Episode 128: Stepping Up to Institutional Grade Multifamily with Shane Carter – Apartments Operators Podcast

Shane Carter joins Joseph Gozlan on the Apartments Operators Podcast to share his over 25 years journey from buying small 4plex and 6plex properties to buying large institutional grade multifamily. Shane shares the challenges along the journey and his plans to create his own property management company in the near future.

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Show Transcript

Welcome to the Apartment Operators Podcast, where you can learn from experienced operators what it really means to be an apartment operator. No fluff, no sugarcoating, just the raw, unfiltered truth of  the ups and downs of operating multifamily communities.

Welcome everybody to another episode of the Apartments Operators podcast.

Today we have Shane Carter. Shane has over 25 years of experience in multifamily. Shane, welcome to the show. Thank you so much. Great to be here. Awesome, Shane, at the beginning of every show, we ask our guests to kind of introduce themself, tell our audience a little bit about yourself, what you guys have been doing, and how is your portfolio looking like.

Sure. So, so my background, I like to I like to call my background one of the classic self-made man story. I started, about 25 years ago, like you said, and I started flipping contracts, wholesaling contracts, wholesaling properties, did fix and flips. And sort of transitioned up from there to really I found that I had a real affinity and love for contracting and construction and general con, general contracting in general.

And so I started a construction firm and that, I first, I started renovating homes and doing remodels, and then doing additions, and then building, single family homes. And then I started doing community development and, high-end luxury homes, two to 5 million homes.

And then doing mixed use projects and condo developments and town homes and doing land development. And That was my growth in that business. That’s all obviously cash flow transactional business. I always took the money I made in that and bought apartment units. So mostly, when I started it was a four unit and then a six, and then an eight, and then a 20, and then a 60, and then a.

200 unit and so on and so forth. So I sort of grew organically as my capacity grew and as my cashflow grew, didn’t really take on a lot of investors, a couple of JVs here and there with one or two folks. And really changed my investment thesis in 2020. I had sold off most of my assets in, between 16 and 18.

Cuz it, it kind of felt like it was the top right. It kind of felt like, oh, this is the peak again for those of us who owned assets and sort of lived through the oh 8, 0 9, fallout of course nine, 10, and 11. I bought millions and millions more assets. And so by the time 2000 16, 17, 18 rolled around it kind of.

That was it, right? We were, we’re ready to kind of tap out and cash out. Of course, we know what happened after that. Everything doubled again. So, in retrospect, not maybe the best move, but it still, we still did well. So, Started Hampshire Capital in sort of, in 2020. And Covid with a longtime friend and business partner, associate Nick Bouquet.

And really our thesis was to get into the larger asset classes, really get to, multi-billion dollar portfolio, engage with institutional capital and essentially do it differently than what we had done over the last, 10, 15, 20 years of our of our investment cycle.

So, We started buying, bought our first tranche of assets in March of 2021 in Texas. And since then we’ve acquired about 2000 units, about about 230 million in assets under management. And it’s really all, kind of B and c class value add. We are now starting to incorporate some newer development 2022.

2023 type builds into the portfolio just to have a little bit of that yield stabilized asset in our holdings as well as the value add. But in general, yeah we buy multi-family assets, 200 plus units in Texas, North Carolina, South Carolina, Florida. Those are the only places we buy. Major MSAs.

Okay, so that’s a very impressive background, right? So I’m sure you have a lot of stories all the way from the beginnings with the small ones, through the bigger ones and the bigger acquisitions right now. So one of the key questions we always ask is, do you guys self-manage or use a third party? So I started self-managing and started managing all my own assets, especially on the smaller side when we started entering these larger markets.

And of course we. We’re a couple of guys that are based out of New Hampshire and we have, local partners, employees and staff in all the locations that we own assets, but they’re mostly there for construction management and asset management. So we do have, we do construction management obviously because of my background.

We do have that vertical in-house, but we don’t have in-house property management right now. That is part of our goals is that by the end of 23, about 12 months from now, We want to be able to be in a place where we can take property management in-house and do it and execute at a high level.

So currently we do work with third priorities. Okay. So I’ll split my next question to two is like, how is it working right now and why did you guys make the decision to transition So, Well, the second answer is kinda cause of the first answer is that things aren’t going as well as we’d like.

Right. Okay. We don’t so our company is, we’re really focused on culture, right? Within our own organization, we’re focused on culture as the sort of c e o of the company. That’s kind of my main job is people and money and. , people and culture to me are the most important thing in any business, and it’s critically important in our business, in, in multifamily.

It’s super important. This is a people business and your culture and how you run and conduct your business is the most important thing about your culture. So, and about your business. So that’s what’s not going well right now. We don’t like when you third party. Property manage you sort of third party and sub out your culture, right?

So now you have another firm in there that maybe aligns with your culture. Maybe they don’t, but they’re not taking on the property the same way that you would. And that’s the aspect of it that we don’t like and why we’re interested in going to be doing property management in house ourselves.

Just too much misalignment with the culture aspect. Okay, so remember I mentioned earlier we do honest truth, no fluff, no sugar coating, right? Yeah. So, what does it mean, misalignment of culture, right? What do they do that you don’t like? What do they not do that you would like them to do? So, look, specifically, I’ll start with accounting.

Accounting is the number one thing that, that I don’t like in terms of how they do things. So it. . For us it’s a control mechanism, right? We like to be intimately, we’re very hands on as asset managers. And so we expect, and even though we have access to, Entrada or Yardi or whatever software we’re looking at Things just don’t get executed the way we want.

They don’t get executed as quickly as we want, as well as we want. And in a manner that creates a partnership with vendors, a partnership with, with key relationships. Right? And so, and I’m starting with accounting because some of that flows with timeliness of payment. Oh we didn’t, we couldn’t pay them because they didn’t fill out this form and they’re not in our system.

And I’m like, what the hell is that? Just. They did the work. We need to pay them. Well, that’s not how our system works. So there’s things like that, that are just a misalignment of how our culture is. And and look, I get, I get e o s I love traction with that. That’s something we implement in our company.

And, process and procedure is important, but not if it’s doing your business a disservice in terms of function and execution. Right. So that would be one thing that I would. Is, accounting bill, paying a p a r, it’s just not as tight and tightly run as I like to see it. And then secondly, again, at the culture level, we, let’s say we’ve had multiple regionals, right?

Regional managers that come in to our property level staff and we’re, our asset managers are engaged with the regionals. . And they’re managing, our 600 unit portfolio plus somebody else’s 400 units, plus somebody else’s 300 units, and they’re just stretched super thin, right? So they’re not giving it the detail, they’re not giving it the attention that it deserves things.

Hey, we have a request. This need, pick anything, right? Something needs to get done, a task needs to be accomplished. And they say, okay, I’ve got it. I’ve got. We follow up two days later, it’s not done. Three days later it’s not done. Five days later it’s not done. That’s not acceptable. I want that done the next day after we said we were going to do it.

Right. So things like that, that just are not acceptable to how we function. Yeah, no, and it kind of makes sense, right? I’ve, one of my pet peeves with third party management is we, as an industry, we don’t know how to compensate. and I wish I had a good answer cuz then you know, I’d be one of the best third party property management in the country.

But there’s just no right way to compensate a property management in a way that will align with the interests of the owner, right? People say, well, we pay them off the top line so they have no interest in driving bottom line. So, okay, so we’ll pay them on the bottom line. Well, they’ll defer maintenance, they’ll get the bottom.

So, so it’s like there, there’s no right way to make a third party property management align in a cost effective way. Cuz let’s be realistic that we can pay them a lot more and they’ll do a lot more, but then we’re not gonna be profitable as the business. Right. So That’s exactly right. Yeah, so, so every big operator, or 95% of the big operators we talk to when they get to a certain scale, They transition into a third from a third party to an in-house management.

And the keyword word, and you’ve said it is control. That’s right. Is being able to get what I want done when I want it done. The way I want it done is what I’ve seen is the main driver for operators to switch to self-management. . Yep. That’s a hundred percent correct. That, and that’s exactly our goal and our thesis.

Look, I do, I want to have a bigger company and have more payroll and have more overhead and staff. Not necessarily, but I can’t accept the results that we’re getting with third party property management. Right? So we have to take it in-house and you’re, you hit the nail on the head. It’s all about control.

It. Not a profit center. We don’t expect to make money at it. It’s just about control and execution and speed of execution, which to me is very important. Yeah and another thing you mentioned earlier is the damaging of relationships, right? In today’s market where it’s so hard to find good labor and good vendors and vendors that you can trust then being able to preserve that relationship is super critical.

So if they feel. You know that they’re not getting paid on time or appropriately or whatever, then they’ll go work for somebody else. And now you lost a clinical vendor in a world where it’s so hard to find good ones. Yeah. The entire paradigm has shifted and I sort of felt it in that same sort of 2000 16, 17, 18 timeframe.

So, obviously I was a contractor for 20 plus years, a general contractor, and I. The sort of relationship with subcontractors, with laborers, with vendors was more like, Hey, I’ve got the work and, and I’m the sort of the, the one that, that everyone should be coming to and the subcontractors, the vendors the labor were, sort of, Hey, Shane we wanna work with you.

How do we work with you? That dynamic shift. In that, probably, like I said, about four or five years ago, and since then, it’s different. You have to have a different relationship and a different understanding of that relationship with your vendors, your contractors, your suppliers.

Because we’re in a labor shortage, we’re gonna continue to be in a labor shortage. And those relationships are very critical. And let’s be honest, getting paid is one of the most important things to that relationship. So when somebody’s messing with your pay and your money they just leave and they go over to the next guy who’s gonna pay him more timely.

So that’s, again, that’s why I started with accounting is my biggest gripe. Yeah. So, but that same situation, the shortage of labor that kind of flipped that equation on us. Is gonna be one of your biggest challenges studying your own third party manager, right? So what do you guys have in mind for hiring retention?

Cuz as somebody that has their own property management company, I can tell you that’s our biggest challenge, right in the last six years, we went through maybe 200 different personnel people for maybe five, 600. It’s insane. A amount of people to go through just to find and retain decent talent.

Yeah, it is it’s hard and it’s going to remain hard until there’s some potential rebalancing, in the macroeconomic world that we find ourselves in. But to answer your question specifically, I am going to continue to come back to my overarching thesis, which is culture.

And so the culture at our organization, which is going, which will flow down to the property level staffing, is one of, our guiding principles, right? And we list them right on our website, and it’s just how we operate. And so it’s creating the environment, the energy within a company, within a culture.

Is inspiring. That leaves everyone feeling like I matter. I’m super important, right? I’m a porter, I’m picking up trash. Man, you are so important to us. We appreciate you so much, cuz without you, our property’s gonna look like crap. And that’s going to affect leasing, that’s going to affect everything.

There’s a negative downflow from there. So every single person is super important. Everyone is valued. , everyone’s input is valued. And creating that culture where we’re doing exciting things, we’re on this really steep trajectory of growth. Get in now where you’re gonna miss the boat, right? Where that sort of energy around our company is one that we’re trying to continue to cultivate and we will cultivate.

And that is actually the more important figure to attract people. People, we all have this innate. Need as humans to be a part of something greater than ourselves, right? And so that’s what we are doing at Hampshire Capital, is creating this environment of this machine that is growing and sort of bringing everyone along with it where everyone wins.

We have company profit sharing where we’re going to be setting up a a system where, kind of like a matching 401k, but it’s a matching pool of investment funds where if our employee. Choose to participate, the company will match their funds and there’s gonna be a tenure aspect according to that. But then we use those to invest in our properties.

So now our employees are part owners of our properties, literally, right? Via the Hampshire Capital Employee Investment Fund. And so we are thinking through things like that, thinking through ways that we can create a fund where our residents can actually apply or invest a portion of their. to become a fractional owner and a, an LP investor in the asset that they live in.

So some of their rent each month is an investment and is going towards their home that they love. And we’re trying to think through new and interesting ways to create that culture that attracts people. So I think culture is the most important thing, and I think that creating something where somebody feels like they’re a part of something bigger themselves is the most important thing.

Secondly, of course, is money, right? We’re we intend to be able to pay more money, we’re just gonna pay more for it. We’re going to take less of the quote, unquote management fee because we’re going to stuff more of that overhead into. The property management the property manager, assistant property manager, leasing agent lead, maintenance supervisors, porters, et cetera.

So all of those folks we’re, we are attracting them with better pay, better benefits and a culture that they’re extremely proud to be a part of. Yeah I love the idea of creating this investment fund for the employees. That, That’s a really cool idea. One of the ideas that we’ve heard and operator mention that I’ve never heard before, but it was fantastic idea, so I’ll share with you and the audience again, is if your properties are high occupancy, right, then what that, that owner did.

anything over 95% occupancy was shared between the employees. So let’s say you have a hundred units and you’re 95% occupancy. So the rent from the last five units is shared between the employees. So he had retention, people staying there for 17, 20 years, and everything is a. because if you drop under 95%, they don’t get a piece of reaction.

But everything they get over is, let’s do a quick turn. Let’s keep the residents happy, let’s get the work orders done fast. So we’ll keep retention cuz as long as they’re here, it increases the chances of us staying over 95% and so on. So that, I thought it was the very interesting concept of. As ownership, if we’re 95% occupied we’re doing good in most markets, right?

So everything on top of it is cherry on top, but the benefits of giving that charity to the employee comes across a hundred percent of your property, right? Increasing retention is what saves us a ton of money in the long run, right? So, I thought it was a really interesting idea, so I thought I’d share.

That is an interesting idea. I li I like that. So my only question would be, isn’t that sort of diametrically opposed to growing, your rents, right? So, can you stay? So in other words, when we look to, to go in and renovate units and raise properties, or even achieve that organic rent growth that is essentially not happening right now.

But, if you look back over the last five years, there’s been, pretty substantial in some markets, double digit rent growth. Oftentimes there’s this balance between. Retention and rent growth and percent occupancy. Right? So would you rather be 97% occupied, but be $75 per month per unit under your competition or under where you could be?

Or would you rather be 92% occupied, but have that extra $75 a month for each unit? Right. Well, it’s interesting. It’s not question, it’s not mutually exclusive here, right? So, so the answer to the question is simple. It depends on where I am in the. So if I am in the value add portion of my of my investment, then of course I want the 92.

So I can turn the units and I can push the rent. But if I’m already stabilized right, and my loss to lease is let’s say a three, four, 5%, then I want the 95% occupancy. Cuz I already stabilized. Right? Right. The refi might have already happened the and so on. So then I want the stability. Depends on where I am in my investment cycle, that’s where I want my occupancy.

But to solve that challenge that you present is you can always say, okay, I’m taking these units out of the equation because I’m upgrading those. So units under upgrade don’t count for the 95% occupancy that you guys need to retain. No that, that’s a good point. Thank you for bringing that up.

How does that help with the tenant retention though? I mean, I can see where it benefits the employees and them pushing for tenant retention, but how does it benefit the tenants in any way? So if you are the lead maintenance guy, or you are manager, right? And you want retention because you don’t want to get dropped off the 95% then you’ll give better customer. You will turn work orders real quick. You will keep, when you do work orders a maintenance guy. You keep everything clean and nice and tidy. You don’t leave anything wet or dirty, right? So you keep the property clean. So everybody on the team is working to make sure everybody on the property is happy and staying.

And it also helps from and again, this is not from my personal experience this is from the conversation with that person. , it helps expel deadbeats off the team because if I, if you are the lead maintenance and you have a maintenance guy that doesn’t contribute to everybody’s efforts to maintain the high percentage of and they hurt your ability to earn that extra income, you will expel that person real quick.

Yeah, no, I like that. I really like that. Which, why Yeah. In the industry where we were struggling to keep people for two years, they had people with retention of 17, 20 years on the property. Yep. So, so I like that a lot. That’s good. That’s a great, that’s a great process. I like that.

So, so just thought out, share that. So, you guys do value add, right? And turnaround. So the obvious is let’s increase rent or let’s charge rubs when nobody’s charging ropes. Right? So, so, so that’s the easy ones. What other things are you guys doing to increase. income from alternative ways or increased value in alternative ways.

And we’ll talk about reducing expenses in a second, right? Cuz there’s two sides to the No, I, yeah. So give us a few ideas that you guys go into properties and you help increase the income side of the No, I, that is not the obvious. Raise, rent or charge Robs. So I’ll tell you one technique that we’ve employed at a couple of assets now with massive success and, a little bit of this has to do with my sort of, construction background and building, lots of homes and building lots of different properties.

And so, I have, I’ve been able to get a decent eye of what space is interior space, right? And sort of how to work with it. Anyway, there’s a there’s been a couple of different assets where I’ve found, we’ve found specific unit types that lend themselves to being separated into two separate units.

So a large three bedroom that lent themselves to, put in putting in a separation wall. And now you’ve got two, one bedrooms. So the three bedroom rented for you. 1400 a month and now the two one bedrooms rent for 9 95. Right? So that’s a win all day long. If you look at that and, general expense for something like that was, I think in the sort of 30, $35,000 range to bifurcate the unit into two units.

But then, You do this amazing thing when you go to trade the asset, which is you get the, no, I bump. But then on a quote unquote, a price per door you’ve just created, you just spent 35 grand and you just created a unit that is on a price per door basis. A hundred, 150, right? Per door, because that’s what the market bears.

So now you’ve just created 10 extra units. At a hundred thousand dollars a piece that’s a million dollars. And forget about, whether or not that extra $400 a month was equated to that extra million dollars in value. It does, right? Yeah. But you’re sort of, you’re covering your bases two ways there.

That’s a great way to add value that I think. Some people miss. Now, the only caveat to that, and then the thing that we did is you really have to drill into the unit by unit absorption and what the unit vacancy rates are. In other words, you don’t wanna be creating too many one bedrooms if that’s your highest vacancy rate, right?

And you’re already having trouble leasing those up. But in this particular asset, it was an old hot asset, from the seventies, super dense, lots of three and four bedroom unit types in there, very few one bedrooms. It was like 6%, one bedrooms. So there was a way to balance out the unit mix create additional units and, create a better operating property.

In one of our highest vacancies was actually in the two and three bedrooms. So we picked the unit types that weren’t doing as well to bif. . Yeah. That’s a great way and improves your property value. Like you said, I get that $400 at a five cap valuations, right. I add a lot more than what it cost me to split that unit.

So that’s a good idea. What else do you guys do? So, we most of it is, it’s pretty. kind of pretty standard, right? In terms of looking at the value add program and then the additional incomes, carports, yards, patios, sort of private spaces for first floor residents.

I would say, what are some of the other things that we really focus on? Yeah, I mean there, there’s rubs, there’s there’s sort of, rent guarantee programs, right? Where or deposit guarantee programs where you get a, where you get a portion or reward program for that.

And, obviously cable, wifi, things like that. So it’s really a full steam approach to all of those things, but it’s really asset by asset, and you gotta look at the comps and you don’t wanna price yourself out either. Yeah, of course. If you actually don’t get too aggressive on the additional income assumptions, we leave those as sort of cherries on top.

Gotcha. . Okay. So what about the other side of the n y right? The expenses. What are interesting ways where you guys were able to reduce costs on a property? Yeah, so, look, one of the biggest ways , in, and this is, pretty common sense, right? But you know, if you buy one asset in an area, try to get another one.

There’s economies of scale relative to staffing, relative to your buying power. So if you just have 150 unit asset, and then the next, the next one is, you got one in Houston and your next one is in Dallas, and the other one is in San Antonio. They’re not really helping each other, right?

So if you get in one specific market and then get more of a scale there, you’ve got staffing and you’ve got buying power from your vendors and your relationships that say, Hey, look. Instead of 150 units, I’ve got 700, I’ve got 800, I’ve got 1100 units in this one little pocket. They’re all within 15 minutes of each other.

What can you do for me? Right? That’s gonna be your biggest bang for the buck in terms of reducing expenses. Staffing is not an expense you can really trim right now. Right? But obviously, we all know about energy conservation, right? And saving saving on your water, your sewer.

I’m a big fan of solar where it fits as well and where it’s appropriate for the asset. And, other than that it’s really just your standard flavor of tightening up your operations. . Yeah. No the economy of scale is really important.

It’s not just being able to negotiate with your clients, but there’s other ways that economy of scale help. Like, for example, when we order materials, Yeah. We can go and order things in bulk. Instead of ordering things in one at a time, we’re going to Home Depot or HD Supply or whatever it is to get three of those.

We order 30 of those, right? Yeah. And then the staffing thing is, it’s less about trimming and more about backup. , right? So if I have a leasing agent here and a listing agent there, but she is sick, I have someone that can cover, versus now I’m stuck and my manager has to do their her job and the leasing agent job, right?

So, yeah. So being able to have a backup is huge. Being able to forward the phones to the other leasing agent is huge. Being able to tell all your leasing agent, you’re gonna get your leasing. Doesn’t matter which property you lease on, it’s gonna help you really with capitalizing on a qualified candidate.

For example, we had a property that had larger units and a property that had fence patios and a property that was, let’s say, closer to the university. So if you have a qualified candidate, and what are you looking for? Do you need washer dryer connections? Do you need a patio? Do you have a pet? Do you need first floor, second floor?

If my leasing agent can lease any one of those properties, or at least send them to the other property instead of just telling ’em I don’t have anything for you. That’s a leverage, right? That’s an ability in that economy of scale when you are in a tight location like you said. So absolutely. That is a great opportu.

Just to add onto that real quick the other thing I would say is the leasing backfill is, we’ve definitely had that, but what we’ve actually seen more of is the maintenance, right? So there’s a look at and every one of our portfolios, there’s assets that are doing better than others, right?

There’s the ones that need more work, they just need more things going on. Maybe they’re a seventies bill or an eighties and they just have more things break, they have more maintenance issues. And so the ability to be able to. Two guys off of this property, Hey, work orders are a little light over on this one.

We’re a little heavy over here. Let’s pull these guys over here for 3, 4, 5 days for a week and let’s just blitz this property get the work orders knocked out, get the tenants happy, and then they can go back and, go back to the property they’re assigned to. That flexibility, like you said, to backfill and use staffing as you need is super.

I. . Yeah. And just the way life works. If you have five, seven maintenance guys, then this guy’s better at electrician. This guy knows HVAC a little bit more. That guy is a more of a plumbing guy and then being able to leverage their expertise is very important across the portfolio. So, yeah, that’s exactly the situation we were in.

, so, 2023, right? I can’t believe it’s already 2023. Where do you see the market is going? What are you guys planning on doing with inflation coming in with the stock market that just ate 20%? The s a p s and P finished with 19.4% loss, and even that only because the energy sector went up by 60%.

Right? So what do you guys see yourself in 2023? Are you buying, are you holding, are you selling? , what’s your outlook? Yeah, so good question, man. It’s it’s a mixed bag. It’s a little bit of all, so we do have, we will be getting out of one asset. Just, we just don’t, we just don’t particularly like it, right?

We want to. Trade up into something else. And, we feel like we’re gonna be able to meet our business objectives in doing that, but for the most part, we are more focused on, stabilizing operations and ensuring that the assets we do have are operating at the highest possible level that they can be.

And then when it’s appropriate and when we find the right opportunities. To buy opportunistically, right? Because I think that we’re in an environment right now where we look back in 3, 4, 5 years and say, Gosh, 23 was actually a really good time to buy. Right. And I think that hindsight might be coming for us.

So I, I don’t wanna necessarily miss the boat, but you know the deal, you can make money in any market, right? It’s, you can buy, you can sell in any market, you just have to do it well. So the key things we look at is number one basis, can we get this asset at a good basis? . If the answer’s yes, then you know, we’re willing to really dig deep and figure out what we can do there.

Cuz you never get a second chance to make a first to get your basis right. . So, in this environment, I think there are gonna be a number of assets where folks have to trade. Not, they don’t necessarily want to, but they have to. They’re not meeting their D S C R requirements for their bridge debt.

They’re, that, that’s coming due. They’ve got an event of default on their record, et c. On the asset and the lenders just saying, no, sorry guys, we’re not gonna work with you. We’re gonna have to sell this thing. I think there are gonna be a few assets like that would meet our buy box, which is pretty tight already.

So number one has to have a good base. Number two, I would say whenever we can assume. Debt that is cheaper than the prevailing rates we have on the market right now. We’re very interested in those scenarios and we know that we can, we’ll have to raise more equity, we’ll have to come with more equity.

But you know, I think there’s, we have institutional partners in different ways to solve for that equity stack that can make it pretty advantageous to acquire. The right type of debt in this environment coupled with the right type of asset. So those are the two key things that we’re keyed in on, in, in this environment.

And if we can make that a success, then then we’re absolutely buyers. Yeah, no you’re hitting some really good points. I’m just gonna kind of recap Well first we al, we’ve always said and I’ve said that multiple time on this podcast is, well, multifamily, you make your money. When you buy, you lose your money on operations.

It’s that simple, right? Yeah. So making your money when you buy, that’s really important and I agree with you. I think 2023 is gonna show us some opportunities where. properties took a bridge loan two, three years ago and they’re up for a refi right now. And if I took a bridge loan at a 5% a few years ago, now it’s in the nine and 10% and a higher that changes the entire equations.

Right? We have seen permanent if. Let’s say I under road for a permanent coming in at three and a half percent, but the permanent is now around six. Then again, I could find myself underwater. So a lot of these are gonna be interesting. A lot of the properties that took the FES in 20 20, 21, 20, the early years of covid thinking that things will be better in 2023 and they can start paying again.

That’s gonna be a. And I think that Fannie Mae and Freddy is gonna have some room, but not that much room to keep not getting paid with the deficiencies. So that’s that’s gonna be inter definitely an interesting years for these things to come and underwriting is really gonna be the critical part of can we buy it?

Can we get a decent enough debt to support it? I’m not worried about the equity because all the people that took a major hit from the stock market and pulled out are gonna have to deploy you somewhere. Right? Yeah, no, I agree. Yeah there’s gonna be a lot of retail capital that wants to deploy into real estate, and we have, collectively we have an opportunity now to offer them much better returns and frankly, safer returns for those types of investments.

And look, there’s still. Trillions of institutional and sovereign wealth and insurance company and sort of big money that’s sitting out there quietly and not doing anything, just sort of waiting to see what happens here. Yeah. And but. But the inflation kills them. They’re dying to deploy because the inflation, oh, they’re losing, right?

Yeah. Kills them. And if they were okay with losing 2% a year, a couple years ago, now they’ll be losing four, five, 6%. They’re dying to deploy that capital. Cuz even if a, even a 2% return is better than losing six. Yep. Agreed. Agreed. And that, but you see a lot of that money wanting to go into the debt products, into the preferred equity products.

Right. Sort of safer. And what I’m talking about is the classic sort of JV equity type of equity that’s a lot of that is still sort of sitting on the sidelines and waiting to see what fleshes out here over q1, Q2 of 23. Yep. Absolutely. So, so that’s gonna be interesting. Just try to be conscious of your time and our audience.

We ask every operator that comes on the podcast the same questions. Right. If you could go back 10, 20 years ago. Right. What kind of advice would you give yourself, assuming you can’t tell everybody, well, 2009 is the bottom. Buy everything you can. Right. Other than that or the lottery numbers.

I would say that I didn’t think big enough, fast enough, right?

So, Owning and everyone’s gonna have a different answer for this. This is just me. So owning 200, 300 units or 400 units, yourself and sort of being the guy who owns all of that and that passive income that comes in from that. That was okay. And it was fine. It was a plat, it was a place I wanted to get to when I got there.

But then when I got there, I realized, okay, what’s next? But you know, that’s I climbed that mountain, which one’s next? And I didn’t think big enough. Fast enough, right? So I could have jumped into and bought, 2000 units or more. 2000 14, 15, 16. Right. All any of those years. And I would’ve done much better than what I did during those particular years.

Right. And so that, that’s the number one thing that the, that I would tell myself. The second thing would be that, I should have gotten into more partnerships faster. . And I wanna be careful with that cuz we’ve all had bad partners. We’ve all had bad partnerships. I can think of two or three offhand right now, but.

But finding the right partners and the right people to align yourselves with because there really is one plus one really is three, right? And so the more you can put yourself in a situation where you’re with people that you align with, that you trust and that and are you’re a hundred percent aligned with, you can absolutely grow faster than you could trying to, put your shoulder into it and pushing harder.

I’m just gonna have to follow up on that one. What’s your best advice of find finding the right partner? So I guess it depends on where you are in your career, right? , I would say that it has to be a personality fit.

It has to be, I hate to use the word culture again, but it has to be a an energetic fit right where you are both. Resonating and have the same principles, have the same vision, have the same mentality, have the same goals. See the business that we’re in the same way, and that can be. , from markets to asset class to business plans, to how you operate, how you function, how you actually do your business.

Those I think are the most important things. Everything else you can kind of align and you can make money with anyone. But those are the, I think the key things is really get people that you just resonate. Yeah. No I think that’s a really good advice. So Shane, I really appreciate you coming on the show.

If our audience wants to reach out and ask question or invest with you guys, where the can they find you and whatever you’re gonna share, we’re gonna put in the show notes as well. Yeah, absolutely. So, you look, our website’s a good place, right? hampshire.capital, www.hampshire.capital. There’s no.com, there’s no.net, there’s none of that.

It’s just.capital. You can find me on, Facebook, LinkedIn, Instagram, just Shane Carter nh. And yeah, happy to connect. Awesome. Thank you so much for coming on the show. It’s been very educational. Oh, my pleasure. Thank. Awesome. And for you, the audience we really appreciate if you can subscribe and if you can give us a review, one star, two stars, five stars, whatever you feel is right, just go to iTunes or wherever you consume your podcast and give us a review.

And thank you so much for listening. We’ll see you in the next episode.

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