Podcast Episode 68 Transcript

Episode 68: Finding The Right Market: Learn How To Find Your Next Market To Invest In

And I just kept reading and listening to podcasts and everything. And I came across this thing called syndication, which, frankly, I'd never heard of before, at least not in this capacity and was and it kind of blew my mind. And so I thought, yeah, I can buy. How long will it take me to buy 100 single family houses versus 1100 unit apartment building? So the ability to scale faster was very appealing to me.

We're joined today by our trusted colleague, Rebecca. How are we doing, Becks? I'm good. Thank you. Always a pleasure to have you back on. And Jason Balara. Jason is the CEO and co founder of Lark Capital. Jay, thank you so much for coming on today. I know I did your show a couple of weeks back, or at this point, it may be a few months back. So it's always a pleasure to reconnect. And thanks for taking the time today. Yeah. No. I appreciate you having me on, and I think probably it has been a couple of months. The time goes by so fast, but no, thank you for having me. I appreciate it, Doc. I will refer to him for the rest of the show. Doc is a veterinary, and he has found a really interesting niche, I think, in the market. And he's doing investing now through our capital, which I guess the idea is you're targeting folks in your world in your universe. Is that how this is working? Yeah. That's my idea. I wouldn't turn away investors that are not in the veterinary community, but they always talk about sort of finding your avatar that you're aiming towards. And I also think that in the veterinary community, not that a lot of people get a lot of financial training, but we don't we go to school for a long time and ultimately vets get very wrapped up in kind of just functioning in their day to day work. Right. I got to help as many animals as I possibly can without having any business sense without really thinking. I think a lot of times just about their own financial future. And so that was me, basically all of my life until sort of recently, and I decided that it was just that you can only work so much. Right. And so it was kind of figuring out a way out of that. But my goal, as part of it, as part of my journey is to help other veterinarians kind of reach financial freedom as well. So you touched on something that we're really taking a deep dive on now, financial literacy, where we have book club here at the office, and currently we're doing rich dad, poor dad. And I think it's certainly not just vets, right. I think that across the spectrum, like, for whatever reason, it wasn't obvious, right. Until we got halfway through the book. But then it became so obvious that financial literacy is just not part of any core curriculum it feels and it's just absent from the discussion across the spectrum. Yeah. I think I mentioned that in our last one, our last book club. I said, I don't understand why we're not teaching this in high school. And James was like, even College, we're not learning this. And it's such important stuff, right? No, I totally agree. A big part of it, like I said, is helping vets and helping them gain financial freedom. But also, I'm a big, very passionate about the power of time. And so of course, I want to sort of impart this stuff on my kids. But also, like you said, the high school, College age people you can get started with a lot less at a younger age than if you pick it up in your 40s. Like I have where it's like, I just feel like a lot of times playing catch up in terms of trying to get to that goal of whatever you want as passive income. So the younger generation, I think it'll be really important for us to kind of and with social media and things like that, it's a lot easier. Right. We can put things out, like your podcast and there's so many ways to get it out there now. So, folks, I think it's really important we spend a minute here and talk about what's kind of at the core of what Doc is doing there at large capital. And you had said time is the most valuable commodity, right. And you had talked about you don't want to be in a vet or in any practice forever. I think most of us share those sentiments, but we don't understand the trap of trading time for money. Right. And this is something that we didn't really start to focus on until the last couple of years, is when it really started to take center stage for us as we kind of climb the ranks in our local market, and we're getting involved in bigger projects. And with that comes better and more stronger consulting contracts, if you will. Right. But those contracts, which are great, because if you're in our business, it's feast or famine, right. It almost feels like it doesn't matter how much success you've had in real estate. It's the ebb and flow and the nature of the business. So the consultant contracts become a great way to have just that steady cash flow that, you know is coming in every month. But you fall into the trap of trading time for money. And I would assume in your position, right. There's only so many surgeries you can perform a day. There's only so many animals that you can see throughout the course of whatever the office hours are for the day, week, month or year. And you really are kind of bound by that. And what the market will allow you to charge was that some of what was at the Genesis of you making this transition. Yeah. I mean, it's a funny, quick little story that I've told people before is that now I'm talking about, hey, you need a retirement plan. These are the things you can do to kind of set yourself up for the future. Well, within five years ago, my retirement plan was don't retire. That's literally what I was like. I like working. I'll just keep working. I didn't have a plan for it. And so it was when I talk to people about this stuff, I'm like, Look, I've made every one of the mistakes I've done. It all wrong. But now I figured it out and listen, this is very doable for everybody. But I got into that trading time for money sort of hamster wheel where it was just I learned to work hard at a very young age. I worked for my uncle. I basically always had jobs that were in some way production based. Even when I worked for him, he paid me by the day. So if I got my work done faster, I had more time at the end of the day, effectively making more per hour. Right. So I've always had that sort of thing. And even with being most veterinarians, there's some level of production compensation with it. And you probably would be hard pressed to find a more efficient surgeon than me. And I'm not saying that to Boast or anything. I'm saying that to say it doesn't matter. At the end of the day, I can only do so many surgeries in a day, whether that's patient based or my technical staff or whatever it is. So I feel like I have maxed out what I can actually do in a day in terms of surgery and still be doing a good product. Right. I want to make sure that every one of my patients does well, that's first and foremost. So at some point, you're just cutting corners and rushing, and I have no interest in doing that. But I got on that hamster wheel, and it wasn't until I had my son that I realized I can't do that forever. Or I can. But I'll miss out on everything with him. So folks don't often make the connection. And sometimes candidly, there's a negative connotation associated with being a real estate agent or being a realtor. And for us, it's just been the gatekeeper to all of this other opportunity. Right. And when you're in this business and you're trading what in most cases is the highest priced asset someone's going to have in their portfolio, you are not bound by that trading time for money model as much as you would be in a production style environment. Right. So there's an opportunity to from the sales side really perform exceptionally well. And then if you're trying to put it all together and you're seeing the big picture, the idea is to graduate into investments and to start building your own portfolio. So for us, it's a natural progression. Right. We're in it we're around it. We're very familiar with the market, the terms, we understand what's a good deal and what's not a good deal. I'm really curious. How did you make that leave? Because it feels like a leap, right. Going from being a vet to be in C class, multi family investing. What was that journey like for you? Yeah. So what I sort of isn't really in my bio is before I went to vet school, I worked in construction a lot. So I have a construction background before. During that school, I've done a number of, like, single family flips and things like that. And I've worked for contractors. I worked for an electrician, the house we live in right now. We gutted it to the studs. And I did almost everything myself. I can build a house. Right. So I've always loved it. I've always loved construction like yourselves. I'm from the Northeast when I was sort of deciding sticking with construction or going to vet school. Honestly, the weather had a lot to do with it. I didn't want to be outside in the winter up on roofs. Right. And that's what I associated with it at that time, because that's what I had been doing. I was the guy that carried the shingles up the ladder and that stuff. So that's what I associated real estate and construction with not being on, sort of like, the development side of it where you're just the one orchestrating everything. Right. And so I have that background in construction. When we sort of reached the point where we finished up our current house, we had our sun actually not in that order. Then I was like, oh, I have some time, which is silly to say. It's like, I have some extra time. Maybe now it's time to get into investing in real estate, sort of get back to it. I had always done it as basically my own houses. I owned a three family in Boston at one point, like, little stuff. So I started looking into I live in Los Angeles, so it's very hard to cash flow almost anything. Right. Like, it's hard to buy something here, as I'm sure it is in New York as well. The costs are hard. And so buying something here to rent, it didn't really make sense financially. I would happily flip here in Los Angeles because I think you can make a lot of money that way. But again, it's just adding another job. And so I started to do some research, listening to podcasts, reading books. And first I started out where I was going to do long distance burrs, basically on single family. And it just so happens. I had a friend who used to work here with me, moved to Georgia, to Atlanta and became a realtor. And so I was like, George is a good market. I'll talk to her and so essentially made that connection. I actually had kind of everything in place to do it on a single family basis to do rentals on a single family basis. And I just kept reading and listening to podcasts and everything. And I came across this thing called syndication, which, frankly, I'd never heard of before, at least not in this capacity. And it kind of blew my mind. And so I thought, yeah, how long will it take me to buy 100 single family houses versus 1100 unit apartment building? So the ability to scale faster was very appealing to me. I like the idea of long distance, because I think if I get something here in La, I won't be able to keep my hands off. It will become another job, because that's just kind of the way I am. So the long distance thing is good. But I think that's kind of making a short story long. That's how I made that sort of transition. So it wasn't crazy that I would think about real estate or construction or any of that, like the asset management side of multifamily ownership is actually what's most exciting to me, because I understand construction, right? So I can go there and walk these properties and I can look around and know what needs to be done. I know how to sort of if a bid sounds crazy, you know what I mean? I can speak that language. So it makes sense to me to do that asset management. So that's kind of like I said in the journey that I went through to kind of get to that point of looking at multifamily deals. So you've covered a lot of ground there, and just for the audience's benefit, when Doc is talking about, it's hard to make something cash flow, yet you can do flips in a market like La. And we experience this here in New York quite a bit. The barrier to entry in these bigger cities oftentimes is just so astronomically high that it it's very difficult to rationalize putting the significant amount of capital toward a transaction that you have to lay out. Right. Your cash on cashes here are usually very challenging. And while your rents are great, in most cases, the purchase price is also extremely inflated, at least as compared to the rest of the country. So when you're doing the fix and flips right, when you're finding an asset and for whatever it needs, you're going in, you're adding a second floor, you're rehabbing it, or you're doing whatever you're doing because of those higher purchase prices. And now where you've got super low interest rates, there's a lot of buying power out there. There's a lot of cash out there. I found it's a great place these markets to get the seed money together, to build the experience and to churn a book and to do as many as it is that you think you need to do to get into that next level. But this is a good place. These types of markets are great to get your feet onto you and build up that bank of cash, if you will, so that you can then go and leverage it in other markets. So what markets are you investing in, or are you targeting now from the multifamily perspective? Yeah. Mainly Georgia, Atlanta, specifically, and the Carolinas. My wife's from Charlotte, North Carolina. So I know that area pretty well. Excuse me. Sorry. We lived in Charleston, South Carolina, for a while. So I know that market as well. So there's some parts of the Carolinas that I would love to invest in, but so far I've been working in Atlanta mostly. And you're in, like, Center City, or are you on the outskirts of Atlanta or are you, like, out in the surrounding counties? More outskirts, more outskirts. I think the surrounding counties can be great. But I think right now Atlanta is experiencing such a boom that if you can get that sort of path of progress just outside of Center City right now, those are great deals. And you'll have cash flow because the prices are low enough. But you also have the opportunity for appreciation in a relatively short period of time. So it's kind of almost like a twofold play on that location. If you went to the more outer markets in Georgia, I think you'll still get a lot of cash flow, but probably not quite the appreciation you'll get if you can stay right around Atlanta. So I think Docker is being very friendly in what he's describing there. So now I think we're at a point where we really feel very strongly about what's happening in these tertiary markets. Right. We're seeing primary markets that are always challenging to break into. So what happens in a hot market is these secondary markets emerge. Right. And there's a lot of damage to be done in the secondary market. But now we're seeing people go to these tertiary markets. Right. So when you start getting further and further away from Center City and you start playing around the outskirts of the outer rim, if you will, of the target area, that's where you can get hurt when the music stops. Right. Folks tend to migrate towards center city because of the job opportunities that are there. And if you're going to be playing in the rental world, you need to make sure that you're at least somewhat centrally located to the employment base. If you want to make sure that those apartments are going to be filling up and going good markets and bad. Right. I appreciate the way you phrase that, but we're seeing people look that are doing really good in these tertiary markets now. But for the most part, I've been through two, three cycles at this point. We know what it looks like on the other side of this coin. And we're just cautioning our listeners be smart about don't buy payments, right. There's a lot of folks that are just straight up buying payments. There's low interest rates. And they're not keeping an eye on when those notes mature, because in most cases, they're not amortizing over a 15 year term. Certainly not a 30 year term. And they feel like, well, at that point, the apartments are rented and cash flow is coming in, and I could just refinance. Right. And usually when you get to that point, you're faced with much higher interest rates, right? Inflation, I think, is without question coming. I think it's here, but I think it's coming in a much more meaningful way. And you'd be surprised how fast the music stops in this industry. Like, it's shocking how quickly the real estate market turns. So I think that's really sound advice and sound strategy that you're deploying there. How are you sourcing these deals? Do you have boots on the ground there? I don't specifically have boots on the ground at this point. I do know some people in Atlanta, like I mentioned, my realtor friend, I've met through networking, some other people that are syndicating in Georgia. And at this point, what I've done is I've just been sort of making those broker relationships myself. I've gone to Atlanta a number of times, and so I've actually made relationships with property managers. So the funny thing is that the property manager thing is actually what turned out to really help me, because anybody who's out there listening, and they're like, I want to get into this. If you read a book about it, you sort of follow the directions. They're going to tell you. You need to make relationships with brokers. You need to make relationships with property managers. So you have that in place. So when you find a deal, those things are kind of already there for you. So I actually worked a lot on that. I mean, that was probably a good nine or ten months of really just working on relationships, looking at deals over all marketed deals. When you're starting out, nobody is likely going to give you the off market deal. That's super hot. It's just not how it generally happens right now. And so I looked at a lot of deals. I made relationships with a property management group. They would go for me to tour the properties. Initially, they would send me videos, pictures, tell me what they thought about it. We got some offers in on a couple and so developed that relationship. And then it was actually the property manager was talking to a deal that was coming online to a broker who I actually hadn't met at that point and was like, hey, this would be a great one for Jason. So it got marketed. I didn't get that off market, but it came through those relationships. So we actually got to look at it before it officially went on market. And then through that, when I went to look at that deal, I said, hey, what you have to the broker, anything else around here that you think we should look at he's like, yeah, we have this other one down the street. That is actually an off market deal that we're working on as well. So we're potentially going to have we have the one under contract. We may potentially have two. So those relationships and everybody says it right. And I think even myself, I'm not sure that I believed the importance at the beginning, but it really once you see it start to work, it's pretty incredible. That's so true. So for somebody who might be thinking like, okay, I want to invest in this other market. And you said that you were networking and making relationships. How did you go about that? Did you do it via social media or was it from going to visit and finding local brokers and property managers? Yeah, it was mostly phone calls and emails for me because I started this during Kobe. And so as much as I would have loved to be traveling more when I was starting this process, I know people did. But at the time, my wife was pregnant, and now we have a four month old. And so there was always my toddlers, not vaccinated. So there's just always this stuff in our minds that it was like, as much as I want to do this and make this work, I'm not willing to put them at risk. I always had that in the back of my mind once the vaccine rolled out, then had more comfort level. So most of it in the beginning was phone calls and emails, just kind of getting to know people and just underwriting a lot of deals and talking to the brokers about them. So it's kind of an exercise and persistence, I guess at first, absolutely. The thing is, and everybody says this, too. But you're going to underwrite most of them are going to look bad. You're going to underwrite them. And most of the time, it can't possibly sell for that, right. And then it does. And you feel like you're doing something wrong. But the reality is, as you mentioned, people are like syndication is really hot right now, and people want to get in. And so people are willing to overpay because the market has been so hot and they're like, Well, this is just going to continue. I'll really be able to ride that tide, but maybe not. Maybe it will keep going up. I hope so. But maybe there's going to come a time where things pull back and you don't want to get stuck. Right. We talked about sort of the Avatar and me looking to do this and have vets as investors. My reputation in the veterinary world is probably way more important to me than my reputation in real estate world right now. And if I'm going to bring in a bunch of vets, essentially a group of people that will be solely trusting me in terms of because it's not something that generally we all know about. They're trusting me. If I lose their money. I'm done on both sides, right? Then I can't do real estate. Not that you can't. But you know what I'm saying? It damages those relationships. And I don't want that. I've been very conservative in terms of the underwriting, and I like the markets like Atlanta and Charlotte, and they're a little bit hotter and more competitive. And as you mentioned, sure, I could go to sort of the middle of nowhere and probably get something at a lower base. But I also won't feel as confident that we're going to be able to implement the value add program that we want to. So you're deploying a ground and pound process, right of identifying the boots on the ground that you're going to have to rely on once you take down the property. So that is as sound fundamentally as it gets. Folks, people don't understand the importance of having the right even above the brokers. And I'm a broker by trade is having the right asset managers and property managers on the ground for a myriad of reasons. But one of which is they also have access to those deals many times before they hit the market, and they typically know every single rub about that asset, right? They know more about that asset than we can ever dare to know on the investment side. So that's about as sound fundamentally as I've heard from a strategy absent being there. I know there's a lot of networking, and folks are doing it on social media, which is also certainly a pathway. Look, the music is going to stop. It always does, right? But that's okay. When the music stops, that doesn't mean that the deals stop, they change. And the metrics change. But if you're positioned properly, we've found always you could make far more money in a challenging market than you can in a hot market like this, because all of that competition that we're talking about, it kind of goes away, right. And real estate loses its luster a little bit. And for a couple of years, people really step back. And when they do that, it creates a vacuum. And there's opportunity you reference on your site. And you've mentioned a few times today that you have a value add model, right? You're seeking Class B class, C multifamily that are value add place. Could you speak a little bit more about what is your investment criteria? And what does that value add play mean to you? Yeah. So I mean, in terms of investment criteria, as you mentioned, B and C class, which for the most part has to do with vintage and location. If people don't know the year that it was built essentially and where it's located, right. So you have the class of the asset and then you have the class of the neighborhood. Essentially, part of the reason for that sort of asset class strategy is because those are potentially the more affordable properties to take. Right. Like an A class property is going to be probably outside of my comfort zone at this point in terms of capital raising and things like that. The other thing is that, as I mentioned, construction is my background. So I don't go into these places that need a lot of work and think, oh, man, this is no, I see opportunity, right. I see current ownership. There's a lot of deferred maintenance. They haven't kept up on it. I see this is how we can improve these properties to not only increase rents and increase, but make the lives of the tenants better. Right. So it's kind of to me those are the opportunities. And I don't think I'm alone in that. I think that's generally the value add strategy. You go in and fix up the interiors, make sure you've got all of the exteriors so that it shows well, right. You don't want your tenants or prospective buyers in the future, and you're trying to exit. You don't want people to drive onto that property and go, nobody has done anything here for the last five years. Right. But I do when I go there and I see that I'm like that's opportunity. So that's just kind of the way I look at it. And I think that comes from, thankfully, my wife tolerates this, but she knows I won't buy a house that's already done. She just knows at this point because if I didn't do it and I didn't know it was done right, then I have a hard time sort of accepting someone else's cosmetic Renault. So I think that same kind of mentality works for me in the multifamily space. And could you talk a little bit about deal size from a price point perspective and a unit count perspective? What are you targeting now? Yeah. So I'm targeting probably around 100 units. And I would say that probably goes 70 to 100. 450 would probably be the area. The interesting thing is when I started this process, I got a mentor and I've heard other people say this. It wasn't just my mentor, but people talk about you can't make them work as well unless you get over 100 units. Right. That's a big thing that people talk about. And so when I started, I thought I had to look at 100 units to 250 units. I was like, okay, it's got to be this big or there's no point. And that's actually where the property management relationships came in. So I had been talking to another property management group who I was referred to, and they're fantastic. I have nothing bad to say about them, but they won't do anything less than 100 units. And so then I started it's daunting to think about the amount of capital you have to raise on, like, a 40 million, $50 million deal. It's just the numbers get sort of scary. And I'm sure for experienced people that's not the case. They see that, as they've already got a list of investors and things like that. So when I started looking at the numbers and what I would have to raise from capital, and that's mainly what deterred me and made me think maybe I should look at some of these smaller ones. So then I started when I would ask the original property management group about what they thought about, say, a 70 unit. They're like, oh, that's too small for us. So I just started asking around who manages those properties in the Atlanta MSA came across. I was introduced to Meridian Property Management Group, and they've just been fantastic. And they'll do those smaller ones, but still do it at a cost efficient level. It just goes back to that. You just need to have the right people on your team because I'm not there, right? Not I'm going to manage it myself. That's probably good. They're going to know in the feedback and the ideas that they've given us just in terms of what to do with this value add strategy. You said before they know the assets well, they know the market well, right. And then they know everybody. They know all the contractors, they know who's going to charge a lot, but it'll be licensed work. They know who's going to do it for really cheap. If you just need something easy done, they already have all of those relationships, which would take me years to do that if I was going to do that myself. So running the asset management through the management group in the area that you're I mean, I'm so sort of fond of them and what they've already done for me that my strategy now is when I pick another market, it's going to be where they are, right? I'm going to say, okay, where are you guys located? Where are you managing properties? I already know sort of that they are managing properties in areas that I like in the Southeast. So it's an easy match. But it's kind of like that just gives me already have that relationship. So trying to start in a new market from scratch will be a lot harder than starting a new market. And already having at least the management group in place is the fund set up where you're identifying a deal, tying the deal up, going and sourcing the capital, or are you raising the capital, then going and sourcing the deal deal first, then raising the capital? I have mixed feelings on funds. I personally don't think that as someone early in syndication that I would likely be able to create a fund that was very successful. Right. I think you need to have a track record and stuff like that when you're setting up a fund. And I think people have once they do that and they already have these investors, it's easy for them to fill up their fund. And then it's easy to find properties too, because you already have the money in place. And you're like, yeah, we can show you this bank account that has the $5 million that we would need to raise. So it makes the certainty of clothes higher. And so the brokers like, that better. The sellers like, it better. Everybody likes that better. I just think that's probably a really high bar for someone early in the game to kind of step up and say, I'm going to create a fund because I have that interest in sort of helping veterinarians. In the back of my mind, I have the idea of having sort of veterinary based funds or fund at some point where once we have a track record and I've already got some veterinarians lined up to invest in these deals. So it's starting. And I think that type of thing that builds momentum, I think pretty quickly. So, yeah, maybe in the future we might have a fund based model. But as an investor in other people's deals, I don't actually like investing in a fund I like to pick. And that's just because I have interest, right. And I know enough to be dangerous. Maybe I know enough to say, oh, this deal looks good to me. This one doesn't with a fund that's those sort of blind funds, you just put your money and you trust the sponsor, which is great. If you just want to trust that person, you want to know anything about the assets that are being purchased. Sure. There's nothing wrong with that strategy. I just think you have to know either as an active or a passive investor what your strategy is. So my reluctance to invest in a fund passively is maybe why I'm not super keen on creating a fund myself right now. So there are certainly inherent benefits, right. When you can show up and as you have stated and verify that you have the cash, not only are you more competitive in the bid process, but deals have a way of funneling their way to you. Right. You start to be sought out in the market. But it also comes at a steep cost. Right. When you have a fund, you're typically paying interest or target interest on that money from the time it hits the accounts. Right. And that creates pressure. Right. Velocity of money becomes a major factor. And sometimes that's where mistakes happen, right. When you're feeling the pressure and you haven't been able to deploy that capital, those deals that maybe you were a little bit more vigilant in your scrutiny of you kind of start to rationalize things a little bit. So I applaud you for doing it the way you're doing it, and you're finding a way to identify the deal you're going, you're raising the capital. Let's talk about what happens next. Right. So the deal is now under contract. How are you financing these things? What type of leverage are you seeking? What partners are you going to for this. It obviously depends on the deal what financing you're going to have. And I've very quickly gotten quite an education and all the different options because it's all kind of thrown at you. And it depends on the deal structure. So Interestingly. The first deal that we got into the seller had its own lending group, and they wanted us to use their lending group as part of the stipulations for getting the deal again, trying to get a deal. Ok. We'll use your lending group. We put in a clause in the purchase and sale agreement that said, essentially, if you can't perform, we get an extension to try and go get debt from someone else. So we protected ourselves. But I don't have a problem using there as long as the terms are good, then fine. I don't necessarily have a problem using their thing. So in that deal, initially, we were thinking it was going to be bridged at because it's been sort of under managed, and I think that there's a fair bit of capex that we want to do to make it nicer. And so initially the quotes we saw on Bridgette were better than what they actually turned out to be once we saw term sheets, and so it just so turned out they managed to find us some agency debt through Fannie Mae that had great terms. And I was like, Well, yeah, we'll do that, of course, that makes a lot of sense. One, because as I'm sure you know, that you need to build a resume in having agency debt to sort of keep getting agency debt or to make it easier to get agency debt. And that brings up probably another part. To answer your question is as a news indicator, who doesn't have millions of dollars sitting in the bank account, you need to bring someone in as a loan guarantor key principle that has the net worth and liquidity and experience levels to sort of satisfy, especially the agency debt, what they want. And it's outside of agency debt. You probably can get a lot more leeway, but you're going to pay a much higher interest rate. Right. So you're essentially going to pay for that risk. We brought in a key principle that had that liquidity and net worth. People always say it's a team sport, and for sure it is not a thing that could it be done on my own. You know what I mean? Like, maybe it's impossible for someone to do it on their own. I don't want to say it's impossible, but there's so many moving parts that it's very hard. And maybe you could do it on your own if you had employees, I guess, to do some of the tasks, but it is very helpful to bring in partners that can there's different roles right there's, like acquisitions and underwriting. Then there's capital raising and there's asset management. There's sort of those components to the whole syndication deal and it's very hard to wear all those hats. Yes, it certainly is. It's interesting that you found an asset where you were contemplating bridge debt. And again, folks, bridge debt is for Doc finds a property that needs a bunch of work. It's not stabilized either there's underperforming tenants or there's a fair amount of vacancy, right. It's not cash flowing the way it should. And these bridge lenders, they charge a premium, but they'll come in and essentially give you short term money. They're the bridge right to permanent financing or agency financing. And it's not typical and good job on your part to be playing in the bridge world and find agency money pre stabilization. That's quite an accomplishment there. There's not a lot of that happening. I don't know that I can take any credit for it. It really was just the lending group and credit to him. He worked really hard to find that because he knew there was obviously incentive, right. Because in the PSA, we had that sort of built in where, yes, we'll use your lending group. But if it's not good terms, then we get to go find our own, so they have incentive to have it be kind of what we want. And so he shopped it out everywhere. I'm very happy now with the terms that we have. I think it's great. There's pros and cons to every different type of debt. Right. The bridge debt. You said it's short term. It's easy to get out of. There's not usually a lot of prepayment penalties, whereas the agency debt there is. So although the interest rate might be lower and things like that now we have to think about in terms of exit when we exit matters because we have that potential prepayment penalty. I mentioned we're sort of working through all this because the other deal was a loan assumption. And so I'm learning about loan assumptions and supplemental debt and all of this. And it's just funny to kind of work through it all and see again, it's another part of that team, right. The lenders having people that you can go to and say, here's the deal. What do you think? Because you want to have an idea of kind of what to expect from a debt standpoint before you really get it locked up and you may be put down hard money, because if you don't get that, that changes the returns dramatically. So it's kind of something you want to have someone you trust to give you that information pretty sort of right off the bat. Yeah. I mean, it profoundly changes the performer, right? I mean, we're talking about most bridge deals we're seeing up here now between eight and 10%. Sometimes there's a point or two involved and stabilized institutional debt. You're down in the threes and fours. You're talking about significant Delta there. So are most of the assets that you're targeting underperforming or in need of a facelift. Now, are you buying straight stabilized 95% occupancy deals, or are you looking for those elbow grease deals? I think again, probably has a lot to do with my construction background, but I think to me I really do like the idea of the value add. I think that there's more to be gained there. Right? Like, the upside would be higher than a stabilized deal. I'm not against it, right. If it's a good deal and we can get good returns for investors, I'm okay with a stabilized deal, but I think I probably would still go in there and be like, okay, how can we make this even better? I don't know that I would just sit back and say, this one is stabilized. I don't have to do anything. So I approach it all with that kind of mentality of how can we make this better? And in those stabilized deals, maybe it's a matter of just amenities. Right. You put a nice playground or fitness center or something like that, something for the tenants just to kind of make it a more desirable asset to live in. Sure. And those little micro adjustments go a long way, right. Those little amenities are the things folks that will likely distinguish you in your market. When folks are researching a place that they want to live, a place they may want to raise their family. Right. Having the ability to stand out with those amenities really do win the day when you're in a tougher environment and you really are competing for tenants. So I think we have a pretty good understanding on the deal side. Doc, can you walk us through just a few minutes on the investment side, right. I'm a vet or I'm someone that's a passive investor. What is your process look like? What can we expect if we want to invest in your fund or not in your fund, in your syndications? What would that look like for us? Yeah. Well, if you back up to what kind of raise is it? Right. So there's sort of two different types that are commonly occur there's the 506 B and 506 C, 506 B. People talk about it's sort of that friends and family type of capital raise where you can have sophisticated investors that aren't accredited up to 35 of them. So you may have friends and family that they may not meet the accredited investor criteria, but they're interested in sort of bettering their lives with what I think is a very safe investment versus the 506 C, which is all accredited investors. But the 560 C you can advertise. So there's pros and cons to both. Generally, what it looks like from my standpoint is because the first year lease we're doing a 506 B, I'm not allowed to advertise it. So it's just I'm reaching out to everyone I know that I think might be interested in the deal again. A lot of them are veterinarians. A lot of us don't have a background in this. So there is a lot of discussion, education. Some people I'm talking to two, three, four times before they're comfortable. But I feel like that's just a part of it, right? That's how we have to get there over time. That part will get easier and easier. But it's a matter of I don't want someone to invest if they're not comfortable. So I strongly believe in the asset class. I strongly believe in these deals. I'm investing my own money in my own deals. So I'm not just trying to sell something. And so it's easy for me to sort of get excited about it and just be all worked up. And this is going to be awesome. But I definitely have to sort of scale it back and just listen to the questions that they're asking. Everybody has different concerns, right? Some people are very much they're looking at the upside. Some people are very much looking at the downside. What could possibly go wrong? That kind of thing where I've had some people say, I feel like you'll probably outperform on this deal, and it's like, well, so do I. But that's not how you want to present it right. Under promise and over deliver. I don't want to tell you that we're going to have a 10% cash on cash return, and then you get a 7% cash on cash. It's much better to go the other way. So it's just kind of managing expectations. I don't know. I feel like I do that a lot in my job as a veterinary surgeon, right. I've got to explain a fairly complicated thing to people surgery on their pet. I've got to explain that in a way that they can understand it and feel comfortable with it. So it's a similar, I think, process in terms of how I go about sort of talking people through it. And I know you had said you're raising money for specific deals, but do you have any kind of typical guidelines? Is there a lockup period? How long can people expect their cash to be tied up? What do target returns look like? Are there capital gains events at the end of these things, or you refi cashing out and just paying people back? What does that process look like for you? So on a general basis, we're thinking like a three to seven year hold, probably more like three to five. We don't really have the intention to sort of refi and kind of keep going from there. It just depends on the deal, too. You talk about the capital gains events. Most sales are going to have a capital gains event at the end, unless you're in an opportunity zone, and then you have sort of those things to think about. So I guess it depends a little bit on the deal, but in general, I think we're in that three to five range. And again, it depends on the debt because the bridge debt is typically going to be about three years. So if you can stabilize that asset and sort of complete your business plan in three years, you might be better off at that point, just selling, exiting and sort of moving on to the next one. I do have ideas in the future of having some that are just for my family, where I might do something like that, maybe a smaller property where we go in with some bridge debt, fix it up and then and then refinance it to like, a HUD loan that's long and low interest rate. And this is for my kids, right? They have a thing that just keeps giving cash flow forever. And if they don't want it when I'm gone, they can sell it for me. It depends. A lot of people you'll hear them talk about really getting into a specific niche. Semi agree with that. I guess I also believe in being opportunistic. So when I started, I have a business partner in Lark Capital. He's literally just a capital partner. He doesn't even want to have any input on how the business goes, but it allows us to pool our money and be more sort of effective. So we do that when we started out and I realized how hard it was to find deals that would work. We started just thinking, okay, well, now we just put a bunch of money in this account. It's just sitting there getting minimal interest. And so we did some private money lending for some flippers, because that's a quick turnaround on the money. Right. So you get your investment back in three to six months and you're getting some interest rate on the money. Through that time, I ended up just through networking, connecting with a group who was doing they used to do multifamily, and they've moved to self storage, and they were doing a joint venture model. And they said, you want to be a part? Sure. If it's a good deal, I'm happy to come in there. It's a joint venture model. It's a joint venture that is managed a lot like a syndication, in the sense that they mostly take care of it. But I just saw opportunity to put our money to work. And so it's kind of do I think that I'll be like a self storage mogul? No. I think multifamily makes more sense to me. I feel like I can affect the value on multifamily more than I can on self storage. So maybe it's just not as fun. I don't know. But I think just being open to what's out there and educating yourself enough to actually not make hopefully not a dumb decision, right? Not putting your money someplace that doesn't make any sense. It's funny when you get yourself out there on social media as a capital group, some of the messages and people I've got reaching out for money. Do you invest in this certain sort of weird thing? No. Sorry. Thank you. For reaching out. But no, I'm not going to do that. I have said this in the rest of my life, too. I don't tend to just say no right off the bat. I want to kind of hear what the opportunity is so I can make my decision. I don't want to miss out on something if it's good. So a couple of great points there when we were putting together our subscription booklet, right for a raise. It was a challenge because you get a lot of advice on these things. Right. And there's that mindset of, well, no, you just want to be experts in one little submarket of submarket of submarket, and people get an expert on the street. Right. And then investors get nervous if there's too many different, diverse opportunities. And we just felt like, no, we've got a really wide birth of expertise. We've been doing this for a long time, and we felt it was very limiting, right. If there were opportunities like, good deals are good deals. And if it made sense, like you said, to deploy some capital in first position at 50%, LTV at 14%, with two points with a minimum of one year and a six month payout, you do that deal, right. And I applaud you for that for doing that, because that's when you're really working for your investors, right. That's when you're driving value there. And people seem to be timid in that regard. But good for you in doing that, because there is a lot of different money to be made in different places. You don't want to be disorganized and you don't want to be chasing different rabbit holes. But you certainly want to be able to fill voids on your terms, right. When the opportunities present themselves. So you mentioned opportunity zones. Do you have a QOF set up? Are you doing Oz stuff or no. So technically, yes, I am in one opportunity zone, funded it's through one of my business partners. We were introduced, actually through our mutual mentor, and probably I think it's been over a year now. And really, we talk a lot. We hit it off. And he was working on a development project in an opportunity zone, a student housing development project. And when I learned about opportunity zones and sort of the tax benefits to that, I had thought I really liked the idea that I could pull some money out of stocks, get rid of some of that capital gains there, and then exit at the end with no capital gains. And I don't mind holding for ten years. I think a lot of people don't like that idea, but it doesn't really bother me. And so initially the discussion was I want to invest in your deal. That deal got pushed back because of Covet quite a bit. And so over the time, and I actually am very interested in development again, that construction background. So we kept talking and he was like, do you want to be a part of this? Do you want to maybe raise some capital and be in the deal for a small percentage? And I was like, yes, again, it's that opportunistic thing. I don't even really care about what I'm getting for fees or percentages or whatever. Like, I'm actually just very interested in development. So here's an opportunity for me to learn something new and also maybe make a little bit of money from it. But it's like the money wasn't the driving force on that. It's more about if I can learn how to do development. That's just like putting another tool in my tool belt. Yeah. So we were really bullish on Oz, spent a lot of time on them. We've got a few QOFs, and we've got some holdings in different States, but unfortunately, here New York decoupled from the federal benefit. California, too. California doesn't recognize them.

Really. It was such a great program. And we're now seeing money funnel out of New York into surrounding States into the areas that need it the most because they decoupled from the benefits. So again for you, I figured I'd touch on it, having the construction background. There's a lot of neat things you can do with the QOF if you do have a construction background. So again, right on the Mark. Good for you. We're getting a little tight on time. I've got a couple of more I just wanted to round out on. Are you targeting program based tenants and assets, or are you targeting market rent for the most part in your portfolio currently not program based more market rent. Again, another thing I learned with all this sort of lending investigating is you get a savings on interest rates to some level. If you keep the rent, it's technically not low income housing or program based housing. But if you keep the rents below a certain level, you can still get a reduction on your interest rate. So that's something that I think can actually be valuable in some of these markets and some of these sort of developing markets, whether their opportunities own or not.

I wouldn't be against it. But I don't know it. I'm not familiar with how that works and how to manage those. So it would be a matter of again, learning another thing or finding a property management group that specializes in that. Got it, Doc. I think what you're doing is great. I'm a big believer in advocating for and promoting the financial literacy component, something that, again, is so obvious yet so far into so many folks. We're weaving it into our Institute that we're building out here is when we really sat and talked about it in book club. It was like, we know these things, but nobody really teaches you this. And certainly for the newbies that come on board. We wanted to offer just some sort of background. So folks understood some of those core principles. We think it's really important in developing the career and in happiness and getting to financial freedom. So I think what you're doing is outstanding. How do folks find you? What's the best way to find you, Doc? They can email me. It's Jason at larkcapital. Com. I'm also on Probably Instagram. As far as social media is the one I use the most, and it's just at large capital, so it's easy to find. But if anyone wants to reach out, please do. I always enjoy talking about this stuff. And I think especially to young people. I train interns in residents, and I'm sure there's me talking about this stuff, but I'm like, Listen, you guys, when you leave here, you're going to be used to not making a lot of money. And then all of a sudden you're going to make a lot of money. Pretend you're still not making a lot of money for, like, two years, and you can change your life for the rest of you. You're in a position at a young age to sort of have a vastly increased income, and you can make it work for you. So I think it's awesome that you're implementing that stuff at your company. And I guess I'm sort of trying to do that with the people I work with, too, but I think once you realize how good it is, it's hard to stop kind of being excited about it and talking about it, it sure is. Well, we really appreciate the time today, folks. He's the Doc. Jason Balara, CEO over at Lark capital Group. Best of luck, man. If we can ever be an asset, you know how to find us and appreciate the time today. Yeah, I appreciate you. Thanks for having me on, James. Thanks. Absolutely. Stay safe. Thank you. You too. Thanks, everyone.