Your Focus as a New Investor with Matt Whitermore and Marcus Long

Episode 169 of the Diary of an Apartment Investor Podcast with Matt Whitermore and Marcus Long. Transcript by – please forgive any errors.

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Brian Briscoe 0:00

This is Brian Briscoe, hosts the diary apartment investor, podcast and partner at four oaks capital. So we have something that we've been working on for a really long time we are building and we'll continue to build an educational community that we're calling the tribe of Titans. And it's going to be a community of multifamily investors based around education and his house on the mighty networks. What you're gonna find in there is a lot of events that are exclusive to the tribe of Titans members a tonne of educational content, and you're gonna find great people. So if you're listening to this podcast, because you're looking for community or you're looking for education, go no further the tribe of Titans is something you need to look into for the price of about $1 a day, you're going to be able to have access to everything that we have an elder content that we continue to produce for years to come. And just so there's no pressure and there's no obligation, the first month is free. So sign up first month free, and give it a test drive if you'd like to keep hanging out and you'll continue to have access to Well, me and my partners are four oaks capital in a lot of other experience and aspiring investors. And where can you find it the tribe of Titans dot info. There's a link to that at the bottom of the show notes of every single episode right now. So if you're interested type in www dot the tribe of Titans dot info or go down to this bottom in the show notes and just tap the link. Marcus, we got Matt on the line. What do you want to ask him for a new investor?

Marcus Long 1:23

Would you recommend, you know building relationships with a broker versus developing processes to go direct to seller versus building credibility or working to get on a team that might already have some of those relationships? Initially,

Matt Whitermore 1:39

if a new investor is looking to get into smaller deals, I would say put 100% of your effort into getting directly in front of sellers. If you're looking for deals maybe two and a half million and up. Most of those deals go through brokers and it's a completely different strategy. Get friendly with those brokers.

Brian Briscoe 2:07

Welcome to the diary of an apartment investor podcast with your host Brian brisco. 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 direct DEP investor podcast. I'm your host, Brian brisco. With poro capital super excited for today's show, we've got two amazing people on the line with one of our Ask the Expert episodes, we've got experienced investor, Matt, where more and aspiring investor Marcus long on the line with us. And for everybody listening, I'm gonna put the biographies of these two gentlemen in the show notes. So if you want to know more about them, you know, check out the show notes. And you know, we'll have their their full length BIOS down there. So that said, Matt, welcome to the show.

Matt Whitermore 3:04

Thanks so much, Brian. Happy to be here.

Brian Briscoe 3:06

Yeah, thanks a lot. And I appreciate your time today. And why don't you tell us a little bit about yourself and give us your background and history and kind of walk us up into you know, what got you into apartment investing?

Matt Whitermore 3:19

Absolutely. Yeah. So I am based in Albany, New York. I have a firm based in Albany, New York called New Scotland capital. And that is part of a vertically integrated real estate business called New Scotland development companies. So I focus on investment properties, but we have a brokerage, a property management company, and we also do apartment developments. So involved in apartments in a lot of different ways. Love to invest in apartments. And I've been in real estate investments and commercial real estate finance for about a decade now. So got my start doing actually acquisitions for a Boston based company, small apartments up to kind of mid market development, maybe 3040 units. They also had property management and brokerage. And then I found myself looking to work on bigger deals and learn that aspect of the business. So I worked for, for a number of years, some of the larger debt and equity shops, intermediary, so placing loans on commercial investment properties, placing equity. Then I actually got into investing myself a couple years ago and partnered up with an even more experienced investor and experienced real estate professional here in Albany and we've been growing our portfolio and doing doing some different creative things since

Brian Briscoe 4:52

Yeah, nice. Well, sounds like you've got you pretty much done the entire gamut of you know, real estate or multifamily investing. From every single angle, so vertically integrated, I think that's a great you got to get property management, you got development, you've got your own assets. What else did you say you had in your brokerage as well, right?

Matt Whitermore 5:13

Exactly, yeah, is really rooted around the three areas brokerage, property management, and then investments. And some of our investments happy happened to be adaptive reuse apartment developments, historic tax credit type projects, that can get pretty complex. All right,

Brian Briscoe 5:30

you're talking like the delighting type things are you guys are the other things out there that I've just not heard up yet.

Matt Whitermore 5:36

So usually, it's it's based on the historic status of the property. So it has to have some historic significance. But yes, similar, similar in terms of how you can get creative with structuring the equity, you can bring in a tax credit investor to buy the tax credits to then you can use that as an equity source to recapitalize the deal or or capitalise it initially. Okay,

Brian Briscoe 6:01

and when you talk historic stuff, are you talking like the things that are like on the National Historic list? or whatever it's called? Or is that what you're looking at? Or something different?

Matt Whitermore 6:09

Yes, there's the national list. There's also historic districts that are more handled on the municipal level. That's typically what we run into in Albany and downtown Albany, virtually the whole city is, is a historic district. Also, Schenectady and Troy have very, very old properties in their downtown pre, pre 1900, even really pre 1800 some of these properties, which is pretty incredible.

Brian Briscoe 6:37

Now Now, first time, I've talked to somebody who's focused on that. So I'm very curious, what what value do you guys get out of going into those historic districts?

Matt Whitermore 6:48

Great question. And it's, you know, it's, we're typically very high yield investors. So if we buy an operating asset, we're usually looking for very high cap rates, but it allows you to be more competitive, because you could take down a deal that say needs a million dollars in equity, you could structure the deal in a way that, you know, there's state tax credits and federal tax credits that a bank or another type of investor might come in and, and purchase those for, you know, 60 or 70 cents on the dollar. And so you calculate, based on the improvements in the projects, there's, you know, qualifying improvements, and through a calculation you end up with, okay, what are the value of my tax credits, then the investor will pay 60 to 70% of that in cash. So it's, it's a way to almost raise equity from a bank, which, you know, isn't, doesn't sound conventional, but with these historic deals and other tax credit deals, it's, it's really what you're doing.

Brian Briscoe 7:55

Yeah, you know, and I like how you get creative with that you're able to use some of the benefits come off, but to, you know, influence people to to invest or invest more. And I know there's a lot of the higher net worth investors who are investing in, in real estate in general are doing so because it is tax friendly. And if you can give them tax credits in return, you know, I can see how that's very valuable for a lot of people. So can you can you give us an idea of one of the deals you guys have done? Kind of paint the picture on finding it and what what the process looks like?

Matt Whitermore 8:31

Sure, yeah, I'll go with one we just closed recently, is a smaller deal. But you know, we're, we're in a small market. So we were happy to buy properties large and small, you know, if the numbers work, so we bought a 20 unit property we used, I think this is a great one for aspiring investors, because it's a great way to get into properties for little money down. So we we raise the equity which you know, was only ended up having to be 10% of the purchase price. We got a 75% LTV bank loan, and then we got 15% subordinate seller financing was to bridge that gap. So very flexible financing. And then we actually did the deal with none of our own money. We raised that that money that 10% from an investor relationship that we have. So it was a great way to get into a million dollar deal. 20 units for very little cash.

Brian Briscoe 9:32

Get Nice, nice. So 75% loan from the bank 15% seller carry back 10% equity, you got yourself a million dollar property. So right.

Matt Whitermore 9:42

It really drives the returns to your cash on cash return if you have, you know, that was about a 10% cap rate. So with only 10% down, we're talking about 25% plus cash on cash return.

Brian Briscoe 9:54

Yeah, absolutely. Now, what was the cost and something something we look at a lot is you know, what is the cost? To the money you're raising, what what term Did you get on the tiller carry back.

Matt Whitermore 10:04

So that we actually told them that they needed to match the bank terms. So we got 4% interest rate a 25 year amortisation? No, no prepayment penalty on that. So we'll probably look to refinance that property and two to three years to, to pay back, you know, pay off that seller note, pay back our investors. So, you know, return that capital and make them whole again. Nice, nice. Yeah, that's,

Brian Briscoe 10:35

that sounds like a pretty sweet deal you guys set up there, I mean, you basically are financing 90% of the purchase price at 4%. And if inflation in the next year is anything like it was in the last year, I think CPI law, you know, the CPI released last week, like 5.4%, year on year over year, you're essentially getting paid to take other people's money is how that works. But absolutely glorious, glorious thing when you can get it to work in your favour like that. So and then, as you mentioned, that just you know, multiplies the returns to the investors and multiplies the returns, that you guys are going to be getting, because your cost of capital is so low for 90% of the deal. So Well, great. One question, I like to ask everybody who comes on the show, you know, what is your big burning? Why?

Matt Whitermore 11:26

Great question. And, you know, I am, you know, I was an employee for eight years, coming out of college and had different roles in the real estate industry. And I never found a great fit as an employee. And I worked hard, I felt like I did a good job, but I just, I just didn't find that fit that made me feel like I wanted to be an employee at whatever company for a long period of time. So you know, I always liked about investing was, you know, having control of your own destiny, and being in a situation where you're truly getting out exactly what you put in, obviously, there's lots of risk and things can go wrong. But if you're measured and calculated, and you put in the efforts, you're gonna get, you know, great, great results out of it, whether you're able to just pick off some long term assets that in the first year that I was a full time investor, I didn't make much cash. But I acquired lots of, you know, property, so I increased my net worth probably by a quarter million dollars in that first year. And that's way more than I was able to accumulate with 401, K's or IRAs, in my almost 10 years of working as an employee. So that was really super eye opening to me is, you know, what, you know, I don't I don't need a lot of things to live, you know, have the lifestyle I want. But if I keep at this for four more years, five more years, and am able to just repeat what I've done, I'll be on my way to building a nice portfolio and having the passive income that I want. Yeah, I mean,

Brian Briscoe 12:59

if you can, if you can keep on adding a quarter million dollars to your net worth every single year, I mean, it's gonna add up quickly, I think it's really easy to see how that's, that's gonna do a lot better than, you know, corporate America or government, as you know, the case of Marcus and I, but you know, and something, you bring up something that's important and something that, you know, I've realised a lot, I've spent 20 years in the Marine Corps, and we have, every year they released the pay schedule, you know, and so you know, exactly what you're going to make you know, exactly what everybody else is going to make. And I think one of the downsides of that is, it doesn't matter how much you work or how little you work, you're still getting paid the same. So something you brought up that really resonates with me is the fact that, you know, in this multifamily space, you get what you earn, you know, and that's, you know, it could be a little it could be a whole lot. You're not capped by, you know, whatever the government or the corporation thinks you should make. So, definite plus to what we're doing. Of course, yeah. Agreed. So, all right, so I'm looking, looking forward. what's what's next for you? And what do you guys working on now?

Matt Whitermore 14:11

Great question. I'm probably going to throw you for a little bit of a loop here, but mine on on a few days from now, Monday, I will be closing on a campground property that we are purchasing a campground and RV park and Okay, we love apartments, you know, we have all the infrastructure, the management company, all the processes in place will always buy apartments. And as one thing I love about real estate, and you being in business for yourself, in general, is you get to steer the ship. You know, I'm the kind of guy that likes to try a lot of different things. So I'll always invest in apartments because they're, in my opinion, the most plentiful commercial asset that's available. There the most easy to understand and the easiest to finance. So yeah, it's it's just a great business for all those reasons, but I like the idea of being diverse. Cepheid, so we're starting with campgrounds but one day I'd like to own office buildings, shopping centres, you know, a fully diversified portfolio.

Brian Briscoe 15:11

Yeah, absolutely. And I mean, you did did surprise me a little bit never expected campground so just curious again, you know why why campground where's the campground and tell us a little bit about that one.

Matt Whitermore 15:24

So that campground is in the Catskill Mountains in upstate New York, we love it because it's about two hours from Midtown Manhattan. So we see it as a nice weekend retreat for all those millions of people that are in New York City. It is a pretty rustic campground, but we're gonna introduce a tiny home rental component. So we're excited about that. And I think the reason we really got into it was we started looking at mobile home parks. And this was years ago, and the cap rate compression was already well underway in the mobile home park space. And we came across some, you know, combo properties that were half mobile, home park, half RV park. So we began to familiarise ourselves with the RV park model. And then being in the northeast, we got acquainted with the seasonal RV model, which is incredible, it's you're basically removing collections from the equation because people pay before they show up, even if it's a full season rental, it's not a residential property. So you're you're not having to deal with evictions, which was a breath of fresh air for me, especially, you know, in a city like Albany where we own a lot of our properties, you can't get evictions done. People know that they don't have to pay rent at this point. It's not an overwhelming majority of our, of our portfolio, it's a small portion of our portfolio, but it was a frustrating experience enough to kind of look outside the box and try and diversify a little bit.

Brian Briscoe 16:54

You know, I like the idea. And my wife, kids, and I spent last five days in southern Utah, and there were a lot of RV parks, as you drive by that are just, you know, chock full of our V's, you know, and it's if you're in the right spot where we were at your within an probably an hour's drive and three national parks, you know, so if you're in the right spot, you know, and the right season, you know, you're going to stay for the entire time. And that close to New York City. I mean, I can imagine that, you know, if you guys have least a decent amount of marketing going on and improve the facilities a little bit, you're gonna stay cool. Yeah, probably around.

Matt Whitermore 17:31

Yeah. And it really the other piece of it that was super appealing was so much less capital intensive, especially in the value add space, we're purchasing a property, it's I call it like a boutique campground, it's $850,000 that we're purchasing it for, and we're budgeting $150,000 to improve it. But that really goes a long way. And so, you know, we there's a real opportunity for us to come in and double the revenue in short order without having to inject that much capital into the property. Obviously, there's the risk of, you know, there, it's an operating business, it's not an apartment building where you have 12 month leases. So I think it's a nice, it's a nice complement to the apartment model where it's more hands off, you know, it's obviously lower cap rate, but it's lower risk. So I think it's a nice, a nice compliment to

Brian Briscoe 18:21

put together in a portfolio. All right, sounds amazing. So that said, we're going to transition right here, we'll bring Marcus on the line. And that said, Marcus, welcome. Thanks, Brian.

Marcus Long 18:32

appreciate you sharing your space with us today and grateful for the opportunity to have this conversation with you and Matt.

Brian Briscoe 18:38

Yeah, not a problem. And thanks. Thanks for your time. You know, I'm looking at the clock. It's 2pm. Here, what time is it where you're at? Yeah, we're about the nine o'clock over here in the UK currently. All right. So every once in a while, we get somebody dialling in from afar, and it seems like every single time it's somebody in the military. So anyway, tell us a little bit about your background, and we'll go from there.

Marcus Long 19:00

Awesome. Thanks, Brian. Yeah, you know, I grew up in rural Missouri, and I got a little taste of, I guess, an entrepreneurial spirit. You know, as a young kid with a family business. I joined the Navy and summer of 2001, I think, probably similar time that you join the military yourself, Brian. So I just rolled over my 20 years this summer. So yeah, like I said, 2001 joined the Navy, and, you know, is probably three or four years later when I bought my first real estate. So I've had I've had some real estate for the better part of 17 years. I'd say for a good 15 years of that or so it was mostly in the single family space, and mostly opportunistic, right. You know, I kind of picked up a few throughout my career, not very intentional, and stuff about it. And there's just a few few years ago, and shortly before I came to the UK, and I was kind of looking at the the transition that was coming up. I didn't really have any intention of staying too far past 20 years and started to get more real. And that's kind of when I started to get a little bit more intentional about the real estate to kind of have a plan, a transition plan. And so about the time I've been in the UK for about about two years now, and I joined a mastermind around that time, and kind of started getting exposed to some different strategies, and including multifamily in about 12 month period I invested in in three syndications as a limited partner, prior to deciding to transitioning over to be on the general partner side. And so that's kind of where I am now.

Brian Briscoe 20:35

Yeah, I mean, it's something that you're right, that is right about the time that I joined, May, May 7 2001, was my my first day in uniform. So I probably probably beat you out by a month or two. But as far as June 14, so you get about 514. Five weeks on it. Yeah, there if it

Marcus Long 20:54

wasn't, if it wasn't for trying to finish up time in the UK, I would, I would have probably been racing to retirement, but I'm gonna, I'm gonna finish my time here and then transition next year. So,

Brian Briscoe 21:03

you know, you're in a good spot, you know, and we we've had a couple of really good overseas tours. You know, I've I've spent a year in Rio, and you know, three years open now. And both of those places were really nice places to I say open now was a great place to live. Rio, I would still I still love Rio, I think it's a better place to visit. But that said, I mean, same thing. I mean, we we got into the multifamily space when I started seeing that light at the end of the tunnel. And I've said this many times on the podcast before, but you have that 20 year mark, it's like a light switch where you can retire. As soon as you hit the 20 year mark. But prior to 20 year mark, you know, zero retirement benefits. So, you know, once I started seeing the light at the end of the tunnel sounds like you had the same same story, seeing the light at the end of the tunnel, and like, Oh my gosh, that lights coming really, really quick. What now? So in the multifamily space is a great place. Great place to be so excited for you really excited for you. Thank you, I appreciate that. So let's talk about your big burning Why now? Well, you know, what's, what's your big motivation for for doing this?

Yeah, there's,

you know, there's

Marcus Long 22:07

a few different levels to this, this question, Brian. And part of it starts out with them, probably about four years ago, when we were in Colorado. And I was in one of those pretty high up tempo military billets and working long hours. And I came home from work one day, and my daughter who was three years old at the time, I came home early by about three o'clock in the afternoon. And she's like, Daddy, what are you doing home? And I said, I just thought I'd come home and spend some time with you guys. And she said, but it's not dark yet. And, you know, it hit me it crushed me that day. Yeah, it was like, I didn't know how to respond to her. And, you know, I thought a lot about it. And I was like, before that it was kind of this, you know, I'll see what happens at 20 years, maybe I'll I'll stay in, maybe I won't. And and that day, there was no question what my intentions were, you know, I knew like going forward that I had to create a lifestyle, that I was going to be present and available for them when I wanted to be. And that's kind of, you know, like I said, I already had some real estate and stuff before that. And that's when I realised like, Hey, I'm going to become more intentional about this. And I'm going to develop a plan to, to be ready financially to transition and do what I need to do for my family at that point in time. And that's really when I started in a family was the core, and the kids were behind that. As I got into developing my plan, and particularly with multifamily. I'm very big, I've always loved to get back, I am very passionate about having a positive impact. And I've see so many ways in the multifamily space, so many vectors that we can do that from the ability to have an impact on our residents, the communities that you invest in the flexibility that we give our own families. And then you know, we can use our profits to support other other nonprofits or charities and things like that. So all of that ability and you know, as you've probably seen my kind of company name and platform is about leaving a legacy. Yeah. And legacy, a long legacy. That's right. And so, you know, you know, and that's for me all about the kids in this real estate space. And that ability to have that impact in so many, so many different ways is, I think, an awesome, tangible way for me, I enjoy doing it, and to show my children, the ways that I can have an impact and stuff and to me that's that's a tangible way for me to leave a legacy.

Brian Briscoe 24:31

Yeah, you know, one one tangible thing that I'm just realising and realising isn't accomplishing, not realising as in light goes on. I guess there's two different ways you could use that word but is the location freedom? I mean, three years ago, you know, before I really threw my hat in full time into the multifamily. My wife's like, hey, when we retire I want to live in Idaho Falls next to where my sisters live, you know, and Idaho Falls is a small city, you know, 6060 something 1000 you know, the metro About 100 or 100,000 people, and what went through my mind is where am I going to get a job in Idaho Falls? Well, because of multifamily guess where I'm living right now, you know, we are a couple of blocks away from both of her sisters. So we were able to live where we want to live, which is best for the family. So you know, very, very much same same lines with you. And obviously, you know, since we're same, roughly the same career and same path, I think a lot of a lot of what we feel and look for exactly the same. So

Marcus Long 25:32

I can really appreciate you know, that geographic freedom, like, that's one of the great things like I'm, I'm learning to do the, you know, some of this stuff. It's always been long distance throughout my entire career, even with the single family stuff. But you know, right now learning to do some of this multifamily stuff from four or 5000 miles away from some of the markets and stuff. And so if I can do that, I can do it anywhere in the US. And, you know, I can go on vacations or work from anywhere in the world that I want to. Yeah, so it's a pretty good way to,

Brian Briscoe 26:00

to learn. Absolutely. All you need is an internet connection and a laptop. And you can do this from just about anywhere, so well. Great. So here comes my favourite part of the show. And it's where I hand you the microphone. So, you know, Marcus, we got Matt on the line, what do you want to ask him?

Marcus Long 26:14

Yeah, thanks, Brian. And it was great listening to some of your background there, Matt. And so I really want to kind of ask one with like, the the current markets pretty competitive, you know, throughout the entire country, and stuff. So for a new investor, from your experience, both as an investor and you know, with brokerage and stuff, like, would you recommend, you know, or what balance? I guess, would you recommend a new investor focus on, you know, building relationships with a broker that, you know, it takes time to develop those relationships versus, you know, developing processes to go direct to seller, versus, you know, building credibility or working to get on a team that might already have some of those relationships? Initially, it's like, you know, is there is there one way you would recommend a new investor go or a balance between them?

Matt Whitermore 27:06

Sure, is a great question. And it's, it's a, something I sort of battle with daily. It's because we play in multiple spaces, I would say, if someone's a new investor is looking to get into smaller deals and buy smaller, I'd say, 2 million, and under, or maybe a million and under, I would say put 100% of your effort into getting directly in front of sellers. And I would say, if you're looking for deals, maybe to 2 million and up two and a half million and up, most of those deals go through brokers, you know, there's all sorts of LLCs and entities that if you try and go direct, you're gonna have a lot of unknown parties. So, you know, it's, it's the constant conundrum for us, because we buy small properties and large properties. And it's a completely different strategy, I would guess, you're probably looking to get into more of the larger properties. So I would take the opposite approach and get friendly with those brokers figure out a package to put together that, you know, you obviously have 20 years of experience almost in real estate, which is highly significant. And so you can put together a little resume and, you know, the one thing that comes up, and we tried to do a lot of deals, so people will ask for proof of funds, you know, I'm a younger guy in terms of being a full time real estate investor. So liquidity is a challenge. So you know, that's why we raise money. And that's something that I think I'll, until I win the lottery one day, you know, there's always be a challenge of showing that you know, 10% liquidity or 100% net worth, that you have to show the lenders to get the deals done. So, you know, and it's, I don't want to be a hypocrite because I'm a I'm a licenced real estate agent myself, and we have the broker, the brokerage. But I get so frustrated working with brokers, my preference would be to just work with sellers directly, you know, I don't I don't perform well, in bidding wars, I just don't like to do that. I like to control the deal. Set the timeframe set the expectations myself, it drives me crazy when you're trying to do a deal through two sets of brokers to attorneys. It's just like a daisy chain of a game of telephone, you know, your message never gets there directly. It seems like sometimes.

Brian Briscoe 29:29

I feel the same way. I mean, I think it's even more so we just saw our single family home and you know, agent to agent, owner to agent agent, the buyer, but as far as the question mark is, I would say, you know, where do you want to get, you know, in five, five to 10 years, and you know, whether you latch on to somebody else, or try to bootstrap it, you know, really kind of depends on where you want to be in that five to 10 years, you know, we chose to bootstrap it at some point you're going to have to have somebody experience on your team. But we wanted to I mean, we had envisioned for oaks being kind of what it looks like now three years ago. And you know, the way for us to get there was not to latch on to somebody else, but to make the relationships ourselves. So I would really say it depends on, you know, where you're trying to get, where you're at now, what your what your resources are, you know, and that's, that's definitely part of part of how it worked out for us. Now, of course, as bootstrapping, it meant it was a little, it was difficult for us to jump in at the 200 unit level Mark from the beginning. And so we didn't, you know, we jumped in our first property was a 50 unit. So little more bite size, and we slowly worked our way up to where we're in the, you know, 10 million plus arena right now. So both ways will work. Just Where do you want to be five years and which will get you there faster?

Marcus Long 30:55

That's really helpful. I appreciate that. Yeah. I think, you know, not not necessarily specific to my question. But going back to something that that Matt said about the liquidity and net worth and stuff. I think that's a great comment. And I think it's a limiting belief and stuff for a lot of new investors and stuff. But I think it's a great point to highlight as I begin to network in the multifamily space, and stuff, right, is that, that those things can be overcome, you know, there's someone else in the space that you can bring on to do that to be that network to be that liquidity. And do you have to give something up for? Yes, you do. You know, but I think just as good to highlight that point of a lot of these limiting beliefs of, you know, you don't have to do it all yourself, you figure out who you can bring in to, to do those things. Absolutely. Yeah, another question, I was going to kind of ask, you know, I'm speaking over here on that kind of on the broker aspect of it. So from UK, you know, a distance and stuff, right. And so, you know, everyone always talks about taking someone to have have a coffee and things like that, and building those relationships. And that's very challenging for me to do from this far apart. And so, while you may be investing, you know, Matt, in the market that you live in and stuff, maybe COVID, you know, where we've gone virtual and stuff is given some experience to this. But what are some ways maybe that if taken a broker or other team member out to coffee and things like that, to start to build those relationships and things? If that's not quite an option, like virtually? and stuff? What are some some ways that you see investors, or that you have stood out to brokers or, you know, maybe other investors stood out to brokers that, you know,

Matt Whitermore 32:40

awesome question. And, you know, it's a, it's an area that we discuss a lot, my partner and I, because I am sort of a black and white, analytical person, we do a lot of direct mail marketing. So when I think about marketing, and reaching out to sellers and reaching out to brokers, I like the mass approach, but I think you have to kind of go the opposite direction with it. So you know, for somebody like you, I might say, you know, identify your top 10 brokers, and send them a box of cookies with a nice note on it or something like that, send something to the office, a snack or whatever. I've seen that when I was on the brokerage side, it goes a long way. And it's, you know, it's not the 80 cent mailer, that you're worried about conversion rates, it might be a $50 expenditure for one lead, but it'll it'll make an impact. I think you just got to focus on going against the grain, so to speak, setting yourself apart, which not to be, you know, negative or pessimists, but I don't, I don't think it's too hard to do that. Because there's going to be people calling them all day that just want the info on the deal. Want to see what's in it for them. So, you know, I think taking an approach like that, where it's more of a personal touch than a mass outreach and a numbers game, you know, make it make it a personal connection.

Brian Briscoe 34:08

Something I did up front and I was in the DC area when I started trying to invest in South Carolina. It's drivable it's a lot better position than you're in right now, you know, across an ocean, but I would send Starbucks gift cards, you know, a $10 Starbucks gift card, I would say something like, you know, hey, you know, I'm, I'm a little bit far away from you guys. I'd love to take you out for a coffee. But since I'm not in the local area, here it is. And I got almost 100% response rate. When sending a Starbucks gift card, they're going to get on the phone, they're going to send you an email, they're going to say thank you, I appreciate it. And it just it was just a little thing cost me $10 each time I did it and usually I send it you know, via email. So you know, it's just one of those things. That process ended up leading me to the broker that brought us our first deal, you know, so what was it a 100% because of the Starbucks gift card, No, probably not. But it definitely started conversations where, you know, an email or a voicemail wouldn't have, you know, 10 bucks. Starbucks gift card. Hey, love to take you to coffee, but I can't right now. So you know, take yourself. Oh, yeah,

Marcus Long 35:22

that's a that's really solid. Yeah, like, because it doesn't, it doesn't cost you any more than if you were there. And while you don't have the necessary the face to face conversation for them, they, they may actually appreciate just as much or more than than the coffee out because they just bought their hour back or something like that. So yeah, that's, uh,

Brian Briscoe 35:39

yeah, that's there, and they're gonna get coffee anyway. And next time they go through Starbucks, they're gonna, you know, use that, that, you know, gift card code that they have, and they're gonna be thinking of you. So, boom, awesome. Anyway, that's good. Yeah, you know, we

Marcus Long 35:55

asked couple questions to kind of about the broker and stuff like that. And we do spend a lot of time especially like, as new, you know, investors, talking about, you know, the broker and raising capital and finding the deal. And things like that. I'm kind of curious, from your all's perspective, like, you know, is that where your biggest challenges have come? Or is it as it been post closing, you know, in asset management and stuff? we don't we don't talk nearly as much about after we close the deal. Like, what what happens then? So? And I mean, there's challenges in all phases of that, but have you have you found your bigger challenges to be pre closing or after?

Matt Whitermore 36:34

You know, I'd say that there are, there's certainly challenges because we, especially if you're raising money for any types of deals, you sell the projections, you sell how smart you are, and how well you know the market and how well you can execute the deal. And then you actually have to do it. And, you know, I think, funny thing in our industry where you might get paid an acquisition fee, and I think there's probably a lot of people out there that they cash their acquisition fee. And that's what they did the deal for, and they're on to the next thing, but the biggest thing for us is repeat investors. So you're not going to get that investor to invest again, if you're missing your projections every single time. So I am very lucky that in order to advance my career, I partnered up with somebody who had a property management company, and so he wears that asset management hat. My my role is to find the deals, but we always work with very conservative projections, because nothing goes according to plan. So you know, it's funny, like you put together a pro forma, and really, the only thing that you know, is that it's not going to be right. Whether it's lower tie, your pro forma is wrong, no matter which way you cut it, you're not going to everything on there, it's going to be wrong. Yeah. Like, it's like, oh, my God, why am I doing this, but your your job is to make sure you're on the low side, not the high side. So I would say, you know, it's it's intertwined. It's hand in hand, it's, it's having an asset management mindset, while you're making those projections, maybe, you know, eking that vacancy rate up a little bit, everybody uses 5%. But, again, we know it's not 5%. So, you know, it's, it's, it's having the end in mind, which is a little bit of a cliche, but if you're not exiting the deal, the way you're telling everyone or yourself or your investors, it's not going to end up the way you want it to. So you gotta you got to plan with that exit in mind.

Brian Briscoe 38:38

Yeah. I mean, as far as challenges go, I think closing is like a sprint, you know, you know, the actual operations is more of a marathon, you know, so they're both challenging, but one of them, you know, you've got, you know, we were should be closing on a property today, I'm waiting for a text at any time from my partner, but I mean, you got about two to three months to close. And so there's definitely challenges you're under the gun. And it may be a little more stress that you're feeling because of the timeline. But really, I mean, what Matt said is absolutely true. You know, if you just want to do one syndication, you know, you really got to focus on the operations, you really got to nail that part. Otherwise, people aren't gonna invest with you again. And that's, that's really what you're trying to do is you make a business out of this that can create that long legacy that you're looking for, and it's not the one and done, you know, so focus on the marathon, you got to be able to sprint, but you got to focus on that marathon. Yeah, yeah. Yeah. I

Marcus Long 39:37

appreciate that. And, you know, the reason the reason I bring that up is because I even you know, whether it's single family multifamily and stuff, I think, you know, it's easy. I shouldn't say easy, but like it, we run the numbers, we run the numbers, run the numbers, but that's all based on these like projections and stuff. And then as Matt said, you know, we actually have to execute and make make those come true and in multifamily, there's a lot more variables to do that. And so there's a lot of preparation on that. On the front end, but I think it's important to kind of highlight that and pull that out, you know, in the operations component of it, because I don't I don't know if that's discussed as frequently in thought of new investors that are just thinking about, like finding their market, finding a team and running some numbers.

Brian Briscoe 40:18

You know, I think a lot of people get the closing table, you know, and that they're so hyper focused on first deal and closing, the deal closes, and they're just sitting there and they're like, great. What now, you know, and that's, that's probably something you want to try to avoid. But you know, we're about out of time. I'd love to, you know, stick around and chat a lot longer. But I think we probably all have, you know, things to do on the back end. But one question for each of you and Matt, you go first, how can investors learn more about you?

Matt Whitermore 40:47

Perfect, yeah, you can visit New Scotland capital calm love to chat talk shop with with anybody love to share my share my experience and think you can learn from everybody. And I'd love to learn from some of the listeners. So you can email me at Matt at New Scotland capital calm as well.

Brian Briscoe 41:04

All right, and we'll have links to both those in the show notes. Market, same question for you.

Marcus Long 41:09

Yeah, thanks, Brian. Yeah, they can visit a long And everything's on there from you know, you can message me they can set up a call with me on my social media. So it's kind of a one stop shop, love for them to stop by whether they're interested in talking multifamily or kind of on the legacy note, I do share some stuff about like teaching my children, seven year old and four year old and stuff like that some financial lessons and things. So I do try to share some other content, generally trying to pass on that financial education as part of my legacy.

Brian Briscoe 41:41

It's nice to see the light go on with kids. Quick, quick moment. You know, two years ago, when I started spending a lot of time pushing towards multifamily. I explained to my son who was probably six at the time may have been five, you know, I explained the concept of we buy apartments, people pay us to live there. And his eyes got really big. He's like, Dad, you need to buy as many of those apartments as you can, you know, and anyway, teaching kids how to how to do what you're doing is is fun, you know, it's fun to see that light go on. But anyway, thanks to both of you for coming on the show today. You know, Thanks, Matt, for all the lessons learned. And Marcus, good seeing you again. And I'm sure I'm sure we'll talk again very shortly. So thank you.

Thank you for listening to the diamond apartment investor podcast today brought to you by four oaks capital. If you'd like to know more about how to invest in apartment buildings or want to be a guest on our show, visit our website at four oaks capital comm slash podcast or email us directly. If you're still listening, you obviously like the show. So pull out your phone, tap, subscribe, and leave us a five star rating on your favourite podcast app. And we'll see you again next week.

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