00:01

Welcome to episode one of Season 16 of the Growing Empires Show. Our theme for this season is about investing in a new market. And more importantly, pivoting during times of change. This season is going to be jam packed with a lot of special guest interviews, where they talk about navigating real estate investments in this time of change. How you look at investments differently, and how you make sure that no matter what cycle you're in your real estate investing is successful. And then you can continue to do it and continue to build on your portfolio and build on your passive income and build on the wealth that you're building. For you and for your family. Each one of my guests got their start a very different way. Some came from corporate America, some came from very stable job. And some just had a desire to get into something more exciting than their current nine to five. But I believe that you're going to find that the stories all come back to some really key factors. And that's that networking is key. Building relationships is key. And there's never a right or a wrong way, how you choose to dive into real estate investing, and what path you choose to go down. There's never a right or a wrong answer. You just have to make sure that the path that you're choosing to take makes the most sense financially, physically, and from a perspective of time that you're going to invest in your journey. So please stay tuned, and make sure you that you listen to all the season 16. Now let me talk to you a little bit about my next guest. You're going to hear on this episode, my special guests interview with Trevor Calton, and Trevor and I will talk about capital, raising capital how to fund deals and the current economic environment. Joker has a wealth of knowledge that he's going to share on these subjects. And I believe that you're going to find some really critical information to help you on your real estate investing journey. So please stay tuned for the episode.

02:01

Welcome to Growing Empires hosted by real estate entrepreneur and trusted Investment Advisor Jennifer de Jesus. Growing Empires provides insight to building wealth through passive income producing real estate investments for those who want to build and manage a more profitable real estate portfolio.

02:22

Welcome, Trevor, to the growing empire show. I'm so glad that you're here. And actually, I'm glad that you're back for a second time. We had such a great conversation back in Season 11. And we had actually four, four conversations about the market at that time. So I'm really excited to get to talk to you about what's new, what's changed and what's happening in your world.

02:45

Thank you, Jennifer. I'm excited to be back.

02:47

Awesome. Why don't you give us a brief background? And kind of an update on like, where you stand today? And what's your what you're doing?

02:54

Yeah, I'm the president of evergreen Capital Advisors. We are a commercial mortgage brokerage firm, we help investors source commercial debt and equity around the country. And I'm also the founder of the real estate finance Academy where we teach real estate investors and real estate professionals how to make the jump into commercial properties. Awesome. Yeah, it's been an exciting time over the past year, a

03:24

lot has changed. Yeah. Well, we're gonna jump right into that today, because we're going to talk about, you know, getting capital and how to fund deals in the current economic environment. So I've asked Trevor to join me to share his wealth of knowledge that he's gained throughout the years on the subjects as well as some insight into what's happening today that you can expect. So let's just jump right in. I want you to tell me about the market fluctuation. So even just from a year ago, so a year ago, we talked and the market looked very different at that time than it does today. Yeah,

04:00

it sure has exactly what a lot of us knew was going to happen did happen. And with the inflation, and all the currency that was flooding the market during the pandemic, we knew the Fed was going to end up raising rates, but I don't think anybody anticipated how aggressive the Fed was going to be raising rates. So suddenly, you have a look at disparity in market conditions where the cost of capital is greater than the cap rates on the properties that people are buying. So market fundamentals really hadn't changed. In fact, the market federal fundamentals are super strong. And that was part of the reason why the Fed was raising rates. But now we have, you know, capital has become so much more expensive. I think everybody has seen volume is way down. And a lot of lenders have pulled back from putting capital out in the market, because in certain sectors, a lot of people were overcome Oh, there's a lot of banks were overexposed. And so you know, a lot has changed. And people really have to kind of understand what has what's different now and adjust to it. Very true.

05:14

So how has sourcing capital changed in the last year or so

05:19

what I've seen is a lot of the banks that maybe were previously lending on multifamily or retail or you know, especially office, they have pulled back after Silicon Valley Bank went down and Signature Bank, the, the world of the capital markets had to regroup. And when, when we're borrowing from banks, those banks are actually borrowing from larger investment banks. And when they have too much exposure in any particular sector, then frequently those lenders or the investment banks that fund them, will say, Hey, we're not going to lend any more in that sector. A great example right now would be office, very few lenders that I know anywhere in the country are lending on Office properties. And a lot of banks just aren't lending anymore in general, or they're only lending to their existing clients. So what has happened now is, it's more difficult, even for a straight up multifamily deal. It's more difficult to find a competitive lender. And it just takes a little bit more effort and more conversations, to shop around to find the right loan. I'll give you an example right now just working on a deal with a client who is he's buying 24 units out in Illinois. And it's a fairly straightforward acquisition, fully occupied, it's in great condition. And when we went out to go shop the debt for him, we were finding loans that range from eight and a half percent on a 20 year amortization, down to the highest 6%, like six and seven eighths on a 30. Year and, and the difference in that is, was monumental. So, you know, in terms of how much it will affect his cash flow. So there's just a lot more disparity in what is available out in the markets right now. It just makes shopping around for capital that much more challenging, and then makes, I think, the importance of commercial mortgage brokers. That much more important.

07:35

So talk to me a little bit about the process. So somebody comes to you and says, Look, I'm trying to buy X, what happens from that moment for because you know, you have a wide variety of options for people. So how do you help them identify the best area to navigate for that, that financing? Or that, you know, whether it be debt equity, whatever to fund these deals that they're looking for?

08:08

Oh, great question, the first thing we do is we sit down and talk about their goals and their strategy. And if somebody is looking for value, add opportunities, and maybe they're early on in their investment career, they're going to have a different set of goals than somebody who might be later in their investment career, and maybe just looking for steady cash flow, without a lot of work to be done. So the first thing is understanding what the client is trying to accomplish. And seeing if their current strategy matches up with that, you know, if somebody says, hey, I want to do some, some value, add, you know, renovating distressed properties in another state, but I don't wanna have to travel or work or be there, I just want to be passive. Those two things don't really mix. Because if you're doing a renovation, you need to typically be around to supervise it. But if you're buying a class, a property that's already you know, fully renovated and really nice, then that might work for an out of state investor. So the goals and the strategy and how they align is really important. And then when once we have an understanding of that, then, you know, we will say, Okay, let's take a look at the property that you're looking at. And as you know, in in commercial, there's no like pre qualifying the underwriting is based on the property not on the borrower like we can do for pre qualifying is saying, Well, based on what we're seeing out in the market right now, you're gonna need probably about this much down. Do you have that? And do you have the net worth to you know, meet the lender's requirements. But once the client shows us the property, we will do our own like preliminary underwriting and just see it There any red flags that we can identify or any problems that we're going to see that lenders might have with that loan proposal. So we basically underwrite the deal first, and then we help the client build the set of documents that they need or establish their entity, whatever it is that the pieces that need to be filled in, to present to the capital markets, a really nice proposal that represents the client in the best light and gives them the greatest number of lenders that want to provide a term sheet for that particular property. And then we'll present those all the term sheets side by side, and let the client see what are the advantages and disadvantages of each of these loans. I'll give you an example of somebody we'll go back to that value add example, if somebody wants to put some extra money in to say capital improvements, right after they buy the property, then a couple years of interest only payments on their loan might be really advantageous, because their payments will be a little bit lower. And that gives them less stress on their cash flow. Another example might be if somebody is buying, this is their last, like big apartment complex that they've rolled up. And this is the one that they want to own forever, then they might be a candidate for like the 35 year fixed rate HUD loan. So what without having an understanding of their goals and strategy, we wouldn't be able to present them with the best options. So we that's what happens first is the understanding what the client is trying to accomplish, then we go out and see how many options we can find that fit that strategy. And then we help the client execute, you know, through the underwriting process, the appraisal, submitting documents, it's fairly complex, certainly much more complex than single family. And that's why we have a lot of people that would much rather come to us and let us walk them through the process than trying to go out there and do all of that themselves. And

12:11

how critical Do you think your understanding of that, that investors goals truly, truly is to the portfolio that they're buying or the property that they're buying as a whole? Do you think it has an impact on their future profitability?

12:29

Oh, absolutely. And understanding how the client wants to proceed long term makes it it makes us able to help them achieve those goals. Another example would be say, if somebody wants to go in and improve a property, maybe get the income up, and then sell it maybe in three to five years, and roll their equity into a new property. Understanding that will be beneficial when we go to bring them loan options, because they don't want to have a 5% prepayment penalty, just a couple years down the road, if they might want to roll up sooner. So it it's all related real estate's a financial investment, and having the right financing in place, is how you're going to achieve your goals. Sure,

13:27

I'm sure you also experienced situations where you have to tell an investor Hey, this deal just doesn't make sense, or, or doesn't make sense for you.

13:39

So the time probably more than you care to admit. Right. So do you find that that has increased drastically because of the current financial environment? Or do you think that that's just you know, something that you, you know, you experience all the time has it? Has it increased or decreased given the current market?

14:03

Great question. I would say it has increased, but for different reasons. Right now, because rates went up so quickly, a lot of sellers that were planning to sell in the coming year, they sort of had a cap rate in mind or a price in mind that they wanted to exit at. And suddenly with debt being so expensive. buyers can't afford to pay those same cap rates of same prices. And so now is a little bit more of educating clients on the concept of positive leverage versus negative leverage, or, you know, just letting them know what the debt service is going to be like. And I think what's what's kind of perplexing is I haven't seen very many ad percent LTV loans out there in the last 15 years. And right now, when we're seeing so few lenders actually being aggressive in the market, we're starting to see 80% LTV loans again. And so I think it just reinforces the point that there's no one size fits all. There's no, there's no blanket, generalization that fits all lenders. It's, it's much more individualized from lender to lender. And so this makes shopping around that much more important. But, yeah, it's it's a strange time. I just don't think it's as bad as a lot of people think it's just a matter of the market catching the system matter of the real estate market, catching up to the capital markets and finding that balance again.

15:49

Yeah, I definitely have to say that I agree with you on that. I, you know, I feel like, as I don't know, if it's an American thing, or if it's just people in general, but I feel like, you know, change brings about questions of, like, Do or do not right. And there's never any, like gray area, right. So like, when I hear questions about, you know, the current real estate market, I hear questions of, Well, should I just not invest right now? And it's never really a matter of should you? Or shouldn't you, it's still about just finding the right deal. So if you found the right deal, and the right deal made financial sense in the current market and the current financing world, and, you know, yes, you should do it, right. But if you know, if you can't find it, then No, you shouldn't. But even if the market was completely shifted, and rates were drastically low, and inventory was really high, and you know, all things were roses and sunshine, I would still tell you the same thing. Only invest if it makes sense only if the deal makes sense. So I think that, you know, I find it that people are just kind of, you know, very, very dramatic. It's either do or do not. And it's always going to be about finding the deal, and then finding the right leverage or equity or debt to make the deal make sense. And if the deal doesn't make sense, you pass and you find another deal.

17:15

You're exactly right. And I actually am kind of amused when people are doom and gloom and say there are no deals out there are always deals out there. That the people that say there are no deals out there, they that's just one less competitor. For those people that are out there looking for deals, and you just touched on it, the financing is the key part there. Because if you find a deal that you really like, but let's say, you know, the loan terms are just not good, you can't get anything that's even close to positive leverage, well, okay, then let you know, don't leverage as much, if you have to raise more equity to do the deal, then do that. And then, you know, we find there are lenders out there that have interest rate reduction programs. So if you go and you get a loan today, and three years now from now, in three years from now, rates drop, the lender will reduce your interest rate to the market rates. So it's a matter of structuring the financing, to make the deal work in a way that doesn't hobble you down the road. But the biggest challenge for a lot of investors is just having enough of that equity, to bring into the deal so that they can do it. But it's sad when you see people walk away from a deal because they didn't know how to get creative with the financing. Yeah, that's

18:43

very true. I also think, too, that people use, like their past history as a marker for whether or not they're going to do well or not well, right. But what you bought a property for, whether you're looking at a cap rate, a price per door, your financing percentage, you know, or anything, what it was 10 years ago is not what it is today, and you cannot compare the two, they were completely different markets. It's like, we gotta we got to, like, let the past alone, like, focus on the positive and the reality of today. And then, you know, and then we're gonna have to do it all over again, because next year in the year after that are going to be a little bit different, too. And you're going to have to adjust to that. But I find that people are almost like paralyzed because they can't focus on what's now under what's real. And they focus on the past and they compare it as it's like it's good or bad, when in reality, it's just different. It's truly there's different. Yeah,

19:41

yeah, you're exactly right. And people have to be flexible and nimble and adjust to the market conditions. But that's the beauty of investment real estate is outside of the capital markets. Even if the economy is suffering, which it's not it you can control your destiny within investment, real estate so much more than other types of investments.

20:03

Yeah, I completely agree. I also believe that you diversify a lot of risk by being invested in investment, real estate. So what do you think is going to happen over the next year or two? What is your prediction?

20:20

Love these questions, and it's, I think rates are gonna level off there, they're saying that we might see some more interest rate hikes, you know, but I don't think there'll be as aggressive. And but, you know, I've always said, it's a 7% lending world, like, you know, the price we pay for other people's money is probably never going to be as cheap as it was over the last 15 years since the 2008. Financial crisis. I mean, right, that was just unprecedented. Low cost of capital. But seeing rates in the seven 8% is historically what we're used to. So what I think is going to happen over the coming year or two, is those sellers that currently own and were trying to sell their property, whether it's to reinvest or get out of the market, and they were thinking they were going to get out at selling at a four cap or a five cap, they're going to realize that that's not going to happen. And then over the next couple of years, their income will continue to grow. And then they'll finally be back up to that, maybe that dollar amount that they had set in their head that they were going to sell. And so sellers will come back, and we'll see a little bit more market equilibrium is right now volumes down, I think nationwide, about 70%. But a lot of that has to do with the fact that buyers can't pay what sellers want for their properties, at least on the commercial side. Yeah.

21:51

That's so true. So true. That's exactly right. I mean, we got to have those conversations constantly, right? It's just that you know, what you want, because what you thought you should have gotten a year ago does not apply to today. And, you know, it still has to make financial sense. And, you know, it's, it's a calculation, it's not, it's not just a feeling so, yeah, I completely agree with that. So what advice are you giving to your clients that are looking for capital? Now,

22:22

the two main things I would say, are, person don't waste too much time trying to shop the capital markets yourself. You know, we and I don't even just say this, because we are more commercial mortgage brokers. But when I was a real estate agent, I said the same thing, go find a good commercial mortgage broker, and let them shop the market for you. And that's gonna save you a lot of time. And those people, that's what they do day in and day out. The second thing that I'm telling people a lot more now is get educated. And that was part of why we decided to turn our training into the real estate finance Academy, because so many people are coming to us, and they don't understand how commercial loans are underwritten. And so we started giving away this training, just so people would understand how we're approaching the market and what we're trying to get creative with. And having a more educated client makes our job easier. And I think it allows us to communicate better, and so they understand what we're trying to do, and maybe, hey, why this doesn't work, but we're going to go and we're going to pursue this option. And, and so I would say, you know, just make sure that you understand how the process works and ask the right questions. And, you know, just be communicating with whoever is helping you liaise with the capital markets.

23:55

Sure. Would you say that there's any new trends are emerging opportunities in the real estate market that the investors that investors should be aware of, or in the finance, the finance industry that anybody should be aware of?

24:10

Oh, for sure. The probably the most interesting one right now is C pace, or pace, which is property assessed clean energy. And that's a nationwide program that's being rolled out state by state, where owners can get additional funding for anything that's related to fighting climate change and sustainability. Where you can get funding for these types of improvements, major capital systems, like if you needed to replace an H vac system, or if you needed to seismically retrofit a building, things that can be big ticket items, those can now be financed outside I'd have your existing mortgage structure. And the the debt service is actually attached to the property taxes and not to the borrowers. So it's interesting, yeah, it's fairly new,

25:15

it's only been around a couple years. And it's not even rolled out in every state yet, because it has to be approved by state legislature. But right now you could make tons of capital improvements to your property, and then go and get PACE financing on those improvements. And it's even retroactive as much as much as three years. So we're starting to see more and more pace inquiries for people that did big renovations, and they're already completed. And now they want to get some of that capital back. And the interesting thing about PACE is when you sell the property, those payments, they go to the new buyer, they don't stay with the borrower. And that doesn't have to be paid back. It also doesn't have like foreclosure rights, it's, it's the financing is actually put on an assessment, and it's paid with your property taxes. The other thing I'm seeing in the market right now is lenders being a lot more willing to be creative. So including with things like pace, so that's really interesting is the lenders that are lending, realize that it's harder to make deals pencil, and so we're just seeing a lot more exceptions being approved, or, you know, like the interest only option I mentioned that we're seeing that more often too sure.

26:36

Yeah, like different flexibility in the terms, right, the terms of the loan, okay.

26:42

Those like the interest rate reduction, that program, you know, that's a HUD thing. And other lenders are doing it now, too. So even if you don't have a variable rate, you have a fixed rate, but then rates dropped by a couple points three years from now, the lender will rewrite your loan at that lower rate.

27:04

The episode will continue in just a moment.

27:07

As an investor, we know it's important to stay on top of market trends and real estate opportunities that add value to your portfolio. We also know that having a trusted source of reliable information to help you stay a step ahead of other investors is critical to your success. If you're interested in having these types of resources, as well as access to me and my team, I invite you to join the Empire Investment Club, a free service that gives you an easier way to make sense of today's and tomorrow's real estate opportunities. As a member of the Empire Investment Club, you'll get access to relevant resources and investment focused experiences, such as live interactive webinars, market trend presentations, and investor socials designed to equip you with what you need to succeed. So whether you're an active investor, passive investor, a combination of both, or just starting out, the club is where you'll get what you need to build a portfolio you love to join, just head over to jenniferdejesus.com, sign up, and we'll see you in the club, where everyone's on a journey to becoming a better investor. So how do you navigate? Or how do you suggest that your clients navigate the risks associated with real estate investments, such as the market fluctuations and unforeseen circumstances that happen? Because you know, nobody has a crystal ball? So it's not like you can foresee everything coming? But how do you suggest that people? Is there anything that they do when they're buying properties? Or how they're leveraging properties that would help somebody kind of weather any future storms? Yeah,

28:37

I think understanding where your risks are, is probably the most important thing. So if somebody is worried about interest rates, skyrocketing again, and they have a 10 year plan, hold for their investment, then, you know, take away that risk by getting a 10 year fixed rate loan, or, you know, if maybe somebody's going into a market that they're not familiar with, and, and that market is dominated by one large employer, you know, understand the risk of that employer doing something by researching it during your due diligence, I think, just knowing what the risks are, and then doing whatever you can to mitigate them, is just the most important thing because like you said, you don't have a crystal ball, and you can't control everything. But the more calculated you can be when taking those risks, the better. Yeah,

29:33

I agree with that completely. And I also think, to kind of add to that, that you also have to have an exit strategy. So I truly believe that you should never buy investment real estate without having an exit strategy. That's right in a plan. So you know, it's one thing to buy properties and say, hey, I want cash flow. Hey, I want to hold this to retirement right. But the market fluctuates. So that property that you bought a couple of years ago may not be the best use of your capital today, because of this shifts in the market. So I always think that, you know, although we always expect everything to go well, right, you want to prepare for the worst and have a plan because the people that don't suffer in real estate are the people that can get out whenever they need to, or if they needed to. And the people that are suffering, or you have to, you know, the end up going into foreclosure, or the people that couldn't find a way to get out because they never had a plan. Absolutely.

30:31

And when I'm looking at an acquisition, I model multiple exit strategies like what, what if we have to get out and it's something something goes wrong, and we need to sell quickly? What happens if interest rates skyrocket, and we knew that was coming, which more aggressive than we expected, but that's something that we model out. And then, you know, what happens if we have to hold this thing longer than we anticipated? Is that going to work for us? Are we dependent on that the first exit strategy? Or can we make this work? And I always say, have an exit strategy? Absolutely. And have a backup and then also be prepared, like don't buy anything that you wouldn't be willing to hold for a little while?

31:19

Sure. Yeah. I completely agree with that. So as somebody with experience in commercial lending, what would you say are some of the key factors that commercial lenders specifically are evaluating as a whole when they're looking at, you know, a loan application? Or are a property that they're assessing? What are some of the really, like, most key factors? 31:46

You know, right now, the, a lot of the same things, the debt service coverage, the lenders debt yield, the lenders gonna want to know, what's their loan constant. And things like net worth, are very important, borrowers need to have typically, a net worth that's equal to or greater than the loan amount. And market, like the sub market exposure, because what we're seeing in commercial real estate are some areas like office that are struggling, and there's not a lot of demand. And then in that same market, the multifamily might be like going through the roof, and in just really, really strong. So that's just again reinforces how investors need to understand what the lenders are looking at, and why this is important. And so if if, if a if I come back to a borrower, or a client that's looking at a loan offer from a particular lender, and they say, Oh, that will they really need an 8% debt yield to make this work, even though the debt service coverage is there? It's helpful when people understand what that means and why the lender is asking for that. So I don't think anything's really changed too much. It's just there's more scrutiny on a lot of applications. But I think most of your listeners, I think, are residential or multifamily investors. Right.

33:29

And commercial, yeah, yeah. Actually, a lot of commercial nowadays, you know, because, you know, people that got in, well, I started this business 14 years ago, right. So the people that I was initially helping buy single families, duplexes, three, four units, five units, I have all done very, very well for themselves, particularly because they were invested in housing, and not the other riskier sectors of investing. But you know, they did really well for themselves. So a lot of them would then sell trade up, do a 1031 exchange, defer the capital gains move on to a larger property. And that's, you know, that's kind of like the cycle, right. And that's also what I mean about those exit strategies, because, you know, all those investors initially said to me, when they bought their very first property, they all said, I'm looking for passive income, I'm looking to retire, right? But it doesn't necessarily mean that it has to be that particular property, if I can take the same $50,000 that you invested or $100,000 that you invested and 10 years ago, I was able to get you a 10% return on that. But today, I can get you a 20% return on that. I mean, it only makes sense to move that capital and just keep doing it. Yeah, so but yeah, to you know, kind of illustrate your point is that, you know, the reality is, is that you do have to have that extra strategy. You've got to be able to look at different different things. You do have to understand what your lender is looking at, because you nobody wants to buy a bad deal you everybody want wants to have a profitable investment. And you don't want to be the one of the ones that we all talk about after the fact that he should have done that he should have just listened to me. But yeah, there's, you know, investment, real estate provides a lot of opportunities, and you don't necessarily have to be buying $50 million deals to be profitable, there's so many ways to do it. And you know, what you buy and how you invest, and where you get your capital from, all has a significant impact on that outcome, that future outcome of that investment property.

35:28

Oh, absolutely. And the path that you just laid out, you know, buying an investment property, the smaller one, and then trading up through 1031, and continuing to roll your equity into new properties. In my opinion, that is the best path to building wealth that exists out there, when it comes to, you know, adjusted for risk. And where the investor has control, buying a property, adding some value. And then like we talked about last time, not being afraid to sell and then roll into the next project, I've seen more people go from buying a four Plex to having a 10 $15 million dollar property that's now cash flowing hundreds of $1,000 a year, and just a few steps might take a while might take a decade. But the you know, a lot of these people, they come I call them the bootstrap millionaires, like they don't come from wealth, they started out buying a small investment property and working hard. And they are living that life that people talk about. And I think that the rolling up through investment properties is the best path to do that unless you get lucky and you bought Bitcoin in 2011 or so.

36:44

However, most of us are not that not that experienced are savvy enough to predict, you know, the future of financial, financial wealth. As easy as they did with Bitcoin. So, yeah, so I guess the next best avenue is invest in real estate where you can kind of weather some of those storms and have a little bit more risk adjustment for sure. Absolutely.

37:09

Yeah. And I think you're, you give a lot of really good advice. And that's why I like coming on your show. And, you know, right now, if people are scared, but yeah, don't you know, I think really, what you have to realize is we're there just scared because they're seeing these reactions from the Fed, because the economy is doing so well. And we, I think we all knew the economy would rebound and be pretty robust after the pandemic. And, and so they're just trying to slow things down a little bit. And none of us like that bothers me when the Fed raises rates because it hurts businesses, and it hurts a lot of people's investments strategy and the deal that they thought they're going to be able to do, they can't or, or they have to go and raise more capital. We're doing a huge property in the Midwest, and the developer thought he could get 90% loan to cost on this giant multifamily development he was doing. And then of course, things change. And now he couldn't and so he had to end up bringing on more equity partners. So it's not always easy. It just reinforces how you have to get creative sometimes. But it's still the best path for most people. I

38:25

think, sir. Yeah, I definitely agree. Do you have any particularly challenging investment acquisitions projects that you've worked on recently with with any borrowers?

38:39

Recently that yeah, like, like, challenging that we couldn't? Well, the one I just cited, I think, is probably been the most challenging, because this was an experienced developer, who has he's built multifamily, multiple, multiple times. And he was used to just going to his local bank, and getting a commercial loan for 90 95%. And, you know, now he's up at this is a development that's exceeds 50 million in budget. And he has to go now bring on partners that he's never really had to deal with before. And that has been a little bit challenging. But we were able to show him that. If we bring on the partner and we structure it the right way. He's going to be able to he's going to be able to put in less of his own money. And his returns are probably going to quadruple and so he's not going to end up having the same equity amount that he wanted, but by bringing in the right partners, and we've got a preferred equity partner and a lender, and he now He's going to be able to actually put some money into other projects and the money he's got in this project is going to return him a lot more. That's a development case, we, we did have. Another challenge that we had recently was an investor who wanted to buy an apartment building. And then with rates going up the loan, all the loan offers that were coming in were a lot lower, and the debt service is really high. And suddenly it doesn't pencil. And, you know, I told the client, I said, I think we can make this work. But we got to get the seller to cooperate and the lender to cooperate. And what we did is we were just short on the NOI. So we the debt service coverage wasn't there. But the buyer didn't have more money to bring in and didn't want to bring in another partner. And we really just needed about $20 per unit per month of more income. And so what we did is we got created when we approached the seller, who had not raised rents in a while, and we said hey, look, if if, if you already know you're selling, and tenants are going to find out, let's present this to them in a way that will make it actually they'll be happy about it and say, Hey, I was thinking about raising rents $50 in the coming year. But if you sign a new lease today only raise your rents 25 bucks, and then you're you're guaranteed that when we sell the building, your rents not going to go up for at least a year. And so every single tenant in the building, signed the new lease, we got the $25 per month per unit increase, and then went back to the lender and said, Hey, we have new leases in place at this higher amount. And because their releases instead of month to month, the lender said, Okay, we'll underwrite to the new leases instead. And we were able to get the deal done. But that's the kind of thing that you have to have good advisors, you have to have, you know, a good relationship with the brokers in the cellar. And that was pretty exciting, because everybody thought that deal was dead. And just a little bit of creativity, and getting everybody on the same page made it happen.

42:19

Yeah, I that's, that speaks volumes to as to how critical your partnership is with your team, right, as an investor at your your, your lender, your broker, your, you know, maybe property manager, it's so critical for that. And actually, it's, it's interesting, because that's the segue into my, my last question for you is really just about, you know, your belief in the importance of networking and building relationships in the real estate industry. Because, you know, my experience has always taught me that, you know, when I'm helping investors buy, sell whatever I mean, we're invested together, it may be their property, they may own it, but we are 100% in business together. And it's my job to help them really navigate the changes of the market use my my expertise and my education to help them and I feel like you have a very similar outlook into how serious you take from the initial loan application, just looking at the deal as a whole trying to understand their their goals and their desires for the real estate and what it's trying to do and does the property that they're trying to buy, and the product that you're going to give them work well with that strategy. And if it doesn't, helping educate them as to why. So, you know, if you had to really put a number on it, or a thought behind it, how critical Do you believe that those relationships are those long term relationships?

43:50

The relationships are gold, and any investor out there that says they can't find deals needs to understand that. It's not what you know, or who you know, it's who knows you? And the, you know, especially brokers have, they have their Ailis clients? And if, if they get a new listing or deal before it's the market, brokers call their Ailis clients and say, Hey, I've got this, you know, do you want to take a look at it. And if you as an investor are not on the a list of at least some of the brokers in the markets where you're working or looking, then you're not doing enough to, you know, connect to create awareness. And we're all professionals. I've been an investor, I've been a broker and I've been a lender and you know, in commercial, especially, relationships are everything. We don't advertise the way that they do in single family. So, if a deal comes around, or if there's an opportunity there A lot of the professionals are going to talk about it with those people that are top of mind. So when people are creating that team, whether it's if a, if a real estate agent sends you a deal, even if that deal is not something that you are interested in, you know, be responsive and follow through with whatever you say you're going to do, are you going to look at it are you going to let them know if you're interested or not, then do that. Because there's so many professionals in our industry that work on straight commission, and they are going to give attention to the people that are responsive and that respect to the work that they're doing. And that's how you cruelly create that relationship. And I think that just having an understanding of, you know, how valuable those relationships are, and then acting on it, and showing people that you respect their time and their efforts. That's the way to create a good team, you know, and then finding people that are experienced in the product type or the property type that you're working in. That's also really important. I

46:07

completely agree. So let's take a quick moment to jump into your newest ventures, the training, the education, the I think you reference them as like seminars that you put on for investors, how did you? How did you get started? Or what made you or not? How did you get started, what made you actually decide to do that?

46:29

Actually, it was funny, I was working with a client about 15 years ago, who was a professor at the University teaching in the Masters real estate program. And he would ask me to come in and be a guest speaker in his class. And then, soon after that, they asked me to come teach. And so I was moonlighting as a real estate finance professor for about 10 years. And then, pretty early on my students were asking me if I would put my lectures on video. So after I retired from teaching, and I started putting some of my stuff up on YouTube, really, just as a favor to my students, I got tremendous feedback. And I am not really a big on promoting and all that. So it was very organic, how people started coming to me and saying, Hey, this is amazing. I really want you to coach me, or can you put together a set of videos that will teach me this and over time, as I have been working on it, kind of on the side, it's grown into a full fledged Academy where we do masterclass programs for real estate investors. We do for real estate agents, we've got mortgage broker masterclass, and, and then a lot of those people end up coming in for one on one coaching, and where they will go through the training. And now they understand what debt service coverage ratio is, and you know, those types of things, then, if they want to get out and go and do a deal, and they want to have a mentor or coach along the way, you have a waitlist of people that want to have coaching. And then I've done some group coaching to where a real estate team will, you know, maybe they're just now deciding to break into the commercial market in their city. And they need training and they want to get up to speed so they can compete with the commercial brokers that are already there. So that's been really fun. And I think right now having I've done the lending, and I've done the real estate brokerage and I right now I'm having a lot of fun, coaching investors and coaching new professionals in the industry, because there's so much excitement around it. And people know that this is a great path to building wealth. And it's just a lot of fun. Helping people get up to speed and walk through it and then to see them get their deals done or to see them close their first sale after they got a listing is really exciting. So we're going to join that.

49:07

That's really awesome. So how do my listeners find you and find out more about your masterclasses

49:15

they can go to real estate finance academy.com. And then we also have some free videos at Evergreen capital, our website there's evergreen dot LLC, or evergreen capital advisors.com. And my main goal is to help people and to give them information. The people that really want to get into his truck structured program, then we have those training options for them. But we want to educate investors and we want to educate professionals because it makes all of our jobs easier and it makes this this whole industry more fun when people understand why we're giving them certain types of advice and And, and so creating better investors and better business people is our main goal. And we just want to give out a lot of that information. So we give our training way. We always have free courses and free lessons people can take in, take a look at, or you know, if they want to dive in they we have options for that, too. But really, it's just because real estate being so complex from a finance standpoint, it's, it's not as easy as other things to just learn as you go, you really do need quality advisors. And so that part, like I said, has been a lot of fun. That's awesome.

50:41

Thank you for sharing that information. So last question. And I asked it every single time to every guest, I probably asked it to you last time, so you should be well prepared. What didn't I asked you that you want everybody to know?

50:57

I've been on a handful of podcasts, Jen. And this is yours is my favorite. And I really you ask great questions. And so this is a lot of fun. I can't think of anything else really. But I think maybe I know last time we talked about like not being afraid to sell. I think the probably the one thing is, you know, maybe not a question you should ask. But my advice would be, don't let fear paralyze you. There are ways to get your goals accomplished there, it might take time, and it might take creativity. But you know, this the the old saying the best time to plant a tree was 20 years ago. And the second best time is today. And, you know, I just want people to stay focused, stay encouraged, keep moving forward and know that investment real estate is a great way to achieve their goals. Oh,

52:03I love that. That is perfect. That was a good one. I'm glad I gave you some time to pause there and think about that, because that was really, really good. Trevor, as usual, I can't thank you enough for your your time, your expertise and just your dedication to educating people and trying to really see, help help everybody see success and invest in real estate. It's really it's really empowering. It's really awesome.

52:29

Thank you, Jenna. Appreciate it. Yeah, I love it. And I can tell you do too. Yeah. So I'm always, always happy to chat with you. So thanks so much.

52:36

Oh, that's awesome. Thank you for listening to my episode with Trevor Colton. I hope you enjoy this episode and until next time, take care.

52:47

For more information about how Jennifer can help you plan, develop and manage a strong real estate investment portfolio visit growingempires.com