BiggerPockets Real Estate Podcast - 903: 120 Rentals in 3 Years by Buying Multifamily During a BAD Market w/Brian Adamson

Starting point is 00:00:00 This is the Bigger Pockets podcast show 903. What's going on, everyone? I am David Green, your host of the Bigger Pockets Real Estate podcast. Today, here with my partner in crime, Rob Abasolo. How's it going, Rob? I'm good, man. I'm good. I'm tired.

Starting point is 00:00:14 I woke up at 5.30 today. I've started the routine again. I'm back on the grind. But, you know, there's light at the end of the tunnel because we've got a great show today where we're going to be featuring an investor who is successfully investing in multifamily today in 2024. And in today's show, you're going to see Rob put on his diva hat as we dive deep into a topic that most people are afraid to get into. Today's guest, Brian Adamson, shifted from single-family rentals into multi-family investing at a time when others consider it risky to invest in that asset class.

Starting point is 00:00:48 Yeah, we're going to cover how to be successful in multifamily today and how to look at markets to invest in. We're also going to address the big old elephant in the room, which is funding in the multifamily space. and some of the ticking time bombs that might be lurking around the corner for this niche in real estate. And we're also going to get into the nitty gritty of the numbers on deals that Brian is currently doing in markets that he thinks will be profitable in the multifamily space for the next couple of years. That's right. We've got awesome content for you. Brian is going to be sharing how much he likes to pay for, what he wants the ARV on that to be, when he exits deals versus when he keeps them, what markets he invest in, as well as the rents that he's looking for on the properties that he's buying. This is some great stuff. So if you've been looking for an opportunity in real estate, there's probably not a better one than in the commercial spaces.

Starting point is 00:01:33 Everybody else is afraid to get into that asset. So we've got what you need on today's episode of the Bigger Pockets podcast. Let's get into it. Brian Adamson, welcome to the Bigger Pockets podcast. How are you today? I'm doing great, man. Thanks for having me. All right.

Starting point is 00:01:46 Now, you've been in the real estate game for a long time now. Me too. So let's talk. What strategies are working for you in today's market? So I did, you know, fix and flip wholesale for many years. I bought single family at the start of my career back in 2006. And then most recently the last few years, I've been buying commercial multifamily. And so started out buying semi-occupied units and then we'll come in and reposition them.

Starting point is 00:02:11 And after the rent moratorium in my specific market, it was taking six, eight months to get people out. And so I'm like, well, I can't pay for them to live there for free and then still have to do my reposition. So I switched up my strategy and started buying vacant units. We come in, do the renovation, put our, are people in from day one. And so that's what we've been doing the last 18, 24 months to date. I like that you said commercial multifamily because it removes the confusion between, are we talking two to four units or five units plus? Because both sides use the phrase multifamily. I've had entire conversations where I thought they were talking about big apartments and they

Starting point is 00:02:44 were talking about triplexes the whole time. So thank you. Yeah, I'm a unicorn. I do both. So I make sure I delineate which one I'm talking about that very reason. Let's talk about first off, give me an overview of what your portfolio looks like right now and then I'm going to dig it down some specifics. So right now I've got about 120 units. I got a small tranche of two to four units, maybe got a single family or two in there. And then mainly, though, is I got a couple six unit buildings. I got a couple of 16 unit buildings.

Starting point is 00:03:13 I got a 20 unit, a 40 unit, and 12 buildings and properties. Thank you, Rob. Properties in total with 120 units. Now, I want to definitely hear why you are buying multifamily when everybody is running away from multifamily. That's interesting. But I also understand that like me, you are an out-of-state investor. So where do you live? Where do you invest? And why did you pick that market? For sure. So I live in Orlando, been here for the last almost 14 years, and I invest in Detroit. Now, many people think I invest in Detroit because that's where I'm originally from. However,

Starting point is 00:03:47 that's not the case. It just so happened to be a great market with great equity positions and great cash flow positions. And so unlike investing here in Orlando, while it may be, be sexy to say I invest here. The margins just aren't there. You know what I mean? With respects to the yield that I get investing in the mid-West. And so when you develop good systems and processes and accountability measures, you figure out that you're susceptible to the same thing as going wrong eight blocks away as you are 800 miles away. And for me, if the risk are all the same, then I'm going to go where the highest potential yield is. And so that's why I've invested from a far away that I have. I think you and I need to write a book for Bigger Pocket.

Starting point is 00:04:26 It's eight blocks, 800 miles, and eight mile road, how I pick Detroit and Wyatt Rocks. There are gems and areas that you would typically think of like Detroit back in the Josh Dorkin days. People definitely dumped on Detroit as a terrible market, but you're making it work. Is there a certain local market knowledge that you have that you know where to invest in and where not to invest in because you live there? Or do you think that the gentrification, the money that's moved in there, if people aren't aware, a lot of mortgage companies moved in when the auto industry's left, and they brought a lot of, lot of jobs and opportunity. Is that why you think Detroit is doing so well? It's a mirrored of those factors. It's interesting because when I started in 2006, I was in college. I was a junior and a buddy of mine was flipping houses in like CD class areas. I didn't know what any of that

Starting point is 00:05:11 meant. This is all retrospect talk. But he gave me an opportunity to get started with a $6,000 refund check, basically to help cover the down payment for his buyers, right, essentially gift them the money because they were using state of income loans. And then when he flipped them to house, he gave me a return on my investment, right? And so that's how I got started. And so, and I'm going back to your, your previous question, David, about why am I running toward the market when most people running away? So at that time, I didn't have any education. I was just being opportunistic. I started buying properties of stated income loans, my senior year in high school, I mean, in college as well, 2007, obviously 2008 happened. And so while I was upside down on

Starting point is 00:05:52 some of those bad investments at that time, I still wasn't jaded. I was. I was, so new. I'm like, there's three bad deals. All I know is that this $148,000 house is $29,000. I'm going to go do more of these, right? And so I bought over 20 doors from 2008 to 10 when the market was contracted. And just because it just made sense to me, I'm like, I saw a lot of people losing their shirt and running away, but I'm like, if you pick this stuff up, you buy a house for 10 grand and you can make $700 a month, how do you lose, right? Still didn't have some fundamentals down yet in terms of like analyzing deals properly and planning for CAP-X and all those types of things. And so I ended up being affected by that, you know, as those properties started to age and had to get rid of some of the

Starting point is 00:06:35 portfolio. But my point is kind of that same energy now, right? Looking at what's happening in the market over a trillion dollars and, you know, bad debt come and due over the next 24 months or so in the commercial space, probably 600 billion of that and multifamily specifically. But that just to meet me, it's more opportunity, right? And if you know how to analyze deals, you know how to hire and build good teams and go from A to Z on the execution, then it's a lot of great opportunity out there right now for operators that are being hurt that need help. All right. Stick with us. We'll be right back after this quick break. I have an uncomfortable question for you. If your rent collection drop to 80% next month,

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Starting point is 00:10:48 real estate, make it happen with PropStream. Hey, everybody, welcome back. Let's pick back up right where we left off. Yeah, so that's interesting because it does seem like there's a bit of a ticking time bomb in that specific niche of real estate. And you've known this. And in the last few years, you've decided to scale up into multifamily. So when and why did you make that choice? So June 20 of 2020, first time out the house during the height of COVID where my family, we went to Clearwater Beach, it was Father's Day, actually. And I was out on the balcony praying, and God clear his day told me he wanted me to start investing in commercial multi-fam. This didn't make sense to me at that time, because that was totally juxtaposed, my whole

Starting point is 00:11:29 business plan for that year, so much so when I called my consultant, he told me I was nuts. And I was like, bro, I'm telling me, I heard this clear as day. I got to act on it. And so, you know, I went out, started seeking a mentor in that area, all because I had done a single family for 14 years and had a lot of success, I still believe in education. right and so filed a mentor when it got some framework and started taking action immediately had a 136 unit locked up in like 60 days after getting the framework and so anyway while that deal didn't work out and we don't have enough time for me to go through that whole story um it got me in the act of taking action and from that deal led to the next one which was my first one that i closed which was

Starting point is 00:12:11 a six unit deal and then shortly after that i closed a 40 unit and then i just kept buying after that. So previously to the multifamily stuff, you said you were doing fix and flips, right? Yeah, fix and flip and wholesale. Cool. All right. So fix and flips wholesales, which are obviously, once you're a skilled investor, you're good at one thing. It's probably easier for you to transition to something else in real estate more than someone just breaking into the industry. You decide, hey, I feel like I'm being, you know, I want to do multifamily. You get into this first property and it didn't work out. Tell us why. What was the actual process there? Because I feel like just jumping into 136 unit is something that most seasoned investors wouldn't even do.

Starting point is 00:12:53 So give us a little bit of a timeline of what happened in that deal. I didn't realize I got to have a therapy session today. Well, thank you, Rob. What do you see on the cards? Yeah, exactly. So it was a crazy situation, right, where I found this deal in LoopNet, and I saw that it was in Flint, Michigan. 136 units. They wanted like $5 million for this thing.

Starting point is 00:13:16 and I knew it was overpriced. And I just so happened to call the number. Why not, right? Called the number just so happened. The number was to the owner. He lived in Miami. I live in Orlando. We talked a little bit about the deal.

Starting point is 00:13:27 And I told him, I said, I love to come down there and get need-to-k with you and do lunch. So I drive down to Miami. And we have a conversation. And he just was like, look, if you're serious, I've had this thing fall in and out of contract a couple of times. If I don't sell it by March, I'm going to lose it to some back taxes. And he was like, if you fly up there, do all your due diligence,

Starting point is 00:13:46 and you're ready to move forward, then we'll put it under contract. And so I moved in faith. I went up, I got my contractors out. We did phase one, appraisals, serving everything. We did all the due diligence on it,

Starting point is 00:14:00 all 136 units, and finally got the thing under contract by Halloween. But I was spending tens of thousands of dollars before I even had this thing on the contract because I just believed it was that good of a deal. And I got the number down to well under 2,000, and bucks because we had like, you know, probably about a $400,000. I'm sorry, it was a $4 million renovation we would have to do to it, but it would have

Starting point is 00:14:24 been worth $8.5, right? And in that process, because of working on a deal that big, shout out the mayor Neely. I got to meet the mayor of Flint. He and his cabinet, you know, gave me a ton of support and, you know, met former state senators and formed alliances with the local boys and girls. It was a tremendous thing, right? and it was a faith walk because obviously I had never done it before, but this is why confidence is only built through competence. I only felt like I could do it because I took the time to

Starting point is 00:14:55 invest in myself, get the right support, get the right mentorship network that afforded me enough confidence to keep taking these action steps. And through it all, we got redlined by a couple of lenders. We got pretty close to getting this thing over the finish line twice. But when it got to final committee at both of these different lending institutions, they pulled on it because they didn't like the fact that it was in Flint. Many of them thought that there was still a water crisis, although mass media covered the water crisis, but they didn't cover the other side of it, which was the fact that it was fixed. And I learned that from spending so much time up there that the issue was resolved. And so by this time, it's getting close to the time that the owner said that he was

Starting point is 00:15:36 going to lose it if he didn't figure something out. And so he ended up taking another contract on it. And those guys that were coming in had the money, but not the infrastructure. So they ended up calling me after I got cut out the deal and wanted me to partner with them. And they were going to bring me in on another 171 units. So the deal turned into almost $24 million worth of real estate, a little over 300 units. And I would have had to move back to Michigan. They were going to pay me a salary. I would have equity in one of the buildings, but not the other.

Starting point is 00:16:06 But when I finally got an opportunity to meet their team, they flew to Orlando. for a final meeting with me. And some just didn't sit right, to be honest. Like, I saw the dollars, but it was a lot of character things, things that were mentioned during that meeting that just didn't align with me and where I'm at and where I was at in life in that time. And I went to, told him, give me a week, let me think about it, pray about it. And just so happened, I got invited to this mastermind in Miami and Jeff Hoffman was there.

Starting point is 00:16:34 We're sitting in this small room, this intimate setting. and Jeff was just talking about how this billionaire was pursuing him to do a deal on a private island. And he was like he wasn't interested. And the guy flew his private jet to pick Jeff up in Orlando. And Jeff was like, what part of I can't be bought? Don't you understand? And so somebody in the room asked Jeff, like, why were you so upset with the guy? He said because our company culture is we only do business with people if we can ask ourselves, are they one of us?

Starting point is 00:17:05 And so for me, I felt that confirmation in my spirit at that time that that was my answer. So I got back that Monday, I called to guys. I pulled out of the deal. The very next day is when I got the 40 unit department building that I eventually ended up closed. So let me backtrack a little bit here because you said something that's really interesting to me that I don't want to gloss over. I feel like a lot of people don't necessarily know how to close this loop. So you mentioned the deal was roughly about $2 million, somewhere in there. and you were going to need to put in $4 million in renovations.

Starting point is 00:17:37 So we're at $6 million total. And as a result, it would be worth $8 million. So you're adding $2 million in value. Why is it now worth $2 million more after the renovations? Where does the actual, like, what kind of metrics play into getting that much money out of a property? For sure. For sure. That's a great question, Rob.

Starting point is 00:17:56 So essentially, we would have, you know, did the CAPEX. we would have done a rental, but with that, would have afforded us the ability to then increase rates, right? And so once we increase the rents and occupancy, then our NOI would have increased. And then our NOI, which is our net operating income, divided by the cap rate in that area, would have then given us our new evaluation and added that value to the property. Yeah, that's really interesting because you mentioned you got some appraisals on the property. were the appraisals that you got based on the actual real estate, the actual building improvement on the land, or were the appraisals based on NOI and the cap rate and all that good stuff?

Starting point is 00:18:39 Yeah, so we did both. We did an as-is appraisal, which was part of my leverage for getting the price down, right, based on what he put a hat out there on the internet. And then we did as-complete with the income approach as well as the sales comparison approach. So, you know, on these types of assets, you look at it from two different ways. You look at it from an income approach as well as the sales comparison approach, which is your cost per door versus what the actual thing is producing from an income basis. Now, I'm going to ask you the question every investor hates. So work with me here.

Starting point is 00:19:12 We're going to try to get as specific of an understanding of the numbers as we possibly can. You're not, nobody go blow up Brian and say, he said 40 a door and I found out it was 41 a door. So don't worry about that. But if we're looking at someone who wants to buy a deal, similar to this one. What's the price per door that you're trying to get? I've got a series of questions to ask you like that. So I won't talk about the one that I didn't do it, right? Because that's the one we were just talking about in Flint. But in my local market in Detroit, I want to be all in at no more than $45,000 a door. And that's with the acquisition as well as the improvements that we have to do to the

Starting point is 00:19:49 property so that I could potentially exit at $60,000 a door or more at some point. Beautiful. So in a sense, this is kind of like a burr or a flip where the acquisitions what you're paying for the property and the improvements would be like your rehab budget. So you want to be all in for $45,000 a door and you want to try to bump the ARV to $60,000 a door so you could sell. Now, are you buying these deals with other investors? I am. Yeah. Yeah. So most of my deals, I try to live for partnerships first and then, you know, I'll put my money in if I have to, but I've been fortunate to raise a lot of capital. Now, you may keep the property, of course, but you want to know that you could sell it if the partners wanted to get their money out, if interest rates weren't in a favorable position, if you had a better

Starting point is 00:20:35 place to put that capital. So that doesn't mean we're flipping apartments, but you want to have that exit strategy available to you. It's always good to have an emergency chair there when the music stops, because when you're playing musical chairs, which is the world of commercial financing, you don't know when that balloon payment comes to do what that chair is going to look like that sitting right in front of you, Right. So what is the general rent you're trying to have per door that you're looking for? So it's interesting. The first 120 units I bought, I strategically bought them all in affordable housing space, right? I did that because at the time in which I started investing in a commercial multifamily, obviously, again, June 20 of 2020, that was at the height of COVID. All that is the SIR funds and all that didn't exist yet. All the operators who had, you know, A and B and C class stuff.

Starting point is 00:21:23 that didn't have guaranteed rents were being host and, you know, all of that. So for me, I was like, well, I want to start the base of my portfolio with as much guaranteed rents as possible so I could have Section 8, other subsidized rents, etc. I'm using Section 8 and other subsidized rents in my market. I'm actually outperforming market rent in those areas, right? So say, for instance, on a one-bed, one-bath unit market is probably $750 to $8. I can, could get 950 section 8 in these areas that I'm buying in, right? Two bed, I could get up the 1,200 even sometime. So the 1 beds we can get as much as, you know, 952,000, section 8.

Starting point is 00:22:10 And then the 2 beds, in some cases, we can get as high as $1,200 bucks. So you're looking for anything between 900 to 1,200 a door. And of course, not every door is the same, right? So you're going to have a mix of 1 bedrooms and 2 bedrooms in here. But that does give people a pretty good understanding of like a target to shoot for if they have a market similar to Detroit. Now, what are some of the things that would automatically disqualify a property? You don't care what the numbers are, what the price is. Is there neighborhood issues?

Starting point is 00:22:36 Is there flood issues? Is there like building age issues or certain things in a building that you don't want to mess with? Well, before I answer that, I do want to just put one more caveat on the market rent piece, right? because although I evaluate these deals and I know that my target rents are Section 8 rents, which are outperforming market, but I also underwrite the deals from a market rate perspective, right? I keep that in mind because if for whatever reason I had to put a market rate tenant in there, I don't want to, I don't want to overshoot what I can really get by assuming I'll be

Starting point is 00:23:16 able to guarantee that I'll have the higher performing rents in there. So I underwrite the deals more conservatively to make sure that I got that wiggle room and agility if it came to that. So I just wanted to clarify that point so people weren't too over and others in their approach. What are some things that you would just say, nope, I'm not going to mess with it. Is there an age of the apartment you don't want to deal with? Are there neighborhood metrics or statistics that would cause it to be disqualified? Yeah, I buy a C minus, even D plus, but I won't buy any S properties. Like, I'm not doing that.

Starting point is 00:23:46 I've got a question. I mean, it seems like you have a pretty good. system for how to underwrite and how to pad it in a bit where you're coming in a little bit more conservatively. Let's talk about the funding a little bit because I think right now with everything going on, I'd imagine commercial lending is probably not all that favorable. What's your experience been in the last 12 months as it pertains to getting loans and getting funding on some of these commercial multifamily properties? Yeah, you know, to date his point earlier when he said how finicky it is, it is so weird. Like you can literally start the underwriting process, have a

Starting point is 00:24:19 application in, have an approval, and then two weeks later, they're like, yeah, we can't, we can't do it. Like, the markets have changed that much in that short period of a time. I've seen more stability as of late, 12 months ago, is we were trying to refinance a larger unit, and we ended up having to do a second round of bridge debt on it just to wait because the product that was available was so outrageous. Like, the, bridge debt was actually better to some degree. And so we've been fortunate that our, our units still perform with the bridge debt. Okay. And, but we've, we've also had some other refies that have gone through that we put 30-year debt on recently as well. I'm actually,

Starting point is 00:25:05 hopefully, by the time I get off of here, I've got a six unit that I've got an appraisal coming back on today that hopefully will get closed out on the refinance next week in a 30-year debt. So what I can say is the last 45 days. I've seen things open up in the lending market again. But 12 months ago, yeah, it was brutal for sure. Yeah, so how are you combating this? Because I know, are you just doing the bridge debt and hoping that it kind of works out once that bridge debt is done?

Starting point is 00:25:32 Or, yeah, like, is bridge debt kind of the answer to some of the wonkiness that's going on right now? It is. I think because my strategy also changed, I'm more comfortable with bridge debt than most operators because we're buying these things vacant, which requires bridge debt anyway, right? either you use an all private capital or you got to use a bridge because, you know, we're doing several hundreds of thousands of dollars on rehabs on these properties. So we've been, again, fortunate because we've been buying at such a deep discount that our deal still cash flow with the bridge debt.

Starting point is 00:26:06 You know what I mean? It's not great, but it's better than not. Okay, we're about to take one more quick break, but stick around because when we come back, Brian's going to tell us how he's combating the risks of bridge debt, which is a huge topic right now, what kind of profit is portfolio actually making and the markets he sees the most potential in right after this break. Thinking about wholesaling or flipping your first property, but not sure where to start. The truth is, deals don't just fall into your lap anymore.

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Starting point is 00:30:49 Brian Adamson is here and we're talking about how he's making multifamily deals work in today's market when everybody else is scared of them. Let's jump back in. Can you give us just a quick refresher on how bridge debt works? Because we've talked about it enough where I think there's some people at home that are like, I don't really quite understand that concept. What does that mean? So most of our acquisitions will get 75% of the purchase, right?

Starting point is 00:31:13 Which means that we have to put 25% down. And then they'll cover 100% of our rehab. Okay. So in that instance, you know, depending on what the totality of the project is, you know, we'll immediately take out a 12 year, I mean 12 month or even a 24 month depending on how the scope of the project. Because it's cheaper money if you pay for it up front. that you need an extension versus doing that on the back end. But essentially, bridge debt is designed to help operators get going on a project to bring it to a place of stability so that then you can get

Starting point is 00:31:48 long-term financing on it from a more conservative institution. Got it. So the idea is we're trying to kind of have this extension with bridge debt for as long as we can, hoping that the current market rates maybe go down a bit and we can refinance long-term into longer-term debt. that is lower interest? For sure, for sure, 100%. Awesome. Okay, so tell us a little bit about your portfolio now. I know you mentioned you have 100 units across 12 properties today. What does that look like in terms of profit? Is that, you know, people hear the big numbers. Is it more profitable than one would think? Is it not as profitable? Give us an idea of the cash flow of a portfolio that size. Man, I love this question, Rob. You know, I'm always preaching this from my platform and in my community because I think a lot of new investors, especially, they're off on this, right? Like, I've got, don't get me wrong. I think there's a place for both, okay, especially on the tax and depreciation, right? Like, there's a place from both, okay? But at the very same time, I want the new investor listening to this to understand, you may make more money on a four unit than you would on even a tuning unit in some cases. And that's all predicated on what percentage of

Starting point is 00:33:06 that deal do you own? So you're a lot of people that may say, oh, I got a thousand doors. And I'm not knocking this. I'm just bringing in context to it. They may own three to five percent of that, right? That's not horrible. But at the end of the day, it's more of a trophy than it is something that can help them go on vacation. That I can promise you. And so don't compare your unique starting point to those that have a big door count because you may be printing money when they're not. Door count is the most useless metric anyone could ever give. It always happens at a meetup and they always say it to newbies.

Starting point is 00:33:42 I vote through the same thing when I was new and I felt this big when I'm listening to these people talking about all these doors. And then I find out my net worth was like eight times theirs because I had six properties but I owned all of them. And they didn't. And I realized that people just start to say I got 12 doors but they don't tell you it's a garage door, a screen door, a front door, a bathroom door, a side door, a cabinet door. It's not all the same. So I'm so glad that you're that you're mentioning this.

Starting point is 00:34:07 Yeah, it's important. It's important because I've got, you know, a four unit, for instance, that I bought a couple years ago. I want to say all in. We were at like 100, maybe 110. And the debt service on that thing, pity payment is like 900 bucks, principal interest, tax and insurance. We bring in, I think that one gross is 3,200. So we net every bit of two grand a month on that on that property, right? And so that, I mean, those are great numbers, right? And those types of deals exist. And so, you know, on our larger units, I own on average 40 to 50%. That's healthy, though. That's more than healthy. It's pretty healthy, yes. It's pretty healthy for sure. I mean, because the way in which I structure my deals, the larger stuff anyway, typically I open up 50% for limited partners, 50% for general partners. So for the newbie that wants to get into, jumping up to that space, understand that banks are going to require that you have experience. Where it's like, well, how do I get experience if I don't have experience? It's a great question. And so you have the internship conundrum where you need eight internships before they'll consider you for the internship. This is my biggest frustration in college. And I was like, I can't, I can't become an intern without becoming an intern first. What do you want from me? 100%. And so you need to go out and

Starting point is 00:35:27 find somebody called a sponsor, right? And with these sponsors, you can have them participate in the deal from an equitable position. You could pay them outright or you could do a combination of both. And so although I had 14 years of experience when I got started, my first couple of deals, I had to bring in a sponsor. And so after that, though, then my equity position increased because I was able to sign off on my own debt and didn't need somebody, didn't need to bring somebody in and give up a piece of the deal. And so my encouragement, though, and saying all of that, it start where you stand. Some people give up 80% of their deal and on 20% when they start, right? Some people give up 90% and 10%. You know, I don't believe any

Starting point is 00:36:09 investors should work for free, but I also think that you should be open-minded to what the ultimate goal is and start building toward that. Don't worry about hitting a home run on your first one. Just keep hitting base hits and let that thing grow organically. Okay. So that being said, I mean, we make tens of thousands of dollars a month. You know, know, we've got, you know, a couple million dollars in equity, you know, given, I don't know where the market is right now, somewhere between three to five, I would say, and make tens of thousands of dollars in profit a month. That's fantastic. And I think what you said, honestly, is very fair because I don't really like to poo-poo the door count thing because there are

Starting point is 00:36:48 so many scenarios and so many times where new investors are bad at negotiating and they'll take a bad deal just to get a free house. And you might say, all right, yeah, you can have 75% equity. I'll take 25% and I'll manage it for free just so that I can get into this deal. And so a lot of investors get into these types of deals where they work for free for a long time. And I think it's fair to be proud of maybe a partnership like you're talking about where, in your instance, I mean, you have a little bit more probably equity than the people I'm talking about here. But I think it's fair to say, hey, I'm working for free to get into this property. And I think that to me is like a free, the concept of partnering with someone to get a quote

Starting point is 00:37:27 unquote free property is something to be proud of versus the actual arbitrary number of how many doors that might be. Yeah, I can see it both ways. I think the thing I cringe most about when people work for free, though, you got to have a lot of confidence in whomever that person is that's making you all these promises or broken promises even. But I agree with you. We got to be humble and start where we stand. It's just that we got to make sure that whatever door we walk through, even if it is for free, that it's going to lead us to the actual thing that we should be able. Could not agree more. That second opportunity rarely comes in those scenarios. So I agree with you there. And I think that's super fair to bring up. Now, I understand that you're working on achieving cash flow by actually paying attention to the asset, right? Which can only happen if you move away from this passive investing approach. That's a personal thing with me. I've lost a lot of money over the years. I've seen a lot of other people lose money over the years by thinking that you just buy a property and forget about it. You stop paying attention to it. What's your thoughts on achieving cash flow by keeping. keeping costs down and paying attention to the asset, sort of treating it like something,

Starting point is 00:38:29 like a business or a child, something you have to pay attention to versus the way that real estate is often discussed where you just buy it and you never think about it again and money just shows up. Yeah, we got to stop telling this lie that rental properties are passive income. You know what I mean? There's nothing passive about it. If you wanted to be successful in my experience, right? And so for me, it's about keeping your pulse on what's going on at all times making sure that you're meeting with property management companies regularly. We got like a weekly cadence where I meet with my property management company in addition to the weekly report that they send me because, you know, even I believe monthly may be a little too loosey-goosey

Starting point is 00:39:08 because by the time you find out something 30, 45 days later, that thing can evolve into a 90-day problem really quick. And so I like having a cadence in a rhythm of meeting with them weekly and really just monitoring more so the effectiveness and efficiency of the operation as opposed to the money that comes out of it. Yeah, that's literally the same cadence I use. It's weekly meetings. And I've actually stopped meeting with Rob every week. And just to highlight this, as you can see, his shirt is halfway unbuttoned now. He's showing more chess than he ever has. If you guys are watching on YouTube, you see what I'm talking about. This is an example of how quickly things fall apart when you stop paying. attention, Rob. I can't afford to have the button re-sowed on. So my trials and tribulations I face is taking the buttons off my shirts. But what you're saying, Brian, is that you can't passively make $10,000 a month and live on a beach and sit mitas just like all the TikTokers say. It hasn't been my experience, Rob, has not been my experience. It's kind of funny how not

Starting point is 00:40:09 passive Airbnb can be for me. I have a property manager slash assistant and she, in theory, does all of the managing for me. But I live a whole life that I shield her from that. She doesn't even know about. Even meeting with your property managers weekly, there's just so much work and strategy that goes into making sure that your property managers are also properly property managing your portfolio. 100%. They essentially need to become a partner in your business. And if you don't build that kind of synergy in alignment with them, you know, then they just become another expense. Right. And so I want to make sure that, you know, my property management company feels like a partner and that, you know, they treat my business as their own in my absence. And so, you know, I invest remotely. That's been a great strategy for me for over the last decade. And whenever I'm in town, I'm doing, I'm spending less time looking at my properties. I'm spending more time with the people that are tending after my properties. And I just think that's a really, really key piece. We could do an entire show just on. this and maybe one day we will, Brian, because it's like, I just want to shout it from the rooftops.

Starting point is 00:41:18 You got to make up for 10 years of bad information people have been hearing that real estate is passive. So, Brian, I got one last question for you before we let you get out of here. What are some markets that you are bullish on or you think people should be considering similar to how you found Detroit that are worth investigating right now? Yeah, I think Milwaukee is one of those places. I believe definitely Cleveland, Cincinnati, Columbus, parts of North Carolina. A lot of people in my community are doing things in Georgia, even, Lithonia, Atlanta, some of those outskirts surrounding Atlanta. I just think the yields in those markets are really good, right? And just to be clear, it's a good market in every market,

Starting point is 00:42:00 right? It's just about what is good, because I think that's relative to the investor. And your specific strategy, that's what I'm getting at. For what you're doing, the way you look at a deal, you feel those markets have a higher than average probability of finding a deal that'll work. For sure. All right. And do you think people should stay away from commercial or do you think now is a good opportunity to get into it? I think it's a great time if you don't know it to learn it and then jump right into it like 100%. But I believe that we have to get out of this idea that just because it's cheap, we should buy it. It's the fastest way to lose money, right? Because cheap properties are expensive. So make sure that you really understand how to evaluate these deals and you don't get

Starting point is 00:42:39 overzealous just because of the discounts that you see. Brian, thanks for being here, man. I appreciate it. This was really good stuff. If you guys would like to learn more about Brian or Rob or I, you can find our information in the show notes. Let us know on Instagram what you thought about today's show. And how happy were you that a guest actually gave the numbers, the metrics, and even cities that he likes to invest in when nobody else ever wants to give those details.

Starting point is 00:43:01 Well done, Brian. We appreciate you, man. I'm going to let you get out of here. This is David Green for Rob. What are you doing with email Abas Solo? Signing off. Thank you all for listening to the Bigger Pocket. Real Estate Podcast. Make sure you get all our new episodes by subscribing on YouTube, Apple, Spotify,

Starting point is 00:43:37 or any other podcast platform. Our new episodes come out Monday, Wednesday, and Friday. On the host and executive producer of the show, Dave Meyer, the show is produced by Ian K, copywriting is by Calicoe content, and editing is by Exodus Media. If you'd like to learn more about real estate investing or to sign up for our free newsletter, please visit www.com. The content of this podcast is for informational purposes only. All host and participant opinions are their own. Investment in any asset, real estate included, involves risk. So use your best judgment and consult with qualified advisors before investing. You should only risk capital you can afford to lose. And remember, past performance is not indicative of future results. Bigger Pocket's LLC disclaims all liability for direct, indirect, consequential, or other damages arising from a reliance on information presented in this podcast.

BiggerPockets Real Estate Podcast - 903: 120 Rentals in 3 Years by Buying Multifamily During a BAD Market w/Brian Adamson

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