• Brian Briscoe

Accelerating Your Progress in Multifamily with Arn Cenedella and Jonathan Nichols

Episode 132 of the Diary of an Apartment Investor Podcast with Arn Cenedella and Jonathan Nichols, hosted by Brian Briscoe. Transcript by Otter.ai – please forgive any errors.

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Brian Briscoe 0:00

Jonathan, we have Arne online here. What do you want to ask him?

Jonathan Nichols 0:03

What are some things that either you did or maybe you wish you would have done that could have accelerated your progress when you started looking into multifamily investing?

Arn Cenedella 0:12

I wish I would have learned to give up some control. And what I've come to learn in multifamily is you need to partner up you need to let go of certain control you need to associate yourself with good teammates who can do their jobs and you have to trust they can do their jobs. For me, what held me back was wanting to have this sense of control, and I just had to recognize you got to let some control go so you can exponentially grow your business.

Brian Briscoe 0:54

Welcome to the Diary of an Apartment Investor Podcast with your host Brian Briscoe. In this podcast we bring some of the top professionals in the apartment investment field to discuss various aspects of the apartment investing journey, with the sole purpose of educating listeners to make wise investment decisions. The Diary of an Apartment Investor podcast is sponsored by Four Oaks Capital bringing you high yield returns through apartment complex investing. This is journal entry number 132. And part of our Ask the Expert series. Today we speak with experienced investor Arn Cenedella and aspiring investor Jonathan Nichols. Keep listening to hear how you can accelerate your progress in multifamily investing, and some of the levers you can pull in making offers to get more deals. And now the show. Welcome to the diamond apartment investor podcast. I'm your host, Brian Briscoe with Four Oaks Capital. Very excited. It's another Ask the Expert series episode. And we have two amazing people on the line with us right now. We have Arn Cenedella, who's very experienced in multiple different real estate pursuits. And then Jonathan Nichols. So first of all was bring on the show, Arn. Welcome.

Arn Cenedella 1:59

Hey, Brian, great to be here. I've listened to your podcast since you started it. And I've had the pleasure to get to know you fairly well over the last year. So excited to be here me, Jonathan. And hopefully we can discuss some good topics that help your listeners further their education about multifamily investing. And I'm excited to get you on. I

Brian Briscoe 2:22

mean, as you said, we we've known each other for a little while. Incidentally, for the listeners, we also partnered on, you know, 167 units in Augusta together. So very excited for that one as well. But let's start with this Arne, tell us about yourself, you know, give us an idea what your background in history is, and kind of lead us into that you know, how you got into multifamily?

Arn Cenedella 2:44

Sure, well, thanks. So, it's a long story because I'm old. So I got out of grad school in 1977. And Went, went went into the real estate business March 1978, in my home area, which is the San Francisco Bay Area, basically Silicon Valley, and went to work for my dad selling single family homes in Menlo Park, Palo Alto, and did that for about 35 years. And I was blessed and fortunate to live in probably one of the greatest real estate markets in the world, and learn from my dad, my dad was a very active real estate investor, kind of old school started with single family homes. And so in 1980, I bought my first single family home, and it may blow some folks mind, but I paid 11 and three quarters percent on my mortgage. Okay, so that's a little trip down memory lane and lived in that house many years. And then like many new and real estate investors, kept that house moved into a bigger, nicer house and rented my my original house. And that was the start of my investing career back about 1986. And from there, I just kept investing in single family homes, both in the Bay Area as well as across the country. There was kind of an old school approach, and it's worked for me, and that's what I did until about 2020.

Brian Briscoe 4:24

So So one question on there. I mean, San Francisco has some of the most expensive real estate in the country right now. Was it back? Was it still the most expensive area of the country in the in the 80s? Or that that happened since then?

Arn Cenedella 4:35

Um, great question. So when I got into the business, basically homes were maybe 100,000 a bedroom, just as around number. By the time I left the Bay Area, they were about a million dollars a bedroom, wow. Over a 35 year period. So I would say in the early 70s prices were still relatively affordable. And I would say the big increases started in the late 1980s. And then also continued in the late 1990s. primarily with the.com, boom, and, you know, IPOs and and that and it created a lot of wealth in the Bay Area. And so, prices really ratcheted up two or three times, typically about a decade apart for three, four years, we'd have a period where prices would go up 15 20% a year. Yeah.

Brian Briscoe 5:34

Wow. That's That's some amazing increases now. I mean, I, my first time in the Bay Area would have been let's see, 93. You know, I was in high school and I did a swim camp at Stanford, which is Palo Alto, right and right in Eurostar? Yes, yeah. And I remember the the coach of the swim team, who also coached the Olympic swim team at the time, had us all over at his house. And I remember prior to going there, somebody said, he's got a really nice house. It's super expensive. And I was expecting mansion. I'm from Salt Lake City, and walked in his house, I looked around and I'm like, Wow, my parents house that barely cost. $100,000 is like three times the size. You know, now, that was my first real take on on real estate. And, you know, he ended up getting, I mean, the price of his his house in San Francisco is probably five times the price of my parents house at the time.

Arn Cenedella 6:29

Yeah, so currently, prices in the on the San Francisco Peninsula, Silicon Valley are probably over 1000 a square foot just to kind of put it in perspective. If I was a young guy, young woman, and I wanted to find my, you know, find my fame and fortune, probably no better place to be than in Silicon Valley. And so it attracts people from all over the world, highly educated. And there's a lot of dynamic growth and energy and a lot of smart people. So it's a pretty fabulous place. Nice.

Brian Briscoe 7:04

Nice. So so you told us a lot about your single family the selling the investing. What What got you into multifamily?

Arn Cenedella 7:11

That's, that's another good question. And it was actually a conversation with a young investor friend of mine here in Greenville, and go back to march 2020. COVID, just hit America. And we were all kind of wondering what what was it going to do? And so my buddy Mario called me up and he goes, Arne, what do you think COVID is going to do with rent collection. And I told them, Mario, I'm not sure. Talk to me about April 4, or fifth. And I'll let you know, my April rents came in. So we had a great conversation, he had done four or five syndications. And that's the great thing about this business. young folks are doing amazing things. And an old dog like me can still learn from them. So we finished the conversation. And he texted me a podcast from a well known West Coast syndicator. And I listened into that, and kind of the light bulb went off in my head. And I said, one, this is really interesting. It's fascinating. And it makes a lot of sense. And so at that point, I kind of immersed myself 24, seven and learning multifamily. Of course, I had real estate background, I had investment background, it just wasn't specifically tied to multifamily. So I just consumed information for three, four months and jumped in and started making investments as an l. p, and then started moving to being a GP. Nice, nice. So

Brian Briscoe 8:46

so a tip from a friend and a podcast episode, people actually listen to podcasts. That's, that's good news for guys like me,

Arn Cenedella 8:53

I had six or seven podcasts that I listen to religiously, and I'm kind of a fitness fanatic. So they close the gyms for a while. So I take what hour long, two, three hour long bike rides, I put in my earbuds turn on the podcast. And I would just listen. And I know john, Jonathan has an engineering background. I have a science background. So the numbers all fascinate me. So it was a great learning experience. And then I kind of jumped in, because you can study as much as you want. I think you need to get in the game, get in the arena to actually work and that's where your education curve really ramps up. So it's been exciting, and it's been fun. Awesome.

Brian Briscoe 9:41

That's neat. That's neat. So let me let me ask a question. And it's probably my favorite question of the podcast on what's your big burning Why?

Arn Cenedella 9:51

Good, good question. So through real estate investing, I've been able to create a good life for my myself and my family, we're not jet setters, I often refer to it as kind of the good simple life, where you have time to enjoy the things that are important to you, friends, family, Community Church recreation, and because to me times kind of the most valuable commodity, and especially at 66, it's even more more worthwhile. So I love the real estate investing, it's done very well for me. And a lot of my friends back in Silicon Valley had nice Silicon Valley careers, they're making lots of money, but they were being ground 60 to 70 hours a week, you know, they got paid a lot of money, but boy, they earned it, no doubt about it. So I think my Why is to help other people kind of learn real estate investing, it's worked for me, it can work for you and your family to kind of create the life you want. And just take a little pressure off and provide you a little bit of space and time to really enjoy life and do the things that are really most important to you.

Brian Briscoe 11:07

Yeah, you know, in time, time is a commodity that you can, you can never buy back, you know, everything else is a commodity that, I mean, you can even pay for time. I mean, it's something that I think resonates with a lot of people. And it's something that I'm I'm finally starting to see and winding down my my Marine Corps career, which has been very demanding on my time. And I'm excited to do exactly we talked about, you know, have that time for the friends, the family, the, the the church, the community, and, and everything else going forward. And it's definitely done it for me too. So I appreciate that.

Arn Cenedella 11:43

Yeah. And and the other thing that I really particularly like about multifamily is the relationship aspects, the team aspects of it, because that, for me is really where the juice is building the relationships, partnering with people having fun doing it for me, you got to have fun, I'm at a point in my life, where if it's not fun, I'm probably not going to do it. And so I really enjoy the relationship aspect of it. And it's just great working together. And of course, in the military, you know, that working together as a team towards a common goal, just makes the reward all that much better, makes the goal much that much more important, you know, when it involves more than just yourself?

Brian Briscoe 12:32

Yeah, absolutely. Absolutely. And it's, it's something that's definitely we have in common is always at team mindset, you know, in in what I do on the Marine Corps side, you know, nobody's operating alone, ever. So, you know, you have to learn how to work as a team. And that's one thing that came easy and natural to me, you know, transitioning from one side to the other is working with other people. Okay, check. Got it, you know, people have different roles yet understand that that's what we do. So, but good enough. So let's switch gears a little bit here. And let's talk a little bit about, you know, one of the deals that you've you've participated in and let listeners know a little bit more about that.

Arn Cenedella 13:10

Sure. So I've had two multifamily transactions today. And the first one will warm your heart because I think your first major syndication deal was in Spartanburg, South Carolina. So I'll go to Spartanburg, South Carolina where we bought 12 units and converse heights. We had nary I think, you know, and that was more a joint venture type deal with three local Greenville guys I know and a brother of one of the guys who lived in Boston. So five owners, I actually put an ad up and not even an ad or post in a local Facebook, Greenville Real Estate Group. Two hours later, a guy calls me and goes, Hey, I may have something for you. And so that acquisition was through a wholesaler or longtime owner for different families that own the building for a long time. closed on that one in December. And that one's doing well. We had a couple vacant units initially, and we seen was very slow January, February, but come March, April. It's really picked up and we're now fully occupy and I expect that to be a good long term investment. So that was one I can talk about. And I have one other if we have time. Yeah, yes. So

Brian Briscoe 14:37

what were some of the biggest big lessons learned from that that 12 units? What what came out of that?

Arn Cenedella 14:42

Well, so one, trying to purchase a multi family property through a wholesaler was a little bit of a challenge. Most wholesalers deal in single family kind of Fix and flips in Greenville, we're talking property 7080 100 150,000. It's all done cash, you can close in a week, there's not much to it right? Were with the multifamily acquisition, we did have to finance the purchase. And of course, there's much more documentation and due diligence that you need to do through a multi family and so having to work through so there wasn't a broker involved, which, if you have a broker involved, they kind of know what the standard operating procedure is, they know what needs to be provided they know what's reasonable, they know what's not with a wholesaler, this was his first multifamily deal. So there was a little static and trouble kind of getting to the seller getting what we needed to put the deal together. So that that was a learning lesson. At the end of the deal, it comes down to whether the investment makes sense, it did working through the wholesaler was a little aggravating, but you have to stick with it if you want to, you know, make progress, right as part of the deal.

Brian Briscoe 16:07

True, true. Some good food for thought there. You know, I I've heard a lot of wholesalers stories before, and I think a lot of times wholesalers get bad raps. And in your case, you know, being difficult to work with and being being the go between I think a lot of wholesalers, you know, are trying to control everything so so they don't get bypassed. And that can be difficult for both buyer and seller. Because you know, there's there's one person hinge in the middle of the deal. But

Arn Cenedella 16:34

absolutely, and they work hard to locate properties, they have systems, they spend money, they invest money developing leads, so I don't begrudge a wholesaler his profit at all. And I think on this one, it was his first multifamily deal. So he didn't really have an idea of what to what to expect. So no problem. I'm glad he called me. I'm glad I own the property. Absolutely.

Brian Briscoe 17:04

I think what you said was, was key is, it was still a good deal. So it was worth going through the aggravation, you know, and we think we've had to do a lot of work getting some of our properties, you know, past the closing, you know, line or the past the finish line. And our first Spartanburg property, which, incidentally, in commerce heights, which is why you said that we know the area well. Yeah, it took it took a while to get that across the finish line. And it was a long, hard process. But at the end of the day, we kept on going back to the question, Is this still a good deal? You know, and as long as we can answer yes to that question, we would keep going forward and keep pushing through. So it's not a it's not a rose garden, or maybe it is a rose garden, you just have to deal with the thorns to get to the roses. But anyway, well, sweet. Good enough. So what's what's next for you?

Arn Cenedella 17:57

What's next for me is expanding my multifamily business. I'm currently in the middle of my first true syndication acquisition 43 units in Greenville, we've completed the raise the big thing, the big learning curve is we're trying to get a Freddie Mac loan. And that's been a learning experience and and they kind of make you jump through hoops. You know, you're single family, homeowners, people own single family rentals. No. Sometimes dealing with a lender can be a little bit of a pain in the rear, right? They keep asking for more documents, more documents, and none of it seems to make sense. But they have the money you want the loan, you got to do it well, with a multifamily loan, it's 10x that then I know wed foros capital, you know that and it's kind of the effort to obtain these larger multifamily loans, to bring the thing to the closing table coordinate all the various aspects to bring it to a point to a day to get that acquisition done. It's a lot of work. For me. It's been a great learning experience. And I've learned so much over the last month or 45 days, my knowledge is just kind of increased exponentially. We love the product. It's a newer build. We love Greenville, and 43 units, I think is a good stepping stone for me to start. I was honored to be part of the 167 unit deal in Augusta, but I wasn't ready I'm not ready to be the lead sponsor on that 43 units I am it fits. I'm good to go and I'm excited to take it on.

Brian Briscoe 19:49

I like that very, very measured approach and with with the loan process. You know one one thing that really frustrated me and this is when when you did a Freddie Mac ourselves is They asked you for a bunch of financials. And the rule is, you know, the financials had to be the last two months. And three times they came back to us and said, Hey, we need new financials, you know, and they asked us for new financials, because the two month mark had passed. And our documents were two months out of date. And so we had to go back to them twice with new financials, because the loan took so long to close. So it's, there's a lot of hoops. But end of the day, you sit back and ask, Is this still a good deal? You know? And if the answer is yes, you jumped through hoops.

Arn Cenedella 20:37

And the truth is, we're working for our investors. And part of that is to obtain the best financing possible. And the truth is, in most deals, agency, dad is kind of the no brainer way to go. And we'll be getting a sub 4% interest rate on this fixed for 10 years, a couple years i O. So it's necessary to make the deal work. And so for the investors, you have to go to that effort and get it get it across the finish line.

Brian Briscoe 21:09

Absolutely. Absolutely. Well, we're gonna shift gears one more time and bring Jonathan Nichols on the show. Jonathan, how are you?

Jonathan Nichols 21:17

doing? Well, Brian, How about yourself? Doing great. Thanks

Brian Briscoe 21:20

a lot. I appreciate it. Thanks for coming on the show. And it's it's been great getting to know you. I know. We've been in several meetup groups and networking events together, looking forward to you know, one day, hopefully soon, you know, sitting across the table from from you. But anyway, let's, let's talk a little about you now. Well, how about tell us a little bit about your background and history and kind of lead us into how you got into apartment investing?

Jonathan Nichols 21:42

Yeah, that's a great question, Brian. So I live here in Dallas, Texas. And I've always grown up in Texas and Oklahoma, and don't really come from a family that's necessarily involved with real estate or any type of, I guess, serious level investing. And so you know, I went to school, got an engineering degree and began to work in the aerospace industry, I worked for a manufacturer and aerospace industry. Now, I've been with the same one for almost eight years now. And so you know, just kind of went down that normal path that everyone wants their kid to go down when they grow up. And about three years ago, after I got married to my wife, Paula, we began to just stumble upon some information about real estate investing. And it caught our attention right away, because it just seemed like this whole new world to us. And so as we learn more and more, we jumped in right away, started to buy some single family properties, you know, this was a few years back, and actually converted those to short term rentals. And I've had a lot of success with that, and very happy with how they perform. But the question that kept coming back to us is, how are we going to scale this? Like, how can we make this a long term business? And so we began to talk to some of the experts in our local real estate meetups and just kind of ask those probing questions. And the answer that kept coming back is you have to go to commercial multifamily. That's where you want to go, if you really want to make this a long term business. And so about a year and a half ago, I think it's been now we just jumped in all the way and just began to learn, kind of like, what are the saying just every book, we could get our hands on every podcast, went to dinner with everyone we knew who was, you know, remotely involved with some kind of multifamily project. And then it was really during the middle of the pandemic, when we pulled the trigger and said, Hey, we're going to do this, you know, we want to find a deal and take it on. And so basically, for, you know, the last eight or 10 months now, we've been actively looking to take out our first deal. As you know, it's the first one's always the most challenging to find and to get across the finish line. And so that's our journey today. I think we're getting pretty close, but definitely excited about the future in this industry. Yeah,

Brian Briscoe 24:00

yeah, definitely. Now, same, same question for you, as I ask everybody, what is your big burning? Why?

Jonathan Nichols 24:07

Yeah, so I knew I've listened to enough episodes, I knew this one was coming. And I really had to think about it a lot. Because for me, Brian, I felt like I had a lot of different lies. And so I was trying to think well, how, how can I summarize them all into into one statement, because like everyone, you know, I want to build financial freedom for my family. Like every one I want to have time freedom to pursue other things that I'm interested and I would say like everyone, you know, I want to be able to give back and in a big way on my future and sound sick, how do I summarize those And so that kind of the phrase I came up with is to run the race well, so my passion, my hobby, my whole life has been running I love to run have done a lot of different races and stuff and and you know, running the race Well, to me means with whatever gifts or abilities that you're given in every aspect Like that, you're gonna, you know, do your best to to reach your potential reach what you're capable of. And so I think that kind of captures all my why's, you know, in one simple phrase.

Brian Briscoe 25:12

Nice. Nice. And for those of you who are listening to the podcast, just behind him on the wall, I see probably about a dozen different metals hanging down. All from running races, I assume.

Jonathan Nichols 25:23

Yeah, absolutely. Running in a little bit of triathlon too. Okay,

Brian Briscoe 25:27

nice. Nice. Yeah, I see, it looks like a bib or two on the wall as well framed up there. So, yeah, so definitely, definitely run the race. Well do do your best. I like that, you know, I really do. And, you know, when it when it comes down to my big burning, why the reason I ask is because, you know, that's what ends up motivating me, that's what ends up pulling me through when when things get hard, you know, and that's, that's the fire that's kept me going when, you know, you call 20 brokers in a row and 20 brokers in the road tell tell you to get lost, you know, so that big burning, while a lot of times is is what will put you through, you know, the cold dark nights, so to speak. But yeah, I like how you sum that up. And I like the analogy, you know, run the race. Well, so there we go. So, you know, I've already said, you know, the big bring Why's my favorite question. This is also my favorite question. So here we go. Jonathan, we have Arne online here. What do you want to ask him? Yeah, absolutely

Jonathan Nichols 26:23

aren't. Thanks for coming on today. I appreciate you taking the time to jump on the podcast and answer just a few questions I have. So the first one I wanted to kick off with is, as you're aware, this industry, you know, it's it's hyper competitive. And I think especially today, with this hot market, it's full of experts, how can you differentiate yourself and bring value as a newer investor in the multifamily space?

Arn Cenedella 26:48

Well, Jonathan, nice to meet you. And I love all the young people getting into the industry, I think it's great. And we have a similar love of fitness. So I, I really appreciate that. So I would say my particular value add would be over four decades of experience in the real estate industry. And I think with experience and time, you kind of gain perspective, that's only available for a long term thing. I think, in today's society, things happen. And it's like the 24, seven hour news cycle, and we go off. So since I've gotten into real estate, just recount a few events, major economic events that I've gone through. So there was Black Monday and 1987, where the stock market dropped about 30%. In one day, in the early 1990s. Not many people remember it 1/3 of all American savings and loans collapse and went bankrupt, went through the.com, boom, the.com bust, through the Great Recession, through unprecedent, economic expansion through COVID. So there have been a lot of events over the last 40 years and through at all, I've just kept investing, I've had faith. And so I think I bring the perspective of time. And particularly for a new investor, they have fears, concerns. And so I think working with somebody that's kind of been to a few rodeos, helps gets people over that hurdle, and into the game. So I think that's kind of where I bring the most value is some kind of long term perspective through numerous economic and real estate cycles.

Brian Briscoe 28:46

How would you recommend to someone like Jonathan differentiate themselves then?

Arn Cenedella 28:51

Well, I know you have an engineering background. So I would imagine you're pretty good with numbers and understanding high level concepts. I think the other thing would be and I feel the same, you're kind of a Texas, Oklahoma native, you know those areas. So my suggestion would be focus on those markets, because you bring some credibility, you have your finger on the pulse of those markets. And I think that's very important. You can get a costar report, and it's going to give you some data. But if you live in work in an area, you kind of know what's going on what's gonna be the next neighborhood what neighborhood today has a vibe that you know, in five years is going to be good. So I would leverage your engineering skills, I would leverage your local market market knowledge, and that's how I think you can best you know, present yourself and then of course, my senses. You're a person of character and integrity and at the end of the day, that's number one. You've got to manifest And people gotta feel that

Brian Briscoe 30:02

love is great answers. And one thing I mean, you definitely have a competitive advantage in your backyard, you know. So that's something that, you know, a lot of people want to invest in Dallas, you know, I've looked at Dallas, I looked at Oklahoma, but we've got to fly halfway across the country to get there. So you have a lot more in depth knowledge of all these areas, and you can definitely take advantage of that.

Jonathan Nichols 30:26

Yes, absolutely. So kind of playing off, I guess another twist to that question artists? What are some things that either you did or maybe you wish you would have done that could have accelerated your progress when you started looking into multifamily investing?

Arn Cenedella 30:43

Well, if I can extend the question to kind of life in any investing, I believe in karma. And so I believe if you conduct yourself properly, and with integrity, good things come back to you. So that's more over overarching above anything else, I would say for me and my real estate investing career, I wish I would have learned to give up some control. earlier in my career, then what it took me and what I say by that is, for most of my career, I self managed all my rental properties. And that's time consuming, and so forth. And maybe there's a little bit of ego there where well, I can do it better than somebody else. So I'm going to do it. And what I've come to learn in multifamily is you need to partner up, you need to let go of certain control, you need to associate yourself with good teammates who can do their jobs, and you have to trust they can do their jobs. And so for me, within the last year, I started turning over my my single family rentals to a property manager. And I should have done it 10 years ago. He's better at it than I am, and I just should have done it. And now he's my main partner on these 43 units. I've been hafter him for a year and a half to come join me in multifamily. And we finally found something. So for me, what held me back was wanting to have this sense of control. And I just had to recognize you got to let some control go. So you can exponentially grow your business and do more by partnering and assigning tasks and duties. Yep,

Brian Briscoe 32:35

that was also a tough pill for me to swallow, you know, getting getting four partners. And I love my partners, they're all great. But I came from a background where I was used to being in control, but giving up control and letting other people do the jobs. It was difficult, but you know, we've been able to scale a lot quicker because of

Arn Cenedella 32:57

it. And I think there is a skill in finding the right people and and bring in the right teams together. And so that's an important skill to kind of recognize talent, motivate a team to all grow together, so to speak. And it's really a part of the business I really enjoy.

Unknown Speaker 33:21

Yeah, absolutely. So tell me aren't on the on the 12 unit. And then now you're you're 43 unit? What are some things that maybe you've learned? You know, now we're in a particularly hot market, aside from purchase price and hard money? What are some levers that you've pulled to make your offers competitive when presenting them to sellers?

Arn Cenedella 33:40

Yeah, great, great question. And I might extend the the, the sellers to sellers and their brokers, right. Because you know, Mom and Pop you may buy from direct from seller. Generally as you get a little bit bigger. There's brokers involved. And so I think the question is, how do you appeal to both sellers and their brokers. So for me, it was getting my ducks in a row, getting my team lined up, having my attorney selected, having my debt broker on board and ready to go, who's already looked at the property right and looked at the numbers and they know what we're doing. So for me being a relatively new investor, I had to show people that I had my team organized, we knew what we were doing and can proceed on the 43 unit transaction that was brought to me through a broker. And I've been working to develop a relationship with that broker for a year and a half. And so I think that's key. You just kind of got to put in the time. We go to lunch, we play golf, they just have to get to know you. And and and recognize you're actually serious about doing this. And if they award you the deal, you can actually close it. So I think there's a lot you can do to build credibility that can push you over the top, oftentimes it comes down to price. And that's just the way it goes. But the more you can do to kind of properly position yourself the better.

Brian Briscoe 35:28

Couple, a couple of notes there, the brokers are the keys to most things, you know, so the first first person you need to win over is the broker. And if you can win the broker over, you know, you put it you put the ball in the brokers court, and the brokers gonna take your offer to the seller. Now, you know, me Me personally, when I bought when I've sold single family rental properties, and incidentally, we're selling one right now, but I have stated many times that I would go for a slightly less price, if we could guarantee a smooth, close. And, you know, some some owners are sticklers on price. But if you can guarantee a smooth, close, and I think what Arne said about having all of your ducks in a row before you put the offer in, now, with someone being brand new, it's hard to guarantee it. But if you can basically paint that picture that you're going to be a low risk, you're going to be an easy, close, the brokers are going to push you more than anybody else,

Arn Cenedella 36:26

and what others are a key part of it and would be as Jonathan, especially if you're going for agency debt, you're going to have to have your key principal who has agency debt experience lined up. So again, that's one other key team age you need. And so if you have that, Kp, the brokers probably know the kp. And it's easy enough to kind of research the Kp and see where they're established. So if you have the Kp on board, and the Kp can talk to the broker or the seller, and hey, I know Jonathan, he's legit, I'm going to sign on the loan, I'm 100% behind the deal, that's gonna help big too. So get your GAPI lined up. And that will really help your rock. Mark.

Jonathan Nichols 37:15

Absolutely. So then go into the other side of the core, you know, we're talking credibility with sellers and brokers now talking about investors for your deal, when you're a new syndicator, and you don't have a track record, what are some of the tips you would have for talking to and developing credibility with investors that might want to join you on your on your deals? Great question. And, of course, most of us start with friends and family, and hopefully they will have a good experience. And then they can refer people to you.

Arn Cenedella 37:49

And I think the answer is the same as dealing with sellers and brokers. So when you're approaching investors, you have to kind of present you have your act together, right? You know, the market, you know, the rents in the market, you know, the sale comps in the market, you've done your numbers, you understand those numbers backwards and forwards. And so I think having that knowledge base, doing your homework allows you to talk in a credible way to investors. And I don't know about you, but I suspect Brian and you are similar. If you're listening to somebody who's trying to pull your leg for lack of a better word, okay to be polite, there's probably a little voice that goes off in the back of your head that says, Wait a second, this doesn't add up. Right? What this person's telling me doesn't make sense. And immediately, you're not going to invest with that person. So I think having the numbers, the knowledge, being able to express the thesis of the investment, instill confidence in them that Yeah, Jonathan is research this he's put the time in, he knows it. It's not a guarantee, stuff can happen. Life can happen. COVID did happen. But the premises there. And he's got his team lined up, which will also include some more experienced people. And I think for all the GP deals I've done, I've put in my own cash. So I think one thing is you got to put your out, you got to put your money where your mouth is to express it crudely right if you're asking me to invest 50 Well, hey, john, and then you have to put some money into the deal to win. So I think that's a way to add credibility,

Brian Briscoe 39:45

that the good tips, I think, I think putting your own money and, you know, on our first deal, you know, there's there's two things that I got asked a lot, you know, it was my first deal and a lot of people keyed in on that one. They asked, you know, is there somebody on your team with experience? or What experience do you have? And we had to get over the experience hurdle? You know, so and I know, Jonathan, you're in the same coaching program I was in, but I was able to leverage my experience coach, I was able to leverage the Kp on the deal. You know, I was able to leverage some of these other people that had the experience. And you know, same thing with with skin in the game, you know, we I put $100,000 into our first deal as well. And a lot of people asked that question, and that that was actually the, the game changer with a lot of people was, you know, well, how much money are you putting in, you know, and when I put that amount out, they said, Okay, I'll put 50k in with you. Because I know you're going to take care of your own money. And that's, that tends to be a huge deal with a lot of people. And incidentally, one quick story. We had a capital raiser on one of our deals who originally told us he wasn't going to put money in. And he had an investor that he was courting. And the investor asked him, Well, how much money are you putting in all Macha? And so that capital raiser called me up? He's like, Hey, I told him I'm putting in 50. So I'm now putting in 50. But it does, it does get? So I mean, for us, that was great. So we got we got $100,000 in one swoop. But I think those are good tips, you know, that the more skin in the game you have that's going to lend credibility and experience part good.

Arn Cenedella 41:24

Yeah, it's a I think one other thing is, and this just may be my old school, conservative buy is really be tight on your underwriting, don't pump it to a 15 IRR. If it's really afford to, you know, be solid on that. Because ultimately, when they invest, you want to you want to produce the returns, and nobody ever cares if you do better than what you promise. So I think Don't try to oversell the deal, kind of be humble about it. And at least for me, that works a little bit better. Because for me investing is a series of wind drive base hits over 1015 years. I've never gone for the Grand Slam people do when they hit it, but it also people crash and burn. So I think keep it grounded, make it solid, kind of make it bulletproof. And I think it'll be an investors will appreciate that. Like right now in this market. If I see a offering come through, and they're promising 22% IRR. I'm sorry, I don't believe it. I may be dumb, but and I may miss out on the deal of a lifetime. But if I see that, I almost immediately toss it in the trash bam, right? Because I know that's not where the market is, in a competitive market like this. Returns have decreased a little bit, but they're still excellent. And they're going to be fine. Nice.

Jonathan Nichols 42:59

Absolutely. Final question I have for you, Arne. So what's your biggest challenge that you face ongoing now as a successfully established sponsor?

Arn Cenedella 43:11

Well, so I'm still getting to successfully establish, but I appreciate the kind word I will get there. So I think it's the same problem for all of us, right? Is deal flow, and finding stuff that makes sense, right? We want to do a deal. We're motivated to do deals, we enjoy doing deals, but we can't let that carry us away into bad deals. Right. And so how do you properly modulate the desire to move forward with also being prudent and respectful of your investors money? And I mean, the environment we're in now, it's totally fascinating, because we're at historically low interest rates, fairly low cap rates. What's going to happen in five years? I don't really know. It's a fascinating industry. And yeah, I enjoyed talking about it.

Brian Briscoe 44:17

Just gonna say we're about out of time. So let's one last question for both of you aren't you get to go first today. So how can listeners learn more about you?

Arn Cenedella 44:26

Thanks, Brian. So the name of my company is spark investment group. And the website is invest with spark SBA rk.com. You can reach me at Arne at invest with spark calm or my cell phone from Silicon Valley, which I'll keep they're basically social security numbers these days is 650-575-6114.

Brian Briscoe 44:55

All right, and we will have that in the show notes. So anybody who needs to contact It's gonna be right down there. Jonathan, same question for you. how can listeners learn more about you?

Jonathan Nichols 45:05

Absolutely same response. So they can definitely check out our website. It's a, our company name is Apogee capital, the website is Apogee, ap OGM, FC for multifamily capital calm. And if someone wants to reach out to me directly my numbers 806-290-4111.

Brian Briscoe 45:28

All right, sounds good. And we'll have those in the show notes as well. So thank you so much to the to the both of you for coming on the show today. This has been an absolute pleasure. And looking forward to talking to both of you again pretty soon.

Thank you for listening to the divergent apartment investor podcast today brought to you by four oaks capital. If you'd like to know more about how to invest in apartment buildings or want to be a guest in our show, visit our website at four oaks capital comm slash podcast or email us directly. If you're still listening, you obviously like the show. So pull out your phone, app, subscribe, and leave us a five star rating on your favorite podcast app. And we'll see you again next week.

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