Breaking Out In a Competitive Market
On this episode of Next Level American Dream, Abigail and Sean are joined by Emily Cortright and Adam Roberts. Emily and Adam have been investing in multifamily in the Dallas-Fort Worth area since 2017 and have seen great success. Today they discuss the challenges and how to stay competitive in high saturated market.
Key Topics
How do you stay competitive in such a saturated market?
What are some challenges investing in a competitive market?
What is your advice for people starting out?
Connect with Adam & Emily:
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SUMMARY KEYWORDS
Multifamily, property, people, deal, business, building, offers, Emily, team, important, Adam, started, investing, DFW, find, raise, investors, talk, units, rent
SPEAKERS
Sean Thomson, Abigail Thomson, Adam Roberts, Emily Cortright & Adam Roberts, Emily Cortright
Abigail Thomson 00:00
Welcome to the Next Level American Dream Podcast brought to you by Thomson Multifamily Group. Your hosts, Abigail and Sean, will discuss how you can take your American Dream to the next level through real estate investing, business practices, and personal development. Join us as we share our experiences as a father daughter duo who are trying to accomplish our goal of financial freedom. We hope you learn more about how to define and achieve your American Dream. Here's another episode of Next Level American Dream. On today's episode of Next Level American Dream. Sean sits down with Emily Cortright and Adam Roberts. They have been investing in Multifamily since 2017 in the Dallas/Fort Worth area and are using their past experience and corporate leadership to drive their success. They now have over $38 million in real estate, and today they discuss with Sean how they were able to be so accomplished in such a competitive market. If you're interested in learning more about multifamily investing, visit our website at www.thomsonmultifamilygroup.com.
Sean Thomson 01:07
Hi, Emily and Adam. Thanks for being on The Next Level American Dream Podcast! How are you guys doing?
Emily Cortright & Adam Roberts 01:11
Great! Thanks for having us here.
Sean Thomson 01:13
Good. I'm glad you guys can make it. You know, we met at a Aaron Katz event. And I heard you guys talk about your apartment. And it was amazing that you knew, like every little detail of your property and so in depth, and I could really see how you guys are being so successful in multifamily. So I was really appreciative that you guys were willing to come on the show. If you don't mind, maybe just tell people kind of your background and how you got into real estate.
Adam Roberts 01:36
Yeah, so I'm originally from Philadelphia, Emily's originally from Cincinnati. And we worked for about 10 years or so the aerospace industry design engineering and manufacturing of jet engines. And while we were on a work rotation out in California, GE Aviation who worked for sold our businesses. And at that time, it was pretty traumatizing, because we thought we were the next CEO, C suite level executives of GE, and that so at that point is time for us to kind of look for something different, whether that be other jobs or something else in life. We ended up going to a couple of real estate events in California where we were living. And it kind of got us really interested in the single-family real estate business. We attempted to do some single-family real estate investing in California, but it wasn't really wasn't the right time financially for us. So, we relocated to Fort Worth, Texas, where I got another job in the aerospace industry. And Emily did not go back to work. She started to flip single family homes and build a small rental portfolio right here in Fort Worth, Texas. And so that was really our introduction to real estate investing, just flipping single family homes keeping a rental every so often until we had a small rental portfolio. And we did that for about four or five years.
Sean Thomson 03:02
We'll talk about that's interesting transition to aerospace to real estate stuff that doesn't that's not a direct line, I guess. necessarily think about it. Talk about So you started with single family. What was it about single family that are against multifamily? Because you guys are in multifamily now, what was it about one of the other that kind of made you make the transition to multifamily from single family
Emily Cortright 03:26
With the single-family homes, we were self-managing those. And since I was full time in real estate, I was the main contact for maintenance, leasing, everything like that. And it was I was very much in the landlord role. So, the toilet broke, I got a call the air conditioner broke, I got a call. And the cash flow was not growing fast enough for Adam to join me full time, just and we had been investing for about four years and the market started to shift where we were doing more flips than we were rentals because the flips were more profitable. And so, there were cash flow goals in order to get Adam to quit his job and join me full time that we just weren't hitting fast enough. So, we started looking for other opportunities and we went to a two-day educational seminar on multifamily investing here in DFW and it was completely mind blowing, how much more sophisticated it was than single family investing. It really was the business owner mindset instead of the landlord mindset. And that was one of the biggest things that drew us to multifamily as well as the cash flow that it could provide. So, we after that weekend, we joined the Brad some rock educational program as a personal mentoring student. So, it's it’s a coaching and mentoring program. We got educated on how to buy analyze, acquire multifamily properties. And I think that was really important because that was the first time, we were going to manage other people's money. So, with single family, it was all our own money. And if the deal did great, we did great. And if it didn't do so good, it was all on us. But with multi family, you're managing millions and millions of dollars of other people's money. So, I think it was very critical that we got formal education and had some personal coaching as we were making our first offers.
Sean Thomson 05:22
Yeah, so it's the way you look at your business is you look at your business as sort of an acquisitions business, or you look at your business as an asset management business for investors, how do you kind of guys kind of look at how you do what your role is in this in this whole multifamily business?
Adam Roberts 05:37
I mean, it's really both when you when you look at our personal finance and the cash flow goals that Emily was talking about, you do have to be in the business of acquisitions. And everybody's financial goals are different, depending on where they're where they're at, you know, what stage of life things like that. But yeah, for us, it was, you know, at that point, it was all about me joining her full time. And even today, in order to achieve some of our financial goals, the properties we own today, we're eventually going to disposition and so we're going to have to continue to look for cash flowing properties that we can bring to our portfolio, not to ignore the asset management aspect, because you'll quickly realize that one aspect of building a successful foundation to the multifamily business is ensuring you know how to operate the asset, that you know how to communicate with investors set expectations, not only for the investors, but for the teams that are running the properties. And so, it's really, it's a little bit of both.
Emily Cortright 06:36
But one change we did make in February of this year was we created more defined roles and responsibilities between us. So as a husband-and-wife team, as of January, Adam took over all of the asset management. And I took over all of the acquisitions. And before that we were doing, we were sharing, roll sharing responsibilities for each one. And it got to the point where we were starting to step on each other's toes. And so, we, we benchmarked, the other has successful husband and wife couples in the group and learned that they were very well-defined roles of asset management and acquisition. So we made that change in January, and that's been a great benefit to us.
Sean Thomson 07:18
Yeah, and multifamily, it's almost like you have almost like you have two separate silos of responsibility there. And they kind of run on the same asset class, but they're, they're, they're run separately or kind of differently. So focusing on one of the others sometimes is what a lot of people will do, and they'll just partner with people to kind of supplement. So I was curious if you guys were doing both, and how that kind of looked. So that's great. Yeah, you guys are working together on doing that. And you guys, you guys do most of your business in the Dallas market, right? In the DFW area?
Emily Cortright 07:50
Correct. Yeah, syndications? Yes. We invest passively throughout Texas.
Sean Thomson 07:56
So you look, when you're shopping for acquisitions, you're looking throughout Texas?
Adam Roberts 08:01
For any deals that we're going to syndicate as lead sponsors and operate as asset managers. It's only in Dallas Fort Worth.
Sean Thomson 08:09
So you're only in Dallas Fort Worth. So that's another question I have, you know, Dallas Fort Worth is a very competitive market. You know, there's some rock group that you guys are part of or came from, that's a large group, they do a lot of business in Dallas, there's a there's a number of multifamily buying groups that are based here in Dallas, and you just have, this is a really hot market for for everybody to buy in. And it seems like everybody wants to own property here. All kinds of property, you know, everything. So how do you guys being a new investors? How do you How did you guys kind of overcome some of that competitive nature this marketplace and find properties? Because you guys have had some tremendous success in the few deals you've done already? How have you guys been successful and able to overcome that, that competitiveness?
Adam Roberts 08:53
Really, the first thing that we tackled was building the right team, having an extremely experienced and strong team working alongside us. And not only from, you know, like our vendor partners, one good thing about the group that we joined, is there's a lot of vendors that are already vetted, and experience in the group has used and that there's, there's there's a trust there. And so that was one big aspect of it. If, you know, if you're working with a broker, and you're making offers and the broker knows that you're using, you know, khalasar and Associates, for example, for as your legal team, there's a there's a level of trust there that the se do ratio on the transaction is going to be very, very positive. In addition, you know, there's several ways to get into this business. The route that we chose was to find a more experienced partner to work with who had done several deals and who'd been experienced in the DFW area for many years. And that, you know, helped pump up our resume quite a bit when we when we went to make offers on properties. And, you know, as with any partnership, you know, there's a Win Win there as far as, you know, workload and compensation and things of that nature. And for us trying to break into the marketplace, and like you mentioned, very, very competitive market, it just really, it worked really well. Because every offer we made, the brokers and the sellers knew who we were based on the team that we built. And you know, it's, it's, to some extent, even a price in terms speak very loudly during the offering phase. That's a lot about who you know, and the relationships were built. So that that building, that team is a big part of it when you're getting started.
Sean Thomson 10:35
Yeah, so a lot of your, I guess a lot of people you've that you've sort of networked with, or connected with to build this team are actually local people, too. I know Aaron is one of your members of your team. And then like you said, khalasar, associates, their local legal office. And your brokers that you use are local guys, too. So almost having such a local connection with every component in your team? Like you said, it's probably that's been beneficial as well, it sounds like you're saying,
Adam Roberts 11:01
Absolutely, yeah, it's extremely beneficial. And not to say, breaking into a new market would be extremely difficult, but there's just extra legwork that you have to go through to establish yourself, you know, as a as a new buyer, and in a market where you don't have as many relationships.
Emily Cortright 11:16
Yeah, and the fact that our partner Aaron had already bought properties from these brokers who are we were making offers to he had already raised $10 million the previous year on his own, and we're making offers where the raise is going to be five or 6 million, there was just there was a lot of confidence in Aaron's ability to, to quote to raise the money, and his ability to close because of his experience. And that's where really what helped us get our first deal was the strength of the combined resume with our co-sponsor.
Sean Thomson 11:51
Right, as you get to a certain point in the in the deal transaction becomes about because everybody's kind of at the same price, everybody kind of has the same offer in pretty much you know, a lot of times when you get the best and final, the offers start to match up, it becomes for the brokers in the sellers decision making process, it becomes more about who can perform on the obligations that they're saying they're putting forward right. So having those local people that are known, that have all worked together before, and the you know, all the all the people in the group that you have, understand each other kind of you know, and what they what their capacity is, that makes a big difference when the seller is trying to make a decision. So if they if they know, like, but Adam and Emily are with Aaron, and he can do this and you know, the legal team strong and you know, the brokers are good, then it really helps. I could see how that would be a competitive advantage to be in that place for you guys in such a competitive market like VFW? For sure.
Adam Roberts 12:47
Absolutely.
Sean Thomson 12:49
Well, you guys want when we met, you guys talked about the property that you're like, this was your that was it. That was your first property that you talked about at the event? Right?
Adam Roberts 12:59
That was actually our second property. Yeah, the one we showcased was the second property.
Sean Thomson 13:03
Okay. Well, can you talk us about either one, whatever, whatever, when you would use it as example. Maybe some of the things that you guys beyond sort of building your team once you've been awarded the deal. And Steve now managing and operating properties now, what are some of the lessons you guys have kind of taken away from that? The different steps in that process and things you've learned that you didn't maybe anticipate learning or or didn't know that you were gonna pick up along the way?
Emily Cortright 13:32
Yeah, so our first property was a 180 unit apartment complex here in Arlington, Texas, called Cooper Park apartments. And the purchase was right around 15 million, and the raise was about 5.6 million. So we partnered with Aaron and the the raise took about three and a half weeks. And one of the lessons learned that that I had during the process was we didn't had an implemented digital signatures yet. So the acquisition paperwork or the subscription paperwork that a potential investor would have to fill out was about 12 pages long. And we were sending it to all the interested parties to print sign scan all your information. And that was quite a process. We ended up having 56 investors. So I had 56 people's paperwork. And you know, somebody missed a signature here missed an initial their big lesson learned from that first one, we did move to a digital signature software the second time, and it was but the other thing that you didn't quite realize is how how much sensitive information is also on these documents. So you have social security numbers. If you're doing a CH you have routing and account numbers, and it's really important for the deal sponsors or the asset manager to be able to have a system to keep everybody's information in safe. So that that was one of my lessons learned on it. And I'm talking about his.
Adam Roberts 15:05
Yeah, I'd say after we took over the first property, and again, I there's a lot of parallels between single family multifamily, and in some, in some aspects, it's just adding a few zeros at the end. Right, one of the things I'd say that we learn, and if you know, is an aspect of the takeover, really, and the business plan is, and depending what type of asset class you're shopping, and we, you know, at the time, we were looking at 1960s, through 1970s, apartment communities, C class assets, where your average rent might be 800 to $1,000, a month, somewhere in that range. And our business plan on Cooper Park had us increasing the average rent almost $200, you know, the average was around 600, we wanted to bring it up to 800, maybe a little bit higher. And the first, you know, the first several months, we learned very quickly that most folks can't really afford much more than their pain. Yeah. And so when you say to somebody, Hey, your rent, you know, at least renew your rent is $600. But tomorrow, it's going to be 800. And I'll take your signature here, right, if bottom line, everybody just moves out, you know, you have you have essentially mass exodus, you have, you know, 70% of the people will leave 20% will stay and attempt to pay, but they really can't. And then there's that small percentage who will stay and not pay. And so it becomes somewhat of a of a mess, the first several months, I think, you know, deal sponsors will talk about stabilization period, they'll, they'll let the property stabilize after they take over. And, and a lot of that is baked into what I just explained. But it's it's amazing, you know, people are definitely at the top of it, when you buy the property, most times people are right there at the top of their affordability range, and you're bringing an entire new tenant or resident profile as you as you upgrade the property and raise the rents.
Emily Cortright 16:56
Yeah, and the higher turnover, stressed the construction team as well. So instead of only having seven or eight units a month, vacant to get ready. Now we had 12 or 13. And so there was a big learning experience, they're going through that process because things weren't getting done as quickly as we expected. And so it's, it's a good kind of, for thought for heavy value add properties, where the rent bumps are very high to just expect a little bit longer stabilization period.
Sean Thomson 17:31
Yeah, as you're transitioning. So I want to recap so the it's funny you guys, those two examples, you guys just use this one that's so simple and small that you that you but it but it makes a huge difference that just having a digital signature software, something so small that the second example you guys use was that's a major, that's a major thing that takes that takes a you know, the first two years to get everything sort of sorted out, right? Oh, yeah. Those are great examples. They both have they both have a big impact on your day for sure. But yeah, so in your transition plan, you kind of have to expect that turnover, and you have to sort of work through that gradually, you know, is would be my assumption. And that's a that's a very viable lesson, everybody. I think a lot of a lot of people that I know, they start looking at those things like, oh, we're gonna raise rents, it's going to be great, you know, and it's like, well, that's gonna take you two years to get that sort of, you know, to happen, right? It's
Adam Roberts 18:26
You're exactly right, it has taken that long.
Emily Cortright 18:29
We did adjust our strategy on the second deal to be more lenient on renewals. So the first, the first property, it was like, if you can't pay the new rent, you got to move out on the second property, it was a little bit of a easier transition, because we said if we kind of ran an analysis, and if we could bump people's rents, even 50 or $75, from where they were, eventually we would get them to market read.
Sean Thomson 18:58
Before your investment horizon hits, they may be at the number you need them to be at, right. Yeah, most people if you're if you're bumping them more than about 5%, they're, they're going to struggle, you know, it's just that's just the nature of it. And my single family business, same thing, you know, I do I do rent increases as necessary. But, you know, I don't I don't just raise rents every year I do a market analysis, if the markets transitioned up, I raise the rents on them, you know, but in multifamily, you kind of just have this cost of expense that goes up all the time. So you're doing your renewals, there's always kind of a three to 5% increase, and that's really about what people can tolerate. incomes just don't match inflation, you know, many years in a row for sure. So, unless they're getting a promotion, or you know, some other job, their pay is not changing a dramatic amount, but right. Let's, let's talk about so those were, those are great. Let's talk about some of the things that maybe surprised you in the process that you weren't or some of the challenges you had in syndicating the that you maybe didn't expect.
Adam Roberts 20:02
You know, I would say as far as the process for for actually getting the deal I'm not sure if surprised is the right word. But the competitive competitive nature of what type of money is shopping deals out there today, that's always interesting to see, you could come to the table with an extremely competitive offer, almost to the point where you're, you know, feel like you're overpaying for a particular asset, and then get completely beat out by another buyer who's willing to pay, you know, five plus percent more than your already overpriced offer. And so, I would say that continues to kind of open our eyes a bit, but still makes you extremely sensitive to your underwriting and staying conservative in the marketplace. Because, you know, it's it. If you're in it for the long haul, you'll do the deals the right way. And so I'd say from that aspect, surprised us owning the deals and operating. I mean, almost every week, I feel like something comes up, that is fun to talk about. But one thing we dealt with that was interesting on our first deal was and it was a very challenging situation. We obviously setting expectations for the teams on site, making sure that financials are laid out, everybody knows what the goals are. But we had one leasing assistant who had leased quite a few units to folks who did not meet the application requirements, things like, you know, three, you know, making three times the rent amount, no evictions in the past several years, you know, things of that nature. And she leased out to the tune of almost like 50 units to people who just were very, very subpar applicants. And so we went through a period of refreshing those units through, you know, evictions and things of that nature, which stressed our financials a lot. But what we learned from that is just being having processes around audit team that that application process is very important we both come from, like I said before, we come from a manufacturing operations and design background. And so when things go wrong, when you're designing jet engines and airplanes, when things go wrong, you always you always go through a corrective action process where you say, okay, you sit in a room, you talk about the five things that that that are the root cause to the why it went wrong. And then you find some solution that tackles the root cause. And so for this specific instance, we just instituted audit, you know, routine audits. So the people doing the leases know, that me and or the regional manager are going to be down at the property, looking at who is being accepted into the property, and it's just a trust and verify type things just complete quality control, and it's worked very well.
Sean Thomson 22:48
Yeah, 50 applicants that are subpar to unwind that we'd like we just said it just just just if you're doing a remodel, and refreshing the property and then changing tenants that takes several years to unwind. 50 tenants could take the same time period. You know, if you, especially if you're going through evictions, you know, and right now with COVID there's all these moratoriums so people, you never know what it's going to take. That could be quite a mess. Having that little that. It seemed what seems like a small problem could turn out to be a massive issue for a really long time. Yeah, that would be that would be upsetting for sure. Oh, yeah.
Adam Roberts 23:26
It was tough. It took about six months to unwind that whole thing.
Emily Cortright 23:29
Oh, yeah. One of the one of the other higher, overarching causes was that the measure of success was 95% occupancy. And so the leasing, she was basically getting quantity over quality. So she was filling up the units, so she could hit her 95% occupancy, because that was really the only metric that was being stressed. And so the other takeaway was not only do we want to try for 95%, but we also have to look at our delinquency and concessions and all the other things that add up to, you know, did the tenants you put in last month? Are they having trouble paying?
Adam Roberts 24:12
Yeah, and I don't know, you know, we obviously had to terminate that staff. But, you know, they may have done their own post mortem on the situation and a good manager, someone who's very experienced will know that any sort of shortcuts taken on the front end of somebody leaves is going to cause major pain on the back end. And so they just don't, you know, they just don't do it. It's it's, you could have a you could have a whole discussion on KPIs metrics and things that you measure the, the asset on, but having a very robust staff on site who has experienced they know, just, you know, yes, 95% is important. It will always be important, the lender measures us on that. But if you can keep things tight on the front end, the whole process goes away. A lot smoother.
Sean Thomson 25:01
Yeah, 94% and three tenants that don't qualify as much better than, you know, not putting those three tenants in is much better than 95%. And having those three tenants that just don't make it right, that's Yeah, that's much better. Let's talk about just the in the syndication itself. So those are some of the lessons you guys have learned in properties. But let's talk about the syndication business itself. What are some of the challenges that you guys have sort of seen in putting together syndication is that you know, building your was building your team kind of a difficulty or finding the spot the investors, what are some of the challenges you guys have experienced there?
Emily Cortright 25:39
So I would say finding the right deal, actually, two, three years ago, when we were making offers, there were probably it felt like 10 deals a week coming out, it was almost too many listings, to be able to look at everything. And we really had to set your criteria, if there was going to be a certain age range, you know, your built range, or if you weren't going to look at things that had chillers or flat roofs, for example. Or if there were certain areas of DFW we're going to look at, because one of the problems that that we hit right off the bat was like, Oh, my, there's almost too many things too many listings. And then the second one was kind of an analysis paralysis, because you sit at your computer, and you fill out the om, and you're the information and fill in the financials, and you're trying to figure out based on what you have in front of you at your computer, if this is a property that you should pursue further, or should you drop it and focus on the next one that just came out. So that that was a big learning experience, we, we took the approach, a lot of times that if it was in a good area, and if it was if it seemed like a good property that had some value, add components to it, or it was really it was nice and stabilized, then we would go on a tour. And the tours really helped us get face time with the brokers. Now we didn't tour every single property, it was just the ones that the initial analysis looked, we were at least kind of close to list price, meaning like within a million or so. And that kind of helped us narrow down the the go no go decision. So I think that's one of the biggest things that people get stuck with is like an analysis paralysis, and finding the right point to make the go no go.
Sean Thomson 27:37
So when you guys were first getting started, did you set like property parameters and an investment outcome parameters, and then try to adhere to those, that's I think I, I see that a lot with people, they they get this influx of deals, like you're saying, because there's, there's a lot of different types of properties, their locations that are different, their, their performance levels are different, all these things are different. But you really kind of have to say this is my buy box. And if it doesn't fit in that box, initially, I'm not even gonna look at it, I'm gonna let those go away. And then you have to take those ones that do fit in your buy box and say, Okay, what, what is the outcome of this, if we do buy it, you know, and and those ones that don't meet that outcome, then you get rid of those and you sort of narrowing down this needle in a haystack type system. And initially was that kind of that was a complicated to decide what was your your sort of by parameters.
Emily Cortright 28:29
So the guidelines from some rock group, we kind of combine those with with our partner Aaron's guidelines. So in terms of returns, investor returns, we wanted to hit a minimum of 8% cash flow. And at the time, it was 80%, total return now at 70% total return. Because the markets gotten even more competitive over the past few years, we decided with Aaron that we were going to look at anything under 200 units. So that kind of gave us a unit count parameter to go off of he was looking at over 200 units for himself. And so we were looking at under 200 units. And there were certain physical locations in DFW that we did not look at. And are there any other parameters I'm forgetting?
Adam Roberts 29:14
No, I think there's some intangible items, job growth, rent growth, population growth, things, things that, you know, maybe the spreadsheet won't throw back at you initially that you just have to be keen on. There's and it's the same in any market. There's always areas that are slated for very, very robust growth. And that can be a competitive advantage because not everybody is local, and not everybody really understands the local market. They just come and shop and so yeah.
Emily Cortright 29:43
And absolutely like a minimum of between 70 to 80 units because we definitely want to third party property management.
Sean Thomson 29:52
Yeah, so if you don't have enough units, just for people that are listening if you don't have enough units to support a third party property management, the property Essentially, essentially a business, that business essence have enough cash flow to support on site management as well as a third party management overseeing all that. If you're if your property size is too small, the business just doesn't doesn't produce enough income for that for both of those to happen. So I guess in your in your in your initially getting your business started in multifamily and doing the syndications, your biggest obstacle was just defining a clearly defining sort of a laser sight on what properties you guys wanted to target and go after? That's true? Absolutely. Yeah. Okay. Well, good. Yeah, that's one of the best, like the first challenge you have to and it's sort of, I see, I have a lot of people in my network that are just getting started as well. And I see people that just don't know what to look for, they haven't decided on what to look for. And then I have people that are just trying to buy everything, you know, they're just they're like, I just want to deal with just trying to buy everything. And then I think what ends up happening is that you don't really end up with anything, because you're you're not focused on what, what really matters to you, and what really matters to your team to go after, right? Because there are so many variables in there. If you're just swinging it every every pitch that comes your way. You're just you know, it gets to where you're you might hit one every now and then. But you're not really focused on being a better hitter. Right? So I think focusing on what you really need or want and, and what your team objectives are is a critical first step. So that's good, that you guys brought that up.
Emily Cortright 31:29
Yeah. And I think it's important to note to listeners that it took us almost a year to close on our first property from the day we decided we were going to do multifamily. It was about 10 months before we were under contract, and then another two months to close. So almost right at that one year mark. We were, we were closing on our first property. So it didn't happen instantly. But we obviously went through the education process. And then we identified a partner and we started making offers. And we made it to about four best and final rounds on other properties that we didn't win. And then finally, we did get one. So you know, I think another part of the process is just continuing and not being discouraged when you don't win the first couple offers. And I think they make you even better the next time because if you ask for feedback, we got feedback on we came in second place on a deal and the feedback was our earnest money wasn't high enough. And so the next time we bid, we went even more aggressive on earnest money. And that's that was the one we ended up winning.
Sean Thomson 32:35
Yeah, that's a good lesson there is as you're progressing, try to get, try to get feedback on the things you're not winning. And you'll know that for next time. And so those those deal parameters come up again, you can add those things in. And I have to just tell you guys, you know, to get your first property closed in a year in the DFW market that is that's tremendously successful. I think, you guys, you guys obviously educated yourself properly, you put together a great team and you guys you guys conducted your business I think very efficiently. You know, there's a lot of people that are that are probably in the DFW market that will never get a deal because they just haven't put together this the team that you guys have and the methodologies that you guys have done. So you say it takes a year but I think that's I think that's a big win for you guys. That says a lot about how you guys conduct your business. Honestly, if you want to know the truth for me, because I've been doing this for a little while. And I I'm not even getting close to touching any of the Dallas deals, you know, I bid on the deals too. But I'm to $3 million away most of the time, it seems like I'm not even getting close. So to be that competitive in a competitive market for you guys. I think that you guys had to pat yourself on the back for that for sure. Let's talk about you guys have some great experience and more importantly like I just said, you guys are doing such a successful business of just getting started in multifamily for last couple years what is some of the advice that you would give someone like me maybe that's trying to kind of break in to multifamily investing.
Adam Roberts 34:03
You know, I'd say first and foremost Emily hit on this earlier but get educated find find a way to to get the proper credentials on your education resume because it's true, you'll you'll go whether or not you know a lot of folks do start in single family but some don't. But you will be most likely managing other people's money doing these big deals, we have to syndicate investment funds from other folks and and it the whole game takes on a new meaning when you start to manage other people's hard earned money a lot a lot of their money I mean 10s of thousands of dollars. And and so having some background and someone to lean on when things are either you know going sideways or you're just not sure about how to approach certain aspects of the business is critical. And I all the way to the point where I think the partnership even on the initial deal. Is is key. finding someone to work with who has some experience Because they can help prop you up and, and make sure the investors know that there's someone involved who has been has been in this a while and can help. I would say the other big key item that I would tell folks who are getting into the businesses, you know, once you get educated and feel confident behind the deal analysis, getting to the point where you're making offers, is a significant tollgate. Because at that point, I mean, obviously from from from ground zero to that point is a lot of learning the learning curve is very steep. And to the point made earlier, Sean building your team, potentially finding a partner, it's a lot, it's, there's a lot to that. But then pass the offer phase, if you're if you get to the point where you can make offers, things start to move exponentially quicker. And I'm talking feedback from brokers deal flow, people start to recognize your name now, when you email them, and you know, the vendors start to get on your side a lot more like okay, well, these folks are starting to hit the ground running, they're making offers that, you know, they lost the last three or four that they made, but no big deal. They're good. They're, they're up and ready to make the next one. And you start getting really, really good advice from the brokers that you're working with the sellers, brokers, like Emily mentioned earnest money, and you start to just get these nuggets of information that make your next offer 10 times better. And so yeah, there is a lot of work in the up front. But man, I always tell people, what changed it for us was the day we started making deals. It was completely different things started, we weren't we weren't, we were moving quick, you know, we found a partner and a couple months we we got all our education taken care of. So we were going like maybe 50 miles an hour. But once you start making offers you start, you start going 200 to 300 miles an hour things really quick enough.
Emily Cortright 36:49
So and my advice would be around forming that partnership. You had it? Well, you had asked if raising the money was a concern for that first deal. And because of our partner, Aaron has had such a great resume and equity raising abilities. He would you know, we'd be like oh my gosh, we have to raise 5.6 million, are we sure we can do it. And he would look at us and say no problem, don't worry about it, like focus on everything else, don't worry about the equity raise. And that was a huge benefit. And that kind of goes back to how important it is to find that right partner. And I have two thoughts, one, start building your database from day one. So your investor database to when you're building these sec compliant relationships with show, if you don't know about it, you'll learn about it in the education like you have to form, you have your the SEC tells you you have to have substance, you have to have pre existing relationships with all the people that you raise money from if you're going to do a certain type of raise. So build your investor database from day one. Because eventually we want to be able to we'll raise the money ourselves on a deal. But finding that right partnership, the way we approached it is we had our value proposition very well stated out, we knew we wanted to do the asset management, we knew we were going to bring the earnest money, we knew we were going to be the boots on the ground doing all the work. And we were looking for a partner that could raise equity and bring a resume. And we talked to multiple people. And they would say no, you know, that's not really the format I'm looking at, or I'm already working with other people. And then we talked to Aaron. And there was there was an interest and there was very great conversation. So the phone call turned into lunch, which turned into dinner, which turned into going out with him and his wife really getting to know him and building a relationship first and then deciding to work together. Because the strengths of each group complemented each other really well. So I would say for anybody that's in that kind of initial phase looking for a partner, it's very important to have a clear value proposition of what you're interested in doing in the partnership and what you're looking for, for your partner to do. So that from the very beginning, you can kind of set the set the right tone and find the partner that's right for you.
Sean Thomson 39:12
So I'm gonna recap that you guys, you guys did on like, five, five good points. I think I'm gonna try and remember all of them. We'll see. So what your I guess what you're saying is that the first of all, educating yourself on how the business works, how things are structured, you know, how that sort of happens, you know, multifamily investing, and finding a group that can help you kind of get that education. And there's, there's tons of stuff on, you know, podcasts, there's, you know, all kinds of answers out there for people to educate themselves. You know, I read books every day on how to do this business, things like that. So educating yourself would be the first advice you would give and then this is really kind of a team sport, multifamily investing. And we talked about you guys building a team initially, but I was just going to recap and say that this is pretty much you know, I don't think you can do this without a team around you. And what you guys have done is once you figured out the business or learn the business, you figured out what you think your skill set brings the most value to a team, right? So you're being this is a team sport, you guys have kind of figured out the positions that you want to play in that team and what value you can bring most to, to a team that that would move forward with this and you went out, find those other members of your team that you need to fill those gaps. Like you said, Baron brings, you know, capital equity raised easily. But you guys didn't have initially but you had all these other components to what you brought as a value to the relationship that he didn't necessarily want to do or didn't like doing. So finding that that synergy for your team is critical as well for for the success. So I think your two pieces of advice there were educate yourself and and then figure out what your value is in the team and then put together the necessary essentials to make the team whole, right?
Adam Roberts 40:56
Yep. And then get to the point where you're making offers because things really change once you start making offers.
Sean Thomson 41:01
Right, I was gonna tell you so I'm at that phase now where I'm making make offers quite a bit where I've, in my business, I've sort of built this deal machine, I call it I just, I'm processing properties constantly. And, and we're on the phone with brokers pretty much every day. And so we had I am I'm in a best and final right now. And I saw I prepared the email to see, you know, submit everything, and I just kind of stared at it for about 15 minutes. Just Yeah, you know, cuz it's, it is scary. It's very scary. It's scary fun when it's scary if I lose, you know, exactly. So it's the business is really tough. And once you're getting started, and you just kind of have to be brave enough to take those steps. I think a lot of it is just getting over your fears, you know, but I just sat there and stared at it for a while just kind of soaking it in.
Adam Roberts 41:46
Yeah, you have to kind of know that there's, there's always good news coming from the other side of the email. It's either you won, which is great news, or it's, hey, you didn't win. But here's the three things that that I want to see in your offer next time, or here's how you can improve because those are just things. I mean, yeah, we all have coaches, mentors, people, we talked to books we read, but man, that's the real deal. When someone someone on the ground is saying, Hey, this is the transaction, here's what you could have done, or here's how you can make things better. And or maybe you have to go solicit for it. Sometimes we have to ask, it's like, Hey, man, give me some feedback. But that's it's the real deal when you're getting that kind of feedback.
Sean Thomson 42:23
Yeah, and that's a good way to look at it too. You know, it's not a loss. It's a it's a lesson, right? So yeah, when you're getting your hands dirty, it gets real, it gets real, real quick, you know, when you're when you're finally making those steps to get properties for sure. So well, that's fantastic. I think you guys have given a lot of good lessons for somebody if they're trying to get started in this on a high level, you know, just just general stuff. But we always ask everybody that, you know, the name of the podcast is The Next Level American Dream. And the whole idea is that we want to produce put things out there for people to kind of achieve their American Dream. So if you guys don't mind, maybe share with us what your what you're defining as the American Dream for you guys. And then what steps are you kind of taking or what things you kind of doing in your life that have helped you to level up that American Dream?
Emily Cortright 43:09
I would say for us, the the American Dream is having that freedom of time. And one example was about six months after Adam was able to quit his job, we were able to go on a charity trip for 10 days to Ecuador. And it was kind of it was partial charity trip partial vacation and explore the country. And it that was really the first time that we both looked at each other. We said we don't have to put in vacation time. We don't have to get approval from anybody else. Like we're just going to go away for 10 days.
Adam Roberts 43:39
I have to put in vacation.
Emily Cortright 43:42
But it was, you know, there are days there are weeks that we work way more than 40 hours and there's weeks where there's not as much and we maybe work 30 hours a week, but overall we are building our own legacy. We're building our own network. And that is that's I think what is is our American Dream is to build up our our business where we can we can pass it on and and be able to enjoy freedom of freedom of our time, whether it's to go go to Philadelphia for the weekend, or go to Cincinnati for the weekend and visit family and just enjoy life.
Sean Thomson 44:24
Yeah, you're not having to submit a form to to a boss or HR to get to get the time to go Right. Right. Yeah, exactly. So what it was a couple things I don't know I you know, I have my daily routines that I rely on to kind of keep me going every day and I try to read books a lot. So I'm always recommending for people to find a daily routine that helps them and journaling and things are there any things like that that you guys have found in your life or that you do? But in your mind helped you kind of propel yourself to this level?
Adam Roberts 44:56
Yeah, Emily does the gym a lot. She's She's a 4am workout routine person.
Sean Thomson 45:02
So you care that your health is important?
Adam Roberts 45:04
Yes, she's very routine about that. I'm real big into music. And so I'm actually in the middle of kind of re designing a music studio area, where I'm planning to, I won't say it's routine yet. But I'm planning to spend some time every morning kind of before the workday starts just getting some music, you know, in, whether it's listening or playing or a combination of the two. Because, you know, a lot of folks like meditation, I've done some meditation, and that a lot of folks rely on that as a routine during their morning. And music is that for me? And so I am going to start doing a lot more of that once I finished that room.
Emily Cortright 45:41
Yeah. And we try to cook a dinner usually at least five nights a week. And sometimes it's together, sometimes one of us continues working. But yeah, kind of going around the health aspect of it, maintaining a healthy diet, home cooked meals, you know, good quality meats and vegetables, that's important to us.
Sean Thomson 46:03
So Emily keeps you guys healthy?
Emily Cortright 46:07
And Adam plays the music!
Sean Thomson 46:09
Yeah, Adam has the creative, the creative entertainment outlet for you guys to kind of chill to write. Yeah, let's do. Let's good. Well, tell the listeners how they can kind of reach out to you guys, if they want to learn more about your investments and what you guys have going on? Is there a website you guys have or podcast or anything you have going on?
Adam Roberts 46:27
Yeah, probably the easiest way to get in touch with us. And we're real good about the response time is www.aemultifamily.com.
Sean Thomson 46:38
Okay, great. Yeah, they can find out more information about you guys there. I really appreciate you guys coming on. It was great to hear your story at the event. And I as soon as I heard what success you guys were having. I was like, Man, that would be wonderful to have on the podcast. And I really appreciate you guys coming on. And it's I appreciate you guys spending time with us. And sharing everything with everybody.
Adam Roberts 46:58
We appreciate it as well. It's It's an honor to be invited to speak on the podcast. So thanks, Sean.
Sean Thomson 47:03
Yeah, good. Well, hopefully we'll get some good, good feedback from the listeners and everything, everybody. I love it. So I know it's a good time for me. And I know you guys said said some great stuff. So thanks again!
Adam Roberts 47:15
Thank you!
Emily Cortright 47:16
Thanks, Sean!
Abigail Thomson 47:18
Thanks for joining us for another episode of Next Level American Dream. If you would like to learn more about what we talked about today, want to contact the team directly, or are interested in passively investing and being a part of our deal room, head over to our website at www.thomsonmultifamilygroup.com. Before you go, please leave a review! Your comments help us create more episodes for you to enjoy.