Build Wealth by Scaling Your Multifamily Investments!

On This Episode of Peak Market Watch...

Build Wealth by Scaling Your Multifamily Investments!

Jorge Abreu from Elevate Commercial Investment Group shares his knowledge on scaling multifamily investments to build wealth and some helpful information about property management.

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Guest Speaker

Co-host

Connect with Jorge Abreu

  • https://www.elevatecig.com/about-us

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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