Rules to Analyzing Apartments with Tate Siemer and Don Spafford

Episode 143 of the Diary of an Apartment Investor Podcast with Tate Siemer and Don Spafford, hosted by Brian Briscoe. Transcript by – please forgive any errors.

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Brian Briscoe 0:00

Don, we got Tate on the line here. What do you want to ask him?

Don Spafford 0:02

Is there something like that rule of thumb type thing with apartments where you can do a quick analysis to even see if it's worth your time to do a full analysis?

Tate Siemer 0:10

Well, I think the best answer to this is that you need to become a real expert in your market, you need to know the market thoroughly so that when something comes up at 55,000, a unit you know that smoking that's I know I can put 10,000 a unit into that and sell it for 85 or 90 a unit that's kind of a rule of thumb. I think a lot of people that are really savvy in their markets will use is a price per unit rule of thumb. So that's one.

Brian Briscoe 0:50

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. Keep listening to hear some rules of thumb when analyzing apartments, and some of the overlooked pieces of due diligence. And now the show Welcome to diary apartment investor podcast. I'm your host Brian Briscoe with four oaks capital. I say this every time I say I'm really excited for today's show, but I really am super excited for today's show. It's one of our Ask the Expert episodes to great people along on the line with us today we have Tate seamer from my hometown Salt Lake City, which is why I'm super excited. And Don Spafford from Idaho Falls area which is where I'm going to be moving soon. So, you know, lots of lots of good is going to be in this podcast, lots of personal stuff for me. So first thing we're just going to say to take first Welcome to the show.

Tate Siemer 1:59

Brian, thank you so much for having me. It's an honor to be on this podcast is one of my go to podcasts. It's a staple for me and you know, being a fellow podcast host I admire you and and learn from you all the time. So it's such an honor to be a guest,

Brian Briscoe 2:19

you know, and take feeling's mutual. I think your podcast is pretty cool, too. You know, from one podcaster to another, you know, you got the apartment guys, you know, really catchy name catchy theme. And you guys have done some amazing things, too. So actually, why don't you tell us about the podcast real

Tate Siemer 2:33

quick? Sure, yeah, a permit guys. It's a weekly podcast and interview based and we just have high level experts on weekly that bring different perspectives from different parts of the business. And you know, I'll have people on that have 6000 doors and half a billion dollars under management. And I'll have people on that are duplex four Plex owners trying to get into small multifamily and everything in between and, and we just really focus on moving the needle in your business that's, that's our biggest focus is bringing what we can to you a value that helps move things in a really meaningful way. And you know, your, your key metrics, right, like, like, those are the ones that really make a difference at the end of the day. So that's what we focus on. We have a lot of fun, it's honestly, it's the coolest thing I've ever done professionally, this podcast, it's like a creative outlet and expression that I didn't even know that I needed or wanted. It's, it's it's so fun. I love it.

Brian Briscoe 3:41

You know, that's that's true of my podcast, I feel the same way at first it was it was almost a chore trying to get it started. But once I started doing it, I just realized, you know, I talked to people anyway, you know, it gives me a chance to bring people that maybe I wouldn't normally talk to talk to or talk with and you know, people who are way far ahead of me in the business as well, and people who are trying to get started so a lot of fun as well. So awesome. And for anybody listening, we're gonna put a link to his podcast in the show notes. So check it out. And incidentally, I was a guest once upon a time so you know, I you know, wholeheartedly endorse it. So there we go. So take let's let's do this. Let's talk about you talk about your background and history and kind of kind of lead us up into what got you into apartment investing?

Tate Siemer 4:29

Sure. Yeah. So I'm a product of the suburbs of Cincinnati, Ohio. I grew up there and and went to high school in Cincinnati, private, all guys High School and then went to college in Ohio, Ohio University, got a degree in psychology and then got into sales after college really didn't have a whole lot of direction. And in 1999 three years after I graduated from college, I moved to Utah. 21 years ago, I moved to ski specifically and it's awesome. It's my number one passion in life side from my dog and my family and, but it's huge for me and was the driving force behind that move. And long story short, I'm a photographer by trade, I did a lot of ski photography, when I moved out here, got into wedding photography very heavily. did that for about 10 years, shot hundreds and hundreds of weddings have been to all the Utah temples and, and all the beautiful places out here. It's an amazing place to be a wedding photographer. Yes. So, you know, in 2006, I was kind of not real stoked on the level of income that I was generating through that gig in spite of working really as hard as I could, and knew that it wasn't going to be something sustainable in terms of generating the level of wealth and lifestyle that I wanted. So I got into a really basic real estate class on investing on flipping houses and seller financing, and we learned about cap rates and rental properties and highest and best use and, you know, really all the basics, the fundamentals, I started flipping, my first project was a duplex 100 year old duplex in Salt Lake City yet that I did on my own I rehab one unit kept the tenants in the other unit and, and sold it made 10,000 bucks and was on top of the world.

So did a number of other flips between oh six and oh eight got my license during that time, and then the crash happened. And all of the it really hit us like right in the heart because all of the financing programs we were using right up to flip were gone immediately. And so and to be honest, I wasn't really like in the groove in that business. At that point. I was I felt like I was kind of swimming upstream. It just never really clicked and so I wasn't real heartbroken. When the crash happened. I went back to photography for a couple years and started a yoga studio out here and did some other business things. And, and then in 2011 and 12, roughly, my current business partner and I Karl York is his name, we started back in the single family world flipping again, it was kind of all we knew to do, really, and just didn't have a mindset that anything else was possible at that point. And we did that hard for five years didn't again didn't have didn't really click didn't really get in that, you know, it didn't scale up didn't produce what we really would like to have. And so we branched out about four years ago, we took on some land entitlement deals, we flipped a few apartment buildings, some smaller apartment buildings. And we did some new build high end luxury townhomes here in downtown Salt Lake City. And so we tried our hand at about that really three major different asset types all at once and kind of went big. And in some ways that the townhome projects just didn't go well. Really. They were we can I know Don's got questions about stuff that didn't go well. And we'll talk about this a little further. But it became really clear to us through that experience that buying existing larger scale multifamily properties was not only hands down a more efficient way to build wealth and passive cash flow, but was also actually quite a bit risk mitigated, yes, compared to the speculative nature of building new product and hoping to sell it for $900,000. So all of that became very evident just by doing those projects and by by being in the deals. And I guess two and a half years ago, we really focused hard and have honed our focus in on larger scale multifamily acquisitions. We just really cracked the code this year, and we call it in the last actually two weeks. We closed on 249 units in Central Ohio between two different apartment communities. We've got 363 units and Oklahoma City under contract we've got 51 units in Oklahoma City under contract. It's it's been an incredible journey I've I've been I've been a part of a coaching mastermind with Corey Peterson. I've been in Adam Adams inner circle into Michael blanks dealmaker live where I met One of my current partners, Chelsea Garber is just a rock star right now in the making. And speaking of I

Brian Briscoe 10:07

bet you we met there. Because Yeah, we probably did because at that dealmaker live, inside the the, where the presentations were the auditorium area, I was actually sitting right next to her, but I'm sure I'm sure at some point during that whole thing, we probably crossed past shakes, hands shook shook hands or something. But anyway, sorry about that. Go ahead. And

Tate Siemer 10:31

quick side note for listeners go to those conferences. Oh, yes. Like seriously and buy the VIP tickets. And just treat yourself to first class treatment and rubbing shoulders with rubbing elbows with the best of the best. You can't. It's It's literally it's a priceless experience to do.

Brian Briscoe 10:53

And the VIP tickets give you give you access to every other VIP. Most people who are in the business and are doing things are going to buy that VIP pass, you know, and incidentally, I don't have a conference coming up or I'm offering VIP so that's that's straight up. That's what I've learned from doing.

Tate Siemer 11:10

Yeah, absolutely. And I don't have a conference either. Yeah, right. I don't even have one. Well, I guess dealmaker live is you know, it's coming up in July. It's gonna be live. Mike, I don't Michael doesn't know me. He's not giving me anything to promote the event. But I you know, it's probably though it really is like maybe the one event every year that I think so do not miss there's some great other ones Joe fairless. Is is awesome. At Cory is doing one now that, you know, there's there's some really great events to get to. But man, was that a needle mover for us that Whoa, yeah, July, you know, and 2019? Yeah. So yeah, there's been a lot of steps along the way. We've had other deals under contract that have fallen out, we had a 44 unit under contract in Albuquerque, that the financing deadline hit right as COVID hit and kind of blew up our loan, and or at least looked like it could have and we just didn't have enough confidence to stay in and keep our earnest money. Non refundable. So we cancelled that deal. But we I mean, we were $30,000 in due diligence into that thing. And so, you know, we're, we essentially did a deal but didn't close on.

Brian Briscoe 12:21

Yeah. I mean, that's, that's why they call it risk capital. I mean, you you expect to get that back, and you do everything you can to make sure you're keeping that money. But a lot of stuff happens. You know, we've we've lost some due diligence costs on one, two apartments now. So anyway, that's it happens. It's risk capital. And it's, unfortunately, that part of the cost of doing business. But we also had a property that we had just went when COVID hit, we had a property with an LSI, we were back in the contract back and forth. And we hadn't yet put our earnest money down. But at the COVID closures happened a week later, we would have had earnest money in the project that we probably would have backed out up to for the same reason lending dried up. And if you don't know if you're going to be able to get a loan, it's kind of hard to stay in in a deal.

Tate Siemer 13:08

Yeah, it like you said, it happens. It's kind of, you know, this is this business is not for the faint of heart. But you know, there's times that it feels like you're I hate to use the word seat of your pants, but there's, there's times that it feels like that. And, and there's times that you feel like you're, you know you're doing a lot of times you're doing things that you've never done before in business. And when you're especially when you're doing your first deal. And so a lot of times you're kind of winging it, and it takes a personality to do that. It's definitely not for everybody. And that's okay. Like there's nothing wrong with the people that this is not for it takes all of us to make the world go around. But

Brian Briscoe 13:48

now let me let me let me dial in on that one. I mean, a lot of people look at the word winging it and think oh, my goodness, but you had people in your back corner. I mean, you talked about earlier where you had your part of Adam Adams inner circle, a part of core Peters mastermind, how did those groups help you to be able to get through those times?

Tate Siemer 14:08

Yeah, well, I mean, just having an experienced mentor in your corner that has done what you're doing and knows what to tell you to put in the LSI as far as getting a you know, having a 30 day extension for an additional earnest money deposit, stuff like that, like things that are gonna make your life a lot easier and a lot safer, like less risky, you know, that's huge. Their presence will give you the confidence will give you confidence, you know, that, that you do have that expertise in your corner and you've got a second pair of eyes, really looking at things. Mentors are, are priceless. Whatever it takes honestly, to get an A in some sort of mentorship situation, whether it's an unpaid internship with a syndicator or basically bringing whatever value You can to a team if you're great at, at word and creating content creation and, and writing and or, or videography, or photography or underwriting, or there's a lot of different things you can bring to a team that are really valuable. And whatever it takes to get your foot in the door. And, and sometimes that's like a paid mentorship. Michael Blanc has mentorship program that's like, I think it's 25 grants a year and you get your own mentor for a year that's 100% focused on you and your success. And I mean, boom, that's like,

Brian Briscoe 15:35

Yeah, that's it. I'm actually a graduate of that program. And it definitely accelerated. And I feel the same way. I had somebody looking over my shoulder who had probably had about 2000 units at the time, when when we started the mentorship relationship, and most of the things that we went through where we felt like we were seated the pants, you know, he was able to just calm us down and say, Look, you know, this, this happens, you know, it's happened a couple times, here's how you deal with it. And I think, you know, how are we get that mentorship relationship? And we said exactly what you said, however, you can get into that mentorship relationship. It's worth its weight in gold. So let's say let's talk about one of the deals that you guys have done. So you know, pick your favorite pick the one you learned the most from whichever. Tell us about one of the deals that tastes done.

Tate Siemer 16:18

Yeah, I'll I'll mention the most recent closing that we just had. It's 179 unit community in Mansfield, Ohio, which is a little town about an hour north of Columbus, Ohio. And it's 1970 or so product and or 73 was the year I was born. It was built. And it's it's really beautiful. It's in a wooded environment. It's kind of surrounded by Woods. So it gives you this enclosed community feeling. And that's kind of a rolling Hill situation. And there's two parks on the grounds, we're going to make one into a dog area. And it was an off market deal came to us through a broker that I had networked with, through a childhood friend of mine, she was a residential agent, I went to her and said, we're shopping in Columbus, how can you help kind of thing and she directed us to this broker. And this broker knows the seller who's a pretty big player in the Columbus market and knew that they were looking to liquidate this particular asset. So we went after it and got it under contract, it was a loan assumption situation. So we were assuming a pretty sizable loan, but it was a 9.9 point $5 million acquisition, we had to raise four and a half million to bring the equity required and and some repair money about 650,000 in capex repair. And yeah, it's it's just a nice deal. It's it's basically these are good, nice floor plans with central air, nothing special for mica, byte appliances, but you know, LED lighting quality, like everything's up, everything's like updated. And as we turn units will do LVT floors will be the biggest change we'll make. And we'll also add in unit washer and dryers is what

Brian Briscoe 18:22

a nice plan is. So that's a huge amenity for especially like with mothers with small kids, you know, and you know, my my wife is a mother with small kids. So having having the washer and dryer in your unit is huge for that demographic.

Tate Siemer 18:38

Yeah, yeah. And it's something that you can capture 5075 extra dollars a month, you know, a unit from so when you do that, in our case, it'll be 120 units, because 60 are already done. But yeah, when you do that that many times that really increases the value of the property.

Brian Briscoe 18:55

Now are you guys also renting out washers and dryers?

Tate Siemer 18:59

We're actually going to the plan is to provide wash I'll provide them Okay, got

Brian Briscoe 19:03

it. Got it. There you go. Yeah, so that that's just an extra boost in money not as just hookups I mean hookups by themselves are going to raise the rents but hookups with washers and dryers in unit are, you know even better. So that's that's nice. So you're getting essentially a washer dryer rental fee with the rent. Yeah, so Okay, cool. Cool. Yeah.

Tate Siemer 19:23

So it's, you know, the couple nice things about it. We the property manager that's been there the last three years was employed directly by the seller. She is doing a bang up job and is has the place really Hamann. Pretty much 100% occupancy, we our rents are just low, you know. So we have the opportunity where the lowest rents on the block by significant amount we also don't charge or we don't bill back for any utilities, and we've got a waitlist. So yeah, she's doing a great job. And the business plan is a three year business plan to take advantage of some organic rent growth. And also for some appreciation through the washer dryer program and generally upgrading the place, maybe adding some covered parking, that's a value add that we haven't even underwritten. But there's about, let's see, there's about 250 parking spaces. So covered parking is very achievable. And it's, it's kind of like, as far as, you know, professional achievements go, it's kind of my pride and joy, you know, getting the getting the capital raise done, took a team, it's a, you know, what one of our partners in particular, really bring it and getting some serious capital raising done. And then we meet for a third of the capital raise, we straight up had a miracle happen for that, you know, for what about $1.5 million of the capital raise, kind of came through the podcast, my podcast and, and a guy that I that I just had on my podcast, he's a dairy farmer in the middle of Central Pennsylvania. And he's just done very, very well, genetic, fourth generation, and has some asset, he sold something and it had some funds that he needed to deploy. And

Brian Briscoe 21:31

you're right there ready,

Tate Siemer 21:32

he found his call me and, you know, there we go. So, you know, quite frankly, at that point, we were not sure how that was going to wash out. I mean, I had faith and you know, a lot of reason to believe that things would would go well, in the end with that capital raise, but four and a half million dollars is a lot of money to have, you know, conversations about and have wires done and cam signed and all that stuff. So it's Yeah, it's huge.

Brian Briscoe 22:03

So I understand our largest raise was was 4 million. And, you know, it takes a while to get there. It really does. And it's it's a large amount of money. Once you once you step back, and hopefully, you know, five to 10 years from now I'll look at a $4 million raise and be like, you know, but But anyway, yeah, well, congratulations.

Tate Siemer 22:23

Because I What, what I've learned and heard and I am starting to find out is that the more money you're looking to raise, the easier it gets per dollar, right? So and there really are these family offices and, and other sources of capital, that will not look at an investment less than $5 million. We hear that all the time. So you know, we just put this, this 363 unit under contract, it's a $22.6 million acquisition that we'll be raising about 8 million for so we're gonna put this theory to the test and raise a million bucks.

Brian Briscoe 23:02

And I've talked to a lot of people who, you know, almost make a living from passively investing and some of their criteria is 200 and above 250 and above you know, so a lot of the a lot of the big spenders, you know, they're they're looking for those larger, larger assets, there's a little more stability the bigger you get so well that said, let's look at your big burning why it's a question I'd like to ask everybody. I think for me to be able to push myself forward, you always rely on that big burning why so take what's your big burning? Why?

Tate Siemer 23:34

Yeah, so you know, I guess the best way to kind of express my Why is is is just a drive for personal excellence. I feel like I owe it to God and the planet and humanity and my family and everybody to be the best version of me that I can be. And this space this apartment investing space. To me it's like a canvas for me to develop and like almost like I look at this business is like my art and my creation and like what I'm doing with my life and it's it's my true love like I really do love it. Not my only true love but you know,

Brian Briscoe 24:20

skiing was your true love. So yeah, this is Yeah.

Tate Siemer 24:24

But so my big my big burning y is a vision board full of you know, some cool things that material and experiential vacations and you know, heli skiing and stuff like that, but it's really to have the most impact that I can on other people in a positive way through being the best version of me that I can be which includes having an open heart and being compassionate and and being an uplifter. So, but being highly successful in this space is I guess an Another tangible way of looking at this is I really want to be a high level professional coach, I think it'll be specific to this to the multifamily space when I, when I get into it, I want to coach people, you know, inside of this probably, but I'm not sure about that I just, I want to make sure that I've got the foundation of success, that number one builds the credibility that you need to coach multimillionaires, which is the level of people that I want to be coaching, and have, you know, has I that I have the authentic experience of going through acquiring $100 million dollars in assets and and what that takes and and being able to teach that to other people? So yeah, Michael Jordan talked about, he just had higher standards and everybody else, you know, for him it was, I think that was his big why's he he he had kind of that that vicious, competitive, I want to be better than everybody else. And that's not me. I, for me, it's wanting to really be like, the best version of me that I can be. Yeah. Love it.

Brian Briscoe 26:03

I love it. That's awesome. So last question. And we'll bring dawn on. So what's next for you?

Tate Siemer 26:09

Yeah, so I set a goal. Last week was my birthday. And I set a goal to get us to 1000 doors in Columbus, Ohio, and 1000 doors in Oklahoma by my birthday next year. So

Brian Briscoe 26:26

yeah, and slaying 363 in a shot. You know, your makes a lot easier to get there. If you're if you're tackling projects that large.

Tate Siemer 26:34

Yeah, so Exactly. And it forces the issue to Yeah, you know, yeah. 51 unit deal can be good. But is it really like? Is it moving the needle? We are doing a 51 unit deal? Right? Yeah,

Brian Briscoe 26:45

for forces you to raise the bar on the stuff that you're looking at. And when you look at the smaller deals digit, they just have to be, you know, a lot more shiny, you know, before you you take the effort to go after them. So, all right. Well, that said, we got dawn on the line has been very patiently waiting. And so there we go, Don, welcome. How's it going?

Don Spafford 27:06

Good. Thank you. So definitely a pleasure and honor to be here with all of you, Brian and Tate. I've been on both you guys's webinars or meetups at some point in the past. And that's it's an honor for me for me that my very first podcast interview too. So it's a it's more of an honor for that too.

Brian Briscoe 27:23

Yeah. Well, congratulations on your first podcast. I will say that, roughly, I think two thirds to three quarters of the aspiring investors. This is their first first podcast. So yeah. And incidentally, you know, Tate also runs a salt lake city based meetup. And that's where Donna and I met. So yeah, thanks for that date. Appreciate it. Yeah. So Don, let's, let's talk about you tell us a little bit about your background and history and kind of lead us up into what got you into apartments.

Don Spafford 27:50

Sure. So my educational history is more in finance and investment science, you know, as basically neighbors with Warren Buffett back in Omaha, and it's kind of falling in that path, when we get into, you know, more like the financial advisor role at some point. And then, of course, the 2008 crash happened, and all those finance jobs were being laid off, and they go on, like, I made this not so secure, you know, so got me thinking of different things. And, of course, at the time, I was like, Man, this would be a great time to purchase properties. You know, I had a friend in Florida was mentioning that, you know, houses that were doing $50,000 now, like $70,000, like, man, I'd love to do that. But I had no idea how at the time, and I was I was like that, for the time real estate was still for the rich people that you know, have money to do that. So I'm not too long after that, you know, our kids started going up and getting into school. And so my wife is looking for something to do, she has been a stay home mom and don't have a job, but we won't have something she's not tied down in case the kids need to, you know, we're sick, or we do during the summer or whatever. So we're looking for flexible jobs. And and, you know, some some reason came into mind about being a real estate agent. So she looked into it and liked it. So we kind of followed that path and got into real estate. So she became an agent lender in Omaha. And one of our first clients was an investor that was a friend of ours that was able to leverage his business and take a line of credit and started personalized properties, you know, cash basically. And again, it's like, wow, it's pretty cool to do that. And along the way, I picked up the book, millionaire real estate investor by Gary Keller and started getting massive go 30 showings of properties, that's the carnist read and go through that. And so but about the point where we're like, okay, I want to I want to try to do this make something happen and write about that points where we decided Actually, we need to move to Idaho. We wanted to come at Idaho to help take care of my mom, she had MS and it's kind of progressing a lot that we want to get there to be able to help take care of her and be there in person for her. So I kind of left all that to the side for the time being and and to get everything in order to move out here. Once we got here, about a year or so later, I kind of got back into it and just happened to I don't ever watch much TV but it's happened to one day I turn on TV. It was the commercial for one of these real estate seminars, you know that the Guru's that kind of around as I am Interesting. So, we went to that and, and I liked it, you know, it was like, I enjoyed the information, but the other, they're like 50,000 our program wasn't, it wasn't gonna work for me at the time, I was like, I can't do that now enough that even those more, of course about flipping houses and like, this is a smaller market. I was like, you know, I might work in big markets, but here's probably not a whole lot of inventory to make that be reasonable, please do that, right. Yeah, for paying that much money to do. So. But with with that through through, that means I met some of that, let me do bigger pockets. So I got into bigger pockets. And just really fell in love with that immediately. And now, join their pro membership right away, cuz I start using their calculators realize that those are a huge asset to be able to analyze properties quickly and not, you know, mess something up. So that's how I got there just was listen to their podcasts, like daily, you know, I've been working for home from home from since maybe 2014 or so it was 13. And last time, I just didn't hear this music. Yeah, that has to do so. But once I got here is like one day realize, like, you know what, I could just listen to podcasts all day. So I started listening to, you know, back to number one and all those BiggerPockets podcasts, which of course, led to some other ones along the way that you know, people mentioned, like, you know, the Choose fi podcast and get rich education, all these other things that are all, you know, real estate and finance related. So I'm just going to keep learning along that and, and with bigger pockets, they did that one time a 90 day challenge, which, you know, I took on that to find your purchase your first or next property. And so I decided to go Can I take that bike by my birthday is okay, by my 14th birthday, Honda, you know, find our first property. And so I just kept looking every day in your analyzing properties. And you know, if I went through like 100 different properties, analyzing and we made offers on a few and then we finally found one one day actually on Craigslist, it was a four Plex about 45 minutes south of here just outside of Pocatello. And you know, first of all, I was hesitant, but you know, we looked into I ran the numbers, I was like this is this is a great, great property.

So we went looked at in person and put an offer and we got it and it was a you know, at the time they met like the 1% rule. It was I knew the rents were under market. I could get up and and i would self manage it helps save costs on that. So yeah, from from that it's just been kind of a Yeah, don't know, if you guys are you know, Michael Blanc fans, you know, like, one of the things he always would say is like the law of the first deal, you know, once you get that first one get over that fear of it, you know, then I was like, yeah, let's get more right now. You know, so So kind of all that and didn't quite get one right away. After that we did actually had an I want to put under contract, but didn't quite feel good about it. And it was the counteroffer I had my limit, I wanted to go and they wanted more. So like NASA, I backed out of it, you know, and then a few others that we had under contract but did some inspections and they're kind of older properties that needed some updates, I didn't wasn't ready to do didn't have enough funds were able to take on too much risk. So we just kept kept looking and kept analyzing people's new podcasts and everything. And so kind like you're saying, for me, like, all these, these podcasts really were my mentor for the most part, you know, I learned so much just from that, and all the books I've read along the way, you know, like you say that the saying your your, your, your, the sum total, the people you're around the most and for me, all the people as around the most all these people on podcasts are experienced, you know, experts so powerful. So yeah, so it was just helped help my mindset along the way. And, you know, with that, I started looking into other properties. You know, I started getting in through this podcast, I'd reached out to a lot of the guests and just started contacting them directly and saying, you know, hey, I liked what you talked about, I'd love to learn more and connect and the most of them were gracious enough to respond back and I could make some contacts through those people and learn more. Some have even sent me their their books, you know, so it was pretty cool.

Brian Briscoe 33:32

It's it's amazing to me how few people do that. And the first time I reached out to somebody was like, Oh my goodness, that was a game changer for me, the guy I happened to reach out to ended up being you know, one of my informal mentors, and helped me get over a lot of my stumbling blocks. I mean, literally did and it was just a you know, I there's somebody I heard on a podcast, it resonated with me. And I remember I was running at the time and I'm sweaty fingers tapped out an email to them. And anyway, yeah, so so good on you for doing that. But yeah, well let's let's get into your big burning, why really quick and then we'll turn it over to you for some questions. So if you can distill your big burning light down to a couple of sentences, what would it be?

Don Spafford 34:19

So my way of overtime, of course has changed but for right now that this part that is still number one thing would be more to provide a financial future for my family. Of course, I want to spend time with them now but but at some point, you know, if I were to pass away, like tomorrow, I want to make sure that my family's gonna be taken care of and not you know, being in a hole and, and not know what to do because I've seen that happen that way when my dad passed away and doesn't three, you know, of course, we all looked at all the kids were grown but you know, we would have been young when it happened. It would have been devastating for homicide take care of us. Oh, yeah, absolutely. On my shirt, my friend, my family have some some sorts of continual income and generational wealth to take care of them.

Brian Briscoe 34:55

Yeah, that's huge. I think that resonates anybody who has children that top of the list. So let's said, Don, we got Ted on the line here. What do you want to ask him?

Don Spafford 35:05

Sure. So going back to Osama with with bigger pockets, you learned how to analyze these properties pretty quickly, you know more for smaller business properties. But is there something similar to like, like a rule of thumb type thing with apartments where you can do a quick analysis to even see if it's worth their time to do a full analysis?

Tate Siemer 35:21

Well, I think the best answer to this is that you need to become an a real expert in your market, you need to know the market thoroughly so so that when something comes up at 55,000, a unit, you know, that smoking, that's I know I can put 10,000 a unit into that and sell it for 85 or 90 a unit like, that's kind of a rule of thumb, I think a lot of people that are really savvy in their markets use is a price per unit rule of thumb. So that's one, you mentioned, the 1% rule a little earlier, via the 1% rule to me, is going to, which is going to tell us whether or not a property is going to pencil kind of right out of the gate, you know, it's not 1%. It's like, usually, like one and a half percent or one one to three quarters percent. Yeah, that's when a deal is going to pencil and probably I was worth, I want to see what that's going to look like on a spreadsheet. So, yeah.

Don Spafford 36:25

And how would you sum and I've seen many properties that have been sent to me through the different brokers enough times, they don't even tell you what, what their asking prices or those price they say, you know, here's the properties I'm going to use. Here's the rent. So basically, you know, they want to see an offer without knowing your prices. How do you How would you do that without knowing what price they're trying to get

Tate Siemer 36:43

would ask them for pricing guidance? And I use that or those words, I would say, Can you can you give me some pricing guidance on this asset? And they will they have? I mean, they have to they they if they say, well, we're just taking offers that I mean, first of all, a good pro agent isn't isn't going to just, you know, just leave it completely vague. So, I asked for pricing guidance. And if you don't get any I mean, yes, it's it's, I don't know if it's worth spending time on or not. Brian, what are your

Brian Briscoe 37:20

thoughts? I'll go back to what you just said earlier tape is you got to know the market, you know, if you know the market well, and they come out with something without pricing guidance, and you know, the apartment complex down the road just sold at 50 a door, you're probably going to land somewhere around 50 a door, I mean, then you adjust up or down based on what condition it's in, you know, and, and maybe some of the amenities. But I wouldn't necessarily be afraid of something like that I would definitely do it take said first is go ahead and give me some pricing guidance. But if the broker doesn't come back with pricing guidance, I'm going to scratch my head a little bit because the broker knows the market, the broker knows about where it's going to sell. And if the broker can't give you pricing guidance, that may mean the seller has unrealistic expectations, or just not communicative or something like that. But yeah, first question, I asked pricing guidance. And then from there, if we don't get pricing guidance, that's where you rely on your your market, you know, what you know about the market to come up with a price?

Don Spafford 38:25

Sure. Okay. Yeah, that makes sense. So I guess next question, be what CAG? You mentioned earlier with those, those townhomes didn't didn't quite work out? Well, but so what is what's been one of your biggest learning experiences where you thought you had a great deal, but you know, you misjudged something made it not being a great deal. But had you known that ahead of time, maybe would have things would have done differently would change the price or just skipping out altogether?

Tate Siemer 38:47

Yeah, I mean, I think, again, like kind of 30,000 foot view here is, there's a very real huge amount of risk that you introduce to a project, the minute you break ground, and start scheduling all the subs like that. It's we call it construction risk it is there's a million moving parts, and the person that's pulling the strings and making everything happen has to be great at what they do, or things are not going to go well, especially on smaller construction projects, where you're not going to necessarily be able to get the big guys to come in and do it. So man, we you know, all I can say is we got hammered pretty good on those new builds. And for us, it was a confirmation of what we love about multifamily and existing apartments, which is, you know, you got cash. Presently current currently, as it sits, probably ideally profitable asset that has historic financials and proof that of what it's worth, right. It's totally different than what you're doing with a new build project. So For us, it really helped us set our course. You know?

Brian Briscoe 40:04

Yeah, sure. Yeah.

Don Spafford 40:06

Great. So long. I guess along with that, then is there something maybe most people overlook when they're doing their due diligence or analysis? Maybe something that people considered not that big a deal, but maybe actually is a big deal to not pass overnight? Should you spend more time on it?

Tate Siemer 40:21

Yeah, I mean, you know, between physical due diligence and, and legal due diligence on a property, there's, there's an awful lot that needs to happen. And I don't know that there. I don't know that there's one thing that I can think of that people overlook, I think maybe sometimes people may get a little aggressive on on rent bombs, and you know, rent increases and stuff like that. But if there's one common thing that I see, often it's that but I don't know, Brian, what are your thoughts on that? You see, one,

Brian Briscoe 40:54

you know, one thing plumbing has come up a lot of times with us, especially if you're doing the the older stuff, you know, the older the product is, the more likely you're going to have plumbing problems. And we've gone into a couple of deals, knowing there's plumbing problems, and we've gone into a couple of deals, not knowing there's problem problems, and they pop up later. So, you know, there's a couple of things that throughout, yeah, do it do a sewer scope, you know, make make sure, you know, the lines are clear. That's, that's a little bit of a peace of mind right there. But I would just say that, you know, the owner of the property is, you know, the more fluff you should probably have in your cap x numbers. You know, especially, even if you do the sewer scope, that's only the main line out to the sewer. You know, there's a lot of pipes that are behind walls, a lot of pipes that are underground and inaccessible, you're not going to be able to see so that's that's probably the one that we've seen the most is just just read out plumbing.

Tate Siemer 41:52

aluminum wiring, you want to stay a million miles away from Yep. I heard a great idea. With if you're in a situation where you have to put down hard, earnest money, put in aluminum wiring exception into that, like, Oh, that's

Brian Briscoe 42:07

a good idea.

Tate Siemer 42:07

Yeah. And there's a couple others that you can do. Like there's a couple other like deal breaker type things that you can put in there as an exception to you know, yes, earnest money is not good. Yeah, yeah,

Brian Briscoe 42:18

we actually have a property under contract that we know has aluminum wiring, it's gonna be low six figures to remediate it, you know, and it's in, we're gonna do it. I mean, we could not do it and pay higher insurance premiums. But when we sell it, we don't want to have to tell the the next guy coming in to there's aluminum wiring there. Right. So yeah, we're gonna pay low six figures to remediate the property. And that just, you know, pigtails to make sure all the connections out are all with copper. But I think in the long run, we're gonna make that money back when we sell it, and we're gonna have a slightly lower expense on our property. property insurance.

Tate Siemer 42:57

It's is that for 100,000 and mitigation,

Brian Briscoe 43:00

it's 144 units, and it's, it's almost $1,000 per unit to do it. So we're, we're into the low single phase. Low six figures. The first numbers still one. Yeah. So that's good.

Don Spafford 43:16

Yeah. Cool. That's Yeah, that's good information. So I guess state now knowing what you know, Now, of course, as a as an expert, you know, if you were to start over, as like a newbie, right, what would be the probably the biggest or most important thing you could bring to any? Any team as a GP, if you want to get in is up like today? I see. Like almost everybody says they can underwrite so there's underwriting is really not that special anymore, because everybody probably does it. So I mean, is there one thing that you think would be the most valuable to any any team has to come as a GP?

Tate Siemer 43:47

Yeah, it's go get a deal. Yeah. Sure. That honestly, that's, I mean, if you want to, like the you know, that's the best way to get a deal is go get a deal. Take it to a team, and, you know, Hey, guys, I've got this deal under contract or an LSI, under LSI. Or I've got this broker brought me this deal, wherever it is, I mean, ideally put it under contract, or at least under LSI. And then Brian's group or taste group or Ferriss group, you know, go, Michael Blanc has a deal desk, like, you go to those guys. And, and, you know, hey, I've got this deal. I don't necessarily have all the pieces to put it together. You know, is it something that you'd be interested in partnering with me on, you know, and take whatever percentage you can negotiate but it by all means, don't be greedy, especially on the first deal and, and have an agreement that you get to be involved in the important conversations that the decision making, or at least privy to the decision making process and you want to be copying an email chain. And, uh, you know, all that stuff like, that's the best way for me like I would, I would just say kind of do the same thing I did, which is get all the specialized knowledge that you can learn how to speak the language, go to the conferences, and you know, the three day seminars on how to do the business. Corey Peterson's boardroom is fantastic for that. And just the Tim barotz has a great one to great two day event that really just he just learned the business, right? Like, yeah, here's how you write an ally. And here's how you negotiate. And here's how you raise capital, and here's how you operate. That's going to give you the confidence and the knowledge that you need to eventually go out and build broker relationships, go direct to seller, and kind of do whatever it takes to find a deal.

Brian Briscoe 45:46

Yeah, I would agree. I mean, you say, underwriters analyzers are a diamond does. And that's true. A lot of people said, Hey, we can help you with analysis. You know, we've closed on eight properties, we got the analysis thing down. All right. And I, for me, it's the same thing with capital ratios. You know, someone's comes in and says, Hey, I can help you raise capital, you know, well, I mean, we can do that already. But so for different people, I think that they have different needs. I think Tate's absolutely right. If you come in with a deal, and you have something with an LLC signed, and the numbers are solid, you may have to shop around, you may have to talk to, you know, five or six states or Brian's, but somebody is going to take that on. And I mean, the other, I would say, the second thing that I would say is, is raising capital. But once again, there's a lot of people who can say they've raised cat can say they can raise capital. And if they've never done it before, I'll be hesitant to bring them into a GP, unless they have, you know, something there to almost guarantee that they're going to be able to hit their marks. So.

Don Spafford 46:47

So just one one quick follow up question with that, though. I mean, so getting getting something under an L, at least under LSI. If you don't have the team in place, I know Brian's referred this before when, in his past, when he started, he tried to get to the large properties, you know, the brokers wouldn't really take him serious, because, you know, he had didn't have that experience behind them. And if you're not part of a team with experience, I guess, how would How would you convince the broker to accept your LSI, knowing that, you know, you're on your own, and you're say you have a team, but you don't.

Tate Siemer 47:12

So you do have a team and you leverage that team. So you know, put together, it's not within reaching distance, I'd show you my little press kit that I have, as my team and it which now is my team. Early on, it was Cory was my Korean his wife, and my partner, Carl and myself or my team, and Cory has a $950 million portfolio. So, and tons of experience. So I leveraged corys experience in my you know, in my business, right? So, in our structure he was he's our expert.

Brian Briscoe 47:47

Yep. Yeah, I'd say similar thing. I mean, the first call to you know, like, like, like, we were saying a Tater or Brian shouldn't be when you have something under contract, you know, so if you're out looking for deals, you know, have have a bunch of different groups that could potentially help you take it down. And that's what you can talk to the broker about, like, Hey, you know, I'm working with I know I have these guys, I don't have those guys. I don't have those guys. But the credibility kit that Tate was talking about, you know, with, you know, a mentor or Kp or somebody who's pictures on there, who's done a lot of deals is also very helpful. Yeah,

Tate Siemer 48:23

yeah. So one last sub note on this whole subject, too, I think it's so important to know your superpower in the space. Like know what you're really good at know what you like to do it because that is the value that you can bring a team ultimately. And it This is such a team sport, you know, you go out and get deals with a team in your back pocket. And you know, it's and you close deals with a team.

Brian Briscoe 48:49

All right, that said, we're about out of time. Thank you so much to you too. For the engaging conversation we've had one last question for each of you an