JF 4242: Off Market Deals, Repeatable Systems and Scaling Multifamily ft. Justin Spillers and Brandon Virgallito

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When AI works where your team already works, people naturally use it, less friction, more consistency, and more time spent on the work that actually moves the business forward. If you want to see what that looks like for your team, check it out. Find out more at superhuman.com. Right now, when you buy more carpet at the Home Depot, you save more. During our Buy More, save more event going on now. Upgrade your carpeting with the top brands and save up to 15% off installed carpet projects. Installation starting at just 49 cents per square foot. Select from a wide assortment of carpet to fit your room, lifestyle, and budget during the Buy More save more event at the Home Depot. Offer valid August 27th through September 13th, 2026. Base price for standard installations only, excludes traffic master and stock carpet for licenses. See Home Depot.com/licensenumbers What is having the best ever listeners? This is Matt Faircloth, and welcome to the best ever CRE show. I am your host today, Matt Faircloth. And this is yet another best ever presentation for you guys with a podcast partner. If you guys want to hear more about how you could become a podcast partner, go to bestevercr.com. Our podcast partner that we're going to be joining up with is none other than the winner of the pitch slam at best ever con. Best ever 10 real estate alpha joined by Justin and Brandon from real estate alpha today, who are going to be doing the podcast take over here at best ever. So just and Brandon, welcome to the best ever CRE show today. Thanks Matt, appreciate you. No problem, no problem guys. Y'all got to figure out who's to you guys to do the hole that goes. I'm going to talk to you to talk to the hand signal thing like I used to do that and stuff like that. You know, but I'm excited to be working with you guys today. Super excited to be working with a pitch slam winner in here and in that here. So before we get into it, for the best ever listeners that that I want to get to understand real estate alpha and a bit of your guys origin story a little bit, why don't you guys each tell me a little bit about yourself, your backstory before you guys met. Justin, once you go first, give me a little bit of that and then I'll go over to Brandon. Yeah, so I'm from small town, minstrow, Ohio, west central, Ohio. Born and raised there with all a house date from my schooling in Columbus, underground law school, practice real estate law for about seven years. Got done for neural itch and 2016 started a couple companies found Brandon from a mutual friend. He's from about 20 minutes up the road from me. We started buying real estate together 10 years ago and we just snowballed it from there. We had a couple different other companies outside of that. But the last couple of years, we've kind of shed all the other fat and went all in on real estate and this is all we do full time now. So it's worked out really well. We both kind of returned home to our roots in west central, Ohio. And that's where our team and companies based. Can I, before we get over to Brandon and you guys will see, I tend to go a little curious in that. What other companies did you guys get into and how did they go? Like, where, where's that? Too many other companies love it. Are we talking like bars, restaurants, car washes, that kind of stuff? Like what, what, what are some of the interesting things you guys did? On the on the non real estate side, I did a bunch of on track manufacturing businesses with another local guy just built in widgets, any type of standings, die casting parts, full white level products, mostly in Asia, all sorts of manufacturing. To the fun trade war, kind of did everything you could imagine. I'm with global and international freight and shipping and manufacturing. So a lot of learning curve, pretty good experience. But the real estate opportunity definitely was the whale that swallowed the rest. So, divested out of all of those business. We're doing it full time, right? Yeah, nice. Okay, Brandon, your origin is it? Bring me all the way up to the time that you and Justin met. Yeah, so, um, looked in the Sydney Ohio growing up. Went to the University of Dayton studying mechanical engineering, got out of that. Had a leadership development program with the aerospace company, traveled around the country, doing operations, engineering. So I can get a good base, a continuous improvement in ops. And I got burned out on that around 2016. Actually, quit my job, worked for an online marketing company from home. And through that mutual connection is how I met Justin. And we bought our first property in August of 2016. It was a seven unit. And from there, just kept growing as more of a kind of a side gig for us. And then, like you said, both got distracted with some other businesses along the way. Mine was a home building company, a remodeling company, and a roofing company. DNA destruction and sold out of that eventually a few years ago. And then he and I just went slowly and I'm multi-family housing. Love it. And Brian, I got to tell you, you're probably the three dozen recovering engineer now, real estate investor. Yeah, I'm an engineer myself. I got to, you know, see that I get, but there's a Virginia Tech Hokey's flag hanging behind me because I'm some of a proud Virginia Tech graduate engineer. I did engineering for seven years myself until my girlfriend, uh, that now wife of 20 years put rich. I poured out of my hand and I said, oh my goodness, I'm doing this the wrong way, man. What engineer light bulb went off for you that made you get in dongerpreneurship? Yeah, um, I remember vividly. So my first job was in West Virginia, middle of nowhere. So I had a lot of time to read and uh, make spreadsheets and things. So the world's first things it is made a spreadsheet figure out, like, what am I going to allocate? How much money will I make? You know, 401k and I realized it's kind of a trap. And so I started finding other books and I found Rich Dad Portad and, uh, took me a good, was it four, four or five years to really like, dip my toe in the water on some single family houses before I met Justin and then we kind of went all in from there. But yeah, that was the same trigger was reading Rich Dad Portad, realizing that I wasn't going to make it on a 401k, you know, even contributing massive amounts of money to it. I also had some student loan debt that I, you know, really wanted to pay down quickly and I, I did that successfully. So personal finance, Rich Dad Portad got me into real estate. So you paid off the student loan debt through real estate? I paid off the student loan debt by living very below my means. So yeah, prior to getting married, everything I owned, fit my car. And I just found the cheapest place to live and put all my free cash into my student loans. Yeah. So I paid off engineer to paid off all my student loans by living below my means and by house hacking. Um, but that was back before that's what it was called, you know, I just called it getting roommates. But, uh, but I did that and paid off all my student loans as well. So I don't know, there's something about the engineer brain that seems to work for real estate investing. Maybe it's that we're wired for problem solving or something like that. I guess, I don't know. Yeah, I agree. It's problem solving. It's learning how to think about what do I know? What do I not know? And how do I apply that to the problem I'm facing? Yeah. Yeah. Um, what, uh, so real estate alpha gets started in 2000. Was that 16, 17? You guys started your, your company? Okay. Uh, the seven unit. How did that go? Uh, we didn't know we didn't know what happened. Justice, number seven, you know, their name's still off the, you know, off the top of his head. We actually still have one of the same tenants from 10 years ago. You still have the seven unit? You guys still have that? We don't. We actually manage it for a former business partner, but, uh, okay. All right. Well, tell me the story. Yeah. So we bought it for a hundred and eight, a hundred and 10,000 something like that. Uh, uh, a 200 year old. Yeah. All in, um, small town, a while. Uh, and they're almost instantly served with big violations by the city. And, uh, you know, got a very quick education, you know, how to make friends with the city, showing the plan that we had. I had a boiler, common boiler in there that kind of gave us fits for years and, you know, got that replaced eventually. But pretty much everything you could do to a building we did to that one, you know, roof boiler system, type pointing paint windows, renovated the interiors. But what it taught us was that we were the first ones that started pushing your rents and the towns that we were in by remodeling and creating value and giving somebody a product that didn't exist. And so I think some of the rents there were like $350 a month with them only paying electricity. And I think when we started, we were doing 475 and people thought we were crazy. Um, and now today it's probably right around a thousand, um, for a small one bedroom. Um, that was kind of our thesis to begin with is how you create a better place and you can charge where rent. And that's what we do today. We find C C class property that needs a lot of work. Maybe it's under managed. Maybe it's got a lot of deferred maintenance, deferred capex. And we do that work and we do it very rapidly. Uh, to reposition the property very, very quickly and create the value. So what are just and I know you're, um, and I'm maybe asking you a branding question, but I mean, you're also a capital lease up guy, that kind of thing, right? What's the like lowest hanging fruit when you tour an apartment building that you're thinking of buying, right? like you look at this like, oh man, if I just do this one thing or these two things, I know I can push rents or I can create. And let's not talk about push rents. This is really about creating value that's monetizable by residents that want to pay that are willing to pay more for these values we're creating. So anyway, when you tour these properties, what are some one of the two of the value ads that you see that are just best bang for your buck? Yeah, so kind of a twofold. First, obviously on the material side, it's important, but the management style is the most important part. We are very good property managers. We take care of maintenance issues immediately. We actually care about our residents. And we provide a white glove service. We do quarterly proactive inspections. We make sure we put the work orders for them. We take care of problems fast. So same with bi-monthly pest treatments. So that is a huge value adder. People just want a safe, clean environment where their issues get taken care of. And that doesn't cost a lot of money. That's just more about being responsive. So that's by far the biggest benefit we get from an ROI standpoint. And then on the flip side, giving them a really good turn unit. So new LVP floors, new paint, new trim, new cabinets, new countertops, if needed, things like that. The bigger dollar items when we get a bigger rent bump and the bigger units, but even just the smaller quicker turns. I mean, just a nice clean set of paint floors, I'm doing smaller things, is a big deal, right? And making attention to detail. I mean, Brandon's got a very sophisticated checklist. I mean, we make sure we track to see if any work orders on when the moving inspections, if there's anything that wasn't completely done correctly, we address it fast and quick. We have several sets of eyes in it. We even in house custodian that cleans it and flags anything. So there's some methodical process just to make sure it's a really good moving experience. And then just being really good property managers. So that in total is a low-hanging fruit for us. We can do like a higher gold or platinum turn with nice new cabinets, nice new countertops as needed, but that's not really what makes us special. It's just doing the smaller things really well. Do you have that? Like I've thought about developing that with our company, like, you know, this is a gold turn, a platinum turn, this is a bronze turn or whatever it is. Do you guys have those standards? And if you do, can you kind of walk me through what's in each one? Yeah. So we have three to four, and we usually use three of them. So we have a classic drop plus you could call it a bronze. What we do there, so full repaint, but made the foreings in great shape. Previous owner installed high-quality LBP, we're a mix of LBP and good quality carpet. We can keep that and reuse it, clean it, you know, and then we'll go through and we'll do a lot of the stuff that most operators wouldn't do. So, you know, light fixtures, plumbing fixtures, we're looking for efficiency there. So LED, low flow, reduce the utility spend at the property. And then, you know, outlets, switches, cover plates, standardizing all that across all the properties. It gives it a nice fresh face left. And then of course, like your bolt-ons, like your air vents, things that usually get painted over, you'd like to refresh those. It's kind of pennies on the dollar, but you know, you see a bright white air vent and you're like, wow, that this place feels new. From their appliances, for some classic pluses, and then you get into silver, which would be all new LVP. We use rubber cove base rather than base trim. It holds up. We don't have to paint it again. Kind of gives a little bit of a water, you know, resistant seal against the edge of the wall, because someone does have water on the floor. And then everything that we just did in that bronze model. And then from there, the gold model would be all new cabinets. We use a flat pack, you know, painted white cabinet, all plywoods, so they're very durable, white clothes, and then laminate off the counter or off the shelf countertops. And then if we want to go to that flatman level, we'd be doing like a white cords with stainless, but that's very few and far between our markets. Don't really have people demanding those finishes or at least willing to pay for that level of finish. We do have some of that in certain buildings, but mostly if we're going to do that work, we're at a silver level, kind of classic plus when we have a great quality unit, where someone's taken very good care of it. And then gold when those cabinets just don't have any life left in them. Yeah. And so you do sometimes trying to restore the cabinets. How would restore them? We were just reused them. We have a lot of mid 90s construction properties that have a really good quality cabinet still. Yeah. Now, we've, you know, taken the doors off, paint the box, you know, getting new doors, put new doors on, poof, looks like a new cabinet, right? Yeah, some of the year older cabinets are, you know, can be dilapidated or, you know, old school press wood and stuff like that. So they just kind of reach the end of the useful life and that kind of thing. And it's just curious if you guys implemented that strategy. I want to just, you, Clay, you said something that I want to make sure the best overlisters caught, right? You said that you're standardized switch plates. You're probably standardizing on hardware and that kind of thing. Maybe goes that sand for folks have been doing this for a bit like you guys have, but tell the best overlister why? Why are you doing that? Well, why standardization across the board? Yeah. So if you look at an apartment in our like Toledo portfolio or Dayton portfolio anywhere in between, they're all going to look very, very similar. We use the same materials everywhere. We buy them in bulk. We try to reduce skews whenever we can. So, you know, we will sacrifice aesthetics for functionality. So if we can get an LED light fixture that works in one room and we're like, oh, we could use that in the kitchen as well. We'll do that rather than try to get a unique skew just for that kitchen for that apartment complex. But that's all speed and quality. So we're able to train very easily when we hire on new employees because they know that they're always going to use the same materials every time. And then that through the training and through the repetition, more like production in a manufacturing facility creates the speed. It makes it less pretty. It makes it very predictable. Like, okay, cool. I need a light switch. That's it. Yeah. They all look the same if one breaks, you know, all the light switches are equal, right? And we keep an inventory of all that stuff. So every day, the leaders pull what they need. Yeah. It makes it just makes it kind of stupid, simple McDonald'sification. So it all feels like it feels like a franchise almost, right? You know, it's just the same thing every time. Justin, to your side, you handle the acquisitions for real estate alpha, correct? Yeah, Brandon, I do it together. But from an actual outreach standpoint, that's a lot of what I do. What's been your tactics in today's market? If you look at where we're at today versus where we were in like 21, 2020, 21, 22 acquisitions has been flipped on its head. I mean, it's a whole nother tactic for finding deals. What are you doing now? I mean, I know you and Brandon are doing it together, but I'll just, you know, pick on you for a minute here. What are you doing on the acquisition side that you've had to pivot, change? How are you bringing success to the company in today's market? Yes, since we've gone full all in on this, we've really created a really unique flywheel on the acquisition side where we forced the deal flow to happen, right? We don't wait for the deal flow. So there's really three ways that deals come in direct to owner. We get it from a broker off market before they put it on market and ship out the OMS to their list. And then third on market deals, right? We try to always buy the first two rarely do we buy a property on market. So our bell curve is probably about a fifth direct owner, three fifths broker off market and a fifth on market. So we're really pushing the first two channels, which is as much more forced acquisition than then being reactive. And we do that just to massive volume and being consistent. We have an acquisitions manager Ryan. We have two analysts he works with. We have our own proprietary system. We know there's about 20,000 multi-family properties in Ohio of that about 4,000 for our buy box. We only buy used. You can't build new used properties. I know that's the only 4,000 properties in Ohio. We will ever buy. It's not going to be added to. So we hammer that list. So you can buy list online, CREXI, RIONA, etc. The data is about 50% accurate from what we found. So that 4,000 list only about 2,000 accurate and about 10% changes every year, right? We just change of ownership. So our analyst, all they're doing is trying to find that other 50% of the ownership info that no one's ever reached out to because it's not right online. So we use AI. We use virtual assistant tools. They're scrubbing every database, secretary states website, case laws, evictions, county websites, etc. to get all the ownership information. And then we hammer them. We code column. We text message. We email. We direct mail. We direct video mail. We send them bottles of wine. We network with them. We are in front of them always whenever they are at that right place right time because it's just a function of the time, right? You never know when a business partner is going to have a partnership dispute and break up. Someone's going to get divorced. Someone's going to die, right? There's always a reason they're looking to sell. And you want to be in front of them that exact moment they have a reason to sell and have that track record of following up because now they believe you're going to be consistent and actually fall through. We're the exact same way with the brokers. We have our top list of brokers. We have a list of about 500 brokers of that about 50 send us consistent deal flow. We call them every week. We send them gifts. We have a very detailed strategy on gifting to them. And we are just top of mind for everybody. So whenever they get a deal, we want them to call us first and be first in mind. So we want it before they do any work to it, right? We want to put the easy button for brokers like there's hair on the deal. The seller hasn't touched the common areas. The seller has bad financials, etc. We don't care. Send it to us. We'll do the heavy lift. We'll make their job easy. We'll come up with the fair value and we'll see if we can play. Let's make a deal and get under contract before they even ship it off to anybody else. So we try to lock it up extremely fast. We're proven buyers. We always close and we send an L.O.I. We usually send 1% or higher, non-refundable, hard money down. No questions asked. We move extremely fast. Brandon, I don't take vacations. We don't golf. We work on weekends. If a deal is hot, we underwrite it in an hour. We make it all for that same day. And we're hammering the broker seller to get a. I'm just out to us immediately. - You got a deal coming in right now, this guy. - Yeah, that's exactly right. So that's how we operate, right? And we answer the phone, right? - That's what we got your bottle of wine. It's like, I just got sent me a bottle of wine. Let me call them sent them in apartment building, right? Right, right, I love it. - That's, I love your strategy. I love your energy about it, too, man. That's exciting. - Best ever list was we're gonna take a quick commercial break when we get back. I'm gonna talk to Brandon and Justin about how they're raising capital because acquiring deals has changed in today's market and also so is raising capital. But they won the pitch slam, given their very unique capital raising strategies. And so we're gonna unpack that and we're gonna talk about what they're gonna be bringing to the best ever CRE show because these two are gonna be your new hosts coming up in the next couple weeks. Let's get a word from our sponsors and we'll be right back. - One thing I've noticed over the past years, that almost everyone says they're using AI. But when you actually look at how it's being used across a company, it's usually just a handful of people who have really embraced it. It's an AI chat that's already up to speed right there when you need it and it works inside the tools and websites you already use. Without switching apps or losing your place. If you wanna see what that looks like for your team, check it out, find out more at superhuman.com. Labor Day Savings are happening now at the Home Depot with select appliances starting at $399. Plus, save up to an extra $1,000 and get free delivery on appliance purchases of $998 or more. Get a whirlpool laundry tower featuring industry first, UV clean technology designed to reduce bacteria in the wash without fading fabrics. Plus, with great prices at the Home Depot, you can save on select appliances designed to make laundry day easier. Shop Labor Day Savings at the Home Depot today. Offer valid august 27th through September 16th, do us only see store online for details. All right, best of all, let's just wrap back here with Brandon and Justin from Real Estate Alpha. Guys, really interesting conversations so far. And as I said before, I love your, first of all, I love your acquisition strategy. I love that aggressive hustle. Let's not just wait for a broker to send us a deal. Let's go start kicking some doors in, and then your strategy's sending out some bottles of wine to try and get deals, right? But as I said before, capital raising has also changed quite a bit from 2020 to 2021. You used to just be able to do a webinar and then crush your arms and the money would just come flowing in. I mean, we did one deal where like, I mean, by the end of the webinar, almost all the equity was in the hopper from my company, Dorosa Group. But for you guys, as you know, equity raising has changed. What have you guys had to do for changing your capital raising strategies? And what was the very creative tactic that you guys put forth at Best EverCon that got you the grand prize and a lot of equity at Best Ever? So, unpack both of those two things for us. - Yeah, so the real strategy was just sheer volume, right? So same with our acquisition strategy. We had never capital raised before. So we built up a really good model. It helped that brand and I have a really good track record where we've self-funded to date. So that did a lot of the selling of it in its own right. We created a pretty unique fund structure where we offer a fixed 12% return. And we give a lot of creative benefits where you pay no tax on that 12% until year nine. It's some pretty attractive options with liquidity. You can exit at any year as well. So that total package, I think was very new to the field. I was a real estate attorney by trade, Brandon Super connected in the real estate networking spaces. We've seen a ton of syndications. We saw a lot of pitches. We kind of put together our own perfect model of what a fund looked like and built our own structure. Obviously, having the legal background and some securities experience helped that, found a really good account in a rubber stamp kit. And we created a pitch and approach that to me, I've never seen before. It's very different. A lot of people said the same thing. So that was a big part of it having a unique structure and a track record to back it up. But the thing I think that really helped is I had just done 350 pitches in a row right before. And I knew the pitch forwards, backwards, and Brandon and I were not passive operators as you're finding out, right? We're in the trenches every day. So every question the panel had, I knew the answer off the top of my head because Brandon and I talk about it literally every day. Every metric, every number, we're in the properties every single day. We only buy stuff locally. We do everything in-house. We've built it over 10 years. That just all in totality oozes through where I think people saw these guys aren't your typical syndicators. They're not outsourcing management. They're not outsourcing any part of their business. They take pride in ownership in it. They have a really unique structure. They have a good track record. And they waited eight and a half years to raise private capital. So they got rid of the risk, right? I mean, that's how we are with lenders too. Those first years me and Brandon were begging for term sheets and doing everything possible. We're now, we have the luxury of bank stack up to give us term sheets because we removed the risk out of our model and those first four, five, six, seven years perfecting our business plan. And now we're just in that spot where we just can't get distracted. We just have to keep doing the same thing as many times as we can, boring, if you will. But it's working really well. And that's helped capital raise because people see that the risk has been removed. It's a pretty good return from them. It's like hitting a trip every year. I usually equate it to, and that's helped a lot. And then just a really good follow up system. We have an extremely detailed CRM. We call everybody. We text everybody. Same thing on the acquisition side. We're very consistent with our updates. And we're always in front of the investors. We get them responses quickly, timely, answer the phone, a lot of the small things that just go together and then jokingly with Brandon tied off. The wine list is the absolute best thing we do. The amount of people who thank me for the wine and then invest is, it's comical almost. That a $50 bottle of wine is like that one thing that this person sent me a bottle of wine. They're real. They mean it. They took their time to do this no matter what. It's a nice touch. It is a nice touch. I mean, it's, I knew you said the $50 bottle of wine compared to, you know, it's certainly worth a $50,000, $100,000 investment in your business. You know, the trade's very simple. But best over listeners, I mean, I've had people that sent out brownies and stuff like that. It's not about the value of the gift. It's about the thought, you know, and a fit that all bottle of wine is a rounding error compared to the amount of money you're raising with it. And, but it is a thoughtful gift. So I like that a lot. One thing I've noticed over the past years that almost everyone says they're using AI. It's an AI chat that's already up to speed right there when you need it, and it works inside the tools and websites you already use, without switching apps or losing your place. It's from the makers of Grammarly, and whether someone on your team is drafting an email, summarizing a long thread, or getting ready for a meeting, the help is already there. Labor Day's savings are happening now at the Home Depot with select appliances starting at $399. Plus, save up to an extra $1000, and get free delivery on appliance purchases of $998 or more. Get a whirlpool laundry tower featuring industry-first UV clean technology designed to reduce bacteria in the wash without fading fabrics. Plus, with great prices at the Home Depot, you can save on select appliances designed to make laundry day easier, shop Labor Day's savings at the Home Depot today. Offered out of August 27th through September 16th, do us only see store online for details. Brandon, your thought real quick, what for a pitch slam, and the equity pitch and everything like that. Give me some of your take on how this success you guys have had. Yeah, so it's the same energy that we put into acquisitions. That was like the first big process implementation that Justin and I put our brains to a couple of years ago, when we were like, yeah, all right, to scale, we need deals. So that's the first bottleneck. Yeah, but we put that same intensity in the renovation company. We put that same intensity into the response rate. So our maintenance team and training them, you know, they're basically HVAC technicians at this point. And they can do everything else as well. The same intensity on our community managers and the response times that they put into any resident request that might come in, the leasing as well, has got basically the same workflows that Capital Racing does as far as the expectations of in the cadence of communication to get the next resident placed in that apartment. So that's the culture. It's speed above all else, a speed in quality, not trying to sacrifice quality while we're moving quickly. And I think that's what sets us apart. That's what gets the rates of return that we're able to generate. You know, looking at say like 100 unit apartment complex and knowing 12 to 18 months later that we'll have that stabilized renovated and repositioned rather than, you know, when I started doing this, we would think, oh, maybe that'll take three years, they mean I'll take four years, but we just realized by through standardization, through speed, through the culture, and us just saying the same things every day to the team, like, here's what we're doing. This is the goal. And this is why it gets the result much faster. It's love it. Did I hear you guys right? That you build your company for eight years on your own capital. So you didn't raise capital for anybody else. You got to put your own skin in. You didn't just crush your fingers and hope that you could refinance a property and pull those three five proceeds out and put it back to work. This is actually your own hard-earned cash from other ventures going into the company. Is that correct? Yeah, it's a mix of our cash, and also the Merr model. So we were doing direct to seller marketing back in 2017. We were probably some of the first people to mail, direct mail, our markets. We were using a product that Ryan Dossie created at ballpoint pen marketing. Yeah, just like a handwritten letters. And that just had a massive response rate. And that found us a lot of deals. A lot of deals with a lot of equity. And then we just kept rolling it. We didn't need the money to live off of. We had our other ventures. We had other streams of income. And so we just would always keep the portfolio money within the portfolio growing it. And then using that same math we used today of like a dollar and a cap X gets you X amount of dollars of rent slash NOI and just keep always improving things. So it's like if I look at it from the outside, it's great buying by buying off the market. It seems like structured systems around your renovations with everything from like, you know, I noticed that like the platinum standard, the gold standard, those kinds of things in your Renault repeatable. And we didn't get into into this, but I'm sure it's a repeatable cost as well. Like a brand, if I walk you through an apartment building, you can say, I can turn this, I can, you know, turn these into platinum standard units or gold units or whatever it is for X amount of dollars at door because you already know your cost, you know, your labor, you know, you know, what it's going to be to turn these units. Right. So that makes it a systematized process as well. So you're going in and you're creating, you know, five X value for only X worth of investment. So I like that. So the early, be able to do forced appreciation. So it's all it's all adding up for me. I like it. Justin, can you unpack from your old quick this 12% I wrote down 12 of your coupon. I don't know if that's the right term, but tell me again about this 12% investment vehicle that you guys put out at pitch land that won you guys the grand prize. Yeah. So it's a preferred equity fund. It's an open end evergreen fund. The things we do unique is you invest in our entire portfolio. It owns all of our real estate, all of our assets, you're an investor in the entire portfolio. There's no conflicts of interest. We don't keep anything outside of it. I mean, investing into a really good cash flowing portfolio. So it's not a new portfolio. It's not a search or fund. You get into our crown due assets, right? The things that are going really well. You get invest right there. And second, we pay a fixed 12% return. It's not a targeted return. It's not aspirational. It's a true fixed 12%. We pay it every single year in December 31st from our cash flowing business. You then have two good options as an investor. You can reinvest the 12% every year for that pre-tax annual compounding. You double your money every six years at 12% or you can take the 12% payout in December 31st. And there we have a really unique tax strategy. It's called return of capital tax distribution. You can take the full 12% and pay no tax on it until a year nine. So if you invest $100,000, we pay you 12,000 every year. You get to keep the full 12,000. Spend it, redeploy it. You pay no tax until a year nine because you get to draw down your principal first. And then lastly, it's liquid. Every year, there's liquidity all framp. You give us 90 days notice. You can get all your money back at any point. So you don't have to invest until a year nine. You can invest only for one year in theory. The important part is when you get an amount back from us above and beyond your original investment, that's when it becomes taxable. So if you yeah, roll it over for five years, take it all out in year five, only then you pay taxes in year five. So it's a pretty unique strategy for everybody. It checks a lot of boxes and that it gives you that really safe double digit return. You get the pre-tax benefits. You get the optionality of of reinvesting or compounding it every year and it being liquid. And do they get if somebody gets in or you guys buy another deal? Because it sounds like y'all are certainly going to buy more deals, right? Do they get exposure to all the new opportunities the company does? So as real estate alpha grows, their exposure and diversification grows too. That's exactly right. They get the entire portfolio plus all new purchases. Our strategy kind of right now is brand and I used to bring a 100% of the capital closings. Now we're trying to bring about 50% and we use the fund for the other 50% so we're still bringing half the money at first risk the lost dollars meaning our preferred investors are number two in the capital stack. Banks get paid first, they get paid second, main brand in our last and we put our entire net worth all of our equity as that buffer. We would have to lose every dollar of equity first before the first investor dollars at risk and that buffer is a really good selling point because they see we're fully committed. Our skin is all in the game, right? And we're bringing 50% new capital every closing, Ms. Our Target as well. So that's great. I talked to some of the judges at pitch slam and that right there what you just said is I think that probably what they saw to be one of the biggest values is that you're putting your investors ahead of you of your own skin of your own equity that you guys have in the deals too from other from from all the things from all the you know burst strategy and all the stuff but your investors are ahead of you and I think that that and you got skin in but the but but other people's money is ahead of yours. I guess what a lot of people really liked in this structure that you guys had. So so Akuto is for putting that together going to either one of you guys can jump in on this one. This is going back a bit to your acquisition strategy but I wanted to touch that real quick. It seems like you guys might be market centric meaning like somebody approaches you with a deal and you know Provo Utah or something like that. You're going to say no we're not in Provo Utah so we're not going to do this deal or are you guys somewhat are you guys opportunity centric or are you guys market centric it meaning like only things in in this specific geography what we look at. Yeah for now we're we're very very centralized around about a 60 mile radius out of Miami Canyon Ohio and the second location out of Wood County Ohio which is north of Boeing green south of Toledo. And so we want to keep that very very tight because that means we don't have to stand up a new team. If we stand up a new team we need at least 200 units to cash flow to payroll and so for now there's plenty of opportunity plenty of either out of state investors the poorly managed or poorly taken care of property in those two areas where we can buy exceptional basis apply our model to it rapidly and create the value. So we're looking at median household income for those markets we're looking at you know what's the basis that we can enter on and then what's our all-in-unit cost is is there an opportunity there to refive that rapidly within 24 months and we're going in with regional banks typically or credit unions so we're personally guaranteeing everything that's further skidding the game for us and then we're taking out with the agency and planning to hold for long term which is why we're doing so much work to render again once. Are you taking out with agencies so that means that you guys are now I mean again we're not doing seven units anymore you guys are getting into like the larger agency level space where we're in the in the high double digits maybe triple digit size apartment buildings is that is that your typical target. Yeah right now it's like starting you to 200 units. Okay bye bye. Got it. Got it okay. So Justin you're one of the things in your eight seems like you guys really tag keeping a lot of stuff which is really cool but you're one of the things that wrote down is you're kind of the lead on acquisitions you've got acquisitions this team. Why Ohio meaning like if I've got a best-overlistener this listing here not that I want to bring you more competitors and bring them all to Ohio why it's amazing but I want to get I want them to get into your head space and in for them evaluating evaluating their markets and that could be Austin, Texas it could be Orlando Florida whatever it is but what aside from that's your own backyard you guys right. Why is Ohio a great you know a great market to invest in in general and the markets that you guys are in well first I want to tell everyone not to invest in Ohio don't come to Ohio. Yeah don't go sorry they've already bought all I think they've already bought most of it it sounds like anyway so no but no serious this Ohio is a really good market it's kind of that sleeper market in the Midwest it's extremely large it's the seventh largest state in the country most people don't know that it's got massive it's got massive employer growth Columbus is absolutely booming it's attracting a lot of the biggest companies it's kind of called the Silicon Valley of the Midwest everybody's trying to push their headquarters or second headquarters here we have a lot of really good anchor cities Cincinnati Columbus Toledo Dayton Cleveland we got five really good markets that are growing and really it's it's a perfect storm the financial sectors growing the education sectors growing we have really good legal immigration growth in the area because we have a lot of really good high-paying jobs that's attracting a lot of talent but the biggest thing that I pricey it's a little bit difference is we never got the supply shock most other big markets got the the Nashville's the Denver's the Austin's everybody was chasing that that massive rent increase from covid and the big thing is it building prices are pretty much the same no matter where you go right so you're paying three four hundred dollar or a thousand dollars per unit new construction cost in Nashville where you can get 4,500 a month rent and in Columbus you can only get 3,000 a month rent why not build a Nashville right no new builders built in Ohio so the oversupply didn't really hit us so we we never have had that giant supply shock in any of our markets if anywhere we're undersupplied and then that downstream effect with value add guys like us there's just fewer opportunities so if we can take a C cost property and make it like a B plus our basis is just significantly less Then what the new construction guys and other bigger markets are so for Ohio for us I was very risk averse with a lot of Upside still there because we haven't seen the huge 20,000 30,000 new units come online a year And just flood off our market so with us. It's actually if we see a new development It's actually good because it's going to attract some more interest in our markets because it's drastically undersupplied right now with higher level finish and quality products And we're providing competing with all those claims Yeah, that's right. You're not only like a market with like 30 cranes in the air You know what I'm saying? I mean, that's like an Austin Texas or even a Nashville and whatnot I mean I would I was in Nashville years ago I had heard that the Permit to pull to get a crane in Nashville was two years out meaning like if you wanted to have a crane like a bit You know those big boom cranes like that you had to wait two years to get it because that's how long No, this might not be true anymore. That was years and years and years ago But you're not going to hear that in Ohio right meaning like you know that there's not as much in Interest and you know, of course you still want it. You want to see investment you want to see growth But you're also not competing with the three brand new builds are going to try and pull rents pull new residents over to their space I get it so for those that are Listening here that are evaluating markets for themselves. I get job growth coming in but not such fast Hockey stick growth like there are other markets that are growing maybe too fast that are not sustainably grow and not Growing sustainably to the point where the growth is it going to stay in life is it's not going to stay there long term Yeah, I say the most important part is just knowing the market, right? I don't know if it matters what market as much as you know it and so you have your buying right right you're avoiding the landmines We tried desperately to avoid those first years of buying wrong right we're we're to pretty good Comfortability where our worst cases like doing a little bug breaking even right not like betting the farm and losing the farm where right That's a good spot to be we feel really good about our product our competition knowing the markets that just legacy knowledge It's to me as almost as important as anything else So I would highly recommend anybody listening that you just know your market extremely well And whether that's piggybacking off of joining all the syndicators in your area just being on their calls asking them questions joining groups right and it's figuring out the market and what a good price point is talking to brokers I mean getting a pulse on it. I talked to brokers all the time still And just hearing what they have to say seeing what stuff is trading at I mean Brandon sent me a message the other day about a An a-class property that that traded for like almost 300,000 a door which is just Above almost above replacement cross like just seeing that stuff and then what we do It just gives us a lot of confidence and our ability to execute at a high level and be able to make a lot of value quickly When when you know what else the other priorities are selling for so just knowing what's going on is important That's awesome. So bring it home here guys best ever is lucky to be working with you guys With real estate alpha as a podcast takeover host So what are you guys planning on bringing from real estate alpha from a perspective of teaching the best-ever listeners here What should they look forward to in your show takeovers that you guys have come done a pipeline? Yeah, so the big thing is just the six business divisions We've kind of slowly been building out it used to kind of just be one big unit and now as we're growing We're getting a really good org chart and separating our our six business divisions more and more We're gonna talk a lot about our acquisition strategy What I just talked about earlier and Brandon hit on we're gonna deep dive on that We're gonna talk about our leasing strategy, which we didn't even talk about which I think we have one of the best leasing teams in the world And how we use analytics and our lead flow and really Focus in on like the Alex Hermosi principles of knowing your LTV your cax for leads and how to lease up apartments fast We're gonna talk about property management and the importance of it how that dumps tails into maintenance and how responsive it is And then the turn team Brandon's built out some exceptional things just as a sneak peak We bought a 48 unit in January Brandon just messing this one and we've gonna turn 27 of the 48 units this month So we're already 50% through the entire value I termed process of one month four So we'll show you how we already take over units before we close and the process of how we get a jump on the At the turn time and how we meet with residents in person get them to move out transfer quicker than most and do some unique strategies there And then lastly, we'll hit a little bit on the capital racing side So trying to break it up to give value and how we do everything in our business to really give a lot of value to the listeners Yeah, yeah, Brandon you're not gonna let Justin have all the fun taking over the show. Are you? He's the silver time to turn a so we'll let him do most of the talking All the analytics were ever needed Yeah, bring the engineer on the talk it talked just about numbers and stuff And maybe take over the best ever YouTube channel so you can take us out in the field show us some of those Platinum turns and everything like that. So well, I hope you're able to make it to guys What I am excited to hear about and I'll be listening to is you guys have really been able to build out repeatable systems a lot of real estate investors that I talk to act like every deal They like every deal they walk into feels like they're very first deal because they don't have repeatable systems Like just kind of like sitting on the shelf that they can just use over and over and over again And I'd like to you guys have repeatable systems in your business at real estate alpha because it's enabled you guys I think from what I can tell to scale at a very very good clip But I'm excited to to listen to the show Brandon. I'll pick on you last year Where do you see real estate alpha going as a company? What like what's next? Are you guys dropping anchor in a new market in the U.S.? You looking to like you know double up in the markets You're in now add new legs of the business. What's on the horizon for the company that you and Justin are envisioning for yourselves? Yeah, we're hyper focused at this point So you know if it isn't the model of you know buying C class assets and making them nice to do and and freshen And rapidly leasing them up and it's probably not what we're going to do and we're not going to open a new market until you know Maybe there's a home run and it still has to be probably 90 to 120 minutes away from us So that we can get there and keep our eyes on it. We're very hands-on operators We're not going to go to the Sunbelt and you know chase the next wave We happen to be in the Midwest. That's where we're from. We know these markets very well We know the towns that we invest in very very well and the ones that we're already in will probably try to add to those towns And there's about I think seven of them now and you know any ancillary You know 30 to 200 unit properties That you know, we've already targeted and we're watching or communicating with to figure out You know when the the time is right then then we'll we'll put under contract and buy it But it's just more of the same. It sounds really boring, but that's what we do. No, that's discipline though That's that's the engine your discipline talking right there I'm like eight five figure out the system and then just you know run the same play over and over and over again I love it. All right. Well a best ever listeners make sure you tune in Not to the best ever see our e-show for real estate alpha segments and best ever listeners if you guys want to contact Real estate alpha adjusted in brand and how do folks get a hold of your company to hear more about your company What they have to offer and to you know just connect with you guys Yes, so if you search either of our names or Justin Spillers or Brandenburg Alito you'll find us But real estate alpha.io is our main website. You can reach us out there You can contact either of us on LinkedIn my information's all there on my emails Justin at real estate alpha.io feel free to reach out to you either of us anytime We love hearing from people. We love giving back. We love answering questions I mean obviously we're super passionate about this So never hesitate to reach out for any reason happy to to give you our two cents wherever we can We had a lot of people help pull us up and give us a lot of great advice along the way So happy to give that back anytime we can support to throw down a rope right, you know Help help some others up too. I appreciate you guys doing this really appreciate you guys giving your value time today On the best over series show and also for doing the take over here a lot of get back there as well and helping out All of our best overlisters with some great ideas and Inspirations for some of the systems you guys have implemented to get you guys to this point and forward from here best overlisters If you guys like this program then take a minute and like this program in the podcast app that you're listening to this program on It's an amazing review and share this with others that might be lucky enough to be out there in Ohio If you've got a friend of yours, it's living in Ohio share this episode with them so they can hear all about what Justin and Brandon are out to We're up to out there in Ohio with real estate alpha come join us for their to a podcast take over and join us from my segments for For the next level CRE show on Fridays until we see you guys here again on the next next best ever series show and next level CRE have yourself a best ever day Labor Day savings are happening now at the Home Depot with select appliances starting at $399 Plus save up to an extra $1,000 and get free delivery on appliance purchases of $998 or more get a whirlpool laundry tower featuring industry first UV clean technology designed to reduce bacteria in the wash without fading fabrics Plus with great prices at the Home Depot you can save on select appliances designed to make laundry day easier shop Labor Day savings at the Home Depot today Offered all of August 27th through September 16th, we suddenly see store online for details