Deal or No Deal Preview : Evaluating Multifamily & BTR Deals Like a Pro [Shark Tank!]

0:02 Welcome everyone. Today I'm I'm very excited because for the first time in our history, this is probably our 300 plus we I think we've done about 300 webinars. This is the first time we have five co-presenters. So there's going to be a team of five people presenting. Um I'm the shark. Uh and um Daniel and his team will be going through multiple uh projects, real projects. Uh so never done this before. We've uh we've had three people present uh in in webinars before, but we've never had five people simultaneously presenting. So, I won't take uh Daniel's thunder away when he's introducing his team, but I'm super duper excited to have um uh these sessions. So, um I we we do them every week, but um this this one's going to be

0:50 really really special. So, hope you guys uh enjoy this process. You're going to watch the exact same process that we follow every week. So, you know, for the longest time I've been thinking about doing something like this. It's like, you know, we we have this process. It's so much fun. Every week I get to go to a new city and and be a shark. And one day we'll we'll basically bring the whole damn thing exactly as we do it to uh in a webinar session to our investors and and that's what we're doing today. So, it's it's going to be really fun. Yeah. Leading the team is Daniel. I think he Daniel, did you come back in? I am here. Okay. Awesome. Awesome. So, he's going to be with with me. Um, I'll stay on video so you you guys to see my

1:36 my mug, but uh JMO, Daniel, Toby, and Naim are all here and they will be presenting different aspects of the Shark Tank. We will get started in about a minute. Uh, we're expecting about 200 people live. We're at 110 right now. Um, so we'll give it about a minute before we get started. Welcome to everyone. Um, now here's a question. So, I'll I'll ask you guys to put this in the chat before. Have you ever been to a live Shark Tank for multif family or built to rent before? So, here's a question. Have you ever been live? All right. So, this looks like most people have not. So, this is going to be fun. This is going to be fun, guys. So, Oh, awesome. Nobody Nobody has actually been to a live Shark

2:21 Tank. That's great. I think you guys will love it. Uh we um we call Daniel, you can see this on the screen by the way, we call him the dirt to deal architect. So we're going to actually ask him to tell um sort of a little bit of a story of you know how he went from dirt to deal as an architect. He actually is a licensed architect. Um so we you know so this is a this is a session and I I want to give you a little bit of context to this right. So this session and we want to do a a number of these. So, we're going to have three different deal or no deal sessions. And the first one, this one is about land deals. And you'll see the team pitching multiple land deals. And so, they're pieces of land that we

3:07 basically have to buy and then zone and entitle and, you know, and permit and maybe we'll flip them, maybe we'll build them. And then the second time we come back, it will be buildings, right? So the next session that we'll do will be acquisition of buildings because acquisition of buildings is something that many of you are familiar with but I do not think that any of you have ever been to a land shark tank. So we thought that we'd start with land and then we'll do another one where we're doing um you know uh an existing apartment complex. Same you know team. But what's cool is that when when we're doing the land ones I'm the shark right? And when we uh do the uh the apartment one, we will have Daniel uh joining me as a shark. So he

3:53 on the on the um on the existing apartment ones, he's actually one of the two sharks. And then there's other team members that will play the role, Wendy and others that play the role of pitching the property. So very fun. Um very interesting. And um so we've got more than 150 people in here. It is 503. Um, so our our um uh controlling person today, oh not controlling person, I don't know what the right thing to say is. So Toby is driving the deck, right? So he does and he does every every every presentation we do 100% of our presentations. Always driving. Yep. He's always driving the presentation. So Toby, let's get started. Let's move on to the next slide. All right. So

4:38 Daniel's got a team of eight people that basically participate in this whole Shark Tank process. So I'm going to invite Daniel to tell us a little bit about himself and then basically talk about what the roles are that that people play. You'll notice that some of these people you're about to hear them like J is here, Toby's here, um Naim's here, right? But not all of his team members are here today. So Daniel, take it away. Tell us more about yourself and the team. Yeah, I mean, first of all, what we do on almost a weekly basis with these presentations, couldn't do it without the people that are on this call and the the folks you're going to see uh here on this presentation. Uh I've been working with Neil for for almost two years. Uh I lead our development initiatives with land, that means new construction of both multif family and

5:24 BTR town homes. We I'm also involved with Neil in many other aspects like he alluded to with acquiring existing assets too. So Neil and I are are you know involved in many initiatives and uh like I said we have a phenomenal team. Janine really leads our operations. Uh we couldn't do any of this without her. Steven leads our construction and that's our construction practice uh leading our projects across the country. I'm actually with Stephen right now in Burlington, Vermont. We've got a couple projects that we're kicking off up there. JMO, who you're going to meet. He leads our zoning, entitlements, land use planning. Uh he's really the start of the pre-development process. He's involved in our presentations. He really does our due diligence every single week. And then he leads the projects all the way through to we hand it off to

6:10 construction. Toby, next slide, please. Naimm, and I'm not just saying this because he's on the call, probably the best underwriter that I've ever worked with, maybe aside from Neil. uh he is uh intelligent uh you know honest uh extremely efficient uh Yousef works for for him as his underwriter great team there uh Danil is a project manager and then Toby has been with us in this group the longest in mission 10K uh he's been with us for two years he was with Neil prior uh to that we do these presentations almost every single week you'll see our pipeline that Toby has to handle of incoming deal flow I think is I have never experienced anything like it and we'll allude to that. But Toby's

6:56 organization, his attitude, uh his efficiency, his personality, uh I don't think you'll hear from Toby today, but uh he's really the the wheel that makes this all spin. Next wonderful. Before you before you talk about the the pipeline here, I want to say this to everyone. So many of you are multif family folks, so you're like, "Wow, this is about land. you know, it's not my thing. I want to point out to you that in each of the pitches that the team does, they're going to pitch a piece of land using the same metrics that we use for buying properties. So, the metrics aren't any different. And you'll notice that in a very very high-speed pitch that right, each pitch is allowed about 15 16 minutes. We're going to go through 70 plus metrics. I'd say probably 65 of

7:43 them actually apply for apartments as well. So whether you're buying apartments or building apartments, if you're not doing a Shark Tank session like this in your company, then you're you're missing out. So and and you know, hopefully you have a pipeline like ours because ours is pretty awesome. Tell us about it, Daniel. Yeah, so this is through a period of time which is not stated on this slide. Uh but if we look at what we've brought in over the past two years of Neil and I focusing on land, I would think we're over 10,000 deals that we've probably tracked. I think this is 12 months. So Toby, I think there's 12 months, right? Yes, that's right. Okay. All right. Yeah, 12 months. Last 12 months over 6,000 deals that come in. They come in through various sources. Always like to

8:28 touch on that. I travel the country meeting people on the ground. I will say generally we don't work with brokers. We meet people through a network that we've established. And you'll find in this this allows us to get deals that are better priced, move faster, uh, than if we were to work with brokers. Sometimes we do work with brokers, but many of these deals have come in through folks like attorneys, other developers, insurance companies, even one property we have came in through a city planner. So, you know, building that, getting out there, knocking on doors, getting off off your screen is really what has built this tremendous pipeline. Uh you'll see that's 714 underwritten deals by Naim uh and his team. Out of those 6,000, we've

9:15 we've uh 140 total offers sent. Of that, 24 in LOI status. We have 85 of those that are under active consideration. And then 10 deals are in PSA. Uh many of these deals, as you'll see today, out of the 6,000, they don't even pass my initial my own kind of back of the napkin underwriting, then I'll push them to Naim. Many times it doesn't work for Naim and then they go to Neil in this Shark Tank approach. Uh and you know, for many different reasons, you'll see on these slides, Neil's will, you know, say deal or no deal. Uh and like I said, we do this in a very high cadence. And I think, you know, and I think you'll you'll agree, this is something I don't think anyone is doing. Um, and it's brought us, you know, I think, you know,

10:01 uh, just really strong and compelling deals. Next slide. So, this is activity for myself and the team. I shouldn't just take credit for it. I've got a great team that's doing many of the things you're going to see on this slide. But over the last week, we've had 300 calls made and over,200 calls received. We've received over a thousand emails. We've made 45 new connections. We've conducted 15 inerson meetings. We get a lot of texts. Uh sometimes they're very valuable. We visited uh in the past week Boston, Worcester, NSHA, New Hampshire, Burlington, Vermont, and Rumford, Maine. This is an initiative working on two. We've met with seven different banks in this period. We've also met with seven uh nine potential

10:47 investors. Through that week period, we've actually brought in 137 new deals. In one week, we've underwritten 21 of them. And we are going to be presenting three. We're not going to be presenting three today. That's going to be on a another presentation, but it's just good to know what's going on for those listening. Next slide. All right. Do you want myself to start on this one, Neil, or would you like to kick this off? Well, let me let me just set the the groundwork here. So, so this so the slides that you just saw, that's how we start each session because those are the key performance indicators, right? Daniel was talking about, you know, 300 phone calls and all of those sorts of things and and then his pipeline. Those are our key KPIs. And actually, we didn't show you all of our KPIs. There

11:32 are some that are confidential. So three or four slides were removed, but that that's how the team starts. So we know how they're doing. Like for example, there are slides that talk about specific cities and quotas for specific states and cities. But every single week, this slide is this the first and the last slide of the presentation, right? It's always the same. It always looks like this. And Daniel walks me through this through this slide. And then we basically use Google Map to go to the property. Now, keep in mind, Daniel's the one, you know, with with the millions of air miles and so is Steven, right? Steven's his construction manager. So, Daniel, Steven, J Mo, and and Naim, they are the ones that are going out to the site. I get to basically look at the sites through through Google Maps. All right, Daniel, walk us through. Great. So, just to let

12:19 everyone know too, this is a site that Neil's been to uh twice and we found this site, you know, through our trips to Reno. I believe this initially started over a year and a half ago if my memory serves me properly. This is a 13 acre site and this is close to what it looks like right now. There's been more work on the site recently and we'll talk about that as well. Uh the zoning which is very important is mix suburban and JMO I'll let JMO maybe give you a couple sentences of what that means. Yeah, thanks Dan. So mix suburban is as it says mixed suburban. So it this site could actually be a mix of both commercial and residential. It works it would have worked for apartment deals I believe as well. But in this instance um

13:05 this site came to us reszoned so it saved us some time in the planning process not having to get a cup or reszone or go to city council or any of those likes. So, um, any sites like this I encourage our team to go with cuz it saves us a lot of time and, uh, getting shovels into the ground a lot faster. Not too much time, JMO. You wouldn't have a job if all of the sites were, you know, as as good as Mount Rose. I think the next one will be more challenging. So, JO basically is continuously tracking this process of getting land from raw all the way to, you know, to entitlement. Essentially, his his job sort of finishes when we get permits. and Steven's job sort of starts there, though there's an overlap, right? So, when we know that we're about to get permits for a site, 3 4 5 months before

13:52 that, Steven, who's our construction manager, will basically start taking over from J Mo and and working working the site. Um, a couple other things. So, why are we showing you something that's a year and a half old? Well, we felt like we can do multiple sessions and actually we'll get your feedback at the end of this session if you want us to do one that's live where I've never seen it. But we felt like it's useful for us to show you some some that we've seen before and uh we've we we've liked it and and like them and others that we you know we pitched before that we didn't like so that this is a combination of those uh but the process that we're following is exactly the same. Back to you Dan. Sure. So the price which is at 2,265,120 which equates 15,514 per unit. just to let everyone know listening in

14:38 that was not our original price. So, so you're kind of looking back in time and if we talk about today, uh this is the price we have. Uh I think at the time we were probably another million and a half over that and we'll talk about how Neil works as far as you know what happens when we get to the end of this and you know Neil and I go back and forth to what we're going to offer. The beauty of this site, which I want to start off talking about, is this site and part of our sale, what we've negotiated, is the current owner of the land is making this site pad ready. Now, what does that mean? They're putting all the infrastructure, that's utilities, that's roads, sidewalks, all in for us prior to us taking possession of the property prior to closing. So, within that 2

15:23 million, 2.2 million, there's a lot of work and a lot of value there. So, how much do you think we'd we'd put in in terms of time and also in terms of dollars if the site wasn't pad ready? Daniel? Yeah, we've looked at cost anywhere between $500,000 to to upwards of a million dollars as far as the work that's being put into the site. So, um you know, as everyone knows who's a developer right now, costs are extremely high. So, any way we can be creative and find a way to save money and partner with a seller who's also doing site work, dirt work, etc., That's extremely helpful and allowed us to make this project pencil even more. Next piece is expected yield. So what does that mean? That's 146 units. We look at that in a number of different ways. So we do what's called a massing study. And you

16:10 may or may not know that we have in-house architecture besides JMO. So we have Becca Roberts, we have Owen, we have See, they all on our architecture team and we also employ civil engineers and then we have JO. They collaborate together to do that study to make a recommendation of unit count. Sometimes Neil will increase that account, sometimes he will lower it. You know, in many many cases Neil challenges us of, I'm sorry, you know what? There's no way you're getting 146 units here. Or, you know, I want more. We just had a call the other day about parking spaces. Neil challenges saying, look, there's no way on this project, you know, it's 107 units. I want 107 parking spaces. This goes on all the time. Uh, and it's a great back and forth. So, that's where we got that 146 units from and and

16:56 that's actually what's going on today. And and the this particular property, you're you're you're choosing to build town homes, not apartments. Correct. Correct. This is a mission 10K project. And if you know those on the call are are familiar or not familiar, it is a unbelievable initiative that Neil has championed to build 10,000 missing middle homes across the country. This is a project for that. These are town homes. There will also be a clubhouse and other amenities as well. Um, so this is a mission 10K project. The tax rate 0.56% one of Neil's data metrics, how we choose markets most of the time is low property taxes, construction costs. So you're horizontal and vertical construction cost. Now that's a misnomer because there is no horizontal work going on here. So it is purely vertical

17:42 construction cost and that's coming out at 128 per square foot. It says SBED. What does that mean? Well, we are partnering in a hybrid approach with Southern Brothers Construction. They are doing another project for us. We really like them and we are bringing in national subcontractors called jobbers. We're also handling a lot of the procurement and thus we've through our creativity and ingenuity brought down our construction costs significantly. So, that's a very exciting uh piece that's gone on. We track insurance. Uh that's something that Naim and his underwriting team have built. They've got a great relationship with a national insurance company that's quoting us on a per unit basis. What those costs are average market rents 2540. That's a average market rent per

18:29 square foot of a little over $2. Maybe Naimm you could just two sentences on kind of your approach. We'll dig into that later, but maybe just talk about how those how that comes to be. Yeah, thanks Dan. Um, a as uh Daniel just mentioned, you know, there's there's quite a few uh big items such as tax rates, uh insurance cost, market rents, opex ratios, a lot of things that go into play uh when we're underwriting these deals. And once all of those uh check marks are are are checked for us, that's when we decide whether this deal is even going to be profitable or not. One big portion of that is obviously the market rents. Now, for those uh that may or may not know me, I am known to be very conservative, which does get a lot of backlash from from Daniel. Neil does

19:14 like that approach. Um, however, whenever I'm presenting a deal, I like to be confident and stand behind my numbers. So, majority of the time, the numbers that I am I'm pitching are going to be lower than what we what I expect that we should be able to get. And we usually verify that through market study. So we have a backs stop to Naim and the team in that for each project we spend $7,000 to a third party and you know so far in almost every case Naim's rents come out lower than the market study rents. That way we know we've got some rooms. There's also this interesting score at the bottom which is a a use of AI in our company elevation absorption score. This property has a very high score. The maximum score is 10. We don't often see scores this high. Essentially what this means is that this

20:00 submarket in in uh this area. So what we use a lot of different analytics software. We're not going to mention what the names are but essentially what we do is we pull reports from that software. We've created what is known as a chat GPD powered string. So Naim and and Toby and I work together. We created a powered string. Chat GPD is dumb but if you give it lots and lots of instructions and ideas and cons uh and and concepts, it actually becomes super smart. So when we throw a report into it, an analytics report into it, it compares that report with all of the previous reports that it's gotten and gives this particular submarket a score out of 10. Right? A score of anything above six is acceptable. Anything above eight is awesome. Anything approaching nine is incredible, right? So that's that's a that's a site that will just

20:46 suck up all of those units without any changes in occupancy. [Music]