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From Failing a Flipping Course to 2600 Doors in 3 Years with Chris Grenzig

Chris Grenzig focuses on managing, sourcing, evaluating, and acquiring new assets for Toro’s Multifamily Portfolio. Also, he contributes substantially to capital raising, negotiating joint ventures, financings, and dispositions. Chris has been with Toro since 2016 and has contributed to over 2600 units acquired worth over $155 mil.

Before joining Toro Real Estate Partners, Chris worked in finance at small boutique firm in Rockville Centre, NY. Chris graduated Hofstra University where he earned his Bachelor’s in Business Management, and played Division 1 soccer for 4 years on scholarship.

Key Takeaways:

  • Exit the W2 world because his moral compass wouldn’t allow him to stay.
  • Tied to just one revenue stream. 
  • Try it out but find your niche.
  • Importance of finding a mentor and be part of a mastermind. 
  • Focus on markets that make sense for you. 
  • Outsource your property management. 
  • How do you stay conservative with 100s of ready to go investors in your database?
  • 506(b) vs 506(c)
  • Investing in a 130 unit vacant opportunity zone

Connect with Chris:

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Links mentioned in this episode:

RAW TRANSCRIPT

[00:00:02] Hey, what’s up, everybody? My name is Jay Helms and I’m the founder of this movement and podcast known as the W2 Capital. Today, I have a very special guest with us, Chris Grenzig.

[00:00:14] You did awesome. Chris focuses on managing, sourcing, evaluating and acquiring new assets for Tauro Real Estate Partners multi-family portfolio.

[00:00:25] He also contributes substantially to Kapper raising, negotiating joint ventures, financing and dispositions, which I hope will get him a lot of that today. But Chris has been with Tauruses 2016, as has contributed to over twenty six hundred units. And I’m sitting here thinking, wow, that’s pretty amazing. Acquired worth over one hundred and fifty five million. So if I’m doing the math right, that’s three years. So that’s roughly eight fifty nine hundred units per year, which is incredible. But before joining Tauro Real Estate Partners, you actually worked at a finance small boutique finance firm in Rockville Center, New York. Along with that, you also were a bit of an athlete, right? Play Division 1 soccer for 4 years on scholarship. I might add. Wego which in my role it means something because I was a walk on for the American football and I played about a year and a half and half. Follow a punch, but take it out.

[00:01:23] So go back to getting beat up. I never had aspirations to go pro. What about you?

[00:01:31] I did just quickly realized I wasn’t gonna get there, so I wanted this.

[00:01:36] But if you’re like me, you wouldn’t trade those days at college for now, right? I mean, there’s someone absolutely not best times in the world, but. All right. So let’s let’s start at the beginning, because you just graduated from college. You went into the W2 world. Would you have a finance background, write a song where your FINRA’s certified? And that’s about the extent I’m going to say that because.

[00:02:00] Real quickly, I’m going to get out of my expertise when it comes to financial regulation and whatnot. But you were.

[00:02:07] So tell me about the W-2. Tell me what you hated about it and what really pushed you to do real estate for time.

[00:02:13] Because one of the things here at the DMV to Kabbalist is I focus on is a lot of. Before I started this movement, a lot of folks that I was talking to were focused on financial freedom.

[00:02:24] Wanted to Peiser take it out of the W-2 world where I feel like there’s there’s a gap missing to say you can do both, right? Yeah. You’ve decided to go full time, which your record proves that you know what you’re doing. Twenty six hundred. We sure hope so. Yeah. Well twenty six hundred units. You know, just getting past the acquisition is one thing.

[00:02:47] Right now you’ve got to make sure those those assets perform like you’ve promised your investors and then eventually exit your position in those. But.

[00:02:57] You’ve done something, right? Right. But before we get into that. Tell us a little bit about the deputy mayor.

[00:03:03] What what made you realize? OK. Our this real estate thing or more of a go at a full time for sure.

[00:03:10] So what that bio doesn’t actually mentions? I actually spent a year as a coach prior to finance. So just like a typical, you know, student athlete didn’t really have any prospects lined up after school.

[00:03:23] You know, they’re not going to leave you there. Yeah.

[00:03:25] Didn’t really do any internships or anything. So lucked out. I had a buddy. You hooked me up with Division Two coaching job up in Massachusetts. I’m from New York, born and raised, went to school in Ireland and went up there for a year, tried it out because you don’t have a job. You’ve got to try something and better than flipping burgers at McDonald’s. So try that for you’re really liked the coaching part of it. But because you get paid so little, you did have a second or third job. Right. I didn’t youth coaching on the side and that I did not like because it’s glorified babysitting is basically what it was and just wasn’t for me. I you know, I saw five, 10 years down the road and I was like this. I just think I’m going to be unhappy. So I said, let me change now. So move back to New York. Still had a part time job coaching in college and then also got a another part time, full time job as a cold caller for a stockbroker stock brokerage in Rockville Center. That’s the finance company. Just word a little bit differently for the bio. And eventually got license after several months. But while I was at the job, I quickly realized, you know, what it really meant to be a stock broker and, you know, kind of what that world is. And, you know, it’s not anything to the degree you seen, Wolf, of Wall Street or boiler room anymore. But there still is.

[00:04:38] If that was the case, there seems there’s still some strong echoes.

[00:04:42] I mean, it’s it’s a world where at least where I was, I can’t speak for everybody, obviously. But where I was, it was very much, you know, what can my client make me not what can I make for my client? And it was very much about, you know, how many commissions can I rack up from this person before they close an account? And that was just ass backwards, wrong. And I was just like, OK, that’s that’s the pits. It actually hit me one day. My. And, you know, bless Plesser. Asked if she if it would help if she could roll her. It was some retirement account that she had and a stockbroker. She said, if I gave it to you, would that help you work in housing? No, don’t give it to me. Don’t do that. I mean, you know, no offense to her. She will. She’s not also an accredited investor. So wouldn’t it worked anyway. But at that point, it’s like I only want to take your money because I’m afraid I’m going to lose it all. And my bosses aren’t gonna care that it’s my aunt. So I said no. And then from there I was like, okay, long time coming. This the wakeup call, you gotta get out. Luckily, right at that same time, my mom and my cousin bought a flipping course. So that was my introduction into real estate.

[00:05:52] That was January 2016. For that, I knew nothing. The example I always give is I thought asbestos was a type of mold. So I literally. Yeah. All it’s funny, you know, people who really know their stuff when they get a really good giggle out of that. Some people just give like a little chuckle or two and you know, your pay. Their hands were never in the weeds too much. Not that I really was. You know, I’ve never really been the hammer swinging person. But, you know, quickly learned that that wasn’t the case. So literally, you know, absolutely nothing. So I think, you know, a lot of people I talked to say they don’t have the knowledge and how do they do it? And it’s really not that hard, because if I can do it, anybody can do it. Because I knew nothing. So, you know, the next few months was, you know, ramping up knowledge. Then it was, you know, nights and weekends still worked for the stockbroker company and trying to flip houses on the island and flat out struggled. Never bought a home, never put it on a contract, never flip one. Did you, you know, put it under contract and fuck it up? It just flat out never happened. Just never found a deal that made sense on paper. So we decided to instead of trying to continue to bang your head against the wall, make a change and try to get into the tax DTD side down in Philly and then eventually moved into a small multi and in a large multi.

[00:07:10] I won’t go into too much because you’re asking more about the W-2 stuff. Yeah. But just quick background of how I got into it. But you know, from the W-2 side, it was you know, it was just the lack of flexibility and freedom was a large thing for me. And that’s something that’s changed dramatically now and in the last year. It’s something I’ve really placed a high value on because I’ve got a lot of friends that are, you know, same age, similar age that, you know, for one reason or another, don’t like the job they’re in. And there’s not much they can do because you’re tied to this, you know, revenue stream. They’re only. And, you know, they might be looking for other jobs. There might not be or might be reasons they don’t want to do it. And it could just be the boss. It could be the job, could be the location, could be the flexibility, could be the hours. It’s, you know, a number of different things. And it’s tough to change that when you’re tied to it and you’re not really working for yourself. Yeah, that was it for me.

[00:08:08] That’s incredible. I think it says a lot about you as a person to not want to take your eyes out of your aunt’s money to your aunt’s money, because that could have made you look good for your boss, I’m sure. But, you know, I think you had enough wits about you to say, my boss doesn’t care. This is coming from. Yeah. So I think that’s kudos to you for doing that and kudos to your parents or whoever raised you, because that’s testament. I guess they did our job, right. They did not get what was the flipping course that you took? Fortune builders go. I’m familiar with them. Just know of them. Yeah. So, yes, almost. Some people have either a really good experience with them or really bad.

[00:08:55] Yeah. So the problem we had with it and I. The reason we failed was twofold. To flip a house was one the program from my experience for eight months or whatever was designated around like quick calculations for a renovation dollars purchase, holding costs, et cetera. I think it probably worked great in other parts of the country, just not New York City, Long Island Cats, L.A., Miami, because they were trying to beat down our throats that, you know, a brand new kitchen costs ten thousand dollars and everybody there that owned the home was never getting a brand new kitchen for ten thousand dollars. It’s going to cost you twenty twenty five thousand, you know, roofs and you’re holding costs. And so. Yes. That didn’t work, but I also know that if we were determined to make it work, we could have taken all those. What’s the word I’m looking for the strategies and the systems and everything, and we could have adapted it to fit to our local area. So, you know, it’s not I’m not going to sit here and just blame them, because that would be silly and foolish. You know, it’s on us as well. And instead of we we saw the problem and we said, all right. Instead of trying to make this work where we haven’t, you know, we basically have no experience. We paid for an education difference between knowledge, less education and experience. Two very different things. So we have no experience. We have the knowledge, but we have to adapt the knowledge, but we don’t have the experience to adapt the knowledge. What we decided was, hey, let’s find either someone I’m flipping or someone in another area that we can learn from and piggyback off of.

[00:10:32] And I contribute our time or capital or other resources to get our foot in the door. And the way we ended up doing that was we lent money as a hard money loan to Flipper in Pennsylvania. Through that, his cousin is John, who’s one of the founders at Tauro where I work now. And he was the one that was going to introduce us to the taxis in Philly, tried it. So we drove down me. My cousin drove 50, 60, 70 properties and just hated it instantly. It’s is just super rough, super long hours. He’s about to have his first kids who are just like this isn’t again. You saw the writing on the wall. Wasn’t gonna work. Came back, sat down with John saying, hey, thank you. But, you know, here’s why it’s not going to work. We really, really appreciate it. We’re talking towards the end who’s raised money for an eight year property in Covington, Kentucky. And he’s like, you know, I know you guys wanna do your own thing. I get it. But. Would you consider investing? And we kind of said, I don’t know, you know, let us think about it. And then as we thought about it, more, more we like, hey, this is similar to giving a hard money loan. Let’s invest passively and let’s see if we can just arrange something where we pick his brain or its coffee. It’s, you know, Zuna, Elle’s or Skype calls, whatever it is. So we came back things that, hey, can we just, you know, jump on a phone call? Coffee once a week? Every other weekend, you said? Sure.

[00:11:51] So we invested passively in that. We just started to get in together more, more and more. And then the four of us just had really good synergies. So we started that meetup group would really John did the first one and then we brought it together. That was at a bar and we brought into a hotel to make a more educational. So we did that every month. We then partnered on another 17 units in the same area as a joint venture. And then we joint ventured on an ATV to property in Jacksonville, Florida. But right around the time we started that 17 property, I was ready to quit my job full time. I hated it. It was long hours. It was just didn’t sit well with me. You know, like fundamentally, you know, I had to dress up every day, which I hated. Now I get to wear jeans and a T-shirt. You know, it’s just a lot of things I didn’t like. I guess I’ll never say I was depressed because I think that would be an insult to people that actually struggle with bad press. But I was definitely down beaten. I put on a ton a way to stop going to the gym. I stopped doing things and I just like I looked at myself was like, you gotta get the fuck out here. So, yeah, ready to quit. Luckily, just sitting down with John one day he had actually worked for the same people I was working for just at a different company.

[00:13:05] So we were just talking about it and he got it. So I was like, you know, venting. But he was also like, I get it. He was like, you know, I really want to do this full thing full time. But the flipping and workout, blah, blah, blah, blah. It’s like, well, you know, me and my partner actually looking to bring somebody in to help us out on the side. He’s like, is that something you’d want to do? So I was like, fuck you. And I let’s pump the brakes a little bit. You know, let’s figure out how this is gonna work. So was like a week or two later, you know, I ended up quitting. Ended up moving over full time, helping them out. And, you know, I’m not going to sit here and pretend that, you know, I’m not an employee, but it’s more of a entreprenuer Eske role where it’s, you know, kind of my own hours, you know, my own responsibilities. Right now, my role is basically the Florida region of our portfolio acquisition. That’s a management, you know, equity, debt, insurance broker relationships, investor relationships. You know, the whole nine basically, you know, picking up the pieces where they fall down. So, you know, it’s definitely a hybrid of the two. You know, I’m not going to sit here and say, hey, you know, I bought twenty six hundred units or, you know, I raised money for twenty six hundred units. I just be line and we found it really quick. But it’s definitely a hybrid between the two.

[00:14:22] Yeah, it’s interesting. People will ask ask me how many units do you have in your portfolio. And like the quick answer is three hundred and twenty three. The long answer is in one and one syndication on 14 percent through other syndications on less than 1 percent.

[00:14:39] And then we’ve my wife and I have 5 units ourselves. Gotcha. You know, it’s one of those things where it’s it’s a, you know, guys just wanting to look at the number. Here’s a quick answer. But you say that you’re not taking credit for it. Although you’ve been a big part of it. And I probably wouldn’t keep you around if you weren’t contributing your fair share of.

[00:15:02] Probably not.

[00:15:03] A humbleness is on your side. So I appreciate that. If you ever make it the Pensacola man, you mean to let me know?

[00:15:11] Yeah, definitely. They were mostly overrun. Yeah. Most of our stuff is in the Jacksonville region, but I’ve got a few assets over there. Just haven’t been able to find anything that made sense to me either.

[00:15:21] So we’re where we’re investing at a state now too. So, yeah, it’s interesting. You said you’re responsible for Florida. Also, did I see you somewhere where you guys are in the Midwest, too? I guess so. Arizona at some point.

[00:15:35] Yeah. So like 2015 to like 2017, 2018, we were, you know, Texas straight up and over and just take out kind of like the Chicago North Cold Region and the northeast. And we were like, well, by any deal that makes sense anywhere. And what happened was we had a deal here and a deal there and a deal here. And it was like to visit every property, you’d have to take twelve flights. Fifteen flights. Now we you know, we rejiggered and we’re focusing on north and central Florida. So really Jacksonville, Daytona, Orlando and Tampa and Pensacola a little bit. And then we’re also focused on the Midwest. So Cincinnati, Columbus, Louisville, Indianapolis, Nashville. So we’re trying to just trying to build up scale and it make. Just things a lot easier. Not even the flights, just management. So we had like four or five different management companies. Now we’re really only really down to two. We still have two other ones in play, but they only manage.

[00:16:40] Three outstanding assets of 17 currently.

[00:16:46] So they’re they’re a small portion, but we really only use two now, so that makes it significantly easier and greater economies of scale in the markets, in the areas. So, you know, that’s where we focus now.

[00:17:00] Why those markets, though, out of all the entire U.S., doesn’t seem to have your targets just on those lines as those those markets.

[00:17:09] So when we first started, we obviously targeted the east side because there is just as many good markets on the east side of the U.S. as there on the west side. It’s just way cheaper and way shorter for us in New York to get through outside of the United States. So, you know, why pick a phoenix when you can pick a Atlanta? Right. It’s know not saying they’re the same market, but they’re probably in similar standing. So what’s. You know, unless you really think Phoenix is the best market, which we didn’t think it was head and shoulders above, you know, their investors that like, I only want invest in Phoenix. Great. Go invest with them, not with us. So, yeah, that was why we took that out. We also still really like the Carolinas. We’ve just, you know, our first three deals we bought there were in Greenville and Charleston and then we bought a fourth one in Wilmington. We’ve just struggled since those first three, the fourth one we bought last year. But that was kind of a, you know, a what’s the word isolated incident. We should have been able to find anything so that we felt comfortable buying. So we love the area we continue to buy. Raleigh, Charlotte, Greenville, Charleston, Wilmington. Those areas, we just can’t find anything worth taking down. And we just felt like we were wasting time. So we found that first deal in Jacksonville, Florida. Then we found a second deal. And then late last year, we actually had four properties under contract for like 750 units, but we ended up dropping out of one after Didi’s and we bought another 550. And then we just put two more under contracts where we’re finding some really good synergies there. And then Columbus was another area we really loved for years and years.

[00:18:48] It’s actually John’s first deal he ever bought was in Columbus as a forty eight unit. And the problem that we’ve always had with Columbus is the tax reassessment. They’re super aggressive. The school districts went crazy and basically you’ll get some sort of percentage on sale. You know, if it’s a sale tax reassessment, if that’s how they do it, usually you’ll get, you know, 50 percent or 70 percent or 80 percent of sale as they do 100 percent. So you were jump your spikes are huge, but we never found that cap rates reacted accordingly. There were still very low. And your tax adjusted cap rates, we just couldn’t make heads or tails off. So we just stop looking for stablize stuff there. But where we’ve strayed to now is we’ve actually found now another three assets with super low cost basis is in the mid 30s to low 40s where the tax hit has not been nearly as significant. And because the appetite on sale for, you know, still low cap rates today in the 5 ish range mid 5, we feel we’re insulated enough that we don’t have to worry as much on sales. If we were buying it where because taxes are go crazy, we won, we would want to see much higher. There’s still investor appetite for that higher stuff. So we found some pretty good success in the lower cost basis range. So that’s another reason we’ve revisited there. But that’s kind of why straight toward those areas. The other big thing to why we pick those areas is your management is going to make or break your deals. So we use third party management on all our properties. We don’t self-manage anything currently.

[00:20:26] And you guys use the same property manager and all of them.

[00:20:29] So that’s what I said right now. Primarily, it’s to just one in Jacksonville and one in the Midwest, really just Columbus for now. But we’re trying to get into the other areas. And as we started work with them, we just really, really like them, their regional players or local players. You know, they’ve got decent scale, but they’re not these huge companies. So we deal directly with, you know, the owners and the higher ups of the company we’re not dealing with. You know, the 10 person down on the ring and they’re not really the decision maker. And write to the owner yet. We had really good relationships.

[00:21:01] They see properties the same way as us. They’re also both investors themselves. So they get it from our side as well as the management side. And we said we just want to continue to work with these people because they make our properties good. So why wouldn’t we continue to invest with them? So that also kind of helped shape where we were investing as well.

[00:21:21] Yeah. So what kind of cap rates are you guys running into or what kind of cap rates are you all going after? And what kind of returns are your investors looking? Look in the gang. And one of the things I want to point out here to decide on your website earlier today is do you have was 100 plus return investors with. As a statement to herself, right. These are people who invested with you on a do you know, X of that position? Or maybe the next deposition. But you brought them another deal and they said, yep, let’s do it again. That’s that’s an incredible statement, by the way.

[00:21:53] Yeah, we’ve probably got 250 to 300 past investors and easily a hundred or more, you know, have done it at least twice. You know, we’ve got probably probably pretty close to a hundred of people we know. We’ll seriously consider investing in almost every deal we do pending their own personal finances. And, you know, some people like this market or this type of deal. So, you know, it’s not always. It’s not like we have a hundred people knocking on our door every single time. You know, most of our deals are way less. Usually it’s between 15 and 30 people.

[00:22:28] You want to have a span of control there. Right. And when it comes, actually. Yeah. So you have that many investors at your at your disposal.

[00:22:39] Probably not the best word to use or shared database. Yeah. There you go. There that many investors in your database.

[00:22:48] How do you keep yourself from from not going after every deal? Right. And stay and true to what you know.

[00:22:56] You guys know, right? You found a system has worked for the past couple of years. Chances are you’ve had to alter it just a little bit, depending on what the market’s providing or what investor recourse.

[00:23:06] But how do you how do you stay true to that system or when, you know, to tweak that system and not just to take advantage of some of what the market’s bringing you and say, oh, man, you know, and I kind of picture you as a conservative guy just based on what we’ve talked in the last 30 min. Yeah. How do you keep that within range knowing you’ve got all these guys that are ready to do something right now?

[00:23:31] It’s funny, we we joke about this all the time, right? Nobody that’s out there talking, pitching investors is not saying they’re not conservative. So it’s.

[00:23:39] Yeah, I know. I know.

[00:23:41] Everybody always says, yeah, you know, it’s so funny. I always hear we’ll wash our trashy well, we’re super conservative on underwriter and always going to come out and say all we’re super aggressive on underwriting. But we actually we do actually like to think ourselves. And, you know, we tend to you know, we get a lot of books from other people and we compare ourselves. And, you know, I do think we’re on you know, I’m not going to say we’re super low compared to the market that we see. But I do think we’re in the lower half, if not the lower third. You know, the biggest thing is we co-invest in all our deals. So that’s the big. You got money on the table, too? Yeah. Where do where do we want to put our own money? And it’s usually a fight of how do we get more, you know, where do we find more money to put into deals because we like them that much. Know, I don’t think there’s ever been a conversation of, hey, I’ve got, you know, five hundred thousand dollars from Tauro.

[00:24:32] Let’s only put in 250. It’s OK. How do we do. Five hundred and still have another five hundred for the next one. Yeah. Gotcha. So it’s you know, that’s definitely a large part of it. I think one of the things we also do differently. And going back a little bit to where you’re saying, you know, what do you look for in deals as well? We’re less concerned about going in cap rates as we are. What’s the story behind the property and what’s our exit? A lot of funds will underwrite to whatever the pricing is they give us and we’ll see what the returns are on what we think we can do. And then we’ll alter our purchase based on where we can exit. So we’ll almost back into it. So if that offer is a to cap or a 10 cap, you know, it makes a difference. Obviously, I don’t want to buy a stablize to cap unless it’s a crazy value ed story. But you know, within reason if it’s a four and a half cap. But I know I can make my investors.

[00:25:26] Let’s just say, you know, just for argument’s sake, a 15 IRR and it’s a really great location and we really like it. I’m okay with that. Conversely, I’m not going to just offer a five and a half cap because that’s the market and it’s a deal I like. But on paper, it’s going to return at 10 IRR. So we’re less focus going in. We like more of, you know, why. Why is this being brought to me over somebody else? Why am I winning this deal over somebody else? What’s the backstory?

[00:25:56] How would you get paranoid at that point? Do you all do that?

[00:26:01] But that’s noble. We do get paranoid. So like every market to deal with it, you know, first off, it’s this is another funny thing, too, especially now is, you know, the rise of social media and all this stuff. Every deal that with a 50, 60 day gets passed out, there weren’t the highest offer, but we won on our reputation. Get the fuck out. You’re telling me every single person that’s ever won a deal won it on reputation. It happens now and again. Yes. Everybody’s guys are on the buy side. I guarantee you. I guarantee you. But you’ve no way of knowing. So the brokers tell you that because they want you to feel good. They don’t say, hey, guys, by the way, you paid 10 percent more than anybody else. Yeah. You know what? Never mind. No, they don’t want you to retrain in 30 days or 45 days, so you know, so you’re gonna get slings and bull every now and again. But, you know, that’s why, you know, we do get paranoid because it’s OK market a deal. Why did we win this? And it’s like, okay. Better have a fucking good answer to that. And you know, the last marketed deal that we bought was our 320 unit deal in Jacksonville, Florida. And the reason was. Broker that sold it typically sells class-A stuff, so it gained a lot less traction.

[00:27:13] It was in a slightly higher crime area than most people are comfortable with. But our manager was actually born in that submarket. So she was like, I’m telling you. Yeah, compared to three years ago, this isn’t even the same. She also managed three other deals in the same area. So she knew that area like the back of her hand also was not only a value add play, we could cut costs on the expense side even though taxes were going up 80 percent. So we had a lot of different things going for us and we felt very comfortable even with it being a marketed deal. We’re like, OK, this is we have a we feel like we have a justifiable, significant competitive advantage to other people that are buying this property. Really? You just gave me a deal that was bought three years ago. They put him, you know, five a door into exteriors. They did 10 percent of interiors. And you’re selling it’s me at a tax adjusted five cap. I don’t know where my competitive advantages. I’ve got a I’ve got to find that, so a lot of times we look for, you know, the backstory of the property more than, you know, the nitty gritty financials. So, you know, the last studios we bought in Columbus were deal, you know, one of them, the guy fucked up royally and was like 80 percent occupied.

[00:28:25] It was his last deal. He was getting fined like a thousand dollars a day by the city from all the violations. And we were able to come in because we had bought a property around the corner that we were fixing up. We bought one hundred thirty unit property vacant that we were fixing up and rehabbing and stuff. We had a screwed relationship with the city. So we were able to come in, quell their concerns and say, hey, we’re going to fix this, but you got to stop. And they’re like, OK, I mean, wasn’t that simple, but yeah, they were like, OK. And we were just buying it for a super low cost basis compared to recent trades we bought that for I think like 30 Adore. We’re gonna be all in for like low 40s, mid 40s. There’s properties trading anywhere from 60 to 80. Three adore similar vintage around the corner, you know, and that’s you know, that deal’s got hair on it, you know, not going to sit here and say that it may take more. We may have to just capital guarantee we’re going to have to move money around. But that’s something we felt confident because we were doing.

[00:29:24] One hundred thirty unit vacant property around the corner. We were already eight months into it. Felger good with the area already had a relationship with the manager. Similar sized properties to other ones we had taken down and just a really good backstory because we bought that deal. That same broker brought us another deal around the corner that was off market. First call. Similar price point, a little bit higher, but stable. The guy bought out of receivership just got it occupied. Hadn’t done any renovations over the last five years. Just got it occupied. Did what he had to do. So it’s just to come in. re-brand interior value add push rents play. So it’s just, you know, things like that is what we look for, where it’s you can see. I didn’t even know. I didn’t mention cap rates. I didn’t mention rents. I didn’t mention going in yields. It was more of a whereas the value to be had. And you know, what is our play on top of that?

[00:30:17] So I want to. I’ve got a couple of questions on the hunt. Yeah, sure, they can. They can. Property Bellona back up real quick because you mentioned 50 60 earlier.

[00:30:28] Sure. So that just correct me if I’m wrong, 50 6 B is you’re a sophisticated investor, right?

[00:30:35] Which means you can prove that you or only you think you have to prove, but you just have to a test that you know what you’re investing in. And 5 0 6 C is a government regulation that says you are an accredited investor.

[00:30:50] What you make certain monetary requirements and you have to prove that before you can invest in one of these deals. Do I have this straight?

[00:31:00] Or partially? The other biggest difference is file 5 5:55 B you can only have up to thirty five. They are non-accredited, sophisticated investors. Sophisticated is very loose. But you also, I believe again, double check all of this because I fucked shit up all the time.

[00:31:19] You know, let’s just go and throw the disclaimer out there. You and I are not attorneys. Yeah, exactly. You need if you’re listen to this and you want to get clarification on it, seek your attorney’s advice.

[00:31:29] Yeah. And I also love that on Tauro Rap BCom, you guys have your attorney as listed as a member of your team on your website, which I think and your CPA. Yeah, I think that’s that’s awesome.

[00:31:41] And those are huge, huge assets for people with their first deal. Still, you need those two people in your corner from Fisher. So. Right.

[00:31:52] But going back to that, so 5:55 be up to 35, non-accredited, sophisticated, I believe to still qualify for sophisticated. You have to have three points of contact before you talk about any deal or any returns or anything like that. And then that filing doesn’t allow you to publicly solicit the deal. So that’s where I was saying the five tosucceed deals you see on like LinkedIn and Facebook and Instagram. This investment opportunity, you could not do that without a fight with 6p. You cannot go on like I could come on your show and say, hey, guys, we got X, Y and Z property.

[00:32:25] It’s gonna be a 17 percent return over 5 year hold and blah, blah, blah. Couldn’t do that 5 or 6 C, however, only accredited investors know non-accredited. So your mom or dad calls you up, says, hey, I have five grand I want to throw in. Pretty sure. Tough shit. But you could go, you know, you can advertise. You can probably solicit. You can go to random strangers in the park and tell them you have an investment opportunity and know how well that’s going to go over. You can, you know, you can do all that stuff. So ever. No, look. Yeah. It’s still you know, it’s still gray because it’s, you know, illiquid. It’s an alternative acid. There’s still stuff you have to be careful. It’s not like, you know, raising money. You’re not a licensed broker. You still there’s still stuff you have to be careful of. You know, it’s not like a carte blanche to just go raise money and do whatever the hell you want. But it is public. It is allowed the public to solicit versus the five or six B, which you can add all the best thing to do if you have questions about that.

[00:33:25] Consult your attorney. Those are just right. And then, you know, if you mess up for a reason, they’ll have your back because they have to do what was appropriate. So one hundred thirty unit vacant, completely vacant. You got. You said you said you guys took that down eight months ago. How do you. I’m assuming it was a value add. Right. So you got to come in. You got. Yeah, basically. Yeah. How do you bite something like that off? Right.

[00:33:52] I mean you do project phases. I mean what’s the what’s the scoop like. Oh. At. Now since it’s been eight months.

[00:33:59] Yes. So it’s actually been a little over a year. It was eight months prior to when we got the idea. So that deal was brought to us. So another back story. It was a senior living facility by this woman and then it got condemned by the city. And instead of just trying to fix shit, she decided to let the clubhouse on fire. And then basically, I think it did ended up not getting too badly damaged. Just a lot of like fire damage inside. Like the structure was fine. It was just like, I think the roof need to be replaced. I think some framing on the inside need to be replaced, stuff like that. And, you know, is a gut job anyway. So, yeah, it was fine. I forget who took it back if it was the city or the lender, but it was about to go to short sale and a flipper we knew had it under contract for a while and it is just too big for them to take down. You know, they single family flipper trying to do one hundred thirty units just couldn’t put it together. So they you know, they I think they assigned it to us for like a small fee and we took that down.

[00:35:03] And our manager there has a really good maintenance team in place with a lot of construction knowledge. So it wasn’t something that really required a GC because it wasn’t new structure stuff, all the framing, all the units, you know, all the units framed out, a lot of the stuff was in place. We actually took a lot of it out because it was just old and shitty. And and it’s sitting there, you know, it’s like we replaced almost all the drywall. You did all new kitchens, only bathrooms. Didn’t necessarily have to like some of that as we could. We kept tubs and toilets and stuff like that. Yeah, but did like all new bet, you know, vanities and stuff and new a season doors and windows and stuff. Just because we bought it for dirt cheap, I think we bought it for like a million. Think we’re going to end up putting like. One hundred thirty two fast for a million dollars. Yeah. I mean, is 100 percent vacant. I mean, it’s not a cash loan deal.

[00:35:58] So how do you how do you position that with investors? Like what’s that?

[00:36:02] It’s super risky with a ton of value in the back in that it’s, you know, essentially a massive flip is what? Yes. You know, it was also originally when we bought it, it’s qualified as an opportunity zone deal. So when we first started looking at it, we thought, hey, this is a deal. We’re gonna go ten years on. So even if it’s a little bit more expensive or takes a little bit longer in 10 years, all be forgiven. Right. Because it’s that old 10 years plus you get the tax bonuses and all that fun stuff. In the end, we just had so much appetite from investors for a quicker flip and higher risk. We just said, you know, and there wasn’t as much people, you know, when opportunity zones came out. Everyone’s like, this is the, you know, God’s gift to real estate investing. And then suddenly, you know, people kind of realize, OK, it’s OK, it’s still nice, but it’s not what everyone thought at first. So we just kind of said, you know. At the end of the day, more appetite for a quicker flip, even though it’s a high risk, high reward deal. Let’s go that route instead of going.

[00:37:07] Opportunities en route. So it was just a very honest, blunt, upfront conversation with people and just, hey, this is what we’re gonna do. You know, here’s our experience. You can either trust us or not trust us, basically. Yeah. You know. Yes, people you know, enough people trusted us. They kind of know, let us do it. And there’s been a ton of hiccups. You know, we told people that. We said, you know, it’s going to take a while. It’s not gonna be quick. You know, we have a bunch of rent ready units and we’re waiting for something from the city. I forget offhand. That’s John’s region more so I get like certificate of occupancy. Maybe it was something something before that. And that was two or three weeks ago. I last got the updates as we kind of sit down and go through all the deals and stuff like that. So I don’t know offhand exactly what it is, but it was just, you know, one thing after another where you have to figure it out and make do. And one of the things we actually changed was it was actually a hundred and twenty one units when we bought it with a massive clubhouse where I would actually go to the city and add another nine units.

[00:38:11] So and shrink the clubhouse because it’s, you know, very small. One bedroom units doesn’t need a big clubhouse. We were able to cut it down. It’s our senior living facility right now. I don’t just be free market. And it’s I mean, it’s night and day. It’s beautiful. You know, we’ve posted a bunch of stuff on Facebook, Instagram link and stuff like that. And it’s it’s gonna be an unbelievable property and great value for that area. But it’s just, you know, the type of project that just going into it, you have to know that it’s new. It may take extra money. There may be a capital call. There’s gonna be bumps in the road. What I expect to happen is not going to happen, you know, out there. But we think that there’s enough wiggle room value experience to tackle any problems that occur. And so far, we’ve been able to, you know. Do what we need to do to get close to getting this thing.

[00:39:11] We step in your investors. They probably went into this thinking, OK. Or at least the expectation was set with them. Your money’s in the back in. Right. We’ll start trusting when it’s when a certain percentage occupied or what not. That’s very cool. So.

[00:39:28] How much of your you know, as as a division one athlete? There are routines, there’s training that you have to go through. How much of that learning those systems has now applied to what you do?

[00:39:41] Right. So I think of getting up early in the morning, going to doing math drills and no one where the nearest garbage can is at all. You know you know, you kind of get in this routine and you walk in and like, I can still hear the 70s pure funk that we listen to every day that worked out. And, you know, it’s just one of those things where you get into a routine. And now I’m on Imagine Dragons. It’s no longer 70s, pure thought. But when I get in here and I start looking at deals or doing real estate stuff, I’ve got to imagine dragons in my ear because that just kind of gives me in the zone. Do you do that now yourself? Do you find that correlation from what you did as an athlete to now investing or no?

[00:40:23] I struggle to answer that because I don’t know anything else. Yeah, right. You know, it’s it’s it’s not like I know my whole life. I grew up and then became an athlete. Right. The day I went to college. Yeah. So it’s you know. You did. Yeah. Yeah. Wasn’t wasn’t that good. No.

[00:40:41] I mean, you know, for years and years played sports and had routines and things like that. So how much does it translate over. It’s tough for me to say. Yeah. I think one of the things that I know for sure changed was, you know, my junior year going into senior year, I was. Struggling to get playing time and starts that I thought I should be getting by that time and right or wrong, probably more wrong, decided that summer was like, hey, like this is your last shot. You’re most likely if not, you know, definitely not going pro or really playing seriously after like you. If you look back in 5, 10 years, if you don’t give this summer, you’re all you’re just going to you’re going to look back and regret it. I was like, OK, fuck it. Like, we’re doing this. We rented a house for that year, so it started that summer. So me and three other bodies that were living in that house, you know, barely drank that whole summer. Eight super healthy would cook every day. And we just train two or three times a day for the whole show, three months, two and a half months, whatever it was, two months, because we came in early for pre-season and I dropped like 10 pounds. I was already lean, but like drop 10 pounds. We’d run a three mile knock like 30 seconds off. My three mile came in one of the top for the, you know, the beat test and ended up, you know, improving minutes and start time. And I think that was the first time is like, okay, like I made a conscious effort to put in serious work, like serious work and dedication over a extended period of time.

[00:42:17] You know, two, three months isn’t that long in the grand scheme things. But for up until that point, it was the hardest I’d worked for, the longest I’d worked and saw results from it wasn’t anything life changing or altering, but as like ha like that’s that’s how that works. And I think that’s the biggest takeaway I’ve had from there because it’s, you know, little by little it was getting better, getting better, getting better. And then it was like when I came in. Everyone’s like, holy fuck. Like the biggest thing was the wake up, bro. What did you do? And it was like the biggest change. And then it was just other things, I guess, you know, comfort and playing and stacking up against other people and yeah, you know, all that stuff. And it was just like it was very visceral, like it was just there. And that was proof of concept where you in the past it was kind of just take things as they come. And if you’re good enough, you’re good enough. If you’re not, you’re not. And that to me has been the biggest translation over into, you know, kind of my professional career, not for sports. But I never, you know, just, you know, setting goals, creating plans and putting in the work to actually get them, you know, has I think definitely changed everything that I’ve accomplished up until this point.

[00:43:31] Yeah. leysen. No problem with licensing and getting dirty, right? Yeah, for sure. I did the same thing going from junior to senior in high school and then also my junior year in college. But in high school my head coach came to me and he said, hey, there are rumors that we’re gonna be drug testing saying you’re gonna be able to pass it like coach.

[00:43:56] You see me coming in at 7 00 every morning.

[00:44:00] I said I said, yeah, we’re fine. Unless unless they have something against creatine, which I think is suppling. Good. But anyway, I had seen Angelman a long time.

[00:44:10] So, you know, you got a little bit older, a little bit older than you start having kids and you know, the things kind of go to the wayside. What I’m going to challenge you. You said something earlier about being a youth coach and soccer is more like babysitting. I figure a you are correct. I just helped coach. I wasn’t the I wasn’t a coach. I was just a fill in guy when the head coach can be there. But I helped coach my son’s 5 year old, four and five year old team, five and six year old team this year. And you’re right. It’s that’s I mean, your had age. Definitely. Yeah. So I think when you when you have your kids, your kids are gonna be looking at a little different.

[00:44:56] Oh for sure. It’s all. Everything’s different when it’s, you know, your own kid I’m sure. Yeah. And look, I like kids. So there is days. I loved it. I have fun because you love hanging out kids. But it’s the days where they don’t fucking listen and you want to coach because you know, you have to try to incorporate some coaching.

[00:45:15] You can’t just sit there and play. You know, you do play games, but you try to make the games educational as well. Yeah. And then some days, just like you. You just want to stop. Yeah. And it was just like, that’s not I can’t do this for ten years, just like I’ve done one year. And it was enough. So that’s all it is. And I was and I was that I was coaching like ten year olds. So it was even, well, you know, a little bit better. But even still, I mean, 10 year olds, 10 year olds, they’re gonna, you know, goof off and not listen and stuff like that.

[00:45:44] So especially when they’re not your own. Right. Exactly. I was listening to you on the Jaquan’s, you know, show earlier today. And you made a comment. I’ve never thought about this before. It’s just another testament to you having your head on your shoulders, you know, the right spot. But. You made a comment to the effect and try to quote you, but a seller doesn’t want to go through the selling process multiple times either.

[00:46:08] Sure. I’ve never thought about that. But that is so freakin true, right? I mean, nobody. You don’t want to get through. At least I don’t. I mean, when I’m sold single families and small motel families, I get on a contract.

[00:46:22] I go under contract with the expectation that we’re going to close very soon. And I’ve never thought about that from the other side of the table. An and offering that that the that the seller is wanting to make, this is one and only shot. So I think those that’s a. Quote of the day for me, that really hit home. That’s awesome.

[00:46:43] Yeah, I think it’s it’s definitely. A large you know, it becomes a bigger and bigger factor as you move up and up. You know, when you’re in the you know, the you know, the sub milliondollars space or, you know, the twenty fifth, you know, I think it’s less important because it’s easier to get through. But there’s deals we’ve looked by and they’re like, hey, guys, it’s you know, it’s a two percent earnest deposit up front and then an additional 2 percent hard after due diligence here, 4 percent. So we were looking at a 20 million dollar deal like, fuck, you know, like 4 percent. We can’t say like, yeah, we love this deal, but it’s like it’s not even there because it was an institutional seller. It was gonna be institutional buyers with discretionary funds. And we’re just like. You know, it is you know, it doesn’t help, and that’s why, you know, I always ask the question, I always get the same answer, but I still ask it because, you know, whenever we’re buying it, you know, I said, hey, what’s more important to them closing or we’re price and broke, always gone. Well, you know, it’s a blend of the two, but some to sometimes you do get a little bit of a better feel because some people will take the chance on a newer group because they’re offering. And that’s where I said, you know, these, you know, five or six season, they’re not all getting the, you know, the third highest offer with their reputation. But sometimes it does happen because a group, you know, for us, for example, in Jacksonville, Florida. We hunt. The deal or buying now we’re buying to the one we’re going to close on probably early next year. I know for 100 percent fact that we are probably.

[00:48:20] 5 percent below where they had it under contract that prior times at least, if not higher, I know for a fact because I know the group, it was three properties, they closed on the other two. They walked in this one because it was a loan assumption and it was for whatever reason. I guess they thought was a higher supplemental or they thought they could do free and clear. Don’t know the full story, but I know somebody that knows where they had it under contract. So I know we’re closer. But I also know that we got it. They were trying to get a higher price, but we had because the loan assumption we had the one of the executives from the loan holder call them say these guys are a good group. We had the broker go to bat for us because he sold us that three hundred and twenty unit deal we bought. We had five of the deals closed. We were under contract for six and definitely one hundred percent not, you know, in our own horn, had something to do with reputation that we were going to close. They’d already gone through the sale process once it had been for five months after that process that they went under contract. Couple months after that when it closed and they were way more concerned about closing because it was the last deal they owned in Jacksonville. So sometimes that does happen. And that was a deal where it was OK. It was 100 percent, you know, not a hundred percent, 80 percent, 70 percent on closing instead of more like 50 50. Yeah. The other deal we currently have in contract in Florida, he said if you don’t hit 6 million, I’m not selling, but tremendous, tremendous value.

[00:49:47] Fair price. We were able to get there. So sometimes it really just depends on who that seller is and what they’re looking for. But, you know, if you’re looking to sell, especially, you’ve got investors, you hit a price and you’re under contract for fifteen, twenty, twenty five days. And that thirty days usually due diligence. Right. And you’re coming up to that go hard date on their earnest deposit because typically you know, especially unless like I said, unless you’re institutional, probably not doing hard money day one. Right. So there’s still a chance they can back out. But as you get closer and closer you start thinking OK, this is gonna sell, is gonna sell, and then you start counting dollars and then you start you know, you tell this investor what you’re thinking and this investor what you’re thinking. And then all of a sudden they back out and ask for a retread. That now changes. So you like fuck, do we go through this again? Do we? Do we go with what they’re asking for trade? A lot of it’s going to depend on other offers. You got other interest. What you think it’s worth how that whole process went. Also on the new terms they’re offering to change the contract. But I can tell you right now, if it takes you an additional six months as the sponsor, you’re gonna earn less money. All right. On an annualized return and your vest is going to earn less because it’s taken an additional six months for that same sale price. And with sponsors, the way most people have it set up is some sort of split over different hurdles.

[00:51:14] You have the same exact sale dollars, but it takes you longer. Your money is going down. Your investors are making the same, which is great at least on the, you know, dollar for dollar, but not in that, you know, not in the same time. So, you know, from that selfish standpoint, which 100 percent is influence on sale, if anybody tells you otherwise, they’re. Right. Because every you know, that’s you know, it’s your job. It’s your income. You want to note, you know, you want to make as much as you possibly can. You can hit a greater return quicker. You’re going to make more money. It’s not like you’re screwing anybody over the way it’s set up. So, you know, if you can do that, great. So if you know, you’ve got somebody that is wishy washy and they’re only a little bit higher, probably gonna take the group that you’re way more confident in closing because you’re not going to have to go through. You know, all the unit walks again. You’re not going to have a second lender, not a second appraiser, not second insurance. You’re not going to have to sign documents the second time. You’re not going to have to answer questions a second time. And the less experienced the group, the more fucking questions you’re gonna get and the more that doesn’t make sense to me. Question and the more hand-holding you’re gonna have to do. So there’s a lot to be said for, you know, track record experience, surety of closing, you know, especially as you get higher and higher up in dollars and units.

[00:52:32] Chris, I know we’re we’re bumping up on time, man, but as we were talking earlier before it hit the record button, I’m jealous of your mike setup and have that mike set up as you just launched a podcast. Let’s talk about that a little bit and then tell people what’s the best way to get in touch with you?

[00:52:49] Yeah, for sure. So our podcast is called The Real Estate Investing Experience. John and I both host at John’s, like I said, one of the owners at Tauro. And pretty similar setup to you. It was you know, we had a lot of podcast there were listened to. And, you know, no disrespect to these, but, you know, it was. What’s your first deal? What’s the numbers? And, you know, how did you make a 40 IRR more like we’re just tired. Yeah. So it was you know, we would have awesome conversations with people and really why God, we should. Record these near lake. All right, let’s just do it together around it so, you know, we try to get know with John and I. Three or four people, you know, just having a chat and, you know, different people from all different walks of real estate investing and just having, you know, very, very similar to how you’re doing, you know, 40, 50, 60, 70 minutes of authentic, honest conversation, because that’s what we want to have. We don’t want to sit there and talk about, you know, nitty gritty numbers. And people like that. And that’s just, you know, we’re not the right show for themselves. And that’s exactly I know there’s a lot of people that don’t like it. So but yeah, that’s you know, that’s what we do. You know, we launched probably a month and a half ago. We got probably. Twelve or thirteen episodes out, some like that. We do too weak and yeah, it’s been going good.

[00:54:05] I would definitely make a link in the show notes for sure. Yeah. And I’m like, you know, I don’t do very good with scripted questions or anything like that. Yes. A lot of people ask and I’m like. Now we’re just gonna chat.

[00:54:18] You know, the very first podcast I was on, they sent us this list of questions that get a pre-recording. And I’m like, so freakin nervous. I had someone else just chat. You have a chat. But when their format and I totally get it and bombed it or whatever. So again, but I’m like you, man, I’m having these conversations anyway. I’m like, why not? So. Exactly. Hey, man, I have enjoyed this tremendously. I’m actually O’Neills website right now at Tauro dot com. Amazing.

[00:54:50] Filling out the investor questionnaire because I imagine that’s where one deals come in. You guys are going to blast them out of that yelp.

[00:54:58] Right. So because I’m interested in what you guys are doing. So definitely don’t want this to be the last time you and I talk. Whether it be on or off air. But if anybody wants to get in touch with you, what’s the best way to do that?

[00:55:12] Yeah. Best two ways is email. Chris at Tauro rep dot com. So t o r o r e.p dot com or you know, pretty active on social media as well. So, you know, Instagram at Chris Dot Grand Zager Facebook, LinkedIn, just search Chris Guernsey. You can find me.

[00:55:28] Sounds good. Thanks, Chris. I appreciate you, brother. I’ll talk to you soon. Awesome. Thank you.