 – 00:46:05:08
Cameron
We should have done a more affordable product and I would have flown off the shelves quicker. Right. You know, the other we had also in our back pocket, we had nine townhome lots that we could sell that would be an extra juice that wasn’t included in the model. And I was fortunate that we modeled that because at we ended.
00:46:05:08 – 00:46:05:19
Rod
Up needing.
00:46:05:19 – 00:46:06:17
Cameron
It, we ended up needing it.
00:46:06:21 – 00:46:07:14
Rod
Gotcha.
00:46:07:16 – 00:46:36:12
Cameron
But, you know, on the last as the last condo sold, the Atlanta Beltline came in and said, We think we’re going to come right through here to connect. And if you’re an apartment owner, yes, the Beltline comes through in this market. There’s another Atlanta market showing maybe. Yeah, that’s double digit increase in value right there on right it rents and right So you know, a lot of lessons learned there was to stay in our wheelhouse stay in the for rent product.
00:46:36:14 – 00:46:58:02
Rod
I wonder if you could have found out about that if you had a little ear with the with the you miss the municipalities you learned you know because I was one of the things I teach at my boot camps is pay attention to what’s going on with zoning, with with things like that, because, you know, it can be a positive or a negative, you know, if they’re putting a new sewer lines in front of your complex, guess who pays for that?
00:46:58:02 – 00:47:18:16
Rod
Or waterlines or whatever new infrastructure. So but in your case, it was definitely a positive. Wow. Well, woulda, coulda, shoulda. Yeah, that’s right. Okay. I got stories like that that one time I had 500 houses in Denver. If I still had those, they’d be free and clear and I would be, bottom line, netting $1,000,000 a month right now, bottom line net.
00:47:18:18 – 00:47:22:15
Rod
And we wouldn’t be having this conversation. We would, but it’d be on Zoom on the back of my yard. That’s right.
00:47:22:16 – 00:47:29:14
Cameron
Yeah So we talk about what what you know, the cost per unit as. Oh.
00:47:29:16 – 00:47:32:19
Rod
We pay in the twenties, right. Yeah. Yeah. I mean you crazy.
00:47:32:19 – 00:47:36:12
Cameron
Some of the stuff you sold and yes, you, you recycled that you had it.
00:47:36:12 – 00:47:53:10
Rod
And I’ll tell you, I don’t know about you, but I get I have mental pushback sometimes when I see the pricing and I remember that it’s hard for me to recognize that the dollar is devalued so much that, you know, it’s not as bad as it looks when you look at it at first blush. Does that make sense?
00:47:53:11 – 00:47:54:15
Cameron
That’s a very good point. Yeah.
00:47:54:15 – 00:48:18:17
Rod
Yeah. But I mean, you know, just what’s happened with with inflation in this country, I mean, I remember 20, 24% gas, 24.9 gallons of gas when I was a kid, you know, and hamburgers for $10 and fries for five I’m sorry, $0.10 and $0.05. You know, I mean, this is how old I am, so, you know, but, you know.
00:48:18:17 – 00:48:42:10
Rod
Wow. So. So anyway, so you’re putting this fun together. That’s fantastic. And so are we very excited about it. I think there’s going to be lots of opportunity. And so, Leslie, you know, you’ve been very, very successful. You’ll continue to be very successful. So a lot of my listeners, I’ve got a lot of seasoned listeners as well, but a lot of my listeners haven’t actually taken the plunge yet.
00:48:42:12 – 00:48:53:11
Rod
You know, they know they want more out of life. They know they deserve more out of life. Speak to those people. Speak to speak to them, you know, inspire them a little bit, if you could, please. Yeah.
00:48:53:12 – 00:49:15:04
Cameron
I mean, I wish I would have done it sooner. And I was pretty I got out pretty early and everybody I’ve ever spoken to, that’s the same thing as I should have figured it out sooner. I should have taken the jump. Yeah. And I always wanted to be an entrepreneur. Yeah, it was just my calling. Right. And I remember when I finally was able, you know, had bought enough assets that, okay, I can go take that jump.
00:49:15:09 – 00:49:23:21
Cameron
Right. And I thought that would be such an easy decision and the happiest day of my life. And it was very happy. Right. But it was scarier than I thought it was. Right. Right. And it’s just to.
00:49:23:21 – 00:49:26:07
Rod
Give up the W2. That’s right. Right. Yeah.
00:49:26:07 – 00:49:28:13
Cameron
And it was shocking to me. I’m why am I scared?
00:49:28:14 – 00:49:51:16
Rod
But but let me say this. And those of you listening, you don’t have to frickin give up the W2. In fact, you call me, I get to call this all the time. Should I quit my job and do this full time? My answer is always no, because I’ve got students that have built, you know, super successful. I mean, they’ve retired from their W-2s, but they they built this what they did, you know, on the side with families, with kids with a consuming W2.
00:49:51:16 – 00:50:14:07
Rod
And they were still able to do it, you know, to get going. And so, yeah, don’t quit your job just there is that. But do get your butt to my boot camp in September, for God’s sakes, because it’s coming. Okay. Hopefully this will air with enough time to give them that impetus. But yeah, it’s it’s, you know, like Cameron and I both say, opportunity is knocking right now.
00:50:14:08 – 00:50:15:04
Rod
That’s right.
00:50:15:06 – 00:50:24:23
Cameron
And what’s important and you’re talking about boot camps is understand what you’re investing in. Mhm. So you need to understand the process and how to underwrite deals. You can’t just trust anybody. No.
00:50:24:23 – 00:50:45:21
Rod
And even if you’re going to invest passively, candidly, you know, you should have a basic understanding. If you want to invest passively, you don’t want to do this as an operator, still get your butt to my boot camp because you know, it’s three days. It’s not a big sales pitch and it’s just full on training. And I and I tell people it’s like, why would you give your hard earned money to someone without having some basic understanding of what it is?
00:50:46:02 – 00:51:01:04
Rod
And you will do it every day with, you know, these stockbrokers that are just glorified salespeople haven’t got a clue what they’re selling you. They’re just glorified salespeople. And so it’s it’s really important, I think, to self-educated a little bit. Regardless of whether you want to be an operator or a passive investor. Would you agree?
00:51:01:04 – 00:51:01:23
Cameron
Absolutely.
00:51:01:23 – 00:51:02:05
Rod
Yeah.
00:51:02:08 – 00:51:10:16
Cameron
You know, there’s there’s certain sensitivities that you should be aware of as a passive investor. Sure. And how does that affect this model? Right. If you ask those questions, you should.
00:51:10:16 – 00:51:13:07
Rod
Things like that maybe, huh? Yeah.
00:51:13:09 – 00:51:15:04
Cameron
What what is your annual rent increase?
00:51:15:06 – 00:51:30:15
Rod
Right. All right. And I saw I saw I don’t want to throw them under the bus to publicly, but his initials are GC and he promoted 10% rent increases for five years. This was last year. Oh, boy. Yeah.
00:51:30:16 – 00:51:31:11
Cameron
Wonder how those are going.
00:51:31:11 – 00:51:48:11
Rod
Yeah, right. Yeah. I mean, he buys the best of the best, you know, And he’s smarter than me. He’s got a jet and a helicopter. But the point is, 10% a year. Good Lord. Come on. That’s. I mean, we’re at, you know, 3% at best still today. You know, with what’s happening economically, I don’t know where you think zero year one and then we got to 3%.
00:51:48:17 – 00:51:50:07
Rod
We’re about the same.
00:51:50:09 – 00:51:54:15
Cameron
Yeah, we’re showing no no organic rent increases in year one and.
00:51:54:15 – 00:51:55:17
Rod
Right, right. Same here.
00:51:55:17 – 00:51:58:06
Cameron
Same it was maybe half of what we would.
00:51:58:08 – 00:52:10:05
Rod
Just try to bring us to market, you know, And that’s it. Yeah. Yeah. So talk about some of the best advice you’ve ever gotten in this business.
00:52:10:07 – 00:52:30:08
Cameron
You know, I think it goes to trust but verify and that goes to the execution. That’s why we’re so hands on with our team. That’s why we have to dig into all the data and make sure as what you’re telling me, accurate. And do you understand the data? Right. It’s not necessarily catching your teams misleading you. Okay, maybe I interpret this differently and this is the way I see it, right?
00:52:30:10 – 00:52:45:08
Cameron
You can educate your teams on how you look at it, how we’re looking to move the needle and get them on the same page. And I’ve said this before on podcasts, right? But I always tell our property manager that they are the CEO of a multimillion dollar.
00:52:45:11 – 00:52:46:14
Rod
Oh yeah. And they.
00:52:46:14 – 00:52:53:22
Cameron
Are. And they really are. And they will make or break your asset. The property manager, the maintenance supervisor are mission critical to.
00:52:54:03 – 00:53:10:04
Rod
Absolutely. If that property manager is not getting their butt out of a chair and walk in that complex every day, that’s a problem, you know, with a critical eye, with eagle eye. You know, that’s that’s absolutely critical in this journey of yours. Were there mentors that you leaned on and if their work can you speak to that a little bit?
00:53:10:04 – 00:53:16:17
Cameron
Absolutely. I mean, I got to work with I had a great mentor, our CEO at the first company.
00:53:16:22 – 00:53:17:19
Rod
Right, Right, right.
00:53:17:19 – 00:53:25:04
Cameron
Investment and development group. And then I got to work for some international institutions such as CBRE and JLL and see how they look.
00:53:25:04 – 00:53:28:07
Rod
Oh, no kidding. Yeah. What were you doing for them?
00:53:28:09 – 00:53:31:20
Cameron
One was consulting on the highest and best use for state owned.
00:53:31:22 – 00:53:35:11
Rod
Oh, that’s right. I saw that on your. The governor of Tennessee got you going there.
00:53:35:11 – 00:53:52:18
Cameron
Great experience. Wow. And then CBRE, you know, and just working on the asset management side of things and how people are underwriting, how people look at things. So I got to and I’ve kept in contact with so many of these former mentors or colleagues of mine.
00:53:52:18 – 00:54:01:00
Rod
Industry leaders on the right. Right. I mean, you were at I am in so obviously you got the memo that you need to be at events like that if you’re going to be in this business.
00:54:01:00 – 00:54:41:02
Cameron
That’s absolutely right. So, you know, I love to hear what our colleagues are seeing and how they’re looking at things. What’s their strategy for things keeping an ear to the ground. So you’re ahead of trends before their report and then mainstream media. And, you know, I’ve used that network of mentors, colleagues, vendors to solve problems. And that’s part of having experience in this business and and being able to nothing goes as planned, as we’ve said, you know, And so having a seasoned professional at the helm helps ensure that when those problems arise, they and they’ve seen it before, they know who has and can help solve it for them.
00:54:41:07 – 00:55:00:12
Rod
They know how to execute on issues like that. Yeah, that’s that’s kind of where I come in as a like a troubleshooter and, and it serves me and I actually enjoy it, frankly, you know, but talk about your team. So you’ve got new partners now and talk about the different roles that are played. What role do you play?
00:55:00:17 – 00:55:02:06
Rod
What role do your partners play?
00:55:02:08 – 00:55:05:20
Cameron
So I’m heading up our acquisition side and both sets of Element.
00:55:05:20 – 00:55:06:20
Rod
Got you.
00:55:06:22 – 00:55:20:05
Cameron
Our business partner, Phil, who’s located in Atlanta, he oversees construction management and I asset management and talking about being detailed in this approach. He is he’s a pilot in his spare time.
00:55:20:05 – 00:55:20:15
Rod
Nice.
00:55:20:20 – 00:55:32:14
Cameron
Always says, well, I’d prefer to know as a pilot, I want to know about a problem on the ground as opposed to in the air. Yeah, exactly. And so the systematic approach that he takes to both of those.
00:55:32:16 – 00:55:49:20
Rod
Well, that’s fantastic. I mean, pilots are so frickin detail oriented checklists and, you know, any business is nothing but people and systems in the systems involved checklists and sops and and you know, and, and KPIs and so on and so forth. So pilot is perfect for that role and anybody else or is it. Yeah.
00:55:49:20 – 00:56:14:15
Cameron
Yeah. And then I’ve got Bob Howe and West Howe that are out of Lake Stevens Washington now that were the stone mark capital side of the house and Bob brings 50 years of experience and real institutional real estate investment on it a predominantly in a CFO role. So so that’s right him and his son West are very analytical, very bright, constantly underwriting.
00:56:14:15 – 00:56:19:15
Rod
They’re doing the underwriting. So you’re finding the deals that you do the preliminary, and then they send it to them for final.
00:56:19:18 – 00:56:23:11
Cameron
That’s right, yeah. And then the ongoing accounting on it, of course.
00:56:23:15 – 00:56:24:17
Rod
That’s a big piece. Yeah.
00:56:24:17 – 00:56:41:08
Cameron
And, you know, so they’re constantly tweaking models. So what happens And in this scenario, what happens under that scenario? And it’s and all of us are coming together and saying, okay, let’s can we answer that question? And so there’s a roundtable on any deal that we do. And unless where we’re not moving forward.
00:56:41:08 – 00:56:52:05
Rod
It’s like it’s like a oh, crap board of a board of.
00:56:52:07 – 00:56:52:17
Cameron
Directors.
00:56:52:17 – 00:57:07:01
Rod
Board of directors. Thank you. Good lord. It’s never pretty when you lose your mind. It’s right there on the tip of my tongue. Yeah. Board of directors. And that’s what you want. The same here. I mean, you want to. You want to. And if any one person doesn’t go for that, same with a hire. Honestly, when we do, we do a hire.
00:57:07:01 – 00:57:24:20
Rod
We have multiple interviews and one person says, no, it’s no yeah, it’s it. Because you because everybody has different skill sets. They bring the game, right? That’s right. Yeah. Well, listen, brother, I appreciate you coming out here all the way from Vegas and all. That’s good to know. You live there so I can pay you for. For a meal or something next time.
00:57:24:20 – 00:57:35:01
Rod
Come on. Yeah. Yeah. That’s where I Buy my watches, by the way. So I love going out there and buying watches, but I really appreciate you coming in, my friend. And you’ve added tremendous value today. So I appreciate you.
00:57:35:02 – 00:57:36:05
Cameron
I appreciate you for having me.
00:57:36:05 – 00:57:54:09
Rod
Thank so much. Absolute pleasure. Thank you. Thank you. So one other quick thing. We encounter so many people that are frankly frustrated. You know, they’re looking in the mirror and they’re frustrated that they haven’t been able to escape the rat race. They haven’t been able to build cash flow to the point where they’re able to have financial and time freedom with their families.
00:57:54:10 – 00:58:16:19
Rod
You know, and maybe they see other people buying real estate and creating, you know, incredible cash flow. And they think, well, it’s just scary. You know, buying apartments is intimidating. And I get it. See, that’s why we created our Warrior Mentorship program. There are coaching students and they’ve had extraordinary results. My students, I’ve been teaching about five years and upwards of 140,000 units now that we know of.
00:58:16:19 – 00:58:46:11
Rod
Right. And we feel like it’s just getting going now, we’re looking to grow this group and really take it to the next level and honestly believe that the greatest transfer of wealth could be upon us right now with this current economic environment. Everything’s going on sale. So we’re looking for people who want to follow a proven framework, really like a blueprint or a map, literally step by step, and then they’re able to leverage our systems and our incredible network to raise money and equity to find deals and close those deals and build partnerships really nationwide.
00:58:46:12 – 00:59:07:18
Rod
So if you’re interested in finding out more about how you can become more in our incredible network and take advantage of the unbelievable opportunities that are upon us, you can apply to my Warrior Mentorship program by texting the word crush to seven two, three, four or five. Or you can go to mentor with Broadcom. And what we’ll do is we’ll set up a call so you can check us out and we can check you out and see if it’s a fit.
00:59:07:20 – 00:59:15:10
Rod
Now, again, you can go to mentor with Broadcom or text the word crush to seven two, three, four, five to apply and we will speak soon.
