December 23, 2024 • 41 mins
Multifamily real estate investor Dave Seymour joins us to share his incredible journey from battling fires to battling the real estate market. Dave's shift from single-family homes to multifamily investments, particularly in workforce housing, demonstrates his commitment to offering affordable solutions for essential workers in Florida. His story isn't just about success; it's about an entrepreneurial spirit driven by innovation and the desire to tackle the housing crisis head-on.
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Episode Transcript
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Speaker 1 (00:00):
Welcome to the Everyday Millionaire Show with
Ryan Greenberg and Nick Kalfas.
All right guys.
Welcome back to another episodeof the Everyday Millionaire
Show.
We are here with Dave Seymour,a multifamily real estate
investor.
You've started a fund.
There's a couple of thingsyou've done, so why don't you
(00:21):
give us a kind of an elevatorpitch on what you've done?
Speaker 2 (00:24):
Yeah for sure.
I started in the single familybusiness coming right out of the
crash.
I used to tell people I'm inreal estate and they'd say I'm
sorry, I just I was stillworking as a firefighter and a
paramedic just north of BostonMass.
At the time, work constructionon my days off got a little
taste, a little flavor for theinvestment side of things.
I remember I was sitting on aconstruction site in January in
(00:47):
Boston freezing my butt off.
Car pulled up with three orfour individuals in it.
They were in nice clothes,driving a nice car.
They had smiles.
I didn't.
I said to one of the guys onthe job who's that clown circus
just showed up there.
Who's that?
He goes.
They own the house we'reworking on silly.
He said those are the investors.
I go.
What's an investor?
He goes.
(01:07):
Those are the guys that makethe money while we dig the
ditches.
I'm like, well, I need to getto know those guys.
So anyway, long story short, Igot to talk to them a little bit
.
I realized they weren't thatsmart.
Through a set of circumstancesthat I believe to be a little
bit of divine intervention, Ifound myself in a position to
become on the investment sideand you know I really did
(01:29):
progress from this, like I said,starting a single family
business during the crash, doingclean out, short sales, loan
modifications.
You know I got to sort of seethe greed in this business as
well.
You know what I mean Justgreedy, greedy people doing
stuff.
And then from there wetransitioned into our own small
portfolio of multifamily landed.
(01:50):
A reality TV show ran with thatfor four or five years on the
A&E network put me on biggerstages, bigger places.
From there I moved into thelending space.
From there I moved into thelending space hard money lending
, private lending Again, througha set of circumstances,
transitioned into what we'redoing today.
(02:16):
Today's focus, today's attentionis all about solving the
housing crisis.
The single-family homes arepriced out of range, can't even
afford to put gas in the car,eggs in the refrigerator.
So people still need a place tolive.
So we're building.
We're building what we call theMiss Middle in Florida
workforce housing, police,firefighters, nurses, hotel
(02:36):
workers, people who can't affordthe fancy stuff and they don't
want to live in the crappy stuff.
So we're building them homes,small apartment complexes,
raising capital, deployingcapital and doing our best to
give a return.
Are you based in Florida?
Speaker 1 (02:54):
So you live in Florida 100% of the time?
No, I don't.
Speaker 2 (02:57):
So I'm still up in Boston and the reason that we
have two offices the Bostonoffice and the Florida office,
is there's a lot of money uphere in New England and it needs
somewhere to go.
Okay, it needs somewhere warm.
Up here we have what we callthe snowbirds, yeah.
So you know they live inFlorida in the winter and they
(03:18):
live up here in the summer, andyou know that capital resource
from accredited investors,smaller family offices it's
pretty prevalent.
So I'm bagging for dollars andthen we put that money to work
in the Florida market.
Speaker 3 (03:32):
So we're both real estate investors and I've heard
this before, but would you saythat what you just described is
kind of like the cycle of a realestate investor?
You mentioned that you startedwith single family, you went to
multifamily, then, I'm assumingyou had some money that you
could start lending.
It became a hard money lenderand now you're doing like you
know funds and such.
Is that kind of like theprogression that you know?
Speaker 2 (03:56):
people who start out eventually want to get you or
just kind of no, no, it's not.
It's absolutely not theprogression.
It's absolutely not theprogression.
It's um, I think it's part ofmy DNA.
I get bored quickly and, um,you know, I can take a single
family home today, uh, analyzeit, underwrite it, flip it and
(04:17):
it doesn't really get get myblood boiling.
So I think a true entrepreneuris never, is never, happy with
the norm right Scalability.
The next challenge it's been adriving force for me personally.
You know my personal life aswell as my business life, so you
(04:37):
know it's learning a newbusiness model altogether.
You know the fundamentals aresticks and bricks are the
fundamentals.
They don't really change thatmuch.
But what does change is youknow what angle are you coming
at that piece of real estatefrom?
Are you coming at it from afinancial standpoint?
Are you coming at it from aconstruction standpoint?
(04:58):
Are you coming at it from arepositioning standpoint?
And each of those strategieswithin a real estate deal in and
of themselves are a businessplan on their own.
So again, for me personally, tomove into the lending space was
cool, but that's kind of boringtoo.
(05:18):
That's just sitting thereunderwriting numbers and making
sure that your capital or theline of credit you're working
off has a good pipeline ofborrowers who aren't going to
screw stuff up, so you have totake over the properties.
So for me, the three years inthere led me down the road to
some of these larger financialpools of capital, if you will.
(05:42):
And then, once you have accessto capital, money hates sitting
still.
It wants to move.
It's what it's designed for.
It's designed to go out, and Ialways talk about velocitizing
capital.
So for me to then transitioninto the work that we're doing
today, I would not say it's anormal transition for an
investor, but it's alsointeresting what noise you
(06:03):
listen to out there.
Right, if you listen to some ofthe gurus, slash experts out
there, they'll tell you that youcan buy a 500-unit property in
an A market with no money down,no credit and no track record.
Well, they're full of shit.
If that's what they're saying,it's not a reality.
Speaker 1 (06:24):
Yeah, those people are typically just debt raisers.
They're trying to basically putmoney together and buy the
assets themselves.
So we typically I mean I couldspeak for probably Nick and I
both we're in the heavy in thesingle family to small
multifamily one to four unitgame where we buy and hold, we
do some flips.
I own a construction and aproperty manager company and we
(06:48):
make great money.
But you know you always kind ofsee like the grass is always
greener situation with the guysthat are that are doing these
big debt funds and bigdevelopments and stuff.
What are some of the kind ofthe hurdles from getting from
where we're doing these singlefamily deals, you know maybe
buying and selling in the fiveto 700,000 range and you know
(07:10):
what.
What.
What was your biggest hurdlesfrom getting to that to you know
doing track developments andstuff.
Speaker 2 (07:15):
Yeah, Let me.
Let me ask you a couple ofquestions first.
So your single family flips,what market are you guys in?
Speaker 1 (07:21):
Like DMV, I'm in near annapolis, maryland, so right
inside okay and then how do youfund those?
Speaker 2 (07:28):
are you funding those who have money lenders, private
lenders, combination?
Speaker 1 (07:32):
combination, yeah, combination people.
Um, I'm from long islandoriginally, so I have some
investors from new york.
I got some people out west andum, you know, just people we put
money together for.
And then there's obviously yourlocal hard money companies.
And then we use someinstitutional money as well.
You know, now that we have somemore experience, we're doing
(07:55):
some more institutional money.
But yeah, that's basically it.
You know, we buy them, fix themup I own the construction
company that fixes them and weresell them or rent them on the
back end.
Speaker 2 (08:05):
So when I emigrated from England back in 1986, my
wife was an American.
I met her in London.
She was from Wontar, so you andI can be friends.
Okay, she was a lifeguard onJones Beach.
Okay, I lived in a village forabout six months.
But the reason that I ask youthose questions is you know the
(08:28):
folks who listen to your podcast, your show, and get to know you
.
You know you set a precedentout there.
So if you guys are looking toscale, you know your question is
what's the track right?
The grass is always greener.
You said greener.
You said it's a case of thefirst equity position that's
(08:48):
raised for a, let's say, a12-unit building or a 14-unit
building, that first equityposition that's raised between
LP Capital Limited, partner theequity position, and the GP, the
general partner, you theinvestor or the investment group
.
That capital usually is friendsand family or people who
already know and trust you.
(09:08):
So when I ask you, do you haveprivate lenders as well as hard
money lenders?
Your hard money lenders are notinterested in your three to
five-year strategy.
As you know, hard money lendersare quick-turn capital.
They want to see it in and outin six months to a year because
they're probably working off ofa line of credit and ripping
those notes right back throughWall Street anyway, making a
couple of bucks on the spread.
(09:29):
So you know, in the world ofscale, you know it's somebody or
a group of people who haveexperience with you as
individuals.
You know I teach people how toraise money as well.
I teach people the velocity ofcapital.
And it's the same question howdo I go from where I am to where
I want to be?
I've got 20 single family homesor I flip 20 houses or 100
(09:54):
houses, and that's a job.
That's a hard job flippinghouses, construction et cetera.
And they say how do I get to bethat general partner in a 12 to
15 unit property when I need $3to $5 million down?
Plus, I got to go get a bankloan.
I don't know that my net worthis good for the balance sheet.
(10:15):
The balance sheet isn't strongenough.
How do I get into these deals?
What does an AIA contract looklike with a GC, with a
contractor who's building bigstuff, not just the guy that's
going to the Home Depot threetimes a day to pick up another
plank of wood.
It's a different game.
It's just a different gamealtogether.
So on the financial side ofthat, it's who have you worked
(10:37):
with in the past that has trustin you.
And then do you have the skillsets and the ability to
underwrite a piece of realestate that's a cash flow and
asset for a three to five yearperiod of time.
Now what does that look like?
Are you able to proform aroundand project expenses and incomes
?
Are you able to underwrite anasset with market stresses in
(11:00):
there?
What if the cost ofconstruction goes up?
What if the cost ofconstruction goes down?
What if the interest rateincreases?
Did you lock in an interestrate?
Is it an adjustable rate?
What's the rental market looklike?
What does the population growthlook like, the employment
growth look like?
(11:20):
I know a few guys who were inIndianapolis and in that market
and they said it was really,really strong and it's maybe
leveled out a little bit.
Now I don't know, I don'tinvest down there, but if you
can, it's a good story.
Do you have a good story thatmakes sense, that's based on
fundamentals of real estate,income and expenses?
(11:42):
And if you do and you canpackage that properly, then
you're in a position to offer aninvestor.
Let's say, somebody can writeyou a check for a million bucks
and you're going to go buy a $3million property, just for
example, if that investor iscoming in for a million bucks
and you can quantify and qualifyyour return to them to be an
(12:04):
internal rate of return of 19 to25 percent, you know they're
looking at a two equity multipleon their money over a three to
five year hold.
I don't know many people who donot get excited when you start
talking about doubling yourmoney every three to five years.
You know without withoutselling drugs.
Speaker 1 (12:23):
So do you suggest that people get involved as an
LP first prior to becoming a GPand managing a syndication?
So I do construction for somebigger multifamily developers
and I'm doing a 60-unitapartment assisted living
facility right now build out.
(12:44):
So do you suggest that you knowwe get involved first as like a
limited partner and learn thegame that way?
Good question.
Speaker 2 (12:53):
Yeah, it's each to their own.
Right, it's each to their own.
So I'm sorry to turn this onyou, but we'll make it about you
, right.
So you're a GC If you'rebuilding a 60-unit complex,
you're a GC with some skill setsand some depths and you've got
(13:14):
your overhead and profit builtinto that deal.
If you came to me and you said,dave, I'll build this for you,
here's my overhead and profit.
Can I take some of that and putit back into the deal as a
limited partner, so that I canbe on the investment calls, so
that I can see the other side ofthe equation?
I may very well do that, andthat would be a fantastic
learning lesson for you.
I like to work from a place ofabundance and not scarcity.
(13:39):
Right, somebody might hear mesay that and go what are you
crazy?
He's going to know what you'remaking.
I don't care.
Right, my, my experience, myknowledge is incredibly valuable
, as is yours.
So when you in that situation,I would highly recommend that
you get in at a, at an LP level.
You know your exposure is lessand in your, your situation is
(14:00):
kind of interesting because youknow if you screw up as a GC,
you also screw up as the LP, youhurt yourself in both equations
.
But you know the avatar for themajority, the retail avatar.
(14:21):
When I say retail, I'm talkingabout somebody who's not a
family office.
I'm talking about somebodywho's not a high net worth
individual.
They're probably just anaccredited investor as
determined by the SEC.
I mean those individuals.
They know this.
If they've never done it before, they know there's something
there.
You know what I mean.
They just know that there'ssomething in those cash flow and
assets and they're timid, let'sbe frank.
(14:44):
They're not educated enough tomake a decision on how to pull
the trigger on their first deal.
So if they can come in in thatLP position and get to see how
these assets are acquired,either built or repositioned,
how you can maximize the netoperating income all
(15:07):
repositioned, how you canmaximize the net operating
income, how they can begin todefer the tax situation and put
themselves in a strong taxposition, when they learn about
depreciation and costsegregation, they get super
excited and there's a lot ofeducation just in that one
sentence alone.
But once they learn that, theycan then stand back and say to
themselves okay, I feel like Ihave enough of a foundation, if
you will, to go out and do itmyself.
(15:27):
But to be frank with you,brother, no fluff and buff here.
They look at it and they go.
That's too much work.
That's way too much work.
Here you work my money, right.
You put this money to work onmy behalf, on my behalf, and
then we as gps get into thatposition of being a steward of
other people's capital, which is, I don't know that there's a a
(15:49):
higher you know higher positionwithin real estate than
stewarding somebody else'scapital.
Speaker 1 (15:53):
You know yeah, so that that's very true.
Using other people's money tomake money, it's a beautiful
thing, uh, that's why we that'spart of the reason we love it.
But so go back to your timewith reality television.
How'd you get involved withthat?
And I'm just interested becauseI feel like we've had a boom of
real estate investors ingeneral because of reality shows
(16:14):
, of the flipping shows and allthe different shows.
And from somebody that actuallyflips a lot of houses, some of
those shows seem completely madeup and BS Nos no, no, like
they're flipping the whole homein seven days they renovate the
house inseven days and they make three
hundred thousand dollars, like Ijust I know from flipping a
(16:35):
hundred and you know hundreds ofhouses at this point.
Um, you're, you know you, we'redoing renovations, a lot of
them.
Nick owns a hundred houses, Iown a bunch.
We're we see it and then we seethem.
Nick owns a hundred houses, Iown a bunch, we were we see it,
and then we see this stuff on TV.
What's where's there?
Is there a line of realitythere?
Speaker 2 (16:51):
Yeah, it all depends on the production company and
the people on the show.
Brother, it really does so.
I was in.
I told you I was a firefighterand a medic and then a few years
later I was watching thereality TV shows like everybody
(17:20):
else does.
I'm like I know how to fix ahouse, like you.
That takes more work than that,but it was entertaining, right.
Reality TV show Show it's ashow, it's not the real world.
Right, and through theeducation space in the seminar
world.
(17:40):
That's how I landed the show.
I was running with a bunch ofinternet marketers that I've met
at various events that I'vebeen to during that period of
time.
Gary Vaynerchuk actually wasone of the up and coming guys
back then.
Who's the guy who does?
Russell Brunson?
These are all internet guys.
(18:01):
These are strong, intelligentguys who know how to drive
information to where you neededit to be.
Anyway, one of those guys,russell Brunson, sent me a link
to the TV show Application,right, and this was 2010,.
11, maybe a little late, 11 or12, I think.
And real estate was dead.
(18:21):
Dude, it was dead on arrival.
Hit that with the paddles.
That sucker ain't getting up.
And anyway, I turned in theapplication.
I loaded it with profanitybecause I knew I had to separate
myself from everybody else whowanted their you know 30, 30
minutes of fame.
And, uh, that was how itstarted.
(18:41):
You know, I sold myself tothese guys as a you know the
firefighter in the worst marketever.
When everybody else goesrunning out, we go running in.
Uh, you know, it's all bullshit, it's all fluff and puff.
Man, it's a story, but I knowhow to tell a good story and
that's how we landed the show.
And then, once we land thatshow, then I get to see the
(19:05):
backside of what was going on 29or 30 episodes, something like
that.
And everyone was a real house,built in New England turn of the
century, and every singlefreaking thing that could go
(19:27):
wrong with a house would gowrong in my market.
Right, we still had to make aprofit.
We still had to take the uglyduckling and make it real.
And one thing I'll give mypartner was was he said you know
, at the end of every show theygo, you know, bought it for this
, put this into it, made thisright, whatever that is.
He said he never wanted anybodyto ever come back and question
(19:48):
the finances of our deals.
So we kept the numbers real.
Now, what everybody else does,I don't know If you watch half
of this BS.
Like I said, it's a show and ifit's entertaining, take the
entertainment value, but for uswe stay true to the numbers.
We even took out the free stuffout of our numbers, if you ever
(20:13):
watch one of those shows, andI'll give you an example Hi, I'm
installing three-quarter-inchmulligan flooring with stain and
scratch-resistant coating fromblah blah, blah.
Right, I would have to do amini commercial inside the
reality TV show because thestuff was free TV show.
(20:40):
Because the stuff was free, mypartner would deduct the value
or he'd use a line item valuefor you know, hardware floors in
a you know whatever a thousandsquare foot home.
He'd add that on the line itemto make sure that the numbers
were real.
You know was some of the shitmanufactured?
Yeah, I got sick and tired ofthat stuff.
I said to him early on I go, Ipromise you there'll be enough
aggravation and argy-bargy goingon that we don't have to
(21:01):
manufacture any drama, I promiseyou.
So you're right, there's a lotof fluff in there, but it was
good for us.
It put us in a good positionfor sure.
Speaker 1 (21:11):
Did they pay you for being on the show, or was it
just money?
Yeah, yeah, pay you for beinglike on the show, or is it just?
Speaker 2 (21:17):
yeah, money, yeah, yeah, I didn't.
I didn't get no.
Uh, what's the name of the thefamily there in la?
What the hell's their name?
Um, jenna kardashians?
Yeah, kardashians?
Right, let me tell you I didn'tget no.
Kadashian money all right, myfirst episode.
Gdansk money All right, myfirst episode.
(21:37):
My first episode, I think.
They paid us 1500 bucks, um,and then the last episode was 30
grand or something like that,you know.
Speaker 3 (21:45):
And they were all episodes of properties that you
guys bought yourselves, that youwere going to do a renovation
on anyway.
Yeah.
Speaker 2 (21:51):
Yeah, yeah, and that was that was interesting because
towards the end, because wewere successful, we were getting
regular following.
You know our ratings were sothey say.
Anyway, the ratings were thebest ever on A&E for that time,
saturday morning slot.
I'm sure somebody's crushed ussince then, but you know, we
(22:14):
were kind of proud of that.
Look at us, we're funny.
I'm sure somebody's crushed itsince then, but we were kind of
proud of that.
Look at us, we're funny.
But I could have done betterwith it.
To be frank, it was good.
These were all our houses andwhen they were looking for the
repetition I don't know how youare in your market and how good
your pipeline is we would do twoat a time tops.
(22:37):
Now all of a sudden they wantthree, four, five going because
they know it takes us six toeight months to fix a house.
You know another 30 day, 45 daycycle to sell it.
So you know we had to reallycrank up the pipeline.
We did a couple of smallcommercial deals to pad out a
(22:59):
couple of episodes and stuff.
But yeah, we got there, we gotit done, we got it done.
Speaker 3 (23:04):
It made me rich.
Did the pipeline get cranked upfrom the marketing that people
saw from the show?
Would they contact you saying,hey, I got this house, I want to
sell you, and if so, how didthey even have your contact
information just from seeing theshow?
Speaker 2 (23:16):
this house I want to sell you and if so, how did they
even have your contactinformation just from seeing the
show?
Yeah, so we made a point of umhaving our company name on on
our trucks right whenever wecould.
Um, we couldn't be blatant withit, they didn't want it to be
over.
But you know, as soon as peopleas dave seymour Seymour from
City Light Homes you can Googlethat and they would find us if
(23:39):
they wanted to.
To be frank with you, I don'tknow that we got a massive pop
in the pipeline.
It's interesting, you know thatseller mentality.
We like to buy single familyhomes from sellers who were in a
distressed situation.
Well then, the sellers who cameto us after the TV show, you
(24:01):
know they all wanted top dollarfor everything, because their
perception of who we are is nowdifferent.
So you know it wasn't a massiveopportunity.
But you know my ex-partner'sbrokerage has done well off of
it.
You know he's maintained itsince then.
So you know, good for him.
And then I just went in adifferent direction in the
commercial world.
But I still leverage it today.
(24:22):
You know, I still leverage Davefrom Flippin' Boston.
I think about him as somebodyelse.
Otherwise it's ego, and ego isjust BS, you know.
Speaker 1 (24:32):
Nice.
So do you have a place down inflorida that you go to?
Speaker 2 (24:40):
that you go back and forth or do you stay fully up
there?
I stay up here in boston.
So my my um chief investmentofficer is a gentleman by the
name of walter novicki.
He's been in the market for 30plus years down there, so he
lives in fort myers and then ourchief operations officer, er
Eric.
He will go between the two.
He's the young gun on the team,just turned 30.
So between the three of us weunderwrite, execute, manage, get
(25:05):
these things up and out of theground.
Speaker 1 (25:09):
Yeah, I was always interested.
So I bought a house in Tampaand we do it, you know, put it
on Airbnb and we go down therein the wintertime when it gets
cold here, I bring my boat downthere and all that stuff and I'm
always interested in looking atthe market down there.
But the single family market isis so crazy with the way that
they're priced nowadays.
So do you?
Are you finding that?
(25:30):
That's why you have to buildthese new developments to keep
your costs down.
Speaker 2 (25:36):
It's not even keeping our costs down, it's, it's um,
it's single family.
Single family pricingavailability that you know the
majority of the workforce inFlorida cannot afford.
You know, 1,500, 1,800, three,two single family home.
They're priced out of themarket.
It's a shit show out there.
(25:56):
So that's why we built, so theygot somewhere to rent yeah, the
housing.
Speaker 1 (26:01):
When I see deals down there, people doing deals I'm
like those deals don't make anysense compared to like the
single family stuff that we weredoing up here, so we never
really kind of tapped in besidesbuying the one, the one house.
So you're you're saying thestuff that you buy you own, own
and rent.
Basically right, you rent itout.
It's like apartment complexes.
You focus on that, notnecessarily condos or resale.
(26:24):
At the end you're more of a buyand hold guy.
Speaker 2 (26:27):
Correct.
Yeah, so the strategy.
My investors don't want a quickturn, right, they want to
double their money every threeto five years.
So if I'm in the single familygame in a market that's
overpriced, I'm not going tokeep my investors happy, right,
I'm not going to keep theircapital moving.
I might be able to do one if Ifind one here or there.
Like you said, market doesn'tmake sense.
But if I put my investorscapital into a 20 unit, 300 unit
(26:52):
I'm just finishing up 100 unit,106 unit building Cape Coral,
you know I put that capital intothose.
They sit in a negative cashflow position for two, three
years.
Then we get into lease up,maximize the return of the net
operating income.
Now I can turn that capitalover.
(27:14):
So that's, not only is it goodfor the investors, but I got
renters.
I mean, lease up is ridiculousin that market.
Speaker 1 (27:23):
Yeah, so that's actually.
It's interesting.
You say that because there wasone commercial deal 24-unit
building that I was doing duediligence on and I had raised
the money, I had everythingready to go, and somebody that
bid against me bid and paid likea crazy amount of money more
than me, right, and it turns outto be more of like an
institutional kind of personwith a fund, like you did, and
(27:46):
they, the guy that I had raisedthe money from I, was like how
the heck?
You know, it's a half milliondollar renovation that we need
to do with these numbers, howare they making any money?
And he's like, well, they'renot, for five years they're not
going to make any money andthat's purposeful.
And they have the money thatthey're going to burn for three
to five years and then they'llturn it over and then their
(28:06):
money will you know, at the refiwhen the rates go up and blah,
blah.
So what's like the?
I guess?
I guess we can go back to thatlpgp thing like how not to get
bullied around by those big guysjust by joining?
You just have to, you know,join up with them as lps yeah,
yeah, you're not gonna beat them.
Speaker 2 (28:26):
You're not gonna beat them.
And look, man, we've had thesame experiences at our level.
There's always a bigger fish inthe pond somewhere.
So you know, accept the waythat it is if the bully's in the
playground, but figure out howto work around them.
Right, work around them.
If you can come in in a passiveposition, which is what you're
(28:48):
getting at there as anindividual, and you're able to
still get an aggressive returnprofile based on good
fundamental underwriting and atrack record, then why not?
Right, do whatever's right foryou, mr Investor, but the
individual, smaller apartmentbuilder or property owner, you
(29:12):
want to buy that 24 unit, forexample, without mowing the deal
.
I'm going to guess that wasprobably two or three years ago,
because the yeah yeah, it waslike 2021.
yeah, worst time ever, becausethere was so much stupid money
in the market.
Brother, you, you didn't standa hope in hell.
You know, you, you didn't, youdidn't stand a chance.
(29:35):
Um, you know that market iswhat it didn't drive us, but it
it didn't make sense to do that.
Those deals because theinstitutional capital is coming
in and they're buying at a twoand a half three cap.
Well, they're buying two and ahalf three cap because they're
buying 10.
You know that 24 unit was oneof probably 30, 40, 50
(29:56):
properties that they snapped upat that period of time.
So that's what pivoted us overto ground up construction.
So if I could build at a cost of6%, 7% return, I've then still
got the upside.
Over the next three to fiveyears, I can put a healthy,
clean return in front of myinvestors without worrying about
(30:20):
the institutions, because ifyou're smart at this game, you
build and then the institutionstake you out, because they're
going to take us out at apremium, rather than sitting
there waiting for Jimmy Joe Blowto show up and write you a
check and you can't qualify ifyou want to get out of the deal
and even if the market isn'tgreat at the time that you
(30:40):
proform it for an exit.
All my investors know that'sall right.
We're going to just sit in thecashflow.
Whatever, we'll sit in thatcashflow.
So it was tough to play from 21,22.
What I'm seeing now is I justhad one come across my desk
today.
It's a new build that falteredand sputtered and fell flat on
(31:05):
its face in the Kissimmee market.
Now it's a bankruptcy auctionand I think we're going to see
more of that in the commercialspace over the next 18, 24
months.
So I think there'll be someopportunities and opportunities
to take some of this smallerstuff out as well.
Speaker 3 (31:22):
How are you finding most of your deals?
Speaker 2 (31:25):
Hey, good question.
I'd love to tell you we weredirect mail marketing.
We're not.
It's a network, right?
So again, my partner Walter, 30plus years in that market, over
30 years, that thoseconnections, those realtor
relationships, homeownerrelationships, property owner
relationships, propertymanagement, insurance
construction, you know thatnetwork is critical to know
(31:49):
where the opportunities are.
So for us it comes just throughour network of brokers,
realtors, et cetera, et cetera.
Speaker 1 (31:59):
Interesting, interesting.
So the yeah one of the ratesare 6% 8%.
(32:23):
There's a lot of thosesyndications that are getting
massive capital calls.
How do you hedge against that?
Great question.
Speaker 2 (32:34):
If you're underwriting on the buy side of
any deal, deal is notfundamentally just you got to.
I'll tell you how you hedgeagainst it.
You use your common sense whenyou're looking at a PPM and a
pro forma and if you see a proforma that says you know, last
year there was a 5% rentincrease, so I'm going to pro
(32:57):
forma out the next three to fiveyears at 5% and run away from
them.
Conservatively underwritingyour deals is the only hedge you
have against unknown forces.
I didn't know that Russia wasgoing to invade the Ukraine.
I didn't know that Biden was asmuch of a donkey as he ended up
being.
I didn't know that the interestrates were going to spike.
(33:20):
I didn't know that COVID wasgoing to pour trillions and
trillions and trillions ofdollars into the marketplace.
I didn't know any of thosethings.
But the fundamentals, all theway down to that one single
family house that you guys buy,we make our money on the buy
side of the equation.
It's always on the buy side.
If we're lucky, we make moneyon the exit.
That's when we realize theprofits.
(33:41):
So, being a super, superconservative GP, and then also,
as the market has moved in theopposite direction of what you
described at those 3% rates, andfor us it's a case of we go
with higher, lower, sorry,loan-to-values.
I might put a deal together ata 65% loan to value or a 60%
(34:03):
loan to value, so that I knowthat the cash is sitting strong
in that position as thevolatility of the markets messes
around and does its own thing.
Does that make sense?
Yeah?
Speaker 1 (34:16):
Yeah, absolutely yeah , nick, you have anything else
for Dave?
This is an interesting yeah,absolutely yeah, nick, you have
anything else for Dave?
This is an interesting, I guess.
Speaker 3 (34:27):
Just at least one more question so you're buying
land deals or are you buyingdeals that have property on them
that you're tearing down andnew building?
Speaker 2 (34:35):
No, we don't tear anything down, I'm not taking
stuff out.
So there's so much dirt inFlorida and still such a strong
demand for housing, it makessense for us to develop and
build Now at the same time.
If across the desk comes a 60,70, 80, 90, 100 unit asset
that's been mismanaged, justpoorly rented, et cetera, et
(34:59):
cetera, it's got all the keyfactors in there for us to
reposition and make it morevaluable, and we'll we'll
underwrite it and take that onedown as well.
So we're not you know we're notone trick ponies in that sense
that we're only builders orwe're only repositioners.
I would love to tell you we'reonly in multifamily, but it
looks like I'm building apickleball facility in the next
(35:25):
in the next few months, which isjust interesting.
Speaker 1 (35:27):
We're building a pickleball facility right now,
as the GCs Are you really.
Yeah, yeah, yeah, one of ourprojects.
Yeah, the cash flow on thisthing in Florida is absolutely
ridiculous.
Speaker 2 (35:37):
It's ridiculous.
I'm embarrassed to put it outin front of investors because it
sounds like such a scam.
It really does that can't betrue Right.
Speaker 1 (35:46):
Yeah, no, it is.
I belong to a pickleball clubhere and it's yeah, it's got
seven courts, it's got oneemployee that works there and
you pay for the membership andthen you pay to rent the court
for an hour.
It's an unbelievably profitablebusiness and they're always
booked.
It's it's pretty wild, but yeah, we're actually getting in.
(36:07):
We're building one right now.
Um, yeah, interesting andtrying to get in, and I never
really thought about using ourconstruction as a leverage to
get in as lps on some of thesebigger deals.
That's a really good idea.
Speaker 2 (36:20):
I used to do it even with my GCs when I was doing
single family stuff.
I mean my GC in the singlefamily world.
Obviously it doesn't apply toyou because you're the GC, but
when you're subbing out to a GC,once they prove themselves on
the first couple of deals, Iwould bring them in.
I'm like carry the cost of XYZand I'll bring you in on the
(36:43):
back end.
And if they carry 50 grand'sworth of whatever into the deal
and they got their 50 back andthey made an additional 25 on a
SPF, let's do it again.
That's what I would want tohear from them.
But you're building thatpickleball facility.
That's definitely one you wantto get in on, brother, I'm
(37:03):
telling you.
Membership fees are nuts.
It's crazy.
They'll spend a thousand bucksa year and they'll give you 250
members.
We got a tennis club thatapproached us and said, hey, you
own that piece of dirt.
Will you build a pickleballfacility?
And I'm like why?
Because these pickleballbandits keep on setting up on
our beautiful tennis courts.
(37:24):
Those low lives, you know, we,we need to help them out.
Okay, so you?
Speaker 1 (37:31):
know, when.
Speaker 2 (37:32):
When somebody offers you a half a million a year just
in membership fees before yougo out, it's kind of crazy.
You can't turn that stuff down.
It's nuts yeah.
Speaker 3 (37:41):
So I have one last question in regards to the land
and developing and building onthe land.
How are you guys gauging thedemand on a property that's
basically dirt before you starton it and then you build up?
How are you gauging, like, thedemand of filling that place up
once it's done?
Speaker 2 (37:59):
yeah, great question.
Look, it's all data drivenright.
That's the boring stuff.
That's the stuff that makes mewant to stick pins in my eyes,
which is why my team does that,my partners do that.
So I'm looking for rent growth,I'm looking for population
growth, I'm looking foremployment growth.
What are the driving factors?
And Florida continues to be thenumber one, number two growth
(38:24):
market in the country.
Yeah, there are pockets thataren't as sexy or as attractive.
You talk about Tampa.
Tampa's done, tampa's flat now.
It went through a crazy drive.
But where we primarily focus insouthwest Florida, down by Fort
Myers, cape Coral, i-41corridor and down there, we're
(38:45):
still seeing massive populationgrowth and for every one retiree
that comes into that market, itbrings with it four service
jobs.
Speaker 3 (38:56):
So was that a good buy opportunity in Fort Myers
when the hurricane came throughWas that last year and wiped out
a lot of it?
Speaker 2 (39:02):
Yeah, yeah, it still is.
It's nuts, isn't it?
So we went through HurricaneIan and then we just went
through this last hurricane.
Floridians, they forget.
I don't know what it is, Ican't put my finger.
So I'm in Boston, right, we getsix feet of snow.
I can't put my finger.
So I'm in Boston, right, we getsix feet of snow.
It's national news.
(39:22):
I get six feet of snow.
I go, I got to crank up thesnowblower.
Come on, kids, let's go shovelthe driveways.
Like we just know how to dealwith Mother Nature.
Now, when Mother Nature iscoming at you at 150 miles an
hour with 14 foot surges right,storm surges, it's a little bit
(39:43):
different than six feet of snow,I get it.
But what it does is it takes outthe inventory that is no longer
applicable in that market, theamount of property that just got
taken out.
It's re-gentrification.
It's going to come back upagain.
From the ashes of disaster,grow the roses of success.
(40:03):
It is what it is, and Floridacontinues to assist and help
businesses like mine grow inthat marketplace, build it and
they will come.
It's a field of dreams.
I'm sorry to be so airy-fairywith it, but it's all based on
solid data.
Hurricanes take the oldinventory out.
(40:24):
They let us build new hurricanecode inventory.
And if you look at Fort MyersBeach after Hurricane Ian from
an aerial shot, you see exactlywhat I'm talking about.
Anything that was hurricanecode was standing there.
Everything else was gone.
So it's sad, sad, it's horrible, but I I can't control the
(40:45):
weather.
But I can, you know, I candefinitely uh strategize around
it, yeah yeah, that's.
Speaker 1 (40:51):
There's profit to be made in sure, in catastrophes,
unfortunately.
Yeah, so I'm unfortunate forothers but yeah, yeah, all right
, dave.
Well, um, I know you got a twoo'clock to get to, so I don't
want to keep you too long and weappreciate you coming out on
the show and we'll uh, we'll bein touch soon to get this stuff
out there.
Speaker 2 (41:09):
Yeah, guys, I appreciate the time with you.
It was good.
Speaker 1 (41:11):
Thank you, thank you.
Welcome to the Everyday Millionaire Show with
Ryan Greenberg and Nick Kalfas.
All right guys.
Welcome back to another episodeof the Everyday Millionaire
Show.
We are here with Dave Seymour,a multifamily real estate
investor.
You've started a fund.
There's a couple of thingsyou've done, so why don't you
(00:21):
give us a kind of an elevatorpitch on what you've done?
Speaker 2 (00:24):
Yeah for sure.
I started in the single familybusiness coming right out of the
crash.
I used to tell people I'm inreal estate and they'd say I'm
sorry, I just I was stillworking as a firefighter and a
paramedic just north of BostonMass.
At the time, work constructionon my days off got a little
taste, a little flavor for theinvestment side of things.
I remember I was sitting on aconstruction site in January in
(00:47):
Boston freezing my butt off.
Car pulled up with three orfour individuals in it.
They were in nice clothes,driving a nice car.
They had smiles.
I didn't.
I said to one of the guys onthe job who's that clown circus
just showed up there.
Who's that?
He goes.
They own the house we'reworking on silly.
He said those are the investors.
I go.
What's an investor?
He goes.
(01:07):
Those are the guys that makethe money while we dig the
ditches.
I'm like, well, I need to getto know those guys.
So anyway, long story short, Igot to talk to them a little bit
.
I realized they weren't thatsmart.
Through a set of circumstancesthat I believe to be a little
bit of divine intervention, Ifound myself in a position to
become on the investment sideand you know I really did
(01:29):
progress from this, like I said,starting a single family
business during the crash, doingclean out, short sales, loan
modifications.
You know I got to sort of seethe greed in this business as
well.
You know what I mean Justgreedy, greedy people doing
stuff.
And then from there wetransitioned into our own small
portfolio of multifamily landed.
(01:50):
A reality TV show ran with thatfor four or five years on the
A&E network put me on biggerstages, bigger places.
From there I moved into thelending space.
From there I moved into thelending space hard money lending
, private lending Again, througha set of circumstances,
transitioned into what we'redoing today.
(02:16):
Today's focus, today's attentionis all about solving the
housing crisis.
The single-family homes arepriced out of range, can't even
afford to put gas in the car,eggs in the refrigerator.
So people still need a place tolive.
So we're building.
We're building what we call theMiss Middle in Florida
workforce housing, police,firefighters, nurses, hotel
(02:36):
workers, people who can't affordthe fancy stuff and they don't
want to live in the crappy stuff.
So we're building them homes,small apartment complexes,
raising capital, deployingcapital and doing our best to
give a return.
Are you based in Florida?
Speaker 1 (02:54):
So you live in Florida 100% of the time?
No, I don't.
Speaker 2 (02:57):
So I'm still up in Boston and the reason that we
have two offices the Bostonoffice and the Florida office,
is there's a lot of money uphere in New England and it needs
somewhere to go.
Okay, it needs somewhere warm.
Up here we have what we callthe snowbirds, yeah.
So you know they live inFlorida in the winter and they
(03:18):
live up here in the summer, andyou know that capital resource
from accredited investors,smaller family offices it's
pretty prevalent.
So I'm bagging for dollars andthen we put that money to work
in the Florida market.
Speaker 3 (03:32):
So we're both real estate investors and I've heard
this before, but would you saythat what you just described is
kind of like the cycle of a realestate investor?
You mentioned that you startedwith single family, you went to
multifamily, then, I'm assumingyou had some money that you
could start lending.
It became a hard money lenderand now you're doing like you
know funds and such.
Is that kind of like theprogression that you know?
Speaker 2 (03:56):
people who start out eventually want to get you or
just kind of no, no, it's not.
It's absolutely not theprogression.
It's absolutely not theprogression.
It's um, I think it's part ofmy DNA.
I get bored quickly and, um,you know, I can take a single
family home today, uh, analyzeit, underwrite it, flip it and
(04:17):
it doesn't really get get myblood boiling.
So I think a true entrepreneuris never, is never, happy with
the norm right Scalability.
The next challenge it's been adriving force for me personally.
You know my personal life aswell as my business life, so you
(04:37):
know it's learning a newbusiness model altogether.
You know the fundamentals aresticks and bricks are the
fundamentals.
They don't really change thatmuch.
But what does change is youknow what angle are you coming
at that piece of real estatefrom?
Are you coming at it from afinancial standpoint?
Are you coming at it from aconstruction standpoint?
(04:58):
Are you coming at it from arepositioning standpoint?
And each of those strategieswithin a real estate deal in and
of themselves are a businessplan on their own.
So again, for me personally, tomove into the lending space was
cool, but that's kind of boringtoo.
(05:18):
That's just sitting thereunderwriting numbers and making
sure that your capital or theline of credit you're working
off has a good pipeline ofborrowers who aren't going to
screw stuff up, so you have totake over the properties.
So for me, the three years inthere led me down the road to
some of these larger financialpools of capital, if you will.
(05:42):
And then, once you have accessto capital, money hates sitting
still.
It wants to move.
It's what it's designed for.
It's designed to go out, and Ialways talk about velocitizing
capital.
So for me to then transitioninto the work that we're doing
today, I would not say it's anormal transition for an
investor, but it's alsointeresting what noise you
(06:03):
listen to out there.
Right, if you listen to some ofthe gurus, slash experts out
there, they'll tell you that youcan buy a 500-unit property in
an A market with no money down,no credit and no track record.
Well, they're full of shit.
If that's what they're saying,it's not a reality.
Speaker 1 (06:24):
Yeah, those people are typically just debt raisers.
They're trying to basically putmoney together and buy the
assets themselves.
So we typically I mean I couldspeak for probably Nick and I
both we're in the heavy in thesingle family to small
multifamily one to four unitgame where we buy and hold, we
do some flips.
I own a construction and aproperty manager company and we
(06:48):
make great money.
But you know you always kind ofsee like the grass is always
greener situation with the guysthat are that are doing these
big debt funds and bigdevelopments and stuff.
What are some of the kind ofthe hurdles from getting from
where we're doing these singlefamily deals, you know maybe
buying and selling in the fiveto 700,000 range and you know
(07:10):
what.
What.
What was your biggest hurdlesfrom getting to that to you know
doing track developments andstuff.
Speaker 2 (07:15):
Yeah, Let me.
Let me ask you a couple ofquestions first.
So your single family flips,what market are you guys in?
Speaker 1 (07:21):
Like DMV, I'm in near annapolis, maryland, so right
inside okay and then how do youfund those?
Speaker 2 (07:28):
are you funding those who have money lenders, private
lenders, combination?
Speaker 1 (07:32):
combination, yeah, combination people.
Um, I'm from long islandoriginally, so I have some
investors from new york.
I got some people out west andum, you know, just people we put
money together for.
And then there's obviously yourlocal hard money companies.
And then we use someinstitutional money as well.
You know, now that we have somemore experience, we're doing
(07:55):
some more institutional money.
But yeah, that's basically it.
You know, we buy them, fix themup I own the construction
company that fixes them and weresell them or rent them on the
back end.
Speaker 2 (08:05):
So when I emigrated from England back in 1986, my
wife was an American.
I met her in London.
She was from Wontar, so you andI can be friends.
Okay, she was a lifeguard onJones Beach.
Okay, I lived in a village forabout six months.
But the reason that I ask youthose questions is you know the
(08:28):
folks who listen to your podcast, your show, and get to know you
.
You know you set a precedentout there.
So if you guys are looking toscale, you know your question is
what's the track right?
The grass is always greener.
You said greener.
You said it's a case of thefirst equity position that's
(08:48):
raised for a, let's say, a12-unit building or a 14-unit
building, that first equityposition that's raised between
LP Capital Limited, partner theequity position, and the GP, the
general partner, you theinvestor or the investment group
.
That capital usually is friendsand family or people who
already know and trust you.
(09:08):
So when I ask you, do you haveprivate lenders as well as hard
money lenders?
Your hard money lenders are notinterested in your three to
five-year strategy.
As you know, hard money lendersare quick-turn capital.
They want to see it in and outin six months to a year because
they're probably working off ofa line of credit and ripping
those notes right back throughWall Street anyway, making a
couple of bucks on the spread.
(09:29):
So you know, in the world ofscale, you know it's somebody or
a group of people who haveexperience with you as
individuals.
You know I teach people how toraise money as well.
I teach people the velocity ofcapital.
And it's the same question howdo I go from where I am to where
I want to be?
I've got 20 single family homesor I flip 20 houses or 100
(09:54):
houses, and that's a job.
That's a hard job flippinghouses, construction et cetera.
And they say how do I get to bethat general partner in a 12 to
15 unit property when I need $3to $5 million down?
Plus, I got to go get a bankloan.
I don't know that my net worthis good for the balance sheet.
(10:15):
The balance sheet isn't strongenough.
How do I get into these deals?
What does an AIA contract looklike with a GC, with a
contractor who's building bigstuff, not just the guy that's
going to the Home Depot threetimes a day to pick up another
plank of wood.
It's a different game.
It's just a different gamealtogether.
So on the financial side ofthat, it's who have you worked
(10:37):
with in the past that has trustin you.
And then do you have the skillsets and the ability to
underwrite a piece of realestate that's a cash flow and
asset for a three to five yearperiod of time.
Now what does that look like?
Are you able to proform aroundand project expenses and incomes
?
Are you able to underwrite anasset with market stresses in
(11:00):
there?
What if the cost ofconstruction goes up?
What if the cost ofconstruction goes down?
What if the interest rateincreases?
Did you lock in an interestrate?
Is it an adjustable rate?
What's the rental market looklike?
What does the population growthlook like, the employment
growth look like?
(11:20):
I know a few guys who were inIndianapolis and in that market
and they said it was really,really strong and it's maybe
leveled out a little bit.
Now I don't know, I don'tinvest down there, but if you
can, it's a good story.
Do you have a good story thatmakes sense, that's based on
fundamentals of real estate,income and expenses?
(11:42):
And if you do and you canpackage that properly, then
you're in a position to offer aninvestor.
Let's say, somebody can writeyou a check for a million bucks
and you're going to go buy a $3million property, just for
example, if that investor iscoming in for a million bucks
and you can quantify and qualifyyour return to them to be an
(12:04):
internal rate of return of 19 to25 percent, you know they're
looking at a two equity multipleon their money over a three to
five year hold.
I don't know many people who donot get excited when you start
talking about doubling yourmoney every three to five years.
You know without withoutselling drugs.
Speaker 1 (12:23):
So do you suggest that people get involved as an
LP first prior to becoming a GPand managing a syndication?
So I do construction for somebigger multifamily developers
and I'm doing a 60-unitapartment assisted living
facility right now build out.
(12:44):
So do you suggest that you knowwe get involved first as like a
limited partner and learn thegame that way?
Good question.
Speaker 2 (12:53):
Yeah, it's each to their own.
Right, it's each to their own.
So I'm sorry to turn this onyou, but we'll make it about you
, right.
So you're a GC If you'rebuilding a 60-unit complex,
you're a GC with some skill setsand some depths and you've got
(13:14):
your overhead and profit builtinto that deal.
If you came to me and you said,dave, I'll build this for you,
here's my overhead and profit.
Can I take some of that and putit back into the deal as a
limited partner, so that I canbe on the investment calls, so
that I can see the other side ofthe equation?
I may very well do that, andthat would be a fantastic
learning lesson for you.
I like to work from a place ofabundance and not scarcity.
(13:39):
Right, somebody might hear mesay that and go what are you
crazy?
He's going to know what you'remaking.
I don't care.
Right, my, my experience, myknowledge is incredibly valuable
, as is yours.
So when you in that situation,I would highly recommend that
you get in at a, at an LP level.
You know your exposure is lessand in your, your situation is
(14:00):
kind of interesting because youknow if you screw up as a GC,
you also screw up as the LP, youhurt yourself in both equations
.
But you know the avatar for themajority, the retail avatar.
(14:21):
When I say retail, I'm talkingabout somebody who's not a
family office.
I'm talking about somebodywho's not a high net worth
individual.
They're probably just anaccredited investor as
determined by the SEC.
I mean those individuals.
They know this.
If they've never done it before, they know there's something
there.
You know what I mean.
They just know that there'ssomething in those cash flow and
assets and they're timid, let'sbe frank.
(14:44):
They're not educated enough tomake a decision on how to pull
the trigger on their first deal.
So if they can come in in thatLP position and get to see how
these assets are acquired,either built or repositioned,
how you can maximize the netoperating income all
(15:07):
repositioned, how you canmaximize the net operating
income, how they can begin todefer the tax situation and put
themselves in a strong taxposition, when they learn about
depreciation and costsegregation, they get super
excited and there's a lot ofeducation just in that one
sentence alone.
But once they learn that, theycan then stand back and say to
themselves okay, I feel like Ihave enough of a foundation, if
you will, to go out and do itmyself.
(15:27):
But to be frank with you,brother, no fluff and buff here.
They look at it and they go.
That's too much work.
That's way too much work.
Here you work my money, right.
You put this money to work onmy behalf, on my behalf, and
then we as gps get into thatposition of being a steward of
other people's capital, which is, I don't know that there's a a
(15:49):
higher you know higher positionwithin real estate than
stewarding somebody else'scapital.
Speaker 1 (15:53):
You know yeah, so that that's very true.
Using other people's money tomake money, it's a beautiful
thing, uh, that's why we that'spart of the reason we love it.
But so go back to your timewith reality television.
How'd you get involved withthat?
And I'm just interested becauseI feel like we've had a boom of
real estate investors ingeneral because of reality shows
(16:14):
, of the flipping shows and allthe different shows.
And from somebody that actuallyflips a lot of houses, some of
those shows seem completely madeup and BS Nos no, no, like
they're flipping the whole homein seven days they renovate the
house inseven days and they make three
hundred thousand dollars, like Ijust I know from flipping a
(16:35):
hundred and you know hundreds ofhouses at this point.
Um, you're, you know you, we'redoing renovations, a lot of
them.
Nick owns a hundred houses, Iown a bunch.
We're we see it and then we seethem.
Nick owns a hundred houses, Iown a bunch, we were we see it,
and then we see this stuff on TV.
What's where's there?
Is there a line of realitythere?
Speaker 2 (16:51):
Yeah, it all depends on the production company and
the people on the show.
Brother, it really does so.
I was in.
I told you I was a firefighterand a medic and then a few years
later I was watching thereality TV shows like everybody
(17:20):
else does.
I'm like I know how to fix ahouse, like you.
That takes more work than that,but it was entertaining, right.
Reality TV show Show it's ashow, it's not the real world.
Right, and through theeducation space in the seminar
world.
(17:40):
That's how I landed the show.
I was running with a bunch ofinternet marketers that I've met
at various events that I'vebeen to during that period of
time.
Gary Vaynerchuk actually wasone of the up and coming guys
back then.
Who's the guy who does?
Russell Brunson?
These are all internet guys.
(18:01):
These are strong, intelligentguys who know how to drive
information to where you neededit to be.
Anyway, one of those guys,russell Brunson, sent me a link
to the TV show Application,right, and this was 2010,.
11, maybe a little late, 11 or12, I think.
And real estate was dead.
(18:21):
Dude, it was dead on arrival.
Hit that with the paddles.
That sucker ain't getting up.
And anyway, I turned in theapplication.
I loaded it with profanitybecause I knew I had to separate
myself from everybody else whowanted their you know 30, 30
minutes of fame.
And, uh, that was how itstarted.
(18:41):
You know, I sold myself tothese guys as a you know the
firefighter in the worst marketever.
When everybody else goesrunning out, we go running in.
Uh, you know, it's all bullshit, it's all fluff and puff.
Man, it's a story, but I knowhow to tell a good story and
that's how we landed the show.
And then, once we land thatshow, then I get to see the
(19:05):
backside of what was going on 29or 30 episodes, something like
that.
And everyone was a real house,built in New England turn of the
century, and every singlefreaking thing that could go
(19:27):
wrong with a house would gowrong in my market.
Right, we still had to make aprofit.
We still had to take the uglyduckling and make it real.
And one thing I'll give mypartner was was he said you know
, at the end of every show theygo, you know, bought it for this
, put this into it, made thisright, whatever that is.
He said he never wanted anybodyto ever come back and question
(19:48):
the finances of our deals.
So we kept the numbers real.
Now, what everybody else does,I don't know If you watch half
of this BS.
Like I said, it's a show and ifit's entertaining, take the
entertainment value, but for uswe stay true to the numbers.
We even took out the free stuffout of our numbers, if you ever
(20:13):
watch one of those shows, andI'll give you an example Hi, I'm
installing three-quarter-inchmulligan flooring with stain and
scratch-resistant coating fromblah blah, blah.
Right, I would have to do amini commercial inside the
reality TV show because thestuff was free TV show.
(20:40):
Because the stuff was free, mypartner would deduct the value
or he'd use a line item valuefor you know, hardware floors in
a you know whatever a thousandsquare foot home.
He'd add that on the line itemto make sure that the numbers
were real.
You know was some of the shitmanufactured?
Yeah, I got sick and tired ofthat stuff.
I said to him early on I go, Ipromise you there'll be enough
aggravation and argy-bargy goingon that we don't have to
(21:01):
manufacture any drama, I promiseyou.
So you're right, there's a lotof fluff in there, but it was
good for us.
It put us in a good positionfor sure.
Speaker 1 (21:11):
Did they pay you for being on the show, or was it
just money?
Yeah, yeah, pay you for beinglike on the show, or is it just?
Speaker 2 (21:17):
yeah, money, yeah, yeah, I didn't.
I didn't get no.
Uh, what's the name of the thefamily there in la?
What the hell's their name?
Um, jenna kardashians?
Yeah, kardashians?
Right, let me tell you I didn'tget no.
Kadashian money all right, myfirst episode.
Gdansk money All right, myfirst episode.
(21:37):
My first episode, I think.
They paid us 1500 bucks, um,and then the last episode was 30
grand or something like that,you know.
Speaker 3 (21:45):
And they were all episodes of properties that you
guys bought yourselves, that youwere going to do a renovation
on anyway.
Yeah.
Speaker 2 (21:51):
Yeah, yeah, and that was that was interesting because
towards the end, because wewere successful, we were getting
regular following.
You know our ratings were sothey say.
Anyway, the ratings were thebest ever on A&E for that time,
saturday morning slot.
I'm sure somebody's crushed ussince then, but you know, we
(22:14):
were kind of proud of that.
Look at us, we're funny.
I'm sure somebody's crushed itsince then, but we were kind of
proud of that.
Look at us, we're funny.
But I could have done betterwith it.
To be frank, it was good.
These were all our houses andwhen they were looking for the
repetition I don't know how youare in your market and how good
your pipeline is we would do twoat a time tops.
(22:37):
Now all of a sudden they wantthree, four, five going because
they know it takes us six toeight months to fix a house.
You know another 30 day, 45 daycycle to sell it.
So you know we had to reallycrank up the pipeline.
We did a couple of smallcommercial deals to pad out a
(22:59):
couple of episodes and stuff.
But yeah, we got there, we gotit done, we got it done.
Speaker 3 (23:04):
It made me rich.
Did the pipeline get cranked upfrom the marketing that people
saw from the show?
Would they contact you saying,hey, I got this house, I want to
sell you, and if so, how didthey even have your contact
information just from seeing theshow?
Speaker 2 (23:16):
this house I want to sell you and if so, how did they
even have your contactinformation just from seeing the
show?
Yeah, so we made a point of umhaving our company name on on
our trucks right whenever wecould.
Um, we couldn't be blatant withit, they didn't want it to be
over.
But you know, as soon as peopleas dave seymour Seymour from
City Light Homes you can Googlethat and they would find us if
(23:39):
they wanted to.
To be frank with you, I don'tknow that we got a massive pop
in the pipeline.
It's interesting, you know thatseller mentality.
We like to buy single familyhomes from sellers who were in a
distressed situation.
Well then, the sellers who cameto us after the TV show, you
(24:01):
know they all wanted top dollarfor everything, because their
perception of who we are is nowdifferent.
So you know it wasn't a massiveopportunity.
But you know my ex-partner'sbrokerage has done well off of
it.
You know he's maintained itsince then.
So you know, good for him.
And then I just went in adifferent direction in the
commercial world.
But I still leverage it today.
(24:22):
You know, I still leverage Davefrom Flippin' Boston.
I think about him as somebodyelse.
Otherwise it's ego, and ego isjust BS, you know.
Speaker 1 (24:32):
Nice.
So do you have a place down inflorida that you go to?
Speaker 2 (24:40):
that you go back and forth or do you stay fully up
there?
I stay up here in boston.
So my my um chief investmentofficer is a gentleman by the
name of walter novicki.
He's been in the market for 30plus years down there, so he
lives in fort myers and then ourchief operations officer, er
Eric.
He will go between the two.
He's the young gun on the team,just turned 30.
So between the three of us weunderwrite, execute, manage, get
(25:05):
these things up and out of theground.
Speaker 1 (25:09):
Yeah, I was always interested.
So I bought a house in Tampaand we do it, you know, put it
on Airbnb and we go down therein the wintertime when it gets
cold here, I bring my boat downthere and all that stuff and I'm
always interested in looking atthe market down there.
But the single family market isis so crazy with the way that
they're priced nowadays.
So do you?
Are you finding that?
(25:30):
That's why you have to buildthese new developments to keep
your costs down.
Speaker 2 (25:36):
It's not even keeping our costs down, it's, it's um,
it's single family.
Single family pricingavailability that you know the
majority of the workforce inFlorida cannot afford.
You know, 1,500, 1,800, three,two single family home.
They're priced out of themarket.
It's a shit show out there.
(25:56):
So that's why we built, so theygot somewhere to rent yeah, the
housing.
Speaker 1 (26:01):
When I see deals down there, people doing deals I'm
like those deals don't make anysense compared to like the
single family stuff that we weredoing up here, so we never
really kind of tapped in besidesbuying the one, the one house.
So you're you're saying thestuff that you buy you own, own
and rent.
Basically right, you rent itout.
It's like apartment complexes.
You focus on that, notnecessarily condos or resale.
(26:24):
At the end you're more of a buyand hold guy.
Speaker 2 (26:27):
Correct.
Yeah, so the strategy.
My investors don't want a quickturn, right, they want to
double their money every threeto five years.
So if I'm in the single familygame in a market that's
overpriced, I'm not going tokeep my investors happy, right,
I'm not going to keep theircapital moving.
I might be able to do one if Ifind one here or there.
Like you said, market doesn'tmake sense.
But if I put my investorscapital into a 20 unit, 300 unit
(26:52):
I'm just finishing up 100 unit,106 unit building Cape Coral,
you know I put that capital intothose.
They sit in a negative cashflow position for two, three
years.
Then we get into lease up,maximize the return of the net
operating income.
Now I can turn that capitalover.
(27:14):
So that's, not only is it goodfor the investors, but I got
renters.
I mean, lease up is ridiculousin that market.
Speaker 1 (27:23):
Yeah, so that's actually.
It's interesting.
You say that because there wasone commercial deal 24-unit
building that I was doing duediligence on and I had raised
the money, I had everythingready to go, and somebody that
bid against me bid and paid likea crazy amount of money more
than me, right, and it turns outto be more of like an
institutional kind of personwith a fund, like you did, and
(27:46):
they, the guy that I had raisedthe money from I, was like how
the heck?
You know, it's a half milliondollar renovation that we need
to do with these numbers, howare they making any money?
And he's like, well, they'renot, for five years they're not
going to make any money andthat's purposeful.
And they have the money thatthey're going to burn for three
to five years and then they'llturn it over and then their
(28:06):
money will you know, at the refiwhen the rates go up and blah,
blah.
So what's like the?
I guess?
I guess we can go back to thatlpgp thing like how not to get
bullied around by those big guysjust by joining?
You just have to, you know,join up with them as lps yeah,
yeah, you're not gonna beat them.
Speaker 2 (28:26):
You're not gonna beat them.
And look, man, we've had thesame experiences at our level.
There's always a bigger fish inthe pond somewhere.
So you know, accept the waythat it is if the bully's in the
playground, but figure out howto work around them.
Right, work around them.
If you can come in in a passiveposition, which is what you're
(28:48):
getting at there as anindividual, and you're able to
still get an aggressive returnprofile based on good
fundamental underwriting and atrack record, then why not?
Right, do whatever's right foryou, mr Investor, but the
individual, smaller apartmentbuilder or property owner, you
(29:12):
want to buy that 24 unit, forexample, without mowing the deal
.
I'm going to guess that wasprobably two or three years ago,
because the yeah yeah, it waslike 2021.
yeah, worst time ever, becausethere was so much stupid money
in the market.
Brother, you, you didn't standa hope in hell.
You know, you, you didn't, youdidn't stand a chance.
(29:35):
Um, you know that market iswhat it didn't drive us, but it
it didn't make sense to do that.
Those deals because theinstitutional capital is coming
in and they're buying at a twoand a half three cap.
Well, they're buying two and ahalf three cap because they're
buying 10.
You know that 24 unit was oneof probably 30, 40, 50
(29:56):
properties that they snapped upat that period of time.
So that's what pivoted us overto ground up construction.
So if I could build at a cost of6%, 7% return, I've then still
got the upside.
Over the next three to fiveyears, I can put a healthy,
clean return in front of myinvestors without worrying about
(30:20):
the institutions, because ifyou're smart at this game, you
build and then the institutionstake you out, because they're
going to take us out at apremium, rather than sitting
there waiting for Jimmy Joe Blowto show up and write you a
check and you can't qualify ifyou want to get out of the deal
and even if the market isn'tgreat at the time that you
(30:40):
proform it for an exit.
All my investors know that'sall right.
We're going to just sit in thecashflow.
Whatever, we'll sit in thatcashflow.
So it was tough to play from 21,22.
What I'm seeing now is I justhad one come across my desk
today.
It's a new build that falteredand sputtered and fell flat on
(31:05):
its face in the Kissimmee market.
Now it's a bankruptcy auctionand I think we're going to see
more of that in the commercialspace over the next 18, 24
months.
So I think there'll be someopportunities and opportunities
to take some of this smallerstuff out as well.
Speaker 3 (31:22):
How are you finding most of your deals?
Speaker 2 (31:25):
Hey, good question.
I'd love to tell you we weredirect mail marketing.
We're not.
It's a network, right?
So again, my partner Walter, 30plus years in that market, over
30 years, that thoseconnections, those realtor
relationships, homeownerrelationships, property owner
relationships, propertymanagement, insurance
construction, you know thatnetwork is critical to know
(31:49):
where the opportunities are.
So for us it comes just throughour network of brokers,
realtors, et cetera, et cetera.
Speaker 1 (31:59):
Interesting, interesting.
So the yeah one of the ratesare 6% 8%.
(32:23):
There's a lot of thosesyndications that are getting
massive capital calls.
How do you hedge against that?
Great question.
Speaker 2 (32:34):
If you're underwriting on the buy side of
any deal, deal is notfundamentally just you got to.
I'll tell you how you hedgeagainst it.
You use your common sense whenyou're looking at a PPM and a
pro forma and if you see a proforma that says you know, last
year there was a 5% rentincrease, so I'm going to pro
(32:57):
forma out the next three to fiveyears at 5% and run away from
them.
Conservatively underwritingyour deals is the only hedge you
have against unknown forces.
I didn't know that Russia wasgoing to invade the Ukraine.
I didn't know that Biden was asmuch of a donkey as he ended up
being.
I didn't know that the interestrates were going to spike.
(33:20):
I didn't know that COVID wasgoing to pour trillions and
trillions and trillions ofdollars into the marketplace.
I didn't know any of thosethings.
But the fundamentals, all theway down to that one single
family house that you guys buy,we make our money on the buy
side of the equation.
It's always on the buy side.
If we're lucky, we make moneyon the exit.
That's when we realize theprofits.
(33:41):
So, being a super, superconservative GP, and then also,
as the market has moved in theopposite direction of what you
described at those 3% rates, andfor us it's a case of we go
with higher, lower, sorry,loan-to-values.
I might put a deal together ata 65% loan to value or a 60%
(34:03):
loan to value, so that I knowthat the cash is sitting strong
in that position as thevolatility of the markets messes
around and does its own thing.
Does that make sense?
Yeah?
Speaker 1 (34:16):
Yeah, absolutely yeah , nick, you have anything else
for Dave?
This is an interesting yeah,absolutely yeah, nick, you have
anything else for Dave?
This is an interesting, I guess.
Speaker 3 (34:27):
Just at least one more question so you're buying
land deals or are you buyingdeals that have property on them
that you're tearing down andnew building?
Speaker 2 (34:35):
No, we don't tear anything down, I'm not taking
stuff out.
So there's so much dirt inFlorida and still such a strong
demand for housing, it makessense for us to develop and
build Now at the same time.
If across the desk comes a 60,70, 80, 90, 100 unit asset
that's been mismanaged, justpoorly rented, et cetera, et
(34:59):
cetera, it's got all the keyfactors in there for us to
reposition and make it morevaluable, and we'll we'll
underwrite it and take that onedown as well.
So we're not you know we're notone trick ponies in that sense
that we're only builders orwe're only repositioners.
I would love to tell you we'reonly in multifamily, but it
looks like I'm building apickleball facility in the next
(35:25):
in the next few months, which isjust interesting.
Speaker 1 (35:27):
We're building a pickleball facility right now,
as the GCs Are you really.
Yeah, yeah, yeah, one of ourprojects.
Yeah, the cash flow on thisthing in Florida is absolutely
ridiculous.
Speaker 2 (35:37):
It's ridiculous.
I'm embarrassed to put it outin front of investors because it
sounds like such a scam.
It really does that can't betrue Right.
Speaker 1 (35:46):
Yeah, no, it is.
I belong to a pickleball clubhere and it's yeah, it's got
seven courts, it's got oneemployee that works there and
you pay for the membership andthen you pay to rent the court
for an hour.
It's an unbelievably profitablebusiness and they're always
booked.
It's it's pretty wild, but yeah, we're actually getting in.
(36:07):
We're building one right now.
Um, yeah, interesting andtrying to get in, and I never
really thought about using ourconstruction as a leverage to
get in as lps on some of thesebigger deals.
That's a really good idea.
Speaker 2 (36:20):
I used to do it even with my GCs when I was doing
single family stuff.
I mean my GC in the singlefamily world.
Obviously it doesn't apply toyou because you're the GC, but
when you're subbing out to a GC,once they prove themselves on
the first couple of deals, Iwould bring them in.
I'm like carry the cost of XYZand I'll bring you in on the
(36:43):
back end.
And if they carry 50 grand'sworth of whatever into the deal
and they got their 50 back andthey made an additional 25 on a
SPF, let's do it again.
That's what I would want tohear from them.
But you're building thatpickleball facility.
That's definitely one you wantto get in on, brother, I'm
(37:03):
telling you.
Membership fees are nuts.
It's crazy.
They'll spend a thousand bucksa year and they'll give you 250
members.
We got a tennis club thatapproached us and said, hey, you
own that piece of dirt.
Will you build a pickleballfacility?
And I'm like why?
Because these pickleballbandits keep on setting up on
our beautiful tennis courts.
(37:24):
Those low lives, you know, we,we need to help them out.
Okay, so you?
Speaker 1 (37:31):
know, when.
Speaker 2 (37:32):
When somebody offers you a half a million a year just
in membership fees before yougo out, it's kind of crazy.
You can't turn that stuff down.
It's nuts yeah.
Speaker 3 (37:41):
So I have one last question in regards to the land
and developing and building onthe land.
How are you guys gauging thedemand on a property that's
basically dirt before you starton it and then you build up?
How are you gauging, like, thedemand of filling that place up
once it's done?
Speaker 2 (37:59):
yeah, great question.
Look, it's all data drivenright.
That's the boring stuff.
That's the stuff that makes mewant to stick pins in my eyes,
which is why my team does that,my partners do that.
So I'm looking for rent growth,I'm looking for population
growth, I'm looking foremployment growth.
What are the driving factors?
And Florida continues to be thenumber one, number two growth
(38:24):
market in the country.
Yeah, there are pockets thataren't as sexy or as attractive.
You talk about Tampa.
Tampa's done, tampa's flat now.
It went through a crazy drive.
But where we primarily focus insouthwest Florida, down by Fort
Myers, cape Coral, i-41corridor and down there, we're
(38:45):
still seeing massive populationgrowth and for every one retiree
that comes into that market, itbrings with it four service
jobs.
Speaker 3 (38:56):
So was that a good buy opportunity in Fort Myers
when the hurricane came throughWas that last year and wiped out
a lot of it?
Speaker 2 (39:02):
Yeah, yeah, it still is.
It's nuts, isn't it?
So we went through HurricaneIan and then we just went
through this last hurricane.
Floridians, they forget.
I don't know what it is, Ican't put my finger.
So I'm in Boston, right, we getsix feet of snow.
I can't put my finger.
So I'm in Boston, right, we getsix feet of snow.
It's national news.
(39:22):
I get six feet of snow.
I go, I got to crank up thesnowblower.
Come on, kids, let's go shovelthe driveways.
Like we just know how to dealwith Mother Nature.
Now, when Mother Nature iscoming at you at 150 miles an
hour with 14 foot surges right,storm surges, it's a little bit
(39:43):
different than six feet of snow,I get it.
But what it does is it takes outthe inventory that is no longer
applicable in that market, theamount of property that just got
taken out.
It's re-gentrification.
It's going to come back upagain.
From the ashes of disaster,grow the roses of success.
(40:03):
It is what it is, and Floridacontinues to assist and help
businesses like mine grow inthat marketplace, build it and
they will come.
It's a field of dreams.
I'm sorry to be so airy-fairywith it, but it's all based on
solid data.
Hurricanes take the oldinventory out.
(40:24):
They let us build new hurricanecode inventory.
And if you look at Fort MyersBeach after Hurricane Ian from
an aerial shot, you see exactlywhat I'm talking about.
Anything that was hurricanecode was standing there.
Everything else was gone.
So it's sad, sad, it's horrible, but I I can't control the
(40:45):
weather.
But I can, you know, I candefinitely uh strategize around
it, yeah yeah, that's.
Speaker 1 (40:51):
There's profit to be made in sure, in catastrophes,
unfortunately.
Yeah, so I'm unfortunate forothers but yeah, yeah, all right
, dave.
Well, um, I know you got a twoo'clock to get to, so I don't
want to keep you too long and weappreciate you coming out on
the show and we'll uh, we'll bein touch soon to get this stuff
out there.
Speaker 2 (41:09):
Yeah, guys, I appreciate the time with you.
It was good.
Speaker 1 (41:11):
Thank you, thank you.
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