fbpx
Global Investors Podcast
GI134: Flipping Houses to Repositioning Over 2,300 Apartments with Andrew Cushman
January 13, 2022
0
GI134: Flipping Houses to Repositioning Over 2,300 Apartments with Andrew Cushman

Andrew Cushman is a former chemical engineer who in 2007 left his corporate position to start flipping single family properties in Southern California and then transitioned to multifamily acquisitions and has successfully syndicated and repositioned over 2,100 multifamily units.

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 Andrew Cushman. He is a former chemical engineer who in 2007 left his corporate position to start flipping single family properties in Southern California and then transitioned to multifamily acquisitions and has successfully syndicated and repositioned over 2,100 multifamily units. So thank you so much for being on the show, Andrew.

Andrew:
Good to be here, Charles. Appreciate it.

Charles:
So you have a very interesting story. Can you give us a little background on yourself, both personally and professionally prior to getting involved in real estate investing?

Andrew:
Yeah. Yeah. I you know, you met, I when I was in high I knew I wanted to do my own thing cause ever since I was five years old, I used to do, you know, like you know, rake leaves for PE neighbors and shovel snow and do all that kind of stuff. Probably wasn’t all that good at it at five, but I did it, it still got paid, so that’s all it mattered. Right? They were happy. I was happy. I knew I wanted to do my own thing. I had no idea how to be an entrepreneur. So I figured, Hey, I’ll get a chemical engineering degree. Least I’ll have a good job until I figure out what I’m really gonna do. Got the chemical engineering degree went and worked for a great food company for seven and a half years.

Andrew:
Got married along the way. And my wife and my wife had the same idea that I did. And so we just kept looking for different opportunities. We tried, we like, we made popcorn and you know, oh, we can sell, flavored popcorn and, you know, vending and all this stuff. And we figured out, okay, every one of these things makes a little bit of money, but it’s really just another job. Hmm. And I think it was in late 2006. We, I happened to be walking through the break room at work, saw a wall street journal article about flipping houses said, oh, that’s interesting. Picked that up, read it, went and researched. It, learned a lot about it and said, and my wife and said, okay, this, this is it. We’re gonna try this. I, in it to do that business, it required reaching out to people who were in pre foreclosure, meaning they were behind on their payments.

Andrew:
The bank was gonna take the house, but they hadn’t taken it yet and say, Hey, let’s see if we can help you. And then at the end, if, if they couldn’t keep the house, hopefully they’d wanna sell it to us. And so that involved, reaching out to those people. So being an engineer and not real good on the phone, it took me 4,576 cold calls. Wow. to get our first deal working probably 90 hours a week, my regular job and that one, but we got it. And when we got that deal and then we flipped it, we made as much as I made all year at my job. So I said, all right, this is, I don’t know what better sign than that. So I walked in, quit. My job went full time. Flipping my wife did the same thing two years later, after a couple, you know, about four really good years of that business.

Andrew:
We said, this is great, but it’s also kind of like a job. It’s not quite as bad, but it’s similar. And they said, what, what will build long term wealth? What will build passive income? And we just came out of a recession. So we’re going into an expansion. All these people who lost their houses, can’t buy another one. So they’re gonna rent. What’s gonna do well in those circumstances. And we’re like, well, apartments should do well. So we went and found a mentor to learn the business from did our first first indication was 2011. It was 92 units, mostly vacant other side of the country. And then, like you said, I’ve done 2100 unit since it’s been a great business. Love doing it. And yeah, lots, lots of

Charles:
Benefits. So, so that’s interesting. Yeah. So you’re getting outta the transactional and you’re getting more into the wealth generation, which is an awesome place to be. I want to kind of dig into this first deal because it’s very interesting for me. Number one, is that a first multi-family syndication deal. So you, you, you know, you, you picked going into a deal that was 75% vacant if I’m correct. On 92 units in Georgia, was it Macon, Georgia, is that correct? Yep.

Andrew:
You’re right on. Okay.

Charles:
So tell us a little bit about how you found this deal and why did you choose such a, I mean, such a heavy renovation? Well,

Andrew:
First anyone listening, don’t do what I did. <Laugh> the reason I chose it was because I was naive. And the reason I got the deal is cuz the broker spotted a sucker from a mile away. And this was back in, this was back in 2011, there was lots of distress. Buyers were far and few between, you could basically, you know, pick any property you want, make an offer and it’s a good chance you’re gonna get it. And you know, what we did is we knew we liked the Southeast. And so we just started with Atlanta and then literally followed the freeways out. And there was a particular broker in Macon who seemed to have a almost, I think EPP had like 80% of the listings. Mm-Hmm <affirmative> we saw that one called him on it, ended up working out a deal. And we said, okay you know, there’s one point know the purchase price was like $700,000 for, for 92 units, which kind of that tells you something, right.

Andrew:
<Laugh> and then with the rehab and everything, the total capital raise was 1.2 million. So yeah, so that’s how we did it. We just said, Hey, you know what? We like, what’s going on in the Southeast, as far as population and business trends go, that’s an area we wanna invest in long term. So let’s go out, out there. And then we found this property and again, you know, again, I would never recommend someone go buy a C minus heart, you know, very high, heavy, deferred maintenance, mostly vacant property on your, on your first deal, but that’s what we did. So,

Charles:
And so how do you know you, we, I imagine you raised all the money for this, so did you get some kind of loan with it? I mean, I imagine there’s no, there’s definitely no typical loan for a hard money loan. Yeah.

Andrew:
I mean, today you could probably get a bridge loan for 55% or something like that, but back then there was no lending on that kind of thing. So what we did is we, we syndicated it and basically we, we, it was a cash indication. I, okay. We need a total of 1.2 million here’s our proforma, and we’re gonna go out to investors to raise that entire 1.2 million. And that was, you know, we coming from the flipping world, we knew some investors because that’s how we funded our flips, but we underestimated how difficult it would be to raise 1.2 million back in 2011 with again, a very different market and our limited network. And we almost didn’t get it done. It took us six months. We had to delay closing multiple times. And at the end, how we did it is we actually got the seller to carry a note for, it was either two or $300,000. And that’s, that’s how we completed the race was actually getting the seller himself to finish it <laugh> so we could

Charles:
Close. Wow. When he did that, how many years did he do that for you? Like

Andrew:
You know what I don’t re it was either three or five years. Okay. And we did successfully turn the property around when, when we bought it, he was collecting 8,000 in a month, again on 92 units. And then when, you know, we eventually got it up to collecting about 40,000 a month. And so we refind it into, you know, agency, Fannie Mae loan, paid him off investors, got, you know, all their money back. And so it eventually, it, it turned out great, but it was a rough learning experience.

Charles:
So let’s talk about how you like with this property. How did you estimate the rehab? Like when you’re doing it, did you bring a lot of G season, were you using your own knowledge from single family and then also you know, managing a project three time zones away cuz you’re in California.

Andrew:
Yeah. We estimated it poorly is this is the succinct answer to the question. What we did is we did bring some contractors in for certain aspects of, of it and the remaining aspects we made the classic beginners’ mistake of kind of loo leaning on, you know, what you hear, especially if you go to boot camps and stuff, you hear these rules of thumb, right. Don’t ever, ever use a rule of thumb. So we’d go into units and be like, okay, well, yeah, we we’ll just budget. Yeah. This should be $5,000 for this unit. And then we, well, okay. And we could, class folks said, easy, turn, medium, turn hard turn. And we said 5,000 for this. Well, the problem was with a property built in the sixties and seventies that’s been neglected for 15 years is every time you touch something, it’s like peeling back the layers of a rotten onion.

Andrew:
Right. You find out, okay, I need to fix this layer and you move, you, you go to do that. And you’re like, there’s four things wrong beneath that. And so the renovation ended up being way more than we anticipated. So we, we went over on that, how we managed it is we partnered with a management company, a third party. And then we actually hired a renovation coordinator, a guy who used to have his own general contracting business. And we hired him on salary to go live on site and, and run the, run the renovation. So that, then that was a critical piece of being able to do that kinda lift from the other side of the country. Now nowadays, you know, kinda as you, as you referenced, if we’re do, when we’re buying a property, before we close, we have contractor bids on everything.

Andrew:
So we know, you know, to the tee, what the budget should be. And of course, P factor in a, you know, contingency and all that kind of stuff. But there’s no rules of thumbs. There’s no guesstimating. We have bids on absolutely everything beforehand. But on that first one it was a mix of, well, we think it’ll be this and we’ll get a few, we got a few bids. And with that much neglect of a property, there was, there was a lot more there than we estimated. And we had vandalism along the way that added to it. So,

Charles:
Oh, even with the guy living on on site.

Andrew:
Yeah, because it was a ni again, 92 units, so it’s a decent sized property. So he’s living on one end. And then for example, one night so broke into a vacant fourplex. So one of the buildings that only had four units and they ripped out all the copper out of the walls and didn’t bother to even turn the water off. So not only did they rip the, you know, rip the copper out, but they flooded the units. Right. So that was like $50,000 worth of, you know, vandalism you know, at, at, at, you know, on the property. So again, a lot, a lot of lessons learned and we have all kinds of procedures and things in place now to prevent all of that. We learned our lessons, but yeah. So that’s how that happened

Charles:
Other than I mean, other than this, this, the high vacancy and a miscalculation on the estimating for the rehab. Were there any large other huge mistakes that you made maybe with the property, like choosing it or anything else like this that

Andrew:
Yeah, I mean, in retrospect it, it was, you know, it, it’s very common if you, you know, when you talk to a lot of owner operators, syndicators, anyone in the business, it’s extremely common for, for us to start off and see assets and then kind of move up the chain. Right. And we ended up doing the same thing because one of the mistake, oh, Hey, this is cheap. We can afford it. Right. Well, it’s cheap for a reason. And so one of the, I would say the mistake is, is we bought a income property in a low income area. And, you know, that is something, you know, we, we like, we would never even think, think about that kind of asset now. Right. So, you know, today we screen for population growth, median income, crime rates. We look at what the neighbors are, is it in a flood zone?

Andrew:
It’s all kinds of parameters that every property has to pass before we even look at it. So that was one mistake. We, we bought a, a, you know, a C minus property in a C area and even more important is it, you know, there’ll be some people listening, oh, I’ve done great on those kind of properties. Well, we have two. But the area was not only C it was declining. Okay. Right. So you’re not gonna get cap rate compression. You’re not gonna get population growth. You’re not gonna get income growth that will, you know 10 your returns on the property. And again, we, you know, fortunately we did buy at the right point in the cycle, we did buy at the right price. And so, you know, and still ended up to be a very profitable deal, but we made a ton of other mistakes as far as out valuating costs and, and, and, you know, submarket and all those kind of things. Yeah.

Charles:
Interesting. So what is your current criteria now? You’re sticking more to what is your strategy and criteria now? Is it B class?

Andrew:
Yeah. We’re B class. Or if a, we’ll look at a C plus, if we can bring it up to a B, and if it’s in a B neighborhood, so generally we’re looking at 1980 to 2010 construction, mm-hmm <affirmative> and you know, in, in B to a markets and we buy in markets where strong population growth you know, strong incomes and some, so to put numbers on that, you know, we will only buy a property if the median income in that neighborhood, not a three mile radius, which is what you see in a lot of OMS. Cause that’s deceiving. Yeah. You know, three mile radius, that’s six miles apart, right. So you can get a neighborhood way over here that the immediate incomes are 150, but your property’s in an area where the median income is 15 grand and it, the numbers will, you know, the statistics lie, right?

Andrew:
So we look at, we go, we actually pay for data from Esri, E S R I. So we can get in median income at the neighborhood level. And we are, we won’t look at anything. If the median income is below 35,000, we really prefer it to be over 40 and ID over 50. The reason for that is affordability. If you, I, you know, affordable housing is generally defined as someone can spend 25% or less of their, of their gross income on rent. So if your rent is $835 a month, that’s $10,000 a year. So in order for that to be you know, know, affordable, and someone only has to pay 25%, that means that the median income needs to be 40,000. Right. So that’s how that, so if you’re investing in California or, you know the Mid-Atlantic, those numbers would change for you, but for us in the Southeast, that, that 35 to 40,000 cutoff work.

Andrew:
So that that’s a, that’s a, that’s absolutely critical. I get, and we don’t buy in, don’t buy in flood zones. Mm-Hmm <affirmative> we look for areas where popul, ideally population growth is above the national average, but the requirement, it has to be at least flat or, or with the national average, that can’t be declining. Cuz over time you’re gonna lose pricing, you know, pricing strength with, with your rents. And we can’t be a high crime area. We won’t buy in an area that has high crime. And we also look at the neighbors. We won’t buy something next to a traditional mall because because those are dying, right? We’ve seen malls, we’ve seen a handful of malls in Georgia go completely dark, go outta business. Right. Which is kills the local economy. Now the one exception would be is sometimes you can find a mall where there’s already plant, where’re gonna come in and redevelop it into something completely different. That that’s a positive. So we won’t buy next to ’em mall. We won’t buy something if there’s like a, you know, laundry mat and, and you know, kind of rundown commercial. And then, but some of those, those are some of the main factors we’ve actually, like I said, we’ve got a whole, a whole procedure that they run through, but those are, those are the critical ones.

Charles:
Yeah. It’s so important because it’s funny when you talk about the income, because unless you’re driving the area, you can see, oh wow. Income, these properties really change. But when you’re looking at it on a map, you might say, wow, income is a really difference between this. And it could be train tracks, it could be a highway and it mean that’s 30, 40 feet. Right. You know what I mean? I mean, it’s nothing, you know it’s and you’re like, wow, that’s really changed, you know, one side of the Street’s better than the other. And so it’s so important to know your neighborhood and see that there’s some sort of wave of gentrification coming through it, because without that, I mean, you’re just gonna be, like you said, buying in a declining area. And, and then there’s no right. There’s no cap rate compression. So at that point there goes your returns, you know what I mean? Yep. So so what do you, when you’re you talk about screening your neighborhoods and stuff like that, what is your role in the process? Are you finding deals? Are you underwriting? Are you raising money? You know,

Andrew:
For many years I was every role. You know, we, we did bring all on an admin admin person pretty early on and, and that was a blessing and she’s still with us. And now she’s way above admin she’s knows and can do anything. These days we we’ve brought on a couple more people. You know, one is focused on acquisitions and he actually lives out in Atlanta. And so my role now is really PRI is primarily relationships relationships with the investors. So like, you know, you know, whenever we bring on a new investor, we act that that person and myself you know, have a one-on-one phone call as well as some, some other steps. And you know, when people are investing in the deal you know, the deal and this goes for any, any sponsor, anyone is investing with it.

Andrew:
The success of it is more on the person running the show than the deal itself. I mean, a great deal is, is, is obviously mm-hmm, <affirmative> what you want that, but a, a, a good sponsor can take a bad, bad deal and turn it into a good one, but a bad sponsor can take an amazing deal and run it into the ground. And I’ve seen both half been, right? So so my, you know, my main role is those relationships on the investor side. And then also you know, I have a lot of long stranding relationships with brokers that are, that are bringing us the deals and then the relationships with our property management company. And I also go out of our way, and this is, this is, this gets into asset management, which is a critical piece of, of, of multifamily is I have good, you know, very active relationships with our onsite staff at the property.

Andrew:
So the maintenance, the, the maintenance manager knows how to, he can call myself if he wants, right. If he’s got, if you gotta just not for, Hey, what do I do about the air conditioner on unit three C <laugh>, but like, he’s having an issue like, Hey, you know what, the regional managers, you know, I don’t feel like I’m being listened to, I need these tools and I can’t get ’em, you know, stuff that they, they, they don’t call for day to day, day stuff, but, you know, important stuff. And really, it’s more, they know that there’s an open chain of communication and they have the whole, they have the vision of where we’re trying to get the property and what they’re role is in that. And so my role is to provide that vision, to provide them with, you know, a venue. You know, I, I tell ’em all the time, my role is to enable you to be able to do your job as effectively and easily as possible.

Andrew:
Right. So what tools do you need? Do you have any ideas on how to improve things and all of that? And then of course, I I no longer do the initial underwriting of, of deals cuz that was a bottleneck. So now we have a couple people that, that do that and then if we’re gonna put in an offer, then that’s when I get involved. And then certainly if we’re actually believe, you know, believe we’re getting an offer accepted or we’re gonna go under contract, then I, then I go back through every single detail. So I’m kinda at the high level deal

Charles:
Approval now. Nice, nice. So you’re working on relationships, you’re sourcing money, sourcing deals. That’s, that’s very interesting what you said about doing, having contact directly with the maintenance men. We do something similar there like with our attorneys and stuff, even eviction attorneys, I’ve had mm-hmm <affirmative> attorneys call you and be like, Hey, we can’t reach the manager. I’m in, you know, eviction court right now. What are we doing here? You know what I mean? And so it’s great to have that contact for those one off que calls, not like like you said one thing I said when I was reading, when I was researching for this episode is you said about how you vet passive investors and how have kind of been an issue in the past. And this is very interesting, cuz it’s not something that many people talk about or I don’t. How do you vet your passive investors and how, I mean, how does that process work, where you you can bring them in they’re into your network and how do you know that it’s you know, how do you know that they’re gonna work out for a or deal that you you’ve got going?

Andrew:
Yeah, it really comes down to communi clear communication and understanding what, what each person’s expectations are. And so where that comes from is going back to that very first deal. I mentioned that we needed 1.2 million, well from the get go, I had two investors that each said, Hey, I’m in for 400. I’m like, man, this is awesome. I already got 800 raises and I haven’t even started. Right. Well, one, one of those investors who actually was a pretty good friend turned out, he didn’t even have the money and he ended up filing bankruptcy a couple years later. Right. So I didn’t, I didn’t do a good enough job of, of verifying that he actually had the funds available. The second one, he had the funds, but turns out I didn’t ask enough good questions to find he wanted to be my general. He wanted to be general partner on the deal.

Andrew:
And, and he, his 400 came, came with that, that attach. And I was like, wait a second. We barely know each other, like, you know, getting, being a partner in one of these things is like a five to 10 year marriage. And you don’t, you know, you Don it’s easy, easy to get into hard and messy to get out of. And I already could tell like him and I would, you know, would probably wanna see things differently. So even though it was scary, I said, sorry, I can’t take your 400. Right. So those are two examples of, you know, I didn’t find that out up early enough. I found it out later and of course it caused me in a lot more difficulty. Eventually obviously did raise it, but it caused a whole lot more stress. But so now, you know, if some, if, if you’re saying, okay, I wanna, I wanna take other people’s money in and provide them with an opportunity and syndicate number one.

Andrew:
And, and this is, this is, this is, you know, what we do is we have ’em fill, first thing we do is have ’em fill out a questionnaire. You know, it just kind of says, Hey, you know, are you accredited? Are you sophisticated? How much money do you, if you like a deal, how much money do you think you wanna invest? You know, what’s your timeline for, you know, can you, are you wanna invest now? Are you looking to invest in six months? You know, do, are you okay with a five year hold, right? You don’t wanna accept funds from somebody who needs their money back in 12 months, if you’re doing a five year deal. Right? So you wanna make sure that those expectations line up if you’re look, if you’re talking to somebody and another question we ask is you just usually during the interview is, Hey, if you were to invest in a syndication, what kind of returns are you looking to get?

Andrew:
Right. If someone says, I want a 25% IRR, you know, what, five years ago we could, we could do that. I wouldn’t pro I can’t, I don’t feel, I don’t feel right promising that to in today’s market. So we’re probably not a good fit for you. Right? So that, that, that, so when, when it comes to the vetting investors, that’s really what it comes down to is making sure their expectations and financial goals line up properly with whatever opportunity that you are providing them. And if not to say, Hey, you know what, I was great meeting you. We appreciate it, but we’re probably not the best fit. And, and you know that, and then that’s really of the way to do it now, you know, as far as like, you know, deeply vetting him, like finding out the guy was actually on the verge of bankruptcy <laugh> instead of having 400 grand, we don’t, we don’t do that anymore.

Andrew:
And the, the key there, the key mistake I made on that first one is I was basically relying on two people for 80% of the capital stack. Don’t do that. Unless you’ve got someone that, you know, is absolutely reliable and vetted in will and will show up with it. Right. So now, you know, if I talk to somebody and they’re like, oh, we’re gonna invest 50 grand and turns out they filed bankruptcy, no big deal, because I’m not relying on that 50 grand. So as long as you don’t, as long as you do that, where you’re not relying on a particular person then, then you should be good. And then also, especially in the beginning, always raise way more capital than you think you need. Mm-Hmm <affirmative> in terms of soft commitments, right? So if you need to raise a million dollars to do your first indication, get soft commitments, you know, basically someone says, yeah, I’ll invest for 2 million. Yeah. Because when it actually comes time to write that check, some people just get cold pee. Some people say, shoot, I forgot. I gotta, I’m gonna I’m buying a condo for grandma, you know, whatever, it’s that first time around, it tends not to show up, you know, at a hundred percent.

Charles:
So, yeah. Yeah. You’re definitely gonna have 50%, especially in your first indications. It’s typical for 50%, the kick out as I’ve seen before. And it’s like you said, I’ve had everything like people buying RVs, people doing this, people that, all this kinda stuff with their money, or they’ve already invested it and yeah, that too, you know, that’s in, in like, oh listen, come back to me in five years. Okay. Or something like this. So that doesn’t really, yeah. <Laugh>, doesn’t really help me now, but thank you for being honest with me. So tell me some of the best ways you guys have found, obviously right now, over 2000 units done, it’s not really an issue for raising money, but I guess when you’re starting out or maybe what you’re continuing now, what are some of the best ways you found of sourcing capital from investors?

Andrew:
You know, it’s, it’s changed since we’ve, since we started the business, you know, when, when I started, it was basically strict, you know, in person one-on-one networking. We definitely started as most people do, you know, friends and family mm-hmm, <affirmative>, you know, people that literal my, my mom was our first ever check. Right. And, and and on that syndication. And then now again, people that we had met in the flipping business now today all of that still applies, but the new syndicator has a lot more other venues. Right. You can start, you can go on places like bigger pockets and start just get on the forums and just start getting involved in conversations and answering questions and asking questions and connecting with people and letting people know what you’re doing and will reach out to you and be like, Hey, well, you know, when you do your next deal, let me know.

Andrew:
Right. And you say, okay, cool. Hey, let me let’s, let’s get on the phone for a few minutes and then I’ll get you in the system. So do that. So there, you know, it’s, I mean, I know, I know people who raise millions of dollars on Instagram, right? Mm. I’ve never made an Instagram post in my life, but you know, nowadays, if you’re good on Instagram, you can raise millions of dollars for real estate. So those are, those are the way, and, and candidly, we’re looking at transitioning a little bit and say, okay, well, you know, how do we, how do we in a professional way, you know, use those platforms as well. But yeah, that, that is really friends and family immediate network, and then build a following, however, small you know, you only need, you don’t need that many raving fans or partners to, to get started.

Andrew:
And then that the, the second thing is partners, right? Maybe you’re a really good deal finder, really good underwriter partner with somebody who already has the network and can raise the capital. That’s what we did for deal. Number two, three, and four is the, the P the guy that taught me the business. You know, I, after closing the first deal, I went to him and said, Hey, you know, we barely made that raise. But we love the business. And we learned a lot, would you partner with us? And he is like, you know what? We gotta actually get along pretty well. Sure. We’ll do that. And so the next three deal as we found the deals and he helped us raise the money. And by the time we got past that, it starts to snowball. And we, you know, we didn’t have to do that anymore. So either, you know, you can, you can do it, I would say, do it yourself. But then also simultaneously consider who you might be able to partner with that can bring that to the table for you, for you and accelerate your, your, your skill scaling.

Charles:
Yeah. So find out the places that round out people that round out where you’re not the best at, and to finalize the whole deal with the GP mm-hmm <affirmative>. So what kinda mistakes do you see real estate investors make?

Charles:
Well, one is especially, you know, in today’s market. I see a lot of investors making overly aggressive assumptions. Mm-Hmm, <affirmative> I saw a sponsor put out a deal the other day, where they assumed in addition to their value, add strategy, 4% market growth for five consecutive years going forward. That’s a bit aggressive, you know, like it, everything has to go absolutely perfect for five years in order for that to happen. So, you know, aggressive is two aggressive assumptions. Another one is under capitalizing deals, and this is some something that, you know, I’ve seen over and over again for the last 10 years where, you know, someone says, okay you know, the purchase price is this, I need, you know, 200 grand for renovation and our you know, pay a fee here, pay a fee there. Okay. That’s how much capital we need.

Charles:
You also need operating reserves. You need contingencies for for cap, you know, for case your renovation, budget runs over. How much is your deductible on your insurance, right. So I’ll give you an example. We had a pro we have a property in the Florida panhandled that got destroyed by a hurricane in in 2018. And, you know, I, the, I mean, the deductible on that I think was almost $400,000, right. So do you have the reserves to cover the deductible? And do you have the reserves to get going on rebuilding that property instead of waiting for six months until the insurance carrier cuts you a check or, you know we’ve had properties where, you know, managers commit fraud or something like that. So, you know, always having sufficient reserves you to, to get the property through any kinda unforeseen circumstances.

Charles:
The reason people don’t like to do that is because of course, when you’re underwriting it, Dr. It drops the return, right. Cause you’ve got cash, that’s just kind of, you’re raising and sitting there, but it is far, far harder to get capital after you close on the property than it is to get it up front. It certainly would, you know, we’ve, we’ve never done a capital call but you know, if you have to go to your investors two and a half years down the road and be like, oops, sorry, we need some more money. That’s not gonna go over well. So always, you know, always bring more as much capital as you can to the table up front. Okay, awesome. So what do you think are the main factors that have contributed to your success?

Andrew:
Relentless persistence? I don’t give up easily. You know, like I said, we made, I made 4,500 phone calls <laugh> to get our first flip the, you know, we just closed a large portfolio in March. We had to, we looked at 347 apartment comp to find that one that we truly felt was a great deal and, and was worth was, you know, was a worthwhile opportunity. So yeah, so patience and relentless persistence and not, not compromising on things we shouldn’t. And actually that’s a bit of a, I mean, so, you know, we’re probably a little too conservative and everyone, these days gets on podcast and stays that they’re conservative and actually kind drives me nuts cuz half of them aren’t. But you know, the flip side of that is I, I, when I, the reason I say, I think we’re too conservative is we, you probably should have bought a lot more deals. Over the last few years there’s probably deals we passed on that actually would’ve been great. So it’s kind, it’s a, it’s a tough, it’s a tough thing to balance out. Right. Cause you’re, you’re guessing about the future and, and you wanna, you want to your goal is to under over pro under promise and overdeliver, but if you do that too much, you’re never gonna buy anything. Right. Right. So yeah, so that, that, that’s, that’s another thing that I would that would add to that.

Charles:
Okay. Awesome. Well, thank you so much for coming on today, Andrew. How can our listeners learn more about you and your business?

Andrew:
Probably the easiest way. Like I said, our, so I’m, I’m still gearing up to, to social media. I’m kind of, I’m semi, semi old school here. I’m, I’m trying to get up to the modern age, but probably the easiest way is just our website vantage point acquisitions, VP, aq.com. If you Google vantage point acquisitions, that’ll come up. It’s usually the top, top search result. And there’s a number of tabs on there for learning about, you know, investing or mastermind. We have a mastermind for people who actually started investing in taking action and gotten into the game and wanna scale faster. But also if you just wanna reach out and connect there’s a contact us tab on there and of course, LinkedIn and bigger pockets and all those as well. So awesome.

Charles:
Yeah. So our listeners can reach out to you and your team and learn more. And thank you so much for coming on today and looking forward to connecting with you in the near future.

Andrew:
Yeah.Sounds good. I appreciate Charles take care. Thanks

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.

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 Syndication Superstar, LLC, exclusively.

Links and Contact Information Mentioned In The Episode:

About Andrew Cushman

For over a decade, Andrew has been growing real estate investment businesses full-time. After graduating from Texas A&M with a BS in chemical engineering, Andrew worked for a large food company for 7 years in a variety of supervisory positions.

During that time, Andrew (joined by his wife in 2004) experimented with a variety of businesses in the hopes of making the jump from W-2 employee to entrepreneur.

In 2007 Andrew discovered house flipping and left his corporate position to start a business in real estate investment. In 2011 Andrew transitioned to the acquisition and repositioning of multifamily properties, successfully syndicating and repositioning over 2,100 multifamily units to date.

Andrew is a details-driven multifamily real estate investor who leaves no stone unturned when vetting deals. His passion drives him forward in entrepreneurial endeavors but his easygoing, friendly spirit is what builds lasting relationships with his investors and business partners. He believes in building passive income streams in order to free up more time for enjoying family and the personal hobbies/passions that make life a little bit more exciting. He is a frequent guest and panelist on Real Estate podcasts and educational forums, and recently launched The Multifamily Accelerator: a multifamily mastermind group for active and experienced Real Estate investors. When he’s not looking for and managing deals, you can find Andrew surfing, backcountry skiing, or chasing around his two young children.

0

About author

Admin

Related items

GI135: The Benefits of the Deferred Sales Trust with Brett Swarts

GI135: The Benefits of the Deferred Sales Trust with Brett Swarts

Read more
SS57: How to Successfully Hire and Train Virtual Assistants

SS57: How to Successfully Hire and Train Virtual Assistants

Read more

SS56: Real Estate Joint Ventures Vs. Syndications

Read more

There are 0 comments

%d bloggers like this: