BiggerPockets Podcast 488: From 4 Units to 2,000 and Why Large Multifamily “Isn’t So Scary”

BiggerPockets Podcast 488: From 4 Units to 2,000 and Why Large Multifamily “Isn’t So Scary”

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The average journey of a real estate investor tends to go something like this: buy a house, use profits to reinvest into another house, buy a duplex here and there, and buy another house again. Does this sound like you or someone you know?

For Feras Moussa, stacking single-family properties was never the goal, especially after he had to manage his first rental investments. At some point, it becomes too hard to scale and you’re stuck with 30+ units and 30+ tenants all trying to get your attention to fix something. This is how real estate can become more of a job than a business.

Feras knew this so he started venturing into medium/large multifamily investments instead. His first big multifamily deal was a 99-unit deal in Atlanta, Georgia. He was able to take a neglected apartment complex and turn it into a cash-flowing, high-value piece of property that he later sold for a sizable multiple. Now, Feras does bigger deals, like a $50M+ apartment complex that his company Disrupt Equity and Open Door Capital are partnering on.

If you feel too scared to jump (or even dip your toe) into bigger multifamily investments, hear out Feras. He shows it’s a lot less scary than most people think.

Click here to listen on Apple Podcasts.

Listen to the Podcast Here

Read the Transcript Here

Brandon:
This is the BiggerPockets Podcast, show 488.
“[inaudible 00:00:04] doing now. We are going in significantly lower leverage than what we could. Right? Literally to the tune of $8 million less leverage to reduce risk. Right? We don’t know what the future holds, but we know we cash flow, and we’ve reduced risks, so it’s a safe investment.”

Intro:
You’re listening to BiggerPockets Radio, simplifying real estate for investors large and small. If you’re here looking to learn about real estate investing without all the hype, you’re in the right place. Stay tuned and be sure to join the millions of others who have benefited from biggerpockets.com, your home for real estate investing online.

Brandon:
What’s going on? Good morning. This is Brandon Turner, host of the BiggerPockets Podcast, here with my cohost, Mr. David 31 Flavors Greene. What’s up, man? How you doing?

David:
Well, I just got a new nickname, so I’ve got to say I’m doing pretty good. Can you explain what that means?

Brandon:
No. No, I’m not going to explain it. It’s going to come up later in the show. You’ll hear it later, so stay tuned for that, a little bit about David’s background you might not know about him, that I did not know about him. And I’m like your bestie. I’m a little offended, actually. I didn’t know this. I learned it today. That said-

David:
That’s because all we ever do is talk about you. If you talked about me more than yourself, you’d know a lot more.

Brandon:
Listen, man, enough about me. Let’s talk about you. What do you think about me?

David:
I think that part of the reason we get along is … yeah, that’s actually very good.

Brandon:
Another joke, it’s another joke. Right?

David:
You said a comment one time before I was on the podcast that I always thought was good when you said, “Millennials say things like, ‘I’m a millennial. I don’t like labels.'” Or, “I’m a millennial. We don’t like labels.” I always thought that was one of the funniest things I’ve ever heard.

Brandon:
I don’t know if I was saying … I think I said that, and you just made fun of me for it. I don’t remember. Anyway. Today’s show is not about you. It’s not about you. Today’s show is about Feras, actually, an amazing guest. His name is Feras Moussa. Feras is a super awesome guy. He’s going to talk about going from the small deals and the mindset of the single-family and the small multi. He started with a fourplex all the way into buying 100-unit, and now today, he’s owned thousands of properties. He’s bought thousands of units. A cool story.
You’re going to hear a lot about that today, a little bit about underwriting, how to run the numbers on properties, and make sure you’re not messing up there. We talk a little bit about networking that’s really good. I talk about how David is a master networker. You’re going to learn David’s secrets today, so grab a pen for that and a lot more. So that and more to come. But first, let’s get today’s quick tip. David, why don’t you do this quick tip today, something real estate related? What can you share?

David:
Today’s quick tip is, don’t make the fatal flaw of assuming that year-one numbers are going to be the same as year 30 numbers. Real estate is an evolving moving target. Many deals don’t look great right off the bat and are incredible three, four years later. Other deals look like home runs and are nothing but a headache three to four years later.
The quick tip now is what I call zoom out. When you zoom in, you tend to see the problems, and you then amplify them in your brain. You look at an inspection report, you see there’s a foggy window, and it just becomes a deal-breaker for you. But if you zoom out 30 years, there’s not a person alive that ever bought a house that could tell you what was even in that inspection report, and they’re very glad they bought the property. Take some pressure off of yourself by taking a bigger picture approach.

Brandon:
I like it. It’s actually one of the reasons I like the BiggerPockets calculator, the rental property calc., especially, and the burr calc., is because at the bottom of that page when you go to results page, it has year one, two, three, four, five, 10, 15, 20, 25, 30. And you’re like, “Oh, wow! If I hold this $100,000.00 property for the next 39 years, it’s going to make me $1.1 million in profit over those 30 years.” You’re like, “Oh, I guess the $20.00 light bulb that I’m freaking out about right now is really not that big a deal.” Yeah, zoom out. I like it, man. Good job.
All right, we’re about ready to jump in with a quick disclaimer. I do want to put this out there. Feras, who’s our guest today, he is actually a JV. We’re doing a JV deal together right now, so I just want to make that aware. We’re doing a big apartment deal together, so if you’re wondering, that’s now why he’s on the show. He’s got a cool story, and he’s super good at explaining topics. I don’t want people to think that I brought him on and didn’t mention that he’s a partner of mine. So Feras is a partner of mine, kind of like David Greene here is a partner of mine in about 100 different things in life.

David:
Crime.

Brandon:
In crime.

David:
A partner in crime. A partner in fighting crime, maybe.

Brandon:
We fight crime together.

David:
A partner in getting triangled. Are you my geometric partner? You triangle me all the time.

Brandon:
Oh, I like it, Geometric Turner. That might be my new nickname I’m going to give myself. All right, forget Beardie Brandon. We’re going Geometric Turner. With that said, time to get into today’s show. And hey, if you’re watching us on YouTube, don’t forget to hit that little thumbs up below the video, and subscribe to our channel for more amazing podcasts like this.
Feras, welcome to the BiggerPockets Podcast, man. Good to have you here.

Feras:
Oh, I’m glad to be here. Thank you very much, Brandon.

Brandon:
Yeah. Well, let’s jump into your story a little bit. I mean, you and I hung out in person there down in Houston, Texas, a couple of weeks ago. We really hit it off, and I was like, “I got to get this guy on the show because you have a cool story.” How did you get into the world of real estate? Why real estate investing? What were you doing before that? Where did the inspiration come from?

Feras:
Yeah. For me, my background is software. Right? I used to work at Microsoft, had a software company in high school. Then after Microsoft, I had a software company. And really, I was looking to invest in something. And believe it or not, I started listening to the BiggerPockets Podcast many, many years ago. And really, I’m the kind of guy that listened to a lot of podcasts, read a lot of books, and you hop in and figure it out.
So I pounded down probably 100 episodes the first three months and really got inspired and bought my first purchase, really a fourplex down the road from our office now. And so, bought that and got a good taste of what multiple units looks like. Bought a bunch of houses, realized it doesn’t scale, and the rest is history. I fell in love with real estate. It’s the things that I love. It’s people, numbers, systems. That’s maybe the short answer. I’m happy to give you more if you want to know.

Brandon:
I want to jump into the fourplex then. Tell us about that. Where did you find it? What were you feeling like when you got it? Walk us through that.

Feras:
I was still in Seattle at the time, and literally, I got inspired to go buy a fourplex. I knew I was going to move back to Houston and did all the research, found a deal, ran all the numbers, and again, I’m a very numbers guy. I just called up a random agent that I found on BiggerPockets. I’m like, “Hey, I’ve already found the deal. I just need someone to transact it for me.” And boom, lo and behold, I went out there.
My dad thought I was nuts because I had never bought any real estate in my life and bought that fourplex and did very well with it in the long run. But it was nice for me because it gave me a taste of what having more than one unit looks like. Right? That’s the big thing. Coincidentally, it’s literally a mile and a half from our office, Brandon. We almost drove right by it. I didn’t point it out to you.

Brandon:
That’s funny. All right, so walk us … you said you bought some houses as well. What were the big differences between multifamily and the single-family for you? What did you find, and why did you get attracted to the multifamily? I know you do a lot of big multifamily today, but what scared you away from the single-family long-term?

Feras:
Yeah. Maybe to give a little bit more to the story, I bought that fourplex in Houston because that’s what everybody was talking about, but there’s not a lot of fourplexes and duplexes in Houston. That’s part of the problem. Right? Houston is a very … we grow out, not up right here in Houston. And so really didn’t find many more fourplexes, so I bought a bunch of houses. I think I did 16 closes in that first year, year and a half, so did a lot, and then realized it just doesn’t scale very well. Right? It’s not a business where you can have a dedicated team until you get much bigger. Right?
I didn’t really like that fact of it. And really, it’s a numbers game. You get one hit, and sure, you just bought a house, but that house is a $200,000.00 house. It can’t grow much more quickly. And so, with that said, I was going to go do my own small apartment, and I’d already got a taste of the fourplex. I saw the power of that one because guess what? A tenant leaves, there’s still three more people that are paying rent. Right? And as long as two people are there, that fourplex would have been mine for free in the long run.
I did that, and yeah, just learned about apartments. And luckily, I did not win that very first deal that I had offered on. It’s a 32-unit in Conroe near Houston. And it’s a funny story because I didn’t win that deal. Well, fast forward three years later, obviously, I buy a much larger apartment complexes now. And that broker, I had asked him about a deal that he had for sale. I think it was a $70 million deal. And he asked me, he was like, “How do you go from a 32 to a $70 million?” And I asked him the same thing. I’m like, “How do you go from listing the 32 to listing that $70 million deal?” It’s funny how things come full circle.

Brandon:
It is. I guess you said earlier, “I’m glad I didn’t get that 32-unit.” Why?

Feras:
Because I would have been stuck with it, meaning I would have focused all of my time and effort in that. And yeah, I would have done well with it. Right? But that’s a get rich yourself kind of business, but it’s not scaling and building a business. I’m an entrepreneur. I love building businesses. I love building teams. I love building cultures. That is just building wealth for me, and I would have probably spent two years with that deal and not really opened my eyes up and learned more about syndication and started disrupt equity. So that’s maybe the reason why I’m happy I did not win that deal.

Brandon:
Dude, I’m so glad you brought that up. So this is an important distinction in real estate. In fact, the book that we are launching here at the end of July, The Multifamily Millionaire, is in two volumes, volume one and two. And people ask, “What’s the difference between them?” Well, volume one is all about the first thing you said, which is the small deals. I’m in it. I’m getting rich because I’m involved. That’s a different approach.
The way you buy a duplex, a five-unit, a 20-unit is very different than the way that, for example, we’re buying a 530-unit. Right? It’s a completely different game. Same business and still real estate, but you would never plan on picking up a toilet and moving it because you can’t get it to plunge right. You never do that in a 500-unit. It’s really a mindset game. Right?

Feras:
It absolutely is. One is a me sport. One is a team sport. Getting past that and understanding that piece, I think, is crucial to people. And I think that’s what I love about it. Right? That’s why I’m glad I didn’t win the smaller one because, again, it’s fun to do things with a team, with people, and build entire companies out of it if that’s what your thing is. I’m on the younger side, so I’ve still got many more years in me. And I want to really build a company with a track record reputation. That’s why I’m happy I went in that direction.

Brandon:
Yeah, that’s cool, man. A question for you. Do you think people … I’ve got a lot of questions for you. It’s a podcast

Feras:
Hit me with them. Hit them all.

Brandon:
Do you think people should start? Is there a case where somebody should start with the big, start with the 50 million, or 60 million, or whatever that … 20 million even? Should they start there, or should everyone go through the fourplex, the single-families, the 10-unit, and then scale up? What are your thoughts on that?

Feras:
I mean, you learn a lot. Right? Brandon, I mean, you know this yourself. Right? You learn a lot changing those toilets or dealing with those contractors. And you start to learn about quality, and people, and how shady or un-shady people can be. So I think those are valuable lessons that you learn. I would answer the question as it depends. Right?
If you are doing a larger deal with qualified people that have done many of them that know the ins and outs, that’s okay. You’re there to learn. But if you’re going to go do that yourself, I mean, I think, unless it’s your own money and you don’t really care if you lose it all, I think it’s reckless to go at it with other people’s money, really. It’s a big part of how I look at it.
I think it’s valuable to learn a lot about closing real estate, about operating real estate, about even transacting and selling real estate. And what does a buyer look for, and what does a seller look for? Right? Those are two different parties, two different people. And putting yourself in that mind thought, and sure, you can do a larger apartment. It’s all just to what you said, Brandon. It’s all the same thing. It just happens to be scaled out. Right? And with teams involved instead of individuals.

Brandon:
Going on that same topic of the bigger deal versus a smaller, maybe you can dive into what are some of the skill sets that you have to develop in order to do those bigger deals, the scalable ones. And you mentioned teams, the team sport. I agree. It’s not a me sport. It’s a team sport. What are those things you’ve got to be good at?

Feras:
The very first thing you’ve got to be good at is delegating. And I think a lot of people really struggle with that. It’s not about you doing everything, even though you can. And constantly in my business, I pause, and I think about, “Okay, what is the thing that is taking the most of my time that I could bring someone in that is better at it than me that could really micromanage that and do it more successfully?” I think that’s a huge skill that you have to learn. Whereas, whenever you’re buying a smaller residential house, a fourplex, it’s all you. You’re wearing every single hat. That’s one piece.
The other thing I’ll say actually is structuring. Right? I think where you get really successful with real estate on the larger side is being able to get creative in the structuring, understanding the debt, understanding the seller and their situation, and really being able to get creative. People talk about that on the residential side, really on the wholesaling front, but it really has a multiple on the commercial side. Right? Being strategic, being smart, and knowing that, I think, is a huge skill set that you learn over time because it starts to open up more doors.
Whenever we analyze a deal today, it’s very different than whenever we analyzed a deal four years ago. Right now, we literally have a checkbox of different ways that we could structure this thing to make it possibly work and figure out what is the way to reduce the most risk then get the most gains. So I think that’s a huge piece of it.

David:
Yeah, the reason that it’s much harder to use creative financing on smaller deals, specifically four and under, is really the financing. Most people are using a Fannie Mae, Freddie Mac loan to get into that, which is great because they have those low down payment options if you want to house hack. They have really low interest rates. It’s easy to originate those loans. Well, they’re available to a lot of people, I should say.
The problem is, because they’re done at scale, the lenders have to comply with these Fannie Mae and Freddie Mac guidelines that are very not flexible. It has to fit in this box so they can go sell that loan. And that’s why you don’t have a lot of the stuff that you hear Brandon and I talk about, and Feras is going to talk about with smaller deals. It’s because the lender won’t allow for that.
But when you get into commercial lending, everything opens up. You’re not held into that box. And you also have more moving pieces, which means there’s more stuff you can play with where you move this piece over here and move onto that. Is that similar to what you found in your investing deals?

Feras:
No, absolutely right. Even the simplest example, I want a seller to plink money in the deal. You can’t pull that off with a Fannie and Freddie. Right? That’s a simple concept, but you can’t do that. Right now, we’re doing a deal in downtown Atlanta. It’s an office to apartment conversion. And that deal only works because the seller is going to keep a significant chunk of money in the deal. They believe in the story. They believe in everything. They did not have the rest of the team to get that deal done, but we’re able to make that deal work. And it’s an awesome deal because the seller is going to keep a significant amount of equity.
Us and our investor are bringing a small piece. And guess what? We sit sister to sister, so it’s reduced risk for everybody. Right? The seller is obviously the one that believes in it the most. They’re putting their money where their mouth is. Doing those kinds of things is a way you can unlock real potential on a deal. And so that’s maybe the biggest thing.
And maybe the last thing I’ll add, which ties to this, Brandon and David, is just underwriting and really understanding the intimacies of underwriting. In the end, it’s all numbers. I’m a numbers guy. I’m a spreadsheet guy. But really being able to look at a deal, quickly sniff it out and say, “Hey, what potential could there be?” And then figuring out how can I back into it creatively to make that deal potentially work. Nine times out of 10, it doesn’t pencil out, but sometimes you find that last piece of it. And oh, can I add one more, Brandon?

Brandon:
Please do, please do.

Feras:
Networking. That is probably the biggest thing that is huge in the multifamily world. I think that is. And I regret this. Whenever I was still at Microsoft or even had my software company, I wish I was better at building my audience and networking with people. I met people all over, amazing people, but I did not follow up with them or keep up with them. Whereas multifamily, it’s a whole nother sport.
If I was to say the number one thing that can differentiate a person is a person that knows how to network themselves probably more than anything else. Because you can bring in other good people for each piece of it, but if you know how to network, if you know how to get out there and meet people and form meaningful relationships, I think that’s huge.

Brandon:
Yeah, that’s such a good point. There’s a bunch of stuff that I think we could unpack. Yeah, networking, for example, the fact that … here is the long picture shortened down into three sentences. I went to a real estate conference. I think it was Best Ever Conference, Joe Fairless’ event. And that’s what inspired me to get into the large, to change my game from the me game to the team game. That’s what shifted it was being around those people.
Then I started this Maui Masterclass, Mastermind here in Maui, where people came out. And the first year I did it, Brian Murray shows up. And Brian Murray and I became good friends, and we ended up starting Open Door Capital together. And then from there, Brian introduced me to you guys with you and-

Feras:
I’ll tell you my side of the story. Right. I joined the Mastermind. People say, “Oh, why do you spend that much money on a Mastermind? You can go out there, and you’re just hanging out with people.” Well, guess what? I’m at Mastermind. I met Brian, and then I happen to sit with him to dinner on the shuttle over, so we got to have a real meaningful conversation. And now we’re partnering with you guys on a big deal. You never know who you’re going to meet.
You have to explain that to people, even to my wife. She’s like, “You can’t possibly meet more people.” I’m like, “No, you never know who’s out there or who’s looking for what. Do I have a solution to their problem? Do they have a solution to my problem?” Can we all grow together? And I think it’s really getting out of that mindset that it’s not just about you building wealth. It’s about a team building and growing together.

Brandon:
Yeah, that’s a really good point. Sometimes people ask me about different Masterminds I’m a part of, for example, GoBundance, or my Maui Mastermind, or the Masterclass stuff we do. Everybody is like, “Is it worth it? Do you always get your money’s worth?” And I’m like, “Well, you might go to an event and have a great time, and then go home and nothing might ever come from it.” And you’ll be like, “Well, that was a waste of five or $10,000.00, whatever it was.” But if you went to four of them, and out of four of them, three of them, you didn’t get any tangible moneymaking value. But one of them, you met a partner who ended up helping you buy $100 million of real estate.
You can’t look at it in a did I get my exact return on investment from this event that I went to? It’s a lifestyle, networking, connections, reaching out. It’s a lifestyle. Does it pay back? Yes.

Feras:
I’ve never heard it put that way. It totally is, and that’s a very good way to put it. It’s a lifestyle. And to your point, I just look at the caliber of the people there. That’s the value. Then it’s up to me to go fish that group and see if there’s any connection. Maybe I don’t connect with anyone, like you said, if something doesn’t fizzle with them. But then you may meet someone really cool. It’s all networking, and that’s how you can grow, really.

Brandon:
Hey, David, can I just ask you this question? David is like … I don’t know. I’ve got to have a good analogy for it. But you’re a very under-the-radar amazing networker. What I mean by it is David is not the guy that’s out there passing out business cards and flashy. David, you’re usually in a corner having a deep conversation with someone, and then you end up doing business with that person. Or people walk away from that conversation, going, “David just changed my life.”
You are under the radar and one of the best networkers that I know at these events. So I’m wondering, David, what’s your secret?

David:
That’s a really good question. I think part of it is just that’s who I am, my personality is. I tend to go an inch wide and a mile deep. So if I try to play the role of what I think a networker is supposed to be, which is this idea we have in our head of someone just out there passing out business cards like candy at Halloween and talking to everyone, it won’t work.

Brandon:
You get a business card. You get a business card. You get a … yeah.

David:
Yes. Yeah. Those people give … Just as a side note, I think business cards are actually a terrible way to network. I get it, I put it in my pocket, I throw it away. I think everyone does too. You’re way better off to get a follow on social media or somewhere you can keep connections.
But what I’m looking for is who could I actually benefit. Who could I actually help in their business or in their life, or with whatever is going on? Because I don’t think I can help everybody. If I’m trying to network with people that I don’t believe I even can help, I right off the bat am being disingenuous, and I’m missing the point of what you’re trying to do, which is to bring mutual value.
The reason I sit back is I like to look and get to know people and figure out what problems they are having. Can I help them? If I identify that’s a human being that I could help in some way, then you have that conversation. And during that conversation, it comes up if they are willing to help me, or if they could help me or whatever. What you’re really talking about is making friends or being a good person. But when you throw the work network onto it, then all of a sudden, people are like, “Oh, I don’t like that.”

Feras:
First off, for being such a great networker, David, I’m disappointed we haven’t networked and met at an event, so we’re going to fix there here soon. And to hit the point that we’re saying, networking is not about just giving out a lot of business cards. Some people really think that. And we all know those people. They just come up, hand you a business card, and walk away. And I’m like, “Great. What do I have? I have some starter for my fireplace.” I got no value from that.
And I really like what you said, David, around really looking at how can I add value to them. I think that’s where it starts because if you can add value to them, they are more receptive to having that conversation and engaging. Right? And it’s about building meaningful relationships that you maybe spark something, and then you can follow up offline. That’s, to me, at least what networking is about.
The people that come out at us, just, “Hey, who do I need from here?” Well, you might not find anyone. But really, there are people that might know someone or might have other ways to really add value if they had heard what you could do first. Right?

Brandon:
Yeah, that’s really good. Really good stuff. All right, so you mentioned the networking thing is super important, especially if you want to get bigger and get into real estate. But even if you’re small-time, and you’re doing your first deal, you’re trying to buy a duplex, just go into local meetups. And now that COVID is winding down a little bit, and hopefully, it stays down, meetups are opening back up again. Conferences are opening back up. BPCon is happening soon. There’s lots of conferences going to be happening because everyone missed out on last year.
My advice to people listening is get out there, even if you’re scared, if you’re not good at talking to people. You’re an introvert. You’re not an extrovert. Just go to these events. And like David said, don’t worry and freak out about meeting lots of people. Aim for three. If you meet three people total in the entire four, three, two-day event, whatever it is, and you meet three people you have a good conversation with, I’d call that a win. And if you do that every year, you’re going to build good relationships with people.

Feras:
And don’t be scared. They want to network just as much as you want to network. It’s a mutual thing. And I think people really forget that. And maybe to drive the point home, Brandon, I mean, I literally met yeah partner Ben at a meetup. That’s how I met him. And fast forward, we started this company, and now we have multiple companies, all because I happened to go to that meetup and get to really know the guy.

Brandon:
Yeah. Actually, I met Ryan Murdock, who now lived here in Hawaii next to me, and he’s one of my partners. Ryan and I met at a meetup, which is funny. Actually, David, you and I met at a GoBundance Mastermind weekend. Crazy how much-

David:
[crosstalk 00:22:20] person.

Brandon:
My person, yeah.

David:
[crosstalk 00:22:21] our first bro date.

Brandon:
That’s it. However, even more, you came on the show because Hal Elrod introduced you to me.

David:
Yes.

Brandon:
And Hal Elrod knew you from the GoBundance Mastermind. Again, almost every relationship that I have, I feel like, today, came from some sort of networking event.

Feras:
And it sounds like I need to join GoBundance. Right?

David:
I first learned that principle when I was trying to get my first job. And I went, and I drove all over town, dropping off applications at every single place I could. I probably dropped off 50 applications. It was months of time. And then I was complaining to my friend about it, and he went, “Oh, I think we’re hiring at Baskin Robbins. I can get you a job there.” And I had a job in three days. That’s how the world works. Going against the grain makes it very difficult.

Brandon:
I didn’t know you worked at Baskin Robbins.

David:
It was my first job.

Brandon:
I was Cold Stone. That’s funny.

David:
Oh, so you were a classy version of what I did. Oh, that’s cool. Your first car was a Honda Civic.
[crosstalk 00:23:18] I had a Maserati.

Brandon:
You don’t sing for tips? I mean, come on. I do.

David:
Yeah, so that’s why it’s so important that the impression that you leave people with is that you’re a good person because things get done through what people say about others.

Feras:
Yeah, people want to work with people they enjoy working with, period.

Brandon:
Yes. That’s so true. Man, that’s so true. People want to work with people they enjoy working with. I always say people want to sell to people they like. They want to buy from people they like. They want to work with people they like. If you just remember that and be likable and stop trying, like David said, stop trying to pull the networking word. Just make friends with people. It’s amazing what happens.
All right, so you mentioned the networking. Huge skill for any real estate investor to be focused on. And by the way, I do want to say this as well. All of those skills that you laid out a minute ago about the networking and underwriting, those are the same skills you have to be good at in the small deals as well. But just on the small deals, sometimes you do got to be good, or you try to be good at changing the toilet or painting the wall. Those are added skills, but you don’t need to. David doesn’t paint or move toilets, and David has a portfolio of smaller deals.
Anyway, yeah, I just want to warn people. Don’t just turn this off because you’re like, “Well, I’m not buying big deals.” But I want to go back to underwriting for a little bit. A lot of people want to get into multifamily. And the word underwriting just sounds overwhelming like, “Wait, whoa, whoa. I know how to analyze. But underwriting, what is that? That’s a whole new thing.” Can you explain what underwriting is? And then walk us through your process. What do you do to find the right multifamily investment opportunity? How do you know there’s a bad one and that you should stay away from it?

Feras:
Absolutely. Underwriting is no different than what the lenders do. Right? It’s called underwriting because you are assessing risk. That is what everybody is doing, whether you are an investor or you are a lender. Right? You are assessing risk. All it means is analyzing a deal and figuring out where it performs today, what you possibly have to do to get it to perform better, and what that performance looks like, and what it takes to go from A to B. That’s, in a nutshell, what it is. Don’t let it scare you.
Just take a very, very simple … let’s not even talk about apartments. Let’s say you’re going to buy a pizza shop. You know how much it costs to make a pizza. You know how many pizzas they’ve been selling on average for the past 100 years. And so, therefore, you know what your income and your expenses are.
Now you know that, hey, if I could upsell 10% of my customers with a Coke, well, now my income can increase, but maybe my expenses stays about the same. Right? And so now I’ve created more value. I’ve created more income.
Now apply that to apartments, same exact thing. Right? I know where the deal collects and what the expenses are. We know what our taxes are. We know what the insurance is. We know what our repairs and maintenance are. There’s a lot of things. And again, for those of you that are looking at underwriting, go get educated. There’s tons of content out there between this podcast, other podcasts, books. Brandon has got a book coming out here as well. There’s a lot of information out there. Go get educated. We’re in a world where it’s easier to learn anything than it’s ever been.
There’s a set of expenses that we know. There’s a set of income that we know. And ultimately, we’re saying, “Okay, based on the income and the expenses and whatever debt that I have,” and that’s where we talked about getting creative, “how much cash can I produce for this thing?” Meaning if I can get the thing 100% financed, let’s say I bring $1.00 to the table, and that’s all I have to bring to that deal. Well, guess what? If all I did was make $1.00, I’ve made 100% return that year. Right?
You’re really looking at how much money that I need to bring based on the structure that we have, based on the income and the expenses, and how much profit did that generate. Hopefully, that simplified it, and we’re not too crazy. I mean, at a high level, happy to dig in.

Brandon:
Sure, yeah. You can go real in-depth on analysis, and you can have a 40-tab spreadsheet and all of that. And eventually, if you’re trying to get into the big deals, you might get there. But in reality, it all can boil down to how much comes in, how much goes out, and understanding those numbers, not just what taxes are this. Well, what are taxes going to be next year? You got to make some assumptions, maybe a little bit, but you can dive into that information. The more you know your area and your market, the easier those become.
So yeah, underwriting is basically that, income, expenses, and then what’s it look like in-
[crosstalk 00:27:19]

Feras:
As you underwrite more and more, it becomes secondhand. I like to joke with my partner, Ben, that I can smell a good deal. Literally, I just glance at it, and I can tell. “Hey, okay. There’s some opportunity here, but let’s still spend the time and effort to get the team and go decipher everything and pull quotes.” Right? As you do more and more of it, I can quickly say, “Hey, this payroll on this property is $1600 a door. It could be 1250 because that’s what we have in our portfolio in Houston.” I know that number off the top of my head.
Tax, the same thing. “Hey, the taxes are here.” Well, I know Harris County, which is Houston, is a very aggressive county. They’re probably going to get us to 95% of what we buy it at. So that’s what we need to assess there, the taxes. And if it comes in lower, great. We just made some extra money. It’s those kinds of rules of thumb that you start to build as you do more of it. Definitely get out there and get educated. It’s not that scary.

David:
Can I take one second to comment on this concept of projecting for the future? Working with so many investors with the David Greene team and just talking to people that we come across, I think this is one of the biggest sticking points that stops people from getting started investing. There’s this need the human brain has to understand exactly what’s going to happen. That alone stops people from getting into investing because they don’t know what to expect.
But even when you’ve accepted that and you’re in the game, it stops you from buying deals when it doesn’t work on day one. Now for a long time, we’ve told people, “Don’t buy anything that doesn’t cash flow on day one.” And you can’t expect any kind of appreciation. And that has been like the … What’s the word that you’re looking for? Just the knee-jerk response or the classical advice, whatever it is.

Feras:
The safe answer.

David:
What’s that?

Feras:
The safe answer.

David:
Yes.

Brandon:
The safe answer, yeah.

David:
And that is true in certain conditions and for certain people. If you don’t have a lot of money, that yes, you want it to cash flow, we don’t want you to lose your property. Or if you don’t know what the economy is going to do, that becomes even more important. It could lose value, so you want it to cash flow. But in many situations like, Brandon, you and I talk about, the rules of the game start to change. When things like inflation creep up, and your money is losing value by not investing it, and not just the property’s value is appreciating, but the rents are appreciating as well, it becomes foolish to not have some form of projection that taxes are going to be raised, rents are going to be raised. Expenses could be going up.
The wage you have to pay your handyman or your maintenance person should be increasing just like everything else. And I see so many people that get scared by that unknown. I don’t know what it’s going to be five years from now, so I just won’t do anything. And it’s probably the worst thing that people could do.
I just want to give encouragement from experienced investors that it is okay to not know exactly what rents or expenses are going to be in three, four, or five years from now. It’s not okay to have zero idea where they’re trending. You should have some idea of what to expect, but you’re never going to know altogether.
And I think a lot of people start looking at multifamily deals, and they look at what it is right now. And they say, “Oh, I can’t buy that. That’s only a 4% return.” Whereas the three of us look at that, and we say, “In five years, that’s going to be like a 17% return, plus I’m going to have all of this benefit. Plus, I have this value-add. That’s a clear great deal.”
And I just see a lot of people that don’t get in the game because of that, so I wanted to highlight it is okay to understand that the way your property performs in year one is not going to be the same that it is in year five. Is that similar to the experience that each of you have had in your portfolios?

Feras:
Absolutely. I think you hit on a lot of good things, maybe, there to highlight a little bit. Right? A, it’s a numbers game. Don’t fall in love with a deal, first of all. The numbers are the numbers. They speak for themself. But what you’re saying, David, it’s about really assessing enough risk to be comfortable with it. But you’re not going to know everything. Right? And really, even at the high level, right?
Not to get too political, a ton of money got pumped into the economy. Right now, CDs and 10-years are worthless. They’re pennies. They don’t generate any money. So even if someone is … You mentioned a 4% return, David. Right? That is so low, but that is probably 20x what they can get in a 10-year. Right? So it’s actually very attractive for bigger money, so you have to look at the bigger picture. To someone else, maybe that’s a really good return.
And again, if the deal checks a lot of your boxes, and maybe it’s not what you wanted on the exit because you’re being ultra conservative, well, think about the bigger picture. Right? And to your point, every deal I didn’t buy is a deal I regret having not bought. But it’s about assessing risk, and that goes to a lot of things. Can you structure it in a way to reduce risk?
What we’re doing now, we are going in significantly lower leveraged than what we could, literally to the tune of $8 million less leverage to reduce risk. We don’t know what the future holds, but we know we cash flow, and we’ve reduced risk, so it’s a safe investment. That’s what I love about real estate. Again, it goes back to what I said earlier. It’s about getting creative about structuring things. Can you reduce risk while also keeping the upside that you want? Up to the limit-

David:
Now, the majority of your risk will be at the beginning of the deal. The first couple of years is when you have the biggest degree of risk. People often get like, “Oh, all this stuff could go wrong. I don’t want to do it.” And they just forget that it’s not going to be that way for the first 30 years or the next 30 years. The first workout you get is hard. It sucks. You don’t get very much of a return on it. But if every workout was like that, we would never work out. I see that all the time.
With surfing, right before you catch that wave, you expend so much energy. It’s so stressful trying to make sure that you put yourself in the right position and you get enough speed. You’re paddling really hard. Then you’ve got to stand up. But once you’re up, man, you go really far. And I found real estate investing is very similar to that. But the new people just focus on that very initial part, and they get scared.

Feras:
Yeah, I want to mention one quote that I think I heard on this podcast. It’s, “Real estate is not a get rich quick scheme. It’s a get rich slow thing, but you do build wealth over time.” And so really, to your point, that first year is always the worst year because you don’t even know what you just stepped into. Yeah, you know the numbers, but you don’t know where the bodies are buried on that property, so to speak.
And it’s what Brandon said a little bit earlier about know who you’re buying from. You want to work with people that you like working with. On the deal we’re doing now, we know we’re buying from institutional. They’re great folks. We know that there’s not going to be a lot of skeletons in the closet. Versus, we’ve bought deals from people that probably should have never owned an apartment. And so that first year is whenever all of this comes to head, and you start to figure it all out. And challenge after challenge after challenge, but then it all simmers down. And now you know where your baseline is to grow.

Brandon:
Well, and there’s one more about people who are afraid, and they’re like, “Well, I don’t want to take a risk.” It supports what David … what you were just saying. The first few years, yes, are risky. But we’re not investing for a year or two. Right? We’re investing for a decade, two decades, for our kids, for our grandkids. Right?
When I make a big investment, for example, Feras, the deal that we’re doing together right now, we don’t know what five to 10 years are going to look like in Houston. I don’t know for sure, but I can see the trends of the population moving there. A million people are going to be moving there in the next few years. I can see the lack of housing that they’re building. I can see these data points that help offset some of the risk as well. It’s not like we’re sitting there like real estate investors just making a guess.
We’re saying, “Look, what does this mean in a world where they’re printing money like it’s Monopoly money, and there’s not enough building going on for the amount of people who want to buy? What does all this mean?” I think it supports that rent is going to go up pretty dramatically, and supply and demand is going to make property values go even higher over the next decade. Might we see a blip in there? Of course. But long-term, I don’t think any of us believe that a property in any of these major cities is going to be worth less 20 years from now than it is today.

Feras:
Exactly right. Again, I tell people it’s about assessing risk and squeezing the risk out. And so even to the points that you made, risk that you do have, oh, is there a blip sometime in the next few years? Great. There’s ways to solve for that. Right? It’s a problem. You solve for it, and you move on. As long as you believe in the bigger picture, I mean, it’s absolutely the way to play it.

David:
I think that’s really the point that I wanted to highlight, Brandon, that you were saying. It’s okay to let go of needing to understand if I do A, B will happen. That is not the way this works. And experienced people have that fluidity where they are making decisions based off that.
And the last point I’ll make before I move on is when Blackstone was buying every single house that they could possibly get their hands on, there was a lot of people criticizing them. “Oh, that doesn’t even cash flow. They don’t know what they’re getting into. These guys, they’re idiots.” Right? As if we’re smarter than the brightest minds and the biggest hedge fund that’s ever existed. They didn’t care. They just kept buying.
And now Blackstone looks like complete geniuses that probably made the smartest move that any company … and we’re all trying to buy from them like Feras was just saying. I just-

Brandon:
I don’t know. Feras got a deal from them two weeks ago.

David:
There you go. When you hear your neighborhood real estate investor, that owns two properties, at the pub, talking about how dumb someone is for buying a house, just consider that there’s people that take a longer-term horizon that don’t know exactly how it’s going to work out that do very, very well compared to the people that operate from that … I need to know exactly what to expect.

Brandon:
Yeah. I once heard Jocko Willink say something about in the military … maybe it was in one of his books. But he’s like, “In the military, and you’re going into a situation, you don’t know the other variables. You don’t know who’s hiding around the corner and all that. All you know is what you know.” Right? A leader takes what they know, and this is a situation as I see it. And they’re decisive. They make a decision. They move. All right?
And then they get to a new spot, and they say, “Okay. Now, what’s the situation that we know right now? Now we’re going to make a decision, and we’re going to move again.” So many people in real estate, again, like you were saying, David, they look, and they can’t see down the road 10 yards, or 1,00 feet, a mile, whatever. So they just stop. They don’t do anything.
If you treat it like a military operation, we cannot know everything. What do the facts say right now based on what we know? And make a decision. Be decisive. Go for it, but then correct course along the way. Agreed, guys?

David:
Totally agree. I totally agree.

Brandon:
All right. I want to move back a little bit to your story, Feras. You decided to get into the larger deals. Now, where are you at today? How many units do you have right now, and what’s your portfolio look like? And then we’ll unpack it.

Feras:
Yeah, right now, we have about a little under 2,000 units currently. We’ve done four deals full cycle, and we have another, I think, three or four that we’re selling this year. By then, we’re about eight units, eight properties full cycle, and then we’ll probably be at maybe closer to 1600 units because they’re selling off a lot. So that’s stuff that we found, but we own and operate as well.

Brandon:
Yeah, full cycle meaning just that you bought it, fixed it up, did your value-add and sold it.

Feras:
Exactly. Like I said, we went into Atlanta a couple of years ago. We’ve done very well in Atlanta. We’re getting unsolicited offers at crazy price points, and we’re opportunistic. We’ll take that and fly when we an.

Brandon:
Yeah, exactly. I love that. All right, we talked about the early years. We talked about the 30-some unit that you missed out on that you’re glad you didn’t. What was the first big deal that you did?

Feras:
The first big deal I did was actually an Atlanta deal. My partner Ben had done a deal. For me, I was going to go do this deal regardless. And that’s really the deal that we built up our partnership on. For me, what I’ve learned, I left Microsoft for the vision of building software in old industries like real estate. What I’ve since learned is the real opportunities actually use the stuff that is the norm in tech to make us a lot more effective and efficient than everyone else. Right?
And that goes from asset management to even how we market ourself, to even what we do on the property management side, and using all the tools, and systems, and processes to just really help to … what David said earlier … assess the real risk and understanding of the lay of the land. That’s maybe the answer there.

Brandon:
Cool. Let’s walk through that. What was that feeling buying that? How many units was the first one?

Feras:
[crosstalk 00:39:00] 99-unit deal.

Brandon:
All right, 99-unit deal. Were there-

Feras:
99 units in Atlanta, nine down units, and it was a deal that, honestly, the current owner should have never owned. They were just guys that stumbled into an apartment. But I learned a lot from that deal, and I learned about how many skeletons can you find in a closet. But it was a challenging deal, and we worked through it. Right? And that’s where I like to say I got one of my four steps to a PhD in lending. I learned about how bad a lender can be.
On that deal, it was really a loan tunneling shop. They said that it was the best turnaround they’d ever seen. We literally took a rough deal in an area and turned it into the diamond and turned it into a family-friendly place where literally, people came up to us and said, “Thank you very much. You’ve completely made this place. You’ve transformed this place into a place we are happy to be at.”
But we learned a lot from bringing on security. We took down occupancy. To give you some metrics, 80% is what we bought it at on paper. We bought off basically down to 40%. Then we brought it back up to 95%. We had nine down units. We put about a million dollars into this property and ultimately made a really strong exit for our investors on that deal. Right?
I mean, that was a deal that I think we got to about 25%, 30% IRR, so we did phenomenal on that deal, but it was a hard deal. I have to joke that’s the deal where my partner Ben lost all his hair. It was a hard deal. To what David said earlier, we assessed the risks. We knew the things to be aware of. You get in there, and there’s more challenges than you expect, but it’s about having the gusto to go solve one problem after another, after another, and work through them. And ultimately, if your business plan was reasonable, you can hit it and deliver. I mean, that was a deal … yeah.

David:
And it’s like that with everything else in life too. Okay? You start training in Jiu-jitsu, there’s risk. You could get hurt. So what they do is they say, “We’re not going to have two white belts go together. We’re going to have a person monitoring what these people are doing, and we’re going to see that person’s out of control. Let’s stop it.” It doesn’t mean you stop doing martial arts, but you assess risk. You put mats in there so we’re not slamming our heads on concrete all the time.
When you’re learning how to drive a car, it’s very risky, so we put an instructor in there with you. We make you pass tests. We go really slow. When you show you can do well, you go do more. Everything in life is like that. We’re not saying something unique to real estate like, “Oh, there’s risk, and you’ve just got to be okay with it.” There’s risk in everything single thing we’re doing, and we are naturally looking for ways to lower risk, which tends to be the most in the very beginning. Like we were saying earlier, that’s when your risk profile is highest.
If you’re the person that can just make peace with that and get comfortable with the fact that, yes, there’s risk. Who cares? That’s how life works. I will take these steps to limit where I can get hurt with risk. And then, as I start picking up momentum, you start worrying less and less about risk, and things start to get smoother and smoother. And then you start to worry about the stuff that we’re talking about today, building a team, finding skill sets that are different than yours so that you can scale, seeing angles other people don’t see. I am sure on that big deal that you just mentioned, to bring it from 80 to 40 would have terrified most people.

Feras:
Oh, yeah.

David:
But you went into it knowing that could happen, and here’s our plan for hopefully we’re going to survive that stage. I mean, was there a specific plan you can share for why you were comfortable going 40%?

Feras:
Well, it’s funny. We did plan to get down to 40s. I’ll tell you a thing we didn’t plan for. It goes back to that lender. Whenever you’re at 40% occupancy, trust me, people, you’re operating in the red. You are losing more money each month. Your goal is to get out of that and get it back up to 60, 70, probably where you at least break even.
And on that deal, the thing we did not account for was that lender essentially intentionally trying to see if we default. In hindsight, we should have learned more about the lender. You think all lenders are created equal. They’re not. Trust me, I’ve learned the ins and outs, and we’ve seen the good, the bad, the ugly on all the different deals we’ve done.
On that deal, the lender, and I’m not going to mention any names, but they intentionally … basically, they were out there. They said, “We love the property.” They love what we’ve done with it. They know that we did a draw request. For those that don’t know, in multifamily, whenever you’re doing a big rehab, usually the lender holds onto the money. You do the work, and then you submit a request. They fund you back the money.
Well, on this deal, we submitted the request, and the lender basically said, “You know what? No, we’re not going to fund that.” And they started making up excuses as to things they wanted us to do, even to the point where they said if you do A, B, C, we’ll fund you Y. And a month later, we got A, B, C done, and they’re like, “Oh, our investors didn’t agree with us.” And ultimately, Ben and I are looking at each other, and we’re like, “So why did you tell us to do A, B, C?”
The thing we didn’t plan for was them not giving us the money that they have that’s our money. And so ultimately, Ben and I literally funded $200,000 into the del, unjammed it, got it out of the negative red because we know we’re operating in the red. It’s not going to help you because you can’t get out of that rut. Got it out, and like I said, got it to 95% fur months later and rocked and rolled. That was part of the business plan, going back to the risk thing and just being resilient and willing to work through it. Right?

Brandon:
How did you get lending on that? I’m sorry, not lending. How did you raise money on that first deal? You didn’t have a huge track record. You didn’t have a ton of experience in the big deals, so how did you get investors to fund you?

Feras:
Friends and family, and Ben had done a deal too, so I had been able to leverage some of his experience. Right? But ultimately, like I said, I was going to go do that deal alone. What was nice about it, it was 99 units, so it’s not huge, but not tiny. It was big enough that I felt like, with a couple of friends, I can toss the people into buying it because it was, I think, $1.2 million check size if I remember correctly on the amount of equity we brought to the closing, so it wasn’t that much.

Brandon:
So what did you buy the property for? What did you-

Feras:
[crosstalk 00:44:24] Yean, so that was a deal we bought at $39,000 a unit. We sold it for $73,000 a unit. And we could have sold it for more. That’s in 18 months, so we did very, very well on that deal.

Brandon:
This is why I love value-add real estate, whether it’s a mobile home park, or an apartment complex, or a shopping center. I just love value-add. Can you explain to those who maybe have never heard that term before what the heck is value-add, and why does it just work so well sometimes?

Feras:
Yeah. We’ll start with how commercial real estate is valued. The problem with houses and fourplexes, the way they’re valued is you look at the other houses in the neighborhood, how much they’re selling for. That’s your theoretical valuation. With commercial real estate, it’s all about how much money does that generate. How profitable is it?
If I can make it more profitable, I’ve actually increased the value significantly as well. Value-add is all about can I bring money to the table, inject money into the property, increase the income, and therefore, not only increase my cash flow but also increase the valuation.
Let’s take a very simple example. Let’s say I have an empty lot. It’s worth something. But now let’s say I turn it into a parking lot, and I stripe it, and I put a little machine. Well, not I’ve added value. I’ve spent money into the property. I’ve put up a machine that’s generating cash.
Now we do that with apartments. Usually, it’s a combination of doing things like spending money on the interiors, making the interiors nicer. So the deal we’re doing right now, Brandon, what’s the play? The play is to do exactly what the seller did on the first floor, do it on the second floor. Right? And continue that out so we’re not having to guess at rents. We know what they’ve gotten already. And then on top of that, do some other things like carports.
Carports is a really easy way to add a … really, you’re adding an amenity for the tenants, and the tenants are willing to pay for that. Low hanging fruit, and yes, it might only be $30.00 a month, but 30 times let’s say you do 50 spots. Well, that’s real money. Then times that by 12, and then divide that over a cap rate and valuation, you’ve added 500,000, a million dollars in value to the property. That’s maybe my short, long answer for you.

Brandon:
I love it. This is one of the examples I’ll give in the mobile home park space when you buy a mobile home park. We want to fill in. Our expertise in the mobile home park space is called in-fill. We want to put a home in there that’s rented. And we’ll even pay, and we will lose money purposely to get a home brought in.
For example, let’s say a lady, Cheryl, she rents from another person’s mobile home park. She owns her own home, but she rents from another park. We will pay her the cost of moving her home into our park. We will lose $10,000.00 sometimes to get somebody to bring their home into our park. And the question is, why would we do that?
It’s because that $10,000.00 loss, we will now add, let’s call it, $300.00 every month in lot rent. Well, 300 times 12 of lot rent is … what is that, $3600 every year? $3600 a year, which means in two years, three years, really, we pay back our investment. But the real key there is by adding $3,000.00 of annual profit to our business, that’s worth about $50,000.00 in value to the park.
In other words, we will spend 10 to add the value of $50,000,00 to a park. Plus, we get paid back our money over the course of three years, so it’s not a big deal. So that’s how we look at value-add on the park side.
On the apartment side, the same thing. Let’s say like the deal we’re doing, we’re going to remodel a unit. We’re going to spend $5,000.00 to remodel that unit, and it’s going to get an extra, let’s call it, $100.00 in rent. Now people are thinking, “Why does it matter to add an extra $100.00 in rent? That’s not a lot of money.” Well, across 530 units, it is. But then additionally, the value created there is $1200 a year. Divide that over a five cap or a four cap. Now it gets dramatically different, which is why value-add apartments are so much fun.

Feras:
I can give you a very simple … I literally just did the math while we were talking. Let’s say you’re in a six-cap market. For every dollar of revenue that you increase on that property a month, you actually create $200.00 of value a year.
[crosstalk 00:48:27] valuation. And the math I did for those that want to validate it, one times 12, 12 months in a year, so $12.00 generated, and divide that over a six cap. That’s $200.00. To your point, Brandon, for every one dollar you brought into that park, as long as it didn’t cost you more than $200.00, you’re actually in the positive.

David:
Yep.

Brandon:
Yeah, and this gets so fun. We talked about this on a recent episode we did with Sharon Lechter on the podcast, co-author of Rich Dad Poor Dad. We talked a lot about this idea of businesses like real estate, commercial real estate, are valued, like you said, based on their profit. It’s a really fun game. I love this game where you get in, and you buy a property, buy a business, which is exactly what an apartment is. It’s a business.
You buy a business. You decrease the expenses and/or increase the income. Now it’s way more profitable. You make way more money. You either refinance it, pull a bunch of money into your pocket tax-free, or you sell the thing and make a bunch of profit that way, and then just turn that into the next deal. It’s fun.

Feras:
[crosstalk 00:49:24] Exactly. [inaudible 00:49:25] that you are buying a business. There is a dedicated team, dedicated people. It’s a business. You need to treat it and run it like a business too. Now that’s what I love about it. I like to say we’re serial entrepreneurs because each one is a different business. I mean, Disrupt Management is 110 people now. Right? That’s a real troupe of people.

David:
Yeah, that’s a business.

Feras:
They’re on properties, so it’s a business.

David:
I’ve noticed a lot of the people listening to the podcast think when they hear this, “Well, why would I be able to increase the rent or decrease the expenses if the current owner didn’t?” The assumption is everyone that owns real estate cares about it as much as we do, who record and listen to podcasts religiously about this topic. But I’m sure, as you guys have found, most of the people that we’re buying real estate from have not paid attention to it in a very, very long time. They don’t want to deal with it.
The value that we’re bringing is our knowledge and our time, or the systems, like you were saying earlier, that allow us to decrease the expenses and increase the rent, increase the performance of the property. And you’re probably buying it from somebody who hasn’t been doing that.

Feras:
Yeah, and actually, I’ll add one more thing to that too because people ask me this. The deal, let’s keep going on the story, the same deal we’re talking about, that 99-unit in Atlanta. I care a lot about it, to what you said, David. We obviously looked over it very carefully. We thought we squeezed the juice that we had. Well, guess what? We only brought a million dollars in CapEx to that deal, so the amount of juice that I could squeeze out of that deal was limited by that million dollars.
Well, I sold it to the next guy, and guess what? He cares a lot about real estate too. And so the question is, why would the next guy pay the price that we sold it for? It’s ultimately because he can bring a fresh set of CapEx, a new set of money, and do things that we had no more money to do. While we could operate the property in cash flow and pay distributions like we were, it’s actually more beneficial to get someone to pay a premium for it because they know if they bring another million or two or three, whatever the business plan is, they could actually elevate it to even a higher level. Sometimes it makes sense to sell.
People always ask that. “Why are you selling?” And then people ask the inverse, “Why is that guy selling?” And it’s really the same answer. I’m coming with a fresh business plan. I can bring things its current owner doesn’t have, which is usually capital. Right?

Brandon:
Yeah, what I find of small deals typically, almost every small deal I have ever bought has been from a failed landlord or a distressed seller. Almost everything has been because a person failed at it. They gave up. But in the commercial world, that’s not usually the case. You’re not just buying stuff because they failed at it. I’m sure the person, Feras, that we’re buying our deal from together, I don’t think the looking at themselves going, “Oh, I failed at this deal.” I’m sure they’re going to make a killing off of it. And someday, we’ll make a killing off it, and the next person may. In the commercial world, that’s just what it is. People recapitalize for a number of reasons. They sell for a number of reasons. It’s usually not failure.

Feras:
Even in the deal now, why are they selling? That’s a good question. Well, did they reach the end of their fund, and they’re already making the profit? And there’s a clear pathway for someone else to do something. They’re selling because they have a time bomb they have to sell. We’re buying because we see a way to do value-add. We can push the red to a great area, great deal. It makes sense for both parties.
In commercial, I think people really think negotiation is about I win, you lose. And that’s not really how it works. The best deals are the ones where you structure them, I win, I win. Both sides win. Right? Whenever we sell a deal, we also set it up in a way that the next guy has a clear pathway to pay a premium to us and improve the deal. And whenever we’re selling a deal, we also make sure that we don’t blow up their debt, and we give them all the stuff they need to make it easier. It’s a win-win.

Brandon:
Yeah, that’s really good, man. Well, let me relate this back to the small deals because I know a lot of people listening to this show are trying to buy their first deal, second deal, third deal. I’ll say this, you have some hope out there. I got a property right now. It’s a duplex that I’m going to sell. It’s in Grace Harbor, Washington. And it needs work to make it really nice. It’s been 15 years since I remodeled this thing, and I’m just not going to do it.
I just don’t want to do it. I bet you, fixed up, it’s probably worth 250, but I just don’t have the energy or the desire. It’s not a failed property. It was fine. But I’m going to sell the thing probably for 180. So somebody is going to get … Potentially they can buy it for the 180, let’s say. They put in 20 grand worth of work, and now it’s worth … They’ve got $50,000.00 of equity. Great. Meat on the bone.
But I just don’t need that. I’m at a different part of my investing career that that doesn’t matter to me anymore. What matters to me is moving onto these bigger deals, these different deals. Again, I say that because I want people knowing that by contacting local landlords in your area, small mom-and-pop landlords, they probably have property in their portfolio that they would be willing to part with because they just are in a different part of their life, a different part of their investing. They’re tired of it. They’re just burned out. They don’t care about that property anymore, but you get to bring fresh enthusiasm to it.
When people say there’s no good deals anymore to be found, they’re everywhere. Just get out there, and there’s the word again, network, connect with people who own property.

Feras:
I’m in the same boat, Brandon. Those properties that I have, I’m slowly selling them off. I sold that fourplex a year and a half ago. There’s meat on the bone for the next guy, and I’m okay with that. They’re happy, so it’s a win-win. Again, it’s not worth me to spend all of that energy and effort. I’m happy to give up that $5,000, $10,000, $20,000.00 of meat to them, and you move forward.

Brandon:
Yeah. Cool, man. Let’s talk about some red flags you see. When you’re trying to buy a large multifamily deal, what are some that you’re instantly like, “Oh, yeah, I don’t want to deal with that”? Anything come to mind?

Feras:
On the buy side, not on the investor side, right? On the buy side, I mean, ultimately, we’ve learned from that Atlanta deal, really, to understand who we are buying from. We’ve bought from the institution, and we’ve bought from the guy that should have never owned a deal. And we’ve seen the spectrum. And I have learned I want to be halfway and up of the spectrum. And yes, sometimes there’s a lot of money to be made on these deals, and that’s okay, but there needs to be more meat.
The Atlanta deal, our investors did phenomenal, but it was probably way too much work for us versus what we got out of it. Right? Understanding who you’re buying from is a really big red flag. Understand if they’re doing third-party management, or are they poor-boying it themselves. If they’re managing it themselves, oh man, I literally throw out the financials, and I just basically say, “Okay, if I just adopted this deal out of the blue, what could I do with it?” That’s another really big red flag is just looking at the financials and the quality of the financials.
And then really, I always like to understand the story. There’s a story behind every deal, and understanding the story and seeing if it jives with what you’re seeing on the deal. And that could be a red flag in itself versus, hey, it was a partnership. One of the partners passed away. They thought they were going to keep it for 10 years, and now it’s for sale. We saw that deal literally four miles away from here. And we offered it, but again, it is not in a great area. We couldn’t get the rents that we wanted to, so we ultimately did not win it.
I mean, we really like to see deals that have meat on the bone. That’s the other thing too. Can we actually do a value-add, or is it the BS Value-add? You hear this all the time. I mean, every deal had a value-add, and every deal is off-market. But in this day and age, that’s not true. Every deal on larger deals goes through a broker one way or another because, again, I think it’s reckless if, as a seller, you don’t.
And then the other thing is brokers say every deal has value-add, but you need to assess what your risk is and do you agree with that value-add. And so we like to see a track record, a proven pathway to value-add. Either we own a deal next door, and we know what we’re getting in that sub-market, or the seller did a decent number … On this deal, they did more than half of the units, so we know what we could get. It’s continuing that. Those are maybe the biggest red flags, I’d say. And then-

David:
That’s really funny that you mentioned some of those. Off-market is one of those deals that people just throw around. I think the world foreclosure used to be that way 10 years ago. You said, “I want a foreclosure,” and that was synonymous with, “I want a really good deal that I could just find really easy.” But foreclosures, if they actually go through the foreclosure process, get put under the MLS just like every other property once it’s REO. You’re not getting a better deal on those than anything.
And now it’s just off-market. We have a lot of people that will come, literally, to our team and say, “Can you guys find me an of market deal?” And I say, “Well, who would be paying your agent? You’re going to have to pay him.” Now all of a sudden, it’s not a great deal anymore. You’re making a very good point that you need to know the specifics of what you’re looking for. Don’t just throw around words like, “Oh, I want a value-add deal.” An experienced broker will sniff right through that and just be like, “This person does not know what they’re doing. I’m not going to waste my time with them.”
What I wanted to ask you was what are you specifically looking for in a deal for you to say, “This could work, let’s put this into our pipeline of analyzation”?

Feras:
Great question. Where we are in our career and our business, we are, I like to say, glorified matchmakers. What we bring to the table is we have a very … like I said, I’m a tech guy, so our acquisitions pipeline, Brandon saw it himself. It’s definitely a thing. We built a system to underwrite and look at more deals than anyone I know and really do in-depth on all of them. Now, why?
We did that investment because we match deals to equity. If I have an investor that wants a 1% return and the best deal in the best area, I can buy just about any deal in Houston or any deal in most of the country. Now, it’s about, again, I need to find a box that fits my investors.
Typically, what we’re looking for today, we’re looking for deals that are for a newer deal, maybe a seven-and-a-half cash-on-cash average throughout the whole. On a B, C, and up, we’re looking from seven-and-a-half to nine-and-a-half, ten-and-a-half. That’s the cash-on-cash play we’re looking for.
We are cash flow investors, so that’s our number one thing. And as we’ve grown, we’re really looking for 250 units and up deals, more institutional-ish quality assets. We’re not really looking for the deep, deep distressed deals. Yes, there’s money in those. But again, is it really worth the time and effort? Probably not. And it’s risky. There’s a lot of risk in those plays.
So we’re looking for deals that have a clear pathway to value-add, whether they’re A, B, and C. I like to say risk-adjusted. And I like to make a joke about some groups that’ll buy an A, and a B, and a C, and every time, their returns are the exact same. That doesn’t make sense to me. It needs to be risk-adjusted and realistic underwriting. It’s not about just making the numbers work. Because again, I’d rather not do a deal than do a deal we can’t deliver on.
That’s maybe the answer there. It’s just really deals that fit our box that cash flow. And we’re looking to double people’s money in that five to seven-year play.

Brandon:
When we were meeting in person, you mentioned something to me. You said you went over a year at one point during your career without a deal where you were analyzing a ton, underwriting a ton. And you went a long time without one. What was going through your head during that point? Were you just thinking, “This doesn’t work anymore, I should just give up”? Or were you just plowing forward, analyzing, analyzing, offering, offering?

Feras:
I mean, for us, it was patience. I mean, again, it’s easy to buy a deal. I could buy any deal. It’s real easy to buy a deal. But you have investor confidence. We have a long track record. Our investors will believe in us in anything. But again, I guess where it was going in my head is my partner and I, we’re both in our mid-30s. We’re younger. We’ve got a long career ahead of us, and we cannot falter, so patience, patience, patience.
Because guess what? If we do the right deal, we continue to grow and continue to buy more in the future. Versus, there’s people that will just do a deal to do a deal. And again, it’s easy to do a deal. Me and my partners of mine, our goal is to really, we dump the money back on the company. We continue to do that. We have a 30-year career. And my wife, who likes to make fun of me, she’s like, “Do you ever plan anything short-term?” The answer is no. I have a long-term plan. What’s going on in my mind is patience, patience, patience
Also, maybe to add to that, Brandon, I have since started looking at nicer, newer deals. As we’ve seen cap rates compress, the difference between an A, and a B, and a C has gotten so small that sometimes it’s worth paying a little bit more for a much newer asset, versus, continue to duke it out and to see value-add.

Brandon:
Yeah, I agree. That makes a ton of sense. Yeah. I think, yeah, there’s a level of deal that you craft into. For example, when you’re buying duplexes, fourplexes, eight-plexes, I don’t want to say you can be reckless. You shouldn’t be reckless. But if you were reckless, you could probably go and do more of those. And at that level, nobody would ever know that you screwed over some investors or you ruined your reputation with this small group of people.
But what’s interesting at this level, when you get to buying the 10, 15, 20, $57 million like we’re doing right now, when you get to that level, everybody knows everybody in that space, especially in an area. Everybody in Houston knows everybody who’s doing that size of deal. All the brokers know each other. If you lose your reputation because you were greedy or because you were impatient, you’re not just affecting that one deal. You’re affecting your entire career.
I’ve had numerous investors say this to me, who are in my fund, investing in Open Door Capital, that they’re investing because they know that I can’t afford to lose my reputation. I can’t hide. If I lose that, it’s just too big. And that’s one of the reasons that I chose to work with you guys, and we deliver and have been building this relationship is because I’m like, “Dang, I like that you’re patient, and you’re not like, ‘Oh, crap. It’s been 30 days. We better go and just adjust our underwriting and get a little bit more fuzzy with it to land something.'”

Feras:
You said it perfect. I can’t afford to lose people’s trust. It’s not to say every deal is perfect. Every deal has its challenges. We have the home runs and the deals that have been a pain. But we ultimately will perform and keep that reputation. But you said it exactly right. I haven’t heard it that way. But yeah, I really can … because again, some people will just do three, four deals as fast as they can before anyone knows any better, and boom. Whereas, again, if you’re trying to build a sustainable company, that’s why we continue to hire on more and more people.
There are people that have three times as many units that we have, which have half the stuff that we have. But it’s about doing the right thing and really, to your point, can’t afford to lose that reputation.

Brandon:
Yeah, super important. When did you quit your job, your day job? When was that in your career?

Feras:
It’s funny because, after Microsoft, I had a software company. Then what happened is, really, we started … we had made a lot of money with apps. And then after that, really, we knew we made a lot of money in apps. We knew that was not long-term. It was not sustainable. So we decided to double down and build property management software, of all things, because I was getting interesting real estate thing. That did not pan out, and so that was a nice transition between that winding down while I was starting to grow in real estate. Those two things went hand in hand, and it made life a lot easier. That was, what, that transition, four years ago or five years ago.

Brandon:
Wow, yeah. And then you found Ben somewhere in there. Why him? Let’s talk about partnerships for a minute before we begin to move towards the end. What attracted you to Ben, and where have you been on partnerships?

Feras:
I’ve had multiple partners. I’ve had multiple businesses. The most important thing is someone that has the same kind of outlook. Like I said, Ben doesn’t complain whenever we continue to invest back in the company. I have a joke with Ben. I’m like, “Don’t worry. One day we’re going to make money from this business.” That’s really our joke because we continue to pay everyone else and continue to build on being better people. We have that same outlook, so I don’t have to fight those battles with Ben on, “Hey, are you cool with me hiring on this person? I have this much.” We have that. That’s an important thing.
And ultimately, Ben is similar to be where we will both roll our sleeves up, good, bad and ugly, and just … If I’ve got to over a place to tour a lot of property, I’ll go do it. Some people have this stigma or this mentality of, “Hey, I’m not. That’s beneath me.” Whereas Ben and I, it’s like, hey, it’s about getting what we need to get done done and moving on.
We’re both very dynamic and very fluid. Like I said, I met him at the meetup, got to know him from multiple meetups. And then, fast forward. And the joke I have with Ben is he had been running that meetup for a year prior to me. But again, it wasn’t systematized. He’d literally hold his finger to the air and say, “You know what? I’m going to hold the meetup next month or next week.”
Once me and him partnered, it became very much a system. We do it the first Thursday of every month. We’re actually doing it this Thursday. We started back up after COVID, so we’re excited. We should have probably 150 people out there. We’re the first Thursday of every month. We start at 7:00. We have people sign in. Three days before the meetup, we send them an email. The day of the meetup, we send them an email and get it buttoned up. It’s been a good partnership, and we’re both looking to continue to grow that.
If they’re someone that you jive with, someone that you trust, and someone that has that same outlook, I think, is the biggest thing. I’ve had previous partnerships where we were almost too similar, and that has its own problems. Ben and I are different enough, and we’re both willing to grind it out where needed.

Brandon:
Yeah, that’s really good, man. What about let’s go with money real quick? Let’s talk about money. For people who are listening to this, going, “I want to get into the bigger deals. I want to invest in the big stuff.” Do you have to invest? Do you have to put a lot of money into your own deals? Is it possible to do no money down, value-add multifamily syndications? How does that world work?

Feras:
Yeah. I mean, once you get past small … let’s say 50 units and up, it’s hard to do no money down. Yes, your lenders will finance you 70, 75, maybe 80%. But someone is bringing money somewhere, whether you got creative and you had the seller keep money in the deal, you put your own money, or you syndicated and brought investor money. There’s definitely money involved, but it does not necessarily mean it has to be your money. And so I’ve heard of it as phrased OPM, other people’s money.
Now Ben and I, we invest in every single deal because I’m also not a big believer in just being a fee guy and onto the next. And it’s funny, my joke is literally, our biggest home runs for the deals that I had the least in, and deals I had the most in were not. But it’s a numbers game in some capacity. And so, it’s about really just having that fiduciary duty to the investors and also showing them, “Look, I’m aligned with you. My money is sitting on the same side of the seat as yours. I really want this deal to work. Trust me.”

Brandon:
Yeah, I’m a big believer in that. I don’t need to put money into Open Door Capital, but I’ve put money into every one of our funds because I want every investor knowing that I’m on the LP side as well. It’s almost more of like … I mean, yeah, I know my deal is going to do really well. I know it’s going to make a good return, better than I can get in anything else. But it’s more important to me that everyone knows that I’m not getting rich off of this. I’m getting rich when this makes you rich. And by putting your own money into it, yeah, it’s been a big piece. Yeah, I’m glad to hear you say that.

Feras:
And I had one more thing too. It’s about taking care of your investor. Right? Because again, if you’re in it for the long haul, you’re not making money, a quick buck from one deal. You make money from 100 deals. And so the real example is we literally got an unsolicited offer. Brandon, this is last week after you guys left. On one of our deals in Atlanta, we bought the thing for 14 million. Let’s just say we got an unsolicited offer at 26, a really, really high price point, and in two years.
And on that deal, I remember I had to half my initial investment because we had too much investor interest, and I wanted one of our main investors to be able to get into that deal. Now I’m just like, “Man, that deal is a home run.” But again, it’s okay. But it’s taking care of the investors and showing, again, “Look, I am invested. I am aligned with you.” But then also give them the meat on the bone.

Brandon:
Yeah, that’s cool, man. I love it. It’s been fun to hear your story, how you got from just getting started on those small deals, jumping to the big ones. And now you’re taking down massive projects like the one that we’re doing. What is it, 57 million? Crazy. But it is-
[crosstalk 01:08:20]

Feras:
It’s all about having the right team and the right people and networking. Right?

Brandon:
That’s what it is, the right network, the right people, the right team, the right mindset going into stuff. Getting into value-add multifamily is totally doable. And I want to encourage anybody listening to this right now, don’t feel like it’s something you have to have an MBA for, or you have to be super wicked smart for, or you have to be well-connected and born a Trump. You don’t have to have any of that stuff. You can just learn this stuff. Read a book or two on it, or attend some classes on it. Follow somebody around.
Or what you said earlier, you said you’ve partnered, like that first deal with Ben mt first big one, because he had done a deal before. And now we’re going into the large multi-space. We’re partnering with you because we’re like, “Hey, they’ve got the experience that we don’t have in the large apartment syndication space.” Right?
A lot of this is just, again, building the right team. Even if you’re not the hero of the team, you can be a partner or a piece of it, or an employee of it, or whatever you got to be to get that knowledge, get that experience, get that traction. And then it sure makes the rest of your career look a lot easier.

Feras:
Absolutely, man. Put better people around you, and all will grow and learn together. Have the same goal, and you can accomplish anything. Literally, right now, I’ll give you an even better example. I’m hiring on a key position in the company, and yeah, that’s well above our range of what we initially thought. But ultimately, if I have a team of superstars, I can go accomplish anything. Right? Again, it’s a short-term pain for a long-term gain.

Brandon:
Yeah, and it just goes back to you’re not thinking year two, three years down the road. You’re thinking 20, 30, 50 years down the road. And when you look in that horizon at real estate, it’s amazing what’s possible.

Feras:
Absolutely.

Brandon:
Amazing.

Feras:
That’s why I love this business.

Brandon:
I love it. All right, man. Well, we’re almost ready to get into the famous four. But first, a question for you: where do you see the next 10 years of your life headed? Do you guys have big 10, 5, 10, 15-year goals set? Or is it just to see where the world takes you?

Feras:
Great question. I mean, for us, like I said, we’re vertically integrated. We’ve continued to make the investments in the different parts of the business that make sense. For us, it’s really about continuing to build up the management company, first and third-party, but acquiring deals. I mean, multifamily is what we do A to Z. And having other partners for other things, right?
We’re not disrupt multifamily. We’re disrupt equity. I love that phrase. And multifamily is our expertise. But guess what, Brandon? One day I’m going to beg you guys to let us go do a mobile home park with you guys so we can, again, go do something bigger, better, together. Right? And so for us, it’s about having key operators that the experts in their space continue to provide that as an opportunity for our investors.
We vet the deal. We make sure things look attractive. We provide that benefit to the investors, but really continuing to grow that and building a company and a culture around it. That’s what gets me excited. Money is one thing, but I love building a company, and a culture, and a place people want to be at. I really like to say … and you came by the office. I think we run our company more like a tech company than we do a real estate company. Right?

Brandon:
Yeah. What’s that game called with whatever the little bean bags?

Feras:
I don’t even know the kids call that.

Brandon:
Corn hole.

Feras:
[crosstalk 01:11:17] That’s a random thing.

Brandon:
Corn hole, yeah.

Feras:
Corn hole, there you go. Corn hole, yeah, yeah, yeah. And so, it’s just really building a cool culture, a place that people want to be at. I think I’m seeing that more and more, especially with management. Management is a really hard business for a lot of reasons, and it’s a high turnover business. Now I’m really fixated on how do we fix that. What’s missing in that type of business model to make it that culture, that place that people want to be at?
And I’m the kind of guy that’s crazy. I’ll literally, Brandon, I joke with the team. But very, very soon … we have a team in the Philippines as well, and I tell our team here, “Hey, soon, I’m going to fly the whole team out there, and we’re all going to do a big pow-wow there in the Philippines with the rest of the team.” Make it that thing because if you can take care of people for life …
There’s a phrase, and I just banked out. The Oracle guy has a really cool phrase that essentially, it just boils down to teach people to be able to leave but make them want to stay for life kind of thing.

Brandon:
Oh, yeah.

Feras:
So I’m a big believer in that. That gets me excited. Where we’re headed is continuing to grow that, really build out each part of the business to be the best in class in each space. And then really focus on that culture.

Brandon:
I love that. I love it. Well, now you mentioned you’ve got a team in the Philippines. Explain that. What are they doing?

Feras:
Yeah, that’s a great question. One of the, I’d say … In tech, having what we cal Vas, virtual assistants, is a normal thing. Right? I mean, I’ve had them literally 15 years ago when I had my first one. One of the things we’ve done on the management side, I think, in terms of innovation, is having that team as well, where they’re an extension of our onsite staff. They’re our people in the Philippines. They’re all digital, but they are very qualified people. And we pay them really well for over there. And they do things that help really facilitate the business.
And I’ll give you a real example. A very simple one is, I have them call every week, call every single property. And every Friday, we get into Teams. We’re using Microsoft Teams. They dump a report saying which property answered, which one didn’t, which one called back, which one didn’t, and which one introduced themself, which one didn’t. There are simple things like that.
And Brandon, you probably have all these cool ideas that come to mind. And you’re like, “Man, it’d be cool if I knew A, B, C every day.” And guess what? I can turn around, and we have a savvy enough team to go and turn it into a process and a system. And we get to see that every week. I mean, literally, the list goes on and on. There’s like 60 of these things, and to the point where I’m just like, “Man, we get a lot of reports.” But it’s good stuff because it helps you keep performing up and take care of the important parts of the business.

Brandon:
That’s awesome. All right, there’s a good quick top for-

Feras:
We love our team out there. If they’re watching, they know they’re an awesome team. They’re phenomenal, and we love to take care of them.

Brandon:
That’s awesome, man. Appreciate it. Well, let’s move on to the last segment of the show. It’s time for our famous four. Same questions we ask every guest every week. And so we’re going to throw them at you. First one: what is your current favorite real estate or all-time favorite real estate related book?

Feras:
Wow. I’d say The Millionaire Real Estate Investor. Right? And the reason for that, it’s an eye-opener. For people that are new in real estate, it does a good job. I guess for me, I only really like it because of one part of the book where it talks about the couple that doesn’t make a lot of money but how over 30 years, they retire millionaires. That really is an eye-opener. I remember reading that. And any book written by Brandon Turner obviously fits that.

Brandon:
Well, thank you. Thank you.

David:
All right, what’s your favorite business book?

Feras:
I’d say The Emyth Revisited. I’m a big proponent of that book. And I was thinking just the other day, it’s been five years since I’ve read or listened to that book. And I think I’m at the point in our business of probably listening to it again and really rethinking. For those that don’t know, the book really talks about how do you systematize a business. How do you not become the chef that’s really good at cooking but really doesn’t know how to run a business? And how do you really bring on a role and systematize that?

David:
Yeah. I love it. Yeah, I 100% agree. Life-changing book.

Brandon:
All right, next question. What are some of your hobbies?

Feras:
I love sailing. Unfortunately, I’m in Houston, and Galveston is really ugly. Sailing is a lot of fun. Mountain biking is fun. But lately, it’s just been a lot of family time between … my hobby is real estate. That’s really maybe the short answer. I love real estate, and so that takes up a lot of my time. And I enjoy it probably too much. And then the other stuff is as I can find time for it.

David:
That’s cool, man. You said family life. What you got for family?

Feras:
I heard a phrase a while ago, and it really resonated with me. It’s basically health, family, work, choose two. Unfortunately, I guess I’m not as in shape as I used to be back in sailing days. And I used to be into mountain climbing and all of that stuff.

David:
There’s something to that I’ve been trying to figure out my whole life. I always say either my bank account is healthy or my body is healthy. I’ve never been able to get both at the same time. It must have something to do with your reticular activating system. And when you’re thinking about fitness, you’re scheduling time to go to the gym, and you’re eating healthy, and work just fits in around it. And then with work happening, just all your resources are going towards that, and you have no emotional energy.

Feras:
I wholeheartedly believe it, David. Let’s write a book on it.

Brandon:
What do you believe separates successful real estate investors from those who give up, fail, or never get started?

Feras:
I guess the answer really … people that’ll just put in the effort. Right? Problems come up, and I see it time and time where people hit a problem, and they just implode on themselves. Be confident. Have confidence in yourself and really work through the challenges. There’s challenges every step of life, really. And just don’t let it overwhelm you, and just work through it and move on. And realize everything there’s a problem, there’s a solution.
And so, I think that’s the number one thing I see, whether it’s people that get bogged down with analysis paralysis, or people that, for whatever reason, don’t get a deal done, and they just say, “You know what? This sucks.” I’ve seen all of that. We’ve been through A, B, C, and D. You get up, and you go at it, and you work through it and move on. That’s my answer.

Brandon:
I love it. It’s a great answer, man. All right, with that said, we’ve got to get this thing closed up. So David, last question. What do you got?

David:
Where can people find out more about you?

Feras:
Yeah. Www.disuptequity.com, D-I-S-R-U-P-T equity.com, or send me an email, [email protected] Brandon will appreciate this. My Instagram is Feras.moussa, M-O-U-S-S-A. I’m not good on the Instagram thing. Brandon is going to inspire me here.

Brandon:
We’re going to get you there. We’ve just got to put some more funny stupid videos on your Instagram like David and I-

Feras:
That’s the stuff our company, we should have done. Right?
[crosstalk 01:17:34]

David:
There’s no one better if you want funny and stupid videos to have in your corner than this man right here.

Brandon:
All right. Oh, actually, we were laughing when Feras and I were hanging out in Houston, and we were talking about how I wonder if there’s other syndicators out there who are having a conversation about putting together some $57 million deal, at the same time making funny animated mouth talking videos of, I don’t know, Michael Jackson songs. I’m like, “I don’t know if there’s other companies out there that do it, but I like operating that way.”

Feras:
Same here, man. I like to say I’m the kind of guy that despite how old I get, I’m always going to be the guy standing on the shopping cart and pushing myself through. Enjoy life. Be laid back. Don’t be that uptight person. That’s really my philosophy.

Brandon:
Every day. Love it.

David:
Is that where you made the video that I put on my Instagram of the Shakira song?

Brandon:
Yes. Yeah, I was hanging out with Feras-

David:
It was the same time-

Brandon:
… when he made this.

David:
That’s hilarious.

Brandon:
Yeah, you were singing Shakira, yeah. If you guys want to see David singing Shakira, go check out his Instagram. It’s back on. I don’t even know what date, probably end of … Was that early June-

David:
It would be-

Brandon:
… on there?

David:
Probably one of the more recent ones.

Brandon:
May have been the end of May.

David:
I don’t post that often. It’s me and you at the sea shed. They just click on that one, and they’ll …

Brandon:
Yeah, okay. There you go. And you’ll see David singing some Shakira. It’s pretty great. All right, with that said, we’ve got to get out of here. Feras, thank you so much. Appreciate you. Love to hear your story of going from the small stuff to the big stuff and the mental shifts you had to make to do that, making millions through value-add multifamily. It’s awesome, man. I love it.

Feras:
Thank you, guys, very much. Definitely a pleasure. I love it. It’s a lot of fun. Take care.

David:
All right. This is David Greene for Brandon Magic Mike Turner, signing off.

Speaker 2:
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In This Episode We Cover:

  • How to scale your real estate investment portfolio with medium/large multifamily
  • The habits that a successful multifamily investor develops
  • Networking and being more than just the “business card” person
  • Why masterminds are a HUGE source of deals, partners, and friends
  • Underwriting and how it differs from basic deal analysis
  • Using “value-add” to increase the value of a property and cash flow
  • The red flags you should look for when buying multifamily properties 
  • And SO much more!

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