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Global Investors Podcast
GI57: Syndicating New Real Estate Developments with Sam Bates
July 22, 2020
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Mr. Bates is a partner of Trinity Capital Group that is based in the Dallas Fort Worth area. Sam’s background is in financial services, state and local taxes, and real estate. He has been directly involved in the acquisition, rehabilitation, disposition, and management of around $75 million dollars in multifamily and single-family real estate since 2009.

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Transcript:

Speaker 1:
Welcome to the global investor podcast, a show that focuses on helping foreign investors and, or the lucrative U S 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.

Speaker 2:
Welcome to another episode of the global investors podcast. I’m your host Charles Carlo. Today we have Sam Bates over the past 10 years. Sam has been part of nearly 75 million real estate investments. In 2016. Sam founded Trinity capital with two other partners, and over the last four years, they have syndicated 11 real estate projects, including apartments, retail development, and mobile home parks. So thanks so much for being on the show. Sam Charles, thank you for having me. It’s a pleasure and look forward to speaking to you more. Okay, great. Great. So can you give us a little background on yourself prior to starting Trinity? Yes, and my background really wasn’t in real estate. Um, I got a undergrad in finance and I thought I was going to get my masters in real estate, but during that time period, I got an internship out in Los Angeles with UVS and I really loved it.

Speaker 2:
Um, so, uh, after the internship, I started full time as an investment analyst with UVS and, um, I put together a stock or client portfolio. It was mainly stocks and mutual funds and that was back in Oh five when the market was going up. So it was, it was a pretty easy job and all the portfolios were well, all the client’s portfolios, we basically put in the same funds. So there wasn’t a lot of thinking or thought behind it. So I decided to go back at that time to get my masters. And I thought I was gonna just be in the S I guess, investment analyst business forever. So I got a masters in financial planning, and then there was a joint MBA program. Well, I graduated the market tanked and I then want to go back in to basically having people put their money in equities when I had no control over it.

Speaker 2:
So, um, I took a job at a consulting firm and I worked at a consulting firm and tax accounting for about five years. And then I worked at an energy company for five years doing taxes as well. And during that time really early on, I realized I didn’t want to work in corporate America. And I knew there had to be a better way. And I kept going back to real estate, even though I didn’t understand much of it. I just started reading a ton of books, networking, and I was a limited partner in my first deal in 2009. And that’s where I got the real estate bug and started investing since 2009, 2010. So why did you choose real estate as your, uh, your investment vehicle? I think, um, I I’ve always been an analytical and numbers person and it just made sense. And at that time I started buying single family assets in 2010 and in Dallas Fort worth, I was buying three and four bedroom houses for 60, 70, a hundred thousand dollars.

Speaker 2:
And you’re a cashflow and anywhere from three to $500, usually on those after renovations. And it just made sense. Um, I liked the business model. I understood the entire process. I’ve lived in either apartment or house, obviously my entire life. So it was just something easy that I could do on the side and grow it while I was still working 50, 60 hours at the consultant job. So tell us about your first couple of real estate investments. I know you did, you did passive investing and then you were, uh, you, you, then you didn’t re did you actively invest it? So if you could tell us about your first couple investments. Yeah, the first investment I did was a passive investment and it was at least to my knowledge, one of the first times the operator had done a PPM. So that was all new.

Speaker 2:
And now that, that seems like that’s just standard boiler plate language, and everybody knows what a PPM is. And we bought a, it was a 208 unit apartment in Dallas and one of the better sub markets in Dallas. But with that being said, there’s pockets and more so just the apartment pockets in that sub market that are very, um, there’s a lot of issues there and the GP he thought we could go in and didn’t realize how bad the tenant base was. Like we had African gang shootings, we had all kinds of different things that they weren’t expecting. So we bought the deal for, I think, 13,000 on a door and sold it. Yeah. And now they’re selling that same sub-market for 90 to 110 probably per door. So fine over the first, that whole period of two years or whatever, but there were a lot of issues.

Speaker 2:
We had three different property management companies. The GP was actually removed from the Bible. Um, and luckily we got about an 8% return just because the market was going up at that time. And again, I felt like I was in the stock market situation where I didn’t really have any control over the investment. And that’s what led me to single family. Um, and from 2010 to 2013, 14 time period, I bought 18 single families. Um, either buying a whole fix and flip, um, I did a single family development ground up construction a little bit later, but through that process, I realized it would be hard to scale that, and it’d be hard to raise money for that. And with my experience with, uh, as an LP in that first deal, I understood how to raise the money. I understood the legal process, the PBM process.

Speaker 2:
And so in 2014, I started looking at a small apartments just for myself. But during that timeframe, I ran into one of my partners now who we used to work together and he was looking for small apartments. Um, and we had kind of a similar path in real estate. He started buying single family in 2010, same as I did. And then that’s how we came together and, um, initially formed our partnership. Okay. Yeah. So, uh, you know, Sam was using the PPM and the PPM is a Pilipino. It’s a private placement memorandum. It’s one of the documents that you’re gonna get when you become, when you’re on a passive investor into a us indication. And, um, it just, most of it’s boiler plate, it’s like 70 or 80 pages, but there there’s all the facts of the deals in there that you have to understand.

Speaker 2:
And then there’s a few other documents, but that’s what he was referring to. Um, so I mean, obviously it seems like that passive dealer you’re involved with it was just, uh, like sounds like a declasse area that you were purchasing in. And if you purchase that at any other time, other than 2009, uh, you guys probably would not have had any type of return. Yeah. Um, it was, I don’t know if it was the D class area like around it, there’s four or $500,000 homes, but that little, just that apartment, and there’s a couple other apartments. There were definitely class. And honestly the first two years we didn’t see any, um, any type of return. And then we got all of our return essentially on the cell. And the only reason we sold it at that point, we knew it’d be a good longterm investment.

Speaker 2:
But, um, we did a bridge loan because we put, I think one point $4 million in cap ex into it. And the bridge loan was maturing. And since the GPU is removed from the partnership, he didn’t want to sign on the note. And at that time, nobody else could sign on the notes, so we have to sell it. But if the market wasn’t going in the right direction, it could have been, we could have lost money or definitely broke even. Yeah, definitely. When you’re, um, when you’re dabbling in a C minus in, in D class properties, uh, or even C class properties, um, you have to, uh, put that at that additional window for stabilizing the tenant base because normally what’s happening is you’re getting tenants. That just aren’t good tenants where if the management wasn’t good beforehand, which is probably why you’re buying it, uh, with the ability of,

Speaker 3:
You know, adding value. Um, but it, you know, it takes for something we bought, it took, you know, nine months almost, um, to get it where get it over 94, 95% economic occupancy. So people actually paying rent that percentage. And at some point it was dabbling, you know, down in the eighties and you have to get it up, but that’s the whole point where you’re just evicting and renting and evicting and renting for, you know, months and months at a time until it kind of gets some sort of foundation, uh, some sort of stabilization actually occurs.

Speaker 2:
Yeah. And in the lower class properties, that’s definitely a concern. And even in different areas, tenants have been trained that they can pay different timeframes. Like we have a apartment now, a suburb of Memphis, Tennessee. And when we took over, they were all paying essentially 30 days late. And that was just a standard protocol. The last owner allowed, and we’ve owned it now for about a year and we’ve been able to get most of them to pay on time, but we still have a handful of tenants that paid on the 15th or 30th, and we’re trying to correct that behavior, but it’s just ingrained in them and it’s hard to, to retrain them.

Speaker 3:
Yeah. When you start taking late rent like that, and it’s okay. It’s, it’s not, I mean, I’ve, I’ve done it many times when I was 30, when I was managing my own stuff, self managing it. And, um, sometimes third party managers that we have now will allow if we get, if we get a, you know, obviously a late fee with it, but then you’ve kind of then changed roles from, uh, it’s not really a real estate landlord tenant, um, relationship. It’s kind of like almost going to like, almost like a payday lender now, because now I’m, I’m lending you money and maybe it’s 5%, you know, that late fee for two weeks. Right. So now I have to make sure that I have money to pay all the mortgages, everything else. And now I’m just kinda like hoping that it gets paid. And, but that’s what has to happen when you’re in those lower class, uh, complexes where you have to, it’s not always what they’ve signed, it’s kind of, you have to really renegotiate cause that’s how the, that’s how the client, the tenant base is. They renegotiate as they get home.

Speaker 2:
Yeah, they definitely do so.

Speaker 3:
So you’re involved in a number of different asset classes. Trinity is. Um, so what is your normal acquisition criteria currently?

Speaker 2:
Initially, we looked at rent growth, job growth, um, indicators. Those were the main two. And honestly from 2014 to now, I’ve always looked in DFW or larger markets. And I don’t know how many deals I’ve put LOI on and we haven’t been able to get it. I think it’s one, we require different RR Mars than other investors. So we haven’t been able to offer what others do. So it started gravitating towards a lot of our investments are in secondary or tertiary markets. And now it’s sort of, once we realized that was kind of our niche and especially from our developments, we do that. And most people don’t look at the secondary and tertiary markets to developed. So we’ve started focusing more on that. And that’s honestly how the, uh, Mississippi dope came about is I was talking to different brokers and telling them where we were investing and he brought us a few deals and they didn’t make sense.

Speaker 2:
And then the one deal he brought us, the numbers just stood out, um, from, I don’t know, probably 70 other deals. So we decided to put an offer on it and got it. But, um, yeah, we, we look at growing areas. Um, and luckily Texas, I mean, depending on who you believe is supposed to grow anywhere from 10 to 20 million over the next 20 years. So everybody’s moving here, job creation, job growth. So a lot of our, a lot of our data and market research is just where ever people are moving and it’s kind of across all markets in Texas. So what is your, your, your, you guys are involved a lot of development. Can you explain what types of projects you guys are you’re involved with now? What’s your typical in development project? Yeah, we we’ve done about half developments, maybe the more than half the developments.

Speaker 2:
And that was because the first guy I was partnering with for about a year and a half, two years, we didn’t get one bill and we were like, we need to change our criteria. We need to change something up. Um, because we just weren’t getting it. Um, and so we brought in a third partner who he’s been in construction 20 years, um, 25 years, something like that. And we, our first development and it was kind of a one off thing, just seeing if it worked, if we meshed as a partnership. Um, and it was a mixed use development as a 16 unit apartment complex with 10,000 square feet of retail space. And we realized there was a lot of synergies and we compliment each other really well. And like we sold the mix while the retail space on a year two in a day, just so we wouldn’t, we’d get longterm capital gains.

Speaker 2:
And we were able to provide a 41% IRR to our investors. Wow. And, um, from that, we just started growing and we were working on our fourth and fifth development apartment developments. Um, and we have a minimum required return. We want to give our investors, but we have now started doing market studies from third party, uh, independent, um, yeah, independent third parties, just to see if their demand and their research meets what our research is. Um, a lot of our developments are West of Fort worth because one of my partners lives there and that area is growing just like the rest of DFW. And it makes sense. Um, we’ve done a 48 unit while we’ve done several 48 unit developments. We’re working on a 252 unit development. We closed on land a little South of Fort worth. That’s going to be a 68 unit development.

Speaker 2:
So it just kind of depends. And the longer we’ve gone through this process, we’ve realized that working with the cities, it just takes infinitely more time and going through P planning and zoning and getting an approved and not getting approved on some other things and having to rework it. It’s just been a pain and gives us heartache. So the last few developments we’ve actually bought land outside the city where we don’t have to deal with the planning and zoning committees, but we’re in still very desirable areas. And it’s just helped us be able to buy land and really start leasing in about a year instead of a year or two to just start the construction.

Speaker 3:
So is your goal with those projects too? You build them, you’re, you’re going to lease them. And then are you, are you going to you’re disposing of them or how are you doing, do you hold onto any of them for the longer term

Speaker 2:
On some of the smaller developments that we’ve done outside? The city limits has been with us and one or two partners. So it kind of depends on obviously overall market dynamics, but also what their goals are. Um, and they all the partners with JVs, they want longterm cashflow, and that’s what we’re planning on doing. But two of the apartments with built her own by us in one family. And I’ve talked to several brokers that are talking about numbers that we just don’t imagine after a few years. So we’ll probably seriously consider about selling them and then either 10 31 and then to a new, large development project, or maybe a 1980s, nineties, two to 300 unit complex. Um, if we can get that price that they’re promising. Right.

Speaker 3:
Awesome. So what’s your role? Um, what’s your role at Trinity? Are you you’re the analytical numbers person? Um,

Speaker 2:
We, I don’t know if we have defined roles. One of my partners, Daniel, he’s definitely the contractor and the builder then Michael, my other partner, he he’s a CPA. We met at a consulting firm, so we have similar backgrounds, um, but he’s focused definitely on the tax and accounting. And then also we both share in the equity raising and investor relations, but yeah, I, if I had to segment my roles, I’d deal with the acquisitions, dispositions, underwriting, the deals. Um, I’m also a realtor. So I’ve talked to our attorneys throughout the process. Um, I handle most of the operations and talking with the third party property managers on a daily or weekly basis, depending on how the properties are going. Um, I’ll usually go to the properties, Michael. He goes to one of their properties and then I’m over all the other properties. So there’s a lot of, a lot of responsibilities and then some of them overlap with each Evans.

Speaker 2:
Yeah. Cool. Hey, awesome. So I know that you guys, for all the developments you do, and you guys are always looking to save money on products, that your products that you’re, you know, your suppliers are, that are selling to you, that you’re putting into your properties. And you’re talking to me earlier about, uh, you guys are, you import a lot of your products from Asia and, um, I mean, typically for your own properties now, can you explain more? Cause that’s a very interesting, I I’ve heard it once or twice from other, uh, from other syndicators, but I’ve never heard it, but they weren’t doing development. So it’s obviously you’re doing on a much larger scale. Yeah. And this has been a strategy that I thought about honestly, probably four or five years ago, even before we started developments, I was listening to the podcasts and somebody talked about they were important materials and that just put a light on my head and started thinking about it.

Speaker 2:
And we, the further down we went, we knew quality needed to be, um, paramount. And luckily Michael, he worked at PWC and he was in their financial services practice. And he worked in New York, um, for months at a time. And one of his staff at that time was from China. So he had a relationship with a woman that worked for a Chinese importer and she connected us and we just started dialogue and had dialogue for six months to a year. And then we went to, um, we kind of traveled all over China last year, last February and March for two weeks and went to probably five or six different factories cities and got to go through different factories. And, um, we focused on our quality control because there was, you could tell the companies that paid attention to that and the ones that didn’t. And if you’re an outsider buying product from China, you wouldn’t really know.

Speaker 2:
And we actually bought before he met this company, we bought some product through Alibaba and it was mini blinds. And luckily they worked out, but buying some other products like cabinets or countertops, even material of fixtures, you might not know the quality. So going over there, touring all the factories we gained trust with the basically they’re the middleman force. And so we’re starting to import well for the last year. We’ve imported a lot of products that are superior quality at a price, usually 50 to 60% less than what we could buy here. It completely depends on the product, but like we’re getting quartz countertops for 15 to $16 a square foot. Um, and they’re already fabricated. We’re getting Daniel. He also has a custom home business. So he’s buying sinks for $120 that home Depot sells. And for four 30, wow. Our flooring we’re getting also with all their tear, bores is kind of changed, but flooring we’re getting anywhere from 50 cents to 64 cents, where if we’re buying it from a retailer would probably be a dollar to a dollar 50 depending on the retailer. So

Speaker 3:
It’s pretty dramatic, pretty dramatic distance

Speaker 2:
Accounts. Yeah, it is. And it’s helped our bill costs go down. We haven’t got to implement all of it for our rehabs. Um, timing has been an issue on it and also to ship the products it takes anywhere from two to four months and you have to front load the cost. So with the, with the rehabs, there’s more complications and with the developments, just because you have a lot longer runway with the development than you would on a rehab,

Speaker 3:
Are you finding it to be trouble problematic where you’re doing a rehab and you’re getting products that aren’t fitting correctly. And obviously with older properties mean

Speaker 2:
Rehabs, we’re rolling only imported flooring. Um, we’ve actually bought mud for our latest rehab. We bought all the fixtures, sort of another company in DFW that imports from China. Um, I think their quality of materials actually a little bit lower than what we’re getting, but their prices are also reflective of that. So once we have several rehabs going on at the same time, I think it would make sense, but we’re also working with banks and financing institutions to get lines of credit. So we aren’t having to front load all the costs. And, um, because especially on rehab, like the lender, they aren’t gonna reimburse you until you have the product on site or it’s installed. And that also adds some complications.

Speaker 3:
Right. And then also if you’re, you know, if you’re ordering from there, there’s such a, there’s such a, you know, so many months in advance so that you’re doing it and it takes so many weeks to get here. And I mean, you’re saving money, but there’s a lot of money you have to put out. It’s not just like you’re ordering and you’re getting it, you know, in the next few days. So it’s yeah,

Speaker 2:
A lot more planning and we didn’t know this until we went over there to last year, but the Chinese new year, the entire country, the entire country takes off off almost a month. So if you need it, if you put in the order a few weeks out, that’s going to be probably four months till you get it.

Speaker 3:
You know, it’s definitely like, you know, it’s definitely planning. It definitely takes it when you receive something, you’re ordering something the same day, um, to do it again and just kind of keep that, uh, keep that whole flow of your products coming in, but obviously the savings make it well worth it. And then if you can help other developers and suppliers, we’d like to hear about that once you guys get that actually going.

Speaker 2:
Yeah. And that’s Covance actually slowed down that process, but we were planning by the summer to hopefully start importing, building up materials, just to have inventory, to sell to people, but with all the uncertainty that codes produced with put that on the back burner and maybe by next year, we’ll have that for other investors and builders.

Speaker 3:
Nice. So I kinda want to circle back to, um, kind of your team and everything like that. And you’ve been very successful with your business with developments and, um, it’s a little different, most indicators aren’t doing developments. Um, some are, but very few, uh, there’s a lot more moving pieces with a development. There’s a lot more stuff you have to, uh, check out and do your due diligence on than buying something that’s already making money. So what are the main factors that have led to your success and the success of your team? Um, what, what do you,

Speaker 2:
I think the biggest factor in general is just creating that partnership. And I alluded to it earlier that we have complementary characteristics, um, and Daniel he’s a builder and he thinks everything that we touch will be great. Um, and then Michael, he’s more of a realist and sometimes I’m more of a pessimist. So we balance each other out and we’re able to we’ll have arguments will not see each other’s standpoint, but we can come together and talk about it. And it has allowed for us to do a lot of different things that other people won’t or will not try. And we all bring different experiences. And I think that’s been a big key, um, I think leveraging other people’s or really just leveraging our networks and being able to help some people out or them helping us out through raising money. Um, I think just, I mean, I’m constantly networking, constantly learning, um, speak like to you.

Speaker 2:
We met at a Jake and Gino conference and just go into those types of events. You talk to people, talk to people that have a breadth of knowledge or listen to podcast. And it’s almost like the university education, but it’s a lot more practical and a lot more, a lot more cost efficient. Um, but I think when that first development we did was in Kerrville and I drove down there and just started talking to the city council realtors, apartments, and just skin like the pulse of Kerrville and nothing had been built and probably well there’s one that had been built in 2008. But before that, most of the product was 1970s and 1980s. And you can see just talking to 10 or 12 people, there’s a demand. And I don’t know why anybody from San Antonio, because that’s the closest big city that nobody decided to develop it.

Speaker 2:
But we took a chance from, from our research and this has been a home run and we’ve done that in other places that I feel like we were almost a pioneer and now other people are developing. Um, and in the city of Weatherford, we got our project approved and one other person got it, got their project approved. And then we automated moratorium put on multifamily development. So we know that the demand is going to be there. And luckily the supply is not going to be able to keep up with that demand. So we should do really well.

Speaker 3:
Yeah. That’s great. So you guys went out and you really did your homework, obviously, if to do even more extensive homework, when you’re going into a development where you might not see any cash flow, any money coming back in for years. And, um, but yeah, you went out there, you do all your due diligence through speaking to the city council, um, doing your own research and figuring out exactly what your competitors had out there, which was great, that you would have one of the newest products out there. So you’re gonna capture if there’s that potential renter base in that area, which there are, I mean, you guys did a fantastic job on, uh, you know, recognizing that,

Speaker 2:
Um, opportunity. Yeah. And, um, with development, there’s a lot more uncertainty and things unknown. Like the city on one development they’ve promised they were going to build a road force and they’ve now reneged on that. So that made a short $500,000 or roughly about $500,000. So we had to figure out ways to do that because the loan had closed and we had roughly a million and, um, loan reserves. But since we were only 30 to 40% through with the project, the bank wasn’t going to release those reserves. So unfortunately we had to do a capital call, but we feel like the city will eventually repay us so we can repay the investors. But, um, there’s always a more, um, uncertainty and issues that might arise and acquisitions. So I want to just

Speaker 3:
Ask you about your financing. So normally, I mean, are you getting, you’re getting usually bank financing that I imagine is like three years or something like this, and then you’re going to you refinance it into a permanent

Speaker 2:
Loan product. Yes. Um, for our construction financing, we go through local banks. Um, we’ve used two or three, three local banks now. Um, and they’re usually five-year terms. Some are floating, some are fixed rate and then we’ll refi so far. We have reafied all into, uh, Fannie Mae. We might look at, uh, now since they’ve changed their requirements a little bit, their emiratisation periods are longer, so we’ll be able to cashflow. Um, we should be able to cashflow more than we would on a Fannie Mae loan, right.

Speaker 3:
From a recourse, a recourse loan. And once it’s getting stabilized, once it gets completed, you’re moving that into a nonrecourse loan product that you guys can hold longterm with relatively low interest rates and M and a and a long amatorization. So that’s good. That’s good. Um, so how, uh, when you speak to new investors, cause we met at a conference as you, as you, uh, as you spoke about, when you speak to new investors, what are common mistakes you see them make?

Speaker 2:
I think the two biggest common mistakes I see them make is their return expectations might not have changed. Um, they hear people get into 300% on their investment in two years, and that was going on. And 2015, 2017. I don’t know if that’s going to happen in the future. It’s, it’s hard to tell. I mean, the markets have become much more efficient with technology with more people interested in multifamily. I mean, not only from an international perspective, but with podcasts, with Facebook, other social media, with all these different, I don’t want to say gurus, but all these different guys that promote training, it’s just become mainstream. And when you used to be able to buy an eight cap and some markets, an eight cap, and really any even secondary and tertiary markets almost unheard of, unless it’s just, I’m in a really low income, low population didn’t see place.

Speaker 2:
So, um, I think investor returns are going to have to come down a little bit. Um, and they have over the last few years, but I still think, especially being a newbie, they think you can get 15% rrr without any problem. And that’s especially on acquisitions, that’s a lot easier said than done. Um, and then the other thing is I’ve always been very analytical and understood financial underwriting and models. And I think a lot of people, if you don’t have the engineering, accounting, finance background, your underwriting models, or even just your underwriting assumptions can be completely off. Um, and I mean, with all the natural disasters, we’ve had insurance has skyrocketed the last couple of years. And I mean, we, our insurance policies are coming due Friday and one of our properties, I mean our premium shot up 60%. Wow. Um, if you’re underwriting at 300 per unit or two 50 per unit, um, what a lot of brokers are saying, your underwriting is going to be completely off property taxes over the last few years have skyrocketed because values have skyrocketed.

Speaker 2:
Um, I think a lot of people that are buying the 1970s, even, maybe even early eighties, their capital expenditures budget is isn’t where it needs to be. I mean, if you have plumbing or boilers that go out on a 1960s property and you don’t have the reserve, your returns are going to take a massive hit and a few properties. I walked last year towards the end of last year, we were looking to buy, I mean, the, they were in horrible shape and they just been purchased a year or two ago. And I think the only reason that they were selling is they didn’t have enough reserves to renovate them to where they needed to be. And a lot of people don’t think about that and they just think about X return. But if you don’t have those reserves or the cap X budget to actually do those repairs, that’s not going to work out.

Speaker 3:
Yeah. The other thing too, is that you have operators that will go in and they’re upgrading your, you know, the counters cabinets, toilets, vanities, you know, all this kind of stuff, but you know, Hey, what about what’s the HVAC age? You know what I mean? What are the bones of the property? What’s the roof? I mean, these are things that need to be upgraded. And if you have properties that are built in the sixties, um, I mean just because we’re going through, COVID now isn’t a license for, okay, so you’re not doing your value, add strategy. You’re putting that on hold, let’s say, or you’ve decreased it. Um, but you, you still have to take care of, you know, mechanicals, you have to take care of your, your normal maintenance on these properties and they can get very expensive upgrading, electrical, different things like you were saying for the older product. That’s definitely something. And I think a lot of operators are going in and the only plan they have when they put these guys out is that they’re like, Oh, I’m going to Jack the rent 15% in two years or 20% and three or whatever it is. And that’s the only way they have of making money on the property.

Speaker 2:
Cause they’ve paid so much for it. And with COVID, it’s perfect example where people now are okay, returns I’ve now they’ve now been decreased. Uh, we don’t know what’s happening. We’re not doing any more value add. So you’re obviously not raising rent. So that business plan is really is, is really, uh, is really faulty, right? Yeah. Uh, I’ve listened to a lot of webinars and podcasts since coven started. And I think I’ve only heard one operators say that they’ve continued distributions in the rest of slot. And the majority of people have stopped with their business plans because they’re afraid they can’t raise rents and everybody finances or acquisitions differently. But I agree if you completely stop the renovations, you aren’t going to be able to begin rent increases, and that’s going to just completely change your, your, um, acquisition or your budget. And most people now are projecting to sell and to five years max, and maybe this year has changed, but I know people buying property last year and in 2019, they’re wanting to sell into two to three years and that’s just realistically not going to happen now.

Speaker 2:
And like our last acquisition we’ve slowed down the renovation process a little bit, but we’re still gonna renovate probably 70% of the 70% of the units that we’ve planned to renovate and we’re still going to rent bumps. So once those are completed, we’re going to continue renovating to the full allocated number that we had planned. Yeah. It really just depends on your client base your tenant base. And if they can sustain that, obviously with so much unemployment right now, um, you just have to be very careful with raising rents. And I think that, you know, operators should be spending more time currently on the, you know, your larger cap ex uh, renovation, spending your time there, the bones of the property, as you would say, um, compared to, uh, you know, putting a new vantage again and trying to Jack someone’s rent that might have, might have a half they’re a household out of work.

Speaker 2:
You know what I mean? So, but, um, awesome. Well, thank you so much. So how can our listeners learn more about you and your business? Yeah. Um, you can email me at Sam at Trinity capital, texas.com or you can call me my cell phone is (972) 855-7654. I’m also on most social media platforms. I don’t always get on them, but you can reach out and I’ll, I’ll respond at some point through that, but either or either email or phone is the best way to get me. Awesome. I’ll put those links in the YouTube and podcast notes. And I want to thank you Sam, for being on the show today and look forward to

Speaker 3:
Meeting up with you shortly. Yeah, definitely. Thank you again, Charles. And look forward to it. Talk to you soon. Hi guys. It’s Charles from the global investors podcast. I hope you enjoyed the show if you’re interested in get involved with real estate, but you don’t know where to begin set up a free 30 minute strategy call with [email protected] Thank you.

Speaker 4:
Thank you for listening to the global investor podcast. If you liked the show, be sure to subscribe on iTunes or Google play to get new weekly episodes for more resources and receive our newsletter. Please visit global investor podcast.com and don’t forget to join us next week. For another episode, 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, inc. Exclusively.

Links and Contact Information Mentioned In The Episode:

About Sam Bates

Mr. Bates is a partner of Trinity Capital Group that is based in the Dallas Fort Worth area. Sam’s background is in financial services, state and local taxes, and real estate. He has been directly involved in the acquisition, rehabilitation, disposition, and management of around $75 million dollars in multifamily and single-family real estate since 2009.

Mr. Bates spent 11 years in Corporate America where he honed his business acumen and developed many characteristics that have helped him succeed in the real estate industry. Sam began his career at UBS Financial Services where he cultivated his knowledge about the financial markets. He directly worked with advisors that had over $3 Billion in assets under management. One of his proudest accomplishments at UBS was helping an advisor grow his total assets under management from $500 million to $850 million through multiple marketing campaigns. After graduate school Mr. Bates transitioned his career to state and local taxes. During his tax career he helped companies save more than $45MM in transaction tax overpayments to local and state jurisdictions.

Mr. Bates started his real estate career as a limited partner in a 208-unit value-add apartment syndication in Dallas. The syndication underperformed and Sam knew he needed to take his financial future in his own hands and not rely on other people. This led Sam to investing in single family homes. From 2010 to 2013, Mr. Bates purchased 17 single family homes. He used multiple strategies to acquire these homes and he still has 9 in his rental portfolio.

In 2016, Sam started Trinity Capital Group with two other gentlemen. Trinity Capital
is committed to developing lasting relationships with investors by providing them with exceptional customer service and wealth building opportunities through quality real estate investments. Trinity creation value through development or value-add opportunities we find in the market.

Over the last three years, Trinity Capital has been involved with 10 projects to create value for their investors. The projects cover the spectrum of commercial real estate.

Apartment acquisitions – 3
Apartment developments – 4
Retail development – 1
RV Park acquisition – 1
Subdivision development – 1

Sam plays a vital role in many aspects of these transactions. His responsibilities include sourcing and underwriting all acquisitions and dispositions, being the liaison with attorneys, brokers, investor relations, and asset management.

Sam graduated from Texas A&M University with a BBA in Finance, an MS in Personal Financial Planning, and an MBA from Texas Tech University.  Sam is an avid reader, sports fan, and loves the outdoors. He attends Munger Place Church in Dallas.

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