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hello everyone welcome and happy 2021. it's a new year lots of new things happening in the market i'm really excited to bring our new guest on um first webinar of 2021 here at new view as well um we got quite a few people registered so we're going to give it a few seconds let everyone jump in and then we'll go ahead and get started so today's topic is going to be the passive investors checklist to securing great investment opportunities and our guest speaker's name is ellis hammond a few things before he gets started here at newbie we must confess we are not lawyers we're not attorneys we're not cpas or financial advisors so we cannot provide you that financial advice or that tax advice we are very knowledgeable when it comes to self-directed iras another thing we do not endorse any products or investments is up to you to do your own due diligence and that's definitely something that ellis will be diving deep into about doing due diligence so this is going to be a great great webinar for that if that's something you're looking to learn about a few other things about new view we've been in business since 2003 over 17 years we've been in operations and uh the year went by fast in 2020 so we're almost at 18 years we actually custody 1.5 billion we just hit our landmark in december uh in client assets under custody and a few other things that i love to talk about is we are simple to do business with we are available and we're responsive what does that mean we actually get graded on our percentage of live people answering the phone we average that 99 um we shoot for 100 but 99 of the time you will have a live person on the phone anytime you call newbie we are relationship driven as well so the best thing about view view is we're not too big of a company where you have to call in and you speak with a different person every single time more than likely you will get to know us by a first name basis and we can build that relationship with our clients there's about 50 people staffed here at nubia in our operations building right outside of orlando florida in longwood florida so let me just introduce a little give you a little background on our speaker i'm really excited about his name is ellis hammond his investing journey began when he was still a full-time college pastor and with the gold creative create passive cash flow for his family he rules that investing in real estate could be an incredible resource to help him and his family and many others achieve financial freedom i've been following him on linkedin for a long time now and he posts a lot of great content and he's part of a great circle of people that are multi-family investors he and his wife invested in a duplex in san diego in 2018 and nine months later ellis co-gp on a 144 unit complex in memphis tennessee today ellis is the founder of kingdom rei the number one mastermind community for christian real estate entrepreneurs he also manages his own network of investors who are seeking passive investment opportunities in multi-family apartment complexes across the united states and without further ado here is alice hammond thanks for having me this is a lot of fun so we've got a great crew on here today so excited to uh to get in thanks for joining us i want to encourage you we're going to have a awesome hopefully this will be a very laid back uh presentation to give you some great information um about how to vet and do due diligence on your own if you're looking to use your self-directed ra into real estate um and so if you have questions make sure you're using the chat we will have a time for you at the end of this 20 25 minute presentation um to answer all of your questions so definitely want to point you to that um i wanted to throw the side of this is me and my my wife and our puppy banksy and i just love having an excuse to tell everyone i am about to be a dad in 2021 um i tell everyone that we could we could close no deals this year we could we could do no business and it'll be a big year for our family so i'm really excited to be a a a future father of our little baby girl and now this is my wife hannah my dog banksy we live in san diego however today i'm in a cafe in tucson we have been touring properties and meeting with broker teams all week and so um excited to be here with you all today out of tucson uh my company let me see if i can control these slides there we go is ham and equities we typically work with families and investors between three and ten million dollars net worth who like i said are looking to invest um or on shares and privately held real estate offerings and so you know what i'm going to talk about today a lot is doing your own due diligence and learning how to vet opportunities this is really the service that we provide and so we have a ton of experience doing this and love real estate it's just become an incredible vehicle for us to achieve financial freedom really build wealth um and love being able to help other people do this as well just because you know when you heard my story as a full-time college pastor no one ever taught me that you know there were alternative investment classes outside of the stock market right that my financial advisor wasn't showing me and it really changed my life and so i love being able to help and introduce these concepts to people and so loving in an audience like this where you're taking control of your life of your financial future um and having a self-directed ira and hopefully we can really help you um figure out how to best use that today as well uh so this is our our presentation passenger checklist i love this quote from a from a mentor and friend dave zoo who says you can be conventional or you can be wealthy and uh good for you for showing up here today um and and really investing in your financial future on your own so excited to chat with you you know this doesn't matter to everyone but i think it is important to just kind of know you know who i am like a little bit of what we've accomplished over the last few years i was named 2020 multifamily investor of the year but i think realty uh up against some really great um other incredible multi-family operators and so just love that we've got to bring a ton of value to this space as was made i put a ton of content on linkedin we have a community called kingdom rei which really serves faith-based operators in this in this real estate industry we provide a network and resources and really a board of advisory team for them and then most recently was uh was hand selected by uh institutional level group called waymaker they have just an incredible business model they brought in some top industry leaders here in the multi-family space in our working on building the first ever faith-driven reit and uh so i'm going to be working with them raising a fund over the next six to eight months alongside of them and so really excited about that opportunity so that's a little bit about me and kind of where i'm at in this space and again we can we can talk about questions on that later but let's get in to today and and why i'm so excited about real estate and i don't want to assume that um wherever you know whoever's listening that you that you know what's happening in the market i want to just have a few slides before we get into um okay here's the opportunity now what do we do with it giving you the you're going to leave here today with a couple of things you're going to leave here with some really good knowledge about what's happening in the world in america and how that impacts you as an investor especially as someone who may be interested in real estate you're going to leave with confidence and how to really look at deals really look at private offerings that you might want to invest in and then third i'm going to leave you with a checklist the exact checklist that i use when we're looking at projects and so that you can have a a go-to checklist and how to really use your self-directed ira the cool thing is this is mostly for real estate offerings but i think it actually applies across the various various different asset classes and investment opportunities so i think you'll be able to get a lot of value out of this checklist but like i said i don't want to assume um that everyone is you know we swim in this a lot we're seeing a lot of information and data so i try to simplify this to give you an idea of just what's happening it's an incredible time in our country and a an interesting time i mean with everything that's going on for sure um but even some of these these recent headlines i wanted to pull up for you today you know u.s home sales have risen to a 14-year high um homeowners are now a trillion dollars richer thanks to the pandib uh pandemic-driven housing bill really if you look at the last recession you look at what's happened in light of kobe this is they're so different um i'm out in san diego we have the an historic level of housing supply on the market right now and so um the reason i show you this is it to to to to note that there's an incredible need right now for affordable housing this is really good for you as an investor who's interesting interested in rental property because as affordability becomes harder and harder you know becomes less and less here in the united states this is driving a huge demand for for commercial rental property um and so that was you know as you can see from those articles the other thing is you know one of the things that's driving housing prices up so high you know and there's less affordability in the market right now just interest rates are so low um especially residential rates but we're seeing that on the commercial side as well so from an affordable housing standpoint as interest rates continue to stay low this is um you know this makes it that the housing prices go up and again it's just harder for um you know millennials low-income families typical renters to really be able to buy houses right now um even with low interest rates and there's just not a supply but i also think as an investor this is really good because we're buying commercial buildings at two and three percent interest rate so um really really interesting time in terms of affordable housing and interest rates in the market and then the other thing that's happening in our country right now is just a huge migration trend and so um it's important about where you're investing and what's happening in our country i mean like i said i'm in san diego california and there are companies literally every single week moving to states like texas as you can see on this chart right here to the carolinas to florida arizona i mean tucson has been a sleepy market we're here uh this week and just amazed at what's happening in this tertiary market much less primary markets like phoenix and atlanta and so they're just incredible trends i mean literally our country is shifting in terms of becoming a renting nation and what that means for us as investors so it's an exciting time for you as an investor to be able to have access to capital through your ira and be able to invest that at will um you know in terms of the strength of multi-family why we like this a lot is you know even through covet rents have stayed relatively strong across you know uh across multifamily product as you can see this is a company that tracks that that tracks rental collections across the country and um you can see from this graph that they've been above 90 um even through the pandemic and then you know historically speaking you know thinking about you know why this is a strong asset class why we like this is i mean look at this crap this is a rent growth over you know since 1985 and this is incredibly strong graph i mean the only dip we saw was in 2010 uh you know when we had the great recession but even even there it stayed positive that we're in a market right now tucson where we've had the highest rent growth um this year at uh at four percent and that's even through a pandemic so multifamily continues to be a really strong asset class a stable predictable reliable place for you for us as investors and so i just again this is i want to be aware of what's out there because we swim in this and we see this a lot but again you're not going to go to your financial advisor and he's not going to be able to show you this um this type of information because they don't really get access to it and they they can't really get paid for things like this and so um it's important you know it's why it's so important to be at things like this and be able to see what's what's happening i call it it's like the matrix right once you kind of take the red pill and you see what's out there it becomes really exciting there's huge opportunities for us as investors and so i just say you know when's the best time to invest the best time is to invest is now we see that there is um going to you know of course we wish you would own more real estate back in 2000 but you know we're going to say the same thing in 2040 man i wish we would have bought more real estate in 2020 and so really really like this asset class and feel strong about it and uh i really do think you should too and so that really brings us to the meat of our conversation today is okay if if this is you know i want to start looking at real estate deals i have this ira account or cash or whatever it may be that you're investing out of um you know you're looking for passive investment opportunities um what do you need to be prepared for because the reality is there are some great alternative investments right as that quote said you can be conventional or you can be wealthy and so yes liquidity is found in the public markets but man wealth is built in the private market so if you really truly want to build wealth of your lifetime you have to be in the private markets alternative assets like real estate for example the the problem is though is that you know it in some ways it can still kind of be like the wild wild west there's really no advisor you know over your shoulder kind of giving you like should you know is this the right deal um is this safe you know it's just there are not as many regulations there's not as much oversight so you as an investor need to be really educated or really trust and work with someone who is really educated to be able to make a wise investment decision and so i've created a checklist for me and my company um and i've kind of made it digestible for you as a passive investor to be able to do your own due diligence and have a checklist that you can go through when looking at investment opportunities so that you make the right decision um because you know no one likes you know the most you know warren buffett's rules investing don't lose money and don't lose money right and so i'm having the confidence to really vet deals that you're looking at um is really huge when you get into the alternative and private space especially in the world of syndication right where we're you know private real estate offerings it's just important to um to really know uh the questions to ask and really that's what this checklist is and so let's get into it today you know i want to start with um what i believe to be the most important question the most important component of vetting and doing due diligence when it comes to anything um and it starts with the sponsor it starts with the man or the woman who is in charge and the reason that is is because of the things i'm going to show you today is kind of three different things the sponsor or the operator the market and then the deal the the truth is if you have a good sponsor who you trust who's who knows what they're doing who has experience the rest of these things really can take care of themselves and you may not need to worry about them as much because the sponsor the operator should be doing the rest i'm going to show you today now i'm going to give you the checklist so you can go check them if you like um especially early on but the sponsor and who you're working with who you're partnered with in this is is the most important really should take the bulk of your time because once you find a couple folks or one or two folks that you know you really you really trust you really want to do business with um then you may be just f ne and so here are some questions by the way you can screenshot this stuff or i'm going to give you my contact information at the end of this and i will send you my entire checklist pdf um so that you can have and be able to use even print out on future deals so you can just kind of sit back and listen or take notes if you'd like but i'm going to send you all of this so don't worry um you know some of the uh the most important questions i mean they go without saying what is the track record of the company kind of looking at their track record do they have a great online presence and and um and so that that's one of the first things we look at especially for a new sponsor i got some red flags here and i want to i want to make sure to stay focused i'm going to speak only to the red flags but as you can see there are lots of questions that you could or can be asking but i think the red flags i marked them because they're some of the most important ones to be asking and so for me as an investor in deals you know communication is huge now you have to realize as a passive investor you're giving up control in order to be passive that's the trade you're making so if you invest passively in one of our deals you don't get to have control because you're passive however though i do think there's responsibility between the operator and the investor to communicate effectively and it doesn't matter how like i've been in deals where the returns are pretty decent but the communication is so poor that it really is just not worth it um and so i think asking the question and again these are questions you can ask to the investor or the operator you can ask to your fund managers hey can you send me an example of what your reporting looks like and how often do you send that reporting out you know at a minimum we want to see quarterly reports and some type of monthly communication happening um and again i just think that's that's helpful for me especially it's you know i am passive in these deals or you'll be passive in in these projects but i still like to know what's happening and it just assures me that man this operator has their stuff together and they have their reporting in line and so that's that's important can they pass a background check listen i'll tell you a funny story on why i wrote this is so important i remember doing due diligence on an operator and we got face to face and we sat down and we were going through the deals and i really liked the projects and i finally asked that hey man if you know if we were to run a background check on you is there anything that we should be aware of that might come up and his response was well why don't you go run it and come back and let's talk let me just give you some advice if anyone ever answers the question that way you should run like walk away because that's not the answer that you want to get and i think sometimes just asking that question goes a long ways uh you know and it doesn't mean that they have something on their background um that that they're not a good operator you know a lot of people got hit hard in the last recession doesn't mean that they're not good operators they can't learn from their mistakes but i like to know and i like to give them an opportunity to be able to explain that but if they're unwilling to talk about it or there's something major there uh in this case this guy had a lot uh several um lawsuits against him that i was unaware of and uh because i did go run the background check and we did talk about it and so uh you know if you have an attorney to really do this there's some online sites that do background checks but they're really not good and you really need to um you know if you there's some services you can use but also attorney may be able to do this for you as well um and what does your gut tell you about the operator you know you're going to be in a relationship with you know with this person for you know and especially in a proper real estate offering five to seven years potentially and so you know it's just you want to like i i want to like come investing with and so there are a lot of there are a lot of folks that honestly we don't work with because we just don't mesh well together we don't have the same values the same principles and trust me there are a lot of opportunities out there you don't you know you can say no to someone and you know if you don't like me that's fine i'll introduce you to somebody else but um this is really important you know what does your gut tell you about the sponsor so i spent a lot of time here because i think it's so important to know who you're working with know their track record verify it um verify their track record i think we have here do their professional referrals verify the claims they've made about their experience their track record their background and so you know you may depending on how much you're going to invest with an operator will depend on how much work you really do but if you're going to put half a million dollars into a deal let's say probably important to know who this person is and how well they work with you know with vendor clients um you know maybe potentially they would give you uh contact information to a few of their investors to chat with them and meet their investors and see what their investors say about them but then also on the on the management level even the vendors that they've worked with that's the type of due diligence we'll go into now we're bringing a lot more money into these deals than maybe you as an individual investor would do um but again that's the type of detail you could go into i do think there is a tension here that if you're let's say bringing in maybe a smaller amount into a deal 50 000 100 000 into a project you got to be careful of how much questions you can actually or how much time you get with the with the sponsor because unfortunately you know i mean your time is valuable and so is theirs and they may not have the time to sit down with every single investor and answer you know all these questions but so pick the things that are most important to you and understand that you are training up control for um to be passive into the deal but that doesn't mean you can't ask good questions and most operators that i've found are happy to sit down with you and go through some of this so the next thing would be the market um these are some of the things that we look that our company looks at that we go into we have the data we're looking at trends i showed you that migration trend report but as a as a passive investor you know again you're probably not going to go into all the detail that we might but i do think there are big things you can look at what is the population growth happening in a market what jobs are coming in to that market because you think about multifamily real estate where there are jobs there are people moving into that right if there are good jobs and people can um they're typically their incomes are going up um and if people's incomes are going up they have more money to spend on rent there's there's more demand for rentals and so you want you know this is a this is the lifeblood of our asset class is job and population growth and so i'm going to show you some resources here in a second i'll show you now i'll come back up these are two great resources datausa.io or bestplaces.net where you can this is free you can go and look at demographics job diversity you know typically in a market you want to see really good job diversity because if you know you're in a market where one company or one even industry owns 25 30 40 of that market what happens if they go out of business or what happens if they just decide to move because they no longer like it in that state um or another state offers them better tax incentives and and then they move and now the lifeblood of your asset or your investment is gone and so this is these are great resources for you to go and check and just get an idea of what's the population growth been over the last five years who are the big companies that are working there what are the type of people you know what's their median income and and typically where are they you know what what how what are the jobs and what is the job diversity in this market the other red flag i have on here is what is the crime rate in the area trulia.com is a great free resource you can go type in the address of the property and see what that market looks like and again you may like an area it's okay i'm not saying we don't invest in areas where there's some crime it you know but again if you're if you're if you don't want that then this is a great place to go check that again your operator sponsor what should be doing all this but it's good to verify right and and it's good to be educated in um in the investment that you're in and so those are some great resources for you i already said this is there a sector of the economy that is responsible for more than 25 percent of the employment of the market again you can see why that would be important if they were to leave um how many major competitors are within the three five and ten mile radius of the property the best place for this i had this resource down i think we forgot to list it was apartments.com um and that's a free resource it's a huge listing site for apartments and so you can go and type in the address and see what's out there see what the um the competition is going to be and the reason why this is important as a passive investor is every real estate operator every fund manager they all have to make assumptions in order to give you that projection for your plan so if they say hey this is going to be a 15 you know average analyze return they may be very correct in predicting that but but realize everyone is making an assumption in order to get to that prediction in order to get to that projection now it could be backed by numbers but there are assumptions in that model and so what you're doing and what your job is i think as an investor either on your own or or working with someone else is just to verify those assumptions and make sure that your investment thesis aligns with theirs and if so then you may have found a great partner to work with over the next couple of years and if not then that's okay you need to find somebody else but you're verifying assumptions i just want to make that clear um you know this is this is what we do as an investor it's important to me to make sure we're verifying we're on the same page with who we're investing alongside of uh and then lastly you know we get into property specific you know it comes down to the the property itself the loan the finances again of an experienced operating sponsor is going to be doing a lot of this um but but because you're directing out of your ira i imagine that you like me want to verify some of these assumptions some of these claims and you probably want to do a little bit more due diligence so again i'll send you this checklist if you reach out to me at the end of this um but here are some of the things we look at age of the property when's it been renovated you know things like roof plumbing elevators electrical um what percentage of the capex budget is going to renovations directly tied to rent yield so i think knowing where we are in the market cycle and uh understanding wherever you are in the market you know especially in light of cover 19 stay at home orders we may not we don't really even know what custard customer demand may look like in 15 months from now so for me as an investor looking at deals even our own deals or deals we're passively investing in a huge cap x budget that's renovating big common areas based on things that tenants used to do 24 months ago is really concerning because that consumer base may no longer want to use the apartment complex like they did 12 24 months ago right the entire world is shifting in light of cover 19 and so this question is important because you want to see what is the cap the percentage of capex budget that actually is going towards things that increase rents or decrease expenses because that's how we create equity and value in multi-family real estate by increasing the noi that creates new equity into the project and of course increases your returns as the investor and so that's why that question is in there in terms of the loan and financing again one of the reasons why multi-family has performed so strong even in 2008 2009-2010 is because most of these um these assets were backed by long-term fixed financing and they didn't have to sell because they had cash flow to cover their debt and so this is a massive massive part of your investment because you think about it the bank is the biggest investor of this deal it's the biggest component of this project is the debt and financing that they're getting on this and so again this should be listing in an offering memorandum in terms of the loan terms um but you know we typically want to see that there is a either long-term debt we're purchasing with or there's a plan to get to some type of long-term fixed financing relatively quickly in order to just make sure that our investment is safe and secure and so this is a huge piece of that you know there are things like debt service coverage ratio which essentially just means how much how much dollar per um you know typically the bank's going to underwrite anything over a 1.25 which just means there's a for every dollar of debt there's a dollar 25 of income in order to service that debt and so that's something that you can look at and should be in an operating or offering memorandum for you to see just shows the conservativeness of this of this deal right if it's closer to one then you just know that there's less margin for things to happen in this project and so the higher that number is the more conservative that deal may be um you know and then we get into finances i don't want to um confuse you too much here but again there this you'll have this checklist to go through some of these different finances a good operator is gonna and if you're not an expert in finance then don't get too lost in this but it's important to know the assumptions your operator your sponsor is making when it comes to the financial projections and the finances of of this project and so this is the checklist again i'll send this to you and happy to answer any more questions um again you can email me you know email me checklist just put checklist in the subject line and be happy to to get this checklist out to you and of course i'm i'm available by phone and in my website is ellishiman.com as well and uh happy to jump on a call with with anyone who's uh who'd like to chat more about this [Music] ellis thank you so much for that checklist um i will definitely be emailing you for that checklist as well uh and i'm sure lots of the people listening if anyone has any questions feel free to type those in the q and a section um on the bottom of your screen and we're going to get started with q a questions you know one of the questions i get a lot while we're waiting unless you have things already is you know how important is track record you know what if the track record is is early for the investor does that mean i shouldn't invest with them and i i just don't know the answer that is track record is not everything from me um i do think the business experience is is incredibly important more than just multi-family experience for example you know because when you buy large you know especially if people are investing their ira i imagine they're investing in larger deals the bigger you go in this business it really is more becomes a business than investing in real estate and so i look for things like that what's their savviness when it comes to business and um you know how confident am i that they can make big great business decisions and so you know track record is important but it's not necessarily the like some people might think the end-all be-all in my opinion one question for myself um i see a lot of young people like straight out of college or still in college and they're jumping into this you know these multi-family types of investments and you know sometimes it looks like it would be a good deal but they don't have that track record yet um wha are maybe some other questions we could ask somebody like that well they're probably not going to be able to i mean they maybe do some small deals but in order to do larger deals they're going you can't even buy these properties without the bank will not give you a loan or financing without some type of experience net worth and liquidity right and so you have to have all three of those components to even be part of this so typically these young guys uh are going to have to have someone on their team that can help them do that and so i want to know who they working with who's their mentor how involved are they and what is their track record you know i want you know i want to know them because they're part of the team and they're going to be a huge component of how well this investment goes and so yeah i mean there are a lot of young hungry guys i mean i'm one of them right and so i don't say like let's let's get rid of them but you know where's their experience going to come from who are they really leaning on um that's so that would be some questions i'd be asking all right um first question is this webinar being recorded and available on the new view portal yes it is being recorded we post all our educational content on our blog it will probably be posted by the end of the day tomorrow or first thing on monday we just have to do some edits um but it will be available for anyone to rewatch it um okay the next question what are some of the best market sellers that you are focused on right now yeah great question uh we're in tucson today uh really liking so far what we're seeing in this market [Music] it's a tertiary market you know it's getting a lot from phoenix and so anyways tucson is a great market actually i shouldn't be telling anybody that but not just again um we we really like this market a lot our fund is focused on what they call a fine nine cities so some of the major primary markets which are dallas houston raleigh north carolina denver colorado orlando florida that's where when we look at how you know markets that have performed over the last you know really 24 36 months in terms of rent growth population growth um job growth you know i mean if you really want to to make this really simple follow the jobs follow the big companies and where they're going because they've already done the research for you it's why they're moving there and so our fund is really is really kind of tracking that and following that and so um and working with waymaker we have some access into some into it's harder to get into those bigger primary markets but again like tucson for example because phoenix has done so well it's really considered a tertiary market but it's experiencing you know finally some really great growth because of just the the explosiveness of phoenix over the last couple years and so great question and i would say you know follow the jobs you know the amazons the googles you know where are they going what's happening and um those would be great places you know and then try and find even markets sub markets around those to be able to do that um okay next question i have here is do i assume that since you're listing loans and financing on your due diligence list you are not getting all the funds to purchase from private investors yeah great question randall yeah that's that's true um you know on any of these projects i mean we're you know we're talking about buying 10 to 100 million dollar uh multi-family apartment complexes so the the bank you know fetty franny uh fannie and freddie are typically you know our we're we're taking a loan on these projects somewhere between 60 and 70 percent ltv or loan to value and so typically the model is you know the other 30 and that's really what you're raising from investors is that is that other 30 or 40 essentials what you're syndicating or raising in order to really go purchase these larger deals okay the next question what does a decent return on a five-year investment look like i mean i i guess you're asking maybe what's it's a great question i would say it depends on what your risk tolerance is i mean and what you need you know depending on where you're at in life i you know i think the reason we like multi-family i'll just answer that is that there's great risk adjuster returns in terms of you know the level of risk and the level of returns that are that are accessible and available to investors and so um you know we're really typically underwriting in the mid teens in terms of average annual return in a you know somewhere but you know to we're really want to see our money doubled our investment and our investors money doubled somewhere between the five and seven year mark and so that is uh you know that's gonna that that beats the market all day long at eight nine percent right so again there are other deals out there that that you might be able to find the higher returns are but remember there's there's risk i mean you invest in bitcoin right now you might be able to three extra money you know in a year from now but kylie the the volatility of that of that currency and so it's a great question i think what you're really asking is what should i be looking for and um you know we're really seeing in in both of our um our deals and our funds it's typically mid-teens or what we're uh we're underwriting to and then something between a two and three x on investors capital and in five to seven years is really what our our business model and goal and target is okay uh next question there's a misconception with the exact definition of classic property clarify if class is related to a year of build a year of build a year of rehab or something else yeah great question carolyn um you know i i do think year matters when it comes to maybe you're more your class a right typically all that's being built right now just because of uh cost of construction is typically class a new or built but you know we in this industry again everything is it depends on who you're asking so it's a great question because it is subjective there is no the book on what is class c class b class say but um you know when it really what you're kind of saying there is what is this going to demand for rent what's the type of tenant base that we're going to be getting into this apartment unit when we say class c or class b and so for example we're in tucson this week where you know there are 1970s 1980s vintage style properties that are right now class c right typically bringing a lower income level type of resident and you know one of the things that is happening in this market is is value ad plays so taking those traditionally neglected class that have now become class c properties because they haven't been renovated and essentially doing the value add making them class b type apartment communities that will demand a higher uh you know that can demand higher rents and so year is it is important but it's not everything you know you think about you as a as a as a renter as a tenant you're typically not asking when you go into the the building hey what year was this building built right you're worried about what are the amenities how much the rent is where's the swimming pool you know what i mean like what are the good restaurants around here and so uh you know i would say kind of a below class say a year doesn't necessarily matter in terms of kind of the grade or actually it doesn't matter but it's not the determining factor for how we uh classify uh grades of property that's a great question if you follow up on that let me know all right uh next question is how long you typically keep your apartments and how do you determine when it's time to sell to get the back end profits for the investors yeah another great question it depends on the operator again in everything that we're under right now is typically five to seven years um the reason people sell is because they they want to be able to show the back end profit of hey we reached you know 15 percent irr sick whatever it may be um and and that's why because you know if you're bringing in investors investors typically want their principal back and they don't want their principal in that deal for forever and so that's really why operators have to sell is because they have to get investors their capital or their principal back and so you know i we always and i would say even in our fund and whatever we're doing we typically shoot for that five to seven year mark because again that gives us enough time in these large projects to to execute our business plan and then you know we want to be conservative if if we can do it faster and look to get you know sell that property quick more quickly but the market's not in a good place to be able to do that and timing doesn't work we want to be able to make sure we have the the timeline that we've communicated to investors to be able to extend that so five to seven years is pretty typical however in the last two or three years i've seen i've seen even large deals 150 200 unit deals where they'll be out of those properties in two to three years just because again they can sell it and show investors hey we did 17 20 um the tough thing is is that now you as an investor you know what you know what are you gonna go do with the money now you gotta go reinvest that money because if not it's just gonna sit in cash and you're losing you know two percent a year or three percent a year in inflation and so i personally as an investor you know yes i'd like to have my principal back you know to invest in new things but also i i don't know that's also always the um the best decision because again now you got to go and put that in something else you were already invested into a great asset that's secure that's giving you cash flow and so um i think that's something to consider but i hope i answered the question i have a question this one's coming from myself can you do a 1031 exchange in multi-families locations if you found another i don't know investment say you sold one and you found another one and it's you know the values more than what you sold the previous one for can you do a 1031 exchange yes yes you can and you can 1031 your proceeds um typically if you're raising money from investors you would have to have all the investors on board to 10 31 that next deal you know as a without without cash anybody out however as a as an investor you can still 1031 those proceeds into another you know limited partnership type type project so yes you can continue to 1031 that it is a little bit more complicated if you are doing a syndication structure where you have a gplp split but it definitely is doable interesting um okay do you focus on value-added properties depends um our fund for example is not your traditional value about play we're looking for operational inefficiencies we're looking for low rep like a a low reputation on google three stars or less we have some technological capabilities that we can increase rents and decrease expenses by you know implementing some things to increase our our reputation online so our fund is actually not a huge value it's not your traditional 10k unit more like a thousand to or 500 to 1500 and it's implementing more technology uh more institutional level um data management so in that term it is value add because we're doing something that's not been on the property it is adding value to the the apartment but not your traditional you know moving it from a class c to class b or class b to a class a type value ad however we're in tucson today and we are looking at some heavier value-add deals so i say it depends and depends on the market and depends on the investors we're bringing into the deal um okay this next question it's a couple of questions here what's your success slash failure ratio have all of your offerings return the initial capital back to investors have you had any capital calls and have you had to reduce or stop investor distributions so that question i think you should reach out directly to ellis um and his contact information is available right there and he can answer that one one-on-one with you yeah great question i'd love to answer that please give me a call shoot me an email and um happy to walk through our process with you and track record and everything wide open book here um okay what markets have you done due diligence on that makes you not want to buy there anything that ends in california um anything that ends in new york uh you know we really like i mean go back to the the graph i was showing you the the map i was showing you see if i can go back to this i don't think i can anymore um but you know when we're looking at a market you know again going back to those three main things job growth population growth job diversity but also you know laws when it comes to um as a landlord as a tenant what are the what are the rights that the tenant has versus the landlord has and so california makes it very very difficult um to do anything i mean you don't really own your property in california the the tenant owns your property in some ways because if you have an issue with them you can't get them out and so uh i live in san diego but we invest elsewhere you know the same thing in places like um we see that in new york we i also really don't like places that are cold and so and i even see you think about migration trends right now people are moving to warmer states and so you'll see in all of our all of our underwriting all of our deals all of our even our fund um that sun belt you know kind of draw it from denver across and down is really where we're focused on because that's where we see the future of you know the renter population in our our country really moving to and uh so that's what we're focused on all right um are any of your offerings dsts or are they mostly llc's yeah no dst's all right fantastic well we're going to wrap up the q a i'm sure there's lots of questions that didn't get answered but feel free to reach out to ellis um he will be more than happy to talk to you one-on-one that's his personal phone number there his email and his website um he's got lots of other educational content that he's more than happy to share with you this checklist was definitely helpful thank you again ellis and if you have any questions for myself feel free to reach me at 407-519-9172 if you would like to download our free e guide you can text capital s capital d capital i capital r capital a to 484848 and please include your first and your last name and we will get you that free e guy that's a great place to get started if you're not familiar with self-directed iras thank you everyone again for attending and i look forward to hearing from you and have a wonderful rest of 2021. we'll see you soon bye you