150. Fix-and-Flip to Multifamily Syndication: Adapting for Bigger Wins with Brian Ferguson

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Trent Werner (00:40):
Welcome back to another episode of the Deal Deep
Dive segment on the WestsideInvestors Network podcast. I'm
your host, Trent Werner. In thissegment, our featured guests
will share their unique storieson a specific deal they've
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(01:03):
this episode.
And now, let's dive deep.Welcome back to the Westside
Investors Network podcast. I'myour host, Trent Werner. On
today's Deal Deep Dive episode,we're joined by Brian Ferguson.
Brian is gonna share about his18 year real estate career that
started as a fix and flipper andhas now built a massive Real
Estate Holding Company with afix and flip division,

(01:25):
syndication division, andmultifamily and commercial real
estate, as well as a capital.
Now let's welcome BrianFerguson. Welcome back to the
Westside Investors Network. Wegot Brian Ferguson with Fergmar
here today. Brian, thanks somuch for taking the time to talk
with us.

Brian Ferguson (01:43):
Hey, Trent. Appreciate you having me on,
man.

So I had never heard of FerdMar before our
conversation today. For thelisteners who haven't heard of
it, what is FerdMar, and who isBrian Ferguson?

Well, FerdMar Brian Ferguson is half of
FerdMar. So, my business partnerhas last name Martinez Ferguson.
So FerdMar is where it camefrom. It evolved after years of
trying to come up with namesthat were existing words. And
over time, we realized thatthere's lots of big companies
that name it whatever they want.
And so we just put some meaningbehind our names, and Ferd Mar

(02:17):
was evolved.

I love it, and it's memorable.

Yeah. It's it's better than one of our our
original company was PlatinumHome Investments. You know,
super unique. Right? And then soFrugmar is it a lot of people
are like, what is that?
But then once you see it, theyknow it. It's associated
associated with us immediately.So that's our parent company
now.

And it and you guys didn't start as Firdmars,
you and Brian?

No. So we, started as Platinum Home
Investments. That would havebeen and we're right at 18 years
ago now as a fixed and flipcompany. Ferdmar was initially
established. We created thatname probably, 18, 19, and then
really within the past 2 years,we we have tons of different
divisions with tons of differentnames and we've been putting

(03:00):
everything together, evengetting rid of some of the
divisions and and just stilldoing everything but operating
under that Ferdmar brand.

So you guys started as a as fix and
flippers. Was that local inVictoria, Texas as well?

Yep. Yep. Started out just doing 1 or 2.
We both came from the carindustry. So my partner and, he
was a sales manager.
I was in the finance, realm andwe kinda we were fixing it we're
fixing and flipping a few. Weactually had a third partner at
one time, just, you know, someguy that had some rentals that
we thought had all figured out.So we partnered with him and
then did 1, then 2, then we weredoing a handful. We both left

(03:34):
our job. He left first, then Ileft.
And then, you know, we went fromdoing a few to doing you know,
we've done upwards of a 150, 200transactions a year. Just to,
you know, some years, you know,a few less, some years, a few
more. So we still have thatdivision today. It's a it's a
it's a large piece of our cashflow and of our kind of our
setup here. And then I justevolved into we got into it in
'six, 'seven.

(03:55):
So, you know, not the mostfantastic time to be getting
into real estate in hindsight.Taught us a lot though, taught
us how to run lean and, and tobe in a challenging market,
which has been helpful recently.And then we ended up stuck and
holding, you know, a bunch ofproperties that we couldn't
sell, turned those into rentals,eventually sold those off when
the market recovered, boughtduplexes, 4 plexes, sold those

(04:15):
off, got into multifamily, andthen eventually got into
commercial. So it just it'sevolved over time. We have a
ground up new constructiondivision, land development
division, and then we also ownand manage our own property
management company andconstruction company.

So I guess, were you kind of forced into the buy
and hold because of the timingof when you guys were trying to
flip these?

A 100%. Yeah. If you would've asked me in 2,008
or 9, I thought people who ownedrental properties were dumb,
didn't know what they were doingbecause I could buy a property
and go make $20 or 40 orwhatever it was faster. Why
would I possibly wanna wait along time? If you asked me as
my, you know, I'm only 38, butbeen doing it 18 years.
But if you asked me as I sittoday, I would tell you my

(04:57):
biggest regret is that I did notbuy bigger and hold much longer.
I mean, we what we did was Idon't think we could have
changed that much. Even if I hadknown the syndication route the
way I knew it, I still wouldn'thave changed any of that because
we needed we needed the cashflow back then, but I wish I
would have bought bigger, fasterand held. And we didn't. There's
plenty of properties that wesold and I wish I still own

(05:17):
today.
But that was my mentality backthen. We would rent out what we
had to. And even in recenttimes, even in the past few
years, we have, because thatdivision is so big and we have
kind of that Swiss army knife ofwhat we can do with it. We've
just recently put some, well,we're not really into the single
family holding, but we just tooksome, even a couple of new
construction houses that weresitting and we transitioned them
into our, into the rental fleetand we'll lease them out and

(05:40):
let, you know, let them sit fora couple years. And once that
market's strong enough, we'djust rather do that than sell at
a loss.
And that's what we did then. Wejust did it to the tune of, you
know, 100 of doors back then andheld onto them. But, you know,
you had stuff you'd buy to taxsell for $15,000 you'd put, you
know, 10, 15,000 in it backthen, you know, lease it out for
8, 900. And then over time,well, before you know it, you

(06:01):
now have a $150,000 house in2018 or 19. So, or probably 16,
17 is when we started exiting alot of those.
So it worked out well, but wewere definitely for it was by
force. It wasn't by choice.

And that's I mean, so you did that, you said, until
you did that you basically heldthem for, what, 8 years?

8 to 10 years, some of them, yeah, and then
started sold off 1 or 2 of themand saw this 1031 thing we
became experienced with and, youknow, saw much equity we had.
And and most of those we hadfinanced because there were we'd
only financed for 5 or 10 years.So you can imagine at this 8
year point, you know, therethese things are almost paid
off. So 1 or 2 sales was enoughto buy us a nice 4plex or 8plex.

(06:42):
And then at that point, thingsstarted happening much faster
and but eventually we just wehad exited all of them.
But, yeah, almost probably 8years, we helped most of them.

So your guys' trajectory went from fix and
flip. We're gonna be propertymanagers because we have to. And
then in that 2016, I guess, wereyou doing anything were you
adding more properties to yourportfolio during that 8 year
stretch?

Yeah. We had already we had determined the
foolishness of not holding on tolong term rentals already, but
we were adding, you know,duplexes, 4 plexes, 16 plexes,
21 plexes, you know, thingsalong those lines. And because
you fast forward a little bitskipping around, but we 18, 19
is when we added our first 100plus complex. We had 100 of

(07:24):
doors, but it was it was what wecould buy at a time, 15, 20, you
know, what we had cash built upand we could we could buy at a
time. We had done that along theway.
Then in 14, we sta we did abuilt a few spec houses because
we had some lots left over.Because we weren't we're not
when I say fix and flip, it wasdefinitely single family. We'd
fix and we'd flip commercialbuildings. We'd buy land, buy a
couple 100 84, chop it up intoranchettes. We'd we've done

(07:47):
quite a bit of that.
So and then we ended up withsome leftover lots in 14, built
some spec houses, and then thatinvolved into a entire we
started doing subdivisiondevelopment, putting in full
subdivisions, building. At onepoint we probably had 50, 60
between specs and customs goingat a time before COVID. So we
had a rather large, newconstruction division as well.
So but a lot of things did, itstarted in that fix and flip

(08:09):
world with a few houses and itjust evolved into these other
things. And a lot of it happenedbecause our market, you know,
you get capped on what you cando in the market.
So we would expand instead ofexpanding into other markets, we
would just kind of widen ourspread of, okay, what else fits
into what we do instead of goingand fixing, you know, flipping
houses in Houston or somewhereelse, we would stay in Victoria

(08:30):
and just keep touching otherthings. And some of those things
have been, which we don't dothis anymore, but you know, you
know, we owned laundry mats.We've we've, you know, we had
our own, showroom where we soldproduct and appliances. So we've
done different things along theway just because it it would
allow us to expand more in ourmarket.

And so when did the syndication arm of your
guys' business first get going?

So, syndicate which our syndication is the one
named differently. It's AltunisCapital is our syndication
company or our capital company.But so that was late 21, early
22. Actually, it's a funny storybecause I booked a conference in
Houston. It was actually rightat the beginning of 22, and we
had never taken outside capital.
Maybe some private hard moneyloans, but never had private

(09:14):
capital prior to that. And, wehad this 134 unit complex. We
already knew, like, this iswhere we wanna be. We can manage
this with 2 to 3 people and wesee what it takes to manage the
same 100 and something doorsover here on, you know, mixed
with 4 plexes. You know, it wasNew Year's, I'm gonna book a
bunch of conferences.
I really wanted to travel andand expand my knowledge. And I
booked this multifamily investornetwork conference and thought,

(09:38):
okay, we're gonna go and learnhow to be more efficient on the
properties we own. It was a fullblown syndication conference.
And I realized that in the firsthour, you know, like they served
the pastries and coffee and thenthey started talking and I was
like, this is not I'd heardabout it but never dove in. And,
that was in February of 22.
I had a deal under contract byApril, May range, and we closed

(10:03):
probably, late summer on that ona shopping center. So it moved
pretty quick at that point justbecause of the years we had in
and the contacts we had.

So now where does Furgmar sit in terms of, I
guess, focus? Are you guysfocused on syndication now or
where do where do all thedifferent facets lie?

So, FURDMA is still the parent company. It
employs everyone. FURDMA has itsmain focus in Victoria. That's
is we're known for our we stillhave our fix and flip division.
We have a full acquisitionsteam, dispositions team.
We own and hold a bunch ofassets, the property management
piece of it. And then Altoonastill has as the capital company
that we go out and raise thecapital. But our focus now is we

(10:45):
still have the fix and flip.We're actually beefing gearing
that up and doing even more thanwe've done in previous years and
expanding that. And then, we'restill doing our new
construction.
We're mainly just specs, but wehave a bunch of subdivisions
sitting on the ground. So we'renow that we've kinda gotten
through this whole, you know,rates have started to to come
down a little bit, the market'spicked back up, so we're

(11:05):
building some of those again.But our long term goal is we
sit, you know, in that 5 to 10year especially point, we wanna
be primarily a large holdingcompany for multifamily and
retail. So we've definitelyhoned that back in to say, those
are the only things we're doing.And then as far as what we buy
and hold, like, for instance, wehave some self storage we've
bought.
We're not going after that rightnow. We are going after stuff,

(11:27):
you know, multifamily that cansupport on-site staff and
neighborhood sizable, retailshopping centers, something in
that, you know, 10 to 6000square foot range surrounded by
a bunch of rooftops.

Very nice. When it comes to the syndication side,
obviously you guys haveexperience in operating deals
and and managing deals. On thesyndication side, I know you
said Altunis is a capitalcompany. Are you raising the
capital and, managing thesedeals, or are you placing
capital with other GPs that maybe operating them?

No. We're we're raising the capital through
Altunis and placing it with ourown deals, and then we manage
those deals as a general partnerthrough our through our
management company, which isright now we're managing through
Altunis. We haven't placed inother deals now. That being
said, I I am invested in otherdeals. I'm an LP and and a
handful of deals, and still willconsider some of those today.

(12:20):
Just kinda depends if it'sright. But, you know, the main
reason we started putting thosedeals together is because as we
would sell off assets, we had a1031. You know, we would we
could only buy you know, we'dsell x and then we could only
buy x. But we knew the theefficiency was in the larger
deals. We saw the opportunityfor it.
And so then I started placing myown personal money in some of
these deals as an LP, which, youknow, a lot of people think is

(12:42):
crazy. You have all these thingsgoing on. Why would you put it
over here? Well, I know what I'mable to buy in our organization
with these funds individuallyor, you know, as through our
company. But I see these dealsover here that I know are gonna
have far phenomenal returns in,you know, 3, 5, 7 years.
So I wanted to place my moneythere. So the whole reason the
syndication really our focus wasto somewhere it's a vehicle for

(13:04):
us to place our money in. It'sjust our money is not always
enough to do the deal byourselves, and that's why we
bring in partners. We're prettyI mean, our partner group is
selective. It's not like, youknow, we're not, we're
everywhere on marketplace andjust every $25,000 someone wants
to put, we place in.
It's it's not that at all. Youknow, I still personally I talk
to every investor, vet them,make sure they're a good fit for
us because we're not just doinga ton of deals every day. But

(13:27):
again, the main reason wasbecause, you know, I place money
in it I place money in everysingle deal. I just I wanted the
right deals. I'd much rather put$100,000 in a deal that I'm
managing with our propertymanagement company.
For instance, I I just sunkmoney in a deal in Houston. The
guy I thought was just on fire,and now it's I probably won't
see that money because the dealis going the other way because
of poor management. So it it itwas right after that deal that

(13:51):
really had me start putting ourown deals together for that
reason.

There was a there was a good opportunity for a
joke there, but I'm not gonna doit because it sounds like you're
gonna lose a $100,000, but, oror lose money. I don't know what
the number is, but you said itwas on fire. Now it sounds like
that capital is on fire,unfortunately.

It is. You know, I call that a training pay. You
know, when I was going intothose deals, if I wouldn't have
done that, I wouldn't havelearned and been able to put
together. So to me, it's I don'tI don't lose any sleep over it.
I definitely didn't I haven'tfunded my capital call, not that
I should probably be saying thatonline, but, you know, there
there is a I didn't vote for thecapital call either because it's
I don't wanna throw good moneyafter bad, but, yeah, some of

(14:29):
those deals, I I looked at it asin some of them are doing well,
but the the knowledge you getfrom those sitting in there
listening how other people aredoing it, whether it be good or
bad, it's that's invaluable tome.
And people pay, you know, thator more to go to some of these
conferences around the world. So

Yeah. And that was that was actually my next point
is being an LP definitely helpsas a general partner when you
start operating your own yourown deals Yeah. Because you know
what to do and what not to do,which, I mean, like you said,
it's invaluable.

Yeah. I mean, being coming having our history
and then being, you know, 15 14,15 years before I started
placing my money in other dealsand then circling back and
putting our own deals together.Because most time you see people
become an LP from a really goodw two then turn into a GP. Well,
my w two was real estateinvestment. So it was it's it's
been quite the the the journeyfor me on it.
You know, I just I looked at,man, I don't wanna flip houses

(15:20):
forever. I got I got some money.Let me put it over here. Maybe
this is my retirement. And thenI realized I'm young.
I got plenty of life left in me.Let me go put deals together and
let's chase retirement that way.

So and I guess I forgot to ask you, you know,
when we first were starting thisthis conversation, but you
started in the car business.What initially got you to the
real estate? I know you said youstarted flipping, but what made
you wanna flip the first one?

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Sure. I wanted something that was long term.
Like but, you know, the carbusiness is definitely one of
those things. You know, we'dwork 80 hours a week, 6 days a
week, and then you'd see someonethat was doing amazing. And then
the next quarter, they'reterrible or they're amazing for
3 years, and then they're gone 2days later.
Like there's no, maybe somepeople will watch this and not
agree with me, but there's nolongevity in it. It's good cash

(17:05):
at the time if you're willingto, if you're good at it and
you're willing to put in thehours, but there's no longevity
in it. Like I knew I alwayswanted something that was my own
and real estate just it startedwith the old original Flip This
House show. I watched them. Iwas intrigued by it.
And I mean, to this day, don'tget me wrong, we have stressful
days, but I still there's not aday that I may be tired at 5 am

(17:25):
when I get up to go to the gym,but by the time I get in my
desk, I don't regret, or I'm notlooking forward to the weekend
other than the fact I want tospend time with my family. Like,
I love doing what I do everyday, and it's been that way for
18 years now. So

I think you made the right decision.

Yeah, me too.

So we've covered all the different avenues and
arms of your guys' companycompanies. We talked a little
bit offline about a deal localto you guys in Victoria that
maybe wasn't or isn't one thatwe've talked about on this show,
you know, before. Can youexplain this deal? It's I guess
I'll just preface this with, itwas a single use conversion, a

(18:06):
retail, you know, commercialspace. I'll let you get more
into the details.
But tell us about this deal andwhat made you guys wanna explore
this route?

So a few points there on that. You know, first,
when I said, like, we've talkedabout a lot about how we chase
multifamily and and, you know,the piece of that is when we got
into syndicate, what I realizedwas that's when it was just so
heavy in multifamily. Everyonewas buying them. Cap rates were
so compressed. You just, youcouldn't get your hands on
nothing that nothing that sawthe numbers we wanted to see.
I definitely saw most of thosedeals as being you gotta get in

(18:40):
and get out at the perfect time.And we liked it while we do show
5 year exits, which may be froma refi or we'll buy partners
out. I look at things that Iwanna see in 15, 20 years. And
if I couldn't see that, I don'twanna go into it. But, so that's
what pushed us into retail.
And then we pulled down, we, wewere able to get a couple
centers, you know, existingretail centers that had value

(19:01):
add from just better management,better advertising, what have
you. But then that got tougheras well, Finding enough of those
again in, in our market orsimilar size markets. And then
we just, I just really started,I like to think of what, where
can we separate ourselves? Causeyou go to a lot of these
conferences and you can go to,you can go to 10 tables and 10
GPs that are starting out andyou're gonna, it's almost like

(19:22):
they memorize the same pitchfrom a book somewhere or some
class. And so I just was tryingto think what's what helps us
stand outside the box and, youknow, people would say, okay,
retail's dropping.
And I didn't, I don't believethat in our smaller retail
centers, but those big singleuse spaces, I did see that. So
then our approach became, can wego after these single use
buildings that are virtuallyuseless or are very low value

(19:45):
because they can't fill them?And so that's how and and this
was our first one that weacquired in the sense and
converted. We'd done somesmaller ones, but not not at
this level. So it was a 27,000square foot.
It was originally built as a Mr.Gaddy's Pizza added onto it
multiple times. And then the guyhad a Mr. Gaddy's franchise,
opened his own franchise. Andthen, super interesting deal.

(20:09):
He the guy owned the building,sold the building with this long
term lease as a leaseback, endedup closing down or going
bankrupt like a year later. Sothe investor that bought this
out of New York was stuckholding the building, leased it
to a church for dirt cheap foryears. The church ended up
building their own facility. Thetalks were this building needs
to be demolished, torn down,there's bats in it, it's

(20:31):
terrible. But it was a 27,000square foot structure with about
12,000 of it being a 10 year oldmetal portion in the back.
It also sat on a couple acresoff of which is a road, the main
thoroughfare here, which youcan't buy. You'll spend
1,000,000 just to tear somethingdown now. There's just, there's
nothing left on there. There'sno land parcel. So just the

(20:53):
concrete parking and thestructure, the value was there.
So we approached the sellerdirect, bought it. And again,
this was our first major, weknew what it could be at the
end. We had budgets going intoit, but I mean, it was every and
just a small example, you know,we had a bid to trench through
the concrete, to lay theconcrete, you know, to lay the

(21:14):
plumbing lines. And I rememberwell, remember the GC calls us.
This is getting early in andsays, oh, well, apparently they
laid 4 slabs on top of eachother over the past 50 years.
Well, so every inch, it's youhad to pay per inch of cutting
per foot. Well, this is a longbuilding. So, you know, and then

(21:34):
getting rid of the bats was onething. And then realizing that
they had stacked these roofs ontop of each other. There was an
old awning that I mean, it wasone thing after the other.
So tons of overages and it wasjust it was quite the, it was
quite the ride getting throughall of it because of the size,
and it has 4 buildings that hadbuilt onto each other over the
years. But, it created a at theend of the day, still, if you

(21:57):
looked at you take the initialacquisition, the money we had to
put into it, if we had had toput do it ground up, it would've
cost double what our total costis now with the same finished
product.

And so it started as 1, you know, 1 unit. Right?
And your plan going in was tochop it up and make multiple
units. How many units did youguys want or did you guys end up
doing during that that phase?

So, we ended up with there's a total of there's
a total of 8 suites in therenow, but one of them is a,
12,000 square foot, like, stateof the art fitness facility,
largest, nicest one in town. Andthen the net one next to it's a
6,000 square foot. Think of a,like a boardroom salon that

(22:44):
you'll see in Houston or thebigger cities. And then it has a
has a men's and women's salontotal, so about 6,000 square
foot. So they ate up a bunch ofthe space.
And then the other 6, then youhave, then individual suites
that arrange between 1500 to thecorner, suite being about 22100.
So the mix up of restaurant onthe corner and then just some

(23:06):
miscellaneous businesses goingin there now.

And I know I mean, I know you said you wanna you
you plan to hold it long term.What is long term for you guys?
And do you have, I guess,projected returns that you're
targeting in order to deem itsuccessful?

Yeah. Absolutely. So at one point, you
asked earlier about kinda whatis our reasoning for it. 1, we
do it for we're building aportfolio returns if we have
investors or returns forourselves if we don't. But, you
know, furthermore, our ourslogan is enhancing communities
through real estate.
And that's that's a big piece ofit for us. You know, you've
taken this old building, we'veenhanced it. It changes the
whole jive. And we're actuallydoing a survey right now and, we

(23:46):
recently did on how manyemployee count, like how many
people have been have how manyemployees have been added to the
workforce here by thesebusinesses opening that didn't
have space to open before. Andthen just kind of goes full
circle on their employee, thenput their kids to a better
school.
So just seeing that first fullcircle is a big piece of it for
us. So that piece of it alone isa success. It's kind of why
we're not really into thesesingle use buy Walgreens or all

(24:08):
around the world and put a fundto funds together. Cause that
doesn't really fit with ourenhancing communities. We didn't
do anything there.
You know, we just boughtsomething someone else did. So,
but this particular deal is,we'll be averaging around a 3 X
by the time it's stabilized.We're 2 years in and and we sold
a few vacant suites, but sogoing into probably q 2 of next
year, it'll be well well, it'llbe a double digit cash on cash

(24:30):
easily. And our goal so wheninvestors are involved, if if we
have then we're structuring themdifferent now, but previous ones
were structured, you know, that3 to 5 year, we knew these guys
wanted to exit. And so we makeit very clear and it's in all
our operating agreements that wehave the right to buy out at
market value at that time.
So, and we also structure themto where most of all of our pro

(24:52):
and that varies by deal, but weget very little in the
beginning, very littlethroughout, if anything
throughout the deal other than,you know, for property
management. But we go, we'retrying to pay back that
investor's capital as much aspossible. That way at that exit
timeframe, it's easier for usto, if we've done our job right
at 5 years, we should easily beable to refi it, maybe inject a
little bit more capital of ourown, but every piece that we

(25:13):
would have had in a deal wouldjust go, it would stay as equity
when we go into the refi andwe're able to buy the investors
out at that projected, you know,whether it's 2X, 3X return. But
the development play on thoseinternal into retail allows you
to, it takes a little bit longerto hit the cash on cash,
obviously, because we have, wehave that redevelopment cycle
that has to happen. But once ithappens, we can hit the cash on

(25:34):
cash projections for whetherwhether it be a 2, 5, 7 year
holding period and the exit isbeautiful.
So you get both pieces of it,which underwriting existing
deals, I'm not saying thatdoesn't exist. We just we don't
have a lot of luck finding theones where you can check both
boxes.

Yeah. And how long did that redevelopment period
take?

So we purchased, we purchased November of 22. We
already had the so the second wewanna because I saw it. We put
the we we contacted the owner.We knew the deal was happening.
We were under a feasibilityperiod.
We had been for a few months. Soby the time we closed in
November, I already had thefirst tenant for the gym secured

(26:15):
was working on the salon. Andthen we moved the gym in. They
had their grand opening. It'scoming up on a year, so I
believe it was October 1, 23.
So they've been in there rightof the year. They were the first
they were the first space wedelivered, and then we delivered
the salon probably or the firstmiddle of q one this year, and
then we started delivering a fewother spaces. And we're down to

(26:37):
they just leased, another one.So we're down to 2 spaces left.
So hopefully, we'll go into qone, you know, fully.
So a little bit longer than wethought, we definitely had
construction delays. We wereexpecting to have the entire
center delivered all space iswithin 12 months, which would
have been end of 23 And then thelease up has been taking a
little bit longer on thatparticular space. Main thing we

(26:58):
account that to, both of ouranchors are in the back, which
is because they're not, they'renot necessarily they want
they're the type of businessthey need to be off that main
thoroughfare, but they don'tneed the frontage. And we
learned it was a lesson learnedon this one is getting someone
in that front space because itjust has that vacant feel. And
so the second we saw some someactivity there, that activity
has created activity and we'refilling the spaces faster now.

(27:20):
But so about a it'll be about a24 to 30 month probably 30
months by the time we're fullystabilized from the date of
purchase. But, again, this was a4 and a half $1,000,000, 27,000
square feet constructionproject.

Yeah. So Well, and

big task.

And when I mean, because, obviously, you've done
multifamily too. And especiallywhen you're buying standing
multifamily, you're getting cashflow come or at least revenue
coming in right away. Withsomething like this that was
sitting vacant, plus you had todo the redevelopment. When
you're talking to investors onthis, are you just saying, hey.
You're, you know, you're notgonna see a dollar for the 1st 2

(27:57):
years?
Or what do you how do youapproach that conversation with
investors?

Yeah, absolutely. I mean, because we
we have an active deal now. It'sa it's a 2 pack portfolio that
had a redeveloped gas stationand a redeveloped blockbuster in
front of a in front of a mallbecause it's just amazing
location. But we're just veryclear on them. I mean, when we
show the projections, you know,it that one's a little bit
faster, but, you know, if it's0.5% cash on cash in year 1 or
not by year 2, we just show themthat.

(28:23):
But, you know, that average cashon cash is still a nice number
when you can start getting thosedouble digits once stabilized a,
and then the exit is normally sonice on those. And then like
this recently, we packaged ittogether because one of the
properties was a smallerredevelopment and we knew it
would start producing cash flowfaster, but it didn't have as
big of an exit, whereas theother building has gonna have

(28:45):
national tenants and we couldprobably get a very compressed
cap rate at that and you mix wepackage them together. That way
we'd get a mixture of that cashflow and nicer exit at the end
of it. But yes, we're just veryupfront on it. You know, one
thing I'll point out on themultifamily is people that you
are by a 150 units.
Unless you evict the wholecomplex, you're gonna you're
gonna be 24 to 36 months, whatwe call if you wanna call it

(29:06):
fully stabilized in the way Iunderwrite a deal. Because by
the time I turn all those unitsand get these value add $300 add
ons, it's gonna take a coupleyears to turn all these people,
you know? And, you know, you'llhear a lot of people go, well,
we're just gonna raise all therates at all the renewals.
That's a good theory, but unlessyou're creative, you're gonna
lose people. And again, that'sgonna take time too.
So when I say, you know, let'ssay we go into q 2 on this

(29:28):
27,000 square feet, that isconstruction is completely done
and and we are a 100% occupiedwith everyone at a full market
rate. And I think a multifamilydeal would take you similar
timeframe regardless, but I Itreat them as a ground up. I
tell you, yes. There's abuilding there, but call it a
development project. It's if Iwas gonna go build an apartment
complex tomorrow, this is thesame concept.

I like that. I like that way of thinking about
it because, I mean, I havefriends that do development, and
I've always asked them becausewe we only do existing,
multifamily. And, you know, youstart collecting rents the day
you take over. Right?

And for

him, he's like, Yeah. I mean, I don't pay
investors for 2 years prettymuch because they're all ground
up. You know, I have to get themleased and everything like that.
So that's the main

the right investor. If if I sit down with
someone and I go, you know, andwe start, you know, we kinda,
you know we we can go through abracket process and, you know,
we go through fact finding. AndI tell them, you know, what is
your goal? And they go, oh,well, you know, I'm a lot of
our, like, a a big piece of ouravatar. You know, we have it
probably 2 different avatarsthat are tried to, but one of
the main ones is that, you know,probably forties to fifties male

(30:35):
that owns their own businessthat is looking for that
retirement piece.
And if they tell me, no, I mean,I have x amount of dollars. And
in the next few years, I wannaretire and I need the cash flow
from what wherever I investthis, and that's how I'm gonna
pay my car payment or buy mygroceries. I'm gonna tell them,
no, this is not the deal foryou. Let's let's show you this
multifamily deal over here. Andthat's why we're in both well,

(30:57):
we're in both spaces because welike both spaces and we're we do
fairly well with them, but Iwould shift them there.
I would I would not let them putmoney in this deal. Just, you
know, now I also have our otheravatar is kind of some that have
either exited businesses ormaybe some family money, not
family office style, butsomewhere along those lines
where they're big check writers,they could care less about the

(31:18):
quarterly distributions. I mean,they don't want their money just
not making anything, but theywanna know at the end of my 5
years, where will my money bethe most? Like where, where is
the, where will it, you know,multiply the most? Even if I
don't get a check, but on, onthe day, on the, you know, the
anniversary of the 5thanniversary, it's gonna be 3x
here.
And I told them that you can get1.7 over here and it's gonna

(31:40):
come in ease, you know, evenlyquarterly distributions. Their
response is, give me the 3 x. Icould care I don't need the
money. So just really depends onthat investor, and it's 2
completely different thingsbased on them.

Yeah. That makes sense. Well, Brian, is there
anything else that you wanted toshare about this deal or about
Ferdmar or yourself?

No. I mean, that kinda encompasses the deal. You
know, I definitely if if there'sever anyone that wants to talk
about, you know, this commercialvalue add play, I think it's a
huge deal and we're definitelynot gonna touch every market.
And there's some of thesebuildings in every market, so
it's it's an interesting play.We've learned a lot of lessons
the hard way.
We're we've done quite a few ofthem now, but I'd be happy to
visit with anyone or if there's,you know, anybody that everyone

(32:19):
I love connecting with newfolks. But, that's kinda us in a
nutshell and what we got goingon.

Where can people hear more from you or connect
with you?

So, yeah, altunascapital.com is our
website or fergmar.com. Myemail, bferguson@fergmar.com.
You can always reach me there,or you can find me on LinkedIn
and most socials.

Awesome. Well, thank you again for sharing
about yourself, your businesses,and, and the deal that we talked
about today.

Man, I appreciate it. Thank you for
having me on. It was great.

Intro speaker (32:50):
Thank you for listening to this episode of the
Real Estate ProfessionalsInvesting podcast on Wynn, your
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(33:10):
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