June 18, 2025 • 41 mins
Check the episode transcript here
ABOUT WAYNE COURREGES III
Wayne is passionate about helping busy professionals build generational wealth by offering the opportunity to passively invest in commercial real estate syndications. His company, CREI Partners currently has over $50 million in assets under management in Texas, Louisiana, and Alabama. To build wealth for investors, Wayne focuses primarily on acquiring apartment communities and developing RV/Boat and Business Storage in areas with strong market fundamentals along with strategic partner relationships. Based out of Central Texas, Wayne leads the investment lifecycle and investor relations for CREI Partners as the Lead Sponsor and General Partner.
Wayne started his real estate journey while serving in the US Marine Corps. After completing his service as a Marine Corps Corporal in 2007, he started a career with a Fortune 125 commercial real estate firm that spanned 16 years before focusing full-time on real estate investments.
THIS TOPIC IN A NUTSHELL:
· From serving the Marine Corps to Real Estate Investing
· Founding CREI Partners
· Getting into the Syndication space
· First Multifamily Acquisition
· Direct-to-seller approach and Due diligence
· Deal Structure & Underwriting Philosophy
· Approach to Acquisitions
· Navigating Challenges Post-Purchase and Market Dynamics
· Advice on vetting sponsors
· CREI Partners portfolio
· Connect with Wayne
KEY QUOTE:
We’re not in the business of winning bidding wars. We’re in the business of finding value."
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.
#RealEstateSyndication #VetTheSponsor #MultifamilyInvesting #PassiveInvesting #RealEstateDeals #CREInvesting #SponsorDueDiligence #BuildWealth #FinancialFreedom #CashFlowInvesting #RealEstateStrategy #LongTermWealth #RiskManagement #EconomicResilience #AssetProtection #InvestorEducation #SmartInvesting #ApartmentInvesting #DirectToSeller #UnderwritingDeals #CRESponsors #RealEstateReturns #RealEstateCashFlow #RealEstateInvestor #CREAcquisitions #RealEstatePortfolio #WealthStrategy #GenerationalWealth #CashFlowRealEstate #InvestorRelations #EntrepreneurMindset
CONNECT WITH WAYNE:
Website: https://www.creipartners.com
LinkedIn: www.linkedin.com/in/wacourregesiii
Facebook: https://www.facebook.com/creipartners
Instagram: @creipartners
CONNECT WITH US
For more information about investing with AJ and Chris:
· Uptown Syndication | https://www.uptownsyndication.com/
· LinkedIn | https://www.linkedin.com/company/71673294/admin/
For information on Portland Property Management:
· Uptown Properties | http://www.uptownpm.com
· Youtube | @UptownProperties
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Episode Transcript
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Intro speaker (00:03):
Welcome to the Westside Investors Network. WIN,
your community of investingknowledge for growth. This is
the real estate professionalsinvesting podcast for real
estate professionals by realestate professionals. This show
is focused on the next step inyour career, investing. Thank
you for listening.
And please, if you like ourcontent, rate us on your podcast
(00:24):
provider. Just a quickdisclaimer. The views and
opinions expressed in thispodcast are for educational
purposes only and should not beconstrued as an offer to buy or
sell any shares or securities,make or consider any
investments, or take any otheraction.
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 future guests will
share their unique stories on aspecific deal they've invested
in. We'll dive deep into findingthe deal, financing the deal,
writing an offer, and the duediligence. 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. Welcomeback to the Westside Investors
Network podcast. I'm your host,Trent Warner. On today's
episode, we are joined by WayneCourageous the third. Wayne of
CREI Partners and I are gonna betalking about a couple of deals
that they've worked on.
One that's been great, and onethat's had a little hair on it
(01:23):
that he purchased in 2022. Buthe's gotten greedy and been able
to work his way through thatdeal and maintain control and
ownership of it. CREI Partnershas over $50,000,000 in assets
under management across Texas,Louisiana, and Alabama. And
Wayne Courageous III is going tolet passive investors know how
(01:44):
they should be vetting sponsorsand deals before investing in a
real estate syndication. Nowlet's welcome Wayne Courageous
the third.
Alright. Wayne Courageous thethird, CREI Partners joining the
Win podcast today. Wayne,welcome.
Wayne C (02:03):
I'm excited to be here, Trent. You for having me.
Trent Werner (02:06):
I'm excited to have you. Wayne Did you go
Wayne C (02:08):
to the masters? I'll take over your did did go to
masters? I see your shirt.
Trent Werner (02:11):
I did. I did, yeah. Had to wear one of these
episodes just to let everyoneknow
Wayne C (02:16):
that I was in Wayne,
Trent Werner (02:20):
thanks for joining. I'm excited to get into
our topic, which I'll save forright now. Before we get into
our topic or topics today, Iwant to know who Wayne
Courageous III is.
Wayne C (02:33):
Well, I am a father. I am an investor. I'm a Texan. I'm
born and raised in Texas here.And really just aspiring to grow
our investments with ourinvestors and community and
partners and do good things.
I mean, that's ultimately what Istrive to do is just be good
(02:54):
people. My background has beencompletely in commercial real
estate. I started right out of
to the Marine Corps 2003 to02/2007. And then I started my
single family investing careerin 29 Palms, California, when I
was like 19. And it was a twobed, one bath. But anyway, in
(03:15):
02/2007, had an incredibleopportunity to join CBRE, one of
the large commercial real estatecompanies in property
management. And I was with themfor sixteen years working
institutional client, officeretail.
Why am I going blank? Big Amazonrealm. So you have office retail
(03:39):
and distribution centers, thoselarge
Trent Werner (03:42):
The warehouses. Yeah.
Wayne C (03:45):
Anyway, it's a little late here, so going through
that. But yeah, so reallyworking through business plans
and repositioning assets. And sospeed up to 2019, I was like, at
that time, just finished my MBAat North Carolina. I was still
working for CBRE, had thisentrepreneurial spirit of
starting my own business for ourfriends and family and
(04:08):
investors. And so I started thatin 2019, CREI Partners.
And then we've grown throughthat to a point where in 2023
trend, I couldn't do both CBREand CRA partners. Just wasn't.
It was just all I could thinkabout was CRA partners and it
wasn't fair to my clients to seeit CBRE. So I went out on my
(04:28):
own. That was a big, launch.
But we had built a company atthat point where it was okay to
do it with three kids and awife. Like I felt like it wasn't
too risky. And here we are in2025. We've got about 50,000,000
assets under management. Peoplethrow that number out a lot.
But I mean, those are thatnumber is like what we are lead
sponsors and we're, you know,we've sourced the deal, find the
(04:49):
deal, write, asset manage. Soyeah, we're just continuing to
grow and do, you know, do goodthings for our investors, but
really the communities that webuy into.
Trent Werner (05:00):
And obviously working at CBRE, you got a lot
of experience in the space. Wereyou investing in your own deals
early on in that process? Orwere you using it as a job and a
learning, I guess, vehicle atthe time?
Wayne C (05:14):
Yeah. So when I worked for CPRE, I wasn't actively
investing in, say, syndications.Honestly, crazy to say, Trent,
but I didn't even realize thatpeople could syndicate and pull
money together to buy assets. Iwas in the industry working at a
large real estate company, butin my mind, who I was working
(05:35):
with were institutional clients,MetLife, Invesco, JPMorgan, TIA
Craft. The idea of like retail,quote unquote investors could be
buying large multifamily.
I knew high net worthindividuals, but even just not
putting it all together. And itwas really I must have listened
to a podcast November, Decemberwhen I was like, Okay, I want to
(05:56):
start my own investment company.And then once I caught on to
syndication, got a mentor in themultifamily space and really
just learned as much as I could.We didn't buy anything until
2021. And then in 2022, webought our first multifamily.
So it took when people werebuying values that I just
(06:18):
weren't comfortable with, I'mnot shaming anything, just is
what it is. I just couldn't makethe numbers work. And, and so in
'21, we got into a build to rentcommunity that I really liked,
for many reasons. We can talkabout that. But then 2022 got
into my first, multifamily, butit took a few years to get
(06:40):
through the frothiness of whatwas going on.
And '22 was still frothy. Therewas a lot of high bids. Things
were going on still. But yeah,so I was learning along the way,
but honestly, I had three kids,wife. Like it was just my nine
to five was paying for my fiveto nine.
I was surviving young kids, youknow, and my wife wasn't working
at the time, which was importantto our family to have her focus
(07:02):
on the kids. And I also, youknow, helped the kids as well.
But there's nothing like havingmom around full time. And that
was something that we as afamily decided. So there wasn't
a whole lot of money at thatpoint going into syndications
and such for for reasons Imentioned.
Trent Werner (07:19):
Well, then at CBR, you said your background was
mainly in commercial,industrial, warehouses, that
sort of thing. And then you saidyou bought your first
multifamily in '22. What was thefirst deal that you guys bought
at CREI?
Wayne C (07:33):
So the first one we got into were partners for our Build
to Rent community.
Trent Werner (07:38):
Oh, that's right.
Wayne C (07:39):
And 98 single family and we got that into that in
2021.
Trent Werner (07:43):
Okay.
Wayne C (07:44):
The reason I like that, and that was raw land and
building, you know, these singlefamily homes. What I really
liked about that was there weremultiple exits, meaning like we
were treating these 98 singlefamily homes as rentals to,
similar to a multifamily. Soit's like horizontal
multifamily. So I could see thedemographics of young, older
people who just don't want thehassle of homeownership, but
(08:07):
want to live in a home and notan apartment. They have
backyards and such nicecommunity.
I like that from a standpoint oftreating it like a multifamily
investment, even though it's notyour traditional three or four
story garden style multifamily.But the other exit is like, hey,
in a worst case scenario, if theeconomy or whatever is going in
(08:29):
the wrong direction, we couldput an HOA on it and then
individually sell the homes asan investment too and do really
well. So I had I feltcomfortable. There were multiple
exit options. Again, mind you,like I was saying no to a lot of
investments prior.
This one I got comfortable with,even though it was a
development, I was stillcomfortable with it because of
the multiple exit options. Andthen we got into our first
(08:50):
multifamily in 2022.
Trent Werner (08:53):
It's interesting that you got comfortable with
the ground up development whereyou're usually not gonna start
seeing a return for a yearminimum or maybe even longer.
And that's what you guys gotcomfortable with. Tell more
about that.
Wayne C (09:08):
Well, when you're putting offers, and at the time
I was in Austin, so I wasputting a lot of offers in San
Antonio. I tried to buy intoAustin as well. But when you put
in offers and there's just somuch money just chasing units
and not chasing yield or return.And so I'm just going throw a
number. Put a $10,000,000 offeron.
I would easily get outbid everytime by $11.12000000 dollars
(09:32):
offer, dollars 1,000,000,2,000,000 more. And I'm like, it
just doesn't. I know it's goodthat we can talk through this,
too, throughout the podcast ofdifferent levers that
syndicators and sponsors can useto support the investment or
not. And not everything has tobe or needs to be super
conservative because if that'sthe case, you probably never get
(09:52):
the deal. But when everything isaggressive, then that's really
concerning.
And so, yeah, there was a lot ofnotes. I had brokers tell me,
Trent, the worst deal or no,your worst regret are going to
be the deals you're passing onnow. Like that every deal you
pass on, it's going to be in. SoI was in the penalty box a lot
of times because I just Icouldn't move our numbers much,
(10:14):
maybe $300,000 here or there,but not going up to what some of
these pricing and have forbid Iwas in a bidding war. Like we
have a pretty strict policy.
Like once it goes on the market,we're not buyers. And so brokers
now, because we have a trackrecord, we're good people, we
have a relationship. Now thedeals come to us before we even,
(10:35):
know, before they even go out,before there's even a broker
opinion, a value or I shouldn'tsay a broker opinion value, but
the offering memorandum, beforethere's a presentation put out
to the market. So, and that'swhere you want to be. You want
to be able to get in before, youknow, you have a bunch of sharks
going after the same meat.
Trent Werner (10:54):
Yeah. Well, and in 2020, I mean, obviously, you
were looking at deals before2022. But going into 2022, you
said you acquired your firstmultifamily. Tell me just brief
overview of what that deallooked like and what made you
end up pursuing that deal.
Wayne C (11:08):
So that property took me two years to purchase. And it
sounds crazy, but it was duringone of our off market. We did a
full text blast and we wouldfind off market sellers, people
who weren't actively looking.And we had a strike list of
properties we were interestedin, typically nineteen seventy
(11:29):
newer, 100 plus units, certainareas of Houston, San Antonio,
and Austin. And we did all thegrunt work of finding out who
the recorded going to the taxwebsite, seeing who the reported
owner was or is, go into theSecretary of State's website,
finding out who the ownersbehind that LLC, the recorded
(11:50):
owners are.
So finding the true owners inessence. And then we did a bunch
of pricing and it's a lot ofwork. But that type of work is
where you can find really gooddeals. We've got that. We did
our tax blasts and seller and Ijust started building the
relationship.
It took two years before he wasready to buy. What I liked about
(12:12):
that deal was it was direct toseller. It was a very, in my
opinion, distressed property ina sense that there wasn't a
whole lot of money is being putin the property to keep up. A
lot of the roofs were leaking.HVACs weren't working.
Pools green. There was a lot ofissues. This was not a
professional real estateinvestor who had owned it. It
(12:34):
was a cardiologist out ofCalifornia. Even a good person,
good doctor, all that goodstuff, just got a little out of
hand for him.
So yeah, we put an offer on itafter many offers. And he let us
I won't say let us because itwas like his baby. He let us
(12:55):
take it over. Now we still havethat asset. And we have a lot of
properties in 2022 that werebought, even when they were
strictly underwritten, etcetera.
Those are all have had pains.There's no secret multifamily
everywhere has had those pains.We recently modified that loan,
(13:15):
to, you know, a lower rate fixedrate. And so that was it was,
you know, not an easy project,even though the numbers look
fantastic. It's just in '22,even though I was saying no to
all these other properties, it'sstill, you know, was priced at a
point where, you know, lookingback now, I don't think I would
(13:37):
have done anything differentbecause I liked everything about
the deal and what I knew aboutwhat was going on.
We weren't using debt tooverpay. We were going in
conservative. But it definitelytests grit whenever you have
those markets. When have asponsor who's gone through ups
and downs, because we've hadsome really, really good times,
(13:58):
we've had times of age, maybetwenty years. But when you talk
to a sponsor and you're like,well, how did you get through a
tough time?
Like people want to know and notlike even this will be very
transparent, like open throughit. Like not every not
everything is easy, but that'swhy passive investors want
people like us doing it. Likelast night we had a major flood
(14:19):
event. I won't say flood event,but I'm going say water event.
We had Bryan College Station,Central Texas.
We just haven't tons of rain.Well, last night in one of my
storage facilities, I'm pushingout water because the storm
system, the drainage system, itjust overloaded in Bryan College
Station. I was thinking whileI'm pushing out water, I'm like,
this is why passive investorswant to not be active in real
(14:43):
estate. They want the benefitsof real estate, but they don't
want to be doing. And so Ipushed the water out happily
thinking about my investors andthey don't even know that I did
that.
This is the first time I evenmentioned it outside my team.
But I'm like, this is justreally important for sponsors
and syndicators to be hands onand not controlling a real
estate asset that they're notlocal to and focused and doing
(15:07):
all the hard work that thepassive investors don't have to
do.
Trent Werner (15:10):
Well, and this just talking about this deal,
for example, or not not the notthe flood or the water event
deal, but the the one that tookyou bought in 2022, took you a
couple years to buy it. And and2022, like you said, it it was a
year that was you can find gooddeals, but some of the deals got
a little hairy. They were alittle tough. Maybe, you know,
(15:31):
maybe preferred returns had totake a pause or or whatnot just
to get through some of thesethese tumultuous times. What are
you telling your investors whenyou're dealing with a time like
that, that a lot of multifamilygeneral partners have been going
through recently, especially onthose deals that they bought
maybe two, three years ago?
(15:53):
What are you telling yourinvestors when you're like, Hey,
you know, we need to keep theoperating account filled up. We
need to have some reserves.Market's a little hairy right
now. What kind of conversationsare you having?
Wayne C (16:07):
Yeah, I mean, our conversations have been a lot
better during the early stage ofit. We were communicating, but
those conversations are tough tohave with any investor. The
biggest thing, I had investorswho were so grateful that we
were just on the phone, justcommunicating, doing a webinar,
doing everything we can just tooverly communicate. I have
(16:29):
investors that are I have peoplewho haven't invested with us
that are part of our newsletterthat we send out every other
week. And they're like, I knowmore about your deals that I'm
not part of than the deals thatI'm part of.
And so but that's I mean, goodor bad. We just want to educate
now. Part of that educationprocess is like, Okay, well,
what happened in 2022? Well,bridge debt, which was used to
(16:50):
finance loans when FannieFreddie on fixed rate debt
wasn't being given, then we canget more technical on why would
debt service coverage ratio,etcetera. But just in essence,
bridge debt was being usedbecause just being blunt here, a
lot of properties were justbeing bought above value.
(17:11):
So in doing so, they had to usebridge debt to be a little bit
more aggressive floating ratedebt to get that property. I saw
that time and time again, as Imentioned before, like when I
was doing offers on bids, I wasgetting fixed rate quotes, and I
couldn't compete with the bridgedebt because they can come in
higher value loan to value, etc.Where we what we did is we took
(17:32):
a property. We did bridge debton that deal, but we didn't do
it in a way because we wereoverpaying. We were using in the
sense of like the roofs wereleaking.
HVACs needed to be replaced.There were second, third, fourth
chance type people. There is apurpose for bridge debt, and
it's to take a property that'sstruggling, reposition it, and
(17:53):
bridge the gap to long termfixed rate financing. And that's
what our plan intent was. And soI'm already hearing people talk
about bridge debt atconferences, like how they're
being aggressive on not sayaggressive on deals, but they're
getting deals through bridgedebt.
That worries me. And I think forthose like passive investors
that are listening in, bridgedebt is not bad in the sense if
(18:15):
it's used properly, bridging agap to get to reposition an
asset. But if there's not a realvalue add, a business plan to
get to a higher value of netoperating income, And when I
tell investors, Trent, think ofthis every property as its own
business and it's not a rocketscience. It's income minus
expenses. Is your net operatingincome and then minus your debt
(18:41):
service is your, you know, yourNOI after debt service.
So that's the profit of the thedeal. If it's not cash flowing
in this environment where, youknow, it's a harder, you know,
there's higher vacancy andmultifamily, you know, it's a
little harder time right nowwith rent bumps, etcetera. It
might be something to, you know,just at least ask questions of
(19:03):
that business plan or say like,hey, why is there 5%, 6% rent
bumps when, you know, rents aresoftening a little bit, you
know, so asking the rightquestions for sure. But going
back to your question, it's justbeing open communicating. We put
GPs, we put heavy money into thedeal as well.
And we worked really tirelesslywith our lender going through
(19:26):
meeting them on-site, explainingeverything. Mean, the property
looks and still is runningreally great. And then once once
we were able to get themcomfortable that we were good
stewards of the property,because you see a lot of deals
Trent, they're like the bankstill has them, but they've
moved the property to anotherdeal sponsor syndicator.
(19:48):
Fortunately, they feltcomfortable with us, so we were
able to hold on to it. And nowwe just do monthly updates on
what we're doing and you know,we have a few I always mentioned
exit strategies here.
There's a couple of exitstrategies we're looking at.
We've got some extensions thatwe have on our loan that we can
utilize. But I'm also looking ata HUD rate, a HUD loan, which
(20:09):
gets us into like a forty yearamortization, a lower DSCR so we
can get a fixed rate debt, lowerinterest rate. But that's the
stuff like you and I have todeal with day to day and
strategy and long termpreservation of cash and capital
for our investors and workingthis with our lenders and such.
(20:29):
So now I would say the otherdeals that we have, they're all
cash flowing day one, quarterlydistributions doing extremely
well.
And so, but, but the mindsetshifted from that 2022 asset to
it has to cash flow day one. Ifit doesn't cash flow day one,
I'm not interested. And, and sothat's a lot of lessons learned
(20:50):
that, but to reiterate, I don'tknow if I would have said no to
that property in 2022. Likelooking back, like I felt like
it was a good asset and I stillthink it is a great asset, you
know, as we just get throughthis period of time.
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uptownsyndication.com today tolearn more. So if you're looking
at deals and part of yourcriteria is that it has to cash
flow day one, are you stayingaway from value add or are you
still able to find value adddeals that are cash flowing day
one?
Wayne C (22:14):
Yeah, it's a great question. So it's being
creative. A lot of multifamilyguys have left the space.
They've gone to car washes orATMs or these Bitcoin stuff,
like just storage, all that.Yeah, I'm like, Good people.
Thank y'all for being at thisstation. I'll stay here. And so
I've doubled down on multifamilyand I've been very, very
(22:36):
fortunate to find great dealswhen everybody else was saying
there was no deals. Couple ofexamples. We bought a property
end of twenty three.
It was a REIT who was looking toget out of the Houston market.
They were open to sellerfinancing. We got a 6% fixed
rate, five years interest only.I bought that property about 75
a door, which a couple of yearsago, easily we won $10.01 15 a
(23:01):
door, but they were just lookingto exit and that property has
done extremely well. Everyquarter since we bought it has
cash flowed, minimalmaintenance.
The value add there is if you'reable to even just increase it by
$30 or $20 if you take thattimes the units times twelve
months and divided by the caprate, you're still adding,
(23:24):
depending on the size, it couldbe 500 upwards of $1,000,000 in
value a year just by those smallbumps. So there is value add.
The other thing about value addis it doesn't mean you have to
spend a bunch of money to makemassive capital improvements. If
I can save a nickel and stilltake care of the asset in a way
that takes care of my residents,etcetera, I'm going to save the
(23:45):
nickel. Like it's important tosave everything because at the
end of the day, cash at the endof the matter, cash is king and
it drives returns.
So that could also be a valueadd. Now, deal we did last late
August was a fixed rate 3.82%, aloan assumption. So that's I
mean, rates right now, you know,I'm getting quotes for low five
(24:09):
or, you know, if that's Fannie,if I could, if I do like non
Fannie, Freddie, it's upwardssix and a half percent. I got it
at 3.82% fixed rate. 127 Unit,great location in Houston.
Cash flow has done extremelywell. Great tax depreciation for
investors. It's been fantastic.Right now, I've got a deal in
San Antonio under contract. Thatseller was a distressed seller,
(24:34):
unfortunately.
Their whole portfolio, the loanswere called due by their lender.
A property they bought lastyear, they paid it for about
13,000,000. We were buying itfor $10,000,007.50. It's pretty
much just close to the debt thatthey have on the property. How
we found that property is itcame to us through a strong
broker relationship before itwent out to the market.
(24:54):
And so we're buying a yearlater, buying it for over 2 and
a half million less than whatthe seller paid for a year ago.
And that property is notdistressed. It's just he's
caught up in a broader portfolioof loans that are being due. So
there's great opportunities forpeople who are willing to put in
the work and find good deals.And you also have to raise
(25:16):
capital.
And a lot of unfortunately, alot people are not able to raise
capital. We even the people whohave invested on the property I
told you in 2022, we have gottenthey've reinvested and they have
brought their friends and theirfamily, etcetera. And so we've
been very successful raisingcapital because they've seen us
in the best of times and they'veseen us when it like we're
(25:37):
fighting through and grittingand that Marine comes out of me
where it's like, got to fightthrough it and don't give up
because so many people put theirhead under a pillow and it just
it drives me crazy. So anyway,there's just incredible deals
right now that we're finding.And that's to me, the ultimate
value add.
If you're able to find thesecreative opportunities where
(25:59):
either you buy at a great basisor buy at a lower rate than what
the market's providing at thispoint.
Trent Werner (26:07):
Yeah, and that kind of leads me into another
question is, as a as a limitedpart or a limited partner or a
passive investor that's wantingto get into the real estate
space, the news the new if youlook at the news right now, it's
gonna tell you that allsyndicators are bad. People are
losing their their shorts oneverything right now, which is
(26:27):
not true. Obviously, if you'reable to to weather those storms,
it's gonna make you a bettergeneral partner. But as a
passive investor looking to getinto the space and invest with a
general partner, what are thingsthat they should be doing both
from a deal vetting process aswell as a sponsor vetting
process?
Wayne C (26:47):
Yeah, great question. I think the starting point is then
listening to your podcast,listening to other going to
meetups, conferences, readingbooks. I have a passive investor
coaching program,passiveinvestorcoaching.com.
It's free. There's over fivehours of just content of just
what passive investors can do tolearn about evaluating deals and
(27:10):
all that.
You do it. Number one iseducation and those listening
in, they're starting that path.Two, it's networking. It's
finding sponsors that areshowing up and going to these
meetups or going to conferencesor, you know, going to their
website, doing some searches,you know, and having a
conversation with them. I thinkat the end of the day, like this
(27:33):
is a people business, business,people, business, business, and
being able to, just have theconversation and just see if
anything in your radar systemthat we're all naturally tuned
to for the most part of like,Hey, is this is this person a
good person or not?
I live here in College Station,but I love going to Houston,
(27:54):
Austin. I've gone to San Antoniowhere I'll drive a few hours or
a couple of hours to go meetpeople that I've never met ever,
other than I value that inperson relationship. I have
people who invest capital. I'mlike, hey, I'd love to take you
out to lunch. We haven't met inperson.
It's those type of relationshipsthat I just think matter. So
looking at that, I also thinkfor first time investors,
(28:17):
looking at states or cities thatyou're comfortable and you know,
The USA is large land, and thereare states that are more
landlord friendly. There aresome that are more tenant
friendly. So real estate isalready a risk. Why invest in a
state that is not landlordfriendly?
You are an owner as an investor.You are an owner in a real
(28:40):
property. And having laws andjudges and officials that are
landlord friendly, I think is away to reduce that risk for you.
Always look at the FEMA. I cankeep going on trends.
Just tell me when to stop.
Trent Werner (28:56):
No, keep going. I mean, this is
Wayne C (28:58):
probably think flooding, go to the FEMA
website. There's a flood map,put in the address. That should
be part of the sponsor'spresentation about what the
flood zone is. If it's touchingor in a flood zone, immediately
pass. Real estate is already arisk.
Why add flooding right in aflood zone? There was a property
(29:21):
in Houston that I was so excitedabout. I was put an LOI or
letter of intent. And then afterthe letter of intent, was like,
let me go check the flood zone.And it's right in the bayou.
It's like right where it's likedark blue. Oh my gosh, darn it.
No wonder it was a good deal.And so now I tell my team,
before we even do anything,check the flood map. Can go a
(29:44):
lot of people invest outside ofthe city that they're in.
Use technology, Google Earth,put in the address, go in as
being able to pinpoint streetview, look at the properties. Is
there a pawn shop nearby? Isthere bars, window bars outside
the gas station? What's thenearest school? Where's the
(30:06):
nearest school median income?
What's the crime rate? These arethings that are easily
accessible through onlineresearch.
Trent Werner (30:14):
Let me let me let me ask you real quick. So flood,
I mean, we're in Oregon, wedon't really deal with floods,
right? We get a ton of rain asis our, our weather, our
drainage systems are are topnotch because of how much water
we're used to. And so, you know,our our assets were not I mean,
maybe some wind here or there orlike a tree coming down or ice
(30:36):
or whatever, but it's notsomething that we're we're
worried about all the time. Nowif you're looking at at deals in
the Sunbelt South where you'regetting tropical storms,
hurricanes, tsunamis, floods,whatever, Aside from just
looking at the flood map, arethere other things that you are
analyzing or doing to maybeunderstand what could happen a
(30:59):
little bit better?
Wayne C (31:00):
Yeah, I think, I mean, for most part, especially
coastal areas, FEMA's got itpretty dialed in. I mean,
there's always areas that couldget flooded. I mean, there's
always that risk. But there wasa property that I was looking at
through a partner relationshipin Louisville, Kentucky. And I
just did a quick Google searchof Louisville, Kentucky weather
(31:23):
or something like that.
And it was like the highest ithad like the highest chance of
tornadoes. It had something liketornadoes were extremely likely.
And I was like, yeah, that doesquite a bit of damage. So no,
though we wouldn't havetornadoes every day. But I'm
(31:43):
like, for it to be one of thefirst things that Google popped
up when I Googled that, I waslike, nah, not good.
I mean, Houston deals withhurricanes. So why do I deal
with hurricanes? Well, Houstonis so massive. Was it at least
the fourth largest city andgrowing to Chicago? But it's so
big landmass that we're notbuying right near the coast.
(32:07):
I mean, we're buying North andNorthwest of Houston, which is
several 100 miles away from thecoastline. So by the time it
comes, you know, we're not beingimpacted as much through the
storm. You know, if I buy in SanAntonio, you're not going to
have issues. You'll have issueswith hail. Dallas, I mean, they
have, their own set of thingswith the tornado, at least with
(32:27):
a hurricane.
I can plan for it. I've got fivedays in advance. I'll tell my
friends in Dallas last week. Iwent to the Byron Nelson PGA
tournament. And I was like, I atleast can plan for storms.
Night, you'd just be liketornadoes is popping up and hail
damage. So I mean, there's riskwherever you are. But I just
(32:47):
think if you're able to reducethe risk by at least not buying
or investing in a floodplain,and plus your insurance is going
to be a lot higher, whichdilutes cash flow.
Trent Werner (32:57):
Yeah. And then I guess, I guess just going back
to betting a sponsor, I mean,from, you know, record or their
resume, what else can you beasking these these sponsors when
you're looking to invest withthem?
Wayne C (33:13):
For sure. And so, going back to the likability,
understanding who they are as aperson, what's their values,
what do they have to lose? Likefor me, this is what I do full
time. I've got three kids, awife. I'm a scoutmaster.
I'm a Rotarian. I've got a lotof lose if I'm, you know, my
reputation such, go south. So,but asking, you know, you
(33:37):
mentioned about the trackrecord, but that's important.
And I think if anybody's been inthis business for the last five
years, they have one propertythat struggled. I mean, unless
they just hit perfect basisevery single time.
But there's not one sponsorsyndicator that I know that
hasn't had some type of roughtime if they were investing over
(33:59):
the last five years. And you cansay that about people back in
02/2007, 02/2008, 02/2009. A lotof real estate investors, they
got hosed. But those people thatwere coming in and investing
when others were not, which issort of like what this period of
time is, did extremely well. SoI educate our investors, when
(34:20):
the crowd is going in onedirection, start going in the
opposite direction, becausethat's usually where you can
find some great deals.
So to ask about track record,they should be very transparent
and talk about the lessonslearned. And especially if they
haven't lost any capital, butyou have gone through major grit
events that speaks highly ofthemselves. Understand the team.
One of the things, Trent, I seea lot of is they'll present a
(34:42):
team or you may invest in personA, and you think that person A
is a decision maker on thatteam. Well, person A could be
raising capital andparticipating in asset
management, but doesn't have anydecision rights in the actual
deal.
And that's fine. It's verynormal in syndications. I think
in a lot of cases, multipleheads is a beast. You don't want
(35:06):
you want that one leader. But asa passive investor, you want to
know who that leader is.
Who is that person who's reallymaking the ultimate decision?
Typically, it's the manager ofthe entity. It's the one who's
going be signing your PPMs, theprivate placement marines, the
documents. And so, but you wantto understand what their track
record is and understand, youyou don't want to be in a
(35:26):
situation where you start goingto the person you invested with
to then find out when the dealisn't performing that they don't
really have any decision rates.And I know it sounds a lot
negative, Trent, where it's likewe're talking about deals not
performing.
There's a lot of deals that areperforming. And the publicity,
(35:47):
it's really getting a bad rap.But what I'm saying is real
estate has been around since thebeginning of time. It's the
oldest investment, right?They're not building more dirt,
getting in when nobody else ornot as many people are getting
in where it's less frothy.
It makes sense. And then we getlike supply and demand, you
(36:08):
know, even though there could besome more supply right now
because of the new builds. Ifyou look at no, any permits
coming up, there's no newpermits. There's very few. So as
that supply gets absorbed, thosethat are investing now, I think,
are going to do really well.
Other syndication to ask forreferrals, we're always happy to
give referrals, look at deals,ask for financials. I I mean,
(36:29):
there's all sorts of stuff. I'dsay most people though,
unfortunately, Trent, they joina webinar and then they like the
presentation and then theyinvest. And even on our deals,
we're grateful for those people,but I'm always trying to reach
out to them be like, Hey, let'shave a conversation and, you
know, let's build therelationship.
Trent Werner (36:48):
Well, I know I've mentioned it on this show
before, but a very importantaspect to investing as a limited
partner and and as a generalpartner is the general partner
should be, I guess, coaching youor or making sure that the
limited partner is a good fitfor the investment based on
their goals and what they'retrying to achieve. Because,
(37:11):
yeah, I mean, obviously ageneral partner wants to raise
money and raise capital. But ifthe investor doesn't necessarily
fit the avatar or the criteriafor this investment, that
general partner, if they aregood and know what they're
doing, should be able torecommend that investor to
either a different type ofinvestment or just at least
coach that limited partner upon, hey, this might not be the
(37:35):
best fit for what your goals areright now.
Wayne C (37:38):
Sure. That was like a mic drop. It was really good
because if you don't understandas a passive investor, if you're
a cash flow investor or anequity upside investor or both,
you know, I always tellinvestors that it's like, you
know, you have your growthstock, you know, that's more
risky, but has better chances ofgiving you better returns or
you're more your value stock,your safe stock. And it's less
(38:01):
sexy, you know, but it's lessreturns, but it's stable. And so
when you look at that, dependingon where you are in your life
investment, if you're goinginto, say, growth stock, I
compare that to development.
We've got a multifamilydevelopment in Bryan College
Station. People that aremassively concerned about cash
preservation and cash flow, thatis not a good deal for them
(38:23):
because it is risky. It's adevelopment and it won't cash
flow for at least twenty four,thirty six months as we build
and utilize it. Where to yourpoint, Trent, on our other deals
that are cash flowing, you know,they, they want that 8%, 7%,
whatever that number is, youknow, because that's, they like
the security of it, or they maywant to use it for their, their
(38:44):
life. I have a doctor in LosAngeles and I'm happy to anybody
that reaches out, connect y'allwith him to verify my story
here.
But he makes at least $310,000on passive income through us.
And he just told me the lastweek, and this is the second
year in a row he's paid zero intaxes because of the
(39:04):
depreciation that we provide. Sohe's a retired cardiologist, but
he's like, I now don't have topay. Like I'm enjoying, he's got
other rental properties andthings, but he's like, because
of investing with you and thedepreciation I'm getting through
passive income, There's alwaystaxes. Talk to your tax person,
I'll say all that.
But it's been pretty cool to seethat he's just living off of the
(39:26):
income that he's getting fromCREI Partners. And then the K-1s
help reduce or eliminate, inthis case, his tax liability.
Trent Werner (39:35):
And that is yet another benefit of investing as
a limited partner. Wayne, I knowyou mentioned
passiveinvestorcoaching.com forpassive investors to educate
themselves, learn more. Is thereanywhere else that you want
people to connect with you orhear more from you?
Wayne C (39:52):
Yeah. So passiveinvestorcoaching.com,
thanks for mentioning thatagain. And then cripartners.com,
a lot of information about ourteam, about our deals, about our
strategy. There's podcastinformation, blogs. It just goes
back to the number one thingthat past investors can do, and
that's just get educated.
(40:12):
And so hopefully I added somevalue. And industrial was the
word I was looking forindustrial company. You know,
when I was all the place youmentioned, I was like, Oh, it's
industrial. So anyway, but,know, hopefully it was a good
podcast episode for you and yourinvestors.
Trent Werner (40:27):
Absolutely. Thank you so much for joining and
answering my questions honestlyand transparently. I know you're
a great general partner and Iknow people that invest with you
would agree with me. So thankyou so much for joining the show
today.
Wayne C (40:40):
Thanks, Trent. Appreciate you, man.
Intro speaker (40:42):
Thank you for listening to this episode of the
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(41:02):
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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 future guests will
share their unique stories on aspecific deal they've invested
in. We'll dive deep into findingthe deal, financing the deal,
writing an offer, and the duediligence. 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. Welcomeback to the Westside Investors
Network podcast. I'm your host,Trent Warner. On today's
episode, we are joined by WayneCourageous the third. Wayne of
CREI Partners and I are gonna betalking about a couple of deals
that they've worked on.
One that's been great, and onethat's had a little hair on it
(01:23):
that he purchased in 2022. Buthe's gotten greedy and been able
to work his way through thatdeal and maintain control and
ownership of it. CREI Partnershas over $50,000,000 in assets
under management across Texas,Louisiana, and Alabama. And
Wayne Courageous III is going tolet passive investors know how
(01:44):
they should be vetting sponsorsand deals before investing in a
real estate syndication. Nowlet's welcome Wayne Courageous
the third.
Alright. Wayne Courageous thethird, CREI Partners joining the
Win podcast today. Wayne,welcome.
Wayne C (02:03):
I'm excited to be here, Trent. You for having me.
Trent Werner (02:06):
I'm excited to have you. Wayne Did you go
Wayne C (02:08):
to the masters? I'll take over your did did go to
masters? I see your shirt.
Trent Werner (02:11):
I did. I did, yeah. Had to wear one of these
episodes just to let everyoneknow
Wayne C (02:16):
that I was in Wayne,
Trent Werner (02:20):
thanks for joining. I'm excited to get into
our topic, which I'll save forright now. Before we get into
our topic or topics today, Iwant to know who Wayne
Courageous III is.
Wayne C (02:33):
Well, I am a father. I am an investor. I'm a Texan. I'm
born and raised in Texas here.And really just aspiring to grow
our investments with ourinvestors and community and
partners and do good things.
I mean, that's ultimately what Istrive to do is just be good
(02:54):
people. My background has beencompletely in commercial real
estate. I started right out of
to the Marine Corps 2003 to02/2007. And then I started my
single family investing careerin 29 Palms, California, when I
was like 19. And it was a twobed, one bath. But anyway, in
(03:15):
02/2007, had an incredibleopportunity to join CBRE, one of
the large commercial real estatecompanies in property
management. And I was with themfor sixteen years working
institutional client, officeretail.
Why am I going blank? Big Amazonrealm. So you have office retail
(03:39):
and distribution centers, thoselarge
Trent Werner (03:42):
The warehouses. Yeah.
Wayne C (03:45):
Anyway, it's a little late here, so going through
that. But yeah, so reallyworking through business plans
and repositioning assets. And sospeed up to 2019, I was like, at
that time, just finished my MBAat North Carolina. I was still
working for CBRE, had thisentrepreneurial spirit of
starting my own business for ourfriends and family and
(04:08):
investors. And so I started thatin 2019, CREI Partners.
And then we've grown throughthat to a point where in 2023
trend, I couldn't do both CBREand CRA partners. Just wasn't.
It was just all I could thinkabout was CRA partners and it
wasn't fair to my clients to seeit CBRE. So I went out on my
(04:28):
own. That was a big, launch.
But we had built a company atthat point where it was okay to
do it with three kids and awife. Like I felt like it wasn't
too risky. And here we are in2025. We've got about 50,000,000
assets under management. Peoplethrow that number out a lot.
But I mean, those are thatnumber is like what we are lead
sponsors and we're, you know,we've sourced the deal, find the
(04:49):
deal, write, asset manage. Soyeah, we're just continuing to
grow and do, you know, do goodthings for our investors, but
really the communities that webuy into.
Trent Werner (05:00):
And obviously working at CBRE, you got a lot
of experience in the space. Wereyou investing in your own deals
early on in that process? Orwere you using it as a job and a
learning, I guess, vehicle atthe time?
Wayne C (05:14):
Yeah. So when I worked for CPRE, I wasn't actively
investing in, say, syndications.Honestly, crazy to say, Trent,
but I didn't even realize thatpeople could syndicate and pull
money together to buy assets. Iwas in the industry working at a
large real estate company, butin my mind, who I was working
(05:35):
with were institutional clients,MetLife, Invesco, JPMorgan, TIA
Craft. The idea of like retail,quote unquote investors could be
buying large multifamily.
I knew high net worthindividuals, but even just not
putting it all together. And itwas really I must have listened
to a podcast November, Decemberwhen I was like, Okay, I want to
(05:56):
start my own investment company.And then once I caught on to
syndication, got a mentor in themultifamily space and really
just learned as much as I could.We didn't buy anything until
2021. And then in 2022, webought our first multifamily.
So it took when people werebuying values that I just
(06:18):
weren't comfortable with, I'mnot shaming anything, just is
what it is. I just couldn't makethe numbers work. And, and so in
'21, we got into a build to rentcommunity that I really liked,
for many reasons. We can talkabout that. But then 2022 got
into my first, multifamily, butit took a few years to get
(06:40):
through the frothiness of whatwas going on.
And '22 was still frothy. Therewas a lot of high bids. Things
were going on still. But yeah,so I was learning along the way,
but honestly, I had three kids,wife. Like it was just my nine
to five was paying for my fiveto nine.
I was surviving young kids, youknow, and my wife wasn't working
at the time, which was importantto our family to have her focus
(07:02):
on the kids. And I also, youknow, helped the kids as well.
But there's nothing like havingmom around full time. And that
was something that we as afamily decided. So there wasn't
a whole lot of money at thatpoint going into syndications
and such for for reasons Imentioned.
Trent Werner (07:19):
Well, then at CBR, you said your background was
mainly in commercial,industrial, warehouses, that
sort of thing. And then you saidyou bought your first
multifamily in '22. What was thefirst deal that you guys bought
at CREI?
Wayne C (07:33):
So the first one we got into were partners for our Build
to Rent community.
Trent Werner (07:38):
Oh, that's right.
Wayne C (07:39):
And 98 single family and we got that into that in
2021.
Trent Werner (07:43):
Okay.
Wayne C (07:44):
The reason I like that, and that was raw land and
building, you know, these singlefamily homes. What I really
liked about that was there weremultiple exits, meaning like we
were treating these 98 singlefamily homes as rentals to,
similar to a multifamily. Soit's like horizontal
multifamily. So I could see thedemographics of young, older
people who just don't want thehassle of homeownership, but
(08:07):
want to live in a home and notan apartment. They have
backyards and such nicecommunity.
I like that from a standpoint oftreating it like a multifamily
investment, even though it's notyour traditional three or four
story garden style multifamily.But the other exit is like, hey,
in a worst case scenario, if theeconomy or whatever is going in
(08:29):
the wrong direction, we couldput an HOA on it and then
individually sell the homes asan investment too and do really
well. So I had I feltcomfortable. There were multiple
exit options. Again, mind you,like I was saying no to a lot of
investments prior.
This one I got comfortable with,even though it was a
development, I was stillcomfortable with it because of
the multiple exit options. Andthen we got into our first
(08:50):
multifamily in 2022.
Trent Werner (08:53):
It's interesting that you got comfortable with
the ground up development whereyou're usually not gonna start
seeing a return for a yearminimum or maybe even longer.
And that's what you guys gotcomfortable with. Tell more
about that.
Wayne C (09:08):
Well, when you're putting offers, and at the time
I was in Austin, so I wasputting a lot of offers in San
Antonio. I tried to buy intoAustin as well. But when you put
in offers and there's just somuch money just chasing units
and not chasing yield or return.And so I'm just going throw a
number. Put a $10,000,000 offeron.
I would easily get outbid everytime by $11.12000000 dollars
(09:32):
offer, dollars 1,000,000,2,000,000 more. And I'm like, it
just doesn't. I know it's goodthat we can talk through this,
too, throughout the podcast ofdifferent levers that
syndicators and sponsors can useto support the investment or
not. And not everything has tobe or needs to be super
conservative because if that'sthe case, you probably never get
(09:52):
the deal. But when everything isaggressive, then that's really
concerning.
And so, yeah, there was a lot ofnotes. I had brokers tell me,
Trent, the worst deal or no,your worst regret are going to
be the deals you're passing onnow. Like that every deal you
pass on, it's going to be in. SoI was in the penalty box a lot
of times because I just Icouldn't move our numbers much,
(10:14):
maybe $300,000 here or there,but not going up to what some of
these pricing and have forbid Iwas in a bidding war. Like we
have a pretty strict policy.
Like once it goes on the market,we're not buyers. And so brokers
now, because we have a trackrecord, we're good people, we
have a relationship. Now thedeals come to us before we even,
(10:35):
know, before they even go out,before there's even a broker
opinion, a value or I shouldn'tsay a broker opinion value, but
the offering memorandum, beforethere's a presentation put out
to the market. So, and that'swhere you want to be. You want
to be able to get in before, youknow, you have a bunch of sharks
going after the same meat.
Trent Werner (10:54):
Yeah. Well, and in 2020, I mean, obviously, you
were looking at deals before2022. But going into 2022, you
said you acquired your firstmultifamily. Tell me just brief
overview of what that deallooked like and what made you
end up pursuing that deal.
Wayne C (11:08):
So that property took me two years to purchase. And it
sounds crazy, but it was duringone of our off market. We did a
full text blast and we wouldfind off market sellers, people
who weren't actively looking.And we had a strike list of
properties we were interestedin, typically nineteen seventy
(11:29):
newer, 100 plus units, certainareas of Houston, San Antonio,
and Austin. And we did all thegrunt work of finding out who
the recorded going to the taxwebsite, seeing who the reported
owner was or is, go into theSecretary of State's website,
finding out who the ownersbehind that LLC, the recorded
(11:50):
owners are.
So finding the true owners inessence. And then we did a bunch
of pricing and it's a lot ofwork. But that type of work is
where you can find really gooddeals. We've got that. We did
our tax blasts and seller and Ijust started building the
relationship.
It took two years before he wasready to buy. What I liked about
(12:12):
that deal was it was direct toseller. It was a very, in my
opinion, distressed property ina sense that there wasn't a
whole lot of money is being putin the property to keep up. A
lot of the roofs were leaking.HVACs weren't working.
Pools green. There was a lot ofissues. This was not a
professional real estateinvestor who had owned it. It
(12:34):
was a cardiologist out ofCalifornia. Even a good person,
good doctor, all that goodstuff, just got a little out of
hand for him.
So yeah, we put an offer on itafter many offers. And he let us
I won't say let us because itwas like his baby. He let us
(12:55):
take it over. Now we still havethat asset. And we have a lot of
properties in 2022 that werebought, even when they were
strictly underwritten, etcetera.
Those are all have had pains.There's no secret multifamily
everywhere has had those pains.We recently modified that loan,
(13:15):
to, you know, a lower rate fixedrate. And so that was it was,
you know, not an easy project,even though the numbers look
fantastic. It's just in '22,even though I was saying no to
all these other properties, it'sstill, you know, was priced at a
point where, you know, lookingback now, I don't think I would
(13:37):
have done anything differentbecause I liked everything about
the deal and what I knew aboutwhat was going on.
We weren't using debt tooverpay. We were going in
conservative. But it definitelytests grit whenever you have
those markets. When have asponsor who's gone through ups
and downs, because we've hadsome really, really good times,
(13:58):
we've had times of age, maybetwenty years. But when you talk
to a sponsor and you're like,well, how did you get through a
tough time?
Like people want to know and notlike even this will be very
transparent, like open throughit. Like not every not
everything is easy, but that'swhy passive investors want
people like us doing it. Likelast night we had a major flood
(14:19):
event. I won't say flood event,but I'm going say water event.
We had Bryan College Station,Central Texas.
We just haven't tons of rain.Well, last night in one of my
storage facilities, I'm pushingout water because the storm
system, the drainage system, itjust overloaded in Bryan College
Station. I was thinking whileI'm pushing out water, I'm like,
this is why passive investorswant to not be active in real
(14:43):
estate. They want the benefitsof real estate, but they don't
want to be doing. And so Ipushed the water out happily
thinking about my investors andthey don't even know that I did
that.
This is the first time I evenmentioned it outside my team.
But I'm like, this is justreally important for sponsors
and syndicators to be hands onand not controlling a real
estate asset that they're notlocal to and focused and doing
(15:07):
all the hard work that thepassive investors don't have to
do.
Trent Werner (15:10):
Well, and this just talking about this deal,
for example, or not not the notthe flood or the water event
deal, but the the one that tookyou bought in 2022, took you a
couple years to buy it. And and2022, like you said, it it was a
year that was you can find gooddeals, but some of the deals got
a little hairy. They were alittle tough. Maybe, you know,
(15:31):
maybe preferred returns had totake a pause or or whatnot just
to get through some of thesethese tumultuous times. What are
you telling your investors whenyou're dealing with a time like
that, that a lot of multifamilygeneral partners have been going
through recently, especially onthose deals that they bought
maybe two, three years ago?
(15:53):
What are you telling yourinvestors when you're like, Hey,
you know, we need to keep theoperating account filled up. We
need to have some reserves.Market's a little hairy right
now. What kind of conversationsare you having?
Wayne C (16:07):
Yeah, I mean, our conversations have been a lot
better during the early stage ofit. We were communicating, but
those conversations are tough tohave with any investor. The
biggest thing, I had investorswho were so grateful that we
were just on the phone, justcommunicating, doing a webinar,
doing everything we can just tooverly communicate. I have
(16:29):
investors that are I have peoplewho haven't invested with us
that are part of our newsletterthat we send out every other
week. And they're like, I knowmore about your deals that I'm
not part of than the deals thatI'm part of.
And so but that's I mean, goodor bad. We just want to educate
now. Part of that educationprocess is like, Okay, well,
what happened in 2022? Well,bridge debt, which was used to
(16:50):
finance loans when FannieFreddie on fixed rate debt
wasn't being given, then we canget more technical on why would
debt service coverage ratio,etcetera. But just in essence,
bridge debt was being usedbecause just being blunt here, a
lot of properties were justbeing bought above value.
(17:11):
So in doing so, they had to usebridge debt to be a little bit
more aggressive floating ratedebt to get that property. I saw
that time and time again, as Imentioned before, like when I
was doing offers on bids, I wasgetting fixed rate quotes, and I
couldn't compete with the bridgedebt because they can come in
higher value loan to value, etc.Where we what we did is we took
(17:32):
a property. We did bridge debton that deal, but we didn't do
it in a way because we wereoverpaying. We were using in the
sense of like the roofs wereleaking.
HVACs needed to be replaced.There were second, third, fourth
chance type people. There is apurpose for bridge debt, and
it's to take a property that'sstruggling, reposition it, and
(17:53):
bridge the gap to long termfixed rate financing. And that's
what our plan intent was. And soI'm already hearing people talk
about bridge debt atconferences, like how they're
being aggressive on not sayaggressive on deals, but they're
getting deals through bridgedebt.
That worries me. And I think forthose like passive investors
that are listening in, bridgedebt is not bad in the sense if
(18:15):
it's used properly, bridging agap to get to reposition an
asset. But if there's not a realvalue add, a business plan to
get to a higher value of netoperating income, And when I
tell investors, Trent, think ofthis every property as its own
business and it's not a rocketscience. It's income minus
expenses. Is your net operatingincome and then minus your debt
(18:41):
service is your, you know, yourNOI after debt service.
So that's the profit of the thedeal. If it's not cash flowing
in this environment where, youknow, it's a harder, you know,
there's higher vacancy andmultifamily, you know, it's a
little harder time right nowwith rent bumps, etcetera. It
might be something to, you know,just at least ask questions of
(19:03):
that business plan or say like,hey, why is there 5%, 6% rent
bumps when, you know, rents aresoftening a little bit, you
know, so asking the rightquestions for sure. But going
back to your question, it's justbeing open communicating. We put
GPs, we put heavy money into thedeal as well.
And we worked really tirelesslywith our lender going through
(19:26):
meeting them on-site, explainingeverything. Mean, the property
looks and still is runningreally great. And then once once
we were able to get themcomfortable that we were good
stewards of the property,because you see a lot of deals
Trent, they're like the bankstill has them, but they've
moved the property to anotherdeal sponsor syndicator.
(19:48):
Fortunately, they feltcomfortable with us, so we were
able to hold on to it. And nowwe just do monthly updates on
what we're doing and you know,we have a few I always mentioned
exit strategies here.
There's a couple of exitstrategies we're looking at.
We've got some extensions thatwe have on our loan that we can
utilize. But I'm also looking ata HUD rate, a HUD loan, which
(20:09):
gets us into like a forty yearamortization, a lower DSCR so we
can get a fixed rate debt, lowerinterest rate. But that's the
stuff like you and I have todeal with day to day and
strategy and long termpreservation of cash and capital
for our investors and workingthis with our lenders and such.
(20:29):
So now I would say the otherdeals that we have, they're all
cash flowing day one, quarterlydistributions doing extremely
well.
And so, but, but the mindsetshifted from that 2022 asset to
it has to cash flow day one. Ifit doesn't cash flow day one,
I'm not interested. And, and sothat's a lot of lessons learned
(20:50):
that, but to reiterate, I don'tknow if I would have said no to
that property in 2022. Likelooking back, like I felt like
it was a good asset and I stillthink it is a great asset, you
know, as we just get throughthis period of time.
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uptownsyndication.com today tolearn more. So if you're looking
at deals and part of yourcriteria is that it has to cash
flow day one, are you stayingaway from value add or are you
still able to find value adddeals that are cash flowing day
one?
Wayne C (22:14):
Yeah, it's a great question. So it's being
creative. A lot of multifamilyguys have left the space.
They've gone to car washes orATMs or these Bitcoin stuff,
like just storage, all that.Yeah, I'm like, Good people.
Thank y'all for being at thisstation. I'll stay here. And so
I've doubled down on multifamilyand I've been very, very
(22:36):
fortunate to find great dealswhen everybody else was saying
there was no deals. Couple ofexamples. We bought a property
end of twenty three.
It was a REIT who was looking toget out of the Houston market.
They were open to sellerfinancing. We got a 6% fixed
rate, five years interest only.I bought that property about 75
a door, which a couple of yearsago, easily we won $10.01 15 a
(23:01):
door, but they were just lookingto exit and that property has
done extremely well. Everyquarter since we bought it has
cash flowed, minimalmaintenance.
The value add there is if you'reable to even just increase it by
$30 or $20 if you take thattimes the units times twelve
months and divided by the caprate, you're still adding,
(23:24):
depending on the size, it couldbe 500 upwards of $1,000,000 in
value a year just by those smallbumps. So there is value add.
The other thing about value addis it doesn't mean you have to
spend a bunch of money to makemassive capital improvements. If
I can save a nickel and stilltake care of the asset in a way
that takes care of my residents,etcetera, I'm going to save the
(23:45):
nickel. Like it's important tosave everything because at the
end of the day, cash at the endof the matter, cash is king and
it drives returns.
So that could also be a valueadd. Now, deal we did last late
August was a fixed rate 3.82%, aloan assumption. So that's I
mean, rates right now, you know,I'm getting quotes for low five
(24:09):
or, you know, if that's Fannie,if I could, if I do like non
Fannie, Freddie, it's upwardssix and a half percent. I got it
at 3.82% fixed rate. 127 Unit,great location in Houston.
Cash flow has done extremelywell. Great tax depreciation for
investors. It's been fantastic.Right now, I've got a deal in
San Antonio under contract. Thatseller was a distressed seller,
(24:34):
unfortunately.
Their whole portfolio, the loanswere called due by their lender.
A property they bought lastyear, they paid it for about
13,000,000. We were buying itfor $10,000,007.50. It's pretty
much just close to the debt thatthey have on the property. How
we found that property is itcame to us through a strong
broker relationship before itwent out to the market.
(24:54):
And so we're buying a yearlater, buying it for over 2 and
a half million less than whatthe seller paid for a year ago.
And that property is notdistressed. It's just he's
caught up in a broader portfolioof loans that are being due. So
there's great opportunities forpeople who are willing to put in
the work and find good deals.And you also have to raise
(25:16):
capital.
And a lot of unfortunately, alot people are not able to raise
capital. We even the people whohave invested on the property I
told you in 2022, we have gottenthey've reinvested and they have
brought their friends and theirfamily, etcetera. And so we've
been very successful raisingcapital because they've seen us
in the best of times and they'veseen us when it like we're
(25:37):
fighting through and grittingand that Marine comes out of me
where it's like, got to fightthrough it and don't give up
because so many people put theirhead under a pillow and it just
it drives me crazy. So anyway,there's just incredible deals
right now that we're finding.And that's to me, the ultimate
value add.
If you're able to find thesecreative opportunities where
(25:59):
either you buy at a great basisor buy at a lower rate than what
the market's providing at thispoint.
Trent Werner (26:07):
Yeah, and that kind of leads me into another
question is, as a as a limitedpart or a limited partner or a
passive investor that's wantingto get into the real estate
space, the news the new if youlook at the news right now, it's
gonna tell you that allsyndicators are bad. People are
losing their their shorts oneverything right now, which is
(26:27):
not true. Obviously, if you'reable to to weather those storms,
it's gonna make you a bettergeneral partner. But as a
passive investor looking to getinto the space and invest with a
general partner, what are thingsthat they should be doing both
from a deal vetting process aswell as a sponsor vetting
process?
Wayne C (26:47):
Yeah, great question. I think the starting point is then
listening to your podcast,listening to other going to
meetups, conferences, readingbooks. I have a passive investor
coaching program,passiveinvestorcoaching.com.
It's free. There's over fivehours of just content of just
what passive investors can do tolearn about evaluating deals and
(27:10):
all that.
You do it. Number one iseducation and those listening
in, they're starting that path.Two, it's networking. It's
finding sponsors that areshowing up and going to these
meetups or going to conferencesor, you know, going to their
website, doing some searches,you know, and having a
conversation with them. I thinkat the end of the day, like this
(27:33):
is a people business, business,people, business, business, and
being able to, just have theconversation and just see if
anything in your radar systemthat we're all naturally tuned
to for the most part of like,Hey, is this is this person a
good person or not?
I live here in College Station,but I love going to Houston,
(27:54):
Austin. I've gone to San Antoniowhere I'll drive a few hours or
a couple of hours to go meetpeople that I've never met ever,
other than I value that inperson relationship. I have
people who invest capital. I'mlike, hey, I'd love to take you
out to lunch. We haven't met inperson.
It's those type of relationshipsthat I just think matter. So
looking at that, I also thinkfor first time investors,
(28:17):
looking at states or cities thatyou're comfortable and you know,
The USA is large land, and thereare states that are more
landlord friendly. There aresome that are more tenant
friendly. So real estate isalready a risk. Why invest in a
state that is not landlordfriendly?
You are an owner as an investor.You are an owner in a real
(28:40):
property. And having laws andjudges and officials that are
landlord friendly, I think is away to reduce that risk for you.
Always look at the FEMA. I cankeep going on trends.
Just tell me when to stop.
Trent Werner (28:56):
No, keep going. I mean, this is
Wayne C (28:58):
probably think flooding, go to the FEMA
website. There's a flood map,put in the address. That should
be part of the sponsor'spresentation about what the
flood zone is. If it's touchingor in a flood zone, immediately
pass. Real estate is already arisk.
Why add flooding right in aflood zone? There was a property
(29:21):
in Houston that I was so excitedabout. I was put an LOI or
letter of intent. And then afterthe letter of intent, was like,
let me go check the flood zone.And it's right in the bayou.
It's like right where it's likedark blue. Oh my gosh, darn it.
No wonder it was a good deal.And so now I tell my team,
before we even do anything,check the flood map. Can go a
(29:44):
lot of people invest outside ofthe city that they're in.
Use technology, Google Earth,put in the address, go in as
being able to pinpoint streetview, look at the properties. Is
there a pawn shop nearby? Isthere bars, window bars outside
the gas station? What's thenearest school? Where's the
(30:06):
nearest school median income?
What's the crime rate? These arethings that are easily
accessible through onlineresearch.
Trent Werner (30:14):
Let me let me let me ask you real quick. So flood,
I mean, we're in Oregon, wedon't really deal with floods,
right? We get a ton of rain asis our, our weather, our
drainage systems are are topnotch because of how much water
we're used to. And so, you know,our our assets were not I mean,
maybe some wind here or there orlike a tree coming down or ice
(30:36):
or whatever, but it's notsomething that we're we're
worried about all the time. Nowif you're looking at at deals in
the Sunbelt South where you'regetting tropical storms,
hurricanes, tsunamis, floods,whatever, Aside from just
looking at the flood map, arethere other things that you are
analyzing or doing to maybeunderstand what could happen a
(30:59):
little bit better?
Wayne C (31:00):
Yeah, I think, I mean, for most part, especially
coastal areas, FEMA's got itpretty dialed in. I mean,
there's always areas that couldget flooded. I mean, there's
always that risk. But there wasa property that I was looking at
through a partner relationshipin Louisville, Kentucky. And I
just did a quick Google searchof Louisville, Kentucky weather
(31:23):
or something like that.
And it was like the highest ithad like the highest chance of
tornadoes. It had something liketornadoes were extremely likely.
And I was like, yeah, that doesquite a bit of damage. So no,
though we wouldn't havetornadoes every day. But I'm
(31:43):
like, for it to be one of thefirst things that Google popped
up when I Googled that, I waslike, nah, not good.
I mean, Houston deals withhurricanes. So why do I deal
with hurricanes? Well, Houstonis so massive. Was it at least
the fourth largest city andgrowing to Chicago? But it's so
big landmass that we're notbuying right near the coast.
(32:07):
I mean, we're buying North andNorthwest of Houston, which is
several 100 miles away from thecoastline. So by the time it
comes, you know, we're not beingimpacted as much through the
storm. You know, if I buy in SanAntonio, you're not going to
have issues. You'll have issueswith hail. Dallas, I mean, they
have, their own set of thingswith the tornado, at least with
(32:27):
a hurricane.
I can plan for it. I've got fivedays in advance. I'll tell my
friends in Dallas last week. Iwent to the Byron Nelson PGA
tournament. And I was like, I atleast can plan for storms.
Night, you'd just be liketornadoes is popping up and hail
damage. So I mean, there's riskwherever you are. But I just
(32:47):
think if you're able to reducethe risk by at least not buying
or investing in a floodplain,and plus your insurance is going
to be a lot higher, whichdilutes cash flow.
Trent Werner (32:57):
Yeah. And then I guess, I guess just going back
to betting a sponsor, I mean,from, you know, record or their
resume, what else can you beasking these these sponsors when
you're looking to invest withthem?
Wayne C (33:13):
For sure. And so, going back to the likability,
understanding who they are as aperson, what's their values,
what do they have to lose? Likefor me, this is what I do full
time. I've got three kids, awife. I'm a scoutmaster.
I'm a Rotarian. I've got a lotof lose if I'm, you know, my
reputation such, go south. So,but asking, you know, you
(33:37):
mentioned about the trackrecord, but that's important.
And I think if anybody's been inthis business for the last five
years, they have one propertythat struggled. I mean, unless
they just hit perfect basisevery single time.
But there's not one sponsorsyndicator that I know that
hasn't had some type of roughtime if they were investing over
(33:59):
the last five years. And you cansay that about people back in
02/2007, 02/2008, 02/2009. A lotof real estate investors, they
got hosed. But those people thatwere coming in and investing
when others were not, which issort of like what this period of
time is, did extremely well. SoI educate our investors, when
(34:20):
the crowd is going in onedirection, start going in the
opposite direction, becausethat's usually where you can
find some great deals.
So to ask about track record,they should be very transparent
and talk about the lessonslearned. And especially if they
haven't lost any capital, butyou have gone through major grit
events that speaks highly ofthemselves. Understand the team.
One of the things, Trent, I seea lot of is they'll present a
(34:42):
team or you may invest in personA, and you think that person A
is a decision maker on thatteam. Well, person A could be
raising capital andparticipating in asset
management, but doesn't have anydecision rights in the actual
deal.
And that's fine. It's verynormal in syndications. I think
in a lot of cases, multipleheads is a beast. You don't want
(35:06):
you want that one leader. But asa passive investor, you want to
know who that leader is.
Who is that person who's reallymaking the ultimate decision?
Typically, it's the manager ofthe entity. It's the one who's
going be signing your PPMs, theprivate placement marines, the
documents. And so, but you wantto understand what their track
record is and understand, youyou don't want to be in a
(35:26):
situation where you start goingto the person you invested with
to then find out when the dealisn't performing that they don't
really have any decision rates.And I know it sounds a lot
negative, Trent, where it's likewe're talking about deals not
performing.
There's a lot of deals that areperforming. And the publicity,
(35:47):
it's really getting a bad rap.But what I'm saying is real
estate has been around since thebeginning of time. It's the
oldest investment, right?They're not building more dirt,
getting in when nobody else ornot as many people are getting
in where it's less frothy.
It makes sense. And then we getlike supply and demand, you
(36:08):
know, even though there could besome more supply right now
because of the new builds. Ifyou look at no, any permits
coming up, there's no newpermits. There's very few. So as
that supply gets absorbed, thosethat are investing now, I think,
are going to do really well.
Other syndication to ask forreferrals, we're always happy to
give referrals, look at deals,ask for financials. I I mean,
(36:29):
there's all sorts of stuff. I'dsay most people though,
unfortunately, Trent, they joina webinar and then they like the
presentation and then theyinvest. And even on our deals,
we're grateful for those people,but I'm always trying to reach
out to them be like, Hey, let'shave a conversation and, you
know, let's build therelationship.
Trent Werner (36:48):
Well, I know I've mentioned it on this show
before, but a very importantaspect to investing as a limited
partner and and as a generalpartner is the general partner
should be, I guess, coaching youor or making sure that the
limited partner is a good fitfor the investment based on
their goals and what they'retrying to achieve. Because,
(37:11):
yeah, I mean, obviously ageneral partner wants to raise
money and raise capital. But ifthe investor doesn't necessarily
fit the avatar or the criteriafor this investment, that
general partner, if they aregood and know what they're
doing, should be able torecommend that investor to
either a different type ofinvestment or just at least
coach that limited partner upon, hey, this might not be the
(37:35):
best fit for what your goals areright now.
Wayne C (37:38):
Sure. That was like a mic drop. It was really good
because if you don't understandas a passive investor, if you're
a cash flow investor or anequity upside investor or both,
you know, I always tellinvestors that it's like, you
know, you have your growthstock, you know, that's more
risky, but has better chances ofgiving you better returns or
you're more your value stock,your safe stock. And it's less
(38:01):
sexy, you know, but it's lessreturns, but it's stable. And so
when you look at that, dependingon where you are in your life
investment, if you're goinginto, say, growth stock, I
compare that to development.
We've got a multifamilydevelopment in Bryan College
Station. People that aremassively concerned about cash
preservation and cash flow, thatis not a good deal for them
(38:23):
because it is risky. It's adevelopment and it won't cash
flow for at least twenty four,thirty six months as we build
and utilize it. Where to yourpoint, Trent, on our other deals
that are cash flowing, you know,they, they want that 8%, 7%,
whatever that number is, youknow, because that's, they like
the security of it, or they maywant to use it for their, their
(38:44):
life. I have a doctor in LosAngeles and I'm happy to anybody
that reaches out, connect y'allwith him to verify my story
here.
But he makes at least $310,000on passive income through us.
And he just told me the lastweek, and this is the second
year in a row he's paid zero intaxes because of the
(39:04):
depreciation that we provide. Sohe's a retired cardiologist, but
he's like, I now don't have topay. Like I'm enjoying, he's got
other rental properties andthings, but he's like, because
of investing with you and thedepreciation I'm getting through
passive income, There's alwaystaxes. Talk to your tax person,
I'll say all that.
But it's been pretty cool to seethat he's just living off of the
(39:26):
income that he's getting fromCREI Partners. And then the K-1s
help reduce or eliminate, inthis case, his tax liability.
Trent Werner (39:35):
And that is yet another benefit of investing as
a limited partner. Wayne, I knowyou mentioned
passiveinvestorcoaching.com forpassive investors to educate
themselves, learn more. Is thereanywhere else that you want
people to connect with you orhear more from you?
Wayne C (39:52):
Yeah. So passiveinvestorcoaching.com,
thanks for mentioning thatagain. And then cripartners.com,
a lot of information about ourteam, about our deals, about our
strategy. There's podcastinformation, blogs. It just goes
back to the number one thingthat past investors can do, and
that's just get educated.
(40:12):
And so hopefully I added somevalue. And industrial was the
word I was looking forindustrial company. You know,
when I was all the place youmentioned, I was like, Oh, it's
industrial. So anyway, but,know, hopefully it was a good
podcast episode for you and yourinvestors.
Trent Werner (40:27):
Absolutely. Thank you so much for joining and
answering my questions honestlyand transparently. I know you're
a great general partner and Iknow people that invest with you
would agree with me. So thankyou so much for joining the show
today.
Wayne C (40:40):
Thanks, Trent. Appreciate you, man.
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