Real Estate Revealed

#15 - Ellie Perlman, Journey from Small Beginnings to CEO

Eric Wilson
February 5, 2021

SUMMARY KEYWORDS

investors,commercial real estate, assets, real estate, years, investments, invest, deal,property, unit, returns, perlman, market, north shore, ellie, lawyer, florida,buy, offer, understand

SPEAKERS

Ellie Perlman,Intro Voice Over, Dave Seymour

 

Dave Seymour 00:00

Have youever wanted to create cash flow outside of your job income or retirement plan?Have you considered large commercial real estate assets? Do you know aboutalternative investment strategies? Keep listening. This is real estate revealedhosted by Dave Seymour, the star of a nice living Boston and CEO of freedom ventureinvestments in Danvers. Get the real deal about investing in commercial realestate to create long term stable financial wealth smarten up your real estateskills now. Good morning. This is Dave Seymour host real estate revealedSaturday morning 11 to 12. I hope you Well, I hope you know I hope the kids arebehaving I hope you know you're excited about 2021. If you haven't been with usbefore, standby if you have been with us before, welcome back. But for thenewer listeners, I am Dave Sema, you might recognize me from the TV showflipping Boston or not. Not particularly concerned with that. But I'm also theCEO, co founder of freedom venture investments. commercial real estate is whatwe talk about here we talk about the power of sticks and bricks to createwealth. You know, the one percenters the elite, those those those that specialcrew of people over there in the corner who know some, some special tips andtricks, and they've got, they got the secret scoop. we peel back that onion onthis show. This isn't HGTV, I say it every week. This isn't paint and carpetand oh my god, honey, I need a new fan in the bathroom. That's not what this isabout. This is about the financial side of real estate. And every week, I'mincredibly blessed to bring my peer group to the show. People that I admire inmy business. We'll talk more about that at the end of the show. But I'm verylucky to have a fantastic fantastic businesswoman with us this week. Her nameis Ellie Perlman. I met Ellie when she invited me on to her podcast that sheruns. And I found an affinity immediately. You know, in life, there are momentswhere people cross cross your path and you say, Man, I want to get to know thembetter. I want to know more about what it is that they do. So I immediately enactedthe Law of Reciprocity and invited Ellie onto the show. Ellie has a fantasticjourney from where she started to where she is today, as the as the CEO of hercompany, and I'll let her talk more about that. But she's doing big, big thingsin different markets throughout the country. And she's not that far away fromus. She's in sunny Providence, Rhode Island. We still we still call her a NewEngland fob and in New England, but we'll peel back Ellie's journey, Godwilling, she's there and she can hear me Ellie Perlman. Are you with us? Yes, Iam. Hey, Dave, how are you? I'm doing well doing well. Thank you for having me.No, I appreciate you coming on the show early. I really do. So look, this showis designed to, you know, to teach our avatar, our ideal client for investors,you know, accredited investors, the power of commercial real estate. And I knowthat that's been a big journey for you. It's your wheelhouse as it is mine. Butfirst of all, before we go there, it's such a great story. I mean, earlier,I've read kind of like your bio on your web page, and followed along on some ofyour videos and stuff. Share with the folks who you are, where you are, how youstarted. And then we'll begin to like peel back the onion, like I say, unpackthe life of Le pearl. But if you're cool with that, start at the beginning.Yeah, absolutely. So basically, My story begins probably a few decades ago. Idon't know if you can hear it from my accent. But I'm originally from Israel,and was fortunate enough to be born to a pretty poor and struggling family.

 

Ellie Perlman 04:08

And so Iremember being a kid and being bullied by my classmates, because they weredonating, you know, food and clothes. And those, those clothes, you know, endedup at our porch in at some point, some of them actually recognize the clothesthat they've donated to the poor, because I used to wear them the school. Andso that that's, that was my very, very, very humble beginning. And I rememberearly on, I realized that I need to get out of this situation. And I was theoldest of four kids. And my dad was not working for many years. So my mom wasvery sick and it kind of assumed the role of the parent in the house and helpmy brothers, my brother and sisters and all this time. I think since I can remembermyself, maybe when I was 10 or 11, I decided that I wanted to become I didn'tknow what Financial Independence War, you know, was at that time, but I wantedto become wealthy, independent, and not explore, and not experience I'm sorry,the all the experiences that I've had to, you know, carry with me all thoseyears. You know, there were times where when I was actually cleaning synagoguesto help my parents, you know, bring some cash, so we can buy food. And at somepoint, I realized that, okay, my way out of the situation is through education.So I made up my mind that I want to become a lawyer, I actually dream to becomea judge, believe it or not in so I worked really, really hard to get into lawschool and along the way, for some reason decided that getting married at theage of 19 was a smart decision at the time. No, but you know, when you're 19years old, you know, Dave, you think you figured it out? You think you know,everything. And those who are older, you know, and try to give you advice. Hejust think they don't get it.

 

Dave Seymour 06:27

No, theydon't understand I look at I didn't know that part about you. I was I was justturned 20 years old when I emigrated from London, to the States, followingfollowing my first wife. So I identify I resonate with you, I knew everythingat 20 years old, honestly, my 20 year old did when he was 20, as well, I thinkit's genetic.

 

Ellie Perlman 06:51

Yeah,and, and, you know, I thought back then I thought that love was enough. And ifyou found someone that you're in love with, you know, lack of compatibility isnot an issue. And there were a lot of things that didn't, you know, work out, Iwas also very religious at that point. And so it kind of made sense to me atthe time. And, but I worked really hard to get into law school. And before Igot to law school, because I wanted to get into a good law school, not just anylaw school, because I still had dreams and aspirations of becoming a successfulsuccessful lawyer, I, I didn't know how to use any other resource, but mybrain, that's all that I had. And that's what I use, then I think it took metwo or two and a half years to get into law school. And until then, I wasworking sometimes in three jobs, trying to basically pay for, you know, for payfor my bills and and save some money for college. And long story short, I gotinto I got into law school, and I actually managed to squeeze on bachelor andMaster's in law, because in Israel, you can take a bachelor degree in law. Idid that in four years, and I graduated with excellence, and I was ready toconquer the world. Even though those years were extremely hard, because mymarriage was really suffering at that point. I'm not gonna get into all thedetails, but I had to

 

Dave Seymour 08:29

be dirtylaundry when they're all of that on radio. No, I get it. How did you practicelaw before you before you began to pivot le,

 

Ellie Perlman 08:38

youknow, what, not so many. From me, you know, looking back, and I know manypeople, you know, when they put a lot of effort into taking a certain path,they're committed to it, it's really hard to say, oh, but all this work was fornothing. I realized pretty early on that this is not my calling. This is notwhat I wanted to do specially because I ended up working at a real estatedepartment. And I worked on a huge project. And I realized that I actuallywanted to be my clients, I wanted to be the one buying real estate. I didn'tnecessarily want it to be the lawyer that is, you know, managing to deal Iwanted, I wanted to be part of the action. And at some point, I quit my job.And I became a property manager. And people thought I was crazy. Because, youknow, you got a lot of property managers, but it's not it's not such a highpaying job as as a lawyer, you know, but I thought that hey, I needed to pivotI need to understand real estate because this is what I want to do. And Ididn't understand exactly. I didn't know how exactly I'm going to make money inreal estate and money was actually not the main, the main driver but the therewas fire that was burning to create something to succeed. That was a drivingforce, you know, for me, and that's what made me take that next step. Would

 

Dave Seymour 10:04

youagree that it's also like a like a controlling your own destiny? I mean, Ican't tell you how many times I left the the closing table as a as a as aninvestor, and either the attorney or the realtor or you know, the one of theother partners, if you will, or pieces of that transaction, they would walkaway from the table and they compare, you know, compare checks, if you will,they compare incomes. And I remember an attorney at closing one time looked atmy check in comparison to his, and he turned around, he said to me, what thehell are you doing? And it was like, I almost you understand what I'm saying, Ialmost looked at the transaction, I thought to myself, well, I went out and putmyself in a position to learn real estate at its highest level possible. And Idon't I'm sure you can identify with this as well. You know, a lot of myclients today, and I'm sure yours as well, our high net worth attorneys, youknow, they're lawyers who are still stuck in their business, right? trading,trading time for money, even though you know, you know, attorneys, they could chargeanywhere from 50 bucks an hour to 500 bucks an hour, but there's still hourlyemployees, was that part of the motivation as well to look at the biggerpicture for you?

 

Ellie Perlman 11:22

Yeah,absolutely. I mean, I do work with investors and their lawyers. And if theydon't work, while they sleep, they don't make any money. When I'm sitting, mytenants are paying me. So you know, it's, it's a, it's a beautiful insight, butyou know, it takes time to understand it. And it took me a while to understandthis, I knew I was unhappy as a lawyer. But I didn't have the guts to leave,especially after I've worked so hard to get into law school and manage to get areally good job at a good law firm. But at some point, when I was stillpracticing, I came to the office one day, and I didn't see well and kind oftried to brush it off. But I realized that I can't, the images, the images,were not clear, and I didn't understand what was going on. And then I realized,you know, I found out that I actually had a rare eye disease. And, you know, italmost left me blind. I remember sitting there at the doctor's office, and theysaid, you know, if he came a little bit later, you would probably lose your youwould have lost your eyesight in and it was terrifying to me. I started a verylong and you know, painful treatment. And when you go through something likethis, you know, when I, when I basically felt that I worked really hard againstlaw school, I worked for years, I didn't have any social life, all I did wasworking in studying to get A's straight A's so I can get in, get a good jobright after college. And when I got there, basically, you know, I got my dreamjob only to realize this is not the path I really wanted. There's more to it.And then you realize that you need to basically deal with this disease, andlook at your marriage and also see what's going on there. And that wasn'tgreat. And it it's a lot but when I as I was recovering it actually it actuallygave me courage, this disease and it puts things in perspective, when you gothrough something not necessarily it doesn't have to be a disease. But when yougo through something so hard to deal with it. You know, I basically said, Look,I've gone through this, I've managed to survive and you know, it wasn't lifethreatening, but I came stronger than I was before. Leaving this decision isnot as scary because losing my eyesight was much scarier. And look, I'm okay.

 

Dave Seymour 13:57

And nowYeah, let's let's let's do this. This is this is so good. We're gonna take aquick break. And when we come back from that break, I want to talk about howthat motivation, how that that challenge in your personal life was the driverfor you to be so successful in your business life and bring people along withyou don't go away, Ellie. We're gonna unpack this. We're gonna take a quickbreak.

 

Intro Voice Over  14:19

RealEstate revealed We'll be right back.

 

14:25

Today,the real estate market is booming mortgage rates just at historic 30 year lowsand 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 IRAs 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. Take advantage of one of the most profound opportunitiesin real estate since the housing crisis 15 years ago, call horizon trustretirement specialist at 866-712-2007. And for a limited time, get our freeUltimate Guide to buying real estate with your IRA that's 866-712-2007 or visithorizon trust comm slash day. Horizon Trust Company is an independent passivecustodian and is not associated or affiliated with and does not recommendpromote or advise any specific investment investment opportunity investmentsponsor, investment company or investment promoter or any agents, employees,representatives or other such firms or entities. Horizon trust is not providinginvestment advice, advocating or endorsing real estate. These options may ormay not be a fit for individual investors investments are not FDIC insured,offer no bank guarantee and may lose value or rising trust doesn't receive anycommissions or fees if I invest with any other sponsor.

 

Intro Voice Over  15:48

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 kudos mortgage Officer of cross country mortgageand Danvers is just a loan officer you will need as Essex County's top loanofficer with more than 8000 past happy clients in over 30 years experience.George and his team will be happy to assist you with rates the lowest inhistory Don't hesitate act now you may be able to save 1000s of dollars. CallGeorge at 97877746 630. You're listening to real estate revealed with Dave seemore from Amy's living Boston.

 

Dave Seymour 16:28

Yeah,welcome back, Dave, see more real estate revealed. You know where to go for amortgage. Now, you know where to find the very best realtor on the North Shore.And if you want to use your self directed retirement accounts, you can nowcontact my friends at horizon trust. So that's enough about that. My guest isEllie Perlman. She's talked about her journey from from, you know, simple,humble means back in Jerusalem working, cleaning a synagogue to make some moneyas a young kid fighting our way through law school. So some personal challengesthrough some mental and physical and medical challenges. Let's just be directwith you. So from challenge comes opportunity. So Ellie, please tell us moreabout what it was that kind of pivoted you what pushed you when you face thosepersonal challenges towards you know, building your business today and, and howthat that that journey began, if you will, from from there.

 

Ellie Perlman 17:26

I thinkthat when you're when you go through something so hard, you a you figure outwho's really, you know, by your side, and who can share the journey.Unfortunately, you know, my ex husband, it was it was hard for him. And, butthe main thing was that it you know, it puts things in perspective, and Iwasn't scared anymore, I wasn't scared to leave my job. And to seek for anotherjob that I thought would fit my my long term goals much better. And later on, Iwasn't afraid to apply to Ivy League schools in the US even though everyonearound me told me that it was a stretch that I don't have the right grades, youknow, to go there, or the right family or the connections and I still said Justwatch me. And it gave me the courage to leave Israel into, into come here. Andyou know, go to business school and then later gave me the courage to quit myvery, very cushy take job and start again from nothing and start blue lakewhich, which is a company that I run today.

 

Dave Seymour 18:45

Youdidn't you didn't move from from Israel to sunny Providence, Rhode Island. Imean, you've got some you've got some geographical mileage behind you correct?

 

Ellie Perlman 18:56

Yeah, Iactually moved. So I was on. I moved from Tel Aviv where I used to live with myboyfriend at the time was my husband today. And, you know, we left every week,we just brought books in close, basically. And we moved to Cambridge. That wasa winter that was March of 22,014. Actually. So I, you know, again, I wastargeting really, really good schools applied to Harvard, you know, Yale, MIT,and, you know, decided to go to MIT where the it's it was the hub oftechnology. And I wanted to, I want to really to learn how to start companies,how to market companies how to pitch investors, and that was the best schoolthat could teach me and that's what I did. And so, back to your question, goingthrough something so terrifying and so hard. really gives you that perspectiveand really teach you teaches you If you went through something so hard in yourOkay, then what's quitting a job you don't like? Or searching, you know, careerthat's, that's nothing that's not scary but you know, getting shots straightinto your eyeball to save your yeah to save your eyesight. Well that's scary.That's much scarier than starting a company from scratch or, you know, changingcareers. You know, when you know when

 

Dave Seymour 20:27

you whenyou faced when you faced those kinds of challenges, like when I left the fireservice, I was a firefighter and a paramedic for 16 years here in lean mass onthe North Shore of Boston. And when I was leaving there, everybody said, I wascrazy, right? Everybody said, I was crazy, but And to your point, you know,being able to start a business and grow a business is fearful. But when you'veseen, you know, the challenges firsthand in the fire service, and paramedicine,when you face your own personal demons, and relationships and medicalchallenges, the fear of starting something new is just diminished. It's like Ithink about it today. And I think to myself that decisions I make, yeah,they're based in fundamentals, it's always investors first return on capital,good yield, all the things we talked about. But at the same time, being able topull the trigger, and actually make the offer is so less fearful. When you'veexperienced, you know, some of those other more traumatic, let's be honest,traumatic experiences going forward. So talk about your company, talk aboutwhat you're doing right now. And tell me, you know, what do you see going on inthe commercial real estate marketplace today? With with the challenge of COVIDgoing forward?

 

Ellie Perlman 21:42

Yeah,absolutely. Lee capital is basically a real estate company. And, you know, wepurchase multifamily properties class, the assets across the US, you know,mainly in really, really strong markets like Texas, Florida, Georgia, NorthCarolina. So you know, all those markets that are attracting companies andattracting people, people are moving from all across the US on, you know, allthe time from one state to another, but those markets are attracting a lot ofthem. For many reasons. And the biz, our business plan is prettystraightforward. We we purchase properties and really strong areas, we renovatethe units, we improve the operations, we cut costs, and you know, we we pushrents, we hold the properties for about five, three to five years. And then weexit we sell the property and I do this with investors. So we all chip in andwe we put we write checks in order to basically buy the property. So you know,I invest my family invest, you know, in in the deals. And to the other yourother question about what I see in the market, it really depends which markets.The markets today are behaving very differently than they were, you know, sixand nine and 12 months ago.

 

Dave Seymour 23:06

Yeah,for sure.

 

Ellie Perlman 23:08

Generally,speaking, markets, like Texas, and Georgia are doing really well right now.There were some some trends that started way before COVID. And COVID reallyaccelerated those those trends of internal migration within the US. So peopleare leaving San Francisco, Los Angeles, and New York, New York City, andthey're moving to more affordable markets. And now, you know, you can basicallywork from anywhere, even for the next year until things are back to normal,it's going to take time for companies to demand 100% that 100% of theirworkforce is going to be back in the physical office, there's a lot moreflexibility. So tenants are saying, Listen, why do I stay here in San Franciscoand pay $5,000 for this one for the one and a half bedrooms? Why not pay halfof it, move to, let's say, Atlanta, or Austin, and save that money, or just geta nicer place a year from now, when the company wants, you know, wants me back?Maybe I'll consider it. So we I see a lot of those, you know, changeshappening. And the importance in real estate is that it really helps increasingthe yield and increasing returns on investments that are located in thosemarkets. And if you want me to give you some numerical examples, actualexamples, we were able to able to push the net operating income in in theAtlanta market on some assets by 20% during COVID, and we were able to pushrents anywhere between 12 and 39%.

 

Dave Seymour 24:58

Wow,look for listeners le like you and I like I'm levitating off the chair rightnow, because I understand what you just said, right? for the folks that arelistening, we as syndicators, operators or GPS, general partners in theseassets, AV single purpose is to increase the net operating income on an asset.And the reason that we focus so heavily on the opportunity to do that on theassets that we buy with our investors, is because for every $1, we raise thenet operating income, we raise the value of the property based on what's calledthe capitalization rate in which that market trades. So in a five cap market,for example, for every $1, we increase the net operating income, we increasethe value of the property by $5. It really is a legal way. And I say this, sonot not to be flippant, but to be accurate. And I know you're backing me up ona daily, it's a legal way of printing money, which is why the Smart Money isalways followed commercial real estate. And when I say commercial real estate,and I've looked at your portfolio, so I know I'm I'm on board with ueli, wedon't invest in a pot in, in commercial real estate when it comes to, toretail, we don't invest in light industrial, and I'm not invested in officespace right now. Because the ability to go in and manipulate the noi is astrategy that we find tuned in both at Koreas to be able to offer our investedour investors substantially better targeted returns than most other vehicles inthe marketplace. And to be able to do that within the way you just described isis just magnificent. But it's all about being able to execute on that businessplan. So my question to you is, is you're in Providence, you've got assets inAtlanta, who are the key team members that you have in Atlanta to make surethat you you execute on the business plan?

 

Ellie Perlman 27:03

That's avery good question. When it comes to own an assets, you have to have, you haveto have a team in place, you know, boots on the ground the way we called it.And, you know, we basically, we hire a third party, property managementcompany, and they're local. So just I'll give you you know, real example, weown an asset called element 41. in Marietta, Georgia, right outside Atlanta, wehave 10 employees that comes in, they come to the office every day, we havefive maintenance people and five leasing officers, in including the manager inyou have you know, it's a, it's a big asset, almost 500 units, and those 10people are maintaining the the property. And in addition, there, there is aregional manager that is also that also lives in Atlanta, that is managingthis, the the teams, the maintenance and the leasing, the leasing teams. And sothat that's basically part of the puzzle. And of course, I'm on a plane, evenduring COVID I'm on a plane, I go there or you know, when I when I sometimesyou know, if I happen to be in the area. So a month ago, I spent about twoweeks in, in North Carolina. And so I gotten into my car, and I just drove toAtlanta. And you know, I didn't tell anyone that I was coming. I want to see howthe properties are doing without them knowing that I'm actually coming in ofcourse, that's that

 

Dave Seymour 28:45

secretshopper right there. That's undercover le I love it. Yeah,

 

Ellie Perlman 28:50

yeah.And you know, for the most part, I love what I what I saw, there's always roomfor improvement. But you have to be there. And if you cannot be there as asyndicator, you need to hire someone who can basically visit the property.There's not even I would say 30 or 45 days without me actually being at theproperty. This was key. You can you can do it remotely, but you have to bethere. The team needs to see you. The team needs to know that you're there,you're present. It's very, very different than when you're remote and you don'tvisit the property.

 

Dave Seymour 29:27

Allright, Ellie, hold it right there. We're gonna be right back. I want to knowwhat you're working on right now and what I can help you with. You're listeningto real estate reveal with Dave Sema, and Ellie Perlman, we'll be right back.

 

Intro Voice Over  29:41

RealEstate revealed We'll be right back. Steve molestus of Solaris reality, hasintimate knowledge of the North Shore market with over a decade of experienceand record of 300 real estate transactions when it's time to buy or sellproperty. Give Steve a call directly at 617-763-1001 that's 617-763-1001

 

Dave Seymour 30:14

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 with tune in for all the answers on my showreal estate revealed this is Dave see my might recognize me from the hit TVshow flipping Boston. 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 104point nine call my team at 781-922-4418. Today the real estate market isbooming

 

Intro Voice Over  30:47

mortgagerates just at historic 30 years old. And the New York Times recently reportedthat investors are snapping up real estate at rock bottom prices. And now savvyinvestors are buying real estate using their IRAs that allows them to accesstheir retirement funds to buy properties without paying any penalties or earlywithdrawal fees. If you have funds in your retirement account and you areinterested to learn more call horizon for us today at 866-712-2007. That's866-712-2007 unlock the power of your retirement account and take advantage ofa one of the most profound opportunities in real estate since the housingcrisis 15 years ago, call horizon trust retirement specialist at 866-712-2007.And for a limited time, get our free Ultimate Guide to buying real estate withyour IRA that's 866-712-2007 or visit horizon trust calm slash day. HorizonTrust Company is an independent passive custodian and it's not associated oraffiliated with and does not recommend promote or advise any specificinvestment investment opportunity investment sponsor, investment company orinvestment promoter or any agents employees representatives or other such firmsor entities arising 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 may losevalue horizon trust doesn't receive any Commission's or fees if I invest withany other sponsor. You're listening to real estate revealed with Dave see morefrom Amy's flipping Boston Welcome back. Welcome

 

Dave Seymour 32:15

back.Yes, everything real estate. But financially looking at this monster from froma different angle. You know, it's not always flip in Boston, buy a singlefamily, flip it make a couple of bucks make it look pretty. There's a biggergame, a more profitable game, I believe at play, which is the world ofcommercial real estate. My guest is Ellie Perlman. She has been in thecommercial real estate place as a as a GP general practitioner, right. That'sthe that's the general partner. She's been she's been wearing that hat for manyyears now working on some pretty pretty big deals. I mean, I looked at one ofyour assets over $1,000 in one in one complex that you you were able to purchaseand continue to work on the repositioning of that asset, but walk me throughwhat what is a good deal for you, LA and what are you working on right now? Andlet's let's take a look at some some real sticks and bricks, what's what's inyour wheelhouse right now? What are you doing?

 

Ellie Perlman 33:14

Yeah,absolutely. So right now, I'm focused on finding the next deal. Ideally, youknow, anywhere between 50 to 100 million is where we like to, to is what welike to purchase. That's kind of our sandbox. Remember, I that I told us, Iused to be a lawyer. So that basically shaped my vision and my tolerance forrisk as an investor. So as a lawyer, you're always trained to think, okay, hereare all the bad things that can happen. When you represent someone in a deal orin court, let me protect my client from anything that can happen. So I need toadd all those, you know, different sections in the agreement in case of, ofsomething happens then, then, you know, ABC and D are going to happen, so he'sprotected or she's protected. And that's my mindset, when I'm bringinginvestors a deal. I'm looking into all the things that could go wrong, and tryto protect them from those scenarios. So we know when you ask me, what's a gooddeal for you? For me, it's a deal that still works in in the worst casescenario for a lot. Yeah, if I can't raise if I can't raise rents at all in thefirst six months or 12 months. Am I still cash flowing and myself profitable?Can I still hit, you know, reasonable returns? And that's how I underwritebecause even though we'll be at we were able to raise rents, maybe we won't beable to do it in the next, you know, deal. I don't assume that we can replicatethe same success. So I say, you know what, if the deal works, with no rent increasesin the first year or six months, then I feel I can protect my clients from anymovements. You know, in the real estate arena, at least with this with thisspecific asset,

 

Dave Seymour 35:08

whatit's very important to dial in on what you just said, There, I had a guest onrecently as a developer in Boston, real good friend of mine kid by the name ofRicky Bell view, it's in the middle of doing a 72 door, ground up construction,mixed use property. And we were talking offline. And I basically said to him,you know, Ricky, you scammy, doing these build up, ground up constructionprojects right now. And he said, I don't have any fear. I said, Why do you knowwhat the market is going to be in 24 months or even longer when you finish thisproject. And to your point, you know, professionals will, you know, acceleratethe upside and hedge The downside. And what Ricky said to me was, as he said, Iran my numbers, both as you know, in a class property bringing in the bestrents, he said, and then I ran all my numbers, as if it was a section eightfacility, you know, bringing in subsidized housing rents. And he said both ofthe the the pro formas worked and protected my investors. So that's absolutelycritical for anyone to hear. You know, if you're going to invest alongside acompany like le Pearlman's you invest alongside asset freedom, ventureinvestments, understanding that we underwrite to protect the investor first iscritical. I mean, our investors always get paid first, what are what are thethe one or two strategies that you use led to, to really create? You know, inthe example you gave earlier that that 20% bump in the noi, what are youlooking for, for deficits that you can fix, to be able to go in and createthose investor returns those targeted returns?

 

Ellie Perlman 36:51

Normally,I actually, when I underwrite, I actually assume a decrease in noi in netoperating income during the first year just to see if the deal still works. Ifthings you know, go south and economy is struggling, you know, even more thanit than than it is now. So I don't assume any major increase, you know, inincome during the first year. And I think looking at it this way is it makesinvestors feel more comfortable. Because I said, Listen, every dollar for everydollar that I can increase the noi, you're going to get more than than theprojection, the projected yield, and then the returns that I'm showing you. Andso, for me, when I'm looking at it, I'm trying to target today, at minimum 7%cash on cash on a yearly basis, at minimum 13% IRR over five years. These arethe kind of the metrics that I'm focused on. We're using AI technology andmachine learning technology to basically that can help us predict what's goingto happen in five years. Because you know, if you ever read numbers onspreadsheets, and I don't want to bore anyone to death with, you know, Exceland in AI, you know, toss, but you know, you can make any deal looks good, youknow, you can make any deal look really great. But who knows what's gonnahappen a year from now, three or five years from now, how do you know how muchincome the property is going to generate? You need to use some educatedassumptions. And the question is, where are you taking the information from? Sowe're using pretty advanced technology? We're using pretty advanced technologyin order to help us you know, to come up with key parameters and and keyaspects of the Performa it could be how much rents are going to increase everyyear? What's the occupancy meaning how full a, let's say 500 unit unit complexis going to be Am I going to be able to run it at a 90%, occupancy 95? ADA, thenumbers are very different. And it really impacts the returns. So we're alwaystrying not just to throw numbers out there, but to use very robust research andtechnology, as I mentioned, to basically come up with to run all the scenariosand say, Okay, this is worst case scenario. These are the returns Is it a gooddeal if it's if it still looks like a good deal, then we're moving forward.

 

Dave Seymour 39:49

I likethat. So you're focusing heavily heavily on on data to to basically underwritethe asset. Right, you're focusing heavily on on the the AI tech, if you will,for the projections and the modeling going forward. And it's so interesting tohear you say that, because you know, there's, there's no right or wrong,there's no right or wrong way of really underwriting them when it comes to, youknow, track record history, for example, in one specific marketplace, or bringin, you know, the next level of automation, if you will, to the business goingforward. And the reason I bring that conversation up, is because I've lookedat, you know, your offerings, I've looked at your portfolio, and they performand project very, very similar to our own portfolio and assets. However, we use25 years of feed on the street in one market, right? To be able to, you know,put these deals together with confidence. For our investors going forward, youknow, we target, you know, a little a little more aggressive on our core plus assets,we target anywhere between 12 to 14%, cash on cash, but we give our investors apreferred rate of return, and then target the growth after that. And then theIRR is over a five, six year hold, you know, we target out somewhere between 17and 21%. But, you know, we're able to really get down deep into the minutiae ofthese deals going forward. Because we know the neighborhood street by street,you understand what I'm saying? It's so interesting to see that, you know, wewe basically operate with the same expectation of a result. But how we getthere is totally different. You know, does that make sense? Sally, do youunderstand what I'm saying?

 

Ellie Perlman 41:53

Yeah,yeah, absolutely. And I think, you know, with markets, markets, like Boston,the Boston Market is, is very, very strong. Markets, like Atlanta is alsostrong, but also changing. And it's such a sprawling city, there's so many submarkets, so many streets, so many alleys, you really have to know, the marketinside out to understand where the good areas, the bad areas and those that arechanging, and even if they're changing, okay, they're in a path of progress.But if you're going to be in and out in five years, you may not be able toenjoy. Yeah, exactly, because it takes time for things to change. So, you know,I'm a dairy I'm, I'm a nerd, I like data. I like numbers. I like research. feelmore comfortable, you know?

 

Dave Seymour 42:45

Yeah,yeah, there's that. Look, there's confidence in analysis. There really is and,and don't get me wrong, Ellie, we don't, we don't pay attention to our data oreither. You know, we focus in the Gulf Coast region of Florida. That's where Ibuy I don't buy in Boston, I don't buy in Providence. You know, though, thenumbers, just, you know, the cap rates are too compressed for it to make sensefor our investors going forward. So we love the Florida marketplace. Plus, asyou know, Florida, Atlanta, you know, the other markets that you refer to abusiness friendly, good for landlords, but le ad time has moved so fast. And Iappreciate you being on this call with us. If somebody wanted to learn moreabout you, your fund, how you do business, grow business, what would be areally good place for them to connect with you.

 

Ellie Perlman 43:36

So ifyou go to Google and you just type my name, le Perlman, you can see, you knowinformation about me. You can go to my website, it's Ellie Perlman, calm, andElliott spelled e LL. e. And you can reach out to me through the website, leaveinformation on if you want to read you know about the about real estate onForbes, the articles that I write there. Again, you can just google le Perlmanin Forbes, and you can read all that information there. So a lot of verydetailed free information on Forbes and on my website,

 

Dave Seymour 44:17

info atBlue Lake capital.com 401 to 008380. Ellie, I appreciate you being on the show.And I love the fact that just like us. You want to educate the investors firstbefore we put that money to work. Thank you for joining me. I really appreciateit. We've taken a quick break. We'll be right back. This is Dave SEMA. It wasinterviewing Ellie Perlman on real estate reveal.

 

Intro Voice Over  44:46

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. How to do home improvements. Georgekudos mortgage Officer of cross country mortgage and Danvers is just a 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,you may be able to save 1000s of dollars, call Georgia at 97877746 630. Stevemolestus of Solaris realty 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. That's 617-763-1001 you're listening to real estate revealed withDave Seymour from Amy's living Boston.

 

Dave Seymour 45:59

Welcomeback. Welcome back. You know, I love I love doing this I do I genuinely enjoybeing able to expand knowledge. So you know, what, what did you hear in thepast, you know, 45 minutes, whatever it's been together, we took theconversation pretty high level, we talked about commercial real estateinvesting from the standpoint of two, two looks, if you will ask us as theinvestors. But we also talked very briefly about what it looks like for thecapital that comes into those deal us you the investor. You know, Ellie saidshe raises capital? Well, we do the same thing here at freedom ventureinvestments. So first of all, if you're home and you're listening, write thisnumber down 781-922-4418. I'm old school, you can pick up a phone and you canconnect with us. You can also find us at freedom venture.com. And basicallywhat our business model is, this isn't it's very, very simple. It allows whatare called accredited investors. You can look up that term, an accreditedinvestor as determined by the Securities and Exchange Commission, we're talkingabout capital, we're talking about fiduciary responsibility. We're not talkingabout Hey, just lend me a couple of bucks and I'm going to go buy some realestate now. And I'll pay you some money. It doesn't work that way. This isintelligent investing. And accredited investor as determined by the Securitiesand Exchange Commission says it's, it's an individual who earns $200,000 a yearor more 300,000 as a family unit, or a million dollars in net worth, notincluding their primary residence. And it's funny, it's it's, it's amazing tome how that terminology turns people off, they immediately discount themselvesas an accredited investor. before they've done the due diligence and the workto find out whether that's true. A lot of people don't actually know what theirnet worth is they've never put the effort in, they've never done a balancesheet or a p&l, the profit and loss to determine what their what their truenet worth is, you know, their accounts can do that for them. But here's what'sinteresting, they very rarely include the value of a retirement account, forexample. Now, if somebody is an accredited investor, the next question I alwaysask them is is how are you feeling about your investing portfolio? You know, ifyou're investing with a with a money manager with a certified financial planner95% of the financial planners offer pretty much the same options to aninvestor, you know, bonds and stocks and shares and all of that world and it'snot my wheelhouse. And I don't ever want to feel like somebody who's in aposition to put somebody down to build me up and what we do up but what I willtell you is this is your financial planner. There are three reasons why theyreally don't understand our business. The first reason is, is they've neverbeen compensated for referring commercial real estate investments. So ifthey're not compensated for it, it's probably not in their in their wheelhouseto do it. Secondly, is their fiduciary responsibility and what they can andcan't offer is determined by their licensure. And their licensure doesn't allowthem or offer them, the majority of them the opportunity to share commercialreal estate investments with their clients. And thirdly, they don't understandit. The majority of them don't understand it, go to your financial advisor andask them to show you a commercial real estate investment with a two point spreadbased on the cap market rate for multifamily assets in your geographical areaand they won't they won't know what you're talking about. Tell them that youwant to see you know a consistent cash flow double digit return from commercialreal estate investing, and they probably wouldn't even begin to know how toanalyze and look at a deal for you. So again, not to put them down to build usup. It's not in their wheelhouse, so they don't understand it. So what we haveis what's called alternative investments. This is anything and everythingoutside of the norm. Now, commercial real estate investing, and I'mspecifically talking about apartments, apartment complexes, and I'm not talkingabout a three family in Linn or a six unit in Cambridge. I'm talking about largecommercial assets we invest in 40 to 150 unit apartment complexes in the GulfCoast region of Florida. Why are we down there? And why am I on the NorthShore? I'm sitting in my office right now in Danvers talking to you. I'm inDanvers. What, but what I buy is in is in Florida. Well, the reason we buy inFlorida is because it makes sense to buy in Florida, the numbers are right, theability to produce higher returns are in Florida than they are here in Boston.So it makes sense for us to buy their number one number two we buy in Florida,because that's where our 25 year plus team is my business partner, Walton, aVicki, if you listen regularly, we had an update with Walter, I believe it waslast week that episode aired. And he shared his experience. You know, he's beenin the real estate game since 1986. He's done a quarter of a billion dollarsworth of real estate transactions in the Gulf Coast region of Florida,throughout his career, and he's raised $125 million in private equity, privatecapital, your money as an investor, paid the targeted returns that an investornever turned a property back over to the bank never missed a distribution, andnever lost one dime of capital. Invest the capital, and I'm very proud to say,I've been the same way in my own transactions in my career, almost 15 years. Sowe buy these assets, we pull the capital with our investors, and we make thempart of the deal. Now, what is a good deal? And what is one look like we have adeal right now and I'm gonna I'm gonna walk you through a deal. And you'regonna have to imagine and I'll use my best, you know, descriptive skillsets mylinguistic powers to paint this picture for you. But, you know, what does itlook like to invest alongside us at freedom venture investments, we have a wehave an acquisition that we were just about to bring to market this may beavailable to an investor listening to this call. By the time you connect withus, it may not we've had a lot of interest around this deal, before we finishputting together the full investment packet. But you know, if you could own an81 unit portfolio, in in Lake County in Florida, which is what we have it's 81units, It comprises of, of two complexes. So there's 5051 56 in one and then20, no 55 in one and 26 in the other, giving us the full 81 unit complex. Nowthe total acquisition for this deal is going to be 6.3 to 5 million. Now thatincludes our renovation costs, and this particular project came to us becausethe landlord has had enough he doesn't want to be in the game anymore. He'stired. He doesn't want to work with the minor repairs that are needed. Hisproperty management has been not up to par for one of a better term. So complexone is currently branded in Eustis, Florida 55 unit multifamily. This one wasbuilt in 71 so it's an older unit but it's already had its its upgrades done.It meets all hurricane codes in the in the Florida market. It consists of sixtwo storey apartment buildings with a total of approximately 44,000 gross feetsituated on three and a half acres. What's important to us is the unit mix onthis thing 16 one bedroom and 23 two bedrooms, two bedroom one bath units. Soit has good diversification in what it can offer to the tenant base goingforward. The units feature window air conditioners so we are contemplatingbringing that up to speed with with some water called mini splits. complexnumber two is 26 unit multifamily. This one was built a little younger in 81.But again has already been had its major upgrades done it's concrete block,it's very standard for the Florida market. 18 two bedroom, one bath and fourthree bedroom, one bath the three bedrooms are worth gold to us. The rentalincome is substantial on these two properties at 764,000 a year. We run all ournumbers with effective losses. We look at what what we can do to increase thenoi thereby increasing the value of these assets. So Big Picture on a propertylike this for our investors is we get to go in there and really massage theseproperties. Now the targeted returns on this asset are very strong for ourinvestors. This is a two year hold. So the invest the capital that comes in onthis deal is only committed for two years, we exit after two years. But duringthat two year period of time we raise the rents, we do some minor repairs, wechange out the tenancy Where is needed. And what we're able to do is offertargeted, returns to our investors of 10 to 12%, on this asset, and then theIRR, the internal rate of return for that two year period of time, is coming inapproximately around 16 to 18%. And the reason that the IRR the value of thatmoney working for two years is so strong is because when we sell the asset, ourinvestors participate in the upside, it's also the the equity position on theback end, when we sell these assets. So what would it be like if you knew youowned a piece of an 81 unit portfolio in the Florida market? What would it belike if you could take the depreciation of that asset? What if we, we showedyou what's called cost segregation, where we accelerate the taxable benefits ofone of these assets going forward? This is where the the financial world meetsthe regular retail investor. These are institutional quality investments, theseare the ones that very rarely get to the general marketplace, because they'vealready been snapped up by the institutional buyers. And because of our leadgeneration in this marketplace, we've been very, very blessed to be able to putthese deals together. If you wanted to learn more about this deal and dealslike it, then I've already told you what to do your dial 78192224418. And we'llshare with you exactly what it looks like. Sometimes it's not for you, andthat's fine as well. It's not always a great fit, just because somebody has thecapital to invest, you know, our exit strategy has to meet with somebody else'sexit strategy. But you heard on the on the on the commercials of that break,what if what if you could put a piece of this asset inside your retirementaccount? What would that look like? If your retirement account was working atvelocity working at double digit returns, and we can you know, these aretargeted we can we can talk about what it looks like to have a piece of, ofthese working inside a retirement account. And that's when it gets gets reallyexciting. You know, if somebody had told me, you know, 13 1415 years ago, thatthis is where I would be today, where I will be putting these kinds of qualityinvestments in front of my age group, I'm 54 years old, you know, the next 20years, in my age group are the critical years to reach in retirement goals. Thegovernment's printing money every day, guys, we're fighting inflation. And ifyour portfolio and your your investment portfolios are not outperforming atleast five 6%, then we're killing capital, because inflation will will destroyany growth. And I can't change that. But what I can do is change not only thelife of my family, to commercial real estate investing, but those that seekshell find, get the information, it's here, it's available to you. What wouldit be like if this was the journey that you started on now and reap thebenefits two years, three years, five years from now going forward? It's apleasure. Take good care of each other. Take good care of your capital. Don'tlet it be lazy, put it to work at the highest velocity possible. And we'd loveto be able to share some of that information with you. If you want it. It's assimple as that. Those that seek to find you're listening to Dave Sema realestate reveals god bless and I'll see you all next week.

 

Intro Voice Over  59:02

Anysecurities being offered are under an exemption provided by sec regulation Drule 506 c only accredited investors who meet the SEC regulation d 501.accredited investor accreditations standard form provide suitable verificationof accredited status may invest into these offer any historical performancedata represents past performance past performance does not guarantee futureresults. June again next Saturday at noon for real estate revealed hosted byDave Seymour, the star of age loving Boston and CEO of freedom ventureinvestments in Denver.