00:00
franchise with partners
00:02
i exclusively did multifamily only since
00:05
2010
00:06
i sold that firm back to my partners in
00:09
2020 and just went solo into
00:11
multi-family advisors with myself and my
00:13
staff members
00:15
we cover the northern half of florida
00:17
from orlando and winterhaven and
00:20
lakeland
00:21
all the way up to tallahassee
00:23
jacksonville daytona
00:25
gainesville ocala all those markets
00:28
i do anything over 10 units conventional
00:31
or student housing
00:33
and occasionally i’ll do development
00:34
sites
00:36
very good
00:37
uh so
00:39
when we talk about the markets obviously
00:41
it’s all of uh northern and central
00:45
florida
00:47
except the tempo area and i think
00:49
orlando you’re covering too but
00:53
maybe you can tell us a little bit the
00:54
differences between these
00:56
these main markets that you’re covering
00:59
yeah sure
01:00
so the i mean i guess you can start with
01:03
um i you know the the northern half when
01:06
you remove orlando
01:08
a lot of them have the same metrics
01:10
meaning the same closing price as a unit
01:13
the gross rent multiples a lot of the
01:15
rents are the same it’s amazing i mean
01:17
even from jacksonville to tallahassee to
01:19
gainesville to daytona all those markets
01:22
trade around the same as a matter of
01:24
fact if you lump them all together
01:27
the average closing price a unit right
01:29
now in the northern half of florida not
01:31
including orlando and this is across
01:33
class a b or c
01:36
is 85 000 a unit right now right and
01:39
that average rent in place is 893 a
01:43
month
01:44
um the average size unit is about 812
01:47
square feet
01:49
the average age is a late 1970s
01:53
versus an orlando slash tampa
01:56
now keep in mind obviously it is a
01:58
larger market it has more population it
02:00
does have more jobs but the metrics are
02:04
a little bit insane so for that same
02:07
those those same uh metrics
02:10
you’re closing at an average of a
02:12
hundred and ninety eight thousand
02:14
dollars a unit in those markets if you
02:17
can imagine
02:18
um and now now the the average rents are
02:22
about 1325 a month
02:25
uh you’re closing at about 198 dollars a
02:29
square foot which is amazing
02:32
and the average transaction though
02:34
instead of being late 1970s is late
02:37
1990s
02:38
right so a 20-year newer product now we
02:41
can draw we can drive into class a’s b’s
02:44
and c’s and we can talk about that
02:46
um but in general obviously the market
02:48
is very hot the market market is very
02:50
high hot especially from a pricing
02:52
standpoint
02:53
because basically you have you have low
02:55
interest rates and you have a super low
02:57
supply of assets to come on
02:58
now the reason though there’s a low
03:00
supply of assets that come on is a
03:02
couple things number one
03:04
in november and december of 2020 there
03:06
was a huge number of sales
03:09
in fact 26 percent more sales happened
03:12
in november december 2020
03:14
than november december of night 2019
03:17
and the reason that happened was because
03:19
of the presidency we didn’t they didn’t
03:20
know who the president was going to be
03:22
didn’t know if capital gains was going
03:24
to go up didn’t know what was happening
03:25
with the 1031 exchanges
03:27
and so those who might have waited until
03:30
2021 went ahead and said hell let me get
03:32
let me go ahead and cash out now okay so
03:34
a whole bunch of transactions happen
03:36
november december that would have
03:38
happened in 2021.
03:40
then in january which is the election
03:42
month obviously nothing happened then
03:44
when normally january and february
03:46
is where a tremendous number of listings
03:48
come on in fact i usually tell a lot of
03:49
my customers let’s not come to market in
03:52
january because no matter how good your
03:54
asset is you’re going to be competing
03:56
against all kinds of other assets right
03:58
but what happened in january and half of
04:00
february was nothing came on
04:02
and so as a result as of mid-march and
04:06
we’re working on the new closings now
04:09
but as of mid-march
04:11
with orlando included there has been
04:14
only
04:16
14 closings now i did just look at
04:18
another 10 so i think it i think through
04:21
march
04:22
we’ve had roughly 24 25 closings
04:27
in the entire northern half of florida
04:29
over 10 units
04:31
i’m not even talking about over 100
04:32
units over 10 units
04:35
roughly 25 closings in the entire
04:36
northern half of florida now i will say
04:39
in the last 45 days so call that you
04:42
know call that mid you know call it
04:43
march and april
04:45
the number of bovs that i and my broker
04:48
friends have done has skyrocketed then
04:50
our listings have gone up
04:52
you’ve probably all seen this who are
04:53
listening to this podcast you’re
04:55
starting to see a lot more listings come
04:57
on
04:58
which means that may june and july
05:01
the number of closings will get back up
05:03
there now we’re not going to be at 2018
05:06
and 2019 levels in terms of number of
05:08
closings because what’s happened is in
05:11
the last trailing three years we’ve had
05:14
a little over 30 percent of the
05:16
inventory trade
05:18
right now it what happens is so anywhere
05:20
between six and ten percent of inventory
05:25
typically trades
05:27
per market per year
05:29
but we’ve had roughly 30 in the last
05:32
call it three years plus the four months
05:34
in uh in 2021
05:36
and so you might say okay well beau well
05:38
so there’s 70 percent of the inventory
05:39
that hasn’t closed but you have to think
05:42
how many of that 70 percent has already
05:44
refinanced right probably another 20 has
05:48
already refi in the last 12 to 18 months
05:51
and you can’t buy those because the
05:52
diffusion is going to be too high
05:54
and then how many of them are owned in
05:56
long-term funds so no matter how big of
05:59
a price you bring them they can’t
06:00
entertain your offer anyway
06:02
and how many of them are in locations
06:04
that you probably wouldn’t buy anyway
06:07
and how many of them are owned by a
06:08
person who would sell but they’re the
06:10
kind of person who says this is my price
06:12
and the price is absolutely ludicrous
06:14
right so when you get down to it the you
06:17
know the reason there’s not a whole lot
06:18
of stuff that had come on the market
06:20
and therefore that’s why prices have
06:22
gone up is because
06:23
most of the most of the deals that that
06:25
can sell have sold
06:27
right and then the ones that do come on
06:29
the market they know they’re at peak
06:31
pricing
06:32
so there’s there’s no way around at
06:34
anton you’re going to have to you know
06:36
there’s always going to be multiple bids
06:38
um there’s always going to be a dog and
06:39
pony show you know you have to put your
06:41
best foot forward and there’s a bunch of
06:43
things you can do to
06:45
to make yourself more attractive and
06:46
there’s a bunch of things you can do to
06:47
make yourself less attractive
06:50
but
06:51
you know off market you know quote
06:52
unquote off-market listings don’t really
06:55
exist i had that that word gets thrown
06:58
around a lot and if you want i can
06:59
define for you anton what
07:03
what off market means to a lot of people
07:06
but what it actually is in practice
07:09
yeah yeah very good point we we see that
07:12
all the time
07:13
so many
07:14
newcomers to to the to the game so i got
07:18
an off market deal right and
07:22
we we already know that that same deal
07:24
has been has been shown to
07:27
dozens of orders by multiple brokers
07:31
correct
07:33
you know brokers are fantastic and
07:35
making an investor feel special hey
07:38
listen i just got a call from seller sam
07:40
by the way he’s thinking about listing
07:42
this next week i’m the only broker he’s
07:43
talking to we got to take a run at this
07:45
right
07:46
but broker’s had that conversation
07:48
dozens of times
07:49
it doesn’t make any sense for any seller
07:51
on the planet
07:52
to sell to one human being to have to
07:55
give one human being who he doesn’t know
07:58
a chance at buying his property and if
08:00
he does if he’s any good that seller is
08:02
going to want you to pay a premium
08:04
for the right to not go to market right
08:07
and for a broker it makes no sense for
08:08
any broker to talk to one human being as
08:11
a buyer
08:12
right so if i if a seller called me and
08:14
said hey beau you know we’re thinking
08:15
about list we’re thinking about selling
08:17
our asset we don’t want to list with you
08:20
we don’t want it on all the websites
08:22
but you really are the only guy we’re
08:24
talking to we do you want to take we do
08:26
want you to take it to our to your
08:27
database
08:29
then it doesn’t make any sense for me to
08:30
just call anton
08:32
and say hey i got this opportunity why
08:34
would i do that to myself right i’m a
08:36
race against the clock i need to show my
08:38
settler that i’m talking to major buyers
08:42
so i promise you it is
08:44
extremely rare
08:46
that buyer bob
08:48
happened to call seller sam
08:50
and seller sam has never talked to any
08:52
broker ever or any other seller and
08:55
buyer bob caught seller sam on the best
08:58
day of his entire life
09:00
and somehow convinced him it makes more
09:02
sense
09:03
to accept his
09:04
below market price
09:06
rather than getting 15 offers from a
09:09
broker in five days and making people
09:11
bid against each other never happens
09:13
yeah right particularly particularly
09:16
after that seller has been receiving
09:18
calls from every broker in
09:21
and listen this is you know i’m i’m
09:23
mostly talking about the 50 plus unit
09:25
world right 50 plus the world is
09:27
sophisticated world every every owner
09:29
knows how the market works and most of
09:31
the time it’s over 20 units it’s once
09:32
you start getting below 20 units below
09:35
50 units
09:36
yes there may be some less sophisticated
09:39
folks maybe it’s a mom and pop maybe
09:41
it’s a 40 year old guy who inherited a
09:44
32 in an asset from his parents who you
09:47
know who passed away recently and
09:49
doesn’t know what he’s talking about and
09:50
some guy calls him at just the right
09:52
moment before a broker called him
09:54
and sells to him for some discount but
09:57
i mean but if you made your life going
09:59
after
10:00
off-market deals and that’s all you went
10:02
after
10:03
i’m telling you that you are one of the
10:06
the slowest worst investors on the
10:08
planet
10:09
because simultaneously i can show you
10:12
dozens and dozens of human beings that
10:14
go after every asset on the market or
10:16
not who are trading at a clip that far
10:19
surpasses anybody who concentrates on
10:21
just off market sure absolutely yeah you
10:25
also touched on right uh uh the defeats
10:28
and seal maintenance right uh the reason
10:30
why a lot of deals are not coming onto
10:33
the market
10:34
uh you mentioned refinancings even the
10:36
acquisitions that were done over the
10:38
last two three four years
10:41
uh particularly the ones that were done
10:44
in the 2018 range when interest rates
10:47
were higher
10:48
a lot of these deals have such a high
10:50
yield maintenance or defeasing scores
10:52
attached to them
10:54
that yes the values have gone up
10:56
tremendously for all of these owners
10:59
but yield maintenance diffusions
11:01
essentially would kill all the the
11:03
profits or the maturity of the profits
11:06
and buyers don’t want to assume a loan
11:09
that is in the in the five percent range
11:12
plus right so yeah
11:14
and sellers don’t want to leave a bunch
11:16
of money on the table i mean they’re
11:18
they’re bringing in plenty of cash flow
11:19
they have plenty of profits why not wait
11:22
another couple of years when the
11:23
defeasance is lowered or gone
11:26
because in any market multifamily is
11:27
going to be sought after right i mean
11:29
unless there’s some you know nuclear
11:31
attack
11:32
i don’t see values going in reverse
11:35
anytime soon all i see is
11:38
i think we’re at a point right now in
11:40
you know call it april slash may of 2021
11:44
where
11:45
uh cap rates truly have compressed so
11:48
close to the borrowing rate that i do
11:51
believe we have reached kind of a
11:53
maximum so i believe by the end of 2021
11:56
we’re going to go from the 10 to 15 per
11:58
year increases in values per unit to a
12:01
more normal right so it’s going to go
12:03
from like this i’m as i’m holding my arm
12:05
up almost straight up to a more normal
12:08
now that’s not that’s not going to
12:10
happen values are not going in reverse
12:12
that’s not happening buyers you that you
12:14
that world’s not going to happen anytime
12:16
soon it’s only going to be a slowing
12:18
of the of the appreciation rate just
12:21
because there is no more no there’s no
12:23
more where to go i mean the northern
12:24
half of florida you know it used to be
12:27
where a 5.0 cap was a phenomenal d i
12:30
mean was was a was a a very high price
12:33
deal right we’re in the four and a half
12:35
cap range yeah right in markets in which
12:37
i’ve never seen before
12:39
now you know you know miami’s the new
12:41
yorks the california’s they’ve been in
12:43
the high threes and low fours you know
12:45
for a long time for a bunch of different
12:47
reasons
12:48
but to have that in the northern half of
12:50
florida has been pretty scarce so now a
12:53
five cap is the new six cap like if you
12:55
can find a five cap good property
12:58
in a good location that has remotely
13:01
value add to it you should jump on it
13:03
yeah yeah so how do you see the
13:06
difference between the a b and c
13:08
uh from uh from a cap rate and price per
13:11
unit
13:13
perspective
13:14
so of course i track all that stuff
13:17
so
13:18
the way i track it is not just abc i
13:20
actually break it down into subcategory
13:22
so i go class a
13:24
b plus
13:25
b
13:26
b minus c plus c
13:29
c minus
13:31
and then i track affordable housing
13:32
separately right
13:34
so in the northern half of florida again
13:36
removing um orlando because orlando
13:40
would throw off all the metrics sure so
13:42
across all the transactions that have
13:44
happened a class is basically a new
13:47
construction deal that’s the only thing
13:49
that can be a class every now and then
13:51
you could get a
13:52
1990s asset
13:55
that could be a class as long as it was
13:59
kept up on the remodel and is in a
14:01
phenomenal location otherwise it’s very
14:03
hard to compete against a new
14:05
construction in order to earn that kind
14:08
of um that kind of standing up so new
14:10
construction class a right now is
14:13
running about 220 to 230 a unit
14:16
right and those rents are between 1500
14:19
and 1600 a month on average
14:22
the class b plus uh b pluses are running
14:26
roughly 180 000 a unit now keep in mind
14:30
when i when i give you an average that
14:32
could mean it could go from 170 to 190
14:34
195 but the overall average when you
14:36
combine all the stats
14:38
is running about 180 000 a unit that’s
14:41
about 13.50 a month on the rents uh a b
14:45
class is currently running about 135 to
14:48
140 000 a unit
14:50
and that’s about 1100 a month rents
14:53
a b minus is 95 to 100 dollars a unit
14:58
that’s a little over nine hundred
14:59
dollars a month rent almost 950 a month
15:02
rent
15:02
a c plus is now 85 000 a unit
15:08
um and those are about 825 a month rents
15:12
a c class is 70 000 a unit
15:16
for about 750 a month rents
15:19
and a c minus is running about 45
15:24
basically under fifty thousand dollars a
15:26
door
15:26
yeah and those are usually under six
15:29
hundred dollar a month rents but you
15:30
know sometimes they can be in the sixes
15:33
um
15:34
but all of these have increased over
15:36
time dramatically i mean it’s it’s been
15:39
it’s been pretty incredible
15:41
it’s a it’s only has right uh and
15:44
we see it all across the country
15:46
obviously right uh
15:48
where whatever was trading in 2010 for
15:53
10 15 000 is now exactly in that 90 to
15:57
100 000 range
16:00
so as you uh already mentioned before uh
16:04
that run up that we have seen was just
16:07
absolutely
16:08
extraordinary and
16:10
expecting that it just continues at that
16:13
pace obviously
16:15
it’s not really realistic we may see
16:18
another year or two where it just
16:20
goes in that direction
16:23
but
16:23
at some point we are we are just hitting
16:26
a limit for of how low the cap rates
16:29
ultimately can go right until you
16:32
you get that close to the to the
16:34
borrowing rate where it just uh
16:38
doesn’t make sense anymore right well
16:40
and i you know anton i
16:42
i mean i just hate cap rates all
16:44
together i’ve got so
16:46
you know i’ve done a video on this
16:47
before because cap rates are really only
16:49
they only really mean anything
16:52
on new construction because
16:53
cap rates take into consideration the
16:55
fact that you couldn’t do anything to it
16:57
to improve it right i mean a cap rate is
16:59
only good if the buyer is buying the
17:02
seller’s income that can’t be increased
17:04
you can improve the the vacancies you
17:06
can improve the expenses
17:08
it is what it is and then the cap rate
17:10
means something everything the reason a
17:12
lot of the deals are trading for low
17:14
crap rates isn’t because of the cap
17:15
rates because the cash on cash return
17:18
and the irrs
17:19
can be you know
17:21
the future of those rates
17:23
translate into a low cap rate right so
17:26
if you can buy a true value add property
17:29
not just what a broker calls a value
17:31
but a true value-added property they’re
17:34
looking to achieve a six to eight
17:36
percent cash on cash return within two
17:38
to four years right that could easily
17:41
translate into a four four and a half
17:42
cap if it is a
17:44
you know call it a 1985 property that’s
17:46
300 a month under market or 200 a month
17:48
on the market the guy buying that
17:50
doesn’t give a about or give a crap
17:52
excuse me about the cap rate
17:54
just paying attention to what his return
17:56
is in the future with debt sure yeah
17:58
uh i mean i couldn’t agree more with uh
18:02
with that focus on cap rates is uh is is
18:05
really problematic right also
18:08
uh
18:10
what are the expenses that you’re
18:11
actually using to come up with that cap
18:14
rate right have to be normalized or does
18:16
someone have higher expenses than market
18:19
below market no one really is looking at
18:22
that no one is truly normalizing it
18:25
outside of the institutional space
18:27
obviously in the institutional space
18:29
it’s everyone runs in a very narrow
18:31
range
18:32
with these properties and their cap
18:35
rates
18:36
are are much more applicable but
18:38
particularly once you get into the b and
18:41
then the c space
18:43
as we know expenses are all over the
18:45
board right and unless you kind of
18:48
standardize the expenses for a
18:50
particular property and the size in the
18:52
market
18:54
it’s very hard to say what the true cap
18:57
rate is uh
18:58
it really is
19:00
and i you know i one of one of the
19:02
biggest things i caution investors on us
19:03
and it’s it’s mostly newer to call it
19:06
newer intermediate investors you know
19:08
the first call i get is is hey beau saw
19:11
your so-and-so apartments what’s the cap
19:12
rate i know i’m talking to someone who
19:14
doesn’t do this regularly right it’s
19:16
because it’s it’s not an educated
19:18
question
19:19
um you know the question would be you
19:20
know what you know what are you know
19:22
what can the rents get to you know they
19:24
want to they want to get granular on
19:26
this on the expenses right i mean you
19:28
really have to dive into the expense
19:29
part of things the taxes the insurance
19:31
has gone crazy nowadays
19:33
can you make the repairs and maintenance
19:35
um run one leaner do you already have
19:37
management efficiencies in the area
19:39
there’s there’s so many factors that
19:40
affect
19:41
um you know sort of the return for every
19:43
individual that you know just it’s silly
19:46
to pay attention to cap rates as a
19:47
matter of fact you’re just you’re going
19:48
to lose out on a whole bunch of deals
19:50
because i can tell you that you know i
19:53
could i could name a million buyers over
19:55
the last 20 years i’ve been this
19:56
business that have passed on deals
19:59
that that they want a certain return
20:01
year one which makes no sense
20:04
whereas
20:05
three years from now or four years from
20:07
now
20:08
if i showed them how this property was
20:10
performing from a cash-on-cash
20:13
standpoint
20:14
would they have cared that they were
20:16
quote-unquote overpaying
20:19
four years earlier for that asset and
20:21
the answer is no right but they get so
20:23
scholastic and so sold on that first day
20:27
of of financials and and how they look
20:31
to their investor makeup that they lose
20:33
out on a lot of deals
20:34
yes yeah now i’ve i agree obviously in
20:37
ideal world uh you do not overpay for a
20:41
property right but as long as it’s a
20:43
seller’s market and you compete with
20:45
other buyers well
20:47
it’s your choice either you buy a
20:49
property or you don’t right
20:52
so you touched on
20:54
on taxes uh and on insurance which
20:57
obviously is a hot
20:58
uh topic with with everyone in a lot of
21:02
places
21:03
on the taxi side what have you seen have
21:06
you seen differences from county to
21:08
county in the markets that you’re
21:09
covering how aggressive the sessions
21:12
have become over the last year
21:15
and what you see
21:16
to how it’s going to be this year
21:19
yeah awesome question so on property
21:21
taxes
21:22
here let me tell you what i do because
21:25
as you know in the industry lenders
21:27
investors everybody uses the 80 of
21:30
purchase price rule right
21:32
and so in uh i started in 2016
21:36
trying to quantify that rather than just
21:39
using 80 right because 80 percent can
21:41
sometimes kill a lot of deals for a
21:43
broker when they go to list it and i
21:45
wanted to know if it was actually true
21:47
the answer is yes 80 is still the way to
21:50
go however let me tell you the study
21:52
that i did the report that i did and how
21:53
it varies
21:55
the the way you as an investor listening
21:57
to this podcast the way you should be
21:59
doing it in any market you cover
22:01
is you need to go to the property
22:02
appraiser websites
22:04
the property appraiser websites
22:05
especially in show me states where they
22:07
reveal all the closings florida is one
22:09
of them
22:10
you would go in and so for instance you
22:12
would look at 2019
22:15
sales
22:16
so let’s say you only bought 100 plus
22:18
unit deals conventional whatever it is
22:20
you’d go to the property appraiser
22:22
website you would export every single
22:24
sale that happened to that kind of sale
22:26
into an excel spreadsheet
22:28
and you would list you know the property
22:29
the address what it sold for what it
22:31
sold for per unit
22:33
and then you’d go in and you would take
22:34
the 2020 assessed value
22:37
which would be what that municipality
22:39
now
22:40
deems that property to be worth
22:43
and what you do is you divide the
22:45
purchase price by the assessed value in
22:47
order to come up with a percentage right
22:49
and when you do that in a macro sense
22:51
within markets you can get a pretty good
22:53
indication so what i found was that in
22:55
some markets like for instance in
22:57
tallahassee
22:58
last year it was about 70 on average now
23:02
there were some instances of 80 percent
23:06
and there were some instances of 60
23:09
but the overall average was 70 now
23:12
i understand as an investor in the
23:14
lender if there is even one instance
23:17
in which an 80 happen and 13 others at
23:20
70 investors try to use the 80 so i get
23:24
it
23:26
whereas in jacksonville jacksonville
23:28
right now is running 86
23:30
right
23:31
gainesville was running 80 ocala was
23:33
like 65 percent
23:36
um but i still believe 80
23:39
is a reasonable measure and then if
23:42
you’re in a hyper competitive bid
23:44
the way you can try to win some deals
23:47
is to play the russian roulette and look
23:49
at the stats and see okay there were 16
23:52
closings in jacksonville in this in 2020
23:55
of the type of asset that i buy and 11
23:58
of them were at 70 percent
24:00
two of them were at 80 percent and the
24:02
balance of them or 75 then that’s a way
24:05
because you know your other investors
24:07
are probably not getting that granular
24:09
and you can use a 70 assessment and beat
24:11
that person out on that alone
24:14
and still have a pretty good comfort
24:17
that that’s going to happen
24:18
and if it didn’t to be able to argue
24:20
that with the municipality showing them
24:22
all their closings along with your
24:23
consultant that says hey 13 times of the
24:27
same asset that i just bought you did 70
24:30
how is mine any different and it’s hard
24:32
to answer that
24:33
yeah yeah it’s it’s a great point right
24:36
uh
24:38
going granola in these instances is
24:40
really important uh and
24:43
it’s also from a financing perspective
24:45
right so
24:46
at the high level when we do quick
24:48
quotes we use that 80 percent
24:51
as a standard because we cannot dig in
24:54
deep right but as someone gets into the
24:56
final stages of an offer in the best and
24:59
finals that very often makes a
25:01
difference right
25:03
and as you know right the the expense
25:06
underwriting on the financing side has
25:08
an impact on the noi which has an impact
25:11
on the dscr and the loan proceeds
25:14
right and whether
25:16
a lender’s appraiser is using 80 or 75
25:19
or 85
25:21
will have an impact and
25:23
that’s where we get involved early on
25:26
also with with the buyers to make sure
25:28
that
25:30
we find an appraiser that is comfortable
25:33
with 75 let’s say in a particular market
25:36
right if you
25:37
talk to just one appraiser they may say
25:39
well we do we based on what we have seen
25:41
it say 85 an older appraiser may say i
25:44
think i could support 75 well that makes
25:47
a big difference right
25:50
anton if you let me share a screen i’ll
25:51
just show you a quick spreadsheet for
25:53
the viewers um so
25:55
i’ll do this
25:57
um i’ll just show you like jacksonville
25:59
and i’ll show you a couple other spots
26:01
sure
26:02
let me know when you have that
26:04
it says right now i’m disabled
26:06
yeah okay
26:08
that way the viewers when they see the
26:09
spreadsheet they can see how to set up
26:11
their report
26:12
um okay so yeah yeah here we go i’ll be
26:16
able to do it now yep so as you can see
26:18
this right here this is jacksonville
26:20
right so i’ve got the name of the
26:21
complex these are actual closings in
26:23
2019
26:25
right so these are all the closings
26:28
whether it was a market rate deal or
26:29
student housing deal or affordable
26:31
housing deal the date it closed the year
26:32
it was built this is what it sold for
26:35
this was the assessed value paul i’m not
26:38
sure that we
26:40
i see that you have
26:41
started sharing your screen but it’s
26:44
paused okay hang on a second
26:46
how about now
26:49
uh it still has started
26:51
maybe it’s the wrong
26:53
resume share very weird
27:01
is it the is it the right screen
27:04
yeah i don’t know it’s it’s it said i
27:06
said it asked me to resume share but let
27:08
me try one more time does that work
27:12
yeah it’s still just okay whatever we’ll
27:14
yeah okay so continue on
27:17
anyway i was just going to show you
27:18
graphically if anybody’s watching this
27:20
they want to see what that looks like
27:21
yeah they can reach out to you right and
27:23
they get the statistics there
27:26
no problem yeah
27:28
yeah okay very good on the insurance
27:31
side obviously florida is
27:34
based in texas right we have a lot of
27:36
natural disasters on an ongoing basis
27:39
tax insurance rates have gone up like
27:42
crazy florida is another one of those
27:45
markets
27:46
as we know so what what have you seen uh
27:50
uh
27:50
where
27:51
uh where the insurance cost has gone up
27:54
and have you seen differences between
27:57
uh along the coastal areas like
27:59
jacksonville versus when you go a little
28:02
bit further inland or does that not
28:03
really make sense not as much i mean
28:05
it’s it’s now you know the on the low
28:08
end seven hundred dollars a unit a year
28:11
up to
28:12
about eleven hundred dollars a unit a
28:13
year depending on the size of the asset
28:16
and literally like two years ago
28:18
maybe three at the most but probably
28:20
just two years ago it was half that yeah
28:22
yeah i mean i mean an insurance deal to
28:25
be 350 400 a unit that was that was
28:27
where it was and now it’s more than
28:29
double
28:30
i mean it’s become something it’s it’s
28:32
quite significant and and a lot of its
28:34
liability a lot of is the assault clause
28:37
i’ve you know i’ve talked to some
28:38
insurance guys about it before but it’s
28:40
pretty crazy and it’s it’s actually
28:42
closer to the thousand dollars the
28:44
smaller the asset yeah yeah and if you
28:47
do not have uh any type of uh umbrella
28:50
all rights umbrella right so yeah so
28:53
that’s another another tip you know as
28:55
you accumulate more units if you can put
28:57
them under a bigger umbrella
28:59
you know those guys are able to get
29:01
things back down to you know call it
29:03
2018 levels
29:06
um by by lumping them all with one
29:08
carrier and all under one umbrella that
29:10
helps a lot now when you go to sell that
29:12
asset later you have to imagine that the
29:14
next buyer won’t have your have your
29:16
abilities and your power and your size
29:18
but at least during the hold it can
29:20
boost your turns
29:22
yeah yeah
29:23
in your market you also see that some
29:26
property management companies offer
29:29
offer their own umbrella insurance for
29:32
uh for property owners
29:34
yeah
29:35
at minimum they have connections with
29:37
those who they have their own portfolio
29:39
and their management portfolio under so
29:40
it’s definitely worth checking but it
29:42
depends on the market right the larger
29:44
the market the bigger the property
29:45
management players are
29:47
whereas the secondary and tertiary
29:49
markets
29:50
they could still have great managers for
29:52
that market but they don’t have the
29:53
power of the of sort of the reach if you
29:55
will right yes definitely yeah it’s a
29:59
very good point now here again right so
30:02
if you’re a buyer right so you look at
30:05
at insurance rates taxes we already
30:07
discussed but whatever the current owner
30:09
has in insurance cost
30:12
doesn’t really matter right
30:15
you need to talk to your insurance
30:17
broker early on to get a sense of what
30:19
what that property
30:21
will
30:22
will cost because that’s also for a
30:25
lender will use the current the new rate
30:28
that you have to pay as a buyer no one
30:31
cares what the current owner is paying
30:33
yeah the good thing is this is the one
30:36
section in which everyone’s kind of on
30:38
the same playing field other than the
30:40
giant organizations that can put under
30:42
an umbrella
30:43
it ain’t like their
30:45
underground insurance company that is
30:47
able to do some incredible you know um
30:51
you know offer and beat you out
30:54
sure yes one of the same folks for the
30:56
most part
30:57
yeah absolutely yeah
31:00
now
31:02
switching gears a little bit uh
31:04
i think you have a
31:06
unique model right when we look at your
31:08
marketing
31:10
uh obviously or if you’re a
31:14
multi-family broker in in northern
31:16
florida in the markets you already have
31:18
mentioned i think what is unique of what
31:21
you’re offering is
31:23
that you
31:24
not just saying look we are listing your
31:26
property but you have access to
31:28
essentially the whole broker community
31:30
through brokerage now
31:33
in reality having been in that business
31:35
for a long time
31:37
while co-brokering is a common thing in
31:39
on the residential side virtually
31:41
everyone does it
31:43
uh in the commercial space it’s it’s uh
31:46
it’s unusual
31:48
and uh so so maybe you can tell our
31:50
listeners a little bit how you are able
31:53
to achieve
31:54
like all brokering with with the large
31:57
firms that may
31:58
may not be that willing to cope with you
32:02
yeah so i mean the the co-brokering
32:05
becomes sort of non-existent in the
32:08
commercial investment sales world right
32:11
so like retail leasing office leasing
32:14
industrial
32:16
um you know small office building sales
32:19
anything that’s non-income producing in
32:22
the commercial real estate world
32:23
co-brokering is still very prevalent
32:26
that exists that’s a real thing you want
32:28
every broker to be a part of it and help
32:29
you fill those specific spaces yeah the
32:32
reason that commercial investment sales
32:35
is is largely an un non-co-broking world
32:38
is because
32:39
everybody wants that asset
32:42
versus like if you’re selling a 10 000
32:44
square foot office building
32:46
it’s a needle in the haystack trying to
32:47
find the right buyer who wants that
32:50
building to move their business into and
32:52
so as a listing broker you want to open
32:54
your world up to every broker
32:57
in the investment sales world no broker
32:59
on the planet is worrying whether or not
33:02
he’s going to sell that apartment
33:03
complex it’s sale
33:05
right
33:06
in fact our whole our whole job is to
33:08
choose the right buyer among dozens and
33:11
dozens of across the world
33:13
so the re the reason most um brokers
33:17
don’t go broke in the multi-family world
33:19
and this is primarily in
33:21
most of the nationals right because
33:22
mostly the national companies the marcus
33:25
and miller chapter dallas colliers
33:26
cushman wakefield
33:28
it’s not because they’re being nasty or
33:30
they’re not being you know they’re not
33:32
being a sharing company it’s because
33:34
they don’t have to right most
33:36
multi-family brokers have developed a
33:38
tremendous database it’s a very small
33:41
world
33:42
that that buys these assets okay there’s
33:44
literally only 993 owners in the world
33:47
that own every asset over 10 units in
33:49
the northern half of florida yeah it
33:51
means there’s only about 2 000 and own
33:53
every single one actually there’s less
33:54
than 1500 on every single one i’m in the
33:56
state of florida
33:57
small world they’re all the database if
33:59
you’re worth a crap whatsoever as a
34:01
broker and so really the touch of a
34:03
button i’m already able to put my
34:06
listing
34:07
in front of everyone in the world that
34:08
could ever buy it
34:10
now um so so that’s that’s why
34:12
co-broking is not necessary and so if
34:15
you are a broker who’s representing a
34:17
buyer and you bring it to that broker
34:20
you need to be paid by the buyer because
34:23
most likely that that broker doesn’t
34:25
need your buyer he’s already got 15 or
34:28
50 that wants to buy it
34:30
the reason i’m able and the reason also
34:32
the other reason most brokers aren’t
34:33
able to cobra because you have to
34:34
understand how they’re made up right
34:37
so most brokerages they have
34:40
either either a franchise fee
34:43
and or a corporate fee
34:45
desk fees
34:47
most really good brokers are partners
34:49
right because it’s hard to do it all
34:50
yourself so you have a it’s you and some
34:52
other guy who are killers in your field
34:55
and you’ll usually have anywhere between
34:56
two and five staff members you have lots
34:59
of salaries
35:00
you have all the costs and so i have
35:02
calculated that most national brokerages
35:06
that have a two partner format
35:08
keep between 20 and 35 percent
35:11
individually after all costs
35:14
paid a hundred thousand dollar
35:15
commission they’re making 30 grand the
35:17
actual guy that you worked with right
35:19
and there would be two partners and each
35:20
of them get 30 grand but after
35:22
everyone’s paid and the corporations
35:23
paid everything paid
35:25
for me i own my company i don’t have
35:27
partners i don’t have franchise fees i
35:28
don’t have companies i have one staff
35:31
member and then i sub everything else to
35:33
house to us other companies right so i
35:36
have lots of outside companies that i
35:38
sort of pay per rata to not salaries
35:41
so i keep every i i think my expense
35:44
structure is roughly eight to ten
35:46
percent yeah total with salaries
35:48
included
35:49
so because of that i can offer to my
35:52
customer when you hire me
35:54
you get beau berry you get cb richard
35:57
ellis you get colliers you get cushman
35:59
wakefield you get ara you get all the
36:02
big boys
36:03
and and yes you know most of the buyers
36:05
who they would talk to will have already
36:07
received my my asset
36:10
but i’m happy to co-broke with any of
36:11
these guys it makes my job easier if
36:14
they’ve got a tighter relationship with
36:16
some other buyer happy to it right
36:19
my job is to bring my seller the biggest
36:21
price possible and if i can expose it to
36:23
as many people who a human being is
36:25
possible great
36:26
yeah okay that’s a that’s a good point
36:29
right uh
36:31
obviously you’ve you’re in in that niche
36:33
so you can offer it to the big boys
36:35
right yeah
36:37
and how how has the reception been with
36:39
uh with a child ll or cbre cushman with
36:43
uh you know frankly because you know
36:46
because they have so many of their own
36:48
assets they’re working on yeah
36:50
multi-family brokers don’t typically
36:53
do buyer representation right yeah it’s
36:57
a needle in the haystack business you
36:59
know even if you have the best buyer on
37:01
the planet you’re still going to compete
37:03
against that seller’s 15 or 20 other
37:06
offers absolutely
37:08
hook up with a buyer and go around and
37:11
submit offers to sellers or sell listing
37:13
brokers is a waste of my time because i
37:16
can go out and find my own listings that
37:19
i know are going to sell sure so you
37:21
know
37:22
it’s very rare even though i offer a
37:25
cobra to anyone and everyone that i
37:27
actually end up doing a deal with
37:29
another broker because they either get
37:32
beat out by other buyers that i have
37:34
coming at me or they don’t give it the
37:36
time and i get that i mean i you know i
37:39
i get it
37:40
yeah yeah okay but at least you’re
37:43
offering it right so it still broadens
37:45
the
37:46
reach right if you if they happen to
37:48
have someone you don’t know right so at
37:50
least uh
37:52
uh
37:52
it’s it’s nice to have a partner it’s
37:54
almost like you know i don’t ever i
37:56
don’t ever look at it as adversarial
37:58
it’s not like
37:59
you
38:00
and we you know brokers become a
38:01
partnership we both want the same thing
38:04
we both want to close this deal and i
38:06
love when a broker has a tighter or
38:08
better relationship with that buyer
38:10
because you know if something comes up
38:12
in a transaction
38:13
they can do the arm twisting or the arm
38:16
holding if needed not me yeah yeah very
38:19
good point yeah
38:21
very good so uh looking forward for the
38:25
rest of uh of this year where where do
38:27
you think uh north and florida is going
38:31
yeah i think the number of transactions
38:33
is going to significantly increase from
38:36
the first quarter
38:38
i think pricing is i think probably
38:42
august september
38:44
is going to kind of top off where you’re
38:46
not going to see any more like
38:47
huge spikes
38:49
um
38:50
and and it really depends a lot of this
38:52
depends on what happens with the biden
38:54
tax plan that’s now being pushed around
38:56
right
38:57
you know most investors i’ve talked to
39:00
do not believe the full 44.3 capital
39:03
gains tax will get approved
39:06
i do believe something in between will
39:08
i’ve heard 28 passed around right but
39:11
whatever happens if an actual increase
39:14
actually happens
39:16
what has happened historically
39:18
when that happens what happens so for
39:20
instance let’s say let’s say uh
39:23
september
39:24
biden announces you know there’s a
39:26
pretty good pretty good chance this is
39:27
going to happen i have a bunch of people
39:28
on board we’re going to get this passed
39:31
then the fourth quarter 2021
39:34
brokers are going to sell a crapload of
39:36
real estate
39:37
right and then what will happen is in
39:39
2022
39:41
the number of sales will slow way down
39:44
because people are thinking oh god i’m
39:46
paying eight percent more 10 more 20
39:49
more whatever it is
39:50
and then by 2023
39:53
transacting comes back maybe not the
39:55
full normal but it’s on the way back to
39:58
normal because what happens is what i
40:00
call the covet effect right so when
40:02
kovitt happened in march of 2020 the
40:04
world stopped
40:06
everyone was scared to death nothing
40:07
happened nobody transacted and then
40:10
everyone kind of says
40:12
this is the new world this is the way
40:14
things happen and we got to get back to
40:16
life and and then transacting came back
40:18
to normal for the most part and that’s
40:20
what happens with taxes it feels like
40:23
the end of the world and it sucks
40:25
and there will be a year of turmoil
40:28
where you know number transactions will
40:30
will actually all be done by a small
40:33
number of us brokers right because what
40:34
happens is in a tough tax year people
40:37
use the best brokers not their cousin
40:40
from church who occasionally sells
40:41
apartment complexes right
40:43
but usually things get back to normal
40:46
the the year after that plan comes back
40:48
in
40:50
yeah it’s a it’s a good point uh it you
40:53
really get everyone feels that that’s
40:55
the new normal right and
40:57
you uh you have to you have to live with
41:00
it
41:00
at the same time right
41:03
as an investor whatever investment you
41:05
do that has
41:07
the capital gains attached to them it’s
41:09
not just
41:10
uh limited to real estate it’s it’s
41:12
stocks too and then right
41:15
right so everyone gets hit there right
41:17
so
41:18
that’s that that’s just uh uh just if
41:20
you’re in real estate you have to get
41:22
back to real estate and that’s what
41:23
happens is i mean you have i mean you
41:25
know all the people you and i work with
41:26
on a regular basis anton are in real
41:28
estate in some way and ain’t like
41:30
they’re gonna stop their life because of
41:32
that they’re going to figure out ways to
41:34
transact again and that’s what’s always
41:36
happened throughout the history of the
41:37
world
41:38
yes absolutely and uh so obviously there
41:41
will be some new strategies right
41:44
whatever it might be right so obviously
41:47
bonus depreciation
41:48
is already being faced maybe there are
41:50
some changes to the depreciation
41:53
benefits too
41:55
uh but even if they are not maybe there
41:57
is less
41:59
less aggressive depreciation initially
42:01
so that you do not have to have a
42:03
capital gains tax with the recapture at
42:05
the end so
42:07
who knows right uh everyone will have
42:09
different ways of of uh of uh running
42:13
their strategies
42:19
there
42:20
i’m here yeah now i can hear you i don’t
42:22
know i just kind of went
42:23
oh okay
42:24
i can hear you now
42:26
okay very good
42:28
all right
42:29
very good uh beau it was a great
42:31
conversation thanks for sharing uh all
42:33
your knowledge right uh particularly in
42:36
the you have that niche uh in northern
42:39
florida and i would say there are a lot
42:41
of obviously florida
42:43
owners and buyers in that market but
42:45
there is only a lot of interest from
42:47
across the the country
42:49
uh
42:50
uh in in that market
42:53
yeah for for some time now and i think
42:55
it it’s only will will continue because
42:57
florida as a whole is a is an attractive
43:00
state to be to be invested in
43:03
it’s obviously from a apart from
43:06
uh from from the insurance side taxes we
43:08
have an issue everywhere
43:11
but it’s a landlord-friendly uh state so
43:14
that makes it makes its only uh
43:16
attractive
43:18
so how can
43:21
our listeners uh reach you and i think
43:24
you also have a book that you have
43:25
written so maybe you can also mention
43:27
that on in addition to your contact
43:30
details sure
43:32
three ways to reach me number one i did
43:33
write this book that’s um that’s it’s
43:36
done very well it’s called multi-family
43:37
investors who dominate
43:39
it’s on amazon and hardcover it’s on
43:41
audible it’s on kindle but the book is
43:43
all about how to get flooded with
43:45
listings
43:46
from brokers and sellers
43:48
first before anybody else sees them
43:50
right so it’s got step-by-step processes
43:53
the other way to reach me is i have a
43:54
website called beaubeery.com
43:56
b-e-a-u-b-e-e-r-y.com
44:00
now the reason you want to go there no
44:01
matter what market you’re in i don’t
44:03
care if you’re in the texas market new
44:04
jersey florida whatever it is
44:07
at the top of the website is a section
44:09
called resources and when you click on
44:11
resources all the markets like cover
44:13
drop down
44:14
for your market you want to master every
44:17
metric and every number and every button
44:19
i have in each of the markets i covered
44:21
because the more you can master
44:23
the metrics that i have on those sites
44:26
the faster you can react to
44:27
opportunities in your markets
44:29
and the third way to communicate with me
44:31
um is my youtube channel so i have a
44:34
youtube channel called beau knows
44:35
multifamily b-e-a-u beau knows
44:38
multi-family
44:39
and on that channel i talk about how to
44:41
buy more assets how to sell them for top
44:43
dollar and how to do market analytics um
44:47
very very good so that you can react to
44:49
opportunities yeah excellent uh i would
44:52
say uh when you uh when our listeners
44:55
look at your website and all the
44:58
uh the statistics that they find broken
45:01
down by markets that you’re covering
45:04
uh i would say it’s it’s hard to beat i
45:07
have not seen it with
45:08
with
45:10
any broker anywhere whether they’re
45:11
large or small in in that market or in
45:14
any other market
45:17
so
45:18
just an information alone is only
45:20
very viable obviously for someone who is
45:24
actively looking in your market right
45:26
but as you have said it’s invaluable
45:29
information if you’re not looking in
45:30
that market just to see what you’re
45:32
tracking and give an idea what the
45:35
prospective buyer or an existing owner
45:38
may want to track in their home market
45:40
where they have properties or targeting
45:42
properties because that’s very valuable
45:45
uh way of of knowing what is really
45:48
happening in
45:50
in in your own market that that you are
45:53
interested in or on property and
45:55
yeah i agree yeah yeah
45:58
well thank you for having me i do
45:59
appreciate this anton yeah thanks sir beau
46:02
it was really great uh having you on and
46:05
you’re sharing all your wealth of
46:06
knowledge and uh i wish you all the best
46:09
for the rest of 2020