Episode 146: Get Ready For The Upcoming Market Cycle Through Creative Financing with Bill Ham

Bill Ham is the Chief Operating Officer and the driving force behind Broadwell Property Group. He has upwards of 20 years’ experience in Real Estate with a proven track record of identifying, acquiring, operating, and divesting of large footprint Multifamily Housing. Bill can be seen and heard on countless podcasts and webinars as well as standing on stage giving presentations at tradeshows and other forums both online and off. Ham is a Real Estate Entrepreneur, a sought-after speaker, an author, and an operator but his real passion lies in education. He has been a coach and mentor to the future titans of Multifamily. Over the years he has counseled hundreds of students who have gone on to close countless millions of dollars in their own deals, many crediting Bill with their success. Bill was born and raised in Middle Georgia where he honed his craft opting to move to the big city of Atlanta in 2015 to expand his reach. He has a wife, Yvonne, and two dogs Jake and Lola. He loves gardening, water skiing, and hiking.
Get in touch with Bill: Website

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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 a
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
so we've got uh a lot of value coming at
you today we're joined by a special
guest Bill Ham uh bill is the CEO of
Broadwell Property Group and he's the
founder of real estate raw uh he is a
no-nonsense straight shooting uh
multi-family Guru to be candid and we're
also joined by you may recognize Rob
Nixon uh he joined us in a previous
episode he is the deal ninja super
valued uh top producer year after year
member of the team uh and a heck of an
investor in his own right in the the
medical and commercial space so uh first
Bill thank you so much for taking the
time to join us today yeah pleasure
thanks for having me yeah man always
always a treat to deliver value and Rob
uh thanks for taking the time to join us
as well
um if you could just give the audience
in a few minutes or less a little bit
about the background I know you're a
pilot before and and how you landed
where you are today
yeah no pun intended right
I was uh as you said I was a pilot by
trade
um flying came out of school college
started flying airplanes uh went through
the 911 uh debacle kind of wound up
being a flight instructor longer than I
meant to long story became a corporate
pilot flew for a few years I realized I
was a bad employee so that was kind of
my first aha moment was was I you know
it's not really hated job it's just
having a job hated me I wasn't uh you
know I wasn't a good employee so
um realize the important people actually
were sitting behind me you know and a
pile is real important from take off the
landing and you're not worth much on the
on the ground so uh that you know flying
airplanes was fun being told when to do
it where to do it how to do it and how
long to do it yeah not so much fun so
studied real estate for about a year uh
just Rich Dad Poor Dad poured out all the crap we
all read right went through all that
stuff and my very first deal was a
duplex
um I'd saved up about ten thousand
dollars duplexes cash flow and a couple
hundred bucks 300 bucks a month and I
walked away from the aviation career uh
with the duplex and said I'm gonna
figure this out so
um you know now now fair car out there I
was 28 years old at the time you know no
debt no no failing no kids none of that
stuff so I figured that's great worst
case scenario I'll just go get a job if
I messed this up and I got into flipping
houses and small properties and then
just overtime worked my way up into
multi-family a small multi-family 10 20
units larger and larger until I got up
into large commercial assets and that's
what I do now is uh Syndicate own and
operate larger apartment complexes and
I'm also the CEO of Broadwell Property
Group which is my partner Tony Morgan
and I uh and that's what I do there's a
bunch of us that are ready to go and
we're looking to take that next step uh
where do you start like where do you
where do you start pulling it together
yeah first first thing is education it's
it's always going to be my answer almost
every question it starts with the
education you know the the let's tell
everybody the only real estate deal you
ever have to worry about closing is the
six inches between your ears you can
close that deal the rest of them don't
matter if you can't close that deal the
rest of them don't matter right so it's
really starting about your mentality
your thought process and your education
and the education will lead to
confidence and the education is is
almost your crutch to get to experience
you know so if you're trying to
transition into a larger asset class
you're probably going to be doing it
with other people's money you're going
to be looking for investors you're going
to be looking for partners you're going
to be leveraging someone's capital and
that person is going to look at you and
say are you the right person if you
don't have a tremendous amount of
experience you had better have the
education you know the education leads
to the experience and everybody kind of
feels like they have to have this big
resume or nobody's gonna take them
seriously that's not true people will
give you a shot and they will give you a
break and they'll try out you know your
first deal and things like that but not
if you sound like an idiot not if you
sound like you don't know what you're
talking about so so take care of the
cheap stuff first get a book 20 bucks
you know then listen to some podcasts
Google whatever and then maybe you want
to kind of start investing in a higher
level of Education you know so start off
cheat do all the cheat stuff spend your
hustle before you spend your dollars
then you might want to start looking at
maybe a higher level you know someone
that could help you uh move forward in
the business and learn you know and it's
that's kind of the progression um and
then look at deals you just got to look
at a lot I can tell everybody right here
the only two things you ever need to
know about real estate know the value is
in your area look at more deals than
anybody else
so if you know what a good deal is
and you look at a lot of deals you're
good if you know what a good deal is you
never look at any you're wasting your
time if you look at all the deals in the
world but you have no idea what you're
looking at you're wasting your time so
you got to really focus on that
education and really learn what is a
good deal how do we find them how do we
work with Realtors how do we work with
sellers how do we do all these things to
identify a good deal it's obviously a
lot easier said than done and then
you've got to rinse and repeat that
process on a regular basis so real short
answer would be start with your
education and then just get out there
and start looking at deals just it's
free to look it's free to analyze it's
free to do the math you know do that
what is a good deal to bill is it the
cash on cash return is it the net
dollars at the end of the day what what
is it that that constitutes a good deal
for you yeah again broad answer a good
deal is in my personal definition a good
deal is something that costs you more
that it produces more money than it
costs you to own basically you know all
right so that kind of starts to break it
down and say well what's a good deal
when somebody asks me that I if they're
asking generally what is a good deal I
answer with a question well what is your
cost of capital so we got to look at
like what does your money cost you know
if you own the money then it's cheap if
you're going to a bank and getting 80
percent well then cost of 80 is the
interest rate well where's this other 20
coming from is that investors is it your
money you got to look at you know what
all the money costs if you're
syndicating it's about 80 with the
interest rate the other 20 whatever your
investors want so I would say in that
regard a good deal is a deal that
produces enough return to feed my
investors the returns they want
and have enough left over for me to be
worth the effort return on effort so
that's kind of the answer there is a
good deal is is it pay for itself and
does it cover the people that are going
to help you get into the deal and if it
covers all those things and it's in a
decent location and you can get a decent
loan I'd say that's a good deal you know
um I will now start going a little off
track to the question yeah it's not
about cash flow it's Equity if you want
to have that old let's cash flow Equity
conversation you have to have both first
of all I think when anybody starts
arguing that you know appreciation is
nice to have I buy for cash flow or no I
buy for appreciation I don't worry about
cash you're both wrong you're all crazy
look if you don't have cash flow you're
not a stay in business you've got to
have cash flow to take care of all the
bad days and the things of the break and
the things you didn't see coming it
covers all the bumps in the road and if
you don't have appreciation you've never
tried to exit a deal before anybody that
tells you that they're not worried about
appreciation is not somebody that's been
full cycle on an asset because if you
try to refinance a deal it has gone down
in value good luck to you give me a call
let me know how that goes for you you're
trying to sell something that's gone
down a value again good luck to you
valuation and the appreciation has
everything to do with the exit strategy
you must have both we're at a point in
the market and and I'll I'll stop at a
certain point and I want you to finish
it then I'll share my thoughts we're at
a point in the market where
what do you see happening next in in the
multi multi-family space
big shift
a big shift I I don't want to use the
word crash because I'm not quite sure
I'm feeling a crash correction
absolutely yes
um I I think a lot of things in this we
can spend another hour just sort of
answering that one question of what do I
think is about to happen but short
answer is I I think that we have a Debt
Service ratio problem in the world I I
think that
um a lot of people are going to become
distressed sellers if they got
short-term loans the loan comes due they
did not get the revenue up to where it
needs to be for them to get the price
they want to get I think that's going to
be a problem and that's what I always
tell everybody that's the greatest thing
about multi-family is like hey if you go
and buy a property this afternoon and
you go get a five or a seven year
mortgage and the values crash tomorrow
you know what just don't sell who cares
what policies do you see or what
creative financing do you see is going
to enter the market over the next
however long you think it's going to be
from The Flipper Market Speculator
Market into an operator Market where
operations will be rewarded far more
than they have been over the last three
to five years where flipping in the
quick cash in the 18-month hold and you
made a few million bucks for no good
reason kind of Market is going to cool
off and we're going to see who can
really operate uh that's kind of what I
see first answer second answer yeah I
think seller financing and lease options
are going to be the Hallmark of of
creative financing you're going to see a
lot of lease options with people that
are sellers that got long-term debt they
did go out get the Fannie Mae Freddie
Mac but now they're into a 10-year
mortgage and they've got massive
prepayment penalties to fees and seal
maintenance they can't exit without
paying off this giant loan and they need
someone to assume the mortgage but you
don't really want to assume the mortgage
because you know the loan assumption is
going to be bad or the property's not in
good shape whatever lease option match
lease option is going to be that that's
you know in a nutshell you're going to
go and rent that property with the right
to buy it someday in the future at a set
price and then hopefully you bring the
operations and the valuation up I've
done a lot of those uh and then if
someone has full Equity they actually
own the some Equity property you'll be
looking at seller financing um with that
one uh outside of that and those are the
two positive ones that I come up with
the third one always got to throw in a
negative because that's me but uh Equity
right now I think you're gonna see some
LPS lose some money I think you're going
to see some investors get some of their
investment money written down yep those
are the three things I think you're
gonna see two two creative financing and
ones people go lose some cash in the
multi-family space where do you start if
you want to be in the right position to
take advantage of what's coming around
the corner yeah I would say that really
probably depends on what size asset
we're talking about if we're under 50
units I always kind of split the world
in 50 units and above and 50 units and
below if we're below 50 units you're
better off trying to go directly to
owners you're better off trying to set
up direct mail contact voiceless
ringless voicemail you know text email
whatever these kids are doing today
right you know no uh get out and do some
direct contact campaigns for under 50
units start tracking those people that's
kind of building relationships with
sellers uh if you're 50 units and above
it's really about building relationships
with Realtors you can try the lender
things they're likely to not really talk
to you not on the higher level they're
going to just refer you to back to a
realtor they're just that doesn't work
as well as the gurus tell you that it
does you know this whole contact the
bank that word where that came from was
back in 08 and and I I had I used to
teach that and we used to do that back
in a week where you could actually call
up asset managers yeah back in that
foreclosure crisis and yeah asset
managers will actually talk to you and
basically sell you property right off
the base Ledger they largely largely
largely got away from all that and
almost never do that anymore so I'm not
saying it's impossible I'm saying it's
highly improbable you're gonna pick up
the phone strike up the relationship
with a lender and go picking up deals
from them unless it's more of like a
private lender if it's any kind of bank
or institutional lender realtor is the
way to go now the Realtors are the ones
that get these properties in
receivership they're the ones that the
bank calls up says hey come over and
give me uh your opinion on value this
kind of stuff so that's where I would
start really working on is relationships
with Realtors over 50 units go directly
to owners under 50 units those are the
two things that I would say third if you
can track the data this is a little bit
higher level but you would need
something like co-star or some other
ability but if you can track loan
maturity in the market I think that's
going to be Hiller data if you can sit
there and watch people's loans maturing
and go all right I see you know once you
Main Street looks like they got about 18
months left you know this one over here
yeah they're about two years and you
start a track of loan maturities in your
Market
you're You're Building yourself a
motivated sellers list and that's what I
would recommend everybody do when
identifying uh other markets what are
some of the things you look for or are
you just investing in your backyard
well no I invest whatever deal makes
sense
um I would say short answer would be
population growth that's probably always
your number one answer is is go where
the people are moving so if you're in a
state that in in Census Bureau by the
way is one of the the best quick places
to get to data but look at your your
general population I think since this
came out what 2021 so it's not that old
but if your state had level or negative
population growth be careful because
you're probably going to have stagnant
rent because if if you're not having
population growth you're going to have a
supply and demand problem and yeah you
might look out the front door right now
and go gosh the rents went up but they
won't for forever if your population is
flat or negative and that's there's a
lot of sort of the northeastern
corridors from Chicago to New York kind
of either lost ran flat or kind of held
in population but didn't inclined much
so I would be looking for population
growth first comment second comment yeah
there is the politics there is but um
you know again we could go into a long
conversation about this but I think that
regardless of whether a state or a city
is landlord or tenant friendly I think
the politics are going to move in the
direction of New York on all older
buildings the viewers are going to see
politicians and cities get liberal I
don't care where you live in the middle
of Dallas Texas I don't care you're
going to see politicians get liberal
when it comes to older buildings the
conditions that those tenants are living
in and your responsibility of that
building the city is going to come after
you you know they're going to look at
you they're going to say you need to
maintain that building and that's
exactly what they're doing to you all in
New York they're saying hey you need to
maintain the building and you're you're
looking around going yeah but I can't
get the revenue high enough the rent's
high enough to justify the repairs that
need to be done
that is a valid argument just not to
code enforcement because they don't care
that's not their department and that's
where I think that even in a
landlord-friendly city you're not going
to get a slumlord free card you don't
get to come down to Atlanta or to some
other you know uh you know a
landlord-centric area and mystery
tenants and run a property into the
ground and think that that city is not
going to come after you for it that's
New York that's LA that's anywhere so be
careful with that don't think you're
going to be a slumber and that's going
to be free on those older buildings that
you are referencing just to go back to
them for a minute is that a no-go for
you now are you staying away from older
buildings I I am yeah for for exactly
the same reasons you and I are talking
about is is I think they're gonna
they're gonna be too expensive to repair
the prices are too high so you've got a
cost basis problem I think the
governments local and you know out of
state are all going to move liberal
towards protecting tenants and
protecting the the people living in
those buildings which is I'm not arguing
a bad thing and all I'm just saying I
think that's what's going to occur and I
think the financial model is going to be
what you've come to realize in New York
there's no money in that I mean there's
just no money in this the building's old
I got to replace all the plumbing I
gotta replace all the roofs I gotta pay
this price and then I got the city that
says I can only do this and I can only
raise it's exactly what's going to
happen in New York you're going to see
the value class
there's no point in there just don't buy
the real estate just don't just go go
play golf go do something else go buy
them in some other state you know let
the market speak this is a free country
you don't like the price don't pay it so
could you spend a few minutes talking
about real estate raw
um I I think that it's a great place for
folks to consider starting uh I went and
I I logged on I took a couple of the
classes there you've got a real
different approach a real need approach
can you can you talk to the audience
about what that's about there yep so um
realestateraw.com is is the website in
that uh is sort of my education Branch
um I've been teaching through different
programs for about 10 years or so I've
had hundreds of students so
realestateraw.com is sort of the
education Branch if you know you want to
get more information on some of the
programs we have you can go there
um yeah and and that is really just me
uh working with people individually
helping them build out their businesses
so if you're new to the business or
you're looking to get in and you need
some guidance that's what that is you
know that's that's hand holding and
teaching you how to build a business
from my 17 years of experience working
with me directly
um I have two books uh one also called
real estate raw that's on Amazon and the
other one creative cash that is one that
brought out about uh two years ago or so
and that is on creative financing so uh
real estate raw the book is how to build
a portfolio creative cash is the book on
how to get that portfolio funded using
uh creative financing and then real
estate around the website uh you know
come over there and check us out yeah
I've helped a lot of people get into the
business and uh you know I always tell
everybody you're going to learn one way
or the other you're gonna you're gonna
pay for you're going to pay for an
education one or the other either
through me or out on the street or you
know you're gonna hire somebody you're
gonna learn on the street fine with me
either way but you will pay it's just
where and how much without a doubt so
Before I Let You Go bill
um if you could spend a minute or two
talking about scale I know that you
owned and operate or still own and
operate a management company for the
asset so uh a minute or two on scale and
at what point and how important is it to
self-manage and have that company set up
um I always tell everybody I think you
should manage and then not manage and
then manage again all right so I think
you should manage in the beginning when
you have a small portfolio a few houses
couple duplexes and stuff like that to
learn but without scale without economy
of scale you're gonna start wearing a
lot of hats and you what's gonna happen
is you're gonna get in the weeds of
building a management company and yes
that will be money that you collect
every month it's W-2 money all that but
it is going to come at an opportunity
cost that may slow down the asset
purchasing so that's where I say I think
you should jump in there and manage for
a little while to learn and then I think
you should Outsource the third party
until you have probably at least a
couple hundred units in a city and then
when you can hire some binge Talent you
come back in and take in the in-house
now you're burnt you've got enough money
and enough economy of scale you can
actually hire some folks know what
they're doing I did not do that I took
none of that advice none of that started
with a duplex managed my way all the way
up and it was great I really learned a
lot but I saw a lot of other people
close a lot of other deals in the same
amount of time it slowed me down so it's
good and it's bad it is not for
everybody it is not free money that's
one thing I want everybody to take away
with don't think you're just going to go
lateral open up a management company but
being mailbox money no no no no that is
brain damage money that's hard job
that's hard work be very conscious into
that business before you do it uh you
know it's great it's good but it's not
easy
yeah so look some tremendous insight and
information today bill I love the the
straight on approach uh you say a lot of
things that other folks dance around and
they don't come quite you know square
and say and I think in real estate where
the stakes are as high as they are you
need that that kind of candid
straightforward direct approach so you
can get hurt you can get hurt out here
yeah yeah you can it's not as easy as
everybody is making it look on on social
media now and and there are some really
difficult
um stories in 2008 we sold hundreds and
hundreds and hundreds of millions of
dollars in defaulted notes and there
were some good folks on the other side
of those notes and some not so good
folks right you know depending on who
and where uh but just be careful out
there folks make sure you're choosing
your syndicators wisely so
lpgp right like has that been the model
that you've used you know have you
pretty traditional not when I first got
started I did my first 402 units with
only creative financing lease options
seller financing line of credit credit
card you know what the hell ever but uh
then after that yeah I got into gplp
syndicated model yeah and that's what I
do so now that you're you've done this
for years you've owned a lot of
different stuff right so what's your
opinion on scale from the standpoint of
hey would you rather you know I don't
know you know which one of your partners
you do study deals with you know are you
in the you know in the mindset of you
know what should we just own some stuff
ourselves you know and not raise money
or is it the opposite I want to scale on
a much larger level and raise it all I'm
curious what yeah I I hear you I would
uh I kind of look at it like the diamond
model right so I'm starting off and I'm
going to Syndicate and use everybody's
money that I can build up that equity
and then pay off and have a small
portfolio as I'm saying so I'm gonna go
wide and narrow so a hundred units with
a mortgage or 10 units free and clear
about the same Equity about the same
cash flow yeah but to get the 10 units
free and clear you might have needed to
Syndicate the hundred you know what I
mean so yeah I'm going out as wide as
big as I can to get as many assets
appreciating as possible so that when I
have those exits I can eventually to
your point burn off the the partners and
the LPS and all that crap in the
academically that's a longer term
business model that takes some years to
pull that off but yeah
so I'm figuring about halfway through so
you know why not
okay and then last question minimum
investment size do you you know like I
know some guys that are like don't get
anything under a hundred thousand or
under 250 that's like then I have the
opposite guys that are like no do the
you know take everything like what's
your opinion on that I mean okay I think
the bigger dollars are better if you if
you
that's irrelevant comment basically what
both of those comments are irrelevant
until you stop and look at your own
database and say can I take that advice
you should only raise money for
millionaires yeah sure I agree do you do
you got some millionaires laying around
go ahead if you don't that's the
comment isn't it so it really
has to do with you looking at your your
own network and saying can I take that
advice yes I agree get a million dollars
out of every individual you'll have big
fish and it'll be awesome and all that
kind of good stuff that might not be
functional comment for you to really
accept so you you got to kind of apply
it where you can apply it um our minimum
is usually about 50 000 to get in
depending on the size deal depending on
how much the raise is depending on what
we're doing I might bump that up to 100
but that's if it's a big deal and I feel
like I've really got the the Rolodex to
bring those folks in you know if you're
out of what I call millionaire
panhandling right if you're uh buying a
spare 50 Grand spare 100 Grand spare 50
Grand you know you're out panhandling
for a million bucks you're gonna take
what you can get yep and if you're about
two weeks before closing and you're out
you hadn't raised your money and your
earnest money's on the line you're going
you're going I'm sure take everything
all right
now this was nice comments but yeah I
don't know how effective they really are
you know those this is really good stuff
definitely give Bill a shot go check out
the site uh Bill Ham Broadwell Property
Group and real estate raw bill I really
appreciate the time today man this is a
good sutff thanks a lot thanks for
having me on absolutely there's always
everyone out there please stay safe