095. Leveraging Corporate Skills for Multi-Family Success with Emily Cortright and Adam Roberts

Connect with the host:

LinkedIn: https://www.linkedin.com/in/brandon-e-jenkins/

Website: https://www.birchprosper.com/

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About the guest:

Adam and Emily of A&E Investments built experience and capital through single family investing from 2013-2017, and then made a full switch to multifamily investing in 2017.  Their current business is focused on multi-family syndications.  Adam and Emily are the lead general partners / deal sponsors of apartment complex purchases ranging from $10M to $52M in purchase price.  Their portfolio is currently at $220M in value across 6 multi-family properties, and they’ve gone “full cycle” on 2 properties producing an average of 80% total return to passive investors (LP’s) after 3 years. 

Connect with Emily Cortright and Adam Roberts: 

Website: https://www.aeinvest.net/

Episode Highlights:

✔️ Taking action after attending industry events

✔️ Getting aligned as a couple in business

✔️ Transferable corporate skills

✔️ Market and property criteria

✔️ Asset management

✔️ Building a syndication team

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💡 Interested in learning more about opportunities to partner in deals as a passive investor? 

★ Join Our Investor Club ★   https://forms.gle/AEpWgPg7krd8YzPU8 

Transcript

SPEAKER_03 0:06

Hey, are you a multifamily real estate investor trying to determine where you could fit in on a syndication team? Well, it turns out you might already have the fundamental skills and training that you need to have a shot at real success on a multifamily project. In my conversations with my clients and other aspiring investors, I often ask them what they do or did on the job because you might not realize it, but those same transferable skills that you've been refining at work for all these years can help you as an investor. So today we speak with Adam Roberts and Emily Cortwright of A E Investments to hear how they were able to turn a successful corporate career into a successful career as asset managers and syndicators. Listen, the worst thing you can do as a new investor is to fail to clarify exactly how you can add value to a team. So you want to make sure to tune in to get the perspective of a team who's been there and done that. So here's Adam and Emily of A D Investments.

SPEAKER_01 1:16

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SPEAKER_03 2:16

What would you do if you had the freedom to pursue the things you enjoy the most? How incredible would it feel to have the resources to pursue your passions fully and live life on your terms? This is Brandon Jenkins, host of the Capital Stack Podcast and principal of Birch Prosper. You might have heard that 90% of the world's wealthiest people attribute their wealth to real estate investing. Well, guess what? It's true. Investing in real property continues to be the greatest generator of wealth all over the world. So join us each week on the Capital Stack Podcast to hear about how commercial real estate group investment opportunities can help you reach true financial freedom and give you your time back. Hello, everyone. What's up and welcome back to the Capital Stack. I'm your host, Brandon Jenkins. One of the things that we talk about on this show a lot is infrastructure, all right, around having um, you know, a company and a firm that uh is built to withstand growth, a company that has a vision and a direction in terms of where it can go, but then the support and the team and the infrastructure to to uh facilitate that growth. And we, you know, we're gonna get into that today with our guests, Adam, uh Adam Roberts and Emily Cortwright of AND Investments. How are you all doing today?

SPEAKER_02 3:27

Hey, good. Thanks, Brandon, for having us.

SPEAKER_03 3:28

Really appreciate it. Absolutely. Thank you all for being here. So Emily has been a real estate investor since 2013. She got her start on the single family rental and flipping side, like yours truly. She leads several major councils and charitable efforts with Keller Williams Realty and the DFW market, amazing um submarket and area to invest in, uh, where she works closely with prominent brokers and leads uh the team strategic um acquisition plan. Adam joined Emily in 2018 to help run their real estate business in a full-time capacity. So that's something that we'll talk about, is making the transition from corporate to full-time, very important uh milestone. Um in his past life, he worked in global management roles with GE Aviation and transportation businesses. So he leads, uh he currently leads the asset management strategy for AE's multifamily holdings, working closely with on-site and regional management teams to ensure success. Together, they are lead sponsors of apartment complexes, ranging from 10 to 52 million in purchase price. Very impressive, with a current portfolio of 220 million dollars in value. So, did that cover it all? Is that everything? That's a good that's a good bio. Absolutely, absolutely. So, why don't you go um you guys kind of share a little bit of your your journey, your background, and what led you to this space?

SPEAKER_00 4:42

Yeah, so thank you so much for having us on today. One of the things that happened um back earlier in my childhood that I remember is I I saw my dad celebrate 30 years at his job, working the same job for 30 years. And I asked him, I said, so when are you gonna retire? And he said, he looked at me and said, I can't retire right now. And this was 2009. He was he had invested in stocks and mutual funds his whole life. And now he was handcuffed to his job because the markets were down. And I just kind of sat there in disbelief and said, like, this is not gonna be me. I'm gonna do something different. I don't know what it is yet, but I'm not gonna have my retirement years taken away from me like that. And so fast forward, I meet Adam. We I we both follow the normal track of go to college, get a good job, climb the corporate ladder. But he invites me to a real estate investing class one night. And at first, I'm like, what are we doing here? I'm not gonna invest in real estate. I don't know anything about investing in real estate. But it was literally the two-hour class that changed our lives. And it showed us the math behind real estate investing and how real estate investing can provide financial growth and security and passive income for the future. And having engineering backgrounds, math is very important and black and white for us. If the math shows it, it can happen. And so that was really the um the light bulb moment in our lives that said we need to pursue this. And then it just so happened that within a six months or so after that training class, I was working for GE full time and GE announced a divestiture. And so they were selling off the business. I couldn't go back to headquarters. You know, it was basically get bought out by the new company or quit. And we made the decision to pursue that I was gonna leave my job full-time. I was gonna leave and start real estate investing. And Adam would maintain his job so we would still have a paycheck coming in. So that was back in 2013. We moved from California to Texas and started our real estate investing empire.

SPEAKER_03 6:58

Oh, that is awesome. Awesome. Thank you so much for sharing um that that background and journey. And you know, so we we actually share some uh or have some things in common there because my background is also in um engineering. And uh, you know, one thing that I've I've experienced or observed is that you really had just kind of 50-50. So some engineers uh do exactly what you said, which is you understand the numbers, and because the numbers it's supported and backed by the numbers, you take action. But I've also seen that um, you know, one of the things that's common in engineering is understanding risk and quantifying risk. And so um, you know, I've observed that some engineers are kind of hesitant to to actually invest, right? I mean, and and to take the action to do so. Um, so it's really good that you all took that, you know, took the necessary steps to do that. Um, I think the other thing that's that's super important that I appreciate as well is that you you went to um sort of a training uh uh course and you said it's a couple of hours, but then you actually took the action that um I'm sure that the the the program or the course was trying to get people to take. And then there again, there are a lot of people who who went there and said, Oh, this doesn't work and they didn't do anything. Right. And so they and I can guarantee you whoever would make that decision, they don't have a 220 million dollar portfolio the way you all do. So um just want to applaud you on that. Um, you know, but I think that's I think that's you know that that's very powerful. So uh Adam, maybe share kind of some of your your your uh background there and also the decision to try and to make the transition that I'd like to kind of get from both of you because it's not an easy thing to do, right? To switch from from corporate uh that mindset um to entrepreneurship and and investing.

SPEAKER_02 8:31

Yeah, yeah. So where where I initially caught um the real estate investing bug, uh my father, uh similar to the story Emily told, um, you know, I grew up in a conservative household financially. Uh, you know, both both parents were career people, um, raised us in a household built around saving money and investing conservatively. And but my my dad, when when I was going into high school age, my father helped me with a budgeting spreadsheet, essentially, you know, monthly tracking of what you're spending your money on and what where your income is coming from. And and every every uh every year in that spreadsheet, uh, looking out, let's say maybe 10 years into the future, he would add a rent house and say, listen, I don't, you know, obviously he didn't do it, like we didn't own any rent houses growing up, but he's like, I've heard this is good. And we put in the spreadsheet. And look at this, after 10 years, you could be making this much money and all that. And I said, Wow, that's that's pretty neat. And you know, buying one house a year seemed pretty achievable. So that was, you know, that that, you know, fast forward to the real estate event. That's the reason when I saw um the the uh ad for the the couple hours, you know, evening real estate seminar, I said, okay, well, you know, I've seen this in the spreadsheet. Let's go see what this is all about. Yeah. Um, and then yeah, we took the dive, like Emily said. And then uh we always had a vision for me to join her full-time. After after we did our first couple of investments, which was a four-unit apartment building and some single-family homes, uh, we knew that it could be scaled. And with the right amount of effort and resources, we could do it. So we always said, hey, listen, let's just find a way for Adam to get into the business. Um, it wasn't until we made the switch to multifamily that the financial resources were there for us for me to actually quit my job and go full-time. But we didn't, I I always tell this story, we didn't uh do that when it was like super safe, right? We made one multifamily, one large multifamily acquisition in 2017 or 2018. Um, and that covered, you know, probably about half of our living expenses. But I knew that if I could quit, join her full-time, my 100% focus in real estate could get, could help us get our second deal and then our third deal. Um, so it was never, I mean, I never felt, you know, from a rich you mentioned branding risk. I never felt like uh like the the risk equation was unbalanced, you know, too unfavorably. Um, but it was never, you know, 100% like, oh yeah, this is safe. I'll work two days a week and we'll we'll get there. It was it was like, okay, I'm going from full-time job to even more full-time job, and uh, we're gonna make it happen.

SPEAKER_03 11:31

Yeah, I love that. And you said something though that I think is very important, and that um you you knew that by shifting and going full time into this space, that your return on that time is actually uh more than enough to then make up for the gap that you were kind of considering uh financially and in your income. Um so that's that's something that people don't talk about enough because the reality is yes, you can wait if you if you want until you know dollar for dollar, whatever your uh business is on the side or your investments match and maybe exceed your your W-2 income. But the truth is the more time you spend on that versus pursuing your business, uh, you're actually taking a little bit of an opportunity loss, I guess you could call it.

SPEAKER_02 12:12

Um and if you're and if you're in a a salary job, a W-2 job, it's it's it's very easy, obviously, to calculate like, hey, here's what my hourly, you know, return on investment is. You know, simply take your salary and divide it out by how much you work. But uh in you know, as an entrepreneur, it's much different. There is a little bit more risk. However, the returns, to your point, could could be far exceeding what you're currently making in, say, uh W-2 job.

SPEAKER_03 12:40

Yeah, absolutely. Absolutely. So um now I want to say this is another point. So two things. One, you all were aligned, it sounds like, um, which I think is important. I just want to talk about that for for a moment. Um, because I actually interviewed someone recently where that was the discussion was around having an aligned vision kind of before you pursue something. What was was there was there any uh uh I guess I'm curious to know kind of who started it off. And were you guys kind of on the on the same page from the beginning, or or was there some uh you know, a bit of a tug of war there? Just always kind of curious to know, you know, how how um you know teams and couples kind of arrived at the same sort of vision um with something like this.

SPEAKER_00 13:20

Yeah, I really we really were aligned from the beginning. Uh the reason that we decided for Adam to stay in corporate was because he was um two years ahead of me on the corporate ladder. So he had a higher paying role and he was a more marketable, you know, manager, you know, uh could manage employees, things like that. And so to live on one paycheck, it was important to have the person who was making more money keep that paycheck. And I I felt very confident in my ability to learn the real the single family real estate investing business and then execute on that because even at GE, I was managing um different assembly lines. So a paint department, an assembly department, um, different things like that. And it was actually very similar to go from managing uh plant employees, manufacturing employees, to managing roofers and foundation guys and house painters and cabinet installers. And so it the transition wasn't as bad as I expected. And I think anybody who has people management capability can can transfer those abilities to the single family investing world and multifamily.

SPEAKER_03 14:39

Yeah, I agree. I think that um transferable skills, you know, that they're really something that that I think people should consider a little bit more. So if you think about it on a daily basis, you're fine-tuning, you know, your skills to work with uh, you know, cross-functional teams, reporting, you know, communication, uh, you know, addressing problems before they kind of get blown out of proportion to minimize the you know, the fallout or the risk to the company. These are all kind of things that that are directly applicable to uh the multifamily business, um, you know, or to invest in in various types of uh real estate. You know, you still have to work with the team to get the job done. You have to come up with a solid plan and vet the plan. You have to understand the market and what the the potential value uh proposition is. Um, so I you know, I just love that that you all were able to do that successfully see that, hey, yeah, this is something that we can do. And we we more or less have the fundamental skills to do so, you know, starting starting off right now. So uh very powerful. So how did you all kind of decide on um DFW? Great market, you know. So I think the decision's an easy one. But just how I just generally speaking, how did you kind of decide to say, you know what, I think we want to uh select that market?

SPEAKER_02 15:43

We uh that first real estate training that we went to uh at the time we were living in California, working at GE. And uh during the training, the the trainer and team there that had set that established the curriculum kept on mentioning Texas as just this really hot market, you know. Oh my gosh, Texas is super hot, you got to get in, you know, and they were kind of approaching it, especially with all the California attendees, they were approaching it from hey, you know, make your investments, live in California, make your investments. Unfortunately, we were working in California on Ohio wages, so it didn't we didn't have that much, but um yeah, and then you know when we made the decision, you know, the divestiture happened with GE, and then we were more or less at a at a pivot point in our lives, and we said, okay, well, what are we gonna do? Uh, I mean, we had we'd been dating for a year and a half, so that was that was in there too. That was like, oh, are you are you moving with me? Are we? Yeah, you sure what do you want to do? Yeah, right, yeah. Uh and uh and and and then you know, we made the decision about who was gonna work in that. And I I had found a job here in Fort Worth. It was a great aerospace um leadership role at a at a landing gear facility, and that just seemed like a natural thing. We're like, okay, that's it. Great job. Let's go after it. We'll we'll relocate.

SPEAKER_03 17:00

And good, good, good. No, that's that's outstanding. So yeah, I mean, that's that's kind of like I said, to me, the DFW is just um it's a really outstanding market, I think, just in terms of the fundamentals. And we can even kind of talk about that. So, what when you guys are um evaluating a deal, you know, just kind of out of curiosity, what types of deals do you look for? What's some of the criteria that you all like to focus on?

SPEAKER_00 17:25

In terms of multifamily, we are currently looking for um, I would say B class, something built in the the 80s or 90s. Uh, we used to buy properties built in the the 60s and 70s and had great lessons learned from those properties. And so now we try to focus on newer. So 80s, 90s, early 2000s. Location is very important to us. So we want to make sure that the median household income is strong. And by strong, I mean maybe 60,000 or more. Uh, we have bought properties where it's been lower and we have learned the lessons that it's harder to find the right tenant demographic in those neighborhoods. And this is particular to the DFW market. Um, and again, location, making sure good school districts, things like that. But in terms of the pricing, if we've almost focused more on like the location and the different stats. And then we say if it's a good enough deal, the money will come in. We'll be able to raise the money, or we'll bring in the right partnership to raise the money. And that's how we've scaled up to a$52 million property because it came across it was in a great area, it was a great property. And we said, this is one that we want to do. And it's like, okay, how are we going to do a$52 million property? And we just pulled together the right team to do it.

SPEAKER_03 18:45

Yeah, that's awesome. I think those are definitely all the right things that um, you know, you have to have your criteria lined out for is right vintage, type of property, location, uh, and then the demographic and the, you know, even the cycle graphics, but also whether or not the um uh, like you mentioned, the median, can it support the business plan? So I'm assuming, so you guys kind of do more of a value add type of structure, or what's your what's your uh typical business plan?

SPEAKER_02 19:09

Yeah, I, you know, I would say there has to be some value add component in order for for us to be interested. Um, but you know, a property built 30, 40 years ago is definitely going to have some uh some capability to implement a business plan that's meaningful for the current residents. Um, not to say that uh a super stabilized property that already has a lot of implementations wouldn't be interesting. I just think there's plenty of meat on the bone here in Dallas in multiple markets where we can get excited. You know, obviously we're going through a little bit of a multifamily cycle right now, and there hasn't been a lot of acquisitions in the past 12 to 18 months. And so uh there again, time has passed. You know, there's gonna be more units to upgrade, there's gonna be more projects to implement at the properties. There's always something you can do with these properties to help bring value um to the folks that live there.

SPEAKER_03 20:01

That's an excellent point, right? So it like you said, time has passed, you know, because that's so so people um, you know, will ask me sometimes, well, you know, with this kind of model, don't you eventually run out of opportunity to improve and add value? And my answer is always no. Because if, you know, if if the property is in one um owner's hands for, I don't know, five, 10 years, whatever it is, there's always going to be an opportunity then for that next buyer, even if it's a shorter time frame, there's always gonna be an opportunity then for that next buyer to step in and to add value um to the property. So I kind of like that you that you mentioned that. Um, and uh so now I want to ask you, because we, you know, I mentioned in the intro, right, that you all have a heavy focus on acquisitions and and asset management. And um, I want to ask the question first about asset management because I think that's one of the very most important pieces in all this. Um, you know, once you once you buy the deal, you're at the starting line. And so um, you know, maybe just explain for the listeners what is asset management and what what do you think is an example of kind of what you know good asset management looks like?

SPEAKER_02 21:03

You know, it really to me it has two pretty distinct components. Um, first, you've got the people component. Um, you know, it's it's very simply the folks that are managing these multimillion dollar communities are everyday people. And um and most likely, uh most typically, they're they're they're very good at what they do. Um and have probably been doing it maybe longer than Emily and I. So so you kind of have to keep that in mind, right? Um and so there's a people component to it. And then secondly, the second distinct item, there's obviously the mechanics of it. Uh, it's an operating business, it has a profit and loss, uh, you know, it has capex investor funds. So uh, so for me, I really approach the asset management um idea as hey, it's people leadership, first and foremost, right? Uh everybody at the property working at the Property and at the management company, they go to work every day wanting to contribute, right, to their job, essentially. And secondly, we need to create an environment where they know what the vision is, what a good job looks like, what we need out of the property's performance. And, you know, we do, as Emily said, we do a pretty conservative underwrite on it, right? We we buy in good areas with with a capable tenant uh resident profile. And so, you know, making the vision and the business plan clear uh with the right parameters and the right operating rhythm for the people that are helping you achieve that goal. That's really that's really uh my belief around asset management. And from there, it's just to your point, you're at the starting line. What operating rhythm do we need to put in place so that we're successful?

SPEAKER_00 22:53

And another way that I like to put it is you have your front end, which is like interfacing with the property management, doing the projects at the capital projects at the property, that kind of thing, uh, managing the occupancy, the and then you have your back end. And the back end is the financials, the lender relations, the you know, everything, the investor communications. And so when Adam and I were doing the asset management together, uh, we ended up splitting up our roles into more of that front-end and back end type of responsibilities. And that's just a another way to help visualize.

SPEAKER_03 23:32

Yeah, I think that's an excellent point. And because if you don't have the back end handled, then everything can kind of fall apart. You know, it's it's it's really about having making sure that someone is paying attention to, you know, hey, how does the port how does this impact the performance of the portfolio, you know, as a whole, you know, and then also how looking at certain metrics with it, whichever metrics are important to you, you know, because having a handle on those can then you know impact the front end, you know, which is well, okay, how are we interfacing with the property manager, how are we working with the people and investors to communicate what's going on and what our vision is. Um, so I think that's incredible. And again, it's just as I'm hearing this, it really sounds like, you know, uh that transferable skill, like we were talking about earlier, you know, this is a lot of this is is um similar to what's done in corporate America. You know, you have these same kinds of conversations, you have a certain cadence, a very professional um, you know, sort of infrastructure that's built out to make sure that you can deliver. And um, Emily, so one thing I'd like to ask ask you about is around building relationships with brokers, because I think I find that um that's very that's something that's super important in this business. And for people who are newer to this business, I know you you all are not, but for people who are newer to it, there's this sort of um nervousness or anxiety around, you know, how can I really present myself in the best light if I don't have um, you know, track record. But just maybe explain kind of the importance of building that relationship with the broker to uh to facilitate you know success in this business.

SPEAKER_00 24:52

Yeah, it it has taken a while. And I'll I'll give an example. Our first year when we were trying to buy our first multifamily property back in 2017, we were trying to get uh lunch dates or coffee dates with the different brokers in DFW, the main powerhouse brokers, and most of them returned our calls and met with us. But there was one particular who had a lot of listings and he would just not return my call. And finally, I go to our partner who uh was much more experienced than us, and I said, Hey, I'm not getting any response. Can you send a quick message and can you, you know, get me a little in with him and see if he can respond? And sure enough, within about 20 minutes, I get an answer back from the broker and says, Hey, let's let's meet up. And so it's it goes to show that sometimes you do need help from the more experienced people. And that's that goes back to um a conversation that that we'll probably touch on, and I'm sure that has been touched on in your other episodes, is about building a team. And as a brand new multifamily investor, you're probably gonna have to partner with a more experienced person. And that more experienced person, you could leverage their relationships because as a brand new syndicator, you don't have the relationships. You knew you may not have the capital raising abilities. Um, and so you're leveraging other people's relationships, they're other people's equity raising capabilities and things like that. And we absolutely did that from the beginning because I tried my best to get lunch dates and coffee dates with these like big powerhouse brokers, but eventually we did need a little bit of help to kind of break down that initial barrier. Um, and then as the relationship develops, eventually you can be the one on the golf course with the brokers. You could be the one inviting the brokers, you know, to a to a steak dinner, not because you had a closing, just because you want to you want to talk to them. And you can build those relationships, but one of the best things to do is to buy from them and show them that you can execute. And once you've shown them that you can execute on a purchase, their uh trust in you and their respect for you goes up by a hundred times.

SPEAKER_03 27:09

Yeah, great, great point, great point. I mean, I you know, I share that with people all the time is that you know, if you are starting out, the bottom line is, you know, this is a relationship build uh uh business. It takes time to build relationships, and you'll have to do exactly what you said, which is leverage people who have experience. And I call that partnering up. You know, you just you just have to do that because, you know, even from a practical standpoint, you know, so if it is a power broker in the area and they have a lot of listings and their time is very limited, then for and from their perspective, it makes sense to then deal with people who they know can close, you know, that surety of close. That's something that's important to them and to their reputation. And so um, you know, I know that from from some investors' perspective, it might seem as if their standoff is, you know, early on, but sometimes it can be like it. So DFW is a you know, uh high. Well, I know right now it's not, but uh traditionally it was a high sort of transactional volume type of market. And that's kind of how it is, you know. It's it's so I like to share that with people as well. Is like, listen, what you'll have to do in the beginning, you'll have to make sure that you uh network so that you can leverage experience um in the contacts of others too. Because I like that you pointed out that it was a phone call or a text to someone else that got you in there like that, you know. So imagine if you didn't have that um connection established and that relationship built up, you know, how much more time it would have taken you. So it really is interesting how this business works in that way. Um and so so maybe just let's let's talk about something. This is kind of as a follow-on to that. How can someone then um make connections with someone who's experienced that will that will lead to you know lead to that, right? They were the being able to leverage their experience in order to help them get farther ahead.

SPEAKER_02 28:47

You know, for us, it was simply having a pretty clear vision and a goal for what we wanted. You know, we wanted to get into the multifamily industry, we wanted to break through and do a deal. Um and we were willing to put in the sweat equity to do that. I think um when you when you put your networking on overdrive and you just get out and talk to people without, you know, without any preconceived intention of, you know, uh, you know, investing with them or doing business with them and and build those relationships uh as well as go out and do the work and people can see that you're actually putting in the efforts and you really want the goals that you're you've you've set out to achieve. Um, those two things I think really go hand in hand. And for for our first partnerships, I think that really helped us because we didn't, you know, we didn't try to necessarily latch on to someone else's, you know, efforts. It was more like, hey, we were out doing our thing, uh, underwriting deals, getting the proper coaching and mentoring, going on property tours, meeting with brokers. And then, hey, we're also looking for partnerships. So if you've uh got any interest in partnering with a couple new folks, here we are doing the work. Um, so I think that really worked well for us.

SPEAKER_00 30:02

Well, and I we had very uh intentional conversations with potential co-sponsors, partners. And the conversation was structured around here's our strengths, are what we want to bring to the partnership. Here's what we're looking for our partner to bring to the partnership. And one of the unique things about that conversation for us is we wanted to do all the asset management. We didn't want a micromanaging co-sponsor, we didn't want to share in the responsibilities. And the reason for that is because we wanted all the income from the asset management because we had to pay for our lifestyle. We needed, we needed that uh asset management check coming in every month. And so that was a really unique scenario because we got about six no's, which is good because I didn't want to partner with the wrong person. And then we talked to the seventh person, and he said he listened to our corporate experience, our background, our single family investing experience, and he said, I could let's talk more about this. It wasn't a yes at the beginning, it was a let's get to know each other better. And that phone call turned into a lunch date, which turned into dinner date. We met him and his wife out for an evening out. And all this time we're talking about roles and responsibilities, who's gonna, you know, expectations, compensation structure. And at the end of all those conversations, he finally said, Yes, I'm I'll work with you. So he was essentially a silent co-sponsor, but he raised the equity, he had the relationships, all those different strengths that we were looking for from that very beginning, like intentional conversation. And so it ended up being the perfect partnership for us. Now, I think a lot of people just kind of rush into partnerships these days. And you have to remember this is a five-year business marriage. So it shouldn't just be one phone call, it should be multiple meetings, multiple conversations on expectations, compensation structures, roles, and responsibilities, because that's what's when it comes down to if something doesn't go right, it's going to go back to those conversations of like, well, this was your role, or this is how we said it was going to get split.

SPEAKER_03 32:16

So yeah, that's all great points. I mean, I think, and you're right to have those conversations up front, to be intentional and clear about it. Um, it can really save you a lot of headache. And also just even going in, it can make it very clear like this is this is what I'll be working on and focusing on. And so it can prevent things like um, you know, kind of not overlap, but just but but uh it can really help focus on the mission, you're right, right? So I think that's incredible. Um, and all those things are to me, it's just it's just very important to have those conversations up front. I I do think it's very unique that you all started off saying, hey, we want to do the asset management. It's probably the first time I've heard that. But I think it's it's it's important to come in saying this is what we want to do. And you know, we would like to, you know, to have you as a partner, but if that's not something you're comfortable with, then you know, fair enough, let us know. Um, you know, but it also, I would imagine, would give people a clearer uh sense of what you all are looking for. Because, like you said, that's that that's a mistake that some people make, is stepping into this arena, but not really clear on which lane they want to operate in. But if you come in saying, hey, this is you we're looking for partners, but this is what we want to do, this is our piece of it. Um, you know, if you don't do that, then you kind of run the risk of things just not being clear. So I think that's um, I think it's a top standing. And and um, you know, on the topic of that, right, on on team, building a team, maybe talk about, you know, first of all, just for the listeners who are maybe new to this, right? What what what does a team look like in uh syndication? And we've already talked about asset management, but what's what are some of the other pieces um to the team?

SPEAKER_02 33:47

Yeah, so the other responsibilities or the roles that team members take generally. Um, you might have somebody who works on acquisitions uh where their core focus is broker relationships, underwriting deals, keeping the pipeline full of interesting investments, um, you know, that that kind of sales funnel of of acquiring properties. Um you might have somebody also focused more on back-end systems. So, you know, there is a fair amount of accounting and financial reporting that goes on on these uh investment properties. The management company generally does the ground level accounting for the property, but then it's up to our group to make sure that that's communicated in a meaningful way to the investors so that they understand how their investment's doing. Um, and so that's somebody, usually that's somebody on the team's focused on that predominantly, along with um, you know, other back-end systems, tax accounting, tax reporting, um, making sure all the proper things are getting over to the CPA for tax time, things like that. Um, you know, uh investor relations is taking on a very large role these days, uh especially as acquisition activity is kind of cycled to a to a slower pace. Um, a lot of investors are curious to know, hey, how's my investment doing? And so um that generally, you know, I would say a lot of us on a team will do a little bit of that uh just based on relationships. But um, like like our team has a system set up where you know the investors get newsletters uh at some cadence and then they get financial reporting at some cadence. And so um a person on our team just manages that process and and and makes sure that those things happen without any issue. Um and so so those are some of the other roles on the syndication team.

SPEAKER_03 35:39

Yeah, and I think I think that having all of them um, you know, are very essential to this. It's funny because if if one of them drops off, then you know you can see sort of either the operations will fall off or the investor confidence will fall off, both of which are very important. Um, and so yeah, I just think it's it's outstanding to have that. And so you mentioned that we're in a time where the investor relations piece um and the focus on that has increased. And I would agree with you, right? So we're in a uh a bit of a lull or a slump in transactional volume. There's a certain um message that's being put out there about kind of what the economy is doing right now and how it's impacting our business. And so investors are are interested and you know, a lot more curious in in terms of kind of what's going on and what the what's the is there capital protected? What are some of the things that we're doing to uh make sure that we manage our way through this period, especially depending on how the deal was structured when you bought in. And so um, so it is very important. You know, I've a similar time was obviously during COVID. You know, we we had this this uh once in a generation sort of um uh you know pandemic, and and people wanted to know, okay, well, look, how is this impacting the deal? Um so so that's one thing I'd like to actually then talk about is uh, you know, I believe that during different phases in the deal, asset management looks different, or even you know, it just so when you take over the asset, uh there's certain things that you're doing in terms of reporting, communication versus once it's stabilized and then versus once it's you're ready to sell. Um, so maybe you can we can talk about that just a little bit. Like what what are your thoughts on, you know, immediately after takeover, what kind of things you a team should be focusing on, and then once it's stabilized versus once you're ready to exit.

SPEAKER_02 37:18

Yeah, so you know, immediately after acquisition, a lot of the projects kick off. So what what our reporting typically consists of is more on the execution of projects and and uh capital, you know, uh execution, more so than say financials and and and you know, hey, here's how we're doing to the pro forma. It usually takes the management company a month or so to kind of get things taken over and get the financials in order and things start to look like you're operating a business, essentially. Um, and so we generally spend a lot of time uh communicating how we're, you know, getting things finished at the property for the business plan, how we're spending investor money, things like that. Um, that usually comes together pretty cleanly in the first year uh for, I'd say, heavier value add projects, maybe the first two years of ownership. Um, in that time frame, the property will self-stabilize itself. Um, you know, like Emily mentioned, we're we're going after assets that are 90 plus percent occupied already. So there's not a whole lot of things to do from that perspective. Um, and so, you know, generally speaking, within a six-month time frame, we're able to start making investor distributions. Um, you know, if that's part of the business plan, uh, because we've we've got a steady handle on um, you know, cash flow coming through the property and spending money on the capital projects. Uh nowadays, um, over the past several years, we've bought a lot of deals where uh the lender actually holds on to our CapEx dollars. So that's been kind of a a challenge of sorts is to make sure that, you know, the similar things that are communicated to the investors also get communicated to the lender because the lender's the one who's ultimately going to help pay for those projects through with our money that they're holding on to. Um, and so uh yeah, it's all it's all kind of just communicating the right thing at the right time. And uh, you know, we've got deals that uh we've owned for several years where, you know, the CapEx projects are finished, the money's spent, things are just kind of humming along, and you know, the newsletters go out. And there's, you know, potentially a couple of questions here and there throughout the year, but uh not much else. So um, to your point, yes, it does take on kind of a different flavor depending on where you're at at the cycle.

SPEAKER_00 39:35

And I think another really critical point of communication during the first, say, two, two years is between the uh I'll say the asset manager or the um the business plan implementer and the property management when it comes to other income increases. And so I'll give an example. Let's say you're going to add um bulk Wi-Fi to the property. That's a new, that's a really hot thing right now, where the owner buys a bulk contract for internet at say$50 a door, and we charge the tenants$80 a door. And you have to roll that out. Well, let's say that's you're set to start getting income the you know, the day one of year two. Well, six months into the project, the conversations need to be had about okay, who where are we gonna, are we gonna get bids for the contract? And it's such a like the importance of having conversations well ahead of when the income starts hitting our budget is so important. And it can even go down to let's say we want to buy um or we buy washers and dryers or put in private yards. Well, if I need to get income from that private yard day one of year two, I need to start building the private yard in like Q three uh so that it's ready by year, you know, the end of the year. And I think that's one of the most important jobs of the asset manager. And you know, whoever's implementing that business plan is making sure they're they're implementing the projects and communicating to the property management company well ahead of when that other income needs to hit on the budget.

SPEAKER_03 41:20

Yeah, those are incredible points. I tell you, one there's two things that I'm sort of pulling from this. Uh, one is, and this is key for the listeners as well, is the importance of communication throughout um the entirety of the business plan, whether it's communicating to the property manager, communicating amongst each other as a team, communicating to investors. Um, and the other one is, you know, I like to tell people that this is a full-time um uh gig here. You know, if you're if you're really into asset management kind of the way you two are, um, I'm not saying it's impossible to do if you're not full-time, but if you're a full-time, then you can really, really start to dial in on the things that you're talking about because it takes time to say, you know, let's let's look um six months in advance of when we're expecting this income to hit. Let's have these conversations, let's work out all the bugs in the meantime, and then let's make sure we have a smooth transition, you know, because all those things, it's a matter of tracking, you know, a timeline of of of uh of events and then making sure that you're well ahead of them and that you're in place to be able to make those calls, site visits, whatever it is. Um, and if you're full-time, you can do those things, you know. So um, you know, I just think that those are all powerful points that did it's important to, like you mentioned, um, you know, Emily, just to make sure that you're communicating to make it nice and smooth to when to when you actually onboard whatever initiative it is. And then Adam, you also mentioned just making sure that your communication um adjusts to all phases of the project, I think is really, really important. Um, and so for the for the for the folks who are listening to this on the podcast, you can't see it, but you guys have uh have a lot of equipment there in the background. With some band equipment going on uh back here, and actually that's it.

SPEAKER_02 42:55

Yeah, we have a we don't do real estate only, we also in a band, you know.

SPEAKER_03 42:58

Yeah, yeah, let's talk about we so we've been talking about the the the serious stuff. Let's talk about some fun stuff. What's going on back there? Who's who are you both in the band? Or what's no, that's me.

SPEAKER_02 43:07

That's my that's my hobby. Yeah, I uh I play a few instruments well, a few not so well, you know, that kind of thing. And uh I'm in a I'm in a local country music uh band here in Dallas. So we do we we kind of get we gig locally on the weekends.

SPEAKER_03 43:22

Okay, well so which instruments do you play well? Uh piano and guitar. Very nice, very nice, very nice. That's good. Do you do you invite your investors out to to the I I do all the time. I I do. And they don't show up.

SPEAKER_02 43:36

Only a few ever come.

SPEAKER_03 43:38

No, that's that's cool. Yeah, in your background, you mentioned so you're also a um a flight instructor. Is that is that correct? Emily, do you do you fly with them sometimes or or is he?

SPEAKER_02 43:47

Oh yeah, that's a big part of our lifestyle, actually. We've got uh we've got a couple airplanes and uh we love to travel. So, like a couple weekends ago, we were in Aspen. Um, we flew up to see her family in some Cincinnati last weekend. So yeah, that's a huge part of our lifestyle flying around.

SPEAKER_00 44:04

And a funny story is um our very first date, uh, he took me flying. And wow. I so I I'm an adventure junkie and an adrenaline junkie. And so people are like, How did you know? How did you trust him as a pilot? I'm like, I don't know, I just did. It was adventurous. And uh, so we went flying on our first date. And on the second date, I taught him how to ride my motorcycle.

SPEAKER_03 44:30

Oh, that is cool. Those that those are the best first and second dates I think I've ever done.

SPEAKER_02 44:34

I know I was more scared on the second date than I was on the first.

SPEAKER_03 44:37

My goodness, you didn't go get coffee. You guys went and flew up.

SPEAKER_00 44:40

No.

SPEAKER_03 44:42

That is incredible. That's incredible. You know, so it's interesting because um, you know, I like to talk about when I make the uh kind of an analogy or I try to explain what a syndication is, often use um an airplane because it's like the you know, the pilot, the pilot and the co-pilot. Those are kind of the sponsors, and then depending on how you have it structured, if it if you have a pref equity partner in there and then common equity, then you might have pref equity in the front because they get they take kind of the the uh snacks from the cart before it goes to the uh to the um what is it, the economy um seating. So it's it's just kind of a good, you know, it's honestly that for me that that that comparison came out of a bad experience I had on a plane where I was feeling really sick. But the fight, despite the fact that I was going through it, um we safely, you know, we got to our destination safely because the uh crew, their experience and and everything else, they they knew exactly what they were doing to help us out. So I just I just think it's really cool that um that you guys are are doing that.

SPEAKER_02 45:37

Yeah, absolutely. It's a good yeah, it's fun pastime. You know, you do you work hard, you play hard, right?

SPEAKER_03 45:42

Oh yeah, oh yeah, awesome awesome. All right, so um, so we're getting kind of close to to close, but I did want to to ask some details kind of about um about what's next for you all, what what what what direction you're headed in, especially in light of of where we are in the in the market. Um so what's what's next for Amy?

SPEAKER_00 45:59

So actually we have um with with with multifamily being a little slower, and we actually, it's almost been a year since we've bought something because our conservative underwriting uh didn't really align with the higher interest rates, the higher insurance, the higher taxes in our market. And so we have added to our portfolio, our personal investing portfolio, more cash-flowing investments. And that's in the form of more mortgage notes. And so we are we're doing a few things. We're doing some private lending on flips in the DFW market. So just like I used to flip houses here and I used to borrow from private lenders or hard money lenders, now we are the private lender, the hard money lender, and somebody else is doing all the hard work on the flip. Uh, we and then we also have bought mortgage notes on the secondary market at a discount. So they're we're literally buying cash flow streams. And it's very different from multifamily because you don't have this big opportunity for gains on the back end. It's more so literally just buying cash flow streams. And but what we realized at the end of last year is that personally, we were we were probably about 90% invested in multifamily, and it was just a little bit too concentrated in one asset class. And we felt that it was uh safer for us to diversify our portfolio a little bit more. And so we've really been excited about having the multifamily provides big gains on the back end and the notes that we're investing in as private lenders and as um in the secondary mortgage market, that provides solid cash flow. So that's really what we're focusing on today is just a little bit more diversification of um big gains and current cash flow.

SPEAKER_03 47:52

No, that that's awesome. I think um notes investing in notes is a powerful strategy, especially you know, if you find the right market to where you don't uh face much resistance in terms of trying to get the asset uh back if you run into problems. But um no, I think I think that's that's really cool. Um so so that's good. So and so kind of going forward, that'll be kind of your strategy is to, you know, is to focus on both um more cash-flowing assets in the near term. And that's very good. Yeah. Good, good. So um, so uh, we're at the point of the show where we get uh I want to get an actionable tip for the listeners. And so if there's someone who's listened to this and they're excited, they like the journey that the two of you have um have been on and you've had great success in this business, um, but they're hesitant, right? So what can what can they do to then take action today to get into the business?

SPEAKER_02 48:38

I would say find a way to become part of a community. And you know, uh today there's a lot of virtual communities. I prefer the face-to-face, but you know, go to your local meetup, get you know, some business cards, touch base with people, take them out to lunch, learn about what they do, and and start to build a community outside of your normal, your normal and typical, you know, whether that's like your work community or your family, you know, build a community. If you envision yourself doing something different in a number of years, then start building that community.

SPEAKER_00 49:14

Yeah. And if yeah, if I'll give an example, the we have a multifamily national conference coming up, and uh there's a link, uh link on our website under podcasts and events, and it's coming up at the end of August, and it's an example of one of those weekend trainings that could change your life, just like we had we experienced back in 2012 and 2013 when we started with a two-hour training that led to a three-day training that that changed our the direction of our lives. And so there are there are uh live events to attend. There, like Adam said, there's there's uh there's education programs, but really education was the big thing that allowed us to transition from single family to multifamily because you don't just start syndicating 10, 20 million dollar deals without knowing what you're doing. Uh single, I like to say that single family, it's a very individual sport. Like it was our money. If we lost money, it was all on us. Multifamily, when you are managing other people's money, you have a huge responsibility to know what you're doing and to know the industry, know if you're going to be doing asset management, like know what to do, uh, be educated because you you have a responsibility to all of your passive investors to be fully knowledgeable on the investment. And so it's it's a much higher level of responsibility to go from the single family investing that's just us to multifamily syndications.

SPEAKER_03 50:49

Yeah, I couldn't agree more. And I love that you mentioned mentorship and coaching because I think that that's one of the fastest ways to compress the learning curve and to um not only understand it for yourself, but then to partner with people who have had great success with it. Um, you know, I share that with people all the time. You know, you had people are resistant to joining communities and mentoring because of, you know, I know that um, you know, that depending on who you hear it from, it's usually when you hear from people who've never done it, but but when you the negative view of it is typically from people who haven't taken action. But for the people who have, like yourselves, um and who are intimately familiar with the results that you can get from from a good uh mentorship program, um, then you know it's well worth it. And so um, yeah, I think that's just incredible. So um, where can the listeners um hear more about you and and maybe reach out to you? Can they do that?

SPEAKER_02 51:41

So we've got a new website actually, uh aeinvest.net. And uh so that'd be the best place to to to connect with us. And we love doing phone calls and and uh zoom chats and stuff like that. So definitely reach out.

SPEAKER_00 51:56

And you can remember because AE is Adam and Emily. We were really creative on our business name. Aeinvest.net.

SPEAKER_03 52:04

All right, awesome, awesome. So I'll put that in the show notes. And Adam and Emily has been incredible, incredible speaking with you today. Thank you so much for adding value to the show and to myself. I appreciate it.

SPEAKER_02 52:14

Thank you, Brandon. We're honored to be on, really appreciate it.

SPEAKER_00 52:16

Yes, thank you. Have a great day.

SPEAKER_03 52:18

You as well. As always, thank you so much for tuning in to the show today, brought to you by Bridge Prosper. If you enjoyed today's episode and you'd like to learn more about commercial real estate investing, please like, subscribe, and share. And we'll see you again next week. I'm Brandon Jenkins, and this is the Capital Stack, where we help you learn, apply, and prosper.