Maximizing Your Multifamily Real Estate Success with Axel Ragnarsson
In this episode of the Multifamily Real Estate Experiment podcast, host Hutch the Marine Investor is joined by Axel Ragnarsson, founder of Aligned Real Estate Partners. Axel shares his journey from flipping cars in college to managing over 550 multifamily units worth $90 million. They discuss Axel's approach to acquiring properties directly from sellers in a competitive market, emphasizing the importance of buying right to de-risk the investment process. Axel breaks down his direct-to-seller system, from initial contact to closing deals, and offers insights into why sellers decide to sell and how to maintain relationships for future opportunities. The episode also highlights the benefits of off-market deals for passive investors and Axel's experiences and strategies for scaling his business. Tune in for a tactical and insightful session on multifamily real estate investing.
00:00 Introduction and Guest Overview
02:03 Axel's Real Estate Journey
04:51 Finding and Securing Deals
08:50 Direct to Seller System
12:42 Qualifying and Underwriting Deals
18:01 Importance of Off-Market Deals for Investors
21:44 Focus Round and Closing Thoughts
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hutch@hsquaredcapital.com
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
xel Ragnarsson1 (00:00):
Wah Gwan all you multifamily enthusiast.
Welcome to another episode ofthe Multifamily Real Estate
Experiment podcast.
Look, today we got an amazingguest with you.
We're, can be talking about somethings that is not widely
discussed because, you know,these are topics that I think a
lot of it might scare a lot ofpeople because they don't
understand some of theirfundamental.
(00:21):
Look, our guest today, AxelRagnarsson.
Has secured over 300 units,direct to seller, it's in a
market where most people saythat, you know, it's too tight
to make the numbers work.
And he's also the founder ofaligned Real Estate Partners,
managing over 550 plus units.
(00:41):
Which totaling over$90 millionin transaction.
If you're passive investorswondering how sponsors still
find deals in these kind ofmarkets, also, if you're small
business owners and you areinterested in building ownership
through, boutique, multi-familyproperties, this one is directly
for you because we we're gonnabe touching about, some of those
topic as well.
(01:02):
So, welcome Axel.
Yeah.
Thanks for having me.
Looking forward to it.
Yes, sir.
I like to ask my guest, brother,do you have a favorite real
estate quote mantra that drivesyou?
Oh man, that's a good one.
I don't necessarily there, Idon't know if I have a quote
that comes to mind.
Um, I mean, it's really simpleand it's probably just something
that's been discussed plenty oftimes on podcasts or online or
(01:23):
what have you.
But, you know, making your moneyon the buy is something that's I
very strongly believe in.
And if I were to summarize it alittle bit differently, it's,
buying right de-risks the wholerest of the investing process.
And in our business that's whatwe probably place the most
emphasis on, is being able to,you know, find those great
(01:43):
deals.
But we do make our money on thebuy.
That is awesome, man.
One of my, preferred sponsorsthat is mantra as well, is you
make the money on the buy.
You know, so that's a good one.
All right.
Yeah, it's hard to find thosedeals, but, it's the worthwhile
time investment in the business,I think above all else is, you
know, being able to find thosegreat ones.
Gotcha.
Yeah, man.
So, you know, for our listenersthat who may not know your full
(02:06):
story, can give us a 60 secondrundown, you know, how you went
from your first multifamily dealto becoming one of the most
consistent direct to selleroperators in the game.
Yeah, absolutely.
So, just geographicallyspeaking, I live in Boston,
Massachusetts.
Originally from New Hampshire.
So I grew up about an hour northof Boston, right over the
border.
and just started buyingmultifamily way back in, in
(02:28):
college.
and, the way into the businesswas, I used to flip cars in
college, like that was a littleside business.
I ran buying and selling cars onCraigslist and you know, I was
getting towards the end of mytime in college and was trying
to figure out.
What comes after that?
I liked the idea of working formyself.
always had a hard time kind ofkeeping a job down'cause I would
always get distracted with otherstuff I was doing.
(02:49):
Yeah.
And, basically learned aboutflipping houses and I forget
how, maybe it was HGTV or anInstagram ad or something like
that.
Uh, and this is back in, youknow, 2016, 2015 kind of before
real estate got.
A little bit more competitive inthat 2018, 2019 through mid
COVID timeframe.
Yeah.
Um, and that was how I got intothe business, was trying to
figure out how to flip houses.
(03:10):
As I was learning about that andlearning all about how to find
good deals, started learningabout rental property and buy
and hold real estate, investing,cash flow, all that.
And, ended up becoming where Istarted to focus my time.
You know, the idea of.
Doing the work once and youknow, you find a good deal, you
fix it up and you pull yourmoney out and page in perpetuity
was really compelling for me.
Went all in on trying to figureout how to buy deals without a
(03:31):
lot of cash, with no experienceand all that.
And the ticket to doing so wasfinding great deals and
borrowing a lot of money fromhard money lenders.
and that's how I did my firstdeal, which is a small three
unit property that I bought backin 2016 and, uh, and just
started organically growing aportfolio.
Finding really, really gooddeals direct to seller,
financing them with high LTVdebt, pulling my money out when
(03:52):
I refinanced and selling somehere and there.
And just built a portfolio that,that I owned myself.
I got to about 70, 80 units,back around 2020.
And then, wanted to scale thebusiness, make it a little bit
more of a real thing where webring in investor capital and
where we could start doingbigger deals.
Starting to feel a little bitstressed out with how many deals
I was spreading my own resourcesand dollars across.
(04:13):
So 2020, 2021 started raisinginvestor capital.
And, really over the last two,three years, we've built out
the, you know, call it thesyndication side of the business
where we go out, we find smallto mid-size multi-family deals.
We raise LP capital.
This is all primarily throughoutthe market of New Hampshire,
within an hour of Boston.
(04:34):
And that's what the business hasbecome now, and we'll do
anywhere from 150 to a fewhundred units a year.
mainly buying 10 to 50 unitbuildings or portfolios.
and then we manage'em in-housewith our property management
company.
And, and that's what we're up totoday.
Man sounds very simpler.
Yeah.
Yeah it does, right?
Yeah, man.
So look man, you are not justtargeting distressed assets,
(04:54):
right?
So you're actually finding,disengaged, owners, what do you
identify as the, psychology orthe life triggers that makes
some of these small to mediummulti-family owners want to sell
off market?
It's a great question.
'cause I think it's oftentimes,a misconception with even folks
who are in real estate that aremaybe used to buying deals with
brokers attached.
(05:15):
You know, they think that thedirect to seller deal is
somebody who's highlydistressed, whether it's,
they're underwater on the deal,or they're, there's no cash flow
or they're coming up in the endof their loan or it's, you know,
some type of financial distress.
Yeah.
What we oftentimes find is it'sjust lifestyle change.
We do a lot of.
Cold calling, cold texting,direct mail.
Those are, you know, and coldemailing.
(05:35):
Those are kind of our big four.
And oftentimes the profile ofthe seller that we buy from is
the owner who's owned for 10, 15years, who is actually
financially in a good position.
Like they have a lot of equityin the property.
There's plenty of cash flow.
'cause their loan balance isreally low and they've owned it
for a long time and they're justin their mid sixties, late
(05:56):
sixties, whatever.
They wanna retire, they wannamove down to Florida.
And they actually like the ideaof just an easy transaction.
it's kind of funny, like, youknow, the, it is a lot of work
to sell your property with abroker and I think it's easy to
forget that, you know, the realestate professionals who do this
for a living, you myself, peoplethat listen to this podcast are
like.
(06:17):
Well, I know that I'm gonna getthe highest and best price if I
go and hire the broker, and hesends it out to every single
buyer in his network and they gothrough the whole process.
But there's a lot of owners whohave owned the building for 20
years who, you know, maybe ownit free and clear.
And whether they sell it at justto make up numbers 2 million or
you know, 19, 195, 1875.
They have this person who'sgonna give'em an easy deal,
short due diligence periods.
(06:38):
And they're not gonna have tobring in the broker and walk 20
buyers through the property overthe course of two weeks and piss
off every single resident who'sliving there.
You know, risk it going on acontract with somebody who's not
qualified and a falling out.
Takes a lot longer to go throughthat process.
And it's just a lot of work.
And oftentimes people who have alot of money, they just don't
wanna do all the work, right?
It's why you buy a bottle ofwater at 7/11 instead of going
(07:01):
and getting a 24 pack of Costco.
So oftentimes the sellers of ourbuildings, that we buy are just
like, they like the idea thatit's easy, you know, it's a
clean contract.
We tell'em we're just gonna getin there once for an inspection.
You know, maybe we, a coupleunits in the basement for the
appraisal that the bank wants todo.
We'll tell the tenants where weare, whoever you want us to be,
we can be the insurance companygoing through.
So nobody gets spooked and yourconversations are easy and it's
(07:23):
just a really easy process.
Right.
And, and I think that'softentimes who we buy from.
You know, the other prototype,or profile is management related
distress.
Okay.
So again, probably notfinancially or financial
distress in the sense that.
They have a lot of equity.
They're not gonna need to bringmoney to sell the property,
right?
It's not like the situation thatmany.
Texas southeast owners are inright now where they maybe
(07:46):
bought when rates were low withlow cap rates.
And cap rates have expandedtheir underwater, the northeast,
extremely resilient market.
There's no real financialdistress, but you get the guy
who's got his 20 unit building,who's self-managing and he's
just burnt out completely.
He just doesn't wanna do realestate anymore.
You know, maybe he's not lookingto retire.
He is forties, fifties,something like that.
But he's owned it for a while.
He's working through an evictionon three tenants.
(08:07):
'cause he did a terrible jobscreening him and was lazy on
the screening.
And he's like.
Someone else just do this.
I just want it off my hands.
I just, you know, again, clean,easy deal would rather just get,
get it done and the broker'sgoing to bug'em and have'em try
to send me all your financials.
Oh, I can't show these threeunits.
They're gonna get really upset'cause I can't see these units.
You know, because they're undereviction and we're like, it
doesn't matter.
(08:27):
We didn't need to walk'em.
We know what we're getting into.
Yeah.
So the two big ones are justpeople looking to get out of the
game and retire lifestyle andthen it's management distress.
And then the distant, distantthird is that financial
distress.
You say distant third.
Distant third is that financialdistress.
Okay.
Terms of like, the typical Yeah.
Triggers that cause people towanna sell.
(08:47):
No, I got you man.
So let's get a little bit more,tactical man.
Can you describe, your currentseller to seller system?
Like, how does that work?
What tech are you using?
What does the team look like?
how do you track the KPI on aweekly basis?
What does that look like?
Yep.
Yeah.
So in terms of like high level,beginning with the end in mind,
like what's our goal, right?
Our goal is to just be top ofmind with all the people who own
(09:07):
real estate in our market,right?
The other big kind of mindsetshift, we aren't doing all of
this marketing and prospectingand all that to find a deal.
We're doing it to just buildrelationships with all the
people that own the real estate,makes sense in our market.
Makes sense, right?
Makes sense.
So I think it's a key shift,right?
It's not like we're sending mailto get a deal from Joe who owns
123 Main Street.
We're sending direct mail to getto know Joe, to introduce
(09:28):
ourselves, to just be somebodythat he's aware of.
And yeah, we'll mention thatwe're interested in making him
an offer and all that, but like,that's not the only objective of
getting to know him and having aconversation with him, et
cetera.
Makes sense.
So with that being the end game,then we back into how we do
that.
For me, it kind of evolved overthe years, but early it was.
I have an abundance of time anda constraint of dollars.
(09:52):
I don't have a lot of money tospend on a lot of direct mail.
So it was go buy a list fromlist source, filter it based on
the geography of where I wannabuy the cities in New Hampshire.
You know, at the time, orwhatever your list size is now,
it's wider for us, but at thetime it was, you know, 3 to 20
units in size.
And with people that have ownedit for more than five years.
Right?
So we want to assume that theygot a little bit of equity
(10:12):
there, at least more so than theguy who bought it last year, for
example.
And I just started reaching outto'em.
Skip Trace the list.
There's all kinds of servicesthat do that.
You know, lead Sherp is one, ifI'm just gonna plug one, that's
what we use.
And I just would send the ownersan email.
Hey, my name is Axel.
I'm a real estate investor in,you know, this area.
saw you on the property at at123 Main Street.
Would love to.
Introduce ourselves andpotentially make an offer on it.
(10:34):
And if not, we'd just love toget a, get to know another
investor in the marketplace and,you know, maybe there's some way
in which we could, you know,work together, help you out, or
share resources, et cetera.
And then we just start havingconversations with folks.
And the real big thing is thesales cycle is extremely long,
right?
It's, yeah.
You have a conversation withsomebody on July 1st.
They may not be interested inselling for another year or two
(10:55):
years, et cetera.
So the whole game is in justhaving patience and the follow
up.
you know, I started using a freeCRM early, like, I think I used
HubSpot to start.
Then we moved to Zoho, anotherfree one.
Now we run everything throughResimpli, which is the CRM
platform that we use, which is areally, you know, robust tool
that does everything for us.
CRM we can send mail through, wecan call through it all that.
(11:17):
And over time as we startedgetting good at each channel, as
I like to call it, cold emailingwas the first channel.
Okay, now I got some money andwe've done some deals.
Now I'm gonna start reinvestingin the business.
I'll spend some money on mail.
We send mail each quarter, fourtimes a year to the same list.
Basically a very similar messageas to what we include on.
Or in a cold email, right?
(11:37):
But we have a little bit morespace, so we're including like,
eh, this is what we own.
So we show that we're credibleand we're worth talking to.
Here's why we're good to workwith minimal contingencies.
We won't bug your residents, youknow, no broker commissions, et
cetera.
Talk about how we want to, youknow, build a relationship with
them.
And then very recently, Ishouldn't say very recently,
last 18 months, I brought on a,you know, an acquisitions
(11:59):
manager to the business who'sfull-time Okay.
Who's doing some calling aswell, you know, amongst
answering our inbound phonecalls when we send direct mail.
So, very slowly grew over time.
But I think the big thing interms of like what's an
actionable next step is it'sreally just three steps.
You define your acquisitioncriteria and you buy your data
list.
You pick one particular channelof how you'd like to reach out
(12:21):
to everybody on that list, andthen you just do it for a
consistent period of time anduse a CRM to track your follow
up.
'cause the follow up is reallythe biggest thing.
Gotcha.
And just align your expectationswith, you know, your list size
and how much time or moneyyou're willing to spend and
eventually.
You'll see some results, man.
That's an amazing growth story,man.
All the way from college tofiguring out this system that is
actually working for you, man.
(12:41):
All right, got you.
You send out cold email or yousend out a snail mail, you know,
you get a response, can you walkus through, how your team
qualified a seller, underwritesthe deal, you know, move to LOI
all without having a brokerinvolved.
Yes.
Yeah.
This is tricky because it'sdifferent.
I think it's, I think it's aslightly different process if
you live near where you'reinvesting or if you're remote.
(13:03):
Right?
Correct.
If you're in Boston and you'rebuying down in Florida, well,
you can't really go meet theseller.
Right.
Or else your life would beturned upside down if you did
that every time.
For us, we're within drivingdistance reasonably of the
markets that we buy, rightbetween 45 minutes to an hour
and a half.
So what we typically like to dois, you know, we send a piece of
direct mail, sell it calls, Hey,I got your letter.
What do you give me for, right?
That's always how it starts.
(13:24):
There's just cut to the chase,what are you gonna offer me for
it?
And it's like, listen, we gottaask you a couple questions, as
would you most likely if youwanted to buy the property.
I'm sure you'd like to knowabout, you know, what the rents
are and all that.
And we just, you know, fiveminutes we get some information
for you, we can start to puttogether an offer.
If you're open to it, we'd loveto meet you at the property and
walk it.
If you aren't, you know, if youdon't have the time for that's
(13:44):
understood.
You know, we can still puttogether a number based on what
we can find through publicrecord and then some questions
we have for you.
Yeah.
The, the big questions like rentroll with unit mix is like we
just table stakes.
We absolutely need that.
Um, how many bedrooms, bathroomsare in each unit?
What are the rents?
Who pays which utilities?
'Cause that's gonna be the vastmajority of what we'll need, to
(14:05):
really get to a price.
The rest of it we can basicallyfigure out.
Through Google Street view, adrive by or public record.
The other thing that we like toask and we try to ask in an
open-ended capacity is talkabout some of the work that
you've done over the last threeto five years at the property.
Right?
Have you spent any money on somebig stuff like the roof, the
siding, you know, have youturned over any of the units?
And usually through thatconversation you start to get a
(14:27):
sense of like, all right, mostof the stuff's pretty old.
We might have to budget for thisor that, or at least put some
money aside in the underwriting.
And then the last thing is.
You know, timeframe and thatstarts to try to open up the
motivation conversation.
You know, why are you callingme?
What's, you know, what's thetimeframe?
And just trying to get themtalking around.
Oh, well, you know, I, me and apartner own it.
We've owned it for a while.
(14:47):
He kind of wants to sell, and,you know, I kind of wanna hold,
but, eh, we're just starting toevaluate the options and make
note of that.
Or, I'm getting old.
I, you know, my kids don't wantit.
I kind of want to just get ridof it and, all right, take note
of that.
And that starts to tell you alittle bit more about what terms
in your offer are gonna speak totheir situation, which is
obviously something that we wantto address when we make an
offer.
With the rent roll, we get inthere, we know the expenses in
(15:08):
our market, right?
We look up the taxes.
We know what the insurance isgonna be.
That leaves repairs andmaintenance utilities, contract
services, right?
And we know what that is for allthe buildings in our market
'cause we already own in ourmarket.
So it's really easy and managed.
And manage.
Yeah.
Yeah.
so it's a situation in whichit's like we don't need to ask
him for a T 12 or for his taxreturns or anything like that.
We can include that in the offerif we really want it and make
(15:29):
that a deliverable.
But we're never gonna do thatreally upfront.
Now, if he wants to meet usthere, great.
We always want to get in personas much as we can.
We think that's a really gooduse of our time, is to spend.
You know, even though it's acouple of hours total or round
trip drive time to just get infront of a seller and get face
to face right, puts you so farahead of everybody else who's
not doing that.
So we always wanna try to dothat, even if we think his
(15:50):
number is gonna be too high interms of what we're willing to
pay.
But long and short to kind ofround out the process, we take
all of this, throw it in, youknow, here's where we can get
the rents to.
This is what our projected CapExbudget's gonna be.
Put together an offer with termsthat we think are gonna address.
Their situation, you know, likea big one is, yeah, I had a
buyer who wanted under contracton it, but it fell through.
(16:11):
It's like, okay, well now we'regonna do no financing
contingency and we'll do ameaningful deposit.
Right.
And we'll still have our DDcontingency to, to do it, but
like, we want to try toalleviate that concern.
Yeah.
I just don't want my tenantsfinding out.
All right.
So we write in the contractwe'll only access twice and you
know, only access the units ofyour choice.
So we try to solve as many ofthose problems as we possibly
can in the offer.
(16:31):
So we shoot it over with asummary over email.
We always want to present itover email if we can, if it's a,
you know, an older gentleman ora seller who doesn't have email.
All right, we'll call'em.
But we like to recap it in anemail so that we can like, sell
it, verbal or, in written word.
And then we put'em on afollow-up cadence.
Right.
The big thing is we always tryto push urgency around the offer
we're making.
Um, you know, hey, you can say,Hey, it's only good for 48
(16:54):
hours.
That doesn't really mean a lotto a seller.
They're like, okay, sure.
I'll, I'm sure on day threeyou'll still probably buy it if
I accept it.
But we say, Hey, we're offeringon a handful of properties.
We have a.
You know, we're, we have a 1031clock that's ticking and we try
to create some level of urgencyaround him getting us or her
getting us a reply.
And from there, 90% of the time,95% of the time, it's, yeah,
(17:15):
price is a little too low, or Iwanna be high, or, ah, timing's
not right.
And then we just put'em onfollow up every 30 days, every,
60 days, whatever we feel likeis the appropriate cadence, you
know, touch base.
How's it going?
Doesn't make sense to furtherchat.
And at some point down the line,we have some real productive
conversation around it.
And that may not result in adeal, but that seller becomes a
true seller at some point wherethey are 100% gonna sell the
(17:37):
property.
And our job is to have beenthere along the way, staying top
of mind.
that is awesome.
So we're the first one he calls.
Yeah.
Yeah.
And a pretty, pretty simple,straightforward process, man.
But, however, you guys beingmanagers in the area definitely
give you some keen insights of,what the highest and best use of
a property can be, right.
managing so many properties inthe local area, man.
(17:57):
So that, that's dope.
You know, so for, for passiveinvestor, Axel.
who's listened to this podcast,you know, why should they care
about, you know, deals that areoff markets, how does it impact
their returns risk, profile, andcontrol?
Yeah, it's such a good question.
I think, first of all, the termoff market, I feel like is, has
become a vague term.
You know, and I'll quicklydefine it, right.
(18:18):
You'll get somebody who'sraising capital for a deal that
says this is an off market deal.
Right?
Well, is it a direct to sellerdeal where a buyer source it
through a cold call orsomething?
Or is it a direct to seller witha broker only called this one
buyer.
And I'm doing quotation markshere for everyone who's
listening, you know, notwatching this.
But, so it's important tounderstand what that actually
means.
Right off market could mean anynumber of things.
(18:39):
Get clarity on that, and that'llgive you some true insight into
like, how many buyers.
The buyer may have beencompeting with as they won that
deal.
Gotcha.
Now, the reason that it'simportant to care about that if
you're an LP is, there are threekey.
Kind of three key events in thelife cycle of a real estate
deal, and I'm reallyoversimplifying, but it's the
day that you buy and you lock inyour basis in terms of what did
(19:01):
you pay for the property is themost impactful financial
decision from a mathematicsstandpoint in the entirety of
the investing process, right?
So be because that's the biggestnumber.
If you're gonna spend a hundredthousand dollars per unit, you
know, and$10,000 in closingcosts per unit, I mean, that's,
that would be really high.
But just for round numbers, youknow, and you're at 1 10 cost
basis per unit, you're probablyonly gonna spend in multifamily
(19:23):
anywhere from 5 grand to 20grand just for round numbers on
the unit in renovations.
Right?
I mean, it's a small fraction ofcompared to the purchase price.
So when you're able to reducethat to 90 k, you know, 10%
below market, 90 K instead of ahundred, that's a massive delta
that.
Drastically impacts your returnsdown the line as an investor.
So not only do you, you know,obviously you lock in the
(19:45):
ability to earn higher returns,but you're also de-risking the
remainder of the process interms of, okay, you went over a
little over budget on yourrenovations.
That's not the end of the worldbecause you bought it at the
right price and you created abuffer there.
The market adjusts a little bitdownwards, cap rates expand,
interest rates go up, what has,what have you.
Okay?
You still have a little bit moreof a buffer.
(20:05):
And yeah.
The other two key events arewhat you spend on all of your
renovations on your businessplan and what your final cost
basis is.
That's, you know, the other keything that needs to be executed.
And then what do you sell at,like, what's your sales price
per unit?
Right.
Those are the three big numbers.
Yeah.
The one that you can control iswhat you pay for it.
Yep.
You can control what you spend,but like, only to an extent you
can stop spending money, but youmight have to keep spending
(20:26):
money to keep renovating theunits and filling it up.
Right.
If you open up the walls and yougotta do all the plumbing and
electrical and you didn't expectto do that.
Well, you, you still have to doit if you want to get a body in
there that's paying rent.
So it's still out of yourcontrol to an extent.
You can't control what you sellit for.
I mean, you, again, you can, butagain, you're at the extent of
what the market gives you in asense.
So we control what we pay andthat's the easiest thing to get
(20:48):
rights.
so as an lp, that, that tellsyou a lot about what the future
of the deal looks like, and it'sone of the more verifiable.
Data points as well.
Okay.
You mentioned you're gonna spendthis or you're gonna achieve
this in rent, and you think thatthe cap rates are going to, you
know, be this when you sell it,all projections, when you're
buying something, right?
It's, we have this sales price.
These are all of thecomparables, you know,
(21:09):
properties that sold in the last12 months.
These are the cap rates theysold at.
This is the per unit price theysold at.
You know, these were the rentsin the units when they sold
compared to the rents and theproperty that you may be
investing in versus the pricethat it's proposed to be bought
at.
And you have all theinformation.
So that's why it makes a lot ofsense to spend time really
understanding that.
Right.
And getting a good feel for itbecause it's the easiest thing
(21:30):
for you as an LP to get reallycomfortable with outside of, you
know, the team and, and theirexperience.
I got you.
Yeah, that, that's awesome, man.
Appreciate you breaking thatdown for me, man.
So I got about another fourminutes left with you, man.
Before I gotta go do the MarineCorps thing.
So we're gonna dive into thefocus round, man.
it's just an acronym, man.
And this is kind of a lightninground.
Could be quick answers, could bea little bit more extended, but
(21:51):
more so quick answers.
What do you do for fun?
Yeah, I try to get outside.
I live in New England, it gets alittle bit hard to do that, but
golf in the summer, skiing inthe winter, love to travel.
And you know, I think all of usin real estate, it's, it becomes
our hobby as well as our workpretty quickly.
I'll say that we ski, we golf,get outside as much as possible,
and then real estate takes up alot of the other free time.
(22:12):
Gotcha, man.
What is one opportunity, thatwas a game changer for you?
really quick story.
Lost my wallet coming home froma bar in South Boston and it was
found just on the street by aguy who looked me up on social
media and said, I found yourwallet.
And he ended up becoming mybiggest business partner, which
is a funny story.
Yeah, that's guy name.
(22:33):
I might have heard Guy Tj, hisname.
I might have heard him tell astory before.
Yeah.
He gets on podcasts now.
He was an engineer at Amazon andhe was my first LP.
Okay.
And it just, it was the biggestchance encounter and now he
raises a lot of money for ourdeals.
So a lost wallet led to a verylong-term profitable business
relationship and a nice personalfriendship as well.
So that's an opportunity that Ithink was a game changer for our
business and really launched usinto raising capital and working
(22:55):
with partners and all that.
That is awesome, man.
Can you connect us through thepodcast interview?
That'd be great.
Yeah, I would love to.
I'll put you guys on email.
Let's do alright, man.
What would you say is yournumber one thing sponsors, mess
up when talking to lp?
They get too deep into thetactical data too quickly,
right?
And most LPs, their eyes glossover and they get confused.
(23:18):
One of a mantra to go back toyour original question, a
confused mind says no.
And that is so true with LPsthat are not from the real
estate world.
So instead of being like, we'reonly projecting X rent growth
versus y, talk about the.
Story around the deal, talkabout what's easily understood.
This is how we found it at ahigh level.
This is why at a high level, theseller's looking to sell, craft
a narrative around the marketand the opportunity that gets
(23:38):
them excited outside of thedata.
And only introduce data oncethey've become comfortable with
all of the stuff that isn't, youknow, data's not required to
communicate.
That's awesome, man.
Story sales, you know?
So, look, what did you notunderstand about a seller
psychology until you, maybe fullinto direct to seller?
Yeah, I think, I don't know ifit was, so I may be answering a
(23:59):
different question than whenyou're asking, but it's similar
to seller psychology.
I wasn't patient.
you know, I, as a young guy, Ireally wanted it, I wanted
results quickly.
Gotcha.
I think that's a, I think it'seasy for people to have short
term expectations when they doanything in business or life, I
guess.
But, for me, it really, reallytook me a while to become
comfortable with the fact thatall of the money was gonna be
made in the follow up.
And I would always push forclosure from sellers.
(24:21):
I would try to, I would try toconvince sellers to become
sellers.
When you as a buyer are nevergoing to convince a seller to
become a seller unless you offersome.
Insane price, which obviouslywe're not doing as investors,
right?
You're never gonna convince themto sell.
You just want to be around themwhen they decide themselves to
sell.
Right?
And that was a big change forme.
That is awesome becauseownership is actually a good
(24:42):
feeling, especially the guy thatI'm working to working with
right now is 82 years old.
Fun fact, he doesn't use email.
So everything I sent to him hasto be snail mail.
You know what I mean?
So I've been there, man.
Yeah, yeah.
Being able to talk to him aboutwhy is he wanting to sell?
He wanted, ideally you want totransfer it all that asset down
to his son, but his son waslike, dad, you want moms to sell
that property and live off themoney, but he also want his kids
(25:04):
to benefit from the money.
So we start talking aboutsetting up trust and all that
good stuff, you know?
So, you know what I mean?
Understanding psychology of whythey want to become sellers
instead of owners.
You know, so lemme ask you this,man, it's the last question in
the focus round, you know,what's your success built on
that you think most peopleoverlooked?
I think it's, it dovetails withthe previous answer, but.
(25:25):
Patients combined with focus,against quick sidetrack, I'll
bring it back.
Biggest mistake I made in realestate was becoming distracted
in 2021, 2022.
Started looking at othermarkets.
We did a deal in Florida, we dida deal in Indianapolis.
Got away from the corecompetency of direct to seller
in Southern New Hampshire, whichwe had figured out really,
really well, and which really,really worked.
I think people jumped fromstrategy to strategy from, you
(25:46):
know, market to market whateverreally quickly when.
All of your efforts compound inthe multi-year process, right?
So it's when you're doing directto seller, when you're trying to
build a real estate business,when you're establishing those
connections, all of that, etcetera, first couple years,
you're not gonna see thoseresults years 3, 4, 5.
That's when you hit thatexponential on the graph.
So for me.
I think that now I've becomevery cognizant of that and it's,
(26:08):
I have a very, very narrow focusand I'm very, very patient.
And because I understand I'mgonna be doing this for another
30 years and that I think hashelped me generate more results
than the people that jumparound.
Man, that is awesome, man.
That bravo to tell.
I like what you used.
I like that you used the words.
Core competency.
I think as I go into work today,that will be my words of the
(26:31):
day, the core competency.
'cause I work in the maintenancedepartment and we have to do
some maintenance corecompetency, right?
Each prospective work centerhave their own core competency.
Competency that supports theentire maintenance department.
So that will be my word oftoday, core competency.
Alright, brother.
So you know that listeners,that's a wrap, man.
A tactical session with Axel.
(26:52):
So whether you are looking tofind a better deal, your vet
operated more critically or youknow, start building your own
pipeline, you know, theinformation you say to share
today was definitely golden.
So Axel, if our listeners wantto get in touch with you, how do
they do that?
Easiest way, I mean, you couldjust shoot me an email Axel
axel@alignedREp.com, soA-L-I-G-N-E-D-R-E P.com.
(27:17):
That's also our website.
Find my Instagram, I'm veryactive on there.
That's try to, that's where Ipost, you know, the content that
I find to be valuable for thefolks who are, you know, doing
what we do.
And that's, at MultifamilyWealth is that, Instagram
handle, but any of those threechannels tight, tight.
We'll make sure that our, my VAadd that information into the
show notes.
and it will also send you some,some trailers, maybe about four
(27:38):
or five trailers, and then alsothe link to the full episode.
Say, if you feel, if you'rewilling to share those
information, be great.
Greatly appreciate as well, youknow, so listeners, absolutely.
Yeah, listeners, thank you againfor listening to another episode
of the Multifamily Real EstateExperience Podcast.
We trust that this episode addeda ton of energy and value, and
man, if you choose to add somenumbers to your portfolio, some
good numbers, uh, to yourportfolio, whether it's in
(28:00):
acquisition or the way youmanage your property and all
else fell, you can't figure itout.
Give Axel a call or give AxelConnect and ask the question.
I'm pretty sure he'd be willingto assist you, with creating a
mutually beneficialrelationship.
Absolutely.
All right.
So until next time, Axel, thankyou so much, brother.
Until next time, listeners,thank you for spending your time
with, the Multi-Family RealEstate Experiment podcast.
(28:22):
I'm Hutch Marine Investor out.
I.
Wah Gwan all you multifamily enthusiast.
Welcome to another episode ofthe Multifamily Real Estate
Experiment podcast.
Look, today we got an amazingguest with you.
We're, can be talking about somethings that is not widely
discussed because, you know,these are topics that I think a
lot of it might scare a lot ofpeople because they don't
understand some of theirfundamental.
(00:21):
Look, our guest today, AxelRagnarsson.
Has secured over 300 units,direct to seller, it's in a
market where most people saythat, you know, it's too tight
to make the numbers work.
And he's also the founder ofaligned Real Estate Partners,
managing over 550 plus units.
(00:41):
Which totaling over$90 millionin transaction.
If you're passive investorswondering how sponsors still
find deals in these kind ofmarkets, also, if you're small
business owners and you areinterested in building ownership
through, boutique, multi-familyproperties, this one is directly
for you because we we're gonnabe touching about, some of those
topic as well.
(01:02):
So, welcome Axel.
Yeah.
Thanks for having me.
Looking forward to it.
Yes, sir.
I like to ask my guest, brother,do you have a favorite real
estate quote mantra that drivesyou?
Oh man, that's a good one.
I don't necessarily there, Idon't know if I have a quote
that comes to mind.
Um, I mean, it's really simpleand it's probably just something
that's been discussed plenty oftimes on podcasts or online or
(01:23):
what have you.
But, you know, making your moneyon the buy is something that's I
very strongly believe in.
And if I were to summarize it alittle bit differently, it's,
buying right de-risks the wholerest of the investing process.
And in our business that's whatwe probably place the most
emphasis on, is being able to,you know, find those great
(01:43):
deals.
But we do make our money on thebuy.
That is awesome, man.
One of my, preferred sponsorsthat is mantra as well, is you
make the money on the buy.
You know, so that's a good one.
All right.
Yeah, it's hard to find thosedeals, but, it's the worthwhile
time investment in the business,I think above all else is, you
know, being able to find thosegreat ones.
Gotcha.
Yeah, man.
So, you know, for our listenersthat who may not know your full
(02:06):
story, can give us a 60 secondrundown, you know, how you went
from your first multifamily dealto becoming one of the most
consistent direct to selleroperators in the game.
Yeah, absolutely.
So, just geographicallyspeaking, I live in Boston,
Massachusetts.
Originally from New Hampshire.
So I grew up about an hour northof Boston, right over the
border.
and just started buyingmultifamily way back in, in
(02:28):
college.
and, the way into the businesswas, I used to flip cars in
college, like that was a littleside business.
I ran buying and selling cars onCraigslist and you know, I was
getting towards the end of mytime in college and was trying
to figure out.
What comes after that?
I liked the idea of working formyself.
always had a hard time kind ofkeeping a job down'cause I would
always get distracted with otherstuff I was doing.
(02:49):
Yeah.
And, basically learned aboutflipping houses and I forget
how, maybe it was HGTV or anInstagram ad or something like
that.
Uh, and this is back in, youknow, 2016, 2015 kind of before
real estate got.
A little bit more competitive inthat 2018, 2019 through mid
COVID timeframe.
Yeah.
Um, and that was how I got intothe business, was trying to
figure out how to flip houses.
(03:10):
As I was learning about that andlearning all about how to find
good deals, started learningabout rental property and buy
and hold real estate, investing,cash flow, all that.
And, ended up becoming where Istarted to focus my time.
You know, the idea of.
Doing the work once and youknow, you find a good deal, you
fix it up and you pull yourmoney out and page in perpetuity
was really compelling for me.
Went all in on trying to figureout how to buy deals without a
(03:31):
lot of cash, with no experienceand all that.
And the ticket to doing so wasfinding great deals and
borrowing a lot of money fromhard money lenders.
and that's how I did my firstdeal, which is a small three
unit property that I bought backin 2016 and, uh, and just
started organically growing aportfolio.
Finding really, really gooddeals direct to seller,
financing them with high LTVdebt, pulling my money out when
(03:52):
I refinanced and selling somehere and there.
And just built a portfolio that,that I owned myself.
I got to about 70, 80 units,back around 2020.
And then, wanted to scale thebusiness, make it a little bit
more of a real thing where webring in investor capital and
where we could start doingbigger deals.
Starting to feel a little bitstressed out with how many deals
I was spreading my own resourcesand dollars across.
(04:13):
So 2020, 2021 started raisinginvestor capital.
And, really over the last two,three years, we've built out
the, you know, call it thesyndication side of the business
where we go out, we find smallto mid-size multi-family deals.
We raise LP capital.
This is all primarily throughoutthe market of New Hampshire,
within an hour of Boston.
(04:34):
And that's what the business hasbecome now, and we'll do
anywhere from 150 to a fewhundred units a year.
mainly buying 10 to 50 unitbuildings or portfolios.
and then we manage'em in-housewith our property management
company.
And, and that's what we're up totoday.
Man sounds very simpler.
Yeah.
Yeah it does, right?
Yeah, man.
So look man, you are not justtargeting distressed assets,
(04:54):
right?
So you're actually finding,disengaged, owners, what do you
identify as the, psychology orthe life triggers that makes
some of these small to mediummulti-family owners want to sell
off market?
It's a great question.
'cause I think it's oftentimes,a misconception with even folks
who are in real estate that aremaybe used to buying deals with
brokers attached.
(05:15):
You know, they think that thedirect to seller deal is
somebody who's highlydistressed, whether it's,
they're underwater on the deal,or they're, there's no cash flow
or they're coming up in the endof their loan or it's, you know,
some type of financial distress.
Yeah.
What we oftentimes find is it'sjust lifestyle change.
We do a lot of.
Cold calling, cold texting,direct mail.
Those are, you know, and coldemailing.
(05:35):
Those are kind of our big four.
And oftentimes the profile ofthe seller that we buy from is
the owner who's owned for 10, 15years, who is actually
financially in a good position.
Like they have a lot of equityin the property.
There's plenty of cash flow.
'cause their loan balance isreally low and they've owned it
for a long time and they're justin their mid sixties, late
(05:56):
sixties, whatever.
They wanna retire, they wannamove down to Florida.
And they actually like the ideaof just an easy transaction.
it's kind of funny, like, youknow, the, it is a lot of work
to sell your property with abroker and I think it's easy to
forget that, you know, the realestate professionals who do this
for a living, you myself, peoplethat listen to this podcast are
like.
(06:17):
Well, I know that I'm gonna getthe highest and best price if I
go and hire the broker, and hesends it out to every single
buyer in his network and they gothrough the whole process.
But there's a lot of owners whohave owned the building for 20
years who, you know, maybe ownit free and clear.
And whether they sell it at justto make up numbers 2 million or
you know, 19, 195, 1875.
They have this person who'sgonna give'em an easy deal,
short due diligence periods.
(06:38):
And they're not gonna have tobring in the broker and walk 20
buyers through the property overthe course of two weeks and piss
off every single resident who'sliving there.
You know, risk it going on acontract with somebody who's not
qualified and a falling out.
Takes a lot longer to go throughthat process.
And it's just a lot of work.
And oftentimes people who have alot of money, they just don't
wanna do all the work, right?
It's why you buy a bottle ofwater at 7/11 instead of going
(07:01):
and getting a 24 pack of Costco.
So oftentimes the sellers of ourbuildings, that we buy are just
like, they like the idea thatit's easy, you know, it's a
clean contract.
We tell'em we're just gonna getin there once for an inspection.
You know, maybe we, a coupleunits in the basement for the
appraisal that the bank wants todo.
We'll tell the tenants where weare, whoever you want us to be,
we can be the insurance companygoing through.
So nobody gets spooked and yourconversations are easy and it's
(07:23):
just a really easy process.
Right.
And, and I think that'softentimes who we buy from.
You know, the other prototype,or profile is management related
distress.
Okay.
So again, probably notfinancially or financial
distress in the sense that.
They have a lot of equity.
They're not gonna need to bringmoney to sell the property,
right?
It's not like the situation thatmany.
Texas southeast owners are inright now where they maybe
(07:46):
bought when rates were low withlow cap rates.
And cap rates have expandedtheir underwater, the northeast,
extremely resilient market.
There's no real financialdistress, but you get the guy
who's got his 20 unit building,who's self-managing and he's
just burnt out completely.
He just doesn't wanna do realestate anymore.
You know, maybe he's not lookingto retire.
He is forties, fifties,something like that.
But he's owned it for a while.
He's working through an evictionon three tenants.
(08:07):
'cause he did a terrible jobscreening him and was lazy on
the screening.
And he's like.
Someone else just do this.
I just want it off my hands.
I just, you know, again, clean,easy deal would rather just get,
get it done and the broker'sgoing to bug'em and have'em try
to send me all your financials.
Oh, I can't show these threeunits.
They're gonna get really upset'cause I can't see these units.
You know, because they're undereviction and we're like, it
doesn't matter.
(08:27):
We didn't need to walk'em.
We know what we're getting into.
Yeah.
So the two big ones are justpeople looking to get out of the
game and retire lifestyle andthen it's management distress.
And then the distant, distantthird is that financial
distress.
You say distant third.
Distant third is that financialdistress.
Okay.
Terms of like, the typical Yeah.
Triggers that cause people towanna sell.
(08:47):
No, I got you man.
So let's get a little bit more,tactical man.
Can you describe, your currentseller to seller system?
Like, how does that work?
What tech are you using?
What does the team look like?
how do you track the KPI on aweekly basis?
What does that look like?
Yep.
Yeah.
So in terms of like high level,beginning with the end in mind,
like what's our goal, right?
Our goal is to just be top ofmind with all the people who own
(09:07):
real estate in our market,right?
The other big kind of mindsetshift, we aren't doing all of
this marketing and prospectingand all that to find a deal.
We're doing it to just buildrelationships with all the
people that own the real estate,makes sense in our market.
Makes sense, right?
Makes sense.
So I think it's a key shift,right?
It's not like we're sending mailto get a deal from Joe who owns
123 Main Street.
We're sending direct mail to getto know Joe, to introduce
(09:28):
ourselves, to just be somebodythat he's aware of.
And yeah, we'll mention thatwe're interested in making him
an offer and all that, but like,that's not the only objective of
getting to know him and having aconversation with him, et
cetera.
Makes sense.
So with that being the end game,then we back into how we do
that.
For me, it kind of evolved overthe years, but early it was.
I have an abundance of time anda constraint of dollars.
(09:52):
I don't have a lot of money tospend on a lot of direct mail.
So it was go buy a list fromlist source, filter it based on
the geography of where I wannabuy the cities in New Hampshire.
You know, at the time, orwhatever your list size is now,
it's wider for us, but at thetime it was, you know, 3 to 20
units in size.
And with people that have ownedit for more than five years.
Right?
So we want to assume that theygot a little bit of equity
(10:12):
there, at least more so than theguy who bought it last year, for
example.
And I just started reaching outto'em.
Skip Trace the list.
There's all kinds of servicesthat do that.
You know, lead Sherp is one, ifI'm just gonna plug one, that's
what we use.
And I just would send the ownersan email.
Hey, my name is Axel.
I'm a real estate investor in,you know, this area.
saw you on the property at at123 Main Street.
Would love to.
Introduce ourselves andpotentially make an offer on it.
(10:34):
And if not, we'd just love toget a, get to know another
investor in the marketplace and,you know, maybe there's some way
in which we could, you know,work together, help you out, or
share resources, et cetera.
And then we just start havingconversations with folks.
And the real big thing is thesales cycle is extremely long,
right?
It's, yeah.
You have a conversation withsomebody on July 1st.
They may not be interested inselling for another year or two
(10:55):
years, et cetera.
So the whole game is in justhaving patience and the follow
up.
you know, I started using a freeCRM early, like, I think I used
HubSpot to start.
Then we moved to Zoho, anotherfree one.
Now we run everything throughResimpli, which is the CRM
platform that we use, which is areally, you know, robust tool
that does everything for us.
CRM we can send mail through, wecan call through it all that.
(11:17):
And over time as we startedgetting good at each channel, as
I like to call it, cold emailingwas the first channel.
Okay, now I got some money andwe've done some deals.
Now I'm gonna start reinvestingin the business.
I'll spend some money on mail.
We send mail each quarter, fourtimes a year to the same list.
Basically a very similar messageas to what we include on.
Or in a cold email, right?
(11:37):
But we have a little bit morespace, so we're including like,
eh, this is what we own.
So we show that we're credibleand we're worth talking to.
Here's why we're good to workwith minimal contingencies.
We won't bug your residents, youknow, no broker commissions, et
cetera.
Talk about how we want to, youknow, build a relationship with
them.
And then very recently, Ishouldn't say very recently,
last 18 months, I brought on a,you know, an acquisitions
(11:59):
manager to the business who'sfull-time Okay.
Who's doing some calling aswell, you know, amongst
answering our inbound phonecalls when we send direct mail.
So, very slowly grew over time.
But I think the big thing interms of like what's an
actionable next step is it'sreally just three steps.
You define your acquisitioncriteria and you buy your data
list.
You pick one particular channelof how you'd like to reach out
(12:21):
to everybody on that list, andthen you just do it for a
consistent period of time anduse a CRM to track your follow
up.
'cause the follow up is reallythe biggest thing.
Gotcha.
And just align your expectationswith, you know, your list size
and how much time or moneyyou're willing to spend and
eventually.
You'll see some results, man.
That's an amazing growth story,man.
All the way from college tofiguring out this system that is
actually working for you, man.
(12:41):
All right, got you.
You send out cold email or yousend out a snail mail, you know,
you get a response, can you walkus through, how your team
qualified a seller, underwritesthe deal, you know, move to LOI
all without having a brokerinvolved.
Yes.
Yeah.
This is tricky because it'sdifferent.
I think it's, I think it's aslightly different process if
you live near where you'reinvesting or if you're remote.
(13:03):
Right?
Correct.
If you're in Boston and you'rebuying down in Florida, well,
you can't really go meet theseller.
Right.
Or else your life would beturned upside down if you did
that every time.
For us, we're within drivingdistance reasonably of the
markets that we buy, rightbetween 45 minutes to an hour
and a half.
So what we typically like to dois, you know, we send a piece of
direct mail, sell it calls, Hey,I got your letter.
What do you give me for, right?
That's always how it starts.
(13:24):
There's just cut to the chase,what are you gonna offer me for
it?
And it's like, listen, we gottaask you a couple questions, as
would you most likely if youwanted to buy the property.
I'm sure you'd like to knowabout, you know, what the rents
are and all that.
And we just, you know, fiveminutes we get some information
for you, we can start to puttogether an offer.
If you're open to it, we'd loveto meet you at the property and
walk it.
If you aren't, you know, if youdon't have the time for that's
(13:44):
understood.
You know, we can still puttogether a number based on what
we can find through publicrecord and then some questions
we have for you.
Yeah.
The, the big questions like rentroll with unit mix is like we
just table stakes.
We absolutely need that.
Um, how many bedrooms, bathroomsare in each unit?
What are the rents?
Who pays which utilities?
'Cause that's gonna be the vastmajority of what we'll need, to
(14:05):
really get to a price.
The rest of it we can basicallyfigure out.
Through Google Street view, adrive by or public record.
The other thing that we like toask and we try to ask in an
open-ended capacity is talkabout some of the work that
you've done over the last threeto five years at the property.
Right?
Have you spent any money on somebig stuff like the roof, the
siding, you know, have youturned over any of the units?
And usually through thatconversation you start to get a
(14:27):
sense of like, all right, mostof the stuff's pretty old.
We might have to budget for thisor that, or at least put some
money aside in the underwriting.
And then the last thing is.
You know, timeframe and thatstarts to try to open up the
motivation conversation.
You know, why are you callingme?
What's, you know, what's thetimeframe?
And just trying to get themtalking around.
Oh, well, you know, I, me and apartner own it.
We've owned it for a while.
(14:47):
He kind of wants to sell, and,you know, I kind of wanna hold,
but, eh, we're just starting toevaluate the options and make
note of that.
Or, I'm getting old.
I, you know, my kids don't wantit.
I kind of want to just get ridof it and, all right, take note
of that.
And that starts to tell you alittle bit more about what terms
in your offer are gonna speak totheir situation, which is
obviously something that we wantto address when we make an
offer.
With the rent roll, we get inthere, we know the expenses in
(15:08):
our market, right?
We look up the taxes.
We know what the insurance isgonna be.
That leaves repairs andmaintenance utilities, contract
services, right?
And we know what that is for allthe buildings in our market
'cause we already own in ourmarket.
So it's really easy and managed.
And manage.
Yeah.
Yeah.
so it's a situation in whichit's like we don't need to ask
him for a T 12 or for his taxreturns or anything like that.
We can include that in the offerif we really want it and make
(15:29):
that a deliverable.
But we're never gonna do thatreally upfront.
Now, if he wants to meet usthere, great.
We always want to get in personas much as we can.
We think that's a really gooduse of our time, is to spend.
You know, even though it's acouple of hours total or round
trip drive time to just get infront of a seller and get face
to face right, puts you so farahead of everybody else who's
not doing that.
So we always wanna try to dothat, even if we think his
(15:50):
number is gonna be too high interms of what we're willing to
pay.
But long and short to kind ofround out the process, we take
all of this, throw it in, youknow, here's where we can get
the rents to.
This is what our projected CapExbudget's gonna be.
Put together an offer with termsthat we think are gonna address.
Their situation, you know, likea big one is, yeah, I had a
buyer who wanted under contracton it, but it fell through.
(16:11):
It's like, okay, well now we'regonna do no financing
contingency and we'll do ameaningful deposit.
Right.
And we'll still have our DDcontingency to, to do it, but
like, we want to try toalleviate that concern.
Yeah.
I just don't want my tenantsfinding out.
All right.
So we write in the contractwe'll only access twice and you
know, only access the units ofyour choice.
So we try to solve as many ofthose problems as we possibly
can in the offer.
(16:31):
So we shoot it over with asummary over email.
We always want to present itover email if we can, if it's a,
you know, an older gentleman ora seller who doesn't have email.
All right, we'll call'em.
But we like to recap it in anemail so that we can like, sell
it, verbal or, in written word.
And then we put'em on afollow-up cadence.
Right.
The big thing is we always tryto push urgency around the offer
we're making.
Um, you know, hey, you can say,Hey, it's only good for 48
(16:54):
hours.
That doesn't really mean a lotto a seller.
They're like, okay, sure.
I'll, I'm sure on day threeyou'll still probably buy it if
I accept it.
But we say, Hey, we're offeringon a handful of properties.
We have a.
You know, we're, we have a 1031clock that's ticking and we try
to create some level of urgencyaround him getting us or her
getting us a reply.
And from there, 90% of the time,95% of the time, it's, yeah,
(17:15):
price is a little too low, or Iwanna be high, or, ah, timing's
not right.
And then we just put'em onfollow up every 30 days, every,
60 days, whatever we feel likeis the appropriate cadence, you
know, touch base.
How's it going?
Doesn't make sense to furtherchat.
And at some point down the line,we have some real productive
conversation around it.
And that may not result in adeal, but that seller becomes a
true seller at some point wherethey are 100% gonna sell the
(17:37):
property.
And our job is to have beenthere along the way, staying top
of mind.
that is awesome.
So we're the first one he calls.
Yeah.
Yeah.
And a pretty, pretty simple,straightforward process, man.
But, however, you guys beingmanagers in the area definitely
give you some keen insights of,what the highest and best use of
a property can be, right.
managing so many properties inthe local area, man.
(17:57):
So that, that's dope.
You know, so for, for passiveinvestor, Axel.
who's listened to this podcast,you know, why should they care
about, you know, deals that areoff markets, how does it impact
their returns risk, profile, andcontrol?
Yeah, it's such a good question.
I think, first of all, the termoff market, I feel like is, has
become a vague term.
You know, and I'll quicklydefine it, right.
(18:18):
You'll get somebody who'sraising capital for a deal that
says this is an off market deal.
Right?
Well, is it a direct to sellerdeal where a buyer source it
through a cold call orsomething?
Or is it a direct to seller witha broker only called this one
buyer.
And I'm doing quotation markshere for everyone who's
listening, you know, notwatching this.
But, so it's important tounderstand what that actually
means.
Right off market could mean anynumber of things.
(18:39):
Get clarity on that, and that'llgive you some true insight into
like, how many buyers.
The buyer may have beencompeting with as they won that
deal.
Gotcha.
Now, the reason that it'simportant to care about that if
you're an LP is, there are threekey.
Kind of three key events in thelife cycle of a real estate
deal, and I'm reallyoversimplifying, but it's the
day that you buy and you lock inyour basis in terms of what did
(19:01):
you pay for the property is themost impactful financial
decision from a mathematicsstandpoint in the entirety of
the investing process, right?
So be because that's the biggestnumber.
If you're gonna spend a hundredthousand dollars per unit, you
know, and$10,000 in closingcosts per unit, I mean, that's,
that would be really high.
But just for round numbers, youknow, and you're at 1 10 cost
basis per unit, you're probablyonly gonna spend in multifamily
(19:23):
anywhere from 5 grand to 20grand just for round numbers on
the unit in renovations.
Right?
I mean, it's a small fraction ofcompared to the purchase price.
So when you're able to reducethat to 90 k, you know, 10%
below market, 90 K instead of ahundred, that's a massive delta
that.
Drastically impacts your returnsdown the line as an investor.
So not only do you, you know,obviously you lock in the
(19:45):
ability to earn higher returns,but you're also de-risking the
remainder of the process interms of, okay, you went over a
little over budget on yourrenovations.
That's not the end of the worldbecause you bought it at the
right price and you created abuffer there.
The market adjusts a little bitdownwards, cap rates expand,
interest rates go up, what has,what have you.
Okay?
You still have a little bit moreof a buffer.
(20:05):
And yeah.
The other two key events arewhat you spend on all of your
renovations on your businessplan and what your final cost
basis is.
That's, you know, the other keything that needs to be executed.
And then what do you sell at,like, what's your sales price
per unit?
Right.
Those are the three big numbers.
Yeah.
The one that you can control iswhat you pay for it.
Yep.
You can control what you spend,but like, only to an extent you
can stop spending money, but youmight have to keep spending
(20:26):
money to keep renovating theunits and filling it up.
Right.
If you open up the walls and yougotta do all the plumbing and
electrical and you didn't expectto do that.
Well, you, you still have to doit if you want to get a body in
there that's paying rent.
So it's still out of yourcontrol to an extent.
You can't control what you sellit for.
I mean, you, again, you can, butagain, you're at the extent of
what the market gives you in asense.
So we control what we pay andthat's the easiest thing to get
(20:48):
rights.
so as an lp, that, that tellsyou a lot about what the future
of the deal looks like, and it'sone of the more verifiable.
Data points as well.
Okay.
You mentioned you're gonna spendthis or you're gonna achieve
this in rent, and you think thatthe cap rates are going to, you
know, be this when you sell it,all projections, when you're
buying something, right?
It's, we have this sales price.
These are all of thecomparables, you know,
(21:09):
properties that sold in the last12 months.
These are the cap rates theysold at.
This is the per unit price theysold at.
You know, these were the rentsin the units when they sold
compared to the rents and theproperty that you may be
investing in versus the pricethat it's proposed to be bought
at.
And you have all theinformation.
So that's why it makes a lot ofsense to spend time really
understanding that.
Right.
And getting a good feel for itbecause it's the easiest thing
(21:30):
for you as an LP to get reallycomfortable with outside of, you
know, the team and, and theirexperience.
I got you.
Yeah, that, that's awesome, man.
Appreciate you breaking thatdown for me, man.
So I got about another fourminutes left with you, man.
Before I gotta go do the MarineCorps thing.
So we're gonna dive into thefocus round, man.
it's just an acronym, man.
And this is kind of a lightninground.
Could be quick answers, could bea little bit more extended, but
(21:51):
more so quick answers.
What do you do for fun?
Yeah, I try to get outside.
I live in New England, it gets alittle bit hard to do that, but
golf in the summer, skiing inthe winter, love to travel.
And you know, I think all of usin real estate, it's, it becomes
our hobby as well as our workpretty quickly.
I'll say that we ski, we golf,get outside as much as possible,
and then real estate takes up alot of the other free time.
(22:12):
Gotcha, man.
What is one opportunity, thatwas a game changer for you?
really quick story.
Lost my wallet coming home froma bar in South Boston and it was
found just on the street by aguy who looked me up on social
media and said, I found yourwallet.
And he ended up becoming mybiggest business partner, which
is a funny story.
Yeah, that's guy name.
(22:33):
I might have heard Guy Tj, hisname.
I might have heard him tell astory before.
Yeah.
He gets on podcasts now.
He was an engineer at Amazon andhe was my first LP.
Okay.
And it just, it was the biggestchance encounter and now he
raises a lot of money for ourdeals.
So a lost wallet led to a verylong-term profitable business
relationship and a nice personalfriendship as well.
So that's an opportunity that Ithink was a game changer for our
business and really launched usinto raising capital and working
(22:55):
with partners and all that.
That is awesome, man.
Can you connect us through thepodcast interview?
That'd be great.
Yeah, I would love to.
I'll put you guys on email.
Let's do alright, man.
What would you say is yournumber one thing sponsors, mess
up when talking to lp?
They get too deep into thetactical data too quickly,
right?
And most LPs, their eyes glossover and they get confused.
(23:18):
One of a mantra to go back toyour original question, a
confused mind says no.
And that is so true with LPsthat are not from the real
estate world.
So instead of being like, we'reonly projecting X rent growth
versus y, talk about the.
Story around the deal, talkabout what's easily understood.
This is how we found it at ahigh level.
This is why at a high level, theseller's looking to sell, craft
a narrative around the marketand the opportunity that gets
(23:38):
them excited outside of thedata.
And only introduce data oncethey've become comfortable with
all of the stuff that isn't, youknow, data's not required to
communicate.
That's awesome, man.
Story sales, you know?
So, look, what did you notunderstand about a seller
psychology until you, maybe fullinto direct to seller?
Yeah, I think, I don't know ifit was, so I may be answering a
(23:59):
different question than whenyou're asking, but it's similar
to seller psychology.
I wasn't patient.
you know, I, as a young guy, Ireally wanted it, I wanted
results quickly.
Gotcha.
I think that's a, I think it'seasy for people to have short
term expectations when they doanything in business or life, I
guess.
But, for me, it really, reallytook me a while to become
comfortable with the fact thatall of the money was gonna be
made in the follow up.
And I would always push forclosure from sellers.
(24:21):
I would try to, I would try toconvince sellers to become
sellers.
When you as a buyer are nevergoing to convince a seller to
become a seller unless you offersome.
Insane price, which obviouslywe're not doing as investors,
right?
You're never gonna convince themto sell.
You just want to be around themwhen they decide themselves to
sell.
Right?
And that was a big change forme.
That is awesome becauseownership is actually a good
(24:42):
feeling, especially the guy thatI'm working to working with
right now is 82 years old.
Fun fact, he doesn't use email.
So everything I sent to him hasto be snail mail.
You know what I mean?
So I've been there, man.
Yeah, yeah.
Being able to talk to him aboutwhy is he wanting to sell?
He wanted, ideally you want totransfer it all that asset down
to his son, but his son waslike, dad, you want moms to sell
that property and live off themoney, but he also want his kids
(25:04):
to benefit from the money.
So we start talking aboutsetting up trust and all that
good stuff, you know?
So, you know what I mean?
Understanding psychology of whythey want to become sellers
instead of owners.
You know, so lemme ask you this,man, it's the last question in
the focus round, you know,what's your success built on
that you think most peopleoverlooked?
I think it's, it dovetails withthe previous answer, but.
(25:25):
Patients combined with focus,against quick sidetrack, I'll
bring it back.
Biggest mistake I made in realestate was becoming distracted
in 2021, 2022.
Started looking at othermarkets.
We did a deal in Florida, we dida deal in Indianapolis.
Got away from the corecompetency of direct to seller
in Southern New Hampshire, whichwe had figured out really,
really well, and which really,really worked.
I think people jumped fromstrategy to strategy from, you
(25:46):
know, market to market whateverreally quickly when.
All of your efforts compound inthe multi-year process, right?
So it's when you're doing directto seller, when you're trying to
build a real estate business,when you're establishing those
connections, all of that, etcetera, first couple years,
you're not gonna see thoseresults years 3, 4, 5.
That's when you hit thatexponential on the graph.
So for me.
I think that now I've becomevery cognizant of that and it's,
(26:08):
I have a very, very narrow focusand I'm very, very patient.
And because I understand I'mgonna be doing this for another
30 years and that I think hashelped me generate more results
than the people that jumparound.
Man, that is awesome, man.
That bravo to tell.
I like what you used.
I like that you used the words.
Core competency.
I think as I go into work today,that will be my words of the
(26:31):
day, the core competency.
'cause I work in the maintenancedepartment and we have to do
some maintenance corecompetency, right?
Each prospective work centerhave their own core competency.
Competency that supports theentire maintenance department.
So that will be my word oftoday, core competency.
Alright, brother.
So you know that listeners,that's a wrap, man.
A tactical session with Axel.
(26:52):
So whether you are looking tofind a better deal, your vet
operated more critically or youknow, start building your own
pipeline, you know, theinformation you say to share
today was definitely golden.
So Axel, if our listeners wantto get in touch with you, how do
they do that?
Easiest way, I mean, you couldjust shoot me an email Axel
axel@alignedREp.com, soA-L-I-G-N-E-D-R-E P.com.
(27:17):
That's also our website.
Find my Instagram, I'm veryactive on there.
That's try to, that's where Ipost, you know, the content that
I find to be valuable for thefolks who are, you know, doing
what we do.
And that's, at MultifamilyWealth is that, Instagram
handle, but any of those threechannels tight, tight.
We'll make sure that our, my VAadd that information into the
show notes.
and it will also send you some,some trailers, maybe about four
(27:38):
or five trailers, and then alsothe link to the full episode.
Say, if you feel, if you'rewilling to share those
information, be great.
Greatly appreciate as well, youknow, so listeners, absolutely.
Yeah, listeners, thank you againfor listening to another episode
of the Multifamily Real EstateExperience Podcast.
We trust that this episode addeda ton of energy and value, and
man, if you choose to add somenumbers to your portfolio, some
good numbers, uh, to yourportfolio, whether it's in
(28:00):
acquisition or the way youmanage your property and all
else fell, you can't figure itout.
Give Axel a call or give AxelConnect and ask the question.
I'm pretty sure he'd be willingto assist you, with creating a
mutually beneficialrelationship.
Absolutely.
All right.
So until next time, Axel, thankyou so much, brother.
Until next time, listeners,thank you for spending your time
with, the Multi-Family RealEstate Experiment podcast.
(28:22):
I'm Hutch Marine Investor out.
I.
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