November 13, 2024 • 32 mins
ABOUT ANDREW CUSHMAN
Andrew Cushman is a former chemical engineer who found his entrepreneurial calling in real estate. In 2007 Andrew left his corporate position to start a business in real estate investing, starting off flipping single-family properties in Southern California. Sensing a shift in the market, in 2011 Andrew transitioned to multifamily acquisitions and has successfully syndicated and repositioned over 2600 multifamily units.
Outside of the business world, Andrew has been a certified alpine ski instructor and when not working in real estate enjoys surfing, backcountry skiing, and trying not to be outwitted by his two young children.
THIS TOPIC IN A NUTSHELL:
Andrew’s career and what made him switch to real estate
From chemical engineer to Syndicator
Partnership with Vantage Point acquisitions
His big mistake early on
Typical hold time for assets
Which location do they focus on buying assets?
Their target buy box
Finding deals and underwriting
Building relationships with brokers
How do they approach capital raising?
About the 80-unit Deal in Carrolton Georgia
How did they find it and why did they pursue it?
Value Add plan and stabilization of the property
Buying right even with a down market
Connect with Andrew
KEY QUOTE:
“The best time to buy is when the pessimism is at the highest, you will get the best pricing with the least competition. “
SUMMARY OF BUSINESS:
Vantage Point Acquisitions (VPACQ) is a real estate private equity firm focused on acquiring, repositioning, and operating B- to A-class multifamily communities throughout the Southeast. As operators, we take pride in our hands-on asset management approach and transparent investor communications throughout the life cycle of the investment.
ABOUT THE WESTSIDE INVESTORS NETWORK
The Westside Investors Network is your community for investing knowledge for growth. For real estate professionals by real estate professionals. This show is focused on the next step in your career... investing, for those starting with nothing to multifamily syndication.
The Westside Investors Network strives to bring knowledge and education to real estate professionals that is seeking to gain more freedom in their life. The host AJ and Chris Shepard, are committed to sharing the wealth of knowledge that they have gained throughout the years to allow others the opportunity to learn and grow in their investing. They own Uptown Properties, a successful Property Management, and Brokerage Company. If you are interested in Property Management in the Portland Metro or Bend Metro Areas, please visit www.uptownpm.com. If you are interested in investing in multifamily syndication, please visit www.uptownsyndication.com.
#RealEstateInvesting #RealEstate #Syndication #AparmentInvesting #Multifamily #AssetManagement #MultifamilyInvestment #PropertyManagement #GeneralPartner #LongTermInvesting #BuyRight #DownMarket #MarketShift #DownTurn #Acquisitions #AssetStabilization #Renovation #OperationValueAdd #ManagementValueAdd #CapitalImprovement #LandLordFriendlyStates #TenantFriendlyStates #Underwriting #InvestorBased #LongTermAssets #RaisingCapital #RealEstateInvestment #RentalProperty #PassiveWealth #WealthBuilder #InvestmentInsights #JoinTheWINpod #WestsideInvestorsNetwork
CONNECT WITH ANDREW:
Website: https://www.vpacq.com
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Intro speaker (00:03):
Welcome to the Westside Investors Network. Win,
your community of investingknowledge for growth. This is
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(00:23):
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Andrew Cushman (00:29):
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Intro speaker (00:29):
educational purposes only and should not be
construed as an offer to buy orsell any shares or securities,
make or consider anyinvestments, or take any other
action.
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
invested in. We will dive deepinto finding the deal, financing
the deal, writing an offer, andthe due diligence. Do us a solid
and smash that subscribe button,leave us a rating, and share
(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 are joined by Andrew Cushman,
Vantage Point Acquisitions.We're gonna hear about Andrew's
transition from being a chemicalengineer into now a full time
real estate syndicator with over28 100 units.
(01:25):
Andrew's gonna share about adeal in Carrollton, Georgia
that's on the smaller end oftheir buy box, but makes sense.
And we'll hear the reasons whyhe ended up buying that and the
success it's had in the 1st 2years of owning it. Now let's
welcome Andrew Cushman. Alright.Welcome back to the Westside
Investors Network podcast.
We've got Andrew Cushman withVantage Point Acquisitions
(01:46):
joining the show today. Andrew,thanks for joining us.
Andrew Cushman (01:49):
Hey, glad to be here. Appreciate the invite.
Trent Werner (01:52):
Yeah. So today Andrew and I are going to talk
about who Andrew Cushman is, whyhe got into real estate. And
then we have a deal out inCarrollton, Georgia that we'll,
we'll get into. Before we getinto the deal, Andrew, you
didn't start in real estate.You're in real estate now.
Why did you wanna make theswitch and what made you
actually make that switch?
Andrew Cushman (02:12):
So I always, even as a kid, I knew I wanted
to be an entrepreneur, but Ididn't know how to do that. No
one teaches you in high schoolor, you know, I guess in college
there's some options now, but noone basically teaches you how to
go, you know, start a businessand do all that. So I became a
chemical engineer just so that Iwould have a job that I could
tolerate until I figured out myreal calling. Was an engineer
(02:34):
for seven and a half years, sawan article in the Wall Street
Journal about flipping houses,read it, and like, I don't think
I can do that. And startedlearning about flipping houses.
My wife and I, she's businesspartner, did our first one in
2007. When we sold it, we madeas much as I made all year, my
engineering job. So I said,there's no better sign than
(02:54):
that. I'm out of here. Went intoflipping full time.
2 years later, she joined mefull time. That was great for a
few years, but, you know, 2,009,2,005, especially by about 2010,
a lot of the equity was gone.Everyone else was starting to
get into it. And we said, well,what's something that builds
recurring income and long termwealth and is not just, you
(03:16):
know, a treadmill as you're justconstantly on trying to flip
houses? And we said, well,apartments.
And then we reasoned that wejust had a huge recession, which
means you're probably gonna havea significant expansion with job
creation, household formation,and everyone just got either got
foreclosed on and can't buy ahouse for the next 7 years, or
they know somebody gotforeclosed on and they're scared
(03:38):
to buy a house for theforeseeable future. So you put
all those things together and itseemed like to us that
apartments would be doing reallywell for the foreseeable future.
So we hired a coach, and in2011, did our first deal, which
was 92 units out in Macon,Georgia on the other side of the
country. Been doing it full timesince, and, we're at about, 28
100 units.
Trent Werner (03:59):
So Very nice. Were there were there any, I guess,
skills or lessons that youlearned from chemical
engineering that translated intoreal estate?
Andrew Cushman (04:08):
Yeah. It's a surprisingly good introduction,
and you'll find a lot ofengineers in the real estate
world actually. The reason beingis, you know, like, typically,
we will analyze or look at a 100to 200 deals in order to buy 1.
Now in the last year and a half,it's 800. So just to buy 1.
(04:29):
And so having the engineeringbackground of just kind of the
it's the the the cold hardcalculus of it's just the
numbers. It's just the numbers.Keep running the numbers and
being able to being trained andable to make non emotional
decisions, it really helps andjust kinda analytical thought
(04:52):
process. So, yeah, there'sactually a lot of engineering
that translates pretty well toreal estate.
Trent Werner (04:56):
So is is Vantage Point Acquisitions, you and your
wife?
Andrew Cushman (05:00):
No. It's actually grown beyond that. So
we we have a core team of 7 ofus, and then that's kind of our
leadership asset management andasset management and
acquisitions team. And then ifyou go down to the property
levels, there's maybe 35, 40people at the properties.
However, we do hybrid propertymanagement where we have a
(05:22):
property management company thattechnically employs those people
and does payroll and HR and allthat.
But we are very deeplyintegrated into that process.
And so, like, if you go to theproperty and say, hey, Holly,
who do you work for? I'm like,oh, Andrew and Kelly or, you
know, something like that. So,but our core team is, like I
said, the 7 of us. And I have 3other partners and principals
(05:44):
that, we actually, you know,added on, about 10 years ago as
well.
So
Trent Werner (05:49):
And how has the vantage point growth been from
when you and your wife startedit to now? Was it just straight
vertical or were there somegrowing pains along the way in
in transitioning intomultifamily?
Andrew Cushman (06:02):
I'd say it was slow and steady. Kinda like a 20
you know, 15 year overnightsuccess. You know, buying a
deal. I mean, we probablyaveraged 1 or 2 acquisitions a
year. There were a couple ofperiods just right now actually
being the longest one where, youknow, we didn't buy anything for
over a year because we couldn'tfind one that worked.
You know, the the market hadshifted and we just you know,
(06:24):
until something till we getsomething that works, we're not
gonna buy. So sometimes we wentlong, you know, long periods,
without buying something, but itwas pretty much a slow, steady,
kinda linear growth. One of mybig mistakes was I did not
expand the team and bring onadditional team members early
enough. If I had, we probablywould have done more units than
(06:46):
we did, but, it's been kindaslow and steady. And then on the
flip side, a lot of the dealsand operators that are going bad
right now are the ones thatstarted just a few years ago and
went out and just did, you know,thousands of units right away
and didn't put in the systems inplace and knowledge to operate
these things well and to placethe right kind of debt on it,
(07:07):
and now they're in trouble.
So thankful to be on the paththat we've been on. So Yeah.
Trent Werner (07:13):
And that actually I mean, you saying that leads me
into my next question of what isyour typical hold time? Are you
churn and burn? Are you 10 yearholds? What do you guys do at
VantagePoint?
Andrew Cushman (07:24):
We've been 5 to 10 year since day 1. You know, I
think the shortest hold periodwe've ever done, I think was
about 2 years. And that wasbecause, you know, we actually
we saw a potential shift in theeconomy coming, and so we
decided we would actually have ahigher probability of better
returns if we sold early. Mostof our properties, actually, by
(07:45):
the time we get to the the holdend of the hold period, we
actually, a lot of times, willtake a vote of investors and be
like, hey. You know, ourrecommendation is this, but
what's your preference?
You know, our average isprobably 7 or 8 years.
Trent Werner (08:00):
Yeah. And and that kinda the reason I ask that is
because you mentioned some ofthese these operators that
started a couple years ago, andthey're just churning and
burning, high leveraged, andthose are the ones that are are
unfortunately not maybe going toplan right now. And, you know,
Andrew Cushman (08:15):
being That's a nice way to put it.
Trent Werner (08:17):
Yeah. And being in your position, it's very similar
to what we do. We have pretty,you know, safe debt and low
leverage in most of our ourassets. And, you know, we
haven't had a, like, a feelingof concern over the last couple
of years like maybe some otherpeople have. Yeah.
So where do you guys focus yourassets? Is it all Georgia or are
(08:41):
you willing to go anywhere?
Andrew Cushman (08:42):
No. So I live here in Southern California.
People ask me, you know, all thetime, why do you live in
California? And I'm like, well,for 1, that's where my house is.
But my philosophy is live whereyou love to live and then invest
where the returns are the best.
So I like to surf and ski andhave nice weather. So I live in
California, but there's a lot ofwell publicized downsides to
(09:05):
investing or difficulties ininvesting in California. So we
go to the southeast US where wehave strong population growth
from migration, rising incomes,job growth. You can still get
decent cash flow. And then ifyou buy in the right places and
operate it right, you canactually still get really good
appreciation.
Most of those areas are eitherlandlord neutral or landlord
(09:27):
friendly, so it's a little biteasier to operate. And so yeah.
So that's what we do everythingin the southeast because the
fundamentals are really, reallystrong there. And that's not to
say you can't do it in otherstates and other areas, you
absolutely can. But just bigpicture, there's a lot of really
good markets in the southeast,and then we focus on very
specific product.
(09:48):
Class b to a minus garden style,which means 2 to 3 story green
grass, you know, apartments, nothigh rises downtown or again,
not to say those are bad, butjust we've picked a very
specific asset and tried tobecome experts in that one very
specific thing.
Trent Werner (10:04):
And some people think that when you have your
buy box and you're looking for avery specific type of asset that
it may be harder to do deals orfind deals. How do you guys go
about getting deals in front ofyou to analyze and underwrite?
Andrew Cushman (10:19):
Well, they're absolutely right. The narrower
you get, the harder it is tofind what you're looking for up
to a certain point. Number 1, Ithink that's actually a mistake
people make. It's like, oh, Ican't find I'm gonna go do this
or I'm gonna I'm gonna domultifamily. Well, I am also
gonna do industrial and, hey.
I'm gonna buy a car wash and,you know, what about ATMs and
all this stuff? How youcompensate for having very
strict deal criteria is look atmore deals. So, you know, we
(10:43):
have a full time acquisitionsteam. In the beginning, it was
just me, but now we have a fulltime team that all they do well,
not all they do, but the vastmajority of what their time is
spent doing is sendingunsolicited offers, calling
brokers, touring properties, andbeing very specific about what
we're looking for. One of thebenefits of being that specific
(11:05):
hyper specific is the brokertalks to a seller and that
seller is like, yeah.
I might entertain an offer, Andthat property is exactly what
we're looking for. That brokersmean, like, I know exactly who
to bring this to. Right? And andwe get the first call. You know,
if it's a property built in the19 sixties in a rough part of
(11:28):
town, they're not going to callus because they know we don't
want it.
But if it's 2,001 in a high in ahigh income, high growth area,
and it's gotten certain othercharacteristics and they it's
maybe as even a certain type ofseller profile, there's a good
chance we're gonna get thatcall. Or if it's a seller that
is very sensitive to closing ontime or operating a certain way
(11:51):
that, you know, we'll we'll getthat call. So it's kinda, you
know, and it's not I hate Idon't use I don't like the word
training, but, you know, the thethe professional deal finders,
if they know the exact fit foryou, that's how you actually get
some of the best deals. Becausethen when they see it, they
think of you first. Whereas ifyou're like, oh, I'll buy
(12:13):
anything, well, then you justkinda see anything.
Trent Werner (12:17):
Very true. How do you guys go about I mean, being
in Southern California, how doyou guys go about building those
relationships with brokers inSoutheastern States?
Andrew Cushman (12:28):
I when it was just me, I used to make a spend
a lot of time on the phone and alot of time flying to Atlanta
and driving around, you know,Georgia and Florida and such.
These days, I still do some ofthat, but our, you know,
Anthony, who heads up ouracquisitions team, he lives in
Atlanta. And so he can go tolunch, can go to dinner, can go
(12:48):
tour properties, and do all thatstuff very easily. So that's
that's part of how we look at,you know, the number of deals
that we need to look at in orderto, in order to to find the ones
that we're, you know, trying tofind.
Trent Werner (13:01):
Yeah. That makes sense. And what's your I guess
what in your buy box, do youhave a specific number of units
that you're looking for in eachof these these assets?
Andrew Cushman (13:11):
Yeah. Our range our preferred range is 80 to
250. And the reason for that isbelow 80. So we wanna buy assets
that can afford full time staff,meaning at least one full time
manager and at least one fulltime maintenance person. We want
at least those 2 people focusedon just that asset.
If you get below 80 units, it'shard to economically cover that.
(13:35):
And so we want minimum of 80. Wefind that there's some real
efficient sweet spots in termsof efficiency of operations and
expenses at, like, a 100 and 20units and at, like, 220 units.
Once you get significantly above220, there's still efficiency,
but it kinda goes from running aproperty to running a small
(13:57):
city. When you start seeing someof these 345 100 unit massive
properties, it's not that they,you know, don't make money or
they're bad investments.
It's just it's it's a differentfeel. In in fact, you're instead
of hiring a property manager,you're almost hiring a small
time mayor. Right? Becausethey've got, like, a team of,
(14:18):
like, 10 people and a 1,000residents. And then also it's
really hard to be nimble withyou've got a 400 unit property.
It feels a lot more like you arekind of subject to the whims of
the market. Whereas if you got a100 units or 200 units, you can
turn the ship a little morequickly. Right. And you can, you
know, and adjust your strategy.Whereas if you've got 400 units
(14:42):
and 40 of them are beingrenovated or 40 of them are
being vacant and the marketshifts, it's a little harder to
adapt quickly.
Trent Werner (14:50):
Right. And then my my question my other question
for you guys is, in terms ofcapital raising, when you're
taking down, you know, 80 to 250doors, that's usually 1,000,000
of dollars. So when it goesabout capital raising, how are
you guys approaching that? Areyou bringing in other, you know,
GPs to do capital raising? Howdoes that how do you guys work
on that?
Andrew Cushman (15:10):
No. We've actually never never co GP'd.
There's a lot of hazards anddownsides to doing that. So
we're a sole GP on on everythingthat we've done. Our investor
base is, the majority is justindividuals who like to invest
in real estate, but maybe havetheir own business or their
doctors or, you know, they'regood at doing what they do, and
(15:32):
they don't have time or desireor probably skill to go out and
source great deals full time.
Right? And so we do what's, onwe do syndications under, you
know, SEC rules 506 b, and noone needs to really know all the
details of that other than itjust means we don't solicit. So
you will not see our deals onFacebook or TikTok or LinkedIn
(15:53):
or anything like that. It's allyou have we have to have a
preexisting relationship, whichmeans we connect at some point,
you know, before the dealhappens. And then when we get
one under contract, we send itout to our investor list via
email, so it's private.
And that investor list has justgrown over time by word-of-mouth
(16:13):
and referrals. You know, ourtypical raise on a deal will be
anywhere from 5 to 21,000,000,and that is all funded just from
regular people and individuals.We don't take institutional
money. We don't like the therisks and the hooks and
requirements that comes alongwith that. We do have some very
high net worth individuals andsmall family offices and, like,
(16:36):
funds that will write pretty bigchecks.
But you know what? The vastmajority are bread and butter
investors, just regular peoplewho are looking to diversify and
get some, you know, riskadjusted exposure to multifamily
real estate.
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you have a a decent sizedinvestor relations team or or
people that are in charge ofraising money and and keeping in
contact with your investor base?
Andrew Cushman (17:59):
Yeah. We have a full time person that, you know,
her job is, you know, thecommunications, making sure the
k ones get out on time,maintaining the investor portal,
all of that stuff. Now I stillany investor that's investing
with us, you know, still has theability to call or email me
directly. I still talk withinvestors regularly. Yeah.
(18:20):
Really, I mean, pretty muchsomebody every day. And then the
the onboarding call can beeither with me or or with
Anthony. So we have a full timeperson to handle kind of the
just the the admin, but, youknow, any investor is always
able to contact anyone on theteam.
Trent Werner (18:36):
Makes sense. So now let's let's talk about this
deal in Carrollton, Georgia thatwe're gonna get into today.
Eighty units, I think you said.Mhmm. You guys bought it in
2022.
So depending on your opinions,that could have been at the
peak, going down. Who knowsexactly where it was in the
cycle. We'll get there a coupleyears down the road. But tell me
(18:57):
about this deal. How did youfind it, and why did you wanna
pursue this 80 unit deal inCarrollton?
Andrew Cushman (19:02):
Yeah. So I've actually I'd say the peak was Q1
of 2022. We bought this in Julyof 22, so as things were coming
down. And it actually was aproperty that we had been trying
to get for, a good while, andthen finally, we were able to
get it off market through abroker when the seller
eventually decided it was it wastime for them to to move on. So,
(19:25):
you know, purchased off market.
We really like the deal. Again,it's on the it's on it's
literally it's the exact minimumfor for a deal that we would
buy. But, you know, Carrolltonis one of the fastest growing
markets in the country. Thepopulation growth in 2021 and 2
(19:45):
was almost 3% annually, whichis, you know, massive. Very
strong incomes, pro business,pro development.
It's just one of those thrivingsuburbs that's 45 minutes out of
Atlanta. You can be to theairport in, you know, a little
more than half an hour. You canbe downtown in 45 minutes. Lots
of people moving there. Theproperty had very, very clear
(20:09):
upside to it, meaning theexisting rents were well below
the rents at the comparableproperties.
Meaning we go in, we renovate,manage it well. We have we can
get built in rent increases evenif the market didn't go up.
Like, all we needed to do isjust get it to where it should
have been the day we bought it,and we don't need any market
(20:33):
increases in order to make itsuccessful. And, again, and then
we've got a whole screeningprocess. We look at median
income, flood zones, crime, youknow, cell phone coverage, all
kinds of stuff, and it checkedevery box like this is a great
little property.
Trent Werner (20:45):
When it comes to, I guess, doing a deal like this
where I is it class b, class aminus? What what were you
talking here?
Andrew Cushman (20:54):
Yeah. This one this one, you know, in in, you
know, a class b in Carrollton,it'll be very different from a
class b in Orange County,California. Right? So you have
to you know, you definitely haveto factor in market. I would say
this one when we bought it was ab minus.
And in that market today, it's,probably a b plus. And, you
know, we're we we try to move itup move any properties you buy
(21:17):
up a notch, but we're generallynot trying to make huge jumps
that require a complete, youknow, down to the studs
renovation or anything likethat.
Trent Werner (21:26):
So aside from, you know, your rent increases,
changing management, making sureit's operating well, what are
you having to do in order to getthat property to stabilize
space?
Andrew Cushman (21:36):
I mean, that was the the the so there's 2
generally, 2 types of value add.1 is management value add and
the other is, you know,renovation and operation value
add. So the first one was interms of management. You know,
everyone likes to buy deals andsay, oh, the current owners are
stupid. They're not doing this.
The guys we bought it from wereperfectly decent operators, but
(22:00):
it this, you know, maximizingthat property was just not their
main focus. And so yeah. Andalso, you know, we partner with
a management company that hasbeen in that region for, you
know, like 15 years. That'stheir specialty. We've been with
them for that entire time.
And so we work really, reallywell together. So we definitely
had some advantages on themanagement side. And then the
(22:20):
other half of it, candidly, isjust kinda your bread and butter
renovations, going and puttingin nicer countertops, upgrading
the flooring, the fixtures, theappliances, just, you know, it
hadn't been renovated yet andand or at least in in, you know,
recent amount of time. And so,yeah, just kinda bringing it up
to where the rest of the marketwas. And, you know, if you do
(22:43):
that well, the market will be,you know, willing to pay for
that.
And, that's what we did.
Trent Werner (22:48):
And how do the 80 units how many do you think or
are you targeting to do thoseinterior renovations?
Andrew Cushman (22:55):
We generally speaking, if we're buying a
property, our plan is to do itto all of them.
Trent Werner (23:00):
Oh, okay. Alright. I was not expecting that. And is
there I guess, is there a reasonbehind that? Are you trying to
get, you know, all the juicethroughout your whole time and
not leave anything else there?
Andrew Cushman (23:11):
Yeah. I mean, generally speaking, there is a
theory that especially if you'rein and out of properties
quickly, which we don't do, thata lot of times people will or it
was really popular in the in thein the run up where someone
would buy a 100 units, renovate20 or 30 of them, get higher
rents, and then sell the dreamto the next buyer. Like, oh,
look, all you gotta do isrenovate the rest of them and
(23:33):
get get these higher rents andthen they cash out and, you
know, get, you know, you know,turn and burn. They're just in
and out, make some fees, make aquick profit and move on. We
tend to hold 5 to 10 years.
And so we wanna go ahead andupfront improve and fix anything
and everything that needs to beso that then we have a nice, you
know, 3 to 7 year stabilizationperiod where the property runs
(23:56):
well and runs pretty easy. So,yeah, we're we're typically I
can't think of this any timewhere we have not done the
entire property. Now these days,there are some operators that
have stopped renovations becausethey're not getting the rent
increases that they thought theywould. And, you know, that can
be a smart pivot. However, forus, we're you know, the
(24:20):
difference is, is a lot in thosecases, the operator was counting
on the market to go up and thenrenovate and get rent increases.
Whereas ours are based on themarket staying flat and just
getting it to there. So we'restill getting the rent increase
by doing the renovation. Nowthis property is done, but on
other properties, we're stilldoing the renovations because
(24:42):
we're still getting the rentincreases because we weren't
counting on the market going up.So
Trent Werner (24:46):
And if someone if a tenant is just willing to take
a rent increase and not moveout, you're obviously not gonna
kick them out to renovate.Right?
Andrew Cushman (24:54):
Correct. We don't we generally, in most
cases, don't force anybody out.And if that's the case, they're
like, look, I just you know, I'mhappy to pay the new rent. I
like it here. I wanna stay in myunit.
Then generally, what we'll do iswe'll come in and say, okay.
We'll renovate what we can withyou in here. Right? Maybe change
out the you know, improve, putnicer fixtures in, maybe swap
(25:14):
out the nicer appliances, but wewon't do, like, the flooring
until they do move out someday.And, you know, that's an that I
mean, that's a win win.
Right? The resident, they stay.We don't have to spend quite as
much on the renovation upfront,but we still get the rent. And
we might in some cases, we mighteven, you know, not increase
their rent quite as much. Soit's kind of a, you know, again,
(25:35):
a bit of a win win.
But, yeah, we try not to forcepeople out. And if someone's
like, look, I just I can'tafford this. I would love to
have the renovations. I can'tthen we try to work with them
and say, alright. Well, youknow, maybe we can renew your
lease for 6 months at, you know,a number somewhere in the
middle, and that gives you 6months to, you know, maybe find
(25:56):
another living arrangement oror, you know, we we try to work
with people.
We generally don't just come inand say, alright. You know,
sorry. Everyone's going up $300.Like, that's not a good way to
operate for a lot of reasons. So
Trent Werner (26:08):
Yeah. And this is more of a curiosity question for
me, but, because all of ourassets are in Portland Metro
here in the northwest. So I'mI'm not I mean, I've underwrote
deals out there. I've I'velooked at them, but in your
expertise and experience, whatis an expense ratio like in
Georgia? You know, is itoperating at 50%?
(26:30):
Are you guys looking at stufflike that?
Andrew Cushman (26:32):
Yeah. We definitely look at that. It it's
very our operating expenseratios, meaning, you know, like
just what percentage of yourincome are your expenses, not
including the debt, range fromas low as the mid thirties up to
I'd say, I think the highest oneis maybe in the low fifties.
(26:53):
Okay. Which again, that's partof why we prefer the larger
assets is you tend to be able torun them a little bit more
efficiently.
And then also, we've got anumber of situations where we
have multiple properties in onemarket, and so that creates some
efficiencies as well. So
Trent Werner (27:08):
Yeah. That's I was gonna say between 40.50 is kind
of what I've heard forSoutheastern region. And then
with this deal that we'retalking about, you your typical
hold time is 5 to 7, 5 to 10years. You said it's already
stabilized. You're in thatperiod now.
Is there any ever gonna be arefi or any sort of way to get
(27:29):
capital back to investors priorto dispo?
Andrew Cushman (27:32):
Yeah. It's funny. We literally closed the
cash out refinance this morning.
Trent Werner (27:36):
Awesome. Congrats.
Andrew Cushman (27:38):
So, you know, and then just just as an example
of, you know I mean, it's been adown market for the last 2
years. I again, prices areprobably down 20 to 30% since
the Q1 of 2022. And, you know, alot of people have just been
sitting on the sidelines, butI'm gonna wait till things
bottom. If you buy right, youcan still make money in
(28:00):
increased value in a downmarket. So we bought that
property in July of 2022 for$115,000 a unit.
The lender appraisal in Augustof 2024 came in at a 157 a unit.
So a 37% increase in the valueof the property in a market
that's down 20%. So choosing theright assets in the right
(28:24):
markets and then executing theright strategy, you can still
create value in a down market.So, yeah, we literally closed
the cash out refinance thismorning. You know, a chunk of
capital is gonna go back toinvestors.
And then now we're we're kind ofat the fun part where we just,
enjoy, hopefully, you know,solid cash flow for the next 3
to 5 years. So I
Trent Werner (28:43):
love it. That's awesome. Andrew, is there
anything else that we didn't getto talk about about the deal,
about vantage Point, or aboutAndrew Cushman today?
Andrew Cushman (28:52):
Well, I could talk about backcountry skiing
for hours, but no. I mean, justyou know, if for anyone who's
looking to get into it, ifyou're looking to get in
passively, you know, there'slots of deals going bad right
now. I would just say the dealis important, but the operator
is 10 times more important thanthe deal. Good a good operator
(29:13):
can can save a a rough deal. Thebad operator can take an amazing
deal and run it into the ground.
If you're looking to be active,you know, now is a I really you
know, it's funny that theNational Association of Realtors
are are often marked mockedrightfully so for it's always a
great time to buy. It's justseems like every realtor, no
(29:34):
matter what's it's a great timeto buy. I that is true in
multifamily right now. I thinkpricing has hit bottom. The time
to buy is when pessimism is atthe highest.
You're gonna get the bestpricing and the least
competition. Pessimism is ashigh as I've seen it in a decade
right now. And I very stronglybelieve for a lot of reasons
(29:55):
that by the time we get to 2028and 2029, pricing is gonna be a
whole lot higher. And if you buythe right asset in the right
location and manage it welltoday, 5 years from now, you're
gonna be really happy that youdid that.
Trent Werner (30:08):
Yeah. I actually saw a stat. I don't know if it
was from NAR or who who pumpedit out, but 87% of people that
were in the market to buy withinthe last 2 years now feel that
it is not a good time to buy.And that's the highest level
it's been in 16 years, I think.So pessimism is definitely,
definitely up.
Andrew Cushman (30:28):
And that's, you know, and it's funny, you the
opposite is that that numbershould be flipped. It should be
the other way around. Yeah.
Trent Werner (30:35):
Yeah. Well, Andrew, where can people hear
hear more from you and connectwith you?
Andrew Cushman (30:39):
Yeah. I'm not as I don't dance and I don't take
selfies, so I'm not on, TikTokor Instagram or Facebook or
anything like that. I am onLinkedIn, and that is me posting
and that is me commenting. So ifyou comment and that, you know,
that's actually me replying toyou. And then you can go to just
if you Google Vantage PointAcquisitions, we have really
(31:00):
good SEO.
I don't know how, but we do. Andjust go our website is
vpacq.com, and there's a coupleof tabs on there for different
ways to get connected with us.
Trent Werner (31:11):
Awesome. Well, Andrew, thank you again for
sharing about Vantage Point andyourself and the deal in
Carrollton.
Andrew Cushman (31:16):
It was good talking with you. Appreciate it.
Intro speaker (31:18):
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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
invested in. We will dive deepinto finding the deal, financing
the deal, writing an offer, andthe due diligence. Do us a solid
and smash that subscribe button,leave us a rating, and share
(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 are joined by Andrew Cushman,
Vantage Point Acquisitions.We're gonna hear about Andrew's
transition from being a chemicalengineer into now a full time
real estate syndicator with over28 100 units.
(01:25):
Andrew's gonna share about adeal in Carrollton, Georgia
that's on the smaller end oftheir buy box, but makes sense.
And we'll hear the reasons whyhe ended up buying that and the
success it's had in the 1st 2years of owning it. Now let's
welcome Andrew Cushman. Alright.Welcome back to the Westside
Investors Network podcast.
We've got Andrew Cushman withVantage Point Acquisitions
(01:46):
joining the show today. Andrew,thanks for joining us.
Andrew Cushman (01:49):
Hey, glad to be here. Appreciate the invite.
Trent Werner (01:52):
Yeah. So today Andrew and I are going to talk
about who Andrew Cushman is, whyhe got into real estate. And
then we have a deal out inCarrollton, Georgia that we'll,
we'll get into. Before we getinto the deal, Andrew, you
didn't start in real estate.You're in real estate now.
Why did you wanna make theswitch and what made you
actually make that switch?
Andrew Cushman (02:12):
So I always, even as a kid, I knew I wanted
to be an entrepreneur, but Ididn't know how to do that. No
one teaches you in high schoolor, you know, I guess in college
there's some options now, but noone basically teaches you how to
go, you know, start a businessand do all that. So I became a
chemical engineer just so that Iwould have a job that I could
tolerate until I figured out myreal calling. Was an engineer
(02:34):
for seven and a half years, sawan article in the Wall Street
Journal about flipping houses,read it, and like, I don't think
I can do that. And startedlearning about flipping houses.
My wife and I, she's businesspartner, did our first one in
2007. When we sold it, we madeas much as I made all year, my
engineering job. So I said,there's no better sign than
(02:54):
that. I'm out of here. Went intoflipping full time.
2 years later, she joined mefull time. That was great for a
few years, but, you know, 2,009,2,005, especially by about 2010,
a lot of the equity was gone.Everyone else was starting to
get into it. And we said, well,what's something that builds
recurring income and long termwealth and is not just, you
(03:16):
know, a treadmill as you're justconstantly on trying to flip
houses? And we said, well,apartments.
And then we reasoned that wejust had a huge recession, which
means you're probably gonna havea significant expansion with job
creation, household formation,and everyone just got either got
foreclosed on and can't buy ahouse for the next 7 years, or
they know somebody gotforeclosed on and they're scared
(03:38):
to buy a house for theforeseeable future. So you put
all those things together and itseemed like to us that
apartments would be doing reallywell for the foreseeable future.
So we hired a coach, and in2011, did our first deal, which
was 92 units out in Macon,Georgia on the other side of the
country. Been doing it full timesince, and, we're at about, 28
100 units.
Trent Werner (03:59):
So Very nice. Were there were there any, I guess,
skills or lessons that youlearned from chemical
engineering that translated intoreal estate?
Andrew Cushman (04:08):
Yeah. It's a surprisingly good introduction,
and you'll find a lot ofengineers in the real estate
world actually. The reason beingis, you know, like, typically,
we will analyze or look at a 100to 200 deals in order to buy 1.
Now in the last year and a half,it's 800. So just to buy 1.
(04:29):
And so having the engineeringbackground of just kind of the
it's the the the cold hardcalculus of it's just the
numbers. It's just the numbers.Keep running the numbers and
being able to being trained andable to make non emotional
decisions, it really helps andjust kinda analytical thought
(04:52):
process. So, yeah, there'sactually a lot of engineering
that translates pretty well toreal estate.
Trent Werner (04:56):
So is is Vantage Point Acquisitions, you and your
wife?
Andrew Cushman (05:00):
No. It's actually grown beyond that. So
we we have a core team of 7 ofus, and then that's kind of our
leadership asset management andasset management and
acquisitions team. And then ifyou go down to the property
levels, there's maybe 35, 40people at the properties.
However, we do hybrid propertymanagement where we have a
(05:22):
property management company thattechnically employs those people
and does payroll and HR and allthat.
But we are very deeplyintegrated into that process.
And so, like, if you go to theproperty and say, hey, Holly,
who do you work for? I'm like,oh, Andrew and Kelly or, you
know, something like that. So,but our core team is, like I
said, the 7 of us. And I have 3other partners and principals
(05:44):
that, we actually, you know,added on, about 10 years ago as
well.
So
Trent Werner (05:49):
And how has the vantage point growth been from
when you and your wife startedit to now? Was it just straight
vertical or were there somegrowing pains along the way in
in transitioning intomultifamily?
Andrew Cushman (06:02):
I'd say it was slow and steady. Kinda like a 20
you know, 15 year overnightsuccess. You know, buying a
deal. I mean, we probablyaveraged 1 or 2 acquisitions a
year. There were a couple ofperiods just right now actually
being the longest one where, youknow, we didn't buy anything for
over a year because we couldn'tfind one that worked.
You know, the the market hadshifted and we just you know,
(06:24):
until something till we getsomething that works, we're not
gonna buy. So sometimes we wentlong, you know, long periods,
without buying something, but itwas pretty much a slow, steady,
kinda linear growth. One of mybig mistakes was I did not
expand the team and bring onadditional team members early
enough. If I had, we probablywould have done more units than
(06:46):
we did, but, it's been kindaslow and steady. And then on the
flip side, a lot of the dealsand operators that are going bad
right now are the ones thatstarted just a few years ago and
went out and just did, you know,thousands of units right away
and didn't put in the systems inplace and knowledge to operate
these things well and to placethe right kind of debt on it,
(07:07):
and now they're in trouble.
So thankful to be on the paththat we've been on. So Yeah.
Trent Werner (07:13):
And that actually I mean, you saying that leads me
into my next question of what isyour typical hold time? Are you
churn and burn? Are you 10 yearholds? What do you guys do at
VantagePoint?
Andrew Cushman (07:24):
We've been 5 to 10 year since day 1. You know, I
think the shortest hold periodwe've ever done, I think was
about 2 years. And that wasbecause, you know, we actually
we saw a potential shift in theeconomy coming, and so we
decided we would actually have ahigher probability of better
returns if we sold early. Mostof our properties, actually, by
(07:45):
the time we get to the the holdend of the hold period, we
actually, a lot of times, willtake a vote of investors and be
like, hey. You know, ourrecommendation is this, but
what's your preference?
You know, our average isprobably 7 or 8 years.
Trent Werner (08:00):
Yeah. And and that kinda the reason I ask that is
because you mentioned some ofthese these operators that
started a couple years ago, andthey're just churning and
burning, high leveraged, andthose are the ones that are are
unfortunately not maybe going toplan right now. And, you know,
Andrew Cushman (08:15):
being That's a nice way to put it.
Trent Werner (08:17):
Yeah. And being in your position, it's very similar
to what we do. We have pretty,you know, safe debt and low
leverage in most of our ourassets. And, you know, we
haven't had a, like, a feelingof concern over the last couple
of years like maybe some otherpeople have. Yeah.
So where do you guys focus yourassets? Is it all Georgia or are
(08:41):
you willing to go anywhere?
Andrew Cushman (08:42):
No. So I live here in Southern California.
People ask me, you know, all thetime, why do you live in
California? And I'm like, well,for 1, that's where my house is.
But my philosophy is live whereyou love to live and then invest
where the returns are the best.
So I like to surf and ski andhave nice weather. So I live in
California, but there's a lot ofwell publicized downsides to
(09:05):
investing or difficulties ininvesting in California. So we
go to the southeast US where wehave strong population growth
from migration, rising incomes,job growth. You can still get
decent cash flow. And then ifyou buy in the right places and
operate it right, you canactually still get really good
appreciation.
Most of those areas are eitherlandlord neutral or landlord
(09:27):
friendly, so it's a little biteasier to operate. And so yeah.
So that's what we do everythingin the southeast because the
fundamentals are really, reallystrong there. And that's not to
say you can't do it in otherstates and other areas, you
absolutely can. But just bigpicture, there's a lot of really
good markets in the southeast,and then we focus on very
specific product.
(09:48):
Class b to a minus garden style,which means 2 to 3 story green
grass, you know, apartments, nothigh rises downtown or again,
not to say those are bad, butjust we've picked a very
specific asset and tried tobecome experts in that one very
specific thing.
Trent Werner (10:04):
And some people think that when you have your
buy box and you're looking for avery specific type of asset that
it may be harder to do deals orfind deals. How do you guys go
about getting deals in front ofyou to analyze and underwrite?
Andrew Cushman (10:19):
Well, they're absolutely right. The narrower
you get, the harder it is tofind what you're looking for up
to a certain point. Number 1, Ithink that's actually a mistake
people make. It's like, oh, Ican't find I'm gonna go do this
or I'm gonna I'm gonna domultifamily. Well, I am also
gonna do industrial and, hey.
I'm gonna buy a car wash and,you know, what about ATMs and
all this stuff? How youcompensate for having very
strict deal criteria is look atmore deals. So, you know, we
(10:43):
have a full time acquisitionsteam. In the beginning, it was
just me, but now we have a fulltime team that all they do well,
not all they do, but the vastmajority of what their time is
spent doing is sendingunsolicited offers, calling
brokers, touring properties, andbeing very specific about what
we're looking for. One of thebenefits of being that specific
(11:05):
hyper specific is the brokertalks to a seller and that
seller is like, yeah.
I might entertain an offer, Andthat property is exactly what
we're looking for. That brokersmean, like, I know exactly who
to bring this to. Right? And andwe get the first call. You know,
if it's a property built in the19 sixties in a rough part of
(11:28):
town, they're not going to callus because they know we don't
want it.
But if it's 2,001 in a high in ahigh income, high growth area,
and it's gotten certain othercharacteristics and they it's
maybe as even a certain type ofseller profile, there's a good
chance we're gonna get thatcall. Or if it's a seller that
is very sensitive to closing ontime or operating a certain way
(11:51):
that, you know, we'll we'll getthat call. So it's kinda, you
know, and it's not I hate Idon't use I don't like the word
training, but, you know, the thethe professional deal finders,
if they know the exact fit foryou, that's how you actually get
some of the best deals. Becausethen when they see it, they
think of you first. Whereas ifyou're like, oh, I'll buy
(12:13):
anything, well, then you justkinda see anything.
Trent Werner (12:17):
Very true. How do you guys go about I mean, being
in Southern California, how doyou guys go about building those
relationships with brokers inSoutheastern States?
Andrew Cushman (12:28):
I when it was just me, I used to make a spend
a lot of time on the phone and alot of time flying to Atlanta
and driving around, you know,Georgia and Florida and such.
These days, I still do some ofthat, but our, you know,
Anthony, who heads up ouracquisitions team, he lives in
Atlanta. And so he can go tolunch, can go to dinner, can go
(12:48):
tour properties, and do all thatstuff very easily. So that's
that's part of how we look at,you know, the number of deals
that we need to look at in orderto, in order to to find the ones
that we're, you know, trying tofind.
Trent Werner (13:01):
Yeah. That makes sense. And what's your I guess
what in your buy box, do youhave a specific number of units
that you're looking for in eachof these these assets?
Andrew Cushman (13:11):
Yeah. Our range our preferred range is 80 to
250. And the reason for that isbelow 80. So we wanna buy assets
that can afford full time staff,meaning at least one full time
manager and at least one fulltime maintenance person. We want
at least those 2 people focusedon just that asset.
If you get below 80 units, it'shard to economically cover that.
(13:35):
And so we want minimum of 80. Wefind that there's some real
efficient sweet spots in termsof efficiency of operations and
expenses at, like, a 100 and 20units and at, like, 220 units.
Once you get significantly above220, there's still efficiency,
but it kinda goes from running aproperty to running a small
(13:57):
city. When you start seeing someof these 345 100 unit massive
properties, it's not that they,you know, don't make money or
they're bad investments.
It's just it's it's a differentfeel. In in fact, you're instead
of hiring a property manager,you're almost hiring a small
time mayor. Right? Becausethey've got, like, a team of,
(14:18):
like, 10 people and a 1,000residents. And then also it's
really hard to be nimble withyou've got a 400 unit property.
It feels a lot more like you arekind of subject to the whims of
the market. Whereas if you got a100 units or 200 units, you can
turn the ship a little morequickly. Right. And you can, you
know, and adjust your strategy.Whereas if you've got 400 units
(14:42):
and 40 of them are beingrenovated or 40 of them are
being vacant and the marketshifts, it's a little harder to
adapt quickly.
Trent Werner (14:50):
Right. And then my my question my other question
for you guys is, in terms ofcapital raising, when you're
taking down, you know, 80 to 250doors, that's usually 1,000,000
of dollars. So when it goesabout capital raising, how are
you guys approaching that? Areyou bringing in other, you know,
GPs to do capital raising? Howdoes that how do you guys work
on that?
Andrew Cushman (15:10):
No. We've actually never never co GP'd.
There's a lot of hazards anddownsides to doing that. So
we're a sole GP on on everythingthat we've done. Our investor
base is, the majority is justindividuals who like to invest
in real estate, but maybe havetheir own business or their
doctors or, you know, they'regood at doing what they do, and
(15:32):
they don't have time or desireor probably skill to go out and
source great deals full time.
Right? And so we do what's, onwe do syndications under, you
know, SEC rules 506 b, and noone needs to really know all the
details of that other than itjust means we don't solicit. So
you will not see our deals onFacebook or TikTok or LinkedIn
(15:53):
or anything like that. It's allyou have we have to have a
preexisting relationship, whichmeans we connect at some point,
you know, before the dealhappens. And then when we get
one under contract, we send itout to our investor list via
email, so it's private.
And that investor list has justgrown over time by word-of-mouth
(16:13):
and referrals. You know, ourtypical raise on a deal will be
anywhere from 5 to 21,000,000,and that is all funded just from
regular people and individuals.We don't take institutional
money. We don't like the therisks and the hooks and
requirements that comes alongwith that. We do have some very
high net worth individuals andsmall family offices and, like,
(16:36):
funds that will write pretty bigchecks.
But you know what? The vastmajority are bread and butter
investors, just regular peoplewho are looking to diversify and
get some, you know, riskadjusted exposure to multifamily
real estate.
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you have a a decent sizedinvestor relations team or or
people that are in charge ofraising money and and keeping in
contact with your investor base?
Andrew Cushman (17:59):
Yeah. We have a full time person that, you know,
her job is, you know, thecommunications, making sure the
k ones get out on time,maintaining the investor portal,
all of that stuff. Now I stillany investor that's investing
with us, you know, still has theability to call or email me
directly. I still talk withinvestors regularly. Yeah.
(18:20):
Really, I mean, pretty muchsomebody every day. And then the
the onboarding call can beeither with me or or with
Anthony. So we have a full timeperson to handle kind of the
just the the admin, but, youknow, any investor is always
able to contact anyone on theteam.
Trent Werner (18:36):
Makes sense. So now let's let's talk about this
deal in Carrollton, Georgia thatwe're gonna get into today.
Eighty units, I think you said.Mhmm. You guys bought it in
2022.
So depending on your opinions,that could have been at the
peak, going down. Who knowsexactly where it was in the
cycle. We'll get there a coupleyears down the road. But tell me
(18:57):
about this deal. How did youfind it, and why did you wanna
pursue this 80 unit deal inCarrollton?
Andrew Cushman (19:02):
Yeah. So I've actually I'd say the peak was Q1
of 2022. We bought this in Julyof 22, so as things were coming
down. And it actually was aproperty that we had been trying
to get for, a good while, andthen finally, we were able to
get it off market through abroker when the seller
eventually decided it was it wastime for them to to move on. So,
(19:25):
you know, purchased off market.
We really like the deal. Again,it's on the it's on it's
literally it's the exact minimumfor for a deal that we would
buy. But, you know, Carrolltonis one of the fastest growing
markets in the country. Thepopulation growth in 2021 and 2
(19:45):
was almost 3% annually, whichis, you know, massive. Very
strong incomes, pro business,pro development.
It's just one of those thrivingsuburbs that's 45 minutes out of
Atlanta. You can be to theairport in, you know, a little
more than half an hour. You canbe downtown in 45 minutes. Lots
of people moving there. Theproperty had very, very clear
(20:09):
upside to it, meaning theexisting rents were well below
the rents at the comparableproperties.
Meaning we go in, we renovate,manage it well. We have we can
get built in rent increases evenif the market didn't go up.
Like, all we needed to do isjust get it to where it should
have been the day we bought it,and we don't need any market
(20:33):
increases in order to make itsuccessful. And, again, and then
we've got a whole screeningprocess. We look at median
income, flood zones, crime, youknow, cell phone coverage, all
kinds of stuff, and it checkedevery box like this is a great
little property.
Trent Werner (20:45):
When it comes to, I guess, doing a deal like this
where I is it class b, class aminus? What what were you
talking here?
Andrew Cushman (20:54):
Yeah. This one this one, you know, in in, you
know, a class b in Carrollton,it'll be very different from a
class b in Orange County,California. Right? So you have
to you know, you definitely haveto factor in market. I would say
this one when we bought it was ab minus.
And in that market today, it's,probably a b plus. And, you
know, we're we we try to move itup move any properties you buy
(21:17):
up a notch, but we're generallynot trying to make huge jumps
that require a complete, youknow, down to the studs
renovation or anything likethat.
Trent Werner (21:26):
So aside from, you know, your rent increases,
changing management, making sureit's operating well, what are
you having to do in order to getthat property to stabilize
space?
Andrew Cushman (21:36):
I mean, that was the the the so there's 2
generally, 2 types of value add.1 is management value add and
the other is, you know,renovation and operation value
add. So the first one was interms of management. You know,
everyone likes to buy deals andsay, oh, the current owners are
stupid. They're not doing this.
The guys we bought it from wereperfectly decent operators, but
(22:00):
it this, you know, maximizingthat property was just not their
main focus. And so yeah. Andalso, you know, we partner with
a management company that hasbeen in that region for, you
know, like 15 years. That'stheir specialty. We've been with
them for that entire time.
And so we work really, reallywell together. So we definitely
had some advantages on themanagement side. And then the
(22:20):
other half of it, candidly, isjust kinda your bread and butter
renovations, going and puttingin nicer countertops, upgrading
the flooring, the fixtures, theappliances, just, you know, it
hadn't been renovated yet andand or at least in in, you know,
recent amount of time. And so,yeah, just kinda bringing it up
to where the rest of the marketwas. And, you know, if you do
(22:43):
that well, the market will be,you know, willing to pay for
that.
And, that's what we did.
Trent Werner (22:48):
And how do the 80 units how many do you think or
are you targeting to do thoseinterior renovations?
Andrew Cushman (22:55):
We generally speaking, if we're buying a
property, our plan is to do itto all of them.
Trent Werner (23:00):
Oh, okay. Alright. I was not expecting that. And is
there I guess, is there a reasonbehind that? Are you trying to
get, you know, all the juicethroughout your whole time and
not leave anything else there?
Andrew Cushman (23:11):
Yeah. I mean, generally speaking, there is a
theory that especially if you'rein and out of properties
quickly, which we don't do, thata lot of times people will or it
was really popular in the in thein the run up where someone
would buy a 100 units, renovate20 or 30 of them, get higher
rents, and then sell the dreamto the next buyer. Like, oh,
look, all you gotta do isrenovate the rest of them and
(23:33):
get get these higher rents andthen they cash out and, you
know, get, you know, you know,turn and burn. They're just in
and out, make some fees, make aquick profit and move on. We
tend to hold 5 to 10 years.
And so we wanna go ahead andupfront improve and fix anything
and everything that needs to beso that then we have a nice, you
know, 3 to 7 year stabilizationperiod where the property runs
(23:56):
well and runs pretty easy. So,yeah, we're we're typically I
can't think of this any timewhere we have not done the
entire property. Now these days,there are some operators that
have stopped renovations becausethey're not getting the rent
increases that they thought theywould. And, you know, that can
be a smart pivot. However, forus, we're you know, the
(24:20):
difference is, is a lot in thosecases, the operator was counting
on the market to go up and thenrenovate and get rent increases.
Whereas ours are based on themarket staying flat and just
getting it to there. So we'restill getting the rent increase
by doing the renovation. Nowthis property is done, but on
other properties, we're stilldoing the renovations because
(24:42):
we're still getting the rentincreases because we weren't
counting on the market going up.So
Trent Werner (24:46):
And if someone if a tenant is just willing to take
a rent increase and not moveout, you're obviously not gonna
kick them out to renovate.Right?
Andrew Cushman (24:54):
Correct. We don't we generally, in most
cases, don't force anybody out.And if that's the case, they're
like, look, I just you know, I'mhappy to pay the new rent. I
like it here. I wanna stay in myunit.
Then generally, what we'll do iswe'll come in and say, okay.
We'll renovate what we can withyou in here. Right? Maybe change
out the you know, improve, putnicer fixtures in, maybe swap
(25:14):
out the nicer appliances, but wewon't do, like, the flooring
until they do move out someday.And, you know, that's an that I
mean, that's a win win.
Right? The resident, they stay.We don't have to spend quite as
much on the renovation upfront,but we still get the rent. And
we might in some cases, we mighteven, you know, not increase
their rent quite as much. Soit's kind of a, you know, again,
(25:35):
a bit of a win win.
But, yeah, we try not to forcepeople out. And if someone's
like, look, I just I can'tafford this. I would love to
have the renovations. I can'tthen we try to work with them
and say, alright. Well, youknow, maybe we can renew your
lease for 6 months at, you know,a number somewhere in the
middle, and that gives you 6months to, you know, maybe find
(25:56):
another living arrangement oror, you know, we we try to work
with people.
We generally don't just come inand say, alright. You know,
sorry. Everyone's going up $300.Like, that's not a good way to
operate for a lot of reasons. So
Trent Werner (26:08):
Yeah. And this is more of a curiosity question for
me, but, because all of ourassets are in Portland Metro
here in the northwest. So I'mI'm not I mean, I've underwrote
deals out there. I've I'velooked at them, but in your
expertise and experience, whatis an expense ratio like in
Georgia? You know, is itoperating at 50%?
(26:30):
Are you guys looking at stufflike that?
Andrew Cushman (26:32):
Yeah. We definitely look at that. It it's
very our operating expenseratios, meaning, you know, like
just what percentage of yourincome are your expenses, not
including the debt, range fromas low as the mid thirties up to
I'd say, I think the highest oneis maybe in the low fifties.
(26:53):
Okay. Which again, that's partof why we prefer the larger
assets is you tend to be able torun them a little bit more
efficiently.
And then also, we've got anumber of situations where we
have multiple properties in onemarket, and so that creates some
efficiencies as well. So
Trent Werner (27:08):
Yeah. That's I was gonna say between 40.50 is kind
of what I've heard forSoutheastern region. And then
with this deal that we'retalking about, you your typical
hold time is 5 to 7, 5 to 10years. You said it's already
stabilized. You're in thatperiod now.
Is there any ever gonna be arefi or any sort of way to get
(27:29):
capital back to investors priorto dispo?
Andrew Cushman (27:32):
Yeah. It's funny. We literally closed the
cash out refinance this morning.
Trent Werner (27:36):
Awesome. Congrats.
Andrew Cushman (27:38):
So, you know, and then just just as an example
of, you know I mean, it's been adown market for the last 2
years. I again, prices areprobably down 20 to 30% since
the Q1 of 2022. And, you know, alot of people have just been
sitting on the sidelines, butI'm gonna wait till things
bottom. If you buy right, youcan still make money in
(28:00):
increased value in a downmarket. So we bought that
property in July of 2022 for$115,000 a unit.
The lender appraisal in Augustof 2024 came in at a 157 a unit.
So a 37% increase in the valueof the property in a market
that's down 20%. So choosing theright assets in the right
(28:24):
markets and then executing theright strategy, you can still
create value in a down market.So, yeah, we literally closed
the cash out refinance thismorning. You know, a chunk of
capital is gonna go back toinvestors.
And then now we're we're kind ofat the fun part where we just,
enjoy, hopefully, you know,solid cash flow for the next 3
to 5 years. So I
Trent Werner (28:43):
love it. That's awesome. Andrew, is there
anything else that we didn't getto talk about about the deal,
about vantage Point, or aboutAndrew Cushman today?
Andrew Cushman (28:52):
Well, I could talk about backcountry skiing
for hours, but no. I mean, justyou know, if for anyone who's
looking to get into it, ifyou're looking to get in
passively, you know, there'slots of deals going bad right
now. I would just say the dealis important, but the operator
is 10 times more important thanthe deal. Good a good operator
(29:13):
can can save a a rough deal. Thebad operator can take an amazing
deal and run it into the ground.
If you're looking to be active,you know, now is a I really you
know, it's funny that theNational Association of Realtors
are are often marked mockedrightfully so for it's always a
great time to buy. It's justseems like every realtor, no
(29:34):
matter what's it's a great timeto buy. I that is true in
multifamily right now. I thinkpricing has hit bottom. The time
to buy is when pessimism is atthe highest.
You're gonna get the bestpricing and the least
competition. Pessimism is ashigh as I've seen it in a decade
right now. And I very stronglybelieve for a lot of reasons
(29:55):
that by the time we get to 2028and 2029, pricing is gonna be a
whole lot higher. And if you buythe right asset in the right
location and manage it welltoday, 5 years from now, you're
gonna be really happy that youdid that.
Trent Werner (30:08):
Yeah. I actually saw a stat. I don't know if it
was from NAR or who who pumpedit out, but 87% of people that
were in the market to buy withinthe last 2 years now feel that
it is not a good time to buy.And that's the highest level
it's been in 16 years, I think.So pessimism is definitely,
definitely up.
Andrew Cushman (30:28):
And that's, you know, and it's funny, you the
opposite is that that numbershould be flipped. It should be
the other way around. Yeah.
Trent Werner (30:35):
Yeah. Well, Andrew, where can people hear
hear more from you and connectwith you?
Andrew Cushman (30:39):
Yeah. I'm not as I don't dance and I don't take
selfies, so I'm not on, TikTokor Instagram or Facebook or
anything like that. I am onLinkedIn, and that is me posting
and that is me commenting. So ifyou comment and that, you know,
that's actually me replying toyou. And then you can go to just
if you Google Vantage PointAcquisitions, we have really
(31:00):
good SEO.
I don't know how, but we do. Andjust go our website is
vpacq.com, and there's a coupleof tabs on there for different
ways to get connected with us.
Trent Werner (31:11):
Awesome. Well, Andrew, thank you again for
sharing about Vantage Point andyourself and the deal in
Carrollton.
Andrew Cushman (31:16):
It was good talking with you. Appreciate it.
Intro speaker (31:18):
Thank you for listening to this episode of the
Real Estate ProfessionalsInvesting podcast on Wynn, your
community of investing knowledgefor growth. We hope that this
episode has increased yourknowledge and added value to
your path to freedom. If youwould, please take a second to
rate us so that we can get moregreat investors to interview. If
you or someone that you knowwants to be on, please visit
(31:38):
westsideinvestors.com and fillout our form to be on the show.
Thank you again, and enjoy yourday.
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