Over the last 3-4 years I've seen way more aggressive debt terms, they'll shorten their due diligence period, they'll put up hard money on day one of the contract. What who put pause Hard money. Day one of the contract. Hello Hello, welcome back to episode 17. I've had to invest in commercial real estate. My name is Brandon and we have a special guest brain and land on for part two and today we're really going to drive down on, you know, maybe some brokerage tips, how we can expand on people who are brokering maybe get them some bigger deals or or just help them out and then you know, maybe some tips on how somebody could break into multi family for the first time. So you know brian and I'm we formed criterion a couple years ago, you know we've been focusing on other asset classes and you know multi family is one that I think everyone wants to get into but how do you do it? You know where, where do you even start? So let's go back to the first one brokerage steps what what's the biggest piece of value that you think you could give somebody to blow up their brokerage business?

Yeah again, back to when I got started again, I knew no one didn't know much about you know the Oklahoma landscape at all, but you know, I knew it was a relationship business and it very much is so I think that's really critical number one is just build relationships, take people to coffee, uh lunch, whatever you can do to get in the door. A lot of these guys get called on a lot as you can imagine. So it's not easy. Um, everyone would be doing it if it was, but you know, it's a relationship business and number two, I'm a big believer in specialization and building a team, you know, for me that was critical that I do that. Um, you know, back in the day when I was selling securities, I was kind of a, a one man show and I hated that. I've always been into team sports. That's just kind of my, you know, how I'm wired and this is very much the same. Uh, and like I said, we have role players that are incredible at what they do. I think our guys are, you know, the best at what they do and their respective lanes and I'm biased of course. But um, you know, that, that's really critical.

It's relationships, uh, it's building systems every day. You're, you're doing things that are gonna drive you to the goal and um, you know, build a team, you know, find some subject matter experts that are better than you smarter than you in that respect of lane and, and um, you know, um, you know, get a team together, taking a step back. So what if someone is in a completely different industry and they want to get into the brokerage industry, it sounds uh, interesting to them. Do they have to have some sort of certification beforehand or some sort of formal training, or can they just maybe uh interview at a at a company that that's uh doing broke broken brokering and just work their way up or learn by joining that company or how do you uh how do you recommend that someone gets started like that? Yeah, I mean, that's a great question. And when I was trying to get into the business, I was really, you know, I had decided I wanted to be in this business long before I actually did. So I was I was studying, I was reading books, I was, you know, working on my C. C.

I am, for example, just in my in my spare time, what's the C. C. I am, that's a certified commercial investment member. So it's a great credential to have, It really kind of gives you exposure to every food group, you know, in the industry, and it's um you know, I'm gonna take to get, you know, it depends, you can kind of go at your own pace. It took i I powered through it and, you know, inside of three years, four segments. But, you know, I highly recommend it for anybody who's really not Well versed in the business, but, you know, our power through it for three years. I know absolutely. I mean, I think it's taken some people 5-7, but it's really kind of at your own pace. But how many people power through anything for three years? Yeah, that's just a rare statement in and of itself. Yeah, man, last three years is rough. I really had to push through that one. Uh It's it's really it's four or 5 courses and uh and then the what summary or the final, Yeah, the final, you go to Chicago and take the final. And that's that's really it. So that was years ago when I did that. But does someone have to have their C C M C. C. I am to break into?

Not at all. Not at all. Most people don't. Um So no, I mean, you don't you don't have to do that. It's just, you know, if you're in a completely different industry, you know, nothing about real estate or finance or anything like that and say, I want a new career path, That's a great way to go. Yeah, it gives you great exposure to uh you know, to kind of the, you know, all the topics that are typically important. So how many of your analysts or analysts you've worked with have the real estate license versus um analysts, our underwriters on teams like yourself that don't have real estate licenses. It's kind of a leading question because I'm a firm believer and people who want to learn should should get in as an analyst job and then do the brokerage license after. Yeah, absolutely. That's how I started, um, you know, it's Dan Johnson is an analyst just to learn the business and that was a great, that was a great lead in everybody wants to be a broker on day one. And you really can't, in my opinion, you can't be a really good advisor to your clients unless you really understand, you know, from their perspective, what does an analyst do a Well, they underwrite all of our deals.

Um so they really get into the weeds, all the numbers. Yeah, they understand financial statements and You know, they can take a trailing 12 financial statement and dissect it and you know, um it seems like a good, good way to learn. It is, it's a great way to learn, great way to start. And uh most, most of the successful brokers I know really started in that capacity. Okay. It would be good to, to start as an analyst to learn what we're doing on the syndication side too. I mean, just understanding the numbers and improving your financial education, that's really where the game, where the game is played and where the money is made, right? And just like you said earlier, like you, you knew this was something you wanted to be into. So you start educating yourself, you started working on your CCM part time and you started, you know, side hustle with knowledge and you know, we talked about that in previous episodes all the time. If you if you want to break in, listen to podcast, listen to somebody else's podcast, read a book about a talk to people like yourself, get into c. C. I am going back to his point on on building, you're building a team, there's a lot of I would say brokers that try to go it alone, I don't want to split my commission, I want the whole thing and they really tripped himself up for in the short term, taking a little more cut on the commission, getting it all themselves instead of sharing it with other professionals.

I think it limits their growth and you see them where they'll stagnate in their career and they're doing one off deals, but the power teams that are assembled. Yeah, they're they're sharing commission, but they're doing 10 times the business uh for for a third of the commission. So you're making way more and also just having having if if someone is going to break in, I would say break in at uh the biggest company, like a new mark, because you're gonna have the best systems, you're gonna have the best training and and the most experience or if you join a local smaller team will only person you're not gonna get the training and the experience that you would with a bigger shop. I agree. I agree. I mean, and everyone's wired differently. Of course, I mean, some people like to be the lone wolf and go get it and they're happy if they get two or three listings a year and they can make a great, great living doing that for sure. But you know, we were of the opinion of, hey, let's, let's a mass our, you know, our, our talents together, let's, let's everyone get Elaine, uh, like you said, niche down even further and say, I'm gonna specialize not just in multi family, but I'm going to work on Tulsa institutional class A and B stuff North of $10 million.

So we really kind of get down at that level. But you know, again, everyone's wired differently. We just wanted to get more market share. We figured that, you know, deals are going to beget deals and that's the truth. You know, one listing leads to more listings. Um, you know, and that's typically the way it works, man. I mean, it really does work that way. That's right. So how do you suggest that someone just like us, if we want to go out or our listeners want to go out and buy a multi family property, how do they get started? They contact someone like you or how do you think they should get Started? Yeah, I mean, brokers obviously are a great, great way to, um, you know, start making those connections if you want to be a buyer. Um, again, 10 years ago, I thought that's what I want to do. So I started calling brokers and making those relationships and brokers get a lot of calls as you can imagine. So everybody who says, hey, I want to buy multi family, I've bought nothing. I don't have any of my own money. It's like, well, we, we probably are, you know, gonna not make that a top priority to call that buyer. But you know, the guys that are persistent, the guys that, that really show that, uh, you know, they mean they mean business.

One of the fastest growing companies in Oklahoma right now is Izvestia. And three years ago that was the phone call that I got from that principle was just, Hey, I'm, you know, I, I don't know anything, but I want to buy this deal. I thought, well, all right, let's see how that goes. And uh, man, he's bought 18 deals, I think since then, uh, oh yeah, phenomenal guy, incredible at raising capital. And uh, yeah, it's, it happens. So I, I think my biggest suggestion for the guys that really want to get into the business and break in, don't be afraid of the, you know, 50 unit deals. 30 unit deals. I think it's a great way to learn. You're not gonna get rich on that. Most likely. I mean Joel, you can speak to that. Obviously. I think better than anybody because you started with some of those that we thought, well, it's the ugly deal. It's the small deal that doesn't really have a lot of sex appeal. But man, um, you know what a great launchpad for what's a successful company today. Uh, and there's less competition in that space. So if you're trying to go after the 10 million plus deal, everybody wants those, everybody wants to own those.

But there's a lot of competition up there at that level. And uh, less than five million that private client space, um, you know, get a bit better odds. So it's gonna have to be maybe uh, properties with less units or maybe classy properties that need to be fixed up. Yeah, sure, sure. Competition there. Yeah, absolutely. You can buy those right add value and uh, you know, 1031 later. That's interesting. We obviously, we did have to start with some of the uglier older smaller units. Um, I didn't have a, I didn't feel like I had a choice what? I didn't do a good job of talking to the broker because I was, I was like that buyer that didn't know anything and didn't have any money. And so I didn't really want to expose myself and looked like an idiot to the brokers, but I didn't do enough of asking them, hey, how did, How does the underwriting work? And so it led me to making mistakes. So I think if you want to get into the game, having conversations with brokers, getting their underwriting, looking at how they analyze the deal will help you keep you from making mistakes. But the question of whether you should buy 50 unit or a 200 unit, uh, that's, it really comes down to whether you can raise capital and what kind of returns that capital wants.

If you, if you are, if you've studied and you are confident and you know the stuff and you can present a business plan that makes your investors double digit cash on cash returns and they're willing to trust you and you, and, and maybe you have a broker kind of back and you're saying, yeah, this, this deal will make that money then by all means. I say skip to, to, to the bigger units and, and do it that way. But if you can, or you don't have the ability to raise the money. 50 unit 100 unit or an older asset class could be a way to break in. So I've got a really good question. Um, you said earlier that you guys get so many offers on deals, you know, 15, uh, you know, 30, 40 maybe, depending on the deal in the market. Are they getting smarter? You know, are, are the people who are constantly bidding on the steels? Are they, are they learning, are they taking notes? Are they winning deals later on? Do they keep submitting letters of intent with you or do they pass on tell me a little bit about the bidders bidding and how long you keep that relationship going? Maybe tell me about some of the deals they lost as well.

But they kept going because, you know, I know Joel and vic over precision equity, they've, They've been bidding on multi family deals. I mean, the guys out there buying are typically out there bidding 10 times more than they're buying. Yeah, no, that's true. We, we, we've had buyers or prospective buyers who have been making bids and offers for years and I've never bought anything. Uh, and sometimes they fall away. Um, but we're really good at vetting those tire kickers. You know, we, we inevitably have those on every single deal. Um, yeah, But the guys, I think, you know, it helps guys to lose a deal every now and then because they want to know, you know, the guys that really are serious about it, they want to follow up and say, where did we miss it? You know, obviously where did it trade? Does that pencil for us? Uh, in terms of, you know, our return to our investors. Um, sometimes yes, sometimes. No, But yeah, typically, you know, the guys that really ultimately win, uh, they're taking several swings before they actually win a deal. You, and they're calling you afterwards. Like you said, I mean, how valuable is that phone conversation when you bet on a deal, you lose, you call the broker afterwards.

And he says, hey, this is, you know, where it traded as a principle as a buyer. If I could have made that number work, I'm kicking myself so hard. I'm like, man, I could have got there, I could have been higher, you know, I was just scared or whatever it was when it doesn't work. That's when you can go to sleep, you know, good at night because it's like, oh man, that idiot, You know, that's never gonna work. Yeah, I've got another question that I think is interesting. So, you know, obviously I'm underwriting and bidding on even some of your deals and I don't win them. Uh, and, and part of that's just a risk analysis on our part and what return we're willing to live for live with, uh, for that risk. But so you have, we have buyers that are paying prices where I'm penciling it in and it's, and it's just not working. Maybe it's, you know, 6% cash on cash or something. I know the poor form a maybe higher, but I don't really think they're gonna walk away with that that much when you add in Capex and, and some of those expenses. So do you have any without giving names or any any information? Uh, do you have any thoughts on these, these guys that are winning a lot of deals at really low caps and how they're performing after they buy it?

And are they really doing as well as they thought they were going to do or is there any variance there? Yeah, I mean, there's certainly a variance. And again, every, every investor has their own model. You know, they have their own metrics in terms of, here's, here's what I'm paying and my investors for a pref and here's what we're obviously trying to get on the, on the back side once we exit the deal. Uh, and every every investor profile is different. You know, the larger institutional guys, it's hard to compete with those guys in a class A deal because they don't have to pay a big pref preferred return to their investors. So, yeah, I mean, everyone's different. Um, so, you know, we've, we've seen in Oklahoma predominantly guys that have bought it X and they sell it. Why? And they've done well. Um, and everyone's definition of, we did well is different, you know, of course. So a lot of guys are just happy with that coupon basically and we clip the coupon were, you know, it's perceived safety for that particular asset class. We're not taking a lot of risk and we're happy at the end of the day. Is there anything else that can make a buyer stand out? Does it really just come down to the price at the end of the day or as a broker?

Is there something else a buyer can do to, to stand out and increase his chances of winning a bid? Yeah, absolutely. I mean, you know, most sellers obviously are very price sensitive, but at the same time, You know, over the last 3-4 years, I've seen way more aggressive debt terms. They'll shorten their due diligence period. They'll put up hard money on day one of the contract. What um, who put pause Hard, hard money. Day one of the contract, I guess when you buy class a brand new construction stuff, you can do that. That's market basically. Yeah. Three years ago, I would have said they're, you know, not many people in Oklahoma do that. That's why I don't buy multi family. That is that is market, wow. I can we just take a moment of silence for that. I, I don't even know what to say after this. I, I would consider it on a class a deal or a newer deal that would have less hidden problems. Uh, and I would, I would do it with an operator and a broker that I trust. Uh, you know, that there's, they're gonna give me the right financials and there's no hidden, hidden things in the closet. So, well, that's a good point too. I mean, class ideals, we see it way more often if it's a workforce housing deal that's got some hair on it.

Um, you know, it, there might be hard money, but it's gonna be far less just something to show that, hey, I've got skin in the game. I'm serious about this. I'm not gonna walk away from not wasting your time. Some guys do just completely wasted. Absolutely. That's another reason to use a broker is because, you know reading and I are out there trying to buy a property. We don't know that this is the new norm that you have hard money on on day one of the contract and these type of things. So we're not gonna, no, the latest things that attract um, a buyer. So, um, that's, that's another reason I think to use a broker. Yes. But you know, I think we do a good job of coaching people through that because we want people to be successful. Um, and, and when deals, so, you know, that's how we make our living too. We want people to actually buy the deal. So we want it to be competitive. Our, our fiduciary obligation to our clients is, hey, we're going to get you, you know, we're going to get you the biggest price that's available in the market because we're going to, we're going to bring a lot of new blood to the market that you don't even know about. Um, those guys that are trying to enter into the market for the first time are typically the ones that are paying up a bit to get the deal.

And uh, but yeah, we wanted to be ultra competitive. We want to create that competitive bidding environment so that people are getting, you know, those competitive juices start flowing and inevitably that price goes higher. So sellers really like us buyers sometimes get really mad at us. I don't, I don't love your work because I don't get any deals, but I got a question that may kind of wrap us up here obviously, uh, A rising tide lifts all boats and we've we've seen a run in multi family almost 12 years now since 08, uh, maybe that started in no nine in 2010 as as we were rebounding. But so what is the outlook? Um when do we see prices either stabilized or come back down? Get a crystal ball. Yeah, that's uh, I love those questions. Um Yeah, I mean, obviously we, you know, for the last several years we thought to ourselves, man, is this sustainable? It's just getting, you know, more and more aggressive, more and more competitive. No one saw a pandemic coming. Obviously we want to, you know, wonder back in March, how is this going to play out? And it just keeps just keeps getting crazier.

But you know, again, I think as long as interest rates stay somewhat stable, um you know, I think that you're going to continue to see buyers flooding into these markets. Secondary tertiary markets are now in vogue before it was, you know, a little bit more of a limited buyer pool for, you know, call it the tertiary markets. And now it's like, well, that's perceived safety because middle America is getting a little more crowded these days. I think the pandemic just gave it another leg up maybe because um, I know before the pandemic, right, and I were all over retail. It was it was it was it was great. I don't know if everybody felt like that but now during the pandemic, everybody on retailers maybe kind of holding in a little bit and they say well we got a place where money somewhere and multi family is uh is obviously another good place, multi family and industrial seem to still be the darlings of commercial real estate right now. And um you know and to your earlier point Joel again, I mean we we've seen this phenomenon of um you know buyers who were predominantly non multi family buyers are now multi family buyers.

So it's just making that landscape even more competitive. I think the returns will be could be skinny going forward and we may have some correction but as long as interest rates stay low, which I think globally uh the way money works now, they they're not gonna go back up to you know where they used to be in the past, they may come up a little bit, but then you've got uh the government flooding the market with with money trillions of dollars and so that will raise inflation over time and they put on purchasing that money was just sitting on the sideline for for months I think. Yeah I think that will help uh as the dollar kind of devalues that that's going to push prices up as well. So agreed anyway. Very interesting. Well um episode 17 I thought that was great brokerage tips how to break in multi family, make sure the like and subscribe. Thanks brian. Yeah. Thanks for having me guys. Absolutely appreciate it, man. Mm hmm. Yeah.