Old Capital Real Estate Investing Podcast With Michael Becker & Paul Peebles

If available, retaining some or all of the existing staff can give you immediate inside knowledge on some of the property secrets that you did not uncover during due diligence.

Scott Henderson started in the apartment industry in 1982. He has learned some valuable lessons in apartment investing and brokerage over the last 35 years and shares them with you. He gives listeners a unique perspective on some historical events in the apartment industry and his assessment on what is going on today with apartment investing. Items that you should be aware of: -What caused the Savings & Loan Crisis and the impact it had on the apartment industry. -How over building can affect a market. -What caused the last major recession in apartment investing? -Is the current euphoria in apartment investing a bubble or reality. Perhaps a little bit of both. To contact Scott Henderson: scott.henderson@svn.com To receive our FREE 15 page WHITE PAPER REPORT on the 2017 FUNDAMENTALS OF MULTIFAMILY FINANCING 101 and to learn more about upcoming events at Old Capital Speaker Series please visit us at OldCapitalPodcast.com  Are you interested in learning more about how Multifamily Syndications work? Please

Michael gives some general rules of thumbs on how to “stress” your underwriting for a future valuation on the exit.

In this podcast we speak with 4 lead-partners that came together to buy a 152 unit building in Waco, Texas. We discuss how they met, how they found the property and what they liked about the asset and of course…how they will make it profitable for their equity investors.   To contact Kevin or Daniella Dhillon: dhillonpartners.com  To contact Bryant Ho: bryantkho@gmail.com  To contact Angel Flores: aoflores92@gmail.com  To receive our FREE 15 page WHITE PAPER REPORT on the 2017 FUNDAMENTALS OF MULTIFAMILY FINANCING 101 and to learn more about upcoming events at Old Capital Speaker Series please visit us at OldCapitalPodcast.com  Are you interested in learning more about how Multifamily Syndications work? Please visit www.spiadvisory.com to learn about Michael's Real Estate Syndication business with SPI Advisory LLC.


Michael discusses what you should do to protect yourself right BEFORE you sign your loan documents and close on an apartment building.

The quarterly loan officer roundtable is an internal discuss with some of the loan officers at Old Capital on what is working or not working with lending. Jonathan Ferrell is introduced to the listeners. Jonathan joined Old Capital as a Senior Director. Jonathan has over 14 years in banking and is an expert on financing commercial real estate. James Eng gives us macro-economic feedback on how some of the different apartment markets are doing in Texas and the nation. Ricardo Hinojosa shares the importance of property management and getting them engaged early in the transaction. Looking at rental comps in the submarket and then building a an initial rehab budget early on with a qualified property management company, can save a ton of time on a deal that may not work. Ricardo goes onto explain some REFINANCE CASH OUT GUIDELINES for Freddie Mac Small Balance loans. Dave Walls talks about the challenges with affordable housing. Jonathan Ferrell stresses the importance of having the right budget numbers upfront whe

Michael gives reasons on why he would NOT build large apartments at this time.

Multifamily physical due diligence is extremely important. You gotta know what you are buying!  You need an apartment inspector to determine the condition of the asset you are buying.  Bryan Amos is a multifamily inspector & engineer. He helps buyers uncover possible rehab concerns and potential future costs when they are considering purchasing an apartment building. He is looking out for you and your investors on any potential future capital costs. Bryan creates a reliable rehab/ construction budget for you and your lender to review. Whether the transaction is a stabilized property or a value-added property, most lenders should be able to include the rehab costs into your loan.  Again, do not pay for rehab out of monthly cash flow.  BUT BEFORE, you engage an inspector at your INITIAL visit at the property with the listing agent, you should have a back-of-the-napkin opinion on what some of the rehab items will cost to replace or repair. Bryan gives us some initial cost breakdowns on several big ticket ite

Michael comments on his personal beliefs on apartment ownership. He points to a few factors that keep his outlook positive. According to a new study commissioned by the National Multifamily Housing Council and the National Apartment Association, delayed marriages, an ageing population and international immigration are increasing a pressing need for new apartments in the U.S., to the tune of 4.6 million by 2030. Currently, nearly 39 million people live in apartments, and the apartment industry is quickly exceeding capacity; In the past five years, an average of one million new renter households were formed every year, which is a record amount; and, It will take building an average of at least 325,000 new apartment homes every year to meet demand; yet, on average, just 244,000 apartments were delivered from 2012 through 2016. Delayed house purchases- Life events such as marriage and children are the biggest drivers of home ownership. In 1960, 44 percent of all households in the U.S. were married couples with ch

Michael Becker knows something about finding apartment buying opportunities. He and his investors own thousands of apartment units. Michael explains what it takes to get the momentum going with listing agents and other influencers. Michael shares his win-win strategy on how to build deeper relationships with the "right people" in the apartment brokerage community. To receive our FREE 15 page WHITE PAPER REPORT on the 2017 FUNDAMENTALS OF MULTIFAMILY FINANCING 101 and to learn more about upcoming events at Old Capital Speaker Series please visit us at OldCapitalPodcast.com Are you interested in learning more about how Multifamily Syndications work? Please visit www.spiadvisory.com to learn about Michael's Real Estate Syndication business with SPI Advisory LLC.

Michael discusses what lenders are looking for when applying for financing on an apartment transaction.  With apartment lending- the quality, condition and location of the asset are the most important factors in underwriting. A PRE-APPROVAL is not going to be available because 2/3rds of an apartment lending decision is based on subject property. The lender needs to have a complete picture on a number of critical underwriting variables. Examples: Where is property located and age? What are historical cash flows for the last 2 years and year to date? How much deferred maintenance does the property currently have and what is rehab budget necessary to cure? Who is going to manage the property? What does your monthly proforma show; what is your future expected operating expenses and total income?  1/3 of an apartment lending decision is based on you. What is your liquidity? What is your net worth? What is your past apartment experience and level of ownership or management? Do you receive consistent personal income

Lessons learned from 30+ years in Property Management: City Gate Property Group Dawn Waye is President of Dallas/ Fort Worth based City Gate Property Group third party property apartment management. G. Patrick Smits is the CEO. Both have deep knowledge of managing in the “B & C – workforce housing” space. They currently manage over 10,000 units. Dawn & Pat share some ideas on what the ‘biggest bang for the buck’ will get you as an apartment investor. Dawn shares the ‘4 P theory’ for successful property management. 1) People- Are the onsite people they engaged with your success? 2) Price- Are you getting the best price for materials and labor? 3) Product- Do you have a good idea on what other properties in your submarket are charging in rent for their amenities? 4) Promotion- How are you driving new tenants to the property? Social media? Active marketing? Michael asks Dawn and Pat about surviving a future down turn in apartment investing. To get in contact with Dawn Waye: dwaye@citygatepg.com  To rece

Interest only can certainly help the cash-on-cash returns on your investment. If you are purchasing a broken property- deferred maintenance, bad management, bad occupancy; you need some type of payment relief during times of weak cash flow. Having an interest only period during the renovation is certainly typical for a BRIDGE type of loan. Banks typically don’t like to do lots of interest only…because the bank regulators don't like interest only. Most community banks on bridge loans will only do 6-18 months of interest only during the rehab…then it will modify into a principal and interest payment. 

Al Silva has successfully closed nearly 15,000 units and over $600 million in investment sales transactions and in doing so has averaged an industry leading 99.6% closed sales price to asking price ratio. Al is currently based out of the Marcus & Millichap Fort Worth office, where he has been the top agent in seven out of nine years since the office opened in 2007.  You think it’s tough to be awarded a deal by the seller… Al comments on how difficult it is even for a listing agent to win the opportunity to list a property for the seller. Al believes that overall transactional volume will be down 10% in 2017 compared to 2016. He sees that as a blip on the road, when you compare how hot the apartment market has been for the last few years. Al has seen a large increase of international buyers coming into the Dallas/ Fort Worth market. Al comments on what submarkets he likes in the DFW area. If you are a buyer, Al has advice on how you should bid on a property transaction on the tangibles and some of the inta

Michael discusses who represents the buyer and seller and who pays the listing agent. In today’s HOT apartment market…most apartment listing agents WILL NOT share the sales commission with a buyer’s representative. Unlike the single family home market, where it is typical for the listing agent to share or split commission fees, most apartment listing brokers will not pay your agent representing you. If you have buyer’s agent in a buyer’s transaction, you will likely be paying that agent out of your capital raise.

This is the second podcast focusing on the new apartment buyer. “The first transaction is the hardest…” continues to be our theme. Today, we talk to a couple that was motivated to think about creating a passive income stream by a serious car accident. That life changing event put a new perspective on how important passive income can be. Doug is a dentist in north Texas and was severely injured in an auto accident. He was in a coma for over a week and in physical therapy for months. Imagine not being able to work and earn income during the period time that you are recovering. Think of the impact that this would have on your family. This may never happen to you; but it could. Perhaps passive real estate income should be part of your investment plans.  Doug & Jennifer Jopling own a small apartment building in Fort Worth, Texas. We focus on the journey from owning a few single family rental homes to buying an apartment building. Doug & Jennifer share a challenge that they uncovered during the due diligenc

Yes and No…. After the Fed’s raised rates last week; the 10 year treasury fell. The 10 year treasury is the benchmark interest rate for many commercial real estate transactions. The long term interest rates are getting flatter as compared to the short term interest rates. At this time, it should have a limited impact on investor that purchase or own commercial real estate for a long term hold. We have seen interest rates RISE with the community banks. Many investors use community or regional banks for short term bridge lending. That small rise should not have a significant impact; but be aware in the future if your loan is tied to an adjustable rate index.

Buying your first apartment building is the hardest.   The second and third become substantially less stressful and much easier …because you have created a “team template” for successfully closing an apartment transaction.  You have put your team together.   You have your banker, attorney, broker, insurance professional, third party property management company & physical inspector or engineer.  Just like the general manager of a baseball team…you cannot play without players…  You cannot close without a support group. Gary & Heidi Young bought their first apartment building a few months ago.  They wanted to start off with a small property so that they could own and manage themselves.   Gary & Heidi knew that owning and investing in apartment building you would need specialized education. Before they invested in real estate, they invested in education.   Gary & Heidi knew that owning and investing in apartment buildings you needed specialized education.  They joined a local education and mentori

Mark Patten & Mandy Thiebaud are CPA’s with McKinnon Patten & Associates in Dallas. Their firm provides comprehensive tax, accounting and advisory services to a full range of real estate professionals and entities. Mark & Mandy are experts in advising clients on why owning real estate is more than just a return on your investment. With multiple IRS tax implications, the CPA’s layout some structural ideas on how to put your transaction together.  Mandy explains the different ways earned income and passive income are treated by the IRS. She also handles the difference between on-going replacements & repairs versus a capital expense. Mark talks about cost segregation studies and how rapid depreciation could help your real estate investments. What is a 1031 exchange and how can investors benefit? Mark talks about the tax benefits that a like-kind exchange can bring investors.  To contact Mark or Mandy: mpatten@mckcpas.com  To receive our FREE 15 page WHITE PAPER REPORT on the 2017 FUNDAMENTALS O

Not all Lenders are the same; some Banks are not real estate lenders.  Not all Lenders like Apartment loans Not all Lenders like older properties that need to be rehabbed and repositioned  Not all Lenders like non-recourse loans; most will not even offer non-recourse loans Not all Lenders will like the part of town that you want to invest in. Not all Lenders will give you maximum leverage to acquire and rehab with your loan Not all Lenders will amortize apartment loans greater than 15 years Your large bank loan officer is not the decision maker; help him/her build a case for their credit committee to approve the loan. Loan officers are sales people and problem solvers, but they don’t have signing (approval) authority.