Podcast Episode 144 Transcript

Episode 144: From Single Family To Over 1200 Units In 3 Years with Mike Desrosiers

this week on the pre-real podcast we're
joined by Mike the CEO and founder of
Growth Capital group
so Mike has been an intermittent
investor in real estate for most of his
life one family two family a deal here a
deal there over the last three years
they have stacked 1100 units in the
multi-family space and they did it the
right way they kept their eye on
inflation rates and what was going to
happen when these Bridge loans came due
they were very selective in their loan
product they were very smart with rate
caps they really paid attention to the
deals if you're if you're interested in
listening to a pro and how they built at
unbelievable scale give the show a
listen this week really a tremendous
amount of value we get in the weeds
quite a bit it's a good one you don't
want to miss it folks are you ready to
bring your real estate game to the next
level my name is James Prendamano I'm
the CEO and founder of pre-real and over
the past 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
any
this is the pre-real podcast welcome
everyone to the pre-real podcast we're
joined today by Mike Desrosiers he is the
CEO and founder of Growth Capital group
so Mike is a multi-family syndicator uh
focuses on what I call elbow grease
properties value-add propositions uh
extensive background in education and
asset management Acquisitions investor
relations he's a GP in at last count at
least microcoding to our research was 13
multi-family projects through 10
syndications 1100 units and a hundred
million dollars in assets under
management did I get did I get it close
very close yep well congrats first of
all on we were talking offline on the
the fairly new addition to the family
God bless
thank you and uh man that's a heck of a
portfolio that you've put together and
you know the listeners in the audience
it's pretty wide audience we have some
really seasoned investors a lot of
mindset folks
um but we also have people that are
looking to make the transition folks
that are looking to step out of
um their current path if you will and
pursue this life of as the the tick tock
investors say this life of Freedom I'm
still looking for that part but
um looking to get into the game so I
think it's interesting if we can kind of
always go back a little bit with the
guests and talk a little about your
background and how you ended up in the
real estate game if you will sure yeah
you bet
yeah so um you know I've been been
around a long time and I've been in the
I've been an entrepreneur for quite a
long time I've been in multiple
businesses mostly in the marketing uh
sales kind of type of businesses but
it's include including the you know the
food industry the uh satellite industry
the limousine business car business I've
been in all kinds of businesses but um
all along
um and I
you know it's the real estate that I
purchased on the way and it's
interesting because I remember I was
probably 18 years old 19 years old and
and rented my first office uh for my
business I was in the meat business Food
business and the landlord that I was
renting it to he told me he's an older
guy probably you know 60 70s at the time
and and owned this whole building that I
was renting you know where I was renting
and he just and he just wanted to give
me that little uh
you know advice and he said he said you
know I was an electrician for 40 years
and the end of the day you know I I just
closed my doors of my business but the
real estate that I bought in those 40
years made me wealthy beyond belief
and I always remembered that and you
know what it's been so true for me
so to answer your question it's really
been that path and I've been involved in
these different businesses they've all
given me kind of good lifestyle and you
know vacations and homes and you know
and things but the real estate
Investments that I purchased along the
way with the money from that is at the
end of the day was really what created
the major wealth for me and uh so I've
always always had rentals of one type
another mostly all single family
uh it got only got into the multi-family
space just a few years ago and got lured
in through you know some of these
education systems as many do but for me
it turned the light on super fast
because I'd already been involved in
real estate and I knew the potential I
have other friends that are involved in
multifamily but you know you look at
these large buildings of you know 100
units or 200 unit complex it might be 10
or 20 million dollars and you know
initially you just don't think that's
something you could be part of right
it's just too much money right it's just
too much money
but um after kind of learning the
syndication process and you know
bringing you know the ability to raise
Capital bring in investors to help help
with that and how that's all positioned
where you're not going out and asking
for money you're not asking to borrow
money or anybody to you know uh you know
just to give you money you're basically
giving an opportunity for them to come
in and ride the ride with you and
positioning it that way makes it a whole
different uh it's just a game changer so
anyway getting uh following that path uh
learning you know through the education
of the process and you know accurate
underwriting and how to raise capital
and how to position yourself and you
know legally raise Capital you know as a
syndication all started coming together
and I was able to to do that and so I

got into kind of my first first property
I actually bought on my own uh in Las
Vegas I live in California and that was
another kind of aha moment in this
education is like how do you buy out of
state how do you really buy something
that you're not really you can't run to
in an hour you know and so I bought in
Las Vegas kind of testing those Waters
out realized that was not very hard at
all
um got invited to participate in
somebody else's uh syndication as a
capital raiser to come in on the GP side
and uh was able to do that through a
little my own money in as well as
raising some some Capital not a whole
lot but you know it kind of got that
ball rolling
and also with my business experience I
was able to help that syndication team
not operators in other ways you know
just as far as systems and processes and
how things were you know going because
they were growing very fast
so they really like that and then they
just kind of kept inviting me into more
and more deals and I started bringing
more and more to the table
uh as a partner
and then I got invited you know met some
other operators I came into a 426 unit
property in Kansas City and you know
raised a little over a million dollars
to that property and
um yeah so it just kind of grew and grew
and I just I enjoy it could you give us
a little bit of detail on a few pointers
for those that are out there looking to
take this Step Up in class try and give
me some specifics like what are things
folks should be doing now if they want
to try and make that step yeah
absolutely
uh you know education is really the key
here because this is a business that you
really can't fake it until you make it I
mean you know you can if you're buying
your own property you know single family
and you know maybe even doing it with
you know your mom and dad's money or
something but if you're really really
raising capital from investors and
bringing you know money in especially in
these large properties you got to know
what you're doing or you have to have a
team that knows what they're doing so if
you're not you know the the the smartest
thing to do is to partner up with
somebody who is and then you you are you
know it's like I tell
uh you know I I bring in Partners all
the time my partner almost I'm pretty
much on all of my properties right one
way or another and this is a team sport
you know to really nobody takes these
large properties down by themselves they
can't and if you did I mean they could
but
you know if you took even a 20 unit or
50 unit I mean it's going to consume
your life right for forever right five
five years or however long you're
running this but when you have a good
team around you and some really part
some partners that are that are educated
in these uh you know a great underwriter
and a great you know uh person handle
financing and you know to handle the the
operations and the asset management it
happens much easier much quicker and
you're able to excel much faster because
you can quickly get into additional
properties and keep building a portfolio
because it's really easy for these
people to do these jobs right and that
makes it it really does make it a lot
more fun it really does and you as an
individual no matter how much education
you have in this space by surrounding
yourself around these people you know
every day and and all you know on all
these you know hundreds or thousands of
Zoom calls you know whatever but you're
learning every single time so it's it's
a very quick learning curve and as you
said it's uh
in this business it's also it is about
how you who you know and it's about
being in the uh right place at the right
time which is meaning like being around
the right people that come up with these
opportunities
because you know you're you're you're
working with some individuals that are
in the fast lane they're doing they're
doing this this business they come up
with deals all the time and they're
constantly putting deals together and so
they initially are going to reel in
people that are kind of close in their
Inner Circle
um you talked about education twice
what are some specific resources is it
uh podcasts books is it paid courses
what have you found to be the most
valuable resources for folks where can
we point them to start
absolutely well all of the above I mean
obviously the the podcast the um there's
a lot of free education out there for
sure and that's a great place to start
there's some paid education and that's a
fast lane way to start
um I did do that I'm not an easy sell
believe me when it comes I'm the guy I'm
the guy in the timeshare presentation
that's got his arm closed and going
you're not selling me there's no way
right
that's not going to happen and I was
very leery at going into that because
you know they're the uh they're selling
the sky and the moon and you know in a
dream but uh it started to just make
more and more sense and and I kept
getting drawn into more and more and
more and I was following
kind of the least expensive path going
forward
um
but eventually just bought in and got
into the the full uh education and
coaching and process I came through re
Mentor which is uh you know David
lindahl he's wrote several books on the
industry had been around for quite a
long time and they're based on the East
Coast but they're they're all over and I
came through their system
um but there's and there's many out
there that are just terrific uh you know
they all kind of teach the same thing
honestly it's not this is the
multi-family space and syndication is
not uh anything that's you know
different
um but you know maybe they teach it
different ways or have different uh you
know processes through it but uh one
thing I like about our inventors is
their their support system they have a
terrific networking uh group that then
because they've been around so long so
they put on many events and gives you
great opportunities to meet others in
the space but again no matter how much
education you have and where you are in
space it's really about you applying
yourself
uh determining what you're good at
coming up with your you know superpower
as they say or where where you feel you
can really stand out you don't have to
do it all you don't have to be an
excellent everything you just got to be
really good at something and get even
better at that and then you become
valuable and these others that aren't
you know so good underwriting is an
example right because I use that all the
time I I can underwrite I can read
spreadsheets I do excel all the time I
understand them but I'm not the guru on
Excel I'm not the guy who wants to be up
at two o'clock in the morning in front
of a spreadsheet you know calculating
but I have partners that are right I
have partners that email me at two
o'clock in the morning with you know hey
I got you know I have this and look at
this and you know well I'm asleep but
you know I see when the email came in
and they're the type that stay up in the
front of those Excel spreadsheets all
night
and that's the perfect partner you want
when you're not that right so in the
other token like they hate going to
maybe networking events or you know
socializing and you know maybe these
events or something right and so I
really love doing that so together we're
able to
get the deal flow going right and
actually be able to do something with it
I have another partner who's you know
been a was a contractor for many years
and he does a lot of the asset
management for us and so he just you
know he can look at these uh quotes he
can size up a property you can walk to a
property and pretty much tell what's
going to be needed for the capex on that
property uh you know all in about 20
minutes and that's a that's a really big
help for our team as well too right so
it's just those kind of people or
partners that um
uh you know work together as a as as one
it's pretty awesome it's about finding
your superpower your gift what do you
absolutely best at what is it that
you're willing to take that
responsibility for your team that you
are the point person on that specific
discipline and you don't have to worry
about those other areas because you have
counterparts and you have other people
in your syndication that are absolutely
experts in those areas so uh for me that
was particularly difficult of a mindset
to Break
um what is your superpower what is is
your gift in these deals yeah yeah James
well I come out of the same mold
obviously as you do so I I was the same
being an entrepreneur all of my life in
these different businesses I was really
a jack of all trades but a master of
none right so uh I had the ability to
put things together I had the ability to
to you know keep a business going and
you know cut Corners where needed you
know cut expenses and so forth but uh
but yeah never really kind of had a big
master of anything when I got into this
at first one the thing that I thought I
was going to be uh the strength that is
is Acquisitions and being able to do
broker relationships and
um and be able to get the properties
under contract I really thought that was
going to be my strength right because I
feel confident in that level and I still
do but I realized quickly that takes a
lot more time than I expected right just
the broke relationships the phone calls
and you know the multiple calls and then
they're firing all these deals at you
and you got to review them and get back
and um then I kind of got on uh I also
felt strong in the capital raising side
and so I uh when I was able to get
involved in my first deal that obviously
had to turn that Pipeline on and got
into that side I really realized I
really liked that a lot better I love
deal I love dealing with the investors
themselves because I feel like
um
you know it's more of a one-on-one
conversation and you know I'm I being an
investor and being an entrepreneur and
being in that you know position you know
for many years of you know
some businesses do you know sometimes
did really well and I had money but not
necessarily knowing what to do with that
money and how to make money on that
money right I did put it into real
estate but it was in the you know
another single family so I anyway the
conversation flows for me uh much easier
and I really enjoy that so I kind of
came in more on the capital raising side
which
uh obviously you know when you start
raising Capital especially in larger
amounts you're not raised upwards about
20 million at this point and you know
you'd become the bell of the ball right
everybody wants you know you all of a
sudden get Christmas you know cards from
everybody right because yeah everybody
needs the money
um but uh you know and I don't take that
Lightly for sure right I mean I I truly
value my relationships in the industry
for other operators and stuff for them
like certainly my partners but I really
like being able to deal with the uh the
investors direct 101 I enjoy those
conversations I enjoy meeting them uh
you know it's a it's not a one-off call
or conversation it's you know it's a
it's a lifetime uh relationship that
you're building with these people and
taking the responsibility of their money
which is extremely important right but I
uh with my uh jack of all trades
background you know I it does give me
the ability to vet other operators and
vet deals
um
you know pretty quickly and and uh you
know get a really good sense of who are
good operators and who aren't and you
know and that kind of thing in the
business which is important as a capital
raiser right because you can't raise
capital for everybody you're just going
to do it for you know you're going to
come into deals and teams and partners
and I have maybe three uh four partner
teams that I work with that I really you
know trust and like and and do most of
my business with folks are opting for
quieter safer cleaner
less expensive places to call home
and
I believe that that is going to have a
continued impact at least for the rest
of my professional investing career and
we're betting heavily on Emerging
Markets uh what are your thoughts on on
that statement and Beyond of course you
know what are your insights on these
Emerging Markets
yeah I um I mean I think I feel the same
I think that the you know kind of whole
work from home thing
uh you know it's gonna I there'll be a
lot to go back for sure and some you
know are already kind of proving that of
course there's a lot of Kickback and you
know and fight from that from the
employees status but there's certain
businesses that certainly can and don't
you know can can they've learned
now that they can efficiently have
people working from home and you know
that's you know the water cooler talk
that goes on in the offices uh ends up
being just really a lot of wasted time
and certainly the commuting time to to
and from so on so I think you can have
much happier employees and
and really be way more efficient with
your time if you you know if you're
working from home if you have that that
mindset for sure so I do see that
the Emerging Markets are something I
always keep the the pulse on and and
looking for where that Growth is
happening because that's where we like
to invest
um it doesn't guarantee success but it
certainly puts a feather in your cap and
and it makes it a better uh you know
likelihood of success in that market
um yeah so we're you know it's it's the
jobs it's the uh
you know the job growth also we do
follow because uh you know companies
when companies move into markets they
always bring jobs you know following
with that and they're usually uh you
know higher paid jobs
so um we keep an eye on that you know
kind of population growth some of the
markets that maybe have over inflated
from cobit and from the work at home uh
you know I stay a little leery about to
be honest with you I mean I think some
of that can
soften
um
you know and they've blown up pretty
quickly in in you know this recent uh
couple of years to three years here so
can it maintain that without the actual
jobs being there you know I don't know
I'm kind of a little skeptical of it
myself
what are the opportunities how do you
get those either off Market or upside
deals because they become more and more
challenging to get your hands on as more
and more investors enter the market
um what does that process look like how
how are you do how are you penetrating
these new markets
yes I mean you have to emerge yourself
into the markets you've uh you know it
can start with a lot of free data that's
on that is online you know
citydata.com or city uh City Dash data
data.com is a terrific website for
anybody hasn't seen that that pulls up
pretty much every Metro in the country
and you can type in small and larger
large and smaller cities it brings a
tremendous I mean Pages uh I don't know
20 30 40 pages of information
on that City everything from crime rate
to population growth to job growth to uh
you know demographics of the city and
income you know uh and so forth so
there's a lot of information but with
that said it's also a little older
information it's not current uh to this
year it's usually only current to maybe
a year or two ago and but it gives you a
good guide
um and then when you're uh
uh and you know when and that yeah it's
uh going to the Pro to those uh markets
you have to spend some time there you do
need to travel uh getting to know the
Brokers is really key and anybody that's
in the business on boots on the ground
there I mean the Brokers are a
tremendous amount of information right
if you're no matter where you are if
you're
uh you know looking at uh Oklahoma or
you know Tulsa or something I mean if
you get in a conversation with an
experienced broker in that market they
really can tell you almost everything
they know they know it down to the you
know like what happened last week right
in the market there they uh they have
their their feelers uh completely on the
market there and they can tell you cap
rates they can tell you what what areas
of town are are growing what areas
aren't new companies that are moving in
where the path of progress is where the
uh you know they're building the new you
know downtown or the economic
development is economic development
partner is doing this or doing that or
you know and so they can fill you in
they can be a big resource so can title
companies so can
um you know escrow
um you know any escrow people the title
reps if you can get connection with a
title rep at a title company
you know there the title reps are I
learned that uh quite a long time ago
that you know these title reps their
jobs they're kind of like the
cheerleaders for the title company right
but they they run around all day every
day servicing the Realtors and they're
trying to get you know Brokers to do
business with them right but they they
know exactly what's going on because
they actually a lot of times they'll
actually even you know with transactions
they'll bring you know uh you know the
information or pick up stuff and deliver
it for them and they do all kinds of
things so they really do a kind of a a
good contact they can also provide lists
by the way a little uh anybody looking
for a particular Market if you find a
market I mean the direct mail
uh is something that's effective in this
kind of economy when we start to see
this type of shift happening it can be
very effective
title reps can pull lists for you of um
all the you know multi-family uh
business owners in a particular market
and they can dial it down to even like
you know big thing going on now right as
these Bridge loans a lot of owners that
got into these Bridge loans and the
rates are going up right and they have
they only have a certain amount of time
where they got a refi which could be
coming up you know this year next year
and not you know not this year next year
but
um uh and they can pull a list of all
the owners in a certain uh size or in a
certain area that have Bridge loans and
have Bridge loans coming coming due they
have that kind of information so guys
that's gold what Mike is telling you
right now is utter an absolute gold so
you you've stacked a lot of assets over
the last three years you know a lot of
assets
um what has your philosophy been in
acquiring those assets were you going
longer with your debt yes um I mean the
obviously the bridge loans are not
making any sense anymore and the rates
are just you know incredibly high and
fortunately on our properties we did get
some Bridge loans but we were always
pretty uh proactive on purchasing the
rate caps which has turned to be you
know an amazing blessing I mean it's we
have properties that had uh a ten
thousand dollar a month interest-only
payment that are now approaching thirty
thousand dollars a month interest only
right but we have these rate caps that
are paying us back you know fifteen
thousand dollars of that and we'll
continue to do so you know so that that
puts us in a
you know in a it's still you know it's
still increasing our cost with that but
it it ensures our uh you know that it
can't go up any further but uh the
long-term debt is
um
you know we I I see the I see interest
rates and continue and to climb I think
it'll slow down it'll be it'll be
smaller increases next year and then
hopefully we're thinking the Outlook is
maybe 2024 where we'll start to see some
you know some decline so
um long-term debt with uh the ability to
be able to get out of that debt in at
least you know like a three-year time
frame right because that's the downside
is if you lock in a
a long-term debt at a high interest rate
and then to try to get out of that loan
and you have these step Downs or
pretended penalties then you know they
can be harsh it can be it could be a
million dollars prepayment penalty to
get out of the loan too early right so
you're either stuck paying this higher
interest rate or you have to pay that uh
that to pre-pamp I don't think do you
think that the next 12 to 24 months are
great times to buy great times to sell
what are your what are your the magic
ball what's it telling you
yeah I mean it's both depending on again
the kind of loan you know if you're into
uh you know High uh a high interest loan
it's a great time to sell for sure uh I
do think that it's a great time to buy
no question about that
um
you know how uh I don't I don't know
that we've hit you know bottom here on
what we're doing I don't I agree with
you where I don't see a major crash here
but we are going to see some softening
and raising of cap rates and and some
you know lowering uh there's a lot of
sellers out there but they haven't quite
uh you know come to grasp of lowering
their prices I think as we go into next
year we may see that and there'll be
some terrific buying opportunities
um the key is you know keep your pencils
sharp and keep your your education sharp
and you know make sure you keep your
relationship sharp because when it does
happen it can happen quick and you have
to be able to act quick on the
properties right because
um there'll be others that will will do
will take it ahead of you so if you you
have to be ready and and you know keep
your Capital together keep your
investors together keep your
underwriting sharp um
and keep updated up to date on the
markets now more great advice folks from
someone who's in Market just smashing
right now Mike what's the best way for
folks to reach out to you
uh my website is uh growcaptoday.com grow
cap today and for I have a lot of
information on there as well too there's
some you know downloadable ebooks and
connect with me on my uh with my
investor club and we send out
newsletters you know information about
the the market and and what's going on
and you also have an ability to schedule
a call with me direct from the site as
well well I really appreciate the time
the the Candor and the sharing of your
expertise and insights you really gave
the audience some great great points to
consider as they continue or embark on
this journey Mike thank you so much
thank you James pleasure thank you for
having me on oh pleasure was mine best
best of luck as always everybody please
stay safe