The following Q&A was completed as part of our conversational Commercial Real Estate FAQ Interview Series, we hope you find it helpful.
Sitting down with Brian Burke of Praxis Capital we take a deep dive into valuing, investing in, and being successful in the realm of multi-family commercial real estate investment. From getting the right education to avoid costly mistakes, to learning what your niche really is, the passive and aspiring investor can learn the ins and outs of this popular commercial real estate asset class. When starting small and climbing up the ladder, knowing just how to approach this form of investment helps you to avoid the mistakes that can set you back.
Richard Wilson: Hello everyone, this is Richard C. Wilson from CommercialRealEstate.com and today’s we’re doing an expert frequently asked question interview with my friend here Brian Burke from Praxis Capital. Welcome, Brian.
Brian Burke: Thanks for having me on, Richard.
Richard: Great, so we’re going to cover 20 questions here, relatively rapid-fire, but just first off so people know some of the context, and you can correct me where I’m wrong, you now fill in the gaps a little bit, but I know you have purchased over $500 million worth of real estate over your career I believe it is. You currently have around 3,000 doors that you’ve invested in and you’re managing, and you’ve also had 1,000 investors that you’ve served at Praxis Capital. Is that right, is that kind of your perspective here before we get started on the questions?
Brian: Yeah, you pretty much nailed it, Richard.
Richard: Okay, cool. I’ve known Brian for several years, watched him grow, he’s got a great book out if you’re an investor looking to passively invest. Do you want to plug the name of that book real quick before we jump into this?
Brian: Yeah, it’s called The Hands-Off Investor, it’s written specifically for passive investors in real estate who are looking to invest in real estate private offerings. It’s available on Amazon.com or BiggerPockets.com/SyndicationBook.
Richard: Great, awesome, okay. So I’ll jump right into this, I just wanted to make sure people know as we create this we’re not going to a random person off the street to ask these questions to. You know a lot about multi-family and commercial real estate. My first question here – how are multi-family commercial properties valued?
Brian: Well, there’s a couple answers to this question, Richard, and you know there’s a right way to do it and there’s the way a lot of people think it’s done. The common held belief is that real estate is valued using a measurement called the cap rate. Cap rate is simple where you take the income, the net operating income, of the property, you divide it by this so-called cap rate, and you arrive at the value. It’s a very over simplistic approach and often very misunderstood and mis-applied. The way we value commercial properties is we value it using the returns the property is going to generate. So we use the internal return and the cash on cash return. So what you basically have to do is you map out the income of the property over a specified hold period, you factor in how much your debt is going to cost you and how much equity you need to bring to the deal, and then you can calculate the internal rate of return. The value of the property is going to be that price, which gives you the internal rate of return that meets your investment objectives, which is why income real estate is worth a different price to different investors, right?
Richard: Right. For sure, makes sense. What is a common mistake when it comes to multi-family commercial real estate valuation?
Brian: The most common mistake is simply using that cap rate formula, and people will often times say “I want a 10% return.”, so that’s a 10% cap rate. So, if the property generates $100,000 of income, it’s worth $1 million because that’s a 10% cap rate. That’s absolutely the wrong way to approach the valuation of commercial real estate. The cap rate does not necessarily equate to the rate of return you’re going to receive, nor does it necessarily equate to the value of the real estate.
Richard: And how do you calculate NOI on an apartment building asset? Which is net operating income.
Brian: Net operating income is simply taking all of the income that the property generates, and if you think of it like this – how much money did you put in the bank? That’s what we call the effective gross income. From that number, you’ll subtract all of the operating expenses, and operating expenses are things like property taxes, property management, contract services, utility bills, advertising, payroll – those items are all operating expenses, and that’s why they call this net operating income, because it’s really a function of what the operating income is. So, once you subtract all of those things, then you have the net operating income. What’s not included in net operating income, but is often confused with net operating income, is things like debt service. The cost of debt service is not part of net operating income, and neither are capital improvements. If you put on a new roof, that’s not counted, so it’s only operating expenses.
Richard: Okay, good to know. What are the top 3 trends in multi-family real estate investing right now that you’re seeing?
Brian: The most popular by far is the value add multi-family investment strategy, this is where you take an underperforming property, you make physical improvements, you make management improvements, with the objective of increasing the income of the property. That’s probably the most popular multi-family investment strategy now. Second to that is ground-up development. Whenever prices of multi-families start to climb, development becomes a popular strategy – this is where you’re going to buy a piece of land, get it entitled, build a multi-family property, and there’s a couple different strategies there you can either hold it for the long-term or you can flip it and sell it to another investor. Another popular strategy is just the legacy hold, especially for large family offices that have legacy financial goals, you can acquire property and hold it for generations. Those are probably the top 3.
Richard: Sure. How is multi-family investing different from other commercial real estate types?
Brian: The actual process is very much the same. You’re valuing property very similarly where you’re taking the net operating income and factoring in what your rate of return is going to be. The biggest differences come in the various nuances of the characteristics of each of these different asset types. So if you think about retail property, for example, retail has much different lease structures than a multi-family, where you’re cycling out month to month residents, or maybe one year lease residents. Here you might have multi-year leases that might have profit sharing or income sharing components to them. You also have to factor in another commercial property types you might have tenant improvements where if you’re going to lease out a space you might have to put in new flooring or other types of things to get it prepared for the next tenant, you might have extended vacancies because it can take a long time to lease out a retail property. Same with office, industrial is very unique because you might only have one tenant in a large industrial space, so that’s a little bit different.
What multi-family offers that’s different than most other commercial real estate types is just that diversification of tenant base. You might have 200 tenants, or 300 tenants, or 500 tenants instead of 1, 2, 3, 4, or 10. And so you get a lot more turnover, but you can lease them up a lot faster.
Richard: Sure. And you’ve bought almost half a billion dollars, or a little bit over half a billion, of multi-family real estate over your career. So you’ve seen changes in the industry, you’re on top of trends, you’re on podcasts, you’ve written a book, so you have a good view of the forest compared to a lot of people who might just passively invest or are getting started. So what do you think the future of investing in apartment buildings looks like?
Brian: The future is probably a lot of larger transactions, and redevelopment opportunities are probably the biggest ones. What you’re seeing right now which is interesting and unique to this pandemic we’re in the midst of is people buying hotel type properties that are struggling as a result of the reductions in travel and converting them to multi-family use. Because we’re still in a housing crunch, we still have people moving to areas that don’t have enough housing to accommodate them, but yet they have empty hotels or empty office buildings. So redevelopment and repurposing is going to become an increasingly larger piece of the landscape. But larger transactions, you know, it’s interesting how you look at 1960’s built properties – you can find 20 units, 30 units, 50 units all day long, but if you look at something that’s built in 2005, if it’s smaller than 300 units, it’s very unique! They would call it boutique, because the economy scale needed to construct these assets nowadays, it’s demanding these transactions get larger in size. You’re going to see a lot more bigger deals, 20, 30, 40, 50, 100 million dollar deals are going to become increasingly common.
Richard: Sure. What is common for the type of financing that’s put on apartment building assets?
Brian: The biggest lenders in the multi-family space is what we call the “agencies”. The agencies are what you’re already familiar with with single family ownership, and that’s Freddie Mac and Fanny Mae. They comprise a very large percentage of multi-family financing, they have a variety of products, they have a fixed rate product that can go for 5, 7, 10, or 12 years, they also have floating rate products for 5 and 7 and 10 years. So they really are the go-to financing source, it’s who we use in almost all of our transactions, but there are others. Life insurance companies have an interest in larger, especially larger newer assets. CMBS, which stands for commercial mortgage backed securities, CMBS lenders play a role in financing, although right now a little bit to a lesser degree. Then you also have banks, just regular banks, community banks, commercial banks, and a variety of bridge financing players who are debt funds that specialize in providing shorter term financing with the intention of kind of getting you over a hump. In other words, from where the property is to where it’s going, maybe it doesn’t qualify for banker agency financing, the bridge lenders can fill the gap.
Richard: Right, okay. And what have you learned the hard way in regards to optimizing multi-family investments?
Brian: The composition of the pool of resident prospects is very very important. It’s easily underestimated how difficult it can be to manage a property with an undesirable resident profile. If you’re in a high crime area, it’s just very, very difficult – we’ve done this and we’ve struggled at properties where maybe the property itself wasn’t high crime, but the area surrounding it might be, and trying to attract good, qualified, non-criminal residents is very difficult and it’s a constant uphill battle. If you can have a good resident profile, that has good credit, pays their rent on time, multi-family investing is a lot easier.
Richard: Right. I would imagine so. I mean, related to optimization, what is HUD financing? And when is that best considered?
Brian: HUD financing is a product put out by the Department of Housing and Urban Development in cooperation with the FHA, Federal Housing Administration. This loan is really desirable by some because it has low interest rate, and it has really long amortization. So, let’s say you’re a legacy holder, you know you’re going to own this asset for decades if not generations, a HUD loan might make sense because you can amortize it over 40 years, which will improve your cash flow in the early period of your investment, and you can also have a lower interest rate than even what the agencies might provide.
There’s downsides, though, to HUD financing. One of the major downsides is that it takes a really long time to secure the financing, and so if you’re in a situation where it’s a competitive environment, trying to acquire a property, and you want to be able to close in 45 to 60 days, with the HUD financing – forget it. It’s just not going to happen. It takes a long time to close those. But if it’s a refinance and you’ve got all the time in the world, that’s one option for you. The other downside is they have limitations on how often you can make a distribution, it’s one to two times a year rather than with any other financing you can distribute whenever you want. You can distribute monthly, quarterly, as-needed, but with HUD loans, there’s limitations on those distributions.
Richard: Right, right. I think you’re lucky if you get a HUD loan done in 4 to 6 months. It’s many times 5 to 9 months, usually, is that right ballpark wise?
Brian: Yeah, I mean it’s a very long time. Best case scenario, maybe you get one done in 90 days, but you’ve really got to be on top of it to make that happen. It is a very slow process. Now I’ve heard that they want to try to make it better, and do that faster, but still for a refinance scenario maybe it’s one thing. Or if you have a really patient seller, maybe it works, but today’s landscape in the multi-family acquisitions arena, it’s very competitive, and one of the elements that people look at is how long is it going to take you to close, and if you tell them “Eh, 3 to 6 months.”, there’s no way they’re picking you as the buyer for that property.
Richard: Are you seeing in the marketplace offers – cash offers – for multi-family? Just to get it at a better price, fast close, and then people refinance? Because I haven’t seen a lot of that, but you live in this world 24/7, is it becoming so competitive that you can get a better price, you say “Hey, we’ll pay full cash, we’ll close in 15 days.”, or something and people are snagging properties that way? Or is that not very common at all?
Brian: It’s not very common. It may be a little bit more common, perhaps, in over the 50 million dollar mark when you might have one of the 800 pound gorillas that have billions and billions of cash sitting there literally in a bank account waiting to be deployed. I could see them doing that just to edge out their competition. But in the typical private capital space, we’re just not seeing that, and for good reason. Most operators are either raising capital on a deal by deal basis, which of course wouldn’t make a lot of sense to raise 50 million and then give 70% of it back when you get debt later, and then there’s other groups that are using funds, that’s what we do. We use a fund to acquire property, but to make a capital call for a large amount of cash, close, and then return cash or have to redeploy it quickly, it’s tactically problematic. So we really haven’t seen a lot of that.
Richard: Sure, sure. I’ve also experienced that sometimes the bank underwriting, whether you agree with the bank’s checklist or not, is almost another layer of due diligence because if 4 different banks all give you a hassle for some reason because of a flood plain or something that was overlooked because of proximity to something – if it’s going to be hard to finance, you’re going to want to know then before you buy it as well, right? Otherwise you might have a headache the next month when you try to do that plan, unless you really know your stuff and have at least talked to the banks to prep that refinancing right after you close, right?
Brian: Without question. I mean, it would hurt a lot to acquire a 50 million dollar property all cash with the intention of getting a 35 million dollar loan after the fact and not get it.
Richard: Right, right, Yeah. What is a typical timeline for multi-family investment due diligence?
Brian: The timeline varies by property to a certain degree. Typically when you’re making an offer you’re going to make that offer with a 30 day due diligence period. That 30 day due diligence period is going to give you time to conduct a variety of components of due diligence. 21 days is probably about the absolute minimum. We just entered in on a contract on a property here last week and we had a 25 day due diligence which was a good compromise between 21 and 30 and we knew we had to be competitive but we also wanted to make sure we had enough time.
Richard: Right, right, okay. And what does a multi-family apartment building due diligence process look like on a high level? I’m sure you could do a full day workshop on this question, but at a high level what does that look like?
Brian: Yeah, you’re right about that, Richard, you really could – this could be a full day. But on a high level we’re looking at – the main thing you’re trying to accomplish, you’re trying to make sure that the property is what you think it is, and that the income is what you think it is. So, let’s break that down into two easy components. On the income side, what you want to do is we’re going to do a full lease audit where we’re going to compare the signed leases and any lease amendments to the rent roll to make sure that there’s written documentation to show that the rent roll, where it shows $1000 a month for that unit really is contractually $1000 a month. We’re going to verify the security deposits that are on deposit to make sure they match their rent roll. We’re going to look at the delinquency rate to see if they’re hiding non-paying tenants on the balance sheet and not reporting that, and just look to see how many people are in eviction versus what’s being shown. So that’s verifying the income.
On the other side we’re verifying stuff about the property. So you’re going to do what we call a 100% unit interior walk, in other words you’re going to go inside each apartment unit to make sure what the condition is, that it’s habitable, rentable, what kind of renovations are needed and so on. You’re going to look at the major building systems and components, you’re going to get up on the roof, you’re going to have contractors look at the heating and air conditioning systems, and all of those things, and then you’re going to audit the maintenance tickets, you’re going to interview the maintenance man to ask about what their biggest problems are, and then you’re going to examine the title and survey to make sure that there’s no surprises there. Once you’ve done all that, you should have a pretty good handle both physically and on the income.
Richard: Right, great. And in case anyone missed it, at the very beginning of this interview series we talked about a book that Brian wrote, and if you haven’t read that yet related to due diligence, just being a passive investor I think it’s a critical resource just to make sure that you don’t run into something or invest with someone and not have a basic lay of the land since we don’t have time to go super deep on due diligence here in the middle of this interview series here. How does a passive investor get started in multi-family investing? What would be your recommendation for putting their toe in the water?
Brian: My first recommendation is to get educated. So, I guess if that’s a shameless plug for the book, read the book because it will tell you how to do your due diligence on sponsors and on their offerings. But really it’s to get educated and the more you know about real estate, then the better position you are to evaluate what the sponsor is showing you to ensure that their assumptions are reasonable, that the business plan makes sense, and that they’re not fluffing the numbers. Those are the big things that really come back to bite you oftentimes in a passive real estate investment. I like to always say that you don’t need to know how to build a house because you’re going to build a house, but you at least need to know how to be a building inspector, right? And this is that same kind of a thing, be the building instructor – you have to know some kind of construction techniques to be a building inspector, same thing here. You have to know some investing techniques and principles even if you’re just going to be a passive investor.
Richard: Sure. I’m sure some people hear of you having a thousand investors and 3000 units and they say “Well, I want to be Brian Burke when I grow up.” in some way, and they want to achieve that level of success and they’re on property number one and they bought a four-plex or they’re looking to educate themselves to become an active commercial real estate investor, or a sponsor, or open their first fund, etc. What would you suggest to someone who does have that aspiration, who’s looking to do it the right way, who’s really looking to be serious about building a substantial platform over time?
Brian: You kind of almost nailed it right there in your question, Richard. It’s really important to start at the level that you are at, and people always want to jump too high. They’ll say “Yeah, I want to invest in 300 unit apartment buildings.” Well, what have you done? “Oh, I’ve never done anything.” Well, it’s kind of like saying you’re standing on the ground, and you want to get on the roof. There’s two ways to get on the roof: one way is you jump, and you jump up onto the roof, and the other way is you climb a ladder. Well, if you jump, you’re probably just going to break your leg. And if you get people that will actually invest with you on that jump, they’re probably going to break their legs, not your own. So, it’s much safer to climb the ladder, and if that ladder means that the first thing you do is buy a single family home and then you buy a duplex, and then you buy a four-plex, and then a 10 unit, then a 20 unit, then a 50 unit, and then a hundred unit, that is really the path to success because everybody is going to make mistakes. I don’t care how much education you get before you start, everybody makes mistakes, and mistakes are always painful. But if you can limit the damage that those mistakes make by having smaller properties, you can survive it. If you make a serious mistake on a 20 million dollar deal which is your first deal, that’s probably the last thing you’re ever going to do in this business. But if you make that mistake on a $50,000 house, you can recover. So start small, build your way up that’s the way I did it, so if they want to do it the same way I did it, that’s the way I would do it.
Richard: Right, right. That’s the same way we’re operating as well. And I see so many people fail, like through PitchDex.com or Investor Relations Agency we had someone come in, they had never raised capital before and they wanted to raise a billion dollars for some green energy project. And he wasn’t doing it on some island somewhere, but that’s like the worst yet, when you hear someone doing something in another country, at a billion dollars, and they’ve never even done a million dollar raise before. And I said, we’re just not going to serve you, like narrow your focus and be a capital raiser for something practical. Because you’re going to be unhappy with us because you’re going to fail, and it’s not about knocking who you are, it’s just you’re not going to go into Major League Baseball, even Michael Jordan couldn’t as a very talented athlete go straight to major league team playing. He was in the minors working his way up, and you know, I think if Michael Jordan has to do that and pay his dues, then you can bet you have to in the competitive space of real estate. For whatever reason, it’s a common mistake for people to think “Oh, okay, let’s start with a hundred-plex, or 200-plex, without learning the basics. I think that’s really valuable for people to hear, I appreciate you emphasizing that.
Brian: People often forget, Richard, that investing isn’t about the deal, it’s about you. So therefore you could have the best deal in the world, but if you don’t have the ability to pull it off, no one is going to invest in it. And they have to be able to believe that you can do that. So to your point, if that guy’s never done a raise, it could be the best deal in the world, but you’re right, he’s going to fail.
Richard: Right, right, yeah. Investors really want to see that genuine authentic track record, that may not be 100% beautiful, but shows the progression over time. Versus like “Oh, who is this group who’s doing a 500 unit deal? Did they exist yesterday?” You know? Do they have a team? So I think that’s really important to make sure investors know that you respect and are going to be a good steward of their capital. What is the most common mistake made by those investing in multi-family commercial real estate?
Brian: I think it’s when people underestimate the challenges involved with investing in challenging property. So often times you’ll see “Oh, the property is 50% vacant, and we’re going to go in there and we’re going to renovate it, and we’re going to make this class A property out of it.” and you dig in and you find out well somebody’s gone in and stolen all the copper out of the vacant buildings, and the windows are boarded up, and nothing has happened in that neighborhood in 20 years, and there’s no growth. People can really underestimate how difficult it is to turn around a challenging property in a challenging location and they tout it as being the greatest deal in the world, “We got a steal on it! It’s a 15% cap rate, you’ve got to invest in this!” and it can just be a total disaster.
Richard: Right, great. I appreciate you bringing that up. Why is multi-family the most popular commercial real estate asset class, by far it seems, to invest in for private investors? I mean, to qualify that, I think a lot of people get a single family home, they move, they keep the old one as a rental and kind of by accident they become a small landlord. But in the commercial real estate realm, multi-family dominates it seems for the thirst of investor capital trying to flow in there.
Brian: It does and it’s natural. The reasons why are really natural when you think about it. Multi-family real estate is very familiar to people, most people have lived in an apartment building, and if you’ve never lived in an apartment building certainly you’ve lived in some kind of residential property. So residential real estate is familiar to people. The concepts of renting to someone to live in is very familiar to people. And for that reason, it’s very easy to believe in the concept. It’s also that there’s a lot of it available, and when you look at how many apartment units there are out there in the country versus how many small commercial properties are out there, there’s a lot of multi-family inventory to choose from that demands a lot of private capital. You don’t see a lot of private capital syndications for the Empire State Building, or any skyscraper high rise, it’s always done through rates and large institutional capital investors. The private capital space really focuses kind of on that call it $5 million to $100 million space, and that’s dominated by a lot of multi-family real estate and a lot of multi-family operators are out there raising private capital for those ventures. So, it’s familiar and it’s available.
Richard: How would you compare single family residential to multi-family investing?
Brian: Well, from an active point of view, if you’re buying single family and then you’re thinking of going out and buying a multi-family, it’s a natural progression to go to small multi-family and then, as I alluded to previously, you can do 5 unit, 10 unit, 50 unit, 75 unit, you can work your way up that ladder. The concepts are very similar, you know, the biggest difference between the single family and once you get into commercial multi-family, which is over 5 units, it’s just the financing. Instead of getting agency financing residential 1 to 4, it’s done through Freddie Mac and Fanny Mae through residential lending where they’re looking at your personal income, your personal assets, your personal debt to income ratio. When you get over 5 units, that commercial financing is looking at properties income, they’re also looking at your total asset base and your experience. Now this is where it gets different, too, is they’re looking at your experience, not just your assets. But they’re really looking at the income of the real estate more so than the income of the person.
Richard: Right, right, okay, great. That’s helpful to know. Where do you think the most innovation right now is happening when it comes to apartment building investments?
Brian: Technology, without a question. The most innovation right now is in technology, and that could be property management software, property management software platforms are getting increasingly sophisticated, enterprise grade solutions are out there that provide the ability for sponsors and operators like us to have full integration out into the portfolio, and easy transparency to investors. I think that’s a big one. Portfolio analytics, the ability to look at your portfolio, either at individual property level or as a whole, and look at it’s performance, KPIs, and measurements to see how things are performing. There’s a lot of leaps being made there technologically. Market data is another big one, there’s a lot more data out there to be able to study now when you’re analyzing investments, of course it comes at a cost. Operational stuff like maintenance tracking, online leasing, online payments; now we can actually have a prospective resident could see our property online, do a virtual tour online, sign a lease online, and do everything required and never even have to step foot on the property until they’re there with their moving truck to pick up the keys. That was unheard of a decade ago.
Richard: Right. For sure it was. What are the 3 most uncommon ways that you have found you can drive net operating income in apartment buildings?
Brian: One of those we’re using right now is we’re using artificial intelligence to analyze our lease rates, move out notices, vacancy, projected move-ins, to price units almost the same way that airlines price seats. So, as demand goes up, we can increase pricing. As demand wanes, we can decrease pricing. This happens in real-time, every single day. That’s an incredible way to drive revenue at the property. Other ways are charging rent premiums for view units, upstairs or downstairs depending on which are more popular in that area having premiums there. One thing that we did recently is we had a laundry contract with a third party service that was expiring, so we didn’t renew it. Instead we bought our own laundry equipment and now they’re all operated off of card readers, so you don’t have to worry about somebody stealing the coins. That was a dramatic increase in laundry revenue, which far exceeded the cost that it cost us to do that.
There’s other revenue generating things you can do like installing covered parking, especially in warmer climates or maybe even where it snows, I don’t know, having that covered parking your can charge $25 to $30 a month for a covered parking space. One that’s interesting that we’ve done that costs nothing is giving someone a reserved parking spot. So it might be right near their front door, it doesn’t even have to be covered, but you can stick a sign there that says reserved, and charge $10 or $15 a month for the tenant to have that convenience. Those are probably the biggest ones. Solar is another one, putting in solar on a covered parking and then using that to power the parking lot lights is another interesting way to increase revenue. A lot of different little ways.
Richard: Yeah, great. What is the most powerful booster of NOI you have found that is related to reducing cost versus adding lines of revenue?
Brian: The most powerful ways to increase NOI is always going to be on the income side, because you can only limit expenses so much. But that doesn’t mean that there isn’t some room to increase NOI by decreasing expenses. I mentioned a minute ago about adding in solar panels, that’s a way to offset electrical costs that’s one way. Changing out exterior lights to LED that are more energy efficient is another way to save on electricity costs. Installing low-flow water fixtures like showerheads, faucets, toilets, that sort of thing, you can save on water bills. But one big one and it’s often overlooked, it probably has more impact than any other expense reduction you can do, is – and this doesn’t apply to every state – states that reassess the value of your property on an annual basis to form the calculation for your property taxes, appealing and challenging that assessed value every single year can produce enormous dividends. Because property taxes is one of your largest operating expenses, and if you can minimize that expense, or mitigate increases, it’ll go a long way towards improving your NOI.
Richard: Great, yeah, that’s really helpful. I hadn’t heard anyone bring that up in the interviews we’ve done in this space. So I appreciate you mentioning that. And my final question here is why do you continue to work in multi-family? I mean, self-storage investors also like it, industrial is a hot sexy thing with the cloud exploding during the pandemic, multi-family, there’s a lot of people in the multi-family space. I know you just were able to raise a lot of money in just a month of your last offering openings. You’re doing very well in the space, so obviously there’s reasons. But why do you stick at it after all these years and stick to multi-family?
Brian: Well, I’ve been investing in real estate for 30 years. And in this career, I’ve had the good or bad fortune, however you want to look at it, to have done almost everything. I’ve subdivided and for residential subdivisions, I’ve built a resort hotel, I’ve built a self-storage facility, I’ve built single family homes, and I’ve built duplexes, and flipped houses, and just about everything you can do in real estate I’ve done it at one point or another. And our core business is multi-family, and there’s a very good reason for that.
Number one, it’s our core competency. It’s what we are best at, and I always say that you do really well when you stay in your own lane. And what I’ve found is whenever I decide to get out of my lane and get into another lane to try something like self-storage or any of those other things, I always get my hands slapped. It never turns out the way I thought it would, because you always make mistakes. It’s easier for us to just do what we’re best at. We have a really deep experience bench in multi-family here so we stick to it. Now it doesn’t mean there’s anything wrong with self-storage and industrial, and I think those asset classes are great, it’s just not for us at this point in time. I think besides multi-family, if you look at the shining stars in commercial real estate right now, especially with the pandemic, the shining stars are industrial, and multi-family. Then everybody else is in another class by themselves; office, hospitality, retail, all of those are having individual struggles for a variety of somewhat related reasons. And multi-family is going to be one of the best performers through this malaise.
Richard: Great, great, I appreciate you explaining that. And for anyone who is watching this here, depending on when you’ve watched this, you might recognize Brian as a speaker for one of our Commercial Real Estate Power Players Summits, which we’re going to be hosting two of here in 2020, and then quarterly going forward after that. And if anyone would like to connect with him and/or see some of his other talks at our events depending on when you’re listening to this, then please just go to CommercialRealEstate.com/summit and you can see our upcoming commercial real estate power players summit, who’s speaking there. Also if you’d like to connect with Brian you can let us know and we can help you get connected. Brian I appreciate you sharing all these questions and answers. I think that the niche of multi-family is often heard about, but the level of depth that you’ve gone to with the book, and on due diligence, and on really serving the passive investor, is really much further than almost anything else we would have seen through our investor club, and through the CommercialRealEstate.com platform. So, I commend you on that, seems like things are going great for you and congratulations on all the momentum that you have right now during what economically seems to be a challenging time. It seems like your firm is really taking off during this time and doing excellent so I am happy for you and it’s great to connect today.
Brian: Thank you, I appreciate you having me on, Richard.
Richard: Yes, take care, Brian.