April 18, 2024 • 39 mins
Passionate about multifamily real estate, Mandy McAllister, CEO of GoBundance Women, left medical sales for financial independence and to help others do the same. This episode highlights her joint-venture partnerships strategy, crucial to her success. McAllister shares how aligned visions with partners and her reputation secured her first multifamily property during the pandemic. She also discusses the evolving market, economic predictions, and balancing motherhood with entrepreneurship.
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Episode Transcript
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Rachel Oh (00:04):
Welcome to Peaks and Portfolios, presented by PEG
Companies, your go-to podcastfor all things commercial real
estate investment.
I'm Rachel oh, and togetherwe're diving into current events
, trends, issues andopportunities impacting the CRE
investment space, fromdissecting the latest market
moves to sharing insights ontoday's commercial real estate
(00:26):
landscape.
It's time to maximizeportfolios here in the peaks of
the Mountain West and beyond.
Welcome everybody, so gladyou're here with us today for
Peaks and Portfolios.
I am super excited abouttoday's episode because I think
we're going to be talking to avery fascinating individual
(00:47):
whose story I am mostparticularly intrigued by and I
really want to dive into a bitmore with.
But we will be addressing jointventure partnerships in real
estate and, most importantly,jving the right way.
So I'm going to introduce youto today's guest entrepreneur,
multifamily investor, mama,coach and women's inspirational
leader, mandy McAllister.
Mandy, welcome, hi, I am soexcited to be here.
Mandy McAllister (01:11):
Thank you.
Rachel Oh (01:12):
Mandy, where are you calling in from today?
Mandy McAllister (01:14):
I live physically in the suburbs of
Chicago, so that's where I'm attoday.
Rachel Oh (01:18):
Okay, and is it windy ?
No, I'm just kidding.
Mandy McAllister (01:23):
Actually, do you know?
Chicago is called the windycity because of our politicians
are full of hot air because ofthe actual wind.
Okay, how about that?
There's some trivia for you.
Rachel Oh (01:33):
Okay, I like that and that makes a lot more sense.
No, that's awesome, okay.
So, mandy, I have for my shownotes some info about your
background, which I'm going toread just so I have it clearly,
but I'm pretty sure there's moreto it, so we're going to dive
into that in just a bit, but letme kickstart this right now by
sharing a little bit.
You know to our listeners whoyou are, so Mandy McAllister is
(01:54):
a multifamily real estateinvestor and connector.
She spent the bulk of her careerin medical device sales,
chasing cases and commissionchecks, and in 2021, she left
her W-2 life to lean on thefinancial independence she built
through real estate investing.
So Mandy's real estateexpertise includes repositioning
underperforming assets toincrease cashflow and value.
Her portfolio is currentlycomprised and you can correct me
(02:18):
if I'm wrong on this, mandy 373doors of class B workforce
housing, furnished studenthousing and a motel reposition.
Mandy also now serves as CEO ofGoBundance Women, a tribe of
healthy, wealthy, generous womenwho choose to lead epic lives,
and I loved this.
Mandy.
You are most proud to be mamato your seven-year-old son,
duncan, who I understand, alsowants to be a real estate
(02:40):
investor when he grows up.
So, Mandy, I love your story andI honestly love hearing about
entrepreneurs who identifyopportunities in the marketplace
and run with them.
And we wanted to bring you intoday because I think you
represent such an interestingpart of the overall real estate
investment story and that's howone gets into real estate
investing to start and how youare now ratcheting up your
(03:01):
portfolio by partnering withothers, and so I really want to
hear you know how you have, youknow, kind of ventured into
joint ventures, how youdetermine the right partnerships
and, most importantly, JVingthe right way.
So I alluded to this a bit inreading out your bio and, by the
way, again I just want toemphasize I love a good story
about real people doingexceptional things and, if you
(03:23):
wouldn't mind, I would love tohear in your words how you came
to be where you are today.
Would you mind sharing with usmore about your story?
Mandy McAllister (03:30):
Sure, Both my parents were self-employed.
My dad farmed.
I grew up on a farm so I neededto do a lot of hard work coming
up and followed a volleyballscholarship.
So I learned the competitionthere.
And when I was in college I meta friend who explained that her
dad had bought the house thatwe were standing on the porch of
(03:52):
and she was renting out therooms to her friends.
And I thought, oh my gosh, youget to keep that money.
That's the best idea I've heardin my whole life.
So the seed was planted for mustinvest in real estate in like
1999.
And then, you know, I did allof the things you're supposed to
do.
I got all of the degrees and,you know, followed the right
path, quote unquote, and endedup getting a master's degree in
(04:16):
economics and, you know,followed the money, went to the
board of trade and thensubsequently medical device
sales Cause it felt like a nice,safe path to earn a lot of
money and build the life that Iwanted to build.
So I chose not to go to medicalschool because I didn't want to
be on call and the kind of theirony of my life is that I ended
(04:38):
up ascending the ladder ofmedical sales, such that I was
on call in a medical sales job.
So I realized then that it wastime to really put all of the
learning that I had put intoplace in real estate investing
into action and ended up buyingmy first fourplex just as my son
was born in 2015, 2016.
Rachel Oh (05:00):
Okay, so you were in medical device sales.
You were climbing that ladder.
Mandy McAllister (05:16):
Okay, so you, you were in medical device sales
.
You were climbing that ladderand I mean obviously medical we
know that it can be quitelucrative and theme that I loved
.
I loved getting to helppatients and the devices that I
sold were cardiac related.
So I had hugged people who werealive because of something that
I touched and nothing is morepowerful than that.
But you know, I had to go backto work at four weeks after
(05:39):
having my son.
I was on call.
I was working seven to seven.
And I was missing his life, andthat is not the life I
envisioned for myself.
So at some point I realizedthat it's a math problem, that
yes, I'm making multiple sixfigures here, but I can figure
out the cashflow of theseproperties such that I build a
floor of income coming in.
(06:00):
So I can then choose what I dowith my time.
So, I really put my head downon trying to build the most cash
flow in the safest way possiblethat I could, and that resulted
in multifamily real estate.
Rachel Oh (06:12):
Okay and tell me what was going on at the time, like,
what was the environment like?
Was you know were you and Idon't know now what year you
were at, but you know, was it agreat time to invest?
Or did you just be like, youknow, just, I'm just going to do
this, I'm just going to go buysomething.
You know what were you thinkingLike, were you trying to time
the market?
Or you just like, let's just dothis?
(06:32):
Like, tell me how, what youwere thinking.
Mandy McAllister (06:33):
So I had done all of the learning and, as a
straight I think many femalehigh performers will resonate
with this that I got allstraight A's and I waited my
turn and I raised my hand and Idid all the right degrees and I
did all of the things perfectlythat taking a big risk what felt
like a big risk in buying abuilding was more than I was
(06:54):
willing to stomach.
But then when I did it you know, when my son was born, I it got
real.
You know, like you get one passat this life, you get one
chance to try.
And I ended up, you know,taking a swing.
And when I didn't die afterbuying my first fourplex and I
actually had like a thousanddollars cashflow coming in a
month, I realized I wanted tocontinue to rinse and repeat
(07:16):
that process.
So, you know, 2016 into 2017 isreally when I decided to start
scaling up.
Rachel Oh (07:23):
Okay, so you bought your first property by yourself.
Sounds like you didn't partnerwith anyone.
You just did it on your own.
Yeah, okay, yeah.
Mandy McAllister (07:30):
I had saved enough that the four flex was my
own, moved on to a six flexthat was my own and a 10 unit
all just me, and then you runout of money pretty quick.
Rachel Oh (07:41):
Yeah, yeah, I was going to say I mean that's a lot
of down payments at 20% plus orwhatever it is, so okay.
Absolutely so you did that, soit sounds like, so I actually.
You did leave medical device in2021.
So you started buyingproperties and then you just
left your your medical devicecareer forever.
(08:01):
Is that right?
Mandy McAllister (08:02):
Well, that was too scary.
So here's here's the way Icouched that to myself.
I had built a good enoughreputation in medical device
sales that I knew I could gofind another job If it hits the
fan, and I needed.
I was a single mom at the time.
If it hits the fan and I neededto go find another job, I knew
I had the confidence that Icould do it within six months.
(08:24):
Right, right.
So I decided to take a yearsabbatical, right, like I.
Just we're going to do anexperiment see how this feels 12
months from today.
I'm going to see how this feelsand if it feels great, I keep
going.
Rachel Oh (08:44):
If it feels great, I keep going.
If it feels wrong, I go findone of those jobs.
So that took a lot of thepressure off and didn't feel so
permanent, Right.
So you took a sabbatical, youstarted all in or went all in on
the real estate and then itsounds like you never went back.
Mandy McAllister (08:49):
I have not gone back.
Rachel Oh (08:53):
You don't miss it at all, yeah.
Mandy McAllister (08:55):
You know I miss getting to work shoulder to
shoulder with really smartpeople.
Rachel Oh (08:59):
Yeah.
Mandy McAllister (09:00):
But, end of the day, the chance to build my
own empire, the chance to youknow in any type of sales.
If you have a really good yearfor a big company, your number
resets right, oh yeah.
Rachel Oh (09:16):
And then it goes higher.
Right, it goes higher.
Oh my gosh, it's the worst Tomake the same money.
Right and yeah.
And then it goes higher.
Right, it goes higher.
Oh my gosh, it's the worst Tomake the same money right and
you're chasing your tailActually.
Mandy McAllister (09:23):
So it so happened in 2017 that I had won
a president's club.
I was number five out of 500 orsomething, and I had sold 3
million when I should have sold1 million, and then my number
the next year was to make thesame base pay.
I needed to sell 4 million,which wasn't possible.
Rachel Oh (09:41):
It wasn't fair, you know.
No, it's like, hey, you canmove me to 1.5 million or 2
million maybe, but yeah, Rightyeah, yeah.
Mandy McAllister (09:48):
But a boss at the time said well, you just
need to go find more patients.
And that didn't feel, that feltbeyond the scope of a moral
compass that I had.
So that was really the catalystto leaning into.
I need to figure out how muchmoney I need to get out of this
so that I can live the life thatI want to live.
Rachel Oh (10:08):
Okay, so you took your sabbatical you had,
obviously, and you just you gaveyourself a soft landing in case
things didn't go well.
And then you mentioned youstarted running out of money.
So what did you do then?
Mandy McAllister (10:21):
Yeah, so what I saw?
was learning about multifamilydebt, the chance to get agency
debt, the chance to getnon-recourse debt on something
for the long term really feltlike how the rich get richer.
You know if it hits the fan andyou haven't done these bad boy
things that you know you're,you're, you know forgiven is the
(10:43):
wrong word, but it'snon-recourse.
I'm not personally liable.
So it felt like a second, likebelt and suspenders of a safety
net for me to move forward intothese larger properties.
So I had such a clear vision onwhere I was going.
I wanted class B properties inIndianapolis.
I wanted it to be.
You know, I live in Chicago, soI needed to get to a market
(11:04):
that was growing in populationand GDP and jobs and I needed to
get down there and back beforedinner with my criteria so that
was how you picked Indianapolis.
Exactly.
So, I sold a number of thingsthat I owned in Illinois.
So I had some single familyrentals previously that I was
(11:24):
kind of doing concurrently withthose small multis and I sold
those and I had a little bit ofcapital that I wanted to get
into the bigger stuff and Italked that big vision of
exactly what I wanted to otherinvestors and it turned out
vision of exactly what I wantedto other investors and it turned
out.
You know, we I found a partnerwho wanted to throw a million
(11:45):
dollars into something he was inhotels and he was kind of
getting crushed during COVID andhe liked this vision.
So he another guy and I went inon a 53 unit in Indianapolis in
September during COVID.
So that was the first largeracquisition on agency debt and I
got there because I hadpartners who moved with me.
Rachel Oh (12:07):
So they put in their capital, you put in some of
yours.
Are you the sweat equity?
And, by the way, you were at aphenomenal interest rate
environment.
So tell me how that worked.
Mandy McAllister (12:18):
Yeah, totally.
So we came in with I didn'twant to have a taxable event.
So one thing in JV that mattersfor anybody taking notes if I
came in with $0 and my businesspartner came in with a million,
day one of acquisition, the IRSwould feel that I had a $500,000
taxable event right.
So we structured things suchthat we would not realize that.
(12:40):
So I only took 10 percent ofthat first deal because I knew
the path I wanted to go.
What I needed was to be able tohave signed on that, that
Fannie Mae loan so that I couldgo get it on my own later down
the road Got it.
Right, exactly so.
What I really loved, though, isit didn't seem possible for
interest rates to go down muchbelow that 3.2% rate that we
(13:03):
were going to get, and becausemy goal and my business
partner's goal we were veryaligned and we wanted something
for cash flow for the long term.
First thing in figuring out whoto partner with is is your
vision aligned?
Is your vision aligned?
Because, if you want to get inand out quickly and your
partners want to hold on for thelong term, you are absolutely
(13:23):
not well matched and need tofind someone else.
So we were absolutely wellmatched and we moved into that.
It was about a $4.1 millionacquisition, and we moved in.
I brought 10% of the downpayment, another guy brought 10%
and another guy brought 80%, sowe have ownership commensurate
with our on that first one.
Rachel Oh (13:46):
Okay, so you're a pair of pursue with your
partners and you have the samevision, and you guys are just
going to hold this throughperpetuity, sounds like.
Mandy McAllister (13:54):
Exactly With the best possible rate for for
the longterm Right, right, okay,so that sounds like it's your
first joint venture then, sothat we could put a supplemental
(14:16):
loan on it, should we choose topull out any equity in the
future.
Rachel Oh (14:20):
Right, okay, so that sounds like it's your first
joint venture, then, is thatthat was Okay?
So you I don't know were you?
Did you have a grand designwhen you did that, or did you
just kind of stumble into it, orlike it sounds like?
I mean, it sounds like it was alittle more strategic than what
I'm alluding to.
But tell me, like what?
Was your thought process there.
Mandy McAllister (14:38):
Well, the ultimate goal was to get that
loan.
I felt like the loan product inthat low interest rate
environment was the ultimateasset that you know.
Yes, having cash flowing realestate that is Maslow's
hierarchy of need dictates thatyou always need a place to live,
and it's in this growing market.
I think that that is the rightinvestment for the long term.
(14:59):
Need a place to live, and it'sin this growing market.
I think that that is the rightinvestment for the longterm.
But that loan is really thething that I needed to grow my
wealth in a big way.
So that was really step one.
I'd love to say that I was sostrategic that I knew that that
was going to be a first step inthe direction of where things
are going but, I just knew thatI needed to have some sort of
(15:19):
track record of having donethese types of deals so that I
could go after that loan producton my own in the future.
So that is exactly why I didthat deal.
Rachel Oh (15:28):
You know it's so fascinating to me that that was
the impetus for your jointventure partnership.
So you know, peg has beenaround now for 20 years.
We're in our 21st year.
We're about 2 billion AUMno-transcript which I'm not
(16:08):
certain I've heard any otherreal estate investor kind of
focus on.
I mean it's usually like timing, the market making, you know,
taking advantage of interestrates, or you know, I have never
heard anyone saying I wanted tobe to have a track record on,
you know, a loan type.
Mandy McAllister (16:24):
I don't think I've heard that.
Rachel Oh (16:25):
I don't know, maybe I'm wrong and I'm looking at my
producer and he's like he'sshrugging his shoulders, he
doesn't know, but but yeah, no,I love that.
That was your vision and now,so tell me what has happened
since then.
Mandy McAllister (16:38):
Yeah, you know , just to kind of finalize that
point there, there's a new bookby this guy, morgan Housel, who
you know this idea of, likeWarren Buffett talks about it
that you know, rather thantrying to predict what's going
to change in the future, it'seasier and more, you know,
beneficial to try to predict thethings that will stay the same.
(16:59):
Okay, right, and in my opinion,a thing that stays the same is
that people need a place to liveand that an interest rate of 3%
will be really low.
Yeah, and that because the fedhas a plan and a target for
inflation, then inflation willcontinue.
Right, if I do all of thosethings, then that loan product
sets me up for success.
Rachel Oh (17:16):
Yeah, no, and inflation has definitely been a
part of our story recently,which you know we're down, right
, we're down to about three-ishpercent.
I know the Fed wants to be attwo and you know we just had an
episode about Fed funds ratehike and you know when they
anticipate and et cetera.
So, but okay, so, yeah, no, Ilove that.
And again, what was the name ofthat author?
You said it Morgan Housel.
(17:37):
Morgan Housel?
Okay, I mean Warren Buffett, weall know right, the Oracle of
Omaha.
Mandy McAllister (17:40):
Yeah, okay, so cool.
Famous ever is the book Famousever.
Guide to what never changes.
Rachel Oh (17:45):
Okay, I love that.
I love that.
So we're no longer in a 3.2interest rate environment and
costs have skyrocketed sincethat time, so how are you
viewing these?
You know again.
I want to go back to JVing theright way.
So now, how are you approachingthings, given today's
(18:06):
macroeconomics and sort of?
You know the opportunities thatmay or may not be existing at
present?
Are you continuing to JV?
What are you doing right nowwith these joint ventures?
Mandy McAllister (18:15):
Yeah.
So kind of the beauty of theway I've approached things is,
you know, when it felt like thetime was absolutely right to
lock some things in, I was.
I was fortunate enough to lockin kind of three what for me
were larger deals a 38, a 53 and104.
And that then produced a floorof income that helps me live my
(18:36):
life, so that I get to buy andwatch the market.
I get to sit on my hands if Ineed to sit on my hands.
I get to do a little pivot ofthings that I'm curious about.
For instance, that motel that Ibought in joint venture was a
product of I do small multis.
I met a person who herexpertise was in short-term
(18:56):
rentals, so we work to do adifferent type of a project
together.
Most recently, kind of havingtaken note from this group,
gobundance, that I have anopportunity to serve as a leader
in the looking at the peoplewho are doing things bigger than
me, who are at the 200 millionnet worth base Time and time
again to get to the $100, $200million net worth.
(19:19):
There's a business componentbeyond just real estate.
So being curious about that inthis timeframe when there is not
really price discovery formultifamily in the way that we
have seen previously and willsee in the future.
I acquired a car wash abusiness, a real estate heavy
(19:43):
business, to work, to have anengine for cashflow to throw
into multifamily when it becomesdoable again.
Rachel Oh (19:47):
Okay, so you are now pivoting a bit based on where
the market sits, but always withyour eyes on the prize, which
is accumulating wealth or, youknow, additional cash, whatnot,
so that you can pounce on theopportunities when they do
present themselves.
Mandy McAllister (20:02):
That's exactly it.
My end game will always bemultifamily on non-recourse debt
.
I really feel like thebillionaires who want to store
their wealth.
They store it in that fashion.
So how can I answer thequestion?
How can I, with whateverlimiting factors I have, how can
I mimic the people who got tothe absolute for this place?
Rachel Oh (20:27):
Yeah, the partners that we work with, and we work
with institutional groups aswell, but we also work with
large family offices.
These are billion, you know,billion dollar plus family
offices and 1000% a huge part ofall their portfolios is real
estate.
A lot of times they made theirmonies in different, you know,
like tech or oil, and gas or, um, actually some even in home
(20:50):
building.
But the way they've grown theirwealth and cause, you know
they're about wealthpreservation.
At that point, right, They'vealready made their wealth, since
they want to preserve theirwealth for their you know the
future about wealth preservation.
At that point, right, They'vealready made their wealth, since
they want to preserve theirwealth for their, you know, the
future generations.
But they also have wealthaccumulation and you know, a
huge portion of their portfoliois real estate.
Mandy McAllister (21:08):
That's exactly it.
It's this engine for cash flowthat if you have a especially a
business engine, you have thatbusiness engine and can put
those proceeds into somethingthat is like a vault as close to
a vault, as close to a vault asyou could possibly have.
That is the single most provenasset class for creating wealth.
Then that is the best possibleformula, in my opinion.
Rachel Oh (21:30):
Yeah, and then to your point, everybody needs a
place to live, right?
So, yeah, exactly, which I love, which I love, and, man, we can
go down that rabbit hole of youknow, the rise of the forever
renters and renters by choiceand et cetera, because you know
I do that all day long.
But we, we, that's not today'sepisode, well, we can cover that
in a separate thing.
So okay, so let's, let's pivot alittle bit.
(21:51):
So you've told me about how yougot into joint ventures.
It sounds like you're kind ofwaiting in the wings.
What are?
Where do you see, then, thereal estate investment
opportunities?
Like, what are you waiting for?
Like we know, we, you know andI don't know, one of the big
things we keep talking about isall the maturing debt coming due
right, like I mean, there's,they say, roughly about 500
(22:11):
billion a year, but we'relooking, we're talking about 2.2
ish trillion between now andmaybe 20, 27, 20, 28.
So now and maybe 2027, 2028.
So that's just me just talking.
But where does Mandy see thereal estate investment
opportunities?
And what are you kind ofwaiting for?
Because it sounds like you'rewaiting in the wings.
So what are you waiting for?
Mandy McAllister (22:29):
Yeah, what are you waiting for?
Yes, I am sitting on my hands alittle bit, but I continually
underwrite, every single day.
But, what I need to like.
I have a buy box and my buy boxdoesn't change because of the
market.
I think that you know the, the,you know the.
The money is made in.
The weight is what, uh, youknow uh, warren Buffett would
say right, it's not made in thebuyer to sell, it's made in the
(22:50):
way.
So how can I buy?
Wait until I can buy somethingthat is going to meet the
criteria that I need to see, andwhat I have found is in these
growth markets, and I want to bejust an expert in one, maybe
two markets.
So Indy is the place thatmatters to me most.
I want class B assets because Ithink it's, you know, less
(23:10):
headaches than the C and not asexposed in downturns as the A's,
and I would need to see cash oncash double digits by year two.
And I would need to see cash oncash double digits by year two.
So what I love, what the perfectproperty for me is, is when I
can find something that hasupside value at opportunity,
that is not construction risk,because I really started to
(23:33):
scale during COVID and seeingthe changes of inputs and labor
costs and all of the things thatgo into increasing an NOI right
, like it's so unpredictable.
So the things in getting intoan asset that are appealing to
me is how can I lessen that risk?
How can I mitigate and, youknow, reduce the risk that's in
front of me?
So if that upside is a rug, ifthat upside is, you know, a pet
(23:56):
rent or a parking rent, or youknow putting in place, mandating
that my tenants have theirinsurance or renter's insurance
in place, whatever those typesof management heavy plays that
don't involve construction.
That is the ideal play.
So I need to see an asset inplace that will, by year two,
with these management strategies, yield me at least a double
(24:19):
digit cash on cash.
That is what I'm waiting for.
Rachel Oh (24:22):
Okay, so how long are you going to wait for?
Mandy McAllister (24:28):
Well, I know.
Rachel Oh (24:29):
We look at underwriting every day and it is
so not what it was, and it'sreally because of the two things
you mentioned.
Well, you didn't mention somuch interest rates, but it's
cost and interest rates.
Like we are not, you know, inour world.
Now we're looking at I mean,we're trying to find unlevered
yields at roughly 7%, which isincredibly difficult to find.
Mandy McAllister (24:51):
Well, the thing is, though, you're
deploying a ton more capitalthan I am at a time.
I mean, the maximum I woulddeploy at a time is like a
million.
You know, it's easier to get asignificantly higher return when
you've got a smaller number youknow, so I'm in a way at an
advantage, because my N is lower.
Rachel Oh (25:09):
Yes, true, true that.
But then that begs the questionagain when do you think you'll
find those double digit year,two returns.
Mandy McAllister (25:18):
So I underwrite and hope every day,
but at the end of the day I dothink you know.
If you look at that data onhowever many trillions of
dollars that are coming due, youknow I wish I could dig deeper
into that number, because what'scoming due sometimes is debt
that was put on deals 12 and 15years ago.
Rachel Oh (25:38):
Totally.
Mandy McAllister (25:39):
Like you can't tell me that there's not like
an equity basis that wouldsupport a refi at a ridiculously
higher rate.
You know, so, anyway, I thinkthat once price discovery starts
, we will feel it.
I don't think my crystal ballis broken but, that being said,
I do feel like you know, afterthis election, after we have a
(26:00):
little bit more certainty inwhat's happening with you know,
our leadership, we will havemore certainty with what's
happening in our economy interms of price discovery
happening in these multifamilydeals.
So it dropped by like 61percent.
I read recently transactionslast year.
I don't think that.
I don't think that picks upuntil 25.
(26:22):
So you know, I'm interested inbeing patient and hitting home
runs because my strategy is suchthat I don't need to be right
30 times.
I need to be right like fivemore times in my life and I have
a legacy that I get to lead tolead to the next generation.
Yeah, so five more deals, that'sall you need, and you've hit
(26:42):
your goal I mean, at the end ofthe day, if you're, if you get a
cashflow of $20,000 per dealyou know you do four or five of
them you've built a really nicelife.
Rachel Oh (26:52):
Yeah, no, no for sure .
And all this from a farm girlout of the suburbs of Chicago.
Mandy McAllister (26:59):
No, this is what.
Rachel Oh (27:00):
I'm saying, like I'm telling you real people, real
stories and real wealth, andthat's what I thought was,
because you're a little bitdifferent than our typical guest
.
But I really globbed onto thetidbits that I had seen, and so
this is what I'm trying to getinto, and again, the big nugget
that I'm coming away with is Ilove your laser focus on the
(27:20):
type of debt that you were ableto, you know, to position
yourself for, and then that haskind of set.
And now you're waiting and youhave.
You have the luxury of waitingbecause you've built to be able
to do that right, to be able tocreate that.
So let's shift gears for just asecond.
So you mentioned a motel dealand it sounds like it came from
a partner that came out of thisGoBundance and we haven't really
(27:41):
talked about this GoBundancetoo much.
But tell me a little bit moreabout your motel bill.
But tell me also aboutGoBundance, because did I get
that right?
You found your partner throughGoBundance.
So tell me a little bit aboutthis GoBundance, because I'm
sorry, I didn't mean to glossover it because I really want to
get kind of into the nittygritty, but I think now is a
good segue.
Tell me about GoBundance.
Mandy McAllister (27:59):
Perfect.
Gobundance is a tribe ofhealthy, wealthy, generous
people who choose to lead epiclives.
We refer to ourselves as thetribe of millionaires.
The thing that really drew meto the women's division was I
felt crazy, you know, againbeing the farm kid who wants to
go off and buy apartmentbuildings.
Many of the people who loved methought you are.
(28:21):
You are crazy.
Like it must be nice to be ableto do this thing that you're
doing, but it was a ton of hardwork.
They got me there.
Not, it must be nice, you know.
So getting an opportunity to beshoulder to shoulder with a
bunch of other leaders, playingwhatever game they play, in a
really big fashion, reallyputting focus on all of the
things in life.
Because, yes, financial freedommatters, but what matters so
(28:43):
much more in the chat is howconnected are your relationships
?
Are you getting back in a waythat feels authentic?
Are you spending time thinkingabout what your physical body is
like?
You know, um end of the day,you know we we do talk a lot
about financial freedom andsteps to get there and ideas and
hacks, and you know learningfrom each other, but a lot of
(29:03):
time is spent on the right depthof connection in the right
places in my opinion.
So I now get to be the CEO ofGoBundance Women and I ended up,
you know, because my expertisewas these small multis to five
to 50 units largely.
I met a friend who did theseshort term rentals and we we
(29:27):
found a deal that wasincorrectly listed on MLS that
had commissioned a study, formore overnight stay was needed
in that community because theylike 5x their size during the
summer.
They're a late community and wedecided to make this really
(29:50):
problematic, ratty, you knowhotel motel into something that
was really kind of um, kitschyand beautiful and we we actually
uh were able to take theovernight rent from uh nine to
$10 a night up to uh we got 130in the peak season in our first
year.
Rachel Oh (30:10):
Wow.
Mandy McAllister (30:11):
I'm sorry, from nine to $10 a night.
Rachel Oh (30:13):
What, what?
This sounds like a seedy motel.
It was a seedy motel, it wasexactly what it was.
Mandy McAllister (30:17):
It was a seedy motel.
It was a seedy motel, it wasexactly what it was and it had
been a huge problem for themunicipality, so they had a ton
of hope and help for us to beable to make the transition
happen.
So in this area it's calledBalsam Lake.
In that area there'smultimillion-dollar cabins and
(30:38):
the bulk of the people whoneeded to stay is, let's say,
it's a three bedroom cabin andyou've now invited 10 of your
friends to come to the cabinwith you.
The spillover would come.
Stay with us and you know we werefinished it in a way that we
were really proud of.
So that's something I'm lookingto exit because the lesson
learned is the the managementstuff is.
Rachel Oh (31:01):
it's a highly operational game yes, I listen
we do hospitality all the timeand it is incredible, it's and
it's it.
You know it's definitelycyclical.
So pandemic was rough for someof our properties, although
pandemic was great for some ofour resort properties.
So you know it all works outwell.
But to your point, property soyou know it all works out well.
But to your point, yes,operations is key.
(31:22):
So you definitely need a strong, you know property management
group to to manage the asset andthen, of course, you know to
get the, the ADRs and theoccupancies and all that.
So I'm sure you're learning allthat and it's way different
than multifamily, because youknow you've got annual leases
versus nightly rentals.
Mandy McAllister (31:38):
So is it making you more crazy?
Is that what you're saying?
You know, uh, the, the, themanagement of it is um you know,
it's something that you want tojust hand over and it's you got
to manage the manager and thatyou know, uh, a small town
candidly more difficult to to beable to pull off.
So it's, uh, it's not the rightasset for me and I'm looking to
(32:00):
exit it, but we've donesomething really cool for that
area and, uh, looking to stillhave that kind of business
background or backbone, um, inorder to, um, uh, build wealth
moving forward.
Rachel Oh (32:14):
Yeah, no, I love it.
I um, there was that Netflixepisode about those two women in
Canada or something.
And so, yeah, sorry, you remindme of them.
I'll just a little, and I wishI could properly cite their
names.
I have no idea, but I rememberseeing that, and so when you
told my story, very cool, okay,so Balsam Lake, huh, where is
(32:34):
that?
Mandy McAllister (32:35):
Where is that?
Rachel Oh (32:36):
I'm sorry, I have no idea where Balsam Lake is.
Mandy McAllister (32:38):
It's a lake community.
Yeah, there's.
A number of their hockeyplayers have a cabin on the lake
, their newscaster, theirweather girl, that is the lake
that she vacations on, so it's alittle bit riskier.
There's a ton of money cominginto the town and the play makes
(32:58):
a ton of sense.
We just can't make themanagement work.
Yeah, because we're not local.
Rachel Oh (33:04):
So, anyway, that is why I'm looking to exit that
Well, I love it and I love Lakevacations, so I'm going to I'm
going to look it up after thisclass.
Mandy McAllister (33:13):
Maybe I'll be there, but okay, so.
Rachel Oh (33:17):
so then you met this.
You met her through GoBundance,and GoBundance is a big part of
it sounds like right now, a lotof your time, and you're
finding a lot of fulfillment inthat.
So a lot of your time andyou're finding a lot of
fulfillment in that, so is thatthen?
So tell me now what, as you'rekind of waiting in the wings and
discovering that maybe you'renot a hotel operator and whatnot
, what is what is?
taking up your time and how areyou?
(33:38):
You know what are you lookingto in the future and you know
what.
What are your next steps?
Mandy McAllister (33:43):
Absolutely so.
I acquired the rights tooperate GoBundance.
So that is a building out thoseteams with a couple of partners
.
I built out, I acquired therights and I'm now building out
the women's division and we'rereally proud of what it's
becoming the type of personaldevelopment that women are
experiencing being next to otherhigh performing women, figuring
(34:06):
out the stuff, the connectionand all of those other things
that I previously named.
In addition to that, the carwash piece has been really
getting systems in place becausewe bought from a mom and pop
owner who had a lot of back ofan afghan type handwritten books
so in the same way, umacquiring a building from a mom
(34:30):
and pop is is a lot of heavylifting in the numbers to make
right the uh, you know whateveraccounting pieces they've had.
We're.
We're doing that with the, thecar wash, looking to expand that
a little bit so that we can umhave the full-time management.
So, the lesson I learned inbuying smaller multis is you
(34:51):
know, there is a point of scalewhere life gets a lot easier and
I'm I'm not quite there withthe carwash stuff yet.
So getting myself, feelingmyself out of management of the
carwash is the primary thingthat I have going now, and then
using the funds created fromthat engine for cashflow.
Because, just a little bit ofmath on it, if I'm going to buy
(35:15):
at a four cap of a building, I'mbasically saying I'll pay $25
for that dollar of cashflow.
Cashflow is my goal right.
If I'm going to buy a car wash Ipay $3 for a dollar of cash
flow.
So the cash flow comes insignificantly more with those
business-based real estate playsthan it does with just
(35:36):
multifamily.
So, building up our powder,getting as much powder dry our
war chest ready for I thinkmaybe 12 months from now is when
I'm going to buy as much as Ican possibly afford yeah, in
multifamily.
Rachel Oh (35:49):
Yeah, yeah, no, I hear you, you and I think
everyone else, yeah, totally.
Mandy McAllister (35:53):
Exactly.
Rachel Oh (35:55):
We're starting to see things right.
Well, sorry, we're starting tosee things on the hospitality
side.
So there are some hospitality Ithink that's coming up that
we're able to acquire.
We are also waiting in thewings for multifamily assets,
but, interestingly enough too,we really feel like now is a
great time to build, which Idon't think is necessarily what
everyone thinks, but we reallydo think this is going to be a
(36:15):
vintage year for development.
So, but that's just kind of theway we approach things.
But you pointed out very,really articulately that you
know the deployment of ourdollars versus what maybe
individual investors do isreally different.
So kind of the way we look atthings.
But again, like I said, realpeople, real lives, real
challenges and real solutions.
(36:35):
That's what I've really lovedabout, you know, what you've
shared with us today.
So last question so if you wereto crystal ball, sort of where
you think things are going to goand I think you've said the
next 12 months, just like what Imean, what would be your just
kind of prediction for realestate and where you think
(36:57):
things are, when you thinkthings are going to turn and
where you see the opportunitiesare?
Mandy McAllister (37:00):
Yeah, I so.
I did a master's in economics,so I my favorite thing about
economists is there's neverenough band, like a never enough
timeframe for you to reallyprove if somebody's really right
or not.
So this type of thing like youshining out my economist crystal
(37:22):
ball makes me really happyseeing a bunch of my people that
I grew up with in multifamilyhaving done a lot of these
shorter term bridge loans that Ifelt unease with.
I think that we are going tostart having some price
discovery here, beginning maybenine months from now, but I
think that there will feel likemore certainty in the market
(37:45):
after the election.
I just it doesn't like.
I don't want to be a conspiracytheorist, but knowing that that
is on the horizon, that thereare a lot of things in play, and
beginning of the new year is in2025 is is going to give us a
lot more information, and thatis when I plan to make some big
decisions about what the nextright step is.
Rachel Oh (38:05):
OK, yes, I've heard, survive until 2025.
Mandy McAllister (38:11):
So you've heard it here.
Rachel Oh (38:13):
Well, I've heard survive until 2025.
And I'll tell you, the pegwayis we are definitely moving
forward in 2024 as well.
So there's a combo between thetwo.
Okay, Mandy, thank you so muchfor your time, for your insights
, for being a little vulnerableand sharing with us your story.
But then what I what I love isthat you have a very clear and
(38:37):
defined vision for what you'relooking for.
You have criteria on.
You know the investment typedeals that you're looking to do.
You also are giving back toyour community through this
GoBundance and I know that,while we were kind of, you know,
prepping for this, you havesome new life changes, including
the growth in your family.
(38:59):
Yes, so I am just thrilled tohave had this time with you and,
and I'm hoping, maybe in thefuture you'll join us again.
So, amanda, thank you so muchfor joining us today.
Thank you, this was so great.
Thank you, I hope you have thebest day.
Awesome, thank you.
Okay, so thanks everyone forjoining this week's episode of
Peaks and Portfolios by PEGCompanies.
(39:19):
I am Rachel O, your host, andwe look forward to speaking with
you again.
Thanks, everybody.
Welcome to Peaks and Portfolios, presented by PEG
Companies, your go-to podcastfor all things commercial real
estate investment.
I'm Rachel oh, and togetherwe're diving into current events
, trends, issues andopportunities impacting the CRE
investment space, fromdissecting the latest market
moves to sharing insights ontoday's commercial real estate
(00:26):
landscape.
It's time to maximizeportfolios here in the peaks of
the Mountain West and beyond.
Welcome everybody, so gladyou're here with us today for
Peaks and Portfolios.
I am super excited abouttoday's episode because I think
we're going to be talking to avery fascinating individual
(00:47):
whose story I am mostparticularly intrigued by and I
really want to dive into a bitmore with.
But we will be addressing jointventure partnerships in real
estate and, most importantly,jving the right way.
So I'm going to introduce youto today's guest entrepreneur,
multifamily investor, mama,coach and women's inspirational
leader, mandy McAllister.
Mandy, welcome, hi, I am soexcited to be here.
Mandy McAllister (01:11):
Thank you.
Rachel Oh (01:12):
Mandy, where are you calling in from today?
Mandy McAllister (01:14):
I live physically in the suburbs of
Chicago, so that's where I'm attoday.
Rachel Oh (01:18):
Okay, and is it windy ?
No, I'm just kidding.
Mandy McAllister (01:23):
Actually, do you know?
Chicago is called the windycity because of our politicians
are full of hot air because ofthe actual wind.
Okay, how about that?
There's some trivia for you.
Rachel Oh (01:33):
Okay, I like that and that makes a lot more sense.
No, that's awesome, okay.
So, mandy, I have for my shownotes some info about your
background, which I'm going toread just so I have it clearly,
but I'm pretty sure there's moreto it, so we're going to dive
into that in just a bit, but letme kickstart this right now by
sharing a little bit.
You know to our listeners whoyou are, so Mandy McAllister is
(01:54):
a multifamily real estateinvestor and connector.
She spent the bulk of her careerin medical device sales,
chasing cases and commissionchecks, and in 2021, she left
her W-2 life to lean on thefinancial independence she built
through real estate investing.
So Mandy's real estateexpertise includes repositioning
underperforming assets toincrease cashflow and value.
Her portfolio is currentlycomprised and you can correct me
(02:18):
if I'm wrong on this, mandy 373doors of class B workforce
housing, furnished studenthousing and a motel reposition.
Mandy also now serves as CEO ofGoBundance Women, a tribe of
healthy, wealthy, generous womenwho choose to lead epic lives,
and I loved this.
Mandy.
You are most proud to be mamato your seven-year-old son,
duncan, who I understand, alsowants to be a real estate
(02:40):
investor when he grows up.
So, Mandy, I love your story andI honestly love hearing about
entrepreneurs who identifyopportunities in the marketplace
and run with them.
And we wanted to bring you intoday because I think you
represent such an interestingpart of the overall real estate
investment story and that's howone gets into real estate
investing to start and how youare now ratcheting up your
(03:01):
portfolio by partnering withothers, and so I really want to
hear you know how you have, youknow, kind of ventured into
joint ventures, how youdetermine the right partnerships
and, most importantly, JVingthe right way.
So I alluded to this a bit inreading out your bio and, by the
way, again I just want toemphasize I love a good story
about real people doingexceptional things and, if you
(03:23):
wouldn't mind, I would love tohear in your words how you came
to be where you are today.
Would you mind sharing with usmore about your story?
Mandy McAllister (03:30):
Sure, Both my parents were self-employed.
My dad farmed.
I grew up on a farm so I neededto do a lot of hard work coming
up and followed a volleyballscholarship.
So I learned the competitionthere.
And when I was in college I meta friend who explained that her
dad had bought the house thatwe were standing on the porch of
(03:52):
and she was renting out therooms to her friends.
And I thought, oh my gosh, youget to keep that money.
That's the best idea I've heardin my whole life.
So the seed was planted for mustinvest in real estate in like
1999.
And then, you know, I did allof the things you're supposed to
do.
I got all of the degrees and,you know, followed the right
path, quote unquote, and endedup getting a master's degree in
(04:16):
economics and, you know,followed the money, went to the
board of trade and thensubsequently medical device
sales Cause it felt like a nice,safe path to earn a lot of
money and build the life that Iwanted to build.
So I chose not to go to medicalschool because I didn't want to
be on call and the kind of theirony of my life is that I ended
(04:38):
up ascending the ladder ofmedical sales, such that I was
on call in a medical sales job.
So I realized then that it wastime to really put all of the
learning that I had put intoplace in real estate investing
into action and ended up buyingmy first fourplex just as my son
was born in 2015, 2016.
Rachel Oh (05:00):
Okay, so you were in medical device sales.
You were climbing that ladder.
Mandy McAllister (05:16):
Okay, so you, you were in medical device sales
.
You were climbing that ladderand I mean obviously medical we
know that it can be quitelucrative and theme that I loved
.
I loved getting to helppatients and the devices that I
sold were cardiac related.
So I had hugged people who werealive because of something that
I touched and nothing is morepowerful than that.
But you know, I had to go backto work at four weeks after
(05:39):
having my son.
I was on call.
I was working seven to seven.
And I was missing his life, andthat is not the life I
envisioned for myself.
So at some point I realizedthat it's a math problem, that
yes, I'm making multiple sixfigures here, but I can figure
out the cashflow of theseproperties such that I build a
floor of income coming in.
(06:00):
So I can then choose what I dowith my time.
So, I really put my head downon trying to build the most cash
flow in the safest way possiblethat I could, and that resulted
in multifamily real estate.
Rachel Oh (06:12):
Okay and tell me what was going on at the time, like,
what was the environment like?
Was you know were you and Idon't know now what year you
were at, but you know, was it agreat time to invest?
Or did you just be like, youknow, just, I'm just going to do
this, I'm just going to go buysomething.
You know what were you thinkingLike, were you trying to time
the market?
Or you just like, let's just dothis?
(06:32):
Like, tell me how, what youwere thinking.
Mandy McAllister (06:33):
So I had done all of the learning and, as a
straight I think many femalehigh performers will resonate
with this that I got allstraight A's and I waited my
turn and I raised my hand and Idid all the right degrees and I
did all of the things perfectlythat taking a big risk what felt
like a big risk in buying abuilding was more than I was
(06:54):
willing to stomach.
But then when I did it you know, when my son was born, I it got
real.
You know, like you get one passat this life, you get one
chance to try.
And I ended up, you know,taking a swing.
And when I didn't die afterbuying my first fourplex and I
actually had like a thousanddollars cashflow coming in a
month, I realized I wanted tocontinue to rinse and repeat
(07:16):
that process.
So, you know, 2016 into 2017 isreally when I decided to start
scaling up.
Rachel Oh (07:23):
Okay, so you bought your first property by yourself.
Sounds like you didn't partnerwith anyone.
You just did it on your own.
Yeah, okay, yeah.
Mandy McAllister (07:30):
I had saved enough that the four flex was my
own, moved on to a six flexthat was my own and a 10 unit
all just me, and then you runout of money pretty quick.
Rachel Oh (07:41):
Yeah, yeah, I was going to say I mean that's a lot
of down payments at 20% plus orwhatever it is, so okay.
Absolutely so you did that, soit sounds like, so I actually.
You did leave medical device in2021.
So you started buyingproperties and then you just
left your your medical devicecareer forever.
(08:01):
Is that right?
Mandy McAllister (08:02):
Well, that was too scary.
So here's here's the way Icouched that to myself.
I had built a good enoughreputation in medical device
sales that I knew I could gofind another job If it hits the
fan, and I needed.
I was a single mom at the time.
If it hits the fan and I neededto go find another job, I knew
I had the confidence that Icould do it within six months.
(08:24):
Right, right.
So I decided to take a yearsabbatical, right, like I.
Just we're going to do anexperiment see how this feels 12
months from today.
I'm going to see how this feelsand if it feels great, I keep
going.
Rachel Oh (08:44):
If it feels great, I keep going.
If it feels wrong, I go findone of those jobs.
So that took a lot of thepressure off and didn't feel so
permanent, Right.
So you took a sabbatical, youstarted all in or went all in on
the real estate and then itsounds like you never went back.
Mandy McAllister (08:49):
I have not gone back.
Rachel Oh (08:53):
You don't miss it at all, yeah.
Mandy McAllister (08:55):
You know I miss getting to work shoulder to
shoulder with really smartpeople.
Rachel Oh (08:59):
Yeah.
Mandy McAllister (09:00):
But, end of the day, the chance to build my
own empire, the chance to youknow in any type of sales.
If you have a really good yearfor a big company, your number
resets right, oh yeah.
Rachel Oh (09:16):
And then it goes higher.
Right, it goes higher.
Oh my gosh, it's the worst Tomake the same money.
Right and yeah.
And then it goes higher.
Right, it goes higher.
Oh my gosh, it's the worst Tomake the same money right and
you're chasing your tailActually.
Mandy McAllister (09:23):
So it so happened in 2017 that I had won
a president's club.
I was number five out of 500 orsomething, and I had sold 3
million when I should have sold1 million, and then my number
the next year was to make thesame base pay.
I needed to sell 4 million,which wasn't possible.
Rachel Oh (09:41):
It wasn't fair, you know.
No, it's like, hey, you canmove me to 1.5 million or 2
million maybe, but yeah, Rightyeah, yeah.
Mandy McAllister (09:48):
But a boss at the time said well, you just
need to go find more patients.
And that didn't feel, that feltbeyond the scope of a moral
compass that I had.
So that was really the catalystto leaning into.
I need to figure out how muchmoney I need to get out of this
so that I can live the life thatI want to live.
Rachel Oh (10:08):
Okay, so you took your sabbatical you had,
obviously, and you just you gaveyourself a soft landing in case
things didn't go well.
And then you mentioned youstarted running out of money.
So what did you do then?
Mandy McAllister (10:21):
Yeah, so what I saw?
was learning about multifamilydebt, the chance to get agency
debt, the chance to getnon-recourse debt on something
for the long term really feltlike how the rich get richer.
You know if it hits the fan andyou haven't done these bad boy
things that you know you're,you're, you know forgiven is the
(10:43):
wrong word, but it'snon-recourse.
I'm not personally liable.
So it felt like a second, likebelt and suspenders of a safety
net for me to move forward intothese larger properties.
So I had such a clear vision onwhere I was going.
I wanted class B properties inIndianapolis.
I wanted it to be.
You know, I live in Chicago, soI needed to get to a market
(11:04):
that was growing in populationand GDP and jobs and I needed to
get down there and back beforedinner with my criteria so that
was how you picked Indianapolis.
Exactly.
So, I sold a number of thingsthat I owned in Illinois.
So I had some single familyrentals previously that I was
(11:24):
kind of doing concurrently withthose small multis and I sold
those and I had a little bit ofcapital that I wanted to get
into the bigger stuff and Italked that big vision of
exactly what I wanted to otherinvestors and it turned out
vision of exactly what I wantedto other investors and it turned
out.
You know, we I found a partnerwho wanted to throw a million
(11:45):
dollars into something he was inhotels and he was kind of
getting crushed during COVID andhe liked this vision.
So he another guy and I went inon a 53 unit in Indianapolis in
September during COVID.
So that was the first largeracquisition on agency debt and I
got there because I hadpartners who moved with me.
Rachel Oh (12:07):
So they put in their capital, you put in some of
yours.
Are you the sweat equity?
And, by the way, you were at aphenomenal interest rate
environment.
So tell me how that worked.
Mandy McAllister (12:18):
Yeah, totally.
So we came in with I didn'twant to have a taxable event.
So one thing in JV that mattersfor anybody taking notes if I
came in with $0 and my businesspartner came in with a million,
day one of acquisition, the IRSwould feel that I had a $500,000
taxable event right.
So we structured things suchthat we would not realize that.
(12:40):
So I only took 10 percent ofthat first deal because I knew
the path I wanted to go.
What I needed was to be able tohave signed on that, that
Fannie Mae loan so that I couldgo get it on my own later down
the road Got it.
Right, exactly so.
What I really loved, though, isit didn't seem possible for
interest rates to go down muchbelow that 3.2% rate that we
(13:03):
were going to get, and becausemy goal and my business
partner's goal we were veryaligned and we wanted something
for cash flow for the long term.
First thing in figuring out whoto partner with is is your
vision aligned?
Is your vision aligned?
Because, if you want to get inand out quickly and your
partners want to hold on for thelong term, you are absolutely
(13:23):
not well matched and need tofind someone else.
So we were absolutely wellmatched and we moved into that.
It was about a $4.1 millionacquisition, and we moved in.
I brought 10% of the downpayment, another guy brought 10%
and another guy brought 80%, sowe have ownership commensurate
with our on that first one.
Rachel Oh (13:46):
Okay, so you're a pair of pursue with your
partners and you have the samevision, and you guys are just
going to hold this throughperpetuity, sounds like.
Mandy McAllister (13:54):
Exactly With the best possible rate for for
the longterm Right, right, okay,so that sounds like it's your
first joint venture then, sothat we could put a supplemental
(14:16):
loan on it, should we choose topull out any equity in the
future.
Rachel Oh (14:20):
Right, okay, so that sounds like it's your first
joint venture, then, is thatthat was Okay?
So you I don't know were you?
Did you have a grand designwhen you did that, or did you
just kind of stumble into it, orlike it sounds like?
I mean, it sounds like it was alittle more strategic than what
I'm alluding to.
But tell me, like what?
Was your thought process there.
Mandy McAllister (14:38):
Well, the ultimate goal was to get that
loan.
I felt like the loan product inthat low interest rate
environment was the ultimateasset that you know.
Yes, having cash flowing realestate that is Maslow's
hierarchy of need dictates thatyou always need a place to live,
and it's in this growing market.
I think that that is the rightinvestment for the long term.
(14:59):
Need a place to live, and it'sin this growing market.
I think that that is the rightinvestment for the longterm.
But that loan is really thething that I needed to grow my
wealth in a big way.
So that was really step one.
I'd love to say that I was sostrategic that I knew that that
was going to be a first step inthe direction of where things
are going but, I just knew thatI needed to have some sort of
(15:19):
track record of having donethese types of deals so that I
could go after that loan producton my own in the future.
So that is exactly why I didthat deal.
Rachel Oh (15:28):
You know it's so fascinating to me that that was
the impetus for your jointventure partnership.
So you know, peg has beenaround now for 20 years.
We're in our 21st year.
We're about 2 billion AUMno-transcript which I'm not
(16:08):
certain I've heard any otherreal estate investor kind of
focus on.
I mean it's usually like timing, the market making, you know,
taking advantage of interestrates, or you know, I have never
heard anyone saying I wanted tobe to have a track record on,
you know, a loan type.
Mandy McAllister (16:24):
I don't think I've heard that.
Rachel Oh (16:25):
I don't know, maybe I'm wrong and I'm looking at my
producer and he's like he'sshrugging his shoulders, he
doesn't know, but but yeah, no,I love that.
That was your vision and now,so tell me what has happened
since then.
Mandy McAllister (16:38):
Yeah, you know , just to kind of finalize that
point there, there's a new bookby this guy, morgan Housel, who
you know this idea of, likeWarren Buffett talks about it
that you know, rather thantrying to predict what's going
to change in the future, it'seasier and more, you know,
beneficial to try to predict thethings that will stay the same.
(16:59):
Okay, right, and in my opinion,a thing that stays the same is
that people need a place to liveand that an interest rate of 3%
will be really low.
Yeah, and that because the fedhas a plan and a target for
inflation, then inflation willcontinue.
Right, if I do all of thosethings, then that loan product
sets me up for success.
Rachel Oh (17:16):
Yeah, no, and inflation has definitely been a
part of our story recently,which you know we're down, right
, we're down to about three-ishpercent.
I know the Fed wants to be attwo and you know we just had an
episode about Fed funds ratehike and you know when they
anticipate and et cetera.
So, but okay, so, yeah, no, Ilove that.
And again, what was the name ofthat author?
You said it Morgan Housel.
(17:37):
Morgan Housel?
Okay, I mean Warren Buffett, weall know right, the Oracle of
Omaha.
Mandy McAllister (17:40):
Yeah, okay, so cool.
Famous ever is the book Famousever.
Guide to what never changes.
Rachel Oh (17:45):
Okay, I love that.
I love that.
So we're no longer in a 3.2interest rate environment and
costs have skyrocketed sincethat time, so how are you
viewing these?
You know again.
I want to go back to JVing theright way.
So now, how are you approachingthings, given today's
(18:06):
macroeconomics and sort of?
You know the opportunities thatmay or may not be existing at
present?
Are you continuing to JV?
What are you doing right nowwith these joint ventures?
Mandy McAllister (18:15):
Yeah.
So kind of the beauty of theway I've approached things is,
you know, when it felt like thetime was absolutely right to
lock some things in, I was.
I was fortunate enough to lockin kind of three what for me
were larger deals a 38, a 53 and104.
And that then produced a floorof income that helps me live my
(18:36):
life, so that I get to buy andwatch the market.
I get to sit on my hands if Ineed to sit on my hands.
I get to do a little pivot ofthings that I'm curious about.
For instance, that motel that Ibought in joint venture was a
product of I do small multis.
I met a person who herexpertise was in short-term
(18:56):
rentals, so we work to do adifferent type of a project
together.
Most recently, kind of havingtaken note from this group,
gobundance, that I have anopportunity to serve as a leader
in the looking at the peoplewho are doing things bigger than
me, who are at the 200 millionnet worth base Time and time
again to get to the $100, $200million net worth.
(19:19):
There's a business componentbeyond just real estate.
So being curious about that inthis timeframe when there is not
really price discovery formultifamily in the way that we
have seen previously and willsee in the future.
I acquired a car wash abusiness, a real estate heavy
(19:43):
business, to work, to have anengine for cashflow to throw
into multifamily when it becomesdoable again.
Rachel Oh (19:47):
Okay, so you are now pivoting a bit based on where
the market sits, but always withyour eyes on the prize, which
is accumulating wealth or, youknow, additional cash, whatnot,
so that you can pounce on theopportunities when they do
present themselves.
Mandy McAllister (20:02):
That's exactly it.
My end game will always bemultifamily on non-recourse debt
.
I really feel like thebillionaires who want to store
their wealth.
They store it in that fashion.
So how can I answer thequestion?
How can I, with whateverlimiting factors I have, how can
I mimic the people who got tothe absolute for this place?
Rachel Oh (20:27):
Yeah, the partners that we work with, and we work
with institutional groups aswell, but we also work with
large family offices.
These are billion, you know,billion dollar plus family
offices and 1000% a huge part ofall their portfolios is real
estate.
A lot of times they made theirmonies in different, you know,
like tech or oil, and gas or, um, actually some even in home
(20:50):
building.
But the way they've grown theirwealth and cause, you know
they're about wealthpreservation.
At that point, right, They'vealready made their wealth, since
they want to preserve theirwealth for their you know the
future about wealth preservation.
At that point, right, They'vealready made their wealth, since
they want to preserve theirwealth for their, you know, the
future generations.
But they also have wealthaccumulation and you know, a
huge portion of their portfoliois real estate.
Mandy McAllister (21:08):
That's exactly it.
It's this engine for cash flowthat if you have a especially a
business engine, you have thatbusiness engine and can put
those proceeds into somethingthat is like a vault as close to
a vault, as close to a vault asyou could possibly have.
That is the single most provenasset class for creating wealth.
Then that is the best possibleformula, in my opinion.
Rachel Oh (21:30):
Yeah, and then to your point, everybody needs a
place to live, right?
So, yeah, exactly, which I love, which I love, and, man, we can
go down that rabbit hole of youknow, the rise of the forever
renters and renters by choiceand et cetera, because you know
I do that all day long.
But we, we, that's not today'sepisode, well, we can cover that
in a separate thing.
So okay, so let's, let's pivot alittle bit.
(21:51):
So you've told me about how yougot into joint ventures.
It sounds like you're kind ofwaiting in the wings.
What are?
Where do you see, then, thereal estate investment
opportunities?
Like, what are you waiting for?
Like we know, we, you know andI don't know, one of the big
things we keep talking about isall the maturing debt coming due
right, like I mean, there's,they say, roughly about 500
(22:11):
billion a year, but we'relooking, we're talking about 2.2
ish trillion between now andmaybe 20, 27, 20, 28.
So now and maybe 2027, 2028.
So that's just me just talking.
But where does Mandy see thereal estate investment
opportunities?
And what are you kind ofwaiting for?
Because it sounds like you'rewaiting in the wings.
So what are you waiting for?
Mandy McAllister (22:29):
Yeah, what are you waiting for?
Yes, I am sitting on my hands alittle bit, but I continually
underwrite, every single day.
But, what I need to like.
I have a buy box and my buy boxdoesn't change because of the
market.
I think that you know the, the,you know the.
The money is made in.
The weight is what, uh, youknow uh, warren Buffett would
say right, it's not made in thebuyer to sell, it's made in the
(22:50):
way.
So how can I buy?
Wait until I can buy somethingthat is going to meet the
criteria that I need to see, andwhat I have found is in these
growth markets, and I want to bejust an expert in one, maybe
two markets.
So Indy is the place thatmatters to me most.
I want class B assets because Ithink it's, you know, less
(23:10):
headaches than the C and not asexposed in downturns as the A's,
and I would need to see cash oncash double digits by year two.
And I would need to see cash oncash double digits by year two.
So what I love, what the perfectproperty for me is, is when I
can find something that hasupside value at opportunity,
that is not construction risk,because I really started to
(23:33):
scale during COVID and seeingthe changes of inputs and labor
costs and all of the things thatgo into increasing an NOI right
, like it's so unpredictable.
So the things in getting intoan asset that are appealing to
me is how can I lessen that risk?
How can I mitigate and, youknow, reduce the risk that's in
front of me?
So if that upside is a rug, ifthat upside is, you know, a pet
(23:56):
rent or a parking rent, or youknow putting in place, mandating
that my tenants have theirinsurance or renter's insurance
in place, whatever those typesof management heavy plays that
don't involve construction.
That is the ideal play.
So I need to see an asset inplace that will, by year two,
with these management strategies, yield me at least a double
(24:19):
digit cash on cash.
That is what I'm waiting for.
Rachel Oh (24:22):
Okay, so how long are you going to wait for?
Mandy McAllister (24:28):
Well, I know.
Rachel Oh (24:29):
We look at underwriting every day and it is
so not what it was, and it'sreally because of the two things
you mentioned.
Well, you didn't mention somuch interest rates, but it's
cost and interest rates.
Like we are not, you know, inour world.
Now we're looking at I mean,we're trying to find unlevered
yields at roughly 7%, which isincredibly difficult to find.
Mandy McAllister (24:51):
Well, the thing is, though, you're
deploying a ton more capitalthan I am at a time.
I mean, the maximum I woulddeploy at a time is like a
million.
You know, it's easier to get asignificantly higher return when
you've got a smaller number youknow, so I'm in a way at an
advantage, because my N is lower.
Rachel Oh (25:09):
Yes, true, true that.
But then that begs the questionagain when do you think you'll
find those double digit year,two returns.
Mandy McAllister (25:18):
So I underwrite and hope every day,
but at the end of the day I dothink you know.
If you look at that data onhowever many trillions of
dollars that are coming due, youknow I wish I could dig deeper
into that number, because what'scoming due sometimes is debt
that was put on deals 12 and 15years ago.
Rachel Oh (25:38):
Totally.
Mandy McAllister (25:39):
Like you can't tell me that there's not like
an equity basis that wouldsupport a refi at a ridiculously
higher rate.
You know, so, anyway, I thinkthat once price discovery starts
, we will feel it.
I don't think my crystal ballis broken but, that being said,
I do feel like you know, afterthis election, after we have a
(26:00):
little bit more certainty inwhat's happening with you know,
our leadership, we will havemore certainty with what's
happening in our economy interms of price discovery
happening in these multifamilydeals.
So it dropped by like 61percent.
I read recently transactionslast year.
I don't think that.
I don't think that picks upuntil 25.
(26:22):
So you know, I'm interested inbeing patient and hitting home
runs because my strategy is suchthat I don't need to be right
30 times.
I need to be right like fivemore times in my life and I have
a legacy that I get to lead tolead to the next generation.
Yeah, so five more deals, that'sall you need, and you've hit
(26:42):
your goal I mean, at the end ofthe day, if you're, if you get a
cashflow of $20,000 per dealyou know you do four or five of
them you've built a really nicelife.
Rachel Oh (26:52):
Yeah, no, no for sure .
And all this from a farm girlout of the suburbs of Chicago.
Mandy McAllister (26:59):
No, this is what.
Rachel Oh (27:00):
I'm saying, like I'm telling you real people, real
stories and real wealth, andthat's what I thought was,
because you're a little bitdifferent than our typical guest
.
But I really globbed onto thetidbits that I had seen, and so
this is what I'm trying to getinto, and again, the big nugget
that I'm coming away with is Ilove your laser focus on the
(27:20):
type of debt that you were ableto, you know, to position
yourself for, and then that haskind of set.
And now you're waiting and youhave.
You have the luxury of waitingbecause you've built to be able
to do that right, to be able tocreate that.
So let's shift gears for just asecond.
So you mentioned a motel dealand it sounds like it came from
a partner that came out of thisGoBundance and we haven't really
(27:41):
talked about this GoBundancetoo much.
But tell me a little bit moreabout your motel bill.
But tell me also aboutGoBundance, because did I get
that right?
You found your partner throughGoBundance.
So tell me a little bit aboutthis GoBundance, because I'm
sorry, I didn't mean to glossover it because I really want to
get kind of into the nittygritty, but I think now is a
good segue.
Tell me about GoBundance.
Mandy McAllister (27:59):
Perfect.
Gobundance is a tribe ofhealthy, wealthy, generous
people who choose to lead epiclives.
We refer to ourselves as thetribe of millionaires.
The thing that really drew meto the women's division was I
felt crazy, you know, againbeing the farm kid who wants to
go off and buy apartmentbuildings.
Many of the people who loved methought you are.
(28:21):
You are crazy.
Like it must be nice to be ableto do this thing that you're
doing, but it was a ton of hardwork.
They got me there.
Not, it must be nice, you know.
So getting an opportunity to beshoulder to shoulder with a
bunch of other leaders, playingwhatever game they play, in a
really big fashion, reallyputting focus on all of the
things in life.
Because, yes, financial freedommatters, but what matters so
(28:43):
much more in the chat is howconnected are your relationships
?
Are you getting back in a waythat feels authentic?
Are you spending time thinkingabout what your physical body is
like?
You know, um end of the day,you know we we do talk a lot
about financial freedom andsteps to get there and ideas and
hacks, and you know learningfrom each other, but a lot of
(29:03):
time is spent on the right depthof connection in the right
places in my opinion.
So I now get to be the CEO ofGoBundance Women and I ended up,
you know, because my expertisewas these small multis to five
to 50 units largely.
I met a friend who did theseshort term rentals and we we
(29:27):
found a deal that wasincorrectly listed on MLS that
had commissioned a study, formore overnight stay was needed
in that community because theylike 5x their size during the
summer.
They're a late community and wedecided to make this really
(29:50):
problematic, ratty, you knowhotel motel into something that
was really kind of um, kitschyand beautiful and we we actually
uh were able to take theovernight rent from uh nine to
$10 a night up to uh we got 130in the peak season in our first
year.
Rachel Oh (30:10):
Wow.
Mandy McAllister (30:11):
I'm sorry, from nine to $10 a night.
Rachel Oh (30:13):
What, what?
This sounds like a seedy motel.
It was a seedy motel, it wasexactly what it was.
Mandy McAllister (30:17):
It was a seedy motel.
It was a seedy motel, it wasexactly what it was and it had
been a huge problem for themunicipality, so they had a ton
of hope and help for us to beable to make the transition
happen.
So in this area it's calledBalsam Lake.
In that area there'smultimillion-dollar cabins and
(30:38):
the bulk of the people whoneeded to stay is, let's say,
it's a three bedroom cabin andyou've now invited 10 of your
friends to come to the cabinwith you.
The spillover would come.
Stay with us and you know we werefinished it in a way that we
were really proud of.
So that's something I'm lookingto exit because the lesson
learned is the the managementstuff is.
Rachel Oh (31:01):
it's a highly operational game yes, I listen
we do hospitality all the timeand it is incredible, it's and
it's it.
You know it's definitelycyclical.
So pandemic was rough for someof our properties, although
pandemic was great for some ofour resort properties.
So you know it all works outwell.
But to your point, property soyou know it all works out well.
But to your point, yes,operations is key.
(31:22):
So you definitely need a strong, you know property management
group to to manage the asset andthen, of course, you know to
get the, the ADRs and theoccupancies and all that.
So I'm sure you're learning allthat and it's way different
than multifamily, because youknow you've got annual leases
versus nightly rentals.
Mandy McAllister (31:38):
So is it making you more crazy?
Is that what you're saying?
You know, uh, the, the, themanagement of it is um you know,
it's something that you want tojust hand over and it's you got
to manage the manager and thatyou know, uh, a small town
candidly more difficult to to beable to pull off.
So it's, uh, it's not the rightasset for me and I'm looking to
(32:00):
exit it, but we've donesomething really cool for that
area and, uh, looking to stillhave that kind of business
background or backbone, um, inorder to, um, uh, build wealth
moving forward.
Rachel Oh (32:14):
Yeah, no, I love it.
I um, there was that Netflixepisode about those two women in
Canada or something.
And so, yeah, sorry, you remindme of them.
I'll just a little, and I wishI could properly cite their
names.
I have no idea, but I rememberseeing that, and so when you
told my story, very cool, okay,so Balsam Lake, huh, where is
(32:34):
that?
Mandy McAllister (32:35):
Where is that?
Rachel Oh (32:36):
I'm sorry, I have no idea where Balsam Lake is.
Mandy McAllister (32:38):
It's a lake community.
Yeah, there's.
A number of their hockeyplayers have a cabin on the lake
, their newscaster, theirweather girl, that is the lake
that she vacations on, so it's alittle bit riskier.
There's a ton of money cominginto the town and the play makes
(32:58):
a ton of sense.
We just can't make themanagement work.
Yeah, because we're not local.
Rachel Oh (33:04):
So, anyway, that is why I'm looking to exit that
Well, I love it and I love Lakevacations, so I'm going to I'm
going to look it up after thisclass.
Mandy McAllister (33:13):
Maybe I'll be there, but okay, so.
Rachel Oh (33:17):
so then you met this.
You met her through GoBundance,and GoBundance is a big part of
it sounds like right now, a lotof your time, and you're
finding a lot of fulfillment inthat.
So a lot of your time andyou're finding a lot of
fulfillment in that, so is thatthen?
So tell me now what, as you'rekind of waiting in the wings and
discovering that maybe you'renot a hotel operator and whatnot
, what is what is?
taking up your time and how areyou?
(33:38):
You know what are you lookingto in the future and you know
what.
What are your next steps?
Mandy McAllister (33:43):
Absolutely so.
I acquired the rights tooperate GoBundance.
So that is a building out thoseteams with a couple of partners
.
I built out, I acquired therights and I'm now building out
the women's division and we'rereally proud of what it's
becoming the type of personaldevelopment that women are
experiencing being next to otherhigh performing women, figuring
(34:06):
out the stuff, the connectionand all of those other things
that I previously named.
In addition to that, the carwash piece has been really
getting systems in place becausewe bought from a mom and pop
owner who had a lot of back ofan afghan type handwritten books
so in the same way, umacquiring a building from a mom
(34:30):
and pop is is a lot of heavylifting in the numbers to make
right the uh, you know whateveraccounting pieces they've had.
We're.
We're doing that with the, thecar wash, looking to expand that
a little bit so that we can umhave the full-time management.
So, the lesson I learned inbuying smaller multis is you
(34:51):
know, there is a point of scalewhere life gets a lot easier and
I'm I'm not quite there withthe carwash stuff yet.
So getting myself, feelingmyself out of management of the
carwash is the primary thingthat I have going now, and then
using the funds created fromthat engine for cashflow.
Because, just a little bit ofmath on it, if I'm going to buy
(35:15):
at a four cap of a building, I'mbasically saying I'll pay $25
for that dollar of cashflow.
Cashflow is my goal right.
If I'm going to buy a car wash Ipay $3 for a dollar of cash
flow.
So the cash flow comes insignificantly more with those
business-based real estate playsthan it does with just
(35:36):
multifamily.
So, building up our powder,getting as much powder dry our
war chest ready for I thinkmaybe 12 months from now is when
I'm going to buy as much as Ican possibly afford yeah, in
multifamily.
Rachel Oh (35:49):
Yeah, yeah, no, I hear you, you and I think
everyone else, yeah, totally.
Mandy McAllister (35:53):
Exactly.
Rachel Oh (35:55):
We're starting to see things right.
Well, sorry, we're starting tosee things on the hospitality
side.
So there are some hospitality Ithink that's coming up that
we're able to acquire.
We are also waiting in thewings for multifamily assets,
but, interestingly enough too,we really feel like now is a
great time to build, which Idon't think is necessarily what
everyone thinks, but we reallydo think this is going to be a
(36:15):
vintage year for development.
So, but that's just kind of theway we approach things.
But you pointed out very,really articulately that you
know the deployment of ourdollars versus what maybe
individual investors do isreally different.
So kind of the way we look atthings.
But again, like I said, realpeople, real lives, real
challenges and real solutions.
(36:35):
That's what I've really lovedabout, you know, what you've
shared with us today.
So last question so if you wereto crystal ball, sort of where
you think things are going to goand I think you've said the
next 12 months, just like what Imean, what would be your just
kind of prediction for realestate and where you think
(36:57):
things are, when you thinkthings are going to turn and
where you see the opportunitiesare?
Mandy McAllister (37:00):
Yeah, I so.
I did a master's in economics,so I my favorite thing about
economists is there's neverenough band, like a never enough
timeframe for you to reallyprove if somebody's really right
or not.
So this type of thing like youshining out my economist crystal
(37:22):
ball makes me really happyseeing a bunch of my people that
I grew up with in multifamilyhaving done a lot of these
shorter term bridge loans that Ifelt unease with.
I think that we are going tostart having some price
discovery here, beginning maybenine months from now, but I
think that there will feel likemore certainty in the market
(37:45):
after the election.
I just it doesn't like.
I don't want to be a conspiracytheorist, but knowing that that
is on the horizon, that thereare a lot of things in play, and
beginning of the new year is in2025 is is going to give us a
lot more information, and thatis when I plan to make some big
decisions about what the nextright step is.
Rachel Oh (38:05):
OK, yes, I've heard, survive until 2025.
Mandy McAllister (38:11):
So you've heard it here.
Rachel Oh (38:13):
Well, I've heard survive until 2025.
And I'll tell you, the pegwayis we are definitely moving
forward in 2024 as well.
So there's a combo between thetwo.
Okay, Mandy, thank you so muchfor your time, for your insights
, for being a little vulnerableand sharing with us your story.
But then what I what I love isthat you have a very clear and
(38:37):
defined vision for what you'relooking for.
You have criteria on.
You know the investment typedeals that you're looking to do.
You also are giving back toyour community through this
GoBundance and I know that,while we were kind of, you know,
prepping for this, you havesome new life changes, including
the growth in your family.
(38:59):
Yes, so I am just thrilled tohave had this time with you and,
and I'm hoping, maybe in thefuture you'll join us again.
So, amanda, thank you so muchfor joining us today.
Thank you, this was so great.
Thank you, I hope you have thebest day.
Awesome, thank you.
Okay, so thanks everyone forjoining this week's episode of
Peaks and Portfolios by PEGCompanies.
(39:19):
I am Rachel O, your host, andwe look forward to speaking with
you again.
Thanks, everybody.
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