This week real estate entrepreneur Devin Elder and I dive deep into what's changed for underwriting since last year including cheaper interest rates, the "COVID escrow" and much more. 👉👉 Get The Passive Investing Playbook - https://theinvestormindset.com/passive Successful real estate entrepreneur Devin Elder drops by to give us some advice on what can save you time, money and stress when first getting into the investing game. He tells us: think about what you're best at; for you it might be easier to buy a stabilized property rather than one going straight to heavy renovation. If you're not experienced in property management, then the return might not be worth the work and stress. We dive into this and much more including what to look for when underwriting and what impact the past 12 months has had on the market. Devin Elder is a real estate entrepreneur and sole owner of DJE Texas Management Group LLC, which manages all aspects of acquisition, repositioning, and sale of single-family and multifamily properties in Central Texas. DJE Texas Management Group has successfully completed over 200 Real Estate renovation projects since 2012, with renovation budgets ranging from $10k to $1.2MM+. DJE currently has an ownership interest in over 1,400 units of multifamily in Central Texas valued at over $130MM. Devin has extensive experience acquiring distressed properties, managing renovations, raising private capital, and managing single family & multifamily investment properties. So join us on this packed episode, hit subscribe, and build your real estate investing knowledge today.
This week real estate entrepreneur Devin Elder and I dive deep into what's changed for underwriting since last year including cheaper interest rates, the "COVID escrow" and much more. 👉👉 Get The Passive Investing Playbook - https://theinvestormindset.com/passive
Successful real estate entrepreneur Devin Elder drops by to give us some advice on what can save you time, money and stress when first getting into the investing game. He tells us: think about what you're best at; for you it might be easier to buy a stabilized property rather than one going straight to heavy renovation. If you're not experienced in property management, then the return might not be worth the work and stress. We dive into this and much more including what to look for when underwriting and what impact the past 12 months has had on the market.
Devin Elder is a real estate entrepreneur and sole owner of DJE Texas Management Group LLC, which manages all aspects of acquisition, repositioning, and sale of single-family and multifamily properties in Central Texas. DJE Texas Management Group has successfully completed over 200 Real Estate renovation projects since 2012, with renovation budgets ranging from $10k to $1.2MM+. DJE currently has an ownership interest in over 1,400 units of multifamily in Central Texas valued at over $130MM. Devin has extensive experience acquiring distressed properties, managing renovations, raising private capital, and managing single family & multifamily investment properties.
So join us on this packed episode, hit subscribe, and build your real estate investing knowledge today.
KEY TAKEAWAYS
1. Interest rates have moved drastically lower from 12 months ago.
2. Be conservative with your underwriting. This is great for creating modest expectations on your returns and anything higher is a bonus.
3. Lenders right now want to see a COVID escrow. They want to see 9-12 months of payments upfront.
4. Create an underwriting document that can be adjusted by your team as you go along.
5. One of the quickest ways to lose money in real estate is to not have enough capital to pay extra unforseen costs.
6. As a passive investor ask 3 things about reserves.
The escrow budget per door per year that can go to the lender
How is the sponsor handling the escrow reserve for COVID
General property operating reserves
7. As a passive investor make sure that the sponsor is liquid. If there's a short term liquidity requirement on a project, can they take care of it themselves?
8. Ask the sponsor if they've ever done a capital call and make sure the answer is no.
9. Make sure you know what you're entitled to ask as an investor. If you're only investing smaller amounts then you may not be entitled to scrutinize the sponsors financials.
10. When interest rates do down, it makes it more affordable to purchase a property with that leverage in place and in turn makes the property more valuable.
11. As an operator it makes sense to do property management in house if we're going through a rapid change in the market.
12. If you want to get into the multifamily space as an operator then think about working under or with people who have plenty of experience in the field. If you do this first, you're going to educate yourself and set yourself up for success.
13. Think about what you're best at. For you it might be easier to buy a stabilized property rather than one you're going to have to gut out. If you're not experienced in property management then the return might not be not worth the work and stress.
BOOKS
The Passive Investing Playbook - https://theinvestormindset.com/passive
LINKS
Learn more about investing with Steven at https://theinvestormindset.com/invest
Join the MultiFamilyMBA and get exclusive free training: https://theinvestormindset.com/mfmba
Steven [00:00:08]: Alright guys, welcome back to The Investor Mindset Podcast. I'm your host, Stephen Pesavento. And today's guest, I have Devin Elder in the studio. How you doing today, Devin?
Devin [00:00:17]: Hey Steven, doing great. Thanks for having me.
Steven [00:00:24]: I'm excited to have you. And as you guys may know, Devin Elder is a real estate entrepreneur and operator whose company manages all aspects of acquisitions, repositioning, and sale of single family and multi-family properties in central Texas. They have successfully completed over 200 real estate renovation projects since 2012. And they currently have ownership interest in over 1400 units across central Texas. So, we're going to be diving into some stuff about syndication, multi-family, and making the transition from single family into commercial multi-family. So, you guys are definitely going to enjoy today's episode. Are ready to dive into things, Devin?
Devin [00:00:56]: Absolutely.
INTRO: This is The Investor Mindset Podcasts and I'm Steven Pesavento. For as long as I can remember, I've been obsessed with understanding how we can think better, how we can be better, and how we can do better. And each episode we explore lessons on motivation and mindset for the most successful real estate investors and entrepreneurs in the nation.
Steven [00:01:17]: Investors! Have you grabbed your copy of the passive investor playbook yet? If you haven't, I recommend you go pick up the Ultimate Guide to passive real estate investing at theinvestormindset.com/passive. You can grab that in the show notes right down below as we've interviewed tons of the top experts and brought together all of the knowledge that we have on passive investing so that you can lay a foundation for yourself to make sure you're making the right decisions in your investing career. You can grab that guide at theinvestormindset.com/passive, I hope you'll take advantage of it. And let's get back to it.
Steven: [02:09]: All right. So, looking back at earlier in your life, tell me what events or influences from your childhood specifically influenced or shaped who you are today?
Devin [00:02:20]: You know, that's an interesting question. One that I don't get into a whole lot but I was actually home schooled until sixth grade. And looking back, I can see that the freedom and autonomy that I had as a child until I was about 11 really left a mark on me and I never recovered. I went to school in sixth grade and it was torture. And even through getting my bachelor's degree, in my 20s, I never really enjoyed it. I didn't enjoy people telling me what to do. And so I think that set the tone early for me in my life that I wanted, kind of freedom was my highest value that I was pursuing. And as an adult, I discovered the only way I could achieve that was by being an entrepreneur. I think that set the tone pretty early on and I think that really kind of set me in my direction.
Steven [00:03:13]: Who would have thought that when you're thinking about home schooling your kids that as a result, you're going to end up realizing that you're building this habit of, kind of, being on your own, doing your own thing, learning on your own, growing on your own, and how that really does set you up perfectly for entrepreneurship.
Devin [00:03:30]: Yeah, that's right. So I had a hiatus all those years of school, and then I had some time, obviously, in the corporate world. And that all felt to me like it just wasn't a good fit for my personality type, I guess.
Steven [00:03:43]: Yeah, makes sense. And everyone's got to figure out what is right for them. You know, some people are better in that kind of structure environment, some people are better on their own. I know I can definitely relate to you on that. What I'm really curious about, as a multi-family operator being out there acquiring properties, I see new investments coming off your list every couple months here. So what I'm really curious about is, from an underwriting perspective, what's unique today versus 12 months ago when you're underwriting some of these commercial properties?
Devin [00:04:14]: Yeah, that's a great question. The big elephant in the room is interest rates. As we're recording this, we're in the process of closing a property. When this publishes, we'll have closed it. But, it was a deal 250 unit property in San Antonio that we looked at a year ago. Am I intuitive? Actually, the owner's a friend of mine so I'm very familiar with the asset. But, we looked at it a year ago, and it just didn't pencil. And then this year, we looked at it, we're actually buying it because the rates have moved dramatically since then and that's had a huge impact. If you're able to get five years interest only on a non-recourse loan and it's a sub 3% interest rate that changes things. So that's the big one. The other thing I think is being maybe a little more conservative on, at least in your underwriting. Now in reality when you when you get in there and you start doing these unit improvements, you're going to want to push rents as much as you can but at least on the underwriting to kind of tamp down on what you think you can get. If you're spending three, four or $5,000 on, the way we look at it, the way a lot of operators look at it, is what's the ROI on our interior renovation? If we're going to go in and we got an 800 square foot apartment, we're going to put a new flooring, paint fixtures, maybe some kind of accent like a backsplash or new appliances, whatever the thing is, we're going to spend three, four or $5,000. What is the premium we think we can get? Is it 50,100, 150? And what's the ROI? Right on that, let's say we spent $5,000 on the unit, what's our delta on our rent premium? And what's the ROI? And we want that to be north of 20%. The higher the better, obviously, but, our underwriting is kind of tamping down expectations on what we think we can get there. And that way, hopefully we're pleasantly surprised if the market can reward us a little better for our efforts. And so I think that's important to be able to underwrite that. Another big component of underwriting, at least as we're talking right now, is the COVID escrow. The lenders whether we've refinanced the properties and we've bought some properties, they want to see like 9 to 12 months of payments escrowed up front. So we're talking half a million dollars of escrow that we didn't have to do this time last year. I tell people, there's always headwinds and there's always tail winds, and they change. So we've got some headwinds in terms of a COVID escrow right now. And we got some tail winds with interest rates. And so that'll continue to change. But that's where we're at right now is we're talking.
Steven [00:06:48]: Yeah, that makes a lot of sense. I mean, with interest rates so low, it obviously creates an opportunity that makes it much cheaper to be able to purchase and hold these properties. And so, talk to me a little bit about what goes into the thought process when making this shift. What are you thinking about when you came to the realization or the decision that we're going to make some adjustments to our underwriting?
Devin [00:07:10]: I think I liken it to surfing and not that I'm a big surfer but, people want a stable situation that doesn't change. We just, kind of, inherently want that security. I don't think that exists. I mean, we're just constantly adjusting on sometimes a daily basis to what's going on with rates, what's going on with our offers on properties, what's going on with our management, and so it's just constantly adjusting the inputs. I developed a underwriting model of it. I've probably, like you, seen 50 different underwriting models with varying degrees of complexity. We tend to use a fairly straightforward one underwriting model now when we're looking at properties that we can just go in and make. I mean, literally, we might adjust underwriting 100 times to see what is a five basis point change in the rate due to our five year projection? What if I can get rents up, 50 versus $60 on 20% of the units, what does that do? So we're constantly making adjustments throughout the underwriting process. And what we do is we just keep it in a Google Doc and the team's got access to it and we can we can make constant adjustments throughout the whole process. I think the important thing is to get in on a property that you can buy, lock in a good interest rate and leave yourself the appropriate capital cushion. And it's kind of a Goldilocks deal. You don't you can't over raise too much and have millions of dollars in the bank that you have to pay a preferred return on but you can't go in too skinny on the deal either and end up with not enough cash to operate. I think people get in trouble a lot being undercapitalized on projects. So, just to answer your question, it's surfing and it's just constant adjustment on sometimes a daily or weekly basis. And that's just part of the game that I think I've learned to embrace over the years.
Steven: [00:09:02]: Yes, one of those things that people forget is that one of the quickest and easiest ways to lose money in real estate is not to have enough money to pay those payments or cover any kind of expenses that come up that are unexpected. So it's super important to have more than enough money that you need but we don't want to have too much because then you're going to dilute the overall return on the property. So if a passive investor is going to be taking a look at a deal that an operator is putting out, how can they know that they've taken into account some of these changes in the market, some of the things that you're talking about related to interest rates, and you did an improvement, ROI metrics and kind of the escrow numbers for COVID. How can somebody be able to intelligently know this has been taken into account?
Devin [00:09:44]: Yeah, I would ask, if I'm a passive investor, a couple of things around reserves. And I think, off the top of my head, it's three buckets. Usually the lender has a required reserve, a lot of times monthly. So we kind of budget $300 a door per year that the lender is probably going to make us escrow with them. And that's for longer term capital improvements so that's one bucket. The second bucket that's kind of topical, here's the escrow if that's a big one. So how is the sponsor handling that escrow reserve for COVID? And then the third bucket is just general property reserves. Now, in this climate, I could see an operator reducing their general reserve because they have this huge COVID escrow that hopefully they're going to get back in 6 or 9 months. So those are kind of the three escrow buckets, I look at lender required ongoing reserves, COVID escrow reserves and just operating reserves. But the thing that I really encourage people to look at too is sponsor liquidity. Because I think it's easy today, it's easier than it's ever been, to put together a team, put together capital and go close a deal. Maybe go close a $10 million deal by putting together the team. It's actually fairly straightforward to do that. I think it's exceptionally important that if you're passively investing that you understand the sponsors got liquidity to smooth anything out. For example, you might need $100 or $200,000 to pay a contractor to get something done before you can get your money back from the bank. And I've seen operators get tripped up over a $50,000 gap in cash. And that's unacceptable. If you're going out and you're leading a deal that is a multi-million dollar deals a sponsor, you need to have some liquidity to be able to float that without going back to your investors hat and hand over $50 or $100,000 kind of bridge cash situation. And you know, I get a little passionate about it because I'm a passive investor in some of those deals where I've been the bridge on that and the sponsor absolutely should have been able to cover that. And so I think that it's important to ask, if you're passively investing, is the sponsor liquid? If there's a short term liquidity requirement on a project, can the sponsor take care of it without going back and bugging their investors for?
Steven [00:11:55]: Yeah, I couldn't agree more. And that's one of the things that it's so important to be investing with people who are experienced and have the capital themselves to be able to do these deals on their own without necessarily needing to raise all of the money. Now, they may choose to raise majority of the money so that they can have that liquidity but it's one of those things that it's an easier game to get in now than it ever has been to get in the multi-family space. And so it's one of the reasons we only invest with people who have extensive track records. But when it comes to sponsor liquidity, there's nothing worse than having a capital call over something ridiculous $ like a 50 or $100,000 expense that's going to come up. We should be able to anticipate some of those type of things. How does a passive investor, in your eyes, confirm that the sponsor has that liquidity.
Devin [00:12:45]: Great question. If I'm a passive investor, I would want to know, have you ever done a capital call on a deal? And I want to hear that a sponsor has not done a capital call. Because bumps in the road on a construction project or on multi-family are going to be inevitable, a sponsor needs to be able to take those punches and roll with it. And the passive investor, in my opinion, needs to be completely passive in the deal. That's what they signed up for. So, I would ask if sponsors ever had a capital call. And if they have, I want to know more. And then I want to just ask about their personal financial situation. What comes up if there's a $100,000 bump in the road on this deal? What's the game plan there? Now, I tend to invest as a passive investor because I'm an LP in a lot of deals. I'm really, kind of, relationship first. I mean, it's people that I know, or people that have invested with me, or people I've built a relationship with over a long time, to where I may not ask to see their latest bank statement because of the relationship. But I've certainly spent years building that relationship first. And if I'm starting out building a relationship, I'll probably start with the question of have you ever done a capital call? Or what's the game plan if there's a 100k bump in the road?
Steven [00:14:00]: Yeah, that makes sense. And I think it's one of those things where when you're investing 50,000 a deal, it's difficult to justify asking for a balance sheet or a bunch of information to verify. If there is a lack of trust at that point, it kind of makes sense that you would probably want to go a different route of not investing or maybe you have to kind of do some self-assessment about where that lack of certainty internally is coming from, and whether you should be investing at all. Now, of course, nobody wants to lose 50,000. But we see it very differently. When we're investing with more institutional investors, people are putting in 500,000 or a million dollars, it's typical for them to ask for a balance sheet to go deeper into the financials because from their experience, they're risking a lot more, a larger percentage of the deal. And that's one of the directions that if you have that kind of equity and you're going to be investing it, you can ask that but usually it's with a polite no when you're investing a very small amount. So keep that in mind when you're a passive investor, you're looking at doing due diligence on somebody. Know what your slice of the pie is and what's relevant and how much you can really ask when you're going down that path. What I'm curious about, Devin, is when we're looking at acquisitions, we talked a little bit about this offline about what's kind of changed in the market today. But what are you seeing related to where assets are trading today? And talk to me a little bit about what's different?
Devin [00:15:23]: Well, I'm constantly scratching my head on going in cap rates or asking price cap rates because they keep going down. I'm constantly kind of befuddled by that, like, is this just going to keep? Are we going to continue to see cap rate compression is just kind of wild. And then also seeing capric, I guess, similarities across asset, vintages, where you're seeing a 70s vintage asset much closer in cap rate on a late 80s; early 70s versus late 80s. And these are like really different buildings and terms of construction and an age of the building and maybe even the area. And you're seeing the cap rates get closer and closer together. We've kind of tended recently to skew towards bigger, newer projects. It's like, if we're going to pay a lower cap rate for this thing going in then let's get something nicer and newer because there's just going to be less headaches and it's going to be a more stable project for everybody involved. And if you'd have similar cap rates, I think that's the move. So that's what we've seen, it's kind of interesting. And at the same time, you've seen multi-family hold up exceptionally well, nationally through COVID. And that's huge. I mean, we can't say the same for office and/or plenty of other businesses that have just been hammered in 2020. And so I think multi-family continues to be attractive for the reason that it's always been attractive, it's a fundamental essential service that everybody's got to purchase.
Steven: [00:16:59]: Yeah, we're seeing a lot of people from other asset classes moving capital into multi-family. That's probably part of the reason that prices continue to rise, cap rate compression continues to happen, as well as when interest rates go down. For all the listeners who don't understand this, when interest rates go down, it actually makes it more affordable to purchase that property with the leverage in place. And so therefore, it in turn almost makes that property more valuable. And so that's one of the things we think about, well, if we can buy something with a lower interest rate but we can still have the buffer above that interest rate. That is really where the profit is made. And so what else are you doing differently today, from an operation standpoint, as you're out there operating your assets and thinking about making purchases to operate new assets? What are you doing today that's different from before? Because a lot of people have been learning for the last year or two or they've been passively investing in other deals. And I think it's really important for people to be thinking about what's changed and what hasn't, because a lot of people have been thinking huge deals are going to be coming down the pipeline and maybe they are. But maybe they're not, because I've been in this space only since about 2014 or 2015 and since then, people have been saying we're going to be heading into the biggest crash in the next 12 to 18 months. So it's been years and years of people saying that everything's going change and it very well might be. But talk to me a little bit about what you're doing differently moving forward so that our investors can start thinking that same way.
Devin [00:18:30]: Yeah, absolutely. So, just a quick comment on interest rates. And unfortunately, I think this is such a macro thing that I try not to spend too much time thinking about it. But interest rates are so low, and there's been so much quantitative easing that I don't know that there's a way out of it. I don't know that there's a way that globally or in the US that we get to a much, much higher interest rate environment in the near term at all. So, if we continue to be a low interest rate environment that's going to facilitate higher purchase prices, etc., that's on a macro level. On a micro level, we're operating in one market in San Antonio, Texas. And the thing that we've done recently within the last year that's been a complete game changer for us, was starting the management company. And I think like a lot of operators that are in the game long enough, you just realize, there's just going to be efficiencies if we take this in house and go vertically integrated. So I've had good third party management company experiences, I've had a terrible third party management company experiences, but the common denominator was that that was all a little bit outside of my control. And so I was fortunate enough to find the right person and build a management company around them and now we have that all in house and it gives me a much greater degree of comfort operating these assets knowing that we control the whole thing from acquisition to operations down to property level staffing and that we can kind of make decisions on a weekly basis around that. So, going vertically integrated didn't make sense a number of years ago for us but at some point with a certain amount of scale, it absolutely made sense for us. And that's been awesome. I love it.
Steven [00:20:16]: Yeah, for the operators out there, this is a great example of once you get enough properties under your belt, once you have enough assets under management, that it actually makes a lot of sense to do property management in house especially if we're going to be going through some type of rapid change in the market. Not only because it's great to be able to be that close, to be able to pull all the different levers from an individual property level but it also helps keep the lights on for your business because you're going to be the one who's going to be in there making all those decisions and be able to bring on staff to support that. And so you're able to pull a little bit of money from the project to be able to support that overhead. And it's the thing that is not the sexiest part but it's the most important part of investing because you don't make your money on the purchase. A lot of people say that you do. And it's important we got to make our money there but you really stop yourself from losing money when you operate the asset. So that's, that's definitely really important.
Devin [00:21:17]: 100%. I mean, the operation is so critical and it's so easy. A lot of people spend so much time on the underwriting, raising capital and everything. But closing a deal is just arriving at the starting line. I mean, there's so much work that it takes to get to the starting line, it's easy to just focus on that. But that's just the starting line of the race. I mean, you've got to run the race for five years on top of that. And so it's critical.
Steven [00:21:42]: And I just want to underline that because for a lot of you investors out there, passive or active, when you're thinking about this, when you're just getting into the space, all of the education, all the focus is on how do I go and find a deal? And how do I find money? Why? Because that's the biggest problem that you have before you close on the deal. But the most important part of the whole investment is actually executing the business plan. And so many people fail to do this. And I think we're actually going to be heading into a little bit of, if the economy continues to change I think we're going to see some of that end up playing out with a number of new operators going to the market that are not partnering with experienced operators, that are not having other experts running the day to day, they're going to be learning on your dime. And you don't want people to be learning on your dime, you want to be investing with people who have the experience, have been doing this, understand real estate, understand real estate markets. And that's exactly why you will you want to be making those decisions when you're doing your due diligence upfront before investing in an asset if you're on the passive side. And if you're an operator and you're new to the game, don't let that hold you back. Just find a way to bring in that expertise on your team so that the people who have 10 years of experience can tell you well, I've dealt with this problem 20 times and this is how we solve it instead of trying to figure it out.
Devin: [00:23:00]: I love it. Yes, absolutely true.
Steven: [00:23:02]: So a lot of people that listen to the show have been in the single family space, they have been flipping, maybe they own some single family themselves but they want to transition into multi-family, what's been the biggest challenge for you in making that transition?
Devin [00:23:16]: When I made the transition, a lot of it was mindset. I mean, I started out my single family business with really kind of no capital. And the thing that helped me was that right when I started in real estate investing period, I paid some money to join a club and get a mentor right out of the gate. And I think that was hugely valuable. So I got to be around people that were doing big multi-family deals way before I was ready. And we're talking years of me flipping houses and doing rentals and single family stuff and just kind of scratching and clawing a portfolio together over years, but all the while knowing where I wanted to go, beginning with the end in mind. And it took several years to get into multi-family but I was fortunate in that from the very beginning, I got to be around people. And become friends with and truly get to know people that were going out and buying these $10 and $20 million buildings. So I had a framework to get in there and then it was just elbow grease for four years until then. And my transition to multi-family was buying a six unit by myself with no partners that I ran every aspect of, it's kind of miserable but that was my start. And I didn't want to take on any capital. I just wanted to do it by myself. And then the next deal was the 75 unit where I partnered with a couple other operators that had done it before, raised some capital, did some operations but not all of it. And then after that I was ready to transition to 130 units that I was the sole operator on. And then from there, that was my gradual stair step up over a period of a couple of years to where now we can go out and buy a $20 million building and we're the sole sponsor, but It didn't happen overnight. And so it was just a gradual process starting with me by my own little multi-family deal just to prove to myself. Was that necessary? Maybe not, but that's where I was at the time. And I just, I did not want to go out and try and raise 2 million bucks on my first deal out of the gate.
Steven [00:25:19]: Yeah, to put in perspective, you are in single family for a long time, you had flipped many houses, you had a lot of experience, but you wanted to further that experience and see what was different in multi-family before you started bringing in outside capital. I think that's really smart. And for all the investors who are listening, think about going that direction if you're trying to go the operations route. Think about trying to get involved working under or with other people who are experienced that you can actually get the experience, not the experience on paper, the experience of saying I have ownership interest in 200 units. In my eyes, that's kind of bullshit. And a lot of people try to act like they've got all these properties but they're not really actively operating them. It's much more effective, much more valuable to go and do what you did and take the opportunity to learn before going out and doing that on your own and being able to learn from other people's experience. I think that's really, really smart.
Devin [00:26:15]: Yeah, it's an interesting business. I've certainly seen my share of stories and challenges along the way. And now we tend to kind of buy bigger, cleaner properties. I don't see as much of that, but I've definitely done some Warzone properties and had some experiences along the way that I think all that stuff tempers you and hopefully makes you a better business person.
Steven [00:26:36]: Yeah, absolutely. And how would you have avoided some of those challenges If you were going to start again yourself? I mean, what have you done differently in the way that you kind of got started in your space?
Devin [00:26:48]: It's hard to say because some of the challenges that I've had, it's hard to say what impact they've had on me now. They may have created an instinct in me or sharpened me in a way that I wouldn't trade. But looking back, I think it's so much easier to buy a stabilized property than it is to buy something that you're just going to completely gut out and turn around and deal with a really tough tenant base. So that's kind of one takeaway for me is that we've done some Warzone properties, with some big turnarounds, and good returns but I don't know that the returns were worth the struggle on my part. So buying a property is 92% occupied and a week after you close it, there's 100k revenue coming in. It just makes life a lot easier. And I think it makes the investment more stable for everyone involved and so that's kind of an obvious thing to say, buy cleaner properties. But I think it's common for folks starting out to think that, well, the deal is just a trash property that we can buy for high cap rate and get a low price on. It could be, but there's a reason why the cap rates high and there's a reason why the price is low. So I think looking back, I certainly earned my stripes on some brutal properties that we don't do those kind of properties anymore. But I don't think I'd trade anything, to be honest with you, I don't think I traded.
Steven [00:28:18]: Yeah, well, it's because that experience of going through the trenches is something that you took away and you're able to apply and everything that you do, but it's one of the reasons why I personally have no interest of doing super heavy redevelopment where I'm managing the operations of that. Because, yes, as a flipper, I've experienced that I can only imagine what it's like on a very large scale level. Now, we have an operating partner here in Denver, that's all they do. They do heavy redevelopment and their whole business is built around clearing out properties, dealing with the tenant bases that are the most challenging, and that's their area of expertise. So as you're an operator that's listening to this, figure out what is your unique value proposition? What are you the best at? Are you construction heavy? Or are you more on the management of the business side? And if you're a passive investor, understand the value that comes out of somebody putting in all that time, effort and energy into re-developing a property. And understand why there are fees and returns that need to come back to that operator for all the work that goes in.
Devin [00:29:21]: Yes, that's right. That's right.
Steven [00:29:23]: So, this has been really phenomenal diving in and getting to know you a little bit more. Devin, where can people find out more about you or get in touch?
Devin [00:29:30]: Sure. The easiest way is on our website, djetexas.com. We've got a podcast, We've got other resources there, you can reach out and connect with us and the team and see our portfolio. So that's kind of the catch all is djetexas.com.
Steven [00:29:44]: Perfect. We'll include that in the show notes. Thank you so much for joining us and I look forward to the next time we get to hang out.
Devin [00:29:51]: Awesome. Thanks, Steven. Appreciate it.
Steven [00:29:58]: Thank you for listening to the investors mindset podcast, if you like what you heard, make sure to rate reviews, subscribe and share with a friend. Head over to theinvestormindset.com to join the insider club, where we share tools and strategies from the top investors and entrepreneurs and how to take it to the next level.