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Show Host
Guest Speaker
Co-host
Connect with Anton Mattli
- Email: anton@peakfinancing.com
- https://peakfinancing.com/about-us/
- Twitter: https://twitter.com/AntonMattli
- Instagram: https://www.instagram.com/antonmattli/
- LinkedIn: https://www.linkedin.com/in/antonmattli/
Connect with Jorge Abreu
- https://www.elevatecig.com/about-us
Connect with Feras Moussa
- Email: feras@disruptequity.com
- https://www.disruptequity.com/
-
LinkedIn: https://www.linkedin.com/in/feras-moussa-2072a1196
VIDEO TRANSCRIPTION
00:05
welcome to this
00:06
episode of peak financing market watch
00:09
we speak with market leaders in
00:10
commercial real estate and related
00:12
services who have a close pulse
00:14
on the current market environment my
00:16
name is anton madley co-founder and ceo
00:18
of peak financing
00:19
my co-host today is ferris musa one of
00:22
my fellow board members who is also a
00:24
principal with this rapid equity
00:26
that actively invests in and manages
00:29
multi-family properties
00:31
we are honored today to welcome george
00:34
abreu who is the ceo of elevate
00:38
commercial investment group george is a
00:40
full-time multi-family investor
00:42
with more than 1700 doors as a gp and
00:46
over 1400 doors
00:48
as an lp he also owns a construction
00:51
company welcome george it’s a pleasure
00:54
to have you with us today why don’t you
00:57
give us a brief background of you
00:59
and the ly commercial investment group
01:02
yeah welcome to the show
01:07
uh thank you guys for for having me um
01:09
i’m excited
01:10
to be on this episode and um
01:13
you know to be on the show with you guys
01:16
uh known you for a while now
01:17
both of you so as far as my
01:21
you know how i got to this point and a
01:24
little bit of
01:25
my background so i started
01:28
investing real estate about 15 years ago
01:31
started in
01:31
single family at first um
01:35
started doing a lot of fixing flips um
01:40
i really kind of fell in love with the
01:43
transforming a property you know taking
01:45
these really ugly
01:48
um the uglier the better was what we
01:50
said back then
01:51
um and then you know turning them around
01:54
so
01:56
um i wanted to scale the fixing flips
02:00
and that’s what kind of led me into
02:01
opening the construction company
02:03
i got burned a couple times um
02:07
and decided to bring the construction
02:10
in-house
02:12
that got us that worked and it got us to
02:14
the point of doing maybe 40 to 50
02:17
um single-family homes per year
02:21
and then started doing
02:25
smaller multi-family properties to the
02:28
point where i started doing new
02:29
development as well
02:31
and then about four years ago
02:35
i kind of looked back and and
02:39
everything i had done to that point was
02:41
very transactional
02:43
um from one deal to the next and i
02:45
hadn’t really
02:47
worked on building that cash flow and
02:49
that passive income
02:51
and my family was starting to grow and i
02:53
just i felt like that was the direction
02:55
i needed to take
02:56
uh to be able to gain more time
03:01
so that’s when i started looking into i
03:03
was introduced
03:04
so i had a client on the construction
03:07
company side that was a syndicator
03:09
in multifamily we were doing some
03:11
renovations for them
03:13
and he introduced me into what a
03:16
syndication was and and how he purchased
03:18
that that property
03:20
before then i i had no idea you know i
03:22
thought you had to come in with
03:24
millions and millions of dollars to buy
03:25
these apartments that you couldn’t
03:27
um pretty much gather other investors
03:30
together to
03:31
purchase the property with you
03:35
so once i learned that i mean i became
03:37
obsessed with it i got
03:39
well educated on it and
03:42
started tilting my focus towards large
03:44
multi-family properties
03:46
um now to the point where
03:50
we’re actually closing a deal tomorrow
03:52
and that’ll put us about 2100 units
03:55
and um looking to to grow quite a bit
03:58
this year
04:00
yeah so it sounds like we’re i mean
04:01
really it’s the thing i think a lot of
04:02
people
04:03
see right is you know they’re doing good
04:05
business their day job right
04:07
whether that’s construction or something
04:08
else you realize that’s a cash business
04:10
you’re making money
04:12
right but you’re not necessarily
04:13
building wealth and those are two
04:14
different things right
04:15
and yes you can invest the money you
04:17
make into building wealth but you know
04:19
you’re you’re kind of doing the doing
04:20
right is how i like to say it unless
04:22
you’re working on the business you’re
04:24
working in the business instead right
04:26
and you
04:26
i think you came to the realization that
04:28
i really i did as well right which is
04:30
you know it’s not scalable right and
04:33
really
04:33
larger apartments can be bought right
04:36
with the group and you kind of learn
04:37
what syndication is and you realize it’s
04:39
not about one person bringing 10 million
04:41
dollars right it’s about
04:42
collective bringing 10 million dollars
04:44
and kind of having that common goal that
04:45
common
04:46
uh shared interest
04:50
so and so so then let me ask this i mean
04:52
so
04:53
what’s been the biggest you know
04:54
surprised right kind of with that
04:56
transition that changed
04:58
right i think it’s a surprise it’s a
05:00
good question
05:01
um i’m just going to put you on the spot
05:04
because that’s kind of it
05:06
you know and it just and maybe here i’ll
05:08
give you a little more context to you
05:09
right came from the construction world
05:10
we knew how to do construction you knew
05:12
other operators right because they were
05:14
your clients and you know you maybe have
05:16
this
05:16
i want to say this romanticized vision
05:18
of what syndication is right
05:20
so now you’re doing it right and what
05:21
was kind of didn’t really match what you
05:23
thought
05:24
and i’ll put it down um
05:27
you know one thing i knew coming in
05:31
i i knew it was gonna be a lot about
05:33
relationships and
05:35
networking um
05:38
which was very different from what i’ve
05:40
done before at least with the single
05:41
families
05:42
um so i wouldn’t say it was a surprise
05:46
but
05:46
but it definitely confirmed what i was
05:49
thinking going into this
05:51
um so i’ve had to focus a lot on on
05:54
building those relationships and
05:55
networking with others and
05:57
it’s really a team game like you said to
06:00
be able to take these down um you know
06:03
one thing that maybe was a surprise to
06:05
me was that i kind of
06:08
underestimated how much uh i was gonna
06:11
have to move my companies around to
06:13
to kind of adjust and
06:17
move some into the right seats and
06:21
um get rid of a lot of staff honestly
06:23
you know i had to kind of
06:25
slim it down um with the volume of
06:29
single family we were doing
06:31
we had a pretty large staff and
06:35
between the multifamily it’s more of
06:37
having
06:39
less of a staff but but um
06:43
i want to say more talented but
06:47
more more focused on their trade for
06:48
sure
06:50
yeah very good uh so so early on i think
06:54
you partnered up with a pretty sizable
06:57
uh company uh uh how how did you
07:01
how did you find each other was that
07:03
through your construction company
07:05
initially or was that
07:06
that you actively sold them out as a
07:09
potential partner
07:11
um through networking you know goes back
07:13
to networking
07:14
um you know i decided i was going to go
07:18
to pretty much
07:19
any live event that i could find that
07:21
had anything to do with multifamily
07:23
and through that i
07:28
met one of the principals and and um
07:31
actually
07:31
i take that back i i i knew them already
07:34
and i
07:35
saw them again at the event and we kind
07:37
of uh
07:38
started building back up our
07:40
relationship there and
07:42
ended up partnering on some deals very
07:45
good
07:45
so uh again right your your network is
07:48
key to everything you do
07:50
right yeah and that’s what it is right
07:52
with this business that’s i think why we
07:53
all do this that’s why we’re doing these
07:54
podcasts right
07:56
people you know is really how you grow
07:58
this business right you figure out
08:00
who’s looking for what how do you add
08:01
value and continue together right and
08:04
you know being a gc is probably a very
08:06
good piece right because that’s
08:07
something that
08:08
not enough people have that expertise so
08:10
it’s not saturated
08:11
and it’s a good dynamic into other
08:13
operators right such as us
08:15
i’m not an expert in ngc right we
08:17
partner with people and they’ve added
08:18
value for that piece and
08:20
you know they’ve gotten a piece of the
08:21
pipe for that as well and so i think
08:23
for those listening right understanding
08:25
that and realizing this business is not
08:26
about how do i scratch my own backs how
08:28
do i scratch your back and
08:29
in return you scratch my back and
08:31
together all of our backs are scratched
08:33
all right there’s my analogy
08:35
yeah i always say you know buying that
08:37
one aspect in
08:39
multi-family real estate that you’re
08:41
really good at and then
08:42
bring that to other groups and like you
08:45
said with the construction you know that
08:46
was
08:48
what i saw right away a lot of the
08:50
operators don’t have that experience
08:52
and yet you know i know i can step foot
08:55
on a property and give you a ballpark
08:57
of what the capex is going to be within
09:00
an hour
09:01
um so that’s
09:04
yeah you know so focus on what you’re
09:06
best at and then bring that to other
09:08
groups
09:10
absolutely and so let me ask you this
09:12
what’s been the hardest thing you’ve
09:13
seen so far
09:15
sorry what was different than what you
09:16
expected but what’s been
09:18
the most difficult thing and you could
09:19
be candid right
09:22
yeah i know i mean i i always say the
09:25
way it is man
09:25
um you know the hardest thing
09:29
has probably been um know i don’t want
09:36
to say just
09:38
asset management because i feel like a
09:39
lot of people already say that
09:41
um and once you get some good systems
09:46
in place it it does become easier but um
09:52
maybe just just building out the system
09:54
um
09:55
sorry the team and
09:58
doing that organically i i don’t wanna
10:03
push and and build too too much on the
10:06
team
10:07
without having the deal flow and
10:11
you know the work there obviously yeah
10:13
and and maybe and i’ll answer that
10:14
question too to be fair right so the
10:16
hardest thing from what i’ve seen as
10:17
well it’s just
10:18
it’s operations right and and you
10:20
mentioned asset management but i would
10:22
actually say just
10:23
property management right and knowing
10:26
how to work with
10:27
property managers effectively and they
10:30
do their job right because as much
10:32
as we can model the perfect world right
10:34
it’s kind of the
10:35
the the buyer and the at any asset
10:38
manager’s job to kind of
10:39
figure out what’s realistic as well
10:41
right and then from that how do
10:42
you manage the property manager and
10:44
really the people because it’s a
10:46
people’s thing right and so
10:47
you know and then finding that fine line
10:49
between how do you
10:50
as an owner or as an asset manager
10:53
ensure you have
10:54
access to the things you need and you
10:56
can trust them to do their role
10:58
right well also not micromanaging right
11:00
and coming off
11:01
so it’s kind of a little bit of a tit
11:03
for tad and you know ultimately these
11:04
are multi-million dollar businesses run
11:06
by
11:07
you know 40 50 60 000 salary people and
11:10
it’s about how do you
11:11
you know help ensure the business
11:12
performs right while having the right
11:14
people in place to kind of help them
11:16
complete that
11:20
so so we’re talking about uh
11:25
kobe 19 that has been on everyone’s mind
11:28
over the last
11:29
almost 12 months by now
11:32
so obviously now we are in 2021
11:36
2020 just uh has has closed on us
11:40
so how have you experienced the 2020
11:44
uh obviously from not just from a owner
11:47
perspective
11:48
and from a buying perspective but also
11:51
on the construction side right since you
11:52
bring that additional
11:54
gc element to the table uh can you share
11:57
with us a little bit how you
11:59
have you met all these challenges
12:03
yeah um you know it’s been one hurdle
12:07
after
12:07
the other um 2020 was was definitely
12:13
i know our team has has grown a lot
12:17
from it we
12:18
[Music]
12:21
we had to make several adjustments you
12:23
know we
12:24
luckily construction was deemed in a
12:27
central
12:28
um business so at no point did we have
12:31
to close our doors
12:32
um we did have to
12:36
implement safe practices and whatnot
12:40
and we were able to continue with some
12:43
projects we did have some projects
12:45
get put on hold and um
12:49
you know we’ve asked our our team
12:51
members to
12:52
[Music]
12:53
put on several hats and and really step
12:56
in and kind of
12:57
um get in the weeds with us and
13:01
luckily they have um
13:04
and now we’re coming into
13:08
2021 really in a better spot than we
13:10
were before
13:13
and with a massive pipeline
13:16
starting to build up of projects that
13:19
need to get done
13:20
as well as um we’re starting to get a
13:23
lot more
13:24
opportunities as far as acquiring
13:27
properties
13:28
um you know 2021 is starting to look
13:31
like it’s going to be
13:33
pretty pretty crazy year
13:37
oh absolutely and maybe let me ask you
13:40
this i mean what have you been seeing
13:42
with the deal flow kind of thing right
13:43
in terms of what
13:44
brokers are whispering and where you’re
13:47
shaking out and are they
13:48
aligned are things kind of getting
13:49
heated or not no i have my answer but i
13:51
want to see what you’re saying
13:52
oh i know what your answer is but um
13:56
look the the pricing is it’s tough out
13:59
there
13:59
it’s it’s rough they’re
14:03
cap rates continue to get compressed
14:05
from what i’ve seen and
14:07
prices are going up um
14:11
the good thing i’ve seen is that
14:15
lenders obviously are still being very
14:17
aggressive
14:18
and and offering great terms um
14:21
as well as the bridge loans have come
14:24
back
14:24
into play and um
14:28
i’ve been able to spot opportunities
14:30
more on
14:31
deals that would require a bridge loan
14:35
you know an
14:36
unstabilized deal um
14:40
a deal right now that’s cash flowing day
14:42
one
14:44
um some of those prices man are just
14:47
tough no absolutely right and i think
14:50
you mentioned something about lending
14:52
right and lenders are you know
14:54
unfortunately it’s kind of a fluid
14:55
market right and i see people that model
14:58
deals really aggressively right hoping
15:00
they’re going to get
15:01
the best debt in the world and you know
15:03
ultimately once it comes down to the
15:04
chopping block right
15:05
it doesn’t happen and so you know you’re
15:08
seeing people
15:09
get into these deals and you know
15:11
they’re significantly off and
15:12
i got an email this morning actually
15:14
from a group that’s trying to close on a
15:15
deal they’re short
15:16
because the debt can’t so short they’re
15:18
trying to close that last bit of the
15:20
you know the rest of the the raise in
15:21
the gp and so
15:23
yeah i mean it’s important i think to
15:24
kind of be wary of what the pulse on the
15:26
market is and kind of what’s going on
15:28
yeah definitely so it’s it’s interesting
15:32
uh to see that and we certainly have
15:35
seen it much more over the last
15:37
nine months or so where deal deals came
15:41
back
15:41
and it’s less because the property was
15:44
not performing
15:45
right that was typically the case when
15:48
collections dropped and all that
15:50
and they had to re-trade and then the
15:52
buyer walked away now we
15:54
see more and more where the property
15:56
still kind of was performing along the
15:58
same levels
15:59
but the buying group somehow misjudged
16:03
the the capital stack and
16:06
whether it was the cost of that but it
16:08
was the cost of equity
16:10
and you name it and they’ve
16:13
essentially decided to walk away from uh
16:16
from some of these deals
16:18
so it’s it’s only very interesting to
16:21
see and george
16:22
you also mentioned right when it’s a
16:24
cash flowing stabilized asset
16:26
it’s not really a surprise because the
16:28
financing there obviously is the easiest
16:30
to get
16:31
thanks to agency financing and everyone
16:34
loves that
16:35
right whereas on the bridge side while
16:38
the bridge
16:39
loans have come back it is really more
16:42
for the established players where it’s
16:44
still readily available right if you
16:46
just start out
16:48
it’s much harder for your group
16:50
obviously it’s easier to get
16:52
to get breach financing in place
16:55
but it still needs to be the right asset
16:57
and the right market
16:59
whereas on the agency side it’s just
17:01
almost a free for all as long as the
17:04
property underwrites
17:05
you can get that financing in place
17:08
right
17:09
yeah yeah they definitely become more
17:11
strict too
17:13
just even in the paperwork they’re
17:14
asking for in the front end
17:16
um but yeah i agree
17:20
i totally agree as well yeah
17:25
and so i guess so you know with that
17:27
said right wrapping up i mean
17:29
i’d love to hear both you and anton in
17:31
terms of just what you think you know
17:33
now the new administration’s coming into
17:35
you know control
17:36
right what are y’all’s kind of
17:38
perceptions into what the future holds
17:39
and
17:40
i’ll give you mine as well but you know
17:42
let’s start with you anton i want to
17:43
kind of hear your uh
17:44
unbiased swiss banker mentality
17:48
do what the future holds yeah but those
17:50
listening don’t make any big important
17:52
life decisions on anything that three of
17:53
us are going to say right these are all
17:54
predictions
17:56
that proverbial crystal ball right
17:59
i think with uh biden and administration
18:02
we will see a massive amount of money
18:05
that is being tossed
18:07
at us and uh that will have
18:10
definitely a positive impact from my
18:13
perspective
18:14
on the economy and it’s definitely also
18:17
has a
18:18
has a positive impact on on assets
18:22
because there is it’s just so much
18:24
growth and pent-up demand that
18:26
particularly wants the vaccinations come
18:28
through i think
18:29
in the second half of this year assuming
18:31
that all all that works out
18:34
and i anticipate it’s going to work out
18:37
that we will see a strong growth
18:41
that comes into play on the flip side or
18:44
with that i think in the first half of
18:46
this year we will probably get it
18:48
through a brit
18:49
some pretty tough periods of times but i
18:52
think that’s the
18:53
good opportunity to buy assets one still
18:56
can buy
18:57
and the financing is likely also at the
19:00
point where it’s the most attractive
19:02
for some time to come right so i know a
19:05
lot of people feel that
19:07
interest rates will stay low and we
19:10
potentially will get even lower
19:12
i personally do not believe that that is
19:14
going to be the case because with that
19:16
growth that i foresee it’s going to come
19:20
interest rates will move up because we
19:22
have that infla
19:24
inflationary pressure in place so i
19:26
think
19:27
the first half of this year is
19:31
likely a great opportunity to buy and
19:34
get
19:34
financing at very reasonable thing to
19:37
play
19:38
uh into place and even if you all
19:40
already own assets
19:42
that’s probably a good time also to
19:43
refinance
19:46
yeah and maybe i’ll add my opinion then
19:49
i’ll let you kind of
19:50
give yours a wrap up but you know i i
19:52
agree with you anton i disagree with the
19:54
timeline though
19:55
right i i think ultimately the thing
19:59
that
20:00
that your statement is ignoring is
20:03
that there’s because of more money
20:06
pumped into the market right more
20:07
spending more everything
20:09
there’s a lot more you know money that’s
20:11
going to trickle up
20:12
and that money’s going to look to invest
20:14
into something right and
20:16
you know ultimately there’s very few
20:20
better yielding things than real estate
20:22
right and you know multi-family kind of
20:24
was the
20:25
was the what’s the word was the doll
20:27
right through covet right i mean yes
20:29
their delinquency yes some better than
20:31
others but ultimately
20:33
you know it was resilient right it did
20:34
okay right versus things like office or
20:37
hospitality get completely crushed
20:39
and so i think you know money is
20:42
recognizing that
20:43
and i think ultimately they’re going to
20:45
move more money into
20:47
multi-family that’s kind of my big
20:48
prediction right and looking for
20:50
yielding plays and so i actually
20:51
think cap rates will compress probably
20:53
throughout the rest of the year
20:55
and maybe you know from there we’ll see
20:56
what happens but i think it’s you know
20:58
i think your timeline is a little bit
20:59
too tight for me right so i think it’s
21:01
kind of a little bit longer before we
21:04
really start to see
21:05
you know inflation impact interest rates
21:07
and you know pricing
21:10
yeah yeah well that’s that’s the whole
21:13
purpose of this discussion right
21:15
to agree you disagree and again let’s
21:18
look back in a year and see
21:20
but don’t worry i already said a
21:21
reminder to call you that to tell anton
21:23
he was wrong a year from now
21:25
so i’m going to go with a safe bet and
21:27
i’m going to say i agree with both of
21:28
you
21:30
um i do agree this this quarter may have
21:34
some opportunities pop up depending on
21:36
how quick
21:38
things happen and how quick um you know
21:40
obviously they’ve already approved this
21:42
this one bill um but how quick does that
21:45
money kind of get out there
21:48
um if it gets out there pretty quick
21:50
then then i agree with with
21:52
ferris that there’s you know it’s going
21:54
to continue to get compressed
21:56
cap rates and and pricing is going to
21:57
continue to go up
21:59
um i think this year like i said it’s
22:02
going to be
22:03
a hot market this year i mean it’s um
22:07
like fair said money’s going to continue
22:09
to grow into multi-family even more than
22:11
before
22:12
they’re going to be leaving other spaces
22:15
and coming into multi-family um
22:19
my thing is what’s going to happen when
22:23
the economy is back full force and
22:27
like you like you mentioned anton that
22:29
the interest rates are most likely going
22:30
to go up at that point
22:32
um you know then what happens and
22:36
what happens to the market in the real
22:39
estate cycle and
22:40
how much of a dip are we going to take
22:42
um
22:43
that stuff i just don’t know but this
22:46
year’s looking good
22:48
yeah very good so that’s the big
22:51
question mark right once
22:52
once rates move up and again i believe
22:55
they will move up
22:57
but i think there is still quite a bit
22:59
of space there
23:01
for for cap rates to stay the same
23:03
particularly in
23:05
in desirable asset classes right for
23:08
for some like retail and offices
23:12
that might well move up and hospitality
23:15
obviously they have
23:16
it’s hard even to come up with a with a
23:18
true cap rate for hospitality assets
23:21
but when it comes to very desirable
23:23
assets like multi-family
23:25
there is only an opportunity for
23:28
interest rates to move up
23:29
and the cap rate still stays stable
23:32
right
23:33
because the delta is right now is still
23:36
pretty big and historically that still
23:40
could shrink
23:41
without have putting from a historical
23:43
perspective at least put pressure on on
23:45
the multi-family cap rates
23:47
right but again we just do not know
23:51
right i think as long as multi-family
23:53
performs
23:54
really well i see that there is
23:57
a more of a shift from some of these
23:59
commercial real estate asset class like
24:01
offices in retail
24:03
by institutional players too towards
24:06
multi-family
24:08
which uh i think and there i agree with
24:10
ferris that
24:11
the the cab rates will will stay
24:15
at the at the very attractive level
24:17
compared to
24:18
to some of the the other asset classes
24:21
at the same time i still feel that
24:24
there will be some opportunities
24:28
in the first half plainly because some
24:31
operators are not as good as others
24:33
right so and uh i think that’s where
24:36
really the
24:37
the good buyers and uh the not so good
24:40
buyers really make a difference right
24:42
that you
24:43
first are able to identify the
24:45
opportunities
24:46
but also have the right partners and
24:50
capital in place that you can take
24:52
advantage of those and that brings me
24:53
back to that bridge long discussion we
24:55
have had before right with george
24:58
that not everyone can take advantage of
25:00
these opportunities because they don’t
25:02
have the experience and they don’t have
25:04
the
25:05
the backing that is really needed to get
25:07
these deals done
25:08
now you guys thoughts on converting
25:12
office or hotels into multi-family
25:16
i like the idea i think it’s not as
25:18
cheap as some people
25:19
know but hey you know what i happen to
25:21
know a contractor in a gc that probably
25:22
knows a thing or two about what it takes
25:24
so i think it’s conceptually it’s great
25:27
i think it only works in
25:29
certain areas in certain parts of town
25:31
right like you know i’m in houston i’m
25:32
an energy corridor
25:34
does it really make sense like do people
25:36
want to do that kind of conversion right
25:38
you really have to target a higher end
25:39
finish
25:40
right because you’re already dropping
25:41
all the money to begin with and so does
25:42
someone want to live in a higher-end
25:45
quasi-high-rise in the energy corridor
25:47
of houston
25:49
maybe not i don’t think so right but if
25:51
you’re in downtown houston or downtown
25:53
name your city right it probably makes a
25:55
lot more sense and so
25:56
i like the idea i know someone that’s
25:58
doing it i’m kind of
26:00
wanted to sit back and see how that one
26:01
pans out but i mean conceptually i like
26:03
that idea a lot right i think the most
26:04
money you can make in real estate is
26:06
where you buy something at one cap right
26:08
based on one asset class and convert it
26:10
to something else and
26:10
now you’re just getting that immediate
26:12
cap compression yeah i
26:14
i personally feel the opportunities
26:16
definitely are there
26:17
uh i foresee that it
26:20
particularly is very valuable
26:24
in in the workforce housing space right
26:27
it’s extremely difficult as you know
26:29
george to build affordable housing
26:32
at up prices that make sense to offer
26:35
affordable rents
26:36
and particularly offices i’m not so sure
26:39
because the construction cost
26:41
and tell me if i’m wrong but i think the
26:43
the rehab costs there
26:45
would be pretty significant and i’m not
26:47
sure that that would make sense unless
26:49
you go into a class a
26:51
environment but for to convert
26:54
particularly extended stay hotels uh
26:57
in some markets where there is a need
27:00
for workforce housing
27:02
i think that that’s really a niche where
27:04
where
27:05
i’ve i believe there is a lot of
27:07
opportunity there
27:08
yeah yeah construction cost is
27:10
definitely a lot less on the hotels i
27:12
mean you’ve got the plumbing
27:13
and a lot of the layout kind of there
27:16
already
27:16
with office yeah you’re talking about a
27:18
lot of uh
27:20
running a lot of meps and yeah yeah
27:23
totally great yeah all right very good
27:27
so
27:27
uh uh george do you have anything else
27:30
that you would like to share with us
27:32
uh before we wrap it up kind of uh
27:34
interesting
27:35
snippets yeah i’ve got one more i can
27:37
throw out there um
27:39
so how about with some of this pricing
27:42
especially in the
27:44
class c getting so high
27:48
in specific markets like dallas and
27:51
houston maybe is not that high yet but
27:53
um
27:55
comparing that to new construction some
27:58
of these class cities and certain areas
28:00
are getting
28:00
close to what i can build something for
28:04
what are your thoughts on that
28:09
yeah i’ve i completely agree right i’m
28:12
puzzled particularly in dfw
28:14
right where we see some of these uh
28:16
c-class
28:18
uh prices that are being paid uh
28:21
that are at or actually above of
28:24
uh of a of a new construction right
28:27
for even even if it’s a bare bone
28:29
construction right and we really need to
28:31
compare it not with a class a building
28:34
but with the bare bones let’s say b
28:36
minus construction
28:38
and that that is really puzzling me uh
28:41
what what some of these uh buyers are
28:44
paying
28:45
uh but again right as i
28:49
it’s it’s hard to tell why and it’s also
28:53
similar to california i would say very
28:55
where a lot of buyers have experienced
28:57
these price appreciations
28:59
and obviously their replacement cost is
29:01
not even an issue there it’s
29:03
everyone thinks just about appreciation
29:06
and i’m wondering whether a lot of these
29:08
buyers
29:10
hope for that appreciation play going
29:13
forward
29:15
from my perspective it’s pretty risky
29:18
but obviously there are buyers out there
29:19
that are
29:20
willing to take that risk yeah that’s a
29:23
good um
29:24
comparison there because in california
29:27
the only way you can really make
29:28
money is developing at this point um
29:33
and then you see markets like atlanta
29:34
where that’s shifting right you see
29:36
groups that are now starting to buy
29:37
deals at 140 150 a door for
29:40
you know 70s 80s product they’re putting
29:42
30 40 a door into it
29:44
right so they’re doing pretty extensive
29:45
rehabs and the argument is well
29:47
your cost basis ends up being 180 190
29:50
but you’re getting the same rents
29:51
guy that’s paid 230 you know a unit is
29:54
getting
29:54
right but i’m like well yeah the 230
29:56
unit is also like 40 years newer right
29:58
to 30 years
29:59
and so it’s just i’m a big believer it
30:01
needs to be risk adjusted returns right
30:03
not just returns for the sake of returns
30:05
and stuff
30:06
yeah it’s gonna be interesting to see
30:07
kind of where things go and then really
30:10
where where
30:10
where the market shifts like i i’m
30:13
borderline feeling like i’m getting
30:14
priced out of atlanta here so
30:15
you know see where else next personally
30:18
i’m
30:19
i’m jumping on the new development i
30:20
mean we’ve got quite a bit of them going
30:22
on and
30:23
looking at more i just think it’s just
30:26
the way the prices are raising on these
30:27
c-classes really opening the door to
30:30
just doing the new construction yes and
30:33
obviously you
30:34
you have that that background that helps
30:36
right and as long as you partner up with
30:38
the right
30:40
development partners uh i think it’s
30:43
it’s the right thing to do uh a lot of
30:46
people
30:47
i think underestimate the complexity of
30:50
of ground up development though right so
30:53
a lot of moving parts
30:54
yeah that’s right and also the timing
30:57
right the timeline
30:59
just to get everything entitled and then
31:02
actually get to a shovel ready project
31:05
can be can be quite extensive and
31:08
depending on what city you’re in uh
31:10
you may think you’re already in six
31:12
months and 18 months later you’re still
31:14
struggling and
31:16
fighting with city council or sony or
31:19
whoever it might be
31:22
yeah yeah no don’t agree yeah
31:25
very good uh so ferris do you have
31:27
anything
31:28
anything else we’d like to add that’s
31:31
all i got just really horny how can
31:32
people get ahold of you
31:34
um we’ve got a bunch of information on
31:37
our website
31:39
elevatecig.com um they can also shoot me
31:41
an email if they’d like
31:43
it’s george or jorge
31:46
elevate cid.com
31:49
very good uh so it’s very easy to find
31:52
george
31:53
right on social media
31:56
so i don’t think it’s it will be hard
31:59
for for any of you to find him
32:01
so thanks again very much george for for
32:04
joining us today you added
32:06
some some great snippets and uh we wish
32:09
you all the best for 2021
32:11
i’m i’m sure it will be a great success
32:13
for you and your
32:15
your partners and uh we look forward to
32:18
to hear f from you again soon uh to on
32:21
the progress you’re making
32:23
thank you same for you guys yeah thanks
32:26
appreciate it
32:34
[Music]
32:43
you