fbpx
Global Investors Podcast
GI37: The Importance of Asset Management When Investing in Multifamily Properties with Chris Jackson
March 4, 2020
0
The Importance of Asset Management When Investing in Multifamily Properties with Chris Jackson

Principal and Managing Partner of Sharpline Equity, Chris specializes in finding underperforming multifamily assets with high upside opportunities. Sharpline Equity currently has 300 units under ownership in their portfolio.

Watch The Episode Here:

Listen To The Podcast Here:

Transcript:

Announcer
Welcome to the Global Investors Podcast, a show that focuses on helping foreign investors enter the lucrative US real estate market. Host, Charles Carillo, 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 Carillo.

Charles
Welcome to another episode of the global investors podcast. I’m your host Charles Carillo. Today, we have Chris Jackson. Chris began his career as a computer programmer and now is the managing partner of Sharpline Equity. Chris specializes in finding underperforming multifamily assets with high upside opportunities, and currently has 300 units in their portfolio. Chris has over 10 years experience and over 500 units of experience in all aspects except real estate investing, from flipping, wholesaling, lending, and then small multifamily to large multifamily. So thanks so much for being on the show.

Chris
Thank you for having me.

Charles
So it’s pretty interesting because you came from the your tech background and then you became a real estate investor. So I want to kind of dig in a little bit more to your professional experience prior to you becoming a real estate investor, or prior to you starting your current business.

Chris
Sure, I was a computer programmer for a very long time. I would I’m an introvert by nature and I dove into computer programming one because I loved it but to it allowed me to like hide behind the computer for many years. I was very good computer programmer and rose up through the ranks of programming and project manager and partner, but I really was hiding behind some insecurities about that about outwardness and just like I was able to just hide and do my skill set within computer program that’s turned out to be a great skill set that Have in real estate investing. But the truth is, is that I was hiding behind my introversion and I had to get over that through quite a few years of personal growth and brutal, brutal personal growth mechanisms and attempts to find my inner extrovert which has helped me and it’s been a wonderful process and that’s when I really started to flourish as a real estate investor and that actually helped my tech career when I started to find my inner extrovert.

Charles
What is your specialty then? Are you more of an analyst or are you more of the person that’s going out raising the money?

Chris
So I have a business partner. Her name is Krista. She is a an attorney. She and I both handle asset management. We have that overlapping skill set. She also is wonderful at creating relationships and raising equity for deals. But I’m actually the deal finders, the analyst, the underwriter she can underwrite as well, but my main focus is creating relationships with brokers, direct to sellers, bankers, and investors. And that has come from me really finding that I’m like an ambivert, I have used my introversion to find my superpower, which is to create very authentic relationships very quickly. Because I’m not the the guy that goes out there and shiny handshake tons of people. But I go out there and I can quickly, authentically make real relationships, people very deep relationships quickly, because that’s really where I want to spend my time.

Charles
Yeah. So you’re the guy that goes to the conference, and instead of getting 50 people’s business cards, you get five and you really become very close with one or two of those people.

Chris
Yeah, that’s what happened. I feel like that’s an advantage on the broker relationship side to the brokers know that I’m a real dude. And that, that we have a relationship and that allows me to get higher up on the food chain of getting access to good opportunity.

Charles
Yeah, it’s great that you’re the underwriter as well when speaking with the brokers, because then you can give them the quick feedback of what’s happening on the deal why you like a deal why you don’t like a deal and kind of, you know, everything like that you have to to enhance that broker relationship.

Chris
Yeah, I mean actually that’s that’s an important piece right there because when I’m talking to brokers, I’m not just talking about the the one deal that we’re going over and they know that I’m, know my stuff. It’s that I’m so active in the market that I bring up reference points to value of other properties that have sold or are about to sell or doing a certain amount of work where they’re getting rent increases that are surprising. Or some issues that are happening on some other properties in the areas and the brokers know that I know the market and then they know that they can get information and value from me too. So that creates the deeper relationship.

Charles
Yeah, there you go. Yeah, that’s exactly how you want to do it. Then you know, when they’re sending you a Deal, you’re gonna come back and it’s going to be a yes or no, very quickly one way or the other or maybe and with your specific reasons why for every answer. Why did you choose real estate as your investment vehicle when you were when you were starting out? And what other, can you explain more of your other real estate background that you had prior to syndicating?

Chris
Yeah, sure. I’m 44 years old now. And when I was about 21, I got the real estate investing bug. I was seeing the Carleton Sheets of the world. I got the CDs, and for 10 years, because of my introversion, I just thought about real estate and did nothing. Absolutely nothing. I I was a real estate investor in my mind. And I overanalyze, because that’s what I think a lot of introverts do is overanalyze, and I remember it was about 10 years ago, I was speaking to my wife and I just said to her, I was like, I can’t Think about real estate investing anymore. I need to do it. So I hired a mentor, a local mentor and I went right into small multifamily. And I picked real estate because it felt like even though I was an introvert and I was overanalyzing things, it felt like an asset class that I could once I had the knowledge once I could get over the analysis, paralysis, and start taking action, I knew that I could control the value. It was an asset class where I could control value. And that was really important to me.

Charles
Yeah, it’s much more much more control than you do on any other asset class within real estate, especially single family homes where you’re kind of at the mercy of the neighborhood and the comps in that neighborhood.

Chris
There are various levers all over the place operationally that you can pull maneuver to solve a problem or increase revenue or execute your business plan, react to things that are surprises. I love the different levers that you can pull in all areas.

Charles
So you being so knowledgeable, different markets that you’re in what are your target markets? And what is your criteria when looking at those markets.

Chris
So right now the bulk of our portfolio is in the Southeast in the Georgia market. We have gone into larger multifamily over the last few years, we are entering the North Carolina and South Carolina markets, when we can find the right opportunity. We tend to stay away from the Coast just because of insurance premium issues for us. We like markets that have the basics, but important to say is, you know, job growth, population growth. So we focus on those areas, even though those are highly competitive. They still have the bedrock of the market that we’re looking for and with our you know, our relationship building and our ability to penetrate a market and using data at various forms, we feel that we can find opportunities I’ll be competitive right now because of the top of the market cycle. Those are still the areas we want to focus on.

Charles
Yeah, what so many different syndicators out there especially with so much buzz around multifamily investing? How do you guys differentiate yourself from other investors out there? Because obviously there’s I mean, a southeast myself being down there as well. It is a there’s everybody’s everybody all over national syndicators are all over here buying properties looking to buy properties.

Chris
Yes. The way we differentiate ourselves is we bridge the gap between the investor and community, we feel that there is in the marketplace, a lack of connecting those two, there’s a lot of focus obviously on the investor and that’s absolutely critical. You have a fiduciary responsibility to your investors, but it’s at the lack of paying attention to community development. So when you apply principles of community development, in various forms, you get residents that want to stay longer. They want to they get word of mouth after vertising and that in effect if when you when you also focus on community development that enhances your returns for your investors. So we bridge that that gap. And that’s where we feel like we differentiate ourselves because we actually execute on tactics to develop community.

Charles
Yeah, that’s so important because with syndication with the whole value add thing, which is, I mean, what everybody’s been doing, and it’s everywhere. It’s all about, you know, putting work in and jacking up the rents really, I mean, that’s really what it comes out to be. And that’s the only way that you hear from normal syndicators, how they’re able to add value to it. And I always think there’s hidden pieces where you can also by cutting down on the turnover is one of the other factors and this is one of the ways you’re able to do it. You can also create value because of turnover costs. Obviously, anybody that’s ever owned any type of real estate, rented it out, they know it sucks. It’s like the killer in the whole deal for the landlord. So it’s something where it’s pretty great to have someone with an additional kind of avenue of generating and building the NOI other than just, hey, we did some work to your apartment and now your rents going up, you know 10%.

Chris
Yeah, exactly. I mean that that’s the that’s the hidden area of, of multifamily. We’re operators. So we’re constantly looking to tweak various areas in an asset management and community development as part of asset management.

Charles
How does your asset management since you guys speak so much, because most of the time with, with real estate investing with syndication, anything like this, you’re doing about deal flow, and then you’re dealing about and then you’re also talking about raising money, and those are like what people really focus on, but no one really focuses on the most important port, which is actually running the property in the asset management. So how do you guys how do you have that structure with your firm?

Chris
So yeah, I mean, that’s when the work actually begins. I mean, it’s, it’s you find the deal. You raise the money, you said, you celebrate everybody celebrating, but actually, that’s actually day one. So you got that you’re the operator now, you have to operate the deal and you can have a great deal. That’s, that’s miss operated and then that’s actually opportunity for the next person. So that’s why operations is really important. Asset Management is not getting enough play as it should in the multifamily world. One because it’s not sexy, that’s just it’s not sexy, it takes a lot of discipline. And there are areas of focus that most people are not paying attention to. And that’s also where we feel like we differentiate we have you have a few pillars of of asset management that we focus on, you have resident marketing, delinquency management, renewal management, community development, reputation management, and then you also have the onsite staff management, which is either your self manage PM or third party management. So when you focus on these areas, there’s so many levers that you can pull within those and focusing on within the each of these pillars allows you to improve the NOI of the property.

Charles
Yeah, that’s pretty Right. I mean, that’s, it’s definitely their thing, too, is that there’s not that much money made for the syndicator on the asset management, they get that, you know, one or 2% a month, it didn’t get a big acquisition fee. They’re not getting a big disposition fee. It’s really they’re just the ongoing and having the calls with the pm and the project managers and contractors during it is, like you said, not the most sexy thing of real estate.

Chris
Oh, that’s, that’s really the work. That’s where, you know, there is a bit of this going on in the industry right now just because of the heat of the market cycle, but it is like the hunting, you know, and like you mentioned, it’s about getting the deal and that’s where and then like and then the the fee that you get during the asset management, as you mentioned, is not as big as compared to the acquisition fee or the exit. So that’s why like we that’s where we differentiate ourselves that we are more of the operator holder group. So although the fee is not as huge as we are taking on projects where Just make sense where the whole entire project is viewed as the the part of the fee structure acquisition fee, the asset management fee, the exit. So we are operators at heart. And that that really is our focus and and i would love more multifamily groups to start paying attention to because I think that there would see that you can operate buildings better.

Charles
Yeah, of course, because it’s funny because that’s the thing that every person every investor should be looking for is a mismatch building. And then when they actually acquire it, it’s kind of put on the back burner, and you’re like, well, now I see how these how these problems start, because people show me, this has been mismanaged 510 units or 510 million dollar building and you’re like, how is that possible? Someone would let this go disarray. But then you see it because people are putting in the backburner after they acquire it. And they’re focusing on underwriting other units and other stuff and they’re not really 100% into getting that deal actually where we’re supposed to be or where should be in the cycle of the whole value add.

Chris
The Australia Phone calls every week with your property manager. And and it’s not just a Oh, and we spent an hour with that property manager. It’s a review period on our team of the Monday morning report. What areas that have been done correctly last week, what areas we have to pay attention to what things hadn’t been done a lot of whack a mole, a lot of bumper bowling, so that you don’t lose. You don’t lose two weeks, you don’t lose a month by just getting your report at the end of the month and saying Oh gosh, like we have to correct things you you can understand why things are going off track you can make quicker decisions when you see that there’s going to be more notice to vacate coming up and that maybe you have to push marketing a bit heavier this next three weeks to get ahead of it.

Charles
Right. It’s also crucial to do it in the first 12 months, especially the first six months of after acquisition because that at that point is where the truth really comes out. And you find out that, you know, people were paying later than they said and late fees weren’t being collected. Now you’re you might have a whole mess of all issues coming up where you have to be well, we thought we were gonna Vic this money. But now we’re gonna have to do this now we have to stagger it a little bit because we have to keep the cash flow coming in. So it’s really you have to be very it’s very intense for the first few months after acquiring especially a larger property.

Chris
Yeah, I mean, do we have to, do as a group have to pay attention and exert more energy to delinquency management? Is there a way to improve that without just ripping band aid off? Like, you have to really analyze the whole piece? I mean, usually, like the strictness of your of your delinquency management is crucial. You need to understand, you know, is it possible also that you have a fair amount of residents that were just very unhappy with the last owner that wasn’t taking care of maintenance requests, and you do have better resident base than you thought, but now you just need to take care of them or it’s it’s a review period. It’s just a it’s a holistic view of all the pillars and then when you dive into each pillar, that’s what’s so important about operations. That’s the part we love. I mean, truly.

Charles
Yeah. there’s a there’s a lot of, there’s a lot of ways that you can, I mean, there’s a lot of different facets of the whole asset management. And there’s so many different ways that you can actually add value to it, which is different from just like we spoke about earlier than just raising rents and doing it’s just the retention i think is a huge part but you coming from the tech side, and now you’re involved with larger multifamily properties. How does your company incorporate technology into running your business currently,

Chris
Yeah, you can quit being a tech guy. I’m used to the communication side and task management and workflow management and through tech tools. So just from internally at our business, we use Trello and Asana for various types of movement of tasks through projects. When we communicate with our on site property management teams, you’d be have all the various communication forms of video and we make them use Trello and Asana and you can use FaceTime to see things more accurately shorten the distance. Let’s cross virtual teams, if you will. And then also applying technology. And all the various disciplines that we just mentioned of asset management gives gives us an edge to where you have all the new school types of Resident marketing out there from Facebook, Craigslist, email blasting, follow up mechanism through technology tools, communications with residents through community development with newsletters and things like that you get when you don’t have the knowledge of those tech tools to make it easier. Most people tend to just shy away and not do the work. So with my ability to know which tools are appropriate and integrate them through all the teams, it gives us an edge not just from communication within our teams, but but communication with the onsite property teams, to the residents and community and that communication, quickness and response time is where it’s really important for residents and community development big Everybody’s used to things very quickly now the attention spans are gone, and expectations are high. And you can introduce tools that make it so it’s not overwhelming to be almost real time respond.

Charles
Yeah, I was at our meetup yesterday that we had, I had a property manager that was in there. And he was just saying, the, the quickness of the response, right? of going back to that 10. Even if it’s something that small or something you’re not going to handle or something you’re going to put off right for a few days, if you have bigger problems or whatever’s going on, just letting them know that you’ve received it, that you’ve you know, that you actually have it, that you’re responding back to them that whole little process saves so many issues, he says, with all this madness.

Chris
I fully agree and you can then take it one step further to which is say you get a negative review, which is now getting into a reputation management. If you respond quickly, and proactively reach out to that resident that you say Oh, like what happened here there was must have been a miscommunication between You do something wrong. And you correct the issue. We’ve seen that when you respond quickly one online so that you have all the ratings algorithms see that you’re a responsive owner. And then to your responding on the human level, quickly to the issue we have seen that you’ll get I don’t have the exact percentage, but I feel like I’ve seen there were five negative reviews and we responded very quickly. We almost got four of them removed right away, the poster will remove the negative review because they feel taken care of and that’s, that’s important. You’re dealing with this number of residence, you’re not going to be perfect. And you are going to have some negative reviews that show up but how you handle that negative review is really the difference maker and you you that’s how you maintain great reputation is that that negative review got removed and you it’s not just falsely, oh, let’s just get our bad ratings down by doing something. It’s actually taking care of the resident that they they themselves were Move it.

Charles
Yeah.

Chris
And now that now you have word of mouth spreading that they got taken care of. And that’s what we care about.

Charles
Yeah, it we’re living in that Amazon overnight, same day kind of thing where you have to do everything. It has to be done quickly. And they have to respond some people you know, they’re putting something in they want to get a response on it. They want to get their their question answered. They want to get their problem resolved and they didn’t want to have to deal with you don’t waiting it out so long. So it says you so important.

Chris
Owners and asset managers have to provide the technical tools of communication that allow for our on-site teams to respond that quickly without feeling overwhelmed with what it takes to be quick responders. So if you don’t have the processes in place or the tools to accomplish that, it’s going to feel overwhelming, and that’s where tech can help.

Charles
Other than Trello and Asana, which I use I love Trello and Asana is great for project management what other what other tools software to you guys utilize.

Chris
For which parts? There’s so many.

Charles
For let’s say for doing the actual management where your tenants are actually logging in and then how do you how do you communicate with other teams? So you have your inside team, I imagine you might use something like Slack and then how do you speak with your outside team such as contractors or stuff like that do you bring them on to different platforms is done.

Chris
So we use we use slack as our communication tool for our entire team. And then the even inter team amongst all of our property management team or a contractor that’s doing longer period of time work would would get put on Slack so that there can be a communication channel and and then we use a lot of video you know I’m and then I actually go out old school I’ll take a I’ll take old school approach here is, you know, with all of this, we can throw tools at and everybody can hide behind stuff. I get on the phone. Very, Very, very quickly, it’s about communication. So I know when to pull it off slack and email and get on the phone and develop relationship relationship and hear a voice inflection. So you know when somebody is upset or not, or give them encouragement and reward, and encouragement, some other to you know, go I’m sorry. And then as far as you know, numbers management with the various p&l that are coming through on properties, that would be dependent really on your, if you’re using third party management, you’re going to have teams that use a certain software package. So we are used to using various platforms there such as that folio, build him real page, which is super powerful. And we can dive into those systems from our teams and we know how to work with each third party management team within those systems.

Charles
Awesome. Yeah. So you guys have access, full access to it so you see exactly when rents been paid when yeah. Oh, yeah. That’s awesome. Yeah, that’s That’s exactly what you need, especially when you’re speaking to investors and you know exactly where you are in the month and where everything has been done. You know, you can give actual factual, relevant information when you’re giving that monthly newsletter, or you’re doing that webinar with your investors for a product that you’ve previously closed, correct. So with, with where we are right now in the market, and everything like that, what do you think the next the next few years? Where do you think we stand with multifamily, let’s just say, as an example.

Chris
So it’s interesting is that a year ago, you know, we all said, including me, everybody was nervous and mitigating the risk of interest rates going up. It now seems possible that interest rates are going to stay the same or possibly go down. So if that occurs, you are going to see if even if there was a blip in the market for what would no one really can predict if there was a blip and interest rates go down, you would somewhat have a plateau on pricing, because interest rates went down. Where we’re seeing in the marketplace though, as an overall where We’re looking for opportunity. And what I could see is I’m seeing what I what I’m calling. And, and I, I’ll give credit to a guy named Bill Ham, a buddy of mine, he coined this phrase, but it’s a great phrase is called the catback. Tsunami. We are seeing pre 1980s buildings, getting the kind of capital infused in the areas that you were mentioning before, which is in the unit upgrades the units only one to $10,000 in the units to get that rent increase and capture it because there is demand for that kind of increase in the unit in unit upgrades. However, all that’s great and your top line income goes up. But if you’re not servicing the capital needs of the bones of these pre 1980 buildings, you won’t have predictable cash flow. And we see an opportunity in the future, if we can get it at the right pricing for introducing capital at those areas that are getting neglected. Good like roofs, windows, underground piping, AC, water heaters you can in the future, I think there’s going to be an opportunity where capitals not getting infused properly on some of these projects where we could go in at the right price and concentrate on those bones of the buildings in those high demand areas and still continue to work on unit upgrades. But if when the numbers work, infuse the right capital so that you’re handing off a better stable building catbacks building that’s pre 1980s to the next investor who is going to discount people in the future for not doing that work. Right now everybody’s getting rewarded for the top line only. But I do I am starting to see the next buyers in the chain start discounting some of these catbacks needs that are going to start calling we’ve already had two projects were in the 1970s built have underground piping such as cast off iron. And I’m not talking about the unit plumbing, the underground piping, the main lines cast iron, galvanized, they’re 50 years old, they’re coming to their service of a life and we’ve had to put money into those to fix them. And we had one where it was a $21,000 a month bill for water, put $100,000 into replacing to PVC and adding main shutoffs to every building and a drop the water bill to 11,000. So that’s $10,000 savings per month. So it’s a payback of one year. And you’re also going to get rewarded in the future for your evaluation from either I future refi or a supplemental or your next investor saying I’m worried about these things on this vintage Oh, but you did that work. I will pay you a premium for that for doing that work. So I see an opportunity in the future for undercapitalized older vintages and finding those when the pricing is right to do that work and to be able to service the entire building and Not just you know,

Charles
It’s on the water pipes, it’s also on. It’s even on natural gas lines. I don’t know how your properties are there as well. But I’ve had that on some my properties as well, I had a repaper property a few months back, that was natural gas. And the pipes in the property were like pre 1960. So they, when they were doing it, it was they had put, they put like a cent into the gas, which rooms, all of the joints and stuff like that. So I had to have a whole property redone like that. So it’s definitely one of those things that because now everybody’s doing like we’re talking about the sexy upgrades, which gets the top line going, but no one’s going to pay more for rent for a roof that doesn’t leak for windows that aren’t as drafty. So that’s the kind of stuff that needs to be done. And then it will be actually a true turnkey property for the next investor who will most likely be you know, our exit strategies and most of these are to yield investors. So people that just want to hold it long term. Fixed low debt and hold it for for, you know, 10-15 years plus.

Chris
And you and you when you keep your records correct, and you can showcase the next investor that these are the things you should be worried about. But these are the things that have been solved, I believe you will be paid a premium for those. And right now, what’s tough is that to accomplish all that, a lot of numbers don’t work because the numbers are just there to get into a property do the unit upgrades. And, and that’s it. So yes, it’s challenging to find that but I believe in the next few years, those capex needs are going to come calling and we can see an arbitrage in the market for that as an opportunity for us. We also see an opportunity for our group, with a smaller group of investors on some of the smaller unit counts where we can deploy our asset management skills, our operational skills to overcome some of the negatives of smaller unit counts, the lack of advantage of economies of scale, but go into the smaller unit counts doing what we do. Applying asset management principles that we apply to all of our unit size properties. And, and and beat some of our competitors that maybe don’t have as much access to capital and wherewithal that we do.

Charles
Yeah, for sure. It’s so important. And it’s something where especially in the older property, sometimes you’re almost opening a can of worms. So you might try to pack something, and then you find out later it would just been easier just to do the whole thing. And obviously, yeah,

Chris
No, we actually that that was the process on one of our buildings we had, we had an idea that there was possibly a water issue, but it had been fixed by the owner. It was a whack a mole. And the problem with water bills is they’re they’re kind of like three months behind, unless you have it like real time water sensors. So it was fixed but we did have enough cap x in our budget kind of as your mark like I think this day is going to come calling and we had a water leak show up and we whack a mole at once. I think it was something like two to $4,000 of a fixed the next one occurred again and it was two to four and we were like done forget it we’re never going to whack a mole this thing forever at two to $4,000 clips let’s let’s get the pricing on what it’s going to take we had an idea of what that pricing would be and delivered on it and it it’s it’s it’s a stinky project you know it’s like you rip up the the under rip up the the sidewalks it’s it disintegrates the show trail of your potential renters for a time because they should kind of show up to like mud and everywhere. But these are the kinds of decisions that are required by operators to make these hard decisions deploy that kind of correct capital on the non sexy catbacks items, but ultimately do have investment value and return value on all the areas immediate cash flow or reduction of caps cash flow loss. Like if like in this case, a water leak like that was like let’s improve And, and and stop it from being so high, but then we reduced it to a level that, wow, this is more consistent and predictable for us and the next investor and we’ll get rewarded for it.

Charles
What what vintage are the properties that you’re looking at in Georgia? Are they 60s, 70s 80s?

Chris
I mean, we are looking at 60s and 70s. But right now what’s happening is we need to apply a certain amount of capex in the budget to handle the pre 1980s buildings to do it, right. That’s harder to find. So we are looking at newer the problem with newer 1980s and newer, it’s just like everywhere in the market cycle for everybody it is a flight to quality. So you have a lot of competitors. You have a lot of big money in the institutional funds that know the same thing that we do. So you are competing against lower expectation returns on capital. But yeah, we are looking in both areas. But when we look at these newer than 1980 or older than 1980 when we look at older than 1980 We asked right away is there PVC pipes underneath? So that’s, that’s kind of our deductive reasoning there, we will still look at I’m not saying no to 1960s it just usually means I’m priced out for the time being. Because we have to do the right catbacks. However, we still are finding opportunities here and they’re there. You just have to filter them correctly.

Charles
Yeah, a lot of the operators don’t want to deal with a heavy value add. They want to just do a little lipstick and they want to just keep it for for the yields, you know what I mean? So so in regards to passive investing, and what kind of if you had somebody that wants to be a potential passive investor, what factors would you have them look when they’re researching different potential syndicators? What should they look for? In in partnering with another general partner with a syndication?

Chris
Sure they have a track record really importance their experience in multifamily and they should develop a relationship with the sponsor, and find out if they’re of like mine, thinking? And how they approach investing in multifamily. What is the desired goals of the investor and the sponsor? I think that you should look for sponsors that have full cycle we have five full cycle deals under our belt that from finding the deal raising the capital communicating with the investors executing on the business plan either through bridge loan or refinance and then and then ultimately sale. So we have five and like you want to see that a sponsor that knows what it’s like to go through these various processes and then ultimately have the sale return of capital and return.

Charles
Yeah. Now super important the transparency in the syndications as well like you were saying, having the being able to speak to people and to provide them with factual information from it helps out with having all the the tech pieces that you guys employ, but you’re able to tell me exactly what’s happening, what’s going on. And when you’re getting those reports and copies of bank statements. Whenever you do monthly or quarterly, it allows all your investors to see exactly where you are not just I’m telling you over the phone or by email, you know what I mean? So

Chris
You need to communicate with your investors through every technological means possible through we do a lot of video, in our newsletters. We do like the newsletter and we give the financials and but we’re also talking through some of the things that have occurred that month, and what we’re planning to do in the future. And that transparency is critical when there are surprises that come up, how you have determined what the problem is, what are the options that you have at your disposal to solve the problem what you chose as the sponsor is the solution that ultimately is benefiting the investor and the project for the long term. So you have to talk through those things when hiccups happen. And then when you do that, yes, it can be uncomfortable in there’s a surprise but you know, you should be planning for some surprises and how you deal with surprises is very Important. Yeah. And then when you deal with them and execute on that plan, and you talk about it later about how your, your solution worked on you, you have investors for a long time because they felt good about the entire process. They never felt like they were in the dark.

Charles
Of course, and I think when you’re purchasing an asset, especially something that’s 40 years or 50 years old, I mean, it’s it’s foolish to think that there’s not going to be any type of surprises. I mean, you’re buying a property say with 100 different tenants, hundred different customers that are there a property that’s 40 years old, 50 years old, I mean, that expectation has to be given to the investor especially a first time investor at syndications because then they know exactly what to expect. Hey, we’ve and then also hey, we’ve over raised by you know, we have an extra reserve of this and we have a reserve this and that gives them the, you know, it tells them hey, we can weather any kind of storm that we have, for the most part, obviously, if there’s something really drastic, but

Chris
For the most part I mean, all those those pieces that you mentioned are really important. It’s like where’s your capital stack? What are your contingency plans, all those things are are super important. But it’s also important to is just because a building is older, that could have surprises. I’ve seen some new build stuff have surprises with shirt and you know, you could have settling problems on a new build. Like, there can be surprises really in any business venture. So new, basically just communicating what you think the risks are for all the varying asset classes and and talking through how your approaches to mitigating those.

Charles
Right. Yeah, it’s really if you’re looking to buy a property in this in this syndication, this firm has specialty and buying you know, 1970s to 1990 built properties and C class properties, okay, and that’s what they’re buying then. Okay, this is right in their wheelhouse. If I was dealing with person, they were dealing with B plus properties that were 15 years old and now they want to buy a property that’s 45 years old. It’s not really right in their wheelhouse.

Chris
Yeah, I mean, you’d have to talk through with them have the open communication or expect the communication to come from the sponsor about how they identified that maybe this is the first time in their wheelhouse that they’re doing this new asset class, but what have they thought through as far as recognizing that these are the pieces that they are concerned with? how they’ve mitigated it, but here’s our approach to mitigate them, and we’re going to take it on, because we have the experience in these other areas. But it’s just has to be well thought out. That’s the transparency piece. It’s being self self aware. If we were to do new build tomorrow or buying a class. I’m not saying and no, but we would talk through these are the pieces This is our first time doing a class this is what we’re worried about. This is why we think it’s a good deal as compared to other a class. And is this the right fit for you, Mr. investor, given that this is our first a class that’s that’s the kind of conversations that sponsors should have with their investors.

Charles
No, awesome. Yeah, no, I totally agree. So, Chris, how can people learn more about Sharpline and yourself?

Chris
I can go I’m pretty available on the internet of through variety of places, but it can be reached a Sharpline Equity website, sharplineequity.com, there’s a contact form. We answer those emails can reach me on Facebook, Chris Jackson, you can say Chris Jackson Sharpline. We also have a private Facebook group called multifamily unveiled, where we talk about the ins and outs of things that we’re experiencing some we do a lot of thoughtful shares in that group, and also on LinkedIn.

Charles
Awesome. Okay, well, I’ll put all those links into the show notes. And I want to thank you one more time for being on the show and look forward to connecting with you soon.

Chris
Thank you. Appreciate it.

Charles
Thank you. Bye.

Charles
Hi guys, this is Charles from the Global Investors Podcast. I hope you enjoyed the show. If you’re interested in investing in real estate and you don’t know where to begin, set up a free 15 minute strategy call with me at schedulecharles.com. That’s schedulecharles.com.

Announcer
Thank you for listening to the Global Investors 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.

Links and Contact Information Mentioned In The Episode:

About Chris Jackson

Principal and Managing Partner of Sharpline Equity, Chris specializes in finding underperforming multifamily assets with high upside opportunities. Sharpline Equity currently has 300 units under ownership in their portfolio. Chris has over 10 years’ experience and over 500 units of experience in all aspects of real estate investing from flipping, wholesaling, lending money, small multifamily to large multifamily. Chris began his career as a computer programmer and has 15 years’ experience in the tech industry. Chris resides on the North Fork of Long Island with his wife and two children. He is an avid bird-watcher and snowboarder.

1

About author

Admin

Related items

GI41: Successfully Investing in Student Housing and Apartments with Jeff Greenberg

GI41: Successfully Investing in Student Housing and Apartments with Jeff Greenberg

Read more
Syndicating 1000+ Apartments While Working Full-Time with Powell Chee

GI40: Syndicating 1000+ Apartments While Working Full-Time with Powell Chee

Read more
Multifamily Financing Options for Foreign & US Investors with John Brickson (Youtube)

GI39: Multifamily Financing Options for Foreign & US Investors with John Brickson

Read more

There are 0 comments

%d bloggers like this: