680: Great Multifamily Operator In Growing Ohio Markets

We're constantly cold calling, text messaging, emailing, sending them direct mailers, sending them video mailers, we're networking with them, all the brokers in our area, calling those lists on our behalf, we send them gifts. So I'm constantly in front of them because it's all about right time, right place, right? So if they have an inclination of selling, I want them to think of us first, call us first, and then we move fast. So we try to underwrite it and get it under contract in less than six hours. Welcome to Street Smart Success, the show for cash flow investors. This is Roger Becker, your host, whether you're investing in real estate, private equity, private credit, or other alternative investments, this is the show for you. So today this is going to be another great conversation with a gentleman who is very hyper focused on one asset class in one geographic area, near and dear to my heart, the I-75 corridor in the Buckeye State, Ohio, where I hail from, and he's doing stuff in small towns, which is intriguing to me, growing small towns. That is, he is a co-founder of real estate, alpha, and VSF rentals. He's Justin Spiller's, Justin, welcome to Street Smart Success. Thanks so much, Roger. Excited to be here? You know, we, you and I were talking, talking before I hit record, I'm like, you know, let's just, let's just jump on and do the show. So Justin, you are an attorney in addition to being in the real estate multifamily space, which probably serves you well. How did you wind up getting involved in multifamily real estate? Yeah, so I kind of like everybody else had that entrepreneurial ban, really wanted to start my own business from a young age, had a father in law super successful, really told me to explore law school if you're serious about starting a business. That's the one thing you can't just kind of learn on the streets, if you will, it'll give you that foundational component that's very critical. So listen to him, went to law school, really liked business in real estate law, went and practiced law for seven years, mostly to pay down my student loans. I had to get those paid off before I could get into my own businesses, had small businesses along the way all even through college, I was starting all different types of small businesses here and there. And then in 2016 got really into real estate investing serious enough that I bought my first property with my business partner now Brandon, it was a seven unit, ironically enough. We were looking at a ton of single family and do plexus and then we had a seven unit and pick well high. I know we talked about pick well penciled out well. So that was my first purchase in 2016 and we've done pretty much everything in the real estate space the last 10 years, multi-family industrial mix used storage units, wedding venues, retail, etc. But multi-family value at investing was really where we found our footing, had most of our success there. So kind of got rid of all the other real estate pursues, put our blinders home and just solely focused on multi-family value at real estate. Okay. A concise answer to your credit. Okay. What was your father and what did he do? You said your father and law was super successful with business? Yes. So he's a larger refrigerate trucking company in Ohio. It's called continental express. They're a pretty big player in the refrigerated carrier space. He started it with one truck and his grandpa's garage and so on and grow it to a huge successful company. I've lucky enough to marry my high school girlfriend. So we've been together pretty much my entire adult life. So I've had him chirping in my ear for the better part of two decades plus. So I got to see his growth and him be successful as an entrepreneur and that was very motivating. So it was fun to see. And then I got good advice, like go to law school or the legal business aspects of starting a business, growing a business, contracts, et cetera, where to see your blinders, what the legal ramifications could be, knowing what maximum exposure is. And then taking all that and being able to make a good business judgment decision. So when I was wearing the lawyer hat, I got to do the hey, this is what you should do. And now that I'm an operator, it's well, yes, that's what you should do. But you got to weigh out these factors and you actually have to make a real world business decision. So having the legal background is better and super useful in that context. Yeah. Okay. I can see that. You had small businesses, like what kind of businesses we talked about. Everything. I think we had the first green screen photo booth company in the United States. We took the green screen technology, put it inside a photo booth, built out an entertainment company and undergrad, grew that, it had six figures in revenue from an entertainment photo booth company, which is pretty fun. But all different types of things, did a lot of contracting, manufacturing and the Amazon.com run out, manufactured products like white label products in Asia. So had a big foray in the manufacturing space and then obviously real estate too. But as I just took all that experience and stacked on top of each other, learned a lot of what I wanted to do, learned a lot of what I didn't want to do. And real estate really came to the top and it's by far my best opportunity vehicle and gone all in on it ever since. Okay, and you said that the seven units in Pickle, did you say that was in 2016? 2016, yes. Okay. Yes, I should know the purchase price, but it was like $110,000. Are you serious? Oh my God. That's it. Oh, I'm serious in these. We've held these on for a long time too. I mean, when we finally let them go a couple years ago, I mean, we, those are one of our longer holds. I think it was like 400 and some thousand. So I mean, a 400% increase over the six years, I think we held them maybe. So yeah, I was a great first purchase. I mean, it was funny back then you were looking at underwriting stuff at 10,000 a door, maybe maybe 15,000 a door and just completely different times in there are now. Well, in Pickle, I've heard of it. I told you how I heard of it. My first boss was from there. Another guy I worked with was from there because my boss hired the guy blah, blah, blah. This was, you know, a million years ago. But the image I have of it is this very small town, but, but not anything that, no bar, no bad parts of a town like that, just small. And so in my imagination, I'm, I'm like envisioning, yeah, clearly not a brand new build, but something that's not terrible to live in. Am I wrong? It was, it was probably close to 100 years old. So it was old, but it was, it was a Mason exterior, it was built super well. Yeah, I mean, it was, it was a great purchase. I mean, it was an old boiler system, which was a little scary at that time, but we had my business partner brand and had a lot of experience and the construction and roofing space. So he felt pretty comfortable on the exterior, like the touch pointing and some stuff, masonry reworked and would paint it and seal it. And the interiors were great. I mean, they were all real wood like these things were built like rocks back then. The efficient inefficiencies were certainly like the windows and some of the utilities, but they were great. I mean, even just, you get the fun stuff of like, that I've very vividly remember after we had that on a contract, they're asking about lead based, lead based paint and I didn't even know what that meant. I've been a real estate attorney for seven years and we never got into that from the side I was handling it. So I mean, I knew of it, right? But they're way the way to test for lead based paint. I mean, look for asbestos like these are all the fun learnings on those first purchases. It was fun to go through and I think we had like a four or five thousand dollar expense for lead based paint abatement and I was like, oh my gosh, just just tanks the whole deal. This is going to be such a hit to our business and then got through it completely fine. It wasn't a big deal, but there's small things. It's just the funny learning experiences you have on the small first ones. But yeah, it was a great build. It was a really well-built building older, but it was a good purchase. What do you think you had to put into it just to get it, not stabilize per se, but just to get the building, yeah, sure, stabilize for lack of a better term? How much did you have to put into it the first year? Yeah, not a lot the first year, maybe eight to ten thousand dollars. The paint was a big one and then some light turns back then. I mean, we didn't understand what a full value ad unit turn was. We were just doing pretty easy turns out of it and touched the floors, paint everywhere. I think we swapped out some appliances, but nothing major. Once we got into it and realized, hey, we're going to hold this thing. Then we did some of the exterior work, some of the masonry top-pointing. We did do the roof eventually. So eventually they got the capex increased over time, but yeah, right to get it fully leased up, we put very little into it, it's less than ten thousand. What were rents? Gosh, that's a very question. Approximately. Maybe five, five, fifty, I guess, right in that range. Now I mean, today you could get twelve hundred. Yeah, I couldn't imagine. I mean, five hundred bucks sounds like that's like, you know, a hundred years ago. I mean, being gracious, but wow, okay. But nonetheless, it's not like two thousand, sixteen, so that long ago, that sounds like just amazing value. Okay. You're up to, I believe, and maybe it's more than this, but I think you're up to six hundred or so doors now, even correct me, but the question is, so, you know, what does it look like and where is the portfolio and what's how many properties and average number of units per property? What does it look like? Yeah, so we'll be at seven hundred and twenty units. We close on a 48 unit on Wednesday this week, actually, and we'll be at right at seven hundred and twenty units across portfolio. We own from Toledo all the way down to Middletown, Ohio, which is a little south of Dayton. So that I seventy five corridors, the main interstate system in the west side of Ohio. So from the very northwest corner down to getting close to Cincinnati, the southwest corner, we all own all of our properties up that corridor. A more based in a small town called Pickwell, Ohio, a little north of Dayton, so that's kind of where our hub is. We have what we call the south team, which monitors down by Dayton, and we have the north team up in the Toledo area. And then I'd say we have about twenty properties, but really eight properties make up ninety percent of the unit count of Those older properties are smaller. I call them legacy properties. We bought a while ago and just kept similar like that seven unit. We've just held because they cashed well really well. So the big eight properties, though, definitely make up 600 plus units of our portfolio. Those range from 44 unit up to 200 units and everywhere in between those two. - I guess for the bigger ones, then you have onsite. And those are your full time employees I gather 'cause I know that you're vertically integrated. Is that the way it kinda rolls? - Yeah, so fully vertically integrated everything in house, we do acquisitions, property management, leasing, maintenance, and construction all in house. So we've a team of about 50 now, about 35 employees and about 12 to 15 offshore contractors that do a lot of the heavy lifting day-to-day work for us. But yeah, we have about 10 people on the North team in the Toledo area and then the rest is on the South team in the Dayton area. - So when you say offshore contractors, what does that mean? - Yeah, so we have a lot of team members that work offshore. So Philippines, Ethiopia, Pakistan, the UK, I think those are our big countries, South Africa, and they do a little bit of everything. So they do all of our inbound lead calls. I have a VA that his sole job is to call every new lead in the first 60 seconds. That's it, that's all he does. And then we have our in-house accountants offshore. He's in India, that's another country I forgot. He's amazing, he does all of our bookkeeping. Then the Philippines, that's all of our customer management. So they do all of our collection calls. They do all of our payment processing. They do all of our property management questions. They met, we do his app folio for everything. They respond all the tenant questions. They field the calls. We do smart maintenance there app folio, but they take a lot of maintenance calls from our tenants as well. And then on the acquisition side, I have two analysts. All they do is help us find deals. So they're constantly looking for the track ownership information. They're helping me build out the marketing funnels for the outreach, et cetera. So our virtual team is very integrated in all silos of our business. Okay, the construction guys, though, the guys that work on the properties, those are part of their 35 employees. Those are both time employees. Yep, so we have one site. Leasing managers, two maintenance technicians are able to actually run our entire portfolio. Those two guys are rock stars. And then the rest is mostly our construction team. We have about six crews of three man crews. So about 18 guys, they do nothing but unit turns across the portfolio. How long does it take to from the time a tenant leaves? How long does it take to get a new tenant in? Yeah, so this is where we really started to shine. Our entire business model is focused on speed. That's all we care about. So by way of example, this is kind of how first principle thinking we've got and then making this thing a well and machine. When we get a notice that one of our 700 tenants is going to move out, my leasing manager opposed to 24-hour wellness check. He'll go in the next day. He does a full video inspection walkthrough of that unit. Gets the condition video to my turn manager. He's looking at it. We only do three turn types now. 95% skew standardization across all portfolio properties on our turn types. We call it classic plus silver gold. We do all LVP floor paint trim cabinet countertop appliances, bath fixtures, bolt ins. That's kind of our standard package throughout. Silver is an upgraded kitchen package and then gold is stainless steel appliances and a slightly upgraded kitchen package. Otherwise, it's the exact same for both buying discount pricing and for ease of application, our guys know exactly what they're doing 'cause it's the same skew count everywhere. We have less than a hundred skews across the entire portfolio now. So when that tenant moves out at 8 a.m. that day, my turn manager already has all the skews pre-built, palatized, he delivers them to the unit at 8 a.m. My first three man crew arrives at 8 a.m. that work typically 10 hour shifts, working up to seven days a week. Our painting guys work at night and we turn the entire unit in seven days or less. Our goals eventually get to five day full turns and ultimately 72 hour turns. So speed is everything. All the meanwhile, my leasing team already has a 2D 3D virtually staged. We're doing a ramp up paid ad spend. We're getting pre-lease showings done. I have a virtual tenant already signing a lease and they're moving in ideally on day eight. So even in our fully termed units that we're turning entire properties on, we're looking to keep those even at 90% plus occupancy the entire time, even when we're doing almost 10% of the unit count being turned in any given month. So heavily focused on keeping these things 100% occupied always. - What percentage of your tenants turn a year? - Yeah, so this is, we kind of track this in two ways. So we have our legacy tenants that we inherit when we buy the property. That renewal rates probably closer to 40% just because we increase the rent so much. We increase rent two to $400 per door per month. But on our turned unit renewal percentage, that's the one I care most about. We're closer to 80%. So that's where we make all of our money having the tenants renew on units we've already turned and not having to get those back and put more money into and having downtime. So that's where we're hyper focused. I'm trying to get that to be a 90% renewal rate. So that's the one I care more about. - I'm gathering that in these markets, you have virtually no new inventory for so I mean, what are you talking about in their different markets, right? We got Toledo and then all the way down south. What's typical occupancy in these markets? - Yeah, so it's, it really ranges. We do play in a lot of the smaller tertiary markets outside of Dayton, outside of Toledo. That's kind of our sweet spot looking for those overlooked assets, overlooked markets that much bigger players don't tend to go into an underwrite. But you're right. Ohio has not seen the supply shock at all, like a lot of the big growing cities, like Dallas and Nashville, et cetera, have. The cost of construction is pretty much the same in the markets. And Ohio can't demand that high of rent unlike like a Nashville or Dallas can to justify those costs. So we have not seen this huge surge of new units come online, which is great for us as value add guys. I absolutely love that right. I only buy existing used properties. But there has been some new construction, like Sydney Ohio's similar sizes pick. Well, there was one new development there and another one going in. But it's actually really helped us anchor our value add price points because we're still quite a bit less than that a class much, much nicer newer complex. So we've actually been able to get higher rents because of that. So it's actually helped us. But the vacancy is just all over the map. So I actually know the owner of that development and he's at 80% and he's kind of stuck. Where that I have my property there. I have a 63 unit, we're 100%. I got a whole wait list. And we're pushing rents every time that we're new. I mean, I can't believe we're getting the rents for already getting. So we're at 100% there. But I know guys up the road with I'll say, we take a C plus class and turn it into a B plus. Guys up the road that kind of stay in that C plus lane maybe B minus. I know they're at 85% 90%. But a lot of these are mom and pop operators out of state operators that just dumped cash here for a ride off their business owners, they're not managing themselves, these things themselves. And they're at that 92% and they're happy, right? Is it either cash flows or they don't lose money on it, they get the ride off every year. So it's just a very different dynamic with who we compete with. We're very different in these markets. I don't wanna say we're the only real sophisticated operators, but we kind of are just in the way we do everything, especially on the turn process with speed. I mean, most of the guys we go against that do value add turns. They're turning stuff in 75 days. They're outsourcing everything. It's costing them $30,000 a turn. I mean, we're doing it all in-house. We're shooting for seven day less turns at $15,000 or less. So we're just operating in a much different game doing it all in-house. - What do you guys pay in for like this 48 unit deal that's gonna close Wednesday? I'm knock on wood. What do you pay in per door these days? - Yeah, so again, it kind of ranges by unit type mostly. Like if there's a lot of studios or singles versus if it's like three bedroom town homes. So that really, like people like to look at just the unit, price, but that's very conceiving, depending upon the unit type size. So this is a mix of one, two, and three bedroom town homes. And we're gonna pay pretty close to 80,000 a door all in after CapEx renovations, et cetera, which is a pretty good spot for us. We've probably historically bought lower than that in like the 50 to 60 a door. But we're starting to buy, I'll say slightly nicer vintage, slightly larger unit types and slightly better markets. So we're starting to come up on that price per unit purchase price when we go in. - And why is it that you're going kind of up market? - Just there's where we're expanding our scope. There's more territories we're looking at, or we're looking to grow. The numbers pencil out better now, just 'cause we can do things faster. We used to underwrite for a three year stabilization period. And now we're at closer to 12 month stabilization periods, does it how fast we operate now? That allows us to get a little bit more aggressive on the acquisition side and more deals look like better opportunities for us, especially in these nicer markets because we can turn them so fast now. - So when you say nicer markets, what are examples of that? - Troy Ohio, for example, is between Piqua and Dayton. That's a really nice market. Real estate's kind of booming there. There's a lot of really good growth there. There's really good industries, ton of really good neighborhoods, really good school. That's like a step up from Piqua. So we're trying to buy more that this will now be our second complex in that city. So just looking more in some of those markets where it is more expensive, but we can justify the cost going in because we get a higher valuation once we finalize the value add period and get the stabilization there. So like even like a bowling green or thinly, like these markets are a little north of us. They're much nicer markets in communities. They just have a lot more to afford than some of the smaller tertiary markets we're currently in. - All these towns I haven't heard of and I haven't heard of in a long time, but I've heard of them, okay. - Very, very interesting what you do. What is the, you know, you said you've got, out of town, you know, you'll have out of town landlords that are looking for a write-off, which makes me think, question, how competitive is the acquisition landscape? I mean, are you competing with a lot of people and how are you finding the deals? - Yeah, so definitely as competitive, we found a good niche in light tech product. I used to be a light tech attorney for some of my clients, so wasn't afraid of the compliance side. So we went after light tech, pretty hard the last couple of years, and found some good opportunities there, which aren't nearly as competitive. But if you don't know the compliance side, you kind of can shoot yourself in the foot, if you will. It can be difficult, but we have a decent amount of light tech properties now, so it's pretty easy for us. It's just part of our system anyhow. So trying to find some things where isn't as competitive has been helpful, but the biggest thing is trying to buy off market. That's what we specialize. That's where we really shine. And we do that by pretty much doing everything in house on the acquisition side. So from day one back in 2016, I started building out with brand and our database of acquisition targets in our markets, and we built that the last nine years. So there's about 20,000 multi-family properties in Ohio of that about 4,000 fit our buy box. Those 4,000 is what we hunt every single day. We know every address. We try to make sure we know the right owner on any given moment, and we're constantly making sure the owner information, validity is correct. That's what I have two full time offshore virtual team members doing that to all they do. So you go online, correct sea, reonomy, et cetera. About 50% of that data from what I've found is accurate, meaning they're correct ownership information. The other 50% is either interactive or out of date because that property is since traded. That 50% is the sweet spot, right? Because nobody's bulk mailing them, bulk calling them, bulk texting them, bulk emailing them. So we hyper focus in on that, and we do a lot of creative things to find that ownership information. And then we go all in on it, right? We're constantly cold calling, text messaging, emailing. I'm sending them direct mailers, sending them video mailers. We're networking with them. All the brokers in our area are calling those lists on our behalf. We send them gifts. So we try to underwrite it and get under contract in less than six hours. As soon as I find the deal that I say is a hot lead, we drop everything. We have an acquisition manager, Ryan is that based out of Texas, he'll underwrite it immediately. Me and Brandon will be in the numbers, we'll be tweaking it, we'll be calling the broker, talking internally and we'll get them an LLI, typically in six hours or less. And we're working on them. Hey, what it's going to take for hard money to pause it? We'll put down 1% hard, non-refundable. What's the next step? Here's a quick overview of us. We always close and just constantly in front of them. So building up all of that the last nine years has allowed us to differentiate ourselves pretty well. And most of what we buy now is off-market deals. Ironically, usually involves a broker, but the broker just never had to bring it to market 'cause we got a hold of them right away or we use them to kick up the opportunity and we try to lock it up fast before they have to do that on market push. - And you said you do C++ and then reposition to B++. How old are these buildings? - So typically like 70s vintage, 80s vintage is really what we would prefer to buy. We've bought a couple hundred year old buildings that were converted light tech properties. Like an old school got converted into multi-family 25 years ago, which those we don't mind because when they do that light tech conversion, I mean, they're bringing these things down to the studs. Everything's up to code, top to bottom. They're really good assets. So we have three old schools that are 100 plus years old that are now loft style properties, but they were all light in the light tech program and we kind of bought them as they were coming off that 30 year light tech period. So we buy them with a couple years left to compliance and then we get to bring them to full market once the light tech restrictive covenants burn off. - Okay. And tell me about the employment picture, how much are the markets growing that you guys are, is Toledo growing, is Dayton growing, are some of these markets growing? - So I say Ohio in general is doing pretty good. Columbus is definitely the anchor that's bringing all the spotlight and attention. It's kind of become the Silicon Valley of the Midwest, if you will, there's a ton of Fortune 500 and even Fortune 50 companies had quoted in Columbus and everybody kind of wants to have a presence there now. So that outflowing of that's been great. Cincinnati's always been pretty strong, but they're having a really big push of immigration there between there and Dayton. Cleveland's always been pretty good market. I wouldn't say it's growing nearly as much as Cincinnati at Columbus. And then Toledo has had a lot of resurgence because Detroit's kind of coming back a little bit. It's really close to Detroit. And then a lot of the overflow of Columbus is going to Toledo and then Dayton downtown's been really revitalized. University of Dayton and then the right path, Air Force Base has put a lot of money into the communities. So really every part of Ohio is doing pretty well, but that corridor between Dayton and Cincinnati is the biggest growth spot by far in Columbus. 10, 20, 30% census increases in the next 10 years in those counties. So we're really trying to get into those markets just because there is a huge push for growth. And it's just like, from what I've read, it's a combination of everything. They have ton of great employment opportunities. Health care is big, aerospace is big. The banking industry is in Ohio or big. And then they just kind of have the total package. They have really good schools. They have a lot of good of amenities. All the exits along I-75 are being built up. There's a lot to do now. Health care is really good. There's an aging workforce. That's not really being supplied locally by Ohio. So I think it's a big opportunity. It's been a vacuum of immigrants in the area that take up these really good high-paying jobs. The huge chip factory, for example, in Columbus Intel's building, 10,000 plus jobs. The average salary is like $140,000. Across, which is just insane. So that's just a huge feeder system and all the tier one factories that feed into that, a lot of business owners, et cetera. So it's been really fun to watch. The last 10 years of Ohio has been really growing and doing really well. And there hasn't been that huge build-up on the multi-family side, which has just been great for us as value-ad guys. So the next five years, I'm really bullish on Ohio. We have no intentions of leaving in Ohio. We only want to invest here, areas we know. We like investing in our backyards. But we'll definitely be in Columbus and or Cincinnati this year, for sure, by next year with our team. So slowly expanding into those markets. - Justin, you are so persuasive that I consider moving back to Ohio. - Well, I'll tell you one thing. It is 11 degrees out and it feels like negative four. So that won't be the reason why you don't move to Ohio. - And there are many others, no, I'm joking. Ohio is a great place. But I gotta tell you, it is a fascinating conversation because as we spoke about before we started recording, I went to school in Cincinnati, it's where I started my career. So when I hear immigration, it's just like in a granted. That was a long time ago, it's fascinating to me. I mean, immigration to Cincinnati, when I went to college meant that you moved from like Northern Kentucky five minutes away. I mean, so this immigration, where, what countries? It's interesting. - Yeah, a little bit of everywhere. I mean, I've not put my finger in one country that's kind of leading the back. I'd say it's been a pretty good melting pot. Obviously, Ohio State brings in a ton of international students. I think we get a lot of outflowing from that. So there's a lot of immigrants from Asia, from Europe, Mexico, we've had a good push kind of from everywhere. So I've not seen one big country lead the charge by any means. - Super, super interesting. Do you, this is kind of like an existential question that's been in the forefront of my brain in terms of what do I deploy into, et cetera? Is AI? I mean, what do you think of AI down the road in terms of potential unemployment, companies being able to do more with fewer employees and that impact potentially on multi-family? Is it something you even heat at all, or what do you think? - I think if you're not using AI an hour a day and you own a business, you're behind the April. I don't care what business it is. AI is the future. I am a huge believer in it, but I'm a huge believer in it being a multiplier effect. Just like when we invented the tractor, everyone said, what's everyone was a farmer, right? What's everybody gonna do? Well, we figured that out, right? Humans are pretty responsive animals, right? They'll figure out stuff for people to do. So I'm not worried about people twiddling their thumbs. I think it's gonna be a multiplier effect. I think it's just gonna make things better for everybody. We use it all the time in our business. I do not let employees ask me questions anymore. If they haven't asked AI first. If you didn't ask Crock, we use Crock, which is Twitter's AI Elon Musk. If you haven't asked Crock or Chad Cpt, don't come to me because it's gonna give you an answer that's in most cases, just as good if not better than me. If you feed at the right context, you get good prompts, you get a great response. I mean, almost every fair housing question we have, all of our light set compliance, anything compliant related evictions, et cetera. It's gonna give you the exact laws that apply. Granted, I have the luxury being an attorney, so I usually know like sometimes it creates some some fictitious things, which is a little out there, kind of gives you a ghost answer, but 98% of the time, and it just keeps getting better. It's right, and they give you the notice that will give you the verbiage they use. If you say, hey, if I wanna call this tenant, what should I say, what should I not say? It's gonna give you an amazing talk track, just as good as I could if not better. Even on the acquisition side, every single email marketing camp. text messing campaign, all of our scripts for leasing, everything is ran through there. Fine-tuned made better, all of our listings are put through there, every listing description, we have every job opening I have, everything, like top to bottom, it's been amazing technology, we use it everywhere. We now have AI voice agents through open AI called Sona there when sometimes our VA's we try to do 24/7 live coverage but sometimes we miss because of holiday sickness, we just turn on AI and we have literally an AI voice bot answer and can get really good information. We just feed it in the LLM, the language model has all of our stock questions, all of our FAQs, we feed it all of our data and it notes and it sounds human, it's responsive, it's empathy, it's wild, and it's going to be here everywhere. So I don't want to be behind the eight bulls so we constantly test it and use it everywhere. I personally probably use it at least an hour a day and everything I do, rarely is there something big that I don't throw in there first just to ideate and start getting different opinions and options. It's almost like me being able to brainstorm with myself which has been great and I have saved bookmark conversations for I have one for capital raising, I have one for leasing questions, I have one for acquisitions, I have one for bank questions and it just can pull from all my past questions and context and use it for even more tailored responses and it's just it's so good. So I'm huge believer in it and I think it's going to help everyone everywhere in a massive way. Wow, you've clearly given this thought, describe like your criteria in terms of what you will buy as it pertains to yield and returns, yeah, that's the question. Yeah, it's funny. So we really pride ourselves on the very principled underwriters. We underwrite about a hundred deals per month, so about 1200 per year and we only buy three to four per year. So I'm only looking for needle and a haystack deals, home run deals. We have owned it on this scale, we've priced spent three or four hundred thousand dollars on mentorship and masterminds just on building out our underwriting model. So we've done everything, we've under wrote in many different contexts but the thing now that we solely focus in on more so than anything else is we want to be able to increase rents on average two to four hundred dollars per door from the value add side and then we want to be able to get all of our money back out if we refinance in 12 months. That's all I care about. I get all my capital back out in 12 months and that's always a function of how much meets left on the bone in terms of how high can we increase friends after we turn that unit. So it's almost like an ROI function of our own capital and that blended criteria is what we built into our inordinate amount. Of course, we have cap rates and assumptions and things we look at, but that at the end of the day is my north star. Can I increase at least two hundred dollars per door per month and what is, can I get all the capital pulled back out in less than 12 months and what factors into their right is the purchase price versus where we think the future evaluation can be huge function, but that's the value add a vision that you add basically increasing top line rents and then what's our CapEx budget to be able to do that. So if I can increase value by two million, but my CapEx budget is two million versus if I can increase two million, my CapEx budget is five hundred thousand, that property made by some metrics looks similar, but to me, it's wildly different opportunity. You know, another gentleman I did a podcast with, who's a fellow Ohioan of yours, who's in the best ever universe, in fact, he's one of the hosts now, very good guy, said it's very hard to underwrite C class and B class rents, and I think it's a function of maybe you don't have the uniformity in units, he didn't say the latter part, but he said they're hard to underwrite. So how do you do that? How do you get really confident that you can, you know, that you can increase the rents two hundred. So we've been doing this for 10 years now. The markets we've been buying in are pretty close to our existing marketplace. So we're kind of slowly growing. So we have our historical data to use. So I know these, these markets are pretty similar. This is where we would have raised rents too. So I have a pretty good comfort level on that. Obviously we're looking at what competitors can get. We're calling them up or seeing what the unit looks like, we're making sure that they're finished levels the same as ours, just to know where we can move rents to. But the bigger things the under the hood, right, we try to get closer to that 40% expense load. We know how efficient we can operate properties. We know when our full cap X is done, our RNM is very low. We know how much head count is going to go into managing that from a unit count perspective. I know roughly exactly what my insurance is going to be going in. I know where I can bring real estate taxes and where we can save a little bit more cost where the prior owner was kind of, I'll say, bleeding in their T12. And so we feel very good about that. And then the big unknown is the cap X sign, which I'm super fortunate by business partner Brandon. He owned a construction and a roofing company. And he knows this world better than anyone. And he can walk a property and just know everything about it. Well, we're going to have to do from the roof, from if there's water issue, if we're going to have to regrade and move the water flow, if we're going to resurface the parking lots, we need to do the windows, if we need to talk point like he can just do it within plus or minus 5% walking it. So that helps a ton, even a drive by or using Google Maps looking at the roof conditions, et cetera, obviously pictures that the prior owner has online were really good at dialing in the cap X. So that helps us a lot on the clarity of what the total underwriting is going to look like. And when you kind of strap on all those things together, you don't miss by much. You're pretty close, right? And then on the leasing side, from our experience, it's just a volume game, right? If I can't fill it up, I just have to get more top line leads and we're very, very good on the leasing side, increasing our lead flow, whether it's who paid ads or organic. And this is a function of volume. So I know some properties that were really pushing the market rents on 2% of my leads convert. So I get 100 leads to them. We're going to sign a lease. And I know the conversion all the way down how many so 60 of those are going to schedule showing 40 of them are going to show up, 38 are going to submit an application, two are going to sign a lease. OK, well, I need to fill this up even higher and now the conversion is 1%. Because we may be missed on how high we could get the rents. OK, well, now I just need 200 leads to sign two leases instead of 100 leads. And it's just the function of your cost per lead cost per sign lease. So even if you would miss a little, I have the ability to overpay a little bit on the front end to get it stabilized. What is the cost to get your lead? Well, depending by the lead type, it completely wildly ranges could be as low as 10 cents up to $2 a lead. But then the conversion sign, it really matters, like our Zillow leads convert way better than our apartments.com leads. Our Facebook organic leads convert at about 20 times higher than our Facebook paid ad leads. So it's all very different. But my cost per tenant in total blended is about $160 per tenant. And as long as we're well below $800, we'll make money in any market doing value ads. So we're very, very low. We're not even come close to that number. So I'm pretty confident in the new markets are ordering a C C plus class, even if we don't know how high we can get the rents that we're going to get there. So that's a pretty big undertaking we've done the last two years, especially is to make sure like what's our worst case scenario? How do we fill these things up and can we still do it just from the lead side? And we've spent a lot of time dialing that in. You know, Justin, I cannot accuse you of not knowing your business. But we look at it every day, I have slack channels for everything. I mean, if you don't know your numbers, then I mean, that's your biggest mistake, right? So I see the numbers. I'm not dialing into them every day, but I see our numbers every day from showings, movements, leads, leases, et cetera. And when you just see it and you talk about it, it just becomes part of your DNA and your business. And that's a huge part, right? What you track and measure is everything. So we're very big on leading and liking indicators on our business model and knowing where that's going to move us to. So you like to get your money back in a year. What do you think about or what do you project for whole time? Are you a long term buying hold or you kind of in and out in three to five years? What do you, how do you see that world? Yeah. So we had this great idea that we are going to be flippers of apartment complexes. So about four years ago, we wanted to buy 400 units and sell 400 units every year. That's what we thought our our go forward strategy was. And we sold about 300 units in the 2021 time range plus or minus a little and quickly in hindsight, we regretted selling all those in and we had two big mentors, both kind of say, like, why in the world are you selling any of your properties? And at that time, it was selfishly, we wanted to get even more capital back, right? And then we kind of completely shift that our minds says, we're long term holds anything we buy, we plan on keeping in perpetuity, whether that's 20, 30, 40 years. So we're just accumulating a units now. We want to get to 10,000 units. That's just a number we threw in the sand as fast as we can. We think we can get there pretty conservatively in seven years and then grow beyond that. So just building up our unit count is everything right now. Do you still practice law? I'm still licensed. I can do way more legal work than I'd ever care to, but it's just for our business. I don't I don't do it for anybody else or anything like that, but I'm still licensed in Ohio. Have you inevitably, you contemplated or you've at least thought about starting a fund to do or not to do what's your view on that? We actually did start a fund this past year. That's what we've raised into for the last two purchases. It's gone really well. We wanted to sell fund for as long as we could. And we pretty much were able to up until this past year. And so Brandon and I historically would bring all the capital to our closings. And so we created a pretty unique preferred equity fund that allows Brandon and I to bring about half the capital and the fund brings the other half so that we can buy in theory about twice as many units in the same amount of time. So that's our go forward strategy. Each property we purchased now, we bring about half the capital, me and Brandon as the common equity and the prefect what he fund brings the other half. And what are the, so when you say prefect, what So they get just a fixed coupon, is there upside or how does that work? Yeah, so I had the luxury of building funds and syndications for my clients when I did practice. So I saw the good, the bad, the ugly, right? I've seen it all and knew exactly what I didn't want to do. And when we got here, I knew what the structuring would be. So Brandon and I had kind of built the structure on our head that fits really well for the handful of investors. I knew that wanted to invest and then how we underwrite. So we've four really good benefits. First, all of our investors are a preferred equity investor. They get an equity exposure in our full portfolio. So all of our properties are inside the fund. There's no conflicts. There's nothing outside of it. They get exposure to all 700 plus of our units. And they're in that pref equity spot. So our banks get paid first. Our investors get paid second, me and Brandon has the common equity backstop and protect all of our investors' dollars. Second, we pay a fixed 12% return. It's paid every year on December 31st. It's not something targeted IRR, some aspirational number. It's a true fixed 12% we pay from global cash flow. And our investors have two really good options. They can either reinvest that 12% every year with no tax hit. So you get that annual compound and you double your money every six years at 12%. Or they can take the 12% cash flow distribution. And we have a really unique tax benefit. We've been able to build out it's called a return of capital tax treatment. So they pay no tax on that 12% until year 9. So it's really like an after tax 12% for the first eight years. So it's really like a 15 to 19% effective yield when you compare it to something taxable. So it's the way we can structure the return of capital to them. So they don't pay any tax on that again until year 9. Then lastly, we don't have any long term lockups. After the first year, we're just 90 days notice you can get all of some of your capital back at any time. So you don't have to wait until year 9 invest. You can theory investors for one year, five years, seven years, etc. You invest in your own timeline and you don't pay gains until you take an amount out that exceeds your capital count. So try to keep it super simple in the structuring. Give you that early safe. It's about that risk adjusted return of that perfect equity spot. Brandon and I we only have about 50% LTV across our entire portfolio. We're super conservative guys. So all of our equities protecting your dollar. So I like to tell investors you're like $1.51 when you invest with us. Brandon, I put our money where our mouth is your head of us with a syndication. You're like $1.97. You're the last one in you're the first one to lose your money. So very different structuring and models. Very impressive. Wow. If somebody wants to find out more about you connect what's the best way for them to do that. Yeah, so I'm I'm huge on networking, giving back, etc. I've built everything in my life on asking people ahead of me how to do things, calling them up emailing them. So for sure, reach out just in that real estate alpha.io is my best email. Real estate alpha.io is our website. I can be reached there. If you reach out to me, I'll give you my mobile number, happy to have a call anytime. But that's the best way. My LinkedIn profile started posting there. We've been head down operating. And now that we're capital raising, I'm trying to get the brand and trying to do podcasts. Things like this again to get our name and info back out there. So my LinkedIn profile is pretty active now. Well, as well, Justin spillage will find that real estate alpha. And then you can DM me there too to connect. That's a great spot. Wow, fantastic. I am really glad we did this and I look forward to doing it again with you and being in touch. This has been just a wonderful interview. You did phenomenally well and I appreciate it. Likewise, Roger. Great questions. Love talking about real estate, especially with someone that knows the area, especially Pickwell, which is very cool. So I really appreciate you reaching out on the time. You got it. I'll talk to you soon. [BLANK_AUDIO]