April 25, 2024 • 40 mins
Kristopher German has specialized in selling multi-family residential properties since joining RE/MAX Commercial in 2007. Kris consistently ranks among the Top 3 Commercial Agents within the RE/MAX Commercial National Division, and over the last 16 years, has been awarded every award RE/MAX has to offer. With a proven track record of more than 400 successfully closed transactions, accounting for more than $450,000,000 in investment real estate, Kris attributes his success to a client-centered business based on hard work, honesty, and unparalleled negotiation skills.
In his spare time, Kris has been an active community leader working with high school youth through religious and athletic outreach programs. In addition, Kris is a contributor to philanthropic efforts such as St. Jude Children’s Hospital, the American Cancer Society, and annually provides a Holiday Celebration for Veronica’s Home of Mercy, a women’s and children’s shelter in San Bernardino, CA.
In this episode:
- Journey from a non-traditional childhood to a successful real estate career
- Entrepreneurship, Mentorship, Faith, and Health
- California rent control measures
- Challenges in the multifamily market
- Multifamily real estate market in California
The Norris Group originates and services loans in California and Florida under California DRE License 01219911, Florida Mortgage Lender License 1577, and NMLS License 1623669. For more information on hard money lending, go www.thenorrisgroup.com and click the Hard Money tab.
Video Link
Radio Show
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Narrator (00:01):
Welcome to The Norris Group real estate podcast, a
show committed to bringing youinsights from thought leaders
shaping the real estateindustry. In each episode, we'll
dive into conversations withindustry experts and local
insiders, all aimed at helpingyou thrive in an ever-changing
real estate market. continuingthe legacy that Bruce Norris
(00:24):
created, sharing valuableknowledge, and empowering you on
your real estate journey.
Whether you're a seasoned pro ora newcomer, this is your go-to
source for insider tips, markettrends and success strategies.
Here's your host, Craig Evans.
Craig Evans (00:45):
All right, we want to welcome everyone to the
podcast today. We are superexcited. We've got a great guest
with us today. Let me jump inhere. We've got a large number
of followers that have alwaysasked Bruce Norris in the past
about commercial real estate.
The answer over the years hasalways been you know that Bruce
was deferring to people withthis knowledge. It's simply not
what The Norris group has dealtwith or have invested in in the
(01:05):
past. We typically loan up tofourplexes but that's about the
extent of our lending process.
So but today, we've got one ofthose experts that Bruce has
always depend to Kris German.
Kris German is the CEO of theApartment Dealer. Kristopher
German has specialized inselling multifamily residential
properties since joining REMAXcommercial in 2007. Chris
(01:27):
consistently ranks among the topthree commercial agents within
the REMAX commercial nationaldivision. And over the last 16
years has been awarded everyaward REMAX has to offer. The
prestigious Diamond Club Awardin years 2015 through 2022, the
REMAX Hall of Fame Award, theLifetime Achievement Award and
(01:50):
most notably the REMAX Circle ofLegends award, with a proven
track record of more than 400successfully closed
transactions, accounting formore than $450 million in
investment real estate. Krisattributes his success to a
client centered business basedon hard work, honesty, and
unparalleled negotiation skills.
(02:14):
What Kris' clients have found isthat regardless of market
direction, Kris continues tosuccessfully sell more real
estate and at higher prices thanhis competitors. In his spare
time, Kris has been an activecommunity leader working with
high school youth throughreligious and athletic outreach
programs. In addition, Kris isa contributor to philanthropic
(02:36):
efforts such as St. Jude'sChildren's Hospital, the
American Cancer Society, andannually provides a holiday
celebration for Veronica's Homeof Mercy, a Women's and
Children's Shelter in SanBernardino, California. Kris, my
friend, welcome to the podcasttoday.
Kristopher German (02:53):
I just seen that I was wondering who we're
going to have on today. Itsounds great. No, thank you.
Craig Evans (02:59):
That's a bio there, my friend.
Kristopher German (03:02):
Thank you.
Thank you for having me.
Craig Evans (03:04):
Hey, listen, you know, I know you've spoken a lot
of our events in the past. It'sdone a lot of stuff with Bruce.
But you know, one of the thingsthat we've kind of been diving
into as we're kind of reignitingour podcast and getting the
content out is one of the thingsthat we like to do is really let
our audience know who you guysare, not just what you do now,
but I want to talk about, youknow, how did you get to where
(03:26):
you are? So if that's okay, letme just go through a few things.
I mean, you know, because again,I we met last year, out and in
California the event in June,but are you originally from
Southern California?
Kristopher German (03:40):
Yeah, I'm born and raised in Southern
California. And, my parentsdivorced at an early age. So I
lived probably in 10, 12different communities between
the age of four from birth tohigh school. And I always share
that with my children becausethey have more of a traditional
lifestyle versus what I had as achild. But yeah, so I know the
(04:03):
area well, I've been here all mylife.
Craig Evans (04:07):
Now, as you were growing up, did you imagine
yourself in real estate or whatwere you thinking? Hey, I want
to be the the astronaut or whatwas your desire growing up?
Kristopher German (04:18):
You know, as I look back in my youth,
especially my high school youth,I was just living by the seat of
my pants sort of thing, I didn'treally, I didn't know what goal
setting was at that time. That'sone of the things that
definitely changed my life as Ibecame a young man. But I was
lucky enough to have gone toprivate high school so and when
you go to private high school,college is just a given. So
(04:40):
okay, great. I'm going tocollege but never had a long
term plan in terms of whattomorrow was going to look like
and but I just knew my fatherwas a business owner. I knew
that that looks more attractivethan say being an employee,
being able to make my own hoursand you know what I had advanced
or different things my dad couldbe there because he made his own
(05:02):
schedule. And I thought that Iliked that idea, being my own
boss. I thought, you know,wearing a suit daily would be a
cool thing to do. But yeah, justvery simple things that I
thought you know that okay, youknow, one day, if I could have
it my way, that's where I likeit. But how I got to real estate
is a longer story. But at onepoint, I thought I was going to
(05:25):
be a policeman. I had wentthrough all the testing
psychological analysis, liedetector and had done this with
multiple departments. But I'mactually colorblind, slightly
colorblind. And I didn't findout till the end of all the
testing a portion that that's anautomatic disqualifier. And so
(05:46):
that turned my world kind oftopsy turvy for a while
thinking, oh, gosh, I went fromnot really having a goal, to now
okay, I'm gonna go into lawenforcement. And now that's not
going to work out. So afterthat, that was probably around
the age between 20 and 21. I wasfloundering around for a while
to kind of skip ahead. A goodfriend of mine that I went to
(06:08):
high school with, post collegegot hired by Marcus and
Millichap, which is a very largecommercial firm, was doing well
for himself. And so the Decemberof 2006, I went to reach out to
him, he wasn't around, he was onvacation. So I sent him an
email. And in this email, Ibasically said, You know what I
have, by this time I had a smallfamily of my own. And if you're
(06:34):
willing to be my mentor, I'mwilling to be a good student.
And that January, or by that,and following March, I was
licensed by that followingSeptember, I had made enough
money in real estate to walkaway from what was my full time
job, which was not veryimpressive. As I'm studying real
estate. I was actually by day Iwas working for school police,
(06:58):
and having to supplement myincome, I was delivering pizzas
at night. So literally, the yearbefore I get into real estate,
that's what I'm doing. I'm apizza delivery boy, if you will.
And that first year in realestate, I was awarded from our
office we had in downtown LosAngeles Junior agent of the
year, the following year, Idoubled my income the following
(07:18):
year after that, I doubled myincome again. And so it's just
been the trajectory, you know,by God's grace of my career that
it's worked out, I fell in myniche, I found, I think what I
was some, you know, born to dois they say, I get to be my own
boss, I get to sharpen the suit,you know, those couple of things
that I was looking for as asmall boy. And yeah, and I'm
(07:43):
just grateful for all thementors I've had along the way,
because it you know, they say,You're a self made success.
Nobody's self made. Everybodyhas mentors along the way. And
definitely Bruce Norris is oneof those. And so, you know, I'm
happy to assist you guys, youknow, however I can.
Craig Evans (08:00):
Who do you think was the biggest influence on you
Kristopher German (08:02):
Growing up as a small child, probably my
growing up?
father again, just, you know,because he was a business owner,
and versus my mom worked for theschool district. And this isn't
to say anything against youknow, union employees. But
obviously, that's two differentlifestyles, two different types
of income. And it was, forwhatever reason, it was just
(08:24):
more attract. And he always toldme and I now I tell my children,
except my kids kind of make ajoke about it. But you know, my
dad would say whatever you'regonna be in life, even if you
decide to be a trash man, justbe the best at it, you know,
that's all I'm asking of you isjust be the best at it. And so
my kids joke like, 'Well, Dad,are you the best trash man in
town,' you know, so theynaturally make light of it. But
(08:45):
that simple thing is, is reallywhat I've chased after. So I
could just be a realtor and justsell multifamily properties like
I do. But I wasn't satisfiedwith that. So a big arm of my
business is investor education,or educating the landlords. We
hold live events, we have achannel on YouTube, and so
(09:09):
forth. And so that's part ofthat idea of being the best I
can in this field, is that mostanyone can sign up a real estate
purchase agreement. But we'vewe've gotten the next step to
essentially lock arms with ourclients, the landlords, and to
(09:29):
educate them along the way, orat least make available to them.
Those mentors, real estateattorneys, eviction attorneys,
tax professionals, individualslike Bruce, who could then
educate them, keep them apprisedof what they need to know year
to year and then only helps themmove what I call their financial
legacy are their real estateportfolio in a positive
(09:51):
direction, year after year, andso, you know, we like doing
that.
Craig Evans (09:56):
Sure. So, you mentioned faith a few times, you
know, by God's grace, thingslike that, how big of a role
does faith play in what you'vedone growing up into becoming
who you are?
Kristopher German (10:07):
You know, so the last interview that I was
headed to when I was trying tobecome a policeman, at that
point, things weren't workingout, I just felt like, Okay, I'm
fighting destiny here. And sobefore I leave my house to go to
the the interview, the chiefsinterview that I'm headed to, I
(10:27):
said, a little prayer in thecar, 'God, if, if this isn't
what you want, then you got toshow me another way, because
this is what I'm going after, atthis point.' And literally, on
my way to the interview, myradiator broke in my car, and
not just broke, I had literallyjust fixed the radiator, like a
(10:48):
week or two prior. So it wasloud enough of a, you know, a
signal that maybe lawenforcement, you know, wasn't
meant for me. And at that time,and since then, I've always
worked with high school age,kids, in terms of I was a youth
minister at one point, and, youknow, teaching them, you know,
(11:09):
the faith, and still involvedtoday, in that realm. And so
it's a big part, you know, mywife and I, we have nine
children, faith is the center ofour household. And, yeah, I
think it's my compass. It reallyis.
Craig Evans (11:23):
I mean, you know, everybody that knows me, really
knows me know that I'mcompletely unashamed about my
faith in Jesus Christ. And I wassuper excited to read more about
that. Because obviously, when Imet you last year, you know, we
didn't get to talk about ourfaith or what, you know, it's
not what we just don't standaround and do that every second
(11:43):
of the day, right. But as I'velearned more about you and
prepping, being ready tointerview for this, I was
excited to read more about thatand hear more about that. And
all of a sudden, you start outtalking about so. So appreciate
you diving in on that. But solisten, I hear you're an avid
reader. So what are you readingnow? What's the one book or
(12:03):
ebook or thing that you wouldrecommend to investors now?
Kristopher German (12:08):
So right now I'm actually reading a book, Gut
Check by Dr. Steven Gundry. Andso the one thing aside of real
estate and my faith, the thingthat I know most about is
health. I've had some familymembers that have had health
challenges, I've had some of myown. And that's caused me to
have take this deep dive, I'dsay over the last decade. So Gut
(12:30):
Check. Yeah, I'm it's a seriesof books that Dr. Gundry has
written. And he's just reshapedthe health of some of my family
members, my own health. And soanyway, I'm not doing a
commercial for him. But that'sgreat. And along that same line,
that same thread, you know, wecan make all the money in the
(12:52):
world. But if you don't haveyour health, and I'm fortunate,
I've had clients who are"wealthy", but not very wealthy
when it comes to their health.
So long that point, I would sayone book that everyone should
read, it's a book by Dr. Lee Eatto Beat Disease. Most people
I've seen him he's been on Oprahhas been on all these different
shows. But in that book, heessentially talks about what are
(13:12):
the foods that we can eat daily,that will suppress or mitigate
your risk to all the variousdiseases like cancer and these
you know, simple things, justfood you can add on we're not
talking about it, you got to beoutlandish with supplements and
these sorts of things, but foodso anyways, yeah, I would
suggest that book Eat to BeatDisease.
Craig Evans (13:34):
And that's what's fun about talking to more
people, you know, when you startto dive in, so many people want
to talk about, how do we makemore money? Like you said, you
know, if you don't take care ofyourself, what good does making
it? Do you know, if you're notthere to be a good steward of
it, to have fun with it, dothose things making it doesn't
(13:56):
matter? How many beans in theworld, right?
Kristopher German (13:58):
Yeah, I mean, there's plenty of books, I try
to read a book a month, I'vetried to keep that keep that in
practice, over the course of mylife. And so someone's looking
for something outside of health,and maybe that will help them in
their real estate business, ifthey haven't read it already.
Atomic Habits is a great book.
Matter of fact, when I wastalking to Bruce, he had said he
just had finished that book aswell. But you know, simple, you
know, we get in our own way,with a lot of things. And for
(14:21):
investors, especially a lot ofour clientele, they become just
complacent over time. So inother words, they purchase a
property that is supposed tohave been a stepping stone. And
then they get too close to thetenants, life gets annoying,
whatever it may be, and thenthey wake up 20 years later, and
they own the same property. Andyet they could have made these
(14:42):
various moves through 1031exchanges and you know, to grow
their portfolio. So I think, youknow, habits, right, so if we
form the habit of what it isthat we're doing daily, better,
our future self will thank us ifyou will. I think that's very
important. So that's a greatbook as well.
Craig Evans (15:01):
So let me start diving into more what your
expertise is about and who youare, you know. When did you
actually, how long have you beenin the industry of real estate?
Kristopher German (15:12):
Yeah, so I was licensed March of 2007. And
initially for the, you know, thefirst two, three years, I was
just trying to put a couple ofdollars together to provide for
my family. But then once thatstarted gaining steam, I said,
look, I need to be an investormyself, for two reasons. One, if
(15:34):
this is the product that I'mgoing to sell to people, and if
I truly believe in it, then Ishould know what it is to be a
landlord myself. In other words,whatever it is that I'm asking
them to take upon themselves,you know, taking on more units
and doing exchange, I should beable to speak to that
personally. So around 2009, mywife and I bought our first
investment property. And sosince 2009, I've been an
(15:55):
investor as well. So I've beenan agent since 2007, still
practicing today, the vastmajority of what we do is, of
course, represent landlordspurchase and sale multifamily
real estate. But since since2009, I've my wife and I have
grown a small portfolio we'vepurchased and flip multifamily
properties. There's some thatwe've just rehabbed to hold for
(16:19):
our, you know, our own futureretirement and so forth. So
yeah, I've been involved in bothcapacities.
Craig Evans (16:25):
So if I remember right, you said that you're with
another company prior, was itonly that and then REMAX or have
you been anywhere else? Whatyour history looked like that?
Kristopher German (16:35):
Yeah. So just by chance, you know, I've always
been with REMAX commercial.
That's why I joined day one, I'mstill with them now, different
franchise, but same brand. Andthen my brand, you know, The
Apartment Dealer is a brandwithin the brand. I was asked to
oversee the multifamilydepartment division of the
(16:56):
franchise, I'm a part of now.
And then as a part of that, Isaid, you know, there I need, I
need to create a way ofseparation to brand ourselves
and what we were doing becauseagain, it wasn't just sales, it
morphed into these educationalconferences and so forth. So The
Apartment Dealer, I forget whatyear we actually branded that
(17:20):
maybe around 2010-ish or so. Andso yeah, it's the The Apartment
is my company but we're, I'mstill under the umbrella of
REMAX commercial and they andthey do a lot of good stuff for
us as well.
Craig Evans (17:32):
So you've talked about that you've been in the
real estate investment side wasmultifamily, your first
endeavor? Or did you start withsingle family or have you ever
dabbled between the two or haveyou always stayed in
multifamily?
Kristopher German (17:45):
So I cut my teeth on multifamily. It's what
I know best. And that's what Isell today. And that's what I
own today. Along the way. I'vesold a warehouse here and there
and an office building here andthere. And but multifamily it
has been my focus.
Craig Evans (18:06):
Now with the change of ADUs, have you looked at any
of this stuff in your marketwith single family and adding
ADUs or is that still not thespace you stay in? Or is that
not the space you look atreally?
Kristopher German (18:19):
Yeah. So you know with ADUs the interesting
thing is that here inCalifornia, you know, we have
statewide rent control. And soif you buy a single family home,
and then you add an ADU theminute you do that now that
house is now under rent control.
It wasn't under rent control.
But now that it's multi unitwith an ADU now it falls under
rent control that just wantedit. When it comes to
(18:41):
multifamily, many individualsnow are taking carports and
garages, turning them into ADUsor you know additional space on
a property. I'm yet to do itmyself. But I've had a number of
clients now, do that becauseespecially with where we've been
in the market cycle, and rentcontrol, you know, under rent
(19:03):
control the way it is today, ifsomething was built within the
last 15 years, it doesn't fallunder rent control. So if you
build an ADU today, thatparticular unit is not under
rent control. Although, let'ssay this is like a 10 unit
building, all the other 10 unitare under rent control. At least
that ADU now is not under rentcontrol. Now, we have a proposed
bill we could talk about this alittle bit later on. But there's
(19:25):
a proposed bill that's going tobe on our ballot here in
California in November of thisyear that would change
everything it would put singlefamily houses under rent
control, it would put newconstruction under rent control.
And the nail in the coffin forlandlords would be it also would
make vacancy control legal. Sothat's just something that you
(19:45):
know people have to be aware ofnew we'll see what happens in
November but ADUs are a way forinvestors to increase their cash
flow and the value of propertiesthat they currently own for
sure.
Craig Evans (19:59):
So as you continue to grow in this industry, you
mentioned the one mentor thatreally kind of jumpstarted you
into this career. Is that stillthe biggest mentor for you? Or
do you have others? Who do youlook to as your go to mentor
today?
Kristopher German (20:17):
Yeah, so for anyone who's read Think and Grow
Rich, Napoleon Hill says you'resupposed to have a mastermind,
right? You're supposed to,encircle yourself with
individuals from variousindustries that as you all work
together, you build this"mastermind", and I just been
very fortunate that my closefriend learned the industry
(20:38):
brought me under his wing Ilearned under him and then went
out on my own. Shortly after hismentorship, I befriended a real
estate attorney, Steven Spear,who has been a part of now my
educational events ever sincethe beginning. And you know,
he's an individual that owns1000s of units, he runs a site
of a very successful lawpractice. He runs syndications
(21:01):
and so forth. And so I've hadhim in my back pocket, you know,
so to speak, in terms of when Ihave questions, only to then be
friend, one of the bestcommercial lenders here locally,
to then befriending that one ofthe most prominent eviction
attorneys here locally, and Ican go on and on. So again, God
in His grace to help me alongthe way, every facet of this
(21:22):
industry that I possibly couldneed a mentor, or someone to
turn to I literally have himnow. And that's actually speaks
at, you know, our educationalevents where they've been, at
least on our YouTube channel,but everything and even from,
say, I started thinking abouttanning buyouts, and then all of
a sudden, I bumped into somebodythat said, you know, you gotta
meet this guy, Dennis Munoz, heactually does what you're
(21:43):
looking for. And now we'vebefriended him, we have a good
working relationship he'salready helped sell for our
clients by our tenants, becauseagain, here in California with
rent control, that's somethingyou need. But yeah, just again,
every facet that you could comeup with, I have not just a
person to turn to, but arguablythe person to turn to and, and
Bruce being one of them, youknow, in 2015, maybe I saw
(22:08):
Bruce, I had heard Bruce's nameeverywhere. He spoke at a
educational event that I wasalso asked to be a part of, but
he and I were on the paneltogether. We weren't speaking at
the same time. And I thought,Okay, I got to find a way to, I
got to meet this guy, BruceNorris. Everyone's talking about
Bruce Norris. And he gave atalk, and I thought, Okay, after
his talk, meet him off in thewings, forget it, the minute he
(22:29):
got off stage, everybody justrushed him the attendees, you
know, the ask them questions.
And so I didn't get anopportunity. So my accountant
who was holding the event, Isaid, Look, you got to somehow
create a bridge between me andBruce, I'd love to interview
him, you know, for my channel.
And that was our firstinteraction, you know, Bruce, of
course, you know, he was veryhumble, and what have you, he
was more he didn't know who Iwas from anyone except that to
(22:51):
do an interview with me. And Istarted our friendship. And
shortly after that, I came toBruce and I said, you know, I
know you don't land onmultifamily properties but what
if I could convince you that Ihave some good projects I'm
working on personally. And youcan use me as the beta test. And
since then, you know, throughthe hard money division of your
(23:13):
company, we've now funded atleast three or four multifamily
properties that we bought,improved, and then flipped and
done very well. And, you know,Bruce was very gracious in that
way, in the sense that hetrusted me, you know, he
entrusted me to do the rightthing there. And it worked out
great for both of us.
Craig Evans (23:34):
That's awesome. So you talked about your brand, The
Apartment Dealer. You know,there's a lot of people in
commercial real estate, a lot ofpieces of people in the
multifamily space. Tell ouraudience, what do you think is
the biggest specialty that youguys do within the brand of The
(23:55):
Apartment Dealer?
Kristopher German (23:57):
So, we talk about the financial legacy, the
way I see it is that anyone whoowns investment, real estate,
they're building a financiallegacy for themselves, you know,
many of these individuals areeither working individuals or
own small businesses like myselfand my wife and they're
purchasing investment realestate, to replace them some day
(24:20):
down the road in terms of youknow, passive income. Many of
these individuals are already ata point where their properties
represent the vast majority ofthe income that they're living
on. And then there's those who,you know, they've had the cash
flow, right where they want itfor several years. They're not
looking at you know, expandingthey see themselves as too old
(24:40):
for that and they're beginningto contemplate well, the next
generation behind them, theirheirs, their children, is it
cash they give them or is itproperties? Do the kids want to
be landlords or not? Do theywant to put the kids in
partnership with each otherbecause that's what happens when
you will your kids the propertyis whether you look at it that
way or not, you just made thembusiness partners. So I talked
(25:02):
about the financial legacy inthe sense that that's what this
is. And so I think whatdifferentiates us is that rather
than calling everyone andsaying, 'Do you want to buy or
sell', understanding that thereare these various segments of
investors that have thesediffering needs. And, you know,
Zig Ziglar, he says that, if yougive an individual, what they're
(25:27):
looking for what they want,you'll get everything in return
that you want. So us by havingserved these investors in this
way, specifically, through oureducation, have done a good
amount of business in return,because again, they've all had
different needs. It's not aboutjust, you know, 'Hi, sir. Are
you looking to buy or sell' likein a cold call, but knowing each
other investor stories, and thenbeing able to serve them in that
(25:48):
need? And I think that is whathas differentiated us over time
Is that helping them along thatroad of building the financial
legacy, educating them along theway, making sure they had the
right resources and at theirdisposal. And, yeah, just being
there trusted resource in thatway.
Craig Evans (26:10):
So, you know, part of what we're trying to do with
the podcast is always bringingthe best information we can to
our listeners. And you know, Iknow a lot of our listeners are,
they deal in a lot of SFRs, youknow, their single family is an
easier process. I know when Istarted in investing, you know,
(26:33):
at one point, our portfolio wasa little over 1000 doors. When I
first started investing, Istarted in FSRs, and or SFR
rather and got into multifamily.
Tell our investors our tell ourlisteners really, if you will,
do you find it difficult to getinto the multifamily space?
Kristopher German (26:53):
I think what's difficult, difficult
about it today is just the pricepoints, right. So for example, I
met with a client yesterday, whowas telling me a story about you
know, he bought some property byaccident with $3,000. And I'm
just like, oh my gosh, if Icould buy a property with
$3,000, I'd be done you know,next week, right? You know, I
(27:14):
unload my treasure here. So theprice points, I think is the
biggest barrier of entry. Andwould it be for me, I would have
to guess why individuals startwith single family because you
can get you know, there's lowerprice points, you can get in
with a 20% down not owneroccupied maybe even less
depending on what kind offinancing you're using versus if
(27:36):
you're buying multifamilyproperties, especially something
that's five units or larger inthe commercial realm. Well, in
California, based on our prices,today, you're probably looking
at 35, 40%, down easy that thebanks will lend up to 75% LTV,
but the reality of it isdifferent than single family
homes that are more dependentupon your personal income.
(27:59):
They're looking at the income ofthe property relative to the
purchase price. And so that'swhy while they will land, say
75%, LTV, the property is don'tqualify for that and you're
needing to increase yourdownpayment. Second to that, I
would think probably assomething that's more just
psychological for whateverreason, there seems to be this
(28:22):
negative perspective that well,more units is going to have to
equal more evictions or moretenant headaches or you know,
something like this. And nothingcould be farther from the truth.
It just comes down to yourmanagement style. And you know,
of course, location matters. Andyou might inherit some bad
tenants from a previous owner.
And there's ways to deal withthat and get the property turned
(28:43):
around. But it's your managementstyle. And I think that
especially in the multi, youknow, when people that are
buying and flipping homes,tenants really are not a
thought, right, you're nothaving to worry about
personalities, you're dealingwith a vacant unit, multifamily,
you know, depending, you know,you're dealing with people. And
if you don't treat it businesslike and I see that being one of
(29:05):
the biggest challenges for a lotof landlords, you get too close
to the tenants, you get tooinvolved in their story. I'm not
saying that you don't have aheart, but you know, this is
business. This is not a work ofcharity, you know, make money in
real estate so that you can doyour charity over here. But if
you use your units like charity,and you don't raise your rents
and do certain things. Well,that's why now that we have
(29:27):
statewide rent control,landlords got caught flat
footed, and is a big obstaclefor them now to grow from where
they are. Because the cash flowisn't there, and maybe the value
isn't there because of therental rates or what have you.
And so, yeah, they just have to,I know it's kind of long winded,
(29:47):
but you know it from beginning,beginning to end, it's you gotta
be business business oriented.
Craig Evans (29:53):
That's right.
That's right. And that's whatwe're trying to say is we want
people to understand that youknow, reason that we're having
the experts if you will on is wewant people to be armed with
that information. And so oftenyou're right, I see so many
people that have the feel andcall it a pie in the sky
mentality of like, oh, this isgoing to be great. And then,
like you say they get suckedinto the tenant of thinking that
(30:15):
this tenant, well, I'm gonnagive him a break. And that's not
business. You can't functionlike that. So, you know, Kris, I
know you started going straightinto multifamily. Do you think
that's an easier route? Or youknow, there's a lot of variables
(30:36):
to that question. And so that'sprobably a big open ended
question. But do you typicallysee the people that are coming
to you have they been in smallerstuff before they've been either
in smaller multifamily or SFRs?
Or do you find people that arecoming to you, is it because of
a cash situation, that they'relooking for bigger deposits to
(30:57):
build to place their cash.
Kristopher German (31:00):
So you know, our investor base really is a
mom and pop clientele. These areindividuals that, you know,
against what culture will saytoday and demonize the wealthy.
They started out with not twonickels to rub together,
bootstrapped it and maybe boughta house or at most bought a
(31:20):
duplex, and then just played therules of real estate, let it go
up in value, either refinanceit, pull some equity out, buy
something else, or sell it do a1031 exchange. And I'll tell
you, I've been lucky enough thatthe two largest multifamily
owners here in California,they're both my personal
clients, right, you know, I'vedone business with them. And one
I'm very close to more than saythe other. But they both have
(31:43):
similar stories where they wereimmigrants came to this country,
were educated in this country,didn't come from money, they
didn't start with that handout,found value in real estate, and
simply by continuing to buy andand, and exchange and ratchet up
over time. These gentlemen areworth a lot, a lot of money.
(32:07):
One's even a billionaire today.
And we're again, didn't have twonickels to rub together. The one
who's a billionaire todaystarted working out and a
canning factory originally whenhe got here and was going
through college. And so it canbe done. So again, if you have
enough to buy a single familyhouse, then buy that first
single family house, even if yougot to buy it out in the sticks.
(32:27):
But the idea is if anyone'scontemplating, well, look at the
market today, look at theeconomy, look who's present look
at real estate's, real estate,people need a place to lay their
head, it's not going to be takenout by Amazon or AI. Because
again, people need housing. Herein California, we're so spoiled
in terms of the supply anddemand. That vacancy is next to
(32:48):
none. And even when it takes up,and people get a little worried,
we're talking about a 5% vacancyversus other states that when
they have a problem, we'retalking 15% vacancy, or maybe
even more. So real estate,again, with my limited
knowledge, the last, you know,17 years. But when we look
historically, it always goes up.
(33:10):
And when you look at rentalrates while they do stymie at
times, or maybe pull backslightly over time, they go up
and when you look when you trackvacancy, and these are things
that were Kris, you're justtalking about these, like, you
know, just on a whim, no, no, atour in our educational events,
and we do market updates, welook at all the numbers. So I
could give, you know the boringnumbers, but the overarching
(33:33):
idea here is that values go up,rental rates go up and vacancy
comes down. And that's what youcan rest assured on now. Can you
do a bad deal? Of course, andcan you make it bad, and that's
where you know, you have to geteducated ensure that you have
the right network ofprofessionals that are assisting
you. But I think the name of thegame is get involved. My first
(33:55):
property was a three unitproperty, just by accident, my
first investment property. And Imean, I done some of the dumbest
things with when we wererehabbing that property. And I
mean, so I thought I was goingto be slick and not pull
permits. Hey, we're gonna, youknow, because I figured I didn't
have much money for the rehabs.
So we're gonna do this with nopermits. And I had, you know,
(34:17):
some of my bigger clients.
They're like, Hey, Kris, youdon't need permits, I think I'm
going to be like them, you know,what do I know? And my workers
at that time were so brilliantthat we ordered a trash banner
for whatever reason from thiscompany. We ordered the trash
bin, it was bright red. Theythought it was smart to put this
(34:38):
bright red trash brand at thefront of the property so that
when the inspector was drivingdown the street he just said oh,
there must be work being donehere. Let's go check their
permits. And we had none. We gotred tag, we had to stop the
project. I had to go pullpermits and it was a whole
project. And but you know whatit just worked out in the end
(34:59):
and that's how we got started.
Craig Evans (35:02):
So as you know, let me just clarify with the
multifamily space you primarily,is it primarily or solely deal
in Southern California?
Kristopher German (35:15):
Yeah, Southern California and not even
all of Southern California. Sothose who are familiar with the
area, I'll give you someboundaries here. So if you're,
we start at the 710 freeway. Sojust before you get to downtown
Los Angeles, we go as far eastup to about where San Bernardino
begins. We're along all thefoothills, and then we go about
(35:36):
as far south as the 91 freeway.
So that's our box. And nowRiverside, we're also moving
into Riverside, sorry, to ourcompetitors, but we're moving
there as well. So, but that'sour general geographical area
that we cover. You cannot, inthis business, you cannot be a
jack of all trades, in myopinion. So it's multifamily
(35:56):
that we do if you have someother type of asset type than
like warehouse or some what haveyou typically, we're going to
refer that out. And we're goingto speak to and help those
individuals that own within thatgeographic area.
Craig Evans (36:13):
In the multifamily space, the area's you deal with
what kind of cap rates are youseeing right now?
Kristopher German (36:18):
Easily above 5%. Now, and in the multifamily
world, it's a push and pullbetween interest rates and cap
rates. And so for those of youmaybe not familiar with the
terminology, easy way as a caprate is if you were to buy a
property, all cash, what wouldbe your rate of return. So when
(36:39):
I say a 5% cap rate, or Craigmentioned a 5% cap rate, again,
if you were to buy thatproperty, all cash, you would
make 5% return on your money.
Well, the interest rate todayfor a multifamily property is
about 6.7%, and probably headedupwards. And we can talk about
that. But I made that predictionthree weeks ago that the week
after the Fed came out and said,'We promise you three rate cuts
(37:00):
later this year'. I'm on stagethe following week, saying I'm
sorry to tell you that's notwhat I'm reading. That's not
what I believe the data says. SoI think rates are going up. But
today, it's 6.7%. So thatdifferential 5%, cap rate 6.7.
So now let's say you didn't buythe property, cash and you
purchased the property withfinancing, you're losing 1.7% on
every dollar borrowed. So hence,at the beginning of 2022, we
(37:27):
still, or at the end of 2022, wewere at about, say a four and a
half percent cap rate, at aboutthe same very close on an
interest rate. So almost evenmaybe it sure was slightly
higher than that. By the time weget to third quarter 2023,
interest rates had gone up toseven and a quarter. And cap
(37:49):
rates were lagging behind himand we were finally cusping the
hill of 5%. The needless to saythe market was dead third
quarter 2023. By fourth quarter2024 interest rates had come
down some and sellers got thereality check that I need to
(38:09):
lower my price, the lower theprice that increases the cap
rate. So to where we are nowwhere I would say easily if you
want a property to be sold, andyou don't want to be on the
market forever in thegeographical areas that I just
mentioned, because I'm gonnaspeak to what I know, you're
probably looking at least fiveand a quarter 5.4 cap in order
for that unless there'ssomething really unique about
it, or maybe it's been fullyrehabbed or something, but
(38:32):
you're in that realm. And again,you take a look at that interest
rate, which historicallyspeaking isn't all that bad. But
when you're dealing with aninvestor base, who remembers
3.5%, three years ago, they'relooking at that saying, you
know, well explain to me why Iwould buy that deal, you know,
with such a low cap rate. And sothat and that's been the other
(38:57):
tug of war is trying to educatethe landlords that we're not
going to see 3% Again, we'reprobably not going to see 4%
again, and if we did, it'sbecause there's some sort of
economic calamity. So I don'tthink we want to see those
interest rates. And if we getinto the fives, that would be a
godsend, and we should be happywith that because again,
(39:17):
historically speaking, that isabout somewhere between five and
six is about an average interestrate. There's probably viewers
here I was before my time butthat remember 15, 16, 17, 18%
interest rates and so thoseindividuals are hearing us cry
about 6% saying what are youcrying about? You know, I had to
figure this thing out with it.
Obviously, prices were cheaperand cap rates were higher but
(39:40):
the point is historically, weremore in line and that three and
4% that we got to enjoy was agood ride hopefully made a lot
of money during that time. But Ithink those days are gone for a
while.
Craig Evans (39:52):
Okay, that's gonna do it for part one with Kris
German. Make sure and catch usnext week for part two.
Narrator (39:57):
For more information on hard money loans, trust deed
investing, and upcoming eventswith The Norris group. Check out
thenorrisgroup.com. For moreinformation on passive investing
through the DBL Capital RealEstate Investment Fund, please
visit dblapital.com.
Joey Romero (40:16):
The Norris group originates and services loans in
California and Florida underCalifornia DRE license 01219911.
Florida mortgage lender license1577 and NMLS license 1623669.
For more information on hardmoney lending go to
thenorrisgroup.com and click thehard money tab.
Welcome to The Norris Group real estate podcast, a
show committed to bringing youinsights from thought leaders
shaping the real estateindustry. In each episode, we'll
dive into conversations withindustry experts and local
insiders, all aimed at helpingyou thrive in an ever-changing
real estate market. continuingthe legacy that Bruce Norris
(00:24):
created, sharing valuableknowledge, and empowering you on
your real estate journey.
Whether you're a seasoned pro ora newcomer, this is your go-to
source for insider tips, markettrends and success strategies.
Here's your host, Craig Evans.
Craig Evans (00:45):
All right, we want to welcome everyone to the
podcast today. We are superexcited. We've got a great guest
with us today. Let me jump inhere. We've got a large number
of followers that have alwaysasked Bruce Norris in the past
about commercial real estate.
The answer over the years hasalways been you know that Bruce
was deferring to people withthis knowledge. It's simply not
what The Norris group has dealtwith or have invested in in the
(01:05):
past. We typically loan up tofourplexes but that's about the
extent of our lending process.
So but today, we've got one ofthose experts that Bruce has
always depend to Kris German.
Kris German is the CEO of theApartment Dealer. Kristopher
German has specialized inselling multifamily residential
properties since joining REMAXcommercial in 2007. Chris
(01:27):
consistently ranks among the topthree commercial agents within
the REMAX commercial nationaldivision. And over the last 16
years has been awarded everyaward REMAX has to offer. The
prestigious Diamond Club Awardin years 2015 through 2022, the
REMAX Hall of Fame Award, theLifetime Achievement Award and
(01:50):
most notably the REMAX Circle ofLegends award, with a proven
track record of more than 400successfully closed
transactions, accounting formore than $450 million in
investment real estate. Krisattributes his success to a
client centered business basedon hard work, honesty, and
unparalleled negotiation skills.
(02:14):
What Kris' clients have found isthat regardless of market
direction, Kris continues tosuccessfully sell more real
estate and at higher prices thanhis competitors. In his spare
time, Kris has been an activecommunity leader working with
high school youth throughreligious and athletic outreach
programs. In addition, Kris isa contributor to philanthropic
(02:36):
efforts such as St. Jude'sChildren's Hospital, the
American Cancer Society, andannually provides a holiday
celebration for Veronica's Homeof Mercy, a Women's and
Children's Shelter in SanBernardino, California. Kris, my
friend, welcome to the podcasttoday.
Kristopher German (02:53):
I just seen that I was wondering who we're
going to have on today. Itsounds great. No, thank you.
Craig Evans (02:59):
That's a bio there, my friend.
Kristopher German (03:02):
Thank you.
Thank you for having me.
Craig Evans (03:04):
Hey, listen, you know, I know you've spoken a lot
of our events in the past. It'sdone a lot of stuff with Bruce.
But you know, one of the thingsthat we've kind of been diving
into as we're kind of reignitingour podcast and getting the
content out is one of the thingsthat we like to do is really let
our audience know who you guysare, not just what you do now,
but I want to talk about, youknow, how did you get to where
(03:26):
you are? So if that's okay, letme just go through a few things.
I mean, you know, because again,I we met last year, out and in
California the event in June,but are you originally from
Southern California?
Kristopher German (03:40):
Yeah, I'm born and raised in Southern
California. And, my parentsdivorced at an early age. So I
lived probably in 10, 12different communities between
the age of four from birth tohigh school. And I always share
that with my children becausethey have more of a traditional
lifestyle versus what I had as achild. But yeah, so I know the
(04:03):
area well, I've been here all mylife.
Craig Evans (04:07):
Now, as you were growing up, did you imagine
yourself in real estate or whatwere you thinking? Hey, I want
to be the the astronaut or whatwas your desire growing up?
Kristopher German (04:18):
You know, as I look back in my youth,
especially my high school youth,I was just living by the seat of
my pants sort of thing, I didn'treally, I didn't know what goal
setting was at that time. That'sone of the things that
definitely changed my life as Ibecame a young man. But I was
lucky enough to have gone toprivate high school so and when
you go to private high school,college is just a given. So
(04:40):
okay, great. I'm going tocollege but never had a long
term plan in terms of whattomorrow was going to look like
and but I just knew my fatherwas a business owner. I knew
that that looks more attractivethan say being an employee,
being able to make my own hoursand you know what I had advanced
or different things my dad couldbe there because he made his own
(05:02):
schedule. And I thought that Iliked that idea, being my own
boss. I thought, you know,wearing a suit daily would be a
cool thing to do. But yeah, justvery simple things that I
thought you know that okay, youknow, one day, if I could have
it my way, that's where I likeit. But how I got to real estate
is a longer story. But at onepoint, I thought I was going to
(05:25):
be a policeman. I had wentthrough all the testing
psychological analysis, liedetector and had done this with
multiple departments. But I'mactually colorblind, slightly
colorblind. And I didn't findout till the end of all the
testing a portion that that's anautomatic disqualifier. And so
(05:46):
that turned my world kind oftopsy turvy for a while
thinking, oh, gosh, I went fromnot really having a goal, to now
okay, I'm gonna go into lawenforcement. And now that's not
going to work out. So afterthat, that was probably around
the age between 20 and 21. I wasfloundering around for a while
to kind of skip ahead. A goodfriend of mine that I went to
(06:08):
high school with, post collegegot hired by Marcus and
Millichap, which is a very largecommercial firm, was doing well
for himself. And so the Decemberof 2006, I went to reach out to
him, he wasn't around, he was onvacation. So I sent him an
email. And in this email, Ibasically said, You know what I
have, by this time I had a smallfamily of my own. And if you're
(06:34):
willing to be my mentor, I'mwilling to be a good student.
And that January, or by that,and following March, I was
licensed by that followingSeptember, I had made enough
money in real estate to walkaway from what was my full time
job, which was not veryimpressive. As I'm studying real
estate. I was actually by day Iwas working for school police,
(06:58):
and having to supplement myincome, I was delivering pizzas
at night. So literally, the yearbefore I get into real estate,
that's what I'm doing. I'm apizza delivery boy, if you will.
And that first year in realestate, I was awarded from our
office we had in downtown LosAngeles Junior agent of the
year, the following year, Idoubled my income the following
(07:18):
year after that, I doubled myincome again. And so it's just
been the trajectory, you know,by God's grace of my career that
it's worked out, I fell in myniche, I found, I think what I
was some, you know, born to dois they say, I get to be my own
boss, I get to sharpen the suit,you know, those couple of things
that I was looking for as asmall boy. And yeah, and I'm
(07:43):
just grateful for all thementors I've had along the way,
because it you know, they say,You're a self made success.
Nobody's self made. Everybodyhas mentors along the way. And
definitely Bruce Norris is oneof those. And so, you know, I'm
happy to assist you guys, youknow, however I can.
Craig Evans (08:00):
Who do you think was the biggest influence on you
Kristopher German (08:02):
Growing up as a small child, probably my
growing up?
father again, just, you know,because he was a business owner,
and versus my mom worked for theschool district. And this isn't
to say anything against youknow, union employees. But
obviously, that's two differentlifestyles, two different types
of income. And it was, forwhatever reason, it was just
(08:24):
more attract. And he always toldme and I now I tell my children,
except my kids kind of make ajoke about it. But you know, my
dad would say whatever you'regonna be in life, even if you
decide to be a trash man, justbe the best at it, you know,
that's all I'm asking of you isjust be the best at it. And so
my kids joke like, 'Well, Dad,are you the best trash man in
town,' you know, so theynaturally make light of it. But
(08:45):
that simple thing is, is reallywhat I've chased after. So I
could just be a realtor and justsell multifamily properties like
I do. But I wasn't satisfiedwith that. So a big arm of my
business is investor education,or educating the landlords. We
hold live events, we have achannel on YouTube, and so
(09:09):
forth. And so that's part ofthat idea of being the best I
can in this field, is that mostanyone can sign up a real estate
purchase agreement. But we'vewe've gotten the next step to
essentially lock arms with ourclients, the landlords, and to
(09:29):
educate them along the way, orat least make available to them.
Those mentors, real estateattorneys, eviction attorneys,
tax professionals, individualslike Bruce, who could then
educate them, keep them apprisedof what they need to know year
to year and then only helps themmove what I call their financial
legacy are their real estateportfolio in a positive
(09:51):
direction, year after year, andso, you know, we like doing
that.
Craig Evans (09:56):
Sure. So, you mentioned faith a few times, you
know, by God's grace, thingslike that, how big of a role
does faith play in what you'vedone growing up into becoming
who you are?
Kristopher German (10:07):
You know, so the last interview that I was
headed to when I was trying tobecome a policeman, at that
point, things weren't workingout, I just felt like, Okay, I'm
fighting destiny here. And sobefore I leave my house to go to
the the interview, the chiefsinterview that I'm headed to, I
(10:27):
said, a little prayer in thecar, 'God, if, if this isn't
what you want, then you got toshow me another way, because
this is what I'm going after, atthis point.' And literally, on
my way to the interview, myradiator broke in my car, and
not just broke, I had literallyjust fixed the radiator, like a
(10:48):
week or two prior. So it wasloud enough of a, you know, a
signal that maybe lawenforcement, you know, wasn't
meant for me. And at that time,and since then, I've always
worked with high school age,kids, in terms of I was a youth
minister at one point, and, youknow, teaching them, you know,
(11:09):
the faith, and still involvedtoday, in that realm. And so
it's a big part, you know, mywife and I, we have nine
children, faith is the center ofour household. And, yeah, I
think it's my compass. It reallyis.
Craig Evans (11:23):
I mean, you know, everybody that knows me, really
knows me know that I'mcompletely unashamed about my
faith in Jesus Christ. And I wassuper excited to read more about
that. Because obviously, when Imet you last year, you know, we
didn't get to talk about ourfaith or what, you know, it's
not what we just don't standaround and do that every second
(11:43):
of the day, right. But as I'velearned more about you and
prepping, being ready tointerview for this, I was
excited to read more about thatand hear more about that. And
all of a sudden, you start outtalking about so. So appreciate
you diving in on that. But solisten, I hear you're an avid
reader. So what are you readingnow? What's the one book or
(12:03):
ebook or thing that you wouldrecommend to investors now?
Kristopher German (12:08):
So right now I'm actually reading a book, Gut
Check by Dr. Steven Gundry. Andso the one thing aside of real
estate and my faith, the thingthat I know most about is
health. I've had some familymembers that have had health
challenges, I've had some of myown. And that's caused me to
have take this deep dive, I'dsay over the last decade. So Gut
(12:30):
Check. Yeah, I'm it's a seriesof books that Dr. Gundry has
written. And he's just reshapedthe health of some of my family
members, my own health. And soanyway, I'm not doing a
commercial for him. But that'sgreat. And along that same line,
that same thread, you know, wecan make all the money in the
(12:52):
world. But if you don't haveyour health, and I'm fortunate,
I've had clients who are"wealthy", but not very wealthy
when it comes to their health.
So long that point, I would sayone book that everyone should
read, it's a book by Dr. Lee Eatto Beat Disease. Most people
I've seen him he's been on Oprahhas been on all these different
shows. But in that book, heessentially talks about what are
(13:12):
the foods that we can eat daily,that will suppress or mitigate
your risk to all the variousdiseases like cancer and these
you know, simple things, justfood you can add on we're not
talking about it, you got to beoutlandish with supplements and
these sorts of things, but foodso anyways, yeah, I would
suggest that book Eat to BeatDisease.
Craig Evans (13:34):
And that's what's fun about talking to more
people, you know, when you startto dive in, so many people want
to talk about, how do we makemore money? Like you said, you
know, if you don't take care ofyourself, what good does making
it? Do you know, if you're notthere to be a good steward of
it, to have fun with it, dothose things making it doesn't
(13:56):
matter? How many beans in theworld, right?
Kristopher German (13:58):
Yeah, I mean, there's plenty of books, I try
to read a book a month, I'vetried to keep that keep that in
practice, over the course of mylife. And so someone's looking
for something outside of health,and maybe that will help them in
their real estate business, ifthey haven't read it already.
Atomic Habits is a great book.
Matter of fact, when I wastalking to Bruce, he had said he
just had finished that book aswell. But you know, simple, you
know, we get in our own way,with a lot of things. And for
(14:21):
investors, especially a lot ofour clientele, they become just
complacent over time. So inother words, they purchase a
property that is supposed tohave been a stepping stone. And
then they get too close to thetenants, life gets annoying,
whatever it may be, and thenthey wake up 20 years later, and
they own the same property. Andyet they could have made these
(14:42):
various moves through 1031exchanges and you know, to grow
their portfolio. So I think, youknow, habits, right, so if we
form the habit of what it isthat we're doing daily, better,
our future self will thank us ifyou will. I think that's very
important. So that's a greatbook as well.
Craig Evans (15:01):
So let me start diving into more what your
expertise is about and who youare, you know. When did you
actually, how long have you beenin the industry of real estate?
Kristopher German (15:12):
Yeah, so I was licensed March of 2007. And
initially for the, you know, thefirst two, three years, I was
just trying to put a couple ofdollars together to provide for
my family. But then once thatstarted gaining steam, I said,
look, I need to be an investormyself, for two reasons. One, if
(15:34):
this is the product that I'mgoing to sell to people, and if
I truly believe in it, then Ishould know what it is to be a
landlord myself. In other words,whatever it is that I'm asking
them to take upon themselves,you know, taking on more units
and doing exchange, I should beable to speak to that
personally. So around 2009, mywife and I bought our first
investment property. And sosince 2009, I've been an
(15:55):
investor as well. So I've beenan agent since 2007, still
practicing today, the vastmajority of what we do is, of
course, represent landlordspurchase and sale multifamily
real estate. But since since2009, I've my wife and I have
grown a small portfolio we'vepurchased and flip multifamily
properties. There's some thatwe've just rehabbed to hold for
(16:19):
our, you know, our own futureretirement and so forth. So
yeah, I've been involved in bothcapacities.
Craig Evans (16:25):
So if I remember right, you said that you're with
another company prior, was itonly that and then REMAX or have
you been anywhere else? Whatyour history looked like that?
Kristopher German (16:35):
Yeah. So just by chance, you know, I've always
been with REMAX commercial.
That's why I joined day one, I'mstill with them now, different
franchise, but same brand. Andthen my brand, you know, The
Apartment Dealer is a brandwithin the brand. I was asked to
oversee the multifamilydepartment division of the
(16:56):
franchise, I'm a part of now.
And then as a part of that, Isaid, you know, there I need, I
need to create a way ofseparation to brand ourselves
and what we were doing becauseagain, it wasn't just sales, it
morphed into these educationalconferences and so forth. So The
Apartment Dealer, I forget whatyear we actually branded that
(17:20):
maybe around 2010-ish or so. Andso yeah, it's the The Apartment
is my company but we're, I'mstill under the umbrella of
REMAX commercial and they andthey do a lot of good stuff for
us as well.
Craig Evans (17:32):
So you've talked about that you've been in the
real estate investment side wasmultifamily, your first
endeavor? Or did you start withsingle family or have you ever
dabbled between the two or haveyou always stayed in
multifamily?
Kristopher German (17:45):
So I cut my teeth on multifamily. It's what
I know best. And that's what Isell today. And that's what I
own today. Along the way. I'vesold a warehouse here and there
and an office building here andthere. And but multifamily it
has been my focus.
Craig Evans (18:06):
Now with the change of ADUs, have you looked at any
of this stuff in your marketwith single family and adding
ADUs or is that still not thespace you stay in? Or is that
not the space you look atreally?
Kristopher German (18:19):
Yeah. So you know with ADUs the interesting
thing is that here inCalifornia, you know, we have
statewide rent control. And soif you buy a single family home,
and then you add an ADU theminute you do that now that
house is now under rent control.
It wasn't under rent control.
But now that it's multi unitwith an ADU now it falls under
rent control that just wantedit. When it comes to
(18:41):
multifamily, many individualsnow are taking carports and
garages, turning them into ADUsor you know additional space on
a property. I'm yet to do itmyself. But I've had a number of
clients now, do that becauseespecially with where we've been
in the market cycle, and rentcontrol, you know, under rent
(19:03):
control the way it is today, ifsomething was built within the
last 15 years, it doesn't fallunder rent control. So if you
build an ADU today, thatparticular unit is not under
rent control. Although, let'ssay this is like a 10 unit
building, all the other 10 unitare under rent control. At least
that ADU now is not under rentcontrol. Now, we have a proposed
bill we could talk about this alittle bit later on. But there's
(19:25):
a proposed bill that's going tobe on our ballot here in
California in November of thisyear that would change
everything it would put singlefamily houses under rent
control, it would put newconstruction under rent control.
And the nail in the coffin forlandlords would be it also would
make vacancy control legal. Sothat's just something that you
(19:45):
know people have to be aware ofnew we'll see what happens in
November but ADUs are a way forinvestors to increase their cash
flow and the value of propertiesthat they currently own for
sure.
Craig Evans (19:59):
So as you continue to grow in this industry, you
mentioned the one mentor thatreally kind of jumpstarted you
into this career. Is that stillthe biggest mentor for you? Or
do you have others? Who do youlook to as your go to mentor
today?
Kristopher German (20:17):
Yeah, so for anyone who's read Think and Grow
Rich, Napoleon Hill says you'resupposed to have a mastermind,
right? You're supposed to,encircle yourself with
individuals from variousindustries that as you all work
together, you build this"mastermind", and I just been
very fortunate that my closefriend learned the industry
(20:38):
brought me under his wing Ilearned under him and then went
out on my own. Shortly after hismentorship, I befriended a real
estate attorney, Steven Spear,who has been a part of now my
educational events ever sincethe beginning. And you know,
he's an individual that owns1000s of units, he runs a site
of a very successful lawpractice. He runs syndications
(21:01):
and so forth. And so I've hadhim in my back pocket, you know,
so to speak, in terms of when Ihave questions, only to then be
friend, one of the bestcommercial lenders here locally,
to then befriending that one ofthe most prominent eviction
attorneys here locally, and Ican go on and on. So again, God
in His grace to help me alongthe way, every facet of this
(21:22):
industry that I possibly couldneed a mentor, or someone to
turn to I literally have himnow. And that's actually speaks
at, you know, our educationalevents where they've been, at
least on our YouTube channel,but everything and even from,
say, I started thinking abouttanning buyouts, and then all of
a sudden, I bumped into somebodythat said, you know, you gotta
meet this guy, Dennis Munoz, heactually does what you're
(21:43):
looking for. And now we'vebefriended him, we have a good
working relationship he'salready helped sell for our
clients by our tenants, becauseagain, here in California with
rent control, that's somethingyou need. But yeah, just again,
every facet that you could comeup with, I have not just a
person to turn to, but arguablythe person to turn to and, and
Bruce being one of them, youknow, in 2015, maybe I saw
(22:08):
Bruce, I had heard Bruce's nameeverywhere. He spoke at a
educational event that I wasalso asked to be a part of, but
he and I were on the paneltogether. We weren't speaking at
the same time. And I thought,Okay, I got to find a way to, I
got to meet this guy, BruceNorris. Everyone's talking about
Bruce Norris. And he gave atalk, and I thought, Okay, after
his talk, meet him off in thewings, forget it, the minute he
(22:29):
got off stage, everybody justrushed him the attendees, you
know, the ask them questions.
And so I didn't get anopportunity. So my accountant
who was holding the event, Isaid, Look, you got to somehow
create a bridge between me andBruce, I'd love to interview
him, you know, for my channel.
And that was our firstinteraction, you know, Bruce, of
course, you know, he was veryhumble, and what have you, he
was more he didn't know who Iwas from anyone except that to
(22:51):
do an interview with me. And Istarted our friendship. And
shortly after that, I came toBruce and I said, you know, I
know you don't land onmultifamily properties but what
if I could convince you that Ihave some good projects I'm
working on personally. And youcan use me as the beta test. And
since then, you know, throughthe hard money division of your
(23:13):
company, we've now funded atleast three or four multifamily
properties that we bought,improved, and then flipped and
done very well. And, you know,Bruce was very gracious in that
way, in the sense that hetrusted me, you know, he
entrusted me to do the rightthing there. And it worked out
great for both of us.
Craig Evans (23:34):
That's awesome. So you talked about your brand, The
Apartment Dealer. You know,there's a lot of people in
commercial real estate, a lot ofpieces of people in the
multifamily space. Tell ouraudience, what do you think is
the biggest specialty that youguys do within the brand of The
(23:55):
Apartment Dealer?
Kristopher German (23:57):
So, we talk about the financial legacy, the
way I see it is that anyone whoowns investment, real estate,
they're building a financiallegacy for themselves, you know,
many of these individuals areeither working individuals or
own small businesses like myselfand my wife and they're
purchasing investment realestate, to replace them some day
(24:20):
down the road in terms of youknow, passive income. Many of
these individuals are already ata point where their properties
represent the vast majority ofthe income that they're living
on. And then there's those who,you know, they've had the cash
flow, right where they want itfor several years. They're not
looking at you know, expandingthey see themselves as too old
(24:40):
for that and they're beginningto contemplate well, the next
generation behind them, theirheirs, their children, is it
cash they give them or is itproperties? Do the kids want to
be landlords or not? Do theywant to put the kids in
partnership with each otherbecause that's what happens when
you will your kids the propertyis whether you look at it that
way or not, you just made thembusiness partners. So I talked
(25:02):
about the financial legacy inthe sense that that's what this
is. And so I think whatdifferentiates us is that rather
than calling everyone andsaying, 'Do you want to buy or
sell', understanding that thereare these various segments of
investors that have thesediffering needs. And, you know,
Zig Ziglar, he says that, if yougive an individual, what they're
(25:27):
looking for what they want,you'll get everything in return
that you want. So us by havingserved these investors in this
way, specifically, through oureducation, have done a good
amount of business in return,because again, they've all had
different needs. It's not aboutjust, you know, 'Hi, sir. Are
you looking to buy or sell' likein a cold call, but knowing each
other investor stories, and thenbeing able to serve them in that
(25:48):
need? And I think that is whathas differentiated us over time
Is that helping them along thatroad of building the financial
legacy, educating them along theway, making sure they had the
right resources and at theirdisposal. And, yeah, just being
there trusted resource in thatway.
Craig Evans (26:10):
So, you know, part of what we're trying to do with
the podcast is always bringingthe best information we can to
our listeners. And you know, Iknow a lot of our listeners are,
they deal in a lot of SFRs, youknow, their single family is an
easier process. I know when Istarted in investing, you know,
(26:33):
at one point, our portfolio wasa little over 1000 doors. When I
first started investing, Istarted in FSRs, and or SFR
rather and got into multifamily.
Tell our investors our tell ourlisteners really, if you will,
do you find it difficult to getinto the multifamily space?
Kristopher German (26:53):
I think what's difficult, difficult
about it today is just the pricepoints, right. So for example, I
met with a client yesterday, whowas telling me a story about you
know, he bought some property byaccident with $3,000. And I'm
just like, oh my gosh, if Icould buy a property with
$3,000, I'd be done you know,next week, right? You know, I
(27:14):
unload my treasure here. So theprice points, I think is the
biggest barrier of entry. Andwould it be for me, I would have
to guess why individuals startwith single family because you
can get you know, there's lowerprice points, you can get in
with a 20% down not owneroccupied maybe even less
depending on what kind offinancing you're using versus if
(27:36):
you're buying multifamilyproperties, especially something
that's five units or larger inthe commercial realm. Well, in
California, based on our prices,today, you're probably looking
at 35, 40%, down easy that thebanks will lend up to 75% LTV,
but the reality of it isdifferent than single family
homes that are more dependentupon your personal income.
(27:59):
They're looking at the income ofthe property relative to the
purchase price. And so that'swhy while they will land, say
75%, LTV, the property is don'tqualify for that and you're
needing to increase yourdownpayment. Second to that, I
would think probably assomething that's more just
psychological for whateverreason, there seems to be this
(28:22):
negative perspective that well,more units is going to have to
equal more evictions or moretenant headaches or you know,
something like this. And nothingcould be farther from the truth.
It just comes down to yourmanagement style. And you know,
of course, location matters. Andyou might inherit some bad
tenants from a previous owner.
And there's ways to deal withthat and get the property turned
(28:43):
around. But it's your managementstyle. And I think that
especially in the multi, youknow, when people that are
buying and flipping homes,tenants really are not a
thought, right, you're nothaving to worry about
personalities, you're dealingwith a vacant unit, multifamily,
you know, depending, you know,you're dealing with people. And
if you don't treat it businesslike and I see that being one of
(29:05):
the biggest challenges for a lotof landlords, you get too close
to the tenants, you get tooinvolved in their story. I'm not
saying that you don't have aheart, but you know, this is
business. This is not a work ofcharity, you know, make money in
real estate so that you can doyour charity over here. But if
you use your units like charity,and you don't raise your rents
and do certain things. Well,that's why now that we have
(29:27):
statewide rent control,landlords got caught flat
footed, and is a big obstaclefor them now to grow from where
they are. Because the cash flowisn't there, and maybe the value
isn't there because of therental rates or what have you.
And so, yeah, they just have to,I know it's kind of long winded,
(29:47):
but you know it from beginning,beginning to end, it's you gotta
be business business oriented.
Craig Evans (29:53):
That's right.
That's right. And that's whatwe're trying to say is we want
people to understand that youknow, reason that we're having
the experts if you will on is wewant people to be armed with
that information. And so oftenyou're right, I see so many
people that have the feel andcall it a pie in the sky
mentality of like, oh, this isgoing to be great. And then,
like you say they get suckedinto the tenant of thinking that
(30:15):
this tenant, well, I'm gonnagive him a break. And that's not
business. You can't functionlike that. So, you know, Kris, I
know you started going straightinto multifamily. Do you think
that's an easier route? Or youknow, there's a lot of variables
(30:36):
to that question. And so that'sprobably a big open ended
question. But do you typicallysee the people that are coming
to you have they been in smallerstuff before they've been either
in smaller multifamily or SFRs?
Or do you find people that arecoming to you, is it because of
a cash situation, that they'relooking for bigger deposits to
(30:57):
build to place their cash.
Kristopher German (31:00):
So you know, our investor base really is a
mom and pop clientele. These areindividuals that, you know,
against what culture will saytoday and demonize the wealthy.
They started out with not twonickels to rub together,
bootstrapped it and maybe boughta house or at most bought a
(31:20):
duplex, and then just played therules of real estate, let it go
up in value, either refinanceit, pull some equity out, buy
something else, or sell it do a1031 exchange. And I'll tell
you, I've been lucky enough thatthe two largest multifamily
owners here in California,they're both my personal
clients, right, you know, I'vedone business with them. And one
I'm very close to more than saythe other. But they both have
(31:43):
similar stories where they wereimmigrants came to this country,
were educated in this country,didn't come from money, they
didn't start with that handout,found value in real estate, and
simply by continuing to buy andand, and exchange and ratchet up
over time. These gentlemen areworth a lot, a lot of money.
(32:07):
One's even a billionaire today.
And we're again, didn't have twonickels to rub together. The one
who's a billionaire todaystarted working out and a
canning factory originally whenhe got here and was going
through college. And so it canbe done. So again, if you have
enough to buy a single familyhouse, then buy that first
single family house, even if yougot to buy it out in the sticks.
(32:27):
But the idea is if anyone'scontemplating, well, look at the
market today, look at theeconomy, look who's present look
at real estate's, real estate,people need a place to lay their
head, it's not going to be takenout by Amazon or AI. Because
again, people need housing. Herein California, we're so spoiled
in terms of the supply anddemand. That vacancy is next to
(32:48):
none. And even when it takes up,and people get a little worried,
we're talking about a 5% vacancyversus other states that when
they have a problem, we'retalking 15% vacancy, or maybe
even more. So real estate,again, with my limited
knowledge, the last, you know,17 years. But when we look
historically, it always goes up.
(33:10):
And when you look at rentalrates while they do stymie at
times, or maybe pull backslightly over time, they go up
and when you look when you trackvacancy, and these are things
that were Kris, you're justtalking about these, like, you
know, just on a whim, no, no, atour in our educational events,
and we do market updates, welook at all the numbers. So I
could give, you know the boringnumbers, but the overarching
(33:33):
idea here is that values go up,rental rates go up and vacancy
comes down. And that's what youcan rest assured on now. Can you
do a bad deal? Of course, andcan you make it bad, and that's
where you know, you have to geteducated ensure that you have
the right network ofprofessionals that are assisting
you. But I think the name of thegame is get involved. My first
(33:55):
property was a three unitproperty, just by accident, my
first investment property. And Imean, I done some of the dumbest
things with when we wererehabbing that property. And I
mean, so I thought I was goingto be slick and not pull
permits. Hey, we're gonna, youknow, because I figured I didn't
have much money for the rehabs.
So we're gonna do this with nopermits. And I had, you know,
(34:17):
some of my bigger clients.
They're like, Hey, Kris, youdon't need permits, I think I'm
going to be like them, you know,what do I know? And my workers
at that time were so brilliantthat we ordered a trash banner
for whatever reason from thiscompany. We ordered the trash
bin, it was bright red. Theythought it was smart to put this
(34:38):
bright red trash brand at thefront of the property so that
when the inspector was drivingdown the street he just said oh,
there must be work being donehere. Let's go check their
permits. And we had none. We gotred tag, we had to stop the
project. I had to go pullpermits and it was a whole
project. And but you know whatit just worked out in the end
(34:59):
and that's how we got started.
Craig Evans (35:02):
So as you know, let me just clarify with the
multifamily space you primarily,is it primarily or solely deal
in Southern California?
Kristopher German (35:15):
Yeah, Southern California and not even
all of Southern California. Sothose who are familiar with the
area, I'll give you someboundaries here. So if you're,
we start at the 710 freeway. Sojust before you get to downtown
Los Angeles, we go as far eastup to about where San Bernardino
begins. We're along all thefoothills, and then we go about
(35:36):
as far south as the 91 freeway.
So that's our box. And nowRiverside, we're also moving
into Riverside, sorry, to ourcompetitors, but we're moving
there as well. So, but that'sour general geographical area
that we cover. You cannot, inthis business, you cannot be a
jack of all trades, in myopinion. So it's multifamily
(35:56):
that we do if you have someother type of asset type than
like warehouse or some what haveyou typically, we're going to
refer that out. And we're goingto speak to and help those
individuals that own within thatgeographic area.
Craig Evans (36:13):
In the multifamily space, the area's you deal with
what kind of cap rates are youseeing right now?
Kristopher German (36:18):
Easily above 5%. Now, and in the multifamily
world, it's a push and pullbetween interest rates and cap
rates. And so for those of youmaybe not familiar with the
terminology, easy way as a caprate is if you were to buy a
property, all cash, what wouldbe your rate of return. So when
(36:39):
I say a 5% cap rate, or Craigmentioned a 5% cap rate, again,
if you were to buy thatproperty, all cash, you would
make 5% return on your money.
Well, the interest rate todayfor a multifamily property is
about 6.7%, and probably headedupwards. And we can talk about
that. But I made that predictionthree weeks ago that the week
after the Fed came out and said,'We promise you three rate cuts
(37:00):
later this year'. I'm on stagethe following week, saying I'm
sorry to tell you that's notwhat I'm reading. That's not
what I believe the data says. SoI think rates are going up. But
today, it's 6.7%. So thatdifferential 5%, cap rate 6.7.
So now let's say you didn't buythe property, cash and you
purchased the property withfinancing, you're losing 1.7% on
every dollar borrowed. So hence,at the beginning of 2022, we
(37:27):
still, or at the end of 2022, wewere at about, say a four and a
half percent cap rate, at aboutthe same very close on an
interest rate. So almost evenmaybe it sure was slightly
higher than that. By the time weget to third quarter 2023,
interest rates had gone up toseven and a quarter. And cap
(37:49):
rates were lagging behind himand we were finally cusping the
hill of 5%. The needless to saythe market was dead third
quarter 2023. By fourth quarter2024 interest rates had come
down some and sellers got thereality check that I need to
(38:09):
lower my price, the lower theprice that increases the cap
rate. So to where we are nowwhere I would say easily if you
want a property to be sold, andyou don't want to be on the
market forever in thegeographical areas that I just
mentioned, because I'm gonnaspeak to what I know, you're
probably looking at least fiveand a quarter 5.4 cap in order
for that unless there'ssomething really unique about
it, or maybe it's been fullyrehabbed or something, but
(38:32):
you're in that realm. And again,you take a look at that interest
rate, which historicallyspeaking isn't all that bad. But
when you're dealing with aninvestor base, who remembers
3.5%, three years ago, they'relooking at that saying, you
know, well explain to me why Iwould buy that deal, you know,
with such a low cap rate. And sothat and that's been the other
(38:57):
tug of war is trying to educatethe landlords that we're not
going to see 3% Again, we'reprobably not going to see 4%
again, and if we did, it'sbecause there's some sort of
economic calamity. So I don'tthink we want to see those
interest rates. And if we getinto the fives, that would be a
godsend, and we should be happywith that because again,
(39:17):
historically speaking, that isabout somewhere between five and
six is about an average interestrate. There's probably viewers
here I was before my time butthat remember 15, 16, 17, 18%
interest rates and so thoseindividuals are hearing us cry
about 6% saying what are youcrying about? You know, I had to
figure this thing out with it.
Obviously, prices were cheaperand cap rates were higher but
(39:40):
the point is historically, weremore in line and that three and
4% that we got to enjoy was agood ride hopefully made a lot
of money during that time. But Ithink those days are gone for a
while.
Craig Evans (39:52):
Okay, that's gonna do it for part one with Kris
German. Make sure and catch usnext week for part two.
Narrator (39:57):
For more information on hard money loans, trust deed
investing, and upcoming eventswith The Norris group. Check out
thenorrisgroup.com. For moreinformation on passive investing
through the DBL Capital RealEstate Investment Fund, please
visit dblapital.com.
Joey Romero (40:16):
The Norris group originates and services loans in
California and Florida underCalifornia DRE license 01219911.
Florida mortgage lender license1577 and NMLS license 1623669.
For more information on hardmoney lending go to
thenorrisgroup.com and click thehard money tab.
Popular Podcasts
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations.
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
The Nikki Glaser Podcast
Every week comedian and infamous roaster Nikki Glaser provides a fun, fast-paced, and brutally honest look into current pop-culture and her own personal life.