Wayne is the founder of CREI Partners, dedicated to helping busy professionals build generational wealth through passive real estate syndications. His firm manages over $50 million in assets across Texas, Louisiana, and Alabama, focusing on acquiring apartment communities and developing RV/Boat and business storage in strong markets. Wayne is committed to protecting investor capital while delivering high returns and giving back to local communities. Based in Central Texas, he leads investment strategy and investor relations as the Lead Sponsor and General Partner. A former U.S. Marine Corps Corporal, Wayne transitioned into real estate after a 16-year career with a Fortune 125 commercial real estate firm.
Here’s some of the topics we covered:
- Being a Marine & Becoming A Real Estate Success
- The Rollercoaster of Office Real Estate and the Move to Multifamily
- Breaking Into Multifamily in 2019
- Building Wealth with Horizontal Build-to-Rent Multifamily Properties
- Targeting Sellers with Wayne’s Massive Text Blast Strategy
- Using VA’s to Help Your Business & Where To Find Them
- The Importance of Cash Flow and Why Understanding It is Crucial
- Co-GP Explained
- A Look Inside Wayne’s Mini Storage Property Success
- The Advantages of Owning Properties Next to Highways
To find out more about partnering or investing in a multifamily deal: Text Partner to 72345 or email Partner@RodKhleif.com
Full Transcript Below
01:20:15:17 – 01:20:33:06
Rod
Welcome to another edition of Lifetime Cash Flow to Real estate investing. I’m Rod Khleif, and I’m thrilled you’re here. And I know you’re going to get tremendous value from the gentleman I’m interviewing that his name is Wayne Courageous. And Wayne doesn’t just do multifamily, he also does RV and boat and business storage, which I’m very interested in personally.
01:20:33:06 – 01:20:36:08
Rod
So I’m excited to get into all of it with him. Welcome to the show, bro.
01:20:36:09 – 01:20:39:24
Wayne
Hey, thanks for having me. And, great to be in your new studio.
01:20:39:28 – 01:20:54:04
Rod
Oh, thank you buddy. Thank you. Yeah, it’s a beautiful day out there. It’s hard to be inside right now. But, Yeah. So. So why don’t you give us a little background on you? I mean, first of all, thank you for your service. I know you’re in the Marines, but but go ahead and elaborate on all that.
01:20:54:05 – 01:21:09:03
Wayne
Absolutely. And I’ll try to do cliff notes. But I was, I got into real estate, really? When I was in high school, dated someone whose dad was a developer in Austin. And so I got the bug early on. And so when I went in the Marine Corps, 2003, 2007, I served in the Marine Corps.
01:21:09:03 – 01:21:33:22
Wayne
So two days out of high school went right in. Wow. But my investing journey really started in the Marine Corps. I bought my first single family home at 19 and 29 palms, California. It was no sexy property. It was a two bed, one bath, like $80,000 property. But that was really the start of the journey. I joined CBRE in 2007 when getting out of the transitioning out of the Marine Corps, and I worked with them a total of 16 years.
01:21:33:24 – 01:21:36:27
Rod
So that’s that’s abbreviated for Coldwell Banker Real Estate.
01:21:36:27 – 01:21:38:20
Wayne
Yeah. Over time, they, you know.
01:21:38:20 – 01:21:42:14
Rod
They changed they changed the name to I’m old. So I remember Coldwell.
01:21:42:20 – 01:21:46:23
Wayne
Banker Real Estate and then they did, well, it’s, caller banker Richard Ellis.
01:21:46:25 – 01:21:48:08
Rod
Oh, I thought it was real estate.
01:21:48:11 – 01:21:55:01
Wayne
That was, Richard Ellis. So there was a, there’s a, British and Americans when they came together was but anyway.
01:21:55:08 – 01:21:56:29
Rod
So what did you do, what did you do for CBRE?
01:21:56:29 – 01:22:19:13
Wayne
So I worked, heavily on the property management and, and little asset management for institutional clients. JP Morgan, Invesco, TIAA-Cref. You know, a lot of those big institutional firms, they’re investing in real estate, a lot of it for retirement, you know, pension funds, etc.. So, you know, our job was to execute the business plan similarly to, you know, multifamily and everything else we’re doing there.
01:22:19:13 – 01:22:25:14
Wayne
Just, you know, much, you know, for them, it was typically core assets and, you know.
01:22:25:17 – 01:22:27:07
Rod
Great core assets are all.
01:22:27:07 – 01:22:50:00
Wayne
Core assets, great location downtown. Typically, even if they’re an older vintage, they’ve been renovated. They’ve been, brought to the best use. And so for us was, you know, in Houston, I managed a 52 story, one point 2,000,000 square foot high rise. You had extremely strong creditworthy tenants. You know, they they typically want to.
01:22:50:01 – 01:22:51:11
Rod
That was office that was involved.
01:22:51:18 – 01:23:24:25
Wayne
That was right. That’s office, industrial. There was some industrial as well and retail. But these, you know, I got into multifamily ironically because it didn’t compete with CBRE. So and then as I was starting to dig in on multifamily, I’m like, man, I’ve seen so many ups and downs on office and retail. Just had been in the industry office, you know, it was like, you know, but in multifamily, as I was, you know, we had talked, you know, previously I, you know, got in with a mentor, learned about, you know, underwriting and and really seeing that, hey, you can make an impact on the community.
01:23:24:27 – 01:23:38:28
Wayne
You can, you know, at the end of the day, there’s a risk aversion of, you know, everybody needs a place to live. You know, there’s, you know, there’s been a lot of supply brought to the market over the last couple of years, but there’s not a lot of new supply. Oh, no.
01:23:38:29 – 01:23:52:12
Rod
No, we’ve got a housing shortage. I mean yeah the multifamily game is in trouble right now. We can talk about that a little bit. By the way, let me give a shout out to your mentor James. Kind of some. He’s a good friend. We even did a deal together early on. And he was in my mastermind for a couple of years.
01:23:52:12 – 01:24:00:19
Rod
Really good guy. So give him a shout out. But, so so you got into multifamily. When did you when did you, do your first multifamily deal?
01:24:00:19 – 01:24:26:17
Wayne
So I got into multifamily at the end of 2019, and I took a year to really learn as much as I can on underwriting, you know, going through a lot of due diligence processes. I didn’t source our first deal until the end of 2021. It took about two years for me to find something, and I’m so grateful because there’s so many people, that were buying really, really high on bad debt.
01:24:26:17 – 01:24:28:02
Wayne
And, you know, poor.
01:24:28:04 – 01:24:35:11
Rod
That’s why there’s distressed assets. That’s why if there’s ever. So you get in this freaking business right now they got they took on adjustable rate debt and they paid too much.
01:24:35:11 – 01:24:46:05
Wayne
Yeah. So I’m it took a while. But it wasn’t because of laziness or anything. It’s just I didn’t find anything that would work. Now, I got into a build to rent community development ended December and Lafayette.
01:24:46:05 – 01:24:49:11
Rod
Louisiana, 2021. You did a build to rent like houses or towns.
01:24:49:12 – 01:25:17:19
Wayne
They’re all houses and that we’re still developing. We’ve got 70 of the 90, eight homes, in progress. But that was a, 98 single family development, three bed, two bath, worked with, some partners there and joined them because you know, then they like for when I look at risk, I’m like with, you know, just developing, you know, these single family homes, like, you only need a permit or a cost of occupancy per home.
01:25:17:19 – 01:25:29:18
Wayne
You want to wait for all 150 units to be built. So I like that. I like that in the worst case scenario, we could do, you know, do an HOA, we could sell the homes outright individually. So there was different exit options. So we looked. But that’s.
01:25:29:18 – 01:25:43:06
Rod
Much safer. Yeah, I love Build to rent. I want to do it myself. I actually I’m pushing my son to get his general contractors license so we can we can do some of that here possibly, possibly a little further north of here. But so three, two bedroom, they got garages or just.
01:25:43:10 – 01:25:57:19
Wayne
There’s no garages. Three, two. There’s a dog park, you know, and if people want to build a rent, it’s think of it like you have your vertical multifamily, your traditional multifamily. We call this horizontal multifamily. So we treat and manage the asset just like a normal multifamily.
01:25:57:21 – 01:25:58:25
Rod
Gotta buy the land, right?
01:25:58:25 – 01:26:12:09
Wayne
You gotta buy the land, right? And I’ll be honest, like, that was our first project and I haven’t done another one because I want to see a full cycle. You know, if we’re bringing investor capital, bring our own capital. I believe in the asset class. I think it’s going to do well. But I also want to see on the exit what are the buyers?
01:26:12:09 – 01:26:18:17
Wayne
There’s plenty of multifamily buyers. But on the build to rent, what’s the institutional what’s the appetite for investors like you.
01:26:18:17 – 01:26:22:01
Rod
So you want to buy and sell. You don’t want to buy, refinance it and hold on to it then.
01:26:22:01 – 01:26:37:29
Wayne
No on not on the build to rent on the multifamily. We typically on our 5 to 7 year hold, you know, we’ll we may at some point look at different ways to recapitalize, bring in new investors. So we’re not always in this transaction mode. But for us right now, you know, it’s it’s the 5 to 7. So I did that.
01:26:37:29 – 01:26:43:08
Wayne
And then a year later you know I, I do text blast I found a potential seller.
01:26:43:08 – 01:26:44:04
Rod
Text blast too.
01:26:44:04 – 01:27:04:24
Wayne
Meaning owners to the owner. So we found, you know, the owner. I’m happy to add value and share that whole process. But great. You know, we we found, a off market seller, based in California. He’s actually, you know, invested with us, afterwards, but he, eventually sold us this property after building the relationship. What kind.
01:27:04:24 – 01:27:05:06
Rod
Of property?
01:27:05:11 – 01:27:22:10
Wayne
It was 101 units and the Galleria submarket of Houston. Oh, nice garden style. The property. He had owned it since 2007. It it was a great location, but the property was just a lot of deferred maintenance, a lot of third, fourth, fifth chance type people. I mean, it was not,
01:27:22:12 – 01:27:22:27
Rod
It was a C.
01:27:22:27 – 01:27:23:24
Wayne
Class. It was rough.
01:27:23:24 – 01:27:24:13
Rod
Yeah.
01:27:24:15 – 01:27:32:04
Wayne
So we went but, you know, we went in and, you know, did a lot of the renovations and such, but, but that was done through finding and I’ll tell you what we did is.
01:27:32:05 – 01:27:42:27
Rod
Yeah, let’s talk about the text blasting. Yeah. That’s that’s really cool. That hasn’t been brought up here before as it relates to dealing with seller. So yeah. So first of all, what did you target and how did you get their phone numbers.
01:27:42:27 – 01:27:48:28
Wayne
Yes. So we, I mean for us as our partners, we target 100, 100 to 150 unit garden.
01:27:48:29 – 01:28:05:02
Rod
So gotcha gotcha. That’s your by the way, that’s called investment criteria. Okay. And, if you DM me on any channel, I’ll send you our investment code to get an idea what that looks like. You talk about the size, the age, you know, and other, other factors is that you target because you can’t be all things to all people.
01:28:05:02 – 01:28:10:21
Rod
You’ve got it. You’ve got to kind of to hone your you’ve got to have focus. Focus is power okay. So 100 150 units.
01:28:10:21 – 01:28:22:18
Wayne
And I’ll say the focus is power because you can actually close on those deals. Like I don’t look at 400 500 units because I can’t you know we do it. But if you can focus on 50 to 70 because that’s what you can close. So for us 100, 150 we can close. Yeah.
01:28:22:18 – 01:28:29:29
Rod
You can raise the money for that. Yeah. If you get a 400 unit deal it’s you know, you’re going to waste your time looking at it because you have no ability to close on it. Most people.
01:28:29:29 – 01:28:51:27
Wayne
Know that. You’re right. One day you will I will get there. But. Right. And you’re there now. But for us, you know, at the time, 100 to 150 units that I was, targeting, we went to the appraisal. You know, I went to costar, you know, we had, you know, we have a co start subscription, found, you know, that was probably 150 property lists that I was able to get out of.
01:28:51:29 – 01:28:54:04
Wayne
CoStar. Okay, so you can choose.
01:28:54:06 – 01:29:05:26
Rod
Costars, not cheap guys. But it’s not cheap. My my warriors will sometimes. I shouldn’t say this publicly, but they’ll they’ll join forces and share a share. One costar is really, really tough about that defense.
01:29:05:29 – 01:29:18:06
Wayne
It’s got a little heart. It’s definitely got harder. But we were able to get the list. But that list, however you get it right is important because at that point you go blind by line and this could be a VA for us. You know, we had someone in the Philippines help us out.
01:29:18:06 – 01:29:21:20
Rod
By the way. You could ask a broker to give you that list, couldn’t you? Some could.
01:29:21:27 – 01:29:33:26
Wayne
You know, if they give it to you now we’re again, we’re sourcing off market opportunities. So we’re trying to go you know, we do value the relationship of brokers. But we’re also trying to find off market deals that may not want to, you know.
01:29:33:27 – 01:29:34:29
Rod
Yeah. But you wouldn’t want to bring them.
01:29:35:06 – 01:29:55:27
Wayne
In on that deal. So it’s sort of like so that list, and then what we did is we went to the appraisal district. And so I had, you know, a virtual assistant go through Harris County. I’m giving an example. It was Bexar County, Travis County, I’ll give it example of Harris County. Houston. So we went through and went to the Harris County Appraisal District to find out who the recorded owner is.
01:29:55:29 – 01:30:02:23
Wayne
The recorded owner is not necessarily the true owner. Oh, so you take the recorded owner because you typically it’s like an entity, an LLC or such.
01:30:02:24 – 01:30:04:17
Rod
Oh, gotcha, gotcha. If you break down the entity.
01:30:04:17 – 01:30:18:17
Wayne
You got to figure out and this all goes into my text, but you had to figure out who that person is within the entity. So you get the recorded and then you go to the secretary of State website, I’m sure Florida, we all have it. And you find the true and ultimate. You got to find the true owner where you get the phone numbers.
01:30:18:17 – 01:30:38:21
Wayne
This is where skip tracing comes into place, and it’s a lot of work. And I can tell this most people won’t do it. But this is so powerful. But you you can go to like, been verified. You can use TLA. There’s different LexisNexis. There’s different services. For us. We use been verified and we went in and put in names that we found the true owners behind these entities put in names.
01:30:38:21 – 01:30:58:22
Wayne
It will spit out typically 5 to 7 phone numbers. Well, those 5 to 7 phone numbers you put into a software called texted Lee. Or there’s other services we use text. You put it all in and, you know, you you come up with this, you know, database of all these numbers, and then you send a text.
01:30:58:22 – 01:31:07:05
Wayne
Now, is it spammy? Yes. Can they unsubscribe? Yes. You just need one deal. And for us, it was 101.
01:31:07:07 – 01:31:10:28
Rod
You do, you have to. You have to verify them through the do not call list as well. Correct.
01:31:11:00 – 01:31:12:27
Wayne
I’m sure you do. We didn’t, you know.
01:31:12:29 – 01:31:23:19
Rod
Okay. Well be careful with that guys, because that’s that’s a yeah, that’s a, that’s an FCC, violation. And it’s about a 10 to $20,000 fine. If they sue you. But but, you know, no big deal. I mean.
01:31:23:21 – 01:31:28:07
Wayne
Most people, at the end of the day on the text, they’ll say, you know, to opt out, say no or yes.
01:31:28:07 – 01:31:44:00
Rod
Say, stop it, stop it, stop. Yeah. But, yeah, you know, it’s funny. I teach this exactly what you just said. I teach in my bootcamp and how to break down an entity. You know, I had Vas do it. I had one time, I had six Vas in the Philippines. I was paying each one of them $1.93 an hour.
01:31:44:00 – 01:31:56:06
Rod
So I had six people for working under 12 bucks an hour. They were happy to get it. It wasn’t like I was taking advantage of them, not 40 hours a week. It’s a pain in the ass because you got to talk to them late at night, early in the morning because it’s a 12 hour time difference. But yeah, guys, this is how you do it.
01:31:56:07 – 01:32:05:09
Rod
When you’re willing to do what other people are willing to do, success is inevitable. Absolutely. It’s just the way it works. And this is a great example of that. You got to break down that entity though, you know, you’ve got to find out who owns it.
01:32:05:12 – 01:32:11:25
Wayne
But I also think about like, the virtual assistants. Yeah. People may be wondering, where do you get them? Yeah. You know, we used Upwork.
01:32:11:25 – 01:32:12:28
Rod
Yeah. So you can.
01:32:13:00 – 01:32:14:27
Wayne
You can use, you know. Fine.
01:32:14:28 – 01:32:32:07
Rod
I’ll give you another one. Is it remote SEO? Yeah. You remote SEO, you get you get people in Latin America, which is a hell of a lot easier because they’re on the same time zone. Absolutely. You know, so that’s where we’ve got we’ve got some wonderful Vas in the, in, Latin America. And, so remote dot SEO, you can use Upwork.
01:32:32:09 – 01:32:46:23
Rod
Upwork is fantastic on Upwork though. Make sure they’ve got a perfect rating. Okay? I mean perfect. I forgot if it’s five or out of 10 or 10 out of ten or whatever it is, it needs to be perfect if you’re going to use one of them. It’d be my suggestion to you. I’ve done a lot of stuff on Upwork.
01:32:46:25 – 01:32:55:29
Rod
No, but that’s fantastic. That had a tremendous value. So that’s. You found that place in Houston. What happened? You you rolled your sleeves up?
01:32:55:29 – 01:33:01:10
Wayne
Yeah, we got our sleeves up for six months. I mean, the roofs were leaking Hvac. It needed to be replaced. It was.
01:33:01:10 – 01:33:03:00
Rod
So you raised CapEx money as well?
01:33:03:04 – 01:33:07:02
Wayne
Oh, yeah. We were too scared because it was a true bridge. It was a bridge debt loan.
01:33:07:02 – 01:33:07:27
Rod
I see,
01:33:07:29 – 01:33:12:03
Wayne
In a sense of a lot of people were using bridge debt because they couldn’t.
01:33:12:05 – 01:33:13:03
Rod
Afford.
01:33:13:06 – 01:33:18:28
Wayne
Right. They couldn’t afford the high price. There wasn’t a whole lot of value to be done. So they did the bridge debt.
01:33:18:29 – 01:33:36:19
Rod
Yeah. Let’s hold on. Let me elaborate on because that’s really important piece. So the reason there’s so many operators in trouble is several reasons. One, the prices were too high. Secondly, Fannie Mae and Freddie Mac dropped their loan to value. I think at some point it was down to 6,570%. Where before you could get 80% loan to value.
01:33:36:21 – 01:33:55:15
Rod
And, you know, the less capital put into a deal, the higher the returns. Bridge debt was still doing 80, 80, 85% loan to value. So you get you can show much higher cash on cash and IRR returns, which is what a lot a lot of operators did. And they got that 3% debt. That’s now 9%. Yeah talk about a problem.
01:33:55:18 – 01:33:57:20
Rod
But anyway you used it the right way. You use.
01:33:57:20 – 01:33:58:07
Wayne
The the bridge.
01:33:58:07 – 01:34:16:12
Rod
Debt is in place to bridge the gap from a non-performing asset to a performing asset. So you get this high interest rate debt, but you get a higher loan to value. And, and you use it until you’ve got the property stabilized. And get conforming debt is did that work, did you get that done on that property.
01:34:16:14 – 01:34:35:22
Wayne
So that was and you know, that was a tough one 2022. That was that was that was the one that we can really dive into. And I think it’s a good lesson learned. We went through that whole process renovating the asset. One of the things that I had learned, rod, was, you know, we wanted to change like the name of the property because this was like one.
01:34:35:23 – 01:34:40:16
Rod
Rebranding, one point of horrible reputation, 1.2 reputation. You got to change the name.
01:34:40:16 – 01:34:43:20
Wayne
But Google ties to the address, not.
01:34:43:23 – 01:34:43:26
Rod
The.
01:34:43:26 – 01:34:52:20
Wayne
Name. Oh, wow. So this is like lessons learned. I hope some moments come out of this podcast, but I’m like, okay, well, so we changed it from Gallery Apartments to Ivy at the Galleria.
01:34:52:21 – 01:34:53:01
Rod
Okay.
01:34:53:07 – 01:34:55:25
Wayne
And so we changed the branding.
01:34:55:28 – 01:34:57:08
Rod
Change the size, everything.
01:34:57:08 – 01:34:58:00
Wayne
I mean, it’s a beautiful.
01:34:58:00 – 01:34:59:02
Rod
Property website, everything.
01:34:59:07 – 01:35:21:12
Wayne
That’s a great asset. With that, I didn’t realize the how hard it would be. Not only it’s easy to bring in capital and renovate, right and even be on, but under budget and all that gets, you know, all the things you need to do as Stuart as of, the property. Right. But changing a reputation in a market is extremely difficult.
01:35:21:12 – 01:35:43:08
Wayne
And if those Google reviews tie. So we work through that. We actually got out of the bridge debt. We actually modified our loan. So we were one of the you know, I would be very proud of this. Seems like one of the few that were able, recently able to modify the loan into a 6% fix that. So, you know, we brought in, you know, capital brought in capital.
01:35:43:10 – 01:35:43:28
Wayne
We also that.
01:35:43:28 – 01:35:45:14
Rod
Was my had to do that to buy the loan down.
01:35:45:19 – 01:35:52:16
Wayne
Well we had to do it just to bring in, an additional influx of capital for the debt. You know, so.
01:35:52:19 – 01:35:53:25
Rod
That was it did hit you.
01:35:53:27 – 01:36:01:23
Wayne
The debt hit us. Now, we did do a rate cap. We had, like, a three year rate cap. You know, we spent like, 375,000.
01:36:01:26 – 01:36:24:14
Rod
There was a rate cap, guys, is is what you do is you pay an amount of money to lock the to to basically, set it so that your rate doesn’t go up more than a certain percentage. Now, can you give you an interesting example of this back in 2020. You could and so you could get $100 million rate cap three years, 3% for $20,000 to $23,000.
01:36:24:14 – 01:36:40:11
Rod
Okay. So you could borrow $100 million. Your rate’s not going to go up more than 3% in three years. And it cost you 23,000 for that privilege. That same rate cap. I think the last time I checked was a year and a half ago for one year, forget three years was 2.3 million, I believe it. Yeah. Yeah, it’s just crazy.
01:36:40:17 – 01:36:54:01
Rod
Which is why there are a lot of operators that are struggling right now. But I want to talk about reputation for a moment because I’m actually dealing with that with one of my assets right now. We had a homeless camp across the street. It took us almost a year to get them out of there. So a lot of people are complaining.
01:36:54:01 – 01:37:12:20
Rod
Yeah, you’ve seen the homeless and we had cars broken into and everything else, and that still showed up. Literally just had an asset management call with our property management company this morning about this. And they and we have instructed them to order pop cards. So you familiar with those cards know it’s like a card that’s got a QR code on it that that ties into that address and that property on Google.
01:37:12:22 – 01:37:25:00
Rod
And you give it to your maintenance people, you give it to your property manager. And the minute anybody’s even slightly happy, you say, hey, can you take two seconds, scan this and say something nice about us. And that really helps to get more positive reviews. Just a the ninja trick there.
01:37:25:01 – 01:37:42:06
Wayne
Okay. Yep. Now we got asked, I think if you look at it now, I think it’s like 3.9 stars. That’s fantastic. You know, that’s it takes a lot of time because you need a lot from a 1.2 or so rating to get. So it took a lot. But we have added a lot of value. We added the playground.
01:37:42:06 – 01:37:45:21
Wayne
We I mean they didn’t have a pool, they didn’t have a fitness center. All this was not you.
01:37:45:21 – 01:37:46:14
Rod
Put a pool in.
01:37:46:14 – 01:38:01:15
Wayne
Well the the pool was just green and it wasn’t work. Yeah. So we had a resurface. We did a gazebo too. So we did a lot of the right things. And we had a property manager who, you know, had a backbone and was like evicting people left and right. So occupancy went down pretty low. We did all the right things.
01:38:01:15 – 01:38:09:21
Wayne
And just like many people with interest rates, insurance in Houston, you know, real estate taxes, payroll, you know, rents declining.
01:38:09:22 – 01:38:30:04
Rod
Yeah. We everything’s gone up, guys. Payroll has gone up. Taxes, of course, gone up. Insurance. Don’t get me started on insurance. You know, and all that impacts the bottom line. And so that has really hit a lot of operators, myself included. We’ve seen our our expense ratio, which should be around 50%, go up to 65, 70% in some cases, which kills your cash flow.
01:38:30:04 – 01:38:46:21
Wayne
That’s right. Yeah. Yeah. And I think during that time transparency with investors. So we have you know, we’ve done a lot of deals since. And those are cash flowing deals. And we could talk about that because there was a lot of lessons learned on that. But with the Ivy, you know, we modified the loan. We fought through it.
01:38:46:22 – 01:38:50:27
Wayne
We talked about little grit before this, recording. We talked a little bit more about it.
01:38:51:03 – 01:38:54:15
Rod
I’m sorry. I talked about what, a grit. Oh. Oh, yeah. Where, you know, the.
01:38:54:15 – 01:39:11:21
Wayne
Head sponsor, the sponsor has to, you know, fight through there. It’s not always going to be great returns. Great everything. It will, it can still be in it. And I’m very optimistic that everything’s going to be fine. But you got to fight through it and you have to, you know, just not give up.
01:39:11:21 – 01:39:30:04
Rod
Well, let’s talk about that for a minute, because, you know, I was telling I was telling Wayne before we started recording that, you know, I’ve got warriors coaching students that come from the military, and they’re extremely successful because they have integrity. Number one, they have self-discipline. Number two, which is ingrained India in the military, by the way, thank you for your service, brother.
01:39:30:06 – 01:39:39:18
Rod
And and and and you have to have grit, right. You’re in the Marines, for God’s sakes. Doesn’t get any more grit than that, right? What else? What else do they hammer? India.
01:39:39:25 – 01:39:58:04
Wayne
I mean, obviously, you showing up, you know, just, you know, no. You know, and and I think, you know, law enforcement, Army, whatever branch or whatever the service are correct. You know, when people are running, you run to it. I was watching, a police show yesterday, and it was, it was a great example of this officer.
01:39:58:06 – 01:40:20:17
Wayne
He showed up for, you know, this resident landlord, dispute. Ironically, it was real estate thing. Wow. But then he started hearing gunshots around the corner. So he ran to the gunshots, and. And the guy who was in the background, you know, those, like, live PD shows or whatever he’s like, when people are running, police are moving in and, you know, like, real estate is not police work or.
01:40:20:18 – 01:40:44:18
Wayne
Right. You know, we’re not in combat. We’re not war right now. You know, we’re we’re doing real estate. Thank God. But the other day, what it teaches you is like when things get tough and when people just want to put their head under a pillow, you go through it and you’re transparent. I mean, you, and not only on that particular deal, but other deals because lenders, they’re they’re partners with you and they want to know, okay, what happened on this property?
01:40:44:18 – 01:41:00:04
Wayne
What did you do. And they don’t want to find out by them doing, you know, a, you know, a search on the property. They want you to tell them upfront. And so I’ve had other deals where we, you know, we close the loan and all. And I think a big part of that was because they trusted us.
01:41:00:04 – 01:41:17:06
Wayne
There was an integrity. We have investors who reinvest. And I think those are listening even when times are tough. This is this is an issue. Let’s let’s say what it is, let’s say what you’re going to do about it. And work through it. And there’s some challenges.
01:41:17:06 – 01:41:33:07
Rod
Whenever you have issues, you overcommunicate with your investors, with your lenders know, and and and and that’s that’s integrity, you know. And bottom line, you’re not the person videoing what’s happening. You know, you’re if there are a bunch of people standing around wondering what to do, you say, get the hell out of the way. Let me get it done.
01:41:33:08 – 01:41:34:13
Rod
That’s all right. That’s well.
01:41:34:13 – 01:41:46:23
Wayne
And we’re talking a lot of, you know, what was happening those years. But now that the tide has changed a little bit, there’s these great distressed opportunities. And really the focus for us is we want to see, you know, cash flow. We want to still do a value.
01:41:46:23 – 01:41:47:27
Rod
Add all about cash.
01:41:47:27 – 01:41:55:15
Wayne
Flow, fixed rate debt, cash flow. And you know, and obviously the name of your podcast heavily on.
01:41:55:18 – 01:42:12:18
Rod
Lifetime cash flow. But you know, it’s interesting I wrote a book about this, and I’m not trying to sell the book because I give it away for free. But it’s titled How to Create Lifetime Cash Flow to Multifamily Properties. But the subtitle is The New Rules of Real Estate Investing. And the new rules are I don’t care what you bought the property for.
01:42:12:20 – 01:42:34:23
Rod
You know what somebody else bought it for three years ago, and you can buy it for half that now. What’s the freaking cash flow? Yes. Bottom line, cash flow is everything right now in this market that we’re in. So I’m really glad you brought that up. Well, if you don’t mind, let’s shift gears for a minute, because I would love to hear about your storage endeavors because, you know, I it can be very lucrative.
01:42:34:26 – 01:42:39:05
Rod
It’s not like heavy infrastructure. Yeah. But talk about what you’ve done there.
01:42:39:06 – 01:42:57:00
Wayne
Yeah. So, I mean, I got into it one because we’re, we’re RV ers. We like to go camping and stuff. So, you know, we don’t have anything fancy. It’s like $30,000 travel trailer. But we show up to a campsite and we see the class AA motorhomes, and my wife and I are googling like, how, how much or how much is that a million bucks, 500, 600 bucks plus.
01:42:57:00 – 01:43:09:13
Wayne
And we’re like, okay, but it just shows up for us. We’re like, okay, even if, you know, we bought one of those, there’s always going to be a nicer one, right? So we love our little travel trailer, but those people need a place to park their RV when they when they’re.
01:43:09:13 – 01:43:09:28
Rod
Not driving.
01:43:09:28 – 01:43:27:03
Wayne
Around. Because the reality is, is there may be use it on three weeks of the year, maybe different times. I mean they’re so they’re being stored. They can’t store in your, you know, driveway because HOA and such. So I always thought about that type of storage. Well, one of my good friends Stuart, he’s had an opportunity in Huntsville, Alabama.
01:43:27:09 – 01:43:32:28
Wayne
All these units were 20 by 50 in size. Every single one with 14ft by 14ft units.
01:43:32:28 – 01:43:33:25
Rod
They were actually enclosed.
01:43:33:25 – 01:43:45:20
Wayne
They’re all enclosed 20 by 50. Wow. So these are large thousand square foot units and, yeah. So I’ve known him a while. We typically don’t raise capital for other people, but we. But I did with him.
01:43:45:20 – 01:43:46:14
Rod
So you.
01:43:46:16 – 01:43:47:23
Wayne
With GPD.
01:43:47:25 – 01:44:09:04
Rod
And by the way, let me explain that for a second. In Syndications, you’ll have a general partner, a GP. Okay. And a lot of times in my warrior group, for example, there’s a reason my students own upwards of 250,000 units. Because they do these deals together, many of them will will align with a GP. As a GP to raise money for it, to get involved in other aspects.
01:44:09:04 – 01:44:31:16
Rod
By the way, you can’t just raise money, you have to be actively involved in the deal. You can’t just be a money raiser. You have to be adding value with due diligence, with asset management, with investor relations and so on and so forth. But but that’s called a cop. When you step into a deal and maybe you bring a deal to to a to, you know, to a group that that’s got a reputation that’s done deals already.
01:44:31:19 – 01:44:40:21
Rod
And, and, you know, if you can bring a deal or bring money to a, to a team, you’re in. Okay. So that but that’s called coming in as a cop. All right. Please continue.
01:44:40:21 – 01:44:59:27
Wayne
Well said on that. And so you know cop. And when we close the deal about a month later, two months later, I went to Huntsville to help change out locks and change out leases. And while I was there, I was curious, who the heck needs a 20 by 50? These are large units, and obviously you have your high end RVs.
01:44:59:27 – 01:45:00:12
Wayne
You get your point.
01:45:00:12 – 01:45:01:10
Rod
You have the height thing.
01:45:01:10 – 01:45:09:10
Wayne
As well at the height. So that’s for the 14ft high door that covers majority of any RVs or, you know, vehicles. You know, at least in Texas. You know.
01:45:09:10 – 01:45:17:29
Rod
I just had a flashback to the movie with Ben Affleck. Oh, God. That where he’s where he’s like this major assassin, but he’s an accountant.
01:45:17:29 – 01:45:19:19
Wayne
Oh, yeah. It’s like it was.
01:45:19:22 – 01:45:28:06
Rod
I think the became the accountant. And I remember he had an RV in one of those storage lockers, had all this gold and paintings. Anyway, sorry I digress. Oh no, but.
01:45:28:08 – 01:45:39:04
Wayne
Don’t hide it. So I thought that was like our customer base. I was like, okay, so maybe, 20% of those are a customer base. Okay, majority were businesses. And this is where I get super excited. So there are businesses.
01:45:39:06 – 01:45:42:00
Rod
That needed inventory for for whatever.
01:45:42:00 – 01:46:03:01
Wayne
Mechanical, electrical, maybe carpet, flooring, roofers, generators, disaster recovery companies. The guy who goes to the neighborhoods and cleans out the trash cans, you know, that he he parked there. And so I was like, getting all excited because I’m like, this is an extension to people’s business. They don’t necessarily need the flex warehouse space, but they have an office.
01:46:03:03 – 01:46:06:24
Rod
And well, that’s that’s ideal if you have that. But if they can’t afford it, then.
01:46:06:27 – 01:46:09:27
Wayne
Or maybe they’re run out of their house, work out of their house or their truck.
01:46:09:29 – 01:46:12:06
Rod
And so how many of these units were there just sort.
01:46:12:08 – 01:46:20:14
Wayne
The Alabama, gray space storage is 125 units. It has stayed 100% occupied since purchasing it. It cash flows extremely well.
01:46:20:16 – 01:46:22:00
Rod
So is it like aluminum buildings?
01:46:22:03 – 01:46:23:11
Wayne
So they’re all still building.
01:46:23:12 – 01:46:23:19
Rod
Steel.
01:46:23:19 – 01:46:31:00
Wayne
Buildings with, you know, red iron, you know, structure, concrete drive lanes. We’ve got so after I, I.
01:46:31:00 – 01:46:40:17
Rod
They is there I’m sorry I okay. I’m excited. That’s why I keep interrupting. Forgive me. I get hate on my podcast because I interrupt too much, I get excited, but do they have, do they have any Hvac in there?
01:46:40:22 – 01:46:46:26
Wayne
They’ve got insulation. You know, they’ve got insulation. They’ve got, you know, white ceiling, or. Excuse me, a white roof.
01:46:46:26 – 01:46:50:29
Rod
White roof, bounce the heat off. They have electrical. I assume they.
01:46:50:29 – 01:47:10:19
Wayne
Do. They’ve got one ten volt power LED lighting and either a 30 amp or 50 amp. Okay, but I took this because I got super excited about the customer base, right? I went back to my where I live, you know, college, Bryan College station area, a bought land and we built the exact same facility.
01:47:10:19 – 01:47:10:25
Rod
No.
01:47:11:01 – 01:47:29:17
Wayne
72 units. And that’s 20 by 50 storage. You know, they’re all they’re all exact. It was the same plan and the same thing. RVs, businesses. That what also separates because if you have a 42ft RV, RV, you need the drive lanes to get to be able.
01:47:29:17 – 01:47:30:27
Rod
To turn in. You got to get in.
01:47:30:27 – 01:47:37:07
Wayne
So, you know, we have 60ft drive lines at our Alabama location. It’s 80ft drive lanes. It’s a little too much.
01:47:37:07 – 01:47:44:28
Rod
And no, wait a minute. Just so I understand that. So you got to be able to pull in, but you got to be able to make the turn. You gotta make the turn. Okay.
01:47:44:28 – 01:47:45:08
Wayne
That’s right.
01:47:45:12 – 01:47:46:12
Rod
So there’s a lot of concrete.
01:47:46:12 – 01:47:52:12
Wayne
There’s a lot of concrete okay. And so when you go to a typical mini storage those buildings are typically pretty close. Right.
01:47:52:12 – 01:47:57:23
Rod
They’re tight. Yeah. You’re not able to it. You may not even be able to back in. You pull up and you break empty out. Well yeah okay.
01:47:57:23 – 01:48:03:16
Wayne
So so you so for our, facilities really wide at least 60ft to, to get.
01:48:03:16 – 01:48:08:04
Rod
In to give me an idea of the acreage for the one in Alabama and the one in Texas. Yeah.
01:48:08:04 – 01:48:17:16
Wayne
So we’re about nine acres in Alabama. Okay. That’s 125 units. And we’re actually expanding, through, you know, Stewart. And we’re.
01:48:17:16 – 01:48:17:29
Rod
Going to build some.
01:48:17:29 – 01:48:20:01
Wayne
More. They’re building more about 70 more units.
01:48:20:01 – 01:48:30:04
Rod
So no, no, no unexposed parking. This is all in close and close. Oh, God, I love this. Oh, we close now. Did you find a a manufacturer that that builds these things?
01:48:30:05 – 01:48:52:15
Wayne
Yeah, man. So there are groups out there that just sell steel okay. But then they want you to outsource your labor. Okay. For me, I don’t like that. Because then the finger start pointing when the steel and the iron isn’t exactly how. Right. It’s all right. So I found a group, based on a recommendation of other industrial type parks where they do, bring in the steel, and they also do the install.
01:48:52:15 – 01:48:54:11
Wayne
So it’s all sub. It’s all we got.
01:48:54:13 – 01:48:56:08
Rod
We got one, one accountability one out.
01:48:56:08 – 01:49:06:03
Wayne
So I’ve got, so I had, the steel installer, and then I had the concrete. Yeah. The ground work. And that was one vendor. They did all the ground work and.
01:49:06:11 – 01:49:09:21
Rod
And you got to study the electrical utility, the carbon free, obviously.
01:49:09:21 – 01:49:21:03
Wayne
So we did that. So it’s. But it’s fully secured cameras all 20 by 50, as I mentioned. There is a gray Blackwater dump station. I’ve actually pretty important because if you go camping, all that water. Yeah.
01:49:21:03 – 01:49:22:12
Rod
You got a dump, build a dump there.
01:49:22:19 – 01:49:34:14
Wayne
And so most people will dump it at the campsite. But if you’ve got a half million dollar plus RV, you go to Bucky’s or, you know, one of these nice places, you still want to use your restroom. So by the time you get to your storage, being able to dump that. Yeah, this is what we have.
01:49:34:14 – 01:49:38:22
Rod
Oh that’s beautiful. What a great idea. So is this, like a, septic system?
01:49:38:24 – 01:49:51:05
Wayne
So for us, it’s tied into the city. Oh, nice. That was actually the hardest part of my development. And Brian on that was explaining to them. Well, I just had to explain to them, like, what’s the difference between that in an RV park? Like an RV park, you plug right in.
01:49:51:06 – 01:49:51:15
Rod
Oh yeah.
01:49:51:19 – 01:49:53:04
Wayne
And so I had to explain it to time.
01:49:53:04 – 01:49:54:16
Rod
Right. Is this is more sporadic.
01:49:54:18 – 01:50:00:04
Wayne
Sporadic. So not much water is going down. But between like I said, all the businesses, hobby cars.
01:50:00:04 – 01:50:02:14
Rod
How did you market to fill that thing up? I’m just.
01:50:02:14 – 01:50:12:00
Wayne
Curious. Well, we’re still in the list mode for that, but we did, we opened up in July. We’re already 50%, pleased. And so we expect to play in the next six months will be full on that.
01:50:12:05 – 01:50:13:19
Rod
Okay. So a year, a year lease, it’s.
01:50:13:19 – 01:50:28:15
Wayne
About a year lease up, which is, incredible in the storage world. Okay. And mind you, each one of these units at our Brian location is $750 a month, so $0.75 a square foot. Yeah, the expense ratio is about 32%.
01:50:28:16 – 01:50:43:00
Rod
Nice. Nice. We were just talking about expense ratio. Right, guys? A multifamily should be 50%, but we’re experiencing 65, 70%. Yeah, 35% expense ratio. Yeah I love that. I said, well what what are you paying for. You’re paying for electrical.
01:50:43:03 – 01:50:53:17
Wayne
What else. All right. So we pay I get a bill for water and electrical from the city. That’s one bill. I’ve got a landscaper. It’s like 400 a month just because we have some grassy areas. Okay. Keep trees.
01:50:53:19 – 01:50:54:14
Rod
Okay.
01:50:54:16 – 01:51:13:17
Wayne
We we have software system. So what’s fantastic about this, software system is it charges the card on the first of the month, on the fifth of the month. It charges a $100 late fee automatically. It also deactivates your access into the facility from the gate.
01:51:13:17 – 01:51:15:04
Rod
Nice. So it’s all electronic?
01:51:15:04 – 01:51:25:23
Wayne
It’s all electronic. On the 10th of the month, we change out the lock. Now, we haven’t had, luckily, the people who didn’t pay moved out because they wanted to keep their stuff. But there’s no emotions. There’s no, you know, eviction.
01:51:25:27 – 01:51:27:27
Rod
So you don’t have somebody on site there. It’s all done.
01:51:28:01 – 01:51:46:18
Wayne
Everything’s remotely if somebody and you actually yesterday, you know, I was flying in for this podcast. We did the, lease. There’s a local locksmith at all of our key systems or two. He went over to the locksmith to get the key. Everything can be done remote. And then the gate access, even just a tour, a unit.
01:51:46:21 – 01:51:48:26
Wayne
I can do a temporary code to open up the.
01:51:48:26 – 01:51:50:13
Rod
Gate so they can come in and check it out, and.
01:51:50:13 – 01:52:13:28
Wayne
Then I can deactivate the codes, keep the facility secure, and with the cameras and all. So this is something that’s super exciting because this will be the second case study for this type of asset. Once it, does. Well, which it is doing well, and once it’s fully stabilized, then we will look to actually grow this at a much, faster, you know, instead of in one will be doing a portfolio.
01:52:13:28 – 01:52:18:11
Rod
Oh, I love it. Oh, I love that model, dude. I love that model a lot.
01:52:18:14 – 01:52:19:07
Wayne
They’re all month to month.
01:52:19:07 – 01:52:20:27
Rod
Lease is the key. Oh, really?
01:52:21:01 – 01:52:21:29
Wayne
All month, a month leases.
01:52:21:29 – 01:52:25:24
Rod
So interesting. You know, once the benefit of that.
01:52:25:27 – 01:52:41:07
Wayne
Well, for me, I, I like the fact that they can leave if they’re not happy or if I’m not happy with them. Meaning, like one of the things I really dislike are people working on their cars and stuff. Oh, yeah. In the drive lanes. It’s it just it’s not clean. It’s not what I want you in your unit.
01:52:41:08 – 01:52:42:21
Rod
Is that in your data or.
01:52:42:23 – 01:52:45:15
Wayne
Yes, it’s absolutely in the lease. And given the rules and all that good.
01:52:45:18 – 01:52:51:19
Rod
Right. Anybody live in one? No. Okay. You see some TikTok videos, some guy living in his car, living in. Well, it’s.
01:52:51:19 – 01:52:55:27
Wayne
Funny because it doesn’t fit every person out there. I mean, it’s a lot of money.
01:52:55:28 – 01:52:59:06
Rod
Oh, yeah. I think a 750 is not going to be the the homeless person living in there.
01:52:59:06 – 01:53:10:26
Wayne
But people call and they’re like, how much should I tell them? They’re like, well, you can you live in it. You know, like they make jokes because it’s like, but then you have the other people, which are my ideal avatar, customers who are like, oh man, that’s that’s great. And it’s secure. And it stores.
01:53:10:26 – 01:53:16:08
Rod
Well, you got a high ceiling. You can you can store stuff, you put shelving in, whatever you do.
01:53:16:08 – 01:53:34:23
Wayne
Whatever you want on that. So as long as it, you know, leaves, when you know when you leave, then it’s it’s all good. But so we’re, we’re excited with another thing that’s, for these projects to be successful. Right, is right off the highway. I’ve got 72,000 people that drive past that facility, these other stores that do RV’s.
01:53:34:23 – 01:53:53:21
Wayne
I mean, they could be 2 to 3 miles off the highway. And so just from a marketing standpoint, as right now, I’m not paying really anything on Facebook ads or Google ads or anything. I’m getting calls daily, mostly just from drive by people. And I did, you know, for the first few months do Google ads. I did Facebook, but when I was asking like, well, how did you find us?
01:53:53:21 – 01:53:57:25
Rod
So you were right on the highway. So you, you got a sign says storage.
01:53:57:26 – 01:54:16:13
Wayne
Yep, a 20 by 50 storage. And I also have one of my bays, with a big Ole there’s a sign says now open 20 by 50 storage. And so it’s obvious when you drive by, you know what we’re doing. And so I think that’s an hour. Great. And I got that from Gray Space Storage in Huntsville.
01:54:16:13 – 01:54:20:16
Wayne
It’s right off the highway. And I’m like, you have all this traffic saying, this.
01:54:20:23 – 01:54:22:12
Rod
Got to be an industrial zoning, right?
01:54:22:17 – 01:54:29:13
Wayne
Got to be industrial zoning. Absolutely. That’s a great point. It was already zoned that way. Yeah. You know, but we develop other sites.
01:54:29:13 – 01:54:35:06
Rod
Just curious. Curious. I can do you mind talking about the numbers? What’d you pay for the land and total. Total cost in the mind.
01:54:35:06 – 01:54:39:11
Wayne
Yeah. So our total cost in was about 6 million.
01:54:39:11 – 01:54:40:16
Rod
Okay.
01:54:40:18 – 01:54:47:29
Wayne
2.5 million of that, was the land, 2.6 million. Was the actual steel structure.
01:54:48:03 – 01:54:49:08
Rod
Okay.
01:54:49:11 – 01:55:08:14
Wayne
One half a half. Yeah. And I’m just on numbers top of my head right now. Right. So that was the steel structure. Actually, only 1.6 million was the steel structure. It’s okay. There was about, 2.3 million for all the groundwork utilities. A lot of the work is, you know, it’s just that removal of the dirt and then the concrete.
01:55:08:14 – 01:55:11:20
Wayne
It’s just crazy. You know, it’s four point and this site, it’s got to be.
01:55:11:20 – 01:55:13:20
Rod
43 acres concrete to take our RVs and.
01:55:13:20 – 01:55:22:21
Wayne
Stuff. It does it, you know, in the 18 wheelers and stuff that, you know, drive on it. And then the land was about a million, you know, for the four acres. So, you know.
01:55:22:21 – 01:55:24:11
Rod
So four acres on that one and four.
01:55:24:11 – 01:55:24:24
Wayne
Acres on that.
01:55:24:24 – 01:55:28:14
Rod
One. So, what kind of debt were you able to get on it? Just curious.
01:55:28:14 – 01:55:43:03
Wayne
That’s a great question. So we use a local, bank, very local bank. Fairbank. Amazing people, great. Great group. But they they did. All right. So it was a construction loan. So when I.
01:55:43:03 – 01:55:44:22
Rod
Did construction to perm kind of a thing.
01:55:44:22 – 01:56:02:26
Wayne
It is because I could have easily gone to any lender to do a construction only loan. Right. But as you know, the last couple of years. Yeah, but it’s harder to get those construction a perm. But a couple of years ago, when we were working at the interest rates were going I was crazy. And I was like, I don’t want to play chicken with the market.
01:56:02:26 – 01:56:08:12
Wayne
So let’s do a construction loan to Perm. So it’s a two year I owe, it set.
01:56:08:12 – 01:56:09:26
Rod
Interest only two years.
01:56:09:28 – 01:56:37:22
Wayne
Interest only two years. Set to prime the primary, plus .25 percent. So when the fed lowered, you know, quarter percent, quarter percent, 4%, our debt was going down 4%. That was a construction that. Now when it turns into permanent debt, it’s going to be a, five year fixed, but it is fixed. But the fixed rate is based on the seven year treasuries, plus 3%, I see.
01:56:37:25 – 01:56:41:07
Wayne
So we should be around a 7.5% once that’s done.
01:56:41:07 – 01:56:51:05
Rod
So typically with the banks, you’ll get a five year term. Sometimes you’re going to the ability to renew for five years with an interest rate bump. But so, so, what kind of loan to value you get?
01:56:51:05 – 01:56:52:29
Wayne
Just curious. So that’s 65% 60.
01:56:52:29 – 01:56:53:06
Rod
Five.
01:56:53:06 – 01:56:53:15
Wayne
Okay.
01:56:53:21 – 01:56:55:24
Rod
Now once they loan that loan to cost.
01:56:55:24 – 01:56:57:05
Wayne
Right. The loan to cost structure.
01:56:57:05 – 01:56:57:14
Rod
Yeah.
01:56:57:14 – 01:57:06:29
Wayne
The thing to is, which we don’t really we just, in multifamily, especially the, the amortization, we are very blessed with a 30 year amortization.
01:57:07:01 – 01:57:07:29
Rod
Right. That’s that’s really.
01:57:08:05 – 01:57:08:16
Wayne
Something to.
01:57:08:16 – 01:57:08:21
Rod
Do.
01:57:08:21 – 01:57:13:16
Wayne
20 at the bank, we had to do what we did. I have to double check, but I’m pretty sure we did 25.
01:57:13:21 – 01:57:15:02
Rod
It’s 20 or 25, but.
01:57:15:02 – 01:57:26:05
Wayne
It went back and forth. I think we negotiated fine with the 25 year, but that’s something to when you look at loan to cost and you know where your debt service coverage ratio, that amortization period you know, is great.
01:57:26:05 – 01:57:34:27
Rod
Now you had you had to raise enough money to cover the interest payments while you’re, you know, you know, through this process, through this one year process, that’s part of the calculation.
01:57:35:03 – 01:57:46:01
Wayne
Absolutely. Yeah. We look at what our, lease up, is planned to be, the lender wanted some extra replacement or actually not replacement reserves, but just reserves with the bank. And they’ve got.
01:57:46:01 – 01:57:49:18
Rod
Reserves in their bank account right now as well. Yes. It’s your money, but they’re holding on.
01:57:49:19 – 01:58:04:16
Wayne
And, you know, the risk of that is and it’s my only deal that’s a recourse loan. Right. And so with the construction you know there’s recourse. Now we are developing 150 unit multifamily. And Brian, and we’re working through the loan process. That’s a non-recourse. Oh, wow. And a 40 year.
01:58:04:18 – 01:58:07:14
Rod
So you’re doing HUD. Holy cow. Yeah. That’s that’s a market rent.
01:58:07:14 – 01:58:08:09
Wayne
I mean it’s fantastic.
01:58:08:09 – 01:58:10:25
Rod
It’s non-recourse 35 year debt.
01:58:10:26 – 01:58:12:29
Wayne
You know, 42. It’s gone down to 42.
01:58:13:00 – 01:58:13:26
Rod
42 year am.
01:58:13:27 – 01:58:17:00
Wayne
Two year. I o and 40 year. It’s incredible. Wow.
01:58:17:01 – 01:58:23:05
Rod
So 92 year amortization fixed. It’s not a just fixed rates. Yep. Now there’s a lot of red tape.
01:58:23:08 – 01:58:24:09
Wayne
And we’re still going through it. Yeah.
01:58:24:12 – 01:58:28:24
Rod
So it’s pain in the ass. But my god the debt is fantastic. You can do it. High loan to value. What sort of.
01:58:28:24 – 01:58:39:00
Wayne
Loan. So we’re doing 80% percent I mean knock on wood we hope to get this, made. We went through re concept a there’s concept right that that was approved.
01:58:39:01 – 01:58:42:08
Rod
Have you got somebody on your team that’s done one of these because you need help with. Yeah.
01:58:42:08 – 01:58:52:21
Wayne
You got to have help for a HUD which is I think important for the listeners to every deal I personally do. Right. It’s fun because it’s like you’re the quarterback and I never want to be the smartest guy in the room. Right? I want guys.
01:58:52:26 – 01:59:00:22
Rod
You want like like like your storage guy. You you met a guy that’s done that, you’re aligned with him. You’re doing hard. You got somebody like that said, that’s the way smart business people do this.
01:59:00:22 – 01:59:20:18
Wayne
And the guy who, you know, Stuart Heath in, in Alabama, he was a GP. I invited him to be a GP member on the deal because of that experience. And what if something were to happen to me, you know, going home today? Sure. My investors are protected because we have a guy like Stewart who has done it and who’s, you know, sure, who can operate.
01:59:20:20 – 01:59:21:20
Wayne
And I think that’s a not.
01:59:21:20 – 01:59:30:22
Rod
Just that is a strength in number hundreds. I know there’s things he he probably hasn’t relayed to you, you haven’t even encountered yet, but he just knows off the top of his head. Yeah. That’s the beautiful.
01:59:30:22 – 01:59:49:08
Wayne
Thing we did. You know, we general contracted that. We were the developer on on the one. And Brian, a lot of that experience was from like the W2, you know, back to CBRE. Sure. So sure. But, yeah, it’s been been great. You know, I’m still a believer in multifamily. We’re still development. All but that particular asset class.
01:59:49:08 – 01:59:50:15
Wayne
It does, it does.
01:59:50:15 – 01:59:59:24
Rod
It’s exciting. I’m really glad we talked about this. You kind of got me juiced. So you’ve done some development. You did. You did the, build to rent.
01:59:59:25 – 02:00:00:05
Wayne
Yes.
02:00:00:05 – 02:00:05:02
Rod
You’re in the middle of that. I was at a co GP thing and brought some money in. Okay. Yeah. And then you.
02:00:05:06 – 02:00:07:15
Wayne
And then we heavily are on the asset management piece on that.
02:00:07:16 – 02:00:10:01
Rod
Oh you are fantastic. Yeah. Thank you. Because you can’t just.
02:00:10:01 – 02:00:19:28
Wayne
Raise money or heavy on that. Every deal we do we are our hands are deep in it because yeah you have to be. And I hope everyone listening the fiduciary is to their investors. They should at least be on the calls and talk it through.
02:00:20:00 – 02:00:25:20
Rod
That’s right. That’s right. So you’ve developed that. You’re developing the storage and you’re also doing a multifamily development.
02:00:25:20 – 02:00:31:26
Wayne
Yes. So the storage development, and Brian is complete. We’re doing our lease up based on that.
02:00:31:26 – 02:00:32:12
Rod
Lease up you’ve.
02:00:32:12 – 02:00:51:25
Wayne
Done. And then on the, down the road, about a couple miles we went in, there’s, 12 acres total that were, three different parcels. And, one of the parcels on the back is right next to an Imax theater, right next to restaurants. And I just vision. I’m like, this will be a great multifamily development. There’s walking trails already to the schools.
02:00:51:29 – 02:01:10:28
Wayne
It’s not zoned. It was it was on retail office. So we had to go through the the rezoning. You know, we bought that land. We went through the rezoning process. I sat on a lot of people’s couches talking why this may be a good thing for the community. You know, there was definitely some feedback that, you know, understandably, that they didn’t want the entire family right there.
02:01:11:04 – 02:01:21:10
Wayne
But my point to them was like, hey, we’re going to do this Class-A multifamily. It’s going to bring more heads and beds, which will allow me as a developer to do more retail, bring in more, you know, because there’s other it’s.
02:01:21:11 – 02:01:22:08
Rod
A mixed use.
02:01:22:11 – 02:01:40:10
Wayne
So they’re trying we’re going to do different phases. So there’ll be the 150 unit multifamily. You know, we’re working with Birchard to go through the HUD loan process. And then we bought the other, six acres. One, it was like four acres and two acres. So combined the six acres. And we’re working through the site plan on that to do an office retail.
02:01:40:10 – 02:01:45:23
Wayne
Now, this office, it’s not your high rise office. It’s a two story, you know, office, a.
02:01:45:23 – 02:01:46:11
Rod
Little, little.
02:01:46:11 – 02:01:52:06
Wayne
1820 500 square foot spaces. They do extremely well in that market.
02:01:52:09 – 02:01:54:05
Rod
So that office. Yeah.
02:01:54:07 – 02:02:20:02
Wayne
Yeah. No, I, I mean, I for one, yeah. Big offices that take 20, 30,000 square foot, like one tenant, one single use. Are those scare me this 1820 500 square foot. Office slash retail. That doesn’t scare me in the right markets. I mean, I’m one of those users. Like, we’re going to be a tenant in one of those buildings for our partners because, you know, I value the in-person collaboration and such.
02:02:20:02 – 02:02:28:01
Wayne
And then if you’re selling a product, you know, wedding, dresses or, you know, whatever it is, jewelry, you know, you want to be able.
02:02:28:01 – 02:02:42:09
Rod
To you need a physical location that’s small and reasonable and affordable. Yeah, yeah. No, I agree with you on that. Brought back some memories of when I had a real estate company in Denver. I was in a building like that little two storey building with those size units. No, I okay.
02:02:42:14 – 02:03:00:22
Wayne
But I think what that why I’m doing that is because I look at our investor base, we have cash flow investors. And, you know, I mentioned the storage. We have other multifamily that’s just cash flowing. You know, we send out quarterly distributions, but then I have other investors and I’m in I’m in the boat to where I’m not so much needing the cash flow.
02:03:00:22 – 02:03:26:20
Wayne
I want the equity upside. And to do that we talked about core assets and beginning of this where those core assets are low risk, maybe lower returns. Because there’s not a whole lot of, value add upside. And, and institutional groups are comfortable with that. Right. They want preservation of cash is priority number one. But when you start getting the value add or opportunistic, you know, value add being like, for me, the multifamily.
02:03:26:22 – 02:03:35:02
Wayne
You know, buy in value add multifamily a value add. But it’s opportunistic in my mind. There’s no bigger value add than taking raw land and developing it.
02:03:35:02 – 02:03:36:08
Rod
If you’ve got bigger risk either.
02:03:36:08 – 02:03:52:05
Wayne
No bigger risk. But with that risk I can have bigger returns. So I’ve got two investors and myself included that, you know, we like the cash flow, but we are also okay, just like in the stock market where you maybe in some buckets you’re okay to do that. So we we’ve been diversifying and we do this full time.
02:03:52:05 – 02:04:02:09
Wayne
I don’t I don’t work for CBRE anymore. I’m I’m full time all in. We have employees too that we can now diversify and provide options for different. And so that’s that’s that’s great.
02:04:02:09 – 02:04:23:28
Rod
I think you’ve got some great strategy going. And you know, we talk about different buckets. You’ve got a growth bucket. Maybe you’ve got a more secure cash flow bucket, and then you’ve got the high risk buckets. And they’re all important in building, you know, and building your, your portfolio and growing. Well, listen, buddy, I really appreciate you coming down.
02:04:23:28 – 02:04:36:14
Rod
You’ve added to, oh, by the way, his his his website is Creative partners.com. Wayne courageous. And, Wayne, you’ve had a tremendous value. There’s been a lot of fun. I’ve really enjoyed this conversation today, brother.
02:04:36:18 – 02:04:42:09
Wayne
Same here. I appreciate you having me on. And, you know, you provide such great value to your audience. Hopefully this.
02:04:42:09 – 02:04:44:01
Rod
Helped. Thank you. Thank you, buddy. Thank.
