Podcast Episode 155 Transcript

Episode 155: Lifestyle vs Wealth: Location Independence & Intelligent Investments with Amy Sylvis

on the prereal podcast this week um an emotional story Amy Sylvis from Sylvis Capital shares with us how just a few short years ago she retired from her job medically retired um talk about perspective and talk about real challenges and Amy walks us through a forced medical retirement just a few short years ago and how she took that and made that an opportunity and is now uh sitting on top of a hundred million dollar portfolio and 750 units it is a real Amazing Story an inspirational story Amos Amy Sylvis this week on the pre-real podcast don't miss it it's a really great episode are you ready to bring your real estate game to the next level my name is James prendimano I'm the CEO and founder of free 25 years I've closed over a billion dollars in transactional real estate each week I'm meeting with outstanding investors High performing individuals and Visionaries operating in the real estate space these are the people that are actually out there in the real estate game right now getting it done this podcast aims at bringing anyone's game to the next level this is the pre-real podcast welcome everyone to the pre-real podcast we've got a treat for you today we're joined by Amy Sylvis she's the founder and principal of Sylvis capital A really interesting story folks um Amy came over from a completely different segment in the market we're going to get into that a little bit and has now put a hundred million dollars just about 100 million dollars and 750 plus or minus minus units in into management under the portfolio Amy thank you so much for joining us today I'm thrilled to be here thank you again for having me no it's my pleasure anytime we can bring on a pro that can talk about their journey and connect some of the dots for investors of all different sizes and shapes and levels it's important that we share that because this community is It's a Wonderful Community it really is and it's about sharing what we've learned and helping the next person in their Journey so I agree completely I appreciate that so let's talk first about how you ended up in real estate you have a buyer you have a a background in pharmaceutical and biotech correct yes I do I do so how do we go how do we go from pharmaceutical and biotech to real estate ownership yes yeah so like how long do you have right I'll I'll keep it brief and if you want to dive in a little deeper you can take me there and I'll follow you um I was essentially looking for a way to not have to trade my time for money I was born with a health condition where I was only supposed to live to be around eight or nine years old uh I just turned 42 yesterday you can see some of the gray in my hair so as part of that I wasn't sure how long I'd be able to work I wasn't sure how I would be able to have income as the illness progressed it's called cystic fibrosis we can talk about it if you want so essentially well I was in biotech getting sicker and sicker spending more and more time in the hospital I was frantically looking for a way to not have to be dependent on my family if and when I had to quit my job because I wasn't healthy enough and thankfully I Came Upon that amazing purple book I think many of us have read called Rich Dad Poor Dad and this concept of passive income hit me like a ton of bricks like oh my gosh there's something out there where I could earn money even when I wasn't that healthy so that's that's the long and the short of it we can dive deeper if you'd like so you pick up Rich Dad Poor Dad um a book that if you're in the investment game I don't see how it hasn't played uh some sort of transformative pivotal piece in your journey uh you pick this book up you start to understand the concept of trading time for money and the Limitless really Limitless potential that you can derive from passive income Via Real Estate what happens next I mean you know we don't go from that to this so so now what no so this was in the early 2010s and I thought okay great I'm gonna find people to passively invest with I didn't have a ton of money but I had enough to where I could find great experienced people specifically in multi-family to invest some money with and learn this game and in the meantime while balancing my Pharma and biotech job and the full-time job that was to care for myself with cystic fibrosis I was trying to find a way to break into the active game as well failed many times um had had a few blunders a few things that that didn't work out I'm in Los Angeles so I was looking in you know Vegas and Phoenix like a lot of people in my state do so yeah it was it was bad it was really hard for me to get out of the kind of limited partner passive investing space because I wanted to be a GP fast forward I ended up having to medically retire from my job in 2017 really really tough it was a pretty devastating I loved what I did um but a miracle drug for my illness came out in 2019 right before uh covid and I was Off to the Races I had laid down all the groundwork I had made all my mistakes and I was ready to go so I made that transition to being a full-time investor once my health improved well God bless I mean that's amazing um I it's prospective folks when when you're hung up and this happens to us so often we're our worst enemy you know there's a lot of famous quotes that speak to this book why do we remain in prison when the door is wide open and here Amy is talking about real stuff real issues that are literally we're talking about life or death and Amy finds the courage and the pathway to overcome so those of you who are out there sweating the small stuff think about this reflect back on on Amy's challenges and how she's been able to take what seems like an impossible circumstance and turned it into this amazing portfolio so let's talk about the fun stuff now yeah you're investing as an LP and most times as an as an LP not because the GPS are trying to hide knowledge or they're trying to keep things away from you that's the role of an LP a gpp wants to be able to operate uh you've got limited rights you're there to basically fund the transaction and watch the returns but you're not there every step of the way so was there a mentor or someone that you connected with that helped bridge that gap for you yes well thankfully part of my criteria to passively invest was finding a group that was open and willing to let me uh join them and and you know listen in and learn a little bit but yes also I definitely uh enrolled in one of those Guru programs which I know some people don't feel so great about it served me extremely well and the most important part at least for me was getting the the the network that that program provided and and all the you know in addition to the knowledge so yeah there were definitely multi-factors there uh in terms of getting my education and getting experience to make the transition okay so you have a few of these LP deals moving along hopefully you're you're collecting returns at or above what's forecasted yeah um now it's time to take that step and and run deals as to GP are you running these Solo or do you have a team that was probably the biggest inflection point for myself was realizing that I could go further faster with business partners I didn't really understand how many people even if you just saw you know one business name or one group of Partners uh for an investment there are really a lot of different businesses that come together to make these deals work so yes I did uh hook up with a partnership team with folks that were again more experienced than me but that had a need for what I could provide uh in terms of sourcing deals and it ended up being a really great partnership okay so you're on the deal sourcing side of this uh I I am I also still do uh investor relations as well so I do a bit of both so maybe the most important decision when you're steering the ship is where are we going to invest yes right can you walk the audience through how Sylvis Capital has made those decisions and where are the the places that you've you've decided to put a flag down and make Acquisitions in yes this is I as we talked about before we started recording I really love this topic so I'm excited to talk about it for so many reasons but my mentor said live where you want invest where it makes sense and I think that's one of the greatest things about these syndications and these larger multi-family deals that we do is you know I'm in La I don't want to buy in La they couldn't pay me to buy in La we can look across the country and identify hey where are people moving where is the economy growing where are you know States or local municipalities that love investors that love landlords that are willing to be fair and balanced with tenants rights and landlord rights so yeah we I am constantly doing that market research and as you can imagine over the past several years there are lots of exciting markets that have emerged throughout the United States that have proven to be great places to invest and to your point you know there are two ways that we have appreciation or increase in value for our multi-family deals one is the market itself all you know a rising tide lifts All Ships and then of course how we run our business uh and our business plan with the investment specifically so yeah happy to dive further into you know how we do this market research and what all that looks like if you'd like yeah I'd love to I'm a deal junkie and and Emerging Markets um has been kind of my thing for the last gosh it goes back to 2007-2008 when we started to see the decentralization of retail that was really the very first thing we had seen where retailers that historically would pick that Flagship location and their lost leader locations for them that were paying insane rent to have a presence in a marquee Spot somewhere in Times Square or a similar location and as the digital space began to disrupt retail in the most intimate way retailers started to figure out hey we could reach these people on their phone in a very personal way uh perhaps it doesn't make sense to have those lost leader locations anymore and we saw a retailers start to decentralize from the best spots to secondary spots to Outer boroughs and Beyond um and from that we had figured okay this this is going to continue now legislative risks are increasing unfortunately we had seen crime started to hit a trajectory that was on on the rise costs were soaring it was just a matter of time until investors started to measure is the risk worth the reward anymore and then covid hit everyone's patterns are are changed forever and it kind of put jet fuel on that so what what are the factors Amy that you look for when you're identifying these Emerging Markets yes number one is job growth you know how as a multi-family investor how are my residents going to be able to pay their rent and then you know that allows me to pay pay the debt on the on the property and of course give returns to my investors so if we're looking at markets where great jobs are coming to the market companies are relocating salaries are increasing those are all huge green flags to us of hey you know this is a market where we could really prosper and really serve our residents the second one is again that population growth which tends to come you know pre now here after covet or however you want to phrase this time might be a little different because there is remote work but we still like to see network immigration people follow those jobs low cost of living is another is another Factor as well one of the reasons we love the Midwest and some parts of the southeast and then as I alluded to a business friendly and investor-friendly legislature or environment in a given State and municipality um there are a lot of nuances that we've found even you know if a state at the state level is very friendly to investors some of the local municipalities may not be uh so really digging deep into the weeds and creating what is truly this raw spreadsheet where we collect all these different data points track them over time and uh come up with where we think the best place to invest would be now do you do you have one two three um resources that you can point the audience to where you get a a fair bit of that data that you're using yeah one of my favorite is called the Milken report some of you if you're of a certain age you may remember Michael Milken that name may have a different connotation to you but he started this incredible Foundation that's actually located out here in Los Angeles and he publishes an annual report that looks at growing cities Emerging Markets throughout the United States and ranks them on all sorts of data points that I think if you were to look at just one resource it's a fantastic one to look at and I would challenge you to not just look at the absolute rankings but take a look at the movers over the past year so we're looking at Trends right so it's not just you know Austin's number one yes we get it Austin Austin but you know where has some place like Huntsville Alabama what's the trajectory been over the past few years has it moved a lot has it not has it gone down so they do a great job of calling out the movers and shakers of individual cities throughout the US and kind of the rationale behind it I think it's a great resource so you begin pulling your data points together yes um how much of the analysis includes if at all boots on the ground yes boots on the ground are imperative I mean I obviously travel uh to to the location as well but whether we're partnering with people who have great experience in the area or folks that have um already a footprint in the area or just getting to know uh other investors you know this Real Estate Network is is pretty tight um even the economic development folks in a given City can be great boots on the ground that you know they're willing to to talk up their city and give us good information or the local police department there are lots of ways to get that on the ground information but yeah having business partners that are local is imperative to us so you pick a location um you decide this is a place that service capital is going to make Acquisitions yes is there a model that you follow is there economies of scale do you want to pick multiple Assets in a particular Market what does that look like yeah economies of scale are massive they're they're so important and anyone who's been in the single family space that's transitioned to the the larger multi-family space understands this for us the magic number is 100 to 150 plus doors in a given apartment complex and the reason is you know their whole multitude of reasons but one is the fact that we can have a really sophisticated or institutional type property management company it's not you know no offense to the Mom and Pops property managers out there but there is a level of sophistication that our investors our residents and ourselves really demand for property management all the way to the ability to having enough doors enough revenue and again scale to have a full-time real repair as a maintenance person that means we can address our residence needs be very responsive you know the fact that this person is on staff and salaried full-time leasing agent there are so many things that give us you know a great Advantage both from investment returns but also in just how we're able to treat our residents and care for them to give the experience that we know that they deserve so Emerging Markets to us has changed over the last 10 or 15 years the definition of that um there are geopolitical social a number of different factors that drive Emerging Markets yes that drive their life cycle their sustainability what is your interpretation of the last few years and what do you see I know we don't have a crystal ball but what do you see into the future with these secondary and tertiary markets it is an interesting time right because all of us have heard this you know work from home uh companies are trying to drag their their employees back to the office and I think some of these probably more so tertiary tinier markets really experienced a lot of attention and net migration because of the work from home phenomenon uh people no longer had to choose a geographic location to live based on where their employment was you know I think some of that is here to stay but there may be you know some equilibrium the pendulum may be swinging a little bit more towards the middle so uh for us we're a we're excited to follow tertiary markets and understand them but we consider them to be slightly more risky and a bit more volatile if we study them and see you know a consistent pattern of safety and stability and upward trajectory over a good number of years it's definitely something we would consider but we feel more closely uh we feel more safe and more confident in secondary mark markets that surround some of these these primary markets that are so stable and doing so well does that answer your question it does it answers the the first piece entirely uh I'm curious what your thoughts are long term now in these secondary and tertiary markets the the covet impact is very real the decentralization trends are being covered um certainly not entirely but they are being covered more readily now that we're seeing in the big cities what do you think this means for the big cities New York Chicago L.A I'm in New York you're in La yes we've seen a massive change here over the last three or four years what does that mean for the big cities what does it mean for these secondary and tertiary markets yeah yeah I think decentralization that's such a great term and it really resonates with the research that we've done and how we're you know what our Outlook looks like um you know I think there's always a role for major cities there there's a lot that can be provided that residents enjoy but you know I focus very strongly on demography right and the Millennials are the largest generation in the United States history looking at their preferences they're coming into their household formation years having children and living you know having more space uh having more ease of accessing Services they're driving some suburban and secondary maybe even tertiary living so that's going to be balanced with what we see projected with Baby Boomers as they retire and them wanting to be able to have you know easily walkable cities uh and maybe might be more drawn to some major markets for healthcare uh treatment and such but yeah I I don't think from my vantage point in my research that this trend toward secondary and tertiary population growth is going to end and I think the major cities are going to continue to lose population as a result I I agree and it's uh it's rare to have a guest on that's bold enough to candidly say what what you've just said because it's not a popular thing right but this is the reality of what we've seen and it it's driving our decisions and it has driven our decisions for years now we candidly don't see how the big cities stem the tide at this point and the numbers are are shocking and once the big companies as you had touched on earlier began to adopt this mindset and instead of fighting it and insisting on having folks in the office they've said you know what this is a more efficient way to work our workers seem to be happier we can save money we can trade those expensive digs in okay that I feel like was a really important threshold that the cities had to make every effort to ensure that that did not happen and they haven't done that and it is happening correct and we see it in the office space I mean I don't think a day goes by the even the lay press doesn't talk about office vacancies that's you know it's just numbers right it really isn't rocket science it takes a while to you know dig in and really analyze and such but yeah the numbers really don't lie no they don't so could we talk a little bit about um your typical deals I know there's no such thing but what are some uh investment objectives or criteria what are things that investors could expect if they wanted to to reach out and speak to you about a typical deal so yes multi-family we some Flex industrial as well to take advantage of some of that onshoring that's happening in the United States but our bread and butter is really Apartments large apartment complexes anywhere from 100 to 300 doors and we love what's called a value-add strategy so we pick these markets where populations are growing where jobs are growing income is growing and residents are really looking for nicer renovated units we typically buy 1980s 1990s built apartment complexes that haven't been renovated we're not really interested I think some people think of the apartment game of oh you know there's a supply constraint and so you just raise rents on residence because they don't have any other choice that's not us we want to provide a higher quality product because residents can afford it and want it not because we're forcing it on them so we want to provide what's called a value-add strategy uh to Residents and renovate those units typically hold the property from anywhere from three to five years sell the property give our investors you know distributions along the way in addition to some of the capital gains that we make uh from selling the property and then identify the next Emerging Market because those change right uh and then go deploy our Capital into the next emerging market so as your evaluating deals um the role that you seem to be spearheading at at your firm to me is is the most important piece and it's also in part what I do so I tend to lean heavily into it but yes um without deal flow we can have all the investors in the world it doesn't matter I think so many people when they're starting in real estate have it backwards and they feel there's this fear on raising capital and accessing Capital right but if you have the deal you're gonna find the capital for sure so if you're looking in the right spots of course so what do you do Amy to ensure that there's a steady flow of quality deals that you can evaluate at any given time to give your investors that leg up from Jump Street it's a million dollar question or maybe even more than that because it you know candidly the past 12 months have been tough right the feds raised rates tremendously and sellers aren't quite capitulating in terms of you know what they think their properties are worth so I tell my investors that I'm probably going to be one of the most conservative people that they may work with I may have two maybe three opportunities a year at the most um simply because not that I'm not out there trying but I'm investing my own money I'm investing my parents retirement savings I want to be the best Steward of people's Capital possible and you know thankfully people have a lot of choices out there but yes I've got incredible broker relationships thankfully a history of you know being great to work with doing what I'm saying I'm going to do and closing so Brokers are happy and eager uh to put deals in front of myself and my organization and we have even had successful efforts being boots on the ground and contacting sellers directly I know Brokers will like to hear that but sometimes that's what sellers want to do so those relationships this is a relationship business whether you're asset managing sourcing deals you know um helping investors find a place to place their Capital so sourcing deals and those relationships I think what what has given us so much success with we're having great deal for flow over the past few years I'm Tongue Tied excuse me so are you or have you um considered as the market has tightened any ground up or new construction or built to rent type deals I have not at this point again putting on my very conservative Amy hat the the inflation and the increased risk that we that is inherent in development gives me a little bit of pause it doesn't mean I'm not open to it but the supply chains I mean I've seen even as just someone doing value ad deals and renovating the supply chain constraints what inflation has done to our expenses our returns our capex so I'm the type of person that's going to take several years and be a little bit more slow to adopt to something not necessarily new but new to me like ground up development or or built to rent uh type of thing so I'm very open I'm always learning I'm just not ready to pull that trigger right now I do see some markets though in my market research that are really primed for that so that wets my palette of you know hey how can we help solve some of this housing shortage that we experience in some of these markets so as you're pulling together your your decks and you're ready to go to market with investors what is a typical cap stack look like what is the what are the debt ratios how does a typical deal cash flow for you yeah yeah typical again I pause on that um so at this time we're focusing on agency debt anywhere from 50 55 60 loan to value um we have done Bridge debt in the past with rate caps we've done just fine that leverage was what was appropriate it helped us get done what we needed to get done I know Bridge debt is a swear word nowadays but I think it's appropriate for where it is but yes at this time agency debt with a low loan to value um and raising our construction costs our capex costs from our investors and then depending upon how large the deal is we may have some prep Equity folks that are looking to you know get that cash flow but maybe they're not interested in participating in the upside or the sale um upon the sale of the deal and yes then the rest are yeah our average retail investors that are that are looking to invest alongside of us passively so you know Bridge loans are fine as long as there are things like the raid caps and there's the ability to extend the way we we kind of phrase it for the audience is you need to make sure that you can always get to the other side of the rainbow and the the markets turn slowly um but they're fairly predictable within certain boundaries uh if you're paying attention you'll have a good sense of when rates are going to start to creep up and when rates are going to start to creep down but you have to understand the Nuance of what happens behind that right as these Bridge loans were to us it was very very clear during the multi-family Boom the smaller lenders filled a lot of these voids with the bridge that but the bigger lender sat on the sidelines and we observe them uh go from sitting on the sidelines to starting to make inducements to investors Place 250 000 with us and we'll give you a bump on your your rate place a half a million dollars and that was a in our mind it was a a planned process where they wanted to suck whatever Capital they could out of those mid cap and smaller Banks while the coven money was running out yes deposits were starting to drop and those Bridge lenders even if the nodes were performing and the asset was performing there needs to be an outlet at the end of that debt there needs to be a place to go and refinance it yeah and we're starting to see the beginnings of this now where even performing notes uh I believe you're going to start seeing that those notes become available at discounts um because there's just the big banks are still not ready they're sitting on the sidelines while this plays out so it's okay as long as you're aware of what else is happening in the market and how do we get to the other side of the rainbow in the event our debt comes due during the time when Banks don't lend yes liquidity is is the name of the game whether it's you know yourself as an asset manager or the banks are yeah the system as a whole it's imperative to monitor so what can uh an investor do if if we have LPS in the audience that are interested in a a conservative model I love that you mentioned you have your Capital uh in these deals sometimes you have family money in the deal sometimes skin in the game is super important to us where can investors find the information they need to to learn more and to perhaps Reach Out sure so Sylviscapital.com not the easiest thing to spell but I trust that James will put it in the show notes that's my website I'm also extremely active on LinkedIn I love to provide education information there's a lot of interaction so if you're a LinkedIn person I would highly recommend you go there and um I provide a lot of stuff for you to learn and understand what we do and how we can help folks so before I let you go give me one quick prediction where do we see rates from now to the next presidential election oh yeah they're going to be cut before the next presidential election call me jaded but um unfortunately I don't think the FED is as independent as they'd like us to believe all right hot take agree more absolutely wonderful to chat with you Amy congratulations this is a wonderful story to hear thank you for sharing both the personal and the business side of it uh folks Amy Sylvis Sylvis Capital appreciate the time everyone out there please stay safe have a wonderful holiday weekend [Music] foreign [Music] foreign