Episode Transcript
Wayne Courreges III [00:00:02]:
Welcome to The Untold Stories of Real Estate Investing, hosted by Wayne Courageous III, a place where active and passive investors come to hear the good, bad and ugly of real estate investing. Our guests consist of experienced operators and investors who want others to succeed by sharing their stories. If you're looking to syndicate deals or grow your wealth passively in real estate, you've come to the right show. It's now time to sit back, take mental notes, and enjoy our next episode of The Untold Stories of Real Estate Investing. All right, well, we just had our breakout groups and wanted to welcome everybody to our July 2023 meetup. We are recording this for our podcast, but also for other investors that weren't able to join. Hopefully it gives a lot of value. I'm going to be going behind the scenes of what we do on the underwriting standpoint and try to not do this as an underwriting class because we don't have enough time for that.
Wayne Courreges III [00:01:06]:
But more so just for the passive investors of, hey, what are the levers? And stuff that sometimes is used to boost a deal and not and then how conservative or not conservative some operators can be. And that will make more sense as I progress. But the title of this meetup today is Passive investors behind the scenes of Multifamily Underwriting. We meet on the fourth Monday of every month other than December 7, five to 715. We do our networking breakout groups, and then we go into our guest presentation. I try to bring other people to talk about their specialty. Last month we had a gentleman with Quest Trust talk about self directed IRAs and Solo Four and 101 KS. We've had tax consultants, we've had attorneys and other syndicators as well.
Wayne Courreges III [00:02:00]:
And then we go into Q and A networking for the end. But really it's a great time to learn about multifamily investing and really commercial real estate investing in general. A lot of the stuff that we're going to talk about here today also fields into other asset classes. It's not all particular towards multifamily, but the stuff that you're learning here today and the questions you ask, hopefully it makes you a better investor and at least more sophisticated to invest in opportunities outside the stock market and 401 KS and the other investments that are more traditional. So, a little bit about myself, a little picture of my family, very outdated. I need to update it. Hunter there with the glasses, he's actually eleven. So this photo is very dated.
Wayne Courreges III [00:02:44]:
And then my wife, Jennifer, I think we hit 15 years of marriage in October of this year, which is pretty crazy. And then Emma, she just turned eight, and my Lily, she just turned ten. So they're a big force of obviously why I do what I do. I am doing this full time. I'm a full time real estate investor, developer, syndicator, sponsor, based out of central Texas. I live in Bryan College Station area. We focus on multifamily value add properties, storage, and even within that storage, it's more of a niche with RV boat business storage and then build to rent investments in Texas and Southeast United States. We've partnered on about 33 million assets across Alabama, Louisiana and Texas.
Wayne Courreges III [00:03:30]:
And really over the 16 years I've worked with 150 a fortune company we left this year. I've been a great 16 years with them, but really have a lot of solid foundation through working with them over, like I said, it's 16 years and now on my own, doing our real estate investments full time. So pretty exciting. But I enjoy the active side, the stress, the headaches, dealing with all the partners and team members to execute on our investments. I'm not as a passive investor just because, like I said, commercial real estate is what I do. It's in my DNA. Other places to learn untold Stories Real Estate Investing Podcast I've got a really knowledgeable or website that has a lot of knowledgeable, material, blogs, podcasts. There's a resources page as well.
Wayne Courreges III [00:04:30]:
We also have launched our Passive Investor coaching program. Passiveinvestorcoaching.com? If you're looking to invest more on a quicker time frame, definitely look at enrolling and getting part of our Passive Investor Coaching Program. These meetups and books, et cetera, are also great resources as well. But I would say the coaching program accelerates. So hopefully you'll find value in that if that's something that you want to participate in. So I'm going to stop share there and then I'm going to share my underwriting screen. All right. And so for those that are on the call, again, if you want to unmute and ask questions as we go along, great.
Wayne Courreges III [00:05:18]:
If not, I will try to remember to look up to see if there's any chat. But regardless, at the end, I will also double check everything. All right, so I want to start off with saying that whenever we find an opportunity, whether it's through an on market opportunity, which means brokers have blasted it out and there are a lot of people looking at the deal, or if we find something off market because of a preexisting relationship with a seller, or we did a call or mailblast, et cetera, to try to find these potential sellers who aren't on the market to sell, but maybe open to selling. But two documents we typically want to see at a minimum. I mean, there's other documents, but the two big ones is the rent role and the income statement. And I'll start with the rent role. So a rent role is a document that has the resident's name, or if it's office or storage, et cetera, maybe a tenant's name. And then it would show when the move in was, when did the lease start and when's the expiration.
Wayne Courreges III [00:06:27]:
But it also shows what they're paying on a monthly rent standpoint and what other sundry charges they may be paying, whether it's electricity, or maybe they're paying for storage or they're paying for parking, or there's an insurance piece to it, but it shows all the charges that are associated with that person or entity. And so that Rent role would have all the tenants or all the residents on it. And then at the bottom it would show the total number of units leased, total number of units that are leased, but maybe have a notice to vacate. It would show the number of units that are vacant. So it pretty much gives an operator like myself a snapshot of Occupancy. And then as we dig in and compare it to the comps, we're able to see where our average rents are at the property compared to the market and see if there's some value add that way. So that's the Rent Role piece on the income statement, or also called as a T twelve, it's the trailing twelve months of financials. So if I'm looking at a property today and that property, it's what, July? So July's financials probably aren't closed.
Wayne Courreges III [00:07:54]:
So I would be looking at a July 1, 2022 through June 30, 2023. I'd be looking at the last twelve months of financials. And the way the financials would work is it would be like a business statement where you have your income so your tenant rents any miscellaneous, any reimbursements for utilities, et cetera, miscellaneous income. It would give you a net total rent revenue and then below that line you would have your expenses, whether it's utilities, taxes, insurance, repairs and maintenance, payroll, et cetera. And then below that you would have your net operating income. Typically sellers don't give us their debt because that's below the NOI. In short, what we're looking at with the income statement is seeing what their previous twelve months are, right? So those two documents flows into this underwriting. There are many different underwriting templates and there are groups out there that if you're an active sponsor and you pay into this mentorship program, they'll allow you access to their underwriting.
Wayne Courreges III [00:09:13]:
I got a couple of others, but I really particularly like this one. So this is the one that we use. And so this, what you see on your screen is not tied to a specific deal. I kept it pretty vague because this is all being recorded and will be used to hopefully educate others. Or if you want to refer back to it, you can. But at a snapshot of the property, I'm going to go through what we enter and how we analyze it from a CREI partners standpoint. And hopefully that draws some questions or some AHA, moments where you can ask questions either on this call or in a chat box or when you're actually investing in a deal. So again, the two things we just talked about was the rent role and the income statement.
Wayne Courreges III [00:10:13]:
Those are the two important documents for us to flow into here. So let's start off on this tab. Again, this is not an underwriting class. This is more of you seeing as a passive investor, how an active operator underwrites. Again, there's going to be different templates. So in our case, property name, example deal property Address san Antonio year built these are just hard inputs, right? Occupancy acquisition number of units 150 acquisition date may 15, 2023 market Cap so that sort of starts us, right? Well, usually there's a whisper price in residential. You go to the MLS or you go to Realtor.com or Zillow and the seller tells you, hey, I want $500,000 for this house. So you have a pretty good idea of your starting point and then you can offer below or depending on the market, higher to negotiate, to try to get the house in.
Wayne Courreges III [00:11:16]:
Commercial real estate is a little different. We don't know where the seller wants to be because it's not on paper. However, we'll talk to other brokers. We'll talk to the broker who is looking at the deal on behalf of the seller or maybe the broker representing the seller. And we'll call and say, hey, what's the whisper price? And so the whisper price is really where the seller's target is to sell. And that's our starting point. So in this case I'm calling the broker, or maybe I'm calling the seller direct and say, what is the whisper price? What are you trying to get? And in this case, they want 15.2 million. So okay, 15.2.
Wayne Courreges III [00:12:01]:
Well, when I first start, I will start with the 15.2 million because if I can make the numbers work to have an easy win win where our investors are getting returns and the seller gets what they're wanting, great. And in competitive markets, it becomes really challenging because other people may be looking to bid. And what was a whisper price of 15.2 million could end up being a 16,000,016.5 million sell price. In a crazy market that markets, things are slowing down a little bit. So it's not as much as that, but let's just say 15.2 million purchase price. That was the asking. That's where I'm going to start out. You have acquisition fees 2%.
Wayne Courreges III [00:12:47]:
A lot of discussion on LinkedIn goes on behind the acquisition fee. Like sponsors are making their money up front. And the stuff I would say typical sponsors aren't, especially on a 6.8 or 6.6 million raise where it says total equity. The 6.6 million raise usually involves multiple sponsors. There's multiple groups. If I feel comfortable raising, say, $3 million, I can't raise the full 6.6 million. As an example, if I have a partner who can raise a million and another can raise a million, then we can collectively as a team come together and buy this property, right? Different sponsors on top of that, we're not just paying for capital raisers. Can't do that with SEC.
Wayne Courreges III [00:13:31]:
So there's also asset management. There's a loan guarantor. Like personally, my net worth is not 15.2 million, but to get a loan to close this property, you would need somebody with a $15.2 million net worth and you would need someone that same person to have a liquidity of about, say, 1.5 million, 10% of the loan as an example. So this acquisition fee gets split between multiple people. And so as that sponsor may own or manage more of the deal, then this number may come closer to them. So usually 2%. If it's a smaller deal, it's very normal to have 3%. Ultimately, it allows the syndicator one it compensates for all the time it took to find this deal, right, because they go through many underwritings and negotiations and talks, et cetera, that don't actually pan out.
Wayne Courreges III [00:14:28]:
So it's compensating all that time. But it's also compensating if they have staff or administrative expenses, marketing, et cetera. So that's low on the acquisition fees, on the loan fees, typically 1% of the loan fee could go to a mortgage broker who goes and sources out to multiple lenders and finds the best lending. So that's usually 1% in this case, because this was going to be as an example of a bridge loan. As an example, you'll see here, it's 4.25%. I will tell you, on one of our deals last year, it was 101 units in Houston, we spent about $360,000 on a rate cap. And that was an extremely important investment for us because we all sleep very well at night knowing that no matter what's going on in the Fed and what's going on elsewhere, our rate may have a variable component to it. But because we spent an insurance policy to have a rate cap, it won't go higher than that, right? So in this instance, the loan fees includes a rate cap.
Wayne Courreges III [00:15:42]:
If you are investing in a deal that's fixed rate, that rate cap wouldn't be there, so it would likely just be 1%, right? But if you are buying a rate cap on a bridge loan or a loan that has a variable rate, you may have a 300,000 plus charge to the deal to have that rate cap, if that makes sense. And again, put questions in the chat box. If there's any questions, happy to look at it. Or if there's questions, just interrupt me. And then you got closing costs, a lot of that's. Legal fees, working capital, there's money that's going to be set aside, likely with the lender. And so working capital allows us to do work faster and then we submit that to the lender for reimbursement. If it's a bridge loan, in this case, this example would be more of a bridge loan.
Wayne Courreges III [00:16:42]:
So we have one month working capital allows us to expedite work and then we have a capex budget. For this example, 816,000 additional reserves is 450,000. It is a lot of money to sit in a bank, but it allows for safety net, right, and just anything that happens in the market. So depending on the deal size, that number will change, right? Sometimes it's 150,000, sometimes it's 450. It just depends on all that goes on. So in this case the total equity is 6.6 million and then we're going to put in our lender. So say we've sent this out to our lender and they've underwritten it and they're saying hey, we can give you a 68% loan to cost and ten year term, three years of interest, only 30 years. Amortization interest rate, crazy rate 8.25.
Wayne Courreges III [00:17:44]:
The sponsor is getting their numbers from a lender so they will put that here. Exit timing year seven exit cap is 5.75. In this example, typically you would see ten or 15 basis points from the existing cap rate per year. So if your cap rate in this market say is 5%, then 10% to 15%, I'm just going to say 10% each year or ten basis points. Excuse me, over a seven year period you may be exiting at 5.7. This is really important and I'm going to show why. Because if you see this IRR turnover rate of return right now it's set at 11%. So if I reduce the cap rate I increase the value.
Wayne Courreges III [00:18:32]:
So if I'm not as conservative and say I'm going to do five and a half, our IR went to twelve point 23. I've been seeing people if the market cap rates at 5% and I do a less than current cap rate meaning I'm assuming that interest rates are going to be going down and if interest rates go down, by theory cap rates should be going down as well. Well, notice that internal rate of return before was 11%. By me adjusting this one number on the exit cap rate, which is an unknown number, nobody really knows or has a crystal ball of what that's going to be. If I adjusted that and went on a presentation and said hey, I'm predicting the rates to go down, that is the consensus of most people, rates are going to go down and because rates are going to go down, in theory cap rates go down. Well it's a theory and depending on people's risk tolerance that may be fine but other people may be like hey, I don't know what's going to happen in 18 months, two years, much less five years, right? So this exit cap rate when you are analyzing a deal, always look at the cap rate and see if it makes sense. If they had a starting at 5% cap rate and they're doing 10, 15, 20 basis points each year and adding onto it as our initial underwriting had, that's pretty reasonable. I mean nobody knows but it allows us to say hey, we're going to stay on a more conservative stance and say hey, we don't know what this is going to bring but we want to project that we have a higher cap rate than going in.
Wayne Courreges III [00:20:24]:
Just adds a little conservative basis. So gross sales price, cost of sale, this is like broker fee for when we sell it 2% anyway, year seven. So this is pretty much all pretty basic on entering the data that we have, and again this is initial information when we go into supplemental financing. Sometimes a lot of cases it's a fixed rate or it's a term loan, so it's a five year fixed. So there's nothing refinancing involved. If we were refinancing, as this example shows we're doing, then as an operator, sponsor, underwriting, I would say refinancing. Yes, I'm planning on to refinance year three. My interest rate anticipating is 5.4 and typically fixed rate on multifamily non recourse, this would be about average in today's market.
Wayne Courreges III [00:21:21]:
If it's bridge loan more risky, it could be definitely higher interest only two years, 30 year amortization. We mentioned 10% increase expansion over cap. So the refinance here is 5.3. All this to say is that way how this underwriting shows is year three, we're going to refinance and when we do we're going to pull out about 1.8 million in cash to distribute to investors. That's how this example works. I could easily say no, we're not refinancing, we've got a fixed rate deal. And if I said no, then it is what it you know, that's the deal the IR on now is 9%. So as a sponsor, I'm having to look at what is best for our investor.
Wayne Courreges III [00:22:08]:
How do I look at a deal and make it work? And I'm always trying to convince myself how to make it work. So refinance titles in this case by giving our investors back capital early on in the deal, like say year three, and they still cash flow years 45678. However many years, this boosts up some returns a little bit. Another thing too, when we're underwriting is we look at what the best structure is. Typically for us as CREI partners, we're at 75 25 LPGP, so 75%, our limited partners would receive 25%. Our general partnership team would receive, we're typically doing 7% preferred returns. And for us we like to see a minimum of 15% IR. So this eleven point 15 does not meet my excitement level, right.
Wayne Courreges III [00:23:03]:
Even though the equity multiple is 1.9 and the average returns are twelve point 86, I play a heavy basin the internal rate of return. All that said, I'm still trying to convince myself to make the deal work. So I'm looking at how do we do that? If I offered an asset class or a preferred return, say maybe 25% of the deal gets 10% annually, but they don't have any upside when you see that it allows more juice to be made for your class, B or C investor, right? So a lot of times we have investors who don't want the upside. They like that predictable 10% coupon or 8%, whatever that coupon, whatever that amount is annually, they like that. And so they're at 10%. So if the deal was at 15, 17% IR and they collect 10%, then that leaves another five 7% for the other class B members. So it benefits other members of the deal if they allow that. Now, notice by me making that adjustment 25%, I just boosted our IR at eleven point 75.
Wayne Courreges III [00:24:14]:
If I did 30%, it boostes up a little bit more. So I'm going to go back to zero here. But again, as a deal sponsor, I'm looking at ways like what's the best terms for our investors, how do we make it work and how do we get to the sell price that a seller would be willing to sell at? So when I look at all these things here, then I'm going to go over to what we're projecting. So I mentioned early on in the call that the rent role is our document to see what's the existing rents at the property and where can rents go based on doing a market survey. So this 803 is simply all the 26 units that were one bedrooms, one bedroom, one bath. The average rent for all 26 units that were leased. I don't include the vacant units, but the ones that are leased, their current rents are 803. Maybe some units were at 950, maybe some are at 700, but all on average 803 is the current rent.
Wayne Courreges III [00:25:24]:
I do that for every single unit plan. All right, that gives us a pretty good base of where our current rents are. What is our average rents? So all in all, our average rents is 966. But because I know the market well and I've done my comp surveys, I'm able then to go in and say, okay, well, I know where our current rent is because of the rent role the seller provided. Now it's time to go to the market rents of what? The market the submarket shows rents to be. And so in this case, 825, 900, 923. So we're not too far off from market rents, but we are trailing, right? And so there's value add. When you hear that word, there's already value add in the way of where current rents are and where market rents are.
Wayne Courreges III [00:26:14]:
But sometimes current rents are where they are because the property is crap. There's a lot of deferred maintenance, there's a lot of issues, there's poor management, a lot of crime. Maybe they're accepting 2nd, 3rd, 4th chance people. So us as a sponsor, when we do our due diligence, we're looking at why is current rents maybe lower than market, right? Because I can have pro forma market rents higher. Which is great because on paper we can grow the rents to market, but if there's any underlying issues and so we do that through checking Google, and this is something that everybody on this call can do. And those listening in, check the Google ratings. For me as a buyer, I'm okay with comments that are really bad. One star, two star.
Wayne Courreges III [00:27:03]:
In fact, the uglier the reviews, the more exciting I get. Because those are things I can change, right? I can change the name of the property. I can change the perception of that property more that value add. But from a tenant looking in, they may not want to pay these higher rents. They're willing to pay 853 or eight three, because that's all they can afford or that's where they want to be, and they can't pay the higher rent or prefer not to be at another property. So anyway, you just got to figure out as a sponsor why the market rents are where they are, why the current rents. When you're listening to a deal perform a presentation, you're going to want to ask yourselves like, where are the current rents? Where are the market rents? And does the story make sense of how the sponsor is going to get there? Okay. And part of that story is like, hey, we want to renovate units.
Wayne Courreges III [00:27:56]:
We want to renovate the exterior, and we want to renovate the interior. It's very common on older properties. That's where the value add comes in. You're repositioning renovating, pushing rents where possible, and really trying to turn the community around and hopefully a better community than it was before. So here you have your projections. So in this case, I'm projecting out year one. I think I'm going to do 36 units. This is what I think we can increase it to $85 for renovated $100.
Wayne Courreges III [00:28:33]:
So it takes the market rent and it adds additional rent for renovated units. So this would be more of a classic. This would be more the upside on renovating units. Right. So again, it all goes back to because I'm trying to find what my net? I don't look over here, I don't look at the total deal returns. That doesn't bother me. What bothers me is what is my investors going to get? So I'm trying to boost. If I came in here and I was being more aggressive, say 125, we would definitely see an increase in IR.
Wayne Courreges III [00:29:14]:
So if I went over here right? So the more rent now, my IR looks a little better, but I want to be conservative. We're already increasing rents a certain amount from current to performa. Then we're renovating. And we're assuming these increases. These increases. Also, when you're talking to the sponsor, listening to their presentation, you want to make sure the property management company is also buying into projections too, right? The property management company boots on the ground, they're the ones that are going to be implementing and driving this business plan. So we got our units there, and then we got our cap renovation. So $4,500 per unit for a total of $504,000.
Wayne Courreges III [00:30:03]:
So in this case, $4,500 is not a lot. And that's just an example. This could actually be closer to $8,500 a unit. If you think about appliances and flooring, I did a due diligence last week on a property that all units had black appliances, the cabinets looked great. I mean, it was really a pretty solid asset. So for me, I was like, hey, let's just do 4500. It's paint and maybe some new flooring. Right.
Wayne Courreges III [00:30:35]:
So just depending on the due diligence that we're looking at, this will change this number. But this has to be a pretty good number because you can go into renovations and not have enough money to finish the job, which impacts your rents, which impacts your deal. Right. So as passive investors, it's all about the story. The story should be we are purchasing it for this value. This is our business plan, and this is what we're looking to exit. And if all those things make sense, then great. Obviously, there's more to it than that, but from an underwriting standpoint, we're projecting our interior renovations and then our exterior renovations.
Wayne Courreges III [00:31:21]:
So this is where that eight or that 777,000, where this should flow. R 57. Yeah, because we have contingency. So this number that we were talking about before this Capex renovation flows right there. All right, so I'm going to pause. We got a couple of questions. I'm going to look at a lot on the spreadsheet, and as passive investors, you don't have to dig in on everything. But key takeaways before I take a little break and ask questions is cap rate, what is the entry cap rate? What's exit cap rate? Because as I had shown you all before, that can really drive an IR difference.
Wayne Courreges III [00:32:05]:
Right? So we want to stay conservative there, take that back, and then we want to see what the business plan is and is it achievable? And you can see if it's achievable by looking at their comps and just listening to their story. If something seems off, follow your gut and easily just pass. None of this should be more complicated than does the business plan make sense? All right, so I'm going to pause there and answer questions. So is interest only, period, a benefit to the buyer or something that bank asks for? Oh, it's a great question. It's a definite benefit to the buyer. And the reason is because when we first buy a property, say it's a value add property, which term sometimes can be used loosely, I view value add as truly going in a distressed property or property that needs work, renovating and pushing value. Right. And if I have two years of interest only payments, then my debt service is going to be less for those two years, which allows me breathing room to renovate the property.
Wayne Courreges III [00:33:22]:
So if I can get a three year interest only, then that money is I'm only paying interest. And then the money that means more money line to the asset. And once the renovations are done, that means more distributions to our investors. So we like the interest only. Absolutely. What we typically see in today's market is maybe one, two years of I O. And then you'll start seeing principal and. Interest having to be paid, which is also a benefit because as principal is written down because you're paying that debt service, when you go to sell, you have more equity at sale too, right? Just like your house on when you have a house, you're paying PNI every month and you're forcing the debt service to go down.
Wayne Courreges III [00:34:10]:
And when you sell, if you ever sell, you'll have more equity. So that's a great question. And typically, again for bridge loans and even Fannie Freddie, you typically see a two year interest only. It's know negotiable and what's going on in the marketplace. We've got an RV boat storage facility. We'll have 24 months of interest only. It allows us to get the property developed and complete and only have to worry about the interest only instead of interest and principal. So, great question there.
Wayne Courreges III [00:34:47]:
Hopefully answered it. How concerned are you with cost to renovate units and time to renovate given fluctuations in construction, pricing and contractor demand? So it's a really great question. And typically what we would see is two weeks for a unit turnaround. We don't do it in house for one. I see sometimes companies or people, they'll use their maintenance person to renovate the unit. I'm good with the maintenance person doing a make ready and it's just a clean, maybe a quick paint or whatever. But if you're going in and taking out flooring and you're doing a renovation, that takes that maintenance person out of maintaining your asset and something's not going to get done, whether the units won't get renovated timely or the maintenance of the property suffers. Right.
Wayne Courreges III [00:35:42]:
So we have a contracting company that comes in, we discuss what the scope is, whether it's the flooring or the appliances, et cetera, and we come up with our scope and we outsource. Like it's cheaper to go direct to a carpet or a flooring vendor. So we don't go to a general contractor to then have them price and scope with the flooring because they just naturally mark up that's. Nothing wrong with that, it's just what they do. So we go direct to say, flooring painters and then use the general contractor for trash out, clean everything out, doing a lot of the labor stuff work. Great question on pricing. Pricing has gotten more and so if you do see a number like $4,500, this should be a huge red flag. Like why? That sounds really cheap.
Wayne Courreges III [00:36:35]:
Appliances alone are like $2,600, right? And then you think about flooring and stuff. But like the deal that we are working due diligence on now, most of the units already done. So for me it's just really paint, maybe doing the flooring and some of the units and then cleaning up. So $4,500 is more reasonable. But that type of question you just asked is the type of question you should be able to ask your sponsor or the partner who's presenting the deal. And they should tell you the story or like, yeah, they've got pricing or they're know ABC Company, et cetera. So great question. All right.
Wayne Courreges III [00:37:16]:
Another question is, do you walk through the property to estimate rental costs before you sign the contract, or you sign the contract and then run the really, really great question. It all depends on what's going on in the market. So, like, right now we're working through a purchase sale agreement, but I was able to get early due diligence. So the letter of intent was signed. We were able to negotiate early access before the purchase and sale agreement. So in today's environment, that's a lot more acceptable. In some environments, it's hard money day one, and usually 1% of the loan price. So this is where when people get a little concerned about these acquisition fees, I say the risk say 1% of $15 million.
Wayne Courreges III [00:38:07]:
So that's 150,000 down. Hard money day one. So if the deal doesn't close for whatever reason, that sponsor has lost 150,000 or that sponsorship team has lost 150,000. So when you ask, are we able to get early access to price, that is the ideal situation for the sponsor. We really want have early access because we want to be able to say yes or no before our money is hard on the line. That's not passive investor money on the line. That's active sponsors on the line. It's part of doing business, part of our world.
Wayne Courreges III [00:38:41]:
But yes, we ideally like to have the ability to walk each unit and to look at it. I personally walk every unit. Last Thursday, I walked all units of this property with the management team, and we've got our list and we know what unit needs what. And that's important. Sometimes you have to sign the contract to give access. It just depends on the market and what's going on. It has softened, for sure. So you have more leeway to get those early inspections in before money becomes hard and to get a good rental cost.
Wayne Courreges III [00:39:20]:
If not, hey, when you do this enough and you know the submarket or you have relationships in the submarket, there's a pretty good idea of how much a unit is going to cost. And again, when we're underwriting it's all conservative. Notice I've still kept the purchase price at 15.2 million. Once all these levers are adjusted, like, hey, I feel comfortable. I don't want to move more on my rents and you know, what? My capital budget, I feel really solid about my capital budget. I like where it is. I'm just throwing that out as if everything was good there, then really the only thing I can adjust here is purchase price. And as I mentioned earlier, if my IR is 15% and I've done everything I can from an investor waterfall effect to feeling comfortable on my exit cap rate and feeling comfortable to my rents and my capital budget and if I'm going to refinance or not, if all those levers, at the end of the day, it's all about the purchase price.
Wayne Courreges III [00:40:18]:
They want too much money. So maybe I'm going to go at 14.2 million. Well, in doing that, I'm at 13.65. I'm like, okay, well, we're getting a little closer. It's a million dollars off. I doubt they will accept a million dollars off. Who knows? We still talk to the broker, talk to the seller. But this is the stuff that goes back forth.
Wayne Courreges III [00:40:42]:
This is why deals don't work most of the time, right? Because where the seller wants and where the actual value of the property and what we can do to make it work doesn't line up. All right, so these are the assumptions. This is just one tab of all these other tabs, right? Check our time. I need to hurry up a little bit, but hopefully it's good information for everybody. But let's talk about the annual performance tab. Again, every underwriting is going to be a little different for every active sponsor. But another thing to look for is their projections. And for those that are on the call, I am going to go longer.
Wayne Courreges III [00:41:23]:
I'm going to make sure I provide as much value even if I go to 30 more minutes, you'll get the recording. If you have to jump, please jump. But I don't want to rush. I really want to just add as much value as I can. So on this tab, annual performa, the annual rent growth is important. In prior years, and I did this too, it was what the market was doing, right? I mean, it was 8-7-5. Then we get that down to 3%. Notice that by pushing rent growth, which was market just a couple of years ago, to 8% 7% as an example, have that story of like, hey, we're pushing rents, then we're projecting getting it back to stable 3%.
Wayne Courreges III [00:42:15]:
Notice our IR is like now 18%. Our equity multiple is 2.1. This is a fantastic deal. My assumption is still at 15.2. Yeah, I hit the purchase price and my IR equity multiple, that's all pretty sexy. Like all good in today's market, I may do 2-3-3. It's not as exciting, right? But it's the market and being conservative. So reducing those annual increases impacts IR impacts the numbers.
Wayne Courreges III [00:42:53]:
So when you are looking at deal and you're analyzing again, it goes back to the story. Does it make sense? Are they projecting conservative rent growth? Growth? If they are projecting, say 2% year one, 3% in future years, I mean, that's pretty standard. I mean, if your rent is 800 times 1.3, it went up $24 a month. As an investor, anybody who's looking outside in, that's reasonable, right? Rental increases are going to happen in a good market. I haven't had any properties on my stack have reduced rents. Say someone was paying 900. I didn't have to pay charge 850 because of today's market. That makes sense.
Wayne Courreges III [00:43:39]:
So rents are going up, they're just not going up. That 810. Some of them were 15% increases year over year. It was a fantastic market a couple of years ago, a lot of people made a lot of money, which is great. But in this market, let's continue to stay conservative. 2%, 3%. So ask about that. What's the rent growth? What is the other income growth? 0% in this underwriting? 2%.
Wayne Courreges III [00:44:06]:
2%. And your operating expense growth. Maybe this is too low. Maybe you don't like 2% inflation, et cetera. Maybe this really should be more closer to 3% or 4%. And then it goes down. The end of the day, you as a passive investor are not going to change the projections, just like you won't change the private placement memorandum. You read the document.
Wayne Courreges III [00:44:26]:
If the document you don't like, it is sort of what it is like. Just don't invest in the deal if you don't like the document. Right? Same thing with here. You're just looking at it as a sophisticated investor and you're saying, hey, I noticed they did 2% annual rent growth. I think we need to, in today's market, probably be a little bit more conservative. So annual rent growth, operating expense growth, all key for the overall valuations. Then you get into more of the underwriting. This is a lot of technical.
Wayne Courreges III [00:44:59]:
Again, this is not an underwriting class, but if I go back over here to my rents and I say my market rents are $900 and my renovations, there's a loss to lease. Not everybody's going to go from $800 to 850 or 875. Right? So there's a loss to lease. So if you see 1.9 million as gross potential rent that's taken, the rents that are, what's the most possible rents at that property, given where the market is, say it's 1.9 gross potential rent, say 10% of the units over the year can't be converted to the higher rent. So I reduce out 186,000. So the gross schedule tier is 1.715. Again, a lot of this may be too much in the details, but as an operator, I also have to see, does it make sense? My T twelve, remember the T twelve was the income statement. And if their gross scheduled total rents on the T twelve were 1.6 million, remember the T twelve was the trailing twelve months.
Wayne Courreges III [00:46:09]:
And my year one projection is at 1.75. I'm not totally concerned about it because I am going to be renovating the property. We're going to be churning units to get these higher rents, et cetera. So I may be okay with that vacancy loss. I mean, they're hovering about eleven point 14%. We're at 10%. Maybe that's not as conservative. Maybe I should do 12%.
Wayne Courreges III [00:46:40]:
This is up to the underwriter. The underwriting is looking at the market and the property and putting in enough buffers in case maybe one expense is higher and there was buffer in this other area. And so it all evens out. So all that said, total net rental income on the T twelve on the seller's prior twelve months is 1.3 million. I'm projecting it at 1.4 million. As a passive investor, you all should get a snapshot of what all the income and the annual performance is. And so you can look at it and be like, okay, this is where they were, this is where they're going to be. Am I comfortable with their projections? Other rubs rubs is reimbursed utility billings.
Wayne Courreges III [00:47:31]:
So if the utility is 100,000, then you should hopefully see 90,000 or 90% of the billings reimbursed by the residents. I mean that would be the ideal goal. Other income could be parking miscellaneous. So those are questions you all could ask. It's like where is this other income going? What is the other income today which was 71,000? Where is it? Looking at this coming year, 70,000. But notice year two, I have 101,000. So I did a note here. So the additional 30,000, so we were at 70,000.
Wayne Courreges III [00:48:13]:
Year one, we're now at 101. The additional 30,000 of revenue from parking carports were part of the capital plan. So if I'm a passive investor and I reach out to my general partner of a deal that's being presented, I may ask why is year 230 thousand higher on other income versus year one? Well, Villa should have an answer and well, in this case 30,000 revenue from carports. Now if I go back to my assumptions, I want to make sure my carports were budgeted because they were not at the property at the time. So there's 100,000 in capex. So that checks out to me as a passive investor, I'm happy with that and actually I'm pretty excited about it because the sponsor found an opportunity to grow value and spend capital dollars to grow value, not just paint and repositioning. So there's a lot of great force revenues that way. All right, so let's go into property management.
Wayne Courreges III [00:49:15]:
So I mentioned the income statement. I said that a couple of times on this tab because this is where this tab is important. The other one, this assumptions tab was rent roll, a lot of rent roll. This is all income statement. So I see what the projections were over the last twelve months that the existing buyer has, existing seller has. And now I'm looking at my projections year one on I don't underwrite based on what the seller was doing because the seller isn't going to manage the asset the way I would manage the asset. Sometimes I will manage it less efficient because I don't have as many units as that seller. Maybe that seller had 200 units around this property and they were able to share payroll cost or they had insurance costs that were less because they had a bigger portfolio.
Wayne Courreges III [00:50:05]:
So this is more of a starting point. But we always want to budget based on how we think we're going to manage it. Right? And so in this case, these are the numbers that we put in and net cash flow. Year one is negative 43,000. So starting year one is negative cash flow. Now, negative cash flow for the first year, first year in a couple of months. That's normal on a deep value add because you have a lot of turnover and there's a lot of expense in Renovating and you are pushing rents. So I'm not as concerned year one if it's a deep value add that we're negative cash flow.
Wayne Courreges III [00:50:53]:
But what I do want to see from a passive investor side that I think you all should ask is, all right, we show negative 43,000. Where are our reserves that should cover this 43,000. All right. And I'm going to go back to this tab here. That is where additional reserves come in. Now, that's year, 140 thousand. The additional reserves we had underwritten is 450,000. So we're more than covering year one losses.
Wayne Courreges III [00:51:25]:
Year two, I typically want to see our income. I don't want to see that we have less income year two than year one. Again, this is a projection. And I think a lot of this underwriting, I just did the rent growth. So let me see. Anyway, so now if I did that, adjusting the net cash flow, but I've got to, again, trust the number, feel comfortable with the numbers. US passive investors analyzing a performance have to be comfortable with it as well. But just notice what I just did there with annual rent growth, how I turned a negative net cash flow into a positive cash flow by making those adjustments.
Wayne Courreges III [00:52:16]:
So if you feel or the sponsorship team and those that are investing in the deal feel like, yeah, we can get our rent growth at 5% 4%, year two 3%, then we should be fine. But some people, they don't want to do any rent growth in year one, and then they may go year two 2%. And so we want to make sure we have enough reserves. All right, so there goes that. Other things to look at or ask about is the DSCR. Usually this is I don't know if it's not as talked about as much, but it is something that we as the active sponsors pay attention closely to. It's what allows us to sleep at night. Because if you are not able to make your debt service, then things get really stressful, right? That's where capital calls and other things happen.
Wayne Courreges III [00:53:17]:
So in this case, year 1.81 at one DSCR, I'm making enough to just pay my debt service. So if I'm at zero point 81, I'm not even able to make my debt service. Which is why this is a negative 84, 73. Again, if it's a bridge loan, year one is part of the strategy business plan. We're renovating repositioning. There's going to be a loss in year one. We have enough reserves, totally fine. But we want to see this DSCR get to 1.25 or higher by at least year three.
Wayne Courreges III [00:53:54]:
And why year three? So year three 1.25 debt service ratio is important because I've told everybody on this call that I'm planning to refinance year three to refinance into a fanny Freddie agency debt, which allows us to get a nice interest rate and good terms, et cetera. I've got to be at a 1.25. That's the minimum for these agency debt. So I'm at 1.2. So that concerns me as an active sponsor, right? I'm like, okay, well, based on my projections and where I'm going to be, I'm not going to be able to hit the business plan 1.25 in year three. Maybe I get lucky and strike it off park. But as a sponsor who likes to only do two or three deals a year, I'm only doing those amount of deals a year because most deals don't work. And so part of that is like, hey, I've got a lot of negative cash flow and I'm not even hitting my 1.25 year three.
Wayne Courreges III [00:55:04]:
So I'm going to pause and see if there's any questions here. Okay? No questions in the box. So, debt yield, typically lenders want to see at least a seven and a half percent debt constant break even. This is something I like to look at as well. The nice thing compared to like a single family, when we own those personally, when we had somebody lived in that house, it was fantastic. We had rental income, they took care of the property, et cetera. Once they left, though, it was vacant and no cash producing until we leased it up. Right.
Wayne Courreges III [00:55:42]:
Well, in multifamily, why I prefer it is, I could have just as this example, 76% of my units occupied. So was that 30 or 23% not occupied and still be cash flowing to meet our debt service? Anyway, so that's this tab multiclass waterfall. Again, it goes back to sometimes there's a 30 70 split, 25 75. There's different splits and different ways to overcome waterfalls. Maybe after 15% IR, LPGP split 50 50 for this type of conversation multifamily, when you look at a deal, you'll determine like, hey, do these returns satisfy what I'm looking for? And if so, it's likely do they work through the waterfall to make sure it's beneficial for you? And the GP sensitivity analysis, this is pretty crucial as well. Usually during an investor presentation, there'll be a sensitivity analysis, if not something you want to look at. I think it's good because remember going back to that exit cap rate, I think I had it at 5.75. Well, what if it isn't 5.75? Maybe it turns out to be a 6%.
Wayne Courreges III [00:57:14]:
What's my return? What if it's a six and a half percent? So we can look at the equity multiple returns, different on different whole periods. Sometimes they'll do sensitivity analysis on the IR or the cash flow, et cetera, but I always like to look at a sensitivity analysis just to see, okay, well, this is where they projected. But what if rates are not interest rate increases aren't what was projected, or if the exit cap rate isn't where they're projecting, are you still comfortable with the deal with it being higher or lower? So I'm going to pause there. There's a lot of information, but I think if you took out anything, it's going back to, does the story make sense? One, you've got to have trust with the sponsor. So a lot of that is relationships. You want to feel or know the person. Can you text them or call them and do they get back timely? Maybe they're on vacation and they gotten out of office or whatever, but most of the time they should be responsive. Right.
Wayne Courreges III [00:58:29]:
It's the right thing to do. Does their underwriting have the story that makes sense and backed by data? Does it have the property management buy in? Does it have the conservative basis of rental growth or expense growth and exit cap rate? And if all the story and the trust and the track record, et cetera, you feel comfortable, then invest. I think a lot of people get stuck on the sideline because they do want to have all this knowledge, which is important, and you should have as much knowledge. But if you're two, three years having this knowledge and not trying to investor in real estate, then you're always going to be on the sideline. Right. Hopefully this type of discussion sort of went behind the scenes of how we underwrite. And again, we underwriting tons of deals and they don't work and we just move on. Right.
Wayne Courreges III [00:59:38]:
But those are things passive investors don't have to worry about in underwriting daily. So fun times. All right, any questions that I'm going to go back to view? Got a review? All right, any questions? If not, I'm going to stop recording because maybe people want to ask questions without the recording. But if you have a question, definitely ask. Wayne, I had a quick question, if you don't mind. Yeah. Out of curiosity, when you're underwriting a deal, when you're looking at equipment, HVAC, roof, electrical, when you get a property condition report and you look at the effective, useful life of that equipment, how does that tie into how you're thinking about Capex Equity raised impacting returns? How are you approaching that? Yeah, when I do a property condition report, it's usually with the contractors that I know and trust and who are likely going to do the work when we get the property. As an example, Thursday, when I told you I was at the due diligence, we had our HVAC company that had already done another project for us.
Wayne Courreges III [01:00:49]:
That the ID at the galleria. We replaced all 101 HVAC units because they were all in horrible condition, failing, and my maintenance costs would have been extremely high without it, and I don't like the look of window units at any of our properties. So we went and budgeted 101 units. And in the first six months we did that plus a recoding of the roof because all the second floor roofs were leaking. And when you're turning around a property, you don't want leaky roofs. And you need HVACs to work in Houston, Texas. Right. So I would say when you're doing your due diligence, bring people, contractors, people that can help already with that cost estimate.
Wayne Courreges III [01:01:33]:
So that was Thursday. So today I reached out to my electrician, my plumber. We had a roofer and an HVAC, and I'm like, hey guys, where are the reports? Love to have my phone. And I was there. I already know what's wrong and what needs to be done and fixed, but I still want that paper in that report. A lot of times the insurance company want that as well. So at some point, Aaron, you can over renovate a know, we can go in and be like, okay, well, we need to do all the units or we need renovate all the units. Maybe it needs a new recoding, et cetera.
Wayne Courreges III [01:02:13]:
The goal is to push net operating income as high as possible. And you can do that through increasing revenues. It's not always like increasing rents. I mean, rents is one avenue, but if I can do those carports and now have non paying parking to now being a paying parking, well, that's additional income. If I do a contract with, say, Comcast, where they are the preferred vendor, and I get a percentage of all the revenues from them as additional income, laundry, and the list goes on. But if I can boost other income or I can reduce expenses, like one property that we're looking at, we have another property nearby, so we're going to have shared property management expenses. It benefits both properties because we're able to allocate. So hopefully that maybe answered your question, but I mean, you definitely want to bring in your team, and your team isn't like, I don't know if you're an active investor or passive investor, but if you're an active investor, your team building isn't.
Wayne Courreges III [01:03:17]:
When you get a deal under contract, it's go time when you get on a contract because everything's very time sensitive, and especially when you have hard money, you got money on the line, because if the deal doesn't work out, you don't want to lose your earnest money. So hopefully that answers your question. Multifamily. It goes back to due diligence into underwriting. If the property needs one property we passed on, I mean, it was like 60,000 a door in the gallery of Submarket of Houston. But the issue was it had a lot of issues. One, it was a chiller property. And so I looked at like, hey, what would it be? I mean, huge value add for the future of this property is remove the chiller and install individual HVAC units.
Wayne Courreges III [01:04:02]:
But to do that, it was like 1.2 million. I was like, okay, that isn't going to work because the property is like a Class C property, and the return just wouldn't be there. So ultimately, Aaron, you just got to figure out what's that sweet spot of taking care of the asset, which hopefully reduces expenses. Replacing all the HVAC units reduced my HVAC maintenance cost. So you're looking at it holistically. And ultimately, if it's a lot of capital, then maybe you're overpaying, and that's where you can look at negotiating price. Too all right, thank you. Question here.
Wayne Courreges III [01:04:43]:
What's a typical hold time before exit, and what's a typical payback break even time on these deals? So I invest based on deal because I'm investing personally, too, right. And we're partnering and we're pulling money together on properties that we couldn't buy on our own. All right, so an example, one of our properties, it's a three to five year hold period. It was a renovation, and my hope was to do a three year hold on it. But in today's market, it probably is a four or five year hold. So I always say in any of our deals, there's always a range. So three to five year and always be okay with the worst case scenario. So when you're investing in a deal, if it's a five year on the outside, are you okay with your money being held up in five years? That's a question you just got to ask yourself.
Wayne Courreges III [01:05:39]:
So three to five years on deals that I'm doing this year, I'm doing more five to seven years, because it just gets us a little bit more runway out. But there's a saying in real estate, everything is always for sale. And so in a year, two years from now, if we get an offer and it's off market and it's something that hits or exceeds our investor returns, then we have to strongly look at it. But I would say, typically five to seven years is probably pretty reasonable. There's also a thing of just hold real estate long term. And I'm also having as a sponsor, I'm always thinking, like, how do I own real estate longer? Because if I have an investor group that just wants cash flow, and maybe they don't really want that equity upside, because if they get that equity flux in year three, well, then they have to find money to put that in, or maybe that puts them at a tax disadvantage because they have taxes on that. So I have investors who's like, hey, I just wanted a 10% cash flow or 8% cash flow. And so at that point, it's like, heck, we're cash flowing for ten years.
Wayne Courreges III [01:06:56]:
And if someone puts in a million dollars and they're getting an 8% return, they're getting an $80,000 annual passive income that's on paper tax loss because of the K ones. And that's a whole nother subject. But in essence, there's some taxes in that. So ultimately, everybody on this call and those listening in will have to determine. What is your hold period and what is your why? On being in real estate investing? For me, I'm of the age where I like the equity upside. I'm okay with higher risk on some deals and to have that higher return. Okay. So if not, then I would be put into more class A, not as much value add and those are nothing wrong with that.
Wayne Courreges III [01:07:56]:
Everyone's going to be different. But if you'd rather have that, then your returns are less because the risk is less. But maybe you're okay with 3%. Crazy CDs are paying 5% plus right now. So you just have to look at that and then find sponsors who sort of fit. That what you're looking for. It's a really great question. Any other questions? Let's see.
Wayne Courreges III [01:08:24]:
Can you do a 1031 as a passive investor? Yeah, you can. And I have on one of my deals, they put in 1.2 million. So how that works is say the overall capital stack is 3 million and you all bring in a 1031. Investor brings in 1.5 million. That 1.5 million is the entity that they bought other real estate on and they sold it and then they took that entity and reinvested it into another real estate. They never took the money to themselves. They kept it with a third party intermediary and they found an asset within a certain amount of time and then they invested. So say they invested that 1.5 million as an entity, then as my entity, as the LP entity, that would have other my friends and family and colleagues and people on this call, we brought in another million and a half and together we bought this property.
Wayne Courreges III [01:09:25]:
But instead of one entity buying the property, it would be two entities buying that one property. So it would be through a tick agreement, a tenant in common. So you would have 50% 50%. And that tick agreement is what is on the title to own that property. So typically on a 1031, for CREI partners, at a minimum, we want to say 1 million. And it is a little on the higher side, but with the amount of legal fees and just the intricacies of it all, usually 1 million is where it makes sense. But for smaller properties or properties you want to do on your own, that 1031, you can definitely convert over to other deals and other sponsors will have different minimum requirements. But for ours, it's about 1 million.
Wayne Courreges III [01:10:23]:
In that example, the passive investor must have 50% for them to be able to do 1031. No? Good question. So that was just my example. If there was a 3 million raise and they just happened to have a million and a half on the deal, we did a 1031. The total raise was like 5.8 million and they brought in like 1.2. And so I'm not good at math, but they own like 20 or all in all there was like 20% of the total deal. So this LP entity was like 80 some percent, and this was the remaining. So it all depends.
Wayne Courreges III [01:10:58]:
Hopefully that makes sense. Yeah, you could do this, and there's different tax, different financial tax people such but if you were to sell your single families and I don't know if they're in your name and not in entity names, then you could sell the properties and take that money and 1031 it. Right. So if you had this upside, you can combine 1031, but all that would have to be certain time frames. And then if you ever needed a 1031 company, I've got a couple that I've worked with that's been pretty good, but there's plenty of groups out there that do it. All right, thank you all for staying on with me this long. Normally it's not like this. We normally close right at the hour, close to it.
Wayne Courreges III [01:12:00]:
But there was a lot of info. Yeah, reach out to me. My email is Wayne at CREI partners.com. Again, our website is www. CREI partners.com. We have a director of investor education who's on this call, Whitney Pierce. And then we also have an investor relations and brand director of brand and investor relations, Courtney Vendor. You probably get her emails.
Wayne Courreges III [01:12:29]:
If you don't, you'll start getting those emails every other week. We do newsletters, so let's stay in touch for 506 B offerings. If you're not an accredited investor, reach out. Let's build the relationship. Doesn't mean you have to invest at all. It just allows us to present an opportunity. So for accredited investors, we don't have to have the relationship, but for non accredited investors, let's have that relationship. Because we don't do very many 506 B deals.
Wayne Courreges III [01:12:57]:
And the 506 B, we do it's really just to take care of that investor base. Who wants to grow their wealth through real estate? All right, well, my voice is going out, so thank you all so much for being on. I had a quick question. Oh yeah, for sure. I saw that you had a course that you're offering, so I'm a very new beginner. Does that kind of go over how everything works? Because everything that I watch today, I'm not sure exactly about it. It's my first time seeing everything. It's a really great question.
Wayne Courreges III [01:13:29]:
So I went a lot more in the weeds than most people. I don't know if there's other meetups that go into underwriting. I'm sure there are, but it's a lot of numbers that you probably will get a headache from. And that wasn't really the purpose of that. It's just so you know what we do on the back end for underwriting. But to answer your question, yes, our passive investor coaching program, it breaks out. It's like 5 hours worth of videos, but it shortens and makes it all make sense. From where? Starting with your why.
Wayne Courreges III [01:14:05]:
Because everybody has a reason why they want to invest in real estate. And then that ties into your risk and reward, which ties into what type of asset classes you're going to invest in. And then it ties into how do you look at it and underwrite it. And maybe you won't be the person underwriting, but it goes into a lot more information and background of what we talked about today. And look, my course is a lot of time and effort was put into it. It definitely fast tracks, but you can get a lot of this information from BiggerPockets.com, you can get it from books, you can get it from online and these webinars and meetups. I just think if you are looking to invest, if you're going to invest $50,000 this year and you don't have the time to ramp up, then spend the $750 to take our course and then have access to us. That's sort of my thing.
Wayne Courreges III [01:15:03]:
Or if you have time, then there's a lot of free information and a lot of great meetups. So just depends on where you're at and what your timing is. Okay, thank you. Yeah, for sure. And then remember, the fourth Monday of every month other than December, we meet together. And there's a lot of our investors with CREI Partners started just like where you are in this meetup, and they built the relationship and the trust, and we're all learning together and asking questions together, so you're in the right place. And again, we meet on the fourth Monday of every month. Okay? Got it.
Wayne Courreges III [01:15:40]:
Thank you. Yeah, you're welcome. All right, well, y'all have a wonderful evening. Any other questions before I hit stop? Take care, Ray. Good job. Thanks, Lauren. Thank you all very much. Reach out if you need anything.
Wayne Courreges III [01:15:54]:
Thank you all. That's all for this episode. We hope you subscribe, share and leave a review of the show. For more information about passively investing in multifamily apartments, check out Wayne's free ebook by going to creipartners.com forward slash ebook. Also follow us on Facebook by searching CREI Partners. This was the untold stories of real estate investing.
