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Global Investors Podcast
GI78: Raising Capital for Real Estate Investing with Hunter Thompson
December 16, 2020
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GI78: Raising Capital for Real Estate Investing with Hunter Thompson

Since founding Asym Capital, Hunter has helped more than 300 investors allocate capital to over 100 properties. He has personally raised more than $25mm in private capital and controls more than $75mm in commercial real estate. Hunter has been featured in Forbes, Globe St., Inside Self-Storage, as well as a variety of other media news outlets, podcasts, and radio shows.

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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 Hunter Thompson. Hunter has raised over $25mm in private capital from over 300 investors and controls over $75mm in commercial real estate. So thank you so much for coming on the show, Hunter.

Hunter:
Yeah, Appreciate it. And actually we do have to update that bio. We just finished our most recent raise. So now that number is $35 million of capital raised thanks to some very, very loved investors. So thanks again for having me on.

Charles:
Awesome. What did you guys close on?

Hunter:
It was actually an eight TMDL and it’s very interesting space. We can talk about if you’re interested, but you know, the real estate market is been filled with a lot of question marks and question marks create an opportunity for pricing arbitrage, but sometimes those question marks create an opportunity for, you know, bad investments. So COVID has created a really interesting situation where the lending market froze up. And then these other niches that I’ve had my eye on started to become really desirable. So it’s a very interesting niche and we can talk about it.

Charles:
Yeah, definitely. Oh, that’s awesome. I, cause I have a couple of questions cause reading an article earlier today about it. What was your background prior to starting to invest in real estate?

Hunter:
So I have background as an entrepreneur and you know, when I was five years old, I remember living in my mom’s house and we lived very close to a stadium and there was a lot of opportunity to sell parking if you had like kind of a large yard. And I remember I made my first hundred dollars selling parking spaces in my mom’s backyard. And of course I had to split the profit with her, which is kind of what I learned about this concept of owning land versus you know, using land. And I just was fascinated by it. And that is something that, you know, I say that story and it sounds anecdotal, but it was actually a huge moment for me. I mean, I remember making the deposit of the first hundred dollars into a bank account and being like, okay, I’m rich now, you know, no comic club, right? That’s the whole thing. Like I just, I was on my journey and in high school I started a company that did a event production, did a high school dances. And then when in college I actually did a job as a professional poker player. That’s how I paid my way through, not how I paid my way through college, but how I got to do some cool stuff during college, right? Because any expenses that you have going towards books and stuff, that’s one thing, but I’m talking about, you know, travel for example that was all paid through online poker. And then I was very fortunate because online poker, the boom took place, which created it was a multi-billion dollar boom in the poker industry. If you weren’t in the industry at the time, you can look it up, just Google the poker boom. And it created a great opportunity where if you took it seriously, if you focused and got a coach and could learn this very challenging game, you could make 20, 30, $40,000 a month. And I remember I had my first $30,000 a month and I thought, okay, I don’t need to do anything besides this during college. And that’s what I did during summers. And when I graduated college, then all of a sudden, you know, 10, 20, $30,000 a month, there’s other ways to make that money that are more scalable and you can actually build a business and you wouldn’t lose money as frequently. And so then I started real estate and that was really kind of my background.

Charles:
So other than your first forte into it, when you’re renting out that parking lot and your mom didn’t have to do anything to clincher her portion of it, which obviously we look back on is probably the sweetest part of that whole deal. Why did you choose real estate as an investment vehicle in the sense of that? Other than going into other different businesses or expanding other businesses you had like previously in high school and stuff like that.

Hunter:
So the massive opportunity that took place in 2008 was very well-suited for my personality. You know, everyone has their own strengths and weaknesses and I have many weaknesses and just a few strengths. It just so happens that going right when everyone’s looking left can be very lucrative as an investor. And so the mother of that kind of concept was 2008. And so when the seizing up of the capital markets took place, I thought this has gotta be what everyone’s been talking about in terms of blood in the streets from an investor’s perspective. And so I was dedicated to financial assets. I started just learning as much as I could about Warren buffet, Charlie Munger, et cetera, investing in stocks that I anticipated would do well coming out of the recession. And they did now, most people that start in 2008, they had success. So that’s not really anything favorable, but the opportunity that it, the gut perspective, right? The ability to actually say to your friends and family and loved ones that love you, Hey, you’re doing something insane and you just know from a gut feel, it’s the right thing to do. That was actually a good learning moment for me, but I’ll tell you what a lot of people don’t talk about a 2010, nearly enough. For me, that was the moment that I made a huge transition in my worldview, which was that despite the fact that I had done all this research when the European debt crisis happened, which was very similar to the crash in 2008, but in Europe, there was incomplete amount of volatility in the U S markets. And out of all the research I had done, I never anticipated that the German bond yields for whatever reason would be playing a huge role in my portfolio. And so that moment, the moment, everyone, all of a sudden was focusing on that ridiculous metric. I realized no matter how much research I do, no matter how many people I hire, I’m never going to be able to predict that or mitigate that. I need to find a vehicle, which is well-suited for risk mitigation and can be conducted at an elite level without hiring massive bureaucracy in terms of employees, because that’s just empathetic to the way that I wanted to live my life. So that could be led me to real estate. What was your first real estate investment? I was very fortunate in terms of that because when I moved to California, the market was decimated. And so when I started to build my real estate career, I was quickly surrounded by the people that were able to weather that storm. And so the people that were able to weather that storm, by the way, we’re not investing in fix and flip properties in California, they lost their shirt. They’re investing in 15 to $50 million apartment complexes, self storage properties, mobile home parks, et cetera, through syndications. And again, this is before the advent and popularization of crowdfunding, but I was able to invest 25, $50,000 into these $15 million assets that had a default rate of 1.5% during 2008. And so that was some of the first investments I made, which is not the typical route, but I was very fortunate because of who I met and the time at which I met them.

Charles:
Yeah, that’s great because people wouldn’t, I don’t think people really know that that only like 1% of agency debt loans went bad in Oh eight, exactly. Job for agency that’s, we’re talking like larger multi-family for the most part. And that’s, it’s something that most people don’t have access to because, you know, maybe you’re accredited or, you know, to find deals that allow someone in is not accredited. You need to have a lot of networking experience and do a lot of networking. So something that most people aren’t allowed into, I guess you would say. So that’s awesome. That’s a, that’s a great way to enter it, which I haven’t heard before most people start with something a little bit like single family or small multi-family, but what is your current investing strategy? And you own a lot of different asset classes, obviously ATM’s as well, but you’re in everything. What do you guys are looking for your your criteria, your strategy, and what asset classes?

Hunter:
So this is an important distinction to make at this point in the conversation because our position as an Aras in my firm, ACE and capital, we’re positioned in a unique manner, which is not typical. So the way that I view the investment space, I wanted to leverage the expertise, the track record, the ability to access credit of really experienced savvy operators that stand to gain millions of dollars if they execute. And so I wanted to defer to their expertise and leverage all those things. They’re bringing to the table and just invest my 25 or $50,000. So that’s what I wanted to do as a passive investor. And then I realized with all this interest, that’s coming the way of this vehicle, the syndicated slash crowdfunded model, can I build a business around that vehicle? Now at the time, there was a lot of naysayers. Now you can’t build a business around passive investing that doesn’t make any sense, but I knew that there’s the tsunami of interest coming because of the jobs act, which allowed you to publicly solicit accredited investors online. So I said, if I can build up a Rolodex, if I can build and develop a due diligence process, which is far above and beyond what a typical passive investor can produce, then we can leverage that as a resource pool investors together, perhaps negotiate favorable terms with the operating partners who rather than investing $50,000, maybe investing half a million. When I first got started cumulatively, that’s the business model that I created. And it that’s much more thought out than it was at the time. Really what happened was I had developed some relationships and that I wanted to help my mom invest my sister, my best friend, et cetera. So we went from three investors to five, to a hundred to now we have hundreds and have probably purchased around a hundred million dollars worth of commercial real estate. So the reason I say that to answer your question, is that the way that we’re positioned in the marketplace, we can defer to others’ expertise in various niches, whether it be mobile home parks, which I’m a huge fan of self storage, senior living distressed debt and the ATM business. So I’m not a Jack of all trades. I have one trade. The trade is being extremely knowledgeable when it comes to vetting and building relationships with top tier operating partners. And that’s what my firm does.

Charles:
Awesome. That’s great. So you’ve raised tens of million dollars for your real estate and other asset classes and someone contacts you and wants to begin the conversation to invest. What is the procedure you take from there?

Hunter:
You know, actually, that’s a really important question because there’s an assumption there that a lot of people make, which is that that’s where the investments process starts. And that’s not what you’re saying. I know you’re actually, you don’t think that because we’re having this conversation right now and I’ll explain what that means. But my capital raising process does not start with someone reaching out to me having a conversation. It is very challenging to get 30 minutes of my time because my schedule is insane. So what I have developed and what I wrote my book about raising capital for real estate, which by the way, you can get free [email protected] It’s all about attracting investors through building a platform and then educating them through podcasts or eBooks or other call to actions, providing them templates for anything that’s going to help them understand your investment thesis, nurturing them through emails or webinars or podcasts, or et cetera, just replicatable scalable, repurposable pieces of content that actually add value to their lives. So by the time you send out a deal they’re knowledgeable, they’re nurtured. They built a relationship with you, not by taking your time, but they know you incredibly well because the things you put out that all people can enjoy at the same time. So as an example, this podcast and what you’re building is to help streamline your customer nurture and attraction process. Now usually when someone requests a call it’s because they have a specific question about a deal that we’ve just recently put out. It’s very rare that someone would reach out to me or that I would be able to have a call with someone to say, who are you great to meet you, et cetera, because I do a ton of that work to streamline that. So about the time we talk on the phone, they go, Holy crap, like Hunter Thompson is in the Hunter Thompson is in the cashflow connections. It doesn’t mean listen to you for hundreds of hours. It’s so great that we finally get connected. Here’s my specific question about this offering. Now, some of you may be thinking, well, your investors may feel like they’re not that close to you. Why should they invest with you versus anyone else? And nothing can be further from the truth. And again, I’m sure you know this as well. I’m sure some of your listeners know more about you, especially when it comes to investing than some of your best friends and people that are followers of me, or read my book or listen to my show. They know things about the intricacies of my personality that you would have to spend years talking to me, but they have, they’ve done the years have been compressed into short little increments of one hour interviews and little short, Monday minutes that we do. So hopefully that answers your question. I know that wasn’t exactly what you asked, but that’s the truthful answer.

Charles:
No, of course. I mean, someone’s, you’re not just going to put them on a mailing list and send them a deal and they’re going to invest, you know, it’s be something where you’re building that relationship. And, you know, obviously the easiest, I guess, the most efficient way of building that relationship is through our thought leadership platforms and also putting them in a emailing list and stuff like that. Cause like we do the same thing. We, you know, we have a general mailing list and then we also have a separate deals, mailing mailing list so that we can, when we’re putting out deals with people that we’ve spoken to before people that just get our regular weekly newsletter, that probably will never invest. Don’t want to invest, don’t want to see deals, but they want to learn more about what’s going on with real estate. That’s perfectly fine. So it’s, it’s very, it’s great to, you know, provide that information. You, you spoke, which is great previously about vetting different operators and this would be something that’s awesome as a resource for our passive investors as well, that are listening myself being active and passive investor. I’m interested to see when you’re looking and vetting a, a, an operator. What, what are you really looking for obviously track record, but are there anything else that you’re looking at or that you might look initially and say no, or maybe, or in the future and what is your process for doing that?

Hunter:
So, first of all, it’s an excellent question. And I’m excited to have this type of conversation because like I mentioned, the beginning of my career, I spent a lot of time trying to convince people that just because an investment was passive didn’t mean it was upon these games, right? And now we see people such as yourself that say, no, I do have an upper hand in certain areas of real estate. It’s just that I also understand that I can leverage other people’s expertise as well, passively. And the returns are actually somewhat comparable, which is insane to me and very favorable. But as far as vetting sponsors, you know, I like commercial real estate because of the numbers. It is an objective way to determine value. There’s an objective way to determine and predict cashflow. And so where I start to get skiddish with sponsors two areas, I want to be able to analyze things on a risk adjusted basis. And so I can analyze cap rates. I can analyze predicted cash flows. I can analyze the potential for comps to be real, but the fuzzy slash art version of due diligence is where I want to eliminate as much unquantifiable risk as possible. So as an example, business plan implementation risk is something that I don’t want to tolerate unless it’s made up for significantly in the returns to clarify if I have a sponsor that only invests in Austin, Texas, they have 350 million units, or excuse me, $350 million under management in Austin with one property management company within one risk profile. And this is going to be their 15th deal. I can then remove so much uncertainty. I can actually focus on the numbers. I can focus on the cap rate. I can focus on the comps, et cetera, but what I’m not willing to do is if that same operator is now investing in Atlanta, there’s so much uncertainty because it’s not rinse and repeat it’s the market’s not rinse and repeat the, the product type might not be rinse and repeat. The actual property management company might not be the same. All these uncertainties are incurring the risk of the implementation, the integration of that business plan. And so you can do it. It just needs to be reflected in the returns. So that’s the first thing is just rinse and repeat versus doing it for the first time. The second thing, when I talk to sponsors, the number one most important determining factor, whether or not investors get to keep their principal and not lose money is debt. All of the stories you’ve ever heard about someone losing money in real estate has something to do with debt. Okay? Not all but 99%. So what I mean by that is that if you have a 100% vacant office complex in the middle of America and you own it free and cash, you don’t have a problem. What you have is a 100% vacant office complex in the middle of America. Now, if you have the exact same property and it’s 50% occupied, but you’ve got it levered, you could have a real serious problem with protecting investor capital. So I want to talk to sponsors and analyze the way that they respect, leverage and the terms of the leverage and the debt service coverage ratio and the interest only period in the amortization schedule, all these other metrics that it comes to debt that you can twist and turn to make things more aggressive or conservative. So I can go into a litany of things that we do that most wouldn’t even apply to most investors, because it’s not worth their time if they’re only investing $50,000, but those are two hacks that I think will help you tremendously.

Charles:
Yeah. The other thing that I look at too, is I like to see obviously how close their team is from the property. Like you were saying, obviously someone in Texas, they might not have someone in an hour away or two hours away or whatever it might be in Atlanta. If they have seven assets in Atlanta, maybe they’re there once a month. You know what I mean? Compared to some of that, seeing it twice a year. The other thing too is I like to take away a lot of the rent increases and kind of work backwards. So cause I’m not a 12 tab kind of underwriter, let’s say, but when I’m looking at it, the other thing too is I want to take away a lot of that and see what happens if you know, we’ll see if we’re buying this in February of 2019, what’s going to happen or 2020 right before COVID and what’s going to happen with what we’re doing and what happens if we can’t raise the rents. And yeah, it’s very interesting with the interest only and all these different things that are different from normal mortgages that most people are aware of the third year, fully amped, rising home loan commercial. There’s so many nuances. So it’s a, that’s awesome. That’s very, it’s very good to, to hear how you do it, but when you’re explaining an opportunity to your investors, obviously you send out an email, this is what we have go through it, set up a call with somebody from my team or myself. How in the weeds do you get when you’re explaining an opportunity, say for instance, if it wasn’t done by that email and we were just talking pre COVID post COVID you know, in a bar or at a coffee shop.

Hunter:
Hmm. So that’s an important question because before I answer that, I always want to get a perspective on their background and their level of sophistication and their interests. So when I do get on calls with investors or potential investors, the first thing I say is, you know, number one, so glad we got connected, I’ve got about 30 minutes. I’m going to have to jump off at three 30 and is okay if we jump right in just to establish that this is not going to be an endless pitch, that both of those are going to go to sleep. I just want to make that clear up front. Then I want to say, can you tell me a little bit about your background so that I can learn more about your history investing in real estate and otherwise, and from there I can gauge what language to be using, how much I should be focusing on the details and underwriting versus explaining, you know, what a syndication is, for example, which is something that still happens. So I’ll give you a perfect example. If someone is a Wharton MBA, and this is their 15th, invest in investment in syndication, they have investments across multiple asset classes. My answer for explaining deal to them is very different from someone whose aunt is on the phone with me and is now contemplating making their first passive investment. So again, that’s the truthful answer of your question, right? So like in the sense that my answer may be very, very different and should be now, I have a tendency to jump into the details as most analytical people do, because they want to impress those that are impressive, but it’s actually the opposite. That’s true. So anybody that actually knows anything about this industry knows that it’s not the market. It’s not the population growth. It’s not the number of units. It’s also all these other things, which are absolutely critical that, you know, but at the elite level, that’s standard, that’s a requirement. Everyone has a thesis that’s well thought out. What’s actually going to make the difference is the emotional connection that you form with your investors. And that is a little bit counterintuitive. And it’s even more pronounced with people that are also analytics. I’ll give you an example. Someone that’s a CPA gets on the phone with me and they want to jump in and the discussion about profit and losses. For example, I will not entertain that conversation because we are not going to win or lose. And our investor base based on profit and losses, we’re going to win our investors based on ensuring that it’s a good fit from a gut feel perspective because we’re about to be married for seven to 10 years in this deal. And so that’s the way that I present myself. And it can be challenging, especially if you’re an analytical person that you know, all these details about this deal. You get excited, Oh wow, this guy, a Wharton MBA. So he’s going to be really impressed. They may be impressed, but guess what? In 48 hours, they’re going to forget who you are. So what’s really important is to not jump into those details, especially on the initial call and to learn about their background, explain your background, listen to why they’re emotionally motivated to invest and circle the deal that you have as a way to resolve the problems that they have in terms of demo motivation. And that is something that’s talked about in the book pitch, anything by Oren. Klaff where I think we get this concept that the more advanced we go, the more the emotions don’t matter, nothing can be further from the truth. Anybody that knows anything about VC funding, about investment banking, these deals are getting done by their friends, people that they actually like and trust, and that’s it. And everything else is a requirement.

Charles:
No, that’s great. Yeah, because obviously you’re finding out what their pain point is or what they want to get from the investment. And then you can kind of explain how this doesn’t in their terminology. And for a lot of, I have a couple investors, I’ll talk my head that I know of some of my first investors and they don’t know anything about, they don’t know an IRR is mean, you can explain to them, you can send it to them. They’ve never asked. I know they don’t, it’s, it’s cash on cash. They’re wanting to have cash on cash. If down the road, they can get that 15% or 17% IRR that’s, you know, that’s something great that they see in the paper, but when I’m explained to them, it’s all in cash and cash it’s, Hey, it’s 8% pref. And that means, you know, we’re 2% of your money back every quarter or whatever it is. And you can use, that’s very easy. Anybody can understand that and you understand that all these different things that go with it. So it does really matter who you’re speaking to, who you’re explained to it and and their experience in business and finance and whatever, you know, in, in whatever the industry is of the asset class that you’re trying to to pitch them. But speaking of that, let’s, can we talk just a circle back for like a minute or two? I noticed this real estate podcast, but it’s interesting because I’ve had multiple people I’ve spoken to with ATM’s and can you explain a little bit more about that industry in a nutshell?

Hunter:
So the big thing before we even jump into it is that probably 40% of your listener base is about to turn the podcast off because we’re saying it’s a good idea to invest in ATM’s. And that is actually really telling I’ve been in this industry long enough and invested in asset classes at a wide enough degree that I can tell you that that’s about the perfect ratio for longterm lucrative returns, the mobile home park business, since 2010. Do you know how unpopular I was when I would talk about that and now look at what has happened. And it’s not me that caused it, right? It’s just that I had some inclinations, which the market ended up catching on to. This is the same situation with ATM’s. So I’ll give you a couple of metrics. It isn’t the case that ATM’s all the sudden are at risk of going out of fashion. Most accredited investors do not use them and have not used them regularly. In quite some time, the bulk of the ATM transaction volume is made up of EBT transactions and from people that are unbanked or unbankable, which accounts for about 25% of the United States. So as you see all this banking regulation, it most negatively impacts the exact people who the regulation supposedly is set out to help. When you have regulatory hurdles, you have increased in barriers to entry, which means bank of America. For example, going from something that their business model almost exclusively relied on interest rates, because they’re in the business of lending to a business model where 50% of their income is re is generated by fees. Here’s what that means. If you have $150 balance in your bank account, and there’s a monthly fee of $10 to keep that $150 balance, you don’t have a bank account because you’re not an idiot. So that’s what happens. So people do not have bank accounts, not changes the whole spectrum. So probably some of your listeners are thinking, well, what about Venmo and PayPal? And all these other apps that I have because I have a phone it’s not the phone. 92% of America has a phone. The issue is that Venmo and PayPal and these other things, these connect to bank accounts, that’s the requirement. So you got 25% of the population unable to transact without a bank account. And you’ve got a huge PR it’s usually 50 to 60%, at least in the locations that we invest in where these transactions are EBT transactions, which is one of the few government programs that actually work. What I mean by that is that they send you a debit card and the debit card has money on it, and you can withdrawal it. I don’t mean that’s a good thing for the economy. I mean, actually the functionally, they send you, it actually happens as opposed to, you know, not working half the time. So that addresses a lot of concerns most investors have. And then it’s just a matter of, can you find a great team? Can you find an institutional operator that has done a hundred million dollars of transactions in the space that has relationships and is placed in fortune 500 companies, retailers all over the world or country, depending on your model. And then it’s, you know, it’s just about looking at the risk adjusted situation, but I can’t tell you how excited it makes me when again, like roughly 30 to 40% of smart investors are going to go, Nope, not interested. It’s in the ATM business, which we all know is going to be gone in seven years. We’ll go back to 1991 or whatever. 1994, when the internet was invented, that was the end of ATM’s. And every year, since then, it’s been the end of ATM’s and what we see truthfully, we have data to back this up year, over year increase in transaction volume. So it hasn’t started yet. Well, yes, that’s exactly right. That’s right.

Charles:
That’s right. I was reading this article and it was telling me that I guess not coming 2020, cause we have, you know, COVID and stuff, but for the last 25 years or whatever, like you said, 1981 ATM fees have increased every year. So it’s obviously something that mature if it’s pegged off inflation up, but it’s also great to have that where you’re not getting 25 cents or something, which you might’ve gotten 25 years ago. You know what I mean, transaction it’s like two or three or $4 or something.

Hunter:
Two to three is reasonable. And again, it’s, it’s inflation would be one way to state it, but really what it’s about a supply and demand, right? In the sense that with the banking regulations and such with the demand for the product, they can substantiate larger fees. And if you can actually tell which way the wind is blowing, it’s not blowing to the ATM business going, going away. It’s very much the opposite. And you mentioned COVID for example, the model that we look at the model is very lucrative at a reduction by about 30% of transaction volume. So if transaction volume went down by close to 30%, we would still think it was an incredible investment opportunity during COVID. It went down by about 11% across the portfolio. So that was like the mother of all sensitivity tests. We had a historical government lockdowns and it proved quite well because the demand is there, regardless of what’s going on, people need to get those EBT transactions alone. So I can go on and on, but you can learn [email protected] It’s a really fascinating space.

Charles:
Okay. Sounds great. And one last question on real estate before we wrap up here how the age of COVID has your business how have you managed your investor expectations? I imagine you’ve had some paused or delayed distributions. So tell us more about your properties during COVID and kind of how you’ve done it. Cause you work obviously mostly on the investor relations side of it.

Speaker 3:
Yeah. And a good way of stating that too, because I think that a lot of people want to come on shows and talk about how amazing their businesses and of course, myself included, that’s what we want to do. But the reality is that doesn’t, you don’t learn who you are when things are going perfectly. You don’t learn anything about yourself. I mean, all the things that anyone listening to this show, the things that they’ve really gotten out of life have come out of hardship, your weaknesses, become your strengths, the challenges that you have figured it’s when you figure out who you are as a person, as a business owner, et cetera, or an investor, by the way. And COVID has been that for a lot of people. So as far as kind of the distributions and such one that I think was just kind of bad timing, whether very large mobile home park and self storage fund, and one of our strategies there because the fund was quite large. And so we had a lot of dry powder and I mean, we as an in conjunction with our sponsor, cause we’re not involved in operating this fund, but they had a big upper hand in the market because they could purchase assets and all cash, especially in the mobile home park business. That’s very desirable because it’s very competitive. And so if you can get a significant discount for purchasing an all cash, it makes a lot of sense. Let’s say it’s a 25%, excuse me, 20 basis, point 25%, 25 basis point kind of a reduction. That’s an excellent deal in today’s market dynamics. Well, there was a lot of assets that were purchasing cash and the goal was to refinance cumulatively to get very favorable terms. I’m talking sub 3% interest rate terms on a mobile home park and the lending market seized up due to COVID. So for several months we’ve held these assets in cash, which is not ideal, of course, that led to a reduction in distributions. And now the lending markets opening up and we just closed on an interest rate of 2.5% on a very large $12 million loan. So that is incredible. But at the same time, the key to that is diversification. You know, we’ve done many, many investments, many, many funds with multiple properties. So most of our investors, they understand that that reduction in distribution rate was because of that particular strategy and the timing and such, but from an operation standpoint, things are going quite well, which is shocking by the way, but that’s how it’s playing out.

Charles:
Yeah. It’s I don’t want to knock on wood or anything, but everything is after we’ve kind of gone through everything, you know, doing this we’re we’re six months or seven months in the COVID right now, as we’re filming this everything’s running pretty smoothly. I mean, we I can’t say that we have anything, but we purchased a new property 90 units about two months ago and we’re in that kind of stabilizing it right now, but everything else that we have has been running pretty smoothly people paying rent, even with all these moratoriums everywhere. And so it’s just it really goes to show and I think that people having problems now, whether they’re in the industry, they might not like, you know, student housing. They might not be able to help it so much, but in the multifamily or the other commercial industry you know, mobile homes or self storage, it just goes down to the asset management and you kind of really see how your operators can operate and during the weather, cause it’s easy to operate in 2011, 2012, when you just our just raising the rents and everything’s great and everybody’s getting distributions, but it’s much different when you have unknowns. Right. And you have less options and you know, and then the government puts their handcuffs on you with what you can do with your tenants. So

Hunter:
Yes, exactly. Right. I mean, we’ve seen, we have a multi-family operator that has done about $800 million of commercial real estate, just a fantastic strategic partner for us. And it’s very fascinating. They’re in the workforce sector. So some C plus class type of assets that they’re converting into B minus B plus, and we did purchase assets right at the end of 2019. So there’s a transition period where it’s like, there’s a new sheriff in town. You either pay or you going to have to leave kind of thing. We’re right. We’re in the middle of that process COVID starts happening. And so what we’re seeing now is pretty fascinating because we see collections data at the beginning of the month in like the low eighties, you know, at the beginning it was 78%. But then towards the end of the month, it’s like 94%. It’s crazy. They’re out there nickeling and diming and hustling and creating programs and just doing everything in Cannes every single month from the beginning of the month to the end of the month. And it starts over again. And sometimes it’s the same people. Sometimes it’s different people, but I can see from the data that they’re just not quitting. They’re not accepting no for an answer. And they’re just on their grind, despite the regulatory challenges. So I’m proud of the partner.

Charles:
It can be done. We’re giving out Walmart cards that people have pay on time and doing, drawing all types of stuff to get people, to pay on time and get stuff coming in. And our delinquencies in C plus properties are single digits. I mean which is, yeah, which is great for people always say, Oh, C plus a season and getting hammered and all this kind of, stuff’s going to end. If you can, if you have the right property manager, you have the right boots on the ground and you have the right asset manager reviewing everything and keeping an eye. And instead of having those bi-weekly calls, they’re now having weekly calls with us, with their property managers and really seeing what’s going on, do this get rented and really getting down to the details. You can, you, you can really operate your way out of any type of pullback if it’s done correctly, but

Hunter:
Love it. And the right asset class. Right. That’s the thing. Yeah. I mean, in workforce, yes. In hotels, man, you got to really be prepared. So, I mean, that’s why, when you asked me about the asset classes that we focused on our investment thesis, doesn’t change. I wanted to develop a thesis that was favorable in all States to the economic cycle. And it’s just always favorable from my perspective, to give up a little bit of the potential upside in those super cyclical investment opportunities and go defensive all the time. We don’t go more defensive during COVID. We go, great. This is exactly what we were hoping for. Right, right. That’s why you’re investing it to minimize your downside risks. So exactly. And by the way, just to tie it back into the ATM’s, that’s an interesting dynamic because the lower, the credit scores, the more people that have challenging challenges getting bank accounts, the higher, the unemployment rate, the higher, the lower, the credit score is the higher the, the challenges are. And so you have this interesting recession resistant component where the more demand there is for the product, the worst the economy does, and I’m always happy to participate in those types of spaces. So Hunter, thank you. Give us a little information. You have a mentorship problem, problem program. Yeah. Tell us a little bit more about it. Yeah. Happy to do it. So and first of all, thanks again for, for having me on, so yeah. Mentorship program, you know, I’ll just briefly, I’ll keep it brief. I got into this business in the wake of 2008, which is the wake of the fix and flip $50,000 coaching programs taught by people that had never fixed and flip a property. And so I was very hesitant to get into the world of any kind of coaching or mentorship or mastermind. Those were cringey words to me 10 years ago because I saw so much devastation. People paid a hundred thousand dollars and never flipped one house. And so it took me a long time to get around to it. But what happened was that I had an investor who wanted to learn how to build a business similar to the one that we had built and was asking about a resource that I could give him. And there wasn’t one, especially when it comes to the hybrid approach to investing where you’re investing passively and actively and building a business around that. And so I built it and a very proud of it and now, and not because of its quality, I do like the quality, but just seeing people take off like a rocket ship after going through, that’s been a cool part of my career. And yeah, you can learn more about [email protected] You can also get all my secrets when it comes to raising capital for real [email protected] and investors. [inaudible] Capital.Com, tons of great stuff on all those sites.

Charles:
Okay. I’ll put all those links into the podcast and YouTube notes. So thank you so much for coming on today, Hunter and looking forward to meeting up with you in the future.

Hunter:
Thanks again.

Charles:
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 me at schedulecharles.com. That’s schedulecharles.com. Thank you.

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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 Syndication Superstar incorporated exclusively.

Links and Contact Information Mentioned In The Episode:

About Hunter Thompson

Since founding Asym Capital, Hunter has helped more than 300 investors allocate capital to over 100 properties. He has personally raised more than $25mm in private capital and controls more than $75mm in commercial real estate. Hunter has been featured in Forbes, Globe St., Inside Self-Storage, as well as a variety of other media news outlets, podcasts, and radio shows.

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