Listen to Neal’s most recent podcast guesting, an interview with John Casmon  of Target Market Insights.

Top Multifamily Markets in the US with Neal Bawa

by Neal Bawa | Target Market Insights

Speakers:  Neal Bawa and John Casmon

Neal:  Do not simply buy a good property. Go in and work that property. Be an interventionist asset manager. Do not let your property manager call the shots. You’ve got to be in control. Not enough people are doing that.

 [Music starts.]

 Announcer:  Welcome to Target Market Insights, a podcast to help real estate investors navigate neighborhoods to the lens of local experts. Each week we speak with local specialists to talk about their target market, useful tip, and the latest trends in development. Location is the number one rule of real estate and this show will help you identify best market and submarkets for your investing. This is Target Market Insights with your host, John Casmon.

 John:  Welcome to Target Market Insights. I’m your host, John Casmon and thank you for joining us for another great episode.

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 I want to invite you to join us at our second annual Midwest Real Estate Networking Summit. This is a no-pitch, no-BS event, focused on networking and connecting investors with some of the top minds in real estate. Come out to Chicago, it’ll be in June, it’s June 1st and 2nd, and you’ll get a chance to connect with experienced investors from all sorts of disciplines, from multifamily, apartment syndication, fix and flips, note investing, and so much more. Just visit MidwestRESummit.com and use promo code “target” to get your tickets today.

 Again, that’s promo code “target” and the website is MidwestRESummit.com.

 Now, today we’re going to be talking about the mad scientist of multifamily. Neal Bawa, affectionately known by his friends as the mad scientist of multifamily, is a technologist and entrepreneur in love with the power of numbers to create profit for real estate investors. He is the CEO and founder of Grocapitus, a commercial real estate investment company and his firm currently acquires commercial properties across the U.S. with a portfolio north of 1,800 units, and I think it’s actually more than that now. He also serves as the CEO at MultifamilyU, an apartment investing education company.

 With that said, let’s welcome to the show, Neal Bawa.

 Neal:  Thank you, John, for having me on the show. I’m super excited to be on this podcast.

 John:  Oh, Neal, great. I’m still excited to have you on as well. I was telling you before we hit the recorder button that you’re another person who loves to talk about target markets and finding emerging markets and understanding how to navigate that landscape, so, I think you’re going to provide a lot of great value for our listeners today in your approach.

 I know I mentioned over 1,800 units, but I know you’ve closed on some deals more recently, so our number is probably a little outdated, right?

 Neal:  Yeah, it’s up to 2,000 now. We’re both net buyers and sellers in this market, so it does tend to fluctuate. But the portfolio is at the highest dollar number. We just crossed $150 million in portfolio value.

 John:  Nice, congratulations.

 Neal:  Thank you.

 John:  That’s awesome. As we’re recording this now, you know, the market, the interest rates are continuing to move a little bit and I know that there is growing—I don’t want to say concern, but there’s definitely more chatter about where we’re at.

 How are you and your team looking at kind of the market cycle and kind of the overall economic indicators when you look at everything going on?

 Neal:  Well, like everybody else, we are looking at interest rate hikes and we’re looking at recessions. What’s funny to me, John, is, that sometimes when I’m listening to people talk, they’re worried about both at the same time. The first thing that I want to tell your listeners is, you’ve got to hang your hat on one of these two. It is very unlikely that interest rates are going to go up at the same time as us going into a recession. That simply doesn’t happen. It’s basic economics.

 Either you’ve got to be worried about interest rates going up or you’ve got to be worried about us getting into a recession an that affecting multifamily values and single family values.

 Right now, eight out of ten economists say that they’re more worried about the downside risk than they are about the upside risk. Seven months ago, more people were worried about the upside risk. Essentially, what that means is they were worried about interest rates getting so high that people that had to refinance their properties. Numbers would not pencil out because you’re paying so much in interest.

 No one at this point, that I know of, that is savvy in this market is worried about that today. In fact, I can tell you that the people that truly know this much better than most of us, the people that actually sell rate caps—these are companies that basically sell a rate cap so that your rate doesn’t go beyond a certain level—they don’t think that interest rates are going up. I buy rate caps for my bridge projects. When I’m getting a bridge loan, I buy a rate cap.

 I bought a rate cap for a project several months ago, three or four months ago and it cost 2-1/2 times to buy that rate cap compared to what it cost to buy it for the property that I closed yesterday in Tucson. So, it’s only costing me 40% to buy the same rate cap today. Why? Because the people that are setting rate caps don’t think that rates are going up.

 At this point, the risks are more to the downside. Why is the Federal Reserve all of a sudden being overly-dovish and saying—announcing, almost in the beginning of a year saying, “We are not going to do interest rate hikes this year.” Does it make sense for them to do that? No. But it makes all the sense in the world if they’re afraid that the economy is going to go into a recession at the beginning of next year and so what they’re doing is, they’re trying to fight that recession nine months out because interest rate policy takes nine months to take effect. What they’re saying is, we’re going to have a dovish approach.

 They might actually succeed and ward off that recession because now they’re taking a lose-economic policy, and they’re also ending what is known as quantitative tightening. They’re ending it in September.

 Both of these are good news for us because number one, this means that rates will remain low for single family and multifamily investors. Also, it means that the Federal Reserve is starting the fight to ward off the recession early. Last time, they were very, very late to the game. This time, it seems like they’re more cognitive of the fact that there could be a recession in 2020.

 It’s really at this point, I’m worried about recessions. I’m not worried about interest rates.

 John:  Got it. Interest rates you’re not worried about, focus more on the recession. With that said, for investors or let’s just speak for you, I guess, the way you’re looking at that, how are you adjusting? It sounds like you’re still buying the rate caps on anything that has bridge financing or any kind of adjustable terms. Are you looking to lock in long-term debt at this time or do you see that it’s not necessarily a mandatory thing at this time?

 Neal:  I don’t think that—I’m really not interested in long-term debt at this point in time. The math doesn’t work. The truth is that if you’re looking to buy in this extremely red-hot inflated market, you’ve got to get bridge loans. You’re not going to be winning a lot of projects with 10-year or 12-year sort of debt. Having said that, I just did Chelsea Place 3 month ago with 12-year debt. But for the most part, if I’m doing a five-year horizon project, I am going with bridge debt.

 But what I’m doing is, I’m doing two things. Number one, I’m buying rate caps, which are so inexpensive today that it makes all the sense in the world to buy them, right? What’s the downside of buying a rate cap that only cost $25,000 on a $10 million project? There’s no downside.

 Then on the other side, what I’m doing is, instead of doing a two-year bridge, I’m doing 3 + 1 + 1. Those are bridge loans where I can basically—I don’t have a prepayment penalty beyond 18 months, so I can basically execute quickly and get out of it in 18 months. Or I can take two years. I can take three years, I can take four years, I can take five years. To go four or five years, I’m going to have to pay, but that payment is not going to kill me. It might be painful, but it’s not going to really affect my project in a strategic manner, right? Because these are 1 point or sometimes they’re a half a point. If it’s a $7 million loan, I might have to come up with $35,000, but it buys me an extra year, if I’m in the middle of a recession.

 For the upside, rate caps. For the downside, get bridge loans that are not 2 years, they’re 3 + 1 + 1.

 John:  Makes sense. And I think to your point, even if you are wanting to be, let’s call it conservative, and I’ll use air quotes there, and get longer-term financing in place, let’s keep in mind, too, that there are prepayment penalties. Sometimes if you go ahead and get a 10-year loan, but if we are in a situation where the interest rates are low and they continue to drop, you could be looking at those prepayment penalties, the yield maintenance on that.

 There’s different components to look at when you’re securing debt for a project, so it’s not necessarily to say that there was one solution that is better than the others. It’s just understanding both sides of the coin. And then each investor has got to make decisions based on the comfort level they have and the risks that are involved in the deal.

 Neal, that’s great information. I want to talk a little bit more about where you’re doing your projects. You mentioned one of the projects you just closed, but you kind of have a reach across the country. Let’s talk about some of the markets where you have deals now and kind of where you’re focusing your energy going forward.

 Neal:  Absolutely. I think that I believe very strongly that America is splitting into two countries. One part of America is losing to the other part. The part that is losing population will continue losing population. I’m looking mostly at eastern cold states. They are the ones that are bleeding population and I do not see what trend slowing down. In fact, I see it accelerating.

 Chicago, your own city, just lost 7,000 people last year. That may not seem like a huge number, but actually, it’s not something that was imaginable 10 years. A lot of cold states losing population, so a lot of people going to the Southeast.

 Florida is getting 500 people a day. That adds up. That’s a huge number of people. When that adds up to 36, 37,000 people entering into the state every single year, in addition to a very healthy birth rate, then you’ve got a situation where the population growth leads to job growth. Job growth leads to household formation, which basically leads to home prices going up, which again, starts the cycle of their being more jobs created.

 I’m seeing the Southeast doing really well. And then I’m seeing states that are not California, in the west, doing well. What is happening is California is not really a state. We tend to think of it as a state, but California is basically almost 20, 25% of America’s economy. Think of it as a mini America, but it’s a super expensive America. Cap rates are at 4%, there’s no yield in the marketplace, it’s an expensive place to live in.

 What California is doing a really, really good job of is driving people away from California and they’re going to Portland, they’re going to Oregon, they’re going to Arizona, and they’re going to Nevada. All of these states are doing really, really well because they’re attracting both people and businesses from California. To me, some of the states that are doing phenomenally well, that could continue to do well, are Washington, Oregon, Idaho, Utah, Arizona, Nevada. Those six states are right there, I think are going to do really well.

 Then you’ve got the Southeastern states, the Georgia, the Florida, the obviously Texas, those states will continue to do well. But within those states, even though there are some super powerful markets, such as Dallas, what’s happened is for the moment, those markets are expensive. They’re saturated. I’m not buying in places in like Dallas, but I am buying in places like Fort Worth. I’m looking at Houston. I’m looking at submarkets of Houston.

 Then in Florida, Miami is really expensive, and Orlando is really difficult to get into, even though it’s a phenomenal market, so I’m looking in markets like Jacksonville and Tampa.

 I’m also looking at smaller, riskier markets in Florida, in what I call the Corridor of Opportunity. If you’ve heard—I do a podcast every week where I’m a guest on someone else’s podcast, and there’s about 12, 13,000 people that take webinars on my site, MultifamilyU.com, and I talk about this Corridor of Opportunity that starts at the City of Deltona, it’s about 15, 20 minutes north of Orlando, and the corridor runs through Orlando and it turns basically southeast, runs through a city called Lakeland, which is about an hour from Orlando, runs for another hour through Tampa, then turns south and hits, finally hits, a city called Bradenton.

 The corridor was supposed to end there. It was supposed to be 145 miles long and anything in that corridor was really golden. But now the corridor is actually extended down, further down, through Sarasota to Cape Coral and Fort Myers. That Corridor of Opportunity is the most powerful single corridor of real estate investing in America. It’s actually spreading and turning more into a web rather than a corridor, so places like The Villages are becoming part of that and a number of other smaller cities that are nearby, are also becoming very, very strong.

 If you’re not locked into any particular state, take a look at the Corridor of Opportunity.

 John:  Love it. You gave a lot of great information there, so I’m going to try to recap and then we’re going to dive in more to this Corridor of Opportunity. But you talk about really just the country is splitting into two mini countries, right? You’ve got the cold states, the East cold, some of the Midwest, the areas that are losing population. Then you have the more warm-weather states that are growing, and you see that trend continue to happen.

 I love your point about California is that it’s doing a great job of driving people away from California and those nearby states are seeing the benefit.

 Then you started talking about some of the Texas markets. You’re not looking in Dallas necessarily, but you’re looking in Fort Worth, you’re looking in Houston. In the Florida market, you talked about Jacksonville, Tampa, and this Corridor of Opportunity.

 Before we jump into that Corridor of Opportunity, I wanted to go back quickly  to—you said Dallas is saturated. What do you mean? Can you put some context to what you mean by that it’s saturated? Are you saying that it’s just too many investors there or what exactly do you mean when  you say Dallas is saturated?

 Neal:  I think it’s considered, and rightly considered, to be one of the top markets in America. On the one side, there’s a huge number of investors. On the other side, there’s a huge number of syndicators going in, and on the third side, there’s a huge number of developers bringing units to market. It’s a trifecta, right? Individual developers want to buy everything they can get their hands on because Dallas has done so well for the last six years. Syndicators like me are looking for large multifamily and the developers are bringing 20, 30, 40,000 units to market every single year.

 The weight of all of that is weighing on Dallas’ market values for both single family and multifamily. In my seminars from three years ago, Dallas was at the top of everything and now it barely makes it to the top ten. Again, out of a thousand cities, being in the top ten is really good, but clearly, there’s a lot of pressure on Dallas and I see its rankings falling and at some point, it may basically fall out of the top ten before it comes back up.

 I still think that the long-term demographic trends in Dallas are stronger than anywhere else in the U.S., but the short-term trends there are not as bullish.

 John:  Got it, it makes sense. Let’s go back to this Corridor of Opportunity, where you mention that it starts in Daytona, kind of runs through Orlando, then Tampa, Bradenton, and then Cape Coral and Fort Myers. What’s driving the growth in this area?

 Neal:  Here’s what’s really interesting. What’s driving the growth is Orlando. What’s happening is, you have all these people moving to Florida and the people moving to Florida are more worried about hurricanes than the people that live in Florida. A lot of the people that are moving to Florida are actually moving to Orlando because people have this feeling—rightly so—that a category 5 hurricane that hits Miami could turn into a category 3 by the time it goes inland. Orlando is 100 miles inland and typically, that is correct. A category 5 hurricane, which could basically just blow the roof off of a house, is going to just be a tropical storm by the time it hits Orlando.

 Orlando’s population growth is absolutely stellar. So is its job growth. Anytime you see job growth above 3%, that’s a metro to watch. Very, very often, month after month, I see Orlando being close to 4%, so fantastic job growth.

 Also, think about businesses. If you’re a business and you have all these warehouses close to the shores, you’re now worried about it, so what people are doing, what businesses are doing, is they’re moving their factories and associated warehouses away from the shores of Florida into Orlando.

 Orlando is really the big driver, but because Tampa is fairly close on one side, Deltona is close on the other side, Lakeland is an hour away, all of those cities are benefiting. Tampa, think of Tampa as being the biggest beneficiary of the drive for more business to go into Orlando.

 Orlando is also becoming a healthcare destination. If you Google it, some of the healthcare custom projects that they’re building that are $2 billion and $5 billion, are absolutely spectacular.

 John:  Well, that makes a ton of sense. It’s people looking to go to Orlando, companies are looking to move and expand in Orlando, and then Tampa, Bradenton, Daytona, these other cities are really just benefiting from that growth of what’s driving people there.

 What’s driving people to Orlando? I mean, we’ve talked a little bit about weather, but obviously, it’s more than just weather that’s making people move. Is it the jobs there? Are there certain industries that are going? Or is there something else that we just haven’t really talked about yet?

 Neal:  So, low-cost metros close to high-cost metros have done really well in the last three years. Vegas has done phenomenally well because it’s so close to Los Angeles. Boise, Idaho has done so well because it has a highly-educated work force and it’s so close to the Pacific Northwest.

 Phoenix has done so well because it is so much cheaper than California and Seattle and Washington and Oregon.

 We are seeing a trend in the last two or three years that low-cost metros that are close to high-cost metros are definitely doing well.

 If you look at beyond Tampa, when the Corridor of Opportunity turns south, those areas are pretty expensive. Sarasota is expensive, Cape Coral, Fort Myers, a lot of these areas are pretty expensive and so you’ve got all these expensive areas and Orlando, basically, has a lot of land that’s cheap, is flood-resistance, and so it’s just one of those ideal places that a lot of businesses and a lot of people migrating from other states are going to.

 John:  Got it. It makes sense there. All right, so, outside of the Corridor of Opportunity, where else are you seeing some great opportunities in this market? We kind of talked about Jacksonville, Tampa, and then some of the Texas markets. Where else are you looking right now?

 Neal:  Well, I’m beginning to see some interesting things happen in two of the Midwest markets. One is Indianapolis. The other one is Kansas City, Missouri. Not Kansas City, Kansas, but Kansas City, Missouri. Both of these markets are attracting significant amounts of institutional capital. I track five different providers of data, there’s Costar, Local Market Monitor, Housing Alerts, Neighborhood Scout—I can’t remember the fifth. Oh, City Data. These five providers, when I’m looking at the statistics, they are really, really strong right now for Kansas City, Missouri, and they’re also very strong for Indianapolis.

 Indianapolis and Kansas City are both high crime markets, so you’ve got to be careful where you buy in those markets. There’s some really, really rough areas. Actually, if you come to Chicago to John’s event, I’m going to be teaching you how to pick neighborhoods inside of a city, but in general, I think those are two good cities to look at.

 Now, if you don’t mind expensive cities, and there’s people who want to invest in expensive areas because they like the stability, well, then look at Utah. Utah is the second-fastest growing economy in the U.S., and it has its own Corridor of Opportunity, so if you land in Salt Lake City and drive north for about an hour and 15 minutes, you end up in a city called Ogden. Even a little bit further north of that is a city called Logan.

 From Logan, if you start driving downwards, you’ll hit Salt Lake City in about 80 minutes and then keep driving downwards past Orem, Provo, Springville, all the way to Spanish Fork, that is an incredible area of opportunity. Much lower cap rates than you would see in Florida, but then there’s a lot of growth available there as well.

 That’s another 145, 146 miles, starting north in Logan, ending south in Spanish Fork, crossing through Salt Lake City and Provo. Incredible area of 10-year opportunity and growth. That area is not just great for investing, you might want to consider living there.

 John:  What is it about this Corridor of Opportunity? We talked about Orlando and it makes sense when you think of the growth in Orlando, just based on Orlando is a city where many of us probably picture families going out on vacation and different job industries and the tourism that’s there, warm weather, fun times, that kind of makes sense, I think, on a surface level.

 What is it about Utah? This Corridor of Opportunity that’s really driving the growth and driving the people to come and live in these areas?

 Neal:  Well, the first thing is, Mormons produce a large number of babies. This may sound funny, but the larger your family, the bigger your houses are going to be and that helps drive your economy. They have an extremely high birth rate. Florida does, too, because Spanish populations tend to have a high birth rate. But Mormons pretty much have the highest birth rate in America.

 It’s makes sense that if their population grows much faster than everybody else, then their state would grow faster than everybody else. That’s the first thing.

 The second is, that it’s a republican state that has balanced its budget and invested a great deal of money into its infrastructure. They’ve done really well with light rail, they’re doing a $5 million airport expansion in Salt Lake City. Third, is that the Mormon Church is the richest church in America, which means that they tend to buy all the land that becomes available. We think of Utah as it’s just open land. It’s anything but. The Wasatch Front has water on one side and mountains on the other and a narrow strip of land that’s running north to south. That’s all you have. And if the church keeps buying everything and never really sells anything, then eventually you are going to run out of land and that’s what’s happening and that’s why there’s a great real estate opportunity.

 The fourth piece of it is not Salt Lake City, and this is the most exciting part. This is what I got into and I’m really enjoying. South of Salt Lake City is the City of Provo. Provo, in my mind, becomes Austin in 10 years. Austin has done phenomenally well. At this point in time, like some of the best real estate in all of Texas is in Austin and will continue to go there. They’ve done a great job, but remember, tech takes time. Tech started in Austin in the mid-90s. Now it’s been 20-plus years since tech has been going there.

 Provo has had tech going there for five or six years. It started with Novell and then it led to Adobe establishing a new center there. Then they had multiple billion-dollar start-ups and then Google Fiber basically wired the entire City of Provo for free. If you live in Provo, you get 5 MB of Google Fiber for free and you can upgrade if you like.

 But those sorts of things happen. Provo has the trifecta. No other city in America has this unique trifecta.

 Number one, Provo has two world-class universities. They’ve got Utah Valley and Brigham Young, amazing, amazing schools that have a huge number of engineers that are coming out still at very, very inexpensive cost, so companies are attracted there. They’ve got the education.

 Secondly, they’ve got a very, very young population. Provo is a very young place and it’s got an incredible vibe, which I think it comes from that student population and from the technology. The second piece, the driver really is that young population is driving tech companies into Provo. You’ve got the education, you’ve got the tech.

 The third X-factor of the trifecta is the most key one  that people don’t think about. Provo is 20 minutes from skiing. From world class skiing. When you’ve got a young population that is attracted to technology and loves skiing on the weekends, you’ve got an eclectic mix that nobody wants to leave. Mix that with extremely low crime and you’ve got almost the perfect city to live in.

 John:  Love it. Great information and I love the great tips you gave. The quotes you gave, it’s Provo will be Austin in 10 years. Then you talk about Adobe there, what Google has invested there, the two universities, the skiing. Those are the things you’re looking for. I mean, you’re looking at the projections. If you’re looking for emerging markets, I believe Provo is ranked number one on best cities to—

 Neal:  It is.

 John:  Yeah, one of the best cities lists that I saw recently. I mean, those are the kind of things you’re looking for. I mean, if you’re open to investing to wherever, you can just literally cherry pick a city, I mean, these are the kind of places where you want to go. You may be more tied to a specific community, neighborhood, maybe it’s your backyard. In those cases, you may want to dive a little bit more into how to find the best place.

 Let’s talk a little bit more about that. You mentioned some of the reports you use. You mentioned Costar, Neighborhood Scout, and a few others, as far as resources that you pull from. But as you talk about finding the best submarkets, in any city, what are some of the top line, key things that our investors could start doing to make sure they’re picking the path to progress in their market.

 Neal:  Well, the path of progress is the path of jobs and the path of construction, right? A lot of people say, “I know the path of progress through a city.” When they say that, they’re either talking about jobs or they’re talking about new construction.

 Those things tend to go together, though they don’t go together 100% of the time, I have to tell you that. If you could track where the jobs are going in any particular part of your city, you could actually look at the path of progress and say, “This is what’s really the path of progress in any particular city.” Track the jobs. Track the new construction.

 Sites like City Data allow you to look at the demographics. The typical demographics that you would be looking at, these five are universal. They’re really universal. Number one is population growth. Whenever possible, go into a submarket that has population growth because population growth will drive up the median household income of the people living there. When you drive up median household income, guess what happens? Real estate values go up. The median house or condo value is the third number to look at. You’re looking for that to be increasing continuously.

 Number four is, is crime decreasing? If all is going well in the submarket, crime should be decreasing.

 Number five, unquestionably, is jobs, jobs, jobs. Jobs is a tactical driver. It’s not strategic, it’s not long-term, but in the last 12 months, how many jobs has that particular area created? There’s so many ways to look at this information. I’m actually—in about a week—releasing a blockbuster course on Udemy.com that is going to go over this stuff, how you can figure this out for any city, any neighborhood in the U.S. Check that on the Udemy website in one week and you will see a step-by-step course—it’s two hours long—that takes you through this process and it works for any city and any neighborhood in America, all of those metrics.

 But in the end, it comes down to those five key metrics. Once you’re in the neighborhood, then the two other metrics that I like to look at is the unemployment rate of that neighborhood and its poverty rate. Poverty is really a very key driver. Chicago is a perfect example. When you’re in places like South Shore, the poverty level may be at 30%. It’s really hard to deal with on a tenant basis. It may be a great market for fix and flip, but if you’re going to buy and hold in an area with 30% poverty rate, your cost of evictions is going to be insanely high.

 Whereas in North Chicago, poverty rates are often below 10%, 12%, so they’re very manageable.

 Those are some of the things that you’ve really got to look for when you’re picking cities and neighborhoods.

 John:  Love it. You gave five things. I got population growth, median household income, crime decreasing, jobs, and I think I missed something.

 Neal:  The median house or condo value. You want to see house values going up continuously. If you’re an investor, don’t bet on the future. Here’s a quote from me:  A speculator bets on the future. An investor bets on the past. A speculator says, “Things will go up, hence I should buy today.” An investor says, “Things have gone up, so they will continue to go up. I’m going to buy today.”

 Be an investor, don’t be a speculator.

 John:  I love that. I know you just mentioned the Udemy course that you have coming up. You have the MultifamilyU platform. You spend a lot of your time doing education. You mentioned earlier that you’re going to be coming out to the Midwest Real Estate Networking Summit and I look forward to your presentation talking about how to find the best submarkets and taking this information in more detail and actually helping to identify some of those submarkets for our guests who are going to be in attendance.

 But with the MultifamilyU platform, you spend a lot of your time, a lot of your energy educating others. Let’s just talk a little more about that. Why do you think it’s so important to educate people and kind of give back and share a lot of this data and information to help other people along their path?

 Neal:  Well, there’s altruistic reasons and there’s selfish reasons. My altruistic reasoning is this:  I have had one absolutely disastrous project in my life, and I wish that at that point I had found a mentor that had shared the information that I now give out, that I’m going to be giving out at the Midwest Summit. I wish someone had done that to me and I wouldn’t have wasted thousands of hours of my life.

 My goal is that 10,000 people a year should use the metrics and dashboard that I provide for free, and part of that goal is a Udemy course, and those 10,000 people make better investment decisions. I would be jazzed to be effecting the real estate investing outcome of 10,000 people a year positively. None of them have to invest with me, but I’ve played my role.

 Now, on the selfish side, what I find is that when I do more educational outreach, I do more outreach with folks such as you. If I find partners, I find projects, and I find investors. I don’t do it in any organized fashion. We basically do whatever we can. MultifamilyU.com does over 100 webinars a year. We don’t allow any pitches at all. We’re crazy strict on that. You have to come in, you have to provide content, and people, if they like it, they’ll contact you. Our goal is to basically provide a deep dive educational platform.

 Yesterday, I taught people a complex revenue management system named LACIL and 500 people signed up. Today, my Vice President and partner, Anna Myers, had a webinar on cost segregation, the benefits of cost segregation to multifamily are spectacular, especially with the 2018 law, and so we taught that.

 Then on Thursday, I have hundreds of people signed up where somebody that I really know and respect, or really know well and respect, is going to teach us how to use LinkedIn as a tool to find investors, to find property managers, to find all of the different resources that you need in your real estate business. That event is going to be this Thursday.

 Those are the typical sort of webinars that we teach. Always deep type, always rich in content.

 John:  I love it. How can our listeners get access to MultifamilyU, if they want to sign up for some of these webinars?

 Neal:  MultifamilyU is free. It is completely free. All you have to do is go to MultifamilyU.com. At any point of time, when you get to MultifamilyU.com, that’s Multifamily followed by the letter U, you will see at least a dozen different courses that are coming up live in the next week or two.

 Again, we call them courses because we feel that they’re more than webinars. There’s an incredible amount of content being taught in an hour’s timeframe.

 Then there’s dozens of them that are archived. Everything from how to get commercial loans to how to do due diligence to how to pick cities, what are the top cities for rental growth? What are the top cities for appreciation? Syndication, legal structuring, all of these are webinars that are archived there from experts in the industry. No one has to sign any subscriptions. No one has to buy anything. It is meant to be a free university.

 John:  Yeah, so you guys, please check that out. MultifamilyU, the letter U. Neal does a great job of putting together these webinars and these courses and getting some great speakers to share. It’s a really good platform.

 Announcer:  And now, it’s time for the Bullseye Round!

 [Music starts.]

 John:  Give me your number one tip for winning your market.

 Neal:  Do not simply buy a good property. Go in and work that property. Be an interventionist asset manager. Do not let your property manager call the shots. You’ve got to be in control. Not enough people are doing that.

 John:  Love it. Be an interventionist property manager, don’t just give it up to the PM.

 How do you stay on top of market changes?

 Neal:  Constant research. One of the things that I do on MultifamilyU.com, if you go to MultifamilyU.com/toolkit, you’re going to see all of my newest research. As I find the research, I put it in the toolkit, and that changes throughout the year.

 I think that you got to be absorbing that data. Please understand this. External factors beyond your control are affecting you more than the factors that you have control on. In real estate, those factors are far more numerous than the ones that you have control on. The only way to factor those in is to know what they are and how they’re affecting you.

 If you’re not spending at least an hour a week learning about all the things that are affecting your real estate returns, you’re doing yourself and your investors a disservice.

 John:  Give me a daily habit that helps you stay focused on your goals.

 Neal:  Every day before I finish, I write down everything I want to do the next day. Not enough people do that. Finish your day by writing down, “This is what I want to achieve tomorrow.” If you do that every single day, you’re going to be way more organized and get way more done. Because otherwise, the craziness of the next days are basically going to consume you and you’re never going to get the really important stuff done.

 John:  Love it. All right. Give me the best business or real estate book you’ve read in the last year.

 Neal:  Ah, that’s a hard one because I’ve read so many, but the one thing comes to mind. The one thing is really about focus and about how at any given point of time, you can only have one thing that is more important than all of the other things that you’re doing.

 If you have trouble figuring that out, you need to put a lot of thought into it because the truth is, there should only be one. The book teaches you how to identify the one thing that is the most important today.

 John:  Give me a digital or mobile resource you use for your business.

 Neal:  Well, apart from MultifamilyU.com, the one site that I think people don’t use enough is City-Data.com. It is an incredible treasure trove of demographic information that could tell you a spectacular amount of information about any city or any neighborhood that you’re looking to invest in, especially as a real estate investor.

 For all of you out there that are focused on large multifamily, I’ll give you a second resource, WeAreApartments.org. That’s We, W-E, A-R-E, are, apartments, with an S, dot org. That’s an incredible website that tells you what is going to happen in apartments over the next ten years.

 John:  I love those great resources there. Then you are out in the Bay Area, so great weather there, great food as well. Give me your favorite place to grab a bite.

 Neal:  That’s a really tough one. I think, I’m Indian, and while I enjoy all kinds of foods, there’s a hole in the wall here called Shalimar in Fremont and there’s lines outside the door. It’s truly the worst service that you will ever find, but the most amazing food that you will ever find, so check it out. Shalimar. I think it’s **** [0:37:01.0]

 John:  All right, we’ll definitely make sure we check that one out there, Shalimar. We’ll definitely link to that.

 Neal, what great information you gave, man. I really appreciate you coming on the show, sharing how you’re finding deals, where you’re finding deals, the process, the data points you will get. You talked a little bit about the cold states versus the warm states and how there’s so much growth happening in, not just Florida, but the south and the near west outside of California.

 And just what to look for, these Corridors of Opportunity, in particular in Florida, as well as in Utah, and that there’s some opportunities in the Midwest we can look at, Indianapolis and Kansas City, Missouri. Lots of great information, Neal, and definitely want to make sure that our listeners check you out. They can go to MultifamilyU.com and check out some of the multifamily information. You’re going to be one of our speakers at the Midwest Real Estate networking summit.

 Then if folks want to get in touch with you, send you an email or connecting the other way, what’s the best way for them to get a hold of you?

 Neal:  I’m very accessible to people. My first name is spelled the Irish way, so it’s N-E-A-L. [email protected]

 John:  All right. Neal, thank you again for coming on the show. We hope you have a great rest of the week and we look forward to seeing you in June.

 Neal:  Thanks for having me, John.

 John:  Thanks for listening to this episode of Target Market Insights. Now I know I got some great value out of today’s guest and I hope you did, too. If you did, I need you to do me one big favor, drop me a quick line and let us know. You can shoot me an email, you can shoot me a text, you can Tweet me, you can hit me on IG in the comments, you can slide them through the DMs, whatever. If you can go ahead and do that, my information is there, @JCasmon for Instagram, for Twitter. Then you can also reach out to my email, [email protected]

 With that said, I need you to do the same thing for our guests. Our guests are dropping some great gems, some great knowledge. We need you to reach out and let them know that you appreciate the information that they’re giving. Their information is always in our show notes, you can check them out there.

 One last thing, if there is a guest that you would love to have on the show and talk to, let us know or if there are markets that you want us to talk about, send us a note. I mean, there are definitely some markets that we haven’t hit yet, so we want to make sure we get some guests to provide some information, some knowledge of those markets soon. But by all means, if there’s a market or there’s something that you guys want to hear about, let us know and it kind of helps us make the show even better.

 If you have not yet, please subscribe on iTunes, Stitcher or Google Play and make sure you don’t miss an episode. With that said, thank you again for listening. We look forward to bringing you more Target Market Insights. Take care.

 [End of Audio]

 

Key Market Insights

  • Controls a portfolio worth $150MM

  • Interest rate hikes and recessions: the two don’t typically happen simultaneously

  • Cost for rate caps has dropped 40% due to Federal Reserve announcement

  • Neal believes rates will remain low for investors

  • Looking at bridge loans that are 3+1+1 instead of 10-year loans

  • Florida 500 people a day 36,000 in-migration annually

  • States that are not California are doing well – CA is a mini-America with 25% of the economy

  • States poised to do well: WA, OR, ID, UT AZ NV, GA, FL, TX

  • Looking at Fort Worth, Houston, Jacksonville, and Tampa

  • Dallas has a trifecta of developers, syndicators and investors

  • Corridor of Opportunity: City of Daytona, runs through Orlando, through Tampa through Bradenton, now extends to Cape Corral and Ft Myers

  • Orlando is driving the growth, with people having concerns about hurricanes

  • Job growth is close to 4%

  • Becoming a healthcare destination

  • Low cost metros that are close to high cost metros have done well: Vegas to LA, Boise to PNW, Phoenix to CA

  • Midwest Opportunities: Indianapolis and Kansas City, Missouri are both seeing great opportunities

  • Utah’s Corridor of opportunity: Ogden to Logan, Provo, Spanish Fork

  • Why Utah: Mormon’s produce a large number of babies, invested heavily in their infrastructure, Mormon church is richest church in America

  • Adobe established a center in Provo, Google Fiber wired the city for free

  • Two world class universities: Brigham Young and Utah Valley

  • Young population is driving tech, 20 minutes from world-class skiing

  • Use City-Data to track population growth, will drive up median HHI, median house/condo value, crime decreasing, and jobs

  • Unemployment rate and poverty rate

  • Had one disastrous project in his life and wishes he had a mentor to help

  • 10,000 people per year can make better investment decisions

  • When he does education, he also finds partners, deals, and investors

Bull’s Eye Tips:

Winning Your Market: Work the property, be an interventionist property manager

Tracking Market Changes: Constant research

Daily Habit: Write down what he wants to do the next day

Resources:

Costar

Local Market Monitor

Housing Alerts

Neighborhood Scout

City-Data

Best Business Books:

The One Thing by Gary Keller

Digital Resources

WeAreApartments.org

Udemy

Tweet This:

“America is splitting into two countries: Cold States are Losing Population”

“Interest rate hikes and recessions: the two don’t typically happen simultaneously”

“California is doing a great job of driving people from California”

“Utah has the 2nd fastest growing economy in US”

“Provo will be Austin in 10 years”

“A speculator bets on the future, an investor bets on the past”

Places to Grab a Bite:

Shalimar in Fremont

Connect with Neal:

Email: [email protected]

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