Real Estate Revealed

#10 - John Dessauer, Anton Property Management

Eric Wilson
December 29, 2020

SUMMARY KEYWORDS

money,commercial real estate, real estate, rent, call, john, property, investors,investment, year, people, assets, tenant, unit, buy, opportunity, invest, deal,business, chicago

SPEAKERS

John Dessauer,Dave Seymour, Intro Voice Over

 

00:35

Wellhello hello hello.

 

Dave Seymour 00:37

Yeah,it's me again, it's Dave cmo, your host of real estate revealed 104 point nineFM. Welcome. I hope your holidays have been fan

 

00:45

tastic

 

Dave Seymour 00:47

I hopeyou were on the good list and not the naughty list. show real estate revealed.If you've been tuning in for those of you that have you know what it's allabout. If you're a new listener, I got some secrets for you. I got some magic.This is not fluff and bath paint and carpet HGTV real estate. This isn't likeyour average real estate agent listing your house for maximum dollars andtelling you to tuck all your clutter away so you can get big bucks. It's noneof that stuff. This is this is the undertow. This is the currency that reallykeeps our economy moving. This is the currency that talks about equity andhouses how to get money working. You know the one percenters boo you know, theyare the people that have been in the crosshairs recently. I joke but seriously,the 1% is what what have they done to create that wealth over generations?Well, it's always involve real estate. And we'll discuss some of those topicswith you. I am Dave Seymour from freedom venture investments. CEO of thecompany, you may recognize my beautiful dulcet tones from my time on a&enetwork, when we were doing flippin Boston right here in in a geographicalarea. But what most people don't know about me on the freedom ventureinvestment side is that I am a fund manager, managing a fund of capital,managing a fund of cash flowing assets, large apartment complexes that wepurchased down in the Gulf Coast region of Florida. And I can do all of thatwhile I'm sitting up here in snowy New England. But you know, how can you runthat kind of a business? How can you put invest this capital to work withtargeted double digit returns and be competent? How do you execute on abusiness plan? Well, I learned a long time ago. And I know it's kind of corny,but it's true. There is no I in team. Therefore what that means is there's nosuch thing as a self made millionaire or millionaire s it takes. It takes agroup of individuals to be incredibly successful. And when it comes tocommercial real estate investing, I don't care whether it's a retailestablishment and office establishment light industrial, or whether it's asandbox of multifamily, commercial real estate, large apartment complexes, thennone of that works properly without exceptional and I use that wordpurposefully exceptional property management. Exceptional property managementis not one guy in a pickup truck with his name spray painted on the side of thetruck and have a snowblower in a you know, a mower in the back of his truck.That's not property management. Property Management is its own industry. And Iam very excited to be able to bring in my friend, but also the vertical inapbusiness and property management, a gentleman by the name of john desalle. Andbefore I bring him on john Salah, I've known Johnny for probably a decade plusnow and under his guidance I invested out of state in Chicago I invested inGary, Gary, Indiana. All of these were under the guidance of john john is notonly an investor, as well as a property manager, he's a real good friend ofmine. So john, hopefully you're that Johnny D.

 

John Dessauer 04:00

You'reready. Dave I am here. I'm excited. I'm ready to go. It's like it's actuallyDave you may not even know this. It's our we had COVID so this is our first dayout of quarantine. Oh, that's

 

Dave Seymour 04:13

what Iheard Heather was sick, huh?

 

John Dessauer 04:15

Yeah,it's like a whole new world for us.

 

Dave Seymour 04:17

Wow, youmust be going crazy. Is everybody healthy everyone? Yeah, for okay.

 

John Dessauer 04:21

Yeah,we're all good. Everybody's good. And we've survived we've run run through thegamut and or gimlet or whatever. We're talking here triplet

 

Dave Seymour 04:30

cap,gambling, whatever it's called. I know what you mean.

 

John Dessauer 04:33

We madeit when we made it, man. We run the gong show

 

Dave Seymour 04:38

how longhave you been kind of like locked down at home?

 

John Dessauer 04:42

Manreally the last three weeks haven't really gone anywhere and just kind ofgotten caught up on so many things. Now, granted, the COVID thing is a badthing and I don't want to see anybody get hurt or sick or, or pass even but youknow, I've tried to really Use this time to get ahead with some side projectsand family, of course, and things like that. So yeah, I can't, really.

 

Dave Seymour 05:08

So youfound a silver lining and I get it my stepmom and my dad back in England they'vebeen locked down for like seven months because of their, their, you know, theirpre existing conditions. The good news is neither of which have killedthemselves. So that's that's a positive you know what I mean? Yeah COVID TheCOVID is just spending time with each other. So john, let's, let's get intothis a little bit. Yeah. Tell the folks how long you've been around realestate, why you love it? Why have you made a lifelong career out of it? And,you know, share a little bit of your journey if you would, from the beginning?

 

John Dessauer 05:40

Sure,um, I grew up in Chicago. So it's what's interesting about that, you know, alot of people grew up in Chicago. But what's interesting about my story withthat is I grew up in apartment buildings. So I got to see this business fromthe inside looking out rather than someone from the outside looking in. And Ithink that changed my perspective on things and I get to see my, my mother goto her nine to nine, really, and, but I saw the rent guy come once a month topick up that check. And that always stuck with me. And so when I, when Igraduated from college and got out into the workforce and things like that, Ialways remembered that, um, I'm not the best corporate guy, Dave, you probablyknow that. tell stories on that

 

Dave Seymour 06:28

we, myfriend.

 

John Dessauer 06:30

Yeah.And when I decided to get involved into something that was going to number one,I was going to be happy, because I think that's real important. But number two,you know, provide an income source I looked at at real estate and I lookspecifically at multifamily and passive income. And I've been doing that nowfor the last 20 some years. I don't want to date myself, but the last 20 someyears, and I love it, I can't get enough of it. I love every aspect of it. Andin what's interesting with what's going on today, with with everything, youknow, with the politics and with COVID and with, uh, with rent, moratoriums,and eviction moratoriums, and all this stuff, it it does make for an excitinglife.

 

Dave Seymour 07:18

Yeah,for sure, the challenges are pretty interesting. Just to say the least, youknow, I was listening to a little bit of Powell just now he was doing a like alive q&a interview, Jerome Powell, Federal Reserve, and it's it's amazinghow the COVID crisis has created such a mad opportunity for those that see it.And I'm referring specifically to the interest rates that they've they've beenable to sustain and he was talking john about, you know, the the yield, the onthe in the bond market, etc, etc. Now, it's still underneath 1%. And they don'texpect any of that stuff to be moving going forward. So you talk about seeingthe guy picking up the check, right? Pick it up the rent check from from thefamily. So you know, your mom worked the nine to nine. So she traded the timefor money, right? And then you saw this guy trade in sticks and bricks formoney or having the money go to work for him. Like we use this terminology allthe time, john, it's interchangeable, right? Yummy. Give me your description ofhaving money work for you, rather than you working for money? What does thatmean to a guy like you?

 

John Dessauer 08:33

Well,you know, we're trained from when we're real little here in this country. Iknow, you know, you're not from this country originally. But we we have adoptedyou, as you as if you were

 

Dave Seymour 08:45

toChuck,

 

John Dessauer 08:46

this isprobably the case in England as well. Yes, Great Britain. But, you know, Ithink that we're trained to go out and trade our time for money, a veryindustrialized way of educating a workforce to prepare them either for one oftwo things of the military, or, you know, a job. And in 2020, with all of thetechnology that's changed, and it's changing so fast, we really should take alook at that and redesign this. And so it's not that I thought about this, Idon't want to claim that but, you know, I know for me that there was someuncomfortableness of getting out into the corporate world and really trading mytime to build something that wasn't, wasn't mine, number one, but also, thisidea of how you're earning your income. Um, and with technology today, in 2020,I look at it like we should be able to, you know, if you're a person that hasany type of intelligence, and you've got a computer, all you need to be is in aroom with Wi Fi or in a location with Wi Fi and you can make business happen,whether that be in the real estate field or anything else, I really believethat technology is the changing the playing ground for many people that want tochange how they're working. And so when I looked at real estate, and I lookedat having money start to work for me, this gives you an opportunity to usetechnology to maybe even manage your real estate or to find a good deal, or tofind the money for a good deal. And instead of you going to a nine to five, atan office, or at a factory, where you're trading your time, now you can takesome money doesn't necessarily have to be yours, but some money and usetechnology to manage that. So you are, you know, enjoying more time with yourfamily or building another business or, you know, doing whatever it is that youlike to do cooking, or music or arts or things like that. So that's really whatwhat my motivation was to go from working for money to have money working forme. Every time I look to invest in a project or invest in something, I'm alwaysthinking of that realm. What is the return? And what how is that return comingto me in equity? Or is it coming to me in cash flow? You know, there'sdifferent ways that you can get that back. But that made more sense to me,then, you know, going to work for someone for 40 years and trading my time formoney.

 

Dave Seymour 11:31

Yeah,no, I love it, john. Yeah, I remember the first time I saw somebody asked me,what's your R o t? And I looked down, I said, What are you talking about? Hesaid, Your r o t. And then he backed up. And he said, Well, you know what ROIstands for? Right? And I'm all smart now. And I said, Yeah, yeah, that's, you know,that's return on investment. And then he said to me, so what's your ROTC standfor? And what the guy was getting that to your point was exactly return on mytime, because it's the one commodity right that we can never, ever get back.Again, once it's spent, it's spent. And, you know, be unable to find other waysas you've done as I've done to be able to get a higher aro t because wesystematize we automate right systems was system save yourself, time, energy,money and stress, right? We've heard that before as our system stands for. Andwe're going to take a quick break in a minute, john, but what I'd like to dowhen we get back is talk about how you transition to be the as large of aproperty management company as you are, and the fact that you rely a lot onsystems and automation and processes to be able to do that. Alright, so ifyou're cool with that, we're going to take a quick break, john, and then we'lljump into some of that in in in the next few seconds. Okay,

 

John Dessauer 12:39

perfect,excellent, awesome.

 

Intro Voice Over  12:43

RealEstate revealed We'll be right back.

 

12:49

Today,the real estate market is booming mortgage rates just at historic 30 year lows.And the New York Times recently reported that investors are snapping up real estateat rock bottom prices. And now savvy investors are buying real estate usingtheir IRAs that allows them to access their retirement funds to buy propertieswithout paying any penalties or early withdrawal fees. If you have funds inyour retirement account, and you are interested to learn more call horizon forus today at 866-712-2007. That's 867122007 unlock the power of your retirementaccount and take advantage of one of the most profound opportunities in realestate since the housing crisis 15 years ago, call horizon trust retirementspecialist at 866-712-2007. And for a limited time, get our free Ultimate Guideto buying real estate with your IRA that's 866-712-2007 or visit horizon trustcalm slash date. Horizon Trust Company is an independent passive custodian andit's not associated or affiliated with and does not recommend to promote oradvise any specific investment opportunity invest in sponsor investment companyor investment promoter or any agents employees, representatives or other upsetfirms or entity horizon trust is not providing investment advice, advocating orendorsing real estate. These options may or may not be a fit for individualinvestors investments are not FDIC insured, offer no bank guarantee and maylose value. Horizon trust doesn't receive any commissions or fees if I investwith any other sponsor.

 

Dave Seymour 14:12

Everwondered how to create cash flow outside of your job income or retirement plan?Have you considered large commercial real estate assets? Do you know what analternative investment strategy is? Well tune in for all the answers on my showreal estate revealed this is they see my mic recognize me from the hit TV showflipping Boston's. I'm also the CEO and co founder of freedom ventureinvestments to smarten up your real estate now by tuning in every Saturday forall investment details visit us at info at freedom ventures.com slash 104 pointnine call my team at 781-922-4418

 

Intro Voice Over  14:43

thinkingof purchasing a new home second home or investment property or mayberefinancing to get a lower rate, consolidate debts drop PMI or need cash out todo home improvements. George cuartos mortgage Officer of cross country mortgagein Denver is just a loan officer you will need as Essex County's top loan officerwith more than 8000 past happy clients in over 30 years experience. George andhis team will be happy to assist you with rates the lowest in history. Don'thesitate act now you may be able to save 1000s of dollars. Call George at978-777-4663. You're listening to real estate revealed with Dave Seymour fromAmy's living Boston.

 

15:23

Allright. All right. Welcome back.

 

Dave Seymour 15:25

Welcomeback. So look, you got some words from some of our sponsors here. Real Estaterevealed. Steve Alessi was on the show last week, I tell you to be able to geta good real estate agent on your team is critical. And I've talked about thismany times, whether it's in my own business in commercial real estate, whetherit's in the single family business, so do give, give Steve a buzz, give him acall at 978-777-4663. And, you know, reach out touch clubs with these peopleand have that discussion. And also your mortgage. Right? You got to get amortgage, you got to be able to use a decent mortgage company to do that. Andagain, you heard from Greg Colleen over at horizon trust, reached out to themand see what it looks like to put self directed retirement accounts to work. Sojohn, before we went to the break, my man, we didn't mention the name of John'scompany is the Anton A N to N agency based out of Chicago, but john is ourproperty manager for the assets that we we take down in the Florida market aswell. So talk about that automation piece. JOHN, how do you like reduce theamount of, you know, kind of like physical manpower, if you will to execute onmanagement? What are you using for automation? What does it feel like for aninvestor? If I'm using you for property management? And what does it feel likefor a tenant? What is some of the, you know, some of the verticals, if you willthat they go through when you're touching gloves with them as the managementcompany,

 

John Dessauer 16:52

we havea long with our asset management company, we've got a full brokerage as well.And what's interesting about the our conversation on technology is with whatyou talked about what time you said roti, time, time is a currency just like,you know, money's a currency Matter of fact, they feel free to use that if youwant to claim that

 

Dave Seymour 17:14

accurately.Yeah, I'm recording this as well, I'll definitely get that. Yeah, okay.

 

John Dessauer 17:17

But timeis a currency. So you said you know, it's how you spend your time, but it'salso how you save your time. And so it's with the currency, you can spend it,you can save it, you can invest it. And with technology today, such in theproperty management field, you've got to be able to organize your that businessin a way that when you have a tenant come through that door prospect of tenant,you've got to find a way to take their application, you got to find a way tomake sure that you're screening that applicant, and you also have to make surethat you're in from an operational standpoint, you're able to collect rents,you're able to handle maintenance calls, or different things like that you'reable to renew their lease, or at least get the communication that they're notrenewing their lease, so that you can, your team can take action, so that thetechnology needs to be able to do all of that in in the sole purpose of howwe're spending, investing that time, or saving that time. Because when you dothat, that always translates into financial, it always does. And I and let mejust kind of pointed out like this, if you can, by way of technology, getinformation that you have a tenant that is going to be vacating that unit in 45days when their lease is up. And you know that 45 days ahead of time, typicallytenants move out on average, on average, you know, in, say, a Class B propertytwo weeks before their lease is up. Because if you think about it, they'retrying to get into that new place. As of that, first, you know, start of themonth, there may be schools that need to be dealt with, with their children ifthey have children, or some other factors. But typically, it's about 14 days,12 to 14, if my team can get in there and turn that unit and refill that unitwith a good quality tenant, I don't miss a month of rent. And that's beingproactive, the reactive response to that would be to wait to the end of thatmonth that tenants been gone for two weeks, although they're still under lease,but they're gone. They're they're out of that unit. And I don't even get inthere until the first of the month, it might take me a week or two to get thatthing done. And then I've just missed that amount in rent. So that's an exampleof how time in being ahead of that, from a time standpoint will alwaystranslate into financial and you know, Dave, on the apartment side orcommercial side, if you can increase that noi and have your cap rates thanksstagnant, or if it's in a decreasing scenario, that's where you're gonna makeyour money. All right? How would I know? I gotta say,

 

Dave Seymour 20:07

hey, gotall technical there you

 

John Dessauer 20:11

impressthe listening,

 

Dave Seymour 20:12

y'allDude, I am so impressed, john, I'm sorry. So what john was, was alluded to thatwhen he talks about, you know, increasing the noi, he's talking about the netoperating income. And basically, the more money that a commercial buildingbrings in, the more valuable that building is, because we take that netoperating income, and we use a divisible amount by by a purchase price amountto give us a cap rate or return on investment. And that's typically in themarkets where we are in in Florida, you know, six 7%? Is the is the cap ratedown there. We'll touch on this as well, john, because I think, you know, it's,I know that demand for for apartment, housing is on the rise. I was looking atsome statistics. In Boston, I was looking at some statistics in New York, Idon't if you're getting it in Chicago, I'm sure you are. Like there's thisexodus of people leaving the city leave leaving downtown, leaving the officespace behind. Let me ask you this question, what I'll talk a little bit aboutthe marketing of it, because that's just as important as the actual collectionof the rents is marketing to the right people getting the right messages outthere. When you take over an asset for us, you basically go into arepositioning structure with it, where sometimes you might even change the nameof the of the complex, talk a little bit about that and share why why that'simportant, and how you how you overcome that stuff with your team, john.

 

John Dessauer 21:37

So whena property is for sale, there's typically a problem to solve, you know, sometype of problem that could be poor management, it could be poor marketing, itcould be a bad tenant base, it could be physical illness, with the propertyitself, something's wrong physically with the property. And so you almost haveto, during your due diligence, you get a property under contract. And you'redoing due diligence, to study the investment to make sure that it's what theother broker is telling you that that property is how it's going to performthings like that. But also, during that due diligence, you're almost puttingtogether a forensic situation of studying the rent roll, you're studying,you're doing a lease audit, you're doing all these things to make sure thatwhen you take over that property, you're not only hitting the ground running,but you're you know, you're really thriving in this because you have a, as youjust mentioned, you talk about net operating income, you should have anobjective over that next, you know, three months, six months, 12 months. And sothe sooner you can start on that guess you know, we're coming back to the timething, the better you're going to be. So when when people come in, investorscome in, or asset managers come in, and they remarket rebrand, or, you know,just kind of re develop a property. It's because they're solving that problem.And they're focused on the things that are going to drive that net operatingincome in that specific market. It's something that should be done. Pretty muchin the majority of property transactions commercially that take place for sure.

 

Dave Seymour 23:20

You talkabout you talk about solving solving a problem. And we get to see that quiteoften there's the, you know, the mom and pop owner, if you will, and kind oflike that that six flat that we bought in, in South Jeffrey, you know, it wasowned by a guy who was a really, really great plumber, but he was notparticularly a great, you know, investor, if you will go on forward, that momand pop mentality going in there. What What would you say are some of thebiggest problems that create the biggest amount of value for us as investorsthat you as a property manager can overcome quickly. And then the return, youknow, create a better monthly cash flow for us giving our investors a betterquarterly distribution. If you if I put you on under the you know, under thegun, I said, Okay, give me the top three issues that we can solve quickly. Whatwould what would you say they were trying to create to create a bigger noi?

 

John Dessauer 24:13

Well, wejust took down a property on the east coast of Florida in del Rey, and we'retaking on another one in just outside of West Palm. And the reason that thosetwo projects were attractive is because they're low rents are below market andrents and these are, these are owned by more mom and pop type of owners thatare afraid to raise rents. But if you look at the classic economic model ofsupply and demand, it there's no better example of how you can get ahead in thecommercial real estate game, then looking at that model today. Because thedemand for rental units is very, very strong on average across the country.It's about 96% and If when you have a high demand for your product, and alimited supply, the price per unit, or in this case, the rent amount goes up.And if you're an owner or an operator that's not driving rents in 2020. In thismarket, you're really missing the boat economically. So I would say the numberone thing is making sure that you're at market rent and keeping your foot onthe gas in in increasing that where appropriate. That's right. Yeah,

 

Dave Seymour 25:31

that'sthe number one no rent increase. And you hit on a point which I, you know, Iexperienced myself early in my career was the fear of raising rents, right?There's that one guy who's got the bottom unit apartment, his rent is next tonothing, because he picks up the trash outside and keeps the you know, keepsthe landlord informed as to what's going on. I mean, those kinds of strategies,a classic, you know, classic amateur hour, if you will, going forward, you knowwhat I'm saying? Yep. So why, why so much fear, john? Why, you know, share withthat a little bit, because there's some folks who listen to this show on a fourPlex, they own an eight Plex. And they, they're like, No, I'm not raising therent. I mean, why is it so fear based to do that, what you say?

 

John Dessauer 26:13

Well,they don't want to lose the tenant, they feel like they're gonna raise therent, they're gonna lose the tenant. And if you do just a quick, just do thisexercise. If you do this quick math, if you've got rent in a marketplace,that's 1000 bucks. In you're raising the rent at? Let's call it 3%. Nothingcrazy. Yeah. 3% rent raise. So that would be 30 bucks. So $30, over the a yearperiod would be $360? would, would somebody really consider moving over $360per year, it costs you more to move than it would the 360. Right? So you got tostart thinking of that exercise. But the most powerful thing is if you takethat same $360, that you increased rents, by for that one unit, just that oneunit, and you're in a market, where I think you were just saying about yourmarket in Florida being a six cap, right?

 

Dave Seymour 27:17

Yeah,yeah.

 

John Dessauer 27:17

So justby raising the rent $360, you increase the value of that asset by $6,000. Yeah.And so that's why that's, that's a prime example of why you would want to doit, don't raise it 6%, because then for $720, they might move, but for $360,they're probably not going to move, and you've just increased the value of thatasset by six grand. And if you got 10 units there, that's 60 grand.

 

Dave Seymour 27:48

Allright. So watch this, what what you just heard right there from a guy who'sbeen a mentor to me, at times in my own career as well, he just he just droppedsome serious, serious information there. Because what he basically did was heshowed, he showed you it with a simple math equation, how to print moneylegally, that's basically what john just did there. Increasing rent, decreasein expenses, increases, noi increases value. So at the time of disposition,we're able to put ourselves in a position to offer and target those 20% plusinternal rates of return the value of an investment dollar working over a longperiod of time. And it's because of these formulas that we live by, I mean, ifI get junk junk did that math right there. And you said very, very quickly, butit is a testament to the fact that we live, eat and breathe these these theseanalysis formulas in commercial real estate, because it really is that's thetrue power and value of you know, money working for us for you as an investor,rather than you working for the money by trading time, Johnny, I'm loving this,we're gonna take another quick break. When we get back from that break, I wantto I want to talk everything kind of well, not everything. But you know, youknow, you and I, we can go in all kinds of directions. But let's talk a littlebit about, you know, what you see is the impact of COVID not only in the singlefamily marketplace, but also in the commercial real estate marketplace. Andlet's let's project it out, maybe you know, one year two years out, and whatyou see going on, so if you're cool to stick around, I'd like to delve intothat with you in a little bit. Yeah,

 

29:29

noproblem ready to go. Let's do it.

 

Intro Voice Over  29:34

RealEstate revealed We'll be right back.

 

29:40

SteveAlexis of Solaris reality, has intimate knowledge of the North Shore market.With over a decade of experience and record of 300 real estate transactions.When it's time to buy or sell property. Give Steve a call directly at617-763-1001 617-763-1001

 

Dave Seymour 30:08

you everwondered how to create cash flow outside of your job income or retirement plan?Have you considered large commercial real estate assets? Do you know what analternative investment strategy is? Well tune in for all the answers on my showreal estate revealed this is they see my mic recognize me from the hit TV showflipping Boston's. I'm also the CEO and co founder of freedom ventureinvestments to smarten up your real estate now how by tuning in every Saturdayfor all investment details, visit us at info at freedom ventures.com slash 104point nine call my team at 781922441 A

 

30:39

todaythe real estate market is booming mortgage rates just at historic 30 year lows.And the New York Times recently reported that investors are snapping up realestate at rock bottom prices. And now savvy investors are buying real estateusing their IRA that allows them to access their retirement funds to buyproperties without paying any penalties or early withdrawal fees. If you havefunds in your retirement account, and you are interested to learn more callhorizon for us today at 866-712-2007. That's 866-712-2007 unlock the power ofyour retirement account and take advantage of one of the most profoundopportunities in real estate since the housing crisis 15 years ago, callhorizon trust retirement specialist at 866-712-2007. And for a limited time getour free Ultimate Guide to buying real estate with your IRA that's 866-712-2007or visit horizon trust calm slash date. Horizon Trust Company is an independentpassive custodian and it's not associated or affiliated with and does notrecommend to promote or advise any specific investment investment opportunityinvestment sponsor, investment company or investment promoter or any agentsemployees representatives or other upset firms or entity arising trust is notproviding investment advice, advocating or endorsing real estate. These optionsmay or may not be a fit for individual investor investments are not FDICinsured, offer no bank guarantee and may lose value. Horizon trust doesn'treceive any commissions or fees if I invest with any other sponsor.

 

Intro Voice Over  32:03

You'relistening to real estate revealed with Dave Seymour from a nice living BostonAll right,

 

Dave Seymour 32:08

welcomeback. I'm with john desaulnier. From Chicago told me that's the only placewhere a collar is something that you can open up the door of your car wherethey call them pack khakis Is that how you do it Johnny khakis yeah that's acollar. Right is what you use to open the door your car but it's also a What doyou call those high top sneakers? What do you call those?

 

John Dessauer 32:31

What doyou mean Converse?

 

32:33

Converse.What do you call those? You got to make those tailors. Chuck?

 

32:36

ChuckTaylor?

 

32:37

Yeah,Chuck Taylors?

 

Dave Seymour 32:39

Johnny,where's Chuck Taylors?

 

John Dessauer 32:40

Now letme get you're actually saying that I talk funny. You're certainly not.

 

Dave Seymour 32:45

I'm justtelling you. Just Hey, you should have listened to the show two weeks ago wehad Boston Red Sox pitcher on the show crank hanser

 

32:53

okayGreg

 

Dave Seymour 32:53

hadseven who pitch for the Sox we get some of those copies on the radio too. Thereyou go reaching out to your database and let him let him share the share themagic of what real estate does for you after after a successful career in inthe in the major so I only bring that up because I know you're big Cubs fan.Hold on a minute. The cops are coming. I gotta run. All right now it's a fightupon we're all set. So let's get let's get into this a little bit. COVID Yeah,moratoriums, foreclosure relief, debt relief, mortgage relief. And yet, I don'tknow if it's the same in Chicago, I'm sure it is. house price it prices are atthe top stuff is on the market for a very short period of time. And everybody'sbuying overpriced real estate. What What do you see going on? JOHN? I mean,you've been through a couple of cycles as I have. But what what what's thewhat's the opportunity and COVID? From from your, from your perspective?

 

John Dessauer 33:58

Well,um, you know, it's still a little bit of a cloudy future. You know, I thinkwe've got a couple of things that we need to consider number one, COVID. Numbertwo, the economics behind that. And then third, I think we've got a look at thepolitical scene. It looks to be at this point that we are going to have adifferent administration, unless something surprising comes up. And who knows.2020 year weird year, and you never know. But it looks to me that we're goingto have a new administration. And I think you got to look at those threethings. COVID has definitely affected every business market in the country. Notall bad. By the way. If you look at if you look at the performance of Amazon,or you look at the performance of you know, Costco and Walmart in some of theonline other online retailers, there have been through the roof right. Yeah,um, but it's it's definitely affected. brick and mortar. It's affected, youknow, just the way Not only people do business, but like things likeuniversities and, and, and other things that they have to carry out business ina different way with schools and things my son is doing elearning from home.So, you know, think about that kids are at home doing elearning the parentshave to be home to watch those kids, they're not working. So it's reallydisrupted things quite a bit. where that goes in the future. I think it dependson this vaccine. I think 2020 is an important year when I hear you know, BillGates say, hey, expect to wear masks and and have these lockdowns through 2021to Jan a to January of 2022, that tells me that 2021 is not going to be as youknow, it's not going to be back to normal, so to speak. So, you know, I thinkwe, it's 2021 is probably from a COVID sense, it's going to rhyme like 2020 maynot be as bad towards the spring, fall, summer and fall. But the wintercertainly is going to be a little bit challenging until this till this vaccinecan take place and we get more of this, you know, herd immunity going on. Um,the second thing with the economics behind that, I think that really depends onyou know, how if we can snap back from an economic standpoint, based on whatI'm hearing, I don't know if that's going to be until after 2021. So I'mplaying it as if 2021 is going to be like 2020, I think you have to be cautiouson your investment deals, I think that the inventory is very low. So you haveto find different ways to find those deals, you have to be more proactive indifferent ways. And but the silver lining is I do think the economy and witheverything going on, it is going to provide opportunities as well, they're notthere yet, but I believe they are going to come

 

Dave Seymour 37:09

johnwaiting, where do you see the smart money going? Because we talk a lot aboutyou know, the dry powder, I was on a call yesterday day before whatever it waswith a representative from from a family office. So he's a broker dealer. Andhe puts himself between the family offices, the ultra ultra wealthy who like toinvest in real estate funds very similar to ours. And the guy said to me saidyou know a lot of people think that you know, family money is dumb money. Andhe said well what it really is is the smart money so because that's how theygot wealthy in the first place was making very, very clinical financialdecisions. And he said a lot of that money is sitting on the sidelines rightnow looking looking for the opportunity looking for the right time to to pullthe trigger. Right. And so my question to you is this is where where do you seeone the smart money sitting? And number two, when it does move? When what thewhere do you see it going? Because I know you deal with a massive investor poolas part of your business model as well.

 

John Dessauer 38:14

So thesmart money right now is sitting in waiting for opportunities. If you look atguys like Warren Buffett, if you look at guys, like you know Bill Gates andother people that are that are just a hair wealthier than you and I are Davenot just human touch

 

Dave Seymour 38:30

not

 

John Dessauer 38:32

justthey're not as good looking, I

 

Dave Seymour 38:33

canassure it all for sure. We got it in the looks department,

 

John Dessauer 38:36

but ifyou look at where their money is, or looking corporately, where their money islike Apple look at how much money they have sitting there waiting. The SmartMoney is kind of resting right now and waiting for the opportunity. Um, Ibelieve it's it's it's on our doorstep. I don't know if it's here yet. That'swhy my comment earlier of you've got to be cautious on what you're getting intotoday. That's what I feel like the Smart Money is saying they're they'rewaiting because they know something is going to happen. If again, if you lookat the reserves, on Berkshire Hathaway, if you look at Apple, if you look atthe money they have sitting there, it's there for a reason. We deal with a lotof um, we deal with a lot of financial institutions and a large brokeragehouses. We do a lot of work with banks, as you know, Dave on the outside. Andso one of our contacts in, in in Phoenix with Sperry Van Ness, those type ofcompanies Marcus and Millichap. Yeah, they're they're, they're starting torelease these tapes of homes BlackRock is another one. They're starting torelease these tapes of homes that they've had as rental units, and they'reselling them and I'm like, What? So I was on a conference call earlier thisweek. And I'm like, Why? Why now? Why are you guys doing that? They reallythought like this.

 

Dave Seymour 39:57

What'sthat? They're selling them now for top So that they like quit for the next forthe next phase. Yeah,

 

John Dessauer 40:02

yeah,yeah, they're doing it now. So that's what why I think the next 12 months aregoing to be like they're getting money on the sidelines ready to go. That'swhere the Smart Money is. It's it's a it's a lion in the weeds kind of waitingfor that antelope to walk in the field. The antelope is not there, but the lioncan smell the antelope.

 

Dave Seymour 40:22

Yeah.Now we're in the Africa jungle, I was gonna go all over the water, we'll go allthe way around the world, we'll do it, you know, we'll do amphibians with withthe with all his his what I want to throw out there and bounce it off of you.It's a point of clarification for me. You know, there's there's levels ofinvesting, right? There's there's depth, there's capacity, you know, if you'vegot a billion dollars, and you could put it to work at 3%. A lot of people whohave that billion dollars are excited, right? If it's 10 million, 20 million100 million dollars, and you can put it to work at six to eight to 10 to 14%,then that's comparable. That's exciting. What what I'm seeing is this And toyour point, I agree is the fact that the Smart Money is sitting on thesidelines. But it's the deep pocket money that's sitting there right now, whatwhat we're seeing is the the smaller institutions that can write a check formaybe 10 million, or the accredited retail investor, who is comfortablecommitting, you know, 100,000 to 250,000, in retirement funds, or liquid asset,whatever they can do. Those are the ones that are moving the money now, butthis is the but you know, macro and micro markets exist in everything. And themicro markets, we're beginning to see is the fact that those mom and pops thatwe were talking about earlier, and now suffering the COVID crisis, due to thefact of not having any reserves to get them through not having the skill setsthat you just described to raise rents. So we see the opportunities to addlevel, right, as you said, in a joke, you know, we're better looking at BuffettAND gates, but you know, we're just close in finances. But on a serious matter,obviously, we're not in the case of and Microsoft bucket but at the same time,if you're if you level out the playing field of opportunity and assetsavailable to put to work for us, we could put that money to work now becausethe the buying opportunities are there. You know, we do a Deal of the Week, asyou know, john here every week on the assets that Walter is, is underwritten.And it's gotten to the point now where we're beginning to roll out single assetdeals, as well as the fun deals, because the quality of the deals in thatsmaller door class are increasing dramatically. And, you know, to talk to, youknow, your black rocks and the larger corporations. I mean, they bought up sucha huge percentage of the single families that were foreclosed on in the crisis2008 910 and now they're selling them, and they're getting liquid and strongbecause they're going to buy up, you know, the opportunities in bulk all overagain. It's just consistently turning over the money. So yeah, I you with me,right, that makes sense. Yeah,

 

John Dessauer 43:17

forsure. Yeah, for sure. And, you know, my point was these bigger guys, they'renot the lions aren't taken down a field bounce, they're taken down antelopes,you know, the field mouse, the, you know, I'm trying to think of a biggermammal than that smaller.

 

Dave Seymour 43:36

Not not,so there might be some auto lovers out there, maybe like a fox or a little,like a little cute deer or something,

 

John Dessauer 43:41

or apig, a smaller pig,

 

43:43

or apig. Yeah,

 

John Dessauer 43:45

I'll gowith pig. And so that the the the lion, you know, it has to, it has to thereason that it doesn't go after the field miles is the caloric expenditure. I'mgetting deep dive, wow

 

Dave Seymour 43:58

knowsyou are I'm loving it,

 

John Dessauer 44:00

thecaloric expenditure to catch that field mouse isn't worth the return. So that'swhy these investors, the larger investors are waiting on the sidelines, the smallerinvestors should be like, I know your focuses between 40 and 140 units. Thosepeople should be acting right now to get involved in something like that.Because the color the return is better there right now. Does that make sense?

 

Dave Seymour 44:25

Yeah,the expenditure, the expenditure to go out, get them, manage them, you know,process and reposition them, get them back out into the marketplace in the nextfive to seven years. I like that analogy. Actually, the caloric expendituremakes sense, because the reward is is you know, it's it's parallel to what whatwe're doing to put the work and the effort in. Yeah, I do. Yeah, I agree withyou very much smaller

 

John Dessauer 44:49

investorsare the smaller institutional investors, the family shops, those are the onesthat can see opportunity in right now. Yeah, and I think they should be takingaction because there is opportunity going on right now. Um, you know, I justthink that 2021 is going to be an interesting year with the, you know, a newadministration and how they handle things. I'm expecting, by the way that thismoratorium is going to continue through a city Chicago just extended theirsthrough I believe it's February. So they're starting to extend that I see thatstuff. Maybe extending depending on what state it is, you know, if you're in ablue state, and I'm not getting political here, but I'm just calling it like itis. If you're in a blue state, your your chances of seeing those extendedmoratoriums by either state or city governments is is probably higher than inother states that aren't so blue.

 

Dave Seymour 45:47

Andthat's just pushing off the problem to another day will come around again,going forward. All right stuff. Hey, john, we wrapped up our section here. Iappreciate you man. I appreciate what you do for us at freedom ventureinvestments. I am very grateful that you know you do what you do at the levelthat you do. If anybody hears this show, they're in the Chicago market. They'relooking for advice, guidance management, they can connect with john and Tomagency. What's a good phone number? JOHN, if somebody wanted to pick yourbrains and maybe look at the services that you offer,

 

John Dessauer 46:23

you cancall us at 219-226-9450

 

Dave Seymour 46:29

Okay,you got it. You heard it right there from from my friend john dess our out ofChicago. God bless your brother would go into a break. And we'll be right back.

 

46:38

Thankyou so much.

 

Intro Voice Over  46:42

RealEstate revealed We'll be right back. Thinking of purchasing a new home secondhome or investment property or maybe refinancing to get a lower rate,consolidate debts, drop PMI or need cash out to do home improvements. Georgecuartos mortgage Officer of cross country mortgage in Danvers is just the loanofficer you will need as Essex County's top loan officer with more than 8000past happy clients in over 30 years experience. George and his team will behappy to assist you with rates the lowest in history Don't hesitate act now youmay be able to save 1000s of dollars call George at 978-777-4663

 

Dave Seymour 47:21

you everwondered how to create cash flow outside of your job income or retirement plan?Have you considered large commercial real estate assets? Do you know what analternative investment strategy is? Well tune in for all the answers on my showreal estate revealed this is they see my might recognize me from the hit TVshow flipping Boston's I'm also the CEO and co founder of freedom ventureinvestments to smarten up your real estate now how by tuning in every Saturdayfor all investment details, visit us at info at freedom venture.com slash 104point nine call my team at 781-922-4418

 

47:53

SteveAlesis of Solaris reality has intimate knowledge of the North Shore market withover a decade of experience and record of 300 real estate transactions. Whenit's time to buy or sell property. Give Steve a call directly at 617-763-1001.That's 617-763-1001

 

Intro Voice Over  48:22

you'relistening to real estate revealed with Dave Seymour from Amy's living Boston.

 

Dave Seymour 48:27

Welcomeback, Dave see more real estate revealed. I tell you I get I get a warm, fuzzyfeeling. When I have an opportunity to converse with experts. There's somethingabout like minded people share an experience strength and hope around businessand finance and future and family that, you know, it just it keeps me keeps meup and up and running. I'm very excited. I know you guys are listening, becauseyou're calling and I appreciate the the questions that we've been receiving. Iknow that my team is interacting with a few of the listeners here looking toput capital to work. I do this at the end of every show. I think it's importantto highlight some of what we're actually doing it free to venture investments Ikind of like just jump in with with two feet at the beginning of every show.You know thinking that everybody knows exactly this, though it's all good aboutand sometimes I do things back to front instead of front to back. But you know,freedom venture investments, who are we? What are we? Well, I'm locally basedright here in Danville square. We're right in Danville square small office herethat I'm working from. That way I don't get in the way of the homeschoolingninjas that I have back at home and if you're a Danvers resident, you know thatwe you know that we we went to full remote again. So you know, we're dealingwith some challenges and issues going forward. But we're here we're here inDanvers. You can contact us anytime at freedom. Venture investments is 78192244.One eight, you can reach us online at freedom venture.com. So what is it thatwe actually do? First of all, we think of us as an investment company, justlike you have a certified financial planner, who will put a portfolio togetherfor long term growth, short term growth, whatever, whatever the goal is of theclient or the individual, we do the same kind of things I would say, for forour investors, but our investors are looking for, I think, some different goalsin comparison to the other investment vehicles that are out there. We buymultifamily assets in the Gulf Coast region of Florida, as you've heard me saya couple of times 40, to about 140 $150. That's our hunting ground, that's thenumber that we look for. And what we do is we we take these assets, and wedon't over leverage them, we bring in a bank, the bank puts up 65% of thepurchase price. And then we you us together, what we do is is we bring the restof the money to the table for the for the purchase. And then also anyrepositioning capital that we need, you know repairs or fluff and barf or makethe unit's nicer than they currently are. And then what we're able to do withthat capital that is put into the fund, we're able to start paying quarterlydistributions to our investors, ASAP, as soon as possible. We always shoot forthe first quarterly distribution to go out. But the assets need to need to bethere to do that. And we have our first quarterly distributions going out atthe end of this year. Now, what are those distributions look like? Well, theyoutperform any other commercial real estate, when we do a, what's called a t12. Or t 10. Look back 12 months, we go back for 12 months, and we look at theperformance of an asset. But when we compare it to other commercial real estateassets, we do a 10 year look back or a 20 year look back, and multi familyresidential has outperformed all other commercial real estate classeshistorically, why? Well, it's not rocket science, people need some way to live,it's as simple as that. And it's been shown consistently that people will paytheir rent or their mortgage First, if they can, it's that, you know that DNAof survival, right shelter. So that's, that's what we invest in. And that teamis, as 3035 years of experience between myself, Walter is the gentleman I referto He's my partner down in Fort Myers, looking at these properties,underwriting these properties, and bringing these properties into it into ourcompany. So we bring in a fund that structure that allows investors to get theupside potential of not just one asset, but all of the assets that are in thefund. So the investor would own units or shares in the company and therefore,would also on the benefits of all of the assets in the company. And then onoccasion, what we do is we will do what's called a single asset transaction,where we'll raise money with a group of investors a smaller group, maybe fouror five individuals. And we'll all go in on just one asset together. And thatasset would need to be different from the from the business plans that we havefor the assets that go in the fund. So to give you an example, the funds assetsare what's called B class properties, meaning they were built 1990 or newer,they have a certain amount of upside potential to them, either through rent increasesor lease up, so we can increase the cash flow going forward. And they wouldhave a light repair strategy for them. So that we know that we can get in therereal quick and start turning this machine over and and kicking out thequarterly distributions to our investors. So that's what goes into font. I havea deal in front of me here that looks like it's going to be on deck for us verysoon. Actually, within the next 30 days. We're in due diligence on it rightnow. But what would it be like if you could own a piece of a 55 unit apartmentcomplex, right. In the in the in the tamper area. This property is a 55 unitmultifamily complex, but here's the difference. This one was built in 1971. Soit doesn't fit the model for fun however, it went through a lot of repairsrecently. So a lot of the work has already been done to this property consistsof six two storey apartment buildings 44,180 square feet, that sits on threeand a half acres. What's nice about this unit is that it consists of 16 onebedroom, one bath 23, two bedroom, one bath and 16 three bedroom, one bathunits. So for us as investors we look at that we go this is awesome. It's got areally good what we call unit mix, so I can attract all types of things.Different tenants to the property going forward. It's under 15 minutes from,from a couple of really, really important facilities and and mall type areasdown this close to some local airports. So here's the idea of a deal like this,for example, so the property be acquired for 4.2 5 million, it has what'scalled an assumable loan, which means we step into the existing financing. Thelandlord or the current owner on this typical Mom and Pop is done wants nothingto do with it anymore. So we don't have to go out and get the loan for 4.2, wewalk into the existing loan, we need about a quarter of a million dollars to dojust some like minor repairs on this property. And we'll increase the netoperating income on this one by about $50,000, which gives us an increase valueof 851,000. So when you start looking at these, these these complexes, thesesmaller unit mixes, the big investors that john and I were talking about thatthey they're not interested in these they don't they don't even come up ontheir radar, we've been able to dial in a strategy where we can identify thesesmaller units get in there really fast, turn them over as quick as as quick aswe can. Because there's less doors, if you will, or less work to do with theseproperties. And they're able to give these targeted double digit returns. So inthis this particular one here, you know, what would it be like if you're you ontarget return was 11.5%, would that be a good use of money going to work incomparison to the bond market or the or the other investments that are outthere right now. And as we maintain this thing over, this will be a shorterhold maybe a four year hold five year hold, to exit out at 17 and a halfpercent on the capital. And it's what we call the multiple on it, or the equitymultiple the money that the investor puts in the multiple on that is what wecall a 2.4. And what that basically means is if for every $1 that an investorputs in, we target them to get their $1 back plus another dollar and 40 cents.And that's what gives the 2.4 multiple. So it's it's always like I look atthese as bread and butter deals, I understand that they can be a new world, ifyou will, for somebody exploring the world of commercial real estate investing.Very excited to share with you that on the freedom venture investment site onthere, you can now find links to all of the shows that we've recorded here at104 point nine FM. There's also over 20 podcasts that I've done with experts,where they've invited me onto their show to grill me on what we do, how we doit, how we came to be as bullish as we are in a market where a lot of otherpeople are running away. So if you're not happy with with the outlook for 202122, if you're not feeling confident with the return structure in yourretirement account, you know, if you're that person who's fearful of theirmoney running out before, before they do, which is a legitimate fear in oursociety today, then we could be the solution to that problem. But you don'tknow unless you ask right? You got to reach out and ask some questions to seeif that if we are a fit or not. Our investors are what's called an accreditedinvestor, they earn a certain amount of money every year 200,000 as anindividual 300,000 as a family. And the minimum investments $100,000 into ourfund. But if accredited, some of our one off deals might be a strategy thatmakes more sense for you going forward. So it's a suite of services that weoffer. It's always a pleasure to do the show on the weekend. Saturdayafternoon, you're listening to this, I said every time maybe fixing a little lunchfor the kitties. Maybe it's nice and you're out for a walk. Maybe it's not niceand you're sitting at home, just listening to 104 point nine on the radio,whatever it is that you're doing, do it well. Do it all out. half measuresavailed is nothing. Somebody said to me one time, so we live free and meetcommercial real estate. And in return, we get to service fantastic people. Givethem some solidity and competence going forward. And I'll end with this as Ialways go take care of each other. Do unto others as you would have done untoyou. And it's all good. So I wish you I wish you a wonderful day and thanks forlistening to us. We'll see you next week on 104 point nine Real Estate

 

Intro Voice Over  59:31

Group.Tune in again next Saturday at noon for real estate revealed hosted by DaveSeymour, the star of ad libbing Boston and CEO of freedom venture investmentsin Denver.