Episode 212 of the Diary of an Apartment Investor Podcast with Phil Capron and Adam Lacey. Transcript by Otter.ai – please forgive any errors.
Brian Briscoe 0:00
Adam, we got Phil on the line, what do you want to ask him?
Adam Lacey 0:02
If you're looking at a market that's not in your backyard? What do you look for in a market? Or how do you decide on a market to invest in?
Phil Capron 0:10
I think that the key to this whole business is being a master evaluation. It's not, you know, can I get the money, it's not my grade construction, truly understanding when value presents itself to you. So maybe trim it down to your highest priority target or two, and go really deep in where you think you want to be. And that way when something pops, you know, you can grab it immediately, and it's not, wow, let's go throw this into the analyzer. Well, let's talk to property manager you already know.
Brian Briscoe 0:51
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 investing field to discuss various aspects of the apartment investing journey with the sole purpose of educating listeners to make wise investment decisions. The Diary of an apartment investor podcast is sponsored by four oaks capital, bringing you high yield returns through apartment complex investing. Welcome to the diary of an apartment investor podcast. I'm your host, Brian Briscoe with Forbes capital. I'm very excited for today's show. It's another one of our Ask the Expert episodes. We got two great people on the line with us today. We got Phil Kaplan and Adam Lacey. So first of all, you know, Phil's coming on as our experienced investor. Very happy to welcome you feel to the show today. Thanks.
Phil Capron 1:35
Hey, Brian, so glad to be here with you, man. We've known each other for a while and honored that you asked me to come hang out with you today.
Brian Briscoe 1:43
Yeah, absolutely. Absolutely. Yeah, it's been it's been fun. I mean, it's been a couple of years now that I think I first met you, I want to say 2018, maybe at a rock. Yeah, something like that. But they've been a lot of fun. I've very much enjoyed knowing in keeping in touch over the years. So that said, why don't you tell us a little bit about yourself and give us an idea of what got you into real estate events? Investing?
Phil Capron 2:07
Sure. So I jokingly say often that I got into real estate the same way as everyone else, which is doing a tour in the Navy Special Ops in ocean lifeguard playing poker, professionally and traveling around the country and my punk rock band. But obviously none of that's entirely true.
Brian Briscoe 2:24
Yeah, I mean, that's that's how everybody does it. Right?
Phil Capron 2:26
That's right. If you if you didn't do all those things, just forget it, hang it up. Turn the episode off. Yeah. Seriously, when I separated from the military, I knew that real estate was something that I want to pursue after buying my first house using the VA Veterans Administration loan when I was on active duty, and, you know, having some buddies to rent rooms and living rent free. I said, there's, there's got to be something more to this, can I rinse and repeat this process. So unfortunately, I sold houses for a handful of years, flipped a bunch of houses. And in finally the light bulb went off. And I started buying things to keep other than a couple single families and condos. And, you know, over the last handful years, I racked up a little over 500 Total Units that I've sponsored. And current portfolio is about 430 working on selling some things now and just up is just positioning for the future. So you know, that's it. That's it in a nutshell. Don't want to take too much time. Just kind of want to get into talking, talking without, you know, yeah,
Brian Briscoe 3:35
yeah, so cool. So I mean, incidentally, I mean, for people in the military, that VA loan is the starter for a lot of people. And if I remember right, you wrote a book that talked a little bit about that too, right? I
Phil Capron 3:46
did, yeah. 29 I wrote a your VA loan and how it can make you a millionaire because that was, you know, the starting place for my journey. And you know, I'm not sure that everyone necessarily has the same ambitions and wants to devote their professional life to real estate the way that I have but I think that it's gonna do a world of difference for service members who do it rather than those who don't and even after you make the decision to buy a home, there's some things that you should know so I recommend highly that you pick up my book you know, Amazon all the proceeds are going to the Navy SEAL foundation every Veterans Day I turn them over to to that group that you know, I think the world of in support or you know later in the show when I give you like all my info there's a digital download available for free on my website.
Brian Briscoe 4:37
All right, awesome. Yeah, so definitely reached if you if you're military or eligible for the VA loan, you'll definitely reach out grab that book. You know, I did see a copy you know, several years I think I think you sent me a copy to review before you publish it. But yeah, yeah, I did. I did read the pre release copy. It's solid. So you know, highest recommendation for that if you're eligible. But you know, that said Let's talk about you know, one of the, you know, 400 or so units that you have right now tell us about one of the deals you've done.
Phil Capron 5:07
Sure. So, since you know you've got a great concept for the show, by the way, is, you know, trying to bring up the next generation. And so I'll go with my first deal. It was a 13 unit. It's not even really an apartment building. It's for duplexes, triplex and a couple of single families on three contiguous lots in Norfolk, Virginia. And when I was working as a real estate agent, I had, you know, I was showing that to a guy who owned, you know, a handful of units in the marketplace, and I thought I was gonna set myself up for a fat commission, I was let down when he said that he wasn't interested in the deal. The other broker came back to me and said, Well, what if, you know, the seller owner finances it for him? Would you be interested? And you know, my buyer said, No. So the other broker asked, well, you know, do you know any out anyone else that would buy it if it was seller financed, or a lot of it was seller finance? And I said, well, would he sell it to me? He said, I don't see why not. So long story a little shorter. The purchase price was 910,000, we brought 100,000. To close, and I'm exiting at the end of this month for 1,000,075. After or I guess about four years. So for a first deal that's not terrible. mortgage balance is 775. So, you know, not sure exactly what the true profit is on the deal. But its cash flowed over the years, and I've learned some great lessons. And it gave me the courage to go and buy almost 500 more. So that was the that was where the real payment wasn't that deal.
Brian Briscoe 6:50
You know, my my partners and I have talked about this a lot, you know, on our very first syndication, we ended up doing what, well, a lot of people don't we did it like a 9010 split to make sure our investors would make money and, and we're not making almost any money on that at all, you know, but when we look at it, the same thing you said, you know, we have learned so much from that, that it's it was worth it. And we knew that we would so just just to make the numbers work for the investors. You know, we took that 9010 split, and I like that you brought that up, you know, the first one, you know, the first one gets you on the map, it's a learning experience, you know, doesn't matter if it's a homerun, it's, you know, if it helps you grow and get to the next level. So,
Phil Capron 7:31
so this all sounds super cliche, but I truly believe you need to work to learn before you work to earn not sure who said that will say Abraham Lincoln or I was gonna say, Phil, Phil said that definitely not some, but somebody important said that I just don't know who, you know, it should be credit. But it's true. It's so true. And, you know, my second deal was a grand slam home run. So, you know, proven concept and getting a game and getting with the right people like you did with four oaks. You know, that's that's sort of the key, in my opinion, anyway.
Brian Briscoe 8:04
Absolutely. Absolutely. And that that first deal we did is what brought the team together and been very grateful for that sense. But so So that said, you know, something I'd like to ask everybody is kind of a question about motivation, you know, what's, what's your big burning? Why?
Phil Capron 8:21
So when I got out of the military, I said that I was never going to work for someone else. Again, there might have been a little resentment there. That's a whole nother topic. The fact of the matter is, I'm just not employable. So if no one else is gonna let me be the boss, I've got to do my own thing to be the boss. And, you know, that's what I've done. Since separating, and, you know, I've taken my lumps and you know, learn some lessons Learn, learn before iron. But it's, you know, it's worked out really well for me.
Brian Briscoe 8:51
Yeah, yeah. And I, I definitely feel, I think I know where you're coming from. I mean, I spent a little longer in the military. And, you know, you have some good bosses, you have some bad bosses, yeah, good experiences, bad experiences, and I was tired of rolling the dice. You know, and I'm in the same spot where I'm not going to work for anybody again, either, you know, I'll work with my partners. But, you know, I'm in the same boat. 100%. But
Phil Capron 9:16
let me take another stab at that and try to do slightly more articulate well, as it applies to military. There's certain wickets you need to hit in order to promote in the military. And it doesn't matter how good you are. It's just not going to happen for you until, you know, those benchmarks are met. It's the same thing with with many people's jobs in corporate America or wherever they happen to be, you know, a W two employee. I just I don't I don't love that. I like the idea of sinking or swimming on my own based on my merits, and you know, not some predetermined path.
Brian Briscoe 9:55
Yeah, and I you know, if you look at your military in general, and a lot of a lot of Employers have similar structures. But you know, you look at the pay chart and you know exactly what you're going to be making for the next for the rest of your career, you know, and early on in my career before I really understood how investing works, I would be like, Man, two more promotions or two more years, and, wow, look at that money that I'm making. But, you know, the last couple of years when I when I realized that that was really a, a ceiling, more than a, you know, I'm earning more and more every year, that's when it really started hitting home with me. And I really started realizing that there's a better way for me, you know, me that that made that that was fine for a lot of people. And, you know, no disrespect anybody who takes that route I did for 20 years. But yeah, I kind of like the work at your own pace, make as much money as you as you earn. approach. So
Phil Capron 10:51
it's, it's a trade off, it's a trade off, they call it golden handcuffs for a reason. You know, and for a lot of people, it's not golden handcuffs. It's exactly the life they want to live. And that's fine. It's just not the life that I wanted to live. Yeah. So no disrespect, like you said,
Brian Briscoe 11:07
Yeah, well, I mean, 2020 years is what I served, I think, for the first 17 That's exactly the life I wanted to live, you know, and it was it was last couple that I started thinking about, you know, other other ways to live. And, you know, I'll be honest, the last year was painful, because, you know, I started getting a lot of traction in real estate. And, you know, it's just really painful to stay in that the golden handcuffs job. But anyway, that said, what's what's next for you, Phil?
Phil Capron 11:34
So I've decided to sell just about all of my holdings right now, because it's a pretty good time in the market, and consolidate under my new company, Mission First Capital. So I know we're going to talk about that, you know, a little bit later in the show. So I mean, kind of jumped the gun on that. But, but yeah, I've gone from the syndication model, the JV model, the independent ownership model to the fund model. So going forward to, to talk on that a little bit later.
Brian Briscoe 12:05
Yeah, I know a lot of people are moving towards towards fun. So I'm excited to hear what's what's coming up for you. All right. Well, that said, let's, uh, let's introduce Adam to everybody. Adam. Welcome to the show today.
Adam Lacey 12:17
Hey, thanks for having me on. Brian. Fell. Nice.
Phil Capron 12:21
Nice to meet you.
Brian Briscoe 12:22
Alright, so Adam, do me a favor, do us all a favor and tell us a little bit about yourself, you know, where you're from, you know, what you what you've been doing and what got you into real estate?
Adam Lacey 12:31
Yeah, so I grew up in Michigan, got a degree in civil engineering, spent that first part of my career as a mostly as a design engineer designing stormwater systems and doing floodplain permitting and different kinds of flood mitigation systems. And frankly, never really liked it. You know, it was it was this thing, even from year one, it just didn't really provide me an excitement or enjoyment. But like a lot of people, you know, I went through the trouble of getting a degree. So I thought, well, now I'm trapped in this in this thing. And you know, it, frankly, it was depressing at times. But still, I just kind of kept plugging away thinking, well, maybe when I move up to management, it'll get better when I do this, maybe it'll be more enjoyable. And, of course, it never did. But I kept plugging away, I think, like a lot of people. And then, frankly, it took a life event for me to kind of circle back and reevaluate. So just to paint the picture. This was November of 2016. I had a two year old at the time, and my wife was pregnant with our second child. And we found out that that the two year old had a tumor in his bladder, my son know, and like, yeah, Brian, I know you have kids, Phil, I'm not sure. But it's, I mean, I'm sure anybody can, can understand that, like a hit you with like a ton of bricks, you know, I mean, there's nothing, nothing more devastating feeling that. So you know, not only do you have to deal with the stress and the anxiety and the it, just the emotional and mental exhaustion of all of that, but it's also time consuming. I mean, our life just turned into, you know, we were working 40 hours a week, you know, whatever hanging out with our friends on the weekends, and now it's all sudden, it's radiation treatments, every day, chemo at least once a week for 43 weeks, a lot of weeks, it was five days a week. And it was just, it was just so time consuming. You know, of course, all I want to do is be there with my son. But of course I have to work to write I mean, I have my not only do I have my insurance through my w two job, but I have to put food on the table and pay the bill. So I just, you know, my work is somewhat flexible with me, of course, but but there was limitations to that, you know, I couldn't make until the appointments, we had to hire a nanny. Thank God our friend Dion came aboard and with nanny for us and was able to help us get into appointments and whatnot. But it was it was tough, you know? And then fast forward. He's in remission now. You know, he's he, he's been in remission yet. Thanks. So he's been in remission for four years or so. And it was tough, but But you know, I think Go into the experience provided me a couple things. I mean, obviously, there's, there's the cliche reminder that life is short and fragile. And you know, there's no reason to just, you know, go through the motions, it's, it's more fun to live your life to find something to do that's fulfilling. And then, and then yeah, the second piece of it is that I knew that I didn't like my career, and I wanted to find something different. And I wanted to find something that can provide me not only freedom to if life happens again, you know, freedom to be where I want to be when I need to be, but also something where I can just feel more energized through what I'm doing and maybe have a bigger impact too. And that's kind of what led me through. It led me to real estate eventually, you know, just kind of looking at sort of looking at different entrepreneurial options and different options and, and like a lot of people stumbled into bigger pockets and just kind of fell in love with real estate and just decided to plug away and here I am.
Brian Briscoe 15:59
Yeah, just like everyone else, you know, punk punk rock band, you know, professional poker, right?
Adam Lacey 16:05
Yeah. Forgot to mention my punk rock band.
Brian Briscoe 16:07
Yeah. Well, I mean, thank you, thanks for sharing that with us. I very much appreciate it. You know, that's it takes, you know, wow, is all I gotta say, I mean, I think you lived one of my worst nightmares. You know, if you if you look at the things on my list of things that I never want to happen to me, and you know, it's, you know, health, and my wife and kids are probably highest on that list. So, you know, thanks for sharing that. And I'm glad your your son's doing better.
Adam Lacey 16:34
Yeah, thank you very much. Yeah, we were very lucky. You know, everyone isn't as lucky. As us. He, he's okay. Now. So. Yeah, thank you.
Brian Briscoe 16:42
Yeah, I'm sure I know, where we're at business question is probably going to go but we talked about big burning wise, you know, you kind of wove that in and out of your your story up to now. But if you could just break that down as simple as you could. What's your big burning? Why?
Adam Lacey 16:57
Yeah, absolutely. So you know, obviously, it's, it spawned by the story I just told for sure. But but my big burning, why is not only to build a lifestyle that I enjoy, that has freedom and impact, but I also would like to help other people do the same thing. So and I want to use real estate as my vehicle to build this real estate business up and bring people in, you know, whether it's through partnerships or coaching programs or whatnot, and just help other people kind of just find the life that they should
Brian Briscoe 17:27
be living. Yeah. Awesome. Awesome. Thanks for that. Alright, now coming now we come to my favorite part of the show. Adam, we got Phil on the line. What do you want to ask him? Yeah.
Adam Lacey 17:38
Other questions I want to ask is, you know, as I'm looking for deals in different markets, I found that I think I've been probably spreading myself a little too thin looking in multiple markets. And I really want to kind of refocus and just focus on one, maybe two markets most but so my question is, if you're looking at a market that's not in your backyard, what do you look for in a market? Or how do you decide on a market to invest in?
Phil Capron 18:03
That's a tough one for me, because I'm hyperlocal. Okay, like everything in my portfolios within about an hour, there's one outlier, that, you know, it's a little bit more. But other than that, it's something that I can lay eyes on and visit every week, if I want to just depending on the phase of the project. So I'll take my best crack at the at the question. It's, you know, you mentioned spreading yourself too thin. I think that the key to this whole business is being a master evaluation. It's not, you know, can I get the money, it's not my grade construction or spreadsheets, it's truly understanding when value presents itself to you. One reason I'm very thankful for my residential real estate, you know, teeth cutting, I guess, is, you know, being in a brokerage space, working with investors, and then doing a lot of flipping and, you know, wholesaling myself, I became very good at understanding where there was value. So I guess the advice would be, maybe trim it down to, you know, your highest priority priority target or two, and go really deep in where you think you want to be. And that way, when something pops, you know, you can grab it immediately. And it's not, well, let's go throw this into the analyzer. Well, let's talk to a property manager you already know.
Brian Briscoe 19:27
Yeah. Yeah. And I'll just add to that, you know, I looked at the markets that I was in, and when I started out, I wasn't in a market that I was comfortable working with. I was in the DC area, very tenant friendly laws, you know, a lot of a lot of things that are not very conducive to multifamily. And I started looking outside of my backyard. And one question that I asked myself is, you know, where are some places that I go to anyway, my wife was born and raised in South Carolina, and it turns out out that there was a lot of really good dynamics happening in South Carolina. And, and for me, that was that was kind of the the trigger for me was, well, my backyard isn't good enough, where were places that I already go, I already know. And I can have maybe a little bit of a competitive advantage. And so that's, that's what I started doing is looking at those and, Adam, I think you're you're smart to narrow your focus because that helps, you know, just tie into what Phil said, you know, if if you are focused on one area, when a good deal comes across your desk, you can immediately say that's a good deal because I've looked at 20 or 30 or 40 others in the same market. I know for a fact this is a good deal.
Adam Lacey 20:43
Yeah, that's great. That's good advice. Brian. Thank you. Um, another question, I guess, somewhat related to narrowing focus is, you know, obviously, in the in the apartment syndication space, there's a lot of pieces, you know, you got to find the deals and raise the capital and then manage the asset. And, you know, I feel like my skill sets, I enjoyed the hunt, I enjoy trying to find the deals and having a construction management background, I think lends itself very well to asset management, especially managing large rehabs, but like, I'd love to find some kind of partnership or partner that is really good with the marketing and the capital raising piece. So my question to you is, like, give any advice for people like me, looking for partners, you know, how to find partners, and more importantly, maybe how to vet partners what to look out for.
Phil Capron 21:33
So I've had a lot of partnerships, a handful of jayvees, and you know, a few syndications. And, you know, so I've seen kind of The Good, the Bad, the Ugly, it's difficult to see how people are going to react in, in, you know, trying situations until they're there. So I would say, do a deal with a person before you do like a partnership with a person. So I understand that those words are sort of interchangeable in the way that we're using them. So a deal would be like a joint venture partnership, but I would suggest to do that before you can go and start a company and CO branding, and, you know, putting a lot of resources together to build something, just, you know, try to try to see your prospective partners and in, you know, a few different situations, and ideally, some that are not good, because stuff happens in this business that is stressful. And, you know, it's nice to know what kind of character you're dealing with. Before it gets to that point, when there's actually money on the line. And I've been blessed to have, you know, fantastic partners. I think maybe that's more luck in my, in my situation than than any type of skill, but really, you know, trust your gut. And if something feels wrong, don't do it, I will say that there's plenty of people out there that have precisely the skill sets the desires, and you know, the the infrastructure that you're looking to partner with. And I think what you bring to the table, the actual doing, whether it be the deal finding, or the Construction Management is critically important. So, you know, don't sell yourself short, find a great deal, you know, work with somebody with similar values, and they'll see value in you, just the way that you're seeing in them to provide the backend back office type support. Yeah,
Brian Briscoe 23:26
I agree with with everything, you know, I'll just say the best analogy I've heard is it's it's a partnership is almost like a marriage and a lot of ways you want to date and really get to know people, you know, before you get in there. And the way folks came together is, well, the way the way I met you know, Eric Shirley, who was the first person that I met in four oaks, was we decided to start collaborating on underwriting. You know, we were both looking in the South Carolina area. And we decided to collaborate, you know, we would share notes, we would share our underwriting we share our numbers, hey, this is what I'm doing here. This is what I'm doing there. But yeah, date first and get to know somebody and you know, that's, I think that's the the best way to start it out.
Adam Lacey 24:13
Okay, great. Thanks, guys. Another question, Phil. So how are you currently finding deals and markets? Are you mostly going through brokers and agents? Are you going direct to seller? Any any, any tips on that?
Phil Capron 24:29
Deals? That's the interesting word in this current market. Very few and far between. I only bought only about one thing in 2021. And you know, it was solid, not a Grand Slam, but solid. And that came from a broker relationship. Because I'm so hyper focused and where I am, I see most of what's going to come out as a first look kind of thing. And sellers aren't in they're not living under rocks. They understand what's happening in the marketplace. So You know, if there is an opportunity to get something, quote off market, it's not at the prices that we were looking at several years ago. So as a result I've been more or less on the sidelines, the last year, I know people are doing deals, or you know, they're doing transactions, time will tell whether they end up being deals or not. So specifically, the brokerage relationships, they come from actually transacting business with those brokers, and even the ones that you may not have necessarily close to deal with yet, they know that you close a bunch of deals with another one in the marketplace. So they will take your call, and they'll take you a lot more seriously. And it's tough because, you know, you have to do deals before that level of trust occurs. Short of doing that, just being you know, the standard stuff being very engaged, when they send something out, sharing your underwriting with them, taking them out to meals, going deeper to see what's going on with their interests, their families, their sports teams, stuff like that. It's all it's all tried and true. But there's nothing better than actually transacting business with one of those brokers,
Adam Lacey 26:14
do you have a standard interval, like, you try to reach out to each broker like once a month, or once every two months, anything like that, or just a case by case basis?
Phil Capron 26:23
I wish I was that organized, I consider those that I do the most business with actually be friends. So you know, there could be contact that has nothing to do with any business deal. It's Hey, do you want to go surfing? Do you want to come over to my beach house and have some drinks? Would you like to, you know, do a double date for dinner? It's, you know, it's stuff like that. Because, you know, here's another cliche, cliche, it really is a people business, and I just enjoy spending time and learning about people. So not everyone is that way. But if you can put on that hat when dealing with brokers, and not always see it as a means to an end, but it's just a relationship that's going to build over time. And occasionally, it might result in a really big windfall for you. But if not, if you enjoy the process, I think that's a that's a winning strategy.
Brian Briscoe 27:15
Yeah. Yeah. I mean, just just add my two cents on the question. You know, we we go through brokers for a couple of reasons, you know, always to brokers. But, you know, brokers spend their time, you know, the large amount of their time building relationships with owners, you know, and so, you know, the benefit of the broker is you don't have to make hundreds and hundreds of calls to owners to find a deal, because the broker is doing it for you, you know, but on the flip side, you know, right now, things are so competitive that, you know, are there a lot of deals out there? I don't know, you know, and, Phil, we're right with you, we've closed on one property in 2021. You know, we've put a lot of offers in. And, you know, a lot of times we're putting our offering like this is this is the most that we can pay for this. And coming in second, third, fourth, or sometimes fifth place. So be out for the immediate future, we're still going to be leveraging brokers. But, you know, here locally, I am trying to meet as many owners of properties in my local area so I can hyper focus on this area too. And that, hopefully will eventually learn land nice and deals just like it is with Phil.
Adam Lacey 28:30
Okay, it's good advice, guys. Thank you. So one more question, Phil. I just out of curiosity, or you mentioned earlier that your second deal was a Grand Slam, do you want to take us a quick overview of what happened with that one? Sure.
Phil Capron 28:46
You know, so we'd proof of concept with the 13 unit, right? I'm still working as a real estate agent. I'm still flipping houses, but I want more of this because the rent checks had miraculously continued to arrive for the months after I purchased that one. And I just, I couldn't believe it. You know, I'd read the books, but I was convinced something was gonna go tragically wrong. And I was gonna lose my shirt. But now like the rents kept arriving, I kept going to the bank and I'm like, This is great. How do I do this, but like, a lot bigger. So I started getting on like loot net and Craxi and reaching out to the various brokers outside of the MLS land that I was, you know, kind of shopping in when I started, and, you know, open this whole nother universe. And again, it was about being sort of a master evaluation, there was a portfolio of 108 apartments in the neighborhood, I knew very intimately. And it was priced at what I thought was was a pretty good basis. It's like five and a half million or something like that for the 180 units. And so I called to book a tour and long story shorter. I found out that there had been a couple of contracts that had fallen through due to very large retreats. Because the property did have a lot of deferred maintenance. So I, you know, explained to this broker that we were flippers, you know, classic contractors had a property manager on my team. And that if they would accept the price that worked for us that, you know, we absolutely would not Retrade put it in the contract in big bold letters, not that it necessarily would have held a ton of weight with a refundable EMD. But, you know, it's included it and was able to negotiate it down to a price of 3.95, which was just a screaming deal in that market. And so we spent about 750,000 on capex, and today the project's worth a little bit over nine. So yeah, nice, nice. That's, that's a good one to have a JV with three other guys, you know, quarter partners each.
Adam Lacey 30:54
Just wondering, are you planning to sit with it and cashflow for a while are you going to sell it anytime soon.
Phil Capron 31:00
So that's another thing. When it comes to like partnerships, it's good to understand everybody's motivation. I was very blessed to surround myself with people that were a lot further down the path and I a little older than I and you know, all that good stuff. But our, our goals are a little different. So to answer your question, we're, our intention is to hold that one forever, just because we're never going to see that basis. Again, the cash flow is fantastic. You know, if we ever needed it, we know that we've got some equity to draw on. If it was up to me, if I owned it, myself, I would get out of it. Because there's just a ridiculous amount of equity in there, especially in the current market, that I could redeploy into something that was a lot more passive, bigger, you know, to have a larger and better capitalized, you know, mortgage to pay down. So that's what I would do. But, you know, it's a partnership, and everyone gets a vote, depending on how you set it up. And, you know, it seems like the other partners want to just hold on to it, let it do what it does, and we'll revisit it in like 10 years, there's nothing wrong with that. But when you're a little newer in your investment journey you want, you know, to really make every dollar of cash and equity you have at your disposal work as hard as possible. And, you know, if it were up to me, I would have those dollars working a little bit a little bit harder. But when I brought these people into my team, I see to, you know, three quarters of the control, so I'm along for the ride, basically.
Brian Briscoe 32:40
It still sounds like a great, I mean, going from about 5 million less than 5 million all into 9 million in a couple of years. I mean, you're right, that's, that's a screaming deal. That's that's a grand slam right there. But you didn't bring up a good point, you know, we go into partnerships, you know, you got to make sure that everybody has the same goals. I mean, and that's, that's really part of, you know, an answer to your earlier question, Adam, about partnering is, you one thing you want to make sure is you have the same goals and same outlooks. You know, otherwise, you know, it sounds fill it sounds like you're you're good with where you guys are right now. But there could be situations where one person really wants to go a different direction than others and it, it becomes ugly, but making sure you have similar goals really, really helps from the beginning. So
Phil Capron 33:27
it just to clarify, it's not like that. It's just, if it were up to me, I would go take a loan of say 70 or 75% of our current value. And that's like a nice little chunk of cash to go in to buy something new, and it's all tax free. And that's great. That's free finance. But there's also something to be said about being extremely low leopard with a great loan, and just letting it do what real estate does. You know, it's just, it's just different flavors, right?
Brian Briscoe 34:00
Yeah, I've definitely heard of horror stories in the jayvees. But, I mean, you're in a good spot. You know, I think that's, uh, you're, you're in a really good spot. So, you know, Adam, back to you got any other other questions?
Adam Lacey 34:15
Well, um, I guess another question would be related to creative financing. I think you mentioned earlier, you've done some seller carry back to note any interesting tips on how to get seller financing or any creative financing in general.
Phil Capron 34:29
So that one kind of dropped into my lap. I've done a couple other seller financing deals. And, you know, the sellers tend to be older, and they tend to have, you know, a lot of tax exposure if they do a traditional sale. So it's sort of a calculus to how do I get them a cash flow? That's similar to what they were receiving on their poorly managed Mom and Pop rental, and how to actually make it work for me As a bridge loan that didn't need an appraisal that didn't need a lot of, you know, expensive third party reports that I didn't require as part of my due diligence and a lot of lender fees. So then I, you know, go ahead and fix the building, we did a 20 Plex, with that exact same kind of idea. We bought it for 975, we put 100. Down, so very high leverage. The seller carried, what 875 At 4% interest for like three years for something for us. But in the second year, we went and sold it for like 1.55. So like, yeah, yes, that's a good good result. Yeah,
Brian Briscoe 35:39
I mean, that's like 600% return. I mean, no big deal. No big deal. So
Phil Capron 35:44
so we put, I think we put 150 into it. Oh, okay. So we were saying, yeah, yeah, exactly, yeah, I'm terrible. In the Paris, I'm humiliated. But the key is to understand what's important to the seller, though. And a lot of times it's price. So if they want a high price, great, like, I want you to carry 90% at a very reasonable interest rate, then all of a sudden, you can you can go a couple of years down the line, and you've paid off some principal, you've done different things. And it makes sense for you, the cash on cash will be where you need to be, and especially if there's evaluated on it, but you know, seek to solve their problem. First is the succinct answer of how to do seller financing.
Brian Briscoe 36:28
I'm working on something like that right now, with with one of my friends locally, you know, it's not a four oaks deal. It's it's a Brian Briscoe deal, but there's a seller who, and Phil just, you know, described him perfectly older gentleman, you know, has as a high tax liability if he sells, and he wants to do an owner carry, you know, we talked with him on the phone, and there's a lot of give and take, you know, the, there's a couple of things that he wants that we're not happy with. But, you know, if we can, if we can do a little bit of give and take to make it work for both of us, it's going to be a really, really good deal. But, you know, back back to what Phil said, it's just a matter of figuring out what they want. And seeing if you can, you know, give a little bit on what you need to give them what they need to, to make it work. So, you know, in this case, without letting you know too much information out, you know, the owner wants, you know, five to 10 years of guaranteed interest, you know, so that's typically, you know, the prepayment penalty is kind of what he's looking for. So, you know, if we can make it work and to help him get, you know, his guaranteed income for that five years, you know, then and make it a good deal for us. It'll work perfectly but yeah, I think I think the people I know that I've done seller carries, you know, Phil nail on the head, people with tat tax exposure, generally, you know, a little older than, then we are a little more gray in the beard than, you know, maybe I got. But that said, we're about out of time now. So So one question for each of you. And you know, Phil, I hoping to hear a little more about mission first, but, you know, how can people learn more about you? And then tell us about mission first?
Phil Capron 38:07
Awesome. I can't believe how fast this flew by this is fun. We could sit here for three hours here. And so So yeah, I mean, if, if anything I said resonated with you. And you know, you want to kind of get into my universe mission. First. capital.com is the place. Mission First Capital is the first of its kind regulation, a plus fund, backed by real estate that's 100% Veteran Owned and operated. And my goal here is to level the playing field with you know, within private equity. It bummed me out, as you know, I continued to kind of ramp up my portfolio, that all of my offerings, my military, brothers and sisters, they were excluded, because they didn't have the net worth most likely of a million dollars or the income of a couple 100,000 a year for, you know, 506 C accredited offering. And even if I was going to do a 506 B, and I had a $50,000 minimum, like that's a lot of loot for, you know, a young enlisted guy. So, you know, the mission first, we rapidly reduce that minimum investment under regulation, a plus, anyone can invest with us so long as it's not more than 10% of their net worth, or their annual income. So the 98% of the population that was excluded from participating in private equity backed by real estate, guess what, you're welcome here. First and yeah, we'd love to love to have a conversation. So Mission First Capital comm check this out. And, you know, hopefully we'll see you over there.
Brian Briscoe 39:48
I love it, you know, being being open to the masses, you know, you know, 506 B's do have still have a hurdle to get in because there's always that minimum investment. Part of the reason we've never done a 506 C is for ope just because we want to open to more people. And I think funds like this, you know, expand that even further, you know, so, you know, much lower, you'd say 5000 minimum investment
Phil Capron 40:13
5000. Okay, yes, fine. One more thing. One more thing, Brian that I forgot. Absolutely. It's pretty important, especially to a lot of your listeners who are coming from, you know, our type of law. You know, I take the 100% Veteran Owned and operated thing pretty seriously. I, you know, I'm sourcing deals in Hampton Roads, Virginia, that's my place, right? But my big, hairy burning goal is to create 1000 veteran owned small businesses in the next 10 years. So that's real estate as the the core and then to branch on from there. But we're we're starting with mission first capital as if you're a veteran that comes up with a Grand Slam deal, like the one, you know, we just talked about, instead of going in, you know, rallying up a JV like I did, or like Brian did, you know, come to us admission, first capital, and, you know, if it fits our box, our wheelhouse, we will JV with you. on that deal. If you're a veteran, we're active duty, and we'll take care of a lot of the stuff that is hard to do the activity, first and foremost, the senior debt, the accounting, legal marketing, investor relations, you just got to focus on getting a deal that's legit, looking at on the property manager, bringing the KPIs and that, you know, we agree to and sort of the the benchmarks and, you know, you can potentially earn more equity than you would have if you did your own syndication. So,
Brian Briscoe 41:44
yeah, I think that's a huge plus for a lot of people. You basically, they find the deal meets your criteria, they bring it to you and you guys negotiate, you know, facilitate huge Yeah, absolutely.
Phil Capron 41:58
All right, you can still claim it, it's still your deal. We're just
Brian Briscoe 42:04
so sweet. All right. So I'll make sure the information that information makes it to the show notes, Mission First Capital comm is where that's at. Adam, same question for you. how can listeners learn more about you?
Adam Lacey 42:17
You can reach out to me on LinkedIn. My name is Adam Lacey Lacey y and you can email me at Adam at Gold driven investments.com I'm sure Brian will drop it in the show notes. Love to hear from him.
Brian Briscoe 42:29
All right. Hey, well, thank you too much. Thank you too for for coming on the show today. Feel like you said you know, I could have talked with you guys for a long time. But my my clocks telling me that we need to move to something else right now. So appreciate your time guys.
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