Today, Jay Conner interviews Andrew Campbell about multifamily investments.
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Jay Conner (00:01):
Well, Hello there and welcome to another episode of Real Estate Investing with Jay Conner. I’m Jay Conner, your host also known as the Private Money Authority. And if you’re brand new to the show, a special welcome to you here on the show, we talk about all things relating to real estate investing, how to find deals, how to fund deals, how to sell deals quickly, how to automate your business. So you’re running it and it’s not running you. And if you’ve been tuning into the show, my land, since we launched in June, 2018, we’re blowing right on through 300,000 downloads. We appreciate all of our subscribers. So if you’re tuning in on iTunes or Google play, or one of those type formats, we really appreciate if you will subscribe and rate and review us and give us five stars. And also if you’re new to this show the reason I’m called The Private Money Authority is because back from 2003 to 2009, I relied on local banks to fund our deals.
Well, Hello there and welcome to another episode of Real Estate Investing with Jay Conner. I’m Jay Conner, your host also known as the Private Money Authority. And if you’re brand new to the show, a special welcome to you here on the show, we talk about all things relating to real estate investing, how to find deals, how to fund deals, how to sell deals quickly, how to automate your business. So you’re running it and it’s not running you. And if you’ve been tuning into the show, my land, since we launched in June, 2018, we’re blowing right on through 300,000 downloads. We appreciate all of our subscribers. So if you’re tuning in on iTunes or Google play, or one of those type formats, we really appreciate if you will subscribe and rate and review us and give us five stars. And also if you’re new to this show the reason I’m called The Private Money Authority is because back from 2003 to 2009, I relied on local banks to fund our deals.
Jay Conner (01:11):
And I got cut off like the rest of the world in 2009, I was introduced to this wonderful world of private money to where you actually do business with individuals. And so I’ve got right now about 50 different private lenders investing in our deals. And I also coach and train and educate other real estate investors on how to get funding for your deals without relying on banks and mortgage companies and et cetera. So if you’d like to learn all about that, and how you can get plugged into the money and get plugged into funding, I’ve got a free trial for you to come join my membership, where I actually do live training twice a month, and you get all kinds of content and training inside the membership. It’s called The Private Money Academy and for you to come check it out for free for 30 days, get on over to www.JayConner.com/trial.
And I got cut off like the rest of the world in 2009, I was introduced to this wonderful world of private money to where you actually do business with individuals. And so I’ve got right now about 50 different private lenders investing in our deals. And I also coach and train and educate other real estate investors on how to get funding for your deals without relying on banks and mortgage companies and et cetera. So if you’d like to learn all about that, and how you can get plugged into the money and get plugged into funding, I’ve got a free trial for you to come join my membership, where I actually do live training twice a month, and you get all kinds of content and training inside the membership. It’s called The Private Money Academy and for you to come check it out for free for 30 days, get on over to www.JayConner.com/trial.
Jay Conner (02:11):
Glad to have you in there. Now, another thing about the show is that I’ve had just some amazing experts and guests join me here on the show and today is no exception. My guest today is a native Austinite in case you don’t know what an Austinite is that someone from Austin, Texas, and he’s a real estate entrepreneur and he broke into real estate investing first back in 2009 as a passive investor. Well, in 2012, he transitioned into active investing and management as a personal portfolio that grew to 76 units across Austin and the San Antonio areas. Well, he earned his stripes if you will, building and managing his personal portfolio before moving into much larger multifamily buildings and deals. Well, the name of his company is Wild Horn Capital. Well at Wild Horn Capital, he’s focused on acquisitions, finding deals and maintaining investor relations.
Glad to have you in there. Now, another thing about the show is that I’ve had just some amazing experts and guests join me here on the show and today is no exception. My guest today is a native Austinite in case you don’t know what an Austinite is that someone from Austin, Texas, and he’s a real estate entrepreneur and he broke into real estate investing first back in 2009 as a passive investor. Well, in 2012, he transitioned into active investing and management as a personal portfolio that grew to 76 units across Austin and the San Antonio areas. Well, he earned his stripes if you will, building and managing his personal portfolio before moving into much larger multifamily buildings and deals. Well, the name of his company is Wild Horn Capital. Well at Wild Horn Capital, he’s focused on acquisitions, finding deals and maintaining investor relations.
Jay Conner (03:19):
Also leveraging his marketing background to build long term relationships. Well today, his company Wild Horn Capital controls over $200 million in it’s portfolio. And they have over 1700 units in Texas. Well, my guest’s background is in market research and brand strategy, and he’s spending time in both advertising agencies and emerging technology consultants where he was most recently a partner and an award winning app developer. That’s pretty interesting right there. In addition to that, he received a BS in advertising from the university of Texas at Austin, and he has his MBA from Baylor University. With that! well, welcome to the show, Mr. Andrew Campbell. Hello Andrew.
Also leveraging his marketing background to build long term relationships. Well today, his company Wild Horn Capital controls over $200 million in it’s portfolio. And they have over 1700 units in Texas. Well, my guest’s background is in market research and brand strategy, and he’s spending time in both advertising agencies and emerging technology consultants where he was most recently a partner and an award winning app developer. That’s pretty interesting right there. In addition to that, he received a BS in advertising from the university of Texas at Austin, and he has his MBA from Baylor University. With that! well, welcome to the show, Mr. Andrew Campbell. Hello Andrew.
Andrew Campbell (04:12):
Hey Jay, how are you?
Hey Jay, how are you?
Jay Conner (04:13):
I am doing fantastic! So you grew up in Austin, Texas, right?
I am doing fantastic! So you grew up in Austin, Texas, right?
Andrew Campbell (04:19):
Yes Sir.
Yes Sir.
Jay Conner (04:20):
Excellent. Well, my wife Carol Joy, she’s from Wichita Falls, Texas. And so we got a little bit in common right there. So you actually started in real estate back in what year?
Excellent. Well, my wife Carol Joy, she’s from Wichita Falls, Texas. And so we got a little bit in common right there. So you actually started in real estate back in what year?
Andrew Campbell (04:33):
Kind of 08, 09 kind of move back to Austin around then right as the world was ending and thought it was a good time to jump in.
Kind of 08, 09 kind of move back to Austin around then right as the world was ending and thought it was a good time to jump in.
Jay Conner (04:42):
Wow! Well, I tell you that reminds me of what I just shared. I mean not, from 2003 to 2009, I was relying on local banks for my single family house business and wow! With no notice I mean, I got like cut off with no notice, but you know what, for me, Andrew, it was a big blessing in disguise cause I learned about private money very quickly. And actually within 12 months of being cut off from my funding, our business actually tripled because I had access to the funding. So I was able to do, you know, so many more deals. So with you coming in back in 2008, 2009, what was your first year or two like?
Wow! Well, I tell you that reminds me of what I just shared. I mean not, from 2003 to 2009, I was relying on local banks for my single family house business and wow! With no notice I mean, I got like cut off with no notice, but you know what, for me, Andrew, it was a big blessing in disguise cause I learned about private money very quickly. And actually within 12 months of being cut off from my funding, our business actually tripled because I had access to the funding. So I was able to do, you know, so many more deals. So with you coming in back in 2008, 2009, what was your first year or two like?
Andrew Campbell (05:25):
Well, I was probably you know one of the guys you might have been borrowing money from then. I think the first the first few years kind of based in passive investments or I was not real active, you know, kind of barrow lending money and admit it and as a passive investor in some ground up deals in Austin, some infill condo developments and kind of you know, got to see the business happen, got to see things be built, got to see returns come in and, and I think caught the bug a little bit. And really it was started looking for creating a little bit more longterm, passive cash-flows which led me into more on the active side, you know, buying duplexes, fourplexes, and ultimately kind of graduating and now we’re buying, you know, call it 200, 300 unit apartment complexes.
Well, I was probably you know one of the guys you might have been borrowing money from then. I think the first the first few years kind of based in passive investments or I was not real active, you know, kind of barrow lending money and admit it and as a passive investor in some ground up deals in Austin, some infill condo developments and kind of you know, got to see the business happen, got to see things be built, got to see returns come in and, and I think caught the bug a little bit. And really it was started looking for creating a little bit more longterm, passive cash-flows which led me into more on the active side, you know, buying duplexes, fourplexes, and ultimately kind of graduating and now we’re buying, you know, call it 200, 300 unit apartment complexes.
Jay Conner (06:07):
I got you. So you and your company is totally focused right now on multifamily units, right?
I got you. So you and your company is totally focused right now on multifamily units, right?
Andrew Campbell (06:17):
Right, yes Sir yeah. Austin and San Antonio, our focus is really kind of class B, B plus assets that have some sort of value add component but you know, good assets and good location. And the business plan is to hold them for five to seven years and you know, make everybody real nice return and just fortunate to be from a market that’s growing as fast as Austin’s growing.
Right, yes Sir yeah. Austin and San Antonio, our focus is really kind of class B, B plus assets that have some sort of value add component but you know, good assets and good location. And the business plan is to hold them for five to seven years and you know, make everybody real nice return and just fortunate to be from a market that’s growing as fast as Austin’s growing.
Jay Conner (06:42):
Well now, just to make sure our audience understands what is a, B, B plus project or property?
Well now, just to make sure our audience understands what is a, B, B plus project or property?
Andrew Campbell (06:48):
So, you know, most properties, is kind of a subjective, you know, but ABC properties, maybe a D people might have D properties, which I certainly recommend steering clear of, you know, A-class is going to be typically brand new, highly amenitized, you know, might be downtown B class a little bit older, you know, I’d probably say stuff built in the eighties you know, or nineties, early two thousands, even it’s somewhat based on the asset type and somewhat based on the location.
So, you know, most properties, is kind of a subjective, you know, but ABC properties, maybe a D people might have D properties, which I certainly recommend steering clear of, you know, A-class is going to be typically brand new, highly amenitized, you know, might be downtown B class a little bit older, you know, I’d probably say stuff built in the eighties you know, or nineties, early two thousands, even it’s somewhat based on the asset type and somewhat based on the location.
Andrew Campbell (07:17):
You know, but I think for us B, B plus, you know, that’s a good grade in school and that’s a good grade in the real estate world, it’s, we’re not trying to get top of the market rents, but we’re also, you know, we’ve got a good professional base of renters, young professionals, teachers nurses, that sort of thing that are, you know, good, good quality folks and looking for, you know, rental property, but you know, kind sort of middle of the market.
You know, but I think for us B, B plus, you know, that’s a good grade in school and that’s a good grade in the real estate world, it’s, we’re not trying to get top of the market rents, but we’re also, you know, we’ve got a good professional base of renters, young professionals, teachers nurses, that sort of thing that are, you know, good, good quality folks and looking for, you know, rental property, but you know, kind sort of middle of the market.
Jay Conner (07:42):
What would you classify or list are the benefits and investing in multifamily versus single family houses?
What would you classify or list are the benefits and investing in multifamily versus single family houses?
Andrew Campbell (07:51):
I think efficiency you know, as I started out kind of with some duplexes and fourplexes, you realize the more sort of shared units you have say under one roof you just it’s more efficient. So if your roof goes out on a single family, you know, you’re out $20,000 on an eight unit building, you know, it’s the same $20,000 to replace that roof or to replace that concrete you know parking lot or whatever the system might be. So I think that’s a big one, I also think as you get into larger,
I think efficiency you know, as I started out kind of with some duplexes and fourplexes, you realize the more sort of shared units you have say under one roof you just it’s more efficient. So if your roof goes out on a single family, you know, you’re out $20,000 on an eight unit building, you know, it’s the same $20,000 to replace that roof or to replace that concrete you know parking lot or whatever the system might be. So I think that’s a big one, I also think as you get into larger,
Jay Conner (08:23):
So, Scott I’ma need for you to come to the forefront and save the day for a moment because I just lost connection. And I think you all can hear me. I’m gonna sign out and sign right back in. So pick it up, Scott, I’ll be right back.
So, Scott I’ma need for you to come to the forefront and save the day for a moment because I just lost connection. And I think you all can hear me. I’m gonna sign out and sign right back in. So pick it up, Scott, I’ll be right back.
Scott Paton (08:39):
I don’t know if we lost him or not, but continue on Andrew cause you’re live for us.
I don’t know if we lost him or not, but continue on Andrew cause you’re live for us.
Andrew Campbell (08:45):
Okay. yeah, so, you know, I think they’re just more efficient and, you know, as I saw you get better, I guess better management, as well as something I saw that you can afford and a property is big enough to support onsite management. You get a better quality of manager. You’ve got, you know, one, two, three, four people whose full time job is to oversee and over that, that asset. And also just logistically of us as the asset manager, having one place to go where you’ve got a collection of you know 250 units, I think it’s a little bit more efficient than you know, kind of if you had 250 single family homes, you’re trying to drive around and keep tabs on it’s just a little bit more difficult.
Okay. yeah, so, you know, I think they’re just more efficient and, you know, as I saw you get better, I guess better management, as well as something I saw that you can afford and a property is big enough to support onsite management. You get a better quality of manager. You’ve got, you know, one, two, three, four people whose full time job is to oversee and over that, that asset. And also just logistically of us as the asset manager, having one place to go where you’ve got a collection of you know 250 units, I think it’s a little bit more efficient than you know, kind of if you had 250 single family homes, you’re trying to drive around and keep tabs on it’s just a little bit more difficult.
Jay Conner (09:26):
Alright, I’m back with you Andrew, Sorry I got bumped up there for a quick second. So you were talking about efficiency and you know you got one roof and you know, it was $20,000 and you know, you got eight units versus, you know versus one unit. So, let’s talk about acquisitions cause you focus a lot on acquisitions in the company, right?
Alright, I’m back with you Andrew, Sorry I got bumped up there for a quick second. So you were talking about efficiency and you know you got one roof and you know, it was $20,000 and you know, you got eight units versus, you know versus one unit. So, let’s talk about acquisitions cause you focus a lot on acquisitions in the company, right?
Andrew Campbell (09:45):
Yep.
Yep.
Jay Conner (09:46):
Yeah, So how about help us out and understand, what’s your criteria when you’re looking for a deal? What is it that determines what a deal is? And I know that’s a Multifaceted answer to that question, but at least give us the 30,000 foot view on what’s your criteria on whether to buy or not to buy and what are you looking for?
Yeah, So how about help us out and understand, what’s your criteria when you’re looking for a deal? What is it that determines what a deal is? And I know that’s a Multifaceted answer to that question, but at least give us the 30,000 foot view on what’s your criteria on whether to buy or not to buy and what are you looking for?
Andrew Campbell (10:10):
Yeah, I think the first thing for us is it’s gotta have some sort of value add component. You know, whether that’s an interior renovation play or it’s a land entitlement, but something that you we’re buying an existing asset and there’s a path, a very feasible path forward to increase the value of that asset. And then we’re going to look at location, you know, so we want to be in good locations. We want to be you know, where we don’t want to bet that the city is gonna make a left turn. This is going to be in a good area. You know we’re pretty strict about our rule of being kind of class B neighborhoods. And I think the final thing is just looking at what those investor returns ultimately become. You know, I think our job is very much to sort of pair you know, good interesting real estate plays with investors.
Yeah, I think the first thing for us is it’s gotta have some sort of value add component. You know, whether that’s an interior renovation play or it’s a land entitlement, but something that you we’re buying an existing asset and there’s a path, a very feasible path forward to increase the value of that asset. And then we’re going to look at location, you know, so we want to be in good locations. We want to be you know, where we don’t want to bet that the city is gonna make a left turn. This is going to be in a good area. You know we’re pretty strict about our rule of being kind of class B neighborhoods. And I think the final thing is just looking at what those investor returns ultimately become. You know, I think our job is very much to sort of pair you know, good interesting real estate plays with investors.
Andrew Campbell (10:54):
And it’s gotta be something that we feel like is a good risk adjusted return that’s also competitive and that you’re gonna feel good about, you know, take into your friends and family your investor base. It says, Hey, this is a play that’s gonna double your money in five years or seven years or whatever that business plan is. So it varies a little bit into your point it’s very multifaceted, but it starts with having a good asset with good bones and then a business plan we believe in, and then, you know, is it, do we think it’ll make money?
And it’s gotta be something that we feel like is a good risk adjusted return that’s also competitive and that you’re gonna feel good about, you know, take into your friends and family your investor base. It says, Hey, this is a play that’s gonna double your money in five years or seven years or whatever that business plan is. So it varies a little bit into your point it’s very multifaceted, but it starts with having a good asset with good bones and then a business plan we believe in, and then, you know, is it, do we think it’ll make money?
Jay Conner (11:24):
So when it comes to funding these deals obviously your company raises private capital for some of the funding. Do you use some institutional funding? Do you have some owners that will actually sell to you on terms or is it all the above?
So when it comes to funding these deals obviously your company raises private capital for some of the funding. Do you use some institutional funding? Do you have some owners that will actually sell to you on terms or is it all the above?
Andrew Campbell (11:45):
It’s all been kind of private individuals is where we get our funding. We don’t have any bunch of institutional partners. It’s been just relationships and folks that we know and folks that have heard about us that we’ve gotten to know, you know, based on our focal geographic focus, kind of our track record and, you just a lot of recommendations. So it’s, you know, putting those together and really focused on just helping people understand. I think there’s other alternatives out there to investing and you don’t have to you know, you can have a small piece of a large deal and if you like real estate, but you want to be passive that’s kind of been who our investor base is.
It’s all been kind of private individuals is where we get our funding. We don’t have any bunch of institutional partners. It’s been just relationships and folks that we know and folks that have heard about us that we’ve gotten to know, you know, based on our focal geographic focus, kind of our track record and, you just a lot of recommendations. So it’s, you know, putting those together and really focused on just helping people understand. I think there’s other alternatives out there to investing and you don’t have to you know, you can have a small piece of a large deal and if you like real estate, but you want to be passive that’s kind of been who our investor base is.
Jay Conner (12:26):
Alright, So I know it varies, you know, what year are you in? It varies on the project, but what’s a ballpark type of return that your investors can receive these days.
Alright, So I know it varies, you know, what year are you in? It varies on the project, but what’s a ballpark type of return that your investors can receive these days.
Andrew Campbell (12:41):
So we’re kind of on a typically thinking about things on a five or seven year horizon. You know, so again, that it taken advantage of where we’re located in Austin and how much the city’s growing. You know, we’re not looking to do something in 18 months or two years. So on a five to seven year horizon, typically looking for something that’s going to get you sort of a two X or a one eight X multiple on a five year investment. You know, it’s gonna have some cash on cash. I think that’s the advantage of buying an existing asset as we know kind of going in what that’s gonna look like, in Austin right now it’s been really competitive, you know that may be 4% in year one. But you’re going to get some initial cashflow and you know, looking for a total IRR of kind of a low teens maybe 12 to 14% somewhere in there.
So we’re kind of on a typically thinking about things on a five or seven year horizon. You know, so again, that it taken advantage of where we’re located in Austin and how much the city’s growing. You know, we’re not looking to do something in 18 months or two years. So on a five to seven year horizon, typically looking for something that’s going to get you sort of a two X or a one eight X multiple on a five year investment. You know, it’s gonna have some cash on cash. I think that’s the advantage of buying an existing asset as we know kind of going in what that’s gonna look like, in Austin right now it’s been really competitive, you know that may be 4% in year one. But you’re going to get some initial cashflow and you know, looking for a total IRR of kind of a low teens maybe 12 to 14% somewhere in there.
Jay Conner (13:28):
Say, if you can double your money or somebody can double their money in five years that is a whale of a return right there.
Say, if you can double your money or somebody can double their money in five years that is a whale of a return right there.
Andrew Campbell (13:37):
Yeah, no it is. And I think that’s you know, when you pair the getting some cashflow with some of the appreciation and being you know, the advantage of leverage I mean we’re pretty conservative in our leverage about 68% across our portfolio, but the power of leverage really allows you to get some outsized returns in real estate.
Yeah, no it is. And I think that’s you know, when you pair the getting some cashflow with some of the appreciation and being you know, the advantage of leverage I mean we’re pretty conservative in our leverage about 68% across our portfolio, but the power of leverage really allows you to get some outsized returns in real estate.
Jay Conner (13:56):
Yeah, for sure. So what are the what are some different ways that you can increase the value you know, of a you know multi-family you know, apartment complex property?
Yeah, for sure. So what are the what are some different ways that you can increase the value you know, of a you know multi-family you know, apartment complex property?
Andrew Campbell (14:11):
Yeah, the most straightforward is just in improving it, you know, going in, we typically will buy an asset, we’ll rebrand it kind of change the story, update the look and the amenities, update the clubhouse, so it feels like a newer more modern property, and then we’re going to go update the interiors as well. If it’s a deal that was built in the eighties you know, update the cabinetry, knock out some walls, open up the floor plan, modernize it. When you do that, you’re able to raise the rents. You know, maybe you raise them $75 or a hundred dollars. But again, over 200 units, you know, that’s increasing the NOI quite a bit. We’ve also got some strategies, you know, parking, adding covered parking adding private pet yards, you know, or just, if you’re on a first floor unit, you want your own sort of private space for your kids to run around or a grill or anything.
Yeah, the most straightforward is just in improving it, you know, going in, we typically will buy an asset, we’ll rebrand it kind of change the story, update the look and the amenities, update the clubhouse, so it feels like a newer more modern property, and then we’re going to go update the interiors as well. If it’s a deal that was built in the eighties you know, update the cabinetry, knock out some walls, open up the floor plan, modernize it. When you do that, you’re able to raise the rents. You know, maybe you raise them $75 or a hundred dollars. But again, over 200 units, you know, that’s increasing the NOI quite a bit. We’ve also got some strategies, you know, parking, adding covered parking adding private pet yards, you know, or just, if you’re on a first floor unit, you want your own sort of private space for your kids to run around or a grill or anything.
Andrew Campbell (15:01):
You can charge 75 to a hundred dollars a month for that. Amenity fees, package lockers. There’s lots of little strategies that you can employ and you know, add to the NOI. And at the end of the day, these deals are I think one big difference with single family is these are valued like businesses. So it’s based on a cap rate in the market. If you can improve the NOI on a property by a hundred thousand dollars, and the cap rate in Austin as a four and a half, or maybe sub, you know, maybe it’s a 4% you’re getting an outsized return on your value of the dollars you’ve spent. So that’s really the name of the game is finding ways to to increase the NOI
You can charge 75 to a hundred dollars a month for that. Amenity fees, package lockers. There’s lots of little strategies that you can employ and you know, add to the NOI. And at the end of the day, these deals are I think one big difference with single family is these are valued like businesses. So it’s based on a cap rate in the market. If you can improve the NOI on a property by a hundred thousand dollars, and the cap rate in Austin as a four and a half, or maybe sub, you know, maybe it’s a 4% you’re getting an outsized return on your value of the dollars you’ve spent. So that’s really the name of the game is finding ways to to increase the NOI
Jay Conner (15:39):
Is your exit strategy typically to be in a project for five to seven years add value to it and then sell it?
Is your exit strategy typically to be in a project for five to seven years add value to it and then sell it?
Andrew Campbell (15:46):
It is , and I think a lot of that is driven by you know, investors. I mean most investors want to recycle their capital. You know, my personal we’ve got some personal properties and the goal is to own them forever, you know, longterm cash flows but when you partner with investors, people want to recycle that capital. And the hope is they’ll recycle that and potentially might do a 10 31 with those investors but yeah, typically you’re going to sell it in five or seven years.
It is , and I think a lot of that is driven by you know, investors. I mean most investors want to recycle their capital. You know, my personal we’ve got some personal properties and the goal is to own them forever, you know, longterm cash flows but when you partner with investors, people want to recycle that capital. And the hope is they’ll recycle that and potentially might do a 10 31 with those investors but yeah, typically you’re going to sell it in five or seven years.
Jay Conner (16:15):
Excellent! So here we are at least in today’s show we’re still in the midst of COVID-19 and the aspects of that. So is now and today still a good time to be investing in melded family with whatever consequences and ramifications of COVID-19 that’s going on.
Excellent! So here we are at least in today’s show we’re still in the midst of COVID-19 and the aspects of that. So is now and today still a good time to be investing in melded family with whatever consequences and ramifications of COVID-19 that’s going on.
Andrew Campbell (16:39):
Yeah. You know, who knows what the world looks like? It changes by the day. We think it is, you know, and I think couple of reasons our investment thesis has always been you know, people need to live somewhere and offering that kind of B class property you know, It’s a good thing to do you know, people are gonna not pay their car payment, There’s a lot of things you’ll do to make sure you got a roof over your head. We’ve seen collections be very, very strong you know, over 98% across our portfolio since the beginning of cope. And so people have if they can pay their rent they are paying their rent. And so far they’ve been able to do that. I think when you compare it with other asset classes, you know, we feel like multifamily and industrial have been the two asset classes that are outperforming.
Yeah. You know, who knows what the world looks like? It changes by the day. We think it is, you know, and I think couple of reasons our investment thesis has always been you know, people need to live somewhere and offering that kind of B class property you know, It’s a good thing to do you know, people are gonna not pay their car payment, There’s a lot of things you’ll do to make sure you got a roof over your head. We’ve seen collections be very, very strong you know, over 98% across our portfolio since the beginning of cope. And so people have if they can pay their rent they are paying their rent. And so far they’ve been able to do that. I think when you compare it with other asset classes, you know, we feel like multifamily and industrial have been the two asset classes that are outperforming.
Andrew Campbell (17:23):
Obviously office is a lot of concern about office space downtown across the country. The office space in the coast is people are kind of leaving the coasts retail, you know, a lot of question marks about how fast, how many of those businesses come back. So, you know, if you look at what your options are and kind of keep cash under your mattress or, you know, you put it in the stock market and kind of, how do you feel about where that’s going to be, or your multifamily it’s always been for us a pretty conservative play and not a business it’s get rich slow. You’re not gonna go we’re not trying to hit, you know, 30% returns on development deals we’re buying existing assets, conservative leverage, and they have good returns. And we think that thesis has held up so far in COVID. And certainly we’ll continue to look for the right opportunities. Obviously you gotta tweak your underwriting and some of your assumptions now with as the market softened some, but it’s still relative to your other options a very strong bet.
Obviously office is a lot of concern about office space downtown across the country. The office space in the coast is people are kind of leaving the coasts retail, you know, a lot of question marks about how fast, how many of those businesses come back. So, you know, if you look at what your options are and kind of keep cash under your mattress or, you know, you put it in the stock market and kind of, how do you feel about where that’s going to be, or your multifamily it’s always been for us a pretty conservative play and not a business it’s get rich slow. You’re not gonna go we’re not trying to hit, you know, 30% returns on development deals we’re buying existing assets, conservative leverage, and they have good returns. And we think that thesis has held up so far in COVID. And certainly we’ll continue to look for the right opportunities. Obviously you gotta tweak your underwriting and some of your assumptions now with as the market softened some, but it’s still relative to your other options a very strong bet.
Jay Conner (18:23):
Yeah. I’ve experienced the same thing here in Eastern North Carolina. We’ve got quite a few people that are purchasing single family homes by using our rent to own program. And we are at 100% collecting all the way through a COVID-19 and, you know, like you just said, a moment ago, people are going to do what they can do. You know, all they can do to keep a roof over their heads. One thing I’ve heard you say Andrew, is that in this line of, in this investment class, if you will, the way you offer people, you know, investing in your business and et cetera, really four ways to get returns. And, you know, you talk about cashflow, appreciation, amortization and depreciation. Can you talk for a minute about what’s the difference between those four and what are those four returns and what they mean?
Yeah. I’ve experienced the same thing here in Eastern North Carolina. We’ve got quite a few people that are purchasing single family homes by using our rent to own program. And we are at 100% collecting all the way through a COVID-19 and, you know, like you just said, a moment ago, people are going to do what they can do. You know, all they can do to keep a roof over their heads. One thing I’ve heard you say Andrew, is that in this line of, in this investment class, if you will, the way you offer people, you know, investing in your business and et cetera, really four ways to get returns. And, you know, you talk about cashflow, appreciation, amortization and depreciation. Can you talk for a minute about what’s the difference between those four and what are those four returns and what they mean?
Andrew Campbell (19:20):
Sure, so you know, cashflow is just, it’s pretty simple. It’s kind of the, what’s leftover at the end of the month after we pay all the expenses. And again, a benefit of buying an existing asset, you know, we know how that’s performed, so there’s cashflow and that when we make those distribution to investors, that’s a pretty simple concept appreciation, you know, that’s us benefiting from being in a market that’s growing really quickly. And there’s new people moving here every day, there’s new jobs. So the values go up, you know, I think a lot of people talk about real estate as an inflation hedge, which is another thing, you know in today’s day and age where there’s lot of concern about inflation with the FED and their conversations and real estate, you know, if inflation runs people for paying, you know, tomorrow’s dollars for our assets.
Sure, so you know, cashflow is just, it’s pretty simple. It’s kind of the, what’s leftover at the end of the month after we pay all the expenses. And again, a benefit of buying an existing asset, you know, we know how that’s performed, so there’s cashflow and that when we make those distribution to investors, that’s a pretty simple concept appreciation, you know, that’s us benefiting from being in a market that’s growing really quickly. And there’s new people moving here every day, there’s new jobs. So the values go up, you know, I think a lot of people talk about real estate as an inflation hedge, which is another thing, you know in today’s day and age where there’s lot of concern about inflation with the FED and their conversations and real estate, you know, if inflation runs people for paying, you know, tomorrow’s dollars for our assets.
Andrew Campbell (20:09):
So it’s a nice hedge there, but that’s just appreciation. It’s the market saying that, you know, your house, you bought it for $200,000 and in five years later, it’s worth $250,000, that’s your appreciation. Depreciation and amortization are kind of based on the leverage and the tax structure. So we’re able to depreciate these assets. We actually had one advantage of large properties, cost segregation. So we can come in you hire an engineering firm and rather than taking a straight line, 27 and a half year depreciation schedule, they break down your property, you know, 200 lines on a spreadsheet and say well, your roof has as a useful value of X years, your appliances, your flooring, your mechanical, et cetera. We can depreciate about 80% of that property in the first five years which lowers your, you get a K1 that shows you, you made little to no money, even though you made got distributions. And then amortization is just us paying down the loan, you know, so every month as we pay our mortgage we own more of the property. And so you kind of combine those four aspects and it makes it’s another big advantage of really any real estate investing. But I think from a passive standpoint you know, what we’re doing multifamily it gets pretty powerful.
So it’s a nice hedge there, but that’s just appreciation. It’s the market saying that, you know, your house, you bought it for $200,000 and in five years later, it’s worth $250,000, that’s your appreciation. Depreciation and amortization are kind of based on the leverage and the tax structure. So we’re able to depreciate these assets. We actually had one advantage of large properties, cost segregation. So we can come in you hire an engineering firm and rather than taking a straight line, 27 and a half year depreciation schedule, they break down your property, you know, 200 lines on a spreadsheet and say well, your roof has as a useful value of X years, your appliances, your flooring, your mechanical, et cetera. We can depreciate about 80% of that property in the first five years which lowers your, you get a K1 that shows you, you made little to no money, even though you made got distributions. And then amortization is just us paying down the loan, you know, so every month as we pay our mortgage we own more of the property. And so you kind of combine those four aspects and it makes it’s another big advantage of really any real estate investing. But I think from a passive standpoint you know, what we’re doing multifamily it gets pretty powerful.
Jay Conner (21:26):
Last question I’ve got for you Andrew, what are some of your favorite ways? I mean, you’re in acquisitions. What are your, some of your favorite ways to locate these deals?
Last question I’ve got for you Andrew, what are some of your favorite ways? I mean, you’re in acquisitions. What are your, some of your favorite ways to locate these deals?
Andrew Campbell (21:36):
You know, we just are inherently focused on relationships, you know, so we’re born and raised in Austin. We’re focused on Austin and San Antonio. And so we pride ourselves on having really good relationships and being very plugged to the community, with the brokers and the other owners. And so we want to hear about every deal that’s coming out and we want to underwrite them and just see where the market’s going and trending. And, you know, we want to get the opportunity to buy stuff off market, which we’ve been successful three or four times, or you know, getting the first phone call if somebody’s gonna get a listing. It’s just been very laser focused on our market and building relationships here at home.
You know, we just are inherently focused on relationships, you know, so we’re born and raised in Austin. We’re focused on Austin and San Antonio. And so we pride ourselves on having really good relationships and being very plugged to the community, with the brokers and the other owners. And so we want to hear about every deal that’s coming out and we want to underwrite them and just see where the market’s going and trending. And, you know, we want to get the opportunity to buy stuff off market, which we’ve been successful three or four times, or you know, getting the first phone call if somebody’s gonna get a listing. It’s just been very laser focused on our market and building relationships here at home.
Jay Conner (22:14):
I got you. Well, you can’t beat the network, you can’t beat the referrals. So folks you’ve been listening to my special guests today or watching, depending on how you’re tuning in to Andrew Campbell. And so Andrew final thoughts and comments.
I got you. Well, you can’t beat the network, you can’t beat the referrals. So folks you’ve been listening to my special guests today or watching, depending on how you’re tuning in to Andrew Campbell. And so Andrew final thoughts and comments.
Andrew Campbell (22:32):
No, It’s been great. You know, I enjoy talking real estate and you know, mentoring people or talking through investing. And so if anybody is interested in reaching out you can see the website here, WildhornCap.com My email’s AndrewWildHornCap.com be more than happy to have a conversation, and I’m kind of a real estate junkie and love to have conversations. So it would be more than happy to reach out to anybody if they were interested in learning more.
No, It’s been great. You know, I enjoy talking real estate and you know, mentoring people or talking through investing. And so if anybody is interested in reaching out you can see the website here, WildhornCap.com My email’s AndrewWildHornCap.com be more than happy to have a conversation, and I’m kind of a real estate junkie and love to have conversations. So it would be more than happy to reach out to anybody if they were interested in learning more.
Jay Conner (22:58):
That’s great! So for those of you that are listening in, let me give you that website specifically it’s www.WildHornCap.com. That’s spelled WildHornCap.com One more time that’s www.WildHornCap.com and you can reach Andrew specifically himself. And that email address again Andrew, correct me if I’m wrong, Andrew@WildHornCap.com. Is that right?
That’s great! So for those of you that are listening in, let me give you that website specifically it’s www.WildHornCap.com. That’s spelled WildHornCap.com One more time that’s www.WildHornCap.com and you can reach Andrew specifically himself. And that email address again Andrew, correct me if I’m wrong, Andrew@WildHornCap.com. Is that right?
Andrew Campbell (23:37):
That’s right.
That’s right.
Jay Conner (23:38):
Alright, Andrew, thank you so much for joining me here with the show today.
Alright, Andrew, thank you so much for joining me here with the show today.
Andrew Campbell (23:42):
Thanks for having me, I enjoyed it!
Thanks for having me, I enjoyed it!
Jay Conner (23:44):
Alright, very good! Well there you have It folks! Another show Real Estate Investing with Jay Conner. I am Jay Conner, the private money authority wishing you all the best and here’s to taking your real estate investing business to the next level. We’ll see you on the next show, Bye for now.
Alright, very good! Well there you have It folks! Another show Real Estate Investing with Jay Conner. I am Jay Conner, the private money authority wishing you all the best and here’s to taking your real estate investing business to the next level. We’ll see you on the next show, Bye for now.
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