Videos

House Dudes Jack Hoss Meets With Dave

Eric Wilson
November 12, 2020

SUMMARY KEYWORDS

property managers, asset, people, investors, properties, market, jack, fund, buy,network, capital, challenges, business, cap rates, investing, talking, numbers,multifamily, gary vee, years

SPEAKERS

Dave Seymour,Jack Hoss

 

Jack Hoss 00:01

Well, wegot a new guest on the show Dave Seymour. Dave, thank you so much for being onthe show and why don't I just kick things off? And have you introduce yourself?

 

Dave Seymour 00:11

Yeah,man. appreciate you having me on jack. This is This is fun. My name is DaveSeymour. And I got a an opening line jack ready. You might recognize me as thestar from the hit TV show flipping Boston on A and E. Now we're on our onamazon prime. So yeah, I you know, I've been a real estate investor and beenrecognized nationally for my expertise in pretty much all areas of real estatejack, I've been very blessed. didn't start out that way. So yeah, Dave see mallflippin Boston. I'm now one of three owners in a company called freedom ventureinvestments. We're a fund company. We manage 100 million dollar fund that'sinvesting in multifamily real estate and yeah, it's it's been a heck of ajourney. Brother, that's for sure. wasn't always wasn't always dealing in thebig sandbox. I used to play in a different one.

 

Jack Hoss 01:07

Sure,sure. Well, you know, it's always interesting. Let's start with flippingBoston. Like, it's always a curiosity to me, regarding like, and you seem to bea fella that would would give it to a straight here. Like, how much of that isreal versus Am I going there pretty deep

 

Dave Seymour 01:32

already?Wow, that's a that's a heck of a setup right there. You seem like a guy who'sgoing to give it to us pretty real. That's what we call a lead a lead ID that'sa leading question, Your Honor.

 

Jack Hoss 01:45

I know.

 

Dave Seymour 01:47

Nobodyever listen to this, right. So I could say the truth. That's a great question,jack. And I get that all the time. Okay. Can we all use some common sense andsome intelligence right? It's called a reality TV. And the last word is showwritten a show is designed to entertain and if it doesn't entertain, nobody'sgonna watch it. Right. Yeah. So look, what was real? Yeah, the houses that yousaw on our show were acquisitions that we either purchased or we're purchasingand doing some kind of repairs sometimes to to sell back out into themarketplace. But the drama, you know, maybe you could bend reality just alittle bit on all right. So come on, let's be honest, what are the odds thatevery single time something went sideways or when should crappy? You know,there was that'd be a camera there. You know, if you've got any experience in,in real estate, redevelopment, you know that, you know, something can go wrongat three o'clock in the morning when nobody's there. But you know, the firstfew episodes of flippin Boston were tight, man, they were really, they werewhat you saw look in New England, we've got we got challenges with the age ofour stock, you know, the oldest house I ever worked on was like 1812 you know,so we got some challenges with the sticks and bricks, brother, but you know,I'll leave I'll leave it with this. a&e network saw a sizzle reel that ourproduction company put together. And at the end of the the notes that weregiven to the production company, their notes were that big English guy becauseI'm originally from London, England, that big English guy looks like he could getreally angry. We'd like to see more of that. So now you read between the lines,right? We could all be grownups you know it's interesting if I can add to ityou know not to I'm a builder rapper not a Tara downer but but to add some somereal truth to it. You know, if you look at some of the the house flipping showstoday, they really kind of I don't know, man, they though they were a littleoffensive to me. You know, just because you put a stain on a wall and put sometrash in the corner of a room and you call it the stink house. It doesn't meanit was a real flip you know what I'm saying? Yes. Oh, you know we in NewEngland we really we ripped up our houses to put it back out for sure. But wehad fun man it put me put me in a national spotlight and I never believed wasgoing to be a part of my journey. So I've been blessed, blessed and cursed. Did

 

Jack Hoss 04:28

you didyou find like you know the the rehab numbers and in this the final sale price,all of that was pretty legit. Like

 

Dave Seymour 04:35

Yeah, myex partner Peter was a stickler for details. And you know, and so he shouldhave been the purchase price, the construction costs, the liquidation priceminus carrying costs, commissions, etc, etc. You know, that showed a trueprofit on the properties. You know, if you've ever flipped the house Yeah, Ibought it for 200 I put 50 into it. I sold it for 300. I made $50,000 No, no,you didn't get donkey you made, you know, $32,372 and 28 cents, you know, Imean, so, you know, numbers for us what we're based in reality. Absolutely.Yeah. But not all not all. They don't have to be it's not a it's not anoffering. You know what I mean? It's not an investment offering. It's a it's aTV show. So did you find out

 

Jack Hoss 05:32

you wereever directed like in the materials and stuff you use like it because ofsponsorships?

 

Dave Seymour 05:37

Oh,yeah, go right after it. So watch. Okay, boys and girls, ladies and gentlemen,drumroll please. The Wizard of Oz is about to pull back the curtain. If youwatch an episode of flippin Boston, and they portray me as the constructionguy, which I was I was a I was a firefighter and I ran a small constructioncompany for almost 16 years. So I was definitely the blue collar guy, the whitecollar world. But if you sit watch an episode of the show, and you see meinstalling a hardwood floor, and I say I love Mulliken, hardwood floors, threequarter inch solid oak with stain resistant mold resistant, Addy do blah, blah,blah. Come on people, it's a commercial. So um, you know, we were we were givenmaterials into the episode. But again, my partner Pete, he deducted the cost ofthose materials, numbers at the end of the show, because he never ever wantedsomebody coming back and going, Man, you know, so, you know, numbers wise, costwise, materials wise. 100% Drama wise. Maybe we bended reality a little bit.

 

Jack Hoss 06:49

Okay,I'll let you off the hook. Now. I won't ask you My Lord.

 

Dave Seymour 06:52

I feellike I should be wearing a lie detector. Hello straps around my chest in thatlittle thing on my finger?

 

Jack Hoss 06:58

Oh, no,you're making me feel good. I went there.

 

Dave Seymour 07:02

Nah,man, it's all good. It's all good. Look, if if if you see the host of a showwalking through a door walking towards you, and you see the look on their face.And then the next camera angle is behind the host. But you can't see what he orshe was looking at. Come on people. Come on. Now, there was a camera in thefront and a camera in the back and you didn't see the camera on either shot. Itmight have been shot. Once to get the trauma involved. I'm just saying there'sa possibility. Right.

 

Jack Hoss 07:34

So well,let's let's change the subject a little bit, we'll get you off the hook. Solet's let's just talk a little bit about the current market conditions. Andand, frankly, I think we're in a situation where people are looking foralternatives, you know, instead of the, the, the act of flipping and a fewother things right now, which leads to what you're doing today. So what do youthink of the current market is how are you doing regarding your multifamilyinvesting,

 

Dave Seymour 08:08

ya know,it's those, those are fantastic questions. Look, I've I've been a house flipperup in a private lender, a hard money lender. I've been in this industry everyday all day for, you know, 12 years now. So I've been through a recession havebeen through 2008 910 11. And a lot of people say, you know, we're going to befacing something like that, again, because of the horrific slap that we tookwith COVID. Right. So what what really happened with COVID is, is first of all,it's critically important, the fundamental impact, I believe, and this is justmy opinion, and you can get opinions anyway. You know, I think about realestate as a service that we end up giving to people, right, we're really in thepeople business, but our you know, our asset is sticks and bricks, whether it'smultifamily or single, how are the people doing that we serve. And I don'tthink anybody can can argue the fact that we're in a time of fear anduncertainty. And when people are driven by the emotion of fear and uncertainty,a lot of what I consider to be common sense seems to diminish a little bitright. Now what I mean by that is, is give you a classic example. Wall Streetwould buy on the secondary and tertiary markets would buy what's called non qmloans or mortgages. So as a hard money lender, you would write a mortgage to ahouse flipper, and that mortgage that note we would immediately sell it to WallStreet. Well, as soon as COVID hit fear became the underlining emotion thedriver and Wall Street shut down qm lending, non qm lending. Well she saidwe're not buying any more mortgages, without exaggeration, Jakob 75% of thehard money lenders and pre COVID are now out of business. Because their wholebusiness model was based on Wall Street buying up. So now you've got ashrinking down of capital available to house flippers. But what what does thatmean? It means that the tight skinny deals are gone, nobody's lending on them,they're looking for a higher loan to value. They're looking for good creditscores, they're looking for interest reserves, so that a borrower has got maybesix months or four months of interest payments that they can make. So itdramatically changed the landscape of hard money lending. Well, then somebodymight say, well, that's only one lending source. What about private lenders?Well, what happened to private lenders, private lenders, look at the stockmarket and the challenges that have gone on there. And they say to themselves,well, I stay in this thing, you know, I got 20 years to retire, or I've gotfive years or 10 years, they really needed to step back and take a look attheir investment strategies for their for their for their retirement, which isreally what most people are investing for right retirement, and thengenerational wealth afterwards, can I take care of my kids and my grandkids andmy grandkids? grandkids? Right? Can? Can I can I create legacy for one of abetter term? So everybody's asking a lot of questions and why people are askinga lot of questions. It's almost like the deer in the headlights thing, jack, alot of people have done nothing. And you'll hear it from all the pundits on TV,they'll all say no, hold, don't do anything. Let's just wait. Let's just seehold on my own take on the nation, if you will, a look at the landscape. Yeah,I haven't had I haven't done anything, I have not moved one dime into anyinvestment. In the past two months, we'll say that's not true. I made I madeone distribution on a on a construction loan. But I've really not gone outinvesting. But I haven't personally done nothing. What I've done is I've lookedat the landscape and pivoted and the hard money lending business that I was wasinvolved with when that when that crashed, and pretty much three days becauseof what I just described to you with Wall Street being the support for it. Istepped back and I said, Well, what was the challenge there and the challengewas controlling the capital. So here's what I see. And I know it's kind of longway round. And I appreciate you indulging me on it, jack, but I think it'simportant to understand the context before you deliver the content, right? Thecontext is a nation that's riddled with fear, financially, also, you know,socially, we've gone through horrendous upheavals. And that creates a wave ofemotion within our within our foundation as well. So you've got the underliningfear, well, now it comes down to where people still need to retire, peoplestill need to have some some safety and security. So for me, it was lookingback and saying, I don't want to not be in control of capital anymore. I wantto be in control of the capital to make the investments. So what we did was waswe started looking at the statistics, what what are human beings now doing?What COVID does as as scared people about large city living COVID is scarepeople around being in groups. We see it in Florida right now. Now it'snothing. And then all of a sudden, it's something as we see, you know, we seethese changes. So what we identified as a group was myself and my two partnerswas there are the institutional capital is now trying to go towards multifamilyand commercial investing, but that they're only want 250 units or 500 unitapartment complexes, the larger assets. While I don't want to compete withthose, and neither do the investors who invest in our fund. So what we do is welook at the secondary and tertiary markets close to the metropolitan areas, butwe focus on like 40 to 120 unit apartment complex is because what we see is, iswe see an opportunity to lease up open space as people are moving. Because whenpeople move stuff happens, man, it's just fact right. So you've got an influxinto the Florida market where we are in the Gulf Coast region, you got aninflux of population, you've got a low inventory of real estate and you've gota high demand of people who just want they want out that they're migrating awayfrom the larger cities. So that creates opportunity creates an opportunity forus to raise this capital by these smaller multifamily asset classes and be ofservice at the same time. So who are you serving? So wrap it all up for youcheck who you're serving. We serve our investors because we give them a higherrate of return targeted than most other investments in the marketplace. Andthen at the same time you service your client, which is the tenancy that livesin the assets that you manage. So you know, it's it's a very interesting time.It's not a time to do nothing, but it's absolutely a time to educate yourself.And then and then put a plan of action in place because that's what we do jackas entrepreneurs, man, we sit back, we survey, and then we go again, right? Iwas listening to a conversation recently. High Level guys, I can't rememberBlackstone maybe. And one of the guys was saying, you know, everybody's got areally good point. I think it was a mike tyson quote, everybody's got a reallygreat plan to to get smacked in the mouth. And that's what COVID did, itsmacked us all in the mouth. Some people have gone down and won't get up again.And then you know, I align myself with the people go down and then come backtwice as strong. So that was kind of long winded man. But you know, I don'tthink you get a sense of where I'm at with it. Yeah,

 

Jack Hoss 15:58

it'skind of interesting that you're talking about these smaller multifamily classproperties. How do you select those markets that you you're finding theseplaces in? And yeah,

 

Dave Seymour 16:08

and I'msure the question is a lot of data jackets, a lot of data, it's data driven,it's driven by population, it's driven by single family cost of housing, it'sdriven by rents, it's driven by population close to the to the metropolitanareas, is a formula, it's a proprietary formula, pretty much that has beencreated by my partner, a gentleman by the name of Walton, Vicki Walter is inFort Myers, Florida, he's been in that marketplace, building and investing andidentifying these assets for probably 10 plus years, now, you've raised over100, and $20 million of private capital to do these these kinds of properties.Myself, using that proprietary formula, you know that one of the magical thingsabout the TV show was national exposure. So with my network, National Network,if the right deal comes in from Indiana, for example, India is a greatmarketplace, I got guys on the ground in India looking for assets for me rightnow, well, that's great, but you still gotta manage and execute on yourbusiness plan. Even if you take down the asset. I'm very blessed that I've alsogot relationships, pretty much nationwide, that can execute a business plan forus. So we primarily focus there, but we also focus, you know, based off of mynetwork and my relationships when the right deal comes down. Sure.

 

Jack Hoss 17:41

So isthere a certain classes of property that you're looking for to you know, like,in India is a good example? I mean, they're, the conditions have to be all overthe place?

 

Dave Seymour 17:50

Yeah,yeah, we've got it, you know, I'll pull it up. Soon, as you asked me, I'll pullit right up it I've been living, I've been living with what we call my buy boxfor the past month and a half. So I'm properties. B class properties is what wefocus on. So in the commercial world, for your newer investors, you have A, B,C, and D class properties, A, B, C, and D class neighborhoods, right? Justlike, you know, you're graded in school have a was good. And you know, an Swas, well, I got I got one, F, maybe two, maybe two at my. So they justclassified ABC and D. And then they're built around the determined by the yearof being built, how old are they? So we focus on B class properties, B classneighborhoods, 1990s construction, and then our business model focuses on whatwe call light, light value, add, like, I don't need to rip something down andbuild it up. Maybe we go through with what's called a cap x rays or capitalexpenditure raise, we put that capital into the asset, raise the quality of theasset, raise the quality of the of the income, and then and then we sell, andwe sell on a six year exit strategy. And that includes the one year of ramp upthat we do, as we're stabilizing the asset and bringing it up to bring it up tostandards.

 

Jack Hoss 19:20

Soyou're looking more for possibly just when we say distressed property, you'remore looking at it's just maybe under rented not performing to its potential.We run into old, you know, living landlords or something that Yeah, they just,they just kind of become a little blind to what the market rents could possiblybe and that type of thing.

 

Dave Seymour 19:44

Yeah,you're talking about what we call the mom and pops, right? Yeah. So it's, it'svery common in our country for you know, that smaller asset class, like I said,the 42, maybe the 120 range. It's very common that they're managed. By, youknow, a family, if you will, you know, if you if you if you're like a littleinside scoop on market and look for properties that are owned by individuals,not by corporations in this asset class, if somebody is managing or as an assetand their own name, the class is an amateur, it's just fact the professionalsunderstand asset protection, etc, etc. So, by identify that mom and poporganization, I identify somebody who's probably hurting right now, they'reprobably in a tight if not negative cash flow scenario, because a lot of theseorganizations have managed their properties on a very thin line on a very, verythin margin. The quality attendant may not be and I don't mean quality ofpeople don't take it on a moral thing, but the quality attendant their abilityto pay pay on time, every time you know treat the asset, well, you know, mightbe challenged because like you said, they've just they've this what they doevery day, right, they give a discount of rent to Charlie and for B becauseCharlie and for B picks up the trash once a week, that kind of thing. That'syou know, that's that's losing potential income and as soon as you you youknow, you your downside, your noi your net operating income, you're downdowning the value of the asset, no commercial real estate is based on how muchcapital does it bring in. So those are those are fantastic opportunities forus. And we identify those properties through broker relationships throughoutmarketing relationships, asset management companies, they know what we want,and they're always looking for us to be able to take these assets down. Soyeah, undemanding badly managed anything with like a 47% or more in management,expenditure, right income and expenses. There are expenses of 47% or higher.That's a fantastic opportunity for us because we can dial those expenses down.And every every dollar that we increase noi, we increase the value of theasset. Every dollar, we decrease expenses, we increase the value of the assetin Boston, Jackie, love it, we call it a twofer. You get two for one, two forthe press. So yeah, we're always looking for the tufa.

 

Jack Hoss 22:18

twofer.So can you talk a little bit about like, some some properties, you know, youknow, when we're talking about ABCD, you know, type properties? Do you comeacross properties that are like in a B neighborhood, but our C class that youcan try to pull into the B class or Yeah, or how much how much more work? Andeffort is a C property in a C neighborhood versus a B property in a Bneighborhood?

 

Dave Seymour 22:51

Yeah,this uh, you know, there's there's a lot of different philosophies on all ofthat stuff. And they're all right. You know, there's, there's an investor outthere who's been investing in the neighborhoods, their whole career, andthey've made a very nice living in doing so. And that's their business DNA,then there are some investors that look at, you know, C, C plus neighborhoodsand say, No, I don't even want to be there, I want to be in that quality of a bneighborhood. I think I think the biggest mistake that some investors can makeis that they they buy an asset, and they buy the asset with the intent ofraising rent above market value. Now, if you if you're if your business modelis to be at the front of the line, to be the most expensive asset out there inthe sense of income, it's almost it's almost like taking the the mistake ofover rehabbing a single family house will now put that on a on a multiplier of100 units. If you over rehab 100 units thinking you're going to get higherrents, you're setting yourself up for a challenge and potentially a disasternot only for that particular asset, but also for your investors. So what we'lldo is, is well identify a C type property in a B type neighborhood. And it jackto be frank with you, it doesn't, it's really not a huge concern on the amountof work it takes, because I make my money and my investors make money with us,because I make my money on the buy side. And you understand what I'm saying? Ifit's if it's bought wrong in the first place, jack, forget it, you're alreadybehind the eight ball. So if my cost of construction, my capex is a realnumber, well, that goes on my analysis sheet, we use a proprietary underwritingsoftware. I put that on my analysis sheet, and then it tells me Hey, okay,that's your cap x. That's your market rents. There's your T 12. You know,trailing 12 years income, vision deficiencies in Union At least up theirdeficiencies in in financial collection. bomba Baba Baba, this is what you canpay for the property and still pay your investors their preferred rate ofreturn. So for us, it's about paying investors as quickly as you possibly can.Everybody, especially in COVID, is concerned about cash flow, people lost theirjobs. You know, even even some of the investors that I talked to, you mentioneda doctor, prior to the call, you know, the a lot of the medical professionalsTell me frequently, you know, hey, I couldn't even open my practice. So, youknow, all of those procedures that went on during COVID, that couldn't beperformed? Well, every time a doctor performs a procedure, that's how they makeincome, right? So, you know, there's a lot of that fear around cash flow. Soinvesting with us, and our business model is always focused on cash flow tomake sure make sure the deals make sense. So you make the money on the buyside, you realize the bigger profit at the time of of liquidation when you sellthese assets out.

 

Jack Hoss 26:06

So whenyou somebody is evaluating a multi family for the first time, are there likesome gotchas and some numbers that they probably should particularly payattention to?

 

Dave Seymour 26:17

Yeah,absolutely. There are. You know, I did a short video on the back end of ourwebsite at freedom venture. And it's a short one, seven minutes, it's worth alook. I don't even know how it all works. Very true jacket connects to YouTubesomehow, but

 

Jack Hoss 26:36

I can'treally do too.

 

Dave Seymour 26:38

Sowhat's that?

 

Jack Hoss 26:39

I'lllink to that video as well.

 

Dave Seymour 26:40

Yeah,yeah. I'll give you a link to it. Yeah. There were three numbers that we focuson. And a newer investors should focus on these as well. And it's prettysimple. It's a cash on cash return. Right? Does the investment Make sense?There's then what we call a cap rate or capitalization rate. commercial realestate is traded on cap rates, and every market in the United States of Americaas a different acceptable benchmark for a cap rate for a specific asset class.You know, if you bought a 20 unit, beautiful brick building on the CharlesRiver, where I am up in Boston, it would probably trade right now at a threeand a half, maybe a four, four cap or a 4% return. That's the way that it'sstructured. But that same brick 20 unit building in Greenville, right in theCarolinas might trade at a seven cap. Hmm, okay, but you would pay less moneyfor the asset and get a higher rate of return. Whereas other investors willlook in the depressed markets that depressed cat markets. And they'll say,okay, that 20 unit building is, you know, $5 million, but I'm okay getting afull percent return on $5 million, and then try and create some value in it. Solower cap rates are not not designed for cash flow, that designed forappreciation over time. Higher cap rates are designed to give a better monthlycash flow. So we look at cash on cash return capitalization rates. And then theother number, which is critical for any investor and analysis is what's calledthe DCR or the DSR. Some people call it the debt coverage service ratio or thedebt service ratio. And that's that's does this build in create enough income,the bank will land on it. All right, unless you unless an investor or a fundlike us wants to just put all of the capital down and leave it there, whichdoesn't you know, that's leverage man that's real estate fester, one on oneleverage somebody else's money all the time. So what we do is we put ourcapital down and then we leverage out with the bank 8020 7030, depending on theon the deal, but you know, that bank wants to know that the the building canpay for itself. So that kind of like the industry standard is what's called a1.25 DCR, a debt service ratio, debt coverage ratio. And basically what that1.25 means is this jack is for every $1 that I have to make in debt service ormortgage payment on an annual basis, the bank wants to see an additional 25cents coming in. I've seen some shifting recently. There's some institutionsthat are going to a little the other way, they're looking for a you know, likea 1.3, depending on the asset, and it's occupancy, that kind of thing. So caprates, I love to see cap rates 8% or better, because that that puts me in aposition where there's debt service, I can create equity, as well as makemonthly payments. So I like that for cap rate number. debt service coverageratios always got to be better than, you know better than a 1.25 and then cashon cash just to give you an idea of AF fund and these are targeted, right we'realways being sec See compliance, but at targeted cash on cash returns aroundeight to 10%. And then our IRR or internal rate of return, we target that outanywhere between 18 to 20%. For the life cycle of the capital working in ourfund, so, yes, simple numbers in the beginning, but you know, to be very, wegot to beat direct here, you know, it's not fifth grade math, because afterthat you get into how did you get all of those numbers in the first place? Andthat you're doing diligence and your underwriting and your expertise? Sure.

 

Jack Hoss 30:36

So asyou mentioned, you know, you're going into a bunch of these different markets,

 

30:47

how are

 

Jack Hoss 30:48

you? Howare you selecting and finding those inventing out those property managers andall of these markets?

 

Dave Seymour 30:54

Notgreat questions as well. So we have a just like, we underwrite a property, weunderwrite property managers, we're blessed to have some some national managerson that team as well. It's very boots on the ground, man, it's boots on theground. It's evaluating a property managers business model, you know, becauseit's easy to say, yeah, I've managed 500 units or 1000 units, a propertymanagement company, but it's a different thing to say I manage themprofessionally, a lot of these assets, they try and sell them with propertymanagement in place. And yeah, it was the property managers that drove down thevalue of the of the asset in the first place. Right. So depending on what itlooks like, how they meet our criteria, there's an interview. And I mean, our,our process for qualifying property managers is probably a manual that thick inand of itself, right? And I'd be going through those details, you know, for thenext three days, but the best way to describe it is this out of every we'll say100 properties that we evaluate, we also evaluate the property managersattached to those properties. Right, right. So out of 100, that we evaluatemaybe 10 of them get through the initial evaluation, and out of that 10, fivemight go to the next level. And now that that five, we might only put lettersof intent, and start talking contracts with a property managers on two of them.Mm hmm. Which is why a fund and syndicated deals can be the strategy for what'scalled an accredited investor, because it is time intensive. We're not talkingabout a couple of bucks. I mean, we're talking about 100 million dollars. So ifyou're making a commitment in that kind of a, and that kind of world, and, youknow, you better have a proven track record of success as a fund to be able toexecute on the business plan. Yeah, I look, man, I bet there's good and bad inevery market. And I'm, you know, it's experience that allows you to determinewhat is good and what isn't. And I, you know, I'll go zero degrees on that oneall day long. No, no, it's a trial read.

 

Jack Hoss 33:09

We'vewe've toyed around and played around with, you know, investing out of market.Sure. And it's, it's hard enough to find a property manager local where you canget your interests aligned. Yeah, your interest just naturally aren't alignedwith with a lot of property managers. So, so is it No, I

 

Dave Seymour 33:29

get her.Yeah. Look, here's here's the bottom line. It's economies of scale. Alright, soI've got the economies of scale on my side of the equation, whereas mostinvestors are very familiar with either a syndicated deal, one sponsor 20304050 people putting in maybe 25 grand right on the low end. Hmm, well, that'sone deal. Well, that one deal doesn't absorb the economies of scale with a fundwith 100 million dollars in it. Do things go sideways? Yeah. I'd be absolutelylying to you. If I told you everything was perfect. 24. Seven, that that's whatwe that's what we do is for managers, we understand the challenges before weeven go in. And then we hedge against all of the challenges that we know we'regoing to find when we get in there. You know, have some property managers beenfired after 60 days?

 

34:24

Yeah.

 

Dave Seymour 34:25

Right.And some property managers stayed with us with longevity. Yep. Yes. See whatI'm saying? Yeah. So instead of all the eggs in one basket of fund has given usthe economies of scale when it comes to those challenges, jack?

 

Jack Hoss 34:39

Sure. Sowhen you find that perfect property manager, I'm sure that not only are theyhelping you with any kind of vacancy rate, but they help you keep some expensesunder control. Like are there some now that you've done quite a few of these Imean, your portfolio's rather large are there some Like target expenses, youjust know like, we gotta we gotta check and get these under control right away.

 

Dave Seymour 35:07

Yeah,yeah, look, every every market has a price per square foot, right andconstruction costs. cost, the materials are cost the materials, if we're doingthem on volume, there's this, you know, there's a chance to save capital on thecost of materials. But it's it's human beings at the end of the day, I alwaysuse the use the analogy of kind of like Warren Buffett, you know, he buysbusinesses, he looks for underperforming businesses, he goes in he cuts the fatmakes the business more valuable, keeps it sells it. Well, we do the same thinglike we target payroll, for example, what is everybody getting paid for? Youknow, what are they really doing? And Willie, the work that relationship withthe property managers, all we just work it from, from a, you know, a higherfoot view, because we have, we have industry standards that, you know, haverepetitively given us the results that we're looking for. And to sum it all upreal easy is 40 47% 40% of expense to income ratio, anything higher than thatis an opportunity for us, you know, some assets, we can run leaner than others,it all depends on the size and the amount of, you know, challenges that thatspecific asset has. But, you know, with experience, it doesn't take too long topin down where the challenges are, right? That that overpriced hv ACcontractor, you know, you've talked to the property manager, and you say why,why is that hv AC contractor at that price point? Oh, it's my brother in law.Okay, you know what I mean? So who's who's asking all those questions? Well,that's what we do as fund managers, right? We we delve into all of thosespecific details. And we look man with I'd love to be able to put it all in a,you know, in a nice straight line, but it's hard to talk about a combined 50plus years of experience with us, as fund managers on this stuff. You know, like,we look at it and expense income ratio. And without even talking to my partner,Walter, we already know where the challenges are, and whether we can fix themor not. And some you can't fix so we don't buy them. No, it's just simple asthat

 

Jack Hoss  37:21

right.Now, so it sounds like you really rely pretty heavily on your network. And Ithink that's a pretty solid point to pull out. I mean, in your network iseverything. And if you seem to be in a situation where if you if you're movinginto a market, one of your first tasks is building out your network in thatmarket? Sure, that'd be safe to say,

 

Dave Seymour 37:48

Yeah,no, you're absolutely right. It was a saying, Connie, Connie put it any way youwant. I don't care. your net worth is a correlation of your network, right?Which is why this is so hard to do sometimes, man, I hope I'll go direct withyou again. I always talk about the guy from the TV show is somebody else.Otherwise, it feels like an ego trip, right? But what separates us and our fundis that guy from the TV show, in the sense of he is able to open up doors andget responses that a lot of other people can't, right, right? There's an oldadage in business, right? If your phone goes off, and you see on the caller ID,and you send that person to voicemail, you don't ever want to be that persongoing to voicemail understand. So to be able to go into a market that weidentify as having upside potential for us to put our investor capital to work.It doesn't take me very long to make 510 phone calls and have the top 234players in any specific service that we need. At my at the end of the role ofextra Rolodex showing my age, you know, on the on the phone, to be able to toget some numbers rolling and get some feedback. I don't care whether it's abroker, I don't care whether it's capital, its property managers. Building ateam in that market is less of a challenge for us. So it is network drivenbrother, it really is. It's you know, it's not what you know, it's who youknow, if you don't know what, you know, you're never gonna get the right peopleto be in the whole you know, department, you know, right. That makes sense.Makes sense.

 

Jack Hoss 39:33

So, withthat, I know I interrogated you for quite a while here. All right. Well, Ray,before I we end here, do you? Was there anything that you wish I would haveasked?

 

Dave Seymour 39:49

No, manI look I'm I'm one of those guys who does everything he can to be in the momentand whatever we discussed is what we were supposed to do. Discuss, you knowwhat I'm saying? Yeah, like, you know, I'm not I'm not a guy of organizedreligion, but I'm definitely a man of faith. And if we if we had a messagetoday that helped just one person who listened to the show, and that's what wewere supposed to do today, you know, maybe this is not an ulterior motive. Youknow, if somebody reaches out and and we put capital to work and give them agreat rate of return, that's awesome. If somebody doesn't reach out, that'sokay, too. We're gonna be fine. I mean,

 

Jack Hoss 40:29

I justlet me ask you a question. Is there anything I can do for you, jack? I justappreciate your your background and growing my network.

 

Dave Seymour 40:39

Now yougo, brother. There you go. There it is. So if you're new to the business, don'tgive up just stay there stay the course. Yeah, it was broke as a joke one dayand you know, 12 years later, I'm in such a different world. And I'm blessed,you know?

 

Jack Hoss 40:52

Right.So if people were interested in more information or getting in touch with youwere How would they reach out?

 

Dave Seymour 41:00

Yeah,there's a couple of different ways. You can just search us out on Facebook, gofigure. You can find me at Dave Seymour live. That's my personal page. At companyis freedom, venture investments, you can find us at freedom. venture.com is awebsite. It's probably the your most direct. And if you do go to freedomventure.com. Just scroll down to the bottom of the page. There's a book that Ijust finished with my property manager of all people, a gentleman by the nameof john desaulnier. john and i just finished an ebook. It's a free download.You're more than welcome to grab that. Unlocking the code to multifamilyinvesting. And, yeah, there's great resources there. Reach out spend a littletime with us or don't. But, you know, it's all about network man. But you canyou can grab a hold of us at either one of those places. Freedom venture.comYou can find me Dave, Seema, just google me Dave cmic. Y mo you are Find me onLinkedIn, I guess. Yeah. It's not my

 

Jack Hoss 42:11

room isone of those things I think people kind of forget about but frankly, that'sprobably my biggest network. Yeah. Gary

 

Dave Seymour 42:18

Vaynerchuk.If you know Gary Vee, Gary Vee, I he was part of a mastermind group that I wasI was with or affiliated with years ago. And anyway, Gary Vee said in 2013 Ithink it was just did a post today. He was talking about LinkedIn back then.You know, and now, whatever, whatever amount of years it is later, seven yearslater, yeah, seven. Yeah. No, 13 whatever can do the math. He You know, that'sthat's a formula that the next one he was talking about was was this Tick Tockthing. But you know, I my Yeah, my networks for accredited investors. So I don'tknow if they're hanging out on tik tok yet.

 

Jack Hoss 43:02

Yeah.Some of the, you know, as much as I want to keep up with Gary Vee. You know, hejumps on these platforms really fast.

 

Dave Seymour 43:10

Yeah.

 

Jack Hoss 43:10

TickTock. I, you know, maybe it's just my age. I don't quite get it.

 

Dave Seymour 43:15

Yeah, Igot a little gray on the side. You got a little gray in your beard, brother. Iget it. I'm with you. I'm with you. So good. My God.

 

Jack Hoss 43:22

That'swhere you train me on Snapchat. I haven't installed but you know, I don't quiteget that either. But

 

Dave Seymour 43:30

Ihaven't even got Pinterest figured out. So don't worry about it. Also, guys,we'll hang out together. It's all

 

Jack Hoss 43:35

there.There you go. So thank you so much for joining me today, Dave. And I'll makesure to include all those links in the show notes. And I hope we can do itagain sometime.

 

Dave Seymour 43:48

Yeah,you bet. Brother. I'll send you a little. All the links that I have. I'll sendit to you and then you can throw it on there if you'd like. Okay. Yeah,

 

Jack Hoss 43:56

soundsgreat. I appreciate it.

 

Dave Seymour 43:58

Verywell. Thank you.