Episode 138: Two full Cycles Perspective with Steven Weinstock - Apartments Operators Podcast

  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 sugar coating, just the raw unfiltered truth of the ups and downs of operating multifamily communities.

Welcome everybody to the apartments operators podcast. My name is Joseph and I’m your host. And today we have Steven Weinstock. Steven, welcome to the show. Thank you for having me. Awesome. So we start every episode with giving our guests a minute or two to introduce yourself, tell us how you got into multifamily.

What are you guys doing today? And we’ll go from there. Sure. Stephen Whitestock. I live in Brooklyn, New York. Started buying smaller assets in New Jersey, which is my backyard, so to speak. Started there in 2001 all the way until about 2015. Just kept buying self managing really just on my own throughout the process.

Investors here and there on specific deals. 2015 started buying some larger assets as well as out of town. Out of town for me means the Cleveland suburbs and Louisville, Kentucky. We self manage those properties. I do have a partner at WeCapital Michael Eisner that we’re together every day in the office.

But every deal has a different set of partners and different sets of strategies and different workers. But we manage everything in house. I travel to these areas pretty often and I’m boots on the ground and I get to see it with my own eyes. Oh, wow. So we’re going to have some fun on this conversation.

Not only you self manage, but you also started before the previous cycle in 2001. So you’ve seen two full cycles now. Yes. So I’m sure there’s a ton of insights in there. Let’s start with the basic. How many units do you currently manage, own and manage? So 1200 units and, oh, that must be painful in the self management side of things.

So why self management? Why not third party? Good question. My answer today is different than my answer previous over the years. Today most of the stuff we own is B class. Maybe some people say B minus. Some people might call it C. And I find those types of properties really work best self managed third party management is good for some properties.

I find perhaps third party is best on class a properties. But some of these value add properties that we’re buying and that we’re involved in really needs our, finger on the pulse throughout, whether it’s to be nimble, pivot, change price control, which is a major, especially on 70s vintage types of properties or 80s vintage the self manage really keeps us in line.

I think the word you use, you’re looking for in the everybody we talked to is using is control. Yeah, it’s all about control and no matter who we talk to as soon as they reach a certain scale that word keeps coming back into play. Correct. Correct. The days of me getting the phone calls about the actual everyone’s heard this, the toilet stuffed or a leaky roof.

So those days for the most part, stop, I’m not getting personally those calls, but I am hearing about it pretty fast whether it’s in my email or in my management software. And we’re pretty aggressive and involved and taking care of that. So at 1200 units how does your management structure look like?

I have an office here in Brooklyn. I have a partner. We both have different strengths. He’s more of the Excel and the management software and setting that up and making sure that works. He deals with mostly the accounts payable, the accounts receivable. All that I personally am involved more with the on the ground employees that we have at the properties vendors as well finding the vendors, finding the good workers, finding, just everything that involves the actual management that the residents feel in touch.

Gotcha. So who gets the 2 a. m. phone call with, we got a. Somebody drove into the building or we got a roof leak. So luckily for us we’re set up in a way where we do get that phone call, but at 2 a. m. we don’t get it. I get to come to the office. I get to see it. I don’t have to be there.

When the police arrive when the code enforcement called me a few weeks ago about a water main break in one of our properties. I didn’t have to, be there so to speak, but yeah I was definitely involved. I was on the phone on a Sunday afternoon and I was seeking out the vendors the leak detection companies, the water main guys to get this done ASAP.

But the actual phone call at 2 AM I’ll leave that to the politicians. Gotcha. So it does sound like you’re still very much hands on. So you said a minute ago that a few years ago you would have a different answer to why self management. Tell me a little bit about that. Yeah, I’ll tell you.

My first purchase was 2001. It was a single family home in Trenton, New Jersey. It was 32, 000. I was working a corporate job. Always knew I wanted to get into real estate use 10 percent down, back then financing was a little easier, especially on smaller properties. I spent about three and a half grand out of pocket.

And next thing I know, I was a landlord collecting 900 a month with an existing tenant that was there. So about I would say about a year later not on this property, but another one I bought a few months later. I was in the housing court dealing with a tenant that wasn’t paying. And the tenant didn’t show up.

I won by default and in the lobby or in the, the vestibule there were some management companies there and they reached out to me and we tried. We discussed at the beginning. It was mostly money. I didn’t want to spend the money. In hindsight, I’m very happy because I got to learn really the property the I’m talking from putting putting classifieds and print newspapers doing the showings, weeding out people over the phone.

A lot of the tenants I took, even back then when I was dealing with it, it wasn’t necessarily their credit report. I wasn’t renting to doctors and lawyers I’m a people’s person and a lot of it was, I don’t want to say a leap of faith, but it was talking to them, see how they communicate.

I used to just ask them, questions that were not necessarily relevant, but seeing how they respond was important to the guy who wouldn’t show up for a showing because he got pulled over or his car. A lot of that Tells me about them. And, I didn’t persist when texting became more common.

A lot of it was done by text, but again, I would ask them lots of questions. I would see what kind of questions they asked me. So I really got a lot of hands on experience. Fast forward to about oh nine 2010. I did hire this guy who came was a good guy to manage some of my portfolio that I had.

In central New Jersey, the area of Red Bank off the Garden State Parkway. And he did well. He collected the rent. He, found the tenants. The money was okay. I just found that when I came to repairs, and maintenance that since he didn’t really have skin in the game, so to speak, I found those expenses increasing when I say increasing, instead of finding a plumber to fix my water heater, possibly it was always just let’s replace it, get a new one.

Sometimes he might’ve been right. It’s easier for him to just make the call, get it done. Every plumber just wants to just put it, take the old one out, put a new one in. It’s hard to tinker. It’s hard to find the handyman. It’s easier to find, a mechanic, a plumbing, a mechanical guy to just install the new boiler right away.

But So that’s really the reason why I stopped using management back then. I thought about it with some of the larger multis when I was starting. One of the banks required me to have third party local management. And we did sign a potential not an agreement, but a potential.

And we submitted that to the bank. We closed on the property. This is about the, eight years ago. They started managing the property. They didn’t do great. I reached out to the bank. Can I get rid of them? They said, sure. It’s not guess maybe after they closed, they were less concerned.

And we took over the property learned a lot managing a property found good people locally found a super to live in the building to deal with the 2 a. m. phone call. And we have good people working for us. That’s key. Good people is key. Good partners is very important.

When I started on the business I thought it was just me. I have the special sauce, no reason to get anybody else involved. But as I increased with larger properties partnerships are the key really is the key. Yeah, exactly. So how do you go about finding good people in your backyard or even better further out, cause it’s even harder when it’s not your backyard.

Sure. As far as actual vendors and, maintenance staff yeah, that is tough. Sometimes I will reach out to, 10 people for a plumbing problem. Three might show up or three will come right away. See how they communicate. See if I feel they’re trying to sell me a line of, BS and really settle, a numbers guy.

So I know that I’ll find somebody good. If I try 10 people and it’s easy to whittle them out. It’s not necessarily all 10 people showing up. That I know that As far as higher level management locally that does come, a lot of it does come from referrals in the multifamily space, this is a lot of, there’s a lot of GPs helping other GPs just with knowledge, I’m a big networker, I go to a lot of the events and I’m able to find people that come from a referral and, not everyone is great, but if I get four referrals, it’s the top of the list and for the most part I’ve been finding good people like that.

Yeah, no I totally get it. And somebody that’s been operating like you for so long, I bet you are a better plumber than most plumbers you work with, right? I’ve changed a few shower heads in the past. I’ve definitely adjusted to hot water quite a few times. When YouTube finally came out, I could Google, YouTube that.

That made a lot of stuff easier. Yes, but the days of carrying some tools in my car stopped a little while ago. Yeah, no I’m not a very handy kind of person, right? So if you’ll tell me to change a water heater, I’m probably not going to do a good job, but I can tell you step by step how to do it on a commercial size, 1 million BTU water boiler.

No problem. And I can do the lick detection from about 600 miles away. Yeah that’s just the things this business teaches you. Sure. I always say that managing property by yourself is such a learning experience that it’s better than a Harvard education. Even if I make mistakes, it’s just, the value that you get out of some of the stuff that you come across is really tremendous.

Yeah it’s crazy how, This business teaches you something new every single day, just every single day. And it’s mostly because everybody thinks we’re in the buildings business. But in reality, we’re in the people business and it’s and humans will always find a way to surprise you. It’s just, there’s always a way to surprise you.

And, I was having a conversation with somebody the other day and said, yeah, you can’t believe it. I had somebody driving to the building with their car. And it’s I wish I could tell you that happened, that didn’t happen to me. And I wish I could tell you it didn’t happen to me more than once.

But yeah things like this happen and that teaches you a lot. That’s for sure. Oh, yeah. So what’s your larger, largest property, single property? We have 125 units of property. You’re talking about a price or? No. Just units. 125 units is our highest 1 property. Yeah, but mostly, yeah, mostly are similar and I do have a still a bunch of smaller assets in my backyard in New Jersey.

Yeah you’ll get rid of them at some point Yeah, I started selling some here and there. I’ll tell you, it bothers me to sell, even though I’m using the money for something good. I’m not pulling my chips from the table. I’m putting them back into deals. A lot of 1031s. Even if it’s not a 1031 I’m still using the money well, every time I drive by two or three years later and I see the property, I know it’s worth more, and Sometimes I say to myself, sometimes the hardest part is the purchase, getting it done, so I already have that done.

Do I really need to pull the funds from here? I try to get it from somewhere else, but it happens, but when I do buy, when I do buy in my. Gut. I it’s always a long-term hold. It’s always a long-term hold. I’m never flipping, I never go in with the intention to flip.

When I started, I was involved in flipping a few contracts but I got into that after I was already a landlord. It’s a lot of work a lot of taxes and, it’s a lot of work. It’s it’s a tougher I found that tougher, believe it or not. Yeah. No I’m a big believer in not selling real estate just like you.

And sometimes when you have a property long enough, you’ve already got all your money back and more. So it’s infinite returns at some point, but I’ve learned to adopt a benchmark that I think every investor has to adopt. All right. And that is. Headaches to returns ratio. And that is my rule for selling real estate.

If the headaches to returns ratio becomes too tall, too high, too bare, that’s when I sell a property. Yes. I owned a property in New Jersey. It was on a main road. It was a good, it was a nice multifamily. It did well, but since it was on a main road by a bus stop, I got tickets galore, just garbage lawn, some of the stuff maybe I could mitigate it.

But it was just like a magnet for code enforcement, and I sold it, I put it on the market, I sold it, took the chips off the table, put it into a different deal. And again, I still pass by and it’s worth a lot more than I sold it for, and the guy I sold it to is doing well, and I’ve actually done other deals with him.

But it’s it’s hard to it’s hard to drive by old properties that I used to own. I don’t have regrets. If I chose to sell it because of the headaches to returns ratio, right? Then I drive by and I see, oh, they’re doing fine. Good for them. They can handle the headache. But I saved myself all that headache for all those years.

Worth every penny that I didn’t make. You’re you’re not wrong. You’re not wrong. So let’s talk a little bit about tenant retention. How do you cause, cause you’re a long term hold. It’s not a flip. So the goal is not to fill it up and sell it. I’m very much like you. So for us, tenant retention becomes the most profitable thing we can do.

If we can renew the tenant, if we can slowly increase the rent and not have to turn it, not have to find a new tenant, not have to take the risk of a new tenant that we don’t know that’s more money in our pocket in the long run. We always try to do some kind of activities to tell the tenants.

We care about you. We want you to be happy. We want you to stay here for many years. So what kind of strategies you guys have around tenant retention? Some of the easy stuff is, making sure all their maintenance requests are dealt with right away. Communication is key for all the tenants, even if you can’t get the repair done right away.

The fact that you’re communicating with them speaks volumes. Obviously, there’s always a once in a while, a tenant is just. and really goes crazy on you, three minutes after something goes wrong. When it comes to keeping the tenant and asking them to to renew the lease and to try to get a rent bump.

Something I’ve done plenty one of my partners disagrees with this method, but it’s worked and we’ve done it, both ways and we still go back and forth. We’ll reach out to the tenant. And we’ll tell them like this, your rent is, your lease is up in three months you’re a great tenant, always paid on time, we like having you some of the expenses went up on the property, and we do need to put an increase in on a rent renewal.

What do you feel comfortable with? And I’ll see if I can get it approved. Now I found that by asking them first of all, right away, they could say, Oh, I’m not, I don’t plan on staying. And, right away, I know, what’s happening, three months in advance. A lot of times I found that the number that they come back with is sometimes more than I thought that I would.

And sometimes if they come back with a lower number I’ll say, okay, I’ll try to get that done. And then, perhaps the next day come back and say, I can get it done for this much, plus, this much more. And I think the back and forth with the tenant, it relieves the sting of the increase, relieves the sting of seeing, the increase, in their mailbox right away.

Puts a human face on both ends and with text messaging it became a super easy, super simple very big into text messaging, all the tenants we offer that option for anything, they want to come in and pay the rent, they want to find the after office is opened text messaging.

And, we have, a few people here that monitor the. That text number and sometimes it’s me answering. Sometimes it’s somebody in the office answering sometimes somebody the local office answering but communication is very important to get them in. Sometimes they’ll tell you I’ll pay your increase, but I need a new oven and a new oven for me is easier and cheaper than, removing the tenant.

Fixing it up for three weeks, having to do, new paint, et cetera. A new oven is an easy very easy fix. They get what they want. That’s what they’re asking. Great. Continue. So communication is key when it comes to the increases. That’s very important. Tenants like to feel safe.

Cameras all over signs, that security is around. Used to think that having cameras and security maybe deterred people thinking, oh, this is a dangerous place, but I think for the most part, especially now, everybody’s got, yeah, it’s 2024, right? Everyone’s got cameras all over fancy home, bad homes, ring doorbells, etc.

Property is well lit sensors in certain areas that light flashes if somebody’s walking. Keeping things clean common areas we have people cleaning those, laundry room, keeping it tidy, making sure all the machines are working reaching out to the vendor, the laundry vendor just really making it a good place for them to stay.

Again, it’s all about retention for some of these tenants and yeah, whatever it takes. Yeah, and it’s really what it’s all about. But I want to reemphasize something you said earlier, and you actually repeated it twice, and that is communication. I can’t tell you how many times I had to train our staff to realize that, look, they have a work order, we couldn’t make it, or we went there and we’re missing a part and we had to order it, or whatever it is.

If you communicate with a tenant, they know what’s going on. If you don’t communicate, they think you just forgot about them or you’re neglecting them. So always over communicate rather than under communicate. We used to manage C class apartment buildings and, larger communicate communities, 100, 200 units and so on.

And, sometimes a water heater will go out like in the seventies, they built everything under a centralized water heater system or a boiler system. And it would go out and the entire property will not have hot water. And just the way things are, it’s always like a Saturday at 7. PM. Or on new year’s eve or on a holiday or whatever it is, right?

And, the plumber won’t come up and, or they came out and okay, you need a new water heater. There’s nowhere to buy it from. So I told all my staff, especially my onsite managers is if we have A what I call an incident or a crisis, right? You send a message out to the residents every two hours on the hour Just even if the update is we’re still working that the contractor is on side trying to fix this thing We’ll send another update when we have something Communication over communicate is better than under communicating.

And these days with text and email and automated software and mass emails, mass text, it really becomes a super simple to get it done and corrected. It’s so important to give the updates. We’re waiting for the contractor to come. The contractor is coming. He’s there. He’s working on it.

Just like you said, over communicate. Yep, exactly. And of course we use software management property management software, so that it’s as simple as typing up the message, clicking a button, and then everybody gets it. And the software we use actually tells you, do you want to send it to their email?

I want to send a text message. You want to send both? It’s just one button and you saw sent that message everywhere. And I also want to talk about the comment with the oven, right? Sometimes it’s, I want my carpets cleaned or whatever. As owners, we got to look at it from the perspective of if I can get, I don’t know, a hundred dollar increase in rent.

I just used a round number. It could be 25. It doesn’t matter. I’m looking at it at a six cap over 12 months. I just increased my property value by over 10, 000. So paying two, three, 400 for a carpet clean or a new oven. It’s that which is a write off It’s a no brainer But a lot of landlord will get stuck on the 400 expense and don’t realize that we don’t make money.

The big money in apartments is not from cashflow and it’s not from what’s left in the bank at the end of the month. It’s from your NOI and what it looks like on a five cap, six cap, whatever your capital in your area is, that’s where the big money is. Tenant retention and getting that rent increase is more important than one time expense.

Very true. Very true. Yeah. You mentioned earlier that you’re locally in New Jersey, right? I live in Brooklyn, New York but a half hour drive from New Jersey when I started living in New York is crazy crazy expensive. When I started, I was a kid that was living at home I had a job, when I say a kid, that was, 20.

Yes. I’m like that and there was no way I could buy something where I live I spoke to people, being in, being in my community, I hear about real estate all the time. I’m in the Jewish community in Brooklyn. So real estate plays a big part of just the conversation. Everybody.

Wants to be involved in real estate. Everyone likes real estate. You have doctors and lawyers who own real estate, everybody, you have these rich plumbers and, they own tons of real estate. Real estate is just something I found every, everybody who was well to do owned real estate.

And it was something I always wanted to get into. Spoke to an investor That I met from New Jersey when I say investor, he was a real estate, he owned tons of real estate and he recommended a few areas for me to look at. And, MLS brokers took me two, three months. I really just wanted to pull the trigger and buy something.

And that’s how I got to it. It was about a 45 minute drive from where I live. Maybe an hour with no traffic with traffic, but Yes, I started in Trenton, New Jersey purchased some more stuff. Oh, actually, when I purchased my first home, my goal was to buy one and done.

I used to watch these even before I bought real estate. I used to watch, if you remember all these infomercials that were on TV and I never bought, but the infomercials were like a half hour long and I used to watch them. And I remember, I don’t remember which one, but one said that, when you, most people, they buy a house for themselves, they pay it off over 30 years.

And when it’s time to retire, they can now sell this house and, downsize to a condo, et cetera, and have that extra, money along with social security and retirement as like a big windfall. And I remember thinking to myself, what if I just bought my neighbor’s house? Like I’m a regular guy, I own a house and, I also bought my neighbor’s house.

You fast forward 30 years, I don’t have to sell my house. I can now sell my neighbor’s house that I bought, that the tenants paid rent for and financed over the 30 years. So still living at home, not married, single. I figured I’m going to buy the home now, get my retirement, started.

And that’s it. I own one and when it’s time to retire in 35, whatever years I can sell this house and I’m good to go. It’s better than a 401k. Exactly. And, then I’m in real estate, I’m in the game. I’m a player. I, I know what’s going on. So yeah, a big learning curve, a learning process, just the entire process of buying the first.

And after about two, three months of collecting rent, maybe even two months, the numbers just started clicking in my head. Yeah. And I’m like, okay. There’s something into this thing. I could lay out another four or 5, 000 and maybe I could buy another one. And then, why not another. And that’s what I did back then.

Financing was much easier than it is now. We have these stated income loans and, all you needed was a pulse and you’re getting 105, 105 percent financing. I did a lot of the good old days of 2005 and six. Correct. I did a lot of seller financing, a lot of seller seconds. And till this day when I’m buying larger multi’s, I still try to keep the seller somehow involved in the property.

If I’m buying it from, a non institution where it’s a group or, a mom and pop type of guy. I try to keep him involved, even if it’s a small amount, I want his, I want access to him throughout vested interest. Yes. Correct. And it could be small, I could be buying a 7 million property and they could leave, 25 grand in there.

But the fact that I have a line to him speaks volumes. And sometimes, all I’m asking is for the 25 and they end up keeping in, a half a million. And I’ve done other deals with sellers who I met that way. And again, networking. Key is key. Partnerships are tremendous.

Partners. It’s amazing how you can find partners, like minded individuals. And real estate is is a great game. The partners really really work. Yeah. So you mentioned earlier that you guys now own, own in Cleveland. So what triggered the search? Cause I get the, an hour away from my backyard.

That’s easy. That makes sense, but going out to a different state, a different market, how did you pick Cleveland as a market? And why the move to begin with? Okay. I’m pretty sure I know the answer, but I was exploring, looking in other places other people were doing deals outside of New York.

New York is a tough market and there’s a lot of New York money. Okay. In outside real estate, Texas Carolinas obviously Florida, even more. So the last four or five, three, four years I came across this deal in Cleveland. Again, it wasn’t, it wasn’t a broker. It was, networking.

And the reason why it piqued my interest because I spent time in Cleveland. In a suburb of Cleveland for parts of high school. So I was, I knew the area. I knew exactly where this property was. And when I went to see it, I figured, okay, let me go visit my old stomping ground. Let me take a look at the property and how it pans out.

And I remember when I used to travel for school sometimes I would fly and sometimes I would, go on the bus and, it was eight hours of my disc man back then and it was okay. So when I went out there the first time I drove, I, Woke up 4am, drove, got there at, early afternoon I saw the property I was very excited about it because it just looked good it was on a nice street it was terribly managed, terribly Just some hindsight, just some the group that was selling it, they actually bought this as part of a portfolio with other commercial, retail types of properties.

And they, this was just like a one-off in that portfolio that they bought. And when they bought it, they figured, okay, we’ll take it on, no big deal. We’re really interested in other stuff. And they really just let it go. Management is obviously way different for, a subway franchise than for tenants living in class B B minus property. So they really just let it go and not necessarily with the repairs and maintenance. They just didn’t, they had nobody. They, they weren’t turning units. They weren’t finding new tenants.

It was just, Little by little getting more and more less occupied. So I felt that the entire value add strategy which I was looking for was simply, and really just being aggressive with management. And I, until this day, when people ask me what kind of value ad I’m into, it’s really just aggressive management.

I like to buy properties off. Long term owners. Typically I find this more meat on the bone. They’re more, available to speak to. They could work a deal. They can get involved. They’re nimble. And they leave meat on the bone. They, they’re in it for much less. They’re fine with where they are.

They’re not pushing the rents, they’re in it. They owe 2 million on it and they’re selling it for 9 million, they’re fine with a below average market rent for their for their property. So I’m not just coming in there and putting in stainless steel and granite for the value add.

I’m really just taking existing. Tenants, existing property, and just being aggressive with the management. And, my price point is obviously a lot higher than where, this guy’s selling it and I got to make it work. That’s what I’m doing. I’m, making sure the tenants all the month to month tenants, they’re getting notices right away about, please sign the lease.

I can give you this rent. If you stay, if you want to keep a month to month the rent will be this much. And I did a lot of that. And, you fast forward it’s cash flowing nicely. Awesome. So it’s really because you already knew the market from your school days. That’s why you ended up there.

I want to say I knew the market. I knew the area, but when I was in school there, I, I wasn’t a real estate guy. I was a student who was, sneaking out the middle of curfew and going bowling or something, but felt comfortable when I was there, like I knew, so I figured this might be a good place to, to start.

And yeah, I started in in Ohio, Cleveland suburbs for out of town real estate. Cool. So if you let’s start with that. It’s 2024. The market is going sideways a little bit. Personally, I think there’s going to be a lot of hurt coming up to the multifamily world in the next few years.

Mostly because we’re shifting from an environment where rents are going up 5, 10, 20 percent year over year and costs were flat at 2, 3%. Now it feels like we’re in an upside curve here where our costs are going a lot faster and our rents are flat. Some markets in the country are even going down.

Very few pockets are actually still going up, but nowhere near the rates that were going up in the last 10 years. What is your outlook on where we are in the market? What’s your plans going forward? Are you guys still in acquisition mode? I’d love to get your insight, especially as a person that’s at two full cycles.

So I’ll tell you and it’s a cliche, but it’s always the right time to buy. It’s just it’s a it’s the deal that matters, during good times and bad times, there’s always deals happening. Even during the worst times, there’s always deals happening. People can make it work.

They get a good deal. It’s distressed lender workout, however it gets done. There’s always deals to be had. So I’m always in acquisition mode. We purchased something back in June. We’re in contract now to purchase something. But I’m not just looking at every listing that comes.

These are deals that through networking I’m hearing about, and they usually have some sort of story along with it. Again, one of my biggest stories I need is I want a landlord that’s owned it for 10 years plus. Let me hear about those. Let me hear about a tenant, a landlord that, gave up on this market and he’s left with one property still in this area and he just wants to get rid of it.

That’s really what I’m looking at. When I come across a deal and it was purchased two years ago and Now it’s for sale, I can get a good deal that way, but I feel I need to be extra talented to make a deal work that some other operator, and they could be a good operator, some other operator bought it two years ago and now they’re selling it.

I find that again if there’s a lot of meat on the bone from a tired landlord, an older landlord, or a guy who just wants to get out, for whatever reason I find, I could just. Really, simple, value add, raise rents, be aggressive with management, clean up the building show the tenants you care.

I find that method seems to play out better, gotcha. And are you in any other asset classes other than multifamily or multifamily is your main and only thing? So I focus on multifamily. I do own some retail and office. I do own some mixed use properties. I’m also an LP investor into quite a few deals.

But again, really when it comes to LP investing. On my end obviously I don’t really have an involvement in the management. I’m really just vetting the GP, the operators and I’m, putting my money in that way. But for the most part, I focus on residential multifamily. Now, sometimes there could be a mixed use component to it, ground floor restaurants, et cetera, but for the most part residential.

Okay. So this is a question we ask every guest on the show. If you could go back in time and give young Steven Weinstock that driving that sits on the bus with his Discman on his way to Cleveland, give him a good advice. What would you tell him? Okay, outside of all buying the Amazon and Apple stock, outside of all that I would say to myself that I’m happy with how I started in the single family space.

I’m happy with that because without that, it wouldn’t have got me where To, larger assets and then, to multifamily I needed that education and that experience of owning multiple when I say single families, I usually mean one to force the first few were singles, but after a while I focused on really on the three and fours.

But I needed this experience to get me to to where I am. However if I could tell, myself, find partners. Give up some equity. It’s not a crime to get a good partner that will help you. It’s easier to get to, four properties with a partner than to sometimes get to two by yourself.

And sometimes, with the right partner, it’s really sky’s the limit and, partners at first I thought would just be another me. And instead the partners are. Not me. It’s everything that I’m not really doing everything that I’m not interested in, or things that I don’t really have the head for, or just not my forte.

And it took me a while to, to learn the value of partnerships. Find a partner that complements your strengths. That’s correct. Correct. That, that is a great advice that we hear often. Another one is get to the commercial side a little bit sooner. Yes. Obviously, I would have loved to have started a multifamily earlier.

But as they say, I had some limited beliefs and I figured either I just can’t do it or it’s just not for me. But time time heals all and I’m in it and I’m enjoying it very much. I don’t see myself buying smaller assets anymore. There are some, there are positives to it.

If you’re, an owner operator type of guy and you just want everything on your own, it’s great to buy it. All real estate is good to buy. Don’t not buy because of X, Y, and Z. Just, I’m a big believer. Buy, you’ll learn, buy, you’ll make it happen. If you have a half decent head on your shoulders, you buy it right.

You got a good loan. You should do well. Time. Heals a lot of real estate mistakes and during the good times, you could win in a year and during the bad times, it might take you 5 years to win, but I always say the 1st 5 years of owning real estate is the toughest. If you can get to that 5 year mark of owning an asset.

Usually good to go. The first five years is tough. Five to, 15 years is, you make some money 15 years plus 20 years plus that’s where wealth comes in. And yeah, to get to that stage is is, it’s great. But when you’re a 26 year old guy who owns some real estate you’re not thinking necessarily about 25 years in advance.

Is some serious wisdom that you just dropped here. And I tell all of my investors real estate is a 15 plus years game. If you’re playing a three to five year game, just take the money, $300, fly to Vegas, put it on red. You’ll get your answer faster. And because look, if you bought in 2014 and you sold in 2018, you made a lot of money, that’s awesome.

But you could have made the same choice in 2006 and lose your shirt. Correct. The, so the short term in real estate is really gambling. ’cause everybody wants to time the market, but nobody really can. You might get lucky and you might not everybody’s gonna have to roll the dice on that.

But there’s not a single property in the United States that you can show me that is selling today at the same price it was selling 15 years ago. There’s just not a single one. So if you’re playing the 15 plus year game, there’s just no way you can lose in real estate. I remember when the market crashed in 2008.

I used to say when people asked me about it or my opinion on it, I used to say that the people, the investors that are forced to sell are the guys who. End up, really taking a bath when a downturn hits and when I say forced to sell, I’m talking about guys who are investors who, buy to rehab to sell builders who build, in order to sell if you have a long term outlook or if you’re buying with, with an option to rent and keep it long term but if you have a long term outlook, When 2008 hits, it doesn’t really have to hurt.

You might not want to sell it that year, but if you could hold on to it for a couple of years you’re good to go. If you have to sell and the pandemic hits, okay, pandemic, maybe shut it down for a few months and, we saw some great stuff in real estate after that.

But if you have to sell is when the trouble hits. So if you’re not forced to sell, if you’re not a rehabber, you’re not forced to sell. That’s paying, 12 percent interest on your hard money loan plus carrying the property. If you’re not a builder, if you’re not a flipper, if 2008 comes, it doesn’t have to, it doesn’t have to kill you.

Rent, rent still got paid in 2008. It was still due. If you have Section 8 tenants, they were paying. But if you had to sell, it was trouble. And fixed loans are your friend. There’s a market for variable loans. I’ve been guilty of that as well.

But, it’s a big boy game. And if you want to do a variable loan, just make sure you know what you’re doing. Yep. Be ready for the down, downside as well as taking advantage of the upside. Correct. Correct. You have people who they underwrite it very well and okay, we’re getting a floating rate at 6 percent and we’re gonna, underwrite it just in case it goes to nine.

And, today they might be at 10 or 11 and have trouble refinancing out into into a fixed product. Especially some of the LTVs that were given with the variable loans that makes it tougher to exit. If you did a variable loan with a low LTV. You’re safer. You can get out of the loan easier.

But if you’re going to do if you’re going to play with valuable loans, just make sure you know what you’re doing. That’s my advice. Yeah. And that’s part of what we’re seeing and why I mentioned earlier, I think that the next two years are going to be challenging in the multifamily world is I’ve seen properties on, on.

Co star and so on where we can see loan data and you can see properties that are 93 percent occupied on the watch list. And you go, how does a 93 percent occupied property go on the watch list? And you dig down a little bit deeper and you realize that the DSCR is below 1. 25. That’s why they’re on the watch list.

But it’s the blame is both ways. It’s also because there’s a lender over there that gave them a loan to an LTV that would make them below the 1.25 at 93% occupancy. So the same bank that got them in the into that trouble is the one that puts them on the watch list right now. So it’s like I said, it’s a big boy scam and you gotta make sure you got your big boy pants on and if you’re taking the risk, be ready to pay for it.

Correct. We have a property where we assumed an existing Freddie Mac loan and it came, we got, we inherited on the watch list. So we knew what we were getting into. But again, the seller was, out to lunch and wasn’t managing the property and, the value add was, pretty standard in what we do, and we’re doing well with the property.

And. Till this day sorry till recently it was on the watch list, even with above 90%. So it recently came off the watch list. Thank God for that, but they didn’t, they wouldn’t release the reserve money that we put up at closing until it gets to 1. 35. We did what it took to get off the watch list but I guess we’re not there yet, if ever, to get to our getting refunded some of the reserves we put up by closing.

But, the rate is great, it’s in the fours, hard to complain about money that cheap. And it’s a good asset and we’re happy with it, but dealing with Freddie and Fannie and regulatory is definitely a lot different than the single family loans in 2001. That’s for sure.

Yeah, for sure. And I got a feeling, I know which lender you’re talking about. But we’ll talk about that after the show, Steven, I want to thank you for your time and I want to be cautious of your time. If our listeners wants to reach out, maybe invest with you, maybe. Brainstorm, ask a question. How can they find you?

Sure. My company is We, capital website is we Capital X, the letter X at the end, we capital x.com. On LinkedIn is probably the best way to reach me. I go to the website, I’m sure there’s a link to my email there. Always looking to speak to people. On LinkedIn, they could, reach out to me and message me for a phone call schedule a phone call.

That’s fine. We could talk about some of the deals we’ve done. Some of the stuff we’re looking at, always looking to help whether you’re a GP and LP just a guy who wants to get into single family homes. Give me a call. I’d love to chat. Other than that they can watch this podcast.

Awesome. We’ll make sure to put all those links in the show notes. Stephen, thank you so much for coming on the show. I appreciate it. My pleasure. Thank you very much. I appreciate it. Awesome. And for you, the listeners, if you could do us a favor and give us a rating, one star, five stars, we don’t care. As long as you feel we bring value, we’ll appreciate it.

And until the next time, thank you so much. Awesome. Thanks, Stephen. I appreciate it.