YouSaid · the spoken record

Marshall Boyd

lines on the record: 70
first: 2023-02-06
most recent: 2023-02-06
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

“Got to take a moment to burn the lifeboats. There's a moment where I think a lot of people are hedging in their careers. I think a lot of people are constantly looking at switching. And so just saying there's going to be a moment where I'm going to put my head down for three years, five years, eight years, whatever it is, and really invest in this thing and whether it works out or not, I'll believe that being excellent at it will pay dividends in the next thing or maybe this thing. But that idea, just putting your head down and you don't need to constantly be hedging or have a fallback because the switching or the reevaluation constantly is very distracting from excellence in the moment.”
2023-02-06 · Capital Allocators · Marshall Boyd – Meat and Potatoes Multi-Family Real Estate at IEC (Capital Allocators, EP.295) · IDENTIFIED FROM THE TRANSCRIPT · source
“A lot of people believe you shouldn't invest for your family and friends. My parents always said you're honest in business and you're doing great work, then you can work with your family and friends and it'll be joyful. This idea being that good folks win. It's not every moment. It's not every deal for certain. But in the end, things come around. And if you just keep your true north, I think investors, team, residents will understand that you have a true north. And so that's something that's been very gratifying. And there were moments in my career where maybe that wasn't the case. I'm reconvicted that that is the case.”
2023-02-06 · Capital Allocators · Marshall Boyd – Meat and Potatoes Multi-Family Real Estate at IEC (Capital Allocators, EP.295) · IDENTIFIED FROM THE TRANSCRIPT · source
“My father liked to talk a lot. He was a big character, maybe as a child of his, I would roll my eyes a bit. But then, if I ask them, gosh, you barely said anything. Honestly, I get too quiet, and so I should, I need to find ways to get involved, if that makes sense. I try to offset that by doing coffees and taking our team out to lunch where I'm forced to interact, but in the office, I'm very heads down.”
2023-02-06 · Capital Allocators · Marshall Boyd – Meat and Potatoes Multi-Family Real Estate at IEC (Capital Allocators, EP.295) · IDENTIFIED FROM THE TRANSCRIPT · source
“These unloved family owned deals. We can combine that with a location that we have a special view on. That's something that we're jumping on our southwest flight the next morning. We do a lot of 6 a.m. flights and that's one that gets me on a flight every single time because a lot of times you have the unloved family deal that has a nice story, but we don't know anything about the town or we dislike the town. We don't like the location. That disqualifies a deal. So if you can have that intersection of a little bit of good fortune on a deal coming around and something you've already studied extensively, that's not to blame for me.”
2023-02-06 · Capital Allocators · Marshall Boyd – Meat and Potatoes Multi-Family Real Estate at IEC (Capital Allocators, EP.295) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think my father, just his academic approach, I got to hand that to him. Being a professor is very strange to have a professor of economics be running a real estate firm. This idea that there's somebody always smarter in the room, I think is something I definitely appreciate. And then Frank Quatrone, it was a long time ago I worked for him, but I learned a lot watching him operate and then continuing to track his career. And then ultimately I got laid off by him in late 2003, I think that was. And that really gave me a sense of Like I said, I don't deserve anything. I got to go out and create value, got to create opportunity. The cycle can move on you, things that you think are not movable are movable, it turns out in life. That was a gift to get that gift at the age of 23 or whatever you are at that age. That was something that I'd definitely thank him for.”
2023-02-06 · Capital Allocators · Marshall Boyd – Meat and Potatoes Multi-Family Real Estate at IEC (Capital Allocators, EP.295) · IDENTIFIED FROM THE TRANSCRIPT · source
“People talk about fund creep or the J curve. I think what they ought to look at is when people use the word I in association with an investment or an outcome, we're a small company, but with our 100 associates, there's a lot of people getting things done. So the use of the word I when speaking about something that the firm has accomplished, and even the hubris of saying sometimes things are given to you by the market, sometimes you earned them in spite of the market, or sometimes both happen, this idea of taking credit is something that's overdone.”
2023-02-06 · Capital Allocators · Marshall Boyd – Meat and Potatoes Multi-Family Real Estate at IEC (Capital Allocators, EP.295) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think one is just folks saying they don't have time. I think everybody has time. I think we have a lot of time. I think when your average American is watching four hours of television, there's a lot of time to work with. And so this idea that I don't have time either for work or social or athletics go to bed earlier, get up earlier, cut out some of the things you do on the side. I think we all have time.”
2023-02-06 · Capital Allocators · Marshall Boyd – Meat and Potatoes Multi-Family Real Estate at IEC (Capital Allocators, EP.295) · IDENTIFIED FROM THE TRANSCRIPT · source
“Done Ultramans, I've done iron men. If somebody wants to train up to do a five hour swim, I'll do that too. So really pushing yourself, I think it gives you a sense of grit and a sense of purpose and having these little projects you're always taken away at. Every morning with that headlamp, there's something I'm working towards, which is really fun.”
2023-02-06 · Capital Allocators · Marshall Boyd – Meat and Potatoes Multi-Family Real Estate at IEC (Capital Allocators, EP.295) · IDENTIFIED FROM THE TRANSCRIPT · source
“Me, it's pre sunrise athletics with friends. So, my headlamp gets a lot of use out there this morning running through the frost in the dark. And so for me, between work and travel and family, it's very easy to not have time for some physical activity and the social piece. To have friends where they don't really know what I even do for a living and I don't know what they do, but they're just folks that I have a good time with and then push ourselves, whether it's running up a mountain or swimming in the bay, almost always in the dark, which is a funny way to have your social life.”
2023-02-06 · Capital Allocators · Marshall Boyd – Meat and Potatoes Multi-Family Real Estate at IEC (Capital Allocators, EP.295) · IDENTIFIED FROM THE TRANSCRIPT · source
“And we're seeing a lot of folks where they forgot about that for a while, and now they're tending to it. And so thinking about that is really important too.”
2023-02-06 · Capital Allocators · Marshall Boyd – Meat and Potatoes Multi-Family Real Estate at IEC (Capital Allocators, EP.295) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think dominating and showing excellence in this middle market space is where we want to be. There's a lot to do here. I think we're just scratching the surface. But I think staying in our lane is very important to us. I think it's self-serving. I think it's good for our team. I think it's good for our investors. Just continuing to be very focused on this coastal market of what we do, maybe finding other products in those neighborhoods, other versions of multifamily. We're the meat potatoes group. We think that's interesting. I think continuing to grow our teams internally and find ways to keep them motivated, promote internally, have a track for folks is super important. And then growing our investment committee that are all promote holders and they run various pieces of their business continuing to give them ways to elevate. That's a real responsibility for us so we don't end up in the position that some folks that are 20 years older than we are dealing with on a transition standpoint, even though we're young and we don't have to worry about it that much. We want to be planning forward for the business so that it endures.”
2023-02-06 · Capital Allocators · Marshall Boyd – Meat and Potatoes Multi-Family Real Estate at IEC (Capital Allocators, EP.295) · IDENTIFIED FROM THE TRANSCRIPT · source
“Been pretty exciting to see the wages of our residents catapult up over the last few years. So are the rent-to-income ratio for our residents is about 17%, so about 17% of their income goes to rent, and that's really healthy. We get really worried when that touches 30 to 50 percent, and then suddenly they have to not have a car or really trim into something that hurts in their life. What we found is even folks who work at restaurants in Napa are making a lot more money than they used to because the hotel's making more on their per night and then they're going to pay folks whatever they need to to staff the restaurant and the folks working at that restaurant live at our building. And so what we find is their incomes are moving up very nicely. The same in the tech community. That's been something that gives us confidence. And I think if you're in Boise, I don't think the wages are moving up at the same level that they do on the coast. And I think that's something that we'll pay dividends in the coming years in terms of resiliency of our residents.”
2023-02-06 · Capital Allocators · Marshall Boyd – Meat and Potatoes Multi-Family Real Estate at IEC (Capital Allocators, EP.295) · IDENTIFIED FROM THE TRANSCRIPT · source
“A foundational issue at the property, real infrastructure or site issues, we really steer clear of that because when you're doing potatoes investing, there's no way to smooth that over. There's no 10X deal in our world. If you're doing singles and doubles, you don't have time for a foundation that's cracked. So being very methodical on those risk front, we just have no appetite for that. If there's a mold claim at a property, we'll just move on to the next property. And that's the nice thing about it being a big universe of properties to look at.”
2023-02-06 · Capital Allocators · Marshall Boyd – Meat and Potatoes Multi-Family Real Estate at IEC (Capital Allocators, EP.295) · IDENTIFIED FROM THE TRANSCRIPT · source
“We want to have as few variables as possible. We talked about new supply, and we like markets where you can't build anything, even though it's frustrating as a resident of some of these towns. Things like earthquake risk, that's a risk. And so we have earthquake policy on the entire portfolio, which most groups don't. We just say, let's just solve for that. Obviously, nothing's ever solved. Look, the interest rate environment, you'd be remiss not to mention interest rates have effectively doubled for our product. The good news for apartments is we can still get loans. We can get really nice loans still. But if you're in retail or office, there's just no loan. You've got to do all your deals, all equity, which is pretty wild. The effects on us have been much less than others, but the doubling of the cost of the capital is no small thing. There's a resetting of pricing going on right now, which is very interesting. And so we're paying attention to that. I think there's physical plant risk for certain, especially late in the cycle. So we've been very cautious of this over the last few years. If there's an environmental risk or there's a fire risk or”
2023-02-06 · Capital Allocators · Marshall Boyd – Meat and Potatoes Multi-Family Real Estate at IEC (Capital Allocators, EP.295) · IDENTIFIED FROM THE TRANSCRIPT · source
“I'd be remiss if I didn't ask you about risks. And the first obvious place to think about is the macroeconomic environment and what we're seeing with rates and the potential for recession. How do you think through risk in the strategy?”
2023-02-06 · Capital Allocators · Marshall Boyd – Meat and Potatoes Multi-Family Real Estate at IEC (Capital Allocators, EP.295) · IDENTIFIED FROM THE TRANSCRIPT · source
“Wrong, but CEOing sometimes is very lonely and it does take you away from being a practitioner in your vertical. And so for us, we'll divide up the CEO duty, and that allows me to go into the investment. I really appreciate that there's office space to move or the holiday party or think about insurance or whatever it is. One of us will tackle that issue and then the next one, the other one will tackle and then the rest of their day is spent hopefully adding value for the investors and doing the thing that got us to the seat.”
2023-02-06 · Capital Allocators · Marshall Boyd – Meat and Potatoes Multi-Family Real Estate at IEC (Capital Allocators, EP.295) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's been great. I know it's not for everybody, and we get the question a lot. I try to distinguish between partner issues and sibling issues. If I was going to start a private equity firm, I would have partners. And there would be things we would disagree on, and there'd be things we'd push each other on. And those are not sibling things. Those are partner things, and they're really healthy. And that's part of building a business. And then occasionally there's sibling things. Being 100% aligned in terms of we have equal economics, we're not in most meetings together because she speaks for me and I speak for her and that's fantastic. It's actually been very clean. One thing that's beneficial is we have different things that excite us with her consulting background and my private equity background. We just have different things that fire us up and we both understand that. So it's like, hey, this thing came up. You do that. I'll do this. I also think the co-CEOing is something that's very interesting and I'm seeing it more often with some of our investors and even other firms. There's a lot of benefits to it. And I realize you can do it.”
2023-02-06 · Capital Allocators · Marshall Boyd – Meat and Potatoes Multi-Family Real Estate at IEC (Capital Allocators, EP.295) · IDENTIFIED FROM THE TRANSCRIPT · source
“In real estate, there's a lot of hubris. And so we see a lot of people that get over their skis in terms of taking themselves too seriously. There's a lot of people using the word I too much. We got 110 people and most of my job is just taking care of them and keeping them empowered. The idea of have a broad team, have a team that's empowered. We have five people on our investment committee. We have press releases that don't include my name and they shouldn't because there's other people that made that outcome happen. I really think there's benefits in terms of returns to having a team that's empowered and not having it be this one person show. We can all name a lot of private equity firms where there's really just one name that's talked about. And I think that's a real fault. A nice thing with Julia and I co-leading this business is one of us gets over our skis, we'll trim each other back pretty quick, as would our other investment committee members. And so that's a good thing too.”
2023-02-06 · Capital Allocators · Marshall Boyd – Meat and Potatoes Multi-Family Real Estate at IEC (Capital Allocators, EP.295) · IDENTIFIED FROM THE TRANSCRIPT · source
“To school, that's really powerful. And so we talk about those on our Friday meeting. We talk about clean water projects in Africa that are being funded in a very small way, but from us to our foundation investors. So that's something I think our property teams actually get really fired up about. And I think a lot of people just in private equity in general don't talk enough about the ultimate recipient of why we're doing this.”
2023-02-06 · Capital Allocators · Marshall Boyd – Meat and Potatoes Multi-Family Real Estate at IEC (Capital Allocators, EP.295) · IDENTIFIED FROM THE TRANSCRIPT · source
“People do not have to work for you. There are folks who get CPI increases and get promoted occasionally within the team, which is fantastic. And we celebrate those moments, but it's very different than traditional private equity roles. We have 110 people that are working with us right now, and they work with us because we take care of them, they have transparency into management, the culture, hopefully their path up. That was something I had to learn coming out of traditional private equity. Culture was less of the focus or definitely in investment banking. I had to learn that we needed to create a place that people are excited to work. And it's not the money. And it's usually not the money in private equity either. It's about the mission and feeling really passionate about it. One thing that we've really shared with our teams top to bottom is just the mission of our investors. It's something that really motivates everybody. When they realize that the difference between sending cash back to a wealthy family, which is fine, there's a difference between that and funding scholarships for kids who are the first of their family to go.”
2023-02-06 · Capital Allocators · Marshall Boyd – Meat and Potatoes Multi-Family Real Estate at IEC (Capital Allocators, EP.295) · IDENTIFIED FROM THE TRANSCRIPT · source
“You mention at the onset that you stepped into this knowing very little about real estate. There's an aspect of real estate you hear a lot about, about how intensive it is in managing people. You're working with outside contractors, you're working with all the people in the building and your tenants. What have you learned about managing people and teams from this experience?”
2023-02-06 · Capital Allocators · Marshall Boyd – Meat and Potatoes Multi-Family Real Estate at IEC (Capital Allocators, EP.295) · IDENTIFIED FROM THE TRANSCRIPT · source
“Interesting. We don't want to be complacent, but we also think there's just a lot to do where we are. I think you look at Essex large public, they are in our geographies doing what we're doing, and they're 20 times our size. So there's plenty of opportunity to do more significant work within our sandbox. We've had some investors ask us, can you pick up five more states and go do this in those five states? for the experts in those states. We're here doing this. We have thought about owning longer in our geographies because a lot of the brokerage relationships and the location understanding we have could lend itself to acquiring a newer product. And I think that could be interesting or owning things for a much longer duration on the side. But now we're really laser focused on working with the folks who put us in business. We have a core group of about 10 investors that have been in all of our funds. If we do well for them, it's profitable for us. We're hungry to make that a good bet for them.”
2023-02-06 · Capital Allocators · Marshall Boyd – Meat and Potatoes Multi-Family Real Estate at IEC (Capital Allocators, EP.295) · IDENTIFIED FROM THE TRANSCRIPT · source
“Have you thought about adjacencies? So you can stick to your knitting, but maybe there's another group you can teach to do this in a different set of geographies. Just kind of curious the internal discussions you have about scaling laterally.”
2023-02-06 · Capital Allocators · Marshall Boyd – Meat and Potatoes Multi-Family Real Estate at IEC (Capital Allocators, EP.295) · IDENTIFIED FROM THE TRANSCRIPT · source
“Stuck to our knitting because we really appreciate the outcomes that come from that area, we didn't invent the space. There's a lot of folks who have been in this space, but now they build skyscrapers in Manhattan or Honolulu, which is fantastic, and they do great things doing that, but we are the only group that has remained in this space. And so having our fund actually does differentiate us there, which is a bit nice the way that's worked out.”
2023-02-06 · Capital Allocators · Marshall Boyd – Meat and Potatoes Multi-Family Real Estate at IEC (Capital Allocators, EP.295) · IDENTIFIED FROM THE TRANSCRIPT · source
“Important for us, the business works with having funds that buy 15 to 17 assets. Our last three funds have all had about $15 to $17 assets, and that works for us in terms of acquiring deals opportunistically. And so while the fund size has grown somewhat, we raise funds that ideally we can raise in a matter of months, close them, and then just put our heads down and get back to work. We don't let the size of the fund guide us. We let the opportunity set guide us, and we actually think it's better from a J-curve perspective as well. Really 25 years ago, the business was acquiring 20 to 400 unit buildings. Today we're buying 20 to 400 unit buildings. It just takes a little bit more capital to do that. We've been very close to not straying, both on geography, vintage, and size of asset. I think our first fund, the average building was 98 units. And our most recent fund, our average building was 107. In terms of the bricks and the sticks,”
2023-02-06 · Capital Allocators · Marshall Boyd – Meat and Potatoes Multi-Family Real Estate at IEC (Capital Allocators, EP.295) · IDENTIFIED FROM THE TRANSCRIPT · source
“When you look at your business, you went into the saying, hey, mom and dad own 10 properties, maybe we can turn this into a private equity fund. One of the questions you always run into is scale. You're finding low-hanging fruit and operationally intensive situations. How have you thought about the scale of what you can do?”
2023-02-06 · Capital Allocators · Marshall Boyd – Meat and Potatoes Multi-Family Real Estate at IEC (Capital Allocators, EP.295) · IDENTIFIED FROM THE TRANSCRIPT · source
“And you can understand how that could happen if you're sitting in New York and you're tasked with overseeing 150 assets in various states around the country. There's things that are missed. Those are a few examples where every deal has something.”
2023-02-06 · Capital Allocators · Marshall Boyd – Meat and Potatoes Multi-Family Real Estate at IEC (Capital Allocators, EP.295) · IDENTIFIED FROM THE TRANSCRIPT · source
“Mismanaged by a private individual, they had basically thumbed their nose to the district attorney and said, Well, we can raise the rent as much as we want, not taking care of the residents. And so the district attorney wanted to talk to us directly about our plan when we went in with the building. And they've been really excited to see what we did with it, that we cleaned things up, that we took care of everybody. There's all these colorful situations. One other example I'll go to is on the institutional front. So we had a 400 unit building we acquired from a large fund that folks would know. And we discovered that the garages had been locked for the entire ownership, locked off from rental. And just nobody had thought to ask we should unlock these garages and start renting them to the residents and underparked property. And that was worth about $5 million. And when you capitalize the income of that property, we opened those garages and there's cobwebs and all of them and they clearly hadn't been used in years and no clear answer on why that was the case. That kind of low hanging fruit is pretty exciting for us to see.”
2023-02-06 · Capital Allocators · Marshall Boyd – Meat and Potatoes Multi-Family Real Estate at IEC (Capital Allocators, EP.295) · IDENTIFIED FROM THE TRANSCRIPT · source
“Owned it since it was built, made multiples and multiples on their money. So we wish our returns looked like their returns. But operationally, there was opportunity. And so we got in there, ended up winning the deal actually by a handwritten letter to the individuals. And basically telling them we'd take great care of the retirement plan for them to make sure they got the capital that we delivered on the price, which we did. There's color at the property. The head of maintenance had raised his children at the property. Everyone is great friends there at the property, but there were also things that had not been dealt with, whether that was life safety or there were residents that didn't like each other and that needed to be handled. There were common areas and amenities for the residents that were locked off and only used by the staff at the property. So just low hanging fruit. There's colorful situations. We had one other where we actually had to interview with the district attorney for the town to buy this property because the property had been so”
2023-02-06 · Capital Allocators · Marshall Boyd – Meat and Potatoes Multi-Family Real Estate at IEC (Capital Allocators, EP.295) · IDENTIFIED FROM THE TRANSCRIPT · source
“Have a lot of those, so there's a property in Encinitis, which is a fancy market in North San Diego, a great beach town. In the bottom of COVID, we got a call from a broker we've known for 15 years. We started in the industry together. These are dear friends. And so he had been making calls on this 200 unit building with a condo map, so a nice quality building for a very long time. He called us and said, well, I have this opportunity. The ownership was a potato peeling factory out of the Midwest. And this is the retirement plan for the line workers at the manufacturing company. They own one or two pieces of real estate, but a really large potato peeling business. They knew nothing really much about the real estate operations, and they're not in the state. The rents were 40 to 50 percent lower than what we thought we could do with them. Granted, a fantastic investment by the individual.”
2023-02-06 · Capital Allocators · Marshall Boyd – Meat and Potatoes Multi-Family Real Estate at IEC (Capital Allocators, EP.295) · IDENTIFIED FROM THE TRANSCRIPT · source
“Things they're doing with it in the world. But we debate it. I think as well, we take on risk by buying old buildings, by doing renovations, by handling the residents and just doing all the things we're doing. I think real estate in general underestimates how much more risk you add on by taking on an additional seven years of holding a building, your market risk, and just the risk of just something happening in the property, just strange things happen. random slip and fall lawsuit or a truck driving by drives into the front of the building, God forbid things happen. And so you amplify risk by holding deals without a concrete plan of why you're holding it. So this idea of just holding for multiple, I think is overly simplistic.”
2023-02-06 · Capital Allocators · Marshall Boyd – Meat and Potatoes Multi-Family Real Estate at IEC (Capital Allocators, EP.295) · IDENTIFIED FROM THE TRANSCRIPT · source
“Partially informed by insecurity. We think of these young kids trying to build a track record that we could show people and do well for them. And really, it's all talk until we deliver cash back to somebody's hand. But Mark doesn't mean much, especially in today's environment. What's a mark? It's all changing very fast. What matters is your returns. And so for us, in the early days, it was all about, hey, we approved the thesis, sell the deal, show the folks the return on cost or the ROI and the IRR. And so it was all about building the track record that way. What was exciting as we got to know the institutional community was that most of our friends are not taxable. So foundations endowments are not paying tax. And so while we do have debates about how short to hold the deal and obviously we want an ROI that's high enough, we don't want a one-third and a 50% IRR that doesn't get the job done. We need ROIs that are much better than that. The idea of selling a building is a less painful to an endowment or foundation because they're not paying tax when we send it back to them because they securely charge.”
2023-02-06 · Capital Allocators · Marshall Boyd – Meat and Potatoes Multi-Family Real Estate at IEC (Capital Allocators, EP.295) · IDENTIFIED FROM THE TRANSCRIPT · source
“Once you've gone through a building over a couple years with this turnover, you've got it mostly renovated. You mentioned you then look to sell. A lot of people, particularly in families, think of real estate as just the yielding property. I'd love to hear, how did you come to this time horizon that's a little bit shorter than what someone might expect from a real estate investment fund?”
2023-02-06 · Capital Allocators · Marshall Boyd – Meat and Potatoes Multi-Family Real Estate at IEC (Capital Allocators, EP.295) · IDENTIFIED FROM THE TRANSCRIPT · source
“Where we can be very careful not to overspend into a unit, which is a huge risk modulation approach. So when downturns have happened in the past, even when we went into COVID, and the same thing in 07, before we really knew what was happening, we knew our return on cost wasn't quite working, despite what we were trying to figure out in the public markets, we knew we weren't getting the rent. And so the next unit didn't get renovated. We just kept it as a plain unit. You can actually forecast recessions by looking at how aggressively we're renovating our units because the data comes in from the property level versus us seeing it in the macro environment.”
2023-02-06 · Capital Allocators · Marshall Boyd – Meat and Potatoes Multi-Family Real Estate at IEC (Capital Allocators, EP.295) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, when we're renovating, we want to keep ourselves to a high standard of about a 20% return on cost. We want to make sure that we're making returns that are accretive to our aggregate returns for the deal, at least that we originally underwrite, that we're clear of that. We really test ourselves at each feature. A fun example is we'll go in and renovate an entire unit for $20,000 and we'll say, actually, that stone counter costs $2,000. We could have done a laminate counter for $1,000. On unit 103, let's actually pull back the stone and put in the laminate. And if you can get the exact same rent, we may pull back that feature. And we'll say there's actually no return on cost for that additional feature. Another way to put is some people, if you build it, they will come. That's part of real estate is if you build a building, you got to deliver the whole building, whether people like it or not. For us, with each unit, with each feature within a unit, we're iterating and constantly looking at that. And that's.”
2023-02-06 · Capital Allocators · Marshall Boyd – Meat and Potatoes Multi-Family Real Estate at IEC (Capital Allocators, EP.295) · IDENTIFIED FROM THE TRANSCRIPT · source
“You put the numbers together. So first You're talking about renovation of common areas, fixing the problems in the building, then you've got these individual units. How does the math work on either a unit basis or a building basis to get to the types of returns that you're targeting?”
2023-02-06 · Capital Allocators · Marshall Boyd – Meat and Potatoes Multi-Family Real Estate at IEC (Capital Allocators, EP.295) · IDENTIFIED FROM THE TRANSCRIPT · source
“Down to just being good to people, so we're very focused on being good to our vendors, paying them on time, doing what we'll say we'll do. Most vendors pay their teams every week, but then they have a net 30 to charge us. It's a really tough industry. They get paid every 30 days if we pay on time, but they have to pay their teams every week. So us being able to deliver them consistent work to keep their teams busy, but also paying all our bills on time and being good to them, not having them bid endlessly on projects they don't get. So we have to earn it. Nobody has to work for us. I believe in that in the firm. I believe in that with our investors. We have to earn it every single day.”
2023-02-06 · Capital Allocators · Marshall Boyd – Meat and Potatoes Multi-Family Real Estate at IEC (Capital Allocators, EP.295) · IDENTIFIED FROM THE TRANSCRIPT · source
“The market, and then that unit is released that constant turn is always happening. We have thousands of units, and it's not just in one town or in 25 towns with 30 buildings. So a lot of our towns, we only have one building. And so it's this patchwork, this tapestry of vendors and coordination to hit cost, hit timelines with various teams that are most of them are remote. It's actually pretty complicated when you go into the detail of it.”
2023-02-06 · Capital Allocators · Marshall Boyd – Meat and Potatoes Multi-Family Real Estate at IEC (Capital Allocators, EP.295) · IDENTIFIED FROM THE TRANSCRIPT · source
“To 15 days to completely gut renovate an apartment. This is going from shag carpet and pink tile and an old lampshade to a completely renovated unit in 15 days, call it, maybe spending between $15,000 and $20,000 on that unit, which anybody who's renovated a home or a condo, pretty tough to replace the entire kitchen, all the bathrooms, as well as all the living spaces, all the hardware as well in 15 days for $20,000. But that's where the devil is in the details of the process orientation of what our teams do. And so then on the 16th day, the keys are dropped back and the property manager's hand. This unit is ready to show in a perfect world they've already pre-leased it. Sometimes that happens, sometimes that doesn't. And then the days start counting in terms of the time until they lease that unit. If the unit stays vacant too long, then we're asking too high a rent. We start dropping that rent. Call it five days later or six days later. That rent will drop down a little bit until we meet.”
2023-02-06 · Capital Allocators · Marshall Boyd – Meat and Potatoes Multi-Family Real Estate at IEC (Capital Allocators, EP.295) · IDENTIFIED FROM THE TRANSCRIPT · source
“Do we'll come in and we'll put in washer dryers into units while residents are living there, and then they'll just have the washer dryer through the end of their lease. Obviously, for no cost. And they're pretty excited about that. And then when the end of their lease happens, we tend to self-cap our rent increases. So we'll offer call it a 5% or a 10% increase on a really low rent, even though the market might be 40% above that. And then folks have that decision, okay, do I want to keep living here? Is this my community for a long time or not? A lot of times they take that rent increase. We actually find our turnover is not higher than the national average. It's very similar. It's really not our actions that have people leaving. It's really just life. Like I said, having a significant other or changing jobs. The reason you live in an apartment is so you could be flexible. So then when that resident departs, we'll go in there and the clock starts. It's game on. We bonus our construction teams on renovating units. And typically it's about 12.”
2023-02-06 · Capital Allocators · Marshall Boyd – Meat and Potatoes Multi-Family Real Estate at IEC (Capital Allocators, EP.295) · IDENTIFIED FROM THE TRANSCRIPT · source
“First and foremost, we want the confidence of the residents. We want to make sure they feel good about us coming in. Usually they might have had low rents, but they also had a roof that was leaking and they had a garbage disposal that was never fixed. It was promised. So the first thing we go in is we go in and we ask every single resident, tell us everything that is wrong. And we're going to come in and we're going to fix it in the first couple weeks. And that's a little different than a lot of our competitors. And they're shocked. We come blown in and we'll fix everything. The last thing we want is leaky floorboard or leaky roof. We don't know about it and become a major problem. So it's also self-serving. So we'll come in and fix all the habitability issues day one. Then we would go in and start demonstrating our value add by replacing the pool deck or maybe putting in a gym or fixing the roof or showing the residents. We're here not just to push rents, we're here to create a better living environment. Folks are on a one-year lease typically anyway. And so they're just living their unit, paying their normal rent. Another thing we'll”
2023-02-06 · Capital Allocators · Marshall Boyd – Meat and Potatoes Multi-Family Real Estate at IEC (Capital Allocators, EP.295) · IDENTIFIED FROM THE TRANSCRIPT · source
“Everyone is different. Sometimes it's a handwritten letter to the family that maybe tips it in your direction, telling them you can help them with their generational transfer or their tax needs. These can be long conversations. And the negotiation with a family can be just as nuanced and challenging as with an institution where you're back channeling into a big institution and trying to help them understand that you're a sure thing and that you do what you say you'll do. These negotiations sometimes can happen in a couple of days. Other times they could be six months long. I think of it as the analogy of spinning plates. You kind of see where folks are spinning ten plates. You're tending to each one and you want to make sure that they're still going, but you don't want to fall in love with any individual situation. And so you just want to keep tabs on a lot of little things. That's a lot of real estate.”
2023-02-06 · Capital Allocators · Marshall Boyd – Meat and Potatoes Multi-Family Real Estate at IEC (Capital Allocators, EP.295) · IDENTIFIED FROM THE TRANSCRIPT · source
“And we can get a real sense of where cap rates peaked out in a given town. And we like these rich markets where the cap rates really never blew out. And so that gives us some sense of safety in that town. So you pay for safety, if that makes sense. Whereas in other markets, cap rates double every time. In 2002 or 2007, if their cap rates doubled, that's usually not a market we're spending a lot of time in.”
2023-02-06 · Capital Allocators · Marshall Boyd – Meat and Potatoes Multi-Family Real Estate at IEC (Capital Allocators, EP.295) · IDENTIFIED FROM THE TRANSCRIPT · source
“Deals we really love are operationally distressed. So if there's a family who's running a deal and their property may be 100% full, but if they're asking half of what market rents are, so the revenue is broken and will take several years to get that back up to where we believe it should be as residents move. It turns out about 50% of residents move every year in America. And so that's a real opportunity in our space is that as somebody gets a significant other, changes job, they move. And then at that point, we can go in, renovate the unit, and then bring the unit to where we think the market should be. You could be buying something if the revenue is half of where it should be. The cap rate could be two and a half cap. But we believe that just with normal operations, this property is somewhere between four and a five percent cap rate. That would be our view on the going in. And that's shifting today with interest rates moving up considerably. But a nice thing in our markets is we can look back to 2002. We can look back to 2002.”
2023-02-06 · Capital Allocators · Marshall Boyd – Meat and Potatoes Multi-Family Real Estate at IEC (Capital Allocators, EP.295) · IDENTIFIED FROM THE TRANSCRIPT · source
“Job raising your family in Unit One. And Unit Two could have a hoarder in the unit with magazines piled to the ceiling and a small pathway in between. Next to another family that might have seven cats and seven litter boxes. And it makes your eyes water when you go in. So we do unit by unit inspections. I do as well. Our whole team goes in there, our investment committee. And during COVID, we were wearing hair nuts and face shields and a mask and booties and gloves and requesting residents if we could see the units. And then we would leave the unit and we would take it all off, get all new PPE, and then knock on the next door. Not for the faint of heart, but it's extremely tangible of what we're doing. So you're getting in there, and if you're gritty, it's something that's pretty rewarding.”
2023-02-06 · Capital Allocators · Marshall Boyd – Meat and Potatoes Multi-Family Real Estate at IEC (Capital Allocators, EP.295) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, there's always a danger of falling in love with the real estate, it's quantitative first. So, we want to see the model before we ever even look at a photo or anything. We're looking at the model and does this make sense financially. Then we'll start looking at the block-by-block nature. We only underwrite things in towns that we have interest in investing in. So the town usually has already been underwritten. And so then it's, hey, what part of town do we want to be in? Is this in between the church that most of the community goes to and the school, which is outrageously good? And is this the path that the families take every morning? Or is this in the targeter part of town? And there's a bar that has a really bad reputation that's behind it. And there's always going to be a bad element coming and going from that bar next to the asset. Should we price the rents differently because of that? Comes down to a real block by block sense of it. You get at the property level. And I mean, it's colorful. Not every institutional teammate loves what they see when they get to the property level. There'll be a single mother of three doing a fantastic job.”
2023-02-06 · Capital Allocators · Marshall Boyd – Meat and Potatoes Multi-Family Real Estate at IEC (Capital Allocators, EP.295) · IDENTIFIED FROM THE TRANSCRIPT · source
“I know somebody who's a quick yes or a quick no, and we'll get on a plane and come and see this asset and underwrite it accurately and quickly. And so then we want to get that call. Having capital, but being easy to work with, being a quick yes or a quick no, he's super important. Another piece of it is because we don't own assets indefinitely, we'll then sell that asset three, five, six years later, and use that broker again when we sell it. And so someone who brings us a deal, they'll make twice as much. If they bring it to somebody else who never sells it, they'll make one commission when they sell it to us. They'll likely make two. And so we have a history of that as well.”
2023-02-06 · Capital Allocators · Marshall Boyd – Meat and Potatoes Multi-Family Real Estate at IEC (Capital Allocators, EP.295) · IDENTIFIED FROM THE TRANSCRIPT · source
“So we're a small team having steak dinners with a family for 10 years is not a great use of our time to unlock deals because you don't know when they'll trade. What we do do though is we keep a very close tab on the brokerage community. We have folks from Eastill Secured, which are the real estate investment banking folks all the way down to folks with a Gmail account that have a broker license. And those folks are paid as they find deals. Those are the individuals who are having dinners with a family for 10 years and then a generational transfer occurs or a tax bill happens or the family decides they want to move into retail or they want to move out of state or something happens. And then they want to meet the market. And at that point, the broker says, gosh, I've had a relationship with this family for eight years, 15 years. I have one call to make to try to make this transaction and finally get paid. And so then they have a choice on who they want to work with. And that's a call we want to get. And so we'll get the call from the broker saying, you know what, they've been very challenging.”
2023-02-06 · Capital Allocators · Marshall Boyd – Meat and Potatoes Multi-Family Real Estate at IEC (Capital Allocators, EP.295) · IDENTIFIED FROM THE TRANSCRIPT · source
“Sandbox, as I said, with 85% of it owned by non institutional folks. There's a lot of opportunity to dislodge deals, either generational transfer or just an opportunity to buy an unloved asset. One other thing that we see that's really exciting is we can also buy from institutions. So our track record with institutions is actually very similar to our High Net Worth track record, even though they're more fun stories to talk about buying from the family who's asleep at the wheel. But if you look at a big global private equity firm, you might have 15 people managing thousands of buildings. And so no matter how smart they are, they're not as close to the cooking as we are. And so we can just unlock value just as well from a big institutional group where maybe they've never even visited the asset. We live down the street and we saw it the last time it sold and we know the last owner. We know all the vendors who work there. And so we have a deep file on a lot of these properties we'll look at. We can find gems that have been overlooked in those situations as well.”
2023-02-06 · Capital Allocators · Marshall Boyd – Meat and Potatoes Multi-Family Real Estate at IEC (Capital Allocators, EP.295) · IDENTIFIED FROM THE TRANSCRIPT · source
“Silicon Valley up and down the peninsula. We do not love strict rent control because it's just challenging and honestly it raises the rent on those units that are open to market. So we don't love strict rent control. So we're not in the city of San Francisco. We're in Napa. We're in the city of Fremont just across the bay from Sunnyvale. We're in the town of Sunnyvale. We have invested in Santa Cruz. You go down the coast and we're in Ventura from Santa Barbara down into LA on the coast, Orange County on the coast and then in San Diego. And then we're also around the Seattle region as well. And that's something we're really excited about as well as the tech presence and the salaries have parity in Seattle to Silicon Valley, which is really attractive to us. So that's a huge sandbox to some global investors. They say that's very niche. For us, we say it's the western seaboard. He said you were going to invest from New York to Florida. You wouldn't say that's a small market. And for us, we're investing in a huge market and it's a gigantic.”
2023-02-06 · Capital Allocators · Marshall Boyd – Meat and Potatoes Multi-Family Real Estate at IEC (Capital Allocators, EP.295) · IDENTIFIED FROM THE TRANSCRIPT · source