Exit Strategies with Mark Kenney and Marquis Campbell

Episode 154 of the Diary of an Apartment Investor with Mark Kenney and Marquis Campbell. Transcript by Otter.ai – please forgive any errors.

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Brian Briscoe 0:00

Marquis, we got Mark on the line, what do you want to add? So

Marquis Campbell 0:02

um, so when you're syndicating, like what metrics are looking in regards to your old patterns?

Mark Kenney 0:08

Typical underwrite for five, six years, depending the deal. Rarely will be seven, we'll say five or six years. And some investors will say, Well, I want to know exactly what your exit strategy is in your five. Well, you know, I would never invest in a deal if someone told me I'm selling your five. How would I do that? The market could be horrible at that time. So you need multiple exit strategies. We've had properties where we said, Hey, we'll do a five year Performa, and we sold in 14 months made sense to do it.

Brian Briscoe 0:46

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 episode number 154. And part of our Ask the Expert series. Today we speak with experienced investor Mark Kenny, and aspiring investor Mark Keith Campbell. He's listening for tips on how to find the right property and scale your business. And now the show. Welcome to the dive in apartment investor podcast. I'm your host Brian Briscoe with fairoaks capital and I'm very excited for today's show. It's one of our Ask the extra episodes. We've got two amazing people on the line with us we got a man with a tonne of experience in this business, Mark Kenney, and a motivated aspiring investor, Marcquis Campbell. So first, Mark started investing in real estate when he was a senior in college over 25 years ago. I'm sure that's a typo. It's probably 15 years ago, right Mark?

Mark Kenney 1:54

Coursley it's more than 25. Now, I don't want to update. I am. Yeah,

Brian Briscoe 1:59

I know. Right? But going and moving along. He's purchased over 10,000 units and currently owns at 709 different states. He's purchased all property types from 46% occupied the 98% occupied and has added value through management cap x ranging from bike eight 5k door to 20k. A door. Those 20k a door ones are fun. And prior to becoming a full time real estate investor. He was a CPA and his own IT company where he provided consulting services to fortune 500 companies. So Mark, welcome to the show.

Mark Kenney 2:31

Thanks for having Brian. Really appreciate it.

Brian Briscoe 2:33

Yeah, this is this is a lot of fun. I've been following you for a while. And we actually had a couple of people on the podcast two weeks ago who were part of your think multifamily. So actually, let's let's do this. Why don't you tell us before we kick into everything. Why don't you tell everybody what think multifamily is? And we'll go from there.

Mark Kenney 2:52

Yeah, great. So we focus 100% in multifamily. So we obviously purchase multifamily properties. But we also host events, live events that are typically in the Dallas area where I live. And then it could be kind of general different parts of multifamily. And we also do a deal analysis workshop which is kind of hands on where your computer work through deals together for a few days. And we have a we have a coaching programme as well. So people that are trying to get involved in syndication, remember not sure where to start or looking for a community people that can come in and help them we provide one on one coaching on that respect. And I do all the one on one coaching in our group. We don't have sub coaches or anything like that as well.

Brian Briscoe 3:31

Nice. Yeah, I heard a lot of great things about it. You know, like I said, we brought on, let's see Mike Van graan again, and Tyler caviglia. And they both spoke very highly of you. So I was super excited when you when you said you'd be on the podcast. But that said, What do you give us a little bit about your background in history and tell us what kind of led you up into apartment investing?

Mark Kenney 3:50

Yeah, so I grew up in Michigan, I'm one of seven kids have identical twin brother, both probably pretty analytical, both CPAs both did it. But pretty young age. We were like man, this kind of stinks. You know buying your own shoes and clothes and bikes when you're like 10 years old and see my dad were literally 100 plus hours a week because he was a firefighter plus work full time another job in addition to the hustle, he was gone a lot and we was always working on cars breaking down on TVs and all that so my brother and I looked at each other Go man, this is not fun. We don't want we don't want that situation. So really to know what we're going to do. But we were seniors in college and we're like we like real estate when we go look at some some real estate. So we start looking together we started buying small properties, two to four units together didn't know what syndication you know, raising capital from other people even was at that time, sir, buying dinner in our hometown now in Michigan and continue to work corporate jobs, and did pretty well. I mean, from all our respects financially if you want to say I started it business, but my biggest thing was I was working your minimum probably, you know, 9090 plus hours a week. Yeah, I was sleep about three hours a night not like once in a while but that was my routine. I really didn't take care of myself as far as eating. And, you know, fortunately I was I spent some time with my kids, which was good for them a little by neglecting my wife to meal, they really didn't have time, people all over the world on projects in my phone going off like 24 hours a day, literally. Yeah. And so my wife is like, you know, to me, I was like, you need to do something different. This is not working out. And I'm like, Well, I'm thinking like, well, kind of is what it is. But I'm like, we both like real estate to me. And I started buying real estate to get married, pretty young, bought together. She said, Well, why don't we start buying larger properties? And I said, well, you're gonna have to help me. So that was where we ended up getting involved in the larger kind of 100 plus unit properties and looking at syndicating we invested passively, first with a friend of ours in a multifamily investment through some retirement funds, and did that a few times and then decided to try to do on our own. And it took us about a year to find our first deal. I mean, I was you know, everyone has an excuse, I really was super, super busy. Plus, we were distracted looking at other opportunities, outside of real estate as well, like franchises. And yet my whole thing was trying to find out from my, my grind, if you want to say it wasn't so much financially. In fact, I thought I would probably make less money doing real estate than I was, wasn't my IT business. But that was okay with me, because I needed to get my time back and kind of get my relationships back on track.

Brian Briscoe 6:22

Yeah, that's absolutely crucial. I mean, if you were only sleeping three hours a day, and then, you know, all of a sudden, you have to do more work on relationship. Where's the time come from? Say, yeah, I think I would take a pay cut to have better quality of life. But I think it's a good trade. Very, very good trade there for sure. Now, you said when you started out, you had no idea what a syndication was, you know, where along the line, did you you figure out, hey, we can syndicate we can use other people's money, we can bring in investors.

Mark Kenney 6:52

Yeah, my wife, she was a nurse at the time. And she worked with somebody and her husband was just getting into syndication. And he had a I had, we were on our house, he has talked me about, you know, some real estate he was doing he was I think his first deal was 116 doors. And like, you know, sounds interesting. And, you know, it made a lot of sense, I was pretty quick to pick up the analysis pieces, because my background and things like that. Everything looked good. I had already been buying smaller multifamily. So I said, I'll put some money into his deal. Then, after a few months and like, kind of learn more and more. And then I'm kind of like, Well, I think we could probably syndicate ourselves technical knowledge. My thing that really concerned and really kind of petrified me was raising capital. Yeah, that was the biggest thing that really scared me to syndicate all the other aspects of it, building relationships, visiting properties, analysing and getting loans, all that stuff I really wasn't that concerned about but it was a capital side that concerned me.

Brian Briscoe 7:47

Yeah, yeah. And I'll be honest, you know, I'm, I'm a very technical guy got two degrees in math, you know, so I remember that. Yeah. So it's just one of those where I had the same same thing coming in. It's just like, okay, I can I can analyse, you know, I can call I can call brokers, I can ask them questions, I can get all the information I need, I can work in that relationship. But I was the same way capital raising scared me got over the hump, though. But that was my biggest fear going in. What did you do to get over? I mean, what, how did you guys get past that?

Mark Kenney 8:16

Well, the first year we did, I mean, for all practical purposes, are those smaller arrays. This was a number of years ago, but a million dollar arrays. And fortunately, I had a partner at the time, that could cover a bit of it, if we didn't raise it. So I may have probably had to easier than some other people, I was gonna cover it all, maybe cover half of it. And I have been doing it for a long time. And we were going to events and meeting people and we felt fairly comfortable, we could raise it. I didn't really know. But it's kind of pointed out there. And then I talked to a tonne of people about the deal and they knew I was already doing some real estate but not to that level. So my prior experience even though it was small scale, help some not not a lot to help some. So it was really just getting out there taking action. Didn't know where was gonna go. Let's see. But like I said, having someone that could cover let's say, maybe half of that, at the time gave me more comfort level.

Brian Briscoe 9:10

Yeah, you had a little bit of a safety net there, you know, we need to raise a million but really we need to raise 500k and that's that's much more bite size. I don't know. So somehow when I was starting out and you know, let me know was the same with you. But once you once you put that million dollar price tag on the back for some reason difference between 999,000 and 1 million, the big big mental jump for me,

Mark Kenney 9:35

it is for sure. Like you mentioned give you kind of go through it, you'll learn a lot. I think a lot of it comes down to people just you know, trusting you. I've been I've done business, a lot of people and you know, had a good reputation as far as doing what say is going to do and things like that. Plus, I invested passively in a few deals before I started syndicating, which gave me a little bit credibility too, because that was you know, for instance, a partner and some deals that way So I have a few of those things going for me, I guess as well.

Brian Briscoe 10:02

All right, nice. Well, good. So let's, let's talk about some of those deals, you know, so pay pick a deal or, or tell us kind of your overall criteria, let us know type of stuff that you guys do.

Mark Kenney 10:12

So we've all pretty much everything, you know, from A to C. So if you're not familiar with that, just think of new building versus all the buildings. And yeah, you know, my whole thing is we still buy all different types, because we do have a group and people in the group look it up a lot of different deals, and I kind of like more the the B ish type assets, frankly, the issue with some of the older buildings or you know, uses plumbing, for one, it can be right, depending on what they've done for upgrades and things like that. Or it could have like a chiller system, which is one unit to heat and cool the entire property and a couple stories around around those situations. But you know, as far as deal wise, you mentioned, you know, we bought properties for 86%, occupied and 98%. We actually did one recently 0% occupied, which is actually better than 46. Because you don't have to consider people living there. I

Brian Briscoe 11:01

thought that's Oh, yeah, I'm done. Yeah, renovate and filling. So

Mark Kenney 11:06

that's right, any kind of section at all, and things like that, but I think starting now, I don't think it's a great idea. Unless you have a lot of experience in construction, I don't think it's a great idea to buy property like that your first property, I think it's it's riskier. Kanchan is going to cost more money, take more time, things like that. And, but you know, that 46% occupied within 15 months, we did a refi, which is very fast. And we pulled out like 87% of the capital, which is a lot. But it was, you know, it's his first kind of deal. We did like that. So it was riskier. So you have to be you have to kind of define your criteria and see whether you're willing to take those risks or not as an investor and or as a syndicator. But I would, you know, personally, I think, you know, I wouldn't want to do all deals like that, because they are, they are riskier. And like I said, that one just happened to be where it was about $14,000 or door cap x, pretty much everything worked out, you know, even better than anticipated, which is not the case lots of times things happen. But it didn't on that property. So we you know, we started buying other properties like that as well, that were kind of, you know, in distress and things like that. So, I like the distressed ones for the big potential payday, but they're also bigger headaches.

Brian Briscoe 12:19

Yeah. Yeah. And that risk versus reward and work versus reward. And I think you're you're absolutely right, our, our third property, we purchased a 55% occupancy. And, you know, it's it's been a long road so far. And we're we're getting there. And you're right. It's the smallest property we have. But it's also the biggest headache we've had, you know, completely hands down. Anyway, we're we're at a point right now, where we're, we're almost done with all the renovations, the occupancy is coming up. So we're about ready to have the good news story, and then the refinance coming up here soon, too. So yeah, yeah, knock on wood so that I Don't jinx myself. But

Mark Kenney 12:55

yeah, there's risk reward, which is totally true from financial standpoint, then it's the it's a stress related to some of those deals, right? Typically, they're in, you know, a little bit rougher markets. Not always, but sometimes. So you're contending with, you know, some other things like, you know, the crime and those aspects of as well, which can cause some stress for you as a operator. Yeah,

Brian Briscoe 13:16

our biggest stress has actually been the Housing Authority. It's it was it's a project based housing, which I would also not recommend for, you know, first or second deal, but we saved it for our third deal. And I would probably not recommend it for your third deal now that we've done it. But I think the biggest stressor on that one has been working with the Housing Authority, just because government agency, they work at their own pace, you know, and oh, yeah, they're not in a hurry for anything. That's it. Let's shift gears, one of my favourite questions to ask anybody is about your why, what is your big burning? Why?

Mark Kenney 13:49

My why I originally was kind of get time back with my wife, and probably get my life more imbalanced as far as they didn't look like I was unhealthy. But I had to be unhealthy. It really wasn't doing anything other than work and stress, and then not eating much food either on a daily basis. So getting my life back to where the marriage was, is great. Now, it's been great for, you know, for five years, but I've been married for 26 years. So you know, there are times where I was working those long hours. But that was the biggest thing initially. And then when we started thinking about a family, there are two aspects to it. One, you know, I'm more of a transactional guy wanting to continue transactions, I felt like there are a lot of people trying to try to teach your teaching your they either, I don't know, either lazy or don't care, whatever might be not really teaching all aspects of the business, which really frustrated me. I'm like, Man, I wish I would have known all these things when I did my first deal. And then the other aspect of community, which is less of an idea for me, frankly, because I was just transactional guy, my wife to me, it was like, Hey, we're going to we're going to build this community and all that I'm like, okay, whatever, you know, I'm just doing transactions, but fortunately, already. Relationships now come from the group we go out to dinner from every Friday night with some people in the group we just got back from Clearwater, Florida with I think we like over 70 people with kids and stuff in the group there. So I'll it's all the, the the other aspects of it. You know, we had a mentor once before that said, you know, you don't have to like me, like, man should be nice if I did a lot better, you know? Yeah. So we want to develop the whole thing. You know, my whole thing was, I want the most educated people doing deals being a do or say we're gonna do, we're good buyers, we're good sellers. And then the whole community aspect of people coming together, helping each other, not competing against each other, but then also kind of doing life together, where our kids grow up together, you know, we hang out together on vacation, we have some people from the west coast to come in, you know, three, four times a year spend time with us, and just this stuff like that, that makes it that much better. Because I didn't have that before,

Brian Briscoe 15:51

you know, and that's something like I like I said, I've talked to a handful people that are that are inside your community. And that's one of the things that they all point to as being in the biggest benefit. It's, you know, hey, we're all friends, you know, we're all hanging out together, going places together. So I think whatever, whatever you guys are doing, it's working. So So I sat back and just kind of reflecting on where I've been and how far I've come. And I've realised that it's been the people that I've met that have pushed me to further this hasn't been transacted or anything else has been. So that there's something something about that community, that really is great. Anyway, last question. Before we bring Marquis son, what's next for you? Oh, well, you know,

Mark Kenney 16:35

my whole goal has been to they're probably people, similar situation, to me, maybe not as bad some cases maybe worse. And we want to provide an opportunity for people if they want to buy multifamily, providing the opportunity to coach, mentor, whatever, partner up on deals, and really help people go as fast as they can, and then retire as fast as they can retire as relative people sitting on the beach. No, they're usually typically doing things. But we've had a number of people that have been able to quit their w two jobs. It's either probably they quit or got fired, because they're working. They're doing both at once right now, am I trying to do multifamily on the side, right. So we are not our people that have been able to get a lot of people that reach out to us in the group, either call or text or email just about how they feel their life has changed drastically. And then I always say, Well, you know, they thank us and all that like that. Yeah, great. We started the company, we provide community and training and coaching. But at the end of the day, if they didn't take action, nothing would happen. So they they have to multiple don't want to like you know, say oh, well, I did it because I you know, took action, things like that. But there are people that don't take any action just like fitness, right? If you hire a coach, and you don't ever go to the gym, good luck. Yeah, that's not his fault. It's your fault. Right. So same, same thing for us.

Brian Briscoe 17:54

Yeah, I agree. Yeah, a lot. A lot of things there that resonate. I mean, just just with my job, technically, I'm still active duty military, you know, so I've got, I mean, my transition time, you know, but when you said quit or be fired, you know, I think if if I were in any other job, if I wasn't like a government employee in the military, and where I'm at, I'd almost have to commit a felony to get right or kicked out. But any other job, I probably would have been fired, you know, because that's exactly what happened. It's, you know, I'm spending so much time and effort on on multifamily that, you know, my day job kind of kind of fell by the wayside. And I, I see that happen a lot. And for a lot of people, it's like, Alright, I'm done, done with this, moving on to that. But that's

Mark Kenney 18:34

one of the advantages having anyone to partner up with TVs, maybe you have a busy season, right? And you have other times, you're slower, you can pay I'm busy right now, you know, whoever the other person is, in your partnership? Can you take care of this? So that's one of the advantages too, yeah, you're gonna make less because you have more people involved in reality, but you're typically doing less as well. And focusing only on the areas that you're, you're good at you like to do versus working in all areas, and some of them guaranteed in some areas, you're not going to like as a as a syndicator.

Brian Briscoe 19:03

Yeah, you know, and that's that there is something to say about that. You know, our company, there's five of us, started out with four hands, four Oaks, capital, but we all have our very narrow lanes that we work in, and we're all in lanes that we're good at and enjoy. So yeah, you're split the profits five ways, but I wouldn't have it any other way. But I know, I know. Some people like different models, but I like it. Yeah. Yeah. Well, that said, let's shift gears again. And you know, let's bring Mark keys on mark. He says as a native of New York, born in the city raised in Albany, now you're in Jersey working in New York City,

Marquis Campbell 19:41

right? Yeah. All right, in Jersey now. It's definitely it's hot today. And I'm, I'm happy to be home. Take it on this podcast and thank you for the time, Brian. Appreciate it.

Brian Briscoe 19:51

Yeah, as far as your bio, you've been an investment sales broker at cushion weight which is a big, you know, multifamily. We're not just multifamily. The commercial real estate brokerage tell you Tell you what, let's just let's just get your bio from you tell us about yourself. And for anybody listening, I'll just throw his bio down in the show notes. But Marcus, go ahead and tell us about yourself and what brings you here. Um,

Marquis Campbell 20:12

so I'm pretty much from Albany, New York, born in New York City was a basketball guy had a college scholarship to play at Concordia College Division Two school didn't have the hops on the Bron James to get MBA. So I decided what I know best, and I was using my degree. So I started to work in sales. And to be ironic my first job out of college was ourselves. And that's when I learned the psychology of selling I'm using my ability to build rapport with people, and just learning how money works in different type of ways. And turn and commission Yeah, well, being entrepreneurial spirit. And, you know, one day, you know, I just started noticing that my time kind of like you mark, you know, I'm I was young at the time. So I'm 21 I need time, I guess. But I noticed my Saturdays were going away. And then my mother felt her breast cancer. So I had to move upstate back to Albany. And, you know, just help out around the family. I'm being their support system. And you kind of just pivot when I was in Albany, I started to see a lot of investment commercials and real estate, and I'll always was kind of like, worried about those things. But obviously, stuff was happening around the capital region as well, I started to see a lot of new developments go up, money being parked to different areas. So one day I decided to, you know, go and visit the, you know, one of these investment communities in a hotel and just hear what they had to offer. And ever since then my mind has been focused on real estate and, and creating generational wealth for my family, especially since you know, I'm a firstborn American, my mother's from Jamaica, and was more of us. And we've run in most of our lives, and a lot of people in our communities, and many communities don't understand the concept of that they are paying rent to another individual, who, who's our landlord and operator that spurred my interest even more and I kind of wanted to understand real estate from a macro point of view. And I decided the best way to do that was getting my hands dirty and learning how to be a broker. And I've been blessed with the opportunity to work at Cushman and Wakefield, doing our brokerage and then middle markets division and invest themselves. I operate and selling anything, any building from northern Manhattan all the way to the Bronx, and anywhere in the tri state area. Specifically, I'm able to leverage those services and my experience thus far with Cushman and Wakefield has been great, but if even just just hone in on the fact that my end goal is to, you know, invest, like happy glad you're doing this and educate. So, um, now that's a little bit about me, um, it's his humble beginnings, and I'm excited to be on the show and just dig in and learn more.

Brian Briscoe 22:49

Yeah, so So one thing I absolutely love is I mean, you wanted to learn more so you you throw your towel in with with cushion wake. And that's something that, you know, I read about you a long, long time ago, Robert Kiyosaki and Rich Dad Poor Dad, which is probably mentioned on every single episode talks about getting jobs to learn and, and part of me wishes that if I could go back, you know, 20 or 30 years, 30 years, maybe too long, 25 years, I would have gotten jobs to learn about things like you did, but I love it, you know, humble beginnings and let's see if we can step it up a notch. But talk to me later, I got a buddy from from Jamaica, you know, owner douchey guys later and see if you guys can hit it off. But he's a good friend of mine. Yeah, so you talked a little bit about, you know, your your reason, but if you can boil it down to you know, one or two sentences, what's your big burning? Why?

Marquis Campbell 23:42

Yeah, so I would say two tours and self sufficiency, and generational wealth. I've seen, you know, through my family I've seen, you know, just just just the importance of having stuff to pass down to generations behind because you're giving them a leg up on the whole competition in life. And, and in general, I feel like when being an investor you're also doing community service as well by you know, beautifying communities and developing communities or, you know, as well as creating housing when needed. So it's selfish and selfless at the same time for me, and that's my that's my passion. I know. Definitely attendance.

Brian Briscoe 24:21

Yeah, I saw somebody through on LinkedIn last week, the phrase grow to give you know, so you know, there's one thing you know, it's it's hard to be a flat philanthropists hard to give back if you're broke yourself, you know, it's hard to help somebody up. If, if you're at the same level on the ground, you've you've got to be able to grow to give back and I don't think that's, you know, selfish at all. I think that's just part of what you have to do, you know, so that said, you know, marquees we got mark on the line, what do you want to learn?

Marquis Campbell 24:49

So I'm pretty sure at the time I have a lot of questions. One specifically, you were mentioning, you know, how at first you were nervous you know about talking about cap And asking for capital as well as Brian. And, you know, when I'm working as a broker I'm on the phone all the time with, with, you know, just a lot of people, and a lot of people of influence as well. And, you know, it's easy to ask for the cell for a building Hey, um, you know, I have a machine behind me, I'll be able to market your building properly. But that hump of asking for the Capital One, did you just like, say, this is the method I'm going to use to ask for capital? And when did you implement it? Like what McDonald's? Without?

Mark Kenney 25:32

Yeah, pretty at first, you kind of you're trying to raise capital, you're going to have a lot of questions asked of you. And you're like, Okay, I wish I knew the answer this, and then you just get to where you can almost predict every question someone's going to ask and within within reason, right? For me, my biggest thing was, rather than trying to want to say, you know, ask for money. I wouldn't, you know, initially, I didn't do a very good job understanding what the investors goals were, I didn't, I want me money to raise the money, right. And then pretty early on, I started asking people what their goals were in, you can ask investors to that we deal with it. There are a number of investors, I've talked to deals before, where they were probably ready to invest. Or I've, you know, suggested they put a lower amount in. So first and foremost, I think, is understanding what their situation is financially, and then also, what their criteria is, and not trying to just put them in the deal that you have active. I can tell you, that goes a long ways, because people are like, man, I can, you know, thank you for doing that. Right? Because I, you know, might be trying to get into it. They want cash flow, but the deal is, you know, 50% occupied, not gonna cash flow for 18 months or two years and things like that. So trying to be a little bit more of a financial advisor perspective, not financial, advising them to understand their goals. And then the other one, I got really good at what you're probably better at now, did you do sales is like, it's okay. If they say no, right? It's not a reflection necessarily of you. It could be reflection of the deal, the deal doesn't fit with their criteria, that's totally fine. So I guess it was more not really asking for money, understanding their criteria, understanding what deals they like, and don't like, and then trying to guide them that way. And then just presenting the deal to them if they say no, it's a no, but we've had people that literally have gone three, four years never invested in deal, and then they invest. So don't, don't get to the point Be patient. I've had people send me tonnes and tonnes of questions before frankly, it takes time to do that. And some people might say that's pretty annoying, someone sends you 40 questions, which you know, it is in some respects, right. But just being patient working with them understand it's it's their life savings are a big chunk of it, potentially, they're investing for, you know, you mentioned legacy, right for generational wealth, wealth, they're trying to maybe do the same thing. So just trying to steer them that way. And then I would say also is trying to get hooked up with somebody that has a track record, it's just gonna make your life a lot easier for capital raising, if you can rely on somebody else's track record, just just reality.

Marquis Campbell 28:03

So I also one of the things that I like intrigue me working in the city, as well, as, you know, seeing how multifamily in New York is pretty restrictive here. I mean, rent laws are, are very restrictive, you know, stuffers going for five cap, six cats and other markets, you know, you just buy stuff for a higher cap rate and carus. But you know, you're gonna get a little return without the restrictions of no legislation. So, you know, when you're looking at these secondary markets, hey, what do you look at in regards to cuz you're from Michigan, and now you're in Dallas, I'm assuming. I'm assuming something led you to Dallas, and that's a great work work. And it's it's much

Mark Kenney 28:41

much different for sure. So Michigan's pi moral on the lines of people that grew up in my hometown, for example, you know, my four sisters lived there. I have two brothers, but four sisters living in the town, I grew up in there, you know, within two miles of my mom. And so that's not uncommon. People grew up there, they don't really move, they don't really travel much things like that, versus a Dallas for example, very transit, people move here from all over the world then leave and then more people move here and things like that. So we buy a lot in secondary markets, we buy and, you know, some primary markets to the The thing I like about some of the secondary markets that we've invested in one, the the rental percentage is very, very high number of people that rank because again, they grew up there, they live there, they never never move. In some cases, property taxes are not increased as much. In some of the smaller markets. There's not, which is great. And during COVID we had some secondary markets where the judges were still evicting people not paying your rent, you're out. It's not going to happen typically, in a doubt, it's gonna happen in New York for sure but wasn't happening Dallas or Atlanta, or any of those markets were in either. So I do like that about the kind of secondary markets some of the disadvantages that I would say it can be harder to find management they're just Canada not as many media companies as an example is a general statements that can be Harder. There are other things like, you know, finding labour sometimes can be harder. It just is. But as far as rent control, I would, I would never buy in an area that rent control period. In fact, we have a guy in our group that he had bought a lot on his own, I think you have like 250 units, smaller properties and things like that on his own, not through syndication. And, you know, whatever it was a year and a half ago, when some things in New York changed with rent control, things like that, you know, he calls it his property values went down 30% overnight. Yeah. And he just the hsta 2019. Yeah, so I mean, you know, those type of things. So I would say people will also say, well, this, you know, Georgia or wherever is, you know, Florida, whatever it is, is landlord friendly, not necessarily we're in Georgia, up and down from north, you know, Dalton all the way down almost to Florida. And then the court system, right will dictate the judge, they will dictate on how they handle evictions and things like that, you know, COVID are not. And you know, we own a couple properties in Savannah, which frankly, wasn't landlord friendly even before COVID even though people say Georgia is landlord friendly, so you have to be careful about that too. But the biggest thing is that trying to raise capital can be harder in some secondary market unless you have a story we all know like in Dalton, Georgia, most people don't even know what it is, let's you're from Atlanta area. It's phenomenal. We own Gainesville, Georgia, most people never heard of that. It's phenomenal. So some of those smaller markets you need a story to be able to convey. Once you have one good story there, it's much much easier because you can say look, this is basically rinse and repeat almost a duplicatable just bought. And then you can share that story, but your first time going in, I would make sure it's a lower race, you know, and not try to do a huge deal in a market like that, and then build the track record there in that market. And then you can start doing larger deals and things like that, but, but we like secondary markets quite a bit. Yeah,

Brian Briscoe 31:54

we like secondary markets, too. I think, you know, you do pay a premium for things like management and construction, because, you know, a lot of times you're you're taking crews that are travelling, you know, if they've got to travel 6080 miles, you know, they're gonna give you an upcharge on on mileage, Broadway's you know, so just just things you've got to you got to build into your your numbers in your model, but most of our properties are in South Carolina, and we were lucky enough to have judges that were also evicting during COVID. And we have one our largest properties in Augusta. And I'll say they say South Carolina is more landlord friendly than Georgia is, is you know, that's, that's our take so far. I agree. The one property we have there, so I am good place.

Marquis Campbell 32:37

I also, like just seeing the trajectory, I love to like in the pulse of what's happening in real estate. I know a lot of them. And people I've talked to specifically from New York, they they've moved to Texas, in Florida, but more importantly, their investment strategies have changed to a lot of single family investment properties, and they build these these single family properties and pretty much make these little communities whatnot. Are you are you privy to that as well are you are usually building up or instead of just you know, a single family.

Mark Kenney 33:08

We've only really done one development project. Nothing wrong with it not really specialty of RSV. I know a lot of people that do exactly, you said they're building, you know, 100 150 houses, self contained, things like that. All like anything wrong with that not something we really do. But it's almost to me. You know, as long as you're doing something, you're educated about what you're doing, whether you're you know, buying a single family house or buying, you know, 500 unit property, obviously big difference there, but at least you're doing something, right versus the person, my dad talked about it, you know, he passed now, but, you know, talking about buying real estate, since I was little, never bought anything, ever. So I think there's nothing wrong with that, I will tell you from doing it, doing small properties, two to four units, trying to self manage and things like that. Horrible for me. I mean, I almost ruined my whole take on real estate, you know, it did, but I learned a lot by doing it. I actually probably would not do it again, if I had a choice. Because the learning wasn't that great. It was a pain. So but those communities like that. I don't think there's anything wrong with that. I would just say no matter what you're doing as an investor or as a lead, you better make sure you're educated enough and are teamed up with somebody who's been through it before. I would I wouldn't go out and say I'm going to go build 100 houses without having somebody that's done it before.

Brian Briscoe 34:31

I just wouldn't. And I agree. I agree. Part of it is is dependent on what area you're in. I'm in Idaho Falls and I knew a lot of predictions are that Idaho Falls is going to double in size in 10 years, you know, and that's, that's a big change. And there's developments going up all over the place. You know, so here where we're at right now, it makes a lot more sense to there. There's not a lot of existing apartments, you know, it's you know, 60,000 going to 200,000 is where they are right now, but depends on where you are here. I think the money's at the new developments. And, incidentally, I've invested passively in one of those. And I'll probably invest passively and more, but same thing, you know, I'm not going to I'm not going to fight that off myself, I'm not going to start raising money for the new developments. And it's not something that I know how to do yet. But still a great, great enough investment that I'm still dipping my toes in, in a different way. Yeah, so we've

Mark Kenney 35:24

invested in a lot of other ventures, you know, including real estate outside of multifamily, too. But again, to your point, Brian, it's like I'm hooked up with somebody that's been there done. That I know, like interests, and I'll invest passively with them by my trying to go out and doing all these things on my own.

Marquis Campbell 35:40

Yes, I totally understand that. So when you're syndicating, like, what metrics are looking in regards to your hold patterns? You hold terms? Like, are you looking for a five year hold? 10 year hold? You know, when we do performance when, you know, I play around with them? You know, we kind of different in New York, obviously. But do you look at on a case by case basis? Are you looking to hit target metrics be so

Mark Kenney 36:02

you know, typical underwrite for five, six years, depending on the deal, rarely will be seven, we'll say five or six years. And some investors will say, Well, I want to know exactly what your exit strategy is. And your five, well, you know, I would never invest in a deal if someone told me I'm selling your five, I would I do that. The market could be horrible at that time. So you need multiple exit strategies. We've had properties where we said, Hey, we'll do five year Performa, and we sold in 14 months. made sense to do it, we have properties, we said we're gonna have five years probably hold it 10 years, because we put $20,000 a door catbacks in it, return the money through a refi that's cash flowing. So why not hold it longer? and things like that? So? I think so it's a good question. Because actually, somebody in our group has asked, they want to do you know, this long term in presented that way. I said, personally, just based on investor pool that we have, I think you're better off showing two options, or more, but two options, this will look like reselling your five, this will look like if we actually hold it longer. One guy in a group younger guy might pray out your age. He's able he's been syndicating for, you know, a year and a half, two years unable to raise capital and do a lot of things on his own. But he's trying to present 20 year old and I'm like, I'm 50 years old. So. So I don't want to present 20 year old 20 year old for people that are you know, my age. Now, they might say great, but most people aren't willing to. So I think you have to be what you need to understand your investor. But having a single exit and only one exit is not a good, good option, for sure. But I wouldn't go less than typically five years less, you're just doing flips. And I wouldn't I wouldn't go more, maybe 10 years. For me on the high side, I would never probably probably present anything past that.

Brian Briscoe 37:57

We usually do three to five years. And a lot of it depends on you know, the loan that we're able to get for each property, you know, so a lot of the properties we're doing, we're putting 10 to 20,000 a door in cap x, which takes it out of you know, permanent debt, we're doing bridge on a lot of our properties, which three year extendible, a five year terms. So what we're telling our investors is, here's what it looks like in year three, but, you know, depending on where the market is, if cap rates continue to compress, we'll probably sell it year three and make a boatload. But anyway, the bar market is at year three, we could also, you know, refinance, and push it out longer, you know, so

Mark Kenney 38:39

yeah, same with us, I have over 20 Bridge loans. And I agree, I mean, you have a pretty big timeframe, you know, five years you have, let's say at the end of you know, 24 months, you're done with your catbacks, everything that gives you essentially three years where the extensions, right to really make a decision. So it gives but it gives you multiple exits versus saying this is what we're going to do in this year. And in worst case is that there are funds and things out there that actually have that and they're required to, you know, legally required to dispose of assets within a certain period of time. And they get to your five and they're like, Oh, I have to sell these assets. Well, what if it's a horrible time to sell? This doesn't make sense to me. But I think the you know, less than three years pretty short, especially in the big value add deals can take you probably two years really to kind of get everything around and everything. It shouldn't, you know, on paper can take the less than that. But if I can take it to yours. And then you said you get a big big pay day return equity, tax free still on the property or you do a sale. Yeah.

Marquis Campbell 39:46

Yeah, so one of the reasons why I thought about that question even more. So. Just thinking about district debt, what's happening with COVID and interest rates, potentially. One key indicator I look at on a daily basis, the 10 year Treasury has been Watch me run up and down. But I believe in two years, you know, just this is totally an opinionated, these rates are going to go higher with the banks. And I think the lending is going to be a little bit shrunk in regards to being able to recoup money back on, I think that's gonna open up opportunities for value add properties. And that's why I just want to be able to get to that point, then I think there may be opportunity for you to buy properties at a lower premium in a couple of years just because of the inflation. You'll see more loan

Mark Kenney 40:27

assumptions to or we see it now because of all the prepayment penalties people have with agency debt, right. So Friday, they're like, Oh, my gosh, you know, people like oh, we put in perspective, we have an $8.6 million loan, we had $2.6 million prepayment penalty after five and a half years. Wow. I mean, what are you going to do? Right? Yeah, so if you sell it, most likely, you're gonna sell it on an assumption, I think his rates go higher. If they go higher, and he broke any rates, you know, people will assume those loans, in some cases, they assume it with a supplemental loan get to 75%. If it's allowable, rates go higher. And that's a bad thing for people selling that as a bad thing people buying either, but you might have to do a loan assumption instead,

Brian Briscoe 41:06

make it really work. Yeah, we've done two loan assumptions. And we've actually got higher than market rates right now on both. But we were able to negotiate purchase price down. So based on those, I mean, nobody wants to assume a 5.1% loan, you know, in 2021, but because they were facing a $2 million prepayment penalty, we were able to knock that price down significantly, but that's right. Yeah, a lot a lot there. So anyway, we're about out of time, guys, thank you so much for coming on the show today. One question for each of you to end things how can listeners learn more about you mark? You

Mark Kenney 41:41

go first? Sure. Yeah, they can just visit our website and think multifamily comm or you can email me at Mark ma rk at think multifamily calm love to hear from your listeners.

Brian Briscoe 41:51

Perfect. And Marquis same question for you. Yeah,

Marquis Campbell 41:55

likewise, I'm active on LinkedIn. You can just type my name Mr. Keith Campbell. I'm glad to email me um, it's 1111 LLC nine two@gmail.com. I'll be more than happy to answer any questions and collaborates. Yep, so

Brian Briscoe 42:09

anybody listening if you want to contact them, you want to learn more about them. Head down the show notes and tap in that magical internet thing will whisk you away. So once again, thank you so much for coming on the show today guys. I think this is a great little episode and I enjoyed it. a tonne.

Thank you for listening to the diamond 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 on 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, tap subscribe, and leave us a five star rating on your favourite podcast app. And we'll see you again next week.

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