Making Money in Multifamily Real Estate Show

154 | Fluency In Your Market Is the Name Of The Game with Beau Beery

July 05, 2021 Dave Morgia Season 1
Making Money in Multifamily Real Estate Show
154 | Fluency In Your Market Is the Name Of The Game with Beau Beery
Show Notes Transcript Chapter Markers

Beau's Background:

  • Founder of Beau Beery Multifamily Advisors
  • He works in multifamily brokerage, northern half of Florida
  • Has a YouTube Channel Beau Knows Multifamily and his book out Multifamily Investors Who Dominate

In this episode we cover:

  •  02:17 - Beau's jump into his own brokerage
  •  06:09 - Current market sentiment
  •  15:50 - Buying right and becoming more qualitative
  •  21:31 - Seller's mentality in today's climate
  •  26:01 - Dealing with 'testers'
  •  31:15 - Beau's advice on where to invest in the coming years
  •  37:57 - 5KQ1 - If you could only pick one trait that explains your success, what is that trait and why?
  •  39:04 - 5KQ2 - What is the most uncharacteristic thing you've done in your business and why did you do it?
  •  40:04 - 5KQ3 - Can you name any time where you felt like you were not going to end up successful? How did you overcome that fear?
  •  43:07 - 5KQ4 - Can you name a time where something in your business went perfectly and what did you do to make that a reality?
  •  44:49 - 5KQ5 - What have you been focusing on lately to improve yourself or your business?

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Intro:

Welcome to the Making Money in Multifamily show, where we discuss everything to do with multifamily real estate investing. We believe it's the best way to gain financial freedom and build lasting wealth. This is where you'll find it the best information and practices to help you succeed in your real estate business, whether you're already experienced or just starting out. Here's your host, Dave Morgia.

Dave Morgia:

Hello listener and welcome to the show. I'm your host, Dave Morgia. And with me today is Beau Beery. Beau, welcome to the show.

Beau Beery:

Hey, man. Thanks for having me, dude. I'm looking forward to it.

Dave Morgia:

Yeah, I just enjoyed our conversation right before we started recording here Beau, just kind of got a good vibe from you. So really excited for today's talk. And just so the listener knows a little bit more about you just since I kind of have the unfair advantage right now. Here's just a little bit more about him. He is the founder of Beau Beery Multifamily Advisors, and he is basically just an expert transactor. He works in multifamily brokerage, northern half of Florida. He used to work for Coldwell right before he pretty much started this company. He was top in sales there, kicked off his business. I see him all over social media really doing a lot of great stuff. On YouTube, he's got Beau Knows Multifamily and last but not least his book out Multifamily Investors Who Dominate. So Beau, you just want to kind of lead me from there?

Beau Beery:

Yeah, of course. No problem. Thanks, man. I appreciate that I was with I started off with Trammell Crow residential in the late 90s. And I was just on site doing leasing and property management and Trammel Crow residential had a great education program they would pay for education. So I got my real estate license while I was with them. And while I was getting my real estate license, I heard about the Masters in real estate program at UF. I did that program in 2002. And went and worked for a developer where we I brokered and managed office, retail, industrial, and multifamily. And then in 2010, I acquired the Coldwell Banker commercial and just did multifamily. We had about 100 agents that also did residential as well and other commercial stuff. And I sold that in late 2020. And just started my own little boutique firm, still doing just nothing but multifamily in the northern half of Florida.

Dave Morgia:

So late 2020 you jump into doing your own thing. Was that kind of a COVID related drive? Where was the decision to get there?

Beau Beery:

Yeah, I mean, I've been doing my own thing for, you know, for 15 years, even when I owned the Coldwell Banker commercial, I had partners who ran the business so that all I did was produce. And I've always worked for my home office forever, I've always kind of been a standalone little island. But I've been trying to build a brand within the multifamily community, for investors to help them go to the next level. And I've got some other cool things planned. That's why I wrote the book. That's why I had the YouTube channel. And so it didn't make sense to build my own brand while still being under another brand. And so it was just kind of time to leave.

Dave Morgia:

No that makes sense. And you say you kind of like to produce. So what is that in your mind? Versus, you know, the people you manage?

Beau Beery:

Yeah, I've never been good at, at sort of managing lots of people because, you know, I feel like there's one best way to do things and you know, anyone who cuts corners, it's not my thing, right? So that's why my partners were very, very good at it. So they always ran the business and all I did was sell multifamily assets and have for a long time. So I had my own team, even within my own company, while everyone else kind of did their own thing. We would meet as owners, you know, quarterly and go over things and I would kind of help with sort of top level decision making. But, really the last many years it was just kind of me just doing the producing part of things. So it was a good time for me to sell my portion to my partners and to you know, to just kind of do my own my own gig I bought over my own staff and then I farm out kind of everything else, you know, I farmout a lot of underwriting marketing, some social media stuff, you know, just various tasks.

Dave Morgia:

And I guess you pretty much are getting to the fact that you know your thesis versus some of your partners or other co-workers was not exactly aligned. So moving into you know, your own space. Where's kind of your niche, what are you focusing on? I mentioned Northwest Florida. So what exactly is your bread and butter right now?

Beau Beery:

So the northern half of Florida I cover the southern portion would be Orlando, Lakeland, Winter Haven and then I go up Ocala, Gainesville, Daytona, New Smyrna, Orman, St. Augustine, Jacksonville, all the way up the coast over to Tallahassee. And then all the everything that's in the middle are just little small towns, right? So they don't really have apartments. I cover conventional apartments and student housing. I don't really do much more affordable housing. And probably 15% of my deals are multifamily land development deals that are, again a combination of student and market rate stuff. I do anything over 10 units, my trailing five-year average is about 89 units. So most of my stuff is like 50 to 150 units. I don't typically do a lot of stuff over 250-300 units it's usually more institutional grade. And the way those works a lot of that a lot of the nationals and REITs use publicly traded brokerages right to be able to justify that’s who they’re using. So anyway, that's my so it's, you know, some of its mom and pop and mom and pops are really, it's really hard for them to compete nowadays, it's mostly syndications, up to sort of mid-size nationals or who I'd worked with.

Dave Morgia:

Yeah, and that's kind of what I wanted to get into for at least a second. I love talking to brokers it's kind of nice to see you know, window into everyone else all the other investors kind of life you guys have, you know, that little slice, you know, that will keyhole into what everyone else is get into. So you mentioned you know, more syndication heavy lately less kind of mom and pop because they might just be disposing or whatever. I don't know, what is your opinion on that right now, considering we're getting out of COVID? How everything's trending, you know, cap rate compression, all these things that people might be scared of, or might be bullish on where do you kind of fall in line with like the market and where things are turning.

Beau Beery:

I just, I mean, as a “in general” for multifamily. It's why I've been all in for multifamily for the last 15 years. I mean, it is the asset class of the future period, it doesn't matter about ups and downs, ups and downs will be very small downs when there are downs, all because you have to have a place to live. Number two homeownership is it's impossible. I mean, it's become way too costly. Regulations to develop are becoming more and more costly, which means the house is more costly. The 20 and 30 year-old crowd, they're all moving constantly, and they want to rent so they can be more mobile, the seniors are all renting, there's all kinds of metrics that show rentership is blowing away home ownership in terms of increases, right. And that's only going to get worse and worse. Because the more expensive it is to develop, the more costly the home is going to be.

Dave Morgia:

Yeah, and I think, a lot of that fear, pretty much like you said, it's either not going to be realized, I mean, 1031s going away. It's been on the table before in Congress, it's been dismissed in Congress multiple times. I think everyone has a short memory when it comes to that type of stuff. And maybe people haven't personally experienced that market. I know, I'm only 28. I haven't personally experienced it. At least I wasn't old enough to really care about it at the time, I guess. Right. But I think I guess my my takeaway here is that looking longer term is, is going to be the move if your business plan is three years, that's a stupid business plan. If your business plan is, well, we're gonna sell in five, but we also could, you know, have a 7-10 year business plan, that I don't think there's any way you're going to fail in multifamily, as long as you bought it at a decent price, you know, at this point, so I'm totally with you.

Beau Beery:

Yeah. And, you know, I tell you, I study everything and trillion five year averages. I'm a huge data nerd experts, but I traffic and you go to my website, I've got data all over the place. And what I can tell you is the average hold period of those who sell right now is only 41 months, because the vast majority of transactions are syndicators or people using other people's money. Even though I make my money, only selling assets, I'm a huge proponent for holding forever. Because Refi-ing a property is selling, right, like

Dave Morgia:

You’re capitalizing at that market rate

Beau Beery:

Yeah, I would refi forever. You're gonna get an appraisal. It's probably gonna, the appraisal may not be as high as what a multifamily broker could sell it for, because appraisers can only look at historical data and not what's happening in the future like a burger can. But you're still going to get a good bit of your equity back. And you can use some of that to value that again, if you want or whatever. But I've seen the power. But what I have seen is the folks who hold longer term, their global portfolio cash flow increases to a degree at which they become richer and richer and richer, because they're able to buy things more aggressively. And it's hard to compete against them, right. So if you own 1000 units, and you have a 55 to 60% debt ratio on globally on your portfolio, and a deal comes to market a four and a half cap, but it's in a good location, you can buy that you can win it, you're going to beat all the other bidders because you have a global portfolio that you're sort of massaging it into. And if you think that four and a half will become a six or six and a half in three to four years, but you probably will. You can buy those all day long, and not sting, whereas everybody else buying a four and a half cap, they're probably enough cash on cash to pay investors, right. So a lot of those guys go away. Long term hold is always the way to go. But I also understand the allure of being a syndicator. And exiting in three to five years and having a great IRR. That's a great business model. I'm just saying, you know long term, if you can get to a position in which you're running the show, and you don't need all the investors. Man, some of the wealthiest guys I know just get bigger and bigger and bigger. It's why the top 1% of owners and I've actually I track all the stats on my website as well. The top 1% of owners own 11% of the assets, the top 5% of owners own 27% of the assets. And those numbers continue to grow more and more every year because of what I just said.

Dave Morgia:

Yeah, in my mind, some of it can be a little bit of a catch 22 as well. Usually when you're you know, starting smaller scale syndicating your a lot of times looking at, you know, class, C property in the class B area, that type of thing where those aren't always going to be kind of an institutional play where the patient money typically lies, right? A lot of times you're looking at kind of short sighted investors who want that return and cash flow right day one, and then you know, within five years to get their money back to get into the next one. So, so it can kind of be tough. But yeah, that is 100%. Where basically, you're leveraging having exit plans can be because if you can just, you know, ride whatever wave as long as you bought right day one, it's not really going to be an issue. I guess Beau, getting into the kind of the exit strategy and everything right now, with this market. I'm sure you're hearing kind of a lot of frustrations on the buy side pretty much of these prices. And there's the ridiculousness, so how you kind of creating wins for I mean, obviously, both sides, but how are you kind of getting these deals done, when price isn't really wavering? And you can kind of, is it terms that you're really looking at how are these getting done?

Beau Beery:

Alright, so the way I look at purchases is, you know, it's obviously a little bit different too. I try to coach this a lot on my channel. But I, what are the biggest failures I see. And it's from a lot of investors, if not most investors, is that they get very scholastic on the on the first year or two. You know, I'll send an OM that has a 4.75 cap or a 5 cap. And a good number of people be like yep not even looking at it. They don't open it, they don't study it. It's just not in their DNA to buy something like that, right. But they're very short sighted, most investors don't look at the IRR picture. Okay, the IRR is from Day Zero to the day you sell. That's the way my mind works, right? I look at cash on cash and more particular IRR. And so, you know, I think the so many deals crash and burn. Because when little things come up during a transaction during due diligence, or when you're underwriting assets, you're you know, you're looking at, you know, let's say you're looking at a $10 million deal. And you got there's eight offers out there, and the broker is trying to get you to come up 200 grand to win it. You know, most guys are going in there and that they're typing that into the pro forma, they're like, oh, man, well, my, you know, now my cash flow has changed this are my rate of return and my returns changes. Don't ever look at like the fact that over the course of a five year IRR, you know, $100,000 on a on a $10 million deal. probably didn't move an IRR half a point? Probably. Right. And so what I try to coach investors on is, you know, listen, if you five years from now, we're talking to Beau five years from now, and you bought the deals I told you to buy that you that you were being a cheap ass over five years ago. And now you own 500 extra units as a result of you buying it. And now your cash on cash is 9% 10% or whatever it is at the time, even though is was five? Okay, at year zero, would you be happy? The answer is hell yes. Right. But people never think of themselves five years from now and is earning some money or enough money, enough money mean being It ain't what you thought it would be. But it's enough. And it's good and it's happy. Is that good enough? Is that it? Would you be happy having an answer it almost as always, yes. But people get so caught up in that year, zero a year one atmosphere that they pass on a lot of deals and they and they lose a lot of deals. The best investors in the world, the ones I call a lead investors in my book, you know, they're thinking long term, they're thinking big picture the forest through the trees. And they're just trying to assemble a giant portfolio while keeping their debt structure, you know, safe, because they know the more units they can add, the more powerful they become. And that allows them to squeeze everybody else.

Dave Morgia:

Yeah, and we keep getting back to this. But it really ends up being, you know, the mid-sized lower -side syndicator level where they're answering to investors that point, right, they want that eight pref your one no matter what, which I mean, in today's market, you can find those deals, but are you going to find them at scale? It's a lot harder now. You know, you're looking at 200 plus deals instead. 100 plus maybe a few years ago, all these things where you're trying to fit a square peg in a round hole. Right. So it's just it's just insanely tough. I just I understand where investors on the limited side are coming from because they are used to a certain profile of returns. But you also have to kind of manage those expectations as the markets change that the deals will change too.

Beau Beery:

Yeah. And it's tough. You know, I mean you you're trying to add investors but the ideally if you could add the long term thinking investors, right, which are, which are usually they would have to be either like real estate guys or former real estate guys who get it. Right and understand the delayed gratification and who aren't too old. Right, the guys who need the income now it's tougher to have that conversation. But man, if you could have, you know, 20 groups that are, you know, that are long term thinkers that understand the portfolio power mentality, that's gold, but that's hard. It's hard to find

Dave Morgia:

It’s not that everyone's looking out for themselves, but you protect your own interest first, and you gotta, you know, try to get paid as early as possible. I can totally, totally understand that. But it's definitely a market where you have to really think about what you're looking for in real estate. And if it's cash flow day one, it is, certainly and the deals are being, you know, done all the time, where the cash flows are still great, obviously, but what cash flows are definitely harder to come by. And you have to be very careful, especially on some deals. I mean, you see that there's 8 prefs promised, and it's you look at the underwriting and you say, Where is this 8% coming from? Sometimes, if you're not educated, you're getting into a deal that doesn't even look like something that is, you know, returning what you think you're getting, so it's, it's very interesting.

Beau Beery:

Yeah, yeah. And that's why I'll become so reliant on the sale. I mean as cap rates compress and prices go up, you know, people squeeze down their pro formas. And they're okay with a six cash or a five cash on cash, as long as that IRR punch is there in the end, right. But again, that takes convincing investors.

Dave Morgia:

1,000% and you, Beau, you mentioned kind of getting into exiting. I've hinted at it maybe before the show, too. But can we get into I guess the seller's view of the market right now? And what kind of plays they're looking to exit on? I mean, obviously, I think a lot of people are excited to sell in the same vein that they're still excited to buy. Where are the kind of plays for them as far as selling out appreciation? Or, you know, leaving some meat on the bone, those types of things that you're kind of seeing out there right now?

Beau Beery:

Yeah, I mean, the most attractive sale is made... for me as the broker to get the most number of offers, everyone wants to buy at least something they can add value to, right, whether it's management, or kitchens and bathrooms, whatever it is. So my favorite deals to take on is where a group, maybe they bought it five years ago, six years ago, they did probably 60-70% of the of the value add, whether that'd be 60-70% of the units are or they are they've done all the interiors, but they didn't do the exteriors or they did the exteriors and only 20% of the interiors, whatever it is. But if you can, if you can leave something on the table that can be sold to a buyer, that's the best way to go. What I'm seeing right now is that you have to understand 8% of inventory trades per year in any one market, right? So if a city has 100 of apartment complexes, eight of them are going to sell that year. Right? Total. That's it, it's actually running 8.2% in the northern half of Florida. Some markets are 5 some markets are 10. The overall average is 8%. So the 8% of inventory trades per year, what's happened over the last three years, you've got 25 to 30% of the inventory that's already sold. Right? So the balance, you may say, Okay, well below that still leaves 70% of the inventory that hasn't sold. The problem is another 20 to 25% has already refinanced. Right. So that removes that, you know, those don't have defeasance, you're not gonna be able to buy it realistically. And then how many of them are in locations you would buy anyway? How many of them are owned by players who would sell but they'd sell for a ridiculous price, you're not going to buy that anyway? Or how many of them are of a certain age you would never buy? So my point is, is that 30% sell rate in three years, doesn't leave a whole lot of other assets that could sell anyway, right? So the reason we have so few deals coming on the market, because so many of them already sold. So a lot of the guys who are looking to sell today, a lot of a lot of them are testers what I call testers right. So the conversation goes like this Beau calls up, Seller Sam and he’s like, hey, Seller Sam, you know, the markets, great interest rates are low, people are paying big prices. What are your thoughts? Well, Bo, you know, listen, you bring me x, you know, we could probably think about it. I'm not going to give you the exclusive listing agreement. I don't want on a bunch of websites. But you know, listen, shoot, you bring me this number. Okay. Sure. Right. So it's a test, or the conversation could be where the seller calls me up. Hey, Bo, my partner's now thinking about selling, you know, I, you know, we need to get the right number. We weren't really thinking of thinking that we were gonna sell this soon. But the markets so good, you know, maybe if we get the right price, you know, what do you think about taking it to 10 or 15 guys? Right. So that, so a lot of the groups that are left are of that type. And those are usually pretty big numbers, right? The ones who now we're we are also getting some of the 2017/2018 closings, who have now value added and are coming back to market, some of those exists. But you got to leave enough meat on the bones to be able to tell the story. But generally speaking, all sellers are pretty smart. They all are coming if they're coming to market, they're coming to market because they want blood.

Dave Morgia:

Yeah, I think I think your point there is very valid. Pretty much like you said, the three to four year business plans you're seeing a lot of right now or okay, we proved the business plan, kind of, you know, can show you the way and see that you can hit these rents wherever you just got to add a little inject a little bit more capital, inject a little bit more dollars, and you can you know, have a good return and we got our sale so everybody's happy. And I guess the previous point, are you talking about sellers who were kind of buy and hold guys who have been holding for 10 years and just got really a lot riding the wave of the market right now. Okay,

Beau Beery:

Right. Long term holders will sometimes be they’ll be testers oftentimes. Right? If you pay them enough, they'll consider it.

Dave Morgia:

Well, I mean, their cost basis that I don't know, we're not talking specific numbers, but has to be incredible at this point, right. So if they can just absolutely get a home run. And then even if they have to buy in a hot market, now they still have tons of equity to deploy.

Beau Beery:

That's right.

Dave Morgia:

It makes a lot of sense

Beau Beery:

For that reason, I actually even tried to go after some of these longer term holders. I created spreadsheet with an accounting with a CPA firm that that basically analyzes you know, if you sold and had to pay taxes, what is the replacement return that you would have to earn elsewhere, right? So it takes into consideration depreciation, capital, depreciation, recapture, tax, got long term capital gains, individual income taxes, all this stuff, it's really good. It's very good spreadsheet, I did a video on it as well. And what I found is obviously, the longer you hold it, and the more you sold it for makes more sense to sell. And in worst case, you could put it in a four or 5% mutual fund, and still be ahead and not have to run a 300 unit property. Right. But there's not a whole lot of those folks left.

Dave Morgia:

A lot of this has sold? Well. I mean, it makes sense. Because the ones who are still holding, they believe in the product, right? They believe long term in that vision pretty much like we alluded to earlier on so

Beau Beery:

And they have the power to buy possibly more riskier or higher price items, they're in good locations.

Dave Morgia:

Right, you have that synergy in the efficiencies that if you're still within your market, so yeah, it makes it makes a lot of sense.

Beau Beery:

Yeah, let's say your global debt, you say your global debt ratio is 52%. And you're looking at a 4.0 cap property, but it's in a phenomenal location. When you buy that thing, your debt structure globally probably goes from 52 to 56. Right. And so it's like, those are the groups that can kill it. And I see those even in smaller under 100 unit guys, there's several guys who have learned that and said, Hey, the 100 plus unit crowd is too competitive. I'm going to take my skill set and buy 50 to 100 unit deals. Right and they’re killers now they come in there and they're just absolute killers. Yep, meanwhile, the mom and pop who owns one asset it's very hard for them to compete

Dave Morgia:

Anytime nowadays when you can buy two assets nearby to work as one, that ends up being… and even that's kind of getting you know, revealed as kind of a everyone's kind of seen through that play too. And you're not able to buy those as cheaply as you used to, but anytime you can kind of piece together something at least you can, you can eke out a little cost basis savings there it seems to be. So these deals these buy and hold guys you know the huge decade's long thesis; have gotten any wins out of these guys, been able to convince him to sell on terms or something like that, that made him attractive in that sense?

Beau Beery:

In general, no. it's just not even a conversation and it only gets ingrained even more not to sell because you have 65 brokers calling you right?

Dave Morgia:

I have something good here and I know it.

Beau Beery:

Yeah, I mean, I'm just, I'm just not gonna sell and the more you call me, I'm not gonna sell. And, and so it's hard to convince them otherwise, because they become incredibly powerful, the cash flows easy, they can always refi it when they need to, they can always add value within their portfolio they need to. And so they just continue on and I get it, man, I get it. I don't even I don't even try to convince otherwise, all I can do is I can provide it, I try to add as much value as I can by providing sales comps nearby. I provide what rents are going for and competing on comparable properties I talked to them about amenities I see on different properties that I think would do well on theirs, I just try to be there for them as much as possible. I don't even call those guys and say hey, do you want to list anymore. In fact I don't really do that with a whole lot of people, I just try to add value as much as possible. People know, I'm the broker, they know I make money by selling assets, if they want to sell an asset, they're gonna call me, right. That's how that's how that's how I try to work it. But the long term guys are, you know, if I made my career trying to call those guys and sell I wouldn't have a career.

Dave Morgia:

Yeah, and that's just kind of brand equity in general. Right? It's, you know, you think of, you know, Kleenex, you don't see ads everyday, but you know, Kleenex, tissues, like that type of thing. So you're just trying to kind of submit that you know, you are that you are the broker, which, honestly, like I said, at the beginning of the show, you have a great kind of setup, tons of presence online, the book and the YouTube channel, and all the social media. So really appreciate that.

Beau Beery:

All those guys will eventually sell, it's just the best way to get them to sell with you is to just add value in their lives for 20 years. And they're who you were thinking of when they're 78 years old. And we had a medical scare, and they're like, Alright, now I'm going to sell my portfolio.

Dave Morgia:

Yeah, pretty much ends up being a life decision and not business because they crush it in business for 30 years, right?

Beau Beery:

So your kids didn't want anything to do with it, I get that up quite a bit like they just they just didn't want to get into the business. They don't want to be a part of it, whatever the case may be.

Dave Morgia:

No, that's awesome. Is there any kind of final takeaways on pulse of the market? You know, what your kind of strategy is going forward? Or what investor strategy should be going forward the next 5-10 years?

Beau Beery:

Yeah, I mean, to me, the perfect niche is 20 to 80 units. Even though it's gotten more competitive, it's still the least competitive of all the niches. I did a study from, it was 2018 to 2020, where I studied all the all the class ranks, right? So the way I rank classes are A, B+, B, B-, C+, C, C-, right? C- is like, you only want to walk there during the day, it's not a good place, right. And so what I had when I studied was is what are the dollar unit jumps from each class. And so what I found was from C- to C, C to C+, C+ to B- and B- to B, every jump was about 15 to $20,000 a unit, right? So you could buy a C class for you know, $70,000, a unit, put $6,000 a unit in it, and you're going to make nine to you know, 13 $14,000, a unit on the say, on the back end, right, which is nice. However, the sweet spot, which is rare, the sweet spot is to go from B to B+, or from B+ to A $47,000 unit jump. Right? Now, if I pull up my stats here, let me tell you kind of the rarity of those. And I'll tell you the makeup of what that means to be that kind of asset in terms of age and all that stuff. Right, so right now I'm studying the entire northern half of Florida. So a B class asset sells for $120-140,000 a unit, it's a late 1980s to early 1990s unit, it's running about $1025 to $1125-1150 a month rents right, so that's what a B class asset. A B+ asset is running 170 to 190 a door. They are a early 2000s to mid 2000s, like 2000 to 2010/12/14. Their rents are $1300 to $1400 a month. And again, this is for the northern half of Florida, right. So the idea is if you can find a B class asset that is in a good that is Good B/B+ location that is as close to the late 90s to early 2000s as possible, that's a great find. However, as a percentage, that is that divided by that is only 11% of deals are B class, right. And then a B+ is even less B+. For instance, if you try to find a B+ and take it to an A, B+ class assets are only 3% of sales. Wow. Now, you have to understand in a class is almost always new construction is basically from currently from 2018 to 2021. Those are the vast majority of A class assets, there's some 2017. Sure, so if a B, if a B+ is 2000 to 2010, then that has to be in a phenomenal location. And they have to, they have to increase the quality of their kitchens, bathrooms and amenities to a new construction outfit, which can easily be 20/25 grand, but you still have another 20 grand of profit if you can make that work. And a class assets are 10% of all sales, which are mostly new construction or three to four years old.

Dave Morgia:

Yeah, and you talk about injecting that capital for something like that you're talking a complete amenity overhaul, those types of assets, you're all stainless kitchen, spectacular bathroom spectacular. And then just the common stuff, technology, you know, whatever their …proptech is huge now. So that's all becoming a thing. If it isn't already installed, I'm sure all the comps have it. So you got to have that all in there. So very interesting stuff is that all on your website, some of the checkout for listener?

Beau Beery:

Yeah, we got it. So if you go to my website, beaubeery.com. At the top, probably the most popular button is resources. When you click on Resources, there's a few buttons there. One of them is called popular reports. So I have a whole bunch of just kind of neat reports I've done over the over time that people have liked. Then I have a template section. So I have like Letter of Intent template, I have a bio package like a perfect bio package, like when you're submitting offers and multiple offer situations, I have that on there. I have a bunch of other templates on there. But also, no matter where you are in the country, if you're in Texas, New York, New Jersey, whatever. If you click on the markets that I cover, the reason you want to do that, even if you're in a different market is I want you to see all the buttons that I have for each city and all the market reports. If you can master those reports for your market, you'll be a killer, right? Because the reason there are 12 offers in eight days on every deal is because two reasons. Number one brokers are calling investors three weeks before it comes on the market. They're calling their best guys. And number two, those guys and some other guys know each market like the back of their hand, they know exactly what to buy it for. They know what the rent should be now and what they'll be after they value at it. They know what the construction costs are, they know what they're going to sell it for. And for years. They know the sub markets, the good areas, the bad areas, they know the property managers, they know all the stuff, right? And so all those buttons I have on each market, if you can find those for your markets and learn them, like the back of your hand that's going to allow you to react within 10 days with an offer.

Dave Morgia:

Yeah, I mean, that's pretty much time is the killer if you can't react, especially in today's market, but in general, any time of the market, you got to be quick. And that comes with, you know, confidence in numbers. So I am definitely gonna check out the stats, it sounds like you got them, at least, you know, summarize pretty well, it sounds pretty interesting. So I'm going to take a look. And as long as you're ready, Beau, you want to get into the five key questions?

Beau Beery:

Yeah, let's do it, man

Dave Morgia:

So first one here, if you could only pick one trait that explains your success, what is that trait? And why?

Beau Beery:

Easily empathy, right? So I, as a broker, I make my money by helping buyers and sellers understand each other, right? And unfortunately, we're in a world in which, you know, everyone's fairly wealthy, right? These are pretty wealthy people, they don't need to buy it. They don't need to sell this asset for the most part. And so ego can come into play very, very quickly and money goes out the door, right? So I'm always trying to help buyers understand where sellers coming from and vice versa. And when problems arise, I'm trying to say now if you were in this position, how would you handle this? And so empathy is kind of my superpower. I help others see the other view and can usually massage things out.

Dave Morgia:

Sounds very art of the deal. And what's the other book I'm thinking of? Older Book. Dale Carnegie, I'm drawing a blank. But anyways, it sounds right up that alley. And then second one here, Beau, what is the most uncharacteristic thing you've done in your business? And why did you do it?

Beau Beery:

So, you know, I wasn't sure if you were saying if I did something wrong, and why did what I was actually thinking was what do I do differently in my business that may be different than others

Dave Morgia:

I’ve heard it both ways? So yeah, yeah.

Beau Beery:

So for me the latter is you know, my videos, right. So my Youtube channel is Bono's multifamily. And I do a couple things on there, I do videos on how to buy more assets, how to sell them for top dollar, how to do the market analytics, like we just talked about on my website, you know, like a boss so you can react quickly. And the other thing that's unique is I do some really, really crazy property tour videos, right? So I want to have a new listing for sale. I don't just do you know, a minute and a half of drones and pictures. It is a full storyline about the property. So that's kind of my uncharacteristic way of going about the business.

Dave Morgia:

No, I love that. And then can you name a time in your business where you've had a fear of failure? And how did you overcome that?

Beau Beery:

Yeah, actually, my second job so after Trammell crow residential, when I went to work for a developer, he's a very famous developer. He's fantastic. And I was I was 22 years old, and I was brokering and managing his portfolio. It was my, you know, I wasn't even there. I was only there maybe three, four weeks, making phone calls, like crazy trying to fill his spaces trying to sell stuff. And, you know, all I'm doing is spending his money, right, I'm doing marketing, I'm doing mailings and emails, and I'm making phone calls and nothing's happening, right. And you know, what I didn't know at the time, because I was as a young buck is, you know, to build your business and, you know, takes six to 12 months, and then things start happening, right, you got to build your name. And I remember he walked into my office one day, and he looked at me and he said, strike one. And I was like, what, no one's ever said that. We need to get some stuff go on strike one. And then and then about two weeks later, the front desk receptionist, handed me some papers to take back with me to for him to sign and I took it back and put on his desk and he said, Well, What's this for? And I said, I don't know. I said, you know, the administrative student said that, you know, I was just walking back here and he said, you know, just hand it to you and he's like, strike two. That was like, like, what do you mean he's like don't ever hand me something that that you don't you know that you don't know what I'm supposed to sign what it's about. I'm like, All right. So anyway, so it was one of those situations where I really felt like I can't survive in this business. This is like my first big big gig and I'm going to be canned from it, like I'm toast and really he was it was one of the best things you could did he was just posturing me and and he created grit and me and now he's one of my best one of my best customers ever. I do a lot of deals. I'm doing a deal with him right now on a 36 unit deal. I worked for him for 10 years before I acquired the Coldwell Banker commercial franchise and we did a lot of deals together we own real estate together, you know, some non-multifamily stuff. And so anyway, that was that was it was scary as hell the time.

Dave Morgia:

I love stories like that where someone really just impresses on somebodies you know, mind and emotions or anything like that. Like you'll never forget that, and he might not remember it as clearly as you but he I mean, he shaped you know, your mentality forever. I just love hearing stuff like that, where you really kind of, you know, took a second look at who you are, what you're doing.

Beau Beery:

And it was perfect. Because he what he did was early on in my employment, he put me on my toes. And so I just wanted to work like a dog. So I did hire from my first real gig. Right? So anyway, I think it was mean, but it worked.

Dave Morgia:

Yeah. Hard Knocks, I guess, right? Yeah. And that's book. That book was gonna eat me alive. If I didn't remember it. It's How to Win Friends and Influence People just for the listener and for you in case you were thinking of that one. And then pretty much opposite to that one. Beau, can you name a time where something in your business went perfectly? And what did you do to make that a reality?

Beau Beery:

I gotta tell you man writing the book, like my I have a real estate coach that I've had for many, many years and he was trying to get me to write this book this multifamily and investors who dominate and I kept putting it off and putting it off. And, you know, I thought to myself, you know, shoot, first of all two things. Number one, I think if I can get everything I want out of my brain onto a book on what I know grow huge investors, people will add a tremendous number of units to their portfolio, it'll be nourishing to me, because it's everything I've ever wanted to say to an investor. But number two, I thought to myself, well shoot, this is probably going to cost me 20/25 grand, if I get one deal out of it, or if I get one elite investor to fall in love with me as a result of the book in the next 20 years, it was worth it. Well, the result was, you know, it's only been out 90 days, it was a best seller on Kindle for a couple of weeks, which is incredible. It's already paid for itself. But I've gained like my, I've gained three listings that I can attest to as a direct result of the book, that are paying a half million dollars in fees on just those three deals in the next 60 days, as a result of the book. I didn't intend for something like that. But it's been extremely rewarding to see you know, to get calls and emails from people from all over the country on on, you know, the tips and tricks from the book that have been impactful in their business and that's that it's been probably the most rewarding part of it.

Dave Morgia:

No, and I think that's why you wrote it first, right not to put words in your mouth, but it's kind of the giving back and there's catharticism to that, and then just add on top, some great relationships that came out of it. That's, you know, slam dunk. So that's amazing. And then the last one here, what is something in your business that you've been focused on lately to improve?

Beau Beery:

I enacted this a number of years ago, staying under 55 hours a week. I actually, I keep mentioning my book, it's a sound like a dork. But in my book, the problem is in this business, it's loaded with Type A personalities, right? We are all hard charging, you know, I mean, just gangbuster, 80 plus hour a week deals, you know, hitting the grind, especially you as a 20 year old, I was the same way. I always worked 80 plus hours. And you know, we just we want the cars, we want the house, we want the lifestyle, we want it all right. And what happens is you know, burnout happens and we lose focus on why we're actually doing all this, which is to have a good life with our friends and our family, our spouses, our kids. To create, you know, and more importantly, personal time, with our hobbies and the things we'd like to do, right? Very quickly in this business. I never fished anymore, I didn't you know, I wasn't into I didn't spend time doing cars and, and, and competitive swimming and all the things that I love to do. I put off and I learned several years ago, there's study done by guy named John Pinkabal, who's a professor, who and this is this is documented, and everything and TV stations have run stories on this. But we are extremely productive up to 50 hours. Between 50 and 55, we do gain some more productivity, but it's very incremental. And after 55 hours, our productivity doesn't go down, it plummets. Right. Now, you may say, Oh, well, you know, I've been working at 80 hours, you know, for the last four or five years, and I kill and kill and kill it. The point my point is, is that between 55 and 80, if you had actually not done that, your productivity in the 50, and under the 55. And under would skyrocket above and beyond your 80 level. But you'll never know it until you try it. And what happens is, is when you only work 55 hours a week, it forces you to become unbelievably efficient with your time. And it allows you to come up with ideas on how to grow your business in a way that you would never been able to do. Now what happens is the excuse people give to themselves is I'm so busy, I have so many things going on, I have to work 80 hours a week. I get it, I used to do that same I used to have that same mentality, right? But the better you get at this business, it's easier to become busier and busier. And you think that you have to do this, and you just don't, right. And so I end at 6pm every night and I only work a couple hours on the weekend and I have the best life I've ever had. I'm doing all of my hobbies on a regular basis. I've never made more money than I've ever made in the last 10 years. And it's not because of an up market I made great money in down markets. It's because I have more time to think, I have more time to put into my business, I'm nicer I'm I get more sleep, I'm more cordial. I'm better to my wife into my kids, I become more attractive to investors, because people want to be around people who are

Dave Morgia:

Not grumpy all the time.

Beau Beery:

Yeah. Right. And so the investors who I see who are committed to that, that kind of timeframe and process and have a personal life. They have phenomenal people to work for them.

Dave Morgia:

Yeah. I mean, you're, well, everything you're saying really hits me. I think constraining yourself to 55 or whatever the number is versus what you are currently working that makes you become a business owner, right. You really have to challenge your thinking and determine what is important to keep moving forward and make money. So just doing that alone, it's gonna A be more rewarding on the business side, because you actually come up with better ideas and you know, be more efficient all these things, but B, like you said, you're just freeing up that balance in your life that you need to kind of do the things you do. And not to mention, the whole point of this is typically the, you know, work couple years really hard, like no one else won't, so you can live the life that they can’t, right? And if you just never switch that off, then what are you doing? So it's a very interesting predicament.

Beau Beery:

And listen, I get, I'm not saying I think I think from 20 to 25, or 20 to 30 years old, like, you know, it's probably not a problem, you know, once but once you, once you start having a wife and you have a kids, and you know, you're gonna regret not having time constraints on yourself. But until then, I think especially in your early 20s grindings probably not a problem, it's kind of it's fun, it's it doesn't affect you. You know, you're able to catch, you know, catch naps here and there and stay healthy. And, you know, you're still able to go, you know, have fun on the weekends and do things like that. I think you have to do it in your early 20s in order to build a name and to and to build a following and so forth. So I think that's, I don't think that's unhealthy. I just think that as soon as you can recognize when you can kind of taper off then your productivity really starts going up.

Dave Morgia:

I couldn't agree more. Yeah, just keep in present of what's important to you. If it's building a business that's important than then keep at it but once you need the balance don't ignore that. So I couldn't agree more. But yeah, really enjoyed the show went longer than I typically go. I like to keep it kind of the car drives, but I have no problems talking. I always preach to my guests that I like to just kind of off the cuff and just have a conversation with whoever it comes on. Just before we do sign off, you want to let the listener know how they can reach you today.

Beau Beery:

Yeah, cool three ways. We talked about it. BeauBeery.com. That's a great spot. There's a whole bunch of data on there that I think you'll find very helpful, not just on my specific markets, but just in general about the multifamily business. Second way is I really would get the book. I don't; listen, I don't make a bunch of money selling this book. If anyone if you know any authors, ask them have you write money to buy books and make money don't. I wrote that book because I truly get a huge thrill from helping someone make a bunch of money. And that book right there is not as unlike any other book you've ever read. It ain't about how to crunch numbers, how to manage properties. You know how to how to do calculations. This is how you get deals to come to you. It ain't about finding deals. It's how you become an investor that you're flooded with deals in all directions. And the third thing is my YouTube channel, Beau Knows Multifamily. I think there's a lot of great content on there. My videos are anywhere from three to 10 minutes long, and it ain't fluff stuff in a like, hey, should I sell or keep it? I mean, this is like it a lot of in depth calculations. It's how to win competitive bids. It's how to do letter of intent that kill it. It's how to build a huge portfolio. It's what to do during certain situations and transactions. It's how to get brokers to fall in love with you. It's all the things on how do you build a big business?

Dave Morgia:

Beau I really appreciate the time today. Thanks for all the insight.

Beau Beery:

Yeah, dude. Thank you.

Dave:

Thank you for listening. This has been the Making Money in Multifamily Podcast. If you have any questions, comments, or would just like to connect, please feel free to check out the show notes for how you can connect or visit longviewacquisitions.com

Beau's jump into his own brokerage
Current market sentiment
Buying right and becoming more qualitative
Seller's mentality in today's climate
Dealing with 'testers'
Beau's advice on where to invest in the coming years
5KQ1 - If you could only pick one trait that explains your success, what is that trait and why?
5KQ2 - What is the most uncharacteristic thing you've done in your business and why did you do it?
5KQ3 - Can you name any time where you felt like you were not going to end up successful? How did you overcome that fear?
5KQ4 - Can you name a time where something in your business went perfectly and what did you do to make that a reality?
5KQ5 - What have you been focusing on lately to improve yourself or your business?