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Global Investors Podcast
GI14: $100 Million in Multifamily via Japanese and U.S Investors with Yoshi Asano
September 27, 2019
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GI14: $100 Million in Multifamily via Japanese and U.S Investors with Yoshi Asano

Yoshi Asano has been investing in Commercial investments over the past 14 years. Today as founder and managing director of BCF America Investments, he has been involved in more than $100 million worth of multifamily investments as a GP/sponsor; helping hundreds of US and Japanese investors acquire multifamily investments.

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Announcer: Welcome to the Global Investors Podcast, a show that focuses on helping foreign investors enter the lucrative US real estate market. Host, Charles Carrillo, combined decades of real estate investing experience with a professional background in international banking to interview experts in all areas of US real estate investing. Now here’s your host, Charles Carrillo.

Charles: Welcome to another episode of the Global Investors Podcast. I’m your host, Charles Carrillo. Today we have Yoshi Asano. For 14 years. Yoshi has been investing in commercial real estate in the US. Today as founder and managing director of BCF American Investments, he’s been involved in more than $90 million worth of multifamily investments as a GP/sponsor, helping hundreds of people invest into multifamily projects. Yoshi previously was a construction and he found that most people that he was that were hiring him were making more money than he was owning the real estate. And he, he decided to get in. And from 2012 he started focusing on multifamily investing. My number here of $90 million is gonna change this week. Yoshi is closing on a 236 unit asset in Phoenix, Arizona, which we’ll push that over a hundred million dollars a Yoshi works with Japanese and US investors alike. And I’ll let him explain more about that, about how he is able to design a strategy for both what he calls two pools of investors depending on what their goals are. So we’ll speak to Yoshi,

Yoshi: Can we go looking for portfolio deal at all? So just try to try to look for like bigger deals as well. So that’s one of it. And I try to look for the or value how of components, right? Definitely we want to have like some sort of cashflow deal cause if it’s going to be a negative cash flow or like less than 90% occupancy, harder to get the agency debt. Those are the deals stuff that we try to, yeah, we tend to shy away. We try to make sure that we have a pretty good cash flow in place, but the huge value built into the unit, into the deal.

Charles: Right? So it’s B to C, it’s with some sort of value added components that you can, you know, create some value. That goes into increased the, increase the whole assets a property value. What are when you’re looking for specific areas are there specific neighborhoods that you like most when you look into an area? Like you have the whole city all ready when you say I want to go into Phoenix, have you already decided what areas, what neighborhoods you like?

Yoshi: Buildings in class, being able for it, right. That’s the scenario, but it’s going to be hard to find. So what we are actually focusing on right now is like a gentefication area, like transforming area used to be like a C [inaudible] food, but it’s becoming a big class type of location. Have we find that we can find more value ad components in those neighborhoods.

Charles: Okay. Okay. Awesome. Now you work with a number of us and Japanese investors and how do you, how are most of you, the investors holiday found you a, is it word of mouth? Is it from other investors? And

Yoshi: You know from other deals you’ve closed, there was this three interesting. So I have a couple of business partners in Japan and the focus is more on the marketing to the investors. So they have a free, a healthy database and the network of Japanese investors they’re looking for deals in us, but the, they can’t find the deals that they don’t have to deal flows. They don’t have, they don’t know the markets, they don’t have the deal flows, they don’t have relationships with the brokers, you know that. So that’s when I, that’s why I come in. I provide a deal flows, asset management, stuff like that. So I think it walks up three well partner pot and ring up with the guy stuff focusing on more capital or the equity side. And I’ll be more like deal full size.

Charles: Okay. And one day when they come in, when they’re, when you’re dealing with Japanese investors, what are you usually find as their, their main goals? Do they have it? Is it just, I mean obviously it’s very tight. It’s very difficult to make any kind of return in Japan on multifamily. So is it return and some preservation as well or is it mainly preservation or is it just a mix of everything?

Yoshi: Yeah, it’s going to be a mix of everything. It depends on the type of clients or the or the investors. So I have a direct relationship with the more like we’ll draw high net worth investors in Japan. Those are, these investors are looking for more of the preservation. Right. so they would want to have like a class A deals in urban core, like best location, best asset, and the return, they don’t care about the ACAP, you know, [inaudible] too much. As long as there’s a cap. I mean, I’m not Cap rates. Some sort of cap cap rates too much. As long as there’s a, some cap rates, you know, like 3, 4% for them, you know, as long as they have some sort of cash flow and they’re looking into holding for like 10 years, 10+ years. So it’s more like asset preservation for them. So they also like New York city, LA and up to now they’re like Dallas, you know, cause that’s one of the, a good markets for the multifamily investments. And there’s another, a pool of investors looking for more returns, right? More of like what I, what I do actually here as a, as an SUV with the syndication deals in the delicate for like class Speedos they look for some sort of the cash flow, but they’re also looking for depreciation. You know, that’s part of the part of the play for them. It’s kind of like a bonus depreciation here that happening the last two years. Japan has the tax law that allows the investor to depreciate in four years if it’s so rupture [inaudible] a Fritz, DIA 22 years older. So class B deals become it’s a perfect fit for that for them. Cause most of the class be multifamily structures. 99% of the time it’s wood structure and the class videos built in 90s, 90s are 22 years old or older. So it’s going to be a best fit for them. So those are the old stuff they like for depreciation play. So I have two different type of investors.

Charles: So with that, with that that’s just for your Japanese investors, they can do that for 22 years plus. And they can, I mean, usually it’s 28 years, right? They can do the depreciation for us investors, but for Japanese they can do it for how, how are they set up for that? Do they have a U S are they able to use, like come in here, they sit up a U S LLC and they’re still able, or do they have to invest directly with their name being a Jack?

Yoshi: And he says, so for the depreciation, it’s kind of like a 10, 30, 10, 31 exchange share. You have to have your own name and that way you can have the attacks of Spanish. Right? So same thing for this depreciation place. So if you, if they invest as a joint venture or syndication, they can depreciate. So they have to own on their DNA. So typically they come in and 100% owner of the assets and a big them, they’re gonna use their own entity they already have in Japan so that they can write off through that entity.

Charles: Okay. All right. That’s very interesting. I’ve never, I’ve never heard of that before. That’s great. So when, when you have the larger, higher net worth investors, when they’re looking at class a properties they’re not really working through your firm than it is, is that correct? They’re going through a different syndicators or do you also have some class say that you’ve worked with?

Yoshi: Yeah, so, you know, I also have a you know, license real estate license. So I helped them find a deal as a buyer broker. And actually I take one on the asset manager. So I do pretty much same work as a sponsor, just a best fee instead of equity, a petition [inaudible]. So that’s what I do for those those investors. So either way, you know, I’ll, I’ll pretty much kind of a you know, create a second type of cash flow, my business. And a, I provide a lot of value to the Japanese investors because without the service they can get the deal here in the us.

Charles: Yeah. When you set them up or when they’re in, do you guys withhold their taxes for them during the withholding taxes or is that you pass it off to a CPA to handle all of that? We’re

Yoshi: Going to have a CPA handled all that. So typically dig on the register a doing business in the Texas. I mean when they buy, just not so boring boring entity. You can register in the state of Texas so that they know that they’re doing the business here and they filed a tax, you know, tax here in the U S and Japan and the U S I’m a tax Alliance actually between two countries. So whatever they pay tax here that’s deductible in Japan so they don’t double dental [inaudible] you know what I mean?

Charles: Yes. Nice. Yeah, they have the tag lines I imagine with doing the LLC now when you have two pools of investors a year. Let, just to circle back to that, just to clarify, so you have us investors as well that are probably a little bit more aggressive than some of your Japanese investors. Now, do you have another one as well where Japanese investors that are with properties that are 22 years or older, is that how it is? As much of DFW built in the 80s. So that’s not really an issue at all. And most of them all fill into that 20, 20, 22 years plus.

Yoshi: Yeah. Yeah. All the Japanese investors are you know, feeling a lot of the Japanese and Muslims are feeling like 22 years plus kind of deals. And the, for the U S investor [inaudible] you asking you my U S investors, right?

Charles: Yeah,

Yoshi: Yeah, yeah. So US investors, they don’t care about 22 years old or anything like that. Just, just a totally, you know, like looking for the deals that give you like returns. Right. My goal is to have like close to double digit cash on cash returns or three to five year a holding period. And I’m sure you tried to make it 80 to 100% of the total returns to the investors hold up at that time, like three to five years for the period. That’s the, that’s the type of returns I’m looking for for us investors for my investors in the us. And it doesn’t matter it’s class B, class C could be sixties, seventies, like could be eighties.

Charles: Right now after their four years, do you know if that gets recaptured their depreciation in Japan or, or is that okay?

Yoshi: Yeah, it will re recapture when they sell. Yeah. So they have to have a kill question into that investment. But still, you know, still they have a lot of you know, tax advantage you can take after the recapture and there plenty of supposedly until five years, right. So depreciation and a 50 year the capital gains tax will go down in Japanese talk slow. So they are going to hold the one additional year. And did they sell in five years less capital gain and the day enjoy that full depreciation over, you know?

Charles: Yeah. That was going to be my question because a, what your average in, I imagine for Japanese investors it’s at least five years. And then for the U S investors, it just depends on whatever, whatever completes the business plan. Okay. Well that’s awesome. That’s very interesting. I wasn’t aware of that. So, and then they, so when therefore when they’re, when they’re coming in here, they’re registering as a foreign entity. They use a Japanese name, a Japanese corporation, whatever it is. Come in here. They, I imagine let’s say a Texas LLC coming in and they have that and then they can show that too. Japan, their CPA in Japan and it’s all by the book and

Yoshi: That’s awesome. Yeah. They usually have a CPA in Japan or like of course. And you know what I do you jelly, you said there’s a CPA here who, who is Japanese and who have the knowledge home tax store in Japan as well. So that they can connect with those CPA and the two CPA talks and to try to figure out the best structure to walk out for both way. Right? Cause yeah, it depends on the day. It’s just like a, your tax situation. But my tax striations depends on the doing, depends on the business plans. You know, there’s a, there’s a, you know, best match in, in, in, in a tax plan. And so,

Charles: Yeah. And one last thing is what are, what is the first thing a new investor, say a Japanese investor comes to you and he’s looking to invest. What are the first couple steps that you kind of guide him through before you actually start looking at deal flow?

Yoshi: First step would be, well, so it’s, it’s very high level, very, very high level Japanese investor wanting to invest in outside of Japan. Those guys are has some sort of they, they want to diversify, right? They wanna they don’t want to have all the assets and the currency in, in Japan. Right? So giving them diversify, you know, different countries. And if you look up the different countries, a U S would be probably one of the best country to invest into real estate. So we, I kind of have to explain and the compare between like investing, you can invest in us, invest in Thailand, we invest in Malaysia or invest in Hong Kong. What’s the difference, right? What’s the currency risk, what’s the real estate risks? And kind of compare and guide them that U S will be the best best one of the best opportunity for them. And then, you know, talk about the cities cause they liked the LA, they like San Francisco, they like New York. So talk about why does, right, but what that, why Texas and talk about the, you know, the fundamentals and the job growth and population growth and all that stuff. And then talk about the motif on the asset class, you know, talk about PO retails, industrial hospitality and the multifamily and why we’re multifamily and then, you know, talk about just the fundamental multifamily investments. That’s, that’s kind of like what I do for the kind of high

Charles: Level first couple sip of a presentation to do then. So they’re looking at a number of different other international markets as well outside of their home, Malaysia, Thailand, and UK. Those are kind of common ones that they have looked into?

Yoshi: Yes, yes. Yeah. Asia is pretty popular, you know, like Singapore, Malaysia, Thailand, public places like those very popular. It’s like, it’s kind of more like high risk, high return, right. It’s very high, high returns, but it’s also a higher high risk. There’s a country release, there’s a currency risk, you know, whiskey bought into, it’s not just a real estate investment, it’s more like the effects in the foreign exchange and stuff like that. And, and is involved too, so.

Charles: Right. Yeah. Interesting. Yoshi, tell us a how listeners can learn more about you and your company.

Yoshi: Well my company, you know, my focus is multifamily investment, right? Syndication, some scale in the deal as a GP. So I’m looking for one more two deals in this year and hopefully I can pick up one or two deals and try to pick up like four or five deals next year. And then build the you know, like solid syndication company. Right. That’s what I kind of like, you know, I’m focusing on and of course I’m focusing on the markets in all the cities in Texas and some cities in Arizona, like I mentioned, Phoenix, central Florida and Atlanta. And I bill like, I try to go like the point where like I have like 10,000 plus units under my company as a, as a GP or a as a syndication, a sponsor. And then from that point, actually I actually am always wanting to get into the hospitality segments as well.

Yoshi: So I tried to get into the resorts developments in Japan so that we can, I can probably create a fund either in U S or in Japan and knock down those you know, result developments or resorts. Redevelopments you know, I can come in by the districts ski resorts or some sort in Japan and renovate them. A top converted into like a high end luxury result hotel. Right? That’s what the lack in Japan. There’s, there’s a lot of interests right now that they want to come to Japan. For the, for the vacations, but they can’t find a luxury hotels. Hotel is there to stay. And that’s what they are looking for. You know, a lot of the tourists from Hong Kong and Singapore, those in the U S in New York to those are the guys that are looking for like, like luxury boat. They’re spot that there, there’s not enough. So that’s kind of like what I want to do in like three to five years, but the next, next three years I’m really like super

Charles: Say the kitchen business to like 10,000 years. Yeah. Awesome. And how can people learn more about your company and you’re saying the best way to reach out to me is to email me so that you know, we can, we can talk about your goal and my goal and to see how we can work together. So just email me seven [email protected] That’s my email. Okay. Yeah, I’ll put that in the bottom of the email for everyone. And I think yeah, I think that we have everything here so I really appreciate you getting on the show today and thank you very much. Have a great rest of your day and good luck with and good luck with your clothes. Oh, thank you. Thank you. Nice talking to you. Nice talking to you. Thank you. Okay, bye bye.

Announcer: Thank you for listening to the global investor podcast. If you’d like to show, be sure to subscribe on iTunes or Google play to get new weekly episodes. For more resources and to receive our newsletter, please visit global investor podcast.com and don’t forget to join us next week for another episode.

Announcer: Nothing in this episode should be considered specific, personal or professional advice. Any investment opportunities mentioned on this podcast are limited to accredited investors. Any investments will only be made with proper disclosure subscription documentation and are subject to all applicable laws. Please consult an appropriate tax legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of Harborside partners incorporated exclusively.

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About Yoshi Asano

Yoshi Asano has been investing in Commercial investments over the past 14 years. Today as founder and managing director of BCF America Investments, he has been involved in more than $100 million worth of multifamily investments as a GP/sponsor; helping hundreds of US and Japanese investors acquire multifamily investments.

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