Raising Money Before Your First Deal with Charles Seaman and Ramsey Blakenship

Episode 70 of the Diary of an Apartment Investor Podcast with Charles Seaman and Ramsey Blakenship, hosted by Brian Briscoe. Transcript by Otter.ai – please forgive any errors.

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Brian Briscoe 0:00

Hey Ramsey, we got Charlie on the line here. What do you want to ask him?

Ramsey Blakenship 0:03

What is the best way to raise capital without a deal.

Charles Seaman 0:07

So what you want to do is find ways to first meet investors and secondly to engage them find ways to get in front of high income earning professionals. And then the goal from that point is be able to get an introductory phone call or as you're meeting, and you start building the relationship. And then what you're doing is you're engaging with those people. So you want to add them to some type of marketing campaign, most times a drip campaign. The last thing you want to do is meet somebody today and then wait six months before you contact them again, you say I have a deal, because what will happen is that person's gonna say, Who are you and Lydia meet you?

Brian Briscoe 0:47

Welcome to the Diary of an Apartment Investor Podcast with your host Brian Briscoe. In this podcast we bring some of the top professionals in the apartment investment field to discuss various aspects of the apartment investing journey, with the sole purpose of educating listeners to make wise investment decisions. The Diary of an Apartment Investor podcast is sponsored by Four Oaks Capital, bringing you high yield returns through apartment complex investing. This is journal entry number 70. A part of our Ask the Expert series. Today we have experienced investor Charles Seaman and aspiring investor Ramsay Blakenship on the show. Keep listening for tips on how to raise money before you have your first deal under contract and a little bit of advice on what size apartment building you should be looking for on your first deal. Now real quick before we begin today's episode, you know today is December 14, which is a Monday and tonight we have a multifamily mastery webinar. For more information hit up our website at diary of an apartment investor calm and look for the link to upcoming events. If you can't make it tonight or happen to be listening to this after the data errors Don't worry too much because we have a webinar once per month. If you want to get notified of upcoming events go to the website diary an apartment investor calm and give us your email address. We'll send you notification every time we have a new event come and now the show Welcome to the diamond apartment investor podcast. I'm your host Brian Briscoe with four oaks capital. I'm really excited for today's show. It's one of our Ask the Expert episodes. We've got two really great people on the line with us we got a man with tonnes of experience in this and other businesses, Charlie Seaman and a very motivated, energetic aspiring investor Ramsay Blankenship. Now, Charlie is originally from Brooklyn, New York. And he's got 14 years of experience working in the commercial real estate industry in New York City, specifically in acquisitions and asset management. He currently resides in Charlotte is the acquisition manager and asset manager for three oaks management company, and is actively building his multifamily portfolio in the south eastern United States. It's very impressive, Charlie, welcome to the show. Brian, thank you very much for having me. It's a pleasure to be on. We were just talking about this. But what's even more exciting is your three Oaks. And I'm four oaks. So you know, we got to Seven Oaks here today. Yes, we have a lot of dogs. Yeah. So well, good. Good enough. Well, let's, let's talk about this. First, let's talk about your background and your history, you know, up until you decided to, you know, set your course with apartment investing.

Charles Seaman 3:00

So for me, I was fortunate to really stumble into real estate. 20 years old, I was young, dumb, and broke, for lack of a better set of terms. And I was in desperate need of getting a real job. I was a bank teller. At that point, they didn't have direction in life. And they said, You know what, my mother became disabled, and I needed to find something that was going to pay the bills. So I had a friend of the family that had owned multiple businesses. And a few months earlier, he'd offered me a job and I just kind of blew it off, because I wasn't thinking that far ahead. But I said, Okay, you know, my mother's become disabled. She was the one who was, you know, the primary breadwinner. And I said, You know what, I need to find something that's, that's going to keep a roof over our heads and put food on the table. And I said, making $8.82 as a bank teller, you know, wasn't going to do that. So I called up this gentleman, and, you know, went to meet him in his office. And lo and behold, they get hired pretty quickly. And when I first started there, I wasn't making a lot of money, but I was making enough to make ends meet. And that's, that's pretty much about it. And I was working around the clock, and I learned a lot because he owned different businesses and different different industries, construction, real estate, hospitality. So through the years, I got to the point where I was helping him manage all these different businesses and properties. And I got to learn a lot about different industries and make a lot of really good contacts doing that. And I always knew that I wanted to run my own business. When I first started, they were 20 years old. My goal was to be a two or three years, and then eventually go do something on my own. On the hold sometimes in life, maybe you get comfortable, you get complacent and you lose your way. And I said, You know what, I I wasn't broke, but I wasn't rich. And I said I was doing well enough for myself that all my bills were paid and I had, you know, a couple bucks extra. So I said, Okay, you know what, I probably got complacent. Lo and behold, 14 years later, I finally said you know what? I'm 34 Thank you Yeah, not totally broke without anyone. And unfortunately, it is young. But yeah, it happens to the best of us.

Brian Briscoe 5:06

Yes, sir. 30 something is still young, you know, so young enough,

Charles Seaman 5:11

is true. And I said, Okay, let me go after my dream of building my own business, because I said, You know what, right now I'm still at a point in life where I'm single, I don't have any kids. So I said, you know, what, now's the time to deal with this. This is the opportunity, I said, we're in a great spot in the real estate market. You know, there's a lot of investors that have capital they're looking to place. And for me, personally, I initially thought of going into single family route. And I had explored that back in 2014, and 15, and 16. And I talked with a few things. One is that the guy that I was working for was a commercial real estate investors always a heck of a lot more familiar with commercial and I was residential. I enjoyed a lot more. The one difference was my budget, better suited residential and commercial. So then the first one of the best indication, and that opened my eyes to different possibilities, because I said, You know what, I have the knowledge and the skill to run these deals, I don't have the capital. So once I heard about syndication, learn about all the benefits of it. I said, you know, what, I can use my knowledge and my expertise, but somebody else's capital. So that's what started me down that journey. And then that was 2016, when I first learned about it, and really mid 2017, before I started actively engaging in it. And now for the last three years, I've been working at it pretty consistently.

Brian Briscoe 6:29

Okay, now, so you worked in the commercial real estate industry? Was it specifically multifamily? Or was it kind of a range of property types?

Charles Seaman 6:37

Raise your property types more with traditional commercial? At one time, they were more like retail restaurant, ground floor and office space above. And then they were more industrial. There was some multifamily and YouTube and not as much.

Brian Briscoe 6:50

Okay, now, why did you choose multifamily over the other property types? I mean, you had experience with retail and office and, you know, the dual use type properties and industrial?

Charles Seaman 7:00

Why did you go multifamily, the ability? So I haven't the light, traditional commercial assets also. Well, given the last couple months of world events with the pandemic. I'm personally very glad that I chose to pursue multifamily and that industrial or were retail or anything like that. Well, although industrial, still pretty strong. But retail and what is it after imaginer? probably getting hammered at this point. So yeah, multifamily brings unprecedented stability. I always tell people, as you listen, will you make the money with multifamily that you might have successful technology digits that revolutionise the world? Probably not. But you're also not going to take the risk, you're going to have great stability, people need a roof over their heads. And whether there's a good market or a bad market, they got to be willing to pay a price for that because they don't want to stay on the street.

Brian Briscoe 7:50

Yeah, and I totally agree. I did a lot of you know, research into the different property types. And, you know, even with industrial, you know, the last couple of years industrials, probably been the hottest, and the place where you can make higher returns on your money. But you know, the resiliency of multi families, but I kept coming back to people need a roof over their heads, they need shelter, and they're always going to use apartments. I mean, they're always going to be people who want to live in apartments, you know, the, yeah, the retail has changed. I mean, just in the last in my lifetime, you know, I saw Walmart change the face of retail. And then 1015 years later, you see Amazon changed the face of retail. And you know, a couple years from now, there may be another big game changer that changes the face of retail. So, yeah, I think the resiliency I agree with you 100%. I think the resiliency and the stability of the property type really, really helps out. So awesome. So now with the commercial real estate, you know, when you're working for this gentleman, what were your roles and responsibilities, and how did that translate well to being able to do multifamily now,

Charles Seaman 8:57

I'm very fortunate to be able to handle a lot of different roles for them from finding deals to analysing them to getting them on the contract and negotiating. And then with him, he was more of a buy and hold investor. So we also did self management. He didn't use management companies who manage everything in house. So the one good thing about traditional commercial is that once you get the leased up and you get a good tenant in there, there really is minimal management, it's really limited to just collecting rent, and addressing any common area building issues. So most commercial leases require tenants to be able to maintain their own spaces. That means if they have a leak, if they have a problem with your Wi Fi SI unit, you know if there's anything that's within the space, typically they're responsible for maintaining and handling it, the only time they come to you is if it's a common area issue. So maybe if they have a leak that's coming from the space that upstairs that's occupied by now you're shopping you would address a handle, but overall length you do a good job screening attention, you get that least up you do have a minimum minimal management with it. Joe in that regard. A lot less management intensive than multifamily. Now that gave me some good experience because I was able to initially sit with him and spend a lot of time learning how to read contracts and negotiate deals. So those were things that I couldn't have gotten in the classroom or anything else. It was something that just real life experience I had, I was very successful that I was working for. And initially, while I wasn't making a lot of money, I was at what I was learning was invaluable. Yeah. And it was on the job learning at its finest. And I was willing to probably work more hours than most. At the beginning, I was probably in the first few years, I was probably working 100 to 120 hours a week. There were no such thing as sick days, vacation days, weekends, how later and that stuff. But I learned a lot. Even though I still work a lot in Glendale wasn't worth that much anyone. But it was a learning experience that really gave me a chance to learn a lot from him.

Brian Briscoe 10:52

It sounds like you were paid for a mentorship programme is kind of I mean, very, very hefty, very intensive mentorship programme. But, you know, a lot of people, people these days are paying big bucks to get mentored by somebody. Sounds like you went the opposite route. Yeah, that's awesome. That's really, really cool. So let's talk about why you switch. And you said, you talked about wanting to own a business and wanting to have something of your own, you know, what's your big burning motivation for investing in apartment buildings, and you know, having your own business.

Charles Seaman 11:23

So the first one is financial freedom, that's always Route Route Zero, because man, I look at that and say, before you can do anything else, you need to be on solid financial footing. So that's the first thing. The second one is if I ever do wind up getting married, or having a family, I can also have a little more flexibility, because hopefully, I'll have my business my business at a point that it won't require so much of my involvement. I always plan to keep keep active and keep a pulse on it, just because I like to know what's going on, I'll never be totally hands off, because it's not me. But at some point, they figured it'll give him extra time if I decided to go that route. And then the third reason is ultimately, to give back to people. There's a lot of causes that I like to be able to donate to financially, and also with my time. So eventually, I'd like to be in a position where I can do that at one time. You know, I had toyed around with the idea of starting a nonprofit which would potentially spread financial education to people that need it, because I think that's a major area that's not focused upon in our country. Yeah. And I think that the school system often does a poor job of preparing people for real life. And one of the ways they fail people is by not giving them the financial education they need to be able to succeed in life. And that's why they don't want to be middle class, Richard, what is that they don't even prepare you for basic middle class because they send people out there into the world without the knowledge of planning for retirement or even balancing a chequebook?

Brian Briscoe 12:46

Yep, you know, and I look at the school system and what they it seems like they're designed to create w two workers, you know, you look at the average school teacher, you know, and I'm generalising I'm apologise in advance if I offend anybody, but they usually are not wealthy people. You know, so having a school teacher teach my kids about financial sense, I'm really worried about what the schools would teach more than anything else. I agree 100% with you that it's not taught, and it absolutely needs to be taught. What I what I really appreciate is when people are looking to give back more than anything else. And, you know, so you know, you nailed it with me. So, so yeah, financial freedom, you're taking care of the eventual family and being able to give back to worthy causes. So I think those are those are very common themes with with people who are in this business. But yeah, so let's let's look at, you know, more specifically, your your current real estate experience, you know, your holdings and whatnot. Can you give us an idea of some of the tools or projects that you've done with your current company?

Charles Seaman 13:49

Yes, absolutely. So the first one to have a little bit longer to find that I would have liked till we looked at probably somewhere between 150 and 200 deals before we actually got on the contract I was submitting offers, but for one reason or another, they weren't accepted. And there were a few that we can close on. That Finally, we closed our first deal, September of 2019. And that was 92 year property in Stone Mountain, Georgia, which is right outside of Atlanta. Okay, then we have a second one, we just recently closed a 48 unit deal in South Carolina, which we closed actually September 2020. That will have an interesting story behind this. We actually have here the contract pre COVID. And for anybody that's been actively investing the last couple of months, you could probably attest to the fact that the financial world has changed quite a bit. You know, it's almost like before COVID and after COVID.

Brian Briscoe 14:37

Yeah, I mean, Oh, wow. Or during COVID I mean, just lending lending completely shut down. let's let's let's dive a little bit more into that when I think that's probably the more interesting one. So tell us about, you know, when you get that under contract, and you how things change with COVID and how you made it to the closing line.

Charles Seaman 14:52

So the first thing I'll do is I'll sum it up from a high level and I'll say, you know what, I tell people It took three years and seven and a half months when we finally gotta close. So we first looked at this deal in late January 2020. We submitted an offer on it pretty quickly. We tweeted right at the end of the month, and we went to negotiate with the seller a little bit. So by mid February we had it under contract. At that point, the property wasn't stabilised. So our first concern was that the property is located in Sumter, South Carolina, which is a very market. So we should maybe the markets just too small and can't support finding quality tenants. We went down there, we drove the market, we checked out the comps. And we said you know what, it's not the market is the management. So they me pleasantly surprised, because I said you know what, we can go in there and manage it better. I have no issue with that. So out of 48 units 12 of them will vacant or reverse I'm looking at it initially was going to require bridge financing because it wasn't stabilised and frankly brand new stabilised needs that the property has a 90% occupancy rate released 90 days prior to closing. So we had a bridge lender line lined up, we paid them the application fee. And this was somewhere around early March. And I'm St. Patrick's Day, late in the day, I get a call from a mortgage broker. And he said, he said, Charles, you know what, we had some bad news the the bridge landed to the side with all the uncertainty in the market, that they're they're shutting down the Atlantic Ocean right now. And he said, it's not anything to do with you guys are with the loan. In this particular case, it's just their entire lending programme. They're shutting down temporarily. Okay, well, I guess what can we do? So at that point, my partners and I had a discussion and said, Listen, do we want to keep this contract active? Or do we want to terminate history, we're still within our due diligence period. So we could have done that. And we decided that we liked the deal. And we still wanted to move forward with it. But obviously doing show on the original Turner who's gonna be challenged. So most people who I deals on the contract pre COVID, one of two things, they either requested an extension of the due diligence period, or they just terminated the contract and got out of it. Yep. So we started to work with the seller and say, listen, we do want to close on it, or obviously right now, it's, it's gonna be very tough because most bridge lenders are shut down. And it's going to be challenged. So can you give us more time on the due diligence period, so they came back and they agreed, because there wasn't really too many other options at that point. And unless they were going to go find somebody that had all cash, it was probably going to be in a similar position. So we negotiated an extension to 60 days. And then at that point, thankfully, right around the beginning of May,

Brian Briscoe 17:33

so 60 day extension to due diligence, not the entire contract. Okay, so extended due diligence for 60 days, and then you still have the time to close tacked on to the back end.

Charles Seaman 17:42

Correct. Yep. Okay. So, Joe, that put us to mid May. And thankfully, by early May, the property actually got stabilised, I was surprised, you know, during the pandemic, they managed to fill these vacant units. So it almost makes you think, did they just put anybody in these units to say, Okay, well, were they still screening tenants the right way? Were they doing things where they should have? I think what it came down to voiceovers, they actually were was just that they weren't doing a good job of walking the property previously, which, which was one of the first things to determine, oh, they got the property stabilised. And then all of a sudden, the the one good thing is that even though a lot of bridge lenders still weren't lending By May, now we're able to look at agency debt. And we said, okay, we want within with an agency lender, one of the bigger ones out there, and we started with them in mid May, they went through their process, the property appraised surprisingly, well, we had the under contract for, you know, 2,000,005 50. Prior to COVID. We got a little bit of a credit during COVID because of the pandemic, and the property appraiser and whatnot by a bit so we said okay, you know, that worked out really well. We were pleasantly surprised. So that the appraisal came in good. Everything came in good with the the financials. So about a month and a half later, the lender comes back was initially on a term sheet where they give a 75% LTV on the proceeds, and everything else seemed pretty, pretty favourable. So they come back and they said, Listen, we're gonna issue a commitment, but it's only going to be for 65%. And I said, What happened? I said, the property appraised. Well, you didn't tell us there was a problem with the financials. What happened that went from 75 to 65. And still to this day, we never really got an answer, right? So we, you know, I get the impression was just that they were still uneasy about lending because of the pandemic. And nobody told us that they were happy, but I just kind of reading between the lines is what I put together. So I said, Okay, you know what, unfortunate, that's not going to work for us, because with that extra capital raised, it's going to dilute our returns too much, and to be able to reduce the returns that we wanted for our investors. So we ran the clock on with them and then we went with a third lender got another extension of the contract with the seller. And with this particular lever, thankfully, they were able to reuse the appraisal so they didn't have to go out and order a new one.

Brian Briscoe 20:01

When we save you guys some money too, because you don't have to pay for it.

Charles Seaman 20:04

Uh huh. And also you never know where you're gonna Yeah, cuz you're gonna have to appraisers look at the same property totally differently. So when they say, Okay, I value that, you know, actually the other one value today. Why? Yeah, so, so I said that weren't that good from a lot of standpoints, and they did redo their property inspection, their environmental, but overall, they moved pretty quickly, within a month and a half, were able to close it so much in time. Yeah, there was definitely a lot of hiccups along the way. Your story to what we finally got to the finish line is better.

Brian Briscoe 20:36

Yeah, you're fortunate to have an owner who wanted to work with Yeah, we had to lol I signed the the first two weeks of may or March excuse me, first two weeks of March. And then, you know, when the lending dried up, you know, we approached one of the owners, and we were probably a day away from signing the purchase and sale agreement. And, you know, we we asked him to stretch things out. And he said no, basically so so that when that one fell away, it sounds like you guys are on COVID story as well. You know, we got to we also had one under contract that got delayed significantly because of COVID. We were supposed to close that one in March, and it was a loan assumption. And the the lenders things just went haywire. So instead of closing in March, we closed in June. So that ended up being seven month contract period, too. So that was a little excessive. So yeah, we've had our share of COVID on closes and COVID issues, but we're good. But anyway, let's let's get to the next part. what's what's next for you? And what's next for for your company?

Charles Seaman 21:36

Well, any immediate sense, some good news is as we're recording this podcast, actually, just one day ago, we got signed yelloweye for another 64 unit property in Charlotte. So regulations show in the immediate future, closing that deal will be next week, etc. A part of the Illinois that we're going to close by December 31 of 2020. So that's our most immediate goal is getting that deal, you know, screened and making sure we do all due diligence, and then just moving everything along so we can get down to the finish line. And in the big picture, I think, you know, personally, I've always said that I think I want to shoot together when we're doing 10,000 units, that's not gonna happen overnight. That's a big picture goal. Because it's something that you have to build up to, you have to have the infrastructure, you have to have the investors. And you have to make sure that you have the right pieces and the right people in place to be able to succeed with that. So at the beginning of the year, we had set some company goals that we wanted to do three wheels, and 500 units this year. So right now this one will be our second deal, we'll definitely shy in the 500 units based, okay, it's progress. And I said it didn't wind up exactly where we want it to get a little bit later the pandemic but I think things are moving in the right direction, and we have some some different pieces in place that are starting to move things forward. One of the real good things that happened is after you close your first deal, it's you, you have a lot more credibility. So as you start closing, you get a reputation with brokers in those areas. And they started to say, Okay, you know what, we've seen these guys before, they've been active, they've closed a couple of deals. So you'll get their vote of confidence when you start submitting offers, as opposed to when you're the new guy, then you're you're trying to make an impression on brokers, but what happens is, they don't see any track record in the nervous to go with you.

Brian Briscoe 23:20

Yeah, yeah, that's absolutely the case. You know, and, you know, we made similar goals, the beginning of the year, and I think like a lot of people we had to take the COVID Mulligan, you know, just like, you know what, we're gonna have to readjust this hard it's really hard to foresee a pandemic, you know, that's, you know, the, the the one person in the world who did you know, good on him, I guess, but so, well, Hey, good, I appreciate that. And we're gonna now introduce our next guest, Ramsey Blankenship. Your MC is originally from Louisiana. He's active duty in the US Navy as an explosive ordnance disposal technician. He started his real estate investing career by house hacking a property in 2015 with a VA loan, and now owns 22 rental properties and is looking to grow his portfolio. So not the brand new investor. He's already got a little bit of track record behind him. So Ramsey, that's very impressive. And that said, welcome to the show. Hey, Brian, I appreciate you having me on brother. So let's let's do this. Let's dive into your background in history. Actually, before we do this, where are you located right now? Right now I'm in all rain. The middle rain. Okay, Middle East. All right. So I just say active duty Navy. So you are in the middle of a deployment correct.

Ramsey Blakenship 24:33

Just started actually just got out of my two weeks of quarantine. And now getting back to work this week. Starting to get

Brian Briscoe 24:43

nice. So as you're going to be doing a lot of your real estate investment activities from basically the other side of the world.

Ramsey Blakenship 24:50

Yeah, it's not, especially with the laggy internet. It's not ideal, but wait for the right time every time I'll never get started right.

Brian Briscoe 24:58

Yeah. Well, I'll tell you There's there's a lot of people who have done it before, you know, and you know, me being military myself, you know, I know people who've done deals from, you know, Okinawa, Japan from, you know, different spots and, you know, maybe Germany or whatnot, but it's definitely possible. So it's something that just takes a little extra work and electric commitment. And so, end of the day, I know you've got some teammates, teammates that, you know, we'll probably talk about a little bit, but definitely doable. So let's let's do this. Let's now talk about your background in history, you know, up until you decided to jump into real estate investment.

Ramsey Blakenship 25:34

Yeah, absolutely. So like I said, I grew up in Lake Charles, Louisiana, whenever September 11. It was in high school, I was a freshman in high school. And shortly after that, a couple of years, I was kind of figuring out what to do with my life and was want to join the military. And that's whenever Hurricane Katrina hit, which Hurricane Katrina didn't hit exactly where I grew up. But right after Katrina was Rita and Rita hit Lake Charles, Louisiana. And that's where I lived. And from there, my recruiter called me and told me, Hey, you need to go now. So we can get you out of there and get you up to boot camp. Whenever it floods around my house where I live, it basically becomes an island. And I was unable to get to the recruiter from where I was, and me and my, my dad and my two brothers ended up having to take a chainsaw and chop down some trees on the way to meet up with my recruiter was on the other side of like, a flooded area. And right before I left my dad, he told me, he said, Son, let me tell you about Chase, right? Because this is like the, this is the moment that I'm leaving the house. Right? Like, like, for good. A couple of my brothers didn't leave to they're under 30. So I think my dad was actually pretty excited about that. Like, yes,

Brian Briscoe 26:47

we got one.

Ramsey Blakenship 26:50

But he said, uh, he says, when you when you're in your 20s, you're going to chase women, when you're in your 30s, you're going to chase money. When you're in your 40s, you're going to chase your kids out of the house, when you're in your 50s, you're going to realise you spent all your time chasing things, and you're gonna start chasing last time, right. And I never forgot that he told me that. But at that time, my 18 year old brain didn't really fathom what he was trying to tell me. So I went on to the military and did one deployment on a ship, I couldn't stand it. And so I decided I was going to join Special Operations. And this was at like the peak of the surge as well in Iraq. And I really wanted to play my part. So at that time, the the biggest threat to the military was the improvised explosive device. And so I decided to go to your D school so that I could learn how to defeat these things, right. And I had always wanted to be entrepreneurial. And my dad, he is an entrepreneur owns his own business in Louisiana. And I always worked in his shop growing up, and he would, you know, watching him, I would learn kind of how to do things like how to initiate things by yourself, right. And I'd always wanted to do that. And when you join the military, and you can attest to this, the military does not promote initiating things by yourself, whenever you're just coming in. Now, everything has a list of checklists, a structure, there's a rank, you know, you're told what to do shut up in colour,

Brian Briscoe 28:15

every you know, all of it. Yeah, you do things in the military order. And they have this system that you know, you you basically assimilate, or they kick you out.

Ramsey Blakenship 28:24

Yeah, and there, there's a lot to learn from that. And I did in fact, learn a tonne from it. And I started to kind of like, long for wanting to start my own business or do something along those lines. And it wasn't until, I mean, at the time, I lived in San Diego, I graduated EOD school, moved out to San Diego and I was like, Alright, I think I'm gonna start investing in real estate and I went house shopping in San Diego, California. Like, I remember going to my first place so this is in 2009. And I went to this little like, it was not a nice house was no insulation, no air conditioning, single pane windows. And they said it was a half a million dollars.

Brian Briscoe 29:07

My second property my second investment property was in San Diego, and I bought it in 2008. So Oh, God, I know exactly what you're talking about. I started shopping in 2006. And you know, 1200 square feet was going to be a half a million dollars, you know, and so, fortunately, I did not buy anything. 2006 2007 but after the crash 2008 I said hey, Real Estate's on sale, I'm gonna buy something, and I did buy something. But yeah, I right there with you. I mean, San Diego's just very, very expensive place to start real estate investing.

Ramsey Blakenship 29:44

Yeah, well, so it happened to be 2009 whenever the market was was down, but I'm from Lake Charles, Louisiana. And you know, my dad bought it. My dad built his house for $36,000. Yeah, right. And that's the house we grew up in. He still lives in today. So to see something that's not even remotely as nice as the house that he bought, or built for $36,000, for half a million dollars, I was like, What is happening? Like I don't understand. But I ended up buying a house out in California and then sold it in 2014, which I should not have looking back, and I made some money on it. And I was like, wait a minute, this actually works, right. So it was a single family home. But we were fortunate enough to be leaving California, which the real estate market is extremely high, sold, made some money and then move to the North Florida Panhandle, where real estate is extremely cheap. So I moved to the panhandle of Florida thinking I was a big baller, like, like, 50 grand in my pocket. I'm not even 30 you know, I was on top of the world. And so from that point, and that's whenever I decided to actually Okay, I'm gonna make this move, I'm gonna start investing in real estate. I had, you know, I had my track record behind me, got bought and sold a primary residence. But I had one obstacle that I didn't know how to overcome. And it was my wife. I told her, I said, when we moved to Florida, I want to buy a duplex, and I want to live in one side and rent the other out so that we cover our mortgage. And my wife was like, how about No, how about we never do that. And just kind of killed my dreams. But whenever I sat her down and actually talked about what it was, he's like, Look, Ramsey, we have a we have a kid. We're married. We're like a family. We've got dogs. She's like, I do not want to share a wall with somebody who's going to listen to us. Every time our kid cries, our dog barks or mean, you have some sort of argument. I don't want that. Yeah. And the key word that I heard was she didn't want to share a wall. Right. So I started looking for real estate that had a detached units. And we ended up finding a three bedroom, two bath house with two little cottages on the back. And I say we ended up finding that I went out and search for one and found one that had a backyard, your own private space. And then I looked at the cottages on the back and they just looked like neighbours. So brought my wife to this house. And I showed her the house. I mean, it was a nice house. It was nothing to write home about but it was definitely we're only going to be there for three years. And instead How do you like this house? She says, This is fun. We can live here. I said Seriously? She goes, Yeah, what's the deal? I said, All right. Well, let me let me write this down for you. See those two cottages out in the back? She goes, Yeah, I said, What do you think about those neighbours? He says they, their neighbours. I don't know what to think about them. I says, Yeah, they come with the house. And each one of those rent for $650 the mortgage on the house was 1200 bucks. So we would live we're literally going to get paid $100 to live in the big house while two other people lived in these tiny cottages on the back. And that was like the moment when she you know Oh, money. I'm all in right like this is great.

Brian Briscoe 33:12

Fun. So my wife was reluctant with the first two couple investment properties that we had, you know, and I kept on telling her what more real estate more real estate and she was. She was reluctant and when we sold the first house that we that we sold, we walked away with like $140,000 and that's when the light went on for her it was the same thing she saw the money and yeah, she's she just looked me said so real estate. Hmm. Yeah, that was that was a conversation and then from there on out she's been biggest supporter biggest fan. You I think I like what you did. Specifically your wife had a couple hang ups and you listen to her, you know, and what were her hang up was it wasn't investing. It wasn't real estate. It wasn't house hacking. It was the wall and I really appreciate what you did. You kept on going you're like okay, here's here's my wife's hang up. Here's what really is, is bugging her. I don't I still do this, you know. So you ended up finding a solution that worked. And I think that's, that's amazing. That's awesome.

Ramsey Blakenship 34:15

Yeah, and I typically I joke around my wife and give her I gave her crap and tell her she can't see faster nose. Like, I've got all these ambitions and ideas and I will work myself to death. I've literally worked myself to the point to where I had my brain locked up and put me in the hospital for three days because I just don't know when to stop. I really don't. And my wife, she always looks at it from a different perspective. She just, you know, she's worried about family time and health and all of this stuff that I need. Like I need someone to tell me. Ramsey, you got to go to bed. And she's that person for me, right? Yeah. So I always give her smack about it, but I need her I need her. I need her more than I give her credit for so I appreciate her for that.

Brian Briscoe 34:57

Yeah, you know the same same point. You know, when My wife was looking at what I was doing or trying to do with real estate. She was looking inward looking at the kids, and and looking at how is this going to affect the family and endpoints? You know, when I was looking at things, I was looking 10 2030 years down the road. And she was looking at the here and now which I think you absolutely need to look at both, you know, and so I think that's, that's your great, great thing that we've had going on is, you know, she does take care of here now and make sure here now is good. And, you know, I tried to look 20 years down the road, but let me ask you this question right here. And then we'll move into the the Ask the Expert portion, but what is your your motivation for this? You know, what, what keeps you doing multifamily?

Ramsey Blakenship 35:40

Remember, when I told you that my dad said, you know, grab him by the shoulder? He told me about the chase, right? Yep. Well, it wasn't until whenever I hit the 12 year mark, in the military. I've been in for 15 years now. While I was approaching the 12 year mark, and he told me about the chase, you're going to chase women, then you're gonna chase money, chase your kids out the house, and then you're going to chase the last time that you spent chasing everything else, right. And, I mean, I hit I hit, I hit the ground run. And I when I started chasing women, I found one and I, you know, me and my wife had a kid at age 20. So I didn't waste much time

Brian Briscoe 36:15

getting the power.

Ramsey Blakenship 36:17

Yeah, I was 10 years in advance on what my dad was telling me. And so when I turned 25, I started chasing the money. And what I was looking at what he was trying to tell me, I was only looking at a very granular step by step approach, just like the military teaches you, right. But I had forgot what he had told me at the end, you're going to realise you've been wasting your time chasing things, and you're going to start chasing lost time. And so I thought about what that meant. And I realised that every year I go home to visit my dad and my parents for like, at least a weekend or I bring them out. But when I started to distil down the amount of time, I was actually spending one on one with my dad, it was probably about one day, out of the full weekend trip about two hours that day, I would spend uninterrupted time. So I did the math on that 12 years, two hours a year. That's 24 hours I'd spent with my dad in 12 years, that equated to one day, right? So it really started coming down. So how am I going to buy back time? What can I do now to where I can make this time more rich on the back end. Because I was really like, what I told you about what I worked myself to where I was not being negligent to my family in any means. But in my mind, I was trying to do every single thing that I could to provide for them. But really all they want was my time. And that's when I said I need to start working harder and start working smarter, and start, you know, accumulating passive income via assets, right. And that's what turned me on to multifamily over single family because you can just do more in one fell swoop, and it pays you in a passive way to where now you're essentially buying back time. So I heard you ask about the why. And I know I'm kind of jumping the gun on that. But my Why is very clear. What can I do now to maximise my time with my family in and save me from having to get out of the Navy at 20 years and start another career. Right. So my full on goal at 20 years, I want to be able to to be able to look at the Navy and say, I can do more time, but it's only going to be if I choose to and the chances are I'm not going to choose to do that. And that's essentially what my my goal is right now.

Brian Briscoe 38:37

Yeah, and I there's a lot of similarities in there between between us, you know, a couple years ago, I went on this real estate thing. And it was, it was the same. A lot of the same things. You know, one time back, I want to be able to spend time with family and kids. And I've always lived, you know, 1000s of miles away from my parents and from my wife's family. But, you know, I started this thinking, I want to have the option that my 20 year mark to get out if I want to, you know, and not be beholden to or still addicted to a paycheck. So, you know, 100% agree on that one. And I really love that. You know what your dad told you? I think it's, you know, wise beyond yours. You know, you end up realising that you've been chasing the wrong things and try to fix that later. So well, good, good. Well, hey, RAMs, we got Charlie on the line here. What do you want to ask him about real estate investing?

Ramsey Blakenship 39:28

Hey, Charlie, so so cool. I've got a couple of questions written down. And I was even writing them down as you were talking about some of the experiences that you had. I'd like to start with one of the experience that you had you said you close recently, September 2020 on a 48 unit that correct? Correct, yeah. And so with a seven month due diligence period, what did you do to keep your investors committed for that long, I mean, did they already sign and commit the money or did any of them back out during that time because deals started to look sour. What was it that you did.

Charles Seaman 40:03

So we actually had a pretty easy shot on the equity with it, we had one group of investors that came in and funded the entire equity portion. So what happened is, we normally complete our due diligence period before we start our raise. So we want to get at least halfway through our due diligence before we even have our offering documents prepared, just to make sure that we're going to move forward with the deal. So in this case, we had a 30 day due diligence period initially, and we actually completed all of our physical and financial due diligence in that time, and the extra 60 day period that we had was solely to, to see if the market conditions change. And it was really more seeing if we're able to get a loan than anything else. So it wasn't that we were extending it. Now, what we normally do is we'll put a teaser at the end of people and say, listen, we have a deal on the contract that we're looking at, we usually won't go too high level, we'll keep it very high level initially. So you want to give them enough to whet their appetite and let them know that you have something coming. But not enough. We're giving specific numbers right like that. Because when you want to be compliant with all the rules and regulations, and two, you want to complete your due diligence before you start releasing that information. So our investors didn't get squeamish we actually had a few that we had to turn down because we had some people that have invested with us beforehand, and they wanted to invest again. But they weren't able to if this one route can put everything in.

Ramsey Blakenship 41:31

Okay, awesome. So the first few questions are gonna be kind of COVID specific, since that's like what's going on right now. And then I'll move on to some of the like general syndication stuff because my next step is syndications. So with the COVID environment right now, I typically you can see like a 60 day due diligence, but you both you guys just said that, like these deals got dragged on for months. Do you think it's there's a level of, I don't know, responsibility with how much due diligence you put in the offer while still maintaining competitiveness from other offers? Or do you like what would you say you would put on a contract right now for your due diligence period.

Charles Seaman 42:10

So for us, we only use 30 days. And I think that's what most buyers use at this point, somebody will do less than that. But I certainly wouldn't recommend that unless you know, the area and the property really well. And unless you have the infrastructure in place to be able to move very quickly. So 30 days is typical. That's what we use. And I'm pretty sure most of the roofs would say the same. Now, let me get clarity on that last year, we closed suite a 30 day due diligence period in there, and then we extended that 60 days. And then after that those 90 days are up the rest was just the period between due diligence and closing. So we were only doing due diligence, we were just getting everything finalised and then being we had an issue with the loan, we had the wind up negotiating another extension. So what I would recommend is if you're planning to use an extension, you should usually include that in your letter of intent. And you should also specify there's $1 amount that you're paying associated with it. It's always more expensive when you have to go back and negotiate an additional extension later on. So in this particular video, we did and we had to pay extra money. Thankfully, we were able to just give the seller more with the pies that went hot right away as opposed to actually hitting it on the purchase price. But depending on the shell you negotiating with shovel actually charging more than what you initially read them

Brian Briscoe 43:27

for it. We do three days due diligence as well. But on the last one that we did that we have under contract, we actually said extension. So you so in our contract, we said if the contract runs out on x day that we have the right to purchase an extension, you know, and it's money credited towards the purchase price. In previous contracts, we said one extension or maybe two extensions that we put in the contract on this last one just because of the COVID environment. We had the word extensions in there. So we could continue to extend. Now, obviously, the money goes hard immediately, you know, so it's not refundable. So when you start hitting those expense extensions in the stringing it out, it gets a lot more expensive for you, but does make it a lot easier makes it makes a little more flexible when the lenders just taken a whole lot of time.

Ramsey Blakenship 44:17

So are you saying the end goes hard? And then you still purchase extensions? Guess as

Brian Briscoe 44:24

well? Yep. Yep. So now Now in addition to the end, you have a couple of extension prices that are basically non refundable out of your pocket in the owners pocket. So if you don't end up purchasing the property, that money's lost, just more risk capital.

Ramsey Blakenship 44:42

Okay, so when What are you guys seeing on like, if you're putting that in a contract? How much money would you put to purchase an extension? Like ballpark?

Charles Seaman 44:53

We normally use $50,000. So that's usually what we would offer. If you don't multiple extensions. I promise I'd recommend doing less than that. But we usually have $50,000. That goes hard right away.

Brian Briscoe 45:07

Yeah. And ours, ours is just, you know, depends on what our end is we try to go whatever half the MDS.

Ramsey Blakenship 45:13

Okay. Alrighty, cool. So the next few questions are gonna be just general to syndications. What percentage of the total asking price Do you plan to raise from Capital Partners?

Charles Seaman 45:27

So it depends on your cap x budget, but most times, I would say between your downpayment, your closing cost, your fees, and your cap x probably shows you 35 and 40%. that a lot of cases. All right,

Ramsey Blakenship 45:37

and then me is trying to break into the market on a syndication? What would you recommend to as a first syndication, a reasonable range? As far as unit size or price? Which one? Would you go off? Or would you go off of the price you're trying to spend the unit size you're trying to get like? Or what would you What would you recommend?

Charles Seaman 46:03

What I would say is very sure, everybody based on your comfort level and your experience. So if somebody feels comfortable only doing a 20 unit deal, I would say start there, and then you could eventually work your way up. But if you feel comfortable starting with 100 year ideal, then I'd say go for that. Now, what I would say is that you'll have a lot less competition in the 20 to 100 unit space than you will in the 100 year plus, by the point you hit 100 years plus you have a lot of bigger players that are out there looking for those deals, from institutions to equity groups to just other syndicators. So, depending on your own personal preferences, you're probably easier in the 20 to 100 years space starting average is a lot less competition.

Ramsey Blakenship 46:45

Okay, so and I, from my understanding the 100 plus unit deals, you know, you can expect to have in house management, you know, leasing office like it's the economy of scale gets a lot better 100 units plus, with 100 or less down to like 20, do you have any quick underwriting math that you throw out there to quickly? You know, say these deals aren't going to work?

Charles Seaman 47:08

You know what I? It's funny you say that, because I did probably use quick numbers, but I always say nothing I do is quick, I always go through a process. So in terms of quick numbers, I would say that, most times, if you're looking at a property that has no payroll expense, your expenses will probably wind up in the 35 to 40% of the income range. If you're looking at a property that's larger, and it does have payroll, then you'll probably in most cases be closer to 50%. But that expense ratio will go down if you're looking at a property that has higher incomes.

Ramsey Blakenship 47:42

Okay, perfect. Do you have do the guys in your company? Are you the only capital raisers Have you guys ever use a capital razor that's not part of three oaks?

Charles Seaman 47:52

We haven't yet but it's definitely something we can sharing as we as a span. So we're actually speaking with an equity brokering deal. And now to see about potentially signing an agreement with them and having them come in to raise capital for future deals. So the deals that we're doing now we can deal with them internally. But eventually, as we scale up, we start looking at two and 300 unit deals, we like to say we can do them all internally. But just as a backup, we'd like to have somebody like whenever an equity broker dealer on board, so that way we can rely on that and get big institutional money, but some of the capital in that.

Brian Briscoe 48:28

And we're we're actually doing our first bigger deal where we, we need capital ratios upfront. So we've got, you know, a small, small group of people who are all raising capital for us on the same deal. But like, like, Charles, I think the first couple of deals we did we planned on going in and doing it ourselves and taking it that route.

Ramsey Blakenship 48:46

Okay, perfect. What is the best way to raise capital without a deal.

Charles Seaman 48:51

So we want to do is find ways to first meet investors, and secondly, to engage them. So I would say your first step is you want some type of active marketing campaign. So with us, we're actually in the process of launching a Facebook ad campaign, and we're targeting towards the demographics that are most likely to invest in these deals. So when I tell people starting out, one of the mistakes we made is that my partners and I all had real estate backgrounds, we know a lot of other people in the real estate space. But while those are great contacts to having great people to know, they're probably not the most likely people to invest passively in your deal. Either because they're actively investing or putting money in their own deals are a combination of both, and for all different reasons. So the people that you want a high income earning professionals as you start out, the people that make good six figure incomes, you know, they have a couple of bucks stashed away, and they either have a bank account or some other type of account that's not performing the way they'd like it to. And they don't have the time or the energy or the desire to run their own deals. So they're happy to give you their money in exchange for a passive return. So whenever we tell anybody stop out is that that's the demographic you want to be targeting. And eventually, as you're growing a lot of different options available with equity groups, and maybe some institutional money and different things like that, but you want to find ways to get in front of high income earner professionals. So we're going to be launching a Facebook ad campaign to target them. And then the goal from that point is be able to get an introductory phone call or a zoom meeting, and you start building the relationship. So you want to make sure that you have, you know, a documented pre existing relationship. And you know, the rules on that can can be interpreted very differently depending on who you ask. But generally, most people seem to say that at least 30 days of history, and three points of contact, you know, will help keep you safe. So you want to have an introductory call, and during that call you discussing, you know, things about their investment goals, you're building rapport, and you're just starting a relationship, but you're not giving any specific information on a particular deal, because you can't do that initially. And then what you're doing is you're engaging with those people. So you want to add them to some type of marketing campaign, most times a drip campaign, we have a monthly newsletter, we send out as do a lot of other groups. So that's a way that you can keep your investors engaged. The last thing you want to do is meet somebody today. And then wait six months before you contact them again, you say you have a deal? Because what will happen? Is that person gonna say, Who are you and Lydia meet you. So you want to keep in touch with them. And that can be through phone calls. It can be through emails, you know, some groups get a little more creative. And when people register, they ask them for things like their birthday, and they mail a birthday card as something just to separate yourself from the competition and say, Okay, what can we do that's going to make us stand out and make people remember us. So you want to find ways to be relevant. And you know what, sometimes in your newsletter, you may not have anything, if you don't have a deal where you can say, listen, we're looking at deals, we we submitted offers on three deals, we can close on one of them. And that way, at least you're letting people know that okay, we don't have anything yet. But we're looking and we're staying active, we're playing in the space. So first thing is finding a way to meet at high income professionals. And the second thing is engaging with them consistently through either personal connections or some type of drip marketing campaign, where they're getting to know who you and your company are.

Brian Briscoe 52:21

I wholeheartedly agree. Well, we're about the time we need to start wrapping things up. So I got one more question for each of you, Charlie, you go first, how can our listeners learn more about you?

Charles Seaman 52:31

Sure. So what I would say is that every Saturday afternoon, I host a free underwriting session that we do live on zoom. So if anybody's interested in joining that, and during the sessions, we underwrite an actual deal. You can send me a text message 3473063 to seven, eight, or an email trolls at three oaks management. com. That's the number three let me know that you heard me on Brian's podcast and that you're interested in joining me on the writing session we'll be glad to have

Brian Briscoe 52:59

perfect so yeah, if you're interested in it, you know, underwriting sessions absolutely free. I think it's an amazing offer a great deal, email or text, Charlie and get it on that one, or a Ramsey? Same question for you? how can how can our listeners learn more about you?

Ramsey Blakenship 53:14

So the easiest way to get ahold to me right now since I'm deployed is to email me at Ramsay at real focus.org. Real focus.org is our website. If you're interested in investing, when we do get a deal, you can go on there and click the become an investor tab and fill out our questionnaire. But as of right now, I don't have any type of cell phone service or anything like that. So send me an email. I'll respond whenever my timeline catches echo.

Brian Briscoe 53:40

Yep. And you're you're almost 12 hours offset for most of the US. So it's not going to be a quick response. And that's just just the nature of the game. And you also have two partners that are stateside, Correct.

Ramsey Blakenship 53:50

Correct. Brandon mag loski you can email him at Brandon at real focus, calm and then same with Kelly become

Brian Briscoe 53:58

Joey real focused on or Alright, so so you want to want to get hold of Ramsay personally, his email addresses up there. He's also got two partners in a website. So if you're interested in what they're doing multiple ways to get in touch with them. So that said, you know, Charlie Ramsey, thank you so much for coming on the show today. You know, I think you guys both added a tonne of value. Very, very impressed with what's what's been going on, at least in the last hour. So thank you very much. Thank you, Brian.

Ramsey Blakenship 54:24

Charlie, thank you for answering all my questions, man. I really do appreciate and Brian, thanks again for having me on.

Brian Briscoe 54:29

Yeah, not a problem, not a problem.

Charles Seaman 54:31

I interact with you and I wish you very well. I feel that if you can handle explosive devices, real estate will be essentially

Brian Briscoe 54:38

will see me Maybe I'll blow up. Well, one question I forgot to ask, do you still have all your fingers? Yeah, I still I'm one of the fortunate ones. Okay. So so he's at least above average as far as an EOD tech, you know, so there we go. All right. Thanks, guys. And that's a wrap for today.

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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