YouSaid · the spoken record

Keith Wasserman

lines on the record: 62
first: 2019-02-05
most recent: 2019-02-05
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“Yeah, thanks so much for pattering, Patrick, and I enjoy listening to you as well. I'm going to be an avid listener on all the future ones as well.”
2019-02-05 · Invest Like the Best · Keith Wasserman – Real Estate Investing - [Invest Like the Best, EP.120] · IDENTIFIED FROM THE TRANSCRIPT · source
“You can always find me on Keith underscore Wasserman. DM me. You can email me Keith at geltinc.com. You know, I make myself available and try to help as many people as I can.”
2019-02-05 · Invest Like the Best · Keith Wasserman – Real Estate Investing - [Invest Like the Best, EP.120] · IDENTIFIED FROM THE TRANSCRIPT · source
“Exactly I'd say my father, he's been an amazing mentor, friend, father. He didn't need to support us in the beginning in terms of literally, he opened the door to his clients as potential investors. He did all the legal work for us for the company. He really raised me right. He didn't just give us money. Anytime I borrowed money from him, it was with interest and I paid him back. I grew up in a pretty well-off family, but just he raised me right. And I see that in some of my other friends that come from well-off families. Some of them are like that and some aren't. So I'd say the kindest thing he really did is the parenting and being able to allow me to grow and blossom, but just being able to be there if I ever had any questions and needed advice. So having a good role model and mentor. And I've had a lot of them in my life. And I think I try to pay it forward and be a role model and mentor to others. I'm always available. I love Twitter.”
2019-02-05 · Invest Like the Best · Keith Wasserman – Real Estate Investing - [Invest Like the Best, EP.120] · IDENTIFIED FROM THE TRANSCRIPT · source
“I thrive on having a good counterpart and a lot of businesses are like that. So I'd say find yourself a good counterpart. If you're technical, find yourself maybe a good salesperson that knows how to grow a business or vice versa. And I think every business nowadays is really a tech business. There's technology implemented in every single business. So knowing which technologies and how to improve your business utilizing technology, that's another big one. Put your own money at risk. I'd say people always want to see you have skin in the game if that's in terms of money or resources. That's another big one as entrepreneur. And then find a small group of passionate first customers I'd say that will really stick to what you're doing and spread the word like gospel. And that's why I'm seeing at Lambda School. I mean, I can't believe the success stories and they share it with for every person he has graduating. I'm sure they're sharing it with all their friends and family.”
2019-02-05 · Invest Like the Best · Keith Wasserman – Real Estate Investing - [Invest Like the Best, EP.120] · IDENTIFIED FROM THE TRANSCRIPT · source
“I say you've got to start small. That's always the best thing. My next favorite saying is Rome wasn't built in a day. You just put every day. You make sure you're advancing the ball up the field. Make progress on one thing every day, one single thing. And eventually those little things start adding up. It becomes a snowball effect. And the first few years, I was living at home. We weren't making any money on those little fourplexes. All the acquisition fees we made, we kept rolling back into the properties. And I'm so thankful I did that because became even bigger and better. So I'd say deferring immediate satisfaction for future satisfaction, living beneath your means, and finding a partner that having a partner is great. I love having my business partner who's also my cousin, someone I trust and love and we compliment each other so well. Like I'm more of an outside guy. He's more of the inside guy. He oversees a lot of the CapEx and the construction aspects of the business. I'm more of the marketing investor relations. So solo founders out there that do great, but”
2019-02-05 · Invest Like the Best · Keith Wasserman – Real Estate Investing - [Invest Like the Best, EP.120] · IDENTIFIED FROM THE TRANSCRIPT · source
“sold out for huge money because they've been able to scale so fast and they're taking market share away from these legacy brands and stuff that just haven't really innovated in a long time so i just think you got to continue innovating in whatever business you're in and i think uh netflix has been one of the best stories to watch”
2019-02-05 · Invest Like the Best · Keith Wasserman – Real Estate Investing - [Invest Like the Best, EP.120] · IDENTIFIED FROM THE TRANSCRIPT · source
“I'd say Netflix with Reed Hastings and what they've done there has been unbelievable. I bought into them 2002 when they were just doing envelopes and that was even really innovative. They sort of crushed Blockbuster with that. But then they saw that business model being at risk and they transformed that into a, they started doing streaming and I started watching my computer some streaming stuff and they've created a monster and now they're investing they're betting the company on original content and just being you know even though you're getting bigger and still still be very entrepreneurial you know big companies could get complacent and they're just milking the company for money you got to continually be bet the company kind of events and build to what you know you think the future is going to be I'd say and that's the only way to stay around I mean even a lot of these big incumbents in the like consumer space like Procter& Gamble and I know people that have created these direct consumer companies that have”
2019-02-05 · Invest Like the Best · Keith Wasserman – Real Estate Investing - [Invest Like the Best, EP.120] · IDENTIFIED FROM THE TRANSCRIPT · source
“like crazy and the education space is just bloated you have these stupid huge tuitions and funded by debt you know with the government it's just a terrible model I think you know certain people should go to university but others why get yourself into 200 000 of debt if you're going to be making fifty thousand forty thousand dollars a year why not do you know on the lambda school as the income share agreement you're spending zero dollars up front they've even paid people a living stipends essentially to uh to help them get”
2019-02-05 · Invest Like the Best · Keith Wasserman – Real Estate Investing - [Invest Like the Best, EP.120] · IDENTIFIED FROM THE TRANSCRIPT · source
“love being around entrepreneurs and supporting them and we have some amazing companies in that portfolio. My favorite one is Lambda School, for example. I don't know if you've been following that on Twitter. So we invested in Austin. He's an amazing founder. We participated in their seed round and their A round. He's been growing tremendously and he's really reimagining education. It's a modern day trade school that's retraining the workforce into its computer science and coding and moderating modern age jobs that are paying a lot more than what these people were making. And he's transforming lives. It's really amazing where he's making money, transforming lives. This thing is literally in my opinion going to be, I don't want to see anyone, but it could be as big as Uber. I mean, we're literally, it's unbelievable business model. And he's just a passionate gentleman who's just transforming lives and scaling.”
2019-02-05 · Invest Like the Best · Keith Wasserman – Real Estate Investing - [Invest Like the Best, EP.120] · IDENTIFIED FROM THE TRANSCRIPT · source
“Being an entrepreneur, a serial entrepreneur, I love supporting other entrepreneurs. We started making some angel investments, my business partner and I probably three, four years ago, and we said, why don't we start some kind of, we have maybe at the time four or five hundred investors. Now we have 600 investors. They're all accredited high and ultra high net worth. They don't have opportunities to do these kind of investments. Why don't we start some kind of pooled vehicle we created a small fund, we closed it out at 5 million bucks, we put around 1.5 of our own money in so we're a major shareholder in that and we brought in a gentleman who's in the Bay Area who was working in the BC space five years as a BC attorney five years as a sort of a junior partner. We made him a majority partner and we let him run with this in terms of picking the companies and doing all the he's up there meeting with entrepreneurs and founders every single day other VCs we literally helped you know we put a good chunk of our own money in and then helped raise money and that was our first fund and I just”
2019-02-05 · Invest Like the Best · Keith Wasserman – Real Estate Investing - [Invest Like the Best, EP.120] · IDENTIFIED FROM THE TRANSCRIPT · source
“The raw materials are cheaper, the labor is cheaper. At a certain point in the cycle, it doesn't really make sense to build. And we're building only locally here in LA where we know all the local rules and regulations have good connections here. We could go to the project site every day and be very involved. Whereas we're buying existing projects elsewhere, it's not as involved. Development's just very hands-on, very capital intensive. The lenders are very gun shy now. They're only lending up to maybe 65% tops on a project could maybe go higher if you have personal recourse, but we're very into just non-recourse loans. So we have to come up with a lot more cash to do these new developments. But in general, yeah, at different times of the cycle, it makes sense to build versus buy. And we're only building really locally so we can see and feel it and be involved more in high barrier to entry markets as well on the building.”
2019-02-05 · Invest Like the Best · Keith Wasserman – Real Estate Investing - [Invest Like the Best, EP.120] · IDENTIFIED FROM THE TRANSCRIPT · source
“Building has a lot more risk because when you buy a property, if it's unentitled, especially in LA, it took us a year and a half to get this building entitled We're building a 250 unit project a mile from our office here in the San Fernando Valley. So from the time of buying the site to breaking ground was a year and a half. It's going to take about a year to a year and a half to build it, the project. And then it's going to take another year to lease it all up. So you have no cash flow for four plus years. You're going to have interest rate risk when we try to take out that construction loan. You don't know exactly what the rents are going to be in four years from now. So there's a lot more risk, but then there's also a lot more potential reward. So I'd say if you could buy the land at a really good basis, it de-risks it a lot. Construction costs have just been going up astronomically. So I'd say it's just very cyclical development. You want to buy when you could buy something really cheap to land and build when these contractors don't have a lot of work and it's sort of you could.”
2019-02-05 · Invest Like the Best · Keith Wasserman – Real Estate Investing - [Invest Like the Best, EP.120] · IDENTIFIED FROM THE TRANSCRIPT · source
“gas you got. The future is electric and autonomous. There's going to be less cars on the road. There are going to be fleets owned and run by the Ubers, Tesla's Lyfts, I think, or you're going to have partnerships with the car companies. I think GM is really been in the farm on this. They bought cruise for a billion dollars. And I think it's a time to bet the company kind of thing, or else you're going to be a big fat zero in the long-term future. I don't think it's about manufacturing millions of cars anymore. It's going to be about mobility and just renting out the space in your vehicles, I think.”
2019-02-05 · Invest Like the Best · Keith Wasserman – Real Estate Investing - [Invest Like the Best, EP.120] · IDENTIFIED FROM THE TRANSCRIPT · source
“Probably where people live. I think people might, I don't know if they're going to want to live closer or farther. I think they might want to live farther in more desirable where they have more land. And literally, so I just bought a New Tesla and it has, I don't know what they call it, L3 or whatever. It has that self-driving capabilities literally from my 30 minute commute today, I clicked the turn signal a few times so it changed lanes. But other than that, it did 90% of the driving. It was pretty remarkable. I was on the phone and laughing with my friends and stuff. It was pretty crazy. And I think, you know, people are going to move a little further out and have more land and live in more desirable areas and I think that could be one set of people. Another set I think a lot of the cities are going to not need all this parking requirement. You have huge surface parking lots that you're not going to need anymore. I think there's going to be so much less cars on the road because you're only utilizing your vehicle 4% of the time. Why? And you're spending so much money for it in terms of your payment, car payment you got.”
2019-02-05 · Invest Like the Best · Keith Wasserman – Real Estate Investing - [Invest Like the Best, EP.120] · IDENTIFIED FROM THE TRANSCRIPT · source
“I should not be bullish on those kind of like large CVS Walgreens kind of stores. Even Target, I used to shop at Target a lot. I haven't been at Target in a long time. Grocery stores. My friend started, I have a friend that started Instacart, and they're just crushing it. They're partnering with a lot of these retailers. I mean, I just, the experience of going to the grocery store, I don't know where the hell anything is. I get lost in there. I start, if I'm hungry, I start buying too much. Literally, I think you're going to see more and more of that transferred into online sales and real estate, the way real estate is going to change, especially with autonomous vehicles. That'll be the biggest one. That's going to change the landscape completely. I just don't know when that'll happen, but definitely where people live, how they live. It's going to be an exciting future.”
2019-02-05 · Invest Like the Best · Keith Wasserman – Real Estate Investing - [Invest Like the Best, EP.120] · IDENTIFIED FROM THE TRANSCRIPT · source
“Internet first. They had internet first, and then they opened retail footprints. I think as Google AdWords, and it's just getting more and more expensive to advertise online, and I think having that physical...”
2019-02-05 · Invest Like the Best · Keith Wasserman – Real Estate Investing - [Invest Like the Best, EP.120] · IDENTIFIED FROM THE TRANSCRIPT · source
“like hotel to tell you the truth it's a big money suck but if you do it right maybe on a conversion you can make good money people still want that experience even though airbnb is a monster i've stayed at airbnbs before i still crave going to hotels meeting people going to the restaurants going to the bars getting an experience staying at these boutique hotels i think some of these smaller boutique hotels could do pretty well retail people are scared shitless of retail and they have amazon the 800 pound gorilla I think retail is just evolving I think retail you're not going to see as many of the big box stores you're just going to see smaller footprints there's there's one huge shopping center called the Grove that's more of an experience here in LA Rick Caruso a billionaire gentleman owns and built that he built another shopping center with the same number of tenants but it's literally a tenth the size and the sales per foot are astronomical it's also here located in LA area in the Pacific Palisades region and a lot of the retailers there are on the channel and”
2019-02-05 · Invest Like the Best · Keith Wasserman – Real Estate Investing - [Invest Like the Best, EP.120] · IDENTIFIED FROM THE TRANSCRIPT · source
“would be really interesting one also i'd say another one that's interesting is living the sort of hotel apartment kind of concept you have companies like sonder that are going big into that where i think it's like a minimum 30 day stay but you got to you have a lot of hotel like amenities but it's shorter shorter term furnished housing i think that's another big one that could be become really huge i'd say multi-tenant industrial i like because you have that multi-tenant component you're not relying on one big tenant I think you're going to have And then infill industrial like you know Amazon has an insatiable demand for more and more infill centers that could deliver within like an hour or less goods so I'd say buying industrial infill it's sort of expensive now but if you believe that there's going to just be more and more demand for people to get goods quickly you have the omnichannel retailers you could go to the store pick it up they could deliver it to you I think that's that's another big one I still”
2019-02-05 · Invest Like the Best · Keith Wasserman – Real Estate Investing - [Invest Like the Best, EP.120] · IDENTIFIED FROM THE TRANSCRIPT · source
“We have a small VC fund. We're the main investor and we invest in a lot of early stage companies. And I was just a little too late on some of these. There's one called, I think it was United Kitchens that Google Ventures backed. You have the one that Travis Callanick came into, Cloud Kitchen. He essentially bought, he runs it now. He bought out all the shareholders and stuff. And you have a few other upstarts in the LA area. I'm sure in other markets too. I think there's a lot of technology behind it too. It's not just building up the commercial kitchen space. I'd say you find a partner that's technical and we could bring the real estate and build on this. We're in so many different verticals now. I mean, literally, I didn't even talk to you much about it, but we're doing new development ground up here locally. We have the mobile home parks and RV parks. We're buying apartment buildings. We have the seed stage fund. We have our 501c3. I'm sort of pulled in a lot of different verticals. And my partners are like, we can't do anymore. But I'd say if I was starting now trying to merge state and especially in this sector.”
2019-02-05 · Invest Like the Best · Keith Wasserman – Real Estate Investing - [Invest Like the Best, EP.120] · IDENTIFIED FROM THE TRANSCRIPT · source
“The app and it doesn't have to be actually made in that restaurant. It could be made in an industrial kitchen and you wouldn't even know, but it's the same exact as long as it's the company and their quality control and it's the same food it would be the same exact thing. I think there's a huge market for that and it's going to you're going to continue continuing that technology with food delivery.”
2019-02-05 · Invest Like the Best · Keith Wasserman – Real Estate Investing - [Invest Like the Best, EP.120] · IDENTIFIED FROM THE TRANSCRIPT · source
“Footage, so I think that would be really cool. Another one is I like what Travis Kalinick and Uber's up to. He has something called Cloud Kitchen, which I think is an amazing real estate play. So he's building, he's buying and repurposing industrial buildings that are well located infill locations and making them into commercial kitchens. And it's a technology play because he's in, I think he sort of is in with like the postmates and the Uber Eats of the world where he knows where everyone's pinging to get these food, essentially. You can locate these based on where all the demand is. In restaurants nowadays, you don't even have to have a physical location. You could be built on these platforms and create a thriving business. I believe the next McDonald's, the next large, huge restaurateur is going to be built upon just delivery and not having a physical footprint. Also, a lot of restaurants are now being bogged down by all the takeout from these Ubrids and Postmates and such grubhub, where you could be ordering”
2019-02-05 · Invest Like the Best · Keith Wasserman – Real Estate Investing - [Invest Like the Best, EP.120] · IDENTIFIED FROM THE TRANSCRIPT · source
“I'd say I'd focus on sort of a riff on apartments. I think in major markets, you're going to start seeing more and more, they call it co-living. I think we work, try to do the we live component concept. I don't know how I don't think it's really taken off that much, but I'd really buy in really dense urban area where the millennials want to be. And you could essentially charge a lot more per foot because it's smaller spaces, but it's more affordable because it's smaller, essentially. And you have the communal aspect where I think now in today's age, especially with people on their mobile devices and social media and they crave that interaction with people. I think having co-living both on the millennial front and on the when people get older also it could be a great kind of business concept to have 55 plus communities age restricted communities that are built in this co-living model where people could walk places restaurants and plays and whatever movie theaters just really infill locations but where it's very affordable because of the amount of square”
2019-02-05 · Invest Like the Best · Keith Wasserman – Real Estate Investing - [Invest Like the Best, EP.120] · IDENTIFIED FROM THE TRANSCRIPT · source
“it's looking okay more and more okay to rent whereas like in China everyone owns their own home if they can't afford it they'll have a family member chip in or live at home until they could afford you know to buy their own home renting is seen sort of down on but like in america it's not bad and renty it's you can live in an amazing community and have all these amenities and and pay a lot less potentially than than home ownership. I mean, there is always a people are always looking at renting versus buying. That's why we try to buy in markets that it's just extremely hard to buy. It's very expensive. You have to have a big down payment and the rents are much more affordable. We're always monitoring that as well. Like in San Antonio, I think we could actually push rents a lot more because the average renter is only spending 22% of their income to rent, whereas in California it's up to maybe 50 plus percent even.”
2019-02-05 · Invest Like the Best · Keith Wasserman – Real Estate Investing - [Invest Like the Best, EP.120] · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so we're always monitoring the home ownership rate. I think it was up to 69%. It's dropped to around 61, 62%. Every 1% drop is like a million new renter households. So definitely there's been a proclivity for people to rent. They saw their parents lose homes and lose equity in homes. I don't know. I see, you know, I have friends that could afford buying homes, but they like the renting. They don't have to be stuck to a mortgage and it's just easier to move. with jobs being more mobile and people moving. I think just apartment living in general, you have such amazing amenities on some of these new built apartments. And I think apartment living is not going away, but I don't at the same time, I don't think it's you're going to see like a Berlin, you know, in Germany, I think it's around half the people, maybe even more rent. It's a huge amount of renters. It's really interesting. Different countries, there's not many countries that have this whole renter apartment building kind of culture. But culturally,”
2019-02-05 · Invest Like the Best · Keith Wasserman – Real Estate Investing - [Invest Like the Best, EP.120] · IDENTIFIED FROM THE TRANSCRIPT · source
“Stocks of those guys haven't really done as well as the apartment guys. Maybe they've seen some appreciation in the assets, but I didn't like the whole aggregating single-family home strategy. I really feel bullish on just professionally managed larger apartment communities.”
2019-02-05 · Invest Like the Best · Keith Wasserman – Real Estate Investing - [Invest Like the Best, EP.120] · IDENTIFIED FROM THE TRANSCRIPT · source
“Control, so maybe 25%. So people stay in their units, the rents can only be pushed a low amount per year. By year 10, 15, they're paying half of what the market is. So they have no incentive to leave. But typically apartments could have up to 50% turnover. And we're constantly, you know, it's a revolving door. We're constantly having to fill it. But the last 10, 8, 9 years have been pretty strong being able to fill these units because when we started, they literally stopped building. And you had, I think around 9 million households that were homeowners, you know, turned to renting. A lot of them went to rent homes and you had the blackstones and the American homes for rent and all these guys buying up single family. We actually looked into buying single family homes when we started this business. And we like the business model of owning instead of 100 disparate spread apart single family homes. Manageri, it's just crazy to manage. I'd rather have 100 units in one complex that's professionally managed. And I think.”
2019-02-05 · Invest Like the Best · Keith Wasserman – Real Estate Investing - [Invest Like the Best, EP.120] · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so the number one way that we fill the units is drive by still remarkably in this age with computer. So we try to buy buildings that are on major thoroughfares. We have a lot of signage. We always try to boost the signage appeal flags we put in. Just really the drive-by, the curb appeal, make it nice, presentable curb appeal, I'd say is number one. Number two, the internet has definitely, so we're pushing our management companies to really put the money into SEO and online marketing to attract users. The best is resident referrals, I'd say. When someone has a friend that's living in the community or a family member, they're typically going to stay longer. So resident referrals, sometimes we pay our residents to successfully bring in a new resident to live there. Surprisingly, though, turnover is pretty high in the apartment space, in the markets we're in up to 50%. We see turnover. People are pretty transient. They don't live there too long. In markets like California, New York, you might see it lower because you have rent.”
2019-02-05 · Invest Like the Best · Keith Wasserman – Real Estate Investing - [Invest Like the Best, EP.120] · IDENTIFIED FROM THE TRANSCRIPT · source
“literally the most affordable kind of housing and you know people own their own homes it's nice to live in a in a nice community that we take good care of we've added like basketball courts and just take you know better landscaping improve the clubhouses make it a nice community you don't have to worry about having neighbors on all four walls you know being in a park like an apartment it's a nice form of living for a lot of people”
2019-02-05 · Invest Like the Best · Keith Wasserman – Real Estate Investing - [Invest Like the Best, EP.120] · IDENTIFIED FROM THE TRANSCRIPT · source
“By selling them to the residents and get that lot rent going. It's just a great business. It's like a parking lot essentially, but I'd be afraid only parking lots now, for example, with autonomous vehicles coming around the corner. So I feel like this is recession-proof kind of bulletproof real estate. It could be a big win if you buy a park on the outskirts of town and town keeps growing and they buy a lot of these to redevelop into higher and better uses like condo, minium project or apartment building or shopping center, but we're buying them essentially to run them as cash flow businesses and they throw off tremendous cash flow. We have one park in Foley, Alabama throwing off 15-16% cash on cash return, just phenomenal return. The lowest one's throwing off 8 to 10 percent. We're seeing higher cash on cash returns, but the trade-off is you can't really push the rents as hard and as fast as per se an apartment building. But I think the counter argument is during the recession, it's literally the next step down from that is living in your car on the street. I mean, it's”
2019-02-05 · Invest Like the Best · Keith Wasserman – Real Estate Investing - [Invest Like the Best, EP.120] · IDENTIFIED FROM THE TRANSCRIPT · source
“Literally, we help raise money for them and we help with the underwriting, but he oversees all the management and acquisitions. And we're going to continue buying in that space. We love that space. There was only 10 manufactured housing communities built last year. We don't have the same supply issues. They're not building any of them. The cities don't want them, really. They don't create the same kind of tax revenue. Neighborhoods don't want them. They think it's going to lower their property values. You have some parks that are expanding. They expand ones that are already built, but we're not worried about the same problems that we have in the multifamily space with supply. You have a huge amount of supply coming online. So you have a lot of factors. It's affordable housing at its core. So, you know, more people can afford it, three to five hundred dollar lot rent. You don't have to worry about spending a lot of money fixing the buildings because the residents own the buildings. Once in a while, you'll have something called a park owned home where you will buy a park where the owner owns those homes and you'll inherit some. But we try to get them off the board.”
2019-02-05 · Invest Like the Best · Keith Wasserman – Real Estate Investing - [Invest Like the Best, EP.120] · IDENTIFIED FROM THE TRANSCRIPT · source
“Is a lot higher. You could put the same kind of debt on it. Fanny and Freddie, a lot of people don't know, they'll lend on these kind of properties. Great loans in place there. And so we started buying manufactured housing communities. I call them two and three stars. So not the real beautiful ones on golf courses with double and triple wides, but more workforce housing, affordable housing. And we've done extremely well with that. It's tough though. It's a real niche. It's not as transparent as the bigger apartments. There's far fewer brokers dealing in it. A lot of deals are sort of done off market. It's hard to break into. But once you're in, it's a great business to be in. We poached a top regional manager for Sun Communities, which is a publicly traded company. It's the second largest owner operator of these manufactured housing communities. And he's really running the charge. I wanted to start buying these five, six years ago, but my partner is, we didn't feel comfortable is we didn't have the operational experience. So we brought someone in. We made them a partner in the operation.”
2019-02-05 · Invest Like the Best · Keith Wasserman – Real Estate Investing - [Invest Like the Best, EP.120] · IDENTIFIED FROM THE TRANSCRIPT · source
“In the beginning, there was a far less competition, I think, because it was during the recession, we didn't see as many groups bidding for assets. We sort of had our pickings in the beginning. Nowadays, it's very, very competitive. We had one deal that there was literally, I think, 39 offers on. We're friendly with the broker, and we knew the seller, and it helped us win the deal. But at the end of the day, it's getting very competitive out there. And that's why we've shifted into looking to different asset classes. And that brought us to the mobile home park space. We bought around a thousand mobile home park pads. I think we own seven mobile home parks and one RV park even. But we saw that as an opportunity that wasn't really too much institutional capital yet going into the space. You're starting to see a lot of more of that right now with like Brookfield and Carlisle and you have Blackstone Private Reap. You're starting to really pile in. But when we started a couple years ago, they weren't really big in that space. And you could get a lot higher risk adjusted returns, we felt in that space.”
2019-02-05 · Invest Like the Best · Keith Wasserman – Real Estate Investing - [Invest Like the Best, EP.120] · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so I'd say 90% of the borrowing we do is from Fanny and Freddie, the quasi-government agencies. And we've always gotten pretty good pricing and it's probably gotten maybe a little bit better because of our size. They put out billions and billions of dollars a year in debt. We've had leverage as low as 65% and as high as 80%. It's sort of they under it underwrite it to a 1.25 debt coverage ratio. So there needs to be enough cash flow to cover the mortgage and then some. So they have that ratio. And on some deals where we're buying it where there's huge amount of cash flow, they'll go up to that 80%. And we will feel comfortable doing that. There's significant cash flow to cover that mortgage payment. However, as pricing values have gone higher, sort of leverage has come down a little bit. And we've sometimes, even though they'll give us 75%, we've come in maybe 65% leverage. And this way we could get 10 years of interest only. So we don't have to have any amortization. I'd rather be able to put all the cash back into our.”
2019-02-05 · Invest Like the Best · Keith Wasserman – Real Estate Investing - [Invest Like the Best, EP.120] · IDENTIFIED FROM THE TRANSCRIPT · source
“all the major capital expenditures on the properties. We're very hands-on, but we'll pay these management companies between 2% to 3% of the gross revenue. And that's sort of how the business is.”
2019-02-05 · Invest Like the Best · Keith Wasserman – Real Estate Investing - [Invest Like the Best, EP.120] · IDENTIFIED FROM THE TRANSCRIPT · source
“and it's more of an illiquid position. But the costs, so back to the question on cost of capital, the way we structure our deals is we offer a preferred rate of return between usually six and eight percent, meaning the investors get the first six to eight percent of cash flow from the property if it's short for any reason, that will accrue. And then if we sell the building, they get their full money back in full, whatever they put in. And then it's a 70-30 split. So 70% to the investor, 30% to the GELT team. And we call that the promote. And that's where the large money is made. In terms of fees, like we charge like an acquisition fee, one to two percent of the purchase price and an asset management fee of 2% of the gross revenues. We don't do the day-to-day property management. We hire third parties that are better positioned. They're large third parties in these markets that have buying power. They have the personnel on site. And we just really oversee them. We have weekly conference calls with them. Make sure we're hitting all our numbers. Make sure we're setting the rents properly.”
2019-02-05 · Invest Like the Best · Keith Wasserman – Real Estate Investing - [Invest Like the Best, EP.120] · IDENTIFIED FROM THE TRANSCRIPT · source
“People tell their friends, family, friends, or friends. There's a lot of people that have worked their whole life or are starting to earn good money and just don't know where to park it. They don't want to park too much in the bank because of low interest rate environment. The stock market sort of scares them with the volatility. I like the illiquid nature of real estate. You don't see the fluctuation of price. You're not inclined to see your stock go down or your real estate go down in value quickly and say, oh, I need to click the button and sell this thing, which is the worst thing to do, obviously. I mean, you like Warren Buffett, you want to be reading when people are fearful and fearful when people are greedy. Same goes to real estate, but you don't see that fluctuation in value and it's more illiquid. So I always tell our investors only invest money that you don't, you're not going to readily need. We do have a mechanism where if someone does need to sell, which we haven't had that yet in the last 10 years, but if we have someone that's needing that cash, we would have to offer their share to all the other investors in that deal. But they're going to get a small discount to the whole building because it is a fractional interest.”
2019-02-05 · Invest Like the Best · Keith Wasserman – Real Estate Investing - [Invest Like the Best, EP.120] · IDENTIFIED FROM THE TRANSCRIPT · source
“In the beginning, I'd say we had different deal structures with our investors that were probably a little even more friendly for investors. As we've developed that track record, we've tried to push a little bit more in our way, but not too much because investors sort of get used to the deals being a certain way. We started with small deals raising $1 million, $2 million up to $5 million on that Phoenix deal, for example. Nowadays, we're raising 15, 20, up to even $30 million of equity for these large purchases. Our largest purchase was a two-property portfolio for $107 million. We raised north of $30 million from probably around $120 investors, give or take. We have a lot of investors, our minimum per deal is like $100,000 once in a while if we know someone's going to put into a lot of different deals, we'll lower it to 50. But it's skewed because we have some larger investors that put $1 million or multiple millions per deal. But the most common check size, I'd say the mode is like $100,000. And it's literally just spread word amount.”
2019-02-05 · Invest Like the Best · Keith Wasserman – Real Estate Investing - [Invest Like the Best, EP.120] · IDENTIFIED FROM THE TRANSCRIPT · source
“Higher barrier to entry markets that it's tougher to build in and have that growth, obviously. I mean, Texas is growing tremendously. We finally did enter Texas. We bought in San Antonio because we bought it at an amazing price from a seller. We bought eight of the last nine properties we bought from the same seller. And I didn't really go into this yet, but it's all about reputation in this business. You want to be a closer, the broker at the end of the day controls the shots and really you want to have a great reputation as a closer, not someone that comes in and retrades. They say, oh, these phantom issues with the property and they have trouble raising the money maybe or they try to come in with a big price cut. We literally are good to our word. The brokers know that the commission's like money in the bank when they pick us with the sellers and we know we have great reputations with the sellers also. We bought multiple deals from the same sellers. They like working with us. We don't nickel and dime them. We're easy to work with. So it's really all about reputation and relationship in this business.”
2019-02-05 · Invest Like the Best · Keith Wasserman – Real Estate Investing - [Invest Like the Best, EP.120] · IDENTIFIED FROM THE TRANSCRIPT · source
“In California, you have CEQA, you have in LA, there's no available land essentially. In Phoenix, you have, it keeps pushing outward and sprawl. So we're not really buying in the outskirts of town. We're buying in the heart of suburban areas that are not too far from the downtown CBDs and stuff. In certain markets, you have rent control, and it's just very tough to build. You have geographic boundaries, mountains in certain areas, or the ocean, obviously, so geographic boundaries. So areas that cannot see a lot of supply. We looked at Houston, Texas, for example, one time, and we just couldn't get our heads wrapped around. They don't really have zoning. You could have industrial building next to an apartment building, and you have very high property taxes, and they could build, I mean, literally 20,000 units a year with no problem. So I'm always concerned about oversupply. That's one thing that really could put downward pressure on rents and values. So we try to buy.”
2019-02-05 · Invest Like the Best · Keith Wasserman – Real Estate Investing - [Invest Like the Best, EP.120] · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so the first thing we do is we study a market. So we really figure out which markets we want to be in, what cities we want to be in. Then we get boots on the ground, introduce ourselves to all the local brokers, the business leaders, the economic development corporations there, and try to find markets that, if possible, have higher barriers to entry. That's always a good thing. We want to have a market that has major employers that are growing, schools, hospitals, large employers.”
2019-02-05 · Invest Like the Best · Keith Wasserman – Real Estate Investing - [Invest Like the Best, EP.120] · IDENTIFIED FROM THE TRANSCRIPT · source
“On a 20-unit building, you can't afford to have that. And on a Fourplex, for example, if you have one unit vacant, you're 75% occupied only. On a 200 unit building, you're always going to have people coming and going, but you're going to consistently maintain that 95, 96% occupancy. So you're going to have more fluid cash flows coming in.”
2019-02-05 · Invest Like the Best · Keith Wasserman – Real Estate Investing - [Invest Like the Best, EP.120] · IDENTIFIED FROM THE TRANSCRIPT · source
“You got to capitalize the projects right. At the basis that we bought it, the best and highest used was to scrape the site and probably develop. But at the time, we had no development experience. I guess we could have partnered with a developer. We could have contributed to land and partnered with a developer and built even more than 400 units on the site and made it luxurious, brand new building because our cost basis was so low and it was such a prime piece of real estate. But that was the next major jump. And then after that, I'd say next major jump was literally just new markets and rinse and repeat. We kept buying larger buildings that were larger and larger in terms of number of units and purchase price. I always tell everyone it takes the same amount of time and energy to buy a 20 unit building as a 200 unit building. There's less competition for the larger assets. There's more economies of scale. So on a 200 unit building, you could have five, six, seven employees on site between the management office. You have your on-site management leasing staff, maintenance tech.”
2019-02-05 · Invest Like the Best · Keith Wasserman – Real Estate Investing - [Invest Like the Best, EP.120] · IDENTIFIED FROM THE TRANSCRIPT · source
“I don't know if you're familiar with Phoenix. Amazing piece of property on 10 acres of land from a major REIT that had owned it for a long time. We paid $16 million for the property. It was $415 units. A lot of people were just fearful at the time because of the environment. Also, the building was mainly singles and studios and maybe some small one bedrooms. So people were like, oh, they're small units. But I actually like the small units because it's more affordable in terms of absolute rent. So we were undercapitalized. We only raised five and a half million dollars. It took us a long time to raise that money. I think we had a close with our lines of credit and we just kept raising money. But literally that was one of the best deals we bought. We put maybe a million dollars into the property and to ensure renovations, fixing some deferred capital items. We sold it a few years later for 27 million. But then that property, the new investor, put $8 million into it, did a proper large renovation. They were well capitalized and they sold it for around $45 million.”
2019-02-05 · Invest Like the Best · Keith Wasserman – Real Estate Investing - [Invest Like the Best, EP.120] · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so the first major leap was jumping from the four-unit buildings to the 78-unit. That was definitely a major leap. The second leap was geographically, I'd say. So we started in Bakersfield. We bought 13, 14 of those four plexes, bought the 78 unit December of 09. In 2010, we made another jump. We moved into Phoenix. So looking back, Phoenix was decimated by the housing bust. Literally rents dropped 20% from peak to trough in the apartment space. And they had around 100,000 people leave due to the immigration bill that passed, 100,000 illegals left. And they had buildings that were half vacant, essentially. So there was blood in the streets. And I've been going to Phoenix my whole life because my grandparents lived there. And it's the fifth largest city in the United States. I had a good feeling it was going to recover from the recession. I didn't know it was going to go be so quick, but we started buying buildings in Phoenix, large buildings. The first one we bought was 415 units on Camelback, right by the Billbar Hotel.”
2019-02-05 · Invest Like the Best · Keith Wasserman – Real Estate Investing - [Invest Like the Best, EP.120] · IDENTIFIED FROM THE TRANSCRIPT · source
“Restart, yeah. So I think a lot of long-term ownership has done that. My parents have owned a building around that time, and I bet they're going to start thinking about potentially wanting to exchange it because of all that cash flow is starting to be not sheltered. So it's definitely, I think, in people's mind if they own buildings a long time. But a great thing that we're doing now is that cost segregation, they break out personal property versus real property. And some of this personal property has shorter term amortization schedules like 10 years compared to the 27 years. So it front loads the depreciation so you get that higher depreciation up front, which will definitely make sure you're not paying income taxes on that income on those properties.”
2019-02-05 · Invest Like the Best · Keith Wasserman – Real Estate Investing - [Invest Like the Best, EP.120] · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, it happens all the time. So I think commercial compared to multifamily, one's like 27 years, one's 33 years, if it was a straight line depreciation schedule. So long-term ownership, we're buying a building right now from an owner that's owned it around that time period. And that's probably part of the reason why they're selling it, because now all the income cannot be sheltered. And literally, they could sell that building and exchange it into a new building and then have that depreciation schedule.”
2019-02-05 · Invest Like the Best · Keith Wasserman – Real Estate Investing - [Invest Like the Best, EP.120] · IDENTIFIED FROM THE TRANSCRIPT · source
“It's literally, in my opinion, the best asset class in terms of tax savings. All the income you're receiving, especially if you do cost segregation or accelerated depreciation, they call it, all that initial cash flow in the beginning years is essentially tax deferred until you sell that building. But if you sell that building in 1031, you could keep kicking the can down the road and not have to pay that tax either. So you have the depreciation, which is a phantom expense, which essentially”
2019-02-05 · Invest Like the Best · Keith Wasserman – Real Estate Investing - [Invest Like the Best, EP.120] · IDENTIFIED FROM THE TRANSCRIPT · source
“So really, you know, making sure we don't over improve the property, but taking good care of because we want to hold these for the long term.”
2019-02-05 · Invest Like the Best · Keith Wasserman – Real Estate Investing - [Invest Like the Best, EP.120] · IDENTIFIED FROM THE TRANSCRIPT · source
“and just hold on and keep refinancing over the years and pulling out money that way and literally just hold on to these assets and take good care of them. Don't over improve them. We have a saying run it like a Honda. We take really good care of it. We're buying workforce housing built in the 80s and 70s, 80s and 90s. If you spend too much money renovating a unit, you're not going to get it back in terms of ROI. I mean, depending on the market, we've spent up to 40, 50,000 per unit renovating, but that's when the rents were maybe 800 to $1,000 when the market was $2,500 when something was just being totally mismanaged and slummed. But primarily we're buying workforce housing where the rents are around $1,000, $1,200, you know, very affordable here on the western United States. We're in 10 different states now, but primarily markets like Denver, Carl, Colorado, Salt Lake City, Seattle, Reno, spending $2,000 to $8,000 per unit and lifting the rents 100 to $250 in the process.”
2019-02-05 · Invest Like the Best · Keith Wasserman – Real Estate Investing - [Invest Like the Best, EP.120] · IDENTIFIED FROM THE TRANSCRIPT · source
“We have bought around 7,500 to 8,000 apartment units in total of over the last 10 years. We've sold around 2,500 of them. We've sold them primarily to create a track record. We went full cycle on these buildings to return capital to the investors. And then whenever we found a new deal, they essentially gave us all that money and then more and told our friends, family, et cetera. And that's what's enabled us to grow to around 600 accredited, you know, high and ultra high net worth investors. Everything and anything we've sold, essentially regretted selling because they've gone up in value so much more. So our philosophy is right now to really just build a portfolio and sell occasionally if we feel like someone makes us an offer that's maybe way above market price and we could either 1031 that money into a different property that has a lot of upside. But if it's a golden goose laying the golden eggs, why get rid of it? That's our philosophy. So really our long-term goal is to build a large portfolio.”
2019-02-05 · Invest Like the Best · Keith Wasserman – Real Estate Investing - [Invest Like the Best, EP.120] · IDENTIFIED FROM THE TRANSCRIPT · source