Episode 156 of the Diary of an Apartment Investor with Zach Haptonstall and Rowena Agustin. Transcript by Otter.ai – please forgive any errors.
Brian Briscoe 0:00
That said, Rowena we got back on the line, what do you want to ask him?
Rowena Agustin 0:03
What advice would you give to someone that's looking to invest in a competitive market like Arizona,
Zach Haptonstall 0:08
we're looking at a competitive market, you're not going to start off getting off market deals. You have to crank volume to do this, right? It's, it's a grind. It's almost like you have to think of yourself as you are marketing yourself to the brokers. Okay. And initially, they're gonna be like, Who are you? I don't wanna waste your time. And you have to get over that fear. But you have to be relentless and crank the volume. And then either you are or you have a partner who's constantly underwriting deals, so you can promptly give feedback to the brokers. What happens is these brokers will start to respect you because they see the work you're putting in, they see that you're competitive, and that you're, you're pushing it pushing it and they might throw you an off market deal.
Brian Briscoe 0:55
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. Welcome to the diary of an apartment investor podcast. I'm your host, Brian Briscoe, with four oaks capital. I'm very excited for today's show. It's another one of our Ask the Expert series. And once again, we got two amazing people on the line with us today. We got Zack haptonstall, and Rowena Augustine. So first, what we'll talk about is Zack he's CEO and founder of rice 48 equity. And, you know, we're gonna put his full bio in the show notes, so you can check it out. But you know, that said, Zack, welcome to the show.
Zach Haptonstall 1:47
Yeah, thanks, Brian. appreciate you having me on. This is really cool. I've never seen a format like this. I'm excited to go back and forth here with Rowena and I like the format. So I'm looking forward to it. And we'll look forward to bringing some value to your listeners,
Brian Briscoe 1:59
you know, as with anything creative, that comes out of the four oaks brand, it wasn't my idea, you know, I'm not the creative type. This was a this is one of my partner's ideas. And it was just a, you know, once once he said it, I was just like, that's it. That's exactly what we're doing.
Zach Haptonstall 2:18
It's unique. That's cool, because there's so many podcasts. Now, this one, I mean, I get your emails even. And it's unique when you see that,
Brian Briscoe 2:24
you know, and so so here's, here's how it launched, or here's how your idea came about two years ago. You know, the the four founders of four oaks got together in Dallas for dealmaker live. And it was almost exactly two years ago, because events come in and around next week or week after next but event 2019 Yeah, I was there. You were there. Okay. Maybe we met so they knew each other or something. And then we Yeah, I'm gonna have to search through all that stack of business cards that I can see if there's one with you on there. But before the event, we had like two days of you know, bonding, planning, planning, time, everything like that, but just planning what we were going to do. And we had the idea for the podcast, and it was going to be the run of the mill vanilla podcast interview. But as we were going through dealmaker, I swear, everybody that we talked to Hey, I'm launching a podcast, Hey, I just launched a podcast. Hey, you guys heard about my new podcast? You know, and, you know, at the end of the day, we came back together, we're just like, we can't do it. We can't do that. Just same vanilla podcast. You know, that's, that's it. That's cool. So cool. Well, anyways, Zach, are you going to DML later this month? We're not No, we
Zach Haptonstall 3:33
don't have any plans. We're kind of just hunkered down here in Phoenix. We'll stay inside because it's really hot. And we're going to be busy. So we're just going to focus on on our deals and, and getting that stuff.
Brian Briscoe 3:44
Better to do deals and talk about the Ulsan. So there we go. We're very well. Well, so hoping to have a chance to meet you face to face and remember you at this time, but next time next time, I'm sure. So let's do this talk. Tell us about yourself. I've talked way too much already. But tell us about yourself and lead us up to what got you into multifamily.
Zach Haptonstall 4:04
Yeah, yeah. Thanks so much, Brian. So yeah, I mean, I was born and raised in Phoenix, you know, didn't really have much of a real estate background or any experience. I mean, I have a journalism degree. And then I have an MBA, I wanted to healthcare marketing. And, you know, I was I was blessed to be making good money making six figures, you know, in my early 20s, through this marketing, this marketing job I had, and, you know, as I was doing well, but I did that for four years, you know, I paid off my school that bought a house, you know, I was in I was in a good position financially, but I just wasn't satisfied. You know, and I, I wanted, you know, to do something bigger, and something I was passionate about something I could really scale. So, you know, long story short, in January 2018. You know, I resigned, I sold some of the equity I had in that company, and then I live off savings for the next 12 months and figure out how to make how to create passive income through real estate. Okay, so I didn't know anything about multifamily or syndication. I wasn't even thinking multifamily. I quit the job. I was just thinking real estate in general. Yeah. And I didn't have like a rich uncle or no family money. I was not wealthy. No, not not not a high net worth high liquidity anything. I was initially going to flipping homes, and then I realised that's transactional. It's not what I want to do. I looked at mobile home parks, you know, I started cold calling mobile home park owners I had about it was like 260 to 300k. Okay of cash I had relentlessly saved following the Dave Ramsey plan, like the previous four years, and I got a little bump from an equity and so and so I was I was blessed in that regard. Right. I had, you know, these savings I could live off of So anyways, long story short, I discovered multifamily discovered syndication, you know, I grinded through I went through a lot of adversity, just burning through my savings waking up every morning, wondering, what do I do today, it took 10 months when I quit the job to get our first deal under contract, and we closed and four months later, so it was like, it was 14 months, you know, from when I quit the job to actually getting the first deal done. And from there, we were able to learn build the momentum that was in 2019, and build out our syndication platform. So ever since then, you know, we've, we've acquired now, geez, 100 180 190 million worth of real estate, last couple years, 13 1400 units, we have another 100 and 7 million under contract to close by the end of August, we've been very blessed, you know, the next couple months, looking back, it'll be about 300 million that we've acquired, you know, all through a syndication platform, with no experience. And so that's kind of that's kind of what we did. So we're really like your typical, you know, value, add syndicators, where we're going in there. And you're trying to add value to B class assets, and a and b. And so we're just focused here in Phoenix. And that's where all of our deals have been so far.
Brian Briscoe 6:45
So let's let's dissect that a little more. I mean, that's, that's a big number in, in essence, or management, how do you how did you go from zero in 2018? to the point to where you could close on big properties like that? Did you do have to partner did you have? I mean, did you join into any coaching or mentoring programmes? But let's unpack that a little more?
Zach Haptonstall 7:05
Yeah, yeah, good question. So yeah, the first six months, you know, I spent all on my own basically, like reading books, listening to podcasts, like yours, Brian, and, and trying to absorb as much content as I could. And through that process, I was like, I need to get out there. So I started cold calling brokers, lenders, management companies insurance and meeting with all these guys building a team. But still, I didn't have and I was trying to find partners, like I couldn't find the right partners. And it felt like everybody I would meet with, I'm trying to like, educate them and sell them on this thing. Well, then I was like, I need to I need to collapse this time for him. So I started going to conferences, right. So I started going to family conferences in Dallas. We were talking about you know, and I did join a mentorship programme, I dropped 30k to join a mentorship programme and the way I viewed it at the time, and again, I was already burning through cash, right. So it was like to spend that kind of money was was several months worth of survival, the way I was living at that time. And so I joined that I viewed it as buying a network, because basically, if you're gonna drop 30k, you're probably serious, right? It's a high barrier to entry. And so I met my two partners through that programme, which was really good. And you know, I met big Ron Sandu. He's, he's now our CFO, he has a very complimentary skill set to me, where he's got the economics degree CPA financial analysis, whereas I'm more of sourcing deals and equity. And then I met Robert chef chick, our he's now our chief production officer, he had the network liquidity for us to qualify for these loans. And so, you know, I joined that programme. And I also joined it because the the point of the programme was that you can meet people, and you can raise equity by meeting these people. And what we found, you know, after a few months was that, you know, these these people really weren't interested in Phoenix, you know, so we didn't get a lot of value from the programme as far as raising equity. And our first deal we did after join that programme, we actually did not syndicate, okay, we wanted to syndicate it, but we couldn't raise the money. So we got it under contract. We did we got no value from the programme in regards to equity. Robert and I were each 25k non refundable. 30 days go by, we had to raise 1.4 million. It was a 36 unit $3.4 million deal. And Phoenix the first one, like, Oh, crap, what do we do? You don't mean? So I actually met a lady at a conference. She had sold. She recently sold a 12 unit deal in Seattle. And she reached out to me and said, Hey, I heard you have this deal. How about a 1031 exchange? And she brought over six hours a day, we do a tenant in common tick structure. And over 600k Yeah, let's do it. And then so what's the take structure? You know, had no idea what that was. Right. So long story short, at the I had about I had burned through a lot of money. I had about 165k left, I put 160 in the deal, right? So I was all in with pretty much all my cash that I had left. And that was pretty much a high net worth. By the way. Robert put in nearly 300k I met big Ron he put in like a buck 50 and I found a couple other people to put put in bigger chunks. We did tenants We bootstrapped it. And we made it work, right. So we closed it. And the good thing about that was that we got to learn firsthand how to execute the acquisition process, asset management, all these things, you know, where we were really nitty gritty in the details, which, which allowed us not only gain the experience, but to gain the confidence in the momentum, you know, to keep going. And so once we got that first deal, it really helped our track record because it was performing well. And, you know, we kind of just, we kept rolling. So I mean, shortly after that, I was like, I'm out of money, I need more money, if I want to keep doing deals. So I sold my house, I was never gonna sell that house. And I was 23. At this time, I was like, I'm 29. Now, I was like, 2627 at the time. So I and my girlfriend at the time is now my wife, Grace, I was like, babe, we have to unload the house. So sold the house at like, 100, aka, come out, I wired 100k nonrefundable the next week into a portfolio of two deals, we did another tenant in common. And then we syndicated our first deal. So I was all in really, it was really just, you know, relentless networking, finding the right people to partner with, to find complementary skill sets, who whose strengths are my weaknesses, and vice versa. And, you know, through that process, we were able to just quickly learn, and and build that momentum, you know, and as those deals, we sold that first deal, that was a lot of momentum. And that helped us to really gain track record to continue to scale and raise additional funds. Okay, so that's, that's really been kind of the biggest thing where I spent 14 months in the front end with nothing to show, and it's really, it's really tough psychologically, mentally, emotionally, because I, I kind of lost all my confidence and I lost my identity. You know, I mean, because I, I came from this healthcare industry where I was, you know, elite, so to speak. Like, in all humility, I was dominating my market, I knew when I would wake up every morning, what I had to do, you know, just making 200k plus a year, to now making nothing, having no direction having nobody to tell you where to go. And if you're doing the right things, so it was tough. But But process, you develop a lot of character, and thick skin, so to speak to because a lot of people say you can do it, and you start to develop this mentality where it's like, well, screw you, because I'm going to do it, you know, and that's really helped. That's really helped as we've grown to, because as you get bigger, you take on more challenges, more stress, more adversity. And so, so long story short, you know, we've been very blessed. Now we have a business office here, we have in addition to the three principles, we have five full time w two salaried employees were to hire two more people. Now we're building out that infrastructure, but it just goes to show, you know, it does take us here, like the cliche analogies, like the rocket ship spends most of the fuel or most of the energy to get off the ground and then wind up in the air, you that exponential growth. Well, we've really seen that, you know, firsthand, and that's, that was kind of how we got to that point.
Brian Briscoe 12:45
Yeah, a lot, a lot of things to unpack there. I mean, 14 months, you know, and you you were working full time. I know, I know, a lot of people who have spent a lot more than 14 months looking for their first deal. You know, and for me, it really depends on where you start, you know, start the stopwatch, you know, the first podcast that I listened. You know, for me, if you start start the stopwatch, the first time I toured a multifamily property, it took me more than 14 months to you know, so I think that's something that a lot of people don't realise it takes time you It takes a lot of time it takes
Zach Haptonstall 13:14
to Brian, that you don't make any money ruined the beginning, we're just now making money this year, okay, you don't get rich, you don't get rich, quick, it's a grind. It's just like any business, you have to invest on the front end, you know, and really run lean until you can get to that point.
Brian Briscoe 13:29
So yeah, and for a lot of people, I mean, you were fortunate to have, you know, savings tobacco, you know, to back you up and let you go full time.
Zach Haptonstall 13:37
But is there anything either I don't have a family at that time, you know, and there's a girlfriend, so yeah, it's different.
Brian Briscoe 13:43
At the time, you know, when I started, I couldn't do that. I mean, legally, I couldn't do it. Because, you know, I was obligated to the Marine Corps for more time, but, you know, you know, it's something else that, you know, a lot, a lot of stuff to unpack there. And, you know, it's also a lot of people think that hey, once I close on one deal, you know, be financially free. No, you won't, is the answer. Now, and our company's very, very similar. You know, we don't have as many units or assets under management. But you know, the first two years, we haven't taken much of anything out of the company, you know, everything that's gone in has gone towards that next deal. You know, you said you sold a house to sell a house to put in $100,000 non refundable, or deposit end on a property. I did the same thing. You know, I sold one of the houses that I had, and I've been renting out for a long time. And it was just like, I need this money. I need to be able to somebody has put down this it's 50 $80,000 end but right anyway, we roll a lot of our profits for and yeah. Building so but that's, that's great. I love it. So, I mean, you've talked a little bit about your why, but if you could, you know, boil that down for us. What is your big burning Why?
Zach Haptonstall 14:55
You know, I played sports growing up quite a little bit of college football, so I've always been kind of a very competitive A person, that's why I liked, you know, doing health care sales, it was very competitive. And you're not, you don't have a ceiling, on your achievement or your compensation, so to speak, which is what I like. But then I just wasn't satisfied. And I felt like I wasn't being challenged. And so, you know, initially my why was I was burnt out doing something I wasn't passionate about, and I wanted to gain control back in my time. And, you know, the cliche of financial freedom, all that stuff, that's what I was looking for. And so that's why I originally got into it, you know, initially to do that. But then as I started to realise the power of multifamily and syndication, how you can scale it, I realised, you know, what, five minutes do something I'm gonna go all in, I want it to be huge, you don't want to be I want it to be as big as possible. And this is something you can truly scale. And so it's really just the competitive, the competitive nature and the excitement, you know, the size, the pressure, things like that, that really drives me, our goals are, you know, are pretty ambitious to grow it and people ask us all the time, and honestly, I don't I my goals are abstract. But my goal is to become a billionaire by age 40. And it's not to like, be rich and spend money on stupid stuff, I don't even really spend the money to have now it's more, you know, just to have a very big goal. Constantly driving towards it, I want to have, you know, financial resources and the social network to make a big impact later on, in whatever cause that may be. And so my background is, I have a journalism degree, I was a live news anchor sports reporter, Eric, yes. You know, I went to healthcare sales. So I think it's going to be some combination of media, business, and potentially politics. I don't know what it is yet. But I know that, you know, I just want to build that. But those resources now and then I'm I just got married last year, Grace, I just got married, we plan to have at least five kids and we're one big family. So a good number. Yeah. And I mean, I was always, I was always younger, like in my early mid 20s, working with, you know, people who are in their 40s and 50s. And so I see a lot of the challenges that come later in life. And my whole philosophy was, if I can create financial freedom in a, in a good foundation now, then I can spend more time with my kids in the future, you know, and do a lot of the things that a lot of people say they want to do when they're in their 40s 50s 60s and things that my parents who were lower middle class, you know, growing up, never could do, I don't want my biggest fear really is like mediocrity, you know, I don't ever feel stuck somewhere. I would rather lose it all, knowing that I went for everything and just kind of be status quo and unsatisfied. And that's what multifamily kind of has allowed us allowed us to do. So that's, that's really kind of what drives us and keeps us going. Nice.
Brian Briscoe 17:37
Nice. Awesome. Great. So let's, let's talk we talked a little bit about your first deal. Is there another deal you want to talk about today? Something you can you can give a little more detail on? Yeah, yeah,
Zach Haptonstall 17:47
that's a good point. Right? I mean, probably a lot of listeners and everybody who who is familiar somewhat with value, add multifamily understands that the basic premise is you buy a deal, you renovate it, to push the rents in order to increase the value and to sell it. And in Phoenix, it's so hot. It's so competitive, hot, literally, temperature wise, but I mean, the market Yeah,
Brian Briscoe 18:08
that made made me smile when you said that, you know,
Zach Haptonstall 18:11
no pun intended, that was not on my agenda. But but so basically, in Phoenix, we can only have value add to make these deals work because the cap rates are very compressed. It's very competitive. A lot of what we do is looking for operational improvements, burning off loss to lease etc. So I kind of wanted to go over a deal just briefly. Yeah, it's called district flats. It's 112 units. We bought it like right when COVID hit okay, so we closed March 26 2020. Oh, wow. So I so we were like two weeks into the shutdown, so to speak. And the reason I want to go over this deal, Ryan is because it's it's 112 units. It's all studios and ones. It's a chiller. Right. So it basically checks every box of what you people say you don't want Oh, you don't want to use the ones you don't want to lose? It does. Yeah. flat roofs. Yeah.
Brian Briscoe 18:58
There you go. Check all the boxes, chiller.
Zach Haptonstall 19:00
And most of the assets in Phoenix are flat roofs, by the way, that's the flat foam elastomeric roofs. And so with this deal, I'm not going to go into the returns. I can't solicit for sec compliance reasons. But you know, we did really well on it, you know, it was a home run. We sold it in 13 and a half months, we bought it in March 2020. And we just sold it in May of 2021. And we're actually doing a 1031 exchange so investors can defer their capital gains and do another off market deal we have with this deal was sourced completely off market with no competition through a broker relationship. And the reason I wanted to highlight it, Brian is because we only renovated nine units, you know, so the play on this one was because we rent we acquired an off market, it was being managed by an institutional level management company that manages Class A properties right. And so basically what we did is we replaced the management company, you know, we significantly cut the payroll II and expenses and the admin expenses, and then we just really aggressively pushed the marketing and leasing and burned loss to lease off Okay, so in Phoenix, because it's such a strong growth market, you know, as a, as an owner, if you're not pushing your rents to market, the last two, three years, you could easily be 20 to 30%. below market. Okay. And so it was really a combination of operational efficiencies and improvements, we only renovated nine units of the 112. You know, and we had a significant return that justified us selling it in 13 and a half months. And so my point is, is that you can't a lot of people look at these features, oh, I don't want studios, and I don't want a chiller, I have to renovate X amount to make the deal work. No, that's not the case, you know, you have to look at all the different factors. And you have to really take a sophisticated approach, you know, to the operation, because that deal worked. And it's actually was less risky, because when you have a deal that requires that you renovate a big chunk of the units, well, your your execution risk is staying on schedule and on budget with those renovations, which is one of the biggest challenges right? On this one, we had virtually nothing to the exterior, we renovated nine interiors, and we just basically burn loss to lease cut the expenses and improve marketing. Definitely. And that's, that's what cops so that's, I like to tell people about that. Because it's, it's not what most people think of, but you can make these deals work in different ways.
Brian Briscoe 21:17
You know, there's a lot to unpack there. I mean, noi is what you're trying to maximise when you when you sell something. And there's two parts of the noi there's the income side, and there's the expense side. And you guys sounds like you were you're attacking both ends of that one, you're trying to reduce the expenses while you're bringing the income levels up. And something else that I'll mention, I mean, the fact that you renovated nine is also significant because there's the the unit self comp, you know, so you're leaving meat on the bone, but it's a demonstrated rent, increase your you renovate nine, and you can show the next buyer, hey, we put 12k or 15k into each one of these units, here are the rent bumps we achieved. And if you do this to the other 103 units, exactly, you're gonna get the same rent bumps. And incidentally, for the listeners on his website, it'll be in the show notes, the details of the property are on there. So you can find purchase price you can find that turns and check it out highly recommended. While he was talking about it, I brought it up. And it's it's a it's a pretty little place. So moving on one question that I really like asking, you know, what's next for you?
Zach Haptonstall 22:30
Yeah, so our goal as an organisation coming into 2021? Because we were frustrated last year, like probably most multifamily people was COVID. Right? Because it's like, it's kind of like getting injured as an athlete. You know, you have no choice on the sidelines. Yeah, exactly. I deal with the deals, deals froze up, and we feel like we were hitting on momentum. So we set a goal last year to acquire 250 million of new multifamily assets in Phoenix for 2021. And so after we close, what we have under contract by end of August will be around 230. You know, we've been very blessed, get good off market deal flow, good momentum with our investor base to make that happen. And so we've been syndicating all of those, and building out the infrastructure and becoming, quote, unquote, a real company with employees and office, which has been really fun. You know, we, again, we just talked about Brian, you don't really make a lot of money in the front end. Now we're to the point where we converted to an escort last year, almost take salaries on which is nice. So our goal going into next year 2022 is to acquire $1 billion of new multifamily in the Phoenix market in 2022. And we want to allocate 500 million to our syndication platform, which we feel confident we can achieve now that we're kind of building up the infrastructure and you know, big run, and I don't have to spend so much time in the weeds on a lot of these things. And we're gonna allocate 500 million to a JV equity structure, or we partner like private equity group. So, you know, our goal, this year, third, fourth quarter is to get at least one or two deals done with the JV equity partner so we can get the docs done, you know, getting comfortable to really crank it up next year, because we feel like right now, between the 20 to $50 million purchase price, you know, we're getting the first look at a lot of these properties off market from like the top five, six brokerage groups in our last eight acquisitions now been completely off market, no competition. And that's really kind of how we operate because that's the only way we can make these deals work most of the time. And so we feel like there's a huge opportunity in Phoenix, there's so much inquiry, the 5200 plus million dollar purchase price, we know operationally and construction wise, we can execute and do the same exact business plan, right? We just can't we just it's too big for us to raise the equity. So we feel like if we can have that JV equity arm to our company, we can really capitalise on that piece of the market as well. And this year, you know, we've taken construction management in house. So first first year, we were relying on the third party management company to do all the renovations construction. Now we have a director of asset management and construction coordinator where we basically bid out all events vendors, exterior paint, electrical, etc. And then we have third party construction companies that we personally manage. Okay, so we're on site every single day with our staff managing these companies, and these construction crews to make sure they're staying on schedule on budget, which is, which has helped a lot, you know, in our pro forma rents. And so that that's been going well. But as we continue to scale, we want to have more control over that, so that we're not at the whims of construction companies. So we're actually going to, in the next 60 days, we're going to start a construction company, get a general contractor licence and actually hire unskilled workers so that we have full control over their time and energy and in develop our own construction crews. So that's kind of the plan is to build that out, develop these these larger institutional equity relationships, while also scaling our syndication platform. So that's kind of what we're working on, you know, as Yeah,
Brian Briscoe 25:51
wow. I mean, that's there's a whole lot to unpack, there are a lot of lot of gold nuggets that were dropped, you know, so as far as the the JB equity, you know, when you're looking at that purchase price, you know, it's a lot easier to go out and find, you know, one group that can write the 810, or $12 million check, which is what you're talking about. Something else I'd like to highlight is you guys have have developed relationships with brokers, but not only that, you developed a reputation of closing on these properties. And that's why you're getting the first look, I mean, the brokers are coming to you first. And I'll be honest, you know, I'm not a broker, but if I were a broker, I would try to get something sold as quickly and for the least amount of work possible. And that's what most brokers do. I mean, they get something that size, they know you're interested, they know you're going to close, and they pick up the phone and call you. Alright, so that's kind of that that's like the holy grail of acquisitions right there is to have that reputation and the relationships with the brokers for them to call you first. And the third thing I should I should have made a list, I could probably dissect dozens of lessons learned from that. But the third thing is vertical integration. And one of the things that, you know, we struggled with is, is our renovation plans going through that third party property manager?
Zach Haptonstall 27:09
Yeah, every minute, as you know, Brian, every third party manager company will tell you they can do it. You say, Oh, can you crank out 10 units a month with quartz countertops? Yeah, absolutely. Yeah, no problem. And they never happens, right. And so I think everybody's experienced this. And it's like a natural evolution where you have to take more control of that to really, you know, scale, so to speak. And that's,
Brian Briscoe 27:27
that's something that internally, you know, we have talked about doing ourselves is hiring somebody who can be that construction manager, you know, and doing exactly what you're doing right now, I don't think we ever had the scale right now where our company can support it. But we will get there. You know, we'll have that that construction manager in house eventually and have that vertical integration, which what it's going to do for you guys is it's going to streamline things. I mean, yep, you're paying more in salary. But you've got more control, which means you can do quick returns. And time is money when it comes to that, you know, and you control everything, because they all work directly for you. So, anyway, a lot of great stuff there. We're going to shift gears a little bit and bring Rowena on. So that said Rowena, welcome to the show.
Rowena Agustin 28:14
Thanks, Brian, for having me. I really appreciate it. This is my first podcast. So yeah.
Brian Briscoe 28:20
Yeah, not a problem. Not a problem. Yeah. Thanks for reaching out. And, you know, it's been nice getting to know you over the week. You know, we had a couple a couple have been on a couple calls together. So great. So I know you're from San Diego, and, you know, one of my favourite places in the world to live. But tell us a little more about yourself.
Rowena Agustin 28:36
Yeah, I was born in Norfolk, Virginia. My dad was in the Navy, didn't spend too much time in Norfolk, moved over to San Diego and pretty much lived here all my life. So big
Brian Briscoe 28:45
Navy towns, by the way, so I mean, I couldn't have guessed.
Rowena Agustin 28:49
Yeah, so I'm a wife and mother of three. I work a full time job as electrical engineer, a licenced engineer for the local utility company here. So three years ago, I was looking at my financial situation, I wasn't really happy. where we're at is almost like we're living paycheck to paycheck, even though my husband and I, we both have pretty stable jobs.
Brian Briscoe 29:08
But you're also in San Diego. And I tell you, you know, husband and wife have to both have stable jobs to do well there. So I think you're, you're you're still within the normal of the San Diego But anyway, sorry, go on.
Rowena Agustin 29:21
And on. So I was looking at different avenues of making supplemental income came across this guru that was trying to sell like buying laundromats with no money down spending weekends like going to different London master rundown and trying to figure out how I can negotiate a lease from the owner and that never panned out. So I came across BiggerPockets and that that's what kicked off my real estate journey. First, I started off with investing in single family properties invested out of state in in Annapolis, because prices here in California are too high to cash flow. So purchase my first rental three years ago and the next property I ended up flipping because the rehab costs came out more than I expected. And the next four project projects after that I flipped as well, and then completed tubers after that and was starting to get burnt out. I was taking a lot of time away from my family. So I got introduced to multifamily syndications by one of my mentors, and it was just eye opening to me and like, I can invest as a limited partner, make double digit returns and get that passive income that I've been looking for. That's what started my journey in the multifamily.
Brian Briscoe 30:33
Nice. Yeah, a lot of goodness there a lot of good stuff to unpack. I mean, my second investment property was in San Diego County, you know, I bought a house, lived in it for two years and moved out and I intentionally bought it to be a future rental. But the big mistake that I made is I didn't even look at rental prices when I bought it owned the place for nine years. Never once did I cashflow you know, net not one single month, did I have a net positive cash flow in place? So I think you were smart to start looking in other markets. You know, Indianapolis is a little bit far away. So I'm just curious why why Indianapolis?
Rowena Agustin 31:09
Yeah, more for the price to rent ratio, I didn't have a lot of cash to invest in. So it's really a lower barrier to entry.
Brian Briscoe 31:16
Okay, so you look at the price to rent ratio. I assume you looked at a lot of markets. You settled on Indianapolis? You You had a couple of rentals. You did a couple of flips, you got the ball rolling, and sounds like you realised this is transactional. I mean, I'm sure it probably helped your guys's bottom line, but you said the word that a lot of people who get into that business say, you know, you got burned out, you know, it's just little little too much. So that that's great. So what what are you looking to do with multifamily now? What's What's your goal?
Rowena Agustin 31:45
Yeah, my goal is to become a general partner focusing on raising capital and asset management. I'm actually looking at the Arizona market. So happy to have meet Zach on this. Yeah, let's talk. Yeah, call me anytime.
Brian Briscoe 31:58
Yeah, yeah. In Arizona, just a quick drive from San Diego. You know, when I was in San Diego station there, my my brother lived in Gilbert, Arizona. So I've done that drive a couple of times. But so Rowena, before we before we get you asking questions, what's your big burning? Why? What's your motivation for all of this?
Rowena Agustin 32:15
Big burning? Why, as I mentioned, I have three kids, I want to get that time and financial freedom to spend more time with with my kids, and I want to build a solid financial legacy for our family, and provide them opportunities that I never had.
Brian Briscoe 32:29
Yeah, that's, that's awesome. And that's, that's one of the reasons I did it, I realised I was not spending as much time with my kids as I wanted to. But that said, when when we got back on the line, what do you want to ask him?
Rowena Agustin 32:41
Yes. Congratulations on the success, you've really scaled pretty quickly. And really, it's amazing. I did want to ask, I did do some research on you. And you, you had mentioned in some of your podcasts that you've gone from a lot of different careers before you settled on real estate, and not a lot of people do that. So I just wanted to ask you like, What inspired you to go into different career paths until you found what your true passion was?
Zach Haptonstall 33:09
Yeah, no, thanks, man. First of all, thank you for the kind words, appreciate that. Yeah, I mean, my trajectory or path was I had a football score at a high school. And so I like wanted to be a football player. And then I just wasn't good enough or big enough. So I had to come back. And I was like, Okay, well, I like sports. I want to be a sports reporter. So I got a journalism degree. And then once I once I got the degree, and I started realising, you know what it's like to work in the industry. It wasn't what I thought, right? So if you don't make hardly any money, I thought these guys must make tonnes of money because we're on TV, not the case. Right? on work crazy hours. It's very political, you know, and this was, I graduated 2013. So it's nowhere even near where it is now. But it was still political back then. And I was like, Man, this is not what I want to do. I remember I was delivering medical equipment like full time nights and weekends going to school. And I had also finished an internship at the time with like a radio station, which is nationally syndicated for like a pretty well known show that aired on ESPN Radio and stuff. And I got offered a job to be a producer. And so once I was fortunate enough to do that, you know, I just realised this isn't what I want to do forever, you know, and I'm getting, I'm working crazy hours, always on call, it's not I want to do so it's kind of like perfect time for me to exit that company, and kind of do my own thing. And I had a lot of motivation. And again, a big chip on my shoulder to do my own thing because of that. And it was all it was just kind of perfect timing, perfect combination to give me the fuel to do that. And again, when I quit the job, I didn't know I was gonna be doing multifamily syndication. I just was thinking real estate, not even knowing how broad real estate really is. Right? I had gotten my real estate licence, two years prior to quitting that job, but I never used it. I didn't do any transactions or anything. So that was my only exposure to real estate. So for me, you know, it was just an evolutionary process and there were multiple days where I wanted to quit, I doubted what I was doing. You know, I thought, why am I doing this? People ask me that. But then I got to the point where I was like, I wanted it so bad and they had been so long, I was just like, screw it, I'm gonna do whatever it takes, you know, to at least get into it. I don't even care if I lose all my money at this point, you know, because I want to at least prove myself that I, I got it done and not quit. And so so it was never like a plan a planned out thing. Honestly, I'm kind of an evolutionary process. But once I started to learn more, and I think I mean, Brian and Rowena, you probably feel the same way. It's like you don't know what you don't know. And so many people don't know about multifamily and syndication and the benefits that you can get from this. And, you know, coming up in just a traditional middle class family, you know, it's intimidating, and it seems out of reach, right? These are big numbers, big properties, these, you think, well, this must be multimillionaires, billionaires that buy this stuff, you don't even realise the structure that there's so many investors involved in all these big projects, and that not one guy owns this. But growing up, you think one rich guy must own that building? Right? So so for me just kind of evolutionary process and figuring it out as I went along. And, and through that, it really helped me to grow, you know, and so it was just kind of step by step. And to get to that point.
Brian Briscoe 36:14
Yeah, ruin it sounds like you've got kind of gone through the same steps where you know, laundromat to flipping to, you know, you kind of have been the same exploration process, and whether it's multifamily that you land on or not, hopefully you find what, you know, what appeals to you and what gets you go and soon. So, yeah, that's my family even better.
Rowena Agustin 36:34
Yeah. Yeah, yeah, I grew up in a middle class family as well. And we just always taught as a young age, you know, go into a, be an engineer, be a nurse, and, you know, you're not exposed all the different opportunities that are out there. So just curious if that was like something that was taught to you at a young age or that
Zach Haptonstall 36:54
No, not at all? Not at all. Yeah, my parents didn't do any real estate investing, they knew nothing about it. There was a foreign language, and I brought it up to them saying what I wanted to do, but to their credit, you know, they were they were fully supportive. I mean, they probably had their questions and their doubts too. But I mean, at that point, you know, I didn't really need the support anybody else I was just kind of like, locked in by the I had no exposure to it, it was totally new to me. My dad was a blue collar worker. And I honestly used to think that, you know, blue collar workers met,
Brian Briscoe 37:22
you literally wore a blue shirt to work. And my dad did. So obviously, I thought he was a blue collar worker. But yeah, I did not get exposed to any of that, really, until, you know what, actually, my best friend's dad was a doctor. And he would occasionally tell us things about, you know, investing and such. So when I when I read Rich Dad, Poor Dad, I had in my mind, you know, pictures of my best friend's dad and my own dad, you know, but yeah, I was not exposed to you that.
Rowena Agustin 37:51
I also wanted to ask you that, what are your company's core values?
Zach Haptonstall 37:56
Yeah, I mean, honestly, this is a good question. I think this is really important. Because with in this day and age of social media, and all the podcasts, everybody's a mentor and guru, I think it's easy to forget about the investors and the operations. And so I mean, our biggest thing is we always view ourselves as stewards of investor money. And that it's, we have a fiduciary responsibility, you know, so one of our main core values is to truly care for the investors and grind it out to make sure that these deals are performing, because that's one of the biggest things and I guess I could be selling a hypocrite because I'm on a lot of these podcasts now. And people invite me which I like to do, it's fun. But there's just a lot of like phoney people, and I think that people represent themselves as being an expert. And then I'm hearing from investors all the time, we've invested with different people that these deals aren't performing. So for us, you know, we want to be legitimate, so to speak, we want to be the real deal, really, in the operations, making these deals actually perform. We don't want to just close deals to do social media posts, and and go about it that way. So I mean, truly everything we do, and I guess anybody could say this, but it really is investor centric. And a lot of this is credit to you know, my partner, big Ron, who's in the office. Next ornamental, I'm referencing over here, big Ron and his fiance, Alice do all of our investor reporting distributions, and we just get tonnes of compliments on that. So, you know, the investor first really is important now that we're starting to become very fortunate, and we're actually making money as a company. You know, we want to make sure that we're giving back to the community. And because we're focused in Phoenix, we're making a point to donate to local, local Phoenix. Okay, so I mean, we joined this year, we joined the Greater Phoenix Economic Council, which is like a 501, c three, which basically, it's all focused on building Arizona businesses and attracting companies to Phoenix. Our goal for 2022 is to really have like a philanthropy division and my wife grace, she wants to lead that so she's been focused primarily on marketing. So she does all of our mailing campaigns, social media, she is now critically related. ships with some of the top local media outlets. So whenever we close a deal, we have news, she sends out a press release that she creates, and is now now able to leverage those relationships. Well, she wants to kind of pivot from doing that into focusing on on philanthropy, and how we can support, you know, different causes. So, I mean, one of the things that, you know, we're really passionate about is children, and like sex trafficking, and and trying to stop that, okay, so so that's going to really be a focus as we sort of build this up. So those are probably two of the biggest things that it's, you know, investors and then investing back into the community. And not only because we're local, but, you know, I think it just helps your local economy to, you know, I think, from my perspective, a lot of people get caught up in like donating to places overseas or really far away, and that's fine. There's nothing wrong with that. But if everybody focused on their local economy or their area, and in theory, that should take care of most of the issues. So those are kind of some of the core values. Good point.
Brian Briscoe 40:58
Good point. I like the idea of giving back to your community. I also like the idea that, you know, you and your wife are in this together. And you said when your partner's and his just a fiance are also in it together. So it's great. Hey, Rowena, we got time for one more question. So, you know, if you got a silver bullet left time to shoot it right now.
Rowena Agustin 41:18
Yes, Zack, what would what advice would you give to someone that's looking to invest in a competitive market like Arizona?
Zach Haptonstall 41:25
Yeah. Do you in good question. What do you mean as an LP or like a general partner trying to be at the GP? GP? Good question. You know, I think that, I mean, there's a lot of things I think when you're getting started, regardless of the market, you need to find the complementary partner, right, that really benefits you. Because there's so much that goes into that not only company's strengths and weaknesses, but the camaraderie and the momentum. But when you look at when you're looking at a competitive market, you're not going to start off getting off market deals, right. So we had to build up to that. So for somebody like you really know who says you want to get into Phoenix? What I tell people, we had a meetup a couple years ago, right? We had a meetup for over a year, we built it up to the point where we had over 100 people come to this meetup. I have all these people come to me say I want to get into this, I want to do this. And I would see them month after month after month, a year later, they come say the same thing. And I say, Okay, well, how many brokers? Have you talked to? How many deals Have you toured? How many deals Have you underwritten, how many offers? Have you made? And most of them said, none. And I said, Well, are you serious? Then are you actually do you actually want to do this because you have to crank volume to do this, right? It's it's a grind, we, I mean, I don't know this for a fact. But I would bet money, we probably lose more deals than anybody, or we're in the top three in the market. Because big Ron has now become a machine and underwriting. I'm constantly touring deals with brokers, and we're making offers on deals constantly, we're we're losing, we lost a deal this week, we're always losing investment final, it's because we're cranking the volume, you know, I mean, so I think when you want to when you want to enter a competitive market, it's almost like you have to think of yourself as you are marketing yourself to the brokers. Okay, and initially, they're gonna be like, Who are you, I don't wanna waste your time. And you have to get over that fear, right? You have to, you have to think of it as these brokers, they do want to do tours, because it shows their seller that they're getting traction, that they're working for the seller, so don't hesitate to or properties, but you have to be relentless, and crank the volume, okay, and that means that one person, and you're obviously at a state ralina. So that means if you come in, you know, once a month, or once every two months for a day and just crank out property tours. And then either you or you have a partner who's constantly underwriting deals, so you can promptly give feedback to the brokers. And the reality is, is you're going to probably lose 99% of those deals, right? Because these deals are a needle in a haystack, you know, whether it's Phoenix or anywhere in the country, it's hard to find deals that pencil and make sense. But what happens is, these brokers will start to respect you, because they see the work you're putting in, they see that you're competitive, and that you're, you're pushing it pushing it. And you don't have to close a deal to get an off market. Once you start to develop that rapport, simply by going through the exercise, giving them feedback, they start to respect that. And they might throw you an off market deal, or just throughout that process, you're gonna you're gonna advance and improve as an underwriter at understanding of the market. And I tell people now that most people that come to Phoenix, and probably a lot of places in the country, they won't even know a good deal when they see one. Right, because everything is so tight. If you don't know how to underwrite, and you don't know all the assumptions to use, then you're not going to make you're not going to make it work. And so I think you only get to that point, by repetition, just like with anything, you have to just kind of be relentless with the volume. Don't hesitate to reach out to brokers to or deals underwrite and send offers, don't hesitate to send an offer, even if you know it's well below what the asking price is, because they still have to present it. And you never know how competitive that deal is. I mean, there was a deal a couple weeks ago was like 150 units, and there was only like three offers on it. Which is which is shocking. Yeah. I mean, the brokers told me and so in Phoenix, there's so much inventory right now. That Yeah, there's a lot of competition. But a lot of the competition can't underwrite every deal. They're getting spread out, you know, and we just, we just won our first market deal about four weeks ago. It's the first time we want to market a deal since August of 19. And it's not because we're not trying, we're constantly competing. And I found out later that one of the groups we had just lost like two other deals to recently, they weren't even competing on this deal, because they were too busy to remain and if they were, they probably would have blown us out of the water like they've been doing. But but because we just go through the process every time we're consistent, you know, we we grab wherever we can, you know, we we take advantage of the inches, the kind of like football analogy game of inches, you have to just kind of grind it out. So that that would be my advice is to just really pound it. And just be consistent over time with that. Yeah.
Brian Briscoe 45:43
Yeah. I would say one of the big things that moved my trajectory forward was, you know, travelling, you know, I lived in DC at the time, and I mean, eight hour drive to South Carolina, I toured three properties. I was trying to have, like, you know, 10 property tours that we can try to open up as many as many meetings with brokers as I could and most brokers basically told me Nope, nope, not gonna take time. Nope, nope. But I got two brokers that were showing properties. And I made the trip. And guess what one of those properties and that of being our first deal so, you know, I got out of it. You know, like Zack said, you got to put in the sets, the reps and sets, you got to, you know, travel to the market, you're in, show your face and show the brokers that you are serious. And, you know, eventually they'll see you as a contender instead of a pretender. I mean, Okay, that sounds corny, but I like it. I like I did say it. I didn't say it. So there we go. Well, we're we're out of time. So one quick question for both of you and Zach. You're gonna go first. how can listeners learn more about you?
Zach Haptonstall 46:47
Yeah, thanks, man. So yeah, you can just go to our website rise 48 equity comm R is a four eight equity comm you can email me Zack z a CH at rise, 40 equity calm. And then if you if you want to set up a call, get any questions, you can go on our website instead of a call through calendly. And then we jump on a call. I'm happy to help. Alright. Alright,
Brian Briscoe 47:07
well put the website information and his email address in the show notes. So if you're interested, check it out. We're gonna same question for you.
Rowena Agustin 47:14
Yeah, you guys can reach me at to Tru purpose capital comm or you can email me at true purpose. firstname.lastname@example.org.
Brian Briscoe 47:24
All right, and we'll put that information down in the show notes. And if you're interested, definitely reach out to her. All right, that said thank you to both of you for coming on the show very much. Appreciate your time and your and your flexibility. And this is going to be a great episode.
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 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, app, 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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