Achieving Financial Freedom Through Multifamily Real Estate: Insights from Ashley Garner
In this episode of the Multifamily Real Estate Experiment podcast, host Shelon Hutchinson, also known as Hutch the Marine Investor, interviews Ashley Garner, founder of ABG Associate and a multifamily real estate syndicator with over 300 units in his portfolio. Garner shares his journey from small-scale multifamily properties to large-scale syndications, emphasizing the importance of financial freedom and building an 'investor-first' model. The discussion covers Garner's background, his strategies for acquiring and managing properties, key insights for passive investors, the significance of trusting your team, and the role of continuous learning and adaptability in real estate investing. Hutch and Ashley also discuss essential tips for property renovation, the importance of consistent communication with investors, and the challenges and opportunities in today's real estate market.
00:00 Introduction and Guest Welcome
00:43 Guest's Real Estate Journey and Philosophy
04:18 Career Evolution and Multifamily Focus
07:01 Challenges and Strategies in Real Estate
14:39 Scaling and Team Building Insights
16:11 Staying in Your Lane: Military Occupational Skills
16:51 Value Add in Real Estate: Hidden Costs and Pitfalls
18:59 Understanding Market Dynamics and Property Value
23:22 The Importance of Relationships in Real Estate Investing
25:28 Adjusting Acquisition and Investor Expectations
28:04 Focus Round: Fun, Opportunities, and Success Tips
32:32 Conclusion and Final Thoughts
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Thank you to all of our listeners!!! We would love to hear from you!!!
Email me at:
hutch@hsquaredcapital.com
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Visit our website to find out more:
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Join our Facebook Group:
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
video1952013587 (00:00):
Welcome, all You Multifamily Enthusiast to
another episode of theMultifamily Real Estate
Experiment podcast.
I'm your host, ShalonHutchinson.
If you've been in real estatefor a little while, you know me
as Hutch the Marine investor.
And today we have an amazingguest for you and that's gonna
answer some very uniquequestions.
Right?
So see Ashley Garner is thefounder of ABG Associate.
(00:20):
He Personally acquired andoperates over 300 units.
He transitioned from small scalemultifamily property all the way
to multifamily syndication, andhave built and investor first
model that delivers both cashflow and long-term wealth
creation.
Ashley thank you for joining ustoday brother.
All right, Hutch.
Thanks for having me.
(00:40):
I'm pretty excited to be here.
Thank you so much.
Yes, sir.
And I'd like to get to dig intoour, our guest mantra a little
bit.
So I want to ask you thisquestion.
Do you have a favorite realestate quote or mantra that
guides your investment journey?
Ooh, man, that's a greatquestion.
You know, really, uh, the, theeasiest one for me to remember
(01:04):
is that financial freedom.
Kind of thing.
And, and yeah.
And of course that means a lotof different things to a lot of
different people, but just to beable to be as much in control of
my own situation as possible.
Right.
Um, and, and that's kind of,that's kind of what keeps me
going.
And there's a lot of backgroundto that, but that's the, that's
(01:26):
the basic.
Okay.
Give us a little more of thebackground to that.
Yeah.
So, you know, I've always been,I've always been in real estate.
Uh, in one way or the other, Ikind of grew up mom and pop in
the kind of student rentalbusiness.
So we'd buy old houses andsubdivide them into, internally
into different units and thingslike that.
(01:48):
And, but whenever I would, uh,would have a job like working
for someone else or whatever itwas, it never kind of, I, I
could never get my head aroundthat.
I have to get up, I have toclock in, and then I have to
clock out.
And if I don't clock in andclock out when someone else
tells me to, then I don't makeany money and none of this stuff
(02:11):
works.
And I just never could reallyget my head around that whole
concept.
Um, So I was always in thispursuit of how can I, how can I
make money in my sleep, if youwill, you know, to use a term
other people say.
And, and so That whole thing hasled me more and more into.
(02:31):
Multifamily and investing incashflow real estate so that I
can have that income while maybeI'm doing things with my kids or
volunteering in the community orwhatever it is.
Man.
That is awesome, man.
So I've been in the Marine Corpsfor, you know, a little bit of
almost 27 years.
In a couple months it'll be 27years.
And Wow.
Uh, I totally understand whatyou talk about.
(02:53):
You know, you got gotta besomeplace and not only gotta be
someplace, gotta be someplace 15minutes prior, you know, five
minutes early.
It's like 10 minutes late.
Right, right.
You gotta be so.
I totally understand.
Not that I regret any of that.
It's, it has been an amazingjourney.
I, I tell some folks it's thebest mistake that I've ever
made.
Right?
Um, and I think a lot of us cansay that for different career
(03:15):
fields that we've chosen, where,you know, when you're passionate
about it, there's some prettycrappy days.
But at the same time, when youlook at a grand scheme of
things, you, but.
Yep.
I'm doing this for a reason.
You know what I mean?
Um, you're doing something thatis purposeful.
Um, you're doing it on purpose,for a purpose, and your family
gets to benefit, um, from thatjourney and growth as well.
Awesome.
Yeah.
So, yeah, I totally understand.
(03:35):
So I'm, I'm, I'm looking forwardto that man.
I'm looking forward to that, youknow, location freedom, that
time freedom, you know, to beable to live in one place, you
know?
Um, as long as I want to, don'thave to worry about getting,
getting military orders, and Ihave to move, you know, so, um,
I, I'm looking forward to that.
I'm pretty confident.
That's exciting.
That's exciting.
Yeah.
I'm pretty confident that I'm,after three or four years, I'm
(03:57):
gonna be developing the anxiety,like, oh.
Maybe it's time to move, man.
Oh yeah.
Well, you have a lot of energy,so it'll kick in.
You'll, you'll have plenty todo, I'm sure.
Oh, yeah.
Oh yeah.
Definitely.
Especially out here in Hawaii,so, yes, sir.
Yeah, man.
So you've been licensed in, um,real estate since 1994.
That's a, that's a long time.
Time.
I think I was like 14 years agoback then.
(04:18):
You know.
Can you walk us through your,how your career evolved, you
know, from your first deal, um,to now, um, syndicating property
and kind of cover, I also cover,you know, what is your current
focus and who you're serving,um, nowadays.
Sure.
Yeah.
Well, so like I said, it'salways been real estate for me
and I, you know, the mom and popstart that I had.
(04:40):
Um, and then I think I was like.
I don't know, low twenties in1994.
I'd have to do the math, but youknow, I was just kind of getting
started on my own.
Yeah.
And got that real estate brokerlicense.
And, uh, you know, I, I've donea lot of different things in
real estate.
What developed into my quoteunquote day job was being a
(05:01):
residential broker, and then Ihave a small team of people that
work for me in the residentialbrokerage business.
But my passion has always beenthat multifamily thing, like I
alluded to before, you know, Iwas trying, I was always in
pursuit of how can I make moneywithout actually.
Making whatever widget I wasgonna make.
(05:23):
You know, like if I didn't havea buyer in my car or if I wasn't
a listing appointment, I didn'tmake any money.
And so it was just like aregular old job.
It could be anything.
If you don't clock in and doyour thing, you don't make any
money.
So.
Right.
I always was on the side buying,um, uh, rentals.
Right.
So I started the same.
(05:43):
You hear that progression, youknow, single families, duplexes,
triplexes.
And then, and it was working andI loved it, but I realized like
I was, as, as young as I was atthe time, I was already
mathematically eliminated fromreaching the goals that I had if
I continued at that same pace.
Gotcha.
So I, I knew I had to do biggerproperties to get where I wanted
(06:08):
to go.
So then I went to a 10 unitproperty, and then I went to a
32 unit property.
Um, and then that was like 2018.
And from 2018 until, I don'tknow, like three, two years ago,
I didn't really buy anythingbecause I couldn't find anything
that the numbers worked, youknow?
Yeah.
The prices were too high and Icouldn't make the cash flow work
(06:31):
from, and maybe I'm just tooconservative, but it didn't
work, so I didn't buy'em.
Uh, and then we got a 37 unit,and then most recently was a 196
unit.
Nice.
Um, property.
And in fact, that one, you beingin the Marine Corps, uh, this
property, the 196 is inJacksonville, North Carolina.
(06:51):
Okay.
Uh, and it's, it's, you know,right near the base.
Oh man.
That, that's good stuff.
Now look, so.
You talk about making thenumbers work or not being able
to find a property that, apencil that pencils out.
I really want to dive into, um,deal analysis.
However, you touched onsomething that I, that I've
(07:14):
always been curious about, andit is like you and I.
Are gonna have comparable path.
Reason being, I, I renewed mylicense with real broker and so
I'm now an active agent out herein Hawaii.
Okay?
Every single piece of propertythat I look at, I look at it as,
as an investment, right?
(07:35):
So whether it's a single familyor duplex, triplex, say 42 unit,
whatever, right?
To my lens, it's always aninvestment property, but one of
the things that I've seen.
In communicating with, withother realtors is that we are
not wearing the same lens, sothey're not looking for the
highest and best use.
They're looking for, how do Imake the, the next commission?
(07:57):
Why do you think it is that mostrealtors never transition to
becoming investors?
Man, that's a great question.
Um, ugh.
Maybe, you know, I don't know.
I think it's a lot of just that,um, fear of doing something
wrong, you know, or making amistake that you can't come back
(08:20):
from.
And, and I don't know if it'sother realtors, you would think
that the realtors would be evenquicker to get into the game
because they're around realestate so much, right?
Yes.
But it's almost like they're thesame as the, as the, the doctors
and the dentists and the otherpeople that, uh.
Don't, maybe don't know realestate as well, and they're a
(08:42):
little bit reluctant to get intoit.
That's a great question.
Um, you know, one of the thingsI do is I, we kind of host these
periodic investor club meetingshere with, with brokers?
Yeah.
With realtors for that samereason to like, Hey, you know,
you can do this.
This is.
This transaction is exactly thesame transaction as it is, you
(09:05):
know, helping your client buy orsell their home.
You know, it's the same closingstatement, it's the same escrow,
it's the same, blah, blah, blah.
Um, that's a great question anduh, maybe it's just the unknown
of it.
Maybe it is, maybe it is, um,the risk, right?
So maybe a lot of realtor whowere full-time, um, you know,
(09:27):
their bread and butter isactually that commission.
And as, as you know, not allreal estate agents are making a
lot of money.
Right?
Sure.
And a lot of time they buildtheir life around the
transaction, right.
And then yes.
Sometimes make enough money justto survive, right?
So, right.
Yeah.
But for the, for the ones, I, Ithink.
Based on my assessment for theones who I see really break out
(09:49):
from doing single family home toeven buy single family home as
an investment property are theones who are actually top
producers, um, in, in mostcases.
Okay.
Yeah.
Yeah.
I mean, so, um, you, you talkabout, um, you.
Making mistakes.
Let's dive real quick intomultifamily, um, and analysis,
right?
So you teach people how toevaluate multifamily properties
(10:12):
in say, about about 10 minutes,right?
What are some of thosenon-negotiable variables that,
um, that falls in that quickanalysis in 10 minutes?
Yeah.
Um, so for me.
And this is very relevant eventhis morning, you know, right.
We're, um, we're underwritingproperties and the brokers, or
(10:36):
the, the seller, they still wantyou to pay them a value based on
what the property could do inthe future.
Yeah.
And I say, look, you know, I'msorry, but you know, we, we
would pay you the value based onwhat it's doing right now.
Yes, but not, I'm not gonna payyou the, what I hope to earn
(11:00):
when I go in and take the riskto renovate the units or to
improve the operations orwhatever it is to add value.
That's the gravy that I want toachieve for me and my investors
after we do the work.
And so that's really the numberone non-negotiable thing for me
is, is to value it based on whatit's doing right now, not what
(11:22):
it could do.
And I think that's where peopleget into big mistakes is if
you're, like, if you make the.
The play or the bet, if youwill.
It's not a gamble.
This is a business, not agamble.
Right.
But if you go into it like it'sa gamble, like, man, if the
interest rates will go down andthe cash flow will go up, then
this thing's gonna be a homerun.
(11:44):
Yeah.
And if you do that, you're introuble.
Uh.
You're in for a very stressfulexistence in the meantime.
Yeah.
So 10 minutes, you're looking atthe current performance, not the
performer.
Yeah.
To, to your point man, the, thebrokers are really good at
really pushing the performer,which, um, could catch a lot of
(12:04):
newbies, off guard.
Right.
I remember when I was down inPensacola, Florida and, uh, I
was flipping properties and thenI saw some multifamily
properties that I wanted totransition from, and I was
transition to, and I waslearning about underwriting.
That's one of the things that I,that I quickly understood, that
these beautiful numbers that thebroker placed on the offer
offering documents.
(12:26):
on their performer.
They were not actual.
Right.
So yeah, you have to evaluatebased on the property's current,
um, performance becausemulti-family properties are
based on the value is based onthe, the current net operating
income.
Right.
Um, instead of project.
That's right.
Yes.
Yeah.
So that is also main.
After 30 years, um, you know.
(12:48):
What's one underwriting shift ortool that completely changed the
way you look at deals?
What's one of one or two shifts,or tools?
Do, do you use a tool tounderwrite?
yeah.
We use the tools and.
Again, the math is always, it's,it's the same now as it ever
(13:10):
was.
Right.
You know, you, you income andexpenses, and then you subtract
some things out and there yougo.
Uh, one thing that I'm enjoyingnow is, uh, you know, there's
some, there's some AI assistedtools that help with the
calculation.
You know, like you can drag theoperating memorandum into the
(13:32):
thing and it will, it will pullout.
The pertinent information foryou, right.
And populate the fields.
That's been pretty cool.
But what I've noticed is itstill requires us to understand
the process.
Yes.
And go in and verify each lineitem and make sure that it's
correct and it makes sense andthat we didn't miss anything.
(13:52):
Um, so it's a time saver, butyou still have to use your brain
and your experience to analyze.
100%.
I call it inspect what youexpect.
There you go.
So whether it's peopleperformance or AI's performance,
right.
So, you know.
Yeah.
Um, a lot of folks, you know,dump a lot of things in the
chat, GPT, and then you hearsomebody give a speech that
(14:13):
says, insert people name here.
And they actually actually readthat out.
Like, come on man.
Right.
Can you proofread that thing?
You know?
So yeah, it's really important.
So you have to have, um, basicor advanced knowledge of the
expectation of what you want themodel to produce, um, to you.
And then a lot of times itrequires a lot of training of
the model to really understandwhat is the outcome, um, you
(14:35):
want to, you want to achieve.
That's exactly right.
Yeah.
So actually a lot of ourlisteners are, are trying to
scale their portfolio.
A lot of our listeners for, forthis podcast, trying to scale
their portfolio, you know.
Um, what were your biggestmindset and operational shift
that allows you to, to go from,four doors to managing hundreds?
(14:56):
Well, uh, it was the ability to,uh.
Identify the correct teammembers and delegate the
responsibility to them.
Okay.
Um, one of the, one of thethings for me, and I, I still
constantly learn this, is that Ihave to stay in my lane.
I have to manage and I'mresponsible for everything.
(15:19):
But when I find myself gettinginto the weeds of the job, of
the onsite property manager, oryou know, the accountant or
whatever it is, yeah, then Irealize I'm in there kind of
messing things up.
And so I have to design thesystem and trust the people that
I have in place to do, do it theright way.
And of course.
That's where my job is, is tomanage all of each piece, right,
(15:43):
to make sure it's donecorrectly, uh, not to get in
there and do the job for them.
Yeah.
And so that, that start withhaving good, solid people in
your team, right?
One of the things they talkabout in, in the book, good To
Great, right?
The number one thing to do is toensure you have the right people
in the right seat, and then yougo from the who not how concept,
(16:03):
right.
To your point, you stay in thelane.
Fortunately for, for us in theMarine Corps, um, every single
one of us, we have what's calledmilitary occupational skills.
Right?
Okay.
And to your point about stayingin your lane.
We have one aircraft and then wehave a plethora of different
military occupational skills.
You know, the avionics, theordinances, the airframes or the
power plant, you know, andmaintenance control, quality
(16:26):
assurance, everyone stays intheir lane to ensure that this
one thing can go out and, and dosome, do some good work in some
far off land, right?
So, yeah, no, that's somethingthat we do in the Marine Corps
and understand that very well,man.
But it's a great most important.
Yeah.
The most important things thatwe can do is to ensure that we
have the right people in theright seats, and then of course,
trust the process, the the who,not how you know.
(16:47):
Process.
Now.
For a lot of us, right?
In the analysis phase, one ofthe things that we are looking
for is to figure out how do wecreate value in an asset that we
are purchasing, whether it's asingle family property or it's a
multi-family property, right?
So we, we, a lot of us, we focuson the value add, concept of
(17:09):
property, but, but you know,that can spiral.
The, the cost for value add canbe, can spiral out of control.
You know, if we are not mindful,you know, what are the hidden
renovation expenses that, youknow, that most rookie
syndicator might miss?
Oh boy.
There's tons of'em.
(17:29):
a reminder for me, like I'm acashflow guy and, and I, maybe
I, I may get into a differentphase.
You know, as I go through theprocess of maturing as an
investor, but right point being,if it doesn't add cashflow and
subsequently net operatingincome, then I don't want to do
(17:50):
it.
Um, right.
Unless, unless you know, youhave to do it for the protection
of the asset.
You know, you have to maintainthese buildings so that they
will keep paying you.
Yeah.
But for instance, Anybody couldgo in and say, I'm gonna put in
granite countertops and vinylfloors and make this thing nice.
But if you spend the money andit doesn't result in an increase
(18:12):
in rent or whatever, then ithasn't necessarily affected or
increase the value of the assetbecause.
In this commercial real estateworld.
The value is based on theincome.
So everything ha for me has tobe on the cash flow focus and on
what does this do to the bottomline, the net operating income,
because that's how we can getthe value to go up.
(18:35):
Um, that being said, of courseyou have to, to maintain it,
like I said.
But say if you, if you spend amillion bucks on something, but
you don't change your netoperating income at all, then
you haven't increased the valuebased on the income, so,
correct.
That's a, that's a pitfall thatyou would want to avoid because
now you're not making any returnon that million dollars that you
(18:56):
invested on top to do theimprovements.
Yeah, it's really important, uh,as, as for new syndicated, that
they go into an environment toreally understand what value
they're creating based on thedemographic.
Um, that will be.
Occupying, um, those unitsbecause, you know, I've seen
some properties in some reallycrappy areas with some really
crappy renovation and, you know,walking this property, doing
(19:20):
analysis of a potentialacquisition and, you know,
talking to a property manager orthe onsite team and they're
telling me, they're telling usthat this unit is rent ready.
I'm like, for who?
or for what?
Right.
You know what I mean?
And it, it's real disappointing,you know, the way people give
some people property to live.
So, however.
I agree.
Um, seeing the, the variationof, um, of what rent ready looks
(19:44):
like for different, um, areas.
Um, sometime it's sadden andsometime like, okay, good, good,
good.
Downside team, this might besome team that we want to keep
on, however, you know, as you goin definitely to your points is
to ensure that The level ofwhich we are improving this
asset is consistent with therented base.
Right?
And also actually had value in,in this case, force appreciation
(20:06):
of that property by ensuringthat we are impacting in a
positive, Nets operating income,which potentially increase the
value, um, for the sale price ofthe not.
So, yeah, and you, you know, Ihear stories.
Uh, a lot right now.
Really, like, not a lot, butthere, these things are
happening right now wherepeople, maybe they purchased a
property at the peak of themarket at a low interest rate,
(20:29):
and they say, okay, we're gonnago in and value add and we're
gonna, we're gonna renovate,we're gonna upgrade all these
units into platinum status orwhatever.
Yeah.
Yeah.
So they spend a whole bunch ofmoney on top of what they
already spent.
And then the unfortunate part isthat they can't get any increase
in the rent.
Right.
And now they're in troublebecause they, they don't have
(20:52):
the cash flow to support thedebt and pay the investors, uh,
on, on everything that theyspent to get to this point.
And they were banking on this,this rent increase that they
thought they could get.
And it turns out they can't.
And that's a bad situation to bein.
Um.
For me, it's, it's such acomfort to know that our break
(21:16):
even, or our worst case is whatit's doing right now.
Yeah.
And then if we do add value,then we can see the benefit of
it, uh, by way of some increasedincome.
Yeah, I totally understand that.
Man.
We bought a property back in,2019.
Yeah.
2019.
And we look at his property, hadsome shotgun, you know, two
(21:36):
bedrooms or could potentiallyturn into a two bedroom Right.
Property at two bedroom units.
And we try a lot of things, um,however, didn't quite work out,
you know?
We, we end up selling theproperty before we.
Before we realized the entirebusiness plan, And we, we made
some money that coupled thedifferent things.
Right?
COVID kicked in.
Yeah.
Yeah.
Re renovation, delayed, youknow, um, deliverables and new
(21:59):
properties in the area that,that increased the competition,
you know what I mean?
So our shotgun two bedrooms unitwas not really competitive in,
in that market.
So we sold it for profit.
I think our investors madetheir, made their preferred
return, um, over the time thatwe held up.
Held the property, you know, butto your point, it's really
important that, um, the, thelead sponsors really understand
(22:21):
when that property of reachesfull potential and be able to,
you know, exit, um, with aprofit.
You know?
So.
Yeah.
Yeah.
To your point, a lot of time wego into man and things gonna
change, interest rates gonnaincrease, um.
And we might not be able torealize this big rosy, um,
mm-hmm.
Business plan that we had andjust gotta know it's time to
exit to ensure that we canprotect and preserve or invest
(22:44):
this capital, right?
Yes sir.
Yep.
That's right.
Okay.
Alright.
So, um, final question before wego into the focus round, Ashley.
Okay.
Let's discover something on, ona passive investor side, right?
Okay.
For, for passive investor.
Right.
Um, as someone, as you, someonewho have over led, you know, the
(23:05):
end to end, right.
Acquisition, all the way toexit, you know, what are two to
three things that every passivereal estate investor should
inquire before they actuallywire 50,000, a 100,000,$200,000
to a sponsor?
Yeah.
Well, on, on this one, you know,to me, this business.
(23:26):
I'm, I'm a big relationship guy,you know?
Right.
Every, everything I do, youknow, I, I want to be, uh, I'm
sincere about what I'm trying todo and Right.
And, and I want people to knowthat, and I want them to trust
me.
And so if it's people that Ialready know, then you know, I,
(23:50):
I need to.
Share all the details so thatthey trust me and trust my
knowledge of this business.
And, uh, and they invest withme.
But if it's people that I don'tknow yet, I'm just now meeting,
you know, I've gotta get to knowthem and, you know, there's
various ways to do that throughtechnology or like we're doing
right here.
Right.
You know, I'm in, I'm in NorthCarolina, you're in Hawaii and
we're getting to know eachother.
(24:11):
So it doesn't always have to belike sitting down for coffee.
Um, but it's a relationshipthing and it's a trust thing.
Um, you know, I, I've hadinvestors that will tear apart a
spreadsheet and analyze every,you know, question my formula
and my math on everything.
And then I've had more commonlythough, I have people say, Hey
(24:33):
Ash, that's great.
It looks good.
I'm only doing this because ofyou.
If it wasn't for you, I wouldn'tbe doing this.
And so you.
That's great, but it's also alot of responsibility on me
because they're saying, man,this guy trusts me like with all
his money, and so I don't wantto, I don't wanna screw it up.
(24:54):
So I think it's that.
I think it's like know that thesponsor, you know, know their
track record, know that theyhave experience doing something.
Know that they know what they'retalking about and that you trust
their ability To ride this thingout through ups and downs.
'cause there's always gonna beups and downs and you know,
we're not gonna quit till we getit done.
(25:14):
Yeah, it's the fact is somepeople do quit.
Yeah.
Yeah.
We're, we're not quitting here.
Yeah.
Absolutely not.
Absolutely not.
Don't quit, don't die.
That's right.
That's right.
Yeah.
So, um, so quick last questionbefore we get into the focus
round, Ashley.
Okay.
How are you adjusting youracquisition, um, and investor
expectation?
Right.
So we've seen a lot of thingsthat transpired over the past
(25:35):
couple years, right?
Um, and you, your business isfocused around, focused around
invest the first, um, buildingthose relations, um.
How are you adjusting youracquisition to curve investor
expectation in today's, um,markets, we're keeping our eye
(25:55):
on so, so right now and, andlately, you know, past few years
and still currently, you know,like raising money is difficult.
It is.
And uh, borrowing money isdifficult and expensive.
And everything takes long time.
So we're trying to make surethat we set the expectations
(26:18):
that, you know, this is not a,this is not a fast thing.
This is gonna take us, you know,six to eight months to do this.
Like, for example, right nowwe're refinancing a property
into a HUD 2 23 F.
Loan.
Right.
And it's a fabulous loanproduct.
And when we get it, it's gonnabe like the Cadillac of all
multifamily loans.
(26:39):
Yeah.
But it takes like eight monthsto get, and, and it's all, it's
a tremendous amount of work.
Uh, once we get to the end,it'll all be worth it.
But you know, you have to bepatient and you have to trust us
to know that.
We know what we're doing to getthrough.
Um, also the returns maybe, youknow, they fluctuate like what,
what investors expect of whetherit's a cash on cash or an
(27:02):
internal rate of return.
Each investor has their numberthat they is their favorite.
Um, and so those kind offluctuate, you know, to some.
Cash on cash is most important,and to others, the internal rate
of return is most important.
Uh, so we see those kind offluctuate and they go with the
market as, as other alternativeinvestments go up and down and
(27:25):
so do our returns.
They go up and down a littlebit.
Yeah.
And now we throw in 100% bonusdepreciation.
That is back, you know, so forthose people or who are in this
business to preserve capitalthrough the different tax
strategies, then the bonusdepreciation is definitely a, a
good catalyst for it's hugefolks capital.
Yeah, it definitely.
We're gonna be sending out Kones with some very large
(27:48):
negative numbers on it this yearbecause of the bonus
depreciation.
Uh, and that's a good thing.
That's, that's the place whereyou like to have your negative
number on your K one.
Oh, yeah.
Oh yeah.
Passive loss is always good.
Yeah.
Yes, sir.
All right.
Um, so.
We'll dive into the focus round,Ashley.
Um, okay.
It's just, just an acronymfocus, right?
(28:09):
Um, what is something fun you dooutside of real estate?
Oh, boy.
Um, man, I love to do stuff withmy family and I love to do stuff
active and outdoors.
So it's, you know, golf, tennis,fishing, skiing, rafting,
anything like that.
(28:30):
I'm game to do, uh, an outdooractive type thing anytime,
anywhere.
That's awesome.
So what, what is one opportunitythat was a game changer for you?
Oh wow.
Okay.
I think as, I think in bigpicture for me, you know,
growing up around you, you know,people who had the
(28:52):
entrepreneurial spirit.
And, and, and the, and I wasaround some people that
instilled in me that, Hey, you,you know, you can't do things by
yourself, but you can controlyour, your situation.
Like, if you don't, if you don'tlike the way it is right now,
(29:13):
then let's do somethingdifferently to try to change it.
It, it doesn't mean that you,you can do it by yourself and
you, you know, you need luck.
You need the grace of God.
You need all these things thatgo with it.
But point being, if you don't doanything differently, nothing
different is gonna happen.
Facts.
And, and so for me to learnthat.
As a growing up person, and thento continue to learn it as an
(29:34):
adult, that, that's a hugeopportunity that has made a
great difference in my life.
That's awesome, man.
Um, what would you say is yournumber one communication tip to
keep investors calm andinformed, especially during, you
know, maybe a rough quarter.
I think that the consistency andthe frequency of communication
is the key.
(29:54):
Communication is the key to anyrelationship.
Uh, the worst thing that you cando is go radio silent because
then people start to get scared.
And once they get scared, we gotproblems.
Um, so you, you just, you theyneed to hear your voice or see
your face, and they need to seeit frequently enough that it
keeps everybody comfortable.
(30:15):
Got you.
What, what would you say is, um.
Something that you wish youunderstood earlier?
I, I wish I understood that, um,that I already knew enough to
take the step.
Uh, you know, sometimes, andright now, you know, I'm, I'm 54
(30:35):
and sometimes I still thinkabout like.
Hey, I'll do this when I growup.
You know?
Well, man, you're already likean old man, right?
So you need to, but I wish, likeif I look back in my life, I
knew things then I was qualifiedto do things faster than I
really gave myself credit for.
So I guess the, the tip there islike.
(30:57):
Just you, you have to take thestep and, and take action.
Yeah.
100%.
Man, I, um, this, these arethings I tell my marines all the
time.
Things I tell my children allthe time, you are enough, right?
Yeah.
You are enough right now to takethe action.
Like, especially if you arethinking about it, right?
Um, there's, I think it was hisname, Steve Harvey, that said,
(31:18):
we are not smart enough to havean impossible thought.
Yeah.
So if you can think it, you canactually do the thing, right?
Maybe it's not you doing thething, but then you find a who
that knows the how right.
You make it happen, right.
That you lead the team to theplace, you know?
So, um, yeah.
That's awesome, man.
That, um, last question,brother, that's, um, to, to what
do you attribute your success?
(31:40):
oh boy, uh, probably my personalquality is, is my persistence.
Right?
And I, I just.
You know, I don't, uh, I justrefuse to give up.
You know, I've learned to somethings that aren't, some things
you need to end and get out ofyour life, and that's okay, but
(32:00):
Right.
You know, things are gonna getdifficult and you have to keep
grinding.
One foot in front of the otherand just keep going and don't
give up, and you usually willget to the other side.
Um, that's about me.
But really the success, Iwouldn't have anything if I
didn't have the people around meright, that support me, you
(32:20):
know, whether it's my work teamor it's my family or loved ones
and things like that.
So, being surrounded by goodpeople is, is probably the most
important.
That is awesome man.
Man, thank you so much, man.
So Ashley, if our listeners wantto get in, get connected with
you, um, especially for thosewho are passive in investors
looking for, you know, lookingto play some capital or even
(32:42):
core GPs that want to work withyou.
Yeah.
What is the best ways, um, forthem to get in touch with you?
I think the easiest way is justto jump over to our website at
abgmultifamily.com, and fromthere you can either, uh, you
know, sign up for the newsletteror you can, uh, see our emails
and reach out that way.
(33:02):
Whatever you like.
Outstanding, man.
So brother, I want to thank youso much for giving us, your time
and also some wisdom on thisepisode of the podcast.
And listeners, if you find thisinformation valuable, um, I
trust that you hop over toiTunes and give us a, you know.
Five star ratings and a fairreview.
Uh, so we can keep this, getthis information out to more
(33:24):
people, you know.
So, and also listeners, if youlisten to this podcast all the
way through, I want to thank youfor spending some time with us.
Ashley, any pardoning words,man, just, uh, wanted to thank
you, Hutch, for the opportunity.
I appreciate being here and Ilove what you do.
Absolutely.
And listeners, keepexperimenting on your way to
owning more of America.
(33:45):
Until next time, I'm HutchMarine Investor out..
Welcome, all You Multifamily Enthusiast to
another episode of theMultifamily Real Estate
Experiment podcast.
I'm your host, ShalonHutchinson.
If you've been in real estatefor a little while, you know me
as Hutch the Marine investor.
And today we have an amazingguest for you and that's gonna
answer some very uniquequestions.
Right?
So see Ashley Garner is thefounder of ABG Associate.
(00:20):
He Personally acquired andoperates over 300 units.
He transitioned from small scalemultifamily property all the way
to multifamily syndication, andhave built and investor first
model that delivers both cashflow and long-term wealth
creation.
Ashley thank you for joining ustoday brother.
All right, Hutch.
Thanks for having me.
(00:40):
I'm pretty excited to be here.
Thank you so much.
Yes, sir.
And I'd like to get to dig intoour, our guest mantra a little
bit.
So I want to ask you thisquestion.
Do you have a favorite realestate quote or mantra that
guides your investment journey?
Ooh, man, that's a greatquestion.
You know, really, uh, the, theeasiest one for me to remember
(01:04):
is that financial freedom.
Kind of thing.
And, and yeah.
And of course that means a lotof different things to a lot of
different people, but just to beable to be as much in control of
my own situation as possible.
Right.
Um, and, and that's kind of,that's kind of what keeps me
going.
And there's a lot of backgroundto that, but that's the, that's
(01:26):
the basic.
Okay.
Give us a little more of thebackground to that.
Yeah.
So, you know, I've always been,I've always been in real estate.
Uh, in one way or the other, Ikind of grew up mom and pop in
the kind of student rentalbusiness.
So we'd buy old houses andsubdivide them into, internally
into different units and thingslike that.
(01:48):
And, but whenever I would, uh,would have a job like working
for someone else or whatever itwas, it never kind of, I, I
could never get my head aroundthat.
I have to get up, I have toclock in, and then I have to
clock out.
And if I don't clock in andclock out when someone else
tells me to, then I don't makeany money and none of this stuff
(02:11):
works.
And I just never could reallyget my head around that whole
concept.
Um, So I was always in thispursuit of how can I, how can I
make money in my sleep, if youwill, you know, to use a term
other people say.
And, and so That whole thing hasled me more and more into.
(02:31):
Multifamily and investing incashflow real estate so that I
can have that income while maybeI'm doing things with my kids or
volunteering in the community orwhatever it is.
Man.
That is awesome, man.
So I've been in the Marine Corpsfor, you know, a little bit of
almost 27 years.
In a couple months it'll be 27years.
And Wow.
Uh, I totally understand whatyou talk about.
(02:53):
You know, you got gotta besomeplace and not only gotta be
someplace, gotta be someplace 15minutes prior, you know, five
minutes early.
It's like 10 minutes late.
Right, right.
You gotta be so.
I totally understand.
Not that I regret any of that.
It's, it has been an amazingjourney.
I, I tell some folks it's thebest mistake that I've ever
made.
Right?
Um, and I think a lot of us cansay that for different career
(03:15):
fields that we've chosen, where,you know, when you're passionate
about it, there's some prettycrappy days.
But at the same time, when youlook at a grand scheme of
things, you, but.
Yep.
I'm doing this for a reason.
You know what I mean?
Um, you're doing something thatis purposeful.
Um, you're doing it on purpose,for a purpose, and your family
gets to benefit, um, from thatjourney and growth as well.
Awesome.
Yeah.
So, yeah, I totally understand.
(03:35):
So I'm, I'm, I'm looking forwardto that man.
I'm looking forward to that, youknow, location freedom, that
time freedom, you know, to beable to live in one place, you
know?
Um, as long as I want to, don'thave to worry about getting,
getting military orders, and Ihave to move, you know, so, um,
I, I'm looking forward to that.
I'm pretty confident.
That's exciting.
That's exciting.
Yeah.
I'm pretty confident that I'm,after three or four years, I'm
(03:57):
gonna be developing the anxiety,like, oh.
Maybe it's time to move, man.
Oh yeah.
Well, you have a lot of energy,so it'll kick in.
You'll, you'll have plenty todo, I'm sure.
Oh, yeah.
Oh yeah.
Definitely.
Especially out here in Hawaii,so, yes, sir.
Yeah, man.
So you've been licensed in, um,real estate since 1994.
That's a, that's a long time.
Time.
I think I was like 14 years agoback then.
(04:18):
You know.
Can you walk us through your,how your career evolved, you
know, from your first deal, um,to now, um, syndicating property
and kind of cover, I also cover,you know, what is your current
focus and who you're serving,um, nowadays.
Sure.
Yeah.
Well, so like I said, it'salways been real estate for me
and I, you know, the mom and popstart that I had.
(04:40):
Um, and then I think I was like.
I don't know, low twenties in1994.
I'd have to do the math, but youknow, I was just kind of getting
started on my own.
Yeah.
And got that real estate brokerlicense.
And, uh, you know, I, I've donea lot of different things in
real estate.
What developed into my quoteunquote day job was being a
(05:01):
residential broker, and then Ihave a small team of people that
work for me in the residentialbrokerage business.
But my passion has always beenthat multifamily thing, like I
alluded to before, you know, Iwas trying, I was always in
pursuit of how can I make moneywithout actually.
Making whatever widget I wasgonna make.
(05:23):
You know, like if I didn't havea buyer in my car or if I wasn't
a listing appointment, I didn'tmake any money.
And so it was just like aregular old job.
It could be anything.
If you don't clock in and doyour thing, you don't make any
money.
So.
Right.
I always was on the side buying,um, uh, rentals.
Right.
So I started the same.
(05:43):
You hear that progression, youknow, single families, duplexes,
triplexes.
And then, and it was working andI loved it, but I realized like
I was, as, as young as I was atthe time, I was already
mathematically eliminated fromreaching the goals that I had if
I continued at that same pace.
Gotcha.
So I, I knew I had to do biggerproperties to get where I wanted
(06:08):
to go.
So then I went to a 10 unitproperty, and then I went to a
32 unit property.
Um, and then that was like 2018.
And from 2018 until, I don'tknow, like three, two years ago,
I didn't really buy anythingbecause I couldn't find anything
that the numbers worked, youknow?
Yeah.
The prices were too high and Icouldn't make the cash flow work
(06:31):
from, and maybe I'm just tooconservative, but it didn't
work, so I didn't buy'em.
Uh, and then we got a 37 unit,and then most recently was a 196
unit.
Nice.
Um, property.
And in fact, that one, you beingin the Marine Corps, uh, this
property, the 196 is inJacksonville, North Carolina.
(06:51):
Okay.
Uh, and it's, it's, you know,right near the base.
Oh man.
That, that's good stuff.
Now look, so.
You talk about making thenumbers work or not being able
to find a property that, apencil that pencils out.
I really want to dive into, um,deal analysis.
However, you touched onsomething that I, that I've
(07:14):
always been curious about, andit is like you and I.
Are gonna have comparable path.
Reason being, I, I renewed mylicense with real broker and so
I'm now an active agent out herein Hawaii.
Okay?
Every single piece of propertythat I look at, I look at it as,
as an investment, right?
(07:35):
So whether it's a single familyor duplex, triplex, say 42 unit,
whatever, right?
To my lens, it's always aninvestment property, but one of
the things that I've seen.
In communicating with, withother realtors is that we are
not wearing the same lens, sothey're not looking for the
highest and best use.
They're looking for, how do Imake the, the next commission?
(07:57):
Why do you think it is that mostrealtors never transition to
becoming investors?
Man, that's a great question.
Um, ugh.
Maybe, you know, I don't know.
I think it's a lot of just that,um, fear of doing something
wrong, you know, or making amistake that you can't come back
(08:20):
from.
And, and I don't know if it'sother realtors, you would think
that the realtors would be evenquicker to get into the game
because they're around realestate so much, right?
Yes.
But it's almost like they're thesame as the, as the, the doctors
and the dentists and the otherpeople that, uh.
Don't, maybe don't know realestate as well, and they're a
(08:42):
little bit reluctant to get intoit.
That's a great question.
Um, you know, one of the thingsI do is I, we kind of host these
periodic investor club meetingshere with, with brokers?
Yeah.
With realtors for that samereason to like, Hey, you know,
you can do this.
This is.
This transaction is exactly thesame transaction as it is, you
(09:05):
know, helping your client buy orsell their home.
You know, it's the same closingstatement, it's the same escrow,
it's the same, blah, blah, blah.
Um, that's a great question anduh, maybe it's just the unknown
of it.
Maybe it is, maybe it is, um,the risk, right?
So maybe a lot of realtor whowere full-time, um, you know,
(09:27):
their bread and butter isactually that commission.
And as, as you know, not allreal estate agents are making a
lot of money.
Right?
Sure.
And a lot of time they buildtheir life around the
transaction, right.
And then yes.
Sometimes make enough money justto survive, right?
So, right.
Yeah.
But for the, for the ones, I, Ithink.
Based on my assessment for theones who I see really break out
(09:49):
from doing single family home toeven buy single family home as
an investment property are theones who are actually top
producers, um, in, in mostcases.
Okay.
Yeah.
Yeah.
I mean, so, um, you, you talkabout, um, you.
Making mistakes.
Let's dive real quick intomultifamily, um, and analysis,
right?
So you teach people how toevaluate multifamily properties
(10:12):
in say, about about 10 minutes,right?
What are some of thosenon-negotiable variables that,
um, that falls in that quickanalysis in 10 minutes?
Yeah.
Um, so for me.
And this is very relevant eventhis morning, you know, right.
We're, um, we're underwritingproperties and the brokers, or
(10:36):
the, the seller, they still wantyou to pay them a value based on
what the property could do inthe future.
Yeah.
And I say, look, you know, I'msorry, but you know, we, we
would pay you the value based onwhat it's doing right now.
Yes, but not, I'm not gonna payyou the, what I hope to earn
(11:00):
when I go in and take the riskto renovate the units or to
improve the operations orwhatever it is to add value.
That's the gravy that I want toachieve for me and my investors
after we do the work.
And so that's really the numberone non-negotiable thing for me
is, is to value it based on whatit's doing right now, not what
(11:22):
it could do.
And I think that's where peopleget into big mistakes is if
you're, like, if you make the.
The play or the bet, if youwill.
It's not a gamble.
This is a business, not agamble.
Right.
But if you go into it like it'sa gamble, like, man, if the
interest rates will go down andthe cash flow will go up, then
this thing's gonna be a homerun.
(11:44):
Yeah.
And if you do that, you're introuble.
Uh.
You're in for a very stressfulexistence in the meantime.
Yeah.
So 10 minutes, you're looking atthe current performance, not the
performer.
Yeah.
To, to your point man, the, thebrokers are really good at
really pushing the performer,which, um, could catch a lot of
(12:04):
newbies, off guard.
Right.
I remember when I was down inPensacola, Florida and, uh, I
was flipping properties and thenI saw some multifamily
properties that I wanted totransition from, and I was
transition to, and I waslearning about underwriting.
That's one of the things that I,that I quickly understood, that
these beautiful numbers that thebroker placed on the offer
offering documents.
(12:26):
on their performer.
They were not actual.
Right.
So yeah, you have to evaluatebased on the property's current,
um, performance becausemulti-family properties are
based on the value is based onthe, the current net operating
income.
Right.
Um, instead of project.
That's right.
Yes.
Yeah.
So that is also main.
After 30 years, um, you know.
(12:48):
What's one underwriting shift ortool that completely changed the
way you look at deals?
What's one of one or two shifts,or tools?
Do, do you use a tool tounderwrite?
yeah.
We use the tools and.
Again, the math is always, it's,it's the same now as it ever
(13:10):
was.
Right.
You know, you, you income andexpenses, and then you subtract
some things out and there yougo.
Uh, one thing that I'm enjoyingnow is, uh, you know, there's
some, there's some AI assistedtools that help with the
calculation.
You know, like you can drag theoperating memorandum into the
(13:32):
thing and it will, it will pullout.
The pertinent information foryou, right.
And populate the fields.
That's been pretty cool.
But what I've noticed is itstill requires us to understand
the process.
Yes.
And go in and verify each lineitem and make sure that it's
correct and it makes sense andthat we didn't miss anything.
(13:52):
Um, so it's a time saver, butyou still have to use your brain
and your experience to analyze.
100%.
I call it inspect what youexpect.
There you go.
So whether it's peopleperformance or AI's performance,
right.
So, you know.
Yeah.
Um, a lot of folks, you know,dump a lot of things in the
chat, GPT, and then you hearsomebody give a speech that
(14:13):
says, insert people name here.
And they actually actually readthat out.
Like, come on man.
Right.
Can you proofread that thing?
You know?
So yeah, it's really important.
So you have to have, um, basicor advanced knowledge of the
expectation of what you want themodel to produce, um, to you.
And then a lot of times itrequires a lot of training of
the model to really understandwhat is the outcome, um, you
(14:35):
want to, you want to achieve.
That's exactly right.
Yeah.
So actually a lot of ourlisteners are, are trying to
scale their portfolio.
A lot of our listeners for, forthis podcast, trying to scale
their portfolio, you know.
Um, what were your biggestmindset and operational shift
that allows you to, to go from,four doors to managing hundreds?
(14:56):
Well, uh, it was the ability to,uh.
Identify the correct teammembers and delegate the
responsibility to them.
Okay.
Um, one of the, one of thethings for me, and I, I still
constantly learn this, is that Ihave to stay in my lane.
I have to manage and I'mresponsible for everything.
(15:19):
But when I find myself gettinginto the weeds of the job, of
the onsite property manager, oryou know, the accountant or
whatever it is, yeah, then Irealize I'm in there kind of
messing things up.
And so I have to design thesystem and trust the people that
I have in place to do, do it theright way.
And of course.
That's where my job is, is tomanage all of each piece, right,
(15:43):
to make sure it's donecorrectly, uh, not to get in
there and do the job for them.
Yeah.
And so that, that start withhaving good, solid people in
your team, right?
One of the things they talkabout in, in the book, good To
Great, right?
The number one thing to do is toensure you have the right people
in the right seat, and then yougo from the who not how concept,
(16:03):
right.
To your point, you stay in thelane.
Fortunately for, for us in theMarine Corps, um, every single
one of us, we have what's calledmilitary occupational skills.
Right?
Okay.
And to your point about stayingin your lane.
We have one aircraft and then wehave a plethora of different
military occupational skills.
You know, the avionics, theordinances, the airframes or the
power plant, you know, andmaintenance control, quality
(16:26):
assurance, everyone stays intheir lane to ensure that this
one thing can go out and, and dosome, do some good work in some
far off land, right?
So, yeah, no, that's somethingthat we do in the Marine Corps
and understand that very well,man.
But it's a great most important.
Yeah.
The most important things thatwe can do is to ensure that we
have the right people in theright seats, and then of course,
trust the process, the the who,not how you know.
(16:47):
Process.
Now.
For a lot of us, right?
In the analysis phase, one ofthe things that we are looking
for is to figure out how do wecreate value in an asset that we
are purchasing, whether it's asingle family property or it's a
multi-family property, right?
So we, we, a lot of us, we focuson the value add, concept of
(17:09):
property, but, but you know,that can spiral.
The, the cost for value add canbe, can spiral out of control.
You know, if we are not mindful,you know, what are the hidden
renovation expenses that, youknow, that most rookie
syndicator might miss?
Oh boy.
There's tons of'em.
(17:29):
a reminder for me, like I'm acashflow guy and, and I, maybe
I, I may get into a differentphase.
You know, as I go through theprocess of maturing as an
investor, but right point being,if it doesn't add cashflow and
subsequently net operatingincome, then I don't want to do
(17:50):
it.
Um, right.
Unless, unless you know, youhave to do it for the protection
of the asset.
You know, you have to maintainthese buildings so that they
will keep paying you.
Yeah.
But for instance, Anybody couldgo in and say, I'm gonna put in
granite countertops and vinylfloors and make this thing nice.
But if you spend the money andit doesn't result in an increase
(18:12):
in rent or whatever, then ithasn't necessarily affected or
increase the value of the assetbecause.
In this commercial real estateworld.
The value is based on theincome.
So everything ha for me has tobe on the cash flow focus and on
what does this do to the bottomline, the net operating income,
because that's how we can getthe value to go up.
(18:35):
Um, that being said, of courseyou have to, to maintain it,
like I said.
But say if you, if you spend amillion bucks on something, but
you don't change your netoperating income at all, then
you haven't increased the valuebased on the income, so,
correct.
That's a, that's a pitfall thatyou would want to avoid because
now you're not making any returnon that million dollars that you
(18:56):
invested on top to do theimprovements.
Yeah, it's really important, uh,as, as for new syndicated, that
they go into an environment toreally understand what value
they're creating based on thedemographic.
Um, that will be.
Occupying, um, those unitsbecause, you know, I've seen
some properties in some reallycrappy areas with some really
crappy renovation and, you know,walking this property, doing
(19:20):
analysis of a potentialacquisition and, you know,
talking to a property manager orthe onsite team and they're
telling me, they're telling usthat this unit is rent ready.
I'm like, for who?
or for what?
Right.
You know what I mean?
And it, it's real disappointing,you know, the way people give
some people property to live.
So, however.
I agree.
Um, seeing the, the variationof, um, of what rent ready looks
(19:44):
like for different, um, areas.
Um, sometime it's sadden andsometime like, okay, good, good,
good.
Downside team, this might besome team that we want to keep
on, however, you know, as you goin definitely to your points is
to ensure that The level ofwhich we are improving this
asset is consistent with therented base.
Right?
And also actually had value in,in this case, force appreciation
(20:06):
of that property by ensuringthat we are impacting in a
positive, Nets operating income,which potentially increase the
value, um, for the sale price ofthe not.
So, yeah, and you, you know, Ihear stories.
Uh, a lot right now.
Really, like, not a lot, butthere, these things are
happening right now wherepeople, maybe they purchased a
property at the peak of themarket at a low interest rate,
(20:29):
and they say, okay, we're gonnago in and value add and we're
gonna, we're gonna renovate,we're gonna upgrade all these
units into platinum status orwhatever.
Yeah.
Yeah.
So they spend a whole bunch ofmoney on top of what they
already spent.
And then the unfortunate part isthat they can't get any increase
in the rent.
Right.
And now they're in troublebecause they, they don't have
(20:52):
the cash flow to support thedebt and pay the investors, uh,
on, on everything that theyspent to get to this point.
And they were banking on this,this rent increase that they
thought they could get.
And it turns out they can't.
And that's a bad situation to bein.
Um.
For me, it's, it's such acomfort to know that our break
(21:16):
even, or our worst case is whatit's doing right now.
Yeah.
And then if we do add value,then we can see the benefit of
it, uh, by way of some increasedincome.
Yeah, I totally understand that.
Man.
We bought a property back in,2019.
Yeah.
2019.
And we look at his property, hadsome shotgun, you know, two
(21:36):
bedrooms or could potentiallyturn into a two bedroom Right.
Property at two bedroom units.
And we try a lot of things, um,however, didn't quite work out,
you know?
We, we end up selling theproperty before we.
Before we realized the entirebusiness plan, And we, we made
some money that coupled thedifferent things.
Right?
COVID kicked in.
Yeah.
Yeah.
Re renovation, delayed, youknow, um, deliverables and new
(21:59):
properties in the area that,that increased the competition,
you know what I mean?
So our shotgun two bedrooms unitwas not really competitive in,
in that market.
So we sold it for profit.
I think our investors madetheir, made their preferred
return, um, over the time thatwe held up.
Held the property, you know, butto your point, it's really
important that, um, the, thelead sponsors really understand
(22:21):
when that property of reachesfull potential and be able to,
you know, exit, um, with aprofit.
You know?
So.
Yeah.
Yeah.
To your point, a lot of time wego into man and things gonna
change, interest rates gonnaincrease, um.
And we might not be able torealize this big rosy, um,
mm-hmm.
Business plan that we had andjust gotta know it's time to
exit to ensure that we canprotect and preserve or invest
(22:44):
this capital, right?
Yes sir.
Yep.
That's right.
Okay.
Alright.
So, um, final question before wego into the focus round, Ashley.
Okay.
Let's discover something on, ona passive investor side, right?
Okay.
For, for passive investor.
Right.
Um, as someone, as you, someonewho have over led, you know, the
(23:05):
end to end, right.
Acquisition, all the way toexit, you know, what are two to
three things that every passivereal estate investor should
inquire before they actuallywire 50,000, a 100,000,$200,000
to a sponsor?
Yeah.
Well, on, on this one, you know,to me, this business.
(23:26):
I'm, I'm a big relationship guy,you know?
Right.
Every, everything I do, youknow, I, I want to be, uh, I'm
sincere about what I'm trying todo and Right.
And, and I want people to knowthat, and I want them to trust
me.
And so if it's people that Ialready know, then you know, I,
(23:50):
I need to.
Share all the details so thatthey trust me and trust my
knowledge of this business.
And, uh, and they invest withme.
But if it's people that I don'tknow yet, I'm just now meeting,
you know, I've gotta get to knowthem and, you know, there's
various ways to do that throughtechnology or like we're doing
right here.
Right.
You know, I'm in, I'm in NorthCarolina, you're in Hawaii and
we're getting to know eachother.
(24:11):
So it doesn't always have to belike sitting down for coffee.
Um, but it's a relationshipthing and it's a trust thing.
Um, you know, I, I've hadinvestors that will tear apart a
spreadsheet and analyze every,you know, question my formula
and my math on everything.
And then I've had more commonlythough, I have people say, Hey
(24:33):
Ash, that's great.
It looks good.
I'm only doing this because ofyou.
If it wasn't for you, I wouldn'tbe doing this.
And so you.
That's great, but it's also alot of responsibility on me
because they're saying, man,this guy trusts me like with all
his money, and so I don't wantto, I don't wanna screw it up.
(24:54):
So I think it's that.
I think it's like know that thesponsor, you know, know their
track record, know that theyhave experience doing something.
Know that they know what they'retalking about and that you trust
their ability To ride this thingout through ups and downs.
'cause there's always gonna beups and downs and you know,
we're not gonna quit till we getit done.
(25:14):
Yeah, it's the fact is somepeople do quit.
Yeah.
Yeah.
We're, we're not quitting here.
Yeah.
Absolutely not.
Absolutely not.
Don't quit, don't die.
That's right.
That's right.
Yeah.
So, um, so quick last questionbefore we get into the focus
round, Ashley.
Okay.
How are you adjusting youracquisition, um, and investor
expectation?
Right.
So we've seen a lot of thingsthat transpired over the past
(25:35):
couple years, right?
Um, and you, your business isfocused around, focused around
invest the first, um, buildingthose relations, um.
How are you adjusting youracquisition to curve investor
expectation in today's, um,markets, we're keeping our eye
(25:55):
on so, so right now and, andlately, you know, past few years
and still currently, you know,like raising money is difficult.
It is.
And uh, borrowing money isdifficult and expensive.
And everything takes long time.
So we're trying to make surethat we set the expectations
(26:18):
that, you know, this is not a,this is not a fast thing.
This is gonna take us, you know,six to eight months to do this.
Like, for example, right nowwe're refinancing a property
into a HUD 2 23 F.
Loan.
Right.
And it's a fabulous loanproduct.
And when we get it, it's gonnabe like the Cadillac of all
multifamily loans.
(26:39):
Yeah.
But it takes like eight monthsto get, and, and it's all, it's
a tremendous amount of work.
Uh, once we get to the end,it'll all be worth it.
But you know, you have to bepatient and you have to trust us
to know that.
We know what we're doing to getthrough.
Um, also the returns maybe, youknow, they fluctuate like what,
what investors expect of whetherit's a cash on cash or an
(27:02):
internal rate of return.
Each investor has their numberthat they is their favorite.
Um, and so those kind offluctuate, you know, to some.
Cash on cash is most important,and to others, the internal rate
of return is most important.
Uh, so we see those kind offluctuate and they go with the
market as, as other alternativeinvestments go up and down and
(27:25):
so do our returns.
They go up and down a littlebit.
Yeah.
And now we throw in 100% bonusdepreciation.
That is back, you know, so forthose people or who are in this
business to preserve capitalthrough the different tax
strategies, then the bonusdepreciation is definitely a, a
good catalyst for it's hugefolks capital.
Yeah, it definitely.
We're gonna be sending out Kones with some very large
(27:48):
negative numbers on it this yearbecause of the bonus
depreciation.
Uh, and that's a good thing.
That's, that's the place whereyou like to have your negative
number on your K one.
Oh, yeah.
Oh yeah.
Passive loss is always good.
Yeah.
Yes, sir.
All right.
Um, so.
We'll dive into the focus round,Ashley.
Um, okay.
It's just, just an acronymfocus, right?
(28:09):
Um, what is something fun you dooutside of real estate?
Oh, boy.
Um, man, I love to do stuff withmy family and I love to do stuff
active and outdoors.
So it's, you know, golf, tennis,fishing, skiing, rafting,
anything like that.
(28:30):
I'm game to do, uh, an outdooractive type thing anytime,
anywhere.
That's awesome.
So what, what is one opportunitythat was a game changer for you?
Oh wow.
Okay.
I think as, I think in bigpicture for me, you know,
growing up around you, you know,people who had the
(28:52):
entrepreneurial spirit.
And, and, and the, and I wasaround some people that
instilled in me that, Hey, you,you know, you can't do things by
yourself, but you can controlyour, your situation.
Like, if you don't, if you don'tlike the way it is right now,
(29:13):
then let's do somethingdifferently to try to change it.
It, it doesn't mean that you,you can do it by yourself and
you, you know, you need luck.
You need the grace of God.
You need all these things thatgo with it.
But point being, if you don't doanything differently, nothing
different is gonna happen.
Facts.
And, and so for me to learnthat.
As a growing up person, and thento continue to learn it as an
(29:34):
adult, that, that's a hugeopportunity that has made a
great difference in my life.
That's awesome, man.
Um, what would you say is yournumber one communication tip to
keep investors calm andinformed, especially during, you
know, maybe a rough quarter.
I think that the consistency andthe frequency of communication
is the key.
(29:54):
Communication is the key to anyrelationship.
Uh, the worst thing that you cando is go radio silent because
then people start to get scared.
And once they get scared, we gotproblems.
Um, so you, you just, you theyneed to hear your voice or see
your face, and they need to seeit frequently enough that it
keeps everybody comfortable.
(30:15):
Got you.
What, what would you say is, um.
Something that you wish youunderstood earlier?
I, I wish I understood that, um,that I already knew enough to
take the step.
Uh, you know, sometimes, andright now, you know, I'm, I'm 54
(30:35):
and sometimes I still thinkabout like.
Hey, I'll do this when I growup.
You know?
Well, man, you're already likean old man, right?
So you need to, but I wish, likeif I look back in my life, I
knew things then I was qualifiedto do things faster than I
really gave myself credit for.
So I guess the, the tip there islike.
(30:57):
Just you, you have to take thestep and, and take action.
Yeah.
100%.
Man, I, um, this, these arethings I tell my marines all the
time.
Things I tell my children allthe time, you are enough, right?
Yeah.
You are enough right now to takethe action.
Like, especially if you arethinking about it, right?
Um, there's, I think it was hisname, Steve Harvey, that said,
(31:18):
we are not smart enough to havean impossible thought.
Yeah.
So if you can think it, you canactually do the thing, right?
Maybe it's not you doing thething, but then you find a who
that knows the how right.
You make it happen, right.
That you lead the team to theplace, you know?
So, um, yeah.
That's awesome, man.
That, um, last question,brother, that's, um, to, to what
do you attribute your success?
(31:40):
oh boy, uh, probably my personalquality is, is my persistence.
Right?
And I, I just.
You know, I don't, uh, I justrefuse to give up.
You know, I've learned to somethings that aren't, some things
you need to end and get out ofyour life, and that's okay, but
(32:00):
Right.
You know, things are gonna getdifficult and you have to keep
grinding.
One foot in front of the otherand just keep going and don't
give up, and you usually willget to the other side.
Um, that's about me.
But really the success, Iwouldn't have anything if I
didn't have the people around meright, that support me, you
(32:20):
know, whether it's my work teamor it's my family or loved ones
and things like that.
So, being surrounded by goodpeople is, is probably the most
important.
That is awesome man.
Man, thank you so much, man.
So Ashley, if our listeners wantto get in, get connected with
you, um, especially for thosewho are passive in investors
looking for, you know, lookingto play some capital or even
(32:42):
core GPs that want to work withyou.
Yeah.
What is the best ways, um, forthem to get in touch with you?
I think the easiest way is justto jump over to our website at
abgmultifamily.com, and fromthere you can either, uh, you
know, sign up for the newsletteror you can, uh, see our emails
and reach out that way.
(33:02):
Whatever you like.
Outstanding, man.
So brother, I want to thank youso much for giving us, your time
and also some wisdom on thisepisode of the podcast.
And listeners, if you find thisinformation valuable, um, I
trust that you hop over toiTunes and give us a, you know.
Five star ratings and a fairreview.
Uh, so we can keep this, getthis information out to more
(33:24):
people, you know.
So, and also listeners, if youlisten to this podcast all the
way through, I want to thank youfor spending some time with us.
Ashley, any pardoning words,man, just, uh, wanted to thank
you, Hutch, for the opportunity.
I appreciate being here and Ilove what you do.
Absolutely.
And listeners, keepexperimenting on your way to
owning more of America.
(33:45):
Until next time, I'm HutchMarine Investor out..
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