Latest / Real Investor Radio Podcast / Ep. 104 | From Attorney to Operator: Building Multifamily in Ohio with Justin Spillers (Part 1)
Transcript
- Craig (00:12) Hey, welcome back to Real Investor Radio. I'm Craig Fuhr joined again by Jack BeVier in an undisclosed location today. I said he looked like he was at mom's house, but he zoomed out and there's dead things on the wall. Jack, where are you, sir? Jack BeVier (00:25) I'm in Scottsdale, Arizona. I'm out here for the IMN conference, IMNSFR West Conference. So spent the past two days out here talking to a bunch of real estate investors and folks in the industry to try to see which way the wind's blowing, where opinions are. So it was a productive couple of days. Craig (00:40) Man, let's bring in our guest today because I'm sure he'll have a lot to say on what you're finding out at I am and Jack and I really want to get into sort of how the wind is blowing out there. And so our guest today can't wait to have this discussion is Justin Spillers. Justin and his partner are ⁓ operating a company called Real Estate Alpha. in Ohio and we're going to get into everything that they're doing there in terms of raising capital, construction, property management, holding properties. But Justin started in the business of real estate after being an attorney, has been operating in the Ohio area for 10 years. I imagine you still are an attorney, Justin, you know, once an attorney, always an attorney, I guess, right? But he's actually just practicing more real estate now. And also, has three beautiful daughters, which I think he loves more than anything based on his website. And so Justin, I can't wait to hear your story, what you guys are doing in Ohio. Jack says you're in a, in not the easiest of areas in terms of tenants. And so can't wait to hear the story, but Jack, let's jump into what you're finding out by the way, Justin, welcome to the show. Justin Spillers (01:47) Appreciate it guys, glad to be here. Craig (01:49) You can see we keep it light here. ⁓ Jack, what are you finding out at I am in right now in Scottsdale? Like first of all, what's the attendance look like? Justin Spillers (01:51) Bye. Jack BeVier (01:56) Yeah, so it's, ⁓ I think it's smaller than ⁓ past conferences have been. There are still, you you will, always curious. You walk into the vendor room, right? And the thought, you the halls of, of, of tables and stuff. And it's always curious to see what the mix looks like. It is just as lender heavy as it is, ⁓ as it has been for the past five years. So there's still. you know, tons of debt capital chasing the fix and flip and RTL and built to rent space. lots of other new vendors as well. Couple, you know, a couple of booths with it, you know, that have some AI, you know, attached to their name. ⁓ so it's always kind of curious to see, ⁓ who's already trying to commercialize, ⁓ AI, but, attendance is a little, little lighter in terms of attendees than it has been in years past. Craig (02:26) Mm-hmm. Yeah. like noticeably lighter. Jack BeVier (02:47) To me, I mean, I go to all of them. like, you know, I can tell, you know, I can know, I can tell. I think that, I mean, the narrative makes sense to me that as to why the tenants would be a little bit lighter, you know, like it's not like anyone's flipping business is like murdering it right now. like, you know, and so what am I, I'm going to fly to Arizona to meet with more debt, you know, more lenders if I, if I, if I already didn't have enough and, you know, to, fund the, Craig (02:49) Yeah. Yeah. Jack BeVier (03:14) difficult deals that aren't selling right now. you know, like I can see why a lot of flippers and landlords are not making it a priority to go to conferences right now. So that part didn't really, it didn't surprise me. What did surprise me was the, frankly, the, we're either not talking about it here or the opt, or like the, level of optimism here is a little, it was a little freaking me out. because like, My perspective is that things are really hard right now. there, you know, I'm, I'm starting to see even that there are some opportunities as a result of it, but you know, the past 12 months days on market has sucked and, prices are not going up. ⁓ and unless, unless you're in like a couple unique, you know, random Northeast markets, but like most of the investment activity markets are, are, are challenged right now. And like, no one's talking about it, or at least they're all talking about how like, Maybe they're all talking about, how everything's going to be fine a couple of years from now, but like, they're not really talking about how their customers are experiencing pain right now. And it kind of freaked me out. You know, I felt like there was a little bit of denial going on in the room. ⁓ cause I'm like, I know all of you lenders have increased default rates right now. And I know that all of you vendors are struggling for customers right now. Cause they're all tightening the belt. Like, but everyone was kind of just, no, everything's fine. Like, you know, we're, really excited. So anyway, it was the most disconnected I felt from it. Usually I'm like, Hey, the panels, no one's saying anything like groundbreaking, but they're at least like, usually, I usually agree with what's, with what's being said, or like I share that, that same perspective. This was the first time where I was just like, I'm not quite on the same page with the conversation that's the, that's going on in the front of the room right now. So that was my, biggest takeaway. Craig (04:58) What was your, what's the big takeaway from around the bar where you always find your best information? Jack BeVier (05:04) yeah yeah yeah the the bar is always yeah a little bit more honest right so And the, and the guys that, that, you know, that I've seen at this conference for years, uh, it's good to catch up with them. And we're a bit more on the same page in terms of, you know, challenges. uh, I think people are, the posture is generally, you know, for those who are not like in trouble right now, or like licking their wounds right now, the posture is generally trying to figure out what opportunities are going to come out of this. And that's the more, you know, that's more fun conversation to have anyway. So that's, uh, that's what we were talking about. Craig (05:35) Justin, what is your take on sort of where the market is right now? If you know, you know, outside of Ohio, like, well, first give us like, what's your take on the last 12 months? you know, we're getting ready to end 2025. So we've had a full year of, where, you know, where things have been. Don't even know what I just said there, Jack. in any event, what's give us your take on, ⁓ sort of, sort of how the winds are blowing, from your perspective. Justin Spillers (06:00) Yeah, so I'm just solely in the multifamily space, so I can't apply a lot on the single family space and the repos, et cetera. in multifamily, the deal flows up. We're seeing more deals than we've seen in the last three years. So that's been pretty exciting, especially towards end of year. So that's been encouraging. That's a big thing right now. We're seeing more deals than we can take down with the capital side. A lot of the guys and groups I talked to as well kind of had the same story. They've seen a lot of good deal flow. the brokers we work with are presenting us lot more opportunities. People are starting to a little bit more realistic on cap rates, which is nice. So that's been all positive trends as far as acquisition. I'm in Ohio and we primarily just focused in Ohio, some of the states surrounding it. We never got hit with an oversupply issue in Ohio, which has been really nice. I know some other markets like Austin, Texas, et cetera, are really trying to catch up to that oversupply build out. We never had that, which is convenient, especially in the value add space where I'm at. So it's been really good. And then the new acquisitions, banks have been as competitive ever on term sheets. So I get to play the fun game of pitting everybody against each other and beating them up on terms. it's always better than when you just have one bank. You really don't have many cards, but now we got a lot of leverage and a lot of banks are looking to lend, which is really good. Craig (07:04) We love that. So give us your history, man. Like, ahead, Jack. Jack BeVier (07:14) Yeah. Craig (07:17) I was going say to fill us in, like bring us up to speed on sort of ⁓ how you got into real estate from your previous endeavors, kind of a serial entrepreneur. Tell us how you 10 years ago decided to get into real estate. Justin Spillers (07:30) Yes, I have a pretty similar story to most people. I went to law school mostly because my father-in-law said that's the one thing you can't get street smart on. He wished he would have to law school. So I did that for the very point of I wanted to get into business and he said that was a good idea. So I did and I am very glad I did. I practiced law for about seven years, a lot of corporate and real estate law. Got to see a lot of good business owners and how they operated. Had to pay off my fun student loans. So as soon as I did that, I wanted to get out. into the entrepreneurial world. I read all the books, right? Rich Dad, Poor Dad, Drink and Grow, Rich, all the fun ones. Really thought real estate was a great place to be, whether it was my full-time focus or just a side quest. Started investing passively in 2016. Started a couple other companies when I left to practice the law. then best opportunity vehicle by far has been real estate. Real estate's never going to change. People are always going to need somewhere to live. Elon Musk isn't going to technologically advance some new future living state of living in the next 10, 20 years, which I really like. there's job security there. And the cost of construction just keeps going up, right? So in the value add space, it's hard to build supply. So it's really nice having a limited amount of inventory out there. So there's not just some giant player that's gonna come in and crush us. So really liked real estate, looked at a lot of different industries and always just kept gravitating back to real estate. Craig (08:42) Tell us about your first deal. Like what was the first one out of the shoot when you finished reading Rich Dad Poor Dad? Justin Spillers (08:49) Yeah, so I partnered with a friend, Brandon Bergolito, we've been business partners the entire time. We bought our first property together. We still run the company together as equal partners, which is pretty surprising in the last 10 years together. But yeah, he had already bought three single family homes. His goal was to pay them off in full. Craig (09:01) Yeah. Justin Spillers (09:06) where I was coming from the leverage mindset being in the real estate world from the legal perspective, I saw how leverage can work for you. And I was asking, why are you trying to pay these off? That's a terrible use of your money. Let's go bigger. Let's buy multifamily. Let's dump fuel in this fire. So our first buy was a seven unit, ironically enough. So that was my first foray. We bought it for 110,000. Got all the fun horror stories, asbestos, lead paint, everything. I didn't even know what lead paint was at that time. Um, so this kind of learned, uh, the hard way, right? Bought that first one, um, bird our way through it, house hacks, if you will. Um, just kept going from there, but that first seven unit, actually just sold it about a year ago. Um, and that was a great, that was a great purchase. Like in hindsight, it was amazing, but I'll never forget when I brought my wife through and she's like, this is what we bought. This is such a horrible property. It just painted your walls. Craig (09:55) my God, my wife and your wife. I'm sure I'm sure our wives need to get together and exchange horror stories. Jack, I always as I lay my head down on the pillow at night at times, I wonder how much asbestos I inhaled as I walked through all those frickin 1900 houses in Baltimore City like, you know, with no mask on no nothing. Justin Spillers (10:10) you Jack BeVier (10:18) Yeah. Yeah, the good ones where you walked into an REO and like you saw mold and you were like, let's go like. Zoom in on that thing and send it to the REO agent and be like you got I think you got black mold. You need to get this one sold quick. Craig (10:23) Yes, Fire damage? Yes! So you do the first deal, seven unit, crazy. I'm sure you learned everything, but what was it like? ⁓ So what type of neighborhood was it? Were you in danger of being shot like I was in most of my deals back in the early 2000s? Funny story, Justin. My son was like one year old, and I got laid off from the job that I was working, so I just went full time into real estate. And as I was flipping this house in a Justin Spillers (10:48) Yes, sir. Craig (10:58) pretty seedy part of Baltimore. said to my wife, cause I was really proud of it. I said, I'm going to take you there. You're going to stay in the car, lock the doors. I'm going to run to the front door. I'm going to unlock the door. You're to run with the baby into the house and we're going to lock the door behind us. And that's exactly how it went down. So that gives you an idea of the type of neighborhood that I was investing in. It was low hanging fruit. So, you know, what, what was it like, man? It had to be a real eye opener for you to get it renovated and then get it leased up. Justin Spillers (11:28) Yeah, it was. It was exactly like that. So practicing real estate law and actually being on the other side is very different. I have drafted hundreds of three day notices for clients, done tons of evictions. I've never served a three day notice though. So my first time when we bought the seven unit, we evicted several of them. When I posted that first three three days, I was still practicing law. So I went there and full suit and tie trench coat. I'm up here taking a three day notice to the door. the guy's girlfriend pulls in, opens her car door and dents my car. And I'm just looking at her and then a different guy gets out. And then the guy I'm evicting comes out. And these are very large guys that this is not that great an area. And I just slowly walked back to my car, drove away, never thought anything of it, didn't say anything about the dent. Was just happy to get away with my skin. yeah, that was the first eye opener. Had a lot of them since there. had one where a Rottweiler came at me, jumped through the screen door, had to kick it in, bit a hole through my trench coat. I'd go back to the office, I had bite marks through my trench coat after serving a three day notice. yeah, we were in tertiary markets. We were buying in rough neighborhoods like everybody, right? We were chasing the low dollar amount for buying, getting it at a good cost basis, seeing what the upside was. So yeah, we went through it all. It was good though. It's a great learning experience. Craig (12:44) Jack, I really found personally that I just didn't have an appetite for it. You know, we would go into these houses. I think before everything melted down for me, I had like 38 units. We had three, four unit buildings and then a bunch of houses and we would, we would go in and renovate them beautifully, get a tenant in them. And most of our tenants were subsidized and what I found when I would walk into the house is six months later, a year later, I just broke my heart. You know, I mean, we were having a hard struggling to capture rents. were struggling to keep the places clean and habitable, you know, based on the tenants that we were getting. And I just don't, I don't know how you get over that Jack. Like how do you man, we take so much pride in putting out a great product and finding the right tenant. And then you walk into the house a year later and it just doesn't look anything like you produced. And it was just heartbreaking for me. It was really demoralizing. And so like I never got past that Jack. And I don't know how it's same for you, Justin. Jack BeVier (13:40) One of the things that I did, because like when I started in 2007 doing acquisitions and then I was the property manager for a number of years and ran the field for a number of years, like, know, I all the hats. And one of the things I was Craig (13:53) Jack has walked through thousands of houses. mean, thousands to to me so like, you good. Jack BeVier (13:58) Yeah, sure. Yeah. So like the one of the things that I did, because there was Fred, Fred had already my partner, Fred had already built an existing rental portfolio when I started it at 23. He already had 175 houses. So one of the first things that I did when I was became the property manager, because I was like, I got to learn this business, you know, like, so like, hey, let's let's go roll up the sleeves and let's let's manage this stuff. And so I toured all the houses took me like a month to like walk through all the houses. But the, but the experience of doing that was like incredibly valuable because I found situations that were what you were talking about, Craig, where it was just like, Hey, yeah, the housekeeping is not very good. And they're really not taking care of this house. And like, this is not a sustainable situation, but then I'd also walk into other houses in the house and it was gorgeous. It was like, you know, meticulous. Everything was like, you know, pictures on every inch of the wall and like, Craig (14:35) Yeah. Jack BeVier (14:51) they'd wash the wall, know, they'd like spend on wash the walls on Sunday. And I was like, what I need is 175 of those and to just weed out these until we get to 175 of those. And then that is a beautiful, you know, that'll be a beautiful thing because they ain't going nowhere, right? Like this is home, right? Like if I, if I do my piece and maintain the house, they're doing their piece and I just need to weed out. Craig (14:59) Yeah. Yeah. Jack BeVier (15:16) these folks who are not, you know, who are not going to, you know, respect the quality of product that we've put out there, but it's like, it's just like an attrition thing, right? Like you just weed it down and eventually you've got a stable rental portfolio. That's like full of very long tenancy duration that also, you know, because of those factors financially works very well at that point too. So we kind of just like. Justin Spillers (15:17) Thanks. Jack BeVier (15:38) Fred and I would, you know, kind of lock on to like, we just, you know, we would remember a couple of folks names. We'd be just be like, we need just to build a portfolio full of them. And that'll be a, you know, a thing, something we can be proud of and also something that we can do well with. So that was my first. Craig (15:51) Would you say that now these many years later that you guys have got that avatar just right and you know what to look for and what not to look for? Jack BeVier (15:59) better at it, know, better at it. Never, far from perfect. And, but, but I think it is also like a game of like, just over time, the more transient people who have poor housekeeping, they do leave and right. they, they're a percentage of the people, right? Like even if I'm just making up numbers, but say they're one in three, you know, your first two years in the business, you see a third of the time your house is like not being, you know, treated well. And that's hard. Justin Spillers (16:08) Thanks Jack BeVier (16:26) But then those people leave, you kick those people out and release them. And then two thirds of them are good and a third of them are bad. And so over time, you get more and more stable, I think. And so over time, as you season a portfolio, tenancy duration should increase over time as you are screening out the bad folks and screening out the tenants that don't work for your economics. you get some good ones on the front end. like, you know, just pay attention to tenant screening and let time do the work. Craig (16:55) Justin, what's your take on that? you know, from your beginnings to like where you are now in terms of getting better tenants and sort of taking pride and maybe instilling that same pride in them if that's even possible to, you know, keep the place that you've for them in, you know, the most habitable way. Justin Spillers (17:13) Yeah, no, agree 100 % with Jack. And over the last nine years, we've tried everything, right? It's evolved significantly. From the early days, we did none of the stuff we do now, which I think we do it pretty well. But screenings everything. So we have very hard criteria, big four. You have to make two and a half times income to rent. So if rent's thousand, you got to make $2,500 a month minimum. You can't have any evictions in the last seven years, no felonies, and a credit score of 525 or higher. Those are the big four. Once you meet those, then there's still the subjective smell test, right? You got to meet the people either virtually or in person. And you just got to ask yourself, is this person going to destroy the unit and are they going to pay rent? And if the positive answers to those, they meet the big four, we let them rent with us. So that's very strict. Starting out, that's very difficult for a lot of people to do to meet all those because you won't have enough people in your total addressable market. But we've just ramped it up with volume, right? Volume negates luck. We have a tremendous amount of lead flow, a tremendous amount of inbound, outbound for all of our properties that allows us to put in those really good tenants. So screening is everything. And then second, just being proactive property managers, we do everything in-house or vertically integrated. We do quarterly proactive inspections of every unit. So our guys are in every unit, every quarter. and we catch a massive amount of issues proactively. Obviously we see if a tenant's gonna potentially be a hoarder, if there's drug use, we don't allow smoking in the unit. We'll go through a 50-unit apartment complex, we'll come out and we'll put in 180 work orders ourselves. We'll put them in to fix the unit for them. We do bi-monthly pest treatment, just proactively again, just to make sure we're catching things before they can get worse. So a lot of that stuff you just tack on over the years and over the time and you learn. And all that preventative work and cost upfront. saves you a ton of money on the back end. Like Jack said, we're shooting for an 80 % plus renewal rate. You make all the money at time of renewal. If you don't have to turn that unit again, you save a tremendous amount of bandwidth and time and money and energy. Jack BeVier (19:00) So here's the reason I wanted to have Justin on, right? So I had the pleasure of meeting Justin and his partner Brandon at the Real Estate, Real Investor Roundtable Mastermind event that we got a couple months ago. Had a lot of fun hanging out in Austin for a couple of days. Next one's gonna be in February in Jacksonville. If anyone who's listening ⁓ is interested in attending, the way, shoot us an email, jackatthedominiongroup.com. We're always looking to meet with more operators and ⁓ hear stories like Justin and his partner Brandon's. Because we, know, Fred told me about these guys and they're like, yeah, they're doing multifamily syndications in Ohio. And I'm like, my eyebrow is like immediately raised because I've seen a lot of multifamily syndication deals in Ohio. And it's like, yeah, but the rents are like 800. And you can get them cheap, but they're old and they need a lot of capex. And man, you got to work the out of that real estate. in order to make that work. And I've seen a lot of people get chewed up and spit out by the difficulty of operations in that case, because the numbers look great on paper. You're into a unit for like 40 grand. so cap rate on paper looks phenomenal, but people fall in love with that. And then they don't realize how difficult it's going to be to operate. And then they get chewed up and spit out. So hey, endless supply of opportunities because there's guys who are just not good operators. And so I walk in, I walk into RAR with like my eyebrow raised, my arms crossed being like, all right, let's hear about, let's hear about this. And then these two guys get in the front of the room and you could just tell with Justin right there, he's, he's just like rolling off the, the operational things they do, the detail, the operational details that they're obsessed with. And after this 30 minute conversation, I'm like, I'm taking notes. I'm like, that's, that's a good idea. I'm going to take that one. Craig (20:35) You Jack BeVier (20:45) And I was just like, ⁓ these guys are doing that right. Like, yeah, it's really hard work, but that's what they're doing. They're working this thing and they're doing very well as a result of it because when you do work it and you can achieve those cap rates, you can make a lot of money. So ⁓ I was really excited to meet these guys. Craig (21:01) Justin, look out. I sense a dominion junket to Ohio for some property acquisition. Jack BeVier (21:06) I'm done enough. No, they're no way these guys are they're doing the they're doing God's work out there, you know. Yeah, I was good. Justin Spillers (21:13) That's right. Craig (21:15) So, so like, like, let's let's progress here, Justin, like, so we've got the first one. How did things start scaling for you? As you as you guys were completing the first one? Justin Spillers (21:27) Yeah, once you get that burn moment, mean, we were dove into bigger pockets, right? Followed every podcast, listened to everything we could, read every book, and then it's not real until it's real. When you get that first duplex, you buy it for 20 and then you put like 10 in, you get rents up to 800 each side and it appraises at 80,000 and you're like, a bank's gonna give me all my money back plus 20 grand? Like this is the, that's like the aha, right? Okay, how fast can we do this? How many more time? So we just started buying singles, duplexes. four units, eight units as fast as we could, as many times as we could. We reinvested every single dollar back into it. Brent and I each had other businesses and income streams, so we didn't need to take any money out of that portfolio. So that allowed us to grow pretty quick and allowed us to reinvest much faster. A lot of people try to pull cash flow and live off of it while doing it and they go all in. I think that's extremely tough. We had the luxury of having other income streams. Up until last year, we had other companies in. that supported our lifestyle. We to take any money out of the real estate portfolio. And that's what really allowed us to grow more fast, most. So that was a really good thing. And then just having that real world experience, Brandon, the owner of construction and roofing company. So we're a very good yin and yang. He knows that world better than most. I obviously know the legal side of it. Now I have a pretty good relationship with the lenders. I know the leasing, property management, the sales aspect. So we have a pretty good dynamic between the two of us. Having business partners is definitely challenging, but when you find the right one that has completely opposite skill set of you, and you're both thrown in the same direction, that allows for really good synergistic outcomes as well. So that allowed us to grow quicker just because when Brandon was working, I wasn't and vice versa. So we could take on different things and just bounce ideas off of each other. But yeah, just progressed, just buying our way up. So we got to our first. 16 unit was the next one, then we got to a 48 unit, then an 84 unit, and we just kept refinancing or selling them and just reinvesting every dollar into the next one. Craig (23:15) And who like as you guys were working your other full time gigs and had families like who was handling acquisitions for all of that. Justin Spillers (23:22) Both Brandon and I, and we use brokers too. I we were always hunting. I mean, every free moment I had, whether I was with my wife or with one of our newborns at the time, I mean, I was always looking for deals, looking for properties that penciled out, just using some rough math. And we tried to see as many as we could. Eventually we got pretty good at walking through a lot of properties quickly. We could educate some brokers to know our buy box and they could do a lot of the front end work for us too. just trying to multiply your time with other people as well. That helped out a lot. Once we hired our first full-time leasing manager that allowed us to do a ton more work. Then we got an in-house bookkeeper. Then we got a full-time maintenance guy and that just slowly snowballed leveraging other people's time. Craig (23:59) So how far do you live from most of your portfolio? Justin Spillers (24:02) They're all within about 45 minutes for the most part. We call it the South Team, the South Portfolio. We have about 400 units down here. They're all in our backyard for the most part. And then we did buy a big 200 unit complex up in Toledo, Ohio. It's about two hours from me. So that's the furthest one now, but we set up a whole team up there. call the North Team that just manages that complex. Craig (24:21) Wow. Well, I'm sure we could jump into any one of them as case studies, but go ahead, Jack. Jack BeVier (24:22) The. Yeah, the, let's talk about the acquisition side of things. Cause you were mentioning that, you know, you're seeing more deals now. Uh, I'm, I'm seeing experience in the same thing. Like we bought, we bought, uh, like last summer we bought our first multifamily properties. We bought a 20 and a 28 unit. I've never done that before. It always just been houses previous. Um, and I got real excited. I got all giddy. I was just like, Oh, this is awesome. Like multifamily has come around. And then like for the next year, I was looking at everything and just getting, it felt like the market tightened back up. Justin Spillers (24:41) We're gonna put it on number four and this is the process. Jack BeVier (24:54) and I wasn't getting decorated deals again. But then just recently there was a, we've been in on stuff. was an awkward happened to be an auction. That was a multifamily property and I got one. We bought a 40 unit and I was the under bid on. two of the other ones that sold that day. And I was like, Ooh, like that was exciting because I've been in the same numbers I've always been in. Right. So like I'm using the same expense ratio that I've always believed in and adjusting to the cost of capital. So, have you, what's the dynamic been in your area in terms of like the past couple of years? Like, you know, what, kind of, you know, seller capitulation, I guess maybe be the right word to say, ⁓ have you guys seen? Justin Spillers (25:19) Thank Yeah, I'd say before even getting into the, I'll say body tissue of that, it's the actual flywheel we've built out over the last 10 years. So we have a full time acquisition manager now, three analysts. We are hyper focused and always figuring out how do we get volumes in the gate lock. How do we deconstraint any constraints in the business process? So on the acquisition side, it's OK. How many multifamily properties are there in Ohio? We just focused on this 20,000. OK. Of that, how many fit our buybacks? About 5,000. OK. What are all the tools we can use to build our own database of all the properties and the owner information? So we use correct seederonomy, et cetera, scraped all the data, and we start cold calling. Direct mail, email, et cetera. Try to find out what that owner validity is, what the right ownership information is. It's about 40 % from what we found. So that 40 % is getting hit up by everybody, right? Every broker, every other person in real estate, everybody who listens to BiggerPockets. That other 60 % with that ownership information online and from home, that's where we really hunt. So our analysts are constantly pulling eviction records, looking at the email address, looking at Secretary of State's website, where is that LLC registered at? Let's call up that attorney and just say, hey, we do property management. We just want to talk to your client, maybe see if we can do a manager's property storm. We get his information, right? So a lot of creative ways like that to get that correct information. And then we just hammer every owner. I mean, we're constantly calling direct mailers, direct video mailers, networking, all the brokers know our buy boxes. We're giving them lists to call the sellers. So we want to be there when any seller has an inclination or a time or a place they think of us first. Because you can send a postcard and a year later they can say, oh, I had this postcard you sent to me. You guys still interested in buying? So everything we do is trying to be at the right place at the right time and being fast. We underwrite within 24 hours. We know exactly what we're looking for. And when that broker or owner calls us, they're ready to move. We give them a 1 % hard money, non-refundable deposit immediately. We're telling them we're going to do due due due due due due due due due due due due due due due due due due due due due due 18 months, 24 months before they're willing to sell, whatever happens, their partner dies, they get into a divorce, it's the right time, finally, whatever that trigger is, we want to be constantly hitting them up. So we do a lot of creative things on the acquisition side to always be getting deal flow. So we kind of have like forced deal flow and that we're creating our own acquisition model. But yeah, it's really about being fast. And then the counterpart to that as well is we've built up our own construction team, the turn team, we can turn a full property. much faster than we used to. So we used to have to underwrite to like a two and a half, three year period where we fully can stabilize a value add property. Now we can do it in about 12 months. So that speed has allowed us to get way more sharper on our underwriting and more properties that historically weren't deals to us are starting to look like deals just because we can move much faster now. And we've our costs down significantly more than they used to be. Jack BeVier (28:24) Tell me about what Brandon's team, because he's in the field a lot. He's an engineer by trade. can really tell. He's really tried to apply that way of thinking to all the economics and all the details and the nitty gritty economics of running a multifamily well and cramming down all those timeframes to the absolute minimum. Talk a little bit about what he's doing in the field. Justin Spillers (28:47) Yeah, so the construction team bringing that in-house has been the biggest value lever we've pulled on by far in just the speed there. So just by way of example, it's pretty impressive how we've coupled all the different facets of our business together. So when one of our 600 tenants provides us with a move out notice that they're going to move out at some point in the future, my leasing manager will immediately post a 24 hour notice on their door for a wellness check. He'll go in the next day, do a full video walkthrough of that unit. gets it to my construction manager who Brandon closely works with. They determine which of three unit turns we're going to do. We only do three types, classic, plus, silver, gold, 95 % skew standardization across all turns. We fully bought by everything. Now we save a ton of money on the front end that way. Our construction manager will have it fully kitted, palletized with all the skews we need for that turn. He delivers it to the unit at 8 a.m. the day that tenant moves out. Our first three-man crews working at 8 a.m. a 10-hour shift. Our painting crews will work at night. And Brandon's working this like a conveyor belt system. They try to turn the entire unit in seven days or less. All the meanwhile, my leasing manager already has a 2D, 3D virtual leave stage. He's doing virtual showings. We ramp up paid ads. We're getting any more lead flow. We sign a lease with the tenant to move in on day eight to zero downtime. three main crews. That's all they do. And it's just rinse and repeat across the entire portfolio. And they work it like a conveyor belt. So he came from the aerospace engineering side and he brought that entire system with them, making everything efficiently. How do we make it faster? How do we make it cheaper? How do we make it better, et cetera. But we do the exact same thing in every unit type and every property. Same LVP floor, paint trim, countertop, cabinet appliances, and bath fixtures. So it's cookie cutter. The guys know what to do. Brandon's done time studies on every facet. He knows how long it should take. We track everything ruthlessly, KPI scoreboards. Guys get bonus on speed and quality. So we're measuring the tire throughput. So there's a lot that goes in under that. And that's where I said it's just attaching these one at a time over 10 years, right? You just get much better. And that speed allows us to be way more aggressive on the acquisition side. Craig (30:44) Jack, this young whippersnapper is making you look like a slacker. I mean, I've whipped out a pen. I'm taking notes here. Like, that's amazing. Justin Spillers (30:48) You Jack BeVier (30:47) know, the whole room. ⁓ Yeah. No, they presented, they presented in the, ⁓ the real investor round table. Like it's, it's a tough room, right? Cause everyone in the room thinks that they're like, you know, thinks that they're hot and like, you know, like good operators and these guys are, you know, these guys are going through, you know, explaining their way and we're all, and then they talk about the, we have the first crew coming to the day and then we bring in the painters at night and we're all just like, it. That's like, ⁓ Craig (30:59) Yeah. Jack BeVier (31:14) No, no one's doing that. We're like, God, that's just right there in front of you. Isn't it? Huh? Like it was, it was a humbling moment to be like, now these guys, these guys are really have this thing engineered down, like in a way that I, I wish we did, but it's tight. It feels tight. And then the way they talk about it, like they're just, you know, just, just, know, you can just tell when someone's like super in the details that they know it's cause that's where their life is. Right? Like they, know this they're, you know, you, you were, whereas like the the syndicator who learned about syndicating, know, sitting, you know, watching a bunch of videos during COVID doesn't talk that way, you know? Like, and you can tell they've like, yeah, they walked through some houses and they can do a construction estimate, but like, they're not living ops. And, you know, and so like, I believe that, you know, I'm like, like if you, you know, if you're even thinking about it that way, my God, like, you know, if you execute half of what you just said, Craig (32:05) Yeah. Justin Spillers (32:07) You Jack BeVier (32:07) You're going to be better. You're gonna be better than 90%. Like, uh, so I was, I was very impressed by, by your guys presentation and, the, partnerships you guys have. So you guys, feels like you guys have like hit your stride and like have, uh, you know, feel like the machine is really running quite tight. And so your ambition now is to, you know, to, to ramp up, um, feel good about deal flow. sounds like you got that guys have that acquisitions pipeline, uh, you know, Justin Spillers (32:17) see if it's confused. Jack BeVier (32:36) pretty nicely dialed in. And so one of the other things we were talking about is on the fundraising side.